Ssm Project

7/30/2019 Ssm Project

1/21

ROLE OF SERVICE SECTOR IN ECONOMY

The Indian economy witnessed GDP growth rate of 6.9% on top of a high

8.5% growth achieved in the preceding year. The spirit that the economy has achievedwas demonstrated by the fact that this growth of 6.9% took place in the face of

deficient monsoons, steeps hike globally in oil and steel prices and a change in the

government in the center.

While the industrial sector registered a growth of 8.3% reflecting good

spirits in manufacturing activities, service sector maintained its earlier momentum and

grew by 8.6%. However the agricultural sector, growth increased by only 1.1% due to

erratic monsoon. In spite of a deceleration in the overall growth rate, the continuing

momentum in the growth of industry and service sectors has kept business confidence

at high level.

The Indian economy has finally reaped the benefits of just over a decade of

reforms. Economists now expect the Indian and Chinese economies to be the world's

growth engines in the 21st Century.The economy has recorded a growth rate of 6%

per annum since 1990, reducing poverty by 10% points in the process. Industry is no

longer a State monopoly. Almost all sectors have been opened up to the private sector.

Import licensing has been abolished. Foreign exchange reserves have climbed rapidly

from USD 40 billion in March 2001 to USD 50 billion in March 2002 to 142 billion

in June of 2006.As with any growing economy the sectoral composition of GDP has

been changing with the services sectors showing an increased share and that of

agriculture declining to 20%. The fastest growing sector in the economy has been the

services sector, which now accounts 50% of GDP.

- 1 -


2/21

To become an economic power, technology and economy need to be considered in an

integrated manner rather than as separate entities. With the opening up of economy,

Indian industry needs to be globally competitive. Hence, what is required is a clear

vision of what can be achieved and how best to achieve it". The Indian Industry will

have to support the nation in acquiring economic leadership and progress by 2020.

The foundation of this leadership will depend to a great extent on the technological

excellence of the firms.

- 2 -


3/21

DEFINITION AND MEANING

A service is an act or performance offered by one party to another. They are economic

activities that create values and provide benefits for customers at specific time and

place as a result of bringing about a desired change in or on behalf of the recipient of

the service.

The term service is not limited to personal services like medical services, legal

services, professional services etc. according to marketing experts and management

thinkers the concept of service is a wider one. The term services are defined in

number of ways but not a single one is universally accepted.

Following are some important definitions:

According to DONALD COWELL,

Goods are produced, sold and consumed, where as services are sold and then

produced and consumed.

According to WIKIPEDIA,

In economics and marketing, a service is the non-material equivalent of a

good. Service provision has been defined as an economic activity that does not result

in ownership, and this is what differentiates it from providing physical goods. It isclaimed to be a process that creates benefits by facilitating either a change in

customers, a change in their physical possessions, or a change in their intangible

assets.

As per COMMUNICATION EXPERTS,

A type of task that is performed by a Service Element for a Service Consumer (client).

A Service is the actual product that a customer uses, such as a POTS line, cellular

line, Internet Protocol connection and so on.

- 3 -


4/21

CHARACTERISTICS

The distinct characteristics of services are mentioned below.

(1) Intangibility: Services are intangible we cannot touch them They are not

physical objects. According to Carman and Uhl a consumer feels that he has the

right and opportunity to see, touch, hear, smell or taste the goods before they buy

them. This is not applicable to services. The buyer does not have any opportunity

to touch, smell, taste the services

(2) Perishability. Service has a high degree of perishability. Here the element of time

assumes a significant position. If we do not use it today, it is lost forever. If labour

stops working, it is a complete waste. It cannot be stored. Utilised or unutilised

services are an economic waste. An unoccupied building, an unemployed person,

credit unutilised, etc. are economic waste. Services have a high level of

perishability.

