CHAPTERONE

INTRODUCTION

1.1       Backgroundto the Study

            According to Kazmi (2008),organizational capability factors or capability factors (or simplyorganizational factors as this thesis has chosen to call them) are theintrinsic abilities or skills of an organization with which it deploys its competenciesto overcome its weaknesses so as to exploit the opportunities and confront thethreats in its external environment.They are viewed as skills for organizingresources and channelling them to productive uses (Kazmi, 2008;Ekore 2014;Ismail, Rose, Uli & Abdullahi, 2014). On the other hand, organizationalfactors are the strategic strengths that are developed in various functionalunits in the organization which are essential for the formulation andimplementation of strategies (Kazmi, 2008; Ekore, 2014). Resources, whethertangible or intangible, may remain worthless without the organizational factorsto develop them(Ismail et al, 2014). Many strategists argue that organizationalfactors are the result of the organization’s knowledge base which is defined asthe knowledge and skills of its staff (Ismail et al, 2014). Researchers areinterested in organizational factors for two reasons. Firstly, they would liketo know what competencies exist within the organization to exploit theopportunities and confront the threats in its environment. Secondly, they wouldlike to determine what potentials would be developed in order to exploitopportunities and overcome threats in the future.Organizational factors arenumerous and varied. They could be organizational skills, organizationalintegration, product development, technological capabilities, innovation,organizational culture, stakeholders’ management, knowledge management (Ismailet al, 2014; Prahalad & Hamel, 1990; Stalk,Evans & Shulman,1992).

     Kazmi (2008) also argued that strategicadvantages are the results of organizational capabilities/factors.Strategicadvantages are the outcome of the activities of the organization in its bid togenerate greater economic value for its customers, the reward of which are suchfinancial benefits like profitability, return on investments and non-financialadvantages like market share or reputation(Kazmi, 2008; Prahalad & Hamel,1990).Competitive advantage is the common example of strategic advantagecreated by companies.A company is said to have competitive advantage if it isable to create more economic values than its competitors in the industry(Akinbola, Adegbuyi & Otokiti, 2014).According to Prahalad and Hamel,(1990), the source of competitive advantage has moved from physical tointangible intellectual and knowledge based resources.

Thechallenge facing most mobile network firms today is to identify the set ofintangible market based capabilities or factors as sources for creatingcompetitive advantage (Akinbola, Adegbuyi & Otokiti, 2014; Akingbade,2014).  Most of the capabilitiesavailable to the firms are heterogenous and numerous but for a resource to haveand gain advantage, it must be valuable, rare, inimitable, and non-substitutable(Barney, 1991). It is only when these scarce resources or capabilities areidentified and appropriate programme developed to meet the above criteriabefore an organization can have competitive advantage (Akinbola, Adegbuyi &Otokiti, 2014; Barney, 1991). There are different views about where the sourcesof competitive advantage are generated from.The two common views are thecapabilities based view and the resources based view.

Thereare two opinions on the capabilities based view.According to Zhang(2008), thefirst is the core competence opinion postulated by Prahalad and Hamel (1990)and the remaining one is the overall capability opinion given by Stalk,Evansand Shulman (1992). Prahalad and Hamel (1990) cited in Zhang (2011) describedcore competence as the organization’s retained knowledge, especially theknowledge concerning how to manage the numerous types of producing skills andhow to combine the network of technologies, Zhang (2008).They highlighted threecriteria to identify corporate core competence as follows; Firstly, it must beable to co-ordinate several products and markets. Secondly, they shouldguarantee measurable advantages to the final consumers. Thirdly, they must beextremely difficult for competitors to copy (Prahalad & Hamel, 1990). Ontheir part, Stalk, Evans and Shulman (1992) submitted that a successful companyshould focus on its behaviours especially the organizational actions andbusiness systems as well strategize on improving its activities as a basicstrategic goal, Zhang (2008).  By this,they postulated the idea of total capacity as the general skills and experienceamong the employees of the organization (Zhang, 2011).

