PRESENTATION BY
Rajiv Ranjan Keshri (MS-40) Ajay Kumar Donald Tirkey Rohan Acharya Kaushalendra Kumar
HIGHLIGHTS OF THIS PRESENTATION:
PART A
Airtel Background External Analysis MacroMacro-Environmental Analysis: MicroMicro-Environmental Analysis: SWOT analysis Internal Analysis Resource Audit Core Competencies: Strengths and Weaknesses Organisational Purpose: PEST ANALYSIS PORTERS 5 FORCES [ ILC, SGA]
UNIQUE RESOURCES PORTERS VALUE CHAIN FRAMEWORK AIRTEL MISSION STATEMENT EVALUATION
PART B
Competitive Strategy Analysis: Development Strategy Analysis:
PORTERS GENERIC FRAMEWORK ANSOFF S PRODUCT/ MARKET FRAMEWORK
PART C
Conclusions and Recommendations
Evolution of Telecom In India
Department of Telecommunication (DoT) is the main body formulating laws and various regulations for the Indian telecom industry.
Private players were allowed in Value Added Services
Independent regulator, TRAI, was established
BSNL was established by DoT
ILD services was opened to competition Go-ahead to the CDMA technology
Calling Party Pays (CPP) was implemented
Number portability Intra-circle merger was proposed guidelines were established Attempted to (pending) boost Rural telephony 2004 2005 2006 Broadband policy 2004 was formulated targeting 20 million subscribers by 2010 2007
INDIA
1994 1992 1997
1999 2000
2002 Internet telephony initiated Reduction of licence fees
2003 Unified Access Licensing (UASL) regime was introduced Reference Interconnect order was issued
National Telecom Policy (NTP) was formulated
NTP-99 led to migration from highcost fixed license fee to low-cost revenue sharing regime
FDI limit was increased from 49 to 74 percent
Decision on 3G services (awaited)
INTRODUCTION
Telecom giant Bharti Airtel is the flagship company of Bharti Enterprises. Enterprises. It is one of Indias leading private sector providers of telecommunications services with more than 110 million customers. customers. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBUs) - Mobile Services, Airtel Telemedia Services & Enterprise Services. 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. society.
National Coverage
Investor Relations :- http://www.bhartiairtel.in
Integrated Telecom Company
Mobile / Wireless Services 2G / 3G Rural Market
Enterprise Services Carrier Corporate
Telemedia Services Fixed Line Broadband DTH
Passive Infrastructure Bharti Infratel Indus Tower
PEST
PEST ANALYSIS- EXTERNAL ANALYSIS
Political
Regulations Political Opposition to participation by the private players Govt support to promote FDI in Telecom sector Banning 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 E Efficient Customer Care Services
Economic
Cost of calls Being Driven Down Worldwide Recession- Both Boon & Bane RecessionMiddle class consumer base growing due to accelerated economic growth Untapped markets in emerging Economies New Opportunity
SocioSocio-Cultural
High End Phones becoming status symbol Due to Intimate family bonding in Indian Culture, there is need to remain connected Tech Savvy Generation
PORTER 5 FORCES INDUSTRY LIFE CYSLCE STRATEGIC GROUP ANALYSIS
Porters 5 Forces
Customer Bargaining Power
Threat of New Entrants
Threat from Competition
Threat of Substitutes
Supplier Bargaining Power
1. Threat from Competition
Wireless Market Top 4 garnering 75% market share
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
Customers & Market Share HIGH
3. Suppliers Bargaining Power
LOW
4. Threat of Substitutes
Landline CDMA Video Conferencing
DIMINISHING MARKET
HIGH
VOIP - Skype, Gtalk, Yahoo Messenger Gtalk, e-Mail & Social Networking Websites
BROADBAND SERVICES
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
TELECOMMUNICATION INDUSTRY LIFE CYCLE
AIRTEL
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.
STRATEGIC GROUP ANALYSIS
Competitor Analysis
Competitor Analysis
40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Bharti Rcom IDEA MTNL
OP Margin
Net Margin Sep-072 26.40% 23.90% 14.10% 7.00% Sep-083 19.30% 13.20% 6.50% 6.80%
Best OP Margins & Net Profit Margins among Peers
Company Sep-07 Bharti Rcom IDEA MTNL 43.00% 37.90% 32.80% 23.70%
Sep-08 38.00% 31.60% 26.60% 22.90%
Source: CMIE November 2008
AMOU & ARPU Stats
Minutes of Usage per Month Mobile Services
USA
838
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.
India
461
China
303
Russia
88
ARPU* in India Mobile Services
ARPU (USD per month) 10 8 6 4 2 0 Q1 2006 Q2 2006 Q3 2006 GSM CDMA Q4 2006 Q1 2007
The declining ARPU implies that India Inc. is tapping a large market at the bottom of the pyramid by reducing tariffs; thereby, enhancing affordability.
INTERAL ANALYSIS RESOURCE AUDIT AND PROCESS VALUE CHAIN
AIRTEL Resource audit (unique resources) Internal Analysis
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 companys strategy
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
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.
