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Arab Academy for Science & Technology & Maritime Transport

College of Management & Technology

Cardiff Metropolitan University

MBA Program

Managing Intellectual Capital Project

Etisalat Misr

Prepared by: Dalia Hamed

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Index:

Purpose of the Project 3

Introduction about Etisalat Misr 3

Introduction about the Project 3

Value Creation Logic of Etisalat 4

Etisalat Resources Distinction Tree (RDT) 5

Etisalat Intellectual Capital Navigator (ICN) 9

Etisalat resource matrix 11

Future Value Creation Logic for Etisalat 13

Figures index 9

References 10

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Purpose of the Project:

The main purpose of the project is to verify the effect of intellectual capital on Etisalat

organizational performance, and how Etisalat applied the intellectual capital in practice in its

organization, since we see over the last 10 years a fast growing, interest in and understanding

of the role that intellectual capital resources play in the workings of all organizational forms.

We will see through the project how Etisalat define the intellectual capital, what is its value

creation logic. Also will see how they identify, prioritize, and evaluate the most important

resources necessary for their value creation efforts through studding Etisalat Resources

Distinction Tree (RDT).

Finally we will see how much Etisalat interests in reporting on all their value creating resources

including intellectual capital resources.

Introduction about Etisalat Misr:

Etisalat is one of the leading telecommunications’ corporations that catering to consumers,

businesses, international telecommunication, ISPs, content providers and mobile operators.

Since 1976, Etisalat has been at the forefront of the Middle East’s technological revolution and

over the last forty years, the company has developed and grown to become one of the world’s

leading telecommunications companies.

Etisalat operates in 18 countries across Asia, the Middle East and Africa, a coverage area which

reaches more than two billion people. To date, the group’s global subscriber base exceeds over

140 million subscribers through mobile and Landline voice and data services.

The operation was launched in Egypt in May 2007 as the first 3.5G operator. Etisalat’s entry to

the Egyptian market ushered in a new era for the telecom industry.

Etisalat’s entry brought to the market an array of competitive and innovative rate plans that

attracted one million subscribers in the first 50 days of operation. Today, Etisalat Misr’s 2G and

3G robust and high quality network covers and serves 99% of the population in Egypt.

Moreover, Etisalat Misr is the first and the only operator in Egypt that has an exclusive

international gateway and its customers enjoy competitive international rates to all destinations

around the globe. In order to complete Etisalat Misr’s product portfolio, two well-established

ISPs (Internet Service Providers) were acquired and provide broadband services to customers

while at home and while on the move.

Introduction about the Project:

As we see that after the dot.com boom happened in 1999, how the U.S. economy had been

changed and the growth happened for the number, type of business and importance of Nasdaq-

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Listed Firms in the S&P 500 such as telecommunication, Information Technology & Consultation

companies. It became clear that it will be impossible to excel managerially if these companies

apply the same way of thinking & management that developed for the manufacturing companies

“before the boom”. This pushed these organizations to reappraise their mental models, their

assumptions, and their practical approaches to managing the organizations.

We see now a greater focus on services and intangibles than ever before; which requires much

more sophisticated management of issues such as processes, brands, IP, relationships and

competence. Today all companies are trying to improve their value by using new approaches

such as “Outsourcing” which is simply exchanging a physical resource owned by the

organization for a relational resource.

Etisalat as one of the leading telecommunications’ corporations over the world believe that the

responsibility of the valuation of organization, and for managing shareholder value became not

only the responsibility of the finance department, no, it became greater as much as the following

intangibles resources are also affect the firm value (not only the tangibles resources):

1- The Relational resources

2- The Organizational resources

3- The Human resources

Value Creation Logic of Etisalat Misr:

Basically Etisalat “as a telecommunication company” is linking customers, it is enabling direct

and indirect exchanges between customers separated by time and/or space, our economic

behavior is network economic marginal return, so this means that the value creation logic for

Etisalat is value network organization; which is dominated by relational and organizational

resources.

As a telecommunication organization, our Business Focuses are the services we provide to

our customer, our capacity to provide the services and services opportunity that we can provide

before the competitors.

Therefor our Competitive Focus is first the network coverage “the more we extend the

coverage the more we satisfy the current customers and the more we gain new customers”.

