System analysis and design

Group assignment

Group members
1. Heysem bahar cep 422/11
2. Hana mechal
3. Mihret muluneh
4. Teshome fikre

Submitted to: Ali E.

Date: Thursday, April 15, 21

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Purpose – The paper aims to emphasize a positive change toward the strategic
management and decision making. It brings out a few lacking that are important to
know for the industry.

Design/methodology/approach – The paper opted for an exploratory study including

interviews and group discussion with employees representing middle and senior
management. Data is increased by applying the analytical tools, the descriptions of
internal processes, and organizational structures, magazine articles and the web.

Findings – The paper provides practical understandings about the strategic

management analysis and organizational structure.

Practical implications – The paper includes detailed analysis of the various factors that
need to be catered for. That includes SWOT analysis of the organization and deep study
of structuring of organization.

Originality/value – The paper fulfills the need of exploring the strategic management
and organizational structure study.

Keywords: Strategic Management, Organizational Structure.

Introduction
Telecom industry is the collection of all industries and companies providing phone
service, data or entertainment to consumers and businesses. It is the fastest growing
industry in ethiopia and with highest per year growth rate in tele-density Worldwide
(Atta 2008b, P.1 of 1) it has become a backbone in ethiopias economy. Telecom industry
provides many employment and investment opportunities due to high revenues
generated via large number of telephony subscribers. Along with opportunities, this
industry also provides vast facilities to communicate and connect globally in a better,
reliable and modern manner.

Background:
Originally a division of the Ministry of Post, Telephone and Telegraph, what would
become the ETC was established as the Imperial Board of Telecommunications of
Ethiopia (IBTE) by proclamation No. 131/52 in 1952. Under the Derg Regime, the IBTE
was reorganized as the Ethiopian Telecommunications Service in October 1975, which
was in turn reorganized in January 1981 as the Ethiopian Telecommunications Authority.
In November 1996, the Ethiopian Telecommunications Authority became ETC by Council

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of Ministers regulation No. 10/1996. The subsequent Proclamation 49/1996 expanded
the ETC's duties and responsibilities. For its international traffic links and communication
services, ETC mainly uses its earth station at Sululta which transmits and receives to both
the Indian Ocean and the Atlantic Ocean satellites.[7] Engineering consulting firm Arup,
were involved in the design and engineering of the early tower structures (during the
1970s).
In late 2006, the ETC signed an agreement worth US$1.5 billion with
three Chinese companies, ZTE Corporation, Huawei Technologies and the Chinese
International Telecommunication Construction Corporation, to upgrade and expand
Ethiopian telecommunications services. This agreement will increase the number of
mobile services from 1.5 million to 7 million, land line telephone services from 1 million
to 4 million, and expansion of the fibre optic network, from the present 4,000 kilometers
to 10,000 by 2010. It is part of a larger US$2.4 billion plan by the Ethiopian government
to improve the country's telecommunications infrastructure. [8] In 2018, the mobile
service business has reached 85% of the country. In February 2018, it was reported that
Ethio Telecom had 64.4 million subscribers making it the largest telecommunication
services operator in the continent. The operator runs three terrestrial fiber optic cables
with a capacity of 42 Gbit/s to connect Ethiopia to the rest of the world via Kenya,
Djibouti and Sudan.[9] In August 2019, the company announced that it will install 4G
network before other telecom companies enter the Ethiopian market since the
government decided that it will liberalize the telecom sector. [10]

Ethio telecom headquarter in Addis Ababa

The current chief executive officer of Ethio telecom is Frehiwot Tamru since August 1,
2018 preceded by Andualem Admassie who served five years. Andualem is now
assigned as Director of the Higher Education Relevance and Quality Agency. Frehiwot
previously worked as deputy CEO for Internal Support Service for then Ethiopian
Telecommunication Corporation. She told Capital she would manage all surveillance
quality protocols.[11]
By August 26, 2020, Ethio telecom planned to extended 842 new infrastructure site
during 2020 fiscal year. This infrastructure expected to enable the company to host
additional 5.2 million new customers. During this fiscal year, the company planned to
generate 55.5 billion birr in revenue, a 16pc growth from the last fiscal year. It also plans
to boost the country's telecom density to 51.3pc.[12]

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Purpose and statement of problem
The purpose of this report is to understand the organizational structure and strategic
management process by utilizing analytical tools- SWOT analysis. Improvements in
strategic management process and decision-making will be suggested.