(3) Inseparability: Services are generally created or supplied simultaneously. They are

inseparable. For an e.g., the entertainment industry, health experts and other

professionals they create and offer their service at the same given time. Services

and their providers are associated closely and thus, not separable.Donald Cowell

states 'Goods are produced, sold and then consumed whereas the services are sold

and then produced and consumed'.

(4)Heterogeneity: This character of services makes it difficult to set a standard for

any service. The quality of services cannot be standardised. The price paid for a

service may either be too high or too low as is seen in the case of theentertainment industry and sports. The same type of services cannot be sold to all

the consumers even if they pay the same price. Consumers rate these services in

different ways. This is due to the difference in perception of individuals at the

level of providers and users. Heterogeneity makes it difficult t


5/21

in the case of services, we do not find this. The users have only an access to

services. They cannot own the services. For e.g. a consumer can use personal care

services or medical services or can use a hotel room or swimming pool, however

the ownership remains with the providers.

(6) Simultaneity: Services cannot move through channels of distribution and cannot

be delivered to the potential customers and users. Thus, either the users are

brought to the services or providers go to the users. It is right to say that services

have limited geographical area. According to Carman and Uhl, "Producers of

services generally have a small size area of operations than do the producers of

items, largely because the producer must travel to get the services or vice-versa.

When the producers approach the buyer time is taken away from the production of

services and the cost of those service is increased On the other hand it costs time

and money for the buyers to come to producers directly Here the economics of

time and travel provide incentives to locate more service centres closer to

prospective customers, resulting in emergence of smaller service centers.

(7) QualityMeasurement: A service sector inquires another tool for measurement We

can measure it in terms of service level It is very difficult to rate or quantify total

purchase. E g we can quantify the food served in a hotel but the way waiter serves

the customer or the behavior of the staff cannot be ignored while rating the total

process.

(8)Fluctuating Demand: Generally, the services are fluctuating in nature During the

peak tourist season there is an abnormal increase in the demand of services

Therefore, while identifying the salient features of services one cannot ignore the

nature of demand For e g tourists go to hill stations during summer season

wherein public transport utilities are used substantially. This indicates thatflexibility is the important feature of service

- 5 -


6/21

COMMUNICATION SECTOR

Communication is the process of sending information to oneself or another entity,

usually via a language. Specialized fields focus on various aspects of communication,

and include Mass Communication, Communication Studies, Organizational

Communication, Sociolinguistics, Conversation Analysis, Cognitive Linguistics,Linguistics, Pragmatics, Semiotics, and Discourse Analysis.

The major chunk of communication sector is under mass communication which

includes TV, radio, telecom, entertainment sector and so on. In current scenario

telecom sector is contributing with IT sector on equal footing rather it can be said that

this sector is booming in INDIA

- 6 -


7/21

TELECOMMUNICATION

INTRODUCTION

Telecommunication is one of the prime support services

needed for rapid growth and modernization of various sectors of the

economy, the sector has grown rapidly in recent years, its growth

needs to be accelerated further. It is also one of the fastest growing

sectors in India and has immense potential for growth. The

Telecommunication activity is commercial in nature and people are

willing to pay for it. Of all infrastructure sectors, it is perhaps best

suited for private sector participation which would help to create

competitive environment and improve quality of services to

consumers.

Private investment is expected to play a major role

supplementing the efforts of the public sector in expanding capacity

and also providing competition with the system. In the area of

value-added services, the private sector would continue to play a

dominant role. The quantum of investment by the private operatorswould basically be determined by the rate of return on such

investments both basic as well as value-added services.

The Telecom sector has witnessed some fundamental

structural and institutional reforms in past decades. Telecom

equipment manufacturing was completely deregulated in 1991.

Value-added services (including cellular services) were thrown open

to private sector participation in 1992. Basic were opened to private

participation in 1994 by dividing country into 21 Telecom Circlesand allowing one private operator per Circle to compete with DOT.