Second is our capacity utilization, how can we use the capacity we have in an efficient way in

order to reach the biggest network coverage for the area we targeted.

The main Resources we focus on are the platform we created and the process we built, and

these resources are always developed to produce the best services.

Because of the large number of customers we serve which reach around 15 million customers -

may be more - our Value Creation Logic is depending on the concurrent and layered set of

activities that required serving efficiently a random need for mediation services between these

large numbers of customers.

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We provide our services through our network promotions (Product Concepts), the management

for the different types of contracts with our customers also through creating a strong operation

for the network infrastructure that guaranty a professional level of service provisioning.

Our Common Value Creation Focus is on the network infrastructure development, Service

development, Procurement, Contract management and Human resource management.

The Role of Marketing is depend on grow the number of the subscribers and encourage the

subscribers to do more communications exchanges through our network.

Etisalat Resources Distinction Tree (RDT):

From my point of view as an employee work for Etisalat, I see the Etisalat depends more and

more on the intellectual capital resources as a value network organization, and this is what we

will see in our Resources Distinction Tree (RDT) below. And after I identified and mapped the

resources I judged their relative importance for the organization’s ongoing ability to create the

current organization value as the following:

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Etisalat Total Resources Portfolio

100%

Traditional Resources

22%

Monetary Resources

7%

Cash

Physical Resources

15%

Platforms

8%

IT

7%

Intellectual Capital Resources

78%

Relational Resources

30%

Directly Business Related

Customers

7%

Partners

5%

Channels to Market

8%

Indirect Business Related

Owners

2%

Regulatory bodies

4%

Local government

3%

Media

1%

Organizational Resources

30%

External Oriented

Brand

2%

Product Concepts

5%

Internal Oriented

Operating systems

9%

Operating procedures

9%

Internal audit

processes

5%

Human Resources

18%

Compentence

Specific technicality

& Knowledge

4%

Brain Power-IQ

2%

Ability to bild

personal networks

2%

Attitude

Behavioral traits

3%

Motivation

2%

Intellectual Agility

Ability to innovate

3%

Ability to adapt

2%

Level 2

Level 0

Level 1

Level 3

Figure 1: Etisalat weighted resource distinction tree – Initiative one

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From my point of view, Etisalat as a value network company the most important resources that

contribute for the current value creation are the Relational & Organizational resources and that

is because of the following:

1- Our direct business relational resource with the customers, partners & channel of marketing

is one of the keys that contribute to our current value creation. I mean by the customers the

end user customers, those we are trying to satisfy them and most of the media message are

going directly to them, but still see that the contribution for the channel of marketing to the

current value creation is more than the end user customer and this is because of the nature

of the Egyptian market.

Our relationship with the Partners also is important to the organization, and I mean by the

partners here all suppliers and business partners like Huawei & Ericson.

2- For the Organizational resources, yes the platform “as a physical resource” presents the

physical network for Etisalat, but the most important here is the software inside the

machines, the operating systems and the processes that control and guaranteed the

efficiency of the operating system.

I made some interviews with our colleges to discuss their opinion regarding Etisalat RDT; I

found that each one has his point of view about the resources’ relative importance for the

organization’s ongoing ability to create the current organization value – Annex 1 –.

After these interviews, we analyzed the result and reached our new “current” RDT as the

following:

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Figure 2: Etisalat weighted resource distinction tree – The final

Etisalat Total Resources Portfolio

100%

Traditional Resources

25%

Monetary Resources

5%

Cash

Physical Resources

25%

Platforms

15%

IT

5%

Intellectual Capital Resources

75%

Relational Resources

33%

Directly Business Related

Customers

8%

Partners

6%

Channels to Market

8%

Indirect Business Related

Regulatory bodies

3%

Local government

3%

Media

5%

Organizational Resources

27%

External Oriented

Brand

1%

Product Concepts

6%

Internal Oriented

Operating systems

9%

Operating procedures

9%

Internal audit

processes

2%

Human Resources

15%

Compentence

Specific technicality

& Knowledge

3%

Brain Power-IQ

2%

Ability to bild personal

networks

2%

Attitude

Behavioral traits

2%

Motivation

2%

Intellectual Agility

Ability to innovate

2%

Ability to adapt

2%

Level 2

Level 0

Level 1

Level 3

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This new RDT is:

1- Presents the current RDT as a value network company.