April 5, 2021 promises to be a milestone in Ethiopia’s journey to become a digital

economy. Bids are due to be submitted by potential investors for two new full-service
telecom licenses, to be awarded by the Ethiopian Communications Authority (ECA). The
two new operators would compete with Ethio Telecom in mobile communications,
internet and other telecom services. Ethiopia is one of the last countries in the world to
have retained a state-owned monopoly provider of telecom network and services, a
market which is dominated by the private sector in most countries.  Opening the market
to private sector competition, and foreign investment, is expected to bring lower prices,
higher quality of service and more choice for consumers. It will also lay the foundations
for Ethiopia’s future digital transformation.
The World Bank Group was invited by the Government of Ethiopia to support the
process of market reform. The International Finance Corporation (IFC), the private sector
arm of the Bank, is assisting the ECA with the license awards. The World Bank itself is
supporting the partial privatization of Ethio Telecom and the strengthening of ECA as an
independent sector regulator, following its establishment in September 2019. The call
for expressions of interest from potential investors, launched in May 2020, attracted 12
bidders, including many well-known telecom operators from around the world. Now the
request for proposals phase is underway, with every effort being made to consult with
the private sector and to respond to their many concerns and questions.
But the process of opening the telecom market has rarely proven to be a smooth
process, as there are vested interests that may prefer to preserve the status quo. Ethio
Telecom has the most to gain from the expansion of the digital economy, but it is also
at risk from losing market share if it fails to compete effectively. So, what approach
should the government take? Should the government attempt to shelter Ethio Telecom
from competition? This seems to be the motivation behind policy announcements that
seek to restrict the operation of digital financial services to Ethiopian firms and
nationals. But this may slow down innovation and investment in the market and may
actually hinder Ethio Telecom’s own ambitions to attract a strategic investment partner
from abroad. A better strategy would be to encourage Ethio Telecom to compete on
equal terms with the new market entrants in providing mobile money services, without
ownership restrictions.

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Similarly, the direction taken by the government in limiting investment by independent
cell tower companies, obliging the new entrants to use the infrastructure provided by
Ethio Telecom, may slow down network roll out, particularly in rural areas. Ethio Telecom
will need to collaborate as well as compete with the new entrants. But this is best done
by allowing for open commercial negotiations in which the new entrants can make
rational decisions whether to build their own infrastructure or buy capacity from Ethio
Telecom. Ultimately, policies that seek to protect Ethio Telecom’s infrastructure by
allowing it to charge high prices for interconnection will end up harming the company.
The new operators will be Ethio Telecom’s biggest customers if prices are set fairly,
through market competition. Ethio Telecom has the potential to become a regional
powerhouse, but only if it is well-prepared for the competitive environment.
As part of its commitment to support Ethiopia’s plan to open up the telecom sector, the
World Bank is preparing a new Digital Ethiopia Foundations project and invest some
$200 million in the country’s digital economy.  The project will provide funds to further
strengthen the regulator and to prepare the legal and regulatory building blocks for the
digital ecosystem, in areas like eCommerce and Digital ID. The project will provide
support for the development of digital government services, digital entrepreneurship
and provide a digital response to the COVID-19 pandemic. Part of the plan is to pre-
purchase internet capacity from Ethio Telecom and the new operators, through
competitive bidding, to support government institutions and universities as they further
develop digital offerings, and to ensure that those services are available across Ethiopia.
The project will also provide matching grants to support digital start-ups and
established digital businesses looking to build or expand an online presence and
encourage wider participation in the digital economy.
Ethiopians will benefit greatly from the opening of the telecom market, and Ethiopian
firms will be better able to compete internationally if they pay lower prices for digital
services at home.  But to benefit fully from competition does not mean offering
preferential treatment to Ethio Telecom but rather creating a level playing field on which
it can compete fairly with its new rivals.

