strategic management mini project

8/7/2019 strategic management mini project

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MINI PROJECT OF STRATEGIC MANAGEMENT

ON

ANALYSIS OF BHARI AIRTEL GROUP

SUBMITTED TO :- SUBMITTED BY :-

Prof


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INTRODUCTION OF STRATEGIC MANAGEMENT

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

policies and plans, often in terms of projects and programs, which are

designed to achieve these objectives, and then allocating resources toimplement the policies and plans, projects and programs. Strategicmanagement seeks to coordinate and integrate the activities of the variousfunctional areas of a business in order to achieve longterm organizationalobjectives. A balanced scorecard is often used to evaluate the overall

performance of the business and its progress towards objectives. Strategicmanagement is the highest level of managerial activity. Strategies aretypically planned, crafted or guided by the Chief Executive Officer,approved or authorized by the Board of directors, and then implementedunder the supervision of the organization's top management team or seniorexecutives. Strategic management provides overall direction to theenterprise and is closely related to the field ofOrganization Studies. In thefield of business administration it is useful to talk about "strategicalignment" between the organization and its environment or"strategic consistency". According to Arieu (2007), "there is strategicconsistency when the actions of an organization are consistent with theexpectations of management, and these in turn are with the market and thecontext." Strategic management is an ongoing process that evaluates andcontrols the business and the industries in which the company is involved;

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

Birth of strategic management


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Strategic management as a discipline originated in the 1950s and 60s. Althoughthere were numerous early contributors to the literature, the most influential

pioneers were Alfred D. Chandler, Jr., Philip Selznick, Igor Ansoff, and PeterDrucker.

Alfred Chandler recognized the importance of coordinating the various aspectsof management under one all-encompassing strategy. Prior to this time thevarious functions of management were separate with little overall coordinationor strategy. Interactions between functions or between departments weretypically handled by a boundary position, that is, there were one or twomanagers that relayed information back and forth between two departments.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 acompany structure, direction, and focus. He says it concisely, structure followsstrategy. In 1957, Philip Selznick introduced the idea of matching theorganization's internal factors with external environmental circumstances.Thiscore idea was developed into what we now call SWOT analysis by Learned,Andrews, and others at the Harvard Business School General ManagementGroup. Strengths and weaknesses of the firm are assessed in light of theopportunities and threats from the business environment. Igor Ansoff built onChandler's work by adding a range of strategic concepts and inventing a wholenew vocabulary. He developed a strategy grid that compared market penetration

strategies, product development strategies, market development strategies andhorizontal and vertical integration and diversification strategies. He felt thatmanagement could use these strategies to systematically prepare for futureopportunities 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 developwhat he called gap reducing actions. Peter Drucker was a prolific strategytheorist, author of dozens of management books, with a career spanning fivedecades. His contributions to strategic management were many but two are most

important. Firstly, he stressed the importance of objectives. An organizationwithout clear objectives is like a shipwithout a rudder. As early as 1954 he was developing a theory of management

based on objectives. This evolved into his theory of management by objectives(MBO). According to Drucker, the procedure of setting objectives andmonitoring your progress towards them should permeate the entire organization,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 hecalled the knowledge worker and explained the consequences of this for

management.He said that knowledge work is non-hierarchical. Work would be carried out


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in teams with the person most knowledgeable in the task at hand being thetemporary leader.In 1985, Ellen-Earle Chaffee summarized what she thought were the mainelements of strategic management theory by the 1970s:

Strategic management involves adapting the organization to its businessenvironment.

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

Strategic management affects the entire organization by providingdirection.

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

Strategic management is partially planned and partially unplanned.

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

Strategic management involves both conceptual and analytical thoughtprocesses.

Growth and portfolio theory

In the 1970s much of strategic management dealt with size, growth, andportfolio theory. The PIMS study was a long term study, started in the 1960sand lasted for 19 years, that attempted to understand the Profit Impact ofMarketing Strategies (PIMS), particularly the effect of market share. StartedatGeneral Electric, moved to Harvard in the early 1970s, and then moved to theStrategic Planning Institute in the late 1970s, it now contains decades ofinformation on the relationship between profitability and strategy. Their initialconclusion was unambiguous: The greater a company's market share, the greaterwill be their rate of profit. The high market share provides volume andeconomies of scale. It also provides experience and learning curve advantages.The combined effect is increased profits. Thestudies conclusions continue to be drawn on by academics and companiestoday:"PIMS provides compelling quantitative evidence as to which businessstrategieswork and don't work" - Tom Peters.The benefits of high market share naturally lead to an interest in growthstrategies.The relative advantages of horizontal integration, vertical integration,


