Key success factors for Airtel using Porters value chain Analysis Essay
Key success factors for Airtel using Porters value chain Analysis
The methodology of the report is carried out by observing and analyzing various secondary sources. The various secondary sources are study of value chain model in detail from various books and different net sources.. Other than these , study of key factors in the growth of airtel industry. Agter study of key factors, a complete knowledge of industry is taken from various secondary sources. (1. 1)Profile of the company Bharti Airtel Limited, which is also known as Airtel, is an multinational telecommunications services company of India which is headquartered in New Delhi.
It operates in 20 countries and some of them are south Africa, Asia, channel countries. Airtel has GSM network in all countries in which it operates, providing services such as 2G, 3G, 4G depending upon the country of operation. Airtel is the world’s third largest mobile telecommunications company by subscribers, with over 275 million subscribers across 20 countries as of July 2013. It is the largest cellular service provider in India, with 192. 22 million subscribers as of August 2013. Airtel is the third largest in-country mobile operator by subscriber base.
Airtel is the largest provider of mobile telephony and second largest provider of fixed telephony in India, and is also a provider of broadband and subscription television 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 Cisco Gold Certification. And 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.
Airtel is credited with pioneering the business strategy of outsourcing all of its business operations except marketing, sales and finance and building the ‘minutes factory’ model of low cost and high volumes. The strategy has since been copied by several operators. And its network base stations, microwave links, is maintained by Ericsson and Nokia. Vision: 1. Become the most loved brand by 2015 2. Multiplatform services in telecom, enterprise and digital television, unified under brand “airtel” 3. Amongst the Top 100 of Most Valuable Global Brands 4. No. 1 service brand in India CHAPTER – 2 (2. 0) Effects of value chain analysis:
Many organizations do not achieve the profits they anticipate by using incorrect methods or models to determine the true costs of products and services. This failure to correctly assess the costs associated with business not only affects the profit margin, but the organizations competitive advantage as well. In order to assess whether the organization is failing to realize optimum resource allocation, the organization should look at the methodology first popularized by Michael Porter titled the Value Chain Analysis (VCA). “VCA seeks to define the entire chain through which goods are supplied to a customer”.
The VCA can be a powerful tool in increasing an organization’s competitive advantage; by correctly pricing products and assessing the true costs of materials and labour, organizations can align the improvements in efficiency and quality with its objectives. The value chain includes all the activities involved in product making. It is a useful tool to measure the value created for each activity in the process of product creation. It is a part of a firm’s strategic planning to arrange these activities in a way that the total value, the value that buyers are willing to pay, exceeds the total cost.
According to Porter , a company can create value through a cost advantage or product differentiation. The activities in the value chain are not independent. Linkages may exist between activities. In fact, one process may affect the cost and performance of the others. Linkage can exist between primary activities, as well as, between primary and support activities. Therefore, competitive advantages can also be derived from the linkages between activities. Airtel seeks to create value through diversification by moving across businesses that share both operational and corporate relatedness.
With this approach, it expects to achieve high resource sharing and consequently, significant cost reduction. It looks at operational relatedness since a number of its businesses operate across similar technologies and thus the platform for a given product can be used directly for extending the service from a completely new product. As an example, the cables for a telephone connection provided by Airtel can be used to provide broadband service to the customer without any significant change in infrastructure. The skills required from the technicians are also not very different and thus economies of scale are quite possible
(2. 1) The Added-value Chain: According to McPhee and Wheeler , focusing on the firm’s internal core activities is not sufficient to generate value in today’s firms. The authors propose an added-value chain model that includes a set of expanded business activities from different business models and a redefinition of value that incorporates brand, reputation, and relationship-based value drivers of the firm. In the added-value chain model, the definition of value incorporates profit margin and intangible assets like leadership quality, innovate capability, brand equity and competences in strategic-alliance development.
This new value definition gives to the firms the ability to evaluate how their strategies affect both “hard” and “soft” assets of the firms . This model is incomplete for example in finding and exploring non-linear value opportunities. Chapter – 3 (3. 0) Key success factors: Airtel has its presence in all 23 circles of the Indian telecom industry. Some of its key success factors are: Brand name: Airtel is a well known name throughout the world. So due to its internationalization strategy It is earning a huge amount of profit. One Step Ahead:
Airtel always believe in staying one step ahead of its rivals and it achieves this by doing multidimensional expansion. And this thing can be achieved only by a stable and visionary management. Business Process Outsourcing: Airtel always follows the strategy of outsourcing of all the non core activities and it keep on focussing on core activities. And it is also known as the first mobile company to outsource everything except marketing and sales. The outsources infrastructure and I. T operations from I. B. M, Nortel and Wipro and communication networks from Nokia and recently with Cisco and Servion to provide hosted contact centre services.
Innovations in VAS: Airtel has separate value added services for consumers and business enterprises. And other services such as Airtel online desktop for Airtel broadband users which provides free online space for storing, also editing and sharing. It also provides free software and updates on rental basis. M-Commerce: Airtel has also idea for introducing m – commerce as one of its value added service. Because still 80 to 85 percent of population is looking for financial transactions using mobile technology. So it’s a good step. Network: Airtel packs a punch when it comes to network coverage.
The aim of Sunil Bharti Mittal wasto creates a network which is clear even when in the basement. Airtel has done just that and beyond. (3. 1) Strategies of Airtel: Mobile to mobile payment: This is the first mobile-to-mobile payment option, which enables Airtel customers and ICICI bank visa cardholders to pay for their purchases with their Airtel mobile phones. Joint venture: Airtel realised that the role of mobile telephony must surpass the conventional school of thought in India. Ever since internet banking has kick started in India, it was just a matter of time before mobile banking started playing the role of a constant revenue stream.
The only drawback is the lack of infrastructure in India when it comes to cashless purchase To target around 55 million farmers fertiliser cooperative of India came in with a joint venture with airtel. This venture will help the farmers with the help of telecommunication services. And it will also help in giving the vital information to the farmers. And this is an innovative way of targeting the lower part of the pyramis whereas competitiors are not doing so. Hiring strategy: Airtel has a history of hiring some of the high level officials from other companies to be an integral part of their business.
AIRTEL IN WIRELESS IN INDIA: If we talk about wireless network airtel is at no. one position in India. It has a large customer base in comparison to other networks. So, from wireless they earn a total of 30% of revenue from market share. If we will see from the figure, airtel has 187 million customers in india which is the largest. And this proves that value chain plays a very important role in maintaining a profit margin. from this we came to know that the technology advancement , which is a secondary activity and operation , inbound logistics of primary activities is quite strong.
FIG – (1) – WIRELESS SUBSCRIBERS Value chain model of Airtel If we talk about value chain model of Airtel, first we will start with some key factors and we will fit them in a particular step of value chain , so that we can identify how it is giving extra value to the firm. So we will discuss each step in brief one by one. 1) BRAND NAME: Airtel is a well known name and is recognised throughout the world. It has its presence in various countries. If we talk through clear facts it is present in twenty countries and this brand is addressable to around 1.
8 bn population. It has its presence in different corners of world and is a major player in Africa country. It is considered as the provider of best services. It is also number one service brand in india. so because of having an image of respectful brand it is having a huge profit and they are having a profit margin. So its become an important part of value chain as it is providing value to the firm. So we can put this in technological advancement as because of good provider of services and technology it becomes a favourable brand.