Strategic Analysis Rc

7/27/2019 Strategic Analysis Rc

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Strategic analysis

OfReliance

communications


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Reliance communications

1. COMPANY INFORMATION

Reliance - India's largest business house

Reliance Anil Dhirubhai Ambani Group, an offshoot of the Reliance Group founded by

Shri Dhirubhai H Ambani (1932-2002), ranks among Indias top three private sector

business houses in terms of net worth. The group has business interests that range

from telecommunications (Reliance Communications Limited) to financial services(Reliance Capital Ltd) and the generation and distribution of power (Reliance Energy

Ltd).

RelianceADA Groups flagship company, Reliance Communications, is India's largest

private sector information and Communications Company, with over 40 million

subscribers. It has established a pan-India, high-capacity, integrated (wireless and wire

line), convergent (voice, data and video) digital network, to offer services spanning the

entire infocomm value chain.

Other major group companies Reliance Capital and Reliance Energy are widely

acknowledged as the market leaders in their respective areas of operation.


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What Reliance is all about?

Reliance Energy Ltd.

Reliance Mutual Fund

Harmony

Reliance Communications

Reliance Life Insurance

Reliance Anil Dhirubhai Ambani Group

Reliance General Insurance

2. BUSINESS DESCRIPTION

RELIANCE COMMUNICATION

2.1 OVERVIEW

A dream come true

The Late Dhirubhai Ambani dreamt of a digital India an India where the common man would have access to

affordable means of information and communication. Dhirubhai, who single-handedly built Indias largest private

sector company virtually from scratch, had stated as early as 1999: Make the tools of information an d

communication available to people at an affordable cost. They will overcome the handicaps of illiteracy and lack of

mobility.

It was with this belief in mind that Reliance Communications (formerly Reliance Infocomm) started laying 60,000

route kilometers of a pan-India fibre optic backbone. This backbone was commissioned on 28 December 2002, the

auspicious occasion of Dhirubhais 70th birthday, though sadly after his unexpected demise on 6 July 2002.

Reliance Communications has a reliable, high-capacity, integrated (both wireless and wire line) and convergent

(voice, data and video) digital network. It is capable of delivering a range of services spanning the entire infocomm

(information and communication) value chain, including infrastructure and services for enterprises as well as

individuals, applications, and consulting. Today, Reliance Communications is revolutionizing the way India

communicates and networks, truly bringing about a new way of life.

2.2.1VISION:


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We will leverage our strengths to execute complex global-scale projects to facilitate leading-edge information and

communication services affordable to all individual consumers and businesses in India.

We will offer unparalleled value to create customer delight and enhance business productivity. We will also generate

value for our capabilities beyond Indian borders and enable millions of India's knowledge workers to deliver their

services globally.

2.2.2 Indias leading integrated telecom company

Reliance Communications is the flagship company of the Anil Dhirubhai Ambani Group (ADAG) of companies. Listed

on the National Stock Exchange and the Bombay Stock Exchange, it is Indias leading integrated telecommunication

company with over 40 million customers.

Our business encompasses a complete range of telecom services covering mobile and fixed line telephony. It

includes broadband, national and international long distance services and data services along with an exhaustive

range of value-added services and applications. Our constant endeavour is to achieve customer delight by enhancingthe productivity of the enterprises and individuals we serve.

Reliance Mobile (formerly Reliance India Mobile), launched on 28 December 2002, coinciding with the joyous

occasion of the late Dhirubhai Ambanis 70th birthday, was among the initial initiatives of Reliance Communications.

It marked the auspicious beginning of Dhirubhais dream of ushering in a digital revolution in India. Today, we can

proudly claim that we were instrumental in harnessing the true power of information and communication, by

bestowing it in the hands of the common man at affordable rates.

2.2. PRODUCT LINE


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CHART: 1


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Fig: 1

Reliance uses C.D.M.A. ( Code Division Multiple Access ) technology for its wireless

communication service which is used for Mobile as well as Fixed line services. C.D.M.A.

is known for better voice quality and higher data throughput across the air interface at

low operating cost .

2.1.1 RELIANCE MOBILE

Fig: 2


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POSTPAID

FEATURES OF POSTPAID

a)1 INDIA- Now call any phone, anywhere in India for just ONE RUPEE per min.

b) My Plans- Presenting a range of Postpaid plans designed to fit every lifestyle .So go

ahead get on to Local gossip , chat for hours on STD , get close to your group or jest get lost in

new horizon.

c) Joy Plans- Reliance Mobile postpaid is a joy to use. Our postpaid plans help you save on

costs. Take your pick from a wide choice of plans with economical tariff rates, according to your

use and budget.

d) On-net Talk time Pack- Get 1,000 minutes of FREE talk time. Thats right. Now, you can

enjoy the first 1,000 minutes of calling to all Reliance mobiles and fixed wireless phones and

terminals (FWP/T) in your circle, absolutely free!

e) Get Started Kit- Do not be tied down by a particular handset or phone number. Now set

yourself free with the new Get started kit from Reliance Mobile.

f) Bill Payments- Introducing convenient bill payments. Now pay your bills directly from your

credit card or bank account, and save precious time.

g) INMARSAT- Save up to 70 per cent on calls to satellite phones. Reliance exclusively offers

its subscribers significant savings up to 70 per cent depending on the type of terminal and

the location for voice calls made to any Inmarsat number.

