china mobile communications corporation (zong)

Business Ethics

Final Project

Hafi Mustafa (10132)

Zohair Arif (2371)

Acknowledgment

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First of all we would like to thank all mighty ALLAH, most Gracious, and most Compassionate.

We would like to thank Dr. Adnan Siddiqi who makes us Think, to see the other side of the picture, to question ourselves and motivated us to go inside an organization to found out the unethical acts they are committing. Really sir, you make us think.

Then we would like to thank Mr. Faheem Mumtaz who manages all the meetings with the employees of Zong for us on such a short notice. Then we would like to thank all those employees who cooperated with us and provide us all the information we required. We really appreciate their attitude.

Table of Content

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Brief Introduction to China Mobile………………………………………………………….4

A brief Introduction of China Mobile Pakistan (CMPak)………………………………..5

VISION Statement……………………………………………………………………………..6

Mission Statement…………………………………………………………………………….7

Future Plans……………………………………………………………………………………8

Competitors…………………………………………………………………………………….9

Offices in Islamabad…………………………………………………………………………10

Social Work……………………………………………………………………………………11

Code of Conduct or Ethics…………………………………………………………………13

Unethical Issues……………………………………………………………………………...17

Unethical acts at Macro Level……………………………………………………………..19

Conclusion …………………………………………………………………………………...20

Brief Introduction to China Mobile

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China Mobile Communications Corporation (also known as China Mobile or CMCC) is the largest mobile phone operator in China. It is the world's largest mobile phone operator ranked by number of subscribers, with 415 million customers as of June 30, 2008. By turnover it is second to Vodafone, which owns 3.3% of China Mobile. China Mobile is also fifth in global brand equity according to BrandZ rankings.

A state-owned enterprise of the People's Republic of China government, it was spun off from former monopoly China Telecom in 1997, and now has a 67.5% share of the competitive mainland Chinese mobile market. China Mobile also owns Paktel in Pakistan, and in May 2008 the company also took over China Tietong, the third largest broadband ISP in China.

China Mobile is the largest company registered in Hong Kong and it is headquartered on Queen's Road. It is also the largest market capital company listed in the Hong Kong Stock Exchange, surpassing HSBC.

China Mobile's operations are segmented by province. The parent company owns 100 percent interest in provincial subsidiaries including China Mobile Group Guangdong Company Limited and China Mobile Group Zhejiang. As of December 31, 2006, the Group had an aggregate staff of 111,998 and an aggregate mobile telecommunications subscriber base of over 301.2 million, and enjoyed a market share of approximately 67.5 percent in Mainland China. The Group's GSM global roaming services covered 219 countries and regions and its GPRS roaming services covered 138 countries and regions.

China Mobile's majority shareholder is the state-owned China Mobile (HK) Group Limited, which, indirectly held an equity interest of approximately 74.57 percent of the Company through a wholly-owned subsidiary, China Mobile Hong Kong (BVI) Limited. The remaining equity interest of approximately 25.43 per cent. of the Company was held by public investors.

In April, 2008, China Mobile started testing of the third generation (3G) of mobile communication in eight cities (Beijing, Shanghai, Tianjin, Guangzhou, Shenzhen, Qinhuangdao, Shenyang and Xiamen), using the Chinese standard TD-SCDMA (Time Division-Synchronous Code Division Multiple Access). Very few test results, however, have been available publicly.

On May 23, 2008, the company was reported to have announced its acquisition of China Tietong in the wave of industry consolidation changes. On 7 January, 2009, China Mobile was awarded TD-SCDMA license to expand its business to 3G telecommunication.

A brief Introduction of China Mobile Pakistan (CMPak)

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Paktel was a mobile telecommunication company in Pakistan. It was the first ever company granted license to carry out cellular phone services in Pakistan, set up by Cable & Wireless. It carried out AMPS services until 2004, when the company launched GSM services as well. Its main competitor emerged in late 1990s as Instaphone and soon began to dominate the market. However after the launch and rapid success of Mobilink in 1998, both services lost market share. In 2003, Millicom Corporation, who at that time was majority owners of Instaphone, bought Paktel for a sum rumoured to be $1 million from Cable & Wireless. Millicom installed a new management team headed by John Tumelty, former CEO of Instaphone, and Chief Financial Officer David Ordman.

