TABLE OF CONTENTS
PAGE NUMBER
5-7
8-10
11-13
SWOT Analysis
14-15
16-17
18-20
21
22-23
QSPM
24-25
26-33
Conclusion
34
OUR VALUES
Were obsessed with giving exceptional customer service. Were hands-on, positive and
always looking for fresh ways to deliver. The essence of who we are underpins our values.
And by listening to our people, we've found that three things sum up what we're all about:
Speed were focused on bringing innovative new products and services onto the
market quickly
Simplicity we make things easy for our customers, partners and colleagues
The Competitive Profile Matrix (CPM) identifies a firms major competitors and its particular
strengths and weaknesses in relation to a firms strategic position. The weights and total
weighted scores in both a CPM and an EFE have the same meaning. However, critical
success factors in a CPM include both internal and external issues; therefore, the ratings refer
to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor
weakness, and 1 = major weakness.
Airtel
Vodafone
Reliance
Weight
Rating
Score
Rating
Score
Rating
Score
1. Number of Subscribers
0.20
0.8
0.6
0.4
2. Market Share
0.10
0.4
0.3
0.4
3. Connectivity
0.15
0.3
0.6
0.45
4. Customer care
0.10
0.3
0.4
0.1
0.10
0.3
0.3
0.2
6. Innovation in Services
0.10
0.4
0.2
0.3
7. Individualized attention
0.05
0.15
0.2
0.1
0.10
0.3
0.3
0.2
0.05
0.15
0.2
0.1
0.05
0.15
0.2
0.05
8. Advertising and
Promotion
9. Market segmentation
(Target markets and
Ages)
10. Attractiveness of
schemes (Eg: Booster
pack)
TOTAL
1.00
3.25
3.3
2.3
Remarks:
1. Subscriber base:
Airtel: As of March 2013 it has18.81 crore subscribers. The subscriber base has
increased from 867 million in April 2013 to 870 million at the end of May 2013,
registering a monthly growth of 0.37%. Rural subscriber base is at 82.16 million.
Vodafone: Market share of 23.05% As of March 2013, Vodafone India had about
15.23 crore customers with biggest rural subscriber base at 82.24 million a tad higher
than Airtels rural subscriber base.
Reliance: A subscriber base of 12.29 crore at the end of March 2013.
5
Source:http://gadgets.ndtv.com/telecom/news/telecom-subscriber-base-rises-to-8980-crorein-march-trai-373082
2.
3. Areas of Operation:
Airtel: All India. It operates in 20 countries across South Asia and Africa.
Vodafone: All India. Operates in 30 countries and has partner networks in over 40
additional countries
Reliance: All India (except Assam and NE)
4. VAS: They are services that allow customers to access and consume various genres
of entertainment, sports, devotional and other utility services. Revenue from VAS are
as follows.
Airtel: 9.90% (Rs. 1082.70 crore) of Total revenue as ofQ3-FY13. It provides Mhealth, M- education, M- agriculture, M-infotainment etc.
Source:http://www.medianama.com/2013/02/223-airtel-data-arpu-subscribers-q3- fy13/
Vodafone: Revenue from VAS of Vodafone India was around Rs 11.77 billion for
FY13, decreased by 10.8% from 13.19 billion in FY12.
Source:http://www.medianama.com/2013/05/223-vodafone-india-q4-fy13-earnings/
5. Innovation in services:
Airtel and Vodafone: It provides variety of services like DTH, broadband and mobile
services. Vodafone doesnt provide DTH services. Large amount of finance is from
its broadband services. Airtels GPRS service is economical than Vodafone but
Vodafone has better range and International network when compared to Airtel. Also,
Airtel mobile internet is much more reasonable and affordable in many parts of the
country as compared to Vodafone
Reliance: Reliance Jio which has pan India spectrum will provide 4G service which
will be 10-12 times faster than 3G. RJIL is the only company in India to have
nationwide 4G spectrum.
6. Advertising and Promotion:
Airtel: Advertises heavily and has effective sales promotion. It spent 2238.9 crores in
advertising as of June 2012 and added 6.02 million subscribers as a result.
