Strategic Audit of BSNL

BSNL LOSING ITS MINI NAVRATNA STATUSGROUP 9

LOSING THE MINI –NAVRATNA

STATUS!!

A DYING

PROMETHEUS!!!!

FUTURE

Telecom Industry

Telecom Industry

India is the 3rd largest telecommunication market in the world.

Telecom sector contributes nearly 2% of the Indian GDP.

Under NTP 1999 telecom sector has transformed drastically.

The overall teledensity has reached 77.5%

Subscriber base has a growth rate of over 26%.

Evolution of Telecom Sector

BSNL: Introduction

BSNL is the state owned telecommunication company headquartered in New Delhi.

It is the largest provider of fixed telephone service in India

It has 95 million customers as of June 2011.

Services provided by BSNL are Universal telephone service, cellular mobile telephone services, WLL-CDMA telephone services, Internet, IN, 3G, IPTV, FTTH, VVOIP, WIMax

BSNL has 75% market share of fixed lines

BSNL: Introduction

BSNL has13.50% share of mobile telephone.

55.6 % market share with 9.19 million internet subscribers.

BSNL has world-class infrastructure

BSNL’s Turnover for the financial year 2010-11 of BSNL was 29,700 crores.

Growth Plan of BSNLConsidering the current scenario and demand in telecom sector BSNL has planned to increase its customer base to 160 million by March 2014.

Products

Universal Telecom Services

 (75% Market Share)

Cellular Mobile (13.50% share )

WLL-CDMA Telephone

Internet1. Netone

2.Broadband (55% Market

Share)

Intelligent Network

Products

3G IPTV FTTH

Tablet-PC WiMax

Market Share

Competitors Profile: Airtel

Largest player with presence in 23 circles. Market share of 20% (approx)

Cost leadership & High Quality Technology

Operational Efficiency

CORE Competency: Branding & Promotions

Outsourcing Managed Services to Erricson IT service to IBM

Vodafone, completed the acquisition of Hutchison Essar in May 2007.

It is among the top three GSM mobile operators of India.

Cost Leadership & World Class Technology

Core Competency Brand Image Recognition

Vodafone also became a mass mobile phone brand like Nokia, Samsung, Motorola, and Sony Ericsson in addition to continuing as telecom services provider.

Competitors Profile: Vodafone

Major Issues

Issues

ISSUES

EXTERNAL ISSUES

INTERNAL ISSUES

(Rs in crores)

External Issues

Political Environment

External Control and Bureaucracy

Lack of support from the Government

No strategic investments and lack of transparency

Entry of private players

Linkage between social obligations and commercial activities

Internal Issues

Higher wage expenditure.

Lack of coordination and support from employees.

Poor customer service.

Operational inefficiency.Poor marketing strategy and hence poor brand equity.Huge infrastructure and assets.

Poor technology implementations

Slow decision making

Analysis

Analysis

SWOT

Porters Five Forces

PEST Analysis of Indian telecom market

Grand Strategy selection matrix

Ansoff Matrix

SWOT

STRENGTHS Market leader as far as wireline subscriber base

is concerned Large no. of resources Huge optical fiber network Deep penetration into the rural market Huge tower network with approx 70,000 towers Easy deployment of new resources

WEAKNESS High bureaucratic control Operational inefficiency Not leveraging their huge infrastructure Poor technological implementations Poor marketing strategy and hence poor brand

equity Few strategic alliances Other problems like social obligations and

outdated technologies

SWOT

OPPORTUNITIES India is one of the fastest growing market in

telecom sector 5G Allocation and shifting of trend towards

adoption of Next generation networks Strategic alliances to penetrate globally Broadband in rural areas Public private partnership

SWOT

THREATS Highly competitive market Market maturity in basic wireline phones Decrease per line revenues due to competitive

pricing Private players now focusing on fixed wireless

phones

SWOT

Porters Five Forces

THREAT OF NEW ENTRANT(Medium)

DEGREE OF RIVALRY(High)

BARGAINING POWER OF BUYERS

(High)

THREAT OF NEW SUBSTITUTES

(Low)

BARGAINING POWER OF SUPPLIERS

(High)

Degree of Rivalry

There is high degree of rivalry in telecom industry

High Exit Barriers High Fixed Cost: Very Less Time To Gain Advantage

By Innovation Price Wars

Threat of New Entrants

For telecom industry threat of new entrants is Medium.

Licensing requirement act as a major barrier to entry. Sometimes it became very difficult for the new entrants to obtain license.

The Threat Of Substitutes (Low)

Threat of substitutes is currently low in the telecom sector

Rapid increase in penetration of broadband in India, it is gradually increasing with the increasing use of services like online chat, VOIP skype, Email,etc.

Bargaining Power Of Buyers (High)

Bargaining power of buyers is dependent on size and concentration of customers.

It depends on the level of information of buyers & differentiation of the competitor.

In telecom sector buyer power is high as there are many large players in the market.

Bargaining Power Of Suppliers (Medium)

Market has high supplier power if suppliers can charge customers different prices in line with differences in the value created for each of those buyers.

PEST Analysis

Political Political Interference Corruptions like 2G scam. Stability of Government

Economic Subscriber base is increasing – due to increase in

disposable income Usage rate is increasing. Low call cost and increasing frequency of calls.

Social Techsavy consumers Lifestyle changes Regional shift in population from rural to urban

areas.

Technological New generation Networks Use of VOIPs Internet Tablets Business on a phone Coming up of E-commerce

PEST Analysis

Business Strategy

Grand Strategy Selection Matrix

Maximize Strengths with Internal Resources

Concentrated growth Focus on increasing market share in existing

markets. Focus on Rural Market Customized plans and discounts

Market Development Joint ventures for penetrating the global Market. Operationalize a market development strategy .

Grand Strategy Selection Matrix

Product development strategy This involves modification of the existing

products and make new products for the existing customers.

They are trying this strategy with their WIMAX technology (Failure of Franchisee model in some areas)

Grand Strategy Selection Matrix

Minimize Weakness with External Resources

Vertical integration Merger with telecom equipment manufacturer ITI Combine service-providing & manufacturing

Overcome Weakness with Internal Resources

Turnaround or retrenchment plans Cost reduction Assets reduction

Divestiture Divest by selling share to public

Grand Strategy Selection Matrix

Ansoff Matrix

Existing market

Existing product New products

Market Penetration•Landline service•Internet service•Cater rural demand

Product Development•Broadband based content oriented services•Tablets

New market

Market development•Cellular service•Leased circuit•Intelligent network•Broadband WIMAX

Diversification•Turnkey projects for ITES companies•International market

RECOMMENDATIONS

Recommendations

Follow recommendations based on analysis of Sam Pitroda’s Report Enhance the decision making process to

the competitive business environment and the changing market realities.

Minimize Political Interaction. Pruning of staff and adding young blood. Encourage Meritocratic culture in BSNL

Leverage huge network strength Improve performance Improve customer service Improve marketing strategy Leverage the huge tower

strength Implement end to end IT system Indulge into PPP

Other Recommendations