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Strategic Management
Analysis
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Table of Content
Sr. No.
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14.
Main Heading
Vision
Mission
Values
Strategy
Introduction - Airtel
Corporate Structure
Telecom Industry
External Analysis
Internal Analysis
PESTLE Analysis
VRIO Analysis
Corporate Level Strategies
Results & Interpretations, and Suggestions
Conclusion
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Vision:
Airtels vision is to enrich the lives of their customers. Their obsession is to win
customers for life through an exceptional experience.
Mission:
Hunger to win customers for life.
Values:
Airtel aims to work towards their vision, driven by their values of AIR - Alive,
Inclusive & Respectful.
Alive: Airtel is alive to the needs of their customers. They act with passion, energy
and a can-do attitude to help their customers realize their dreams. Innovation and
an entrepreneurial spirit drives them - if it cant be done, theyll find a way.
Inclusive: Airtel is for everyone - Airtel champion diversity, recognizing the breadth
and depth of the communities they serve. They work with them, anticipating,
adapting and delivering solutions that enrich their lives. They do this by having an
open mind and embracing change.
Respectful: They live the same lives as their customers, sharing the same joys and
the same pains. They never forget that customers are why they exist. They act with
due humility, always open and honest, to achieve mutual respect.
Strategy:
How will airtel Win Customers for Life
Win through
go-to-market
excellence
Win with
valuable
customers
Win with a
war on waste
Win with
people
Cost efficiencies
Employee centricity
Introduction - Airtel:
Bharti Airtel Limited is a leading global telecommunications company with
operations in 20 countries across Asia and Africa. Headquartered in New Delhi,
India, the company ranks amongst the top 4 mobile service providers globally in
terms of subscribers. In India, the company's product offerings include 2G, 3G and
4G wireless services, mobile commerce, fixed line services, high speed DSL
broadband, IPTV, DTH, enterprise services including national & international long
distance services to carriers. In the rest of the geographies, it offers 2G, 3G wireless
services and mobile commerce. Bharti Airtel had over 307 million customers across
its operations at the end of November 2014.
Airtel is credited with pioneering the business strategy of outsourcing all of its
business operations except marketing, sales and finance and building the 'minutes
factory' model of low cost and high volumes. The strategy has since been adopted
by several operators. Airtel's equipment is provided and maintained by Ericsson
and Nokia Solutions and Networks whereas IT support is provided by IBM. The
transmission towers are maintained by subsidiaries and joint venture companies of
Bharti including Bharti Infratel and Indus Towers in India. Ericsson agreed for the
first time to be paid by the minute for installation and maintenance of their
equipment rather than being paid up front, which allowed Airtel to provide low call
rates of 1/minute (US$0.02/minute).
Corporate Structure:
Airtel has two distinct Customer Business Units (CBU) with focus on B2C (Business
to Customer) and B2B (Business to Business) segments. Airtel's B2C business unit
deals with servicing the retail consumers, homes and small offices providing mobile,
fixed line, DTH and m-commerce services while the B2B unit deals with large
corporate accounts.
Mobile Services
Bharti Airtel offers GSM mobile services in all the 22-telecom circles of India and is
the largest mobile service provider in the country, based on the number of
customers.
Telemedia Services
The group offers high-speed broadband with the best in class network. With fixed
line services in 87 cities, it helps to stay in touch with friends & family and to be
updated round the clock.
Airtel Business
Airtel business provides a broad portfolio of services to large Enterprise,
Government, Small & Medium businesses and carrier customers. It is India's leading
and most trusted provider of communication and ICT services, offering services that
include voice, data, network integration, data center & managed services, enterprise
mobile applications and digital media.
Telecom Industry
Introduction
India is currently the worlds second-largest telecommunications market and has
registered strong growth in the past decade and half. The Indian mobile economy is
growing rapidly and will contribute substantially to Indias gross domestic product
(GDP), according to report prepared by GSM Association (GSMA) in collaboration
with the Boston Consulting Group (BCG).
The government has enabled easy market access to telecom equipment and a fair
and proactive regulatory framework that has ensured availability of telecom
services to consumer at affordable prices. The deregulation of foreign direct
investment (FDI) norms has made the sector one of the fastest growing and a top
five employment opportunity generator in the country.
