corporate straregy analysis on airtel
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STRATEGIC ANALYSIS
*T&C APPLY
BYGaushik Vijay K &Team
INTRODUCTIONThe era of telecommunication in India started from the year of 1851 with the initiative from Government of India near the city of Calcutta now known as Kolkata. However the rapid growth in telecom industry came into picture after the year of 2002-03 onwards as the more number of service providers came into existence. Since 2002-03 there is rapid change in the technology and increase in numbers of subscribers in the Indian telecom industry till now.
Bharti Airtel Limited, commonly known as Airtel, is an Indian multinational telecommunications services Company headquartered in New Delhi, India. It operates in 20 countries across South Asia, Africa, and the Channel Islands. Airtel has a GSM network in all countries in which it operates, providing 2G, 3G and 4G services depending upon the country of operation. Airtel is the world's second largest mobile telecommunications company by subscribers, with over 275 million subscribers across 20 countries as of July 2013. It is the largest cellular service provider in India, with 192.22 million subscribers as of August 2013.
BHARTI AIRTEL
" Enriching lives means putting the customer at the heart
of everything we do. We will meet their needs based on
our deep understanding of their ambitions, wherever they
are. By having this focus we will enrich our own lives and
those of our other key stakeholders. Only then will we be
thought of as exciting, innovation, on their side and a truly
world class company."
VISION
• Recruit & Maintain Caliber Working Staff• Provides Customer Specific Software Solution• Continues Improvement in Software Quality• Not remain as Only Software Solution Provider, but be
as Continues Service Provider• To empower stakeholders in services and inventories to
deal with associated
MISSION
We understand that social progress and environment protection are extremely critical to sustainable economic growth. Both these aspects are embedded in our core values. Our corporate vision describes what we aim to do, our values of AIR “Alive, Inclusive and Respectful” describe how we intend to get there.
CORE VALUES
STUCTURAL ANALYSIS USING PORTER’S MODEL• RIVALRY AMONG COMPETITORS
• BARRIERS TO EXIT
• BARRIERS TO ENTRY
• THREAT OF SUBSTITUTES
• BARGAINING POWER OF BUYERS
• BARGAINING POWER OF SUPPLIERS
• GOVERNMENT ACTIONS
Attractiveness RemarksLow High
1 2 3 4 5Number of competitors Large
X
Small 2013 outlook: India Telecommunication Services" by the "India ratings and research - A Fitch group company"
Industry growth Slow X Fast Telecom Annual report 2012-13, DOT Govt.of India
Fixed cost High X
Low Telecom industry handbook www.investopedia.com
Differentiation Low X
High Telecom industry review by www.dnb.co.in/IndianTelecomIndustrySwitching cost Low
X High Mobile number portability guidelines
provided by TRAI.gov.inOpenness in terms of sales
Closed X
Open Telecom industry handbook www.investopedia.com
Excess capacity Large X Small Telecom Annual report 2012-13, DOT Govt.of India
Strategic stakes High X
Low Telecom industry review by www.dnb.co.in/IndianTelecomIndustry
RIVALRY AMONG COMPETITORS
Attractiveness RemarksLow
High
1 2 3 4 5Asset specialization
High X
Low
Cost of Exit High X
Low Telecom industry handbook www.investopedia.com
Government restrictions
High X
Low Trai regulation from www.nccptrai.gov.in
BARRIERS TO EXIT
Attractiveness RemarksLow High
