Project on Idea Cellular Ltd.

Strategy in Global Context For Idea Cellular Ltd.

Strategy in Global Context Report-Idea Cellular Ltd.

Company Submitted to

Idea Cellular Ltd. Prof. Dilip

Submitted by

Hitesh Goyal Sheron Prabu Brendan Gomes PGPRM-9 MBA 12 B BLR 0903071001 BLR 0903031042 BLR 0903031006

Batch Reg. No.

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Contents CONTENTS............................................................................................. ........ ............ .... 2 INTRODUCTION TO INTERNAL ANALYSIS:............................................... ....................................................... ............. ..... 4 IMPORTANCE OF CONDUCTING AN INTERNAL ANALYSIS: ................ ......................... ................. ............. ..... 4 PROFIT ANALYSIS:.............................................................. ........ ................ ................ ............... ....... 4 Financial Resources: Resources: The current ratio and the quick ratio of Idea Cellular (Current Assets/Current Assets/Curr ent Liabilities) is 1.38:1 and 1.3:1 which show they can convert their assets in to cash easily and pay their current liabilities (Capitaline, 2009). In the same way their working capital is $1.5 billion which shows that they have huge cash for daily bases operation and financial works. If we talk about their shareholder funds which include general reserve reserve and equity share capital is $ 23 billion and total long term debt is $6 billion which is less than their capital, so it helps them to get loan easily (Idea Cellular Revenue, 2009). Revenues for Idea’s 13 operating service areas for Q1 at Rs. 26 million grew by 13.9% in 2009 (The Financial Express, 2009). Similarly, they invest in almost every big mutual fund companies, such as in ABN Amro Mutual Fund, ICICI Prudential Mutual Fund, SBI Mutual Fund, HDFC Mutual Fund, and Birla Sun Life Mutual Fund. So we can say base on the data, the company has strong financial management resources (Capitaline (Capitaline,, 2009). ............. ............................ ............................. ............................ ................................................ .................................. 5 Technological Resources analysis: analysis: Idea Cellular invests huge amount in the innovation embedded solution to enhance its technology, network, wireless space and Customer Relationship Relationshi p Management (Our Partners, 2009). For this, they signed a deal of $19.2 million with IBM (USA base Software Production Company). Idea uses IBM webspare application server for data and financial transaction, Oracle Siebel customer data integration for Customer Relationship Management and Supply Chain Management, they use OLTP (Online Transaction Transaction Process), CICS (Customer Information Control System) software to optimize the data security, network and mobility management (Idea Portal, 2009). Idea Cellular uses Vehicle Tracking System by GIS (Global Processing System). .............. ............................. ............................. ............................ ............................. ............................. ................................ .................. 6 VRHN: IDEA CELLULAR........................................................................................ 6 INTERNAL FACTOR ANALYSIS:......................................................................... .... 7 S TRENGTH:............. ........................... ............................. ............................. ............................ ............................. ............................. ............................... ............................ ........... 7 WEAKNESS:............. ............................ ............................. ............................ ............................. ............................. ............................. ............................. ........................... ............. 8 IFE ANALYSIS ANALYSI S MATRIX...... .......... ........ ........ ........ ........ ........ ........ .... 9 IMPORTANCE OF UNDERSTANDING COMPETITION: COM PETITION:..................... ............................. ................ ................ ........ 10 RATIONAL BEHIND IDENTIFYING THE COMPETITORS:................................. .......................................... ......... 10 COMPETITIVE COMPET ITIVE PROFILE PROF ILE MATRIX: MATRI X:... ...... ...... ...... ...... ..... .. 10 ANALYSIS OF CPM AND IFE:............................................................ ........ ................. ...........11 INTERNAL-EXTERNAL (IE) MATRIX........................................... ................................................... ................ ................. ...........14

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Strategy in Global Context For Idea Cellular Ltd. QUANTITATIVE STRATEGY PLANNING MATRIX M ATRIX (QSPM) ....................... ............................... ................. ......... 15 PLAN FOR NEXT THREE YEARS................................................. ......................................................... ................ ................. ......... 16 CONCLUSION....................................................................................................16 ANNEXURE 1...................................................................................... ........ .............. ...... 16 ANNEXURE 2...................................................................................... ........ .............. ...... 17 ....................................................... ........ .......... ..19 REFERENCES..................................................................................... ........ .............. ...... 19 APPENDIX.............................................................................................. ......... ...........21