Market Size
Driven by strong adoption of data consumption on handheld devices, the total
mobile services market revenue in India is expected to touch US$ 37 billion in 2017,
registering a Compound Annual Growth Rate (CAGR) of 5.2 per cent between 2014
and 2017, according to research firm IDC. According to a study by GSMA,
smartphones are expected to account for two out of every three mobile connections
globally by 2020 making India the fourth largest smartphone market.
External Analysis
Opportunities
1. Strategic Partnership: Partnering with smart phone companies is going to
be a smart strategy as far as MNP (Mobile Number Portability in India) is
concerned. This will ensure fixed cash flows in the future and a higher
customer base.
2. Market Development: With fierce competition in the telecom industry &
shrinking margins, venturing out in new markets/developing economies will
prove fruitful for the company.
3. Technological Infrastructure: Airtel being the 1 st 4G service provider in the
country, can capture a huge chunk of 4G market and leverage its technological
infrastructure to penetrate deeper in to the telecom market.
4. Untapped Geography of the Current Market: Although it is currently
providing 3G & 4G services, but these services are limited to specific
geographical locations. Expansion of these services to most of its regions will
help the company get more margins and customers.
5. LTE: The whole wireless world is moving towards LTE (long term evolution
or 4G). LTE for mobile broadband can be a good solution for India where fixed
broadband penetration is otherwise low. Airtel has taken the lead with this
version of LTE in majority of States, but deployment needs to catch up pace.
Despite a weak LTE ecosystem in India, Airtel should portray itself as the
embracer of that technology.
Threats
1. Government Regulatory Framework: With the auction of spectrum &
change in the government policies on a regular basis, it is a potential threat to
stability & existence of this industry thereby affecting the players.
2. TRAI Policies: TRAI has mandated to compensate users with Re.1 per calldrop, up to maximum of Rs.3 per day. This will hit approximately 7% revenue
of airtel.
3. Hostile Takeover: Bharti Airtel could also be the target for the takeover
vision of other global telecommunications players that wish to move into the
Indian market.
4. Competition: Price war in the home market and declining margins due to this
is adversely affecting the overall business of the group.
5. MNP (Mobile Number Portability): MNP gives the customer independence
to change the service provider while retaining the number and as Airtel
charges are premium over other service providers, it can see slump in
subscriber base in the next fiscal year with PAN India MNP applicable from
May 3rd 2015.
Internal Analysis
Strengths
1. 4G: Airtel being the first mover in to 4G market, has an advantage and use it
as its strength to gain larger market share. Mobile Data will contribute around
60% of total revenues by 2020, as per the reports. Hence airtel can use this
advantage as its strength.
2. Renowned Telecom Company: With its 19+ years of rich experience in
telecom industry this MNC had travelled far to become worlds 3rd largest
telecom operator overseas with operations in nearly 20 countries.
3. High Brand Equity: It is one of the pioneer brands in telecommunication
having a high brand recall and with a whopping subscriber base.
4. Extensive infrastructure: With the formation of Indus tower & due to its
partnership with Idea & Vodafone, the infrastructure of Airtel has extended
in all parts of the country resulting into nationwide penetration.
5. Strategic Alliances: The Company has top notch stakeholders, namely Sony
Ericsson, Nokia and Singtel, and the recent one being Apple. Such strategic
alliances boost the brand equity and the bottom line of the company.
6. Torchbearer of the Telecom Industry: With its number 1 spot due to its
excellent services in developing economies, Airtel has interconnected the life
of people in a highly efficient way. Thus, where Vodafone is an external
entrant, Airtel is a leading nationwide player in India and the torchbearer of
the telecom industry in India.
Weaknesses
1. Outsourced Operations: Outsourcing operations helped Airtel in lowering
its cost. But on the other hand, they are running the risk of being dependent
on some other companies which may affect its operations.
2. Pan India 4G License: Airtel doesnt have pan-India 4G license while
Reliance JIO possesses pan India license. This is one of the weaknesses due to
which Airtel can lose out on a chunk of 4G market.
3. Venturing into Africa: Although its been 4 years that Airtel has acquired
Zains Africa business, but Airtel is still struggling to turn around the u nit
which was bought at a whopping 9 billion dollars.
4. High Debt: With its acquisitions turning out to bad investment, and credit
being high and margins being low, Airtel group is under high debt. Airtel does
not have as deep pockets as Vodafone.