          The mobile telecommunication networkhas a market share of 72% of the global telecommunication industry (GSMA,2016). Equally, in Africa, the mobile network controls 80% share of thetelecommunication market. In Nigeria, the mobile telecommunication network has99.74% share of the telecommunication industry.In a quest for telecommunicationservices, the Federal Government of Nigeria promulgated Decree no. 75 of 1992which deregulated the telecommunication industry and created the NigerianCommunication Commission as the apex regulator of the industry. Before thederegulation of the telecommunication service in 1992, Nigeria had only about400,000 installed telephone lines and 25,000 analogue mobile lines whichtranslated to 0.4 lines for 100 inhabitants(Ndukwe,2003). Putting it in anotherway, this amounted to a tele -density of about 250 inhabitants to one telephoneline i.e0.45% (Ndukwe, 2003; Hassan, 2011). In January 2001, Nigeria, throughthe telecommunication regulatory body, Nigerian Communication Commission (NCC),conductedthe world acclaimed transparent auction of its digital mobile licenses whichwere won by three service providers, namely MTN (Nigeria), Econet Wireless(Later Vmobile, later Celtel,later Vodafone, later Zain and now Airtel) and thenational carrier, MTEL (a subsidiary of NITEL) at the cost of N285 Million each(Ndukwe, 2003). In the year 2002, the second national carrier, Globacom wasgranted an operating license while in January 2007, the Emerging MarketsTelecommunication Service (EMTS) under the brand name of Etisalat was granted aunified access license (NCC, 2007). In 2009, another unified access license wasgranted to Smile Communications.In December, 2014, the national carrier licenseearlier granted to Mtel was acquired by Natcom which they (Natcom) launched asNtel in April, 2016. From these accounts, there are six GSM service providersin the Nigerian telecommunication industry. They are: MTN, Globacom, Airtel,Etisalat, Smile and Ntel.

         The Global system for mobilecommunication(GSM, originally called Groupe Special Mobile) is a technologydeveloped by the European Telecomunication Standards Institute (ETSI) toidentify the rules or the code for second-generation (2G) digital cellularnetworks which use the altered version of Time Division Multiple Access (TDMA)deployed in mobile phones.It was first deployed in Finland in July 1991 and isthe most popular of the three digital wireless telephony technologies (TDMA,GSM and CDMA), (Abubakar & Bello, 2013).According to Abubakar and Bello(2013), the GSM .technology network is made of three subsystems such as anetwork switching subsystem (NSS), a base station subsystem (BSS) and theoperations support subsystem (OSS).The network describes the technology of theband system of the wireless communication( like GSM,CDMA,WAN).This technologyis made of MSC (Mobile Switching Centre) and other connected registers.The basestation system is made of  a BSC (BaseStation Controller) and many BTSes (Base Transceiver Stations).The operatingsupport system (OSS) coordinates the monitoring and maintenance of thetechnology of the network. Users (subscribers) deploymobile devices referred asUser Equipment (UEs) such as  hand setsto connect with the help of the network.The other connecting system between thesubscriber and the network is the BTS which is regulated by the original basestation controller through the base station control function (BCF).The BCF isexecuted as a separate unit or combined in a TRX (Transceiver) as a singleentity base station.The BCF supplies an operations and maintenance (O& M)linkage to the network management system (NMS) and coordinates  operational states of TRX as well as softwareand alarm linkage.

              The mobile telecommunicationnetwork since its deployment in Nigeria has increased the teledensity from0.45% in 1992 to 107.87% in 2015 (NCC,2016). The subscription level alsoincreased from 425,000 lines 1992 to 154,529,780 GSM lines in 2016, whichrepresents 355% increase.  Table 1.1shows the subscription level for GSM lines in Nigeria from 2002 to 2016

Table1.1:  Number of Subscribers to GSM technologyin Nigeria (2002 -2017)

Years

No ofSubscribers

Teledensity

2016

154,529, 780

110.00

2015

151,017,244

107.87

2014

139,143,610

99.39

2013

127,606,629

91.15

2012

113,195,951

80.85

2011

95,886,714

68.49

2010

88,348,026

63.11

2009

74,518,264

53.23

2008

64,296,117

45.93

2007

41,975,275

29.98

2006

33,858,022

24.18

2005

19,519,154

16.27

2004

10,201,728

8.50

2003

4,021,945

3.35

2002

2,271,050

1.89

Source:NCC 2017 Website

            It is to be noted that theteledensity in Table 1 was computed on the basis of a population of 126 Millionfor Nigeria until 2005 and from 2006, it was computed on a population of 140million people.The penetration level from December, 2007 is based on activesubscribers while from 2002 to 2006, it was based on connected subscribers(NCC, 2016).

Thecontribution of the telecommunication industry to the Nigerian wealth basket istremendous.Table1. 2 shows the contribution of the telecommunication industryto the Nigerian Gross Domestic Product (GDP).

Table1.2:TheContribution of the telecommunication industry to the GDP of

Year

Jun.2016

2015

2014

2013

2012

2011

2010

% contributionto GDP

9.80%

8.50

7.60

7.40

7.70

8.60

8.90

Source:2017 NCC Website.

          The GSM technology controls theNigerian telecommunication industry. Table 1.3 below shows the market share ofeach of the three technologies in the Nigerian telecommunication market.

Table  1. 3: Percentage Market share by Technologyas at January, 2017

Technology

MobileGSM

Mobile(CDMA)

MobileWireless

FixedWired

VOIP

%Market Share