Introduction: In this report on the basis of various tools and techniques like Internal Factor evaluation, SWOT analysis, Resource based view and other techniques like competitive profile matrix; we are now able to suggest the appropriate strategy for Idea Cellular. Now we are incorporating GE matrix as well as BCG matrix in order to come to a definite conclusion as to which strategy is suitable for the firm in the upcoming years as the telecom sector is growing at an unbelievable pace. Idea cellular is a part of Aditya Aditya Birla Birla Group, a multination multinational al having operations operations in 25 countries. The reputation of being the first Indian multinational and part of 100 fortune companies carries a lot of strength which Idea cellular enjoys being the part of prestigious group. (Idea Cellular, 2008) The profit margin of Idea cellular in relation to its competitors like Bharti Airtel and Vodafone has grown relatively about 4% from 2006-07 which was 11% to 15% in 2007-08. It is strength for the organization as it is likely to give them a competitive edge. (Q3 result: Idea cellular, 2008) Idea cellular has strategic alliance with IBM and Oracle. Both have a unique brand image for providing best in class software solutions like CRM (Customer Relationship Management) and OLAP (Online Analytical Processing). It has also tie ups with leading mobile producers producers like Nokia. This shows that the organization organization is dedicated dedicated towards providing superior services to its customers. (Idea Portal, 2009)

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Strategy in Global Context For Idea Cellular Ltd. Introduction to Internal Analysis: Internal Internal analysis is a vital strategic strategic management tool that helps in identifyi identifying ng the strengths strengths and weaknesses of an organization. These strengths and weaknesses, give an organization certain advant advantage agess and disadva disadvanta ntages ges to meet meet the needs needs of its target target market markets. s. Both Both streng strengths ths and weaknes weaknesses ses should should be identi identifie fied d from from the custom customer’ er’ss perspe perspecti ctive, ve, becaus becausee custom customers ers often often perceive what the organization couldn’t identify. (David, 2008)

Importance of conducting an internal analysis: It helps to identify an organization’s own capabilities, assessing the following things: •

What makes us different from competitors?

•

What is the general market condition of our business?

•

What are the problems and complaints that customers are facing with our products in the industry, and how can we deal with them effectively?

Profit analysis: Physical Resources: Idea cellular is a public listed company having license to operate in 22 areas. Presently its operations exist in 11 service areas, having a customer base of 24 million covering more than 60 % of the total Indian telecom population. (Capitaline, 2009) Currently Idea cellular has its corporate office in Mumbai, and a registered office in Gujarat. Its circle circle office officess are locate located d in 17 states states.. Presen Presently tly it has partne partnersh rship ip agreem agreement entss with with some some renowned organizations such as, Cellebrum India Pvt. Ltd., and NDTV for VAS (value added services), and for roaming Bharti Telesoft, for marketing communication it has tied up with Lowe India Pvt. Ltd. and for network, Nokia and Ericson are its biggest partners. (Bureau E. , 2009)

Reputation Resources: Being a part of India’s first multinational group, Aditya Birla, and being the third largest telecom service provider, it carries a strong reputation in the Indian telecom industry. It is also listed in Bombay Stock Exchange (BSE) as well as National Stock exchange. It has been awarded “Emerging Company of the year” by Economic times in 2009 (The Economic Times, 2009) It has won an award for ‘Care services in the best billing or SGC

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Strategy in Global Context For Idea Cellular Ltd. customer care’ at the GSM association award in Barcelona, Spain. The company won prestigious Golden Peacock Award for its innovative product “My gang” in 2008. Idea cellular limited is also an official sponsor of IIFA awards (Idea Cellular, 2008)

Organizational Resources: Along with Idea Cellular, Aditya Birla Group is considered as one of the most ethical companies in India and it reflects in all of its operations. The company has maintained maintained cordial relations relations with its supplier supplierss and distribu distributors. tors. The company company holds holds annual annual award functions to reward its suppliers, distributors and employees. It gives bonuses and dividends to its shareholders and employees every year.

Financial Resources: The current ratio and the quick ratio of Idea Cellular (Current Assets/Current Liabilities) is 1.38:1 and 1.3:1 which show they can convert their assets in to cash easily and pay their current liabilities (Capitaline, 2009). In the same way their working capital is $1.5 billion which shows that they have huge cash for daily bases operation and financial works. If we talk about their shareholder funds which include general reserve and equity share capital is $ 23 billion and total long term debt is $6 billion which is less than their capital, so it helps them to get loan easily (Idea Cellular Revenue, 2009). Revenues for Idea’s 13 operating service areas for Q1 at Rs. 26 million grew by 13.9% in 2009 (The Financial Express, 2009). Similarly, they invest in almost every big mutual fund companies, such as in ABN Amro Mutual Fund, ICICI Prudential Mutual Fund, SBI Mutual Fund, HDFC Mutual Fund, and Birla Sun Life Mutual Fund. So we can say base on the data, the company has strong financial management resources (Capitaline, 2009).