PREPAID

FEATURES OF PREPAID

a) Prepaid Tariffs- Choose the tariff plan that suits you needs.


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b) E-Recharge- Now you can recharge your prepaid with any amount, from Rs.10 to

Rs.10,000. So don't let your budget stop you. Choose a recharge value that suits you and stay

mobile.

c) 1INDIA- Introducing 1 INDIA recharge options of 1 day, 1 week and 1 month validity.

d) Get Started Kit- Gone are the days when you were bound by a particular handset and a

certain phone number. You can now set yourself free with the new Get Started Kit from

Reliance Mobile.

e) Chat & Play - Now you can recharge your prepaid with any amount, from Rs.10 to

Rs.10,000. So don't let your budget stop you. Choose a recharge value that suits you and stay

mobile.

Reliance HELLO

Reliance landline:

Fig: 3

FEATURES

A complimentary bouquet of features

a) Next-Gen caller ID: Reliance Landline displays the name and/or number of a waiting caller

while you are in the middle of a conversation. It allows you the flexibility to choose between two

calls or switch from one caller to another.


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b) Mobile phone features: Now enjoy all the interactive benefits of a mobile phone. Store and

recall numbers from the phone book, check the history of missed / dialed / received calls.

Whats more, you can also use the history menu to make fresh calls.

c) Delayed hotline: You can program your Reliance Landline to automatically call a predefined

number by lifting the receiver and holding it for seven seconds.

d) Navigation keys: Using the navigation keys on Reliance Landline you can activate phone

features like delayed hotline, line locking, etc now you need not remember complicated

feature codes and cumbersome procedures. You can also set your preferred ring tone, ringer

volume and LCD contrast.

e) Remote phone management: You can lock or unlock the STD/ ISD facility or hotline settings

on your Reliance Landline, remotely from anywhere, from any tone / DTMF phone.

Plus, you get host of other interesting features like speaker phone, 3-way conferencing, quick

dialing, and many more.

Fixed Wireless Phone

Fig: 4

Benefits:

a) No wires attached

Get on the wireless connectivity bandwagon. And straight away become immune

to cuts in the cable, rains etc. Carry the set along with you when you move from one

room to another or when you shift your home/office.


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b) Wireless Internet (Reliance Net connect)

The FWP has an in-built modem for high speed internet connectivity. Surfat speeds up

to 115 kbps. Whats more, you do not need a separate ISP connection for operating the

set.

c) Mobile Phone's Features

Enjoy all the features of a mobile phone: SMS, In-built caller line identification, voice

mail, 99-number phone book, speaker phone, a choice of many ringtones, etc.

d) City Mobility

You can use your FWP anywhere within your city and still receive and make calls, at no

extra cost.

FIXED WIRELESS TERMINAL(FWT)

Fig: 5

Fixed terminal, limitless benefits

BENEFIT

e) Great SavingsUnbelievably low call rates. Substantial savings on ISD calls.

f) Zero Effective Rentals

Value of free calls almost equivalent to monthly plan charges.


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g) Parallel Connection Facility

Two voice ports to connect two telephone instruments to be used as parallel connections.

h) No Wires Attached

Wireless connectivity-immune to cable cuts, rains etc. Carry it along when you shift your

home/office.

i) Wireless Internet (Reliance Net connect)

In-built modem for high speed Internet connectivity at speeds of upto 115 kbps. No separate

ISP connection required.

j) State-of-the-art features

Three-way Call Conferencing, Speed Dialing, Hotline, Call Restrict/Call Lock, Call Wait/Call

Hold, Call Divert, Alarm and Caller Line Identification enabled.

Reliance broadband.

Fig: 6


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Fig: 7

2.3 COMPETETORS

2.3.1BSNL

Fig: 8

The Grand Daddy of all Operators, The State owned B.S.N.L. was the first to launch

P.C.O. service across the country under the guidance of Sam Pitroda who

revolutionized the telecom industry in India. Besides its nationwide presence, it enjoyed

the first mover advantage and had no competition for almost a decade. The advent of


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private operators made BSNL pull up its socks but still has an edge over others in the

market.