6
Vodafone: This also has effective marketing strategy called Rebranding after the
acquisition of Hutchison Essar. Most successful ad would be wacky character
Zoozoo which was a huge hit among Children and teenagers.
Reliance: It does not mention Advertisement costs in its Quarterly results.
7. Market Segmentation:
Airtel:
Vodafone:
Reliance:
Interpretation:
Vodafone is slowly overtaking Airtel to reach the number one position in the telecom industry
in India. It needs to innovative its services and foray into emerging technology like cloud
computing to sustain its position in the Indian market.
INDUSTRY ANALYSIS:
THE EXTERNAL FACTOR EVALUATION (EFE) MATRIX
7
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate
economic, social, cultural, demographic, environmental, political, governmental, legal,
technological, and competitive information.
Each factor has been assigned a weight that ranges from 0.0 (not important) to 1.0 (very
important)Each factor is also assigned a rating between 1 and 4 to indicate how effectively
the firms current strategies respond to the factor, where 4 = the response is superior, 3 = the
response is above average, 2 = the response is average, and 1 = the response is poor. Ratings
are thus company-based, whereas the weights are industry-based.
Threats
1. Continuously decreasing Average Revenue Per User
0.10
0.3
0.10
0.4
0.09
0.18
0.07
0.21
0.08
0.16
0.06
0.18
0.04
0.08
Total
1.00
Weight
2.76
Rating
Weighted Score
Opportunities
1. Rapidly growing subscriber base
0.08
0.32
0.08
0.24
0.10
0.3
0.07
0.14
0.04
0.08
0.04
0.12
0.05
0.05
REMARKS:
OPPORTUNITIES:
1. India is the second largest telecommunication market. It has grown from 33.69
million subscribers in March 2004 to 898 million subscribers as of March 2013 and
has reached about 904.46 million at the end of July 2013.
8
2. Though the urban market looks like it is fast reaching the saturation point, 70% of
population live in rural areas which holds huge potential to drive future growth of our
telecom companies.Tele-density in rural areas is only just about 15%. The government
has proposed to achieve a rural Tele-density of 25% by deploying 200 millionconnections at the end of the Eleventh Five Year Plan. The optimum utilisation of
USO fund and increase in mobile services might help the government attain this goal.
3. In order to encourage consolidation in this sector, an empowered group of ministers
(EGoM) has cleared the mergers and acquisitions (M&A) guidelines for the
telecommunication sector. The Telecom Commission has authorized Rs.5,000crore
(US$ 817 million) government proposal to give away 2.5 crore mobile handsets at
subsidised prices.
4. VAS constitutes 7 -10% of total telecom revenue for Indian telecom operators. VAS
includes,Digital music consisting of CRBT and ringtones alone constitutes 35% of
VAS revenue.
5. Astro, Bollywood, Cricket, and Devotional continue to be most preferred services.
Music downloads, Internet Apps, Search has seen an upsurge. Services like Mobile
banking, 3G, 4G and M-commerce will see rapid growth.
6.
7. According to a survey conducted by professors from Sardar Patel University, Gujarat,
from among a total of 107 respondents, almost half of the total respondents (57.9 %)
wanted to change their current Mobile Service Provider. Vodafone was the choice of
majority (52.3 %) of the respondents.
8. Tele-density has grown from 112 per cent in urban and 21.2per cent in rural areas in
2009 to around 147 per cent in urban and 41 per cent in rural India as of March 2013.
9. Worldwide Interoperability for Microwave Access (WiMAX) WiMAX could be used
as an alternative to cable and DSL for providing broadband access in rural areas. It
would not only enable high-speed internet services through high bandwidth spectrum
but also prove to be a useful mode of communication in inaccessible terrains.
THREATS:
1. With the easing of FDI, increase in new entrants in this space has resulted in intense
competitive pressure and cut throat pricing which has resulted in declining ARPUs.
2. The fierce price war among the telecom operators has commoditized the market
resulting in branding taken a backseat. This also puts a pressure on the profit margins.