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diversification, franchises, mergers and acquisitions, joint ventures, and organicgrowth were discussed. The most appropriate market dominance strategies wereassessed given the competitive and regulatory environment.There was also research that indicated that a low market share strategy could

also be very profitable. Schumacher (1973), Woo and Cooper (1982), Levenson(1984), and later Traverso (2002) showed how smaller niche players obtainedvery high returns. By the early 1980s the paradoxical conclusion was that highmarket share and low market share companies were often very profitable butmost of the companies in between were not. This was sometimes called thehole in the middle problem. This anomaly would be explained by MichaelPorter in the 1980s. The management of diversified organizations required newtechniques and new ways of thinking. The first CEO to address the problem of amulti-divisional company was Alfred Sloan at General Motors. GM wasdecentralized into semiautonomousstrategic business units (SBU's), but with centralized support functions.One of the most valuable concepts in the strategic management of multi-divisional companies wasportfolio theory. In the previous decade HarryMarkowitz and other financial theorists developed the theory of portfolioanalysis. It was concluded that a broad portfolio of financial assets couldreducespecific risk. In the 1970s marketers extended the theory to product

portfolio decisions and managerial strategists extended it to operating divisionportfolios. Each of a companys operating divisions were seen as an element inthe corporate portfolio. Each operating division (also called strategic business

units) was treated as a semiindependent profit center with its own revenues,costs, objectives, and strategies. Several techniques were developed to analyzethe relationships between elements in a portfolio. B.C.G. Analysis, for example,was developed by the Boston Consulting Group in the early 1970s. This was thetheory that gave us the wonderful image of a CEO sitting on a stool milking acash cow. Shortly after thatthe G.E. multi factoral model was developed by General Electric. Companiescontinued to diversify until the 1980s when it was realized that in many cases a

portfolio of operating divisions was worth more as separate completely

independent companies.


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EXECUTIVE SUMMARY

This report on Bharti Airtel is done to findout certain objective regardingthe strategic approach Adopted by Airtel to stand strongly in thecompetitive telecom market. Airtels marketing strategies are analysesusing various models like SWOT analysis, BCG Matrix, Ansoffs matrix,

porters 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 the various marketing strategy adopted by the company.SWOT analysis of Airtel helps to find out the weak points of the company andto find out the way to overcome this problem. Similarly with the help of Ansoffmatrix it can be finding that what are the different strategic options available tothe company under the different market condition. and to find the answer thatwhy company is looking for overseas market like Nigeria and Seychelles.

COMPANY PROFILE

Bharti Airtel Limited formerly known as Bharti Tele-Ventures LTD (BTVL)is an Indian company offering telcommunication services in 19 countries. It isthe largest cellular service provider in India, with more than 141 millionsubscriptions as of August 2010. Bharti Airtel is the world's third largest, single-country mobile operator and fifth largest telecom operator in the world with asubscriber base of over 180 million. It also offers fixed line services and

broadband services. It offers its telecom services under the Airtel brand and isheaded by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom service

provider to achieve this Cisco Gold Certification. To earn Gold Certification,

Bharti Airtel had to meet rigorous standards for networking competency,service, support and customer satisfaction set forth by Cisco. The company also
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Sunil_Bharti_Mittalhttp://en.wikipedia.org/wiki/Ciscohttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Sunil_Bharti_Mittalhttp://en.wikipedia.org/wiki/Cisco


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

Singapore.

It is known for being the first mobile phone company in the world to outsourceeverything except marketing and sales and finance. Its network (base stations,microwave links, etc.) is maintained by Ericsson andNokia Siemens Network,

business support by IBM and transmission towers by another company.Ericsson agreed for the first time, to be paid by the minute for installation andmaintenance of their equipment rather than being paid up front. This enables thecompany 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 partnerAlcatel-Lucent to manage the network infrastructure for the TelemediaBusiness.

