International Marketing

Africa & CIS Nations

Presented by: Amit Modi (11M04) Krunal Shah (11M20) Presented to: Dr. D. R. Dave

Africa is the world's second-largest and second-most-populous continent At about 30.2 million km (11.7 million sq mi) including adjacent islands, it covers six percent of the Earths total surface area and 20.4 percent of the total land area. With 1.0 billion people , it accounts for about 15% of the world's human population. The continent of Africa can be conceptually subdivided into a number of regions or subregions North Africa South Africa East Africa West Africa

North Africa
Geography :
North Africa, Northern Africa is the northernmost region of the African continent, linked

by the Sahara to Sub-Saharan Africa. Northern Africa includes eight countries or territories; Algeria, Egypt, Libya, Morocco, Sudan, Tunisia, and Western Sahara. Algeria, Morocco, Tunisia, Libya and often Mauritania are the Maghreb or Maghrib, while Egypt and Sudan are referred to as Nile Valley.

People and Language: Egyptians, Berbers, Bedouins, and people of mixed ancestry live in North Africa. The majority of people in the region speak Arabic. Religion : Most North Africans are Muslims, people who practice Islam. Islam influences many aspects of life in North Africa. A small percentage of people in the region practice Christianity or other nonIslamic religions.

Transport and Industry :

The economies of Algeria and Libya were transformed by the discovery of

oil and natural gas reserves in the deserts. Moroccos major exports are phosphates and agricultural produce, and as in Egypt and Tunisia the tourist industry is essential to the economy. Egypt has the most varied industrial base, importing technology to develop electronics and engineering industries, and maintaining the reputation of its high-quality cotton textiles. Oil rigs are scattered throughout the deserts of Libya and Algeria. Libyan oil is especially prized because of its low sulphur content, which means it produces much less pollution than other fuel oils.

Southern Africa
Southern Africa, southernmost region of the African continent, comprising the countries of Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Zambia, and Zimbabwe. The island nation of Madagascar is excluded because of its distinct language and cultural heritage. Geography : The terrain of Southern Africa is varied, ranging from forest and grasslands to deserts The region has both low-lying coastal areas, and mountains. In terms of natural resources, the region has the world's largest resources of platinum and the platinum group elements, chromium, vanadium, and , cobalt as well as uranium, gold, titanium, iron and diamonds.

Economy :
The region is distinct from the rest of Africa, with some of its main export

including platinum, diamonds, gold, and uranium, but it is similar in that it shares some of the problems of the rest of the continent. South Africa is the dominant economic "superpower" of the region. South Africa's GDP alone is many times greater than the GDPs of all other countries in the region. South Africa is a middle-income, emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors; a stock exchange that is the 18th largest in the world; and modern infrastructure supporting a relatively efficient distribution of goods to major urban centers throughout the region

East & West Africa

Northern Africa includes eight countries Botswana, Kenya, Malawi,

Mozambique, Zimbabwe, Namibia, Zambia, Tanzania, Seychelles, Uganda,. West Africa, also called Western Africa and the West of Africa, is the westernmost region of the African continent. Geopolitically the United Nations definition of Western Africa includes the following countries : Ghana, Mali, Nigeria, Senegal, Sierra leone, Mali, Guinea, Gambia

Culture
The culture of Africa encompasses and includes all cultures within the

continent of Africa

Cuisine :
Africa is a huge continent and the food and drink of Africa reflect local

influences, as also glimpses of colonial food traditions, including use of food products like peppers, groundnuts and maize introduced by the colonizers. The African cuisine is a combination of traditional fruits and vegetables, milk and meat products. Cassava and yams are the main root vegetables. Africans also use steamed greens with hot spices. Dishes of steamed or boiled green vegetables, peas, beans and cereals, starchy cassava, yams and sweet potatoes are widely consumed.