In November 2006, Millicom decided to exit the Pakistani cellular market after it had gained additional space in the 1800 Mhz spectrum, but the grant was not permanent. Additionally, authorities had refused a request to delay payment of a $29 million license installment. The sale implies an enterprise value for Paktel of $460 million, Millicom said in its press release. In January 2007 Millicom sold Paktel for $284 million to China Mobile. On 4 May 2007, Paktel was renamed to CMPak. And then, on 16 May 2007, China Mobile announced that it had upped its stake in CMPak to 100%.

China Mobile, the owner of Paktel is the world's largest mobile phone operator ranked by number of subscribers, with over 296 million customers. A state-owned enterprise, it was spun off from former monopoly China Telecom in 2000, and now has a 65% share of the highly competitive Chinese mobile market.

ZoNG is China Mobile's brand in Pakistan. China Mobile Pakistan (CMPak) is a 100% subsidiary of China Mobile. China Mobile's first overseas operation came about when it acquired a license from Millicom to operate a GSM network in Pakistan. CMPak markets its products under the brand name "ZoNG". CMPak has invested more than US$ 700 million in the telecom sector in Pakistan and an additional US$ 800 million will be invested till the end of year 2008. PTA (Pakistan Telecommunication Authority) has announced that it may resolve the frequency issue with China Mobile, as it was one of the main reasons for pullout by Millicom International Cellular S.A.

VISION Statement

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Making

Communication

Exciting

Mission Statement

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To be the leading mobile operator of Pakistan continuously innovating and offering exceptional quality service to be good corporate citizen

and envoy of friendship between china and Pakistan core value. Responsibility makes perfection.

Future Plans

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China Mobile Communication Corporation (CMCC) has offered to lay a fiber optic cable from Karakoram to Gwadar. This offer was made by a Chinese delegation which met Adviser to the PM on Interior Affairs Rehman Malik with a condition that it be provided conducive investment environment. It merits mentioning here that China Mobile has been waiting for LDI (long-distance international) license, which PTA has not been issuing. The Chinese delegation was led by Co-Chairman CMCC Zhang Chunjiang and comprised other members and Chinese Ambassador to Pakistan Luo Zhaohui.

head of the delegation took up the long-standing LDI license issue with the adviser. Chunjiang pointed out that despite getting approval from the prime minister and the cabinet and clear directives from the ministry of information & technology, the PTA has refused to issue LDI license to China Mobile.

China Mobile future plans to invest another $500 million in the country’s economy during 2009 in the areas of building new network capacity of more than 20 million customer base and other infrastructure. The delegation had pointed out that the company had so far invested $1.66 billion in Pakistan and has generated more than 1,700 direct and over 40,000 indirect jobs in the country. Similarly, China mobile had paid $106 million in direct taxation and paid another $91.5 million under various heads to the government.

Alcatel-Lucent has signed a contract worth USD 52.87 million with China Mobile Pakistan Limited (CMPak) to expand its existing GSM/EDGE network. The expansion will allow CMPak to provide enhanced commercial services in northern Pakistan. Alcatel-Lucent will enable CMPak to increase its network capacity and coverage, bringing enhanced mobile services to a greater number of people in the region and improving the end-user experience. Alcatel-Lucent will have the full responsibility for building the network, providing design, deployment and integration services. The company will also provide project management and maintenance services to help CMPak lower its network operational costs.