The company is structured into four strategic business units - Mobile,Telemedia, Enterprise and Digital TV. The mobile business offers services in 18countries across the Indian Subcontinent and Africa. The Telemedia business

provides broadband, IPTV and telephone services in 89 Indian cities. TheDigital TV business provides Direct-to-Home TV services across India. TheEnterprise business provides end-to-end telecom solutions to corporate

customers 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, Joint Managing 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/Chennaihttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Ericssonhttp://en.wikipedia.org/wiki/Nokia_Siemens_Networkhttp://en.wikipedia.org/wiki/IBMhttp://en.wikipedia.org/wiki/Alcatel-Lucenthttp://en.wikipedia.org/wiki/Indian_Subcontinenthttp://en.wikipedia.org/wiki/Africahttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Ericssonhttp://en.wikipedia.org/wiki/Nokia_Siemens_Networkhttp://en.wikipedia.org/wiki/IBMhttp://en.wikipedia.org/wiki/Alcatel-Lucenthttp://en.wikipedia.org/wiki/Indian_Subcontinenthttp://en.wikipedia.org/wiki/Africa


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Corporate Structure


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AIRTEL ENTERPRISE SERVICES

The Company is a part ofBharti Enterprises, and is India's leading provider oftelecommunications services. The businesses at Bharti Airtel have beenstructured into three individual strategic business units (SBUs) - mobileservices, broadband & telephone services (B&T) & enterprise services. Themobile services group provides GSM mobile services across India in 23 telecomcircles, while the B&T business group provides broadband & telephone services

in 90 cities. The Enterprise services group has two sub-units - carriers (longdistanceservices) and services to corporate. All these services are provided under theAirtel brand. Its include.

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 isnow promoted under the Airtel brand. Recently, the Government opened the

fixed-line industry to unlimited competition. Airtel has subsequently startedproviding fixed line services in the four circles of Delhi, Haryana, MadhyaPradesh, Karnataka, Tamil Nadu & UP (West). Airtel Enterprise Services

believes that these circles have high telecommunications potential, especiallyfor carrying Voice & Data traffic. These circles were strategically selected so asto provide synergies with Airtels long distance network and Airtels extensivemobile network. Airtel Enterprise Services, India's premium telecommunicationservice, brings to you a whole new experience in telephony. From integratedtelephone services for Enterprises and small business enterprises to user-

friendly plans for Broadband Internet Services (DSL), we bring innovative,cost-effective, comprehensive and


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multi-product solutions to cater to all your telecom and data needs.

Voice - Product Portfolio

Airtel Enterprise Services telephone services go beyond basic telephony to offerour users a whole host of Value Added Services as well as premium add-ons.Each telephone connection from Airtel Enterprise Services is backed by asuperior fibre-optic backbone for enhanced reliability and quality telephony.Few of the Value Added Services offered are Calling Line Identification, ThreeParty Conferencing, Dynamic Lock, Hunting Numbers, and Parallel Ringingetc. Airtel Enterprise Services Voice Services provide Free Dial-up Internetaccess that is bundled along with your Telephone connection from Airtel. Itsfast, reliable and gives you unlimited Internet access.

Mobile Services

Airtels mobile footprint extends across the country in 21 telecom circles. Itsservice standards compare with the very best in the world. In fact, thats howBharti has managed to win the trust of millions of customers and makes it oneof the top 5 operators 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 fo efficient usage of spectrum. The First to deploy Voice Quality Enhancers to improve voice

quality and acoustics.

The First telecom company in the world to receive the ISO9001:2000certification from British Standards Institute


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Satellite Services

Airtel Enterprise Services provides you connectivity where ever you take yourbusiness 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 datatechnologies. So we are able to support all types of networks and ensure ourcustomers can migrate their network to the future seamlessly. Our ManagedData & 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


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Managed e-Business Services

Airtel Enterpirse Services, offers an internationally benchmaked, carrier classhosting, storage and business continuity services. A range of services that help

to keep your business running the 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,multiproduct market with varied market size and segments. Within the basicphoneservice the value chain has split into domestic/local calls, long distanceplayers,

and international long distance players. Apart from having to cope withthechange in structure and culture (government to corporate), Airtel has hadto gearitself to meet competition in various segments basic services, longdistance(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 sharesof the

competitors and what strategies Airtel is implementing to beat itscompetitors.

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


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ANALYSIS

SWOT ANALYSIS

Following is the SWOT Analysis for AIRTEL

STRENGTH Very focused on

telecom.

Leadership in fastgrowing

cellular segment.

Pan-India footprint.

The only Indian

operator,other than VSNL,

that hasan international

submarinecable.

WEAKNESS Price Competition from

BSNL and MTNL

Untapped Rural market


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OPORTUNITY

The fast-expandingIPLCmarket.

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

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


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LEADERSHIP IN FAST GROWING CELLULAR SEGMENT Airtel isholding leadership position in cellular market.. Bharti Airtel is one of India's

leading private sector providers of telecommunications services based onan aggregate of 27,239,757 customers as on August 31, 2006, consistingof 25,648,686 GSM mobile and 1,591,071 broadband & telephonecustomers.

