MGT 333 - Group 8 - Report
MGT 333 - Group 8 - Report
MGT 333 - Group 8 - Report
Group – 8
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Acknowledgement
We would like to thank all those who have helped us throughout the project. First, to
Ahmedabad University for providing us this opportunity to learn this course. Next, we would
thank Prof. Kunal for guiding us throughout and administering this course and ensuring that we
learn things from a practical standpoint. Lastly, we would like to thank all our friends who have
been of great help in this project.
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Contents
1.0 INTRODUCTION ........................................................................................................... 5
2.0 EXTERNAL ENVIRONMENT .......................................................................................... 6
2.1 PESTLE Analysis ................................................................................................................. 6
2.2 Porter’s five-force analysis................................................................................................. 10
2.3 Strategic Group Mapping ................................................................................................... 12
3.0 INTERNAL ENVIRONMENT.......................................................................................... 14
3.1 Resource Analysis .............................................................................................................. 14
3.2 Value Chain Analysis ......................................................................................................... 19
3.3 TOWS Matrix ..................................................................................................................... 23
4.0 COMPETITIVE STRATEGY ANALYSIS ....................................................................... 24
5.0 CONCLUSION .................................................................................................................. 25
6.0 REFERENCES ................................................................................................................... 25
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Abstract
This report is based on competitive strategy analysis of Bharti Airtel. First, an external
environment analysis has been conducted using PESTLE analysis, Porter’s five force analysis
and Strategic group mapping. Then, an internal environment analysis was conducted based on
resource analysis, value chain analysis and SWOT analysis. Combining these two, we did what
was the competitive strategy analysis and, in the end, gave some suggestions for what the
company can do next.
In case of Bharti Airtel, we found out that it is a strong player in the telecom sector with its
marketing initiatives and network speed being its core competencies. Our primary suggestion
would be that the company should leverage more on these and keep its large customer base
intact. (121 words)
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1.0 INTRODUCTION
Operating in 18 countries across the continents of Asia and Africa, Bharti Airtel Ltd. is one of
the leading telecommunications companies in India. Bharti Airtel Ltd. was incorporated as
Bharti Tele-Ventures Ltd. in 1995 which was later renamed Bharti Airtel Ltd. in 2006 to
emphasize on its nature and brand objective. By the end of 2019, in terms of customer base,
Bharti Airtel had 403 million customers with a market share of 28%. This New Delhi
headquartered company is one of the top 3 telecom service providers in India with a 1 Million+
small and medium enterprise client base and a 2000+ large enterprise and government client
base. Bharti Airtel provides long distance connectivity in terms of calls and internet to its
customers, both, internationally and nationally. Also, it provides telecom solutions to its
enterprise-based clients.
Jio’s launch in 2016 and its aggressive competition in terms of relatively cheaper data and free
calls was a great threat to Airtel and its other competitors which were already in a significant
amount of debt. Out of its competitors, Airtel was all the more in trouble as it had $17 million
of debt to be paid with additional plans of spending on 5G airwaves. Meanwhile, Airtel still
struggled to acquire new customer base, whereas Jio had already accumulated over 300 million.
Currently, Airtel’s network is about 15% smaller than Jio which is plans to overcome in the
next 2 years by improving 4G infrastructure in the rural parts of India to compete with Jio.
Mobile revenues of Airtel have grown significantly by 32.4% due to improvement in the user
mix and the tariff hikes in the month of December, 2020 considering a year-on year basis.
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2.0 EXTERNAL ENVIRONMENT
In the context of a business, its external environment would consist of all the macro factors
which are beyond the company’s control. A detailed understanding of the external environment
helps a company to take proactive measures in responding to environmental changes which in
turn can be used to gain a competitive advantage and formulate better strategies.
If a company fails to acknowledge these changes and respond to them, they will be in what is
called a strategic drift. A strategic drift can be defined as a failure on the company’s part to
respond to external environment factors which lead to a gradual decline in its competitive action
that affects its position in the market.
• PESTLE analysis
• Porter’s five-force analysis
• Strategic group mapping
Political Factors:
Bharti Airtel operates in a few nations therefore the impact of government instability overseas
is low and limited to very few numbers of nations. Like any other industry, it is very vulnerable
to political changes. Latest instances after coming of Jio have led to many new government
rules which have negatively impacted the enterprise the company.