Alcatel-Lucent, through its flagship company in China Alcatel-Lucent Shanghai Bell will supply CMPak with its industry-leading multi-standard GSM/EDGE radio access solution including its latest Base Station Controller platform and TWIN transceivers, along with microwave transport solutions for enhancing interconnection among base stations and providing mobile traffic backhauling capabilities. Alcatel-Lucent will also provide a comprehensive suite of network integration services such as network optimization, system support and general project management, to enable CMPak to introduce new technologies

Competitors

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there are currently 6 mobile operators present in Pakistan. 5 of them are direct competitors of Zong.

Mobile Operator

Owned bySubscriber base

Services

Network Technology (Used)

Network Technology (Using)

Network Technology (Planned)

Mobilink

PMCL (an Orascom Telecom Holding)

30.75 million

Postpaid, Prepaid

GSM 900/1800 (Using the same)

GSM 900/1800


Telenor TEtisalat 20.0 millionPostpaid, Prepaid


GSM 900/1800


Ufone Etisalat 19.7 millionPostpaid, Prepaid


GSM 900/1800


Zong (Formerly Paktel)

CMPak Ltd.(a China Mobile Company)

6.1 million Prepaid AMPSGSM 900/1800


Warid Warid Telecom17.39 million

Postpaid, Prepaid


GSM 900/1800


SCOSpecial Communication Organization

0.39 million Prepaid


GSM 900/1800


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Offices in Islamabad

CMPak Limited,

68 – E, Jinnah Avenue, Blue Area,

Islamabad, Pakistan

CMPak Limited,

TF Complex, 7-Mauve Area,

G-9/4, Islamabad, Pakistan

UAN: 111-222-111

Fax#: 111-031-031

Offices were very good as in construction, cleanliness and space. The office in TF complex, they’ve acquired 5 floors in the back side of the building. There was one conference room on each floor. Only executives had their own cabins, rest of the employees had their partitions inside a room. They all had fixed sitting arrangements unlike Telenor. Everyone had his own seat and table. Employee’s attitude wasn’t excellent but it was ok, not something you can complain about.

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Social Work

In order to mark the world Blood Donor Day, Zong, in collaboration with Pakistan Red Crescent Society organized a blood donation drive for IDPs at its office premises. A large number of volunteers from Zong, comprising staff and management employees enthusiastically participated to donate blood at temporarily set up blood donation center.

Picture shows one of the cheerful employees making the internationally recognized gesture of “I am feeling good”, while donating blood

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ZONG has launched ZONG Scholarship Program by signing a MoU with University of Engineering and Technology, to fund the education of students annually for higher studies in Computer Sciences, Engineering and Sciences.

The Scholarship Program is aimed at assisting students seeking admissions in the disciplines of Electrical Engineering, Mechanical Engineering, Civil Engineering, and Computer Sciences & Engineering to the University for the academic year commencing in 2009. ZONG intends to provide scholarships in the above-mentioned disciplines, to cover various educational expenses like registration fees, tuition, laboratory fees, internship fees, study materials, accommodation costs and others.

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Code of Conduct or Ethics

There was no printed code of conduct of the company. Mr. Hhasnain Malik who’s an Organizational Development (OD) specialist explained me the code of conduct of Zong. The human resource department is known as organizational department in Zong. Mr. Hasnanin Malik has been working over here for over a year. We weren’t able to get a business card of him, the reason he told us that since I’m in the HR department so whenever I meet someone and tell him that I’m from HR department, the instant reaction is that they ask for a business card, so he was out of cards but he did gave us his contact number which is 0313-5999747. He was working with U-Fone before joining Zong. He has done his MBA from Behria University.

Since Mr. Hasnanin Malik is in HR department so he knows all about the policies of the Zong. Since there’s no hard copy of the policies or the code of conduct so we had to rely on the information provided to us by Mr. Hasnanin Malik who obviously had a sound knowledge of the polices.

Timing Policy addresses the timings of the employs, that is when they should come in and when they can leave. Chinese are, usually, very strict about the timings. For Monday to Thursday it is 9 am to 5:45 pm and for Friday it is 9 an to 5:30 pm. Although for most of us, 15 minutes doesn’t matter but for Chinese it does. 9 am means 9 am for them. Mr. Hasnain Malik himself got himself in trouble on few occasions for being late for only 15 minutes.

