Mini Project of Strategic Management

8/8/2019 Mini Project of Strategic Management

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MINI PROJECT OF STRATEGIC MANAGEMENT

ON

ANALYSIS OF BHARI AIRTEL GROUP

MARKETING BATCH - 2009-11

SUBMITTED TO :- SUBMITTED BY :-

Prof. Rashri Kadam Suman Kumar Singh

PRN No- 092057


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INTRODUCTION OF STRATEGIC MANAGEMENT

Strategic management is the art, science and craft of formulating,implementing and evaluating cross-functional decisions that will enablean organization to achieve its long-term objectives. It is the process of

specifyingthe organization's mission,vision and objectives, developin gpolicies and plans, often in terms of projects and programs, which aredesigned to achievethese objectives, and then allocating resources toimplementthe policies and plans, projects and programs. Strategicmanagement seeks to coordinate and integrate the activities ofthevariousfunctional areas of a business in orderto achieve longterm organizationalobjectives. A balanced scorecard is often used to evaluatethe overallperformance ofthe business and its progress towards objectives. Strategicmanagement is the highest level of managerial activity. Strategies are typically planned, crafted orguided by the Chief Executive Officer,

approved or authorized by the Board of directors, and then implementedunderthe supervision ofthe organization's top managementteam or seniorexecutives. Strategic management provides overall direction to theenterprise and is closely related to the field ofOrganization Studies. In thefield of business administration it is useful to talkabout "strategicalignment" between the organization and its environment or"strategic consistency". Accordingto Arieu (2007), "there is strategicconsistency when the actions of an organization are consistent with theexpectations of management, and these in turn are with the market and the

context." Strategic management is an ongoing process thatevaluates and

controls the business and the industries in which the company is involved;assesses its competitors and sets goals and strategies to meet all existingand potential competitors; and then reassesses each strategy annually orquarterly [i.e. regularly] to determine how it has been implemented andwhether it has succeeded or needs replacement by a new strategy to meetchanged circumstances, new technology, new competitors, a new economicenvironment., or a new social, financial, or political environment.

Birth of strategic management

Strategic management as a discipline originated in the 1950s and 60s. Althoughthere were numerous early contributors to the literature,the most influentialpioneers were Alfred D. Chandler, Jr., Philip Selznick, Igor Ansoff, and PeterDrucker.

Alfred Chandler recognized the importance of coordinatingthevarious aspectsof management under one all-encompassing strategy. Priorto this timethe


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various functions of management were separate with little overall coordinationor strategy. Interactions between functions or between departments weretypically handled by a boundary position,that is,there were one ortwomanagers that relayed information backand forth between two departments.Chandler also stressed the importance oftaking a longterm perspective when

lookingto the future. In his 1962 groundbreaking workStrategy and Structure,Chandler showed that a longterm coordinated strategy was nece ssary to give a

company structure, direction, and focus. He says it concisely, structure followsstrategy. In 1957, Philip Selznickintroduced the idea of matchingtheorganization's internal factors with external environmental circumstances.Thiscore idea was developed into what we now call SWOT analysis by Learned,Andrews, and others atthe Harvard Business School General ManagementGroup. Strengths and weaknesses ofthe firm are assessed in light oftheopportunities and threats from the business environment. Igor Ansoff built onChandler's workby adding a range of strategic concepts and inventing a whole

new vocabulary. He developed a strategy grid that compared market penetrationstrategies, product development strategies, market development strateg ies andhorizontal and vertical integration and diversification strategies. He feltthatmanagement could usethese strategies to systematically prepare for futureopportunities and challenges. In his 1965 classic CorporateStrategy, hedeveloped thegap analysis still used today in which we must understand thegapbetween where we are currently and where we would liketo be,then developwhat he called gap reducing actions. Peter Drucker was a prolific strategytheorist, author of dozens of management bo oks, with a career spanning fivedecades. His contributions to strategic management were many buttwo are most

important. Firstly, he stressed the importance of objectives. An organizationwithout clear objectives is like a shipwithout a rudder. As early as 1954 he was developing a theory of managementbased on objectives. This evolved into his theory of management by objectives(MBO). Accordingto Drucker,the procedure of setting objectives andmonitoring your progress towards them should permeateth eentire organization,top to bottom. His other seminal contribution was in predictingthe importanceof whattoday we would call intellectual capital. He predicted the rise of whathe called the knowledge worker and explained the consequences ofthis fo rmanagement.