 Differences are also noticeable in eating and drinking habits across the

continent of Africa. Thus, North Africa, along the Mediterranean from Morocco to Egypt has different food habits than Saharan Africans who consume subsistence diet. Nigeria and coastal parts of West Africa love chilies in food. The nonMuslim population of Africa uses alcoholic beverages, which goes well with most African cuisine. The most familiar alcoholic drink in the interior Africa is the Ethiopian honey wine called Tej.

Art :
One of the greatest contributions Africa has made to the cultural heritage of

mankind is sculpture. African sculpture is a highly developed art form with thousands of years of history behind it. Traditional art has mostly social purposes.

Language :
More than 1,000 different languages are spoken in Africa. Most countries in Eastern and Southern Africa have adopted colonial European

languages for official government business, most people speak indigenous or local languages. In Namibia, people may speak English, Afrikaans, German, Oshivambo, Herero, or Nama. In Tanzania, people can speak English or Swahili. The majority of the countries in West Africa have adopted French, English, Spanish, or Portuguese as national languages. The majority of each countries' inhabitants, however, also speak one or more indigenous languages. Cameroonians may speak one or more of 24 different languages, in addition to French or English. Most people in the North African countries speak Arabic and follow Islam In some parts of North Africa, however, people are multilingual and speak several languages. For example, the official languages of Chad and Djibouti are Arabic and French.

Founded 7 July 1995 Founder : Sunil Bharti Mittal Headquarters : New Delhi, India Area served : South Asia and the Channel Islands Products : fixed line and mobile telephony, broadband and fixed line internet services, digital television, and IPTV Subsidiaries : Airtel Africa, Airtel Digital TV sri lanka, Airtel Bangla

About Bharti Airtel

It is one of Asias leading integrated telecom services providers with

operations in 19 countries across Asia and Africa. It is structured into four strategic business units -Mobile, Telemedia, Enterprise and Digital TV. The mobile business offers services in India, Sri Lanka and Bangladesh. Telemedia business provides broadband, IPTV and telephone services in 94 Indian cities. Its Mobile Services partners are Nokia Siemens, Ericsson, Huawei. Telemedia & Long Distance Services partners are Nokia Siemens, Juniper, Cisco, Alcatel Lucent, ECI, Tellabs. Call Centre Operations partners are IBM Daksh, Hinduja TMT, Teleperformance, First source & Aegis.

Mode of Entry in Foreign Market

Foreign market entry modes differ in degree of risk they present, the control

and commitment of resources they require and the return on investment they promise. There are two major types of entry modes: equity and non-equity modes. The non-equity modes category includes export and contractual agreements. The equity modes category includes: joint venture and wholly owned subsidiaries. Exporting Licensing Franchising Joint Venture Strategic alliance Wholly own subsidiaries

Entry Strategy of Airtel in African Market

A wholly owned subsidiary includes two types of strategies: 1. Greenfield investment : It is the establishment of a new wholly

subsidiaries. It is often complex and potentially costly, but it is able to provide full control to the firm and has the most potential to provide above average return. Wholly owned subsidiaries and expatriate staff are preferred in service industries where close contact with end customers and high levels of professional skills, specialized know how, and customization are required. Greenfield investment is more likely preferred where physical capital intensive plants are planned. This strategy is attractive if there are no competitors to buy or the transfer competitive advantages that consists of embedded competencies, skills, routines, and culture.

2. Acquisition :

Acquisition strategy offers the fastest, and the largest, initial international expansion of any of the alternative. Acquisition has been increasing because it is a way to achieve greater market power. The market share usually is affected by . Market power. Therefore, many multinational cooperation apply acquisitions to achieve their greater market power require buying a competitor, a supplier, a distributor, or a business in highly related industry to allow exercise of a core competency and capture competitive advantage in the market. Acquisition is lower risk than Greenfield investment because of the outcomes of an acquisition can be estimated more easily and accurately.[ In overall, acquisition is attractive if there are well established firms already in operations or competitors want to enter the region.

