Post on 19-Nov-2014
Comparative analysis between Airtel & Videocon Mobile Services
Introduction Airtel was Established in 1985, Bharti (Airtel) has been a
pioneering force in the Telecom Sector. Bharti Airtel is one of India's leading private sector providers
of telecommunications services based on an aggregate of 66,689,943 customers
Approx 64,370,434 GSM mobile subscribers. Approx 2,319,509 Bharti Telemedia subscribers. Bharti has recently entered into retail business as Bharti
Retail Pvt. Ltd. The businesses at Bharti Airtel have been structured into
three individual strategic business units (SBU’s) Mobile Services, Airtel Telemedia Services & Enterprise Services
ON July 07,1995 it established as public ltd company Provides Telemedia services (fixed line) in 94 cities in India
About Videocon Mobile Services The Videocon Group is a $4 billion, global business conglomerate with
a strong presence in Household Consumer Goods, Oil & Gas, Retail, Telecom, DTH and the Power sector.
Videocon Telecommunications Limited a Videocon group company,
Offering GSM Mobile services under brand name Videocon.
The Videocon Group became the 13th mobile operator in India with its launch of GSM services & currently providing Prepaid service.
Providing the services in Tamil Nadu, Punjab, Haryana, Mumbai, Gujarat, Kerala, Madhya Pradesh & soon will be present across the country.
The Videocon group envisages investment of Rs 14,000 crores in its mobile services over the next three years.
•This is also the primary activity of the company. Their mission is to commit themselves to total customer care by delivering world-class products and services.
•Satisfaction of the customers is the main mission of Airtel.
•Maintain high standards of quality.
Mission
•By 2010 Airtel will be the most admired brand in India:
•Loved by more customers
•Targeted by top talent
•Benchmarked by more businesses
•Airtel always think in fresh and innovative ways about the needs of our customers and how we want them to feel. We deliver what we promise and go out of our way to delight the customer with a little bit more
Vision
Key steps towards Strategic Planning Mission--“To delight and deliver beyond expectation through
ingenious strategy, intrepid entrepreneurship, improved technology, innovative products, insightful marketing and inspired thinking about the future.”
Vision– “ To bring happiness in every home with global presence offering high quality e-products to ease & enrich human life”.
Goal--- “To provide a much higher level of service to all those who seek information.
Why Videocon?
Offering Prepaid plans at competitive price. For most of the current Prepaid plans the cal rates are 1
paisa/sec which will be reduced very soon. Under Special Tariff Benefits Pack cal rates are for V to V 20
paisa/sec & for V to other local cal 40 paisa/sec. On recharge of Rs.59 unlimited local V to V calling & Sms for
30 days.
Continue….. under the Rs 149 monthly recharge plan, subscribers can
make one hour of local calls free every day. Recharge options are V Top-up by visiting nearby mobile
showroom, online or through IVR system. Offering value added services like
Music downloads, Sports updates, V rashi every day, Other News & Updates, Entertainment– jokes, Railway inquiry, Social Networking---- Face book.
BCG Matrix
Stars ?
Cows Dogs • Fixed Line Services
Market ShareLOWHIGH
Mark
et
Gro
wth
R
ate
HIG
HLO
W
8
Mobile Services
BCG Matrix
HIGH
Market Growth rate
LOW
HIGH LOW Relative Market Share
Television---Videocon LCD
?
Consumer Electronics & home appliances,GSM Mobile Services,Mobile Phones,Oil & Gas.
StarsVideocon D2h
Dogs
Colour Picture Tube Glass
Cash Cows
PLC (Product Life Cycle)
3G Servic
e
Introduction Growth Maturity Decline
Mobile Service
Fix line
Product Life Cycle
Continue……… costs reduced due to economies of scale.
sales volume increases significantly.
profitability begins to rise.
public awareness increases.
competition begins to increase with a few new players in establishing market.
increased competition leads to price decreases.
SWOT Analysis
Strengths Bharti Airtel has more than 65 million customers (July 2008). It
is the largest cellular provider in India, and also supplies broadband and telephone services - as well as many other telecommunications services to both domestic and corporate customers.
Other stakeholders in Bharti Airtel include Sony-Ericsson, Nokia and Sing Tel, with whom they hold a strategic alliance. This means that the business has access to knowledge and technology from other parts of the telecommunications world.
The company has covered the entire Indian nation with its network. This has underpinned its large and rising customer base.
Weaknesses An often cited original weakness is that when the business
was started by Sunil Bharti Mittal over 15 years ago, the business has little knowledge and experience of how a cellular telephone system actually worked. So the start-up business had to outsource to industry experts in the field.
