53173388 strategic management mini project

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PROJECT OF STRATEGIC MANAGEMENT

ON

“ANALYSIS OF BHARI AIRTEL GROUP”

SUBMITTED TO :- SUBMITTED BY :-

Prof



INTRODUCTION OF STRATEGIC MANAGEMENT

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

organization's mission, vision and objectives, developing policies and plans, often interms of projects and programs, which are designed to achieve these objectives and thenallocating resources to implement the policies, and plans, projects and programs.Strategic management seeks to coordinate and integrate the activities of the variousfunctional areas of a business in order to achieve long term organizational objectives. A

balanced scorecard is often used to evaluate the overall performance of the business andits progress towards objectives. Strategic management is the highest level of managerialactivity. Strategies are typically planned, crafted or guided by the Chief ExecutiveOfficer, approved or authorized by the Board of directors, and then implemented under the supervision of the organization's top management team or senior executives.Strategic management provides overall direction to the enterprise and is closely relatedto the field of Organization Studies. In the field of business administration it is useful totalk about "strategic alignment" between the organization and its environment or "Strategic consistency". According to Arieu (2007), "there is strategic consistency whenthe actions of an organization are consistent with the expectations of management, andthese in turn are with the market and the context." “Strategic management is an ongoing

process that evaluates and controls the business and the industries in which the companyis involved; assesses its competitors and sets goals and strategies to meet all existing and

potential competitors; and then reassesses each strategy annually or quarterly [i.e.regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology,

new competitors, a new economic environment., or a new social, financial, or politicalenvironment.”



Birth of strategic management

Strategic management as a discipline originated in the 1950s and 60s. Although there werenumerous early contributors to the literature, the most influential pioneers were Alfred D.Chandler, Jr., Philip Selznick, Igor Ansoff, and Peter Drucker.

Alfred Chandler recognized the importance of coordinating the various aspects of management under one all-encompassing strategy. Prior to this time the various functions of management were separate with little overall coordination or strategy. Interactions betweenfunctions or between departments were typically handled by a boundary position, that is,there were one or two managers that relayed information back and forth between twodepartments. Chandler also stressed the importance of taking a long term perspective whenlooking to the future. In his 1962 groundbreaking work Strategy and Structure, Chandler showed that a longterm coordinated strategy was necessary to give a company structure,direction, and focus. He says it concisely, “structure follows strategy.” In 1957, PhilipSelznick introduced the idea of matching the organization's internal factors with external

environmental circumstances.This core idea was developed into what we now call SWOTanalysis by Learned, Andrews, and others at the Harvard Business School GeneralManagement Group. Strengths and weaknesses of the firm are assessed in light of theopportunities and threats from the business environment. Igor Ansoff built on Chandler'swork by adding a range of strategic concepts and inventing a whole new vocabulary. Hedeveloped a strategy grid that compared market penetration strategies, product developmentstrategies, market development strategies and horizontal and vertical integration anddiversification strategies. He felt that management could use these strategies to systematically

prepare for future opportunities and challenges. In his 1965 classic Corporate Strategy, hedeveloped the gap analysis still used today in which we must understand the gap between

where we are currently and where we would like to be, then develop what he called “gapreducing actions”. Peter Drucker was a prolific strategy theorist, author of dozens of management books, with a career spanning five decades. His contributions to strategicmanagement were many but two are most important. Firstly, he stressed the importance of objectives. An organization without clear objectives is like a ship without a rudder. As earlyas 1954 he was developing a theory of management based on objectives. This evolved intohis theory of management by objectives (MBO). According to Drucker, the procedure of setting objectives and monitoring your progress towards them should permeate the entireorganization, top to bottom. His other seminal contribution was in predicting the importanceof what today we would call intellectual capital. He predicted the rise of what he called the“knowledge worker” and explained the consequences of this for management. He said that

knowledge work is non-hierarchical. Work would be carried out in teams with the personmost knowledgeable in the task at hand being the temporary leader.

In 1985, Ellen-Earle Chaffee summarized what she thought were the main elements of strategic management theory by the 1970s:

Strategic management involves adapting the organization to its businessenvironment.

Strategic management is fluid and complex. Change creates novel combinations of circumstances requiring unstructured non-repetitive responses.

Strategic management affects the entire organization by providing direction.

Strategic management involves both strategy formation (she called it

content) and also strategy implementation (she called it process).

Strategic management is partially planned and partially unplanned.



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

Strategic management involves both conceptual and analytical thoughtprocesses.

