Strategic Competitive Analysis of Bharti Airtel in the Global Telecom Industry MBA6021

Introduction

Bharti Airtel is currently one of the giants in the global telecom business; it has a great network that covers almost all areas, is backed by great legacy and is continuously development and providing unique services. By reference to the forces of competition and general business environment in the Airtels industry, this report assesses the companys strengths. That way, this paper seeks to explain how these special assets give rise to a defensive strategy and undergird Airtels strategic timing.

Industry and strategic groups

Figure 1: Telecom sector gross revenue

(Source: Ibef, 2024)

Industry Overview

Bharti Airtel plies its trade in the global telecommunication sector covering mobile and fixed telephony communications, broadband, and digital services (Airtel, 2024). This industry is marked by increased rate of technology and automation, high levels of capital intensity and stiff competition.

Strategic Groups within the Telecom Industry

1. Mobile Network Operators: Firms in fixed telecommunications network including voice and data services.
2. Broadband and Fixed-Line Providers: Companies operating in the provision of broadband and plain old telephone service.

Major Competitors within Strategic Groups

• Reliance Jio: It poses a very strong threat by pricing its products below those from Airtel and spends a lot of money in network and technology (Jio, 2024). Jio has done most of its planning correctly and its pretty damage to competitors view because of offering free trials and cut-price services.
• Vodafone Idea (Vi): That is why Vodafone Idea after their merging expects to strengthen its positions within the industry relying on the united customer base and the necessary networks.
• BSNL (Bharat Sanchar Nigam Limited): Offers fixed-line and broadband services and at many occasions, the services offered in such areas are backed by government (Bsnl, 2024).

Figure 2: Telecom churn rate
(Source: communicationstoday, 2021)

Changes in Industry Structure

The telecom industry has also gone through structural changes in the global market. New entrants who were once barred from the already saturated market are finding it easy to break into the market since technology and the policies have made the market relatively open to new business. A dramatic increase in the availability of low-cost devices and the increase in the number of well-funded players such as Reliance Jio company has further increased competitive pressure and forced old clear operators to activate and adapt on the price strategies.

Nature of Competitive Rivalry

In the telecom context the competition is quite tough and cutthroat due to innovation, pricing and IP competition and changing customers expectations (Hofer et al., 2022). There are highly competitive with intense marketing and advertising, enticing promotions and consistently improving the performance of their networks. The arrival of new entrant and formation of mergers have created higher pressure on one of the large operators like Bharti Airtel to sustain its place in the competitive market by incorporating new services and forming alliances.

Monthly Churn Reduction Strategy

It has been happy to manage the higher monthly churn rate that was a concern earlier and jumped from 1.5% to 2.2% over the period of six months because of the squeeze experienced by its customers in the economic sphere (economictimes.indiatimes, 2022). To tackle this problem, Airtel came up with a calendar pack with date-to-date recharge options, making the payment dates to coincide with customers pay cheque period. Airtel addressed the rising churn rate, which increased from 1.5% to 2.2% over six months due to economic issues and the 28-day billing cycle, by introducing a calendar pack. This innovation aligns recharge dates with salary schedules, reducing churn to 1.5% and surpassing competitors who remain at over 2%.

Effect of the five forces

Figure 3: Bharti airtel international roaming
(Source: Livemint, 2016)

1. Threat of New Entrants

The threat of new entrants industry for the telecom is moderate. High capital investment and strong regulatory measures are two important barriers that also hinder the entry but technology favouritism and deregulation in some region make entry easy (Fraisse, L & Thesmar, 2020). For example, Reliance Jio with huge investment on its back and disruptive pricing, accelerated the competition and forced the incumbents like Airtel to innovate.

2. Bargaining Power of Suppliers

Telecom industry has moderate to high bargaining power of suppliers. The operators also depend on a few firms for the supply of equipment and technology for their network. Telecom infrastructure and technology solutions and services are the main supplies from the key suppliers.