First, government has decreased the interconnect utilization expenses extensively which
significantly impacted its sales. Since Airtel has a significant market reach, customers from its
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rival companies have shifted to Airtel but the reduction in interconnect utilisation expenses
have impacted its revenue.
Moreover, the spectrum public sale charges the government is too high for telecom companies.
India has one of the maximum public sale prices in the world and it's far affecting the
profitability of the telecom corporations in India.
Economic Factors:
Airtel is functioning in few nations it economic outlook which gives it a chance to play on
diverse economic backgrounds. One result would be an increased customer base which in turn
means revenue growth for the company.
In the Indian context, the merger of Vodafone Idea and entry of Jio has made the telecom
industry sort of an oligopoly market with very limited number of players in the field Airtel
being one of them. In the near future, this could prove advantageous for Airtel as they might
be able charge more fees from the customers.
While its customer base is growing, its revenue in step with user declined drastically in 2015
onwards because of difficult opposition with the aid of Jio and Vodafone. By taking several
measures, it somehow managed to boom its ARPU to 129 rupees in August 2019.
Social Factors:
By 2021, India will have approx. 800 million mobile users. The growth of mobile users in India
is tremendous and it brings in a great opportunity for Airtel to rope in the new mobile phone
users to its networks.
Till 2015, the data and call rates were very high and as a result, most people did not use these
services because of which the main source of revenue for Airtel was from calls only. However,
when Jio launched free calling and data scheme for the price conscious Indians, the demand for
mobile data significantly increased and now the main revenue source of telecom industry is
data. So, the change in habits of people of using mobile phone has created a lot of opportunity
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for Airtel to grow. Now India is the highest data consuming nation in the world. It opens up a
new avenue of growth for the Airtel.
Technological Factors:
On the technological front, Airtel has been on its toes and been consistent in responding to new
technologies. It was the first Telecom Company to test LIVE 5G service over a commercial
network in Hyderabad city. They are also the first company which provided customers with
roaming services, International and long-distance communication service and value-added
services.
Airtel has been awarded Rs 4.02 million to implement Voice Over Long-Term (VOLT)
technology on their network in whole India. The company is also shifting to Green Network
and till now more than 40,000 towers are now working on batteries.
So, these gave us an idea on how Airtel is adapting the new technology and competing with its
competitors. Also, this industry demands technological proactiveness because it helps
companies needs to provide updated services to their customers.
Environmental Factors:
With the advancement of technology, the environment suffers to a great extent. For example,
radio frequency which emitted from mobile tower harms the Flora and fauna. Also, it is harmful
to human beings who reside near these towers.
In order to increase the network coverage, more mobile towers are being installed which leads
to deforestation in those areas.
In response to this, Airtel started a program Project Leap, by which they are reducing the
carbon footprint by 70%. Till now more than 40,000 towers are been converted into Green and
they are working on battery. New towers which will work on batteries not on diesel and they
are now shifting towards the usage of renewable energy in their upcoming projects in the future.
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Legal Factors:
Legality is the factor which will hampers company growth. Every industry has its own legalities
to face while doing business or starting their business in any new country. Airtel faces some
legal issues which are as follows:
Competition Commission of India (CCI) between Reliance Jio VS Bharti Airtel, in which CCI
says that “Reliance Jio was not in a dominant position in the market and was not indulging in
predatory pricing.” When Reliance entered into telecom industry, it started competition on the
basis of Price. Jio started giving 4G network free in the beginning and then charged very
nominal prices for the unlimited data and talk-time because of which Airtel and other
competitors have to reduce their price.
Bharti Airtel has to pay Rs 43,980 Cr. AGR dues to DOT in the next 10 years, ordered given
by Apex court of India.
Recently Supreme Court directs Bharti Airtel, Vodafone- Idea to disclose their details about
“segmented offers” to TRAI.
There are many other cases in which Airtel faces many issues in the legality which directly or
indirectly affecting the Airtel in a negative way.