5. Accessibility of Customer Support: Airtel doesnt let its customers access
customer support directly. Customers need to go through various options to
connect to IVR customer support. This is one of the weaknesses of airtel
compared to other network providers.
PESTLE Analysis
The Indian telecommunications has been zooming up the growth curve at a feverish
pace, emerging as one of the key sectors responsible for Indias resurgent economic
growth. It is the fastest growing telecommunication market in the world.
Political
The ministry of telecom industry hiked FDI limits to 100% that has enabled
Indian promoters of telecom sector to spark off the competition by selling their
stakes to foreign investors. Due to increase in FDI, Airtel will be able to modulate
the foreign stakes in their companies that have already acquired a range between
67-69% of their assets.
Airtels infrastructure gives them the first mover advantage.
Airtel is a dominating brand in terms of regulation.
Airtel already have the tie-up with foreign partner SINTEL that is going to help
in investing more in infrastructure and latest technology to provide the best
services to their subscribers.
With the tremendous growth and increase in globalization of telecom sector,
Airtel already launched its mobile services in Srilanka in Jan 2009.
Also Airtel has already acquired Zain for Africa operations which are the second
biggest overseas purchase by an Indian company.
Economical
Indian telecom was growing in the range of 20-30% approximately in the year
2002-03 but this figure has moved to 40-45% during the last couple of years.
Social
Change in lifestyle:
o Fast changing lifestyles are forcing telecom companies to enlarge the
breadth & depth of their services.
Regional shift in population:
o The rural Indian consumer managed to remain an attractive proposition,
especially in the demand for telecom services. As 70% of Indian population
still resides in rural areas, improvement in telecommunication
infrastructure and services will reduce isolation, increase business
viability, farming productivity and easy access to educational and medical
services.
Employment opportunities: The telecom sector offers a variety of career options.
The certificate courses for employment in the industry are:
o Certificate in Telecom Engineering, IT, Computer Science, Management
Information Systems, Computer Forensics.
Demographic and cultural aspect of the environment also influences customer
needs and market size. Likes and dislikes of a teenager and adult might not be
the same, so the company will have to try its best to meet the requirements. To
meet these requirements, Airtel being the leading private broadband service
provider in the country has introduced the ultra-fast speed of 50 Mbps for the
broadband users on VDSL2 technology that will allow users, the convenience to
download a full feature film in less than 3 minutes. Besides that it provides value
added services such as PC secure (anti-virus software), online storage etc.
Technological
Airtel is the first 4G service provider in India and hence it has competitive
advantage over its competitors.
Bharti Airtel is first wireless service provider that supplies roaming services,
international and long distance communication services as well as value added
services.
It has high speed optic fiber network. This network spans 126,357 km all over
India. Bharti Airtels international network infrastructure includes ownership of
the i2i submarine cable system and consortium ownership in five global
undersea cable system.
As Mobile Number Portability (MNP) has allowed the customers to retain their
existing mobile numbers despite changing the service provider, this has
eventually increased the competition among the service providers as the
subscribers can switch to any other network if they are not happy with the
current service provider. Airtel has the edge over its competitors as their
services are far better than the other service providers.
Environmental
Radio frequency waves emitted from the mobile phones harms body cells and
damages the DNA. This is not yet proved that such changes were risk to human
health.
Due to rising terrorist activities and hacking of confidential data on air, India
Department of Telecommunication (DoT) has made several amendments related
to security features that states that telecom companies should have good policies
for security and they should be responsible for the security of the network.
Legal
TRAI has also ruled out against Airtel and other telecom companies to support
net neutrality. Still talks are going on and TRAI might favor telecom companies.
Resource
Value
Technological
High
Rarity
Medium
Cost to
Imitate
High
Organized
to Capture
Value
Medium
Resources
Implication
Weakness
Temporary
Strength
Advantage
of Medium
Low
Medium
Competitive
Weakness
Parity
Spectrum
Human
Strength/
Competitive
know how
License
Competitive
High
Medium
Medium
High
Temporary
Temporary
Competitive
Strength
Advantage
Customer
High
High
Medium
High
Relations
Managerial
High
Low
High
High
Expertise
Sustained
Strength
Competitive
Distinct
Advantage
Competence
Temporary
Temporary
Competitive
Strength
&
Advantage
Medium
Medium
Medium
of Airtel
Sustained
Strength
Competitive
Distinct
Advantage
Competence
The Mobile Services division is probably the most valuable division of Bharti
Airtel.