2.3.2TATA INDICOM

Fig: 9

Pay Telephony Business Unit (PTBU) is a strategic business unit of Tata Teleservices Limited

and has been the first private and branded player in the payphone industry in the country. It

provides its services under the brand name of Tata. Starting with 5 circles in 2000 it has a

nationwide presence in 20 circles and over 200 towns across the country today. Tata also uses

C.D.M.A. wireless technology as used by Reliance but with a much smaller infrastructure which

is concentrated in only a few states like Maharashtra and Andhra Pradesh.

2.3.3AIRTEL

Fig: 10

Airtel, the Basic phone service of Bharti emerged as the first private competitor in the

basic phones market. Though using Landline phones (copper-wire circuitry) the


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service turned out to be a welcome break from the inefficient government owned

operators.

3. STRATEGIC ANALYSIS OF THE COMPANY

3.1.ANSOFFS MATRIX

The Ansoff product-market matrix helps to understand and assess business

development strategy. It has two dimensions, products and markets. Four different

growth strategies can be formulated and any business can choose which strategy to

employ, whether purely or as a mix. The strategies are

Market Penetration

Market Development

Product Development

Diversification

Reliance FWT PCOs can be categorized as product development. Product development

involves selling new products in existing markets.


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TABLE: 1

MARKET

PENETRATION

Penetrating the market for Product A, B,C, D wherever leadership is

there.

PRODUCT

DEVELOPMENT

Introduction of new

facilities, customer friendly

service, attractive

MARKET

DEVELOPMENT

Introducing the Product B, C, D in newer

markets(New territorial region

within the country)

DIVERSIFICATION

The company may try providing

consultancy for Telecom infrastructure

creation in developing countries in Middle

East,


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3.3 PEST ANALYSIS

TABLE: 2

The PEST analysis is a useful tool for understanding market growth or decline, and as

such the position, potential and direction for a business. A PEST analysis is a business

measurement tool. PEST is an acronym for Political, Economic, Social and

Technological factors, which are used to assess the market for a business or

organizational unit.

POLITICAL Permission of FDI (100%)

New Telecom Policy 1999

Recommendations Of TRAI for

growth in WLL phones

Policy changes for public-private

partnerships

Unified Access Licensing Scheme

ECONOMICAL Indias Per Capita holds higher tele-

density potential

Increasing demand for telephony

strong association between service

sector growth and telecom

development

SOCIAL High purchasing power of people.

new sources of employment

welfare enhancing consequences

improved access in the fields of

education, healthcare,

governance

TECHNOLOGICAL

growth of telecommunications

infrastructure

shortage of telephone lines and

high telephone charges

Last Mile Connectivity

Technological innovation in the

form of CDMA and 3G.


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3.4 SWOT Analysis

THREATS

Pitted against well-entrenchedplayer like MTNL / BSNL whichcontrol approximately 85% of PCO

market in metros, 90% of PCOmarket in urban, semi-urban areas

and nearly 100% in rural areas. Entrance of new players like Bharti

and TATA Teleservices

Perceived saturation in PCOmarket.

TRAI's impending regulations

STRENGTHS

Highest commission structure (RIL-30%, MTNL 15-18%) amongnational long distance operators.

State of art wireless technology. Hassle free installation. No security deposit Brand name Reliance. Sales backed by extensive customer

care and after-sales services. Prepaid PCO system, therefore,

hassle free billing mechanism

OPPURTUNITY

Current tele-density of India is only9.15%. 90.85% of people stilldepend on PCOs for their

communication needs. The compound annual growth rate

of PCOs is 25%.

Currently there are 16.55 lacs PCOsin India, waiting to be churned.

Customer service standards of itsmain competitor MTNL / BSNL is

not very satisfactory

Problems of billing in post-paidsystems

WEAKNESS

Hesitation among PCO owners inadopting relatively new technology inlandline segment.

Resentment among business class dueto billing problems with RIM.

Connectivity problems in some remote,rural areas of Bihar, Uttar Pradesh.

Callousness on the part of LBA willeffect customer satisfaction

INTERNAL ASSESSMENT OF ORGANISATION

SWOT ANALYSIS

EXTERNAL ASSESSMENT OF ORGANISATION

CHART- 2


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4. ANALYSIS OF COMPANY STRATEGY

4.1 PORTERSs FIVE FORCE MODEL

CHART: 3

SUPPLIER POWER

High Competition

Concentration of Suppliers

THREAT OF SUBSTITUTES

High (Price Sensitive Market)

High Switching Costs

RIVALRY

Moderate High Switching

CostsrowthLow Exit Barriers

High Switching Costs

BARRIERS TO ENTRY

High Initial Costs

Government Regulations

BUYER POWER

High Bargaining Power


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5 ANALYSIS OF COMPETITIVE POSITION

5.1 BCG MATRIX

BCG matrix is based on the product life cycle theory that is used to explain how different

products should be prioritized in a companys portfolio. It has two dimensions: market

share and market growth. The two dimensions are used to create a quadrant matrix in

which all the products in a companys product portfolio are categorized into the four

categories. This analysis helps avoid a strategy mistake made frequently that is of

measuring the performance of different products on the basis of a single criteria e.g.

generic growth rate. This framework assumes that an increase in relative market share

will result in an increase in generation of cash.