He said thatknowledge workis non-hierarchical. Workwould be carried out in teams with the person mostknowledgeable in thetaskat hand beingthe temporary leader.In 1985, Ellen-Earle Chaffee summarized what shethought werethe mainelements of strategic managementtheory by the 1970s: Strategic management involves adaptingthe organization to its business

environment.


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Strategic management is fluid and complex. Change creates novelcombinations of circumstances requiring unstruc tured non-repetitiveresponses.

Strategic management affects theentire organization by providingdirection.

Strategic management involves both strategy formation (she called it content) and also strategy implementation (she called it process).

Strategic management is partially planned and partially unplanned.

Strategic management is done at several levels: overall corporate strategy, and individual business strategies.

Strategic management involves both conceptual and analytical thoughtprocesses.

Growth and portfolio theory

In the 1970s much of strategic management dealt with size,growth, andportfolio theory. The PIMS study was a longterm study, started in the 1960sand lasted for 19 years,that attempted to understand the Profit Impact ofMarketingStrategies (PIMS), particularly theeffect of market share. StartedatGeneral Electric, moved to Harvard in theearly 1970s, and then moved to theStrategic Planning Institute in the late 1970s, it now contains decades ofinformation on the relationship between profitability and strategy. Their initialconclusion was unambiguous: Thegreater a company's market share,thegreater

will betheir rate of profit. The high market share provides volume andeconomies of scale. It also provides experience and learning curve advantages.The combined effect is increased profits. The studies conclusions continueto be drawn on by academics and companiestoday:"PIMS provides compelling quantitativeevidence as to wh ich businessstrategiesworkand don't work" - Tom Peters.The benefits of high market share naturally lead to an interest in growthstrategies.The relative advantages of horizontal integration,vertical integration, diversification, franchises, mergers and acquisitions, jointventures, and organicgrowth were discussed. The most appropriate market dominance strategies wereassessed given the competitive and regulatory environment.There was also research that indicated that a low market share strategy coul dalso bevery profitable. Schumacher (1973),Woo and Cooper (1982), Levenson(1984), and later Traverso (2002) showed how smaller niche players obtainedvery high returns. By theearly 1980s the paradoxical conclusion was that highmarket share and low market share companies were often very profitable but


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most ofthe companies in between were not. This was sometimes called thehole in the middle problem. This anomaly would beexplained by MichaelPorter in the 1980s. The management of diversified organizations required newtechniques and new ways ofthinking. The first CEO to address the problem of amulti-divisional company was Alfred Sloan at General Motors. GM was

decentralized into semiautonomousstrategic business units (SBU's), but with centralized support functions.

One ofthe mostvaluable concepts in the strategic management of multi -divisional companies wasportfolio theory. In the previous decade HarryMarkowitz and other financial theorists developed thetheory of portfolioanalysis. It was concluded that a broad portfolio of financial assets couldreducespecific risk. In the 1970s marketers extended thetheory to productportfolio decisions and managerial strategists extended itto operating divisionportfolios. Each of a companys operating divisions were seen as an element inthe corporate portfolio. Each operating division (also called strategic business

units) was treated as a semiindependent profit center with its own revenues,costs, objectives, and strategies. Several techniques were developed to analyzethe relationships between elements in a portfolio. B.C.G. Analysis, forexample,was developed by the Boston Consulting Group in theearly 1970s. This was thetheory thatgave us the wonderful image of a CEO sitting on a stool milking acash cow. Shortly afterthat the G.E. multi factoral model was developed by General Electric. Companiescontinued to diversify until the 1980s when it was realized that in many cases aportfolio of operating divisions was worth more as separate completel yindependent companies.