Dress Code tells the employs that how they should present themselves, how they should be dressed up. For men it is formal business dress, that is cooler shirt, tie, dress paint and dress shoes, for ladies, they should look presentable. But this dress code apply to the weekdays that is Monday to Thursday, Friday is the casual day, men can wear shalwar qameez or T-shirts and jeans but they are not allowed to wear joggers. In summers they are exempted from the formal dressing.

Travel Policy talks about how much traveling compensation should an officer get when on a official tour, in which hotel should an officer stay according to their rank. For example an executive officer can stay into a 4 star hotel and a manager can stay into a 3star hotel. Then if they are not on the company expense then company would pay them the traveling allowance in their gross salary or they would be paid Rs. 7 per Km as fuel reinvestment.

Training Policy is about the different trainings available to the employs. Basic training sessions are compulsory for each and every employee but then come the advance trainings. Management and the departments and line managers decide that witch employee should get that training, of course it is not based on personal opinion of the manager, there’s a proper system for it known as KPI System.

KPI System is an internal employee monitoring system to monitor the employee performance and progress. This is a kind of a point system, whoever gets the maximum points gets the Zonger of the Month award, which is not exactly an award, it is just a way to appreciate the employee. On the basis of KPI system most of the decisions are taken for employees.

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Performance Appraisal Policy tells that how an employee can earn a performance appraisal. Again the KPI system plays an important role to pick up those employees who are working exceptionally well in comparison to other average employees. Usually directors gives the tasks to the line managers then line managers further distribute it to its members. If the department is successful in achieving that task then the department is given the bonus or performance appraisal. It is up to line manager to decide that who is the most suitable person to share that bonus with; obviously line manager has to report the distribution for the bonus. The evaluation is done on the annual basis.

Promotion Policy talks about the criteria through witch an employee gets promoted. The back bone of this policy is the KPI system. Then the line manager recommends the employee to the directors. The final decision is of the directors. The least criteria for promotion are 1 year of service. No employee can be promoted before the service of one year.

Hiring Policy of the company is very simple. It advertise its jobs or vacancies in the news paper, call in the CV’s, conduct an interview and a final interview and then select the best person for the job. Everyone have the equal chance to participate.

Termination Policy of the company talks about how to fire a employee. There’s a set criteria for terminating an employee. First he gets a verbal warning, then a written warning, then the second verbal warning and then the last written warning. Then the last stage is to fire him. This criterion is followed strictly so that the termination doesn’t get the employee by surprise.

Medical Policy covers the health issues of the employees. The insurance covers the dependents only, doesn’t include the parents. There’s an OPD allowance which is about 1 basic salary and the other is the hospitalization allowance which is over 100,000 an year.

Administration Policy. There’s no food allowed in the office, for the purpose of eating there’s a canteen in the building. However you may have your coffee or tea on your table. No smokings inside the office not even in bathrooms, if you have to smoke you’ve got to get on to the top of the building that is the roof. The parking area is in front of the building across the road, no one is allowed to take his or her car inside the building.

Harassment Policy. Every employee has the right to report the harassment to the seniors. If such a scenario comes into the attention of the management then there would be special committee assignment with the job of investigating the matter at hand. And if the person proven guilty then the company follow the termination procedure even during the investigation. And by the end of the investigation if he’s still proven guilty, he got fired and he also gets no experience letter.

Department Policy. Each department has then its own policy for example finance department has its own finance policy, procurement department has its own procurement policy etc.

Credit Limit Policy. Each employee get’s a cell phone by the company and it has some credit limits. Credit limits are according to the job cadre. The higher the rank of the officer the higher the credit limits.

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Leaves. Each employee is allowed 40 leaves a year.

We continue our research in the company to find out either the employees have the sound knowledge of the code of conduct or not.