5.1.1 STARS

These are high growth products which have a large market share in fast growing

industries. In case of reliance Communications its FWT services can be called stars

since they have a share of 21% of the market and are growing at the rate of 9%. This

service contributes 18% of total revenues and justifiably accounts for a large percentage

of total investment. Continuous investments should be undertaken by the company to

expand market share of WLL services because this could lead to them becoming cash

cows for the company in the future.

5.1.2 CASH COWS

These are the products which are leaders in markets which are slow growing but the company

has a large share of the market. As a result these products generate large amounts of cash and

profits but because of the slow rate of growth of the market investments in these products


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should be kept low. These products are the foundation for a company and provide the cash

required to turn question marks into market leaders. In context of Reliance its cellular services

are growing at 4% p.a., are the cash cow which form the foundation of the company.

5.1.3 DOGS

These are the products in which the company has a small share in a slow growing market. As a

result their contribution to overall revenues is limited and they can turn into cash traps because

of money tied up in a business which has limited potential. Therefore the company should be

beware of expensive turnaround plans and should try to divest in these products. In case of

reliance its fixed line services can be called the dog for the company.

5.1.4 QUESTION MARKS

These are the products that are growing rapidly and thus consume large amounts of cash, butbecause they have a low market share they dont generate much cash. But if proactive

measures are not undertaken to increase the market share they degenerate into dogs after

years of cash consumption. Therefore the company should aim at either investing heavily to

increase market share or sell off to generate whatever cash it can. In case of Reliance there are

a number of products which can be put into this category for example ISPs and LPCs and WLL

PCOs.

A major limitation of this model is that it assumes market growth rate to be the only factor of

industry attractiveness and relative market share to be the only indicator of competitive

advantage. Therefore it ignores the strategy where a business might use a dog to gain a

competitive advantage in other business units.


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TABLE: 3

6. STRATEGIES ADOPTED

6.1 SEGMENTATION

6.1.1 Geographic

Geographic segmentation divides markets into different geographical units. There are

four main cellular segments

Metro the metropolitan areas of Mumbai, Delhi, Calcutta, and Chennai are under this

category of telecommunications circles and continue to lead.

STAR

Fixed Wireless phone

Fixed Wireless Terminal Phone

QUESTION MARK

PCOs

ISP and Broadband Services

GSM cellular service.

CASH COWS

Cellular Services Reliance India Card

Recharge Coupons

DOGS

Fixed Wire line Phones


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Category A circles mostly analogous to the states of India, comprising Andhra

Pradesh, Maharashtra, (category a leaders) Gujarat, Karnataka and Tamil Nadu.

Category B circles mostly analogous to the states of India, comprising Uttar Pradesh

(east and west), Punjab (category B leaders), Rajasthan, Haryana, Kerala, Madhya,

Pradesh, and West Bengal.

Category C circles mostly analogous to the states of India, comprising Bihar, Orissa,

North-East Assam, Jammu and Kashmir, Himachal Pradesh, Andaman and Nicobar

Islands

In context of Reliance PCOs, the company is specifically targeting non metros,

highways, commercial areas in metros, small townships and low income clusters in

urban areas for e.g. urban villages and industrial areas.

6.1.2 Demographic

In demographic segmentation, the buyers are divided into different groups on the basis

of variables such as their age, family size, family life-cycle, gender, income, occupation,

education, religion, race, generation, nationality and social class. Consumer wants,

preferences and usage rates are often associated with demographic variables. The

relevant categories that can be identified for Reliance PCOs are senior citizens,

unemployed youth, small shop owners, kirana stores and existing PCOs owners

6.2 TARGETING

Reliance Communications current targeting approach is a mass-marketing method that

tries to address the needs of the entire market and widen its subscriber base. In mass

marketing, the seller engages in mass production, mass distribution, and mass

promotion of one product to all its buyers. Mass marketing creates the largest potential


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market, which leads to the lowest costs, which in turn can lead to lower prices and

higher margins.

Reliance successfully implemented this strategy and while it did help Reliance in expanding its

customer base, its strength and spread remained limited to the Category C regions (See table

2). The apparent popularity of Reliance Communications in this category is due to its positioning

in the market as a Common Mans Phone. Dhirubhai Ambani had dreamed of Roti, Kapda,

Makaan aur Mobile which clearly reflects the strategy, adopted by Reliance. The low-tariff

plans, low fared prepaid and postpaid offers have brought Reliance close to the price conscious

people.

