TATA DoCoMo ETOP, PESTEL, SAP, SWOT

Strategic Analysis

Submitted By:

Tarun Kandarpa 10DM-162

Suraj Jain 10DM-163

Saurabh Thadani 10FN-102

Srikanth Konduri 10FN-109

Tushar Gupta 10FN-115

Nikhil Gupta 10FN-121

Anirudh Verma 10IB-069

Submitted To:

K Chander

Professor, Strategic Management

TATA DoCoMoStrategic Analysis

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Table of ContentsENVIRONMENTAL THREAT OPPORTUNITY PROFILE..............................................................................3

PORTER’S 5-FORCE ANALYSIS................................................................................................................4

PESTEL ANALYSIS...................................................................................................................................5

STRATEGIC ADVANTAGE PROFILE..........................................................................................................7

SWOT ANALYSIS.....................................................................................................................................8

APPENDIX..............................................................................................................................................9


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ENVIRONMENTAL THREAT OPPORTUNITY PROFILE

Sector AnalysisFavourabilit

y to TATA DoCoMo

Strategic Implication

Economic

Expanding Indian economy with positive GDP trends, increasing urbanization & youth population.

While catching up with the taste of youth by providing innovative value added services especially internet based, continue attracting traditional customers who wants packages for talk times and messaging services.

Social

People are becoming increasingly used to new technology in their lifestyle. They are affording prices to get superior usage experience.

Technology is highly used as a tool of empowerment & customer engagement to bring in various value added services, plug-play devices, mobile apps, and make 3G/4G based services popular.

Political

Spectrum license allocation is tightly controlled, depends on the impression of company in the view of government

DoCoMo now needs to pay more for gaining additional spectrum access in its present circles, owing to supporting services to new subscriptions.

Regulatory

With departure of A.Raja, TRAI is actively making moves to make up its image by taking initiative to pull back wrongly allocated spectrum and inviting new bids for it. Also, it’s in favour of tariff hike.

With intense price competition limiting the bottom-line of telecom players over the past 2-3 years, though their volumes are increased. Now, a price hike is a very likely phenomenon. Again, DoCoMo is the first to make it, others like Airtel & Vodafone have followed suit.

Market

Saturated, as recent data shows a decreasing growth rate of net subscriber additions over the previous quarters. Also, the churn rate is quite high.

Traffic growth & data revenue will be the key drivers going forward, as the churn rate leads to better competition.

Continued on next page…

Sector Analysis Favourability Strategic


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to TATA DoCoMo

Implication

International

Leverage the global scales by entering new markets for offsetting the decreasing growth rate in Indian market. Also, tie-ups with International telecom firms would result in improving service quality & innovation.

Results are first push based E-mail service, SMS, Route Finder & Smart Pilot of Tata DoCoMo after its pact with NTT DoCoMo & Navteq, to be the best in business in providing out-of-the-box services.

Supplier

Need of infrastructure for providing better networking and need of content providers for launching value added apps & VAS is increasing in the industry

Tie-up with Huwaei to set up 3G network in 5 of its circles. Tie-up with ZTE to provide low cost dongles, Data Cards keeps DoCoMo at a advantage position.

Technology

Enables to provide high quality uninterrupted services and also bring in new apps towards luring customers.

First Indian private operator to launch 3G services. Already conducted 4G trials in physical geographies. Launched i-Mode, a mobile based internet platform service which was an instant hit.

PORTER’S 5-FORCE ANALYSIS

Factor Analysis Effect on Tata DoCoMo


Inter-firm rivalry

Little differentiation between competitor’s products and services resulting in cut throat competition in order to steal customers by means of price wars.

HIGH

Tata Docomo came up with the innovative pricing strategy of charging tariff per second in a bid to get as many customers as possible. Competitors soon followed suit and matched the tariffs offered by Tata Docomo. However it did have a first mover’s advantage.

Bargaining power of

buyers

Bargaining power of consumers is very high because of the large variety of choices available and all the telecom operators providing similar coverage and services.

HIGH

Customers are price sensitive in this sector. As churn rate is high and switching cost is low, attractive Tariff is just not enough and has to be backed by superior service quality.


Factor Analysis Effect on Tata DoCoMo



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Bargaining power of suppliers

Suppliers: Technological support, equipment makers, fibre optic cable manufacturers. Very less substitutes and high competition in the sector leave fewer options.

MODERATE

As the choice of suppliers is very less viz., Huwaei, ZTE. It’s an advantage to have a joint venture with supplier like NTT DoCoMo, there by gaining technological support to bring our innovative products, services.

Threat of New entrant

No barriers related to capital investment (as leasing of towers can be done) & brand loyalty. Only barrier is gaining spectrum access and low tariffs

MODERATE

Introduce fresh services where customer can find value immediately to build a customer base and retain them, as a new entrant penetrative pricing policy hurts unless it is having deep pockets

Threat of substitutes

Substitutes: VOIP, Satellite phones, Online chat, Email. Presently mobility, penetration and price are issues against them.

MODERATE

Can be put to good use if telecom operators introduce special packages for utilizing their internet service over high end mobile phones to access emails, Skype, social networking.

PESTEL ANALYSIS

Situation Analysis Test for TATA DoCoMo


Political

Not favourable in terms of spectrum allocation and an uncertainty still prevails if TTSL’s request for obtaining additional spectrum for 39 districts in Delhi will be approved or not.

