Analysis of The Somalian Telecommunication Industry

Analysis of the Somalian
telecommunication industry
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Telecommunication industry of Somalia is a rapid evolution of technology in Somalia

and people access to it comes as several telecommunication companies here jockey for
customers amid the absence of strong government-regulated phone and internet access.
The competition to supply phone service has stocked the nascent revival of Somalis
shattered economy and it shows that business can thrive even in one of Africa latest
developed markets.
Backed by expertise from China, Korea and Europe and funded from their own pockets
Somali telecom entrepreneurs are providing in expensive mobile phone service. Users
can conduct money transfers via mobile phones and gain internet access, both wireless
functions that aren't widely available in many other parts of Africa.
The success of Somalia's telecom sector is not all that unusual for a war -shattered
economy, experts say. In countries with shaky economic foundation, such as
Afghanistan and the democratic republic of Congo, telecommunication is missing
infrastructure.
The first private telecommunications company to operate in Somalia after Somali

government collapsed in 1991, was Telecom Somalia in 1994, Hormud Telecom in 2002
and Nationlink Telecom in 1997, they all offers all telecommunication services, the three
companies signed an alliance and interconnection deal in 2005 that allows them to set
prices and to control the newly other in entrant companies Like Somafone
Telecommunication and others.
Hormuud Telecom Somali
Hormud Telecom (HorTel) is a privately held enterprise established in April 2002, its
head quarter is in Mogadishu, and it expands south and central of Somalia. more than
600 Somali investors have shared in Hormuud Telecom and its leading
telecommunication in southern and central of Somalia, and it employs over 4000
people, comprised of full time and part time staff, dealers, etc.
Hormud Telecom has received numerous awards in recognition of its grass-roots work
in developing the local community welfare such as supporting educational institutions
,social development and charity , provides a variety of telecommunication service such
as Fixed line, GSM service and Data service ,E voucher, and Zaad service.
Hormuuds chief executive ,Ahmed Mohamed yusuf Started his business selling bread
and spaghetti ,he later opened a popular supermarket ,but like his competitors he saw
huge gaps in telecom sector "everyone wants to get in touch with his brother or sister,
whether inside or outside the country, to hear the latest news'' says the 50-year old CEO.
In 2002 he pooled money with friends and investors and launched Hormuud Telecom
providing telecommunication and later expanded to bank and mobile money transfer
and now Hormuud Telecom Inc has a sales of about $40 million a year.
However Hormuud expands and covers their network all south and central of Somali
and they have two trade makers in other parts of Somalia, like Telesom in northwest and
Golis in north east.
Literature review
Innovation is an idea, product or process that is a new to adopter (Hage and Aiken 1973)
and other deffination by Damanpour (1991: 556): "Innovation can be a new product or
service, a new production process technology, a new structure or administrative system,
or a new plan or program pertaining to organizational members.
Innovation is a survival imperative, if organization does not change what it offers the
world and the ways in which it creates and delivers it offering it could well be in trouble,
and innovation contributes to competitive success in many different ways, it's a strategic
resource to getting the organization where it is trying to go whether it is delivering
shareholder value for private sector firms, or providing better public services, or
enabling the start -up and growth of new enterprises.
But innovation does not happen simply because we hope it will, it a complex process
which carries risk and needs careful and systematic management, the core process
involves three steps -getting hold of new ideas, selecting the good ones and
implementing them.
A competitive advantage is an advantage gained over competitors by offering customers
greater value, either through lower prices or by providing additional benefits and service
that justify similar, or possibly higher, prices.
A competitive advantage exists when a firm has a product or service that is perceived by
its
target market customers as better than that of its competitors.
Michael Porter, in his book Competitive Advantage, identifies five factors that determine
the nature and degree of competition in an industry:
Five forces of competitive advantage
1. Bargaining power of buyers
2. Threat of substitutes
3. Bargaining power of suppliers
4. Rivalry among existing competitors
5. Threat of new competitors
The more completely understand the entrepreneurs the underlying forces of competitive
pressure the better they will be able to assess the market opportunist's.
So creativity and innovation are intricately linked to competitive advantage:
There is a positive coloration between innovation and creativity and market share so for
example Hortel improving their product every year .
Competitors force the introduction of a new product, for example if Hortel did not
introduce new product the other competitors like Telecom Somalia or Nationlik would
produce
Macro changes push Innovation because there's a lot of new entrants in the
telecommunication market in Somali so Hortel faces competition on scale and scope.
As Michael Porter says in his book "To achieve a competitive advantage, the firm must
perform one or more value creating activities in a way that creates more overall value
than do competitors. Superior value is created through lower costs or superior benefits
to the consumer (differentiation)."
Hormuud models of innovation for its production

