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Strategic Analysis of Airtel Limited in Indian Telecom Sector
1. PRESENTATION BY Group 5:
Kinny Jain
Nikhil Saraf
DionysiaMichalopoulou
Rajinder Pal Singh
2. 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
3. Go-ahead to
the CDMA
technology
INDIA
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
4. 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.
8. 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
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
connected
Tech Savvy Generation
Economic
Cost of calls Being Driven Down
Worldwide Recession- Both Boon & Bane
Middle class consumer base growing due to
accelerated economic growth
Untapped markets in emerging Economies -
New Opportunity
13. 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
18. 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
20. Competitor Analysis
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
Bharti Rcom IDEA MTNL
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
21. 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
ARPU(USDpermonth)
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.
24. 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
25. SupportingActivities
Primary Activities
Firm infrastructure - CRM tools, MIS, ERP, Networking Equipment, Telecom
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
M
A
R
G
I
N
M
A
R
G
I
N
26. Primary Activities - Analysis
Input
Marketin
g &
Sales
Process Output
Post
Sale
•Network
Infrastructure
Nokia-Siemens,
CISCO , INTEL
•Software and
content provider
IBM, 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
Competitive
Position
Capable
Supplier
Start
27. Value Chain Analysis –
Conclusions & Recommendations
Inbound
Logistics
Operations
Output
Marketing
& Planning
Post Sale
Value 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
29. AIRTEL Strength & Weakness
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
INTERNALEXTERNAL
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
30. NoNoYesYesNoYesNoYesYes
An evaluation matrix of the mission statement
Customer
Product/
Services
Markets
Technology
Concernforsurvival,
GrowthProfitability
Philosophy
Self-Concept
Concernfor
PublicImage
Concernfor
Employees
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”
32. PRODUCT
M
A
R
K
E
T
E
X
I
S
T
I
N
G
EXISTING NEW
N
E
W
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 **
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
33. 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
36. 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.
L
O
W
C
O
S
T
U
N
I
Q
U
E
N
E
S
S
BROAD MARKET NARROW MARKET
37. 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.