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Bharti Airtel Ltd: An Analysis

Content
  1. About Bharti Airtel Ltd
  2. 1. 1 Identify and critically examine Bharti Airtel's goals, targets and values
  3. Goals and Targets of Airtel
  4. Core Prices of Airtel
  1. 1. 2 Suggest ways in which Bharti Airtel can replicate its success in India in international markets
  2. 1. 3 Making use of your understanding of different strategy development models analyse Bharti Airtel's development of its strategy and identify the model(s) suitable to them.
  3. 1. 3. 1 Porter's Five Forces Model
  4. Threat of New Entrants
  5. Bargaining Electric power of Suppliers
  6. Bargaining Ability of Buyers
  7. Availability of Substitutes
  8. Competitive Rivalry
  9. 2. 1 Analyse the acquisition of Zain Africa by Bharti Airtel. In the event that you were their consultant, might you have advised them to go ahead with the offer?
  10. 2. 1. 1 SWOT Analysis
  11. Strengths
  12. Weaknesses
  13. Opportunities
  14. Threats
  15. 2. 1. 2 Benefits of the acquisition of Zain Africa
  16. 2. 1. 3 Potential problems of the acquisition of Zain Africa
  17. 2. 3 Critically assess the risks faced by Bharti Airtel in Africa and exactly how they can overcome the risks
  18. 3. 1 Critically analyse Bharti Airtel's, quest, eyesight and Strategic intent
  19. Vision Affirmation of Bharti Airtel Ltd
  20. Mission Assertion of Bharti Airtel Ltd
  21. Strategic objective of Bharti Airtel
  22. 3. 2 Along the way of developing their strategy, can you feel that Bharti Airtel used incremental change or transformational change? Analyse your answers
  23. Analyse the impact of global issues in telecommunication industry and its aftereffect of Bharti Airtel
  24. Political Unsuitability in countries
  25. Issues in global monetary conditions
  26. There was higher rate of problem in African countries
  27. Issues in delivering solutions to African countries
  28. Threat of Internet for traditional role of mobile phone services such as calls and SMS
  29. Identify and critically analyse the impact of different stakeholders in Bharti Airtel
  30. Customers
  31. Competitors
  32. Share holders of Bharti Airtel
  33. Government bodies
  34. Suppliers
  35. Employees of Bharti Airtel
  36. Propose and claim ways that Bharti Airtel can react to the environmental factors impacting its Africa operations
  37. Political environment
  38. Poor financial conditions in African countries
  39. Higher currency fluctuations in many African countries
  40. Low level of urbanization in African countries' populations
  41. Conclusion
More...

This task has mainly been done to provide a discussion regarding the program of Strategic Business Management and planning within current global business environment. For this study I have used a case study on Bharti Airtel Ltd that can be an Indian mobile telephone company. Accordingly, this assignment essentially covers followings goals.

Understanding the role of tactical business planning in Bharti Airtel Ltd

Understanding of the strategies Bharti Airtel Ltd use to achieve competitive advantage

Understanding of the impact of inside and exterior factors on Bharti Airtel Ltd

Understanding of environmentally friendly factors which have an impact on strategic business management and planning

About Bharti Airtel Ltd

Bharti Airtel Ltd is a one of the primary global telecommunication companies that operates in 19 countries across Africa and Asia having 200 million customers. It is a one of the six best performing technology companies in world that has been rated by business week. Bharti Airtel Ltd mainly offers pursuing services to its customers:

Mobile words and data services

Fixed phone line

High acceleration broadband services

IPTV, DTH

Turnkey telecom alternatives for enterprises

National & international long distance services to carriers

(Source: About Bharti Airtel Ltd, available from:

http://www. airtel. in/wps/wcm/connect/about+bharti+airtel/Bharti+Airtel/About+bharti+airtel/?WCM_Page. ResetAll=TRUE&CACHE=NONE&CONTENTCACHE=NONE&CONNECTORCACHE=NONE&SRV=Page

(Accessed on 10th March 2012)

1. 1 Identify and critically examine Bharti Airtel's goals, targets and values

It is said that global business environment is changing structurally and, most probably (Kourdi 2003). Hence, any type of business organization must have strong, transference goals, targets and values to be able to succeed the business. They enable the professionals of the business to formulate and deal with appropriate strategies within the business enterprise. Appropriately, in this section I am going to identify and assess goals, aims and core values of Bharti Airtel Ltd.