Until recently Airtel did not own its own towers, which was a particular strength of some of its competitors such as Hutchison Essar. Towers are important if your company wishes to provide wide coverage nationally.
The fact that the Airtel has not pulled off a deal with South Africa's MTN could signal the lack of any real emerging market investment opportunity for the business once the Indian market has become mature.
Opportunities The company possesses a customized version of the Google
search engine which will enhance broadband services to customers. The tie-up with Google can only enhance the Airtel brand, and also provides advertising opportunities in Indian for Google.
Global telecommunications and new technology brands see Airtel as a key strategic player in the Indian market. The new iPhone will be launched in India via an Airtel distributorship. Another strategic partnership is held with BlackBerry Wireless Solutions.
Despite being forced to outsource much of its technical operations in the early days, this allowed Airtel to work from its own blank sheet of paper, and to question industry approaches and practices - for example replacing the Revenue-Per-Customer model with a Revenue-Per-Minute model which is better suited to India, as the company moved into small and remote villages and towns.
Continue…… The company is investing in its operation in 120,000 to
160,000 small villages every year. It sees that less well-off consumers may only be able to afford a few tens of Rupees per call, and also so that the business benefits are scalable - using its 'Matchbox' strategy.
Bharti Airtel is embarking on another joint venture with Vodafone Essar and Idea Cellular to create a new independent tower company called Indus Towers. This new business will control more than 60% of India's network towers. IPTV is another potential new service that could underpin the company's long-term strategy.
Threats Airtel and Vodafone seem to be having an on/off relationship.
Vodafone which owned a 5.6% stake in the Airtel business sold it back to Airtel, and instead invested in its rival Hutchison Essar. Knowledge and technology previously available to Airtel now moves into the hands of one of its competitors.
The quickly changing pace of the global telecommunications industry could tempt Airtel to go along the acquisition trail which may make it vulnerable if the world goes into recession. Perhaps this was an impact upon the decision not to proceed with talks about the potential purchase of South Africa's MTN in May 2008. This opened the door for talks between Reliance Communication's Anil Ambani and MTN, allowing a competing Indian industrialist to invest in the new emerging African telecommunications market.
Bharti Airtel could also be the target for the takeover vision of other global telecommunications players that wish to move into the Indian market.
SWOT Analysis
Strengths1.Leading Brands
2.Customer Loyalty & Relationship
3.Presence across country
4.Competitive products price
Weaknesses1. The sim cards are
not available in many outlets.
2. Network issues3. At present only Prepaid plans, no corporate plans
Opportunities1. Planning to provide
services in all the remaining states, thereby making
presence across India.2.Invetment of
Rs.14000 Cr. Will improve services
3. There by attracting more customers in near
future.
Threats1. Market is captured by existing players.2. Many new service providers are coming
in this field.3. Presences of other
service providers across the country.
Internal Factors
External Factors
Positive Negative
Mar
ket A
ttra
ctive
ness
Strong Medium Weak
Low
Med
ium
Hig
hBusiness Strength
5.00 1.002.333.67
5.00
3.67
2.33
GE Matrix Classification
Business Strength
Current market share Brand image Brand equity Production capacity Corporate image Profit margins relative to competitors R & D performance Managerial personal Promotional effectiveness
Factors Underlying Market Attractiveness
Factors Weight Rating(1 –5)
Value =(Weight * Rating)
Resource availability 0.20 3.5 0.7
Overall market size 0.15 4 0.6
Annual Market growth rate
0.20 4 0.8
Profitability 0.15 4 0.6
Competitive intensity 0.10 4 0.4
Technological requirements
0.20 4.5 0.9
Total 1.0 4.0
Factors Underlying Market/Biz Strength
Factors Weight Rating(1 –5)
Value =(Weight * Rating)
Market share 0.15 5 0.75
New product development
0.10 3.5 0.35
Brand Image 0.10 4 0.40
Sales force 0.15 3 0.45
Pricing 0.15 3 0.45
Distribution capacity 0.10 4.5 0.45
Product quality 0.10 4.5 0.45
R&D Performance 0.15 3 0.45
Total 1.0 3.75
GE Matrix of Airtel
Business Strengths
Mar
ket
Att
ract
iven
ess
Low
High
LowHigh
Attractive
Moderate Attractive
Unattractive
Mobile Airtel
TeleMedia
5.00 1.002.333.67
5.00
3.67
2.33
Enterprise
GROUP 7
GE Matrix of Videocon Company
Business Unit Strength
High Medium Low
Industry
Attractiveness
High Videocon CTR TVs
Thomson CPT & Display Components
Allwyn Refrigerators
Medium
Mobile Phones,Mobile Services,Electrolux Kelvinator
Videocon Oil & Gas
Videocon LCD TVs
Low Videocon Cassette AC
Videocon Side by side Refrigerators
Videocon Multimedia Speakers
Porter’s Generic Strategy
25GROUP 7
Porter’s 5 Forces
Threat from Competition
Customer Bargaining
Power
Threat of Substitutes
Supplier Bargaining
Power
Threat of New Entrants
1. Threat from Competition
Wireless Market – Top 4 garnering 75% market share
HIGH
Competitor Analysis
Bharti Rcom IDEA MTNL0.00%5.00%
10.00%15.00%20.00%25.00%30.00%35.00%40.00%
Competitor Analysis
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%
Best OP Margins & Net Profit
Margins among Peers
Source: CMIE November 2008
Continue…….