Aims and Objectives:

Conduct interviews and discussions with middle and senior level management personnel
from the telecom industry

Conduct SWOT analysis over feedback received from the interviews and discussions

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Study the organizational structure of Ethiotelecom and

Reach out mobile subscribers to get feedback and to help define QoS targets and KPIs

Provide suggestions about improvement in strategic management process and decision

making

Scope:
Survey: Design questionnaires and conduct interviews with middle and senior level
management

Data Analysis Tools: Strength Weaknesses Opportunities Threat (SWOT)

Organizational Structure: Vertical Differentiation (Hierarchical Levels, Span of Control,

Integrating Mechanisms, Centralization and Decentralization, Standardization and
Mutual Adjustment and Professionalism)

Research Methodology

Document/Literature reviews:
The first method we adopted in the implementation of our research methodology was
reviewing work already done in the field closely resembling our analysis. This was done
on the basis of multiple documents most notably of other telecommunication
companies and analysis done on the basis of different circumstances factoring in the
company’s strategic management and decision making process.

Mixture of Quantitative and Qualitative Survey:

The purpose of qualitative analysis is to get a complete detailed description whereas in
quantitative analysis we classify features, count them, and even construct more complex
statistical models in an attempt to explain what is observed.

Qualitative analysis allows for fine distinctions to be drawn because it is not necessary to
shoehorn the data into a finite number of classifications. It is also used to investigate
the why and how of decision making, not just what, where, when. This also justifies the
reasoning behind getting smaller but focused samples rather than getting larger
samples.

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Quantitative analysis basically leads to the systematic empirical investigation of social
phenomena via statistical, mathematical or computational techniques. Its main
objective is to develop and employ mathematical models, theories
and/or hypotheses pertaining to phenomena. In easier terms it basically means that
quantitative researcher asks a specific, narrow question and collects numerical data from
participants to answer the question.

Official Perception surveys:

These surveys will be qualitative surveys conducted on the basis of information gathered
by senior officials from managerial level employees in the telecommunication industry.
These surveys will be in the form of descriptive questions and will be used to analyze
different factors involved in the company’s decision making process.

This analysis will be done in the form of Key Informant Interviews and will be held taking
into account a senior officials own analysis of the company’s strong and weak points.

Customer Satisfaction Surveys:

These surveys will be quantitative surveys distributed amongst people in the form of
questionnaires. This will be done in the form of Random Selection Surveys hence to
cover major portion of our required research.

Literature Review

Strategic Management Process:

Strategic management process defines the strategies of the organizations. It is the
process by which managers choose a set of strategies for the organization that will
assist it to achieve better performance and QoS targets. Strategic management is an
ongoing process that has three main stages namely: strategic formulation, strategic
implementation and evaluation. Organizations use strategic analysis tools for the
strategic management process

Organizational Structure:
Organizational structure determines hierarchy and the reporting structure in an
organization. These may be classified into different types based on a variety of things

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mainly scale of the organization and the scope of its operations. Traditional structure
organizations are based on functional division and departments, various types of
structures under these structures are Line Structure (Used in Small Organizations), Line
and Staff Structure (Used in Large Organizations), and Functional Structure (Division
based on the functions a person perform). Divisional structured organizations are based
on functional division and departments they have. These may be classified as Product
Structure, Market Structure and Geographic Structure. Some other kinds of
organizational structures are Matrix Structure, Network Structure and Team Structure..

Literature review has been conducted for this research article to understand the
concepts underlying strategic management process and the organizational structure.
This will help to carry out the required work of survey, SWOT analysis, and for making
the suggestions based on the conducted research.