Worldwide presence
Airtel is the first largest mobile operator in the world in terms of subscriber

base and has a commercial presence in 20 countries and the Channel Islands Its area of operations include: The Indian Subcontinent Airtel Bangla in Bangladesh Airtel, in India Airtel Sri lanka in Sri Lanka Airtel Africa, which operates in 17 African countries: Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Sierra Leone, Tanzania, Uganda and Zambia.

About Zain
Zain, formerly MTC, was the first mobile telecommunications company in

the Middle East when it started its operations in Kuwait back in 1983. Its subsidiaries include; Mobile Telecommunications Company Lebanon (MTC) SARL, Lebanon, and Sudanese Mobile Telephone (Zain) Company Limited, Sudan.

It is a public company engaged, together with its subsidiaries, in the

provision of mobile telecommunication and data services, including operation, purchase, delivery, installation, management and maintenance of mobile telephones and paging systems in Kuwait and 21other countries in the Middle East and North Africa.

 Zain entered Africa in May 2005 through the $3.4 billion purchase of Celtel

International. Zain invested heavily across the continent through network upgrades and acquiring two more country licences. By June 2010, Zain had over 40 million customers across the continent, operating in East ,Central and West Africa.

 Transaction Details of Bharti Airtel Zain

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Acquirer Bharti Airtel Limited Seller Mobile Telecommunications Company KSC Acquisition -Bharti Airtel Limited indirectly acquired 100% of Zain Africa International BV and its business operations in Africa from Zain under a privately negotiated agreement. Mode of Acquisition Security (Share) Sale Consideration USD10.7Billion Mode of payment All cash deal Bharti Airtel to pay: a) USD 8.3 billion within three months from the date of closing; b) USD 700 million after one year from the date of closing; and c) USD 1.7 billion assumed as debt on the books of Zain

SWOT Analysis
Strength :
Post acquisition, Bharti Airtel will become fifth largest service provider in terms

of the number of subscribers. The deal would give Bharti 42 million subscribers in 15 African countries, which has a combined estimated revenue of $3.6 billion Bharti, largest telecom player in India, can replicate the success of India in Africa.

Weakness :
Bharti has paid a heavy price for the deal Zain Africa has made a net loss of USD 112 million in the nine months to

September 2009. Seven of Zains African units are loss-making, including its highest revenue earner, the Nigerian arm, Zain Nigeria. The loan would be a drag on Bharti Airtel's earnings with no immediate returns expected from the loss-making target.

Opportunity :
Telecom penetration in African countries varies from 37 per cent to 65

per cent. There are few markets with penetration less than 40 percent. The African market is homologous to Indian market in term of its structural similarities. Monthly ARPU on the Continent averages USD 7.5, which is higher than Indias ARPU of USD 5

Threat :
Zain Africa is in trouble and financial paralysis is looming over its head
Bharti Airtel will have to put in a lot of effort to align the varied cultures;

with 15countries to tackle it definitely will be a nightmare. Bharti-Zain will be getting a tough fight with rival like MTN and China Mobile Most of the countries are political unstable and operation are still loss making.

Market Segmentation :
Airtel has targeted the premium and upper middle class. The rationale

behind it is that only those segments should be targeted who value time and have the paying capacity. It is also planning to target the business tourists during their stay in the capital about 60% of the clientele are top executives of corporate houses, about 15% are foreign organisations and the rest are professionals and small businessmen.

Product pricing and Planning :

The basic product promise by Airtel is mobility. Airtel's main marketing

strategy is to be a first mover all the time. Airtel seeks to carry out this segmentation through provision of new information services and making new facilities available.

 The premium segment is nearing saturation the company targeting the upper

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middle and middle-middle class. Inorder to do so Airtel is trying to optimise the price performance package by offering suitable "product bundling. In addition, it offers free Airtime services and other concessions tomake the prices andthus the product more attractive.It hasalso opened a 24 hours customer service.Only price doesn't serve as an effective differentiator, value added services become theeffective differentiator.The "Value Added Services" provided from Airtel are : Voil mail services Mobile fax 1 data services Cash card Caller ID Roaming facility