They focus on few key aspects while promoting -

Next Generation technology

Widely available (Able to connect 90% of Indias population)

Low tariff rates to attract a wide customer base

Range of handsets offered with Reliance connections (Black and white handsets, colour

handsets with camera, video camera phone, camera watch phone, PDA colour phone)

Special offers for making calls to the Gulf, USA and Canada

6.3 POSITIONING

Positioning can be defined as the act of designing the companys offering and image to

occupy a distinctive place in the mind of the target market. The positioning of the target

has to be such that a majority of the target market segment identifies with it.


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7. 4 PS OF MARKETING

7.1THE FIRST P PRODUCT

The action plan of launching a new product includes a decision on the four Ps of

product, place, price, and promotion as well as the three Ps of services namely people,processes and physical evidence. Also it is not a pure product or a pure service that is

being marketed. In terms of product Reliance is offering tangible good with

accompanying services, with the handsets being tangible goods and their mainstay

being the services. Now we can make this tangible on the basis of place, people, price,

and communications material.

Historically the thinking was that a good product will sell for itself. However there are no

bad products anymore in todays highly competitive markets. Therefore its inevitable

now for a company to ignore on the various aspects of a product. We have tried to

analyze the product of Reliance Communications i.e. WLL on the basis of following

parameters:

Quality

When we talk about the quality of any telecom service we basically focus on following

aspects:


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Voice quality-

The Voice quality in CDMA based Networks is much superior as compared to GSM

Networks. Therefore Reliance WLL has a technological edge over its GSM

counterparts.

Data Transfer Rate-

The Data rates throughput available to a WLL user using a 3G handset, being provided by

Reliance is much higher than the data rates provided by the GSM Operators using GPRS, a 2.5

G technology inferior to Reliance 3rd Gen technology. So for a layman, it may mean that

watching a Video Clipping or a multimedia application on a CDMA Handset will be much more

fun as compared to the present day GPRS Services

Strong Optical Backbone-

Reliance, being an operator with Pan India presence, and possessing a strong optical Backbone

spread across the country, is expected to deploy and provide next generation telecom services

quicker and cheaper than any other private operator in the country.

APPEARANCE

Appearance and design, however, still remains the user's first turn-on trigger. Reliance WLL

phone come as a refuge to the market as they are targeting the various segments of the society.

The low end model starts for as low as Rs. 2000 and the range goes up to Rs. 30000. The

various phone models available are quality phones being manufactured by the top firms like

Nokia, Motorola, Samsung and LG etc.

BRAND

Reliance Communications is the outcome of the late visionary Dhirubhai Ambani's (1932-2002)

dream to herald a digital revolution in India by bringing affordable means of information and


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communication to the doorsteps of India's vast population. Reliance Communications Ltd., an

Anil Dhirubhai Ambani Enterprises group company, is India's largest private information and

communications services provider, with a subscriber base of over 11 million. Reliance

Communications has established a pan-India, high-capacity, integrated (wireless and wire line),

convergent (voice, data and video) digital network, to offer services spanning the entire

Communications value chain.

SERVICE

Reliance Communications network is a pan India, high capacity, integrated (wireless

and wire line) and convergent (voice, data and video) digital network, designed to offer

services that span the entire Communications value chain - infrastructure, services forenterprises and individuals, applications and consulting. The network is designed to

deliver services that will foster a new way of life for a New India.

SUPPORT

The major focus for any company in the service sector is how satisfied their customer is

with the service being provided by the company. The service doesnt end with by selling

the phone to the customer but also solving the concern, difficulties, queries and

complaints of the customer. Reliance Communications has some innovative features

like R-World apart from the usual customer support services being provided by other

telecom players. Reliance has a 24 by 7, 365 days a year, customer service in ten regional

languages to ensure consumers have a smooth experience.

7.2THE SECOND P PRICE

How much are the intended customers willing to pay? Here we decide on a pricing strategy - do not let

it just happen! Although competing on price is as old as mankind, the consumer is often still sensitive

for price discounts and special offers. Price has also an irrational side: something that is expensive

must be good. Permanently competing on price is for many companies not a very sensible approach.


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Reliance India Mobile has revolutionized the Indian mobile telephony market through

unique pricing models. In fact, thanks to Reliances innovative pricing, tariffs in India

have fallen across the board by over 70 per cent, making it the world's lowest-cost

mobile market today. India was the world's highest cost market in the nineties.

