MBA

Environment of Business (GIB 846)

Steven Zwane
zwanes@gibs.co.za
Responsible Attuned Stakeholder
leadership leadership Mapping

Social Orders Cone of Systems

Framework Plausibility Theories

History as a Institutional
?
tool Theory
The Maturing of Institutional Theory

WHAT IS INSTITUTIONAL THEORY?

WHAT ARE THE KEY POINTS FROM THE ARTICLE?

HOW DOES IT APPLY TO MTN?

© 2018 GORDON INSTITUTE OF BUSINESS SCIENCE

MTN Nigeria

•$5.2 billion fine for late

disconnection of 5.1 million
improperly registered
subscribers. Since complying,
6.7 million subscribers
disconnected in Nigeria.
Country Number of subscribers WEF Global
(thousands) June 2015 Competitiveness Index
ranking 2016 (out of 138
countries)
South Africa 28 504 47
Nigeria 62 813 127
Ghana 14 886 114
Cameroon 10 363 119
Côte d’Ivoire 8 488 99
Uganda 11 146 113
Syria 5 765 NA
Sudan 8 757 NA
Yemen 5 239 138
Benin 3 913 124
Afghanistan 6 487 NA
Congo Brazzaville 2 128 NA
Rwanda 3 958 52
Zambia 4 901 118
Liberia 1 300 131
Guinea Conakry 3 485 NA
Cyprus 354 83
Guinea Bissau 705 NA
South Sudan 982 NA
Iran 44 146 76
Botswana 1 784 64
Swaziland 892 NA
Total subscribers 230 997
Indicator 2010 2011 2012 2013 2014 2015

GDP in millions of US$ 460 514

369 062 411 744 568 499 525 220
954 965
GDP Growth rate
7.84% 4.89% 4.28% 5.39% 6.31% 2.86%
Annualised Inflation rate
13.7% 10.8% 12.2% 8.5% 8.1% 9%
Federal Government
Revenues (Naira in billions) 2 839 4 628 5 007 4 805 4 714 3 741

FDI flow in US$ millions

6 099 8 915 7 127 5 608 4 694 3 064
Fuel exports (in US$ millions
at current prices) 72 969 87 839 93 492 89 930 77 489 39 318

Annual Oil Price (OPEC 77.45 107.46 109.45 105.87 96.29 49.49
Basket Price) US$

Contribution of telecoms 8.9% 8.6% 7.7% 7.4% 7.6% 8.5%

industry to GDP
 Airtel Etisalat Globacom MTN Total

Number of 33 376 556 21 621 832 37 268 483 61 280 293 153 547 164
subscribers

Market 21.74% 14.08% 24.27% 39.91% 100%

share of
GSM
Internet 19 143 700 14 132 007 27 122 892 32 017 779 92 416 378
Subscribers

Incoming 1 111 13 428 1 381 1 572 17 492

porting

Outgoing 5 770 1 623 3 488 5 746 16 627

porting
Was MTN a
target?
MTN Nigeria – a Perfect Storm
Oil price drop and new Nigerian government – fiscal pressures and forex
problems

99% of MTN customers pre-paid (anonymous since 2001)

2011 NCC introduces sim-card registration – regulations include US-style

biometrics – 3 prior rounds of fines

Technology and support challenges e.g power supply and access to remote
areas and shortage of fingerprint scanners = improper registrations
 “MTN was targeted”
Buhari had just been elected and
needed to show that he was
The amount of the fine was
serious about corruption and the MTN was the most visible
almost the same size as the
fight against terrorism. This was company in Nigeria and was
decline in revenue for the
politically motivated and had therefore an obvious target
Nigerian government
nothing to do with MTNs
conduct.

The registration processes were

MTN was due to renegotiate its not very efficient and MTN MTN had always complied with
operating license so it was more believed that discussions were requests and had paid previous
vulnerable still ongoing when the NCC fines promptly
imposed the fine.