3. Bargaining Power of Customers

The bargaining power of customers is high; this is because there is competition prevail among the service providers besides having a low customers switching cost. As telecom service consumers have Multiple factors such as mobile Telecom, broadband, digital services they are more reactive towards price alteration and other service quality (Reddick et al., 2020). This power has been magnifying by the entrance of new generation price chaser like Reliance Jio raising the bar on offering affordable prices and superior service delivery pressuring Airtel to stick to its strategic direction.

4. Threat of Substitutes

The threat of substitutes is moderate. As a result, there are new entrants and competitive threats in the form of over the top (OTT) services and substitute communication technologies which are essentially reliant on healthy underlying telecom networks. This threat is met by Airtel through investments in cutting edge technology and the broad value proposition that include mobile, broadband and digital services.

5. Industry Rivalry

Industry rivalry is intense. Telecom sector has high technological dynamism and high level of rivalry among key players like Reliance Jio, Vodafone Idea (Vi) and BSNL (businesstoday, 2024).

General Environment Factors

• Technological Advancements: It adapts different tactic resulting to continual technological advancement creates competitive environment and demanding network investment (Sinha & Dhanalakshmi, 2022). Due to technology and innovation, Airtel has some of the competitive edges that it does not compromise even with its rivals.

International Roaming Pack Differentiation

Airtel has come up with an affordable international roaming pack and it has acted as a major point of difference. This pack supplemented by such global partners let the customers keep their numbers when they are in a different country and thus get rid of the necessity to change the SIM and provide the opportunity to get low-cost roaming services.

Firms capabilities

Figure 4: Indian telecom industry statistics
(Source: Livemint, 2018)

Distinctiveness and Imitability

1. Extensive Network Infrastructure: Airtels claim taken over by huge networks of transmission towers and it has invested largely in 4G and 5G which make it highly scalable foundations. This network makes Airtel to be able to cover a large market and be able to provide a stable service which is difficult for any new entrant or competitor to emulate (Frster et al., 2024).

Competitive Advantage

• Enhancing Service Quality: The significant infrastructural development of networks and technologies put Airtel in a greater position to deliver services that are quality and with effective coverage and speed that customers desire.

• Driving Cost Leadership: Thus, Airtel sustains its low operation cost by using the minutes factory model and outsourcing main strategies that enable it offer a competitive price (Islami, Mustafa & Topuzovska Latkovikj, 2020).

Fit with Industry Dynamics

• Industry Rivalry: Airtel has extended its network and has implemented great technology to compete with its competitors such as Reliance Jio and Vodafone Idea Ltd. This one is always able to provide superior service quality and new features setting up strong competition despite existing high levels of rivalry (Petzold, Schmidt & Scaringella, 2023).

• Threat of New Entrants: Another advantage is that the strategy, which requires a huge capital investment and the replication of the Airtel operating model, makes it very hard for new entrants to pose a threat to the company.

Enhanced Trade Visibility Strategy

Airtel has strengthened the market holding by improving its trade facade visibility which should target more client traffic areas for instance airports. It has escalation its brand awareness and reached probable consumers in strategic areas. Airtels international roaming pack, featuring affordable rates and global partnerships, allows customers to keep their numbers while traveling. Enhanced trade visibility, particularly in high-traffic areas like airports, has further distinguished Airtel from competitors, solidifying its position as a leader in international connectivity. BSNL is challenging competitors by leveraging its extensive network infrastructure and offering cost-effective plans, including budget-friendly tariffs and rural connectivity initiatives. Its aggressive pricing and broad service coverage are putting pressure on rival telecom operators.

Conclusion

Finally, it is clear that through their capabilities that include the companys strong network infrastructure to the innovative business model that Bharti Airtel is in a vantage position as a telecommunications company. These strengths do not only create a competitive advantage for Airtel in relation to other competitors and more so, offer cultural capital against threat of new entrants, more to the current market trend and expectations. They have a strong market position because of its efficiency of distinguishing capability and strategic investment in spite of the high level of industry rivalry and the high customer bargaining power.

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