As of now, RIM has concentrated in terms of its pricing in the economy to medium value

segment. The products with high and good value have not been very successful. But

that was partly because at that time, reliance was more than just a service provider,

dealing in handsets and post paid plans and selling customized solution. Now, with a

maturing market, as people are moving to upgrades reliance seriously needs to look

into the high value segment. By high value we mean high quality and high price

segment. A high service in terms of not just the value adding features but also the

quality of your basic services. Airtel has projected itself as a service provider with

superior network coverage. Reliance has had issues in the past with its billing and also

its traffic congestion which has left many customers complaining. And as they look to

expand into new segments that are more life style focused and brand conscious,

negative word of mouth publicity is the last thing they would want. Side by side, they

also need to look for the latest offerings in the market to lure and retain customers. The

first movers advantage they had accrued is now eroded as the competitors have come

out with similar features and services like internet surfing, cricket scores and multimedia

content in both GSM as well as CDMA segments. So reliance needs to heavily invest in

developing new and unique differentiating features and products to project itself as the

better option to the upwardly mobile youth. Like Airtels Blackberry initiative. Even

though Airtel is fighting reliance bitterly in terms of the least priced services to the

consumers, having a high end limited sales volume product in its range gives it a

superior image because of its aspiration power in the minds of the affluent youth.

In terms of the market pricing is concerned, RIM is faced with a unique situation.

Although it is aiming for market penetration, the usual low pricing strategy will not be

very successful as all the rivals are offering services at a very competitive rate and

drastic undercutting will only lead to erosion of profit margins. Also the market is

growing rapidly and further lowering of prices will not fuel the growth further.


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SCHEMES:

TARIFF PLAN FW

150

FW

290

FW

02

FW

03

FW

04

FW

600

RENTAL(RS./MONTH) 150 290 500 1000 1500 600

CLIP CHARGES 50 - - - - -

FREE CALL UNITS 50 150 450 1000 1750 2000

FREE

TALKTIME(RS/MONTH)

60 180 495 1000 1575 600

RATE PER CALL UNIT

RS/CALL UNIT

1.20 1.20 1.10 1.00 0.90 0.30:TO RELIANCE

1.10:OTHERS

SECURITY FEE 2800 2800 2800 2800 2800 2800

TABLE: 4

Amount of sales (per month): FWP/I Phone

AREA FWP(SALE IN UNIT) I FONE(SALE IN UNIT)

MAYUR VIHAR 25 20

ADHCHINI 20 20

GREEN PARK 30 25


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SAKET 25 25

PREET VIHAR 25 20

TABLE: 5

7.3THE THIRD P PLACE

Available at the right place, at the right time, in the right quantities? Some of the

revolutions in business have come about by changing Place. We have focused on

different attributes related to reliance place strategy in successfully removing the

bottlenecks associated with the timely availability of its products through a nationwide

network of Web Worlds.

7.3.1 LOCATIONS

Reliance Web World is a countrywide network of retail outlets offering a host of state-of-

the art communication and information services along with food and beverages in a

modern ambience. It probably is also the world's largest network of public access

broadband centre. A total of 240 Web Worlds are operational in 111 cities and towns

across India. The number of Web Worlds in this network will further increase to cover

nearly 700 towns and cities. All Web World outlets have three components: Customer

Convenience Centre, Broadband Centre and Gourmet Caf.

7.3.2CHANNEL MEMBERS-

The following are the desirable features for sales people:

Competence First and foremost is the competence of the sales force. Reliance has had

billing problems in the past and competent handling of all customer

complaints will be of utmost importance.


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Courtesy RIM has exclusive retail outlets, which can be monitored, but newer

expansion plans will mean selling through other retailers for prepaid

cards.

Credibility This is a major issue as the previous policies were not very transparent

and this has generated a negative perception for Reliance.

Responsibility Problems of area distribution between different franchises

Communication Continuous communication is needed for promoting newer policies and

promotion schemes. Higher flexibility given to franchisees in offering

customized plans.

7.3.3DISTRIBUTION CHANNEL

Reliances FWT PCOs are distributed through a network local business associates

(LBA). Every district is divided into a number of zones each of which is headed by a

zone PCOs lead. In every zone there is a point of sales, the LBA who acts as the

interface between the company and the local PCOs operator. The LBA gets in contact

with existing and potential PCO owners and after they decide to take a PCO

connection from Reliance, he helps to arrange for the entire package which consists of

the phone instrument, FWT, billing machine, telephone booth and patch panel antenna.

7.3.5 MARKET COVERAGE

Reliance is the second largest player in FWT market which is growing at fast rate of

5.5%. The Lead player in the market is Tata Teleservices. But Reliance has shown

major improvement in the market coverage and has grown its share from 34.15% in

April05 to 37.12% in Oct.05.


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Fig: 11

8. CURRENT MARKET SCENARIO FOR WLL PHONES IN

INDIA

8.1 CDMA Mobile Segment

CDMA subscribers base grew 5.7% mom to 14.49mn with Tata contributing a chunk of

additions in subscriber base. Tata witnessed a whopping 20.6% mom growth in

subscriber base, touching the 2.5mn mark. Reliance witnessed a sluggish 3.2% growth


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in the month of October. However, it maintained its market leadership with a total

subscriber base of 11.78mn.