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2.2 Porter’s five-force analysis
The five-force analysis is a theory proposed by Michel Porter based on analysis of the five
factors which determine an industry’s attractiveness. This gives an overview of how the
industry looks from an external standpoint and helps in taking certain strategic decision like
whether a particular industry should be entered in or exited from. These factors are:
In case of Bharti Airtel, the industry which we are looking at is the telecom industry. The
Porter’s five-force analysis looks like this:
• Bargaining power of buyers- Bargaining power of the buyers in the telecom industry
will be moderate to high. Where there are a large number of buyers giving them, a
higher power clubbed with low switching costs, there are very few companies in the
industry which gives them some degree of control. However, customers can easily
switch from one mobile operator to another giving them a moderate to high bargaining
power.
• Bargaining power of Suppliers- The suppliers in the telecom industry are handset
provider, tower provider or network equipment. These suppliers are large in number.
As a result, any company can easily shift from one supplier to the other which gives
them a low power. However, we may look at this from another angle where a company
is quality conscious and as a result, they choose to procure these things from one or
more specific suppliers. In that case, the suppliers get a substantial bargaining power.
Overall, the bargaining power of suppliers can be categorized as moderate to low.
• Rivalry among the competitors- Rivalry among the competitors in the telecom
industry is very high. After coming of Reliance Jio, the competition increased in the
industry because when Jio enter the market, it started the price competition because of
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which Jio gain high number of customers which affected Airtel and other companies
negatively. Companies are operating at a very high cost and low profit margin. So,
rivalry among the existing firm is high.
• Threat of New Entrance- In telecom industry, threat of new entry is high because
there are certain barriers to entry such as government and legal regulations that the new
company need to follow, also if some foreign company wants to establish it market in
India then they need to pay high duties and taxes which will automatically discourage
them to enter. Also, there is a huge license fee, existing intense competition, technology
advancement and many other factors which impact would impact a company’s decision
in a negative way. Airtel is struggling to achieve the economies of scale; this would be
tough for the new entrants too.
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2.3 Strategic Group Mapping
A strategic group map is a tool that groups companies within an industry that have similar
business models or similar combinations of strategies. Such groups can help identify who the
main competitors are from within an industry.
In the case of Bharti Airtel, the industry being looked at is the telecom sector and in order to
create the map, two variables have been used which are price and network coverage.
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Here for price, the standard monthly data pack for 28 days was taken as the point of reference
and for the network coverage, data from a survey published in financial express conducted by
Opensignal on 29th September, 2020 was taken.
As it can be clearly seen that airtel is somewhere in the high price category and has a good
network coverage. It falls in the second quadrant and according to the map, its main competitors
are Jio and VI.
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3.0 INTERNAL ENVIRONMENT
The internal environment of a business consists of all those factors which are in the control of
a business. Analysis of the internal environment helps a company play on its strengths and
achieve competitive advantage in the market. It forms a key part of building the competitive
strategy that the business will follow. Internal environment analysis also helps in identifying
certain problem areas and taking correction actions.
• Resource Analysis
• Value chain Analysis
• SWOT Analysis
Threshold resources: Threshold resources are the resources which are needed to meet bare
minimum requirements and therefore to continue to exist. Example: employees, raw materials
etc. In telecom industry, there are few threshold resources like voice service, mobile service,
satellite service, managed data and internet service & managed e-business services, TRAI
license, Network tower etc. For the survival in the telecom industry these are the basic resources
other than manpower, management, funds etc.
• TRAI License – For starting a telecom company in India, co. need to get the TRAI
(Telecom Regulatory Authority of India ) license which is the basic requirement for the
telecom company. For getting the license company need to file the application with
some documents to the TRAI. Bharti Airtel got their license in the year 1995 for starting
their telecom services. They got approval in the Year 1994 by government of India and
launched their services in 1995.
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• Network Tower – Bharti Airtel has more than 90000 + Tower across India. And
around 40000 towers are now “green” and operate on battery – hybrid, lithium ion and
solar-hybrid technologies. Currently company is focusing to focus on more on
renewable energy.
• Satellite service- Satellite service bring you the benefits of access in remote locations.
Airtel enterprises is a leading service provider of broadband IP satellites services.
• Mobile service – Airtel mobile footprint extends across the country in 21 telecom
circles. They are the first in Asia to deploy the multiband feature in a wireless network
for efficient usage of spectrum. Bharti airtel comes in top 5 operators in the world in
terms of their service quality. Airtel is the first telecom company in the world to receive
ISO 9001-2000 certification from British standard rules.