Mr. Hasnain Malik arranges the meeting with Mr. Noman Aslam of Procurement Department who was a senior Officer Procurement. We were able to get his business card which is enclosed.

At first we checked his knowledge of the policies of the company. And we found that he was well aware of the policies of the company. He told us about the department policy which was the procurement policy. That was regarding the purchases of the company. Whenever they have to purchases something they have to go through the tender procedure, collect the information and the prices. The decision in the end is not only quantitative, it is both ways, they have to concede the prices as well as the quality of the product. Not all the procurement decisions are taken by the line manager. Sometimes the line manager has to take the final decision, sometimes it is the director and sometimes it is the CEO of the company who takes the final decision. It is dependent on the budget and the importance of the purchase. The more important and the more expensive the purchase the higher the authority decides. He wasn’t able to tell me clearly anything unethical in his department , at least he says that he didn’t suspected anything unethical in his job time over here regarding procurement policy and the decision making

He was well aware of the dress code but as I suspected he was wearing a T-shirt, he told me about the policy in summers, it was not that strict. He also told me that the field personals are exempted from the dress code as they work in the field; they have to climb upon the towers so they can not wear dress paints or they cannot afford to dress in formal office dressing.

Then he told us about the timing policy and that it has been followed religiously. Some of the employees even got their verbal warnings of the termination for coming late. So 9 am means 9 am. He told me that he was asking his line manager last week that if could go home early that day at 5:30 pm when he was suppose to be in the office till 5:45. Even for 15 minutes he has to ask that if he can leave early.

Then we talked about the performance appraisal. He was really well educated upon that manner. He told us the very little detail in this policy. There are two types of bonuses in the company, one is the quantitative bonus and the other is the revenue bonus. He says that he didn’t suspect any favoritism in this organization, at least not in his department.

Then we talked briefly about the medical policy and traveling policy, no unethical acts in those polices. He was also very well aware of the traveling policy, infect he told me that the fuel reinvestment is about Rs. 7 per Km. he was also very sure of the promotion policy that it has been carried out very strictly.

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However his knowledge upon leaves policy was not clear. He thought that Its 50 leaves a year. His credit limit was 3000 a month.

Then we interviewed Mr. Tahmoor Raja who belongs to the finance department. His designation was Senior Finance Officer. He was also very well aware of the policies of the department and the company. He talks about the payment policy and the recruitment policy, dress code which he says is followed 90%. He told us about an interesting policy of the company came out last year. The Energy Saving Policy witch addresses the electricity crises in the country and I was surprised to see that it has been followed by everyone. Only the central air-conditioning system was in use, no other units were in use. Whole office was equipped with the energy savers.

He knows all those polices witch related directly to him like the credit limit and the harassment policy and medical insurance and traveling policy etc. well aware of the KPI system and the promotion policy. Here we’ll not go into the details of the interview because it’s the usual.

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Unethical Issues

Now in this part we’ll discuss the unethical issues we found inside the company. the employees who gave us those details didn’t disclosed their identities.

We’ll start with the travel policy. Company has different cadres of employees; on the basis of those cadres company give them the traveling reimbursement. For example a line manager is allowed to stay in a 3 star hotel and executive officers are allowed to stay in 4 star hotels and the daily expense of food and other things are fixed for each cadre. However this does happen in the organization that people of lower cadre gets the special permeation of enjoy the allowances or the facilities of a higher cadre employee from the director. Now this is favoritism. Each and every employee should be treated equally. At least the employees of the same cadre should be treated equally.

As mentioned above about the training policy of the company those basic training sessions are compulsory for each employee who joins the company. However there are some advanced training sessions witches are available to only select employees who are referred by the line managers and by the directors. Employees told us that few employees, on the basis of favoritism, gets a chance to avail a verity of trainings in comparison to other employees who just get the chance to attended the basic training sessions and some department training sessions which are compulsory for them to perform their job. Any other training, they don’t stand a chance in comparison to those who are dearer to the line managers and the directors. So on the basis of special permission from directors, not on the fair basis, some employees gets more trainings than usual.