Growth and portfolio theory

In the 1970s much of strategic management dealt with size, growth, and portfolio theory. ThePIMS study was a long term study, started in the 1960s and lasted for 19 years, that attempted

to understand the Profit Impact of Marketing Strategies (PIMS), particularly the effect of market share. Started atGeneral Electric, moved to Harvard in the early 1970s, and thenmoved to the Strategic Planning Institute in the late 1970s, it now contains decades of information on the relationship between profitability and strategy. Their initial conclusionwas unambiguous: The greater a company's market share, the greater will be their rate of

profit. The high market share provides volume and economies of scale. It also providesexperience and learning curve advantages. The combined effect is increased profits. Thestudies conclusions continue to be drawn on by academics and companies today:"PIMS provides compelling quantitative evidence as to which business strategieswork anddon't work" - Tom Peters.The benefits of high market share naturally lead to an interest in growth strategies.

The relative advantages of horizontal integration, vertical integration,diversification, franchises, mergers and acquisitions, joint ventures, and organic growth werediscussed. The most appropriate market dominance strategies were assessed given thecompetitive and regulatory environment.There was also research that indicated that a low market share strategy could also be very

profitable. Schumacher (1973), Woo and Cooper (1982), Levenson (1984), and later Traverso(2002) showed how smaller niche players obtained very high returns. By the early 1980s the

paradoxical conclusion was that high market share and low market share companies wereoften very profitable but most of the companies in between were not. This was sometimescalled the “hole in the middle” problem. This anomaly would be explained by Michael Porter in the 1980s. The management of diversified organizations required new techniques and new

ways of thinking. The first CEO to address the problem of a multi-divisional company wasAlfred Sloan at General Motors. GM was decentralized into semiautonomous “strategic

business units” (SBU's), but with centralized support functions. One of the most valuableconcepts in the strategic management of multi-divisional companies wasportfolio theory. Inthe previous decade Harry Markowitz and other financial theorists developed the theory of

portfolio analysis. It was concluded that a broad portfolio of financial assets couldreducespecific risk. In the 1970s marketers extended the theory to product portfolio decisionsand managerial strategists extended it to operating division portfolios. Each of a company’soperating divisions were seen as an element in the corporate portfolio. Each operatingdivision (also called strategic business units) was treated as a semiindependent profit center with its own revenues, costs, objectives, and strategies. Several techniques were developed toanalyze the relationships between elements in a portfolio. B.C.G. Analysis, for example, was



developed by the Boston Consulting Group in the early 1970s. This was the theory that gaveus the wonderful image of a CEO sitting on a stool milking a cash cow. Shortly after thatthe G.E. multi factoral model was developed by General Electric. Companies continued todiversify until the 1980s when it was realized that in many cases a portfolio of operatingdivisions was worth more as separate completely independent companies.

EXECUTIVE SUMMARY

This report on Bharti Airtel is done to findout certain objective regarding the strategicapproach Adopted by Airtel to stand strongly in the competitive telecom market.Airtel’s marketing strategies are analyses using various models like SWOT analysis,BCG Matrix, Ansoff’s matrix, porter’s five forces etc.

The outcomes of these models are properly analyzed to find out the variousaspects like companies position and competitors position in the market.This report on Airtel not just give description about the company but it also talks about thevarious marketing strategy adopted by the company.SWOT analysis of Airtel helps to find out the weak points of the company and to find outthe way to overcome this problem. Similarly with the help of Ansoff matrix it can be findingthat what are the different strategic options available to the company under the differentmarket condition. and to find the answer that why company is looking for overseas marketlike Nigeria and Seychelles.



COMPANY PROFILE

Bharti Airtel Limited formerly known as Bharti Tele-Ventures LTD (BTVL) is an Indiancompany offering telecommunication services in 19 countries. It is the largest cellular service

provider in India, with more than 141 million subscriptions as of August 2010. Bharti Airtelis the world's third largest, single-country mobile operator and fifth largest telecom operator in the world with a subscriber base of over 180 million. It also offers fixed line services and

broadband services. It offers its telecom services under the Airtel brand and is headed bySunil Bharti Mittal. Bharti Airtel is the first Indian telecom service provider to achieve thisCisco Gold Certification. To earn Gold Certification, Bharti Airtel had to meet rigorousstandards for networking competency, service, support and customer satisfaction set forth byCisco. The company also provides land-line telephone services and broadband Internet access(DSL) in over 96 cities in India. It also acts as a carrier for national and international long

distance communication services. The company has a submarine cable landing station atChennai, which connects the submarine cable connecting Chennai and Singapore.