2- Presents the first step after we convert it to serve as a basis for developing an

Intellectual Capital Navigator - ICN.

Latter will present the one we want to have as a steady state in the future.

Etisalat Intellectual Capital Navigator:

In order to answer the question of how does Etisalat management view resource deployment to

create value in the organization? We have to develop Etisalat Intellectual Capital Navigator

(ICN), which is a numeric and visual representation that answer the question above. This is a

mapping how resources influence each other, this Intellectual Capital Navigator “ICN” is

providing to Etisalat an overall map of the logic used by management when it comes to resource

deployment in a given organization.

We found that the Intellectual Capital Navigator for Level 2 resources is as the following:

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After we converted the current RDT to serve as a basis for developing an ICN by transforming

the weightings from weighting as a percentage of the node to absolute percentage weightings,

we took level 3 as the most detailed level and by asking the question of how relatively influential

is this transformation when it comes to contributing to the Etisalat value creation, we created

Etisalat resource matrix as the following:

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Platforms 0 25 25 10 5 15 20 100

IT 10 10 0 10 10 30 20 10 100

Customer 5 0 10 40 10 20 10 5 100

Partners 20 30 10 0 10 15 15 100

Channels to Market 5 20 0 10 15 20 20 10 100

Reulatory bodies 20 40 10 0 10 20 100

Local Government 10 30 20 0 30 10 100

Media 50 20 0 10 20 100

Brand 30 20 20 10 10 0 5 5 100

Product Concepts 30 30 20 10 0 10 100

Operating systems 10 30 20 30 10 0 100

Operating Procedures 10 20 50 0 20 100

Internal audit processes 5 5 5 5 5 10 40 25 0 100

Specific technicality & Knowledge 10 20 10 20 10 5 20 0 5 100

Brain Power-IQ 20 20 40 20 0 100

Ability to build personal networks 10 20 10 20 20 10 10 0 100

Behavioral traits 30 10 20 5 5 10 0 20 100

Motivation 20 10 20 5 5 10 10 0 10 10 100

Ability to innovate 40 10 40 10 0 100

Ability to adapt 10 10 30 20 20 10 0 100

Figure 3: Etisalat resource matrix from an advisory organization building on the Level 3 resources in the resource distinction tree

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We converted the matrix from row-based weighting to a total weighted picture of the transformation, which led to build Etisalat

normalized and cleaned transformation matrix

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5.00 Cash 1.25 1.00 0.25 0.50 0.50 0.25 0.50 0.25 0.25 0.25 5.00 15.00 Platforms 3.75 3.75 1.50 0.75 2.25 3.00 15.00

5.00 IT 0.50 0.50 0.50 0.50 1.50 1.00 0.50 5.00 8.00 Customer 0.40 0.80 3.20 0.80 1.60 0.80 0.40 8.00 6.00 Partners 1.20 1.80 0.60 0.60 0.90 0.90 6.00 8.00 Channels to Market 0.40 1.60 0.80 1.20 1.60 1.60 0.80 8.00 3.00 Reulatory bodies 0.60 1.20 0.30 0.30 0.60 3.00 3.00 Local Government 0.30 0.90 0.60 0.90 0.30 3.00 5.00 Media 2.50 1.00 0.50 1.00 5.00 1.00 Brand 0.30 0.20 0.20 0.10 0.10 0.05 0.05 1.00 6.00 Product Concepts 1.80 1.80 1.20 0.60 0.60 6.00 9.00 Operating systems 0.90 2.70 1.80 2.70 0.90 9.00 9.00 Operating Procedures 0.90 1.80 4.50 1.80 9.00 2.00 Internal audit processes 0.10 0.10 0.10 0.10 0.10 0.20 0.80 0.50 2.00 3.00 Specific technicality & Knowledge 0.30 0.60 0.30 0.60 0.30 0.15 0.60 0.15 3.00 2.00 Brain Power-IQ 0.40 0.40 0.80 0.40 2.00 2.00 Ability to build personal networks 0.20 0.40 0.20 0.40 0.40 0.20 0.20 2.00 2.00 Behavioral traits 0.60 0.20 0.40 0.10 0.10 0.20 0.40 2.00 2.00 Motivation 0.40 0.20 0.40 0.10 0.10 0.20 0.20 0.20 0.20 2.00 2.00 Ability to innovate 0.80 0.20 0.80 0.20 2.00 2.00 Ability to adapt 0.20 0.20 0.60 0.40 0.40 0.20 2.00 100 2.50 5.45 6.35 15.40 8.35 10.75 2.20 0.60 6.70 5.95 8.15 15.55 2.15 1.80 3.65 0.65 2.30 0.20 0.70 0.40 0.20 100