1 2 3 4 5Economies of Scale Small X Large Measuring economies of scale in telecom by
Youngson kwonProduct Differentiation
Low X
High Telecom industry review by www.dnb.co.in/IndianTelecomIndustry
Brand Identity Low X High
Switching Cost Low X
High Telecom industry handbook www.investopedia.com
Access to Channel of Distribution
Easy X
Limited
Capital Requirement
Small X
Large Telecom industry handbook www.investopedia.com
Access to technology
Easy X
Restricted Global telecom and technology, wikipedia.com
Access to raw material
Easy X
Restricted
Government Protection
NoneX
Substantial Trai regulation from www.nccptrai.gov.in
BARRIERS TO ENTRY
Attractiveness RemarksLow High
1 2 3 4 5Switching Cost Low
X
High Telecom industry overview by Columbia university www.columbia.edu
Substitutes price value
Better
X
Worse Telecom industry overview by Columbia university www.columbia.edu
Profitability of the producers of substitutes
High
X
Low Telecom industry overview by Columbia university www.columbia.edu
Availability of close substitutes
High
X
Low Telecom industry overview by Columbia university www.columbia.edu
THREAT OF SUBSTITUTES
Attractiveness
RemarksLow High
1 2 3 4 5
Number of buyers Small X
Large Telecom industry overview by Columbia university www.columbia.edu
Availability of substitutes
Many X
Few Telecom industry overview by Columbia university www.columbia.edu
Switching cost Low X
High Telecom industry overview by Columbia university www.columbia.edu
Buyers threat of backward integration
High X
Low Telecom industry overview by Columbia university www.columbia.edu
Industry's threat of forward integration
Low X
High Telecom industry overview by
Columbia university www.columbia.edu
Contribution to quality
Low X
High Telecom industry overview by Columbia university www.columbia.edu
Contribution to cost High X
Low Telecom industry overview by Columbia university www.columbia.edu
Buyers profitability Low X
High Telecom industry overview by Columbia university www.columbia.edu
BARGAINING POWER OF BUYERS
Attractiveness
RemarksLow High
1 2 3 4 5
Number of suppliers
Small X
Large Telecom industry overview by Columbia university www.columbia.edu
Availability of substitutes
Few X
Many Telecom industry overview by Columbia university www.columbia.edu
Switching cost High X
Low Telecom industry overview by Columbia university www.columbia.edu
Supplier's threat of forward integration
High X
Low Telecom industry overview by Columbia university www.columbia.edu
Industry's threat of backward integration
Low X
High Telecom industry overview by Columbia university www.columbia.edu
Contribution to quality
High X
Low Telecom industry overview by Columbia university www.columbia.edu
Contribution to cost
High X
Low Telecom industry overview by Columbia university www.columbia.edu
Industry's importance to supplier
Low X
High Telecom industry overview by Columbia university www.columbia.edu
BARGAINING POWER OF SUPPLIERS
Attractiveness RemarksLow High
1 2 3 4 5Industry protection
Low
X
High R & D subsidies, Universal service obligation fund
Industry Regulation
High
X
Low Ban of intra circle 3g roaming,3g auction,4g redistribution, tough acquisition policies, high taxes on tarrifs
Customs and Tariff restrictions abroad
High
X
Low US and Europe regulations are tough to adopt
GOVERNMENT ACTIONS
AttractivenessRemarksLow High
1 2 3 4 5Barriers to entry
X
Rivalry among competitors X
Barriers to exit X
Power of buyers X
Power of suppliers X
Threat of substitutes X
Government action X
Overall attractiveness X