It is known for being the first mobile phone company in the world to outsource everythingexcept marketing and sales and finance. Its network (base stations, microwave links, etc.) ismaintained by Ericsson and Nokia Siemens Network , business support by IBM andtransmission towers by another company. Ericsson agreed for the first time, to be paid by theminute for installation and maintenance of their equipment rather than being paid up front.This enables the company to provide pan-India phone call rates of Rs. 1/minute(U$0.02/minute). During the last financial year [2009-10], Bharti has roped in a strategic

partner Alcatel-Lucent to manage the network infrastructure for the Telemedia Business.

The company is structured into four strategic business units - Mobile, Telemedia, Enterpriseand Digital TV. The mobile business offers services in 18 countries across the Indian Subcontinent and Africa. The Telemedia business provides broadband, IPTV and telephoneservices in 89 Indian cities. The Digital TV business provides Direct-to-Home TV servicesacross India. The Enterprise business provides end-to-end telecom solutions to corporatecustomers and national and international long distance services to telcos.

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

behind China Mobile and China Unicom. In India, the company has a 30.7% share of the

wireless services market. In January 2010, company announced that Manoj Kohli, JointManaging Director and current Chief Executive Officer of Indian and South Asian

operations, will become the Chief Executive Officer of the International Business Group from

1 April 2010. He will be overseeing Bharti's overseas business. Current Dy. CEO, Sanjay

Kapoor, will replace Manoj Kohli and will be the CEO, effective from 1 April 2010

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Sunil_Bharti_Mittal

http://en.wikipedia.org/wiki/Cisco

http://en.wikipedia.org/wiki/Chennai

http://en.wikipedia.org/wiki/Singapore

http://en.wikipedia.org/wiki/Ericsson

http://en.wikipedia.org/wiki/Nokia_Siemens_Network

http://en.wikipedia.org/wiki/IBM

http://en.wikipedia.org/wiki/Alcatel-Lucent

http://en.wikipedia.org/wiki/Indian_Subcontinent


http://en.wikipedia.org/wiki/Africa

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Sunil_Bharti_Mittal

http://en.wikipedia.org/wiki/Cisco

http://en.wikipedia.org/wiki/Chennai

http://en.wikipedia.org/wiki/Singapore

http://en.wikipedia.org/wiki/Ericsson

http://en.wikipedia.org/wiki/Nokia_Siemens_Network

http://en.wikipedia.org/wiki/IBM

http://en.wikipedia.org/wiki/Alcatel-Lucent



http://en.wikipedia.org/wiki/Africa



Corporate Structure



AIRTEL ENTERPRISE SERVICES

The Company is a part of Bharti Enterprises, and is India's leading provider of telecommunications services. The businesses at Bharti Airtel have been structured into threeindividual strategic business units (SBU’s) - mobile services, broadband & telephone services(B&T) & enterprise services. The mobile services group provides GSM mobile servicesacross India in 23 telecom circles, while the B&T business group provides broadband &telephone services in 90 cities. The Enterprise services group has two sub-units - carriers(long distance services) and services to corporate. All these services are provided under theAirtel brand. It includes.

Voice Services

Mobile Services Satellite Services

Managed Data & Internet Services

Managed e-Business Services

Voice Services

Bharti Airtel became the first private fixed-line service provider in India. It is now promoted

under the Airtel brand. Recently, the Government opened the fixed-line industry to unlimitedcompetition. Airtel has subsequently started providing fixed line services in the four circles of Delhi, Haryana, Madhya Pradesh, Karnataka, Tamil Nadu & UP (West). Airtel EnterpriseServices believes that these circles have high telecommunications potential, especially for carrying Voice & Data traffic. These circles were strategically selected so as to providesynergies with Airtel’s long distance network and Airtel’s extensive mobile network. AirtelEnterprise Services, India's premium telecommunication service, brings to you a whole newexperience in telephony. From integrated telephone services for Enterprises and small

business enterprises to user-friendly plans for Broadband Internet Services (DSL), we bringinnovative, cost-effective, comprehensive andmulti-product solutions to cater to all your telecom and data needs.

Voice - Product Portfolio

Airtel Enterprise Services telephone services go beyond basic telephony to offer our users awhole host of Value Added Services as well as premium add-ons. Each telephone connectionfrom Airtel Enterprise Services is backed by a superior fibre-optic backbone for enhancedreliability and quality telephony. Few of the Value Added Services offered are Calling LineIdentification, Three Party Conferencing, Dynamic Lock, Hunting Numbers, and ParallelRinging etc. Airtel Enterprise Services Voice Services provide Free Dial-up Internet accessthat is bundled along with your Telephone connection from Airtel. It’s fast, reliable and gives

you unlimited Internet access.



