While operating in business environments organizations have to face different kinds of risk, these risks can be internal or external. They can be turned into opportunities if managed rightly and can be threats if they are not looked after well. Organizations have to consider such risks while making their strategic plan their emphasis should be to link their strategy with their strategic plan so that all the risks should be avoided and can be turned into their strengths. In this paper I have chosen an organization and analyzed the various risks that this organization is facing from their current environment.
Introduction to the Organization
For the sake of understanding and the concept of rink management in the organizations I have chosen the leading Telecom organization of Pakistan with the name of Mobilink.
Mobilink is an Orascom Telecom Company, which is one of the top telecom groups in the world. With their 3 billion customers in Pakistan Mobilink has penetrated well in the market and have their competitive edge of being first mover in GSM sector. Moreover they are also diversifying their positioning by coming into broadband and data sector. Having a vision of being total telecom solutions provider, they have are one of the leading telecom player in the market. Their size and range of operation have made them a large organization and that is why they have been selected for the study of risk management (www.mobilinkgsm.com, 2010).
Risks that Organizations has to Face
One of the external risk to which organization is vulnerable is competition, the intensity of competition is increasing day by day and competitors are entering into price and positioning wars. Such competitive environment is making it difficult for organizations to stay profitable and have a long term competitive advantages. There having the customer loyal remained is a challenge for the organizations and same is the case with Mobilink. For them to be ahead of competition it is suggested that they should have been doing regular competitors analysis and their marketing performance analysis. It is very important for the organizations to closely watch their competition and their moves and act accordingly (Hrebiniak, 2006).
Changes in market dynamics are another risk that organization is always facing; therefore our selected organization is also vulnerable to the same change. Mobilink is working in a market with the dynamic characteristics, the change in competition, change in government policies and most importantly change in technology are the factors that put the entire organization on the risky side (Wilson and Gilligan, 2005).
Therefore for Mobilink it is suggested to be on top of the market by having a regular system for their market research, by having such marketing research organization would be able to have the information about the change in market; it is also advised that organization should have the ability to change with changing market dynamics so that they can cope with the change and do not left behind (Wilson and Gilligan, 2005).
Environment change is another risk that an organization has to face throughout their operation; these changes can be external environment change and or can be internal environment change. External environment change and uncontrollable factors that organization cannot do much about it and the only option they are left with is change themselves according to change in external environment. Internal environment change is can be the result of change in external environment, the only challenge for organizations is to create the link between internal and external environment so that they are sync with each other, if failed to do so organizations can be victim of disasters.
Change in Consumer Behavior
With passage of time the buying pattern, preferences and usage pattern of the consumers change, and organization that do not change according to the changing consumer behavior have to face immense difficulties in managing their competitive advantage. The intensity of competition and change in consumer behavior make the organization to be always on their toes and keep an eye on their consumer patterns (Keh et al., 2008).
For this situation is suggested that our selected organization should be able to have a track of consumer behavior by having extensive internal marketing research. They are operating in telecom sector and their systems should be able to track the way consumer use their services and they should be able to create innovative offering according to that research this way they will be able to generate maximum consumer satisfaction (Keh et al., 2008).
Human Resource Risks
Our case organization is working in an environment which is highly competitive; this situation is also affecting the human resource factors of the organization and putting it into the two kinds of risks.
The first risk to that due to competition and entrance of new players it is hard to manage quality human resources, the new entrants try to hunt good human resources from the existing players and managing loyalty of employees is becoming difficult. The lucrative offers from competitors to top performing employees are a challenge for organization.
The other challenge is continuously upgrading the skills and competencies of the employee to make them up to date and facilitate them which abilities to cope with ever evolving industry. Such training and development is costly and requires huge amount of financial. Mobilink should have a comprehensive turnaround in their human resources practices so that they can create loyalty among their quality employees and they stop losing their employees that are the main source of their sustainable competitive edge (Aaker, 2009).
There is certain financial risk that our case organization has to face because of the increased competition, as because of the competition the price of products and service are continuously going down, and the entire industry has entered into price competition. Therefore it has been difficult for the organization in this industry to manage their cash flows and capital and stay profitable.
For our organization should be looking after efficient management of the resources and they should build the brand in a ways that consumers are ready to pay slightly higher prices as compared to competitors. This way they can also cut the cost, manage their cash flows and stay profitable in the industry.
Increased operational costs are also affecting the profitability of the organization therefore they should be able to manage their resource for efficiently to minimize the financial risk and maximize the profit (Hrebiniak, 2006).
Firstly we shall discuss the regularity risks which are related to regularity agencies that are there to keep an eye on the quality of services provided by the telecom organizations. Such agencies do the regular consumer surveys and take feedback from consumers, and if such feedback is not good then heavy penalties are imposed to the telecom players. One more role that such agencies play that these are the authorities that give certain telecom licenses to the players, therefore if, for example, any organization want to upgrade their network from 3G to 4G they have to take the license from these authorities.
As political situation in the host country is not stable the entire licensing scenario is uncertain, that put the organization along with other at risk that whether to prepare for the next generation or not. To avoid such uncertainty it is suggested that our organization should have very good relationship with officials of the agency so that they can have the inside news and developments and prepare themselves accordingly.
Physical Resource Risks
The organization have invested heavily in physical resources, as this industry in resource extensive industry our selected organization have invested a huge amount in their fixed resources. These resources include building, towers, infrastructure that in laid in entire country.
Now due to any natural disastrous situation or any political de stabilization their fixed assets are at risk and they do not have any backup system in place to keep the setup running. Therefore it is suggested to them that they should have a proper backup plan so that they can manage their business in case of any disaster situation. Moreover they should also have the minimum investment in their fixed resources and keep the majority of them on lease so that their fixed investment in minimum (Hrebiniak, 2006).
This assignment is made to analyze what are the risks that an organization has to face while operating is competitive environment. We have observed the various kinds of risks that an organization has to face by analyzing the situation of a real time organization working in telecom sector of Pakistan.
We have seen that the uncontrollable factors like intensity of competition, consumer behavior and external political and legal environment are factors that affect the risk of the organization at the most. We have also devised some strategies that can help the organization to minimize the risk while they also maintain their competitive advantage in competitive environment.