Results

Strategic Management Process

Strategic management involves managers from all levels of the organization to
formulate and implement strategies to provide superior fit between organization and its
environment to achieve set goals of the organization. This involves action and decision-
making. Three stages of strategic management process are strategic planning,
implementation and evaluation. The nine steps encompassing these three stages are
Assessment, Strategy, Objectives, Strategic Maps, Performance Measures, Initiatives,
Automation, Cascade and Evaluation. The process can be described by the flow chart
presented in figure 1 below:

Strategic Management Process is accompanied with SWOT analysis, which provides data
to formulate and implement strategies and changes to achieve the target goals and
QoS. SWOT analysis helps to examine internal (strength and weaknesses) and external
(opportunities and threats) elements of a business. SWOT analysis can help the
management team in a business to discover:

What the organization does better than the competitors do?

What competitors do superior than the organization?

Whether the business is making most of the available opportunities?

How a business should react to changes in its external environment?

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SWOT analysis for Ethiotelecom and has been conducted as case study.

SWOT Analysis of Ethiotelecom

Ethiotelecom is a Ethiopias GSM cellular service provider, a subsidiary of Ethiopian
telecommunication corporation Limited. Its operations started from addis abeba on
January 29 1994. Ethiotelecom has progressed and attracted customers and expanded
its coverage area by adding new cities and highways/motorways. Around US$2.4 billion
have been invested by Ethiotelecom to setup its up-to-date technical infrastructure to
provide fast data services and high quality voice. On its establishment, Ethiotelecom
cater most importantly for the middle class, by announcing low rates and different
packages with amharic names like gebeta etc. Ethiotelecom has extended its customer
support in a very planned and appropriate manner with a strategic network of dealers
and outlets for people.

Ethiotelecom has recently reached the landmark of 45 million subscribers in Ethiopia.

According to reports by the OpenNet Initiative and Freedom House, the Ethiopian government
through Ethio telecom imposes nationwide, politically motivated internet filtering. [13] Under a
2012 law regulating the telecommunication industry, attempts by journalists to circumvent Ethio
telecom surveillance and censorship of the internet could be interpreted as a criminal offense
carrying a prison sentence of up to 15 years.[14]Case study of SWOT analysis for
Ethiotelecom has been discussed as follows:

Strengths:
Ethiotelecom is host to value added services and data connectivity

Ethiotelecom offers the most reasonable prices for its users

Prepaid roaming in Ethiopia was first launched by Ethiotelecom along with the
Multimedia Messaging Service (MMS) and GPRS services

Ethiotelecom’s Prepaid packages are now considered to be one of the most favorite
packages by the youth market

Ethiotelecom has got the best e-marketing department in competition to the other
mobile operators

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LTE Advanced
LTE advanced introduced in selected areas of Addis Ababa
2020

4G/LTE
4G/LTE introduced in Addis Ababa, Ethiopia
2015

NGN, 3G & DWDM

Next Generation Fixed , Third Generation (3G) network  and dense wavelength division multiplexing
(DWDM) based on Optical fiber transmission introduced

2007

Broadband multimedia service

Broadband multimedia service launched

2004

Roaming service

Roaming service launched

2003

Mobile service

Mobile service launched.

1999

Internet service

Internet service introduced.

1997

Digital microwave & fiber cable communication systems

Digital microwave & fiber cable communication systems initiated

1989

Digital exchanges

Digital exchanges installed

1988

Launched International communication through Sululta Earth Satellite Station

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  Launched International communication through Sululta Earth Satellite Station positioned to three
different directions
 1979 :- The largest satellite dish (32 M Radius)
 1987 : - The second largest satellite dish
 1987 : - The smallest largest but highly sophisticated satellite dish (32 M Radius)
1979 -1987

Installed radio stations for international and domestics services

Installed radio stations for international and domestics services

1952

Telegraph Service

Dire Dewa -Djibouti telegraph service started

Weaknesses:
There is no institute in subcitys that provides formal education in the fields of
networking and other core technical capabilities so Ethiotelecom needs to have a major
chunk of their personnel trained from institutions in addis abeba.

The customer service centers are not coming up to national and international standards
as most of the customers’ calls go unattended because of the poor call center
performance

The postpaid connection provided by Ethiotelecom is comparatively expensive.

