Reliance Communications was analyzed using the BCG matrix. It was established in 1999 and expanded its fiber optic network throughout the 2000s. On the BCG matrix, it fell in the question marks category due to its high growth but low market share relative to competitors like Bharti Airtel and Vodafone. Over time, it lost market share and fell into the dogs category as competitors gained. The analysis showed Reliance Communications needed to either invest heavily to increase market share or generate cash while possible from its declining business units. The BCG matrix has limitations and does not provide clear strategies for implementing investment plans.

1. BCG Matrix Analysis of
Reliance
Presented by Nwankwo Emmanuel

2. • Reliance Infocomm was established.
1999
• Laying of optical fiber started in Maharashtra, Gujarat
and Andhra Pradesh.
2000
• Reliance Infocomm was inaugurated.
• First interconnect (POI) was established in New Delhi.
• Commissioned its 1st optic fiber backbone.
2002
• Launched global roaming facility and CDMA services.
2005
• Reliance Communications was formed and listed in
Bombay and National stock exchanges.
2006

3. Main Subsidiaries
• Reliance Telecommunication Limited (RTL)
• Reliance Globalcom
• Reliance Communications Infrastructure
Limited (RCIL)
• Reliance Big TV Limited
• Reliance Infratel Limited(RITL)

4. Why BCG Matrix
Value
&
Efficiency
(Synergy)
Strategy
A
Strategy
B
Strategy
C
Strategy
D
Three techniques most widely used and most referenced in the business literature:
BCG-Growth Share Matrix
GE-McKinsey Industry Attractiveness-Business Strength Matrix
Arthur D. Little Life Cycle Approach
The BCG matrix method is based on the product life cycle theory that can be used to determine what
priorities should be given in the product portfolio of a business unit.

5. ?
Cash Cows Dogs
$
Stars Question Marks

6. 4 categories in a portfolio of a company
1. Stars (=high growth, high
market share)
• use large amounts of cash and
are leaders in the business so
they should also generate large
amounts of cash.
• frequently roughly in balance
on net cash flow. However if
needed any attempt should be
made to hold share, because
the rewards will be a cash cow
if market share is kept.
2. Cash Cows (=low growth,
high market share)
• profits and cash generation
should be high , and because
of the low growth, investments
needed should be low. Keep
profits high.
• Foundation of a company.

7. 4 categories in a portfolio of a company (cont’d)
3. Dogs (=low growth, low
market share)
• avoid and minimize the
number of dogs in a
company.
• beware of expensive ‘turn
around plans’.
• deliver cash, otherwise
liquidate.
• divest, but occasionally hold
for possible strategic
repositioning, which can
lead to question mark or
cash cow.
4. Question Marks (= high
growth, low market share)
• worst cash characteristics of
all, because high demands
and low returns due to low
market share.
• generate insufficient cash,
simply absorb great
amounts of cash and later,
as the growth stops, a dog.
• either invest heavily or sell
off or invest nothing and
generate whatever cash it
can. Increase market share
or deliver cash.

8. The BCG or Growth-Share matrix imposes a two-dimensional analysis on
management of Strategic Business Units:
a comparative analysis of business strength and an assessment of the
environment.
The business strength measure is the business's Relative Market Share.
The environmental measure is the Market Growth Rate.
Formulas for Relative Market Share and Market Growth Rate:
The two dimensional analysis of BCG Matrix

9. Service Provider Subscriber (Mn) Market Share (%)
Relative
Market Share
Bharti Airtel 130.61 21.73 1.243
Reliance Com + RTL 105.15 17.49 0.805
Vodafone Essar 103.75 17.26 0.794
BSNL 70.62 11.75 0.541
Tata Teleservices 67.88 11.29 0.520
IDEA 65.28 10.86 0.500
Aircel 38.46 6.40 0.295
MTNL 5.12 0.85 0.039
Uninor 5.02 0.84 0.039
Sistema Shyam 4.21 0.70 0.032
Loop Mobile 2.89 0.48 0.022
STel 1.11 0.19 0.009
Videocon 0.65 0.11 0.005
HFCL Infotel 0.327 0.06 0.003
Etisalat/Allianz 0.004 0.00 0.000
Indian mobile mkt 2010

