Bharti Airtel Limited Company Analysis
1. Brief introduction to the company
Bharti Airtel Limited is an Indian world's leading telecommunication company which provides fixed-line broadband and mobile 2G, 3G and 4G wireless services, as well as voice services; the company owns more than 39000 telecom towers. The company’s headquarter is located in New Delhi, India. The main markets of Airtel are in 20 countries in Africa and South Asia and totaling more than 20,000 workers. At the research report of Bharti Airtel Limited (November 9, 2018) it is said that: “The company's client base had more than 413 million users at the end of September 2018.” The vision of the company is “to enrich the lives of customers” (Airtel Annual Report, 2018).
2. Company data which can be used to evaluate its success
The key factors assessing the success of a company include the company's financial statements, its place in the market among competing companies, the volume of sales of its products or services (operating highlights), and other. Rohit Krishan Kuri, Dy., company secretary and compliance officer of the Airtel, at the Bharti Airtel Limited Annual Report (2018) has presented the main quantity and financial highlights of the company. Performance highlights are presented at the figure 1 below.
Figure1. Performance highlights of Bharti Airtel Limited for 2014-2018 years (financial year ended March 31)
According to the financial report for the years 2014-2018, presented in the table above, the main operating indicators, such as the number of users of mobile services, home services, digital television and Airtel business have increased. Thus, the total number of users has increased from 295948 million users in 2014 to 413822 million users in 2018.
According to annual report, on the figure 2 consolidated financial indicators for the period from 2014 to 2018 years are shown.
Figure2. Consolidated Financials of Bharti Airtel Limited for 2014-2018 years (financial year ended March 31)
Despite the growth of customer base, total revenues (836879 million) and net profit (10989 million) have reached the minimum meaning in 2018 year. Thus, annual report shows that the consolidated financials increased in the period from 2014 to 2016 years. In 2017, the situation has changed and indicators became lower in years 2017 and 2018, saving such probable tendency in 2019.
At the same time, the overall market situation shows that Airtel is the leader in terms of income in the Indian market among such competitors as Vodafone and Idea (Baburajan, 2018). Moreover, even if Vodafone and Idea companies merge, the situation will not change and will remain advantageous in favor of Airtel.
All the data that has been studied in this section, allow making an unequivocal conclusion that the company is successful, as it was able to increase the size of its customer base in 2018, even despite the negative trends in revenue decline in the whole industry. Also, in the previously reviewed annual report of Airtel (Bharti Airtel Limited Annual Report, August, 27, 2018) it is described all the achievements of the company for year 2017 and which allow to do a conclusion about the success of the company. Thus, the company Airtel was defined in 2017 year according to Forbes (2018) rating as the most innovative company in the world in 2017; also the company “won the TM Forum’s Excellence Award 2017 in the ‘Smart Service Provider – Business of the Year’ category for accelerating digital transformation in India; won Aon Best Employer India 2017 for achieving high levels of employer brand, employee engagement and well established human resource practices”.
3. Business reasons behind the success
One of the main reasons for the success of any company is the correct and loyal approach to its employees. Thus, Bharti Airtel Limited was chosen as the best employer in India 2017. Such award means that the company has a clear corporate strategy and provides all the right conditions for comfortable work as well as a sense of security and importance for each of its employees. Company has training and development program for workers (Khan, 2016). Employees receive decent wages and work in decent conditions - these factors motivate to the desire to show initiative, develop and stimulate the conscientious accomplishment of tasks by employees, as well as increase labor productivity.
Another reason for the success of Airtel is the choice of the strategy of "low cost due to large volumes" (Genesys, 2009). The operator is considered to be one of the business innovators, as one of the first to transfer most business processes to outsourcing. For itself, "Airtel" left marketing, sales and accounting. Later, such a scheme of work was considered acceptable by other operators. Three major partners are responsible for the supply and maintenance of equipment: Ericsson, Nokia Solutions and Siemens (SiliconIndia, 2010). Moreover, Ericsson agreed to an incredible working environment consisting in per-minute billing of specialists. Such strategic alliance has strengthened Airtel’s market position.
One of the reasons for the success of Airtel is the innovative management model – for example, the creation of a virtual corporation. Such a business model allowed the company to manage a large client network, while offering the lowest possible prices on the telecommunications services market. Despite the low prices, the company's revenues increased for many years. It should be noted that the company was the first to introduce a similar management model, and later became the norm in the telecommunications industry around the world.