Hormuud Models of innovation and creation to strength its competitive advantage:
Product innovation: the introduction of a new product, or a significant qualitative
change in an existing product.
Hormuud telecom doing better by adding value and improve for their product and
creating and innovating for something new and completely different with other
competitions ,like product called Zaad Service which they launched May 2010 ,Zaad is a
mobile banking system that is challenging the existing traditional remittance operators
in Somalia.
This system allowing customers to use their money for transfer cash to friends and
relatives or purchase ,paying bills and this service remains one of the most interested
and fluently in both and telecom remittance ,reliving them from the risk of carrying
huge wads of the money
Process innovation is the introduction of a new process for making or delivering goods
and services so Its clearly the relationship between product innovation and process
innovation ,the company cannot developed or improve their product with out investing
in process technology of production or service, so Hormuud Telecom updated their
service and the way they serving for their customer they innovated the process , so they
invested new service and installed to their mobile programs.
And the ways of making and doing things, can arise from the use of new combinations
of tangible and intangible inputs.
Since its formation, Hormuud Telecom's focus and commitment to excellence in
customer care and quality of service has ensured year on year growth and Hormuud
Telecom is now the nation's number one operator in terms of subscribers and service.
Generating idea includes the generating of options in answer to an open ended or
invitational statement of the problem, this stage contains both generating and focusing
phase, during generating phase the organization do fluent thinking ,flexible thinking
,original thinking ,elaborative thinking. In focusing phase of generating idea provides an
opportunity for examining ,reviewing, clustering and selecting promising options .
.
Finding
There is serious criticism revolving around the security of this service. These might
initially be dismissed as the kind of criticism that might be expected for anything new;
however, the continued success of this and other similar services depends on the
adoption of the community for such services.
However the most problem having with hormuud is really the did create a lot of
innovation and development through their technology and bringing still the latest idea
and generating it to better improvements but the tackle that challenging is lack of
education and example senior people not trusting and and not know their innovation for
example by using Zaad service they having these challenges ,other side the people if they
get educated to these technology are also sever because carrying a huge amount of
money is risk in somali because of robbers and gangs ,so Hormuud is avoiding them to
that risk
Hormuud's money transfer system works with U.S. dollars, rather than the Somali
shilling, and users can transfer up to $3,000 a day throughout southern and central
Somalia"They can send and receive cash through this system locally," Hormuud's
spokesman Abdirashid Ali Aynaanshe told Reuters by phone from Mogadishu "The
system is safe, and the probability this cash can be in danger is less than carrying cash or
checks in the pockets or bags while traveling in the country," he said
And the finding is a environment issue, it's a lack of stable government in Somalia thers
a lot of changes , means no continuous regulation,the political instability makes it hard
to project on the growth of users. One day you can have a subscribers but the following
day they could be gone.
The lack of a stable government means there is no regulation. There are four mobilephone companies in the country and competition is stiff, which is good for subscribers
because the costs remain low
Recommendation
In spite of this tremendous innovation and improvements of Hormuud
If the customers or the people are not familiar to the development and they are scaring
by using these technology, innovation becoming useless ,so The management of
Hormud will have to focus on educating the masses on the merits of this service like
giving them training and seminars about using online banking and mobile transfers and
also how they can use it to improve their businesses or benefit from it as consumers to
maximize their profit
Conclusion
The investment in telecom businesses is one of the clearest signs that Somalia's
economy has continued to grow amid the ruins of war. The telecom sector has became
among the country's biggest revenue generators.
The service is especially seen as a utility to facilitate micro-financing and related services
which are held to be the main solution to tackle poverty issue

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Analysis of the Somalian

Telecommunication industry of Somalia is a rapid evolution of technology in Somalia

The first private telecommunications company to operate in Somalia after Somali

Hormuud Telecom Somali

Hormuud models of innovation for its production

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