OVERALL ASSESSMENT
Key External factors Weight Rating Weighted Score ReferencesOpportunities
1. Low broadband penetration in rural areas 0.20 4 0.8 www.moneycontrol.com2. Less scope for telephony
0.0125 2 0.025
www.airtel.in/sustainabilitypdf/ sustainabilityreport.pdf3. Large untapped market
0.10 4 0.4www.marketsandmarkets.com/ ResearchInsight/
4. Matchbox strategy 0.05 3 0.15 www.livemint.com/ 5. Low teledensity
0.05 4 0.2www.articles.economictimes. indiatimes.com/
6. Growth in MVAS and Cloud computing 0.05 3 0.15 www.mindcommerce.com/ 7. Diversification
0.0125 3 0.0375www.articles.economictimes. indiatimes.com/
8. Mobile Banking0.05 3 0.15
www.airtel.in/money/send-money.html
EFE MATRIX
EFE MATRIX
Threats1. Shortage of bandwidth
0.15 2 0.3www.eetimes.com/ document.asp?doc_id=1141893
2. New players coming into India 0.10 1 0.1 www.coai.com/
3. Major revenues only from India0.0125 2 0.025
www.medianama.com/2014/01/223-airtel-q3-fy14/
4. Falling Average Revenue Per User 0.05 2 0.1
www.articles.economictimes. indiatimes.com/
5. Uncertain Economic conditions0.05 2 0.1
www.articles.economictimes. indiatimes.com/
6. Falling Average Minutes Of Usage 0.05 1 0.05 www.businesstodayonline.com/ 7, Impact of low tariffs 0.0125 1 0.0125 www.ndtv.com/
9. Government Regulations 0.05 2 0.1 www.dot.gov.in/
Total 1 2.7
Key Internal factors Weight Rating Weighted Score References
Strengths• Market leader 0.15 4 0.6 www.airtel.in/
• Strong leadership 0.10 3 0.3 www.airtel.in/
• Strong brand image 0.15 4 0.6 www.airtel.in/
• Strong business development team 0.05 3 0.15 www.airtel.in/
• Strong financials 0.05 3 0.15 www.airtel.in/
• Pan India presence 0.05 3 0.15 www.airtel.in/
• Network Infrastructure 0.10 3 0.3 www.airtel.in/
• Management 0.05 4 0.2 www.airtel.in/
• Value Added Services 0.02 3 0.06 www.airtel.in/
Weakness• Outsourcing of core systems 0.04 2 0.08 www.airtel.in/
• Network coverage 0.04 2 0.08 www.airtel.in/
• Untapped rural market 0.04 2 0.08 www.airtel.in/
• Lack of experience in Africa 0.04 1 0.04 www.airtel.in/
• Increase in debt 0.04 2 0.08 www.airtel.in/
• Decreasing Profit Margin 0.04 1 0.04 www.airtel.in/
• Few Employees 0.04 1 0.04 www.airtel.in/
Total 1 2.95
IFE MATRIX
Critical success factors WeightAirtel Vodafone Reliance Idea BSNL
ReferencesRating Score Rating Score Rating Score Rating Score Rating Score
Advertising 0.15 4 0.6 4 0.6 3 0.45 3 0.45 2 0.3 www.iacaward.org/iac/ Market Share 0.2 4 0.8 3 0.6 3 0.6 2 0.4 2 0.4 www.ibef.org/
Technology 0.05 3 0.15 3 0.15 3 0.15 2 0.1 4 0.2 www.venture-capital-firms.findthebest.com/d/c/Telecommunications/
Sales and Distribution 0.1 3 0.3 2 0.2 3 0.3 3 0.3 2 0.2 www.plunkettresearch.com/telecommunications-market-research/
Brand name 0.1 4 0.4 4 0.4 3 0.3 2 0.2 4 0.4 www.asiancorrespondent.com/ Financial Strength 0.1 3 0.3 2 0.2 3 0.3 2 0.2 4 0.4 www.venture-capital-firms.findthebest.com/d/c/Telecommunications/
Spectrum allotments 0.05 3 0.15 3 0.15 3 0.15 2 0.1 4 0.2 www.asiancorrespondent.com/
Customer service and quality 0.1 3 0.3 3 0.3 2 0.2 3 0.3 3 0.3 www.ijicic.org/ijicic-11-01034.pdf Strategic alliance 0.03 4 0.12 2 0.06 3 0.09 3 0.09 3 0.09 www.cfe.lu.se/
Growth 0.1 4 0.4 3 0.3 3 0.3 4 0.4 3 0.3 www.venture-capital-firms.findthebest.com/d/c/Telecommunications/
Customer loyality 0.02 3 0.06 3 0.06 3 0.06 3 0.06 4 0.08 www.grin.com/ Total 1 3.58 3.02 2.9 2.6 2.87
CPM
SWOT ANALYSIS
Internal Factors
External Factors
Strengths
