STRATEGIC MANAGEMENT - 1

IDEA CELLULAR

Presented by Group 9:Asmita Sinha (PGFB1311)

Paridhi Bathwal (PGFB1329)Ram Kumar Sain (PGFB13)

Rishi Sharma (PGFB13)Supreet Gupta (PGFB13)

Public Company Incorporated in 1995 Industry: Telecommunications Headquarters: Santa Cruz, East Mumbai Chairman: Kumar Mangalam Birla Products: Mobile Telephony, Wireless Broadband Revenue: US$ 265 billion (2013-14) Net Income: US$19.68 billion Total Assets: US$ 5.33 billion Employees: 6481 Parent Companies: Aditya Birla Group (49.05%)

Axiata Group Berhad (19.96%)Providence Equity (10.06%)

COMPANY PROFILE

VISION STATEMENT“To be a premium conglomerate with a clear focus on each of the business.”

MISSION STATEMENT“To deliver superior value to our customers, shareholders, employees and society at large.”

VISION & MISSION

Strength

Skilled workforce

Weakness

Small business units

High loan rates are possible

Opportunity

Growing economy

Global market

Constant increase of income level

Venture Capital

High demand for 3G Services

Threats

Tax changes

Rising cost of raw materials

Growing competition

Increase in labor cost

Increase in rate of interest

SWOT ANALYSIS

Finance Minister, Arun Jaitley has allocated Rs. 500 Crores to build the Infrastructure as per National Rural Internet & Technology Mission

In Budget 2014-15 it has been decided to start Kissan T.V. to farmers to give them information on new farming techniques, organic farming and water conservation

According to PWC, the Government should pay more attention in many key areas in the Telecom Sector

INDUSTRY NEWS

Who it serves?• VIP Customers • Corporate Customers• Platinum Customers• Gold Customers• Silver Customers• Medium Value Customers• Low Value Customers

What it provides?• Mobile Telephony• Wireless Broadband

How it differentiates and sustain competitive advantage?• Price affordability• Hires famous personalities for

promotion• Only Company that offers special

package for ladies• Internet facilities on Budget Handsets• Idea Cellular PCO• Roaming Facilities at affordable charges

How it makes money?• More focus on 3G / Internet

Services• Improved Customer Services

How it serves?

BUSINESS MODEL

EXTERNAL ASSESSMENTECONOMIC FORCES•With a subscriber base of nearly 898 million, India has the second-largest telecom network in the world.•The sector's revenue grew by 13.4 per cent to reach US$ 64.1 billion in FY12.• Wireless and wire line revenue increased at a compounded annual growth rate (CAGR) of 10.4 per cent to reach US$ 39.1 billion over FY06–13• Revenues from the telecom equipment segment in FY12 stood at US$ 23.5 billion as compared to US$ 23.4 billion in FY11.

SOCIAL, CULTURAL, DEMOGRAPHIC, AND NATURAL ENVIRONMENT FORCES

• With 70 per cent of population staying in rural areas, the rural market will be a key growth driver in coming years.

• Telecom penetration in the nation’s rural markets is expected to increase to 70 percent by 2017 from the 41.0 percent as of March 2013.

POLITICAL, GOVERNMENT, AND LEGAL FORCES•The Government of India plans to cut license fees up to 33 per cent for operators that cover services for over 95 per cent of the residential areas in a calling circle.• The issuance of several international and national long-distance licenses has created opportunities and attracted new companies into the market.•The government has also allowed foreign direct investment (FDI) of up to 74 per cent in basic and cellular, unified access, national/international long distance, and V-Sat services as well as public mobile radio trucked services.• FDI of up to 100 per cent is permitted for infrastructure providers offering dark fibre, electronic mail and voice mail.

TECHNOLOGICAL FORCES•The mobile application (app) market is expected to expand at a CAGR of 70.4 per cent during 2012–15 and reach US$ 100 billion. •The segment’s growth is expected to be driven by rising mobile connections and availability of low-range smart phones.• Over 100 million apps are downloaded every month across different platforms such as iOS, Blackberry, Nokia, and Android.

COMPETITIVE PROFILE MATRIX  Idea Airtel Vodafone

Reliance telecom

CSF’s Wt Rating Wt’d Score Rating Wt’d Score Rating Wt’d Score Rating Wt’D

Score

Market Share 0.15 2 0.30 4 0.60 3 0.45 1 0.15

Brand Image 0.15 3 0.45 4 0.60 3 0.45 2 0.30

Financial Position 0.10 4 0.30 4 0.40 3 0.30 3 0.30

Service Quality 0.08 3 0.24 4 0.32 4 0.32 1 0.08

Customer Loyalty 0.06 2 0.12 2 0.12 2 0.12 2 0.12

Sales Channel (Distributor, Outlets) 0.10 4 0.40 3 0.30 4 0.40 2 0.20

Global Exposure 0.05 3 0.15 4 0.20 4 0.20 1 0.05

Org. Culture(Awards) 0.08 4 0.32 3 0.24 2 0.16 3 0.24

Sale growth 0.05 3 0.15 4 0.20 3 0.15 2 0.10

Promotions (advertisement) 0.06 3

0.18

3

0.18

4

0.18 3 0.18

Management. experience 0.07 3 0.21 4 0.28 3 0.14 3 0.21

Company Image 0.05 3 0.15 4 0.20 3 0.15 2 0.10

Total 1   2.97   3.64   3.02 2.03

Key Internal Factors: Weight Rating Weighted Score

STRENGTHS:      

Idea Cellular Dominates 70% of rural market 0.08 4 0.32

India’s 2th largest telecom service provider 0.07 3 0.21

Technological innovation like India’s first GPRS service provider 0.09 4 0.36

Brand reputation like SBU of India’s first multinational group 0.06 3 0.18

Superior inventory turnover ratio and current ratio 0.08 4 0.32

Strong advertising and promotion 0.07 3 0.21

Excellent Debt Equity ratio and therefore financial agencies easily provide loan to the company. 0.08 4 0.32

Increase in service operational and network areas 0.07 3 0.21

Profit margin increasing at healthy rate 0.06 4 0.24

Strategic Alliance such as with IBM, Oracle, Nokia      

WEAKNESS:      

Target only North India 0.09 1 0.09

Net operating profit ratio is decreasing 0.09 2 0.18

No presence in Broadband or internet service 0.09 1 0.09

Increase in the operating cost 0.09 2 0.18

Not a player of Direct To Home Service 0.02 1 0.02

TOTAL 1   2.93

IFE MATRIXIFE MATRIX

KEY EXTERNAL FACTORS: WEIGHT RATING WEIGHTED SCORE

OPPORTUNITIES

1. Growth in market size 0.2 4 0.8

2. Scope for new and innovative service 0.1 2 0.2

3. Opportunities for Mergers and acquisition 0.05 2 0.1

4. Growth in rural market 0.15 3 0.45

5. Higher disposable income of consumers 0.1 2 0.2

THREATS

1.Price sensitive Unorganized market 0.1 4 0.4

2. Production malpractices 0.1 2 0.2

3. Competition 0.15 3 0.45

4. Disputes with retailers 0.05 2 0.1

TOTAL 1 2.9

EFE MATRIX