Threshold Competencies: It means basic knowledge, skills, traits and essential knowledge to
perform some task or job. Telecom Company need to have knowledge about their network
basics, network protocols etc. Bharti airtel has strategic approach means they know about their
Vision, objectives and values. Their objective is to grow revenue, grow market share & grow
margins and they are working effectively on this as they have the highest market share in the
India.
They have strategy to win their customers like by giving their customers with the data and
digital service means prime spectrum to yield data growth , 3G/4G and now 5G network rollout,
strategy through go to market excellence means quality customer addition. They have the
competency to win their valuable customers means they have post-paid and sticky user-base,
company owned retail stores and enterprise, DTH solutions through service excellence.
Unique Resources: Bharti Airtel puts robust on innovation. Innovation based totally strategies
enables the company to live abreast of the changes within the industry and provides it with
‘first mover’ gain by launching products ahead of their competition. Bharti Airtel’s emphasizes
on developing services, infrastructure and capabilities. The initiative enables the company to
expand next-generation stores with data rollover facilities. On 28 January 2021, Airtel
announce that it has become the country's first telecommunication to successfully demonstrate
LIVE 5G service over a commercial network in Hyderabad city.
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Core Competencies: The company’s success depends on its ability to provide high quality and
reliable products and services. The services are also prone to unauthorized access, system
viruses, and other disruptive problems caused by customers, employees, and others. Resolving
network failures and security problems could also cause interruptions, failure or delay in the
services. Bharti Airtel has core competences in resolving the fragility of network then other
market player in India.
Resources Competences
Threshold Threshold Resource Threshold Competences
Capabilities
• TRAI licence • Market excellence
• Network Tower • Valuable customers
• Satellite service • Best data and digital
• Mobile service service
VRIN Network:
The VRIN network is one of the ways in which a company can analyse its strategic capabilities
which is a business’s ability to integrate and harness its resources and competencies to gain a
competitive advantage and decide whether these forms a part of their core competence or not.
In the case of Bharti Airtel, the following are some of the strategic capabilities that the company
has:
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a good employer of the country for past many years. The HR policy of the company has
ensured a decent organisational culture and helped company achieve organisational
goals and mission over the years.
• Brand Recognition: Bharti Airtel as a brand has played a role of major catalyst in
India’s reforms as a leading telecommunications company. High brand value and brand
recognition has helped the company build good image, achieve high sales and develop
a unique bond with its customers across different consumer groups from different
countries and is a result of the resonance built through the hard work and quality
deliverance of all these years.
• Network Speed: Speed of network becomes an important variable deciding the fate of
the companies running in the telecom sector. According to Tutela, a service analytics
firm, Airtel had the fastest median download speed at 10 megabits per second (Mbps),
followed by Vodafone Idea with a median download speed of 9.4 Mbps and Jio at 6.5
Mbps. Airtel had the most responsive network in Common Coverage Areas across India
with 24 ms (milliseconds), however only 4.5 ms separated third place Jio from that top
spot and only 2.5 ms difference between Airtel and Vodafone Idea," the report added.
This gives a competitive advantage to the company making it one of the competencies
that Airtel possesses.
• Marketing initiatives: Airtel has always been on the top of the game when it comes to
promotion and marketing. This is one of the competencies which the company has and
which has been working in its favour generating more revenue and increasing its
customer reach. Starting from its first advertisement in 2002 where AR Rahman sang
the airtel jingle, “Har ek friend zaroori hota hai” campaign, India’s first open network
campaign, airtel thanks, the current campaign which aims at zero complaints in their
system and the list goes on. These initiatives help in building strong customer
relationships thereby giving the company a strategic advantage over its competitors.
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List of Is the Is the Is the Is the Competitive Performance
Capabilities capability capability capability capability consequences implications
Valuable? Rare? Costly to Non-
Imitate? substitutable?
Human Yes No Yes No Competitive Average
Resource parity returns
Management
Brand Yes No Yes Yes Temporary Average
recognition competitive returns to
advantage above
average
returns
Network Yes Yes Yes Yes Sustainable Above
Speed competitive average
advantage returns
Marketing Yes Yes Yes Yes Sustainable Above
Initiative competitive average
advantage returns
According to the VRIN network, marketing initiatives and network speed are company’s core
competences and they should focus more on them in order to gain a competitive edge over its
competitors.