3. The operators should have to incur high initial fixed costs to be able to provide
services in rural areas which lack even basic infrastructure such as road and power.
They also lack trained personnel necessary to operate infrastructure.
9
4. Since spectrum, the most essential resource required to provide services Spectrum is
very Limited/finite and is inversely proportional to the number of operators.
Therefore, larger the number of service providers smaller will be the amount of
spectrum available to each of them.
5. The regulatory charges in the this sector have a complicated structure. The multiple
levies prove as a hurdle to the smooth implementation of telecom projects in India.
6. Continuous supply of electricity, cash economies, operational and security risks and
availability of trained personnel are few challenges faced when going rural.
C K Prahlad said in his book, The Bottom of the Pyramid the aspirations of the
rural consumer is no different from the current consumer .The rural consumer is also
looking for better access and experience to go hand in hand with his own changing
consumption patterns.
7. From among the new additional subscribers, dual-sim contributes to about 30%-35%
for which one of the reasons may be the service of Mobile Number Portability.
Weight
Strength
10
Rating
Weighted Score
0.07
0.21
0.1
0.3
people
0.15
0.6
0.05
0.15
0.09
0.18
0.13
0.39
0.08
0.08
0.08
0.16
0.12
0.48
0.06
0.18
0.07
0.14
Total
1.00
Weakness
2.87
REMARKS:
STRENGTHS:
1.BhartiAirtel has a market share o 26.38% during the September 2013 quarter. Vodafone is
in the second position with 23.05%.
Source:www.telecomlead.com
2. Vodafone has expanded its business in different parts of the world like Europe, Middle
East, Africa and Asia, Pacific and Affiliates. It has partnership with mobile operators in over
40 countries and equity interest over 30 countries. It has a diversified revenue base (i.e.)
Germany contributes 18% of the revenue, Italy(13.5%), Spain(12.7%), UK(11.2%),
India(7%). Africa, Central Europe, Asia and Pacific account for 12, 8 and 7.5% respectively.
3. The Zoozoo concept was created specially to convey value added service offering. It was
a creative advertising which has captured the imaginations of millions. This advertisement
gained so much popularity all over the world. It not only helped the company to raise its
profits but also increased its brand value.
11
4. Vodafone is a company with leading market position. Vodafone India has 152.4 million
subscribers as of march 31, 2013. It has postpaid customer base of 8.6 million subscribers as
of Q4 2013. Prepaid customers account for 94.4% of its total customer base. Increased rural
penetration with 73 million rural subscribers.
Source:www.medianama.com; www.vodafone.in
5. Vodafone is present in many countries within Europe. It allows customers to enjoy the
services in their home country. In few countries though Vodafone is not physically present
(eg: Norway) it has strategic alliances which provide better services to the clients. In
Northern and Central Europe Czech Republic, Germany, Hungary, Ireland, Netherlands,
Romania, Turkey, UK.In southern Europe Albania, Greece, Italy, Malta, Portugal, Spain. In
Africa, middle east and Asia pacific Australia, Egypt, Fiji, Ghana, India, New Zealand,
Qatar
Source:www.vodafone.com
WEAKNESSES:
1. Vodafone has a centralised management system which is highly inflexible for today's
competitive market.
2. Churn rate refers to the number of individuals moving out over a specific period of time.
Vodafone has a high level of customer churn rate which is about 33.33%. postpaid churn
declined to 18.2%. prepaid churn declined to 47%. Total churn declined to 47%. This is
common in any subscriber-based service model companies.
Source:www.medianama.com
3. More than 80% of Vodafone's business is running in the Europe. (Vodafone suffered a 4.8
percent hit to organic service revenue in the last three months of 2013 after a poorer
European performance. In Europe, pricing was hit by competition between operators, as
consumers and businesses sought out cheaper phone tariffs)
Source:http://www.ukessays.com/essays/marketing/strategic-recommendations-to-thevodafone-group-plc-marketing-essay.php#ixzz2xVnT9ASW
12
SWOT ANALYSIS:
A SWOT analysis is a structured planning method used to evaluate the strengths, weaknesses,
opportunities and threats involved in a project or a business venture. A swot analysis can be
carried out for a product, place, industry or person.