10. overall telecom operator market share

11. •Bharti Airtel 32%
•Vodafone 20.8% [Consistent]
•Idea Cellular 12.7% [Moderate Growth, but commendable]
•Reliance Communications -11.7% [ Losing to competition ]
•BSNL 9.3% [ Losing to competition]
•Tata Tele [ Gaining on the back of DoCoMo’s innovative strategies
•Aircel 4%
India Wireless Operators Revenue Market Share

12. India Wireless Connection (2010)
Telecom Operator Market Share Relative
Market Share
Bharti Airtel 32.0% 2.735
RCOM 11.7% 0.366
Vodafone 20.8% 0.650
BSNL 9.3% 0.291
IDEA Cellular 12.7% 0.397
Tata Teleservices 8.5% 0.266
Aircel 4.0% 0.125

13. Telecom
Operator
Market
Share
(in %)
Relative
Market
Share
MTS (SSTL) 1.0% 0.017
RCOM 56.0% 1.514
MTNL 0.0% 0.000
BSNL 6.0% 0.107
HFCL 0.0% 0.000
Tata
Teleservices
37.0% 0.661
Top CDMA operators in India

14. 10x 8x 7x 5x 3x 1x .7x .5x .4x . 3x .2x .1x
20%-
18%-
16%-
14%-
12%-
10%-
8%-
6%-
4%-
2%-
0%-
BCG Analysis for Reliance Communications

15. ?
Cash Cows Dogs
$
Stars Question Marks
Remainder
divest
Select
a few
liquidate
Strategy for substantial growth

16. ?
Cash Cows Dogs
$
Stars Question Marks
liquidate
Cash reinvestment
Cash

17. BCG Matrix
(Three Paths to Success)
• Continuously generate cash cows and use the cash
surplus from the cash cows to invest in the question
marks that are not self-sustaining.
• Reinvest in Stars, as the market matures, stars will
degenerate into cash cows and the process will be
repeated.
• Segment the market for dogs, nurse the dogs to
health or manage for cash.

18. ?
Cash Cows Dogs
$
Stars Question Marks
(Segment)
Three Paths to Success

19. BCG Matrix
(Three Paths to Failure)
• Over invest in cash cows and under invest in
question marks.
• Under invest in the stars.
• Over milk the cash cows.

20. ?
Cash Cows Dogs
$
Stars Question Marks
Three Paths to Failure

21. The 4 Portfolio Strategies
•Increase short-term
return without
impacting on long-run
prospects?
•If the SBU retain its
low-growth potential,
should it be dumped?
•Can the SBU
maintain and
preserve market
share?
•Does the SBU have
the potential to
transform into a
star?
Build Hold
Harvest
Divest

22. 1. High market share is not the only success factor
2. Market growth is not the only indicator for attractiveness of a market
3. Sometimes Dogs can earn even more cash as Cash Cows
4. How growth and share are measured highly affect the overall analysis.
5. It does not provide sufficient direction for most effective ways to
implement the investment strategies.
Recommendation:
Either these SBUs should receive enough investment funds to
enable them to achieve a real market dominance and become a
cash cow (or star), or otherwise companies are advised to disinvest
and try to get whatever possible cash out of the question marks that
were not selected.
limitations of the BCG Matrix

23. references
1. http://www.bcg.com/about_bcg/history/history_1968.aspx
2. http://www.rcom.co.in
3. http://www.simonbrandon.com
4. http://www.telecomindiaonline.com/india-telecom-growth-and-subscribers-2010.html
5. http://www.thehindubusinessline.com/2010/05/22/stories/2010052252590700.htm.
6. http://www.businessweek.com/globalbiz
7. http://www.trai.gov.in/WriteReadData/trai/upload/PressReleases/740/PRelease28June10.
pdf
8. http://www.ibef.org/industry/telecommunications.aspx.
9. http://en.wikipedia.org/wiki/Reliance_Communications
10. http://economictimes.indiatimes.com/News/News-By-Industry/Telecom/GSM-CDMA-
players-maintain-subscriber-growth-momentum/articleshow/4281903.cms
11. Carl W. Stern, George Stalk - Perspectives on Strategy from The Boston Consulting
Group