strategic analysis of airtel limited in indian telecom sector
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PRESENTATION BY Group 5:
Kinny Jain Nikhil SarafDionysiaMichalopoulouRajinder Pal Singh
HIGHLIGHTS OF THIS PRESENTATION: Airtel Background External Analysis
Macro-Environmental Analysis: PEST ANALYSIS Micro-Environmental Analysis: PORTERS 5 FORCES [ ILC, SGA] Opportunities and Threats
Internal Analysis Resource Audit UNIQUE RESOURCES Core Competencies: PORTERS VALUE CHAIN FRAMEWORK Strengths and Weaknesses
Organisational Purpose: AIRTEL MISSION STATEMENT EVALUATION
Competitive Strategy Analysis: PORTERS GENERIC FRAMEWORK Development Strategy Analysis: ANSOFF’S PRODUCT/ MARKET FRAMEWORK
Conclusions and Recommendations
PART A
PART B
PART C
Go-ahead to the CDMA technology
IND
IA
Private players were allowed in Value Added Services
National Telecom Policy (NTP) was formulated
1992
1994
1997
Independent regulator, TRAI, was established
NTP-99 led to migration from high-cost fixed license fee to low-cost revenue sharing regime
1999
2000
2002
BSNL was established by DoT
ILD services was opened to competition
Internet telephony initiated
Reduction of licence fees
2003
Calling Party Pays (CPP) was implemented
Unified Access Licensing (UASL) regime was introduced
Reference Interconnect order was issued
2004
Intra-circle merger guidelines were established
Broadband policy 2004 was formulated—targeting 20 million subscribers by 2010
2005
FDI limit was increased from 49 to 74 percent
Attempted to boost Rural telephony
2006
Number portability was proposed (pending)
Decision on 3G services (awaited)
2007
Department of Telecommunication (DoT) is the main body formulating laws and various regulations for the Indian telecom industry.
Evolution of Telecom In India
INTRODUCTION
Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises.
It is one of India’s leading private sector providers of telecommunications
services with more than 110 million customers.
The businesses at Bharti Airtel have been structured into three individual
strategic business units (SBU’s) - Mobile Services, Airtel Telemedia Services &
Enterprise Services.
Core values Empowering People - to do their best
Being Flexible - to adapt to the changing environment and evolving
customer needs
Making it Happen - by striving to change the status quo, innovate
& energize new ideas with a strong passion &
entrepreneurial spirit,
Openness and transparency - with an innate desire to do good
Creating Positive Impact – with a desire to create a meaningful difference in
society.
National Coverage
Investor Relations :- http://www.bhartiairtel.in
Integrated Telecom Company
Mobile / Wireless Services
– 2G / 3G– Rural Market
Telemedia Services
– Fixed Line– Broadband– DTH
Enterprise Services
– Carrier– Corporate
Passive Infrastructure
– Bharti Infratel– Indus Tower
6
PEST
PEST ANALYSIS- EXTERNAL ANALYSIS
PoliticalRegulationsPolitical Opposition to participation by the private players Govt support to promote FDI in Telecom sectorBanning of Phone Use in Certain Circumstances
Technology Equipped with New Technology Rapid Industrial growth rate
induced by emerging technologies.
Strong Fibre Optic Network Utiilization of E- Commerce
facilities Efficient Customer Care
Services
Socio-Cultural High End Phones becoming status symbol Due to Intimate family bonding in Indian Culture, there is need to remain connectedTech Savvy Generation
EconomicCost of calls Being Driven Down Worldwide Recession- Both Boon & BaneMiddle class consumer base growing due to accelerated economic growthUntapped markets in emerging Economies - New Opportunity
PORTER 5 FORCES
INDUSTRY LIFE CYSLCE
STRATEGIC GROUP ANALYSIS
Porter’s 5 Forces
Threat from Competition
Customer Bargaining
Power
Threat of Substitutes
Supplier Bargaining
Power
Threat of New Entrants
1. Threat from Competition
Wireless Market – Top 4 garnering 75% market share
HIGH
Competitor Market Share – Threat HIGH
2. Customer Bargaining Power
Lack of differentiation among Service Providers
Cut throat Competition
Low Switching Costs
Number Portability will have –Ve Impact
Businesses & Consumers
HIGH
Customers & Market Share
3. Suppliers Bargaining Power
LOW
4. Threat of Substitutes
Landline CDMA
Video Conferencing
VOIP - Skype, Gtalk, Yahoo Messenger e-Mail & Social Networking Websites
BROADBAND SERVICES
DIMINISHING MARKET HIGH
5. Threat of New Entrants
Huge License Fees to be paid upfront & High
gestation period
Entry of MVNOs & WiMAX operators
Spectrum Availability & Regulatory Issues
Infrastructure Setup Cost - High
Rapidly changing technology
LOW
AIRTEL
TELECOMMUNICATION INDUSTRY LIFE CYCLE
Johnson , Scholes & Whittington : Pg. 68, 2008
TELECOMMUNICATION INDUSTRY LIFE CYCLE
Telecom Industry is in its mature growth stage.
Significant achievements have happened in this sector.