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EXECUTIVE SUMMARY

This report on Bharti Airtel is doneto findout certain objective regarding

the strategic approach Adopted by Airtel to stand strongly in thecompetitivetelecom market. Airtels marketing strategies are analysesusingvarious models likeSWOT analysis, BCG Matrix, Ansoffs matrix,porters five forces etc.

The outcomes ofthese models are properly analyzed to find outthevariousaspects like companies position and competitors position in the market .This report on Airtel not justgive description aboutthe company but it also

talks aboutthevarious marketing strategy adopted by the company.SWOT analysis of Airtel helps to find outthe weakpoints ofthe company andto find outthe way to overcomethis problem. Similarly with the help of Ansoffmatrix it can be findingthat what arethe different strategic options availabletothe company underthe different market condition. and to find the answerthatwhy company is looking for overseas market like Nigeria and Seychelles.

COMPANY PROFILE

Bharti Airtel Limited formerly known as Bharti Tele-Ventures LTD (BTVL)

is an Indian company offeringtelcommunication services in 19 countries. It isthe largest cellular service provider in India, with morethan 141 millionsubscriptions as of August 2010. Bharti Airtel is the world's third largest, single-country mobile operator and fifth largesttelecom operator in the world with asubscriber base of over 180 million. It also offers fixed line services andbroadband services. It offers its telecom services underthe Airtel brand and isheaded by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom serviceproviderto achievethis Cisco Gold Certification. To earn Gold Certification,Bharti Airtel had to meet rigorous standards for networking competency,service, support and customer satisfaction set forth by Cisco. The company also

provides land-linetelephone services and broadband Internet a ccess (DSL) inover 96 cities in India. It also acts as a carrier for national and international longdistance communication services. The company has a submarine cable landingstation at Chennai, which connects the submarine cable connecting Chennai andSingapore.


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It is known for beingthe first mobile phone company in the world to outsourceeverythingexcept marketing and sal es and finance. Its network(base stations,microwave links,etc.) is maintained by Ericsson and Nokia Siemens Network,business support by IBM and transmission towers by another company.Ericsson agreed forthe firsttime,to be paid by the minute for installation and

maintenance oftheirequipment ratherthan being paid up front. This enables thecompany to provide pan-India phone call rates of Rs. 1/minute

(U$0.02/minute). Duringthe last financial year [2009 -10], Bharti has roped in astrategic partner Alcatel-Lucentto managethe networkinfrastructure fortheTelemedia Business.

The company is structured into four strategic business units - Mobile,Telemedia, Enterprise and Digital TV. The mobile business offers serv ices in 18countries across the Indian Subcontinent and Africa. The Telemedia businessprovides broadband, IPTV and telephone services in 89 Indian cities. The

Digital TV business provides Direct-to-Home TV services across India. TheEnterprise business provides end-to-end telecom solutions to corporatecustomers and national and international long distance se rvices to telcos.

Globally, Bharti Airtel is the 3rd largest in-country mobile operator by

subscriber base, behind China Mobile and China Unicom. In India,the company

has a 30.7% share ofthe wireless services market. In January 2010, company

announced that Manoj Kohli, Joint Managing Director and current Chief

Executive Officer of Indian and South Asian operations, will becomethe Chief

Executive Officer ofthe International Business Group from 1 April 2010. He

will be overseeing Bharti's overseas business. Current Dy. CEO,Sanjay Kapoor,

will replace Manoj Kohli and will bethe CEO,effective from 1 April 2010


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Corporate Structure


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AIRTEL ENTERPRISE SERVICES

The Company is a part ofBharti Enterprises, and is India's leading provider oftelecommunications services. The businesses at Bharti Airtel have beenstructured into three individual strategic business units (SBUs) - mobile

services, broadband & telephone services (B&T) & enterprise services. Themobile services group provides GSM mobile services across India in 23 telecomcircles, whilethe B&T business group provides broadband & telephone servicesin 90 cities. The Enterprise services group has two sub-units - carriers (longdistanceservices) and services to corporate. All these services are provided underthe Airtel brand. Its include.