Threats: elements in the environment that could cause trouble for the business or
project
Strength
Weakness
revenue
Threats
13
Increasing competition
Legal risks
Vodafone.
Emergence of alternative
telecommunication technology
services.
SO Strategy:
Strategic alliances and teaming up with another operator helps Vodafone to reduce its
costs.
Vodafone has developed networking system with modern technology. It helps the
company to diversify in many countries
WOStrategy:
Vodafone is customer focused and is developing new products and services with
advanced technologies. Providing more added value services to the existing customers
helps to retain them.
ST Strategy:
WT Strategy:
Mobile number portability can be reduced by meeting the needs and demands of local
customers
14
Industry (IS)
Average =-2
Average =3.4
Environmental (ES)
+6(worst) +1(best)
Ease of entry
+4
Growth potential
+4
Profits
+2
Capital intensity
+3
Financial stability
+3
Resource utilization
+3
Technology know-how +5
15
Working capital
Liquidity
Return on investment
Leverage
Ease of exit
Business risk
+6(worst) +1(best)
+2
+3
+4
+3
+3
+2
Average =2.8
-6(worst) -1(best)
Price of competing products -3
Barriers to entry
-4
Technological changes
-4
Competitive pressure
-2
Demand variability
-3
Average =-3.2
16
INTERPRETATION:
The SPACE matrix suggests Vodafone to follow competitive strategy, where, Vodafone has
high competitive advantages in a high-growth industry. Vodafone can follow,
17
18
19
20
High
(3.0to
4.0)
Mediu
(2.0 to
2.99)
EFE
(2.76)
IFE (2.87)
Market Penetration
Product Development
Retrenchment
Divestiture
In the above case the lines fall in cells 4 and 7 which indicates that Vodafones strategies
should concentrate on Market development, Market penetration and product development.
(Explained in detail under Grand Strategy Matrix)
21
VODAFONE
Rapid Market Growth
Quadrant 2
1.
2.
3.
4.
5.
6.
Quadrant 1
Market development
Market penetration
Product development
Horizontal integration
Divestiture
Liquidation
1. Market development
2. Forward integration
3. Backward integration
4. Related diversification
Quadrant 4
Retrenchment
Related diversification
Unrelated diversification
Divesture
Liquidation
1. Related diversification
2. Unrelated diversification
3. Joint venture
Interpretation:
Since Vodafone lies in the second quadrant it needs to evaluate their present approach to
either sustain its position or to grow. Vodafone can continue to concentrate on the current
market which includes both urban and rural. They can focus on increasing the rate of teledensity in the rural areas.
Product development: It can foray into cloud computing or provide 4G services to
penetrate deeper into urban area. As cloud computing brings several opportunities as the
users are moving from buying products to buying services
22
Source:http://www.huawei.com/en/about-huawei/publications/communicate/hw080991.htm
Also Vodafone needs to look at horizontal integration since its main competitor Airtel has
raced it to number one position in Mumbai circle by acquiring Loop telecom
(comparatively smaller telecom which was operating only in Maharastra) Loop had a
subscriber base of around 3 million and will take Airtel's combined subscriber base to
around 7 million, compared to Vodafone's 6.9 million.
Source:http://timesofindia.indiatimes.com/tech/tech-news/Airtel-buys-Loop-to-be-No-1telcom-operator-in-Mumbai/articleshow/30642532.cms
23
Horizontal
integration
Weight
AS
TAS
AS
TAS
0.08
0.16
0.32
0.08
0.24
0.10
0.07
0.28
0.04
0.12
0.12
0.04
0.08
0.12
0.05
0.2
0.2
Average 0.10
0.3
0.3
0.4
0.4
0.09
0.08
0.06
0.18
0.18
SIM 0.04
0.08
0.16
OPPORTUNITIES
THREATS
1. Continuously decreasing
Revenue Per User
7. Growing
multiplicity
ownership
in
1.00
24
STRENGTHS
1. Prominent market position
0.07
0.21
revenue
3. Strong advertising strategies and
0.1
impact on people
4. Strong customer base
0.15
0.05
0.2
0.09
0.18
0.13
0.52
0.08
0.08
0.24
0.24
0.12
0.48
0.36
0.06
0.18
0.24
0.07
0.28
WEAKNESS
TOTAL
1.00
2.7
3.27
REMARKS
Attractiveness
LO
HIG
W
H
1 2 3 4
Availability of
closed
substitutes
Switching
Cost
Substitutes
price value
Profitability
of the
producers of
substitutes
High
High
Wors
e
Low
The profitability of
producers is
comparatively low.