Goals and Targets of Airtel

Undertaking of transformational assignments that includes a positive effect on the modern culture while contributing to build the nation

Diversification into new businesses in industries such as financial services, agriculture and retail business with top notch partners

To lay the foundation for creating a conglomerate of future

Core Prices of Airtel

Being Flexible for the adaptation of the environment changes and evolving customers' needs

Openness and transparency

Give power to Visitors to do their best

Creating Positive Effect on the contemporary society by creating a meaningful difference

Making it happen through the innovation of new ideas with entrepreneurial spirit

If we look at the above goals and targets of Airtel, we can see that they are achieving them to a certain extent. If we consider the aim of diversification into home based business, Airtel has been being able to access to such business industries. For example, now they have been interesting financial services in India through telephony services. Acquisitions of Airtel across the world convince us that Airtel has created a basis for conglomerate of future. Above mentioned core beliefs of Airtel which will be the values of owners have been the keys to its success.

1. 2 Suggest ways in which Bharti Airtel can replicate its success in India in international markets

It is a big challenge for any business to own or replicate its success in world due to higher completion. For this purpose, business organizations must formulate and use business strategies that suits global market conditions. Bharti Airtel has been being successful mainly due to its ideals and management. Within this section, I will suggest ways to Bharti Airtel which could assist in replicating its success in India and foreign market.

Further acquisitions and mergers with other telephony service companies in India and international markets:

Since Airtel has a wholesome financial strength, it can give attention to the acquisition of telephony service companies such as Reliance Comm. This may increase the customer bottom part of Airtel.

Access and development of Airtel's business functions in to other countries such as United Arab Emirates, Kuwait, Saudi Arabia and Qatar

Widening 4G network coverage within the areas where Airtel works:

Airtel can widen its 4G network coverage through rural areas in India. Doing they can increase its market while promoting the nation building process in India.

Introducing and promoting new progressive services that match with telephony service industry such new progress solutions such as ATM recharge

Launching good deal promotions to attract mass customers approximately possible

Differentiation of the brand through psychological perspectives

1. 3 Making use of your understanding of different strategy development models analyse Bharti Airtel's development of its strategy and identify the model(s) suitable to them.

Bharati Airtel Ltd has been market head in India since its business models and strategies drawn many industry experts' admiration. So they have been progressive in formulating and employing business strategies through strategy development models. Now let us analyse development of strategy in Bharti Airtel by using strategy development models appropriate to them.

1. 3. 1 Porter's Five Forces Model

Threat of New Entrants

Due to increase demand for telephony services in worldwide, there are prospects for new investors to get started on their business in this field. Appropriately, Bharti Airtel may come across dangers from entrants directly into its market in India, Bangladesh, Sri Lanka and Africa. The number of players in telecommunication industry in India has increased and it includes caused Bharti Airtel to change its strategic techniques that they adopted. Furthermore the inclusion of solutions such as 3G has in to the industry has brought many entries in to the telecommunication industry. Hence, we can see an increasing threat from the new access into the telecommunication market.

Bargaining Electric power of Suppliers

We can easily see uniqueness in telecommunication equipment suppliers in the global market. There is not a perfect market for telecom related machines and materials such as fibre optic cables, broadband switching equipment and software etc in the world. Thus it could be seen that there is a bargaining vitality over Bharti Airtel. Whereas we can easily see an increasing pattern towards the appearance suppliers in relations to the telecommunication related equipment. This have reduced Bargaining Vitality of Suppliers which may be encountered Bharti Airtel.

Bargaining Ability of Buyers

In the telecom industry, the largest is performed by the customers. If customers are not satisfied, they could alter to other telephony service companies. Customers can be maintained if quality services are given for affordable prices. Appropriately, Bharti Airtel has been pursuing cost leadership technique to manage up Bargaining Vitality of its customers.

Availability of Substitutes

Presently, internet services have been the domains of mobile services. Hence internet sector and phone services attended under one sector. While using appearance of broadband, WiFi internet services and new technical cellular devices, people have been able to have the role of cell phone such as phone calls and Text message done through internet cell phone calls and talk services such as SKYPE, Yahoo messenger. These threats from such alternative products have learning to be a significant concern for Bharti Airtel. Nevertheless Bharti Airtel has been expanding and applying many strategies to deal up such dangers by growing its internet services and presenting services like IPTV, DTH services for its sustainable expansion.

Competitive Rivalry

In Asia and Africa there is a high competition among telephony service providers. For instances, in India Bharti Airtel's main opponents are Vodafone Essar and Reliance Comm. In the same manner it offers many rivals in Sri Lanka such as Etisalat, Dialog, Mobitel and Hutch. Therefore we can easily see that there surely is a huge competition in the telephony services industry in Asia and Africa. So Bharti Airtel is employing strategies such as cost control, differentiation to be able to get competitive advantages.

