Case Study onCase Study on

NTT DOCOMO JOINT VENTURE WITH TATANTT DOCOMO JOINT VENTURE WITH TATA TELE SERVICE LIMITEDTELE SERVICE LIMITED

Presented byPresented by

Name ID

Md Jahedul Islam 0921432

Anjuman Ara 1020693

Shomi Ghosh 1127013

Mr. Tamzid Rabby 1130419

Introduction:Introduction:

Company OverviewCompany Overview

NTT DCCOMONTT DCCOMO

NTT DOCOMO is subsidiary of Nippon Telegraph and Telephone NTT DOCOMO is subsidiary of Nippon Telegraph and Telephone corporationcorporation

NTT DOCOMO is Iconic brand in JapanNTT DOCOMO is Iconic brand in Japan Established in july 1992Established in july 1992 Name of the CEO: Karou KattoName of the CEO: Karou Katto Capital: 949.68 billion yenCapital: 949.68 billion yen Employees: 23,289Employees: 23,289 lunched I-mode in February 1999 lunched I-mode in February 1999 Lunched 3G service in October 2001Lunched 3G service in October 2001

TTSL (Tata Tele Service Limited)TTSL (Tata Tele Service Limited)

TTSL is subsidiary of TATA group TTSL is subsidiary of TATA group Established in 1996Established in 1996 It’s headquarter in Mumbai ,Maharashtra, IndiaIt’s headquarter in Mumbai ,Maharashtra, India Name of chairman : Kishor Anant ChakarName of chairman : Kishor Anant Chakar Products: Fixed line and mobile telephony, broadband services, digital Products: Fixed line and mobile telephony, broadband services, digital

television and network services television and network services

About CaseAbout Case

NTT DOCOMO Joint Venture with Tata Tele NTT DOCOMO Joint Venture with Tata Tele Service Limited:Service Limited:

Tata DoCoMo LimitedTata DoCoMo Limited

Type Type : Joint Venture: Joint Venture

IndustryIndustry: Telecommunication: TelecommunicationEstablishedEstablished: November 2008: November 2008Headquarters : Headquarters : New Delhi, IndiaNew Delhi, IndiaArea served :Area served : India India Services : Services : Mobile network, fixed wireless telephony, USB internet Mobile network, fixed wireless telephony, USB internet dongledongleEquity : Equity : TTSL 74% and NTT DOCOMO 26% ( after joint venture) TTSL 74% and NTT DOCOMO 26% ( after joint venture)

ProblemsProblems

•• NTT DoCoMo’s revenue declined because of introducing discount NTT DoCoMo’s revenue declined because of introducing discount program in current market.program in current market.

•• NTT DoCoMo could not enter the Indian market without joint venture.NTT DoCoMo could not enter the Indian market without joint venture.•• As NTT DoCoMo was holding the minority company share, so low As NTT DoCoMo was holding the minority company share, so low

involvement occurred in managing the joint ventureinvolvement occurred in managing the joint venture•• DoCoMo wants to get more involvement in management decisions.DoCoMo wants to get more involvement in management decisions.

External Environment Analysis:External Environment Analysis:

Pest AnalysisPest Analysis

Political:Political:

•• Foreign company is not eligible to apply for a license in its own name. Foreign company is not eligible to apply for a license in its own name. •• No foreign individual investment is allowed unless go for joint venture. No foreign individual investment is allowed unless go for joint venture. •• A foreign company cannot acquire more than 74% company share. A foreign company cannot acquire more than 74% company share. •• In Joint Venture Company, a majority of Directors and Board members including In Joint Venture Company, a majority of Directors and Board members including

Chairman, and CEO must be Indian residence Chairman, and CEO must be Indian residence

Economical:Economical:

•• TATA is getting capital from a foreign investor. TATA is getting capital from a foreign investor. •• Capturing new market introducing 3G network. Capturing new market introducing 3G network. •• Rising up the GDP of the country Rising up the GDP of the country

Social:Social:

•• Reducing unemployment. Reducing unemployment. •• Lifestyle of Indian people changed.Lifestyle of Indian people changed.•• Communication has become easier.Communication has become easier.

Technological:Technological:

•• Faster internet access.Faster internet access.•• Video calling.Video calling.•• Faster downloading.Faster downloading.•• Chatting.Chatting.

Porter five Forces model

Rivalry among Companies:

Telecom sector is highly competitive and generally earns low returns because the cost of competition is quite high.

A highly competitive market results from:i) Many players of about the same size; there is no dominant firmii) Little differentiation between competitor’s products and

servicesiii) A mature industry with very little growth; companies can only

grow by stealing customers away from competitorsThere are majorly 3 types of players in the telecom industry:-

i) State owned players. (BSNL and MTNL)ii) Private Indian players. (Reliance comm, Tata comm, Bharti

Airtel)

iii) Foreign invested companies. (Vodafone, Idea cellular) Competition has intensified with the entry of new cellular players in

circles leading to reduced tariffs which have hurt major operators, as they will be unable to recover their high capital investment costs.