An Independent Telecom Regulatory Authority of India was setup in

1997. A new policy for Internet Service Providers (ISPs) was

announced in 1998 allowing independent services providers to enter

the sector ending the earlier monopoly of VSNL.

Telecommunication has emerged as an important

driving force in a modern economy. Considering it a vital

importance, the govt. adopted National Telecom Policy Declaration

- 7 -


8/21

in 1994. The Telecom network in India is not small in absolute

terms. With over 12 million lines, it is the 14th largest in the world.

Yet it suffers from a terribly low penetration of 1.3 per 100

populations when the word average is over 10. More than 2.1 million

consumers are in queue waiting for Telephone line.

If the Telecom network in India is able to grow at even

the current annual growth rate of 20 % for the next five years, it

would rank among the six largest networks in the world. This is an

absolute terms would mean an addition of 30 million more basic

Telephone lines a number which is expected to be second only in

China. India has also expressed its first commitment to make large

investments in Value-added services by opening up this sector. All

this would place India among the leading countries in terms of

equipment purchases.

The Telecommunication sector has undergone a total

transformation throughout the world over the last 2 decades.

Technological advances have revolutionized the quality and range of

services available. Moreover, developments in sphere of information

technology, satellite-based Television broadcasting, new forms of

communication such as data communication through e-mail and

associated services through internet, are all blurring the definition of

what constitutes the Telephone services and transforming the way

people communicate and conduct business.

Clearly, a countrys ability to benefit from this revolution

depends heavily on the modernity of Telecommunications network.

Countries that can acquire and assess information on demand and

then integrate them usefully into there industrial structure through

modern telecommunications network is most likely to experiencehigh rates of growth. Large-scale use of information and

telecommunication technologies directly influences productivity,

cost effectiveness and competitiveness in industries with high levels

of product differentiations and low levels of unit prices.

An advanced telecommunications system is equally Imp

for services like banking, trading, retailing, transportation,

maintenance and insurance where information and real-time

communications are vital to the production process. A reduction in

- 8 -


9/21

costs of these services will directly enhance international

competitiveness within the entire economic system, since lower

marketing costs for manufacturing firms exposed to international

trade.

Following table gives the brief idea of the teledensity in

some developed or developing countries of the world:-

COUNTRY TELEDENSIT

Y

UK

Australia

USA

Brazil

China

India

Sri Lanka

Indonesia

Pakistan

Nepal

Bangladesh

143.13

126.18

116.43

42.38

42.32

10.38

9.57

9.17

4.42

1.70

1.56

- 9 -


10/21

KEY POINTS OF TELECOM SECTOR

Supply

Intense competition has resulted in prompt service to the subscribers.

However, smaller towns and villages continue to have waiting periods on

account of non-availability of adequate infrastructure.

Demand

Given the low penetration levels in the country and continuously falling

tariffs, demand will continue to remain higher in the foreseeable future

across all the segments.

Barriers to entry

High capital investments, older and well-established players who have a

nation wide network, license fee, continuously evolving technology and

falling tariffs.

Bargaining power of suppliers

Improved competitive scenario and commoditization of telecom services

has led to reduced bargaining power for services providers.

Bargaining power of customers

A wide variety of choices available to customers both in fixed as well as

mobile telephony has resulted in increased bargaining power for thecustomers.

Competition

The entry of fourth cellular player and commencement of WLL services

has resulted in intense competition in the bigger cities. Reducing tariffs

will hurt the new entrants, as they will be unable to recover their high

capital investments.

- 10 -


11/21

MARKET LEADERS AND THEIR SHARE IN TELECOM

SECTOR

Mobile telephony services are rapidly expanding and have

contributed approximately 941% to new subscriber additions in January

2006. The segments subscriber base grew 5.16% mom to 80.61mn. Of

the total subscribers added, almost 75% subscribers belonged to the

GSM segment and the rest were CDMA segment. This strong growth is

largely attributed to the lifetime validity cards launched by all major

operators.