Figure 4: Etisalat normalized and cleaned transformation matrix

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By this matrix we identified our the areas need enhancement in the future by using the color

code based on increasing cumulative influence on value creation, so we found that in the future

we will have a need for enhancing the transformation between Operating System Operation

procedures in order to maximize this transformation influential when it comes to contributing to

the organization’s value creation.

Future Value Creation Logic for Etisalat:

The logic that I see it not exist in our organization and it might add a value creation process in

our organization is the Value Shop logic.

As a telecommunication organization we have created solutions to communicate directly with

our customers through our CRM & CC teams, these solutions are continually developed to

support the business to know more and more our customers and our potential customers about

their needs, their satisfaction level, also to update the customers about our new offers, products,

promotion, etc.

I couldn’t say that we are mix of pure value creation logics (value networks & value shops), that

is because we currently do the role of value shop internally “only for our organization”, and use it

as a tool to have connections with our customers.

But if we develop these solutions to be a new line of business “B-to-B”, it will deliver to these

business line customers a solution for their needs “problems” that do a change from an existing

to a more desired state.

We have the knowhow, the management, the process and the infrastructure for the CRM and

CC management, so we can produce these solutions as a consultation services that serve a

new line of business.

Currently the resources are available but it might need for some development as the following

(depends on the business volume and needs):

1- More and attention, focus and develop the human resources

2- Developing the infrastructure “applications and the software”

3- Developing the process.

I see that adding another value logic to our organization such the value shop logic this will not

only serve the new line of business “consultation business” but also will add more benefits for

the pure organization value logic “value network”.

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Figures Index

Figure 1: Etisalat weighted resource distinction tree – Initiative one 6

Figure 2: Etisalat weighted resource distinction tree – The final 7

Figure 3: Etisalat Intellectual Capital Navigator for Level 2 resources 10

Figure 3: Etisalat resource matrix from an advisory organization building on the Level 3 resources in the resource distinction tree

11

Figure 4: Etisalat normalized and cleaned transformation matrix 12

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References:

1- Book - Managing Intellectual Capital in Practice by Göran Roos, Stephen Pike, Lisa

Fernstrom

2- Study - Intellectual Capital: A Human Resources Perspective , Charles P. Leo, Ph.D.,

Practitioner Faculty at the Graziadio School of Business and Management, Pepperdine

University, USA. Sid Adelman, Principal, Adelman & Associates, USA.

http://www.jgbm.org/page/23%20%20Dr.%20Charles%20P.%20Leo%20.pdf

3- Article - To Verify How Intellectual Capital Affects Organizational, Mei-Fen Wu,

Department of Business Management, Takming University of Science and Technology,

Taiwan, Yu-Je Lee, Department of Marketing Management, Takming University of

Science and Technology, Taiwan, & Gao-Liang Wang, Department of Marketing

Management, Takming University of Science and Technology, Taiwan.

http://www.jgbm.org/page/4%20Yu-Je%20Lee%20V8-1.pdf

4- Study – Intellectual Capital, What is it and Why does it matter, by Prof. Göran Roos

http://www.ipd.gov.hk/eng/pub_press/press_releases/20091029/WIPO/Introduction_Gor

an_Roos.pdf

5- Study - Intellectual Capital Measurement Methods – by Jolanta Jurczak, MSc., eng -

Ph.D. student at Warsaw University of Technology, Faculty of Production Engineering.

http://www.orgmasz.pl/wydawnictwo/files/Intellectual.pdf

6- INTELLECTUAL CAPITAL AND ITS MEASUREMENT, By David H. Luthy, Professor of

Accounting - College of Business, Utah State University, Logan, Utah USA

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.200.5655&rep=rep1&type=pdf

7- Interviews with different persons from different department in Etisalat – attached.