2. 1 Analyse the acquisition of Zain Africa by Bharti Airtel. In the event that you were their consultant, might you have advised them to go ahead with the offer?

In this section, I will analyse the acquisition of Zain Africa made by Bharti Airtel through the PESTEL and SWOT examination. Afterwards I am going to measure the benefits that Bharti Airtel can have from the acquisition and potential issues that Bharti Airtel may have on its operation.

2. 1. 1 SWOT Analysis

The SWOT research is a good tool for decision making process and understanding all kind of situation which can come up in an enterprise group (Pearce, Robinson & Mital, 2008). Accordingly, the word "SWOT" stands for Advantages, Weaknesses, Opportunities, and Threats of a business.

Now let us analyse Bharti Airtel acquisition of Zain Africa by using SWOT examination. Table 1 provides the SWOT analysis regarding the acquisition of Zain Africa.

Strengths

New market electric power over 17 African countries and 5 middle east countries

Addition of 42 million customers to Airtel's customer base

Acquisition of more skilled employees

Increase reputation of Bharti Airtel brand

Entrance into the group of world's top five mobile network operators

Weaknesses

Financial issues may happen because money amounting to $7. 87 Billion have been spent on the acquisition

Amount allocated to the acquisition appears to be expensive

Most of the African countries like Uganda, Ghana and Madagascar have a very lower ARPU compared to others African countries

Morale and commitment of existing employees may reduce scheduled to new employees

Difficulties may occur when Bharti Airtel coping up with organizational social changes in Africa

Opportunities

Bharti Airtel can dominate many telephony service market with its economies of scale

Opportunity to create new kind of cell phone services over customers in Africa.

Opportunity for growing of Airtel's telecommunications operations further Africa

the chance of restructuring of Bharti Airtel's business operations

Threats

Falling of Airtel's stock price by 9. 22% during announcement of the acquisition

Possible counter harm from other telephony services companies in Africa

Management of Bharti Airtel may be exceedingly focused on the acquisition somewhat than focuses on the operations

Table 1: SWOT Evaluation for Bharti Airtel acquisition of Zain Africa

2. 1. 2 Benefits of the acquisition of Zain Africa

With the the acquisition of Zain Africa, Bharti Airtel have been able to go into top five mobile network operators in the world.

Bharti Airtel and Zain Africa fit well along because both companies have valuable skills and experience to provide quality telephony services to the clients. As a result, there can be an chance for Bharti Airtel to be the market innovator in Africa.

Global trustworthiness of Bharti Airtel boosts due to this acquisition.

Increase in global customers of Bharti Airtel by an amount of 42 million

This acquisition has led Bharti Airtel to improve its achievements in telecommunication sector in globally.

Finally this acquisition of Zain Africa as a rise strategy allows Bharti Airtel to broaden its business procedures to a greater extent.

2. 1. 3 Potential problems of the acquisition of Zain Africa

Amount spent on Bharti Airtel's acquisition of Zain Africa appears to be little bit expensive

There may be complexities when such broadened business operations will be monitored by Bharti Airtel

Bharti Airtel may come across some financial problems when a significant investment is again necessary to operate the business enterprise.

Existing employees' moral may lower with new acquisition of Zain Africa's employees.

There may be some complexities when ethnical changes which happen as consequence of this acquisition will be managed.

According to the above mentioned evaluation of Bharti Airtel's acquisition of Zain Africa, we can suggest this package since it brings many advantages to Bharti Airtel Ltd for the current period as well as future times.

2. 2 Examination of Bharti Airtel's technique for remaining competitive and increasing market talk about and subscriber base

Due to the higher people in India, right now there is an emerging of more competition such as local opponents as well as international opponents such as Vodafone and DoCoMo into Indian telephony service market. This has been a min hazard for Bharti Airtel to cope up. Accordingly, Bharti Airtel should formulate and manage strategies in order to have competitive advantages over it competition while increasing its market share. With this section, I will analyse strategy that Bharti Airtel is pursuing to obtain competitive advantages.

According to the research study Bharti Airtel Ltd, we can notice that they are following cost command strategy as its competitive technique to remain competitive on the market. Because of the competition in telecommunication industry in India, Average Earnings per User (ARPU) in India which is one of lower ARPU on the planet was dropped. Bharti Airtel has Rs. 438 ARPU in 2005 and this was dropped to around Rs 350 in middle of 2008. Part of the reduction can be attributed to low price life recharge advertising sheme that Bharti Airtel released in 2007. Finally ARPU of Bharti Airtel has declined to Rs 230 by the end of 2009.