Intellectual Resources analysis: Idea Cellular has separate R&D department which helps to increase market share. It invests a huge amount in advertisement such as they have brand ambassadors such as Abhishek Bacchan and Mumbai Indians (Indian Premiere League). Idea has positioned themselves as young smart and innovative (Idea Cellular Revanue, 2009). Their advertisement punch line “An idea can change your life” created self image of the brand that other players were not able create in a short span of time. Moreover, in the year 2008 it collaborated with Geodesic, an innovator in communication and entertainment applications on mobile for providing “Idea radio” a radio service for its customers.

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Strategy in Global Context For Idea Cellular Ltd. Technological Resources analysis: Idea Cellular invests huge amount in the innovation embedded solution to enhance its technology, network, wireless space and Customer Relationship Management (Our Partners, 2009). For this, they signed a deal of $19.2 million with IBM (USA base Software Production Company). Idea uses IBM

webspare application server for data and financial transaction, Oracle Siebel customer data integration for Customer Relationship Management and Supply Chain Management, they they use OLTP OLTP (Onli (Online ne Transa Transacti ction on Proces Process), s), CICS CICS (Custo (Customer mer Inform Informati ation on Control Control System) software to optimize the data security, network and mobility management (Idea Portal, 2009). Idea Cellular uses Vehicle Tracking System by GIS (Global Processing System).

VRHN: Idea Cellular analysis is considered considered as the foundation foundation of internal analysis. analysis. Whatever Whatever an organizati organization on VRHN analysis posse possess sses es is general generally ly conside considered red as a resour resource ce or capabi capabili lity. ty. Financ Financial ial resour resources ces,, plant, plant, equipments, technology, brand equity and organizational expertise all can be considered as resources. Therefore, in order to have a competitive advantage an organization has to make sure that its resources are valuable, rare, hard to imitate and non substitutable.

Value: The Indian Telecom sector is the biggest telecom sector in the world, which has not been been affect affected ed by economic economic downtu downturn rn (Anton (Antony y A. & Ghosh Ghosh D., 200 2008). 8). Due to change change in per capita income, and providing good service, it is growing rapidly. Many multinational companies such as AT&T (USA), MTN (South Africa), Vodafone (UK) are trying to take control in India, but the domestic players like Airtel and Idea Cellular are trying to stop them to become a market leader. Idea cellular has great goodwill in India, because of many reasons such as, it is a public listed company, part of 12$ billion of India’s first multinational group “Aditya Birla Group”, which has operations in 18 countries (Idea Cellular, 2009). Even though, Idea wasn’t the first player in the telecom industry to launch GPRS, it has been awarded by The Economic Times in 2009 as emerging company of the year (The Economic Times, 2009). So its product has positive image between consumers.

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Strategy in Global Context For Idea Cellular Ltd. Rarity: As we know infrastructure and technology is not at par in India. So, Idea has tie ups with IBM, Oracle, Nokia and Ericson. They provide good software which Idea cannot get in India India due to technol technology ogy.. Idea Idea use IBM webspare webspare applica applicatio tion n server server for data and financ financial ial transaction, Oracle Siebel customer data integration for Customer Relationship Management and Supply Chain Management OLTP (Online Transaction Process) software to optimize the data security, network management. (The Financial Express, 2008) India, a, ever every y tele telecom com comp compan any y has to foll follow ow same same rule ruless and Hard Har d to imi imitat tate: e: In Indi regulations laid down by TRAI (Telecommunication Regularity Authority of India) and DoT. One company cannot copy another’s product, service name or punch line because of Registered Trademarks and Copyrights (TRAI, 2009), but they can start same service at same price with different name such as Idea came up with a unique plan “Idea Women Calling Card and My Gang” then in few days Airtel started “Family and Friends”, when Idea started GPRS service, Airtel and Vodafone also launched similar services with a different name and when Idea reduced call charges and launched easy recharge, others others also did the same thing. The punch line of Idea Cellular “An idea can change your life” cannot be imitated; the quality of product, network and service cannot be imitated.

Not Substitutes: Due to same call tariffs and similar bandwidth, Idea can be easily substitut substituted. ed. There are many telecom service providers who offer services services at almost almost same price such as Airtel, Vodafone and Tata Indicom. Therefore if people are not satisfied with the services or ongoing plans, they can easily step out and use the services of other players.