Low
Bett
er
High
5
Low
REFERNCE:
a) http://www.bharti-infratel.com/cps-portal/web/pdf/Infratel-WhitepaperGreenTowersP7.pdf
b) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
c) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
d) http://www.ideasmakemarket.com/2013/08/aug-entry6-analysis-of-indian.html
26
Attractive
ness
LO
W
HIG
H
1
Economies
of scale
Product
Differentiati
on
Brand
Identity
Switching
Cost
Large
Restricte
d
Remarks
The Economies of scale
is high.
There are many ways to
find out product
differentiation.
We can easily identify
the brand by seeing.
The switching cost is
high.
There are different
ways of product
differentiation
available.
The capital requirement
needed is very large
amount.
There are many ways to
access the technology.
Restricte
d
Substant
ial
Access to
channels of
distribution
Capital
requirement
Access to
technology
Access to
raw
materials
Government
Protection
Large
x
High
High
High
Limited
x
REFERENCE:
a)
b)
c)
d)
e)
f)
g)
h)
https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
http://www.bgr.in/news/telecom-industry-body-repositions-logo-brand-identity/
https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
http://www.icra.in/Files/Articles/2009-March-TelecomInfra.pdf
https://www.dnb.co.in/IndianTelecomIndustry/RegulatoryFramework.asp
http://exploringgeography.wikispaces.com/Chemical+and+Automobile+indust
ies+in+India
i) https://www.dnb.co.in/IndianTelecomIndustry/RegulatoryFramework.asp
27
LO
W
ATTRACTIVENESS
HIG
H
1
Asset
Specializat
ion
Hig
h
Cost of
exit
Governme
nt
restriction
s
Remarks
Sm
all
Hig
h
Sma
ll
Hig
h
Sma
ll
There are
many ways to
procure asset.
The cost of
exit is very
high.
There are
many
government
restrictions
which are
imposed.
REFERENCE:
a) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
b) http://www.thehindu.com/news/national/telecom-industry-cracking-underfinancial-pressure/article4902565.ece
c) https://www.dnb.co.in/IndianTelecomIndustry/RegulatoryFramework.asp
28
ATTRACTIVENESS
LO
HIG
W
H
1 2 3 4
5
No of
competitors
Industry
Growth
Larg
e
Fixed Cost
High
Differentiati
on
Switching
Cost
Openness
terms of
sales
Excess
Capacity
Strategic
Stakes
High
Ope
n
Sm
all
Low
Low
x
Low
Hig
h
Hig
h
Fast
Low
Secr
et
Larg
e
Sm
all
Slow
REMARKS
x
x
x
x
ATTRACTIVENESS
LOW
HIGH
1 2 3 4
5
Switching
Cost
Contributio
n To
Quality
Contributio
n To Cost
Buyer's
REMAR
KS
SMA
LL
MAN
Y
LAR
GE
Low
HIGH
LOW
High
LOW
HIGH
Low
High
High
Low
Low
High
FEW
29
Profitability
REFERENCE:
a) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
b) http://businesstoday.intoday.in/story/2013-flashback-transition-year-fortelecom-sector-growth/1/201770.html
c) http://www.essay.uk.com/free-finance-essays/indian-telecom-sector.php
d) https://www.dnb.co.in/IndianTelecomIndustry/OperationalPerformance.asp
e) http://www.myacme.org/ACMEProceedings09/p11.pdf
f) http://www.dot.gov.in/sites/default/files/Telecom%20Annual%20Report-201213%20(English)%20_For%20web%20(1).pdf
g) http://m.economictimes.com/news/news-by-industry/telecom/telecom-sectorstruggles-with-debt-issues-companies-eye-new-growthavenues/articleshow/msid-21060065,curpg-3.cms
h) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
30
ATTRACTIVENESS
LO
HIG
W
H
1 2 3 4
5
REMARKS
Number of
suppliers
SMA
LL
LAR
GE
Availability
of
substitutes
FEW
MAN
Y
Switching
cost
Supplier's
threat of
forward
integration
Industry's
threat of
backward
integration
Contributio
n to quality
Contributio
n to cost
Industry's
importance
to supplier
HIG
H
LOW
HIG
H
LOW
LOW
HIG
H
HIG
H
HIG
H
LOW
LOW
LOW
HIG
H
the importance
given is high.