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3.2 Value Chain Analysis
Value Chain Analysis is a tool which is used to analyse the firm’s internal activities to recognise
which of these are the value generating to the company and which ones could be improved to
gain a competitive advantage.
Primary activities:
• Inbound logistics: Making of new network coverage towers, renewing licenses and
issuing more of them, and buying of equipment, high quality of goods and services
should be maintained with a well-trained recruited staff.
• Operation: Providing different types of data services, and managing the database every
day, manage the other types of work and outsource IT operations to International
Business Machines Corporation.
• Outbound Logistics: Confirming whether the recharge coupons or other data pack-
related vouchers are available or not at the outlets, reminding the customers about new
data packs offers through customer care services.
• Marketing and sales: Activities like salesforce, advertising through a message, giving
incentives, selection of pricing, selection of channel, providing high-quality products at
best affordable prices.
• Service: Call centres to know the experience of the users and to help them with any
query related to offers and services, other services for post-paid and prepaid users is
that to provide online recharge facility or bill payment facility through the application
or websites or by establishing outlets at different locations across the country.
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Supporting activities:
Supporting activities play an important role in any organization in coordinating the primary
value chain activities. Below mentioned are some of the main supporting activities for Bharti
Airlet.
3) Concrete infrastructure:
Matters like maintaining quality, financing, handling legal matters, strategic planning,
accounting, information technology etc. are very important for having a smooth
operation in a company. Airtel should focus on controlling all these activities which can
assure the company maximum efficiency for internal management of the firm.
4) Technological development:
Being such a giant player in the telecom industry, Airtel should keep a regular update
on its hardware as well as software. Development of value-added service for customer
convenience, investment in R&D and providing good internet speed in every corner of
the country etc. are some of the places which requires a huge support from technology
and Airtel should do it in terms gaining more and more customers.
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Core Activities (Value-adding)
• It provides services for both the type of consumer, end consumer, and business groups
too. It provides services like 2G, 3G, 4G, and LTE services. It also has digital broadband
services.
• The telecom sector has become one of the competitive sectors and Bharti Airtel is giving
a healthy competition to it by giving high-quality services to its users and also by
innovating new services which give an incentive to its users and attracts more user.
Recently Bharti Airtel gained more subscribers than Jio, so this goal is achieved because
of their core activities and their other value-added services.
• In India, the network coverage problems are faced by the users in the telecom sector so
creating more network towers and doing maintenance on its daily basis is important and
Airtel is trying to make its network stronger so the user does not face any coverage
issue. So, this is another core activity of the company.
By focusing on these activities, the company can create core competencies and be the market
leader in the telecom sector.
Outsourcing:
Airtel outsourced their entire IT process to IBM, entire network operations to Ericson and
Siemens along with alcatel lucent and the procuring transmission towers to some other
company. The strategy during the initial times was to reduce the cost and acquire more
customers (in 2004-2005) at this point of time Airtel gained the power to control the market
and introduce new initiatives without any competition.
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Fast forward to future, Airtel wanted to change its major contract with IBM as the times have
changed and one of the reasons was the contract tenure that Airtel signed with IBM which was
of around 10 years. As times have changed and so has the inflation, telecom industry has
evolved a lot as technology has taken over the human kind. With increase in inflation, the cost
of outsourcing was also increasing. As per the recent data, Airtel is now looking forward to
change its strategy and decrease the outsourcing activity and implement a planning to manage
it in-house as much as possible so that to have more control over the activities and also the cost.
Another reason for decreasing the outsourcing is about the evolution in the technological sector.
Airtel has now access to a large market where it can find higher technical expertise. It now has
an option to hire readymade and comparatively cheap resources directly from the market.
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3.3 TOWS Matrix
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4.0 COMPETITIVE STRATEGY ANALYSIS
The last part is to use the internal and external environment analysis and actually decide how
should the company operate on a competitive side. For this, we use the Porter’s Generic Force
Analysis which gives four strategies that the company can follow. These are: Cost leadership,
Differentiation strategy, Cost focus and Focused differentiation.
Competitive strategy analysis for Bharti Airtel is as follows:
• One of the Porter’s Generic Strategies used by Bharti Airtel is Differentiation strategy.