Airtel has the largest user-base (customers) in India and hence the largest
mobile service provider in India.
Airtel offers GSM mobile services in all the 23-telecom circles of India.
Airtel provides 4G services in 296 cities, as of now, in India
It provides myriad Value Added Services (VAS) such as hello tunes, mcommerce, wireless internet, mobile apps like Wynk, etc.
&
The Airtel Telemedia Services division provides high speed broadband internet
and related services.
It launched its DTH services in 2008 and currently has 1 crore active users as it
claims, capturing 19% of market share, only second to Tata Sky (20%).
Airtel provides landline service in 94 cities across India.
c) Enterprise Division:
1) Localization:
Its a Focus strategy but on a wider scope of customers i.e., Differing Focus for
different customer segments. Focusing on the needs of customers of particular
segment and providing solutions to customers according to their requirements.
Airtel has always focused enough on different local needs, in different nations
and it has always been central to their strategies.
Hence the kind of services, offers, plans and VAS that they offer in India is quite
different than what they provide in other nations.
2) Cost Responsiveness:
suggestions from our side which Airtel can leverage to become market leader in
4G segment. Primarily the strategies focuses to:
Increase 4G adoption among customers
Changes required in market communication to attract 4G data users
Overcoming barriers to 4G adoption and leveraging first mover advantage in 4G
technology to gain market leadership in 4G
Winning customers for life (customer retention & increasing customer-lifetime
value).
Changing market communication to attract 4G data users:
Do More in Less Time & Do More in Same Price to combat the perceptions of
4G being pricey and consuming more data.
Roll out compensation to existing 4G customers for deficiency in service to create
a strong & positive word of mouth.
Contract celebrities/superheroes that have image of being speedy.
Associate Airtel 4G with F1 racing & sponsor other racing events.
To capture market share in new phone purchases:
Key partnerships with e-tailers, smartphones retailers (multi-brand) and mobile
manufacturers.
Connecting with school going students early on, as they are the next, potential
new phone buyers.
Barriers to 4G Adoption:
Perception that 4G is pricey and consumes more data.
Majority customers, who recently purchased a 3G smartphone, wont upgrade to
4G devices.
Lack of 4G Availability in regions where there is demand.
Strategies to Overcome these Barriers:
Airtel can forge strategic partnership with mobile manufacturing companies to
promote Airtel 4G in Mobile device Exchange schemes, besides purchases of New
Mobile phones by providing opportunity to
o Subscribe to (purchase) Airtel 4G USIM card (Non Airtel Customers)
o Switch to Airtel 4G USIM card (Existing Airtel Customers)
Airtel needs to take aggressive approach to promote 4G, to gain first mover
advantage and capture highest market share, before the competitors enter the
market. For that Airtel can
o Offer free 4G data to its existing 2G and 3G customers (primarily 3G
customers) for a month and for longer period to customers having high 3G
usage to make them switch to 4G.
In the light of call drops coming into the lime light and being a major issue, we
would suggest Airtel to invest into improving the infrastructure and solve this
problem. This would serve three purpose at the price of one.
First and most obvious, it would solve the problem of call drops.
Second, it would be the first company to do it and hence would get the first mover
advantage. Sooner or later, under TRAIs regulation, all telecoms would have to
solve this issue, so might as well be first one to do it.
Third, in the age of social media, Airtels improved performance would provide
it free positive publicity.
Conclusion
Out of Indias over 1 billion mobile user base, only a little over 350 million users
enjoy internet. But this is set to change. India is on course to overtake US in terms
of mobile users with 402 million users by the end of 2016. If the above-mentioned
strategies are followed, Airtel stands chance to capture a major chunk of this evergrowing mobile internet user base. Also Airtel can also emerge as a pioneer in
bringing 4G technology in India. Similar to India, Airtel, with a well thought strategy,
can capture Africas over 1 billion population as its prospective subscribers. Till
now, Airtel has a well-established strategies to Win Customers for Life. A proper
OGST model helps companies realize its objectives and Airtel is one of those
companies.