1. Market leader2. Strong leadership3. Strong brand image4. Strong business development team5. Strong financials6. Pan India presence7. Network Infrastructure8. Management9. Value Added Services
Weakness
1. Outsourcing of core systems2. Network coverage3. Untapped rural market4. Lack of experience in Africa5. Increase in debt6. Decreasing Profit Margin7. Few Employees
Opportunities
1. Low broadband penetration in rural areas2. Less scope for telephony3. Large untapped market4. Matchbox strategy5. Low teledensity6. Growth in MVAS and Cloud computing7. Diversification8. Mobile Banking
SO Strategies WO Strategies• With the strong brand image and the financials the
untapped rural markets can be exploited.(S3,S5,O1,O3)
• With the already existing good infrastructure and strong development team diversification is relatively easy.(S4,S7,07,08)
• Using the match box strategy the untapped rural market can be acquired. (W3,O4)
• With diversification of the company the decreasing profit margin could be easily overcome.(W6,O7)
• The debt can be reduced by tapping the untapped market. (W5,O3)
Threats
1. Shortage of bandwidth2. New players coming into India3. Major revenues only from India4. Falling Average Revenue Per User 5. Uncertain Economic conditions6. Falling Average Minutes Of Usage7. Impact of low tariffs8. Government Regulations
• ST Strategies • WT Strategies• With the strong financial and the network
infrastructure new bandwidth can be acquired. (S5,S7,T1)
• Being a market leader with strong brand image, leadership and business development team, barriers to new entrants can be created. (S1,S2,S3,S4,T2)
• Providing more VAS the increases ARPU.(S9,T4)
• The revenue in India can be used to train a better team in Africa. (W4,T3)
• Bandwidth can be shared with other companies to increase the network coverage. (W2,T1)
SPACE MATRIX
Ratings References
Financial Strength
Working Capital 2 www.moneycontrol.com/
Liquidity 3 www.moneycontrol.com/
Return on investment 4 www.moneycontrol.com/
Leverage 3 www.moneycontrol.com/
Ease of exit 3 www.moneycontrol.com/
Business Risk 2 www.moneycontrol.com/
SPACE MATRIXIndustry Strength
Ease of entry 4 www.moneycontrol.com/
Growth potential 6 www.ibm.com/in/city/pdf/Bharti_Airtel.pdf/
Profits 2 www.moneycontrol.com/
Capital Intensity 3 www.moneycontrol.com/
Financial Stability 3 www.airtel.in/
Resource Utilization 3 www.airtel.in/
SPACE MATRIXEnvironmental Stability
Price of competing products -3
www.indiatelecom.org/
Barriers to entry-4
www.cci.gov.in/images/media/ ResearchReports/ishitaIntEco090811.pdf/
Technological Changes-4
www.deloitte.com/
Competitive pressure -6 www.ndtv.com/
Demand Variability -3 www.isec.ac.in/
SPACE MATRIXCompetitive advantage
Product quality-2
www.airtel.in/
Market share-3
www.ibef.com/
Customer loyalty-2
www.grin.com/
Technology know-2
www.venture-capital-firms.findthebest.com
FS Average = 2.8333 IS Average = 3.5
ES Average = -4 CA Average = -2.3333
SPACE MATRIXDirectional Vector Coordinates:
X-axis = 1.667
Y-axis = -1.667
BCG MATRIX
Relative Market Share Growth rate Revenue(FY 2014) in crores*
Profit(FY 2014) in crores*
Revenue in percent
Profit in percent
Mobile Services 21.7% 1.4% 22998 7777 56.57008 58.93453
Fixed line 10.9% Negative 1961 718 4.823634 5.441043
Broadband 9.3% 6% 1897 603 4.666208 4.569567
Digital TV 18% 16.5% 1045 161 2.570473 1.220067
Money 42% 11.8% 3301 737 8.119742 5.585026
Health Newly introduced - - - - -
Infratel 10.3% 43.6% 9452 3200 23.24986 24.24977
Total 40654 13196
BCG Matrix helps to manage the portfolio by examining relative market share position and industrial growth rate.