Voice Services

Mobile Services S ellite Services Managed Data & Internet Services Managede-Business Services

Voice Services

Bharti Airtel becamethe first private fixed-line service provider in India. It isnow promoted underthe Airtel brand. Recently,the Government opened the

fixed-line industry to unlimited competition. Airtel has subsequently startedproviding fixed line services in the four circles of Delhi, Haryana, MadhyaPradesh, Karnataka, Tamil Nadu & UP (West). Airtel EnterpriseServicesbelieves thatthese circles have high telecommunications potential,especiallyfor carrying Voice & Data traffic. These circles were strategically selected so asto provide synergies with Airtels long distance networkand Airtels extensivemobile network. Airtel EnterpriseServices, India's premium telecommunicationservice, brings to you a whole new experience in telephony. From integratedtelephone services for Enterprises and small business enterprises to user-friendly plans for Broadband InternetServices (DSL), we bring innovative,

cost-effective, comprehensive andmulti-product solutions to caterto all yourtelecom and data needs.

Voice- Product Portfolio

Airtel EnterpriseServices telephone services go beyond basic telephony to offerour users a whole host of Value Added Services as well as premium add -ons.Each telephone connection from Airtel EnterpriseServices is backed by a


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superior fibre-optic backbone forenhanced reliability and q uality telephony.Few ofthe Value Added Services offered are Calling Line Identification, ThreeParty Conferencing, Dynamic Lock, Hunting Numbers, and Parallel Ringingetc. Airtel EnterpriseServices VoiceServices provide Free Dial-up Internetaccess that is bundled along with your Telephone connection from Airtel. Its

fast, reliable and gives you unlimited Internet access.

Mobile Services

Airtels mobile footprintextends across the country in 21 telecom circles. Itsservice standards compare with thevery best in the world. In fact,thats howBharti has managed to win thetrust of millions of customers and makes it oneofthetop 5 operators in the world, in terms of service and subscriber base.The company has several Firsts to its credit:

The Firstto launch full roaming service on pre-paid in the country. The Firstto launch 32KSIM cards. The First in Asia to deploy the multi band feature in a wireless

networkfo efficient usage of spectrum. The Firstto deploy Voice Quality Enhancers to improvevoice

quality and acoustics. The Firsttelecom company in the world to receivethe ISO

9001:2000certification from British Standards Institute


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Satellite Services

Airtel EnterpriseServices provides you connectivity where ever you take yourbusiness OurSatelliteServices bring you the benefits of access in remote locations. Airtel EnterpriseServices is a leading provider of broadband IP

satellite services and DAMA/PAMA services in India. Our solutions support audio,video and voice applications on demand.

SatelliteServices include :

PAMA/DAMA

BIT - Internet VPN Satellite based IPLCs for redundancy reasons

Managed Data & Internet Services

Airtel EnterpriseServices brings you a comprehensive suite of datatechnologies. So we are ableto support all types of networks and ensure ourcustomers can migratetheir networkto the future seamlessly. Our ManagedData & Internet services make our customers future proof.Managed Data & InternetServices include :

MPLS ATM FR Internet IPLC Leased Lines Customised Solutions International Managed Services Metro Ethernet

Managede-Business Services

Airtel EnterpirseServices, offers an internationally benchmaked, carrier classhosting, storage and business continuity services. A range of services that helpto keep your business runningthe way you want - 24x7. Thanks to our world-class high tech Data Centres.Managed e-Business Services include :