MTN was the only operator that

was fined for pre-registrations in
September 2015. In addition
MTN was given “dominant
operator” status
Should MTN
have been
surprised?
© Gordon Institute of Business Science. ALL RIGHTS RESERVED.
 •Taleb, N.N. (2007). The black
swan: the impact of the highly
improbable. New York NY:
Random House

A black swan is a highly improbable event with three principal

characteristics: it is unpredictable; it carries a massive impact; and,
after the fact, we concoct an explanation that makes it appear less
random, and more predictable, than it was.

© Gordon Institute of Business Science. ALL RIGHTS RESERVED.

© Gordon Institute of Business Science. ALL RIGHTS RESERVED.
 •Wucker, M. (2016). The Gray
Rhino: How to recognize and
act on the obvious dangers
we ignore. Macmillan.

A grey rhino is a highly probable, high impact threat:

something we ought to see… by virtue of its size
© Gordon Institute of Business Science. ALL RIGHTS RESERVED.
What happened
next?
Responses and Consequences
Negotiations with NCC – fine reduced to $1.7 billion and agreement to list MTN Nigeria on
Nigerian Stock Exchange

Top strategic priority for 2016: Enterprise risk management, stakeholder engagement,
reputation protection

New reporting structure – clusters with greater oversight, active management of risks and
stakeholders. Opcos meet regulators at least 1X per month, round table meetings when
compliance reports due

16 000 devices in Nigeria to scan and additional 10 000 staff to recapture 4.1 million subscribers

Culture and HR interventions across the MTN Group

 Leadership Principles to navigate institutions
• Compliance and Ethics: Set the tone for the organization's culture and expectations regarding integrity and compliance.

• Adaptability and Resilience: Embrace change, respond to political or regulatory shifts, and adjust your strategies accordingly.

• Stakeholder Management: Engage with government officials, industry partners, customers, and employees effectively to
ensure that the institution's goals align with societal needs.

• Long-Term Perspective: Make decisions that consider the broader impact on the institution's legitimacy and standing in the
community.

• Risk Management: Identify political, regulatory, and compliance risks and implement strategies to manage them,
safeguarding the institution's operations and reputation.

• Transparency and Communication: Promote an inclusive and diverse organizational culture that respects and aligns with
local norms and expectations.

• Legal Consequences and Accountability: Lead by example and hold your teams accountable for adhering to institutional
norms.

• Innovation and Problem Solving: Encourage creative solutions and problem-solving techniques that can adapt to changing
environments.

• Measuring and Reporting Impact: Communicate these results to stakeholders, demonstrating accountability and value
creation.

• Building Trust and Reputation: Trust is the foundation of legitimacy, and as leaders, you are key in establishing and upholding
it.
TEA BREAK
 What is
shared value?
 The concept of shared value

The concept of creating A shared value The purpose in Businesses acting as Shared value opens up
shared value was approach reconnects business is to create businesses, not as major strategic
postulated as a new company success with economic value in a charitable givers, are opportunities to create
imperative for aligning social progress (Porter way that also creates arguably the most competitive advantage,
business and societal and Kramer (2015)) shared value for society powerful force for while driving the next
value. addressing many of wave of innovation,
society’s pressing issues productivity, and
– Innovation and economic growth
scalability

Realigning companies
around shared value
gives greater purpose
to the corporation and
to capitalism itself

Source: Professor Michael Porter

Source: Professor Michael Porter
Source: Professor Michael Porter
Source: Professor Michael Porter
Source: Professor Michael Porter
Source: Professor Michael Porter
Source: Professor Michael Porter
Is Discovery a
Disruptive
Innovator?
Creating shared value
 Call to Action

Shared value for us, should mean actively

seeking opportunities to create positive impacts
on our communities whilst also pursuing our
personal and professional goals.

It will need you to align individual actions and

choices with the broader goals of societal well-
being and development.
THANK YOU