BCG MATRIX
IE MATRIX
From the IFE and EFE value of the company the IE matrix can be formulated.
GRAND STRATEGY MATRIX
Rapid Market growth
Weak Competitive position
StrongCompetitivePosition
Slow Market growth
With the SPACE giving the airtel as an competitive company and the BCG matrix showing high market growth of the company it can be placed in the first quadrant.
So, the company can do any of the strategies such as
Market development Market penetration Product development Forward Integration Backward Integration Horizontal Integration Related Diversification
QSPM MATRIXKey factors
WeightMatch box Diversification Sharing of towers
Rating Weighted Score Rating Weighted Score Rating Weighted ScoreKey External Factors
Opportunities1. Low
broadband penetration in rural areas
0.20 3 0.6 3 0.6 4 0.8
1. Less scope for telephony 0.0125 4 0.05 3 0.0375 4 0.05
1. Large untapped market
0.10 4 0.4 3 0.3 4 0.4
1. Matchbox strategy 0.05 4 0.2 3 0.15 4 0.2
1. Low teledensity 0.05 4 0.2 3 0.15 3 0.15
1. Growth in MVAS and Cloud computing
0.05 3 0.15 4 0.2 4 0.2
1. Diversification 0.0125 3 0.0375 4 0.05 3 0.0375
1. Mobile Banking 0.05 3 0.15 4 0.2 4 0.2
QSPM MATRIXThreats
1. Shortage of bandwidth 0.15 1 0.15 1 0.15 2 0.3
1. New players coming into India 0.10 2 0.2 1 0.1 2 0.2
1. Major revenues only from India 0.0125 1 0.0125 1 0.0125 1 0.0125
1. Falling Average Revenue Per User
0.05 2 0.1 2 0.1 1 0.05
1. Uncertain Economic conditions
0.05 1 0.05 2 0.1 1 0.05
1. Falling Average Minutes Of Usage
0.05 1 0.05 2 0.1 1 0.05
1. Impact of low tariffs 0.0125 2 0.025 2 0.025 1 0.0125
1. Government Regulations 0.05 1 0.05 2 0.1 1 0.05
Total 1 2.425 2.375 2.7625
QSPM MATRIXStrengths
1. Market leader 0.15 4 0.6 4 0.6 3 0.45
1. Strong leadership 0.10 4 0.4 4 0.4 4 0.4
1. Strong brand image
0.15 4 0.6 4 0.6 3 0.45
1. Strong business development team
0.05 3 0.15 4 0.2 3 0.15
1. Strong financials 0.05 4 0.2 4 0.2 4 0.2
1. Pan India presence 0.05 3 0.15 3 0.15 3 0.15
1. Network Infrastructure
0.10 3 0.3 4 0.4 3 0.3
1. Management 0.05 3 0.15 4 0.2 4 0.2
1. Value Added Services
0.02 3 0.06 4 0.08 4 0.08
QSPM MATRIXWeakness
1. Outsourcing of core systems
0.04 1 0.04 2 0.08 1 0.04
1. Network coverage 0.04 1 0.04 1 0.04 2 0.08
1. Untapped rural market
0.04 2 0.08 1 0.04 2 0.08
1. Lack of experience in Africa
0.04 2 0.08 2 0.08 1 0.04
1. Increase in debt 0.04 2 0.08 1 0.04 1 0.04
1. Decreasing Profit Margin
0.04 2 0.08 1 0.04 1 0.04
1. Few Employees 0.04 1 0.04 2 0.08 1 0.04
Total 1 3.05 3.23 2.74Grand Total 2 5.475 5.605 5.5025
CONCLUSIONThus, diversification is with highest weighted score on QSPM. So AIRTEL can diversify its products to achieve more by taking advantage of the external opportunities and avoiding the threats faced by the firm also taking advantage of their strengths and overcoming the weakness of the firm.
SUGGESTIONS
Finally,The Matrix We all Know about!!!........
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