Co-lo: Dedicated and Shared


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BCRSServices Web hosting

OBJECTIVE:-

The Indian communications scenario has transformed into a multiplayer, multiproduct market with varied market size and segments. Within the basic phoneservice the value chain has split into domestic/local calls, long distance players,and international long distance players. Apart from having to cope with thechange in structure and culture (government to corporate), Airtel has had to gearitself to meet competition in various segments basic services, longdistance(LD), International Long Distance (ILD), an d Internet Service Provision(ISP).It has forayed into mobile service provision as well.

Objective of study are:

What marketing strategies the Airtel is implementing to defend andincrease the market share.

To find who are the competitors of the Airtel and the market shares of thecompetitors and what strategies Airtel is implementing to beat its competitors.

To find out how Airtel react to the technology changes in thecommunications sector,


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ANALYSIS

SWOT ANALYSIS

Following is the SWOT Analysis forAIRTEL

STRENGTH

Very focused on telecom. Leadership in fast growing

cellular segment. Pan-India footprint. The only Indian operator,

other than VSNL, that hasan international submarinecable.

WEAKNESS

Price Competition fromBSNL and MTNL

Untapped Rural market

OPORTUNITY

The fast-expanding IPLCmarket.

Latest technology and low

cost advantage.Huge market.

THREAT

Competition from othercellular and mobileoperaters.

Saturation point in Basictelephony service

STRENGTH

VERY FOCUSED ON TELECOM Bharti Airtel is largely focused onthetelecom, around 93% ofthetotal revenue comes from telecom(Totaltelecom revenue Rs 3,326).


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LEADERSHIP IN FAST GROWING CELLULAR SEGMENT Airtel isholding leadership position in cellular market.. Bharti Airtel is one of India'sleading private sector providers oftelecommunications services based on

an aggregate of 27,239,757 customers as on August 31, 2006, consisting of 25,648,686 GSM mobile and 1,591,071 broadband & telephone customers.

PAN INDIA FOOTPRINT Airtel offers the mostexpansive roamingnetwork. Letting you roam anywhere in India with its Pan-India presence,and trot across theglobe with International Roaming spread in over 240networks. The mobile services group provides GSM mobile servicesacross India in 23 telecom circles, whilethe B&T business group providesbroadband & telephone services in 92 cities.

THE ONLY OPERATOR IN INDIA OTHER THAN VSNL HAVING

INTERNATIONAL SUBMARINE CABLES. Airtel,the monopoly breakershattered the Telecom monopoly in the International Long Distance space withthe launch of International Submarine cable Networki2i jointly with SingaporeTelecommunications Ltd. in the year 2002. This has brought a hugevalueto theIPLC customers, deliveringthem an option besides the

incumbent carrier,to connectto the outside world.


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WEAKNESS

Price Competition from BSNL and MTNL. Airtel is tough competition fromthe operators like BSNL nd MTNL as thesetwo operators are offering services at a low rate.

Untapped Rural market. Although Airtel have strong Presence throughoutthe country but stil l they are far away from the Indian rural part and generally this part is covered by BSNL so indirectly Airtel is loosing revenue from the rural sector.

OPPORTUNITIES

THE FAST EXTENDING IPLC MARKET An IPLC (international privateleased circuit) is a point-to-point private line used by an organization to

communicate between offices that aregeographically dispersedthroughout the world. An IPLC can be used for Internet access, business dataexchange,video conferencing, and any other form oftelecommuni cation.Airtel EnterpriseServices and SingTel jointly provide IPLCs on the Networki2i. The LandingStation in Singapore is managed by SingTel andby Airtel in Chennai (India). Each LandingStation has Power Feeding Equipment,Submarine Line Terminating Equipment and SDH system topowerthe cable, add wavelengths and converttheSTM -64 outputto

STM-1 data streams respectively.