Most blocked sites are those run by Ethiopians in the diaspora who are highly critical of the
government, however, Ethio telecom has also intermittently blocked access to other sites. In
2008, the Committee to Protect Journalists site was blocked for several months after it reported
the arrest and beating of the editor-in-chief of The Reporter.

For almost two years following the 2005 elections, Ethio telecom, which is also the sole
telephone provider in the country, blocked mobile phone text-messaging.

Because it is a state owned organization, the government uses the whole telecom sectors to
influence and promote the ruling parties agenda making it very difficult for the general public.

Franchise distribution system is not up-to standards- This stands as the common
problem for all mobile services operators. Record keeping is also an associated problem

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Ethiotelecom’s biggest weakness is that it cannot meet the demands of its customers

The franchise network of Ethiotelecom is not able to meet the demand of increasing
number of mobile subscribers

Ethiotelecom has not provided innovative services to its subscribers compared to other
operators

Its coverage in centeral region is quite good but in north its coverage is poor

Opportunities:
Participation within the growing Telecom industry and extension of coverage area

Attract more subscribers and increase market share

Product line and packages expansion focusing at various age groups and social classes

Cost discount strategies

Ethiotelecom has enormous ability to expand globally, but since it is a government

owned organization, the economic situation in Ethiopia does not permit this.

With the precise marketing strategy and planning they can gain much more subscriber’s
market

The demand for value added services in increasing with development in the IT &
Telecom sector, Ethiotelecom should come up with improvements in its value added
services in order to gain leading edge in the market

Ethiotelecom should expand their Franchise network in remote areas to provide good
service.

Ethiotelecom should expand its network coverage to the Northern areas of the country
as well with the reason that in those parts of the country not too many companies are
giving services and if Ethiotelecom gets success in providing its services there then it will
definitely attract a huge chunk of people and its number of subscribers can increase

Product innovation and attraction

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To become customer size specialist

Threats:
Monopoly of ethiotelecom and inclination towards state owned telecom service
providers

Government interference in terms of taxes

PTCL should provide more financial support to Ethiotelecom to enhance profitability of

its subsidiary company

Being a responsibility, Ethiotelecom is supposed to provide good pension benefits to its

employees, which sometimes appears like a great idea, but they are now facing
problems as large amount of people are beginning to collect

Ethiotelecom, like many large companies with quality employees’ healthcare welfares, is
suffering from a large financial hit

Some pressure groups are objecting on the towers that are installed in domestic areas.
According to their point of view it is not good for health for the people who are directly
exposed to the radiations caused by the towers

Ethiopia is experiencing serious problems regarding the economy now days which will
ultimately also affect Ethiotelecom. The current downturn in market is not beneficial for
any sort of business may that be telecommunication

At any time ethiotelecom can modify the services of telecom sector

Cutthroat competition operating in kinked demand oligopoly

Implementation of WTO policies will result in open & competitive pricing in services
sector exclusively in telecom

There is an imbalance between prices of inputs & outputs

For almost two years following the 2005 elections, Ethio telecom, which is also the sole
telephone provider in the country, blocked mobile phone text-messaging. The government
accused the Coalition for Unity and Democracy, the largest electoral opposition at the time, of

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coordinating anti-government demonstrations using text messages. Ethio telecom resumed
messaging service in September 2007. [15]

Organizational Structure
Organizational structure defines the reporting and hierarchical structure in an
organization. Literature review presents an explanation about the organization structure
and the different types of it. Case studies of Organization structure and ethiotelecom
will be presented here.