Numerous awards and recognitions can also be attributed to one of the reasons for the company's success. Positive company image is one of the key success factors. Throughout the existence of the company, Airtel has received many different awards (Bharti Airtel Rapport annual, 2017). On the one hand, Airtel receives awards as the best employer, and on the other hand, as a provider of high-quality and fast network. Also, the company has repeatedly received awards for its innovation and contribution to the telecommunications industry as a whole.
Acquisition and merger with other companies are also one of the most important success factors for Airtel. However, the success of these transactions depends largely on the professional approach of the participants of mergers and acquisitions processes: buyer, seller and consultants. Careful planning transactions allow you to take advantage of the current financial situation. It should be noted that the success of mergers and acquisitions largely depends on the correct choice, well-structured strategy and tactics for the implementation of transactions. Based on the fact that the company is currently one of the leading telecommunications companies in the world, it can be concluded that the company has successfully carried out all mergers and acquisitions.
4. A detailed analysis of the company’s strategic capabilities starting with a Value Chain and followed by a VRIN evaluation
A Value Chain analysis identifies parts of firms operations that add value (Volberda, 2011). It consists of primary activities; the process of making, selling and providing the product or service, and support activities; the activities that support the primary activities and provide the resources for them to take place (Porter, 2008). On the figure 9 the business model of Airtel is shown.
Figure9. Brahti Airtel Limited Business model
Figure10. Value chain for Airtel
Value chain for Airtel presents categories of business such as Mobile services, Homes Services, Airtel Business, Digital TV Services and Digital Apps. Value chain formation is based on data regarding the provision of services, such as network speed.
Figure11. VRIN framework
According to the research, Bharti Airtel Limited has valuable innovative technologies, large network, `infrastructure and strong brand reputation. But high level of competition means that competitors can use similar opportunities as Airtel for promoting business.
5. An evaluation of the contribution of leadership to the company’s success
It all started in 1985, when Sunil Mittal began collecting push-button telephones that were imported by the Taiwanese firm Kingtel. The business successfully moved forward due to the fact that very many of the compatriots wanted to replace the old bulky telephone sets with a disk. Sunil Mittal earned the initial capital on that, after which he opened his company – Bharti. After some time, Bharti Telecom Limited (BTL) joined forces with the German company Siemens AG to release push-button telephones. Bharti’s specialization at that time and in the beginning of the 90s included making faxes and radio phones.
In 1992, he took part in a competition for a license to engage in business in the field of mobile communications. One of the most stringent conditions for obtaining a license was having a certain experience in the telecommunications business. In order to circumvent this condition, Mittal signed a cooperation agreement with the French operator Vivendi. Sunil Mittal presented mobile services in 1995. The Airtel brand was immediately introduced. The service quickly gained popularity and after a while Airtel became the first mobile operator to overcome the 2 million subscribers barrier.
According to Daft (2016), cultures serve two critical functions in organizations: to integrate members so that they know how to relate to one another and to help the organization adapt to the external environment. Internal integration means that members develop a collective identity and understand how to work together effectively. It is culture that guides day-to-day working relationships and determines how people communicate within the organization, what behavior is acceptable or not acceptable, and how power and status are allocated. External adaptation refers to how the organization meets goals and deals with outsiders. Culture helps guide the daily activities of employees to meet certain goals. It can help the organization respond rapidly to customer needs or the moves of a competitor. As far as Bharti Airtel Limited was awarded as the best Employer India 2017, it means that organizational culture of Airtel includes internal and external integrations fully, and company has an excellent organizational culture.
According to Singh & Bhandarker (2011):
Sunil has great interpersonal skills in dealing with people and getting the best out of them; he is an intense listener and gives full attention to what you have to say, making you feel that your ideas are valued; he is a great communicator and speaks from the heart. Sunil has a powerful engaging style; his greatest strength is that he is able to connect with as a human being rather than only as a leader. Any meeting with him is not merely transactional; it is inspirational. In fact, he is highly charismatic and in his company people feel elated and charged around him.
6. A detailed analysis and interpretation based on collaboration
After acquiring the Tate Telecom service to the mobile business of Bharti Airtel, which can largely overcome the differences between part of its overall range of activities and that it is the property of the Merger formed after the competitive idea of ??the cell merged with Vodafone in lndia. The body of Bharti and Tata will jointly control more than 28 percent of the total spectrum available to telecommunication service providers and bring them in line with the idea of ??Vodafone shares throughout the country. ln addition, the combined Bharti Airtel-Tata unit will control about 40 percent of the total revenue from communications, and not the 44 percent withdrawal from the idea - to combine Vodafone. Bharti Airtel almost Tata body on a plate - you have to pay only 15-20 percent delay in paying for the spectrum. lt runs around 1,500,2,000 CDs around the PC. Of course, this will have to pay the government $ 1.2 billion. lf he wants to liberalize the non-liberalized spectrum of 1800 MHz that he receives from the body of Tati. But the choice is that of Bharti Airtel. ln turn, the latter will take over 5,000 of its former employees. But Bharti Airtel also receives 40 million additional clients. Then, the share of Bharti Airtel -Tata subscribers combined to 27-28 percent, compared with 35 percent for a single idea - the face of Vodafone.