Mobile Services

Airtel’s mobile footprint extends across the country in 21 telecom circles. It’sservice standards compare with the very best in the world. In fact, that’s howBharti has managed to win the trust of millions of customers and makes it one of the top 5operators in the world, in terms of service and subscriber base.The company has several Firsts to its credit:

The First to launch full roaming service on pre-paid in the country.

The First to launch 32K SIM cards.

The First in Asia to deploy the multi band feature in a wireless network foefficient usage of spectrum.

The First to deploy Voice Quality Enhancers to improve voice quality andacoustics.

The First telecom company in the world to receive the ISO 9001:2000

certification from British Standards Institute

Satellite Services

Airtel Enterprise Services provides you connectivity where ever you take your business Our Satellite Services bring you the benefits of access in remotelocations. Airtel Enterprise Services is a leading provider of broadband IPsatellite services and DAMA/PAMA services in India. Our solutions supportaudio, video and voice applications on demand.Satellite Services include :

PAMA/DAMA

BIT - Internet

VPN

Satellite based IPLCs for redundancy reasons



Managed Data & Internet Services

Airtel Enterprise Services brings you a comprehensive suite of data technologies. So we areable to support all types of networks and ensure our customers can migrate their network tothe future seamlessly. Our Managed Data & Internet services make our customers future

proof.Managed Data & Internet Services include :

MPLS

ATM

FR

Internet IPLC

Leased Lines

Customised Solutions

International Managed Services

Metro Ethernet

Managed e-Business Services

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

Co-lo: Dedicated and Shared

BCRS Services

Web hosting

OBJECTIVE:-

The Indian communications scenario has transformed into a multiplayer, multi productmarket with varied market size and segments. Within the basic phone service the value chainhas split into domestic/local calls, long distance players, and international long distance

players. Apart from having to cope with the change in structure and culture (government tocorporate), Airtel has had to gear itself to meet competition in various segments – basic

services, long distance(LD), International Long Distance (ILD), and Internet ServiceProvision (ISP).It has forayed into mobile service provision as well.



Objective of study are:

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

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

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



ANALYSIS

SWOT ANALYSIS

Following is the SWOT Analysis for AIRTEL

STRENGTH

Very focused ontelecom.

Leadership in fastgrowing

cellular segment.

Pan-India footprint.

The only Indianoperator,

other than VSNL,that has

an internationalsubmarine

cable.

WEAKNESS

Price Competition fromBSNL and MTNL

Untapped Rural market

OPORTUNITY

The fast-expanding

IPLCmarket.

Latest technologyand lowcost advantage.

Huge market.

THREAT

Competition from

othercellular and mobileoperaters.

Saturation point inBasictelephony service



STRENGTH

VERY FOCUSED ON TELECOM Bharti Airtel is largely focused on

the telecom, around 93% of the total revenue comes from telecom(Total telecom revenue Rs 3,326).

LEADERSHIP IN FAST GROWING CELLULAR SEGMENT

Airtel is holding leadership position in cellular market.. Bharti Airtel is one of India's leading private sector providers of telecommunications services based on an aggregate of 27,239,757customers as on August 31, 2006, consisting of 25,648,686 GSM mobile and 1,591,071

broadband & telephone customers.

PAN INDIA FOOTPRINT

Airtel offers the most expansive roaming network. Letting you roam anywhere in India with



its Pan-India presence, and trot across the globe with International Roaming spread in over 240 networks. The mobile services group provides GSM mobile services across India in 23telecom circles, while the B&T business group provides broadband & telephone services in92 cities.

THE ONLY OPERATOR IN INDIA OTHER THAN VSNL

HAVING INTERNATIONAL SUBMARINE CABLES.

Airtel, the monopoly breaker shattered the Telecom monopoly in the International LongDistance space with the launch of International Submarine cable Network i2i jointly withSingapore Telecommunications Ltd. in the year 2002. This has brought a huge value to theIPLC customers, delivering them an option besides the incumbent carrier, to connect to theoutside world.

WEAKNESS

Price Competition from BSNL and MTNL. Airtel is tough competition from the

operators like BSNL nd MTNL as these two operators are offering services at a low rate.

Untapped Rural market. Although Airtel have strong Presence throughout the country

but still they are far away from the Indian rural part and generally this part is covered by

BSNL so indirectly Airtel is loosing revenue from the rural sector .

OPPORTUNITIES

THE FAST EXTENDING IPLC MARKETAn IPLC (international private leased circuit) is a point-to-point private line used by anorganization to communicate between offices that are geographically dispersed throughoutthe world. An IPLC can be used for Internet access, business data exchange, videoconferencing, and any other form of telecommunication.