Need to face hardship for obtaining timely spectrum.

Due to unearthing of the 2G scam there would be tighter audit and control. As a policy of the TATA Group no form of corruption is appreciated or adopted. Other competitors might indulge in lobbying activities and get undue advantages.

Economic

Teledensity has improved from under 4% in March-01 to around 53% by the end of March-10. The mobile subscriber base has grown from under 2Mn. at the end of FY 00' to touch 584Mn. at the end of March-10.

Secular increasing macro trend.

Further penetration is possible in rural areas. While intense competition is making the margins wafer thin, company will have to offer more value to customers and increase the subscriber base by aggressive marketing and technological advancements.


Situation Analysis Test for TATA DoCoMo



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Social

Youth population is increasing, so does the adoption of new mobile technology in daily routine. Urban migration is favourable to increased activation of value added services.

In line with the renewed social needs.

Plans and tariffs will have to offered keeping in mind the current demands of the youth; there is still a scope to tap rural markets through extended network infrastructure initiatives viz., mobile banking, and mobile farming tips.

Technological

Dependences on technology has increased many fold during recent times in an urge to provide innovative services backed by superior service quality and at a reduced operational cost for companies.

Advantageous position.

Tie-up with NTT DoCoMo have to be leveraged further to increase customer activation, engagement and be the most sought after mobile service among youth & corporate markets by bringing affordable 3G mobile phones, VAS.

Environmental

People have growing concerns about the kind of damage the cellular waves do to the brain and other parts of the body.

Has to overcome by spreading awareness about best usage practices of cell phones.

The company should research about the matter clearly; provide scientific findings as they are because people understand that everything comes with a price. And be the first to acknowledge the concerns of the people to garner customer trust, loyalty and a larger market share.

Legal

Recently, due to allegations and speculations surrounding the 2G spectrum sale many service providers are in legal doldrums and have to face wrath of CBI and judiciary. This has jeopardized some joint ventures in the telecom sector like Unitech’s and Telnor’s ‘UNINOR’.

TATA code of conduct keeps it abreast in following legal norms.

Other companies that followed unfair means to win the spectrum allocation are in troubled waters, whereas TATA Docomo has benefitted from its fair policies. It should pat its back for this and march on with the progress it has seen with full vigour.


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STRATEGIC ADVANTAGE PROFILE

Function Analysis Strategic Profile

Marketing

It was the first to launch 1paisa /sec and this is applicable for both prepaid and postpaid connections. Leveraging Tata Indicom's distribution-channels. It has launched a popular advertisement campaign “Keep It Simple Silly” and hired Ranbir Kapoor as the brand mascot to allure the young population base which contributes to maximum sales for telcos.

To "Keep It Simple" be it services, products, tariff plans or customer care grievance redressals.

Finance

11% of market share, 4th largest in India. EBITDA for each customer was around Rs. 75 which was much less than industry average of 110 -120. Tata DoCoMo recently increased its tariff rates according to its innovative tariff process and achieves its breakeven by 2014.

Monitoring Operating Profit per customer and bringing it to the industry benchmark level. Either through rate hikes or through increased usage of VAS by its customers.

R&D

Tata Docomo already invested about Rs 9,700 crore in the past two years for the GSM network rollout across the country. NTT DoCoMo is planning to add a R&D centre in India to produce value added services and applications for GSM and CDMA mobiles. A merger or acquisition could also be on the cards for Tata DoCoMo. Business Line reported it may choose inorganic growth. First to launch 3G & first to conduct physical 4G trials in India.

Has advantage over its peers in R&D, as it can leverage its relationship with NTT DoCoMo, which is known for innovation & technology.

Production and Operation

Rated Congestion free, Innovative tariff plans (pay per second), first to introduce 3G, bilateral agreement with different operators to share network

Better network utilisation by sharing network with other operators and at the same time making sure that the network remains congestion free.

Human Resources

Set up an institute in record 6 years, PMS was designed, won various HR awards for its HR policies

Shared values of TATA group keep the employees focussed & motivated. TTSL was conferred Awards for ‘Best-in-Class HR Practices’ from the HRD congress 2010.


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SWOT ANALYSISStrenghts Weakness

1.First to introduce secs tariff & half paisa per sec plan

1.Weak customer service leads to customer erosion

2.Good advertising,"Keep it simple silly"campaign

2.Service centre issues also prominent

3.High brand visibility because of TATA umbrella. 3.Untapped Rural Market 4.Flexible plans attract customers across diff segments

4.Price Higher than BSNL and MTNL

5.Assistance/ JV from NTT Docomo (Japan) 5.Signal strength in few areas is major concern

6.An array of VAS to satisfy market demands 6.Post paid connections are unavailable as of now.

7.Strong Positioning-Affordable pay only as per use plans

8.Market tieups with leading telecom equipment brands.9.Youth appeal

Opportunities Threats1.Fast expanding cellular market 1.Competitors low price offering

2.Latest and low cost technology 2. Saturation point in-Basic telephony service

3.Untapped rural market 3.Mobile Number Portability4.Upcoming VAS as per changing market needs5.Tap increasing 3G users 6.Introduce new plans for growing internet user base


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APPENDIX


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Documents

TATA DoCoMo ETOP, PESTEL, SAP, SWOT