Figure 1: Average Revenue per End user (ARPU) of Bharti Airtel in its Indian Market

According to the above shape 1, we can see that ARPU of Bharti Airtel is gradually decreasing due to its main cost leadership strategy. Although its ARPU is lowering, Bharti Airtel has been able to stay competitive in the business because its software of cost authority strategy has been increasing its market talk about as well subscriber base.

2. 3 Critically assess the risks faced by Bharti Airtel in Africa and exactly how they can overcome the risks

There is likelihood to have a lower ARPU form African customers since Zain's ARPU is less than 1$ and lower income in '09 2009 compared to 2008. This is due mainly to the fact that many African countries' consumers have very little purchasing power. Thus, Bharati Airtel should lower its prices and increase variety of users in African countries as to its sustainability expansion.

Since Zain's African market had been struggling, there is a possibility not to deliver beliefs to its shareholders. Zain was market leader only in ten of the fifteen African countries it may problematic for Airtel to dominate such marketplaces. Thus, it must adopt cost authority and concentrate strategis for the growth of the business by which key values can be created.

Bharati Airtel's arrears to equity percentage may increase to 1 1:1 credited to long term borrowings from finance institutions. This will likely lead solvency problems in future. Thus, it should try to increase fund through retained earnings, ordinary shares while making world wide web revenue in future.

Cost of basic channels in Africa is high since its cost is 3 times compared with Europe. This indicates that Bharati Airtel have to incure relatively high capital expenditure. With an increased capital investment and lower ARPU, it could generate lower Return on Investment for Bharati Airtel Ltd.

Cultural, language and regulatory distinctions in the 15 African countries is a huge task for Bharati Airtel. If indeed they do not take up such differences quickly, it could lead to the interruption for it functions in African market. Appropriately, Bharati Airtel should be interacting with 15 countries, 15 government authorities and 15 regulatory regimes effectively and effectively to beat possible operational interruptions.

There are high fluctuations in local currencies of African countries. This may bring forex risk for Bharati Airtel. Thus, Bharati Airtel should organise hedging deals with parties to be able to reduce such hazards.

3. 1 Critically analyse Bharti Airtel's, quest, eyesight and Strategic intent

Before Strategic intent of Bharti Airtel is analysed, I will analyse eyesight and quest of Bharti Airtel because eye-sight and mission of Bharti Airtel point out its Strategic intention in broad conditions and in specific terms.

Vision Affirmation of Bharti Airtel Ltd

"Being globally admired for telecom services that joy customers"

Accordingly we can easily see that Bharti Airtel's perspective reflect what it can and the near future status of the organization that it expect to be. This presents the comprehensive picture of Bharti Airtel while providing the major reason to do its business. This provides the company to travel head efficiently as it provides long term route to employees.

Mission Assertion of Bharti Airtel Ltd

"We will meet global benchmarks for telecom services that pleasure customers through customer support concentrate, empowered employees, progressive services and cost efficiency"

Accordingly we can see that mission assertion of Bharti Airtel consists of pursuing 3 essential components:

Key market : Global telecom market

Contribution: Telecom services

Distinction : customer support focus, ground breaking services and cost efficiency

Strategic objective of Bharti Airtel

Bharti Airtel's dtrategic intent express so it tries to give a telecom service that adored internationally to its customer in a manner that they will be delightful. This indicates Bharti Airtel is prepared flexibility when several situations appear in global business environment. Accordingly this provides a direction, breakthrough and destiny for Bharti Airtel's procedures.

3. 2 Along the way of developing their strategy, can you feel that Bharti Airtel used incremental change or transformational change? Analyse your answers

There should be considered a transformational change in the inner environment of Bharati Airtel when they develop strategies. That's organization framework and culture of Bharti Airtel may need to be changed because of its new strategies being developed. Strategies are mainly ready to manage up both inside and external environmental changes. Thus, when strategies are developed, they have to developed and integrated so as to adopt for such changes. Because of this, Bharti Airtel should used transformational changes within its business businesses.

For example, acquisition strategy of Bharti Airtel led them to change its organizational structure and culture as they broadened its operation into Africa. Hence, they cannot do its businesses in Africa using its previous organizational structures and civilizations when they conduct business in Africa. Appropriately Bharti Airtel must adopt and use transformational changes such as adoption to African culture and legislation etc in order to develop and execute strategies to be able achieve a ecological growth.