Airtel Enterprise Services and SingTel jointly provide IPLCs on the Network i2i. TheLanding Station in Singapore is managed by SingTel and by Airtel in Chennai (India). Each

Landing Station has Power Feeding Equipment, Submarine Line Terminating Equipment andSDH system to power the cable, add wavelengths and convert the STM-64 output to STM-1data streams respectively.

LATEST TECHNOLOGY AND LOW COST ADVANTAGEThe costs of introducing cellular services for Airtel are marginal in nature, as it needs only toaugment its cellular switch/equipment capacity and increase the number of base stations. Thenumber of cities, towns and villages it has covered already works to its advantage as puttingmore base stations for cellular coverage in these areas comes with negligible marginal cost.Besides such cost advantages, it has also other cost advantages for the latest cellular technology. As a late entrant into the cellular market, it has dual advantage of latesttechnology with modern features, unlike other private cellular operators who started their



service more than 4-5 years back and low capital cost due to advantages of large scale buyingof cellular switch/equipment.

HUGE MARKETThe cellular telephony market is presently expanding at a phenomenal / whopping __ rate

every year and there is still vast scope for Airtel to enter /expand in this market. Besidesthere is a vast rural segment where the cellular services have not made much headway andmany customers are look ing towards Airtel for providing the service to them. With its wideand extensive presence even in the remotest areas, Airtel poised to gain a big market share inthis segment when it expands cellular services into the rural areas.

THREATS

COMPETITION FROM OTHER CELLULAR It is time for BSNL to improve/expand its cellular services. Fierce and cut-throat competitionis already in place with the markets ever abuzz with several tariff reductions andannouncement of attractive packages, trying to grab most of the ‘mind share’ of the ‘king’ -‘the consumer’, whose benefits are increasing with passing of everyday. If BSNL is notinnovative and agile, its cellular service will be a flop. It needs to be proactive with attractive

packaging, pricing and marketing policies lest its presence in the market be treated withdisdain by the private cellular companies. The launch of WLL services by RelianceInfocomm has aggravated the situation.

MARKET MATURITY IN BASIC TELEPHONY SEGMENT

Although Airtel entered in the basic telephony market it’s a biggest there for the company asthe basic telephony market has reached



Porter’s 5 forces

Threat from

Competition

Customer

Bargaining

Power

SupplierBargainin

g Power

Threat

of New

Entrants

Threat of

Substitutes



Therat from competition(High)

Wireless Market – Top 4 garnering 75% market share

Competitor Analysis



Best op margins & net profit margins among peers

OP Margin Net Margin

Company Sep-07 Sep-08 Sep-072 Sep-083

Bharti 43.00% 38.00% 26.40% 19.30%

Rcom 37.90% 31.60% 23.90% 13.20%

IDEA 32.80% 26.60% 14.10% 6.50%

MTNL 23.70% 22.90% 7.00% 6.80%

Customer Bargaining Power



Lack of differentiation among Service Providers

Cut throat Competition

Low Switching Costs

Attractive Schemes for new connection

Availability of all operators everywhere

Difficulty to differentiate Brand

Number Portability will have –Ve Impact

Businesses & Consumers

Market scenario:

Suppliers Bargaining Power



Threat of Substitutes

Landline

CDMA

World Phone Video Conferencing

VOIP- Skype, G talk, Yahoo Messenger etc.Threat of New Entrants (Low Because)

Huge License Fees to be paid upfront & High gestation period

Entry of MVNOs & WiMAX operators

Spectrum Availability & Regulatory Issues

Infrastructure Setup Cost - High

Rapidly changing technology

Conclusion

After the complete analysis of entire STUDY we put forward a set of Recommendations which are a follows:

PRICING Depending on the market conditions / competition from cellular



Or will-mobile service providers and also to suit local conditions, thereShould be flexible pricing mechanism (either at central or local level).

IMPROVEMENT IN TECHNOLOGYAirtel should immediately shift to third generation switches by replacing its c-dot switches.

This will improve the quality of service to desired level and provide simultaneous integrationwith the nationwide network. The special distribution of the transmission towers should beincreased to avoid “no signal pockets”

ESTABLISHMENT OF DISTRIBUTION CHANNELSAirtel should establish widespread and conspicuous distribution to match that of thecompetitors. The distribution network shall make the product visible and available atconvenient locations.

UNTAPPED RURAL MARKET

Large part of Indian rural market is still untapped therefore airtel is required to bring that areaunder mobility.

53173388 strategic management mini project

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