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MINI 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
an organization to achieve its long-term objectives. It is the process of
specifying 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 to
implement the policies and plans, projects and programs. Strategic
management seeks to coordinate and integrate the activities of the various
functional areas of a business in order to achieve longterm organizational
objectives. A balanced scorecard is often used to evaluate the overall
performance of the business and its progress towards objectives. Strategic
management is the highest level of managerial activity. Strategies are
typically planned, crafted or guided by the Chief Executive Officer,
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 related to the field ofOrganization Studies. In the
field of business administration it is useful to talk about "strategic
alignment" between the organization and its environment or
"strategic consistency". According to Arieu (2007), "there is strategic
consistency when the actions of an organization are consistent with the
expectations of management, and these 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 company is 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 political environment.”

Birth of strategic management


Strategic management as a discipline originated in the 1950s and 60s. Although
there were numerous 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 between functions 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 two departments.
Chandler also stressed the importance of taking a long term perspective when
looking 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, Philip Selznick introduced the idea of matching the
organization's internal factors with external environmental circumstances.This
core idea was developed into what we now call SWOT analysis by Learned,
Andrews, and others at the Harvard Business School General Management
Group. Strengths and weaknesses of the firm are assessed in light of the
opportunities and threats from the business environment. Igor Ansoff built on
Chandler's work by adding a range of strategic concepts and inventing a whole
new vocabulary. He developed a strategy grid that compared market penetration
strategies, product development strategies, market development strategies and
horizontal and vertical integration and diversification strategies. He felt that
management could use these strategies to systematically prepare for future
opportunities and challenges. In his 1965 classic Corporate Strategy, he
developed 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 “gap reducing actions”. Peter Drucker was a prolific strategy
theorist, author of dozens of management books, with a career spanning five
decades. His contributions to strategic management 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 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 and
monitoring your progress towards them should permeate the entire organization,
top to bottom. His other seminal contribution was in predicting the importance
of 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 person most 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 business
environment.
 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 thought
processes.

Growth and portfolio theory

In the 1970s much of strategic management dealt with size, growth, and
portfolio theory. The PIMS 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 then moved to the
Strategic Planning Institute in the late 1970s, it now contains decades of
information on the relationship between profitability and strategy. Their initial
conclusion was 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 provides experience and learning curve advantages.
The combined effect is increased profits. The
studies conclusions continue to be drawn on by academics and companies
today:
"PIMS provides compelling quantitative evidence as to which business
strategieswork and don'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 were discussed. The most appropriate market dominance strategies were
assessed 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 obtained
very high returns. By the early 1980s the paradoxical conclusion was that high
market share and low market share companies were often very profitable but
most of the companies in between were not. This was sometimes called 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 was Alfred Sloan at General Motors. GM was
decentralized into semiautonomous
“strategic 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 Harry
Markowitz and other financial theorists developed the theory of portfolio
analysis. It was concluded that a broad portfolio of financial assets could
reducespecific risk. In the 1970s marketers extended the theory to product
portfolio decisions and managerial strategists extended it to operating division
portfolios. Each of a company’s operating divisions were seen as an element in
the 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 analyze
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 gave us the wonderful image of a CEO sitting on a stool milking a
cash cow. Shortly after that
the G.E. multi factoral model was developed by General Electric. Companies
continued 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.
EXECUTIVE SUMMARY
This report on Bharti Airtel is done to findout certain objective regarding
the strategic approach 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 various
aspects 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 and
to find out the way to overcome this problem. Similarly with the help of Ansoff
matrix it can be finding that what are the different strategic options available to
the company under the different market condition. and to find the answer that
why 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 is
the largest cellular service provider in India, with more than 141 million
subscriptions 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 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 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
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 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 outsource
everything except marketing and sales and finance. Its network (base stations,
microwave links, etc.) is maintained by Ericsson and Nokia 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 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, Enterprise and Digital TV. The mobile business offers services in 18
countries across the Indian Subcontinent and Africa. The Telemedia business
provides broadband, IPTV and telephone services in 89 Indian cities. The
Digital TV business provides Direct-to-Home TV services across India. The
Enterprise 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
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 three individual strategic business units (SBU’s) - mobile
services, broadband & telephone services (B&T) & enterprise services. The
mobile services group provides GSM mobile services across 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 the
Airtel 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 is
now promoted under the Airtel brand. Recently, the Government opened the
fixed-line industry to unlimited competition. Airtel has subsequently started
providing fixed line services in the four circles of Delhi, Haryana, Madhya
Pradesh, Karnataka, Tamil Nadu & UP (West). Airtel Enterprise Services
believes that these circles have high telecommunications potential, especially
for carrying Voice & Data traffic. These circles were strategically selected so as
to provide synergies with Airtel’s long distance network and Airtel’s extensive
mobile network. Airtel Enterprise Services, India's premium telecommunication
service, brings to you a whole new experience in telephony. From integrated
telephone services for Enterprises and small business enterprises to user-
friendly plans for Broadband Internet Services (DSL), we bring innovative,
cost-effective, comprehensive and
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 offer