Internal Factor Analysis: Strength: Idea cellul cellular ar is a part part of Adity Adityaa Birla Birla Group, Group, a multin multinati ational onal having having Brand reputation: reputation: Idea operations in 25 countries. The reputation of being the first Indian multinational and part of 100 fort fortune une comp compan anie iess carr carrie iess a lot lot of stre strengt ngth h whic which h Idea Idea cell cellula ularr enjo enjoys ys bein being g the the part part of prestigious group. (Idea Cellular, 2008) Profit margin has been increasing at high rate . The profit margin of Idea cellular in relation to its competitors like Bharati Airtel and Vodafone has grown relatively about 4% from 2006-07

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Strategy in Global Context For Idea Cellular Ltd. which was 11% to 15% in 2007-08. It is strength for the organization as it is likely to give them a competitive edge. (Q3 result: Idea cellular, 2008) Financial strength: The current ratio and the quick ratio of Idea Cellular (Current Assets/Current Liabilities) is 1.38:1 and 1.3:1 which show they can convert their assets in to cash easily and pay their current liabilities (Capitaline, 2009). In the same way their working capital is $1.5 billion which shows that they have huge cash for daily bases operation and financial works. If we talk about their shareholder funds which include general reserve and equity share capital is $ 23 billion and total long term debt is $6 billion which is less than their capital, so it helps them to get loan easily (Capitaline, 2009).

Market share: The overall market share of Idea cellular is increasing at a healthy rate. It is currently operating in an industry which is expected to grow at a rate of 1.3 $ trillion in revenue according to a US based research agency (Insight research corporation New Jersey). Thus we can infer from this fact that Idea cellular has a huge target audience, as it has expanded its operations in almost all parts of India (The Money control, 2008). 2 008). Technology innovation: Being the first player in the telecom industry to start GPRS services in India, India, and even starting starting unique products, such as ‘My gang’ and ‘Idea radio’, radio’, the technological technological innovation of the organization can act as strength to the company in the long run (The Hindu, 2008). Strong advertising and promotion: Idea cellular is known in the industry for its aggressive promotional and advertising techniques, such as having Abhishek Bachan, a famous Bollywood star as part of its advertising punch line ‘What an idea Sir Ji’ proved effective in carrying out the promotional campaigns throughout the country (Money Outlook, 2001). 2 001). Strategic alliance: Idea cellular has strategic alliance with IBM and Oracle. Both have a unique brand image for providing best in class software solutions like CRM (Customer Relationship Management) and OLAP (Online Analytical Processing). It has also tie ups with leading mobile producers producers like Nokia. This shows that the organization organization is dedicated dedicated towards providing superior services to its customers. (Idea Portal, 2009)

Weakness: No presence in Broadband or internet service: BSNL, Airtel, Reliance communications, Tata, all of them offer broadband services. Reliance communications as well as Tata are now offering high broadband access through Data cards. It thus adds value to their respective brands. Not being a broadband service provider is therefore a big weakness for them. Less PAN India presence: Idea cellular limited has a low PAN (Presence across nation) India presence as compared to its rivals Airtel and Reliance communications. Airtel and Reliance have always been the first ones in expanding their operation expeditiously as compared to other players in the industry. SGC

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Strategy in Global Context For Idea Cellular Ltd. Target only North India: Idea Cellular is the market leader in North India, but they have a small market share in South India. Now recently it has made its presence in Tamilnadu.

Not a player of “Direct to Home Service”: Idea cellular is not a player of DTH services. Players Players like Reliance and Bharti Bharti Airtel Airtel have a strong presence in DTH services. Looking Looking at the future prospects of DTH services the giants like Tata, Airtel and Reliance who are the leading mobile service providers in the country have entered the arena of DTH. The DTH industry is expected to touch a base of 40-50 million subscribers by 2015. Not a big player in urban market: Idea Cellular is considered as rural market leader but they do not have good market share in urban area. They have 70 % market share in rural area and 32 % market share in urban area.