Organization Structure of Ethiotelecom:

The organizational structure of Ethiotelecom is functional structure. The key features are
listed as follows:

There are eight departments, Finance, Customer Services, Commercial, Technical,

Information Technology, Human Resources, Administration and Legal Affairs, each
supervised by a Senior Executive Vice President or Executive Vice President. Each of
these departments follow a flat structure to boost mutual processes and co-operations
between lower staff and managers

Each department has several sections and a manager is in-charge of each section. He
controls the overall operations of that section

Responsibility of each executive in charge includes all the services that are related to
him

Wide span of control in entire organization makes it convenient for the lower staff to
reach top managers and boost coordination between them

There are seven categorized levels. Tasks and duties of each person is evidently defined
at the time of joining the organization. Duties can be changed later, but staff has good
knowledge about their job responsibilities from the time they join the organization.
There is no communication or motivational issues because of the layered structure and
the open culture prevailing at each stage. There are no examples of de-motivation
however in certain areas like Customer Relationship Department or Customer Service
Centre different customer queries and objections can raise frustration levels when
qualities of service targets are not being met. Managers in these sectors interfere to
solve problems.

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On every occasion an employee has an idea, he/she is stimulated to approach the
management or people at higher level of hierarchy and share it with them. Boxes are
also situated at various places where personnel leave their ideas, suggestions and
concerns. To stay anonymous is their legal right.

The Communications Department tries to reach to certain decisions if the ideas can be
executed and then debates them with the employees concerned. There is also a formal
platform at the group level known as SEED where innovation is encouraged and new
ideas about revenue concepts and cost effectiveness can be discussed. Employees are
welcome to contribute and submit their innovating ideas. If the ideas that are shared are
feasible then they are executed in the organization. Employees are then rewarded
accordingly for their helpful contributions.

The organizational structure of Ethiotelecom is hybrid in nature where there is a formal

control on every employee in the organization. The chain of command is decentralized
and each personnel in the organization have his/her own tasks and responsibilities,
which he/she has to fulfill.

The key characteristics of the Organizational Structure are as follows:

Ethiotelecom has a lean or horizontal structure

The company has a decentralized structure making the flow of information easy and
simple

Ethiotelecom has different departments where every department has its head and all
heads are interconnected

Concept of departmentalization remains constantly in practice at Ethiotelecom

Different departments work within their functional divisions to contribute towards the
success of the business and to attain the set targets

Ethiotelecom has 83 sub-departments that are working efficiently. All interact with each
other towards the smooth running of the organization

The organizational structure of Ethiotelecom consist of of Board of Directors who are

reported by the president Frehiwot worqneh.

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CEO is a great supervision to the eight major departments of the company. These are
Finance, Marketing, IT, Engineering, Strategic Planning, Human Resource, and Sales
Departments

Discussion and Reflective Comments

Case studies for strategic management process and organizational structure has been
discussed for Ethiotelecom and Ethiotelecom. A comparison between these two
organizations has been made because these two organizations had remained in close
competition to each other in terms of subscriber’s market. Recent reports have shown
that Ethiotelecom has passed the landmark of 30 million subscriber base having a
market share of 26%. It has shown consistent growth due to the technological
development and efficient strategic management process. On the contrary,
Ethiotelecom’s market share in terms of subscribers has shown decline, which is now
19%. The major factor for this is the policy making at executive and senior managerial
levels. Policy making for Ethiotelecom is generally done by officials representing the
government as Ethiotelecom is a subsidiary of government owned Ethiopian
telecommunication corporation Limited.

Ethiotelecom’s subscribers’ base, technological growth, marketing and network

coverage has surpassed those of Ethiotelecom with a significant margin and today
Ethiotelecom is considered as a mature organization in Ethiopia’s Telecom Industry.
Ethiotelecom also have post-paid connection base, which is normally defined by
business and corporate users. Ethiotelecom’s postpaid connection is expensive and
provides much lesser value added services.

In the discussion about organizational structure, a point worth noting is that

Ethiotelecom has a functional structure where each department has a set of functions
well defined. However, a Hybrid structure combining both functional and horizontal
structure is recommended as it can provide enhancement in coordination and
communication between cross-functional teams and can also provide improved
customer service. Besides this, the structure should be defined such that it is able to
accommodate any changes that might seem appropriate. These changes can be easily
accommodated in horizontal structure.

Since mployee exchange program should be introduced at middle and senior level
management in order to share the level of managerial and technical skills and expertise.
Besides this, stock option could also be provided as a motivation to the employees.

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