CDMA subscriber data

Group

CompanySubscribers as of

September'05

Additions

In Oct

Subscribers as of

October'05 (%)Growth

Reliance11,414,478 366,888 11,781,366 3.2

Tata2,055,865 423,265 2,479,130 20.6

HFCL60,292 542 60,834 0.9

Shyam28,182 43 28,225 0.2

MTNL154,301 (11,296) 143,005 (7.3)

Total13,713,118 779,442 14,492,560 5.7

Source: AUTSP Table: 6

Market share of CDMA operators CDMA share of net additions

Graph: 1 Graph: 2


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8.2 Fixed Wireless Terminals (FWT)

FWT continues to be one of the fastest growing segments with 5.5% mom growth. Tata

maintained it leadership position in FWT segment with 61% market share amongst

private players. In net additions, too, Tata led with 55% share. However, Dots latest

ruling removing FWT service from the ambit of basic service and instead terming it a

limited mobile service liable to ADC levy may be a serious blow to the growth of this

segment.

Group

CompanySubscribers as of

September'05

Additions

In Oct

Subscribers as of

October'05 (%)Growth

Tata 3,219,643 158,437 3,378,080 4.9

Reliance1,921,692 128,972 2,050,664 6.7

Bharti23,999 (265) 23,734 (1.1)

HFCL33,043 1,753 34,796 5.3

Shyam26,915 232 27,147 0.9

Total5,225,292 289,129 5,514,421 5.5

Fig: 12

We compared the above figures with the figures of March05 and realized that reliance

market share has gone up from 34.15% to 37.2% in six months which shows that there

is both potential in the market as well as in the company itself to increase its market

share further.


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Fig 13

Initiatives:

Introduction of Low cost telephony by launching Free Incoming service which took the telecom

market by storm

Achievements:

Brought the mobile phone to the common man by introducing Monsoon Hungama and Happy

Diwali offers in 2003

Milestones:

Became the second largest Mobile service in the country with more than 1 crore subscribers

within 2 years of launch.


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Channel

Ini t iat ives:

Introduced the Dhirubhai Ambani Entrepreneur scheme to involve the middle class to partner

Reliance and profit from it.

Achievements:

Built enduring relationships with people cashing in on the name of Reliance.

Milestones:

Elevated dealers to the position of business associates giving them more importance and

responsibilities which formed the backbone of the channel.

Costs

Initiatives:

Low cost telephony ringing the mobile in the ears of the common man.

Achievements:

Instrumental in bringing down call rates across the entire mobile phone sector.

Milestones:

Still riding the crest of the tide with large volumes of subscribers and subsequent high returns

Service

Initiative:

Spread a network of Reliance Web worlds and Web world Express providing One-Stop shops

for all customer needs.

Achievements:


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A dedicated sales and service staff took care of the customers and led to efficient management

despite swelling subscriber figures

Milestones:

Web world home to a variety of Virtual courses, Gaming Zones and Video conferencing facilities

.First one of its kind in the country

Systems

Initiative:

Introduction of C.D.M.A.1X. Technology into the Indian market on a large scale which resulted

in high quality wireless service at low costs. Add to that a 60000 km fiber optic backbone

network.

Achievements:

Combining of Data and Voice service done on an extensive scale with C.D.M.A. 1X technology.

Instrumental in bringing Mobile to the remotest corners of the country (Regulations not

withstanding)

Milestones:

Reliance possesses 74 Mobile Switching Centres (MSC s) and about 7200 Base Transceiver

Subsystems (BTS sites), providing a 98.6% Quality of Service (QOS) rating for areas under

coverage.

Brand

Initiative:

Indias most reliable brand added another dimension by entering the telecom market. Its name

preceded Reliance but the brand name Communications came into prominence.

Achievements:


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Kar Lo Duniya Mutthi Mein, having the world in your palms, caught the imagination of people

and launched Reliance India Mobile.

Milestones:

Ek Soch thi, Ek Sapna Thaa, Dhirubhais dream of a call at the cost of a postcard was realized

and entire India called out Mujhme Hai Wo Baat.

9. CUSTOMER SATISFACTION

We were more concerned about the factors that influence the consumer before choosing any

new connection or switching from the present connection. We rated the different attributes on

the scale of (1-5). We found the following results.

The Network Coverage was the factor that concerned the people to the greatest extent.

However the factors like the Billing System and the Voice Quality were also important. These

factors were the desired attributes by any user.

Attribute importance (1-5)

3.40

3.503.60

3.70

3.803.90

4.004.10

4.20

4.304.40

4.50

Network

Coverage

Easy

availability

voice quality customer

care

Billing

system


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Graph: 6

This showed that Voice Quality and Billing System were the two areas where Reliance had

performed pretty badly against its competitors. We came to know that the Billing System by

Reliance is said to have many discrepancies. Here Reliance really needs to work upon.