LATEST TECHNOLOGY AND LOW COST ADVANTAGE Thecosts ofintroducing cellular services for Airtel are marginal in nature, as itneedsonly to augment its cellular switch/equipment capacity and increasethe number of base stations. The number of cities,towns and villages it has coveredalready works to its advantage as putting more base stations forcellularcoverage in these areas comes with negligible marginal cost. Besides such costadvantages, it has also other cost advantages forthe latest cellulartechnology. As a lateentrant into the cellular market, it hasdual advantage of latesttechnology with modern featu res, unlike otherprivate cellular operators who started their service morethan 4 -5 yearsbackand low capital cost dueto advantages of large scale buying ofcellular switch/equipment.

HUGE MARKETThe cellulartelephony market is presently expanding at aphenomenal / whopping __ rateevery year and there is still vast scope forAirtel to enter /expand in this market. Besides there is a vast rural


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segment wherethe cellular services have not made much headway and

many customers are looking towards Airtel for providingthe servicetothem. With its wide and extensive presenceeven in the remotest areas, Airtelpoised to gain a big market share in this segment when itexpands

cellular services into the rural areas.

THREATS

COMPETITION FROM OTHER CELLULARIt is time for BSNL toimprove/expand its cellular services. Fierce and cut -throat competition isalready in place with the markets ever abuzz with several tariff reductionsand announcement of attractive packages,tryingto grab most ofthe mindshare ofthe king - the consumer, whose benefits are increasing withpassing ofeveryday. If BSNL is not innovative and agile, its cellular

service will be a flop. It needs to be proactive with attractive packaging, pricing and marketing policies lest its pre sence in the market betreatedwith disdain by the private cellular companies. The launch ofWLL servicesby Reliance Infocomm has aggravated the situation.

MARKET MATURITY IN BASIC TELEPHONY SEGMENT

Although Airtel entered in the basic tele phony market its a biggestthere forthecompany as the basic telephony market has reached


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Porters 5 forces

Threat from

Competition

Customer

Bargaining

Power

Supplier

Bargaining

Power

Threat of

NewEntrants

Threat of

Substitutes


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Therat from competition(High)

Wireless Market Top 4 garnering 75% market share

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 A alysis


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Best op margins & net profit margins among peers

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%

Customer Bargaining Power

Lackof differentiation amongService ProvidersCutthroat CompetitionLow Switching CostsAttractiveSchemes for new connectionAvailability of all operators everywhere Difficulty to differentiate BrandNumber Portability will have Ve ImpactBusinesses & Consumers


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Market scenari

Suppliers Bargaining Power

T reat of Substitutes

Landline C M

World Phone

VideoConferencing VOIP- Skype, G talk, YahooMessengeretc.


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Threat of New Entrants(Low Because)

Huge License Fees to be paid upfront & High gestation period Entry of MVNOs & WiMAX operators

Spectrum Availability & Regulatory Issues InfrastructureSetup Cost - High Rapidly changingtechnology

Conclusion

Afterthe complete analysis ofentireSTUDY we put forward a set of

Recommendations which are a follows:

PRICING Depending on the market conditions / competition from cellularOr will-mobile service providers and also to suit local conditions,there Should be flexible pricing mechanism (either at central or local level).

IMPROVEMENT IN TECHNOLOGY Airtel should immediately shifttothird generation switches by replacing its c-dot switches. This will improvethe quality of serviceto desired level and provide simultaneous integrationwith the nationwide network. The special distribution ofthetransmission

towers should be increased to avoid no signal pockets

ESTABLISHMENT OF DISTRIBUTION CHANNELS Airtelshould establish widespread and conspicuous distribution to match that ofthe competitors. The distribution networkshall makethe productvisible and available at convenient locations.

UNTAPPED RURAL MARKET Large part of Indian rural market is stilluntapped therefore airtel is required to bringthat area under mobility.

Mini Project of Strategic Management

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