Further, telecom sector is divided in three segments they are as

follow:

1. Global system for mobile communication (GSM)

2. Code division multiple access (CDMA)

3. Fixed wireless terminals (FWT)

- 11 -


12/21

DIVISION OF TELECOM LEADERS ACCORDING TO

SEGEMNTS

1. Global system for Mobile Communication (GSM)

GSM Market share GSM share of net additions

2. Code Division Multiple Access

Market share of CDMA operators CDMA share of net additions

3. Fixed wire Terminals (FWT)

Market share of private players in FWT Share of net additions of private players

- 12 -


13/21

CASE STUDY- BSNL

INTRODUCTION:

The BSNL Bharat Sanchar Nigam Ltd., is the largest telecom service provider of

India offering the full range of communication services basic land line, wireless

mobile(CDMA), Leased line circuits, Internet telephony, etc. catering to various

segments SOHO ( Small office Home office), Corporate, Individuals, Business

groups. In terms of the revenue yield it is found that 15% of the subscriber yields

more than 85% of the revenue and this group when distilled further who result in a 5

% of the customer population yielding 50 60% of the billing. In a competitiveenvironment it is this group of customers who are most vulnerable to be lured away

by the private operators (competitors). The following information has made an

attempts to define the various relationship markets present in the segment.

DEFINING THE MARKETING MIX - 7 Ps

The product is provision of communication service( Basic Telephony, mobile

( CDMA, GSM) technologies, Dedicated leased circuits, Voice over IP, Internet

services)

The price is based on the usage charges as per tariff apart from the installation cost.

Discounts are offered to heavy callers.

The place of delivery is the customer premises/location.

The promotion very limited till recently. However now logos, brands names for

different services, slogans (Connecting India) etc have been coined. Very recently

advertisement in the print media as well as television commercials has been released.

(www.bsnl.co.in)

The people have a key role to play since it is a service sector. However this is the

weakest link in the marketing mix since the monopoly attitudes have hardly changed

at the ground level.

- 13 -


14/21

The process is another one of the neglected Ps. A lot of corrective processes have

being provided for after the complaints by line up of escalations, meeting the senior

officials etc. Yet the preventive/ proactive processes are not sufficient/ (work in

progress).

The physical evidence (being a service sector) depends on the maintenance of front

end staff dealing with customer care, the office premises and facilities available there,

toll free numbers, call centers.

The main problem is faced by the company is that it cannot handle its existing

customers in an right manner like partly customers are satisfied with the service and

partly are still need to be satisfy, this can be done only through taking customer care

as main area while segmentation.

- 14 -


15/21

CUSTOMER CARE & SEGMENTATION:

Apart from the marketing mix described above the steps taken towards customer care

can be taken through dividing them in different groups

These may be grouped into preventive processes, empowering the grass root level,

work in progress which are very critical in customer service/ improving service

availability level, Bill payments made easy and some measures quite frivolous as

application form being made free.( A typical example of the monopoly hangover).

The Company has identified the high callers or those who make calls worth more than

Rs.5, 000/- per month as the high calling segment. This kind of segmentation purely

based on the revenue yield alone results in a heterogeneous group of high calling

individuals, companies, corporate with inter city presence. Neither has this group been

refined further for preferential differentiation nor are any of the measures specified in

the customer care specifically targeted towards this groups. Of course the system

corrections undertaken would benefit the high callers as well. Hence apart from

providing certain billing discounts or special meeting time the issues cannot be very

clearly addressed.

Classification of customers (Jones and Sasser Model (1995) )

If one were to use this model for classifying this segment further it would be seen that

about 10% would be in the Hostage category. They are vocal, corner the available

resources for servicing and are complaining in nature. And the experience of the

BSNL managers is that this category normally contributes less to the revenue pool

and hence would not be attractive to the competition. A majority about 60%of the

segment would be in the Mercenary category, ready to make a shift, about 20%

would be in the defector and terrorist segment (this would include the media and

think tank users of the communications) would be make use of every opportunity to

spread the negative image and a loyal group of about 10% who are satisfied and stay

with the company through the problems.