Calculated Ratings on 5 Point Scale

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Reliance

Airtel

BPL

Idea

Hutch

BSNL

Tata indicom

Reliance 3.75 3.56 2.50 3.88 2.81

Airtel 3.64 3.46 2.46 3.93 3.08

BPL 4.00 3.00 3.00 4.00 3.00

Idea 3.20 3.60 3.80 3.80 4.00

Hutch 3.80 3.80 3.40 3.00 3.75

BSNL 4.16 3.89 3.05 2.89 3.53

Tata indicom 4.00 3.00 4.00 3.00 2.00

NetworkCoverag

e

Easyavailabili

ty

voicequality

customercare

Billingsystem


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The Road Ahead

P.B.O. The new age P.C.O. From Reliance

Reliance Communications Ltd is looking at the successful public call office (PCO) model

for delivery of e-governance initiatives to the rural areas.

In the nextgen PCO, Reliance will use broad band to deliver the services, and will be

aptly named Public Broadband Office (PBO). Prakash Bajpai, president, Reliance

Communications, said the G2C (government to consumer) initiative on e-governance

will popularize the use of broad band. However, he neither had the time-frame for

Reliances projected PBO nor the investments needed.

The PBO will need applications like e-mail, transactions, filing of returns, sales tax or

excise duty filing or any other work requiring government interaction. Additionally, we

will have to persuade government for spectrum availability and dedicated carriers for

data will be needed. Investments will be needed forthe creation of base stations, too,

Bajpai said. Meanwhile, pushing its broad band service offering, Reliance

Communications will add another eight products to its existing 12. The new products, to

be launched in another two months time, will include collaborative services and

consumer Internet.

The bouquet of collaborative products will include audio video and web conferencing

services while consumer offerings would include health, games recreation

In an effort to improve its customer care services, the telecom services provider is set to

launch Web World Express (WWE). These franchised outlets will initially attend to

customer care issues and then expand to include broad band services.


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Reliance Netway:Broadband TV at your home

As far as the broadcast sector is concerned however, it is Reliance's broadband plans,

Ethernet broadband 'Netway' for the home user in particular, that is the focus of

attention.

Netway is still nearly a year away from

commercial launch, clarifies Khanna, though a

"test run" of the service that "has no parallel

anywhere in the world except in Italy on a very

small scale" is already on at the Reliance

centre in Jamnagar, Gujarat. 3,000

households of Fig: 15

Reliance employees at the Jamnagar oil refinery have been wired up for this purpose,

says Khanna.

In another two months, the testing process will move up a gear when 5,000 homes of

Reliance Communications employees (there are 15,000 of them working in DAKC

alone) get wired up.

Suffice to say that what Reliance is committing

to give its home user customers is 100 mbps

bandwidth routed through a prototype set top

box that will triple up as a TV remote, a phone,

a keyboard and even a karaoke microphone.

Fig: 16

With this kind of bandwidth capacity, the question is of course what is the sort of content

that will be made available for home users. According to the literature provided, aside

Reliance's set-top-box


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from the obvious high speed Internet which also offers Voice over IP telephony, there

will also be movies on demand, music on demand and digital TV. A vast library of

movies with multiple language subtitles as well as an extensive music listing is being

compiled at the moment. Netway is also promising interactive TV with over 160

channels

Reliance Data Center

Reliance Data Centers are truly world class Level 3 IDC facilities with a total area of

205000 sq. ft. located at the sprawling Reliance Communications Headquarter campus,

Navi Mumbai and at Bangalore. Reliance's data center project further includes setting

up of world-class data centers in 6 major cities in India covering approximately 5,00,000

sq.ft. area in the next 2 years

The Data Centers has been internationally benchmarked with respect to physical and

network security, infrastructure, facilities, network connectivity and its operations, which

achieves and surpasses the Level 3 world standards. The Data Centers are connected

to Reliance's country wide optic fiber based IP network with terabytes of capacity having

points of presence at more than 700 cities. The data centre is further connected to 52

countries including US, UK, Mid-east and Asia-Pac through Flag Telecom backbone

(Reliance Communicationss group company), other undersea cable systems and are

having private peering relationship with the largest Tier 1 ISPs and public peering at

more than 15 Internet Exchange points across the globe. There also exists peering

relationship with domestic ISPs on STM-1 bandwidth levels.


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Recommendations

Reliance has for long been perceived as the common mans phone. It needs

to come out of the mid-segment trap by catering to the high end subscribers

who bring in larger arpu

It is highly important to retain customers as sooner or later the market will

saturate and the low call tariffs will prompt subscribers to switch operators

With uniform number across operators being a possibility in the near future,existing subscribers will be inclined to move to an operator offering better

service, it is highly recommended that Reliance pulls up its socks and

improves its service quality which is lacking in certain areas like network

coverage and billing

Reliance has the most extensive private network in the country and needs to

consolidate its position by improving its standards and living up to its famous

brand name

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