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!!!........

THANK YOU!