BSNL should reward the loyal group by giving strength to their voice, try to

neutralize the impact of the defector terrorist group using pressure strategy and try to

move the Mercenary to the Loyal group. It should also know how to shake off the

hostage group without explicitly stating so.

- 15 -


16/21

RELATIONSHIP MARKETS APPLIED TO THE CASE

(Christopher models)

- 16 -

INTERNAL MARKETS

Synergizing the employee s

commitment to the corporate mission/

goals/objectives is vital on account of

transition from monopoly to

competitive environment

CUSTOMER MARKETS

Key Market in the spectrum and remains

the primary focus. Efforts in Customer

retention and make them move up the

loyalty ladder

EMPLOYEE MARKETS

Key to providing high quality

staff oriented in customer care.

SUPPLIER

MARKETS

Have a role to play in

view of predictability trap

in technologies.

INFLUENCERMARKETS

Government policy makers,

regulators, consumer courts

impact external environment

REFERRAL MARKETS

Media mainstream/

communication related.,

Telecom user groups and

forums which influence

thinking.


17/21

RECOMMENDATIONS FOR CHANGE

1) The High calling segment is distilled further on the basis of revenue yield and

country wide presence.

They should be given classified as Platinum, Gold, Silver, classic groups based on

their total countrywide billing and these member subscribers should be eligible for

country wide facilities. The senior officers, frontline and other staff should be

educated about the value of these groups and they should be provided with premium

service.

2) The requirements should be studied ( guaranteed uptime of service, fault

attendance within the stipulated time, 24x 7 service, integrated billing, single point

contact or Key Accounts Manager, etc) and addressed.

3) Being a public company major problem can be of over staff which need to be cut

off but instead of cutting the staff company can use its some employees in marketing

their product as they working in the company since many years they have more

knowledge about the company and the services which company offers.

4) The provision of total solutions still remain a myth as the customer has to still runbetween various wings ( Circuits, Basic phone, Mobile, Internet, Long distance) for

their communication needs. Nodal points for interacting should be provided. This

would actually help the company sell more as a corporate group having Leased

Circuits will also need land lines for office/ residences, mobile communication needs

for their officers and sales staff etc.

- 17 -


18/21

INTERVIEW WITH A.K. SINHA, CHAIRMAN AND

MANAGING DIRECTOR.

A.K. SINHA, CMD of BSNL.

A.K. Sinha, who served as Senior Deputy Director-General (Switching) in Bharat

Sanchar Nigam Limited's (BSNL) corporate office before assuming charge as its

Chairman and Managing Director (CMD) in September 2004, has brought his

knowledge of various telecom switching systems and other important aspects of

telecommunications to India's largest telecom service provider.

Sinha joined the Indian Telecommunication Service in 1969 and has held the posts of

General Manager (Development) in Mahanagar Telephone Nigam Limited's (MTNL)corporate office and in MTNL, Delhi, and Chief General Manager of Andaman and

Nicobar Islands and Jharkhand Telecom Circles.

He has experience in the installation and commissioning of various switching systems

in the networks of Calcutta and Delhi Telephones. As Divisional Engineer

(Installation), he was instrumental in commissioning the first C-400 type Japanese

telephone exchange in Calcutta Telephones and thereafter in MTNL, Delhi. He

worked for three years in the Telecom Department of Nigeria.

- 18 -


19/21

How do you see BSNL's future as a leader in the telecommunications sector? In

terms of growth, what is the key factor behind the entity's fiscal result for the

previous year?

BSNL holds the top position in the telecom sector and will continue to do so. Wehave the unmatched footprints of our service spread across the country. Being one of

the largest public sector enterprises, BSNL has always delivered targets taking into

account the social and regional goals. Our last fiscal results give a clear picture of our

continuous growth despite fierce competition. We are proud of our impressive growth

of over 50 per cent. I believe over a period of time we have improved the delivery of

our services, which is the most functional factor in awarding us significant growth.