PAN INDIA FOOTPRINT Airtel offers the most expansive roamingnetwork. Letting you roam anywhere in India with its Pan-India presence,and trot across the globe with International Roaming spread in over 240networks. The mobile services group provides GSM mobile services

across India in 23 telecom circles, while the B&T business group providesbroadband & telephone services in 92 cities.

THE ONLY OPERATOR IN INDIA OTHER THAN VSNL HAVINGINTERNATIONAL SUBMARINE CABLES. Airtel, the monopoly breakershattered the Telecom monopoly in the International Long Distance space withthe launch of International Submarine cable Network i2i jointly with SingaporeTelecommunications 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 the outside world.


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WEAKNESS

Price Competition from BSNL and MTNL. Airtel is tough competition fromthe operators like BSNL nd MTNL as these two operators are offering

services at a low rate.

Untapped Rural market. Although Airtel have strong Presencethroughout the country but still they are far away from the Indian rural partand generally this part is covered by BSNL so indirectly Airtel is loosingrevenue from the rural sector.

OPPORTUNITIES

THE FAST EXTENDING IPLC MARKET An IPLC (international privateleased circuit) is a point-to-point private line used by an organization tocommunicate between offices that are geographically dispersedthroughoutthe world. An IPLC can be used for Internet access, business dataexchange, video conferencing, and any other form of telecommunication.Airtel Enterprise Services and SingTel jointly provide IPLCs on the

Network i2i. The Landing Station in Singapore is managed by SingTel andby Airtel in Chennai (India). Each Landing Station has Power FeedingEquipment, Submarine Line Terminating Equipment and SDH system to

power the cable, add wavelengths and convert the STM-64 output toSTM-1 data streams respectively.

LATEST TECHNOLOGY AND LOW COST ADVANTAGE Thecosts ofintroducing cellular services for Airtel are marginal in nature, as itneedsonly to augment its cellular switch/equipment capacity and increase thenumber of base stations. The number of cities, towns and villages it has coveredalready works to its advantage as putting more base stations forcellularcoverage in these areas comes with negligible marginal cost.Besides such cost

advantages, it has also other cost advantages for thelatest cellular technology. As a late entrant into the cellular market, it hasdual advantage of latest technology with modern features, unlike other

private cellular operators who started their service more than 4-5 yearsback and low capital cost due to advantages of large scale buying ofcellular switch/equipment.

HUGE MARKETThe cellular telephony market is presently expanding at aphenomenal / whopping __ rate every year and there is still vast scope for

Airtel to enter /expand in this market. Besides there is a vast ruralsegment where the cellular services have not made much headway and


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many customers are looking towards Airtel for providing the service tothem. With its wide and extensive presence even in the remotest areas,Airtelpoised to gain a big market share in this segment when it expands

cellular services into the rural areas.

THREATS

COMPETITION FROM OTHER CELLULARIt is time for BSNL toimprove/expand its cellular services. Fierce and cut-throat competition isalready in place with the markets ever abuzz with several tariff reductionsand announcement of attractive packages, trying to grab most of the mindshare of the king - the consumer, whose benefits are increasing with

passing of everyday. If BSNL is not innovative and agile, its cellularservice will be a flop. It needs to be proactive with attractive packaging,

pricing and marketing policies lest its presence in the market be treatedwith disdain by the private cellular companies. The launch of WLL services

by Reliance Infocomm has aggravated the situation.

MARKET MATURITY IN BASIC TELEPHONY SEGMENT

Although Airtel entered in the basic telephony market its a biggest there for the

company as the basic telephony market has reached

Porters 5 forces


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Wireless Market Top 4 garnering 75% market share

Competitor Analysis

Best op margins & net profit margins among peers


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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:


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Suppliers Bargaining Power

Threat of Substitutes

Landline

CDMA

World Phone

Video Conferencing

VOIP- Skype, G talk, Yahoo Messenger etc.


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Threat of New Entrants (Low Because)

Huge License Fees to be paid upfront & High gestation period

Entry of MVNOs & WiMAX operators Spectrum Availability & Regulatory Issues

Infrastructure Setup Cost - High

Rapidly changing technology

Conclusion

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

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

IMPROVEMENT IN TECHNOLOGY Airtel should immediately shift to

third generation switches by replacing its c-dot switches. This will improvethe quality of service to desired level and provide simultaneous integrationwith the nationwide network. The special distribution of the transmissiontowers should be increased to avoid no signal pockets

ESTABLISHMENT OF DISTRIBUTION CHANNELS Airtelshould establish widespread and conspicuous distribution to match that ofthe competitors. The distribution network shall make the product visibleand available at convenient locations.

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

strategic management mini project

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