Analyse the impact of global issues in telecommunication industry and its aftereffect of Bharti Airtel

Political Unsuitability in countries

Many of African countries have unstable government which immediately affect the operations of Airtel in African countries. When authorities changes policies, regulations of such countries may be altered. Hence, it may affect the even operation of Bharti Airtel. So they need to change its strategies so as to adopt such governmental changes.

Issues in global monetary conditions

Global financial crisis, brewing for a while, demonstrate its results in 2007 and 2008. As a result, currency markets s around the world dropped down and large finance institutions collapsed.

Source: Global Financial Crisis-Global Issues, Available from:

http://www. globalissues. org/article/768/global-financial-crisis

(Accessed on 10th March 2012)

Accordingly, there is certainly possibility of global current economic climate to unpredictable. If such thing happend, it could have seriously have an effect on the functions of Airtel.

There was higher rate of problem in African countries

With the high rate of corruptions of people in Africa, Bharti Airtel will have a concern with regard to recovery of postpaid charges from such people.

Issues in delivering solutions to African countries

The cost for establishment of basic station in some African countries is 3 times compared with Europe. The cost of a base place in African countries is about $180, 000 to $200, 000. In European countries country the bottom train station would cost about $50, 000 to $60, 000. Therefore, Airtel will have to invest more income on base stations.

Threat of Internet for traditional role of mobile phone services such as calls and SMS

In the planet today, we can see that the internet is among the most future of connectivity. With the appearance of free services such as Skype, Yahoo Messanger etc, there is a danger for telephony service companies. There may be trend that folks have become used to such free services. Appropriately demand for phone call services and Short Meaning Services in Airtel may decrease.

Identify and critically analyse the impact of different stakeholders in Bharti Airtel

Stakeholders will be the outside entities and people that have an interest in an business company (Verzuh 2003). Stakeholders of Bharti Airtel can be determined as follows.

Customers

Business and Individual customers prefer to go through the quality and prices of services provided by Bharti Airtel. If quality of its service is low, customers may shift to other service providers.

Competitors

Competitors such as Vodafone Essar, Reliance Comm, MTN and Vodacom want to know strategies of Airtel so as to give a counter-top episode toward airtel.

Share holders of Bharti Airtel

Shareholders of Bharti Airtel considering the financial performance of the company. If the business is not accomplishing well, shareholder may change the director board or dispose their stocks.

Government bodies

Government bodies in each geographical area such as India, Sri Lanka and African countries have major effect on Bharti Airtel given that they may change laws and regulations regarding telecommunication industry.

Suppliers

Supplies of telecommunication related gadgets and Material know the financial positions and procedures of Airtel in order to convince that they can continue the relation with Bharti Airtel.

Employees of Bharti Airtel

Employees want to their job safe practices and rewards. Employees may resign from the business if they were not cured well.

Propose and claim ways that Bharti Airtel can react to the environmental factors impacting its Africa operations

Political environment

Many of African countries have unstability in their political positions. Airtel can deal up with these governmental changes by developing strategies that suits with such changes and keeping relationships with such governments.

Poor financial conditions in African countries

Bharti Airtel can do its procedures in African countries with such economical conditions by introducing low price structure and increasing subscriber base. This allows the company to provide an increased competition towards other telephony service providers.

Higher currency fluctuations in many African countries

I suggest Airtel to possess hedging agreements with banks to be able to reduce such foreign currency risks. But this might get rid of the opportunities of having foreign currency increases.

Low level of urbanization in African countries' populations

To cope up this environmental factor, Bharti Airtel should install additional towers and radios in such areas. This require considerable amount of capital to be invested.

Conclusion

The acquisition of Zain Africa has led Bharti Airtel Ltd to grow its operations internationally and it could be regarded as a prominent progress strategy of Airtel. Targets of Airtel such as executing transformational projects and diversification into new businesses such as financial services have been achieved to some extent. Development of strategies of Airtel have empowered these to achive such targets while having main worth such as quick adaptation for the environment changes and customers' needs, openness and transparency etc. The main competitive strategy that Bharti Airtel uses is low priced control. The acquisition of Zain Africa have brought benifits to Airtel such as New market power over 17 African countries whilst having 42 million clients to its customer base. But functions in such countries has been concern for Airtel credited to political instability, poor financial conditions and more expensive on base station. Therefore, Bharti Airtel must develop and apply appropriate strategies in African countries to be able to obtain sustainability growth.

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