IFE Analysis Matrix Key Internal Factors: Strengths: Idea Cellular Dominates 70% of rural market

India’s 2th largest telecom service provider Technological innovation like India’s first GPRS service provider Brand reputation like SBU of India’s first multinational group Superior inventory turnover ratio and current ratio Strong advertising and promotion Excellent Debt Equity ratio and therefore financial agencies easily provide loan to the company. Increase in service operational and network areas Profit margin increasing at healthy rate Strategic Alliance such as with IBM, Oracle, Nokia Weakness: Target only North India Net operating profit ratio is decreasing No presence in Broadband or internet service Increase in the operating cost Not a player of Direct To Home Service

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Weight

Weighted Score

Rating

0.08

4

0.32

0.07

3

0.21

0.09

4

0.36

0.06 0.08 0.07

3 4 3

0.18 0.32 0.21

0.08 0.07 0.06

4 3 4

0.32 0.21 0.24

0.09 0.09 0.09 0.09

1 2 1 2

0.09 0.18 0.09 0.18

0.02

1

0.02

1

2.93


Importance of understanding competition: When a company positions its product in the market, it tries to position its brand uniquely among other other bran brands ds pres present ent in the the mark market et.. Th Ther eref efor oree it is crit critic ical al to unde unders rsta tand nd the the stre streng ngth ths, s, weaknesses, opportunities and threats of each of those competitors along with the industry structure itself. This knowledge is important because it’s the competition that helps us to own the unique benefit in our customer’s mind that our competitors’ have not addressed and cannot canno t easily address in the future.

Rational behind identifying the competitors: Analyzing Analyzing the competitor competitorss is an essential essential component of corporate corporate strategy. Knowing about the competitors and their profile will help the concerned organization in knowing its weaknesses that it may exploit. A detailed profile of the competitors, helps an organization in getting an in depth description of the competitor’s background, its unique selling proposition, financial condition, its strategies, the products and the market share.

Competitive Profile Matrix: Reliance telecom CSF’s

Wt

Idea Rating Wt’d

Airtel Rating Wt’d

Vodafone Rating Wt’d

Score 0.30

Score 0.60

Score 0.45

Market Share Brand Image

0.15 0.15

2 3

0.45

4 4

Financial Position

0.10

4

0.30

Service Quality

0.08

3

Customer Loyalty

0.06

Sales Channel

0.10

(Distributor, Outlets)

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0.60

3 3

4

0.40

0.24

4

2

0.12

4

0.40

Rating

Wt’D Score 0.15

0.45

1 2

3

0.30

3

0.30

0.32

4

0.32

1

0.08

2

0.12

2

0.12

2

0.12

3

0.30

4

0.40

2

0.20

0.30

Strategy in Global Context For Idea Cellular Ltd. 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

0.18

3

0.18

0.14

3

0.21

0.15

2

0.10

Promotions

0.18

(advertisement) Management.

0.06 0.07

3 3

experience Company Image

0.05

3

Total

1

0.18

0.21

3 4

0.28

4 3

0.15

4

0.20

3

2.97

3. 3.64

3.02

Analysis of CPM and IFE: With the analysis of the competitive profile matrix (CPM) we can conclude that the company’s strategy in the Nature care segment is better than that of their existing and latent competitors, on the other hand the company has to adopt new strategy to strengthen their position in the health care segment. As the analysis of internal factor evaluation (IFE) we can say that the company’s strategy is aligned with the strength and weakness of their organization. We have have also also recog recogni nized zed how the the stud study y of inte intern rnal al fact factor or and compet competit itio ion n will will help help in determining the strategy for the organization. TOWS MATRIX

Thee TOWS Th TOWS matr matrix ix is an impor importa tant nt matc matchi hing ng tool tool that that help helpss in deve develo lopi ping ng four four type typess of strategies; —usee a firm firm’s ’s inte intern rnal al stre streng ngth thss to take take adva advant ntag agee of exte extern rnal al strategie giess —us 1. SO strate opportunities. 2. WO strategies —are aimed at improving internal weaknesses by taking advantage of

external opportunities. 3. ST strategies —use a firm’s strengths to avoid or reduce the impact of external threats.

—are defens defensive ive tactic tacticss direct directed ed at reduci reducing ng intern internal al weaknes weaknesses ses and strategies ies —are 4. WT strateg avoiding external threats

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2.03

Strategy in Global Context For Idea Cellular Ltd. After analyzing the SWOT analysis of Idea cellular which has been done in the previous report the tows matrix can be constructed as follows: SO strategies: strategies: Under Strength and opportunity strategy the company should penetrate the rural

market as the number of mobile users in rural India is increasing at a fast rate, we can say it is becoming very close to urban consumers. As the organizations carries a good brand reputation of Aditya Birla Group, and being the first organization to launch GPRS service, it should penetrate the rural market and offer other value added services like GPRS at affordable prices. Brand promotion is required in this perspective. The advertisements of Idea cellular give a touch of Indian villages, it therefore can become successful in gaining a large pool of customers, but it has to maintain superior digital clarity that too at an affordable prices. WO Strategies: This strategy is a tool by which we can understand the weaknesses and compare