BSNL is dedicated to performing its work as it drives India into the next league of telecom supremacy by providing technologically advanced services at an affordable cost.

On the private side, there has been a tough competition between Bharti Airtel and Vodafone each having a market share of 30 % and 24% respectively.

Idea cellular, Reliance comm. and Aircel are also in the race but they lack in the infrastructure when compared with Vodafone and Bharti Airtel.

Bargaining Power of Suppliers:

Fast changing technology such as 3G so bargaining power of suppliers is medium.

If the company doesn’t own tower infrastructure, then bargaining power of provider is high.

Medium cost of switching since changing the hardware would lead to additional cost in modifying the architecture

Limited pool of skilled managers and engineers especially those well versed in the latest technologies

IT Vendors’ bargaining power is high as the telecom technical support and innovation is highly dependent on such suppliers.

A lot of technical assistance provided by NTT DoCoMo.

Bargaining Power of Suppliers:

Fast changing technology such as 3G so bargaining power of suppliers is medium.

If the company doesn’t own tower infrastructure, then bargaining power of provider is high.

Medium cost of switching since changing the hardware would lead to additional cost in modifying the architecture

Limited pool of skilled managers and engineers especially those well versed in the latest technologies

IT Vendors’ bargaining power is high as the telecom technical support and innovation is highly dependent on such suppliers.

A lot of technical assistance provided by NTT DoCoMo.

Threat of New Entrants:

Continuous entrance will make monopolistic -> perfect competition Factors that limit entrance :

High loyalty of existing customers. High fixed costs and difficult access to finance. Scarcity of resources. Already existing very low tariff rates. Government restrictions or legislation.

 New technology provides entry for foreign entrant. M&A in telecom sector are giving to new entrants. Bharti –zain, uninor-

unitech and telner, Aircel- maxis and reddy FDI has made it third largest sector.

Threat of Substitutes:

Non-Traditional Alternatives: Online Chat Satellite Phones Wireless land phones

All of them have a huge potential in the future Between CDMA & GSM Issue of mobility & penetration with the substitutes. Cable TV and satellite operators now compete for buyers and internet

telephony, delivered by ISPs and not telecom operators. Price – performance trade off is very high. Overall threat of substitutes is between Low to Moderate level.

Strategic Group Maps

NTT docomo

KDDI corp

softban

k

Emmobile

020406080

100120

market share%

no of subscriber in million

Functional StructureFunctional Structure

• Top Management • Manufacturing • Sales • Finance • Personnel

IFAS Matrix for NTT DoCoMo

Key Internal Factors

Weight Rating

Weighted Score

Comments

Top Management

Manufacturing

Sales Finance

Personnel

StrengthPioneer of 3g

network

0.20 5 1 Make more satisfaction to the

subscriber

Strong technology

0.25 5 1.25 Introduced exclusive &unique technology

on telecommunication

Distribution network

0.15 3 0.45 Maintaining subscriber

relationship and service

Strong R&D department

0.8 4 0.32 Gives the best no. of subscriber

Well known brand in

Japan

0.12 3 0.36 Makes more reliable to the subscriber

Weakness

Low market share

0.05 2 0.1 Reducing total revenue

Not allowed for individual investment

0.15 5 0.75 Reducing chance to gain properly like in

Japan.

EFAS Matrix for NTT DoCoMoStrategic Factors

Weight Rating Weighted Score

Comments

Opportunities

Common Industry

0.15 3 0.45 Already customer are willing

to use.

Practice

Using new technology and gaining

capital

0.11 3 0.33 Providing network

makes higher capital

India is a growing market

0.05 5 0.25 For higher users

company can get higher revenue

ThreatsCustomer Loyalty

0.18 5 0.9 Makes profit minimization

Government policy

0.25 5 1.25 Affects company growth

Other Competitors

0.26 2 0.52 Already Capture

customer satisfaction

Recommendation

By reducing call rate they can retain their current customer.By reducing call rate they can retain their current customer.

NTT DoCoMo should introduce their 3G services to new customer NTT DoCoMo should introduce their 3G services to new customer segment at a reduced rate to attract the other consumers. segment at a reduced rate to attract the other consumers.

NTT DoCoMo can offer more money to develop the total infrastructure NTT DoCoMo can offer more money to develop the total infrastructure of the joint venture and thus it can be able to acquire more company of the joint venture and thus it can be able to acquire more company share.share.

NTT DoCoMo should do more advertisement of their strong 3G service NTT DoCoMo should do more advertisement of their strong 3G service and after grabbing a large consumer market DoCoMo can think to and after grabbing a large consumer market DoCoMo can think to

revise the joint venture terms to get more involvement in revise the joint venture terms to get more involvement in management decisions. management decisions.