We also found out some manipulation in the performance appraisal policy. Although the KPI system is the back bone of this policy, however judgment approach is also used to assist that system and that is where favoritism comes in. Line manager is the key person to recommend the employee for the performance appraisal to the director. Whenever bonuses come in, it is again the line manager who decides that who will be given the bonus or not. So there’s a little politics present in the company. No one likes to do the TC but in these circumstances they have to, to get the bonus and performance appraisal, although they have been performing in the KPI system but still they have to put in some extra effort to got the reward they deserve.

More or less, same is the case with the promotions. Since directors take the decision of whether to promote the employee or not so the line manager cannot just directly take the decision on the basis of favoritism but this decision is greatly influenced by the line manager. The line manager provides the name of the employees who are performing well on the KPI system and vary loyal and ethical within the department. And even within those names it has been noticed by the employees that the decisions are being made in favored of those employees who were not performing very well in comparison to other employees.

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Even in the case of credit limit, it’s been allotted in the basis of job category of the employee but it has been noticed that some employees of the same job category have more credit limit compare to the other employees of the same cadre. They have been allotted those limits on the basis of special permission from the directors or the line managers. Even some employees didn’t disclose their credit limit. This clearly shows that there’s something wrong.

We weren’t able to get a hand upon on the firing policy of the company, the employee’s side of the picture because whoever gets fired is no longer in the company and whoever is working in the company doesn’t know anything about the practices of the firing policy of the company but they do have the sound knowledge about the firing policy or the procedure.

Overall employees are pretty much satisfied but they look or act dull. I get a chance to visit Telenor’s head office. The enthusiasm and the liveliness I saw there was amazing, even at the very last hours of the office. Zong’s employees lack that. They look like if they are forced to work, they just remind me of theory X witch stats that people don’t like to work, you have to get the work out of them, and they exactly look like that.

Since we visited the head office so we didn’t got a chance to notice the dealing with customers. The dealing with customers are usually done at the franchisees which are not exactly the part of the company, they are more like their business partners. But overall the dealing with customers is pretty fair and nice.

We couldn’t found anything wrong with the hiring policy of the company. Even some employees said if they can get a chance, anyone can.

Above was the macro view of the company’s unethical acts. Now let’s take a look at what is company doing at the macro level as far as their unethical acts are concern.

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Unethical acts at Macro Level

Zong’s marketing policy said that it promotes healthy competition. But it is clear to everyone that the company is producing unethical advertisement hitting directly on it’s competitors. From the day Zong launched its services as the first international brand of China Mobile, it has resorted to heavy marketing, advertisement and promotion, which is pretty much the norm in the telecom industry. But over the period of time its TV commercials have kind of become dull. Let me explain how:

A typical Zong advertisement features the following:

Comparative advertisement - targeting and criticizing the packages and services of the competitors and offering a lit better package.

A model or two praising the Zong services and packages in a narrative style standing in front of the screen.

False claims tagged with hidden information e.g. the package that allows subscribers to call one special number 24 hours - for free! Without mentioning anything about the monthly subscription of Rs 500+Tax.

Presenting non-existent deals and offers - like mixing the good points of all the packages and presenting it as a single offer as they did in their very first commercial which also happens to be a copy of a TV commercial made by Dolphin Telecommunication Provider.

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Conclusion

As we conclude this project, there are unethical acts going on even inside big organizations as Zong. We think that we who should be held responsible for all those unethical acts because we are the one who have accepted that system and sooner or later we will be a part of it and we will be doing the same things. The reason is that we’ve grown up in this system, seeing our elders doing, committing and be a part of those unethical acts. For all of our lives we’ve been forbidden for asking questions, so at this stage of live we are actually incapable of asking questions. But never the less we are always ready to complain and criticize. If we want to bring any change in the world, first we have to bring it in ourselves.

“Be The Change You Want In The World”

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china mobile communications corporation (zong)

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