them with the opportunities we have in hand, and making an effort to see how weaknesses can be utilized in maximizing the available opportunities. Earlier the firm was targeting the consumers of Northern India only. In its recent expansion plan it has slowly capture the other parts of India as well, but it has not been able to provide some value added services like Direct to home and mobile broadband service like Tata and Reliance. The reason behind providing these value added services is that it gives a unique strength to the firm and a kind of diversification. The result is broadening of services and capability of jumping into other related services which can be very securely connected with mobile services. ST Strategies: Strategies: Looking at the strength of the firm the firm carries a brand name and the market

share of the company is increasing in other parts of India as well including north and western parts of India. The company’s promotional strategies are also proving beneficial. The recent advertisements have proved successful in executing the brand communication to the consumers. But the threats cannot be ignored and these have to be very carefully analyzed so that the threats can be minimized into strengths. Poor infrastructure and not upgrading the technology whenever the need arises is a big threat and it has to be minimized to the maximum extent possible. Sometimes poor execution of promotional activities can also damage the reputation of the firms. The care has to be taken as to what technology is most suitable, with whom the firm should tie

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Strategy in Global Context For Idea Cellular Ltd. up (like strategic alliance with Nokia and other major software providers like IBM). Another major threat can be the untrained workforce. The strategy strategy here the company company can adopt is to see whether what kind of training training is required for the workforce and at what time. Dealing with the local distributors is a challenging task and it requires a strong convincing power. Thus Idea cellular can minimize this threat by giving appropriate training to its workforce from time to time. Upgrading the technology and bringing on more creative promotional activities can bring in a lot of change in the company’s business.

BCG matrix: BCG Matrix of Idea Cellular Limited with respect to Airtel and industry growth rate:

e t a R h

Idea

t

w o r t

G

e k r a M

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Relative Market Share


The Entire Telecom Industry is growing at a rate of 35% as compared to the base year 2006-07. This can be termed as a moderately growing Industry and it is expected to grow in the coming years. Also as per the latest report of TRAI, an apex body regulating telecom affairs, the number of mobile subscribers has touched 50 crore. Bharti Airtel is the market leader with 32% share for long time but now they are losing their market share. Idea Cellular Limited has a share of 22% in the total GSM telecom market in India (as on July’09) and it is growing at 18% annually. Presently its operations exist in 11 service areas, having a customer base of 24 million covering more than 60 % of the total Indian telecom population. (Capitaline, 2009) Currently Idea cellular has its corporate office in Mumbai, and a registered office in Gujarat. Its circle offices are located in 17 states. Presently it has partnership agreements with some renowned organizations such as, Cellebrum India Pvt. Ltd., and NDTV for VAS (value added services), and for roaming Bharti Telesoft, for marketing communication it has tied up with Lowe India Pvt. Ltd. and for network, Nokia and Ericson are its biggest partners. (Bureau E. , 2009). So it comes under star.

Internal-External (IE) Matrix

The IE matrix is the strategic tool used to analyze the working condition and the strategic position of the business. The IE matrix includes both the internal as well as the external factors which will affect the business, based on the scores of internal factor evaluation (IFE) and external factor evaluation (EFE) we determine the company’s position in the Matrix. The matrix is being divided into nine grids and the relative position of the company in the grid will explain their strategy strategy.. The company lies lies in the position position of strong so it lies in the strong strong grid of the IE matrix so the company has to grow and build which suggests that the company should go for intense and aggressive tactical strategies like market penetration, market development or product development. The company can also consider the alternative of backward, forward or horizontal integration.

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EFE Scores Grow

And

Build

Hold

And

Maintain

Harvest

Or

Divest

Idea

IFE Scores

Quantitative Quantitati ve Strategy Planning Matrix (QSPM) The QSPM is a strategic planning approach for evaluating the possible set of strategies, this act as an analytical tool to for the comparison of the alternative strategies. In the given case we are considering following three alternative strategies for Idea this includes: 1. Strategic Alternative 1: Can go for backward integration such as Vodafone acquire Hutch to increase market share or forward like acquire distributers 2. Strategic Alternative 2: Can go for marketing penetration: Target the urban segment; launch a new service with same brand name like Tata Docomo has done “Billing “Billing per pulse

rate”, provide more high end services like GPRS, mobile internet services and provide good customer service 3. Strategic Alternative 3: Can go for the horizontal integration activities i.e. Airtel has gone for Dish TV, Reliance has gone for Big TV

Evaluating the above mentioned strategies with assigned weight to the strength, weakness, opportunities and threats present in front of the company, and we have figure out that the strategic alternative 2 i.e. Target the urban segment; launch a new service with same brand name. Like Tata Docomo has done, Provide more high end services like GPRS, mobile internet

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Strategy in Global Context For Idea Cellular Ltd. services services and provide good customer customer service. service. This strategy strategy has the attractiveness attractiveness score of 6.22.