In 2009 February, there was a rise in subscriber base by 13.25 million.
Total subscriber base was 375 million in 2009. A hike by 50%.
This shows the changes in the consumption pattern among the middle class.
AIRTEL
STRATEGIC GROUP ANALYSIS
Competitor Analysis
Bharti Rcom IDEA MTNL0.00%5.00%
10.00%15.00%20.00%25.00%30.00%35.00%40.00%
Competitor Analysis
OP Margin Net Margin
Company Sep-07 Sep-08 Sep-072 Sep-083
Bharti 43.00% 38.00% 26.40% 19.30%
Rcom 37.90% 31.60% 23.90% 13.20%
IDEA 32.80% 26.60% 14.10% 6.50%
MTNL 23.70% 22.90% 7.00% 6.80%
Best OP Margins & Net Profit Margins
among Peers
Source: CMIE November 2008
AMOU & ARPU Stats
838
461
303
88Russia
China
India
USA
0
2
4
6
8
10
Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007
AR
PU
(U
SD
per
mon
th)
GSM CDMA
Minutes of Usage per Month – Mobile Services
ARPU* in India – Mobile Services
Despite a low tele-density of approximately 30.5%
India has the second highest minutes of usage per month.
This offers huge growth opportunity to telecom companies.
The declining ARPU implies that India Inc. is tapping a large market at the bottom of the pyramid by reducing tariffs; thereby, enhancing affordability.
Strategic Group AnalysisPR
OD
UCT
RAN
GE
N
arro
w
Bro
ad
NATIONAL GLOBALGEOGRAPHICAL SCOPE
BSNL, MTNL
15.00 %
Other – 5%
Airtel 25%
10 %
Reliance 18%
Vodafone 17%
TATA 9.3%IDEA 9.6%
VIRGIN -0.5%
INTERAL ANALYSIS
RESOURCE AUDIT AND PROCESS VALUE CHAIN
Human resources well defined rewards and recognition system Young team - Average age is 26years Employees decide their training needs. A state-of-the-art learning centre and training
practices adopted from British Telecom PACE (Progressive Assessment of Culture and
Environment) feedback taken from employees used for company’s strategy
Physical Over 110 million customers Received license to provide 2G ad 3G in Sri Lanka First Telecom operator in India to offer MS
Windows Mobile 5.0 Strong Distribution channel.
Financial Profit crosses US$1 bn Fixed asset (09) $ 7,986,254,556 Dividend offered for 2008-09 is 20% of
the face value of each share Received US$1.275 bn investment from
international investors in Bharti Infratel. Ability to raise funds
Intangible Strategic partnership with Google. Goodwill & Reputation Facility based Operator license in
Singapore.
AIRTEL Resource audit (unique resources) – Internal Analysis
Supp
ortin
g Ac
tiviti
es
Primary Activities
Firm infrastructure - CRM tools, MIS, ERP, Networking Equipment, Telecom equipment for coverage and signal strength, IT InfrastructureHR management - IT skilled work force, Telecom engineers, SCM specialists Customer service & Telesales training, Franchisee management, 7,646 out of 23,789 employees in Mobile services, Owned retail staffing and training.
Technology development - Creating a 3G enabled network, mChek - Launching M commerce by tie ups with banks and credit cards.
Procurement - Established a SCM network to acquire networking & Telecom tools, Maintain long term relation with suppliers to provide handsets & services
Inbound LogisticsNetwork Infrastructure1. Equipment vendor2. Equipment Manufacturer - Routers, Switch level3. Equipment Manufacturer - Chip LevelSoftware and content provider1. Software Vendor2. Application Provider3. Content Aggregator4. Content Provider
Operations
1. NETWORK INTEGRATION2. SYSTEM INTEGRATION3. INFRASTRUCTURAL DEVELOPMENT 4. GSM SERVICES, VAS, BASE
Outbound Logistics
1. Sound Distributor2. Retail network across India for both prepaid and post paid services3. Online Ordering of VAS 4. Update of existing plan
Marketing & Sales
1. Online marketing 2. Celebrity endorsement3. Brand positioning 4. Promotional Bundle offers – Extra minutes/ Text or Handsets 5. Promotion at events, organizations
Post Sale Service
1. Multilingual Customer Service Center2. Informative website3. Customer Retention4. Easy online payment options for both pre paid & post paid services
MARGIN
MARGIN
Primary Activities - Analysis
InputMarketin
g & Sales
Process OutputPost
Sale
•Network InfrastructureNokia-Siemens, CISCO , INTEL
•Software and content providerIBM, INFY TCS, AFFLE, On Mobile, India Times, Hungama Mobile, Mauj , One 97 IMI MOBILE. •Finance•Licenses
• Strong Channel Distribution
•Market Innovators
•Trend Setters•Unique advertising strategy – Emotional values & Humor
•GSM Services
•VAS
•Fixed Lines
•Broadband
Public
Corporate
Businesses
SME’s
Institutes
Infrastructure Development
Network Integration
CompetitivePosition
CapableSupplier
Start
Value Chain Analysis – Conclusions & Recommendations
Inbound Logistics
Operations
Output
Marketing & Planning
Post SaleValue Chain Outcome - 37% PM
• Aero mobile, MATE, GPS tracking device for B2B
• M-commerce
•wide network coverage as they own their network infrastructure