our users a whole host of Value Added Services as well as premium add-ons.
Each telephone connection from Airtel Enterprise Services is backed by a
superior fibre-optic backbone for enhanced reliability and quality telephony.
Few of the Value Added Services offered are Calling Line Identification, Three
Party Conferencing, Dynamic Lock, Hunting Numbers, and Parallel Ringing
etc. Airtel Enterprise Services Voice Services provide Free Dial-up Internet
access that 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’s
service standards compare with the very best in the world. In fact, that’s how
Bharti has managed to win the trust of millions of customers and makes it one
of 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 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 remote
locations. Airtel Enterprise Services is a leading provider of broadband IP
satellite services and DAMA/PAMA services in India. Our solutions support
audio, 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 are able to support all types of networks and ensure our
customers can migrate their network to the 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, 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,
multi
product market with varied market size and segments. Within the basic
phone
service the value chain has 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 to corporate), Airtel has had
to gear
itself to meet competition in various segments – basic services, long
distance(LD), International Long Distance (ILD), and Internet Service
Provision
(ISP).It has forayed into mobile service provision as well.

Objective of study are:

 What marketing strategies the Airtel is implementing to defend and


increase the market share.
 To find who are the competitors of the Airtel and the market shares
of the
competitors and what strategies Airtel is implementing to beat its
competitors.
 To find out how Airtel react to the technology changes in the
communications sector,
ANALYSIS

SWOT ANALYSIS
Following is the SWOT Analysis for AIRTEL

STRENGTH WEAKNESS
 Very focused on  Price Competition from
telecom. BSNL and MTNL
 Leadership in fast  Untapped Rural market
growing
cellular segment.
 Pan-India footprint.
 The only Indian
operator,
other than VSNL,
that has
an international
submarine
cable.
OPORTUNITY THREAT
 The fast-expanding  Competition from
IPLC other
market. cellular and mobile
 Latest technology operaters.
and low  Saturation point in
cost advantage. Basic
 Huge market. telephony 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).
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 27,239,757 customers 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 23 telecom circles, while the B&T business group provides
broadband & telephone services in 92 cities.

THE ONLY OPERATOR IN INDIA OTHER THAN VSNL HAVING


INTERNATIONAL SUBMARINE CABLES. Airtel, the monopoly breaker
shattered the Telecom monopoly in the International Long Distance space with
the launch of International Submarine cable Network i2i jointly with Singapore
Telecommunications Ltd. in the year 2002. This has brought a huge value to the
IPLC customers, delivering them an option besides the
incumbent carrier, to connect to the outside 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 MARKET An IPLC (international private


leased circuit) is a point-to-point private line used by an organization to
communicate between offices that are geographically dispersedthroughout
the world. An IPLC can be used for Internet access, business data
exchange, 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 and
by Airtel in Chennai (India). Each Landing Station has Power Feeding
Equipment, Submarine Line Terminating Equipment and SDH system to
power the cable, add wavelengths and convert the STM-64 output to
STM-1 data streams respectively.

LATEST TECHNOLOGY AND LOW COST ADVANTAGE The


costs of introducing cellular services for Airtel are marginal in nature, as it
needs only to augment its cellular switch/equipment capacity and increase the
number of base stations. The number of cities, towns and villages it has covered
already works to its advantage as putting more 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 latest technology 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 buying of
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. Besides there is a vast rural
segment where the cellular services have not made much headway and
many customers are looking towards Airtel for providing the service to
them. With its wide and extensive presence even in the remotest areas,
Airtel poised to gain a big market share in this 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 competition is
already in place with the markets ever abuzz with several tariff reductions
and announcement 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 not innovative 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
with 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 it’s a biggest there for the
company as the basic telephony market has reached

Porter’s 5 forces
Customer
Bargaining
Power

Threat
Threat from Threat of
of New
Competition Substitutes
Entrants

Supplier
Bargainin
g Power

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, there
Should 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 improve
the quality of service to desired level and provide simultaneous integration
with the nationwide network. The special distribution of the transmission
towers should be increased to avoid “no signal pockets”

ESTABLISHMENT OF DISTRIBUTION CHANNELS Airtel


should establish widespread and conspicuous distribution to match that of
the competitors. The distribution network shall make the product visible
and available at convenient locations.

UNTAPPED RURAL MARKET Large part of Indian rural market is still


untapped therefore airtel is required to bring that area under mobility.

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