Plan for next three years The company is having high operating operating cost i.e. the company is not utilizing its its recourses properly, since by the Internal-External (IE) matrix the company falls in the grid of Grow and Build which also suggests that the company can go intense and aggressive strategy of market penetration or the alternative of going for the vertical integration. According to the QSPM analysis as well the alternative for going for the vertical integration was the most attractive one. The company should also come up with new service like

pulse rate” in order to increase the market share. In the BCG Tata Docomo has come up “Billing per pulse matrix Idea Cellular falls in the Star’s category. Idea Cellular should also try to acquire or tie up with other companies such as Vodafone and Hutch and Airtel and MTN tried to tie-up in order to catch up with the competition and the growth of the industry. They acquired spice in past and they have tie-up with Ericson but they do not have any type of advantage in term of internet service or upcoming 3G service. Idea should come up with new service for new segment of customers, try to focus on urban market which is again found out to be best alternative from the QSPM analysis.

Conclusion As a conclusion of this report we figure out that the company’s strategy to t arget the rural segment; launch a new service with same brand name like Tata Docomo has done, provide fast GPRS, mobile

internet services and provide good customer service which is having the attractiveness score of 6.22.

Annexure 1 SO Strategy Target the 1. Can go for Market Marketing ing penetr penetrati ation on:: Target

WO Strategy 1. Can go for Forward Integration- Operate

segment; t; launch launch a new servic servicee with with same same other urban segmen other showro showrooms oms which which supple supplemen mentt the

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Strategy in Global Context For Idea Cellular Ltd. brand name like Tata Docomo has come up “Billing

per pulse rate”, pro provi vide de more more goo good d and and fast fast services like GPRS, mobile internet services and provide good customer service distribution channels

ST Strategy

1. Can go for Backward integration such as Vodafone acquire Hutch to increase market share

WT Strategy 1. Can Can go for for the the hori horizo zont ntal al inte integr grat atio ion n activi activitie tiess i.e. i.e. Airtel Airtel has gone for Dish TV, Reliance has gone for Big TV

Annexure 2

Strength

Wei ght

1 Brand reputation like SBU of India’s first multinational group 0.15 SGC

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Strategic Alternative 1 Weight Sco ed re score



4

2

2

0.6

0.3

0.3

Strategy in Global Context For Idea Cellular Ltd. Strong ng adver adverti tisi sing ng and and 2. Stro promotion 3 Supe Superi rior or inven nventtory ory turn turnov over er rati ratio o and and curr curren entt ratio 4. Wide distribution network 5. Local and global acquisitions Technological innovation innovation 6. Technological like India’s a’s first GPRS service provider 7. Strategic Alliance such as with IBM, Oracle, Nokia 8. Better Better unders understan tandin ding g of rural market Weakness 1. Target only North India 2 Net operating profit ratio is decreasing 3. No presence in Broadband or internet service 4. Increase in the operating cost Opportunities 1. Growth in market size 2. Scope for new and innovative service 3. Opportunities for M&A 4. Growth in rural market 5. Higher disposable income of consumers 6. Levi on fringe tax 7. Increase in FDI 8. Export potential Threats 1.Price sensitive Unorganized market 2. Production malpractices 3. Competition 4. Disputes with retailers 5. Volu Volume me depe depend nden ency cy for sales 6. Transportation problem SGC