Can you detail the steps being planned by BSNL to expand its service from basic

to mobile telephony to broadband?

Despite the impressive strides [made in the sector] over the past few years, India has

low teledensity compared to many other countries. Hence, we see a large potential in

various States. The government has decided to double the teledensity from 10 per 100

people to 20 in the next three years. Public sector telecom units have been given the

mandate to double their own networks. So, we are in the process of doubling the

capacity and penetrating areas that have not yet been covered.

From covering all district headquarters, we plan to spread our footprints to all block

headquarters. A 60 million GSM [Global System for Mobile Communications]

equipment acquisition tender is already on as part of mobile telephony expansion

plans. BSNL is also expanding its base in broadband services and hopes to add a

million subscribers every year, changing the country's Internet usage. Also, BSNL's

network is expected to reach all villages by 2007.

What are BSNL's landmark achievements in the current year?

It has broken all its past records by registering an impressive growth of 55.6 per cent

in Direct Exchange Line. It registered a 9 per cent rise in its operative income. Apart

from this, BSNL has added a large number of consumers, much more than its target,

to its cellular and basic subscriber base and is doing remarkably well in broadband

and village telephony.

In the growing competition among service providers, how does BSNL plan to

stay in the top position?

- 19 -


20/21

BSNL is the leader in all service areas that it operates. Whether it is basic telephony

or cellular or CDMA-based telephony or Internet. As I said earlier, we have an

expansion plan for 60 million lines in mobile telephony alone.

In another three years, when the country's teledensity reaches 20 per 100 people,BSNL will have a 50 per cent market share. The rest of the players together will share

the remaining market.

With our reach and footprint and expansion plans, we will still hold the leadership

role in all areas of telecom service despite fierce competition in the market.

There appears to be a fair reduction in last year's waitlist. What steps are

planned to clear the wait list?

In fiscal 2005-06, BSNL reduced the waitlist from 16.20 lakhs to 12.69 lakhs in both

the landline and mobile sectors. As per our expansion plan, we are qualitatively

improving our network with the introduction of state-of-the-art technology to meet the

requirements. The 60-million expansion plan is aimed at clearing the waiting list as

well as adding new areas and population to our network.

What is your expansion plan for the current fiscal?

Apart from the ongoing one, we plan to add 20 million GSM lines this year. Once the

roll-out of the 60-million GSM tender happens, we will be able to launch 3G mobile

phones. We hope to add a million broadband subscribers to our network. We are also

taking steps to arrest the surrender of phones in our network.

Although there is a net increase in subscribers, we are launching a series of measures

to make basic telephony more attractive. Above all, we plan to improve the quality of

our services and our profits.

This year we expect to emerge as the largest mobile telephony operator in the country

even in numbers, although we are not present in the two largest areas of operations -

Delhi and Mumbai

- 20 -


21/21

BIBLIOGRAPHYwww.techtree.com

www.bsnl.co.in

www.indiainfoline.com

www.equitymaster.com

www.vedamsbooks.com

www.mouthshut.com

www.wikipedia.org

Books

Frontline India Magazine
http://www.techtree.com/http://www.bsnl.co.in/http://www.indiainfoline.com/http://www.equitymaster.com/http://www.vedamsbooks.com/http://www.mouthshut.com/http://www.wikipedia.org/http://www.techtree.com/http://www.bsnl.co.in/http://www.indiainfoline.com/http://www.equitymaster.com/http://www.vedamsbooks.com/http://www.mouthshut.com/http://www.wikipedia.org/

Date post:	14-Apr-2018
Category:	Documents
Upload:	s-syed-vazeer-ahamed
View:	238 times
Download:	0 times

Ssm Project

Documents