838
461
303
88Russia
China
India
USA
0
2
4
6
8
10
Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007
ARPU
(USD
per
mon
th)
GSM CDMA
Minutes of Usage per Month – Mobile Services
ARPU* in India – Mobile Services
Despite a low teledensity of approximately 19 percent, India has the second highest minutes of usage per month. This offers huge growth opportunity to telecom companies.
The declining ARPU implies that India Inc. is tapping a large market at the bottom of the pyramid by reducing tariffs; thereby, enhancing affordability.
2. Customer Bargaining Power
Lack of differentiation among Service Providers
Cut throat Competition
Low Switching Costs
Number Portability will have –Ve Impact
Businesses & Consumers
HIGH
Market Scenario
Postpaid Vs Prepaid Customers & Market Share
Threat of New Entrants 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
3. Suppliers Bargaining Power
33 GROUP 7
LOW
4. Threat of Substitutes
Landline CDMA
Video Conferencing
VOIP - Skype, Gtalk, Yahoo Messenger e-Mail & Social Networking Websites
BROADBAND SERVICES
DIMINISHING MARKET HIGH
Continue….
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
LOW
Core Values
• Empowering People - to do their best
• Being Flexible - to adapt to the changing environment and evolving customer needs
• Making it Happen - by striving to change the status quo, innovate and energize new ideas with a strong passion and entrepreneurial spirit
• Openness and transparency - with an innate desire to do good
• Creating Positive Impact – with a desire to create a meaningful difference in society.
TARGETING Elite Up market professionals Entrepreneur with business plans Low income mass category Youth Women and senior citizens by post paid connection
POSITIONING
“Power to keep in touch” “Touch tomorrow” “Live every moment” “Express yourself”
Strategy
Airtel partnered with leading players in telecommunication players across the globe.
It has managed to work with the best of domain specialists globally and emerge as a world class entity.
Partnerships include operational contracts with marquee vendors and strategic investors ranging from private equity investors to global telecom giants.
RURAL STRATEGIES Airtel follows “Match-box strategy”
Advertisements Sales promotion Publicity and events
The firm expands regularly in Bihar, piggybacking on 300 distributors and more than 50,000 retail outlets selling Airtel prepaid cards
Covers over 4,00,000 villages and hopes to expand to other 1,00,000 by 2009
AIRTEL ADVERTISEMENT Airtel basically uses two appeal to connect to the users
Emotional Humorous
Total advertising budget of Airtel is Rs. 150 crore
SALES PROMOTION “Friendz” pre-paid plan
“Ladies special” plan
“Senior citizen” plan
Youtopia Special tariff plan for youth- Youtopia
Reduced tariffs, access to cell phones
14-19 years of age
Expand customer base (limited to the older age groups till now)
Deviation from earlier positioning for older people symbolizing dignity and power
Re 0.25 for 30 seconds- night!, special bidding portal, music download facilities, SMS at affordable prices
PUBLICITY AND EVENTS
Sponsored events Delhi half marathon Delhi golf tournament
Sponsored TV shows Big Boss KBC Indian Idol
Outsourcing deals in 2004
Ericsson was given the mandate to provide, manage and maintain the equipment as well as provide quality assurance in Airtel‘s then 13 mobile circles.
IBM was given the mandate to handle the back office requirements of Airtel’s presence in India
Performance till date Bharti Airtel has enjoyed an excellent run ever since the
telecom sector opened.
It has managed to hold on to its leadership position inspite of the presence of other players with deep pockets – Ambani’s, Tata’s, Birla’s and Vodafone.
Has coped well with regulatory changes.
Continues to attract and delight customers.
Future Strategies
• Translate its expertise in Indian markets to other emerging economies.
• This could call for acquisitions globally.
• Technology leadership is a must – Airtel must ensure that its reliance on GSM technology does not render it obsolete.
• Indian market in spite of being the worlds largest is still not matured. Opportunities abound in the hinterland which must be exploited.
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