7. An explanation of any external and/or internal factors that might make it difficult for the company to be successful in the future and suggestions (based upon your prior analysis) as to how the company can best deal with these
In the course of the study, it was found that the enterprise communications are constantly evolving and cannot remain at the level reached. To this end, an assessment was made of their capabilities and identified problems, in particular, the unfavorable situation of the telecommunications market in India, which led to a decrease in the incomes of all companies in the field of telecommunications, including Airtel. This external factor definitely affects the company's future success. Also, an important factor that can affect the success of a company in the future is a high level of competition in the industry. In the process of researching the telecommunications industry, it was discovered that despite the leading position of the company Airtel, the company's competitors have every opportunity to catch up and possibly surpass the company Airtel in terms of market share and income in the future. Therefore, companies need to focus especially on the constant gaining of competitive advantages. Yes, you can propose improvements to existing strategies: for example, loyalty programs (discounts, gifts, bonuses) - the main form manifestation of client-oriented activity ". Use of loyalty programs does not reveal the full potential of the enterprise; they are only "the top iceberg ", behind which stable, loyal, mutually beneficial, long-term partnership between the enterprise and the client are hidden. Usage content loyalty programs means offering a set of quality benefits for the client, both material and intangible, the presence of which distinguishes this company on the market, significantly differs from competitors and creates its special market value for the client.
In order to be a client-oriented company, it must begin with the motivation of its employees and development corporate culture, since the staff, working directly with clients, is the link that implements the principle of customer orientation on practice. Moreover, there is a need of value system and a loyalty concept for employees of the enterprise, which will allow stimulating and encouraging workers. Client-oriented management involves use of the most advanced and innovative marketing tools that allow bringing the company to a higher level functioning.
Users of the telecommunication industry are interested not only in its the cost of monthly subscription fees at the tariff. Equally important is the level and features of the service: the transparency of the deduction of funds from the balance of services, the competence of technical support, additional services, etc., as well as time parameters - the lack of queues in salons and hotline, the speed of resolving issues, warranty terms. Therefore, the basis, the key to the effective creation of competitive advantage is customer-oriented management in the enterprise. Mutually beneficial, both for the enterprise and for the client, relations should be based on the effective active feedback. As far as telecommunication companies are concerned, there is more characteristic intangible investments for them, as well as intellectual investments. As for the enterprises of the given sphere development and introduction of the newest technologies of data transmission, Internet technologies, fixed and mobile technologies, etc are of highest priority. So, it's important for Airtel to pay attention both to financial and to tangible investments.
Since in the course of the research it was revealed that the company's profit falls due to external factors, that is, due to the unfavorable conditions in the telecommunications market, this situation is also observed among competitors in the industry. Thus, given that the company occupies a leading position in the telecommunications industry and, despite falling profits, increases its customer base, it would be reasonable to offer the company to focus more on corporate social responsibility. Although the company declares itself as socially responsible, the needs of people are constantly changing and companies need to accept these changes and be able to adapt to them. Consequently, there is now a worldwide trend that companies should be socially responsible. Airtel can take advantage of various tools in order to prove themselves as a company that supports social good for people. The company may think about the environmentally equipped office, about improving the quality of products that they can change or cooperation with socially responsible companies. Airtel can also gradually switch to alternative energy sources such as solar panels, which can be used for the beginning to deliver energy to the buildings of companies located in 20 countries of South Asia and Africa.
There are many business reasons behind the success of the company Bharti Airtel Limited: the correct and loyal approach to its employees; the first company to transfer most business processes to outsourcing; innovative management approaches; numerous awards and recognitions; high brand awareness; acquisition and merger with other companies. The mentioned reasons indicate company as a successful one. Despite the success of the company, there are few suggestions for saving competitive advantages in future. The first suggestion is to be client-oriented company with different innovative strategies. Another one suggestion lies in being corporate social responsible company. As far as such trend is getting popular among some corporations, thus, in the future it will become more popular and necessary for meeting the needs of customers.