Android platform based HTC mobile unique marketing strategy, low STD rates – Trend setters
Bill payments and Indian rail tickets using m commerce
SWOT
SUMMATION OF EXTERNAL & INTERNAL ENVIRONMENT ANALYSIS
AIRTEL Strength & Weakness
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
INT
ER
NA
LE
XT
ER
NA
L
Tele-Density – 30.6% Low among Developing Countries
Low Broadband Penetration
Untapped Rural Market
Bharti Infratel – Cutting Down cost in Rural area
Growing Globally
First Indian Sponsor to signed Manchester United
• Falling ARPU
• Intense Competition From Nearest Competitor
• Shortage of Bandwidth
• New Players Entering Indian telecom sector
• Uncertain Economic Condition
• Valuable Business Partners – Techno & Financial
•Strong Brand Image• First Mover Advantage • Single Private Leading Indian Telecom Company
• Enthusiastic & Innovative Business Development team
•Marketing Driven Low Cost Model• Blessed with Directional Visionary - S.N. Mittal
• Massive Economies of scale from large subscriber base
• Outsourcing of Core Systems
• Lagging behind in Exploring market Investment opportunity
NoNoYesYesNoYesNoYesYes
An evaluation matrix of the mission statement
Cu
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Pro
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Mar
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Tech
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AIRTEL ORGANISATIONAL PURPOSE
VisionBy 2010 Airtel will be the most admired brand in India:
Loved by more customers Targeted by top talent Benchmarked by more businesses
Mission Statement
“We at Airtel always think in fresh and innovative ways about the needs of our customers and how we want them to feel. We deliver what we promise and go out of our way to delight the customer with a little bit more”
AnsOff Directional Matrix
PRODUCT
MARKET
EXISTING
EXISTING NEW
NEW
AIRTEL ANSOFF DIRECTIONAL MATRIX
PRODUCT DEVELOPMENT
MATE – Mobile Application Tool for Enterprise
M commerce – mChek (Recharge Anywhere, Anytime)
Airtel Way Finder - GPS Service Blackberry
New Tech-Savvy Handset Options in Prepaid & Post Paid Schemes: HTC, BlackBerry, Apple iPhone
Lowered Overseas Call Rates – Bahrain @ Rs 5.00/-
3G Network – Awaiting for GOI Approval
AeroMobile – Airtel in-flight connectivity on Emirates and Malaysian Airlines
Bridge Alliance – Roaming in Asia Pacific Region
MARKET PENETRATION
“The Airtel Advantage” : 50 paisa / min Call on both National Long Distance Calls & Local calls
Value Added Services: Airtel Live, Hello Tunes, Astrology
Lowered National & International Roaming Tariff
Extensive & Increasing Sales & Distribution channel covering 1.27 million
Delhi Half Marathon – 2nd Edition – 28000 participants
Celebratory Endorsement - Top BollyWood & International Personality
Tie with major TV events – KBC, India Got its Talent
MARKET DEVELOPMENT
3G Network Implementation in Sri Lanka
Airtel –Vodafone Alliance: Debut in Europe through Channel Islands (Jersey & Guernsey) Low cost Calling Cards to India - UK, USA, Singapore etc.
MTN – Airtel Alliance - South-South Cooperation **
Bhutan’s 2013 ICT Vision – Gov of Bhutan & Airtel Alliance
DIVERSIFICATION
Bharti InfraTel & Indus Towers - Passive Infrastructure Provider
Bharti Teletech – Landline & Telephone Equipment
Bharti Telemedia Services – Broadband & Internet, DTH, IPTV
Airtel Tracking Services – GPS Bharti Walmart – Sipermarket Bharti Realtek – Realty Business
Ansoff Product / Market Framework
110 million Mobile Customer Base 24% of wireless market
3rd largest single country mobile services operator
Sixth largest in-country integrated telecom operator in the world
Poter’s Generic Matrix
Porters Generic Strategy
Differential Strategy Cost Leadership
Narrow Market Scope
Broad Market Scope
Uniqueness Competency
Low CostCompetency
Porters Generic Strategy (Cont….)
Own Tower Infrastructure Operator in 23 circles in india Huge Distribution Network High Customer Base Huge Economy of scale
Low cost Mobiles on Postpaid & prepaid
Lowest fare International Calling cards
First in class Value added services,
Mobile web- internet on mobile,
Hello Tunes, MATE - mobile application
tool for enterprise.
Aero mobile- the In-flight connectivity
iphone and Blackberry Phones.
AIRTEL
LOW
COST
UNIQUENESS
BROAD MARKET NARROW MARKET
CONCLUSION AND RECOMMENDATIONS
“Refine your processes, strive for dominance and build a brand”MR. Sunil Bharti Mittal
Airtel have done a good job by Improving their core competencies.
Being the market leader & Especially in building a brand
We would recommend Bharti Airtel to continue with their good work
and concentrate more on mobile services which is Bharti’s cash
cow, in its process of huge diversification.
Thank You
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