REFERENCE:
a)
b)
c)
d)
e)
https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
http://www.myacme.org/ACMEProceedings09/p11.pdf
https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
http://www.myacme.org/ACMEProceedings09/p11.pdf
http://www.scribd.com/doc/85095034/Industry-Analysis-Telecom-MidTermReport-2
f) http://pib.nic.in/feature/feyr2000/ffeb2000/f220220001.html
g) http://www.equitymaster.com/research-it/sector-info/telecom/Telecom-SectorAnalysis-Report.asp
31
h) http://www.ficci.com/sector/39/Project_docs/FICCI_Website_contentTelecom.pdf
ATTRACTIVENESS
LOW
HIGH
1 2 3 4
Industry
protection
LO
W
Industry
regulation(pollutio
n,etc.,)
HIG
H
HIG
H
REMARKS
HIG
H
LO
W
LO
W
the
protection is
very high
the
regulation
given is very
higg.
theu have
very high
tariff
restrictions.
REFERNCE:
a) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
b) http://cis-india.org/telecom/resources/trai-act-1997
c) https://www.gov.uk/importing-and-exporting-electronic-goods
32
ATTRACTIVENESS
HIG
LOW
H
1 2 3 4
Barriers
to entry
Rivalry
among
competito
rs
Barriers
to exit
Power of
buyers
Power of
suppliers
Threat of
substitute
s
Governme
nt action
Overall
attractive
ness
REMAR
KS
x
x
x
x
x
x
x
REFERNCE:
a) http://www.thehindubusinessline.com/opinion/now-a-high-entry-barrier-intelecom/article3349867.ece
b) http://www.cci.in/pdfs/surveys-reports/Telecom-Sector-in-India.pdf
c) http://www.itu.int/ITU-D/asp/CMS/Events/2012/pacific-bb/S4_PiRRC_Aslam.pdf
d) http://www.essay.uk.com/free-finance-essays/indian-telecom-sector.php
33
e) http://www.equitymaster.com/research-it/sector-info/telecom/Telecom-SectorAnalysis-Report.asp
f) http://www.ideasmakemarket.com/2013/08/aug-entry6-analysis-of-indian.html
g) http://www.livemint.com/Industry/9JEh45TZDJ1HU1xae9YRTJ/What-lies-aheadfor-Indias-telecom-industry.html
h) https://www.dnb.co.in/IndianTelecomIndustry/OverviewTI.asp
CONCLUSION
In the Mobile Telecommunication Industry, Vodafone is a leading player and has
grown quickly, despite high competition. This success is because of prominently positioning
itself in the global market with diversified services such as 3G, 4G, call and SMS schemes
and strong advertisement strategies which widened the customer base. Increase in popularity
of the smartphones was a tremendous opportunity for Vodafone to increase the revenue
contribution by data usage. As high competition is a threat for Vodafone, it focuses on
retaining the customers by developing new products and services with advanced technologies
and exclusive value added services (VAS) to retain existing customers. From this report, the
SPACE matrix recommends Vodafone to follow competitive strategy, because by utilizing the
internal strength, adopting product development and market development strategies Vodafone
can be successful in the young, highly growing telecommunication industry.
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