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0.03

1

0.03

2

0.06

1

0.03

0.04

3

0.12

1

0.04

2

0.08

0.1

4

0.4

4

0.4

4

0.4

0.05

1

0.05

2

0.1

3

0.15

0.06

3

0.18

3

0.18

2

0.12

0.08

2

0.16

3

0.24

3

0.24

0.12

3

0.36

4

3

0.12

3

0.36

1

0.48 0 0.12

2

0.36 0 0.24

0.09

3

0.27

2

0.18

2

0.18

0.06

2

0.12

4

0.24

3

0.18

0.1 1

4

0.4

4

0.4 1

1

0.15

4

0.6

3

0.45

2

0.1 1 0 0.3

0.05 0.04 0.12

2 1 3

0.1 0.04 0.36

3 2 2

0.15 0.08 0.24

1 3 3

0.05 0.12 0.36

0.1 0.06 0.09 0.04

2 1 1 1

0.2 0.06 0.09 0.04 0

3 3 2 1

0.3 0.18 0.18 0.04

2 2 1 2

0.2 0.12 0.09 0.08 0

0.1

4

0 .4

4

0.4

2

0.2

0.05 0.04 0.02

2 1 2

0.1 0.04 0.04

2 1 2

0.1 0.04 0.04

3 1 1

0.15 0.04 0.02

0.07

1

0.07

2

0.14

3

0.21

0.07

2

0.14

2

0.14

2

0.14

Strategy in Global Context For Idea Cellular Ltd. 1

5.33

6.22

5.46

References Idea Journey(n.d.). Retrieved September 02, 2009, from Idea Cellular: http://www.ideacellular.com/ShowBinary/BEA %20Repository/idea/InvestorPresentation/InvestorPresentationQ1FY10.pdf Some gap in Idea market opportunity (2008, July 10). Retrieved August 29, 2009, 20 09, from The Financial Express: http://www.financialexpress.com/printer/news/333489/ Anto Antony & Durba Ghosh, E. B. (2008, December 20). Telecom beats slowdown blues contribute big to GDP growth. Retrieved August 31, 2009, from The Economic Times: http://economictimes.indiatimes.com/articleshow/3864667.cms Budget . (n.d.). Retrieved August 30, 2009, from India Budget: http://indiabudget.nic.in/

Bureau, E. (2009, august 25). Features. Retrieved 09 01, 2009, from The Economic Times: http://economictimes.indiatimes.com/articleshow/4930919.cms

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Strategy in Global Context For Idea Cellular Ltd. Bureau, O. (n.d.). Tax award for Idea Cellular . Retrieved September 02, 2008, from The Hindu Business Line: http://www.thehindubusinessline.com/2008/03/04/stories/2008030451172300.htm Idea Cellular Revenue. (2009). Retrieved August 27, 2009, from The Financial Express: http://www.financialexpress.com/news/idea-cellular-revenue-up-13.9-pct/414357/ Idea Cellular Revenue. (2009, January 23). Retrieved August 30, 2009, from The financial Express: http://www.financialexpress.com/news/idea-cellular-revenue-up-13.9-pct/414357/ India World's Second-largest Wireless Market . (2008, August 8). Retrieved September 1, 2009, from The Economic Times: http://economictimes.indiatimes.com/News/News-By-Industry/Telecom/India-worlds-secondlargest-wireless-market-Study/articleshow/3340553.cms Our Partners. (2009). Retrieved August 28, 2009, from Idea: http://www.ideacellular.com/IDEA.portal? _nfpb=true&portlet_MyIdeaController_5_actionOverride=%2FIDEA%2Fcontent%2FmyIdea %2FdisplayContent&_windowLabel=portlet_MyIdeaController_5&portlet_MyIdeaController_5 displayParam=ourPartners&_pageLabel=IDEA_Page_AboutI News. (2009, January 26). Retrieved August 28, 2009, from Television Point: http://www.televisionpoint.com/news2009/newsfullstory.php?id=1232973159 press. (2009, January 20). Retrieved August 31, 2009, from Idea: http://www.ideacellular.com/IDEA.portal? _nfpb=true&_pageLabel=IDEA_Page_IdeainMedia&displayParam=content_press_newreleases_ corpHome3.html

2 009, from Aditya Birla Nuvo: Press Releases. (2009). Retrieved august 21, 2009, http://www.adityabirlanuvo.net/media/press_releases/pressrelease.aspx?ID=BYPQa0lysY8= 2 009, from Idea Cellular: Press Releases. (2009). Retrieved August 29, 2009, http://www.ideacellular.com/IDEA.portal? _nfpb=true&_pageLabel=IDEA_Page_IdeainMedia&displayParam=content_press_newreleases_ corpHome3.html Publication. (n.d.). Retrieved August 29, 2009, from CIA: https://www.cia.gov/library/publications/the-world-factbook/geos/in.html#top Tax Award For Idea Cellular . (2008, March 3). Retrieved September 1, 2009, from The Hindu Business Line: http://www.thehindubusinessline.com/2008/03/04/stories/2008030451172300.htm SGC

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Appendix 1. Oracle Oracle CRM CRM Data Data model model and and ERP data data model model used used by Idea Idea

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2) GPS and GIS used by Idea Cellular:

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3) GPRS and VAN system used by Idea Cellular:

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Project on Idea Cellular Ltd.

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