Intangible
Strategic partnership with Google. Goodwill & Reputation Facility based Operator license in Singapore.
Firm infrastructure - CRM tools, MIS, ERP, Networking Equipment, Telecom Supporting Activities
equipment for coverage and signal strength, IT Infrastructure HR 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 Logistics
Network Infrastructure 1. Equipment vendor 2. Equipment Manufacturer Routers, Switch level
M A R G I N
Operations
1. NETWORK
Outbound Logistics
Marketing & Sales
Post Sale Service
INTEGRATION 2. SYSTEM INTEGRATION
1. Sound Distributor 1. Online marketing 1. Multilingual Customer Service 2. Retail network 2. Celebrity Center across India for both endorsement prepaid and post paid services
3. Brand positioning 2. Informative website 3. 3. Equipment 4. Promotional INFRASTRUCTURAL 3. Online Ordering 3. Customer Manufacturer - Chip Bundle offers DEVELOPMENT of VAS Level Extra minutes/ Text Retention 4. Update of existing or Handsets 4. Easy online Software and content 4. GSM SERVICES, VAS, BASE provider plan payment options for 5. Promotion at both pre paid & post 1. Software Vendor events, paid services organizations
2. Application Provider 3. Content Aggregator 4. Content Provider
M A R G I N
Primary Activities
Primary Activities - Analysis
Input
Process
Output
Marketing & Sales
Post Sale
Network Infrastructure
Nokia-Siemens, CISCO , INTEL
Infrastructure Development
Network Integration Competitive Position Capable Supplier
Strong Channel Distribution GSM Services VAS Fixed Lines Broadband Market Innovators Trend Setters Unique advertising strategy Emotional values & Humor
Public Corporate Businesses SMEs Institutes
Software and content provider IBM, INFY TCS, AFFLE, On Mobile, India Times, Hungama Mobile, Mauj , One 97 IMI MOBILE. Finance Licenses
Start
Value Chain Analysis Conclusions & Recommendations
wide network coverage as they own their network infrastructure Inbound Logistics M-commerce Operations Aero mobile, MATE, GPS tracking device for B2B Output
Android platform based HTC mobile unique marketing strategy, low STD rates Trend setters Bill payments and Indian rail tickets using m commerce
Marketing & Planning Value Chain Outcome 37% PM
Post Sale
SWOT
SUMMATION OF EXTERNAL & INTERNAL ENVIRONMENT ANALYSIS
AIRTEL Strength & Weakness
STRENGTHS
Valuable Business Partners Techno & Financial
WEAKNESSES
Outsourcing of Core Systems Lagging behind in Exploring market Investment opportunity
INTERNAL
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
EXTERNAL
OPPORTUNITIES
Tele-Density 30.6% Low among Developing Countries Tele 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
THREATS
Intense Competition From Nearest Competitor Shortage of Bandwidth New Players Entering Indian telecom sector Uncertain Economic Condition
AIRTEL ORGANISATIONAL PURPOSE
Vision
By 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
An evaluation matrix of the mission statement
Concern for survival, Growth Profitability Technology
Product / Services
Self-Concept
Customer
Concern for Public Image
Philosophy
Yes
Yes
No
Yes
No
Yes
Yes
No
Concern for Employees No
Markets
AnsOff Directional Matrix
AIRTEL ANSOFF DIRECTIONAL MATRIX
PRODUCT
EXISTING
MARKET PENETRATION
NEW
PRODUCT DEVELOPMENT MATE Mobile Application Tool for Enterprise M commerce mChek (Recharge Anywhere, Anytime)
E X I S MT A IN RG
The Airtel Advantage : 50 paisa / min Call on both National Long Distance Calls & Local calls Value Added Services: Airtel Live, Hello Tunes, Astrology
Airtel Way Finder - GPS Service Blackberry Lowered National & International Roaming Tariff Extensive & Increasing Sales & Distribution channel covering 1.27 million Delhi Half Marathon 2nd Edition 28000 participants 3G Network Celebratory Endorsement - Top BollyWood & International Personality Tie with major TV events KBC, India Got its Talent Bridge Alliance Roaming in Asia Pacific Region MARKET DEVELOPMENT 3G Network Implementation in Sri Lanka DIVERSIFICATION Bharti InfraTel & Indus Towers - Passive Infrastructure Provider Bharti Teletech Landline & Telephone Equipment Bharti Telemedia Services Broadband & Internet, DTH, IPTV Low cost Calling Cards to India - UK, USA, Singapore etc. MTN Airtel Alliance - South-South Cooperation ** Airtel Tracking Services GPS Bharti Walmart Sipermarket Bharti Realtek Realty Business AeroMobile Airtel in-flight connectivity on Emirates and Malaysian Airlines New Tech-Savvy Handset Options in Prepaid & Post Paid Schemes: HTC, BlackBerry, Apple iPhone Lowered Overseas Call Rates Bahrain @ Rs 5.00/-
K E T
N E Airtel Vodafone Alliance: Debut in Europe through Channel W Islands (Jersey & Guernsey)
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 Bhartis cash cow, in its process of huge diversification.
Thank You