It uses differentiation strategy in order to distinguish the brand, its products and its
services from its competitors in the market so as to compete and build a sustainable
competitive advantage.
Airtel has a large product line which it offers to the market after doing an extensive
research of the consumers’ changing needs and preferences. The company also invests
heavily in R&D to bring in new offerings in the market. This has helped Airtel expand
the scope of opportunities and helped build a large customer base over the years.
Airtel has more than 9000+ tower presence due to which it provides a very high-speed
network connection which was supported by speed test done by Ookla. Also, Airtel is
the first telecom sector company to introduce live 5G service in Hyderabad, India.
Moreover, Airtel is known for its marketing initiatives and promotion strategies, which
was explained earlier in detail with the examples of “Har ek friend zaroori hota hai”
campaign and ‘zero complaints’ campaign. These factors bring in uniqueness to its
products, services and brand image of Airtel. Some other differentiation factors of the
company could be the experience it has gained as it is one of the oldest brands, thus has
been successful in creating a strong presence in the world.
• Another Porter’s Generic Strategies used by Bharti Airtel is Focus strategy. It has
adopted focus strategy by offering low-cost along with offering best value to its
consumers. This would serve to a niche market segment by giving attention to the
customers’ changing tastes and preferences.
Airtel designs its products and sets price in a way so as to satisfy customers’
psychological expectations and provide value for money products and services.
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5.0 CONCLUSION
To conclude the report, our main findings suggest that in the current scenario, Airtel is doing
pretty good in the telecom sector. Apart from a few legal problems, the company has been
serving its customers in the best possible way which is clear from the fact that it surpassed Jio
as the company with maximum number of subscribers.
The marketing initiatives that the company undertakes are generating value and are able to
capture good response from the customers. This according to us in one area where the company
should focus on and continue to excel.
6.0 REFERENCES
• Africa?, B., 2021. Bharti Airtel–Perfect example of outsourcing all its activities! But
can it succeed in Africa?. [online] Trak.in - Indian Business of Tech, Mobile & Startups.
Available at: <https://trak.in/tags/business/2010/09/20/bharti-airtel-outsourcing-africa-
business/> [Accessed 17 February 2021].
• The Economic Times. 2021. AGR dues case: Bharti Airtel moves Supreme Court,
claims error in DoT's AGR assessment. [online] Available at:
<https://economictimes.indiatimes.com/industry/telecom/telecom-news/agr-dues-
case-bharti-airtel-moves-supreme-court-claims-error-in-dots-agr-
assessment/videoshow/80139834.cms?from=mdr> [Accessed 17 February 2021].
• Joji Thomas Philip, A., 2021. Bharti Airtel’s evolving outsourcing strategy. [online]
mint. Available at:
<https://www.livemint.com/Companies/v0BPytPnOJMAalnMRWRDAM/Bharti-
Airtels-evolving-outsourcing-strategy.html> [Accessed 17 February 2021].
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• MBA Crystal Ball. 2021. Porter’s Five Forces | MBA Crystal Ball. [online] Available
at: <https://www.mbacrystalball.com/blog/strategy/porters-five-forces/> [Accessed 17
February 2021].
• Rathee, K., 2021. Airtel still preferred operator for users; Jio on top in 4G coverage.
[online] The Financial Express. Available at:
<https://www.financialexpress.com/industry/airtel-still-preferred-operator-for-users-
jio-on-top-in-4g-coverage/2093842/> [Accessed 17 February 2021].
• Businesstoday.in. 2021. Sunil Mittal readies cash to fight Reliance Jio! Airtel to issue
fresh shares to raise Rs 15,000 crore. [online] Available at:
<https://www.businesstoday.in/sectors/telecom/sunil-mittal-readies-cash-to-fight-
reliance-jio-airtel-to-issue-fresh-shares-to-raise-rs-15000-crore/story/295306.html>
[Accessed 17 February 2021].
• NDTV.com. 2021. Airtel Leads In Subscriber Base, Tops Jio In Monthly Additions:
Telecom Regulator. [online] Available at: <https://www.ndtv.com/business/bharti-
airtel-tops-reliance-jio-in-monthly-subscriber-additions-leads-in-subscriber-base-
2337798> [Accessed 17 February 2021].
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