Strategy in Global Context For Idea Cellular Ltd.

Strategy in Global Context

Report-Idea Cellular Ltd.

Company Idea Cellular Ltd.

Submitted to Prof. Dilip

Submitted by Hitesh Goyal

Sheron Prabu
Brendan Gomes
Batch PGPRM-9
MBA 12 B
Reg. No. BLR 0903071001
BLR 0903031042
BLR 0903031006

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 Strategy in Global Context For Idea Cellular Ltd.

Contents
CONTENTS.........................................................................................................2
INTRODUCTION TO INTERNAL ANALYSIS:............................................................4
IMPORTANCE OF CONDUCTING AN INTERNAL ANALYSIS:......................................4
PROFIT ANALYSIS:.............................................................................................4
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). ..........................................................................................5
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 use OLTP (Online 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
STRENGTH:...............................................................................................................................7
WEAKNESS:...............................................................................................................................8
IFE ANALYSIS MATRIX..................................9
IMPORTANCE OF UNDERSTANDING COMPETITION:.............................................10
RATIONAL BEHIND IDENTIFYING THE COMPETITORS:..........................................10
COMPETITIVE PROFILE MATRIX:.................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 (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 Birla Group, a multinational having 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 like Nokia. This shows that the organization is dedicated towards providing superior
services to its customers. (Idea Portal, 2009)

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Introduction to Internal Analysis:

Internal analysis is a vital strategic management tool that helps in identifying the strengths and
weaknesses of an organization. These strengths and weaknesses, give an organization certain
advantages and disadvantages to meet the needs of its target markets. Both strengths and
weaknesses should be identified from the customer’s perspective, because customers 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 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)

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

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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 cordial relations with its suppliers and distributors. The company holds 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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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 use OLTP (Online 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).

VRHN: Idea Cellular

VRHN analysis is considered as the foundation of internal analysis. Whatever an organization
possesses is generally considered as a resource or capability. Financial resources, 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 affected by economic downturn (Antony A. & Ghosh D., 2008). Due to 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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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 due to technology. Idea use IBM webspare application server for data and financial
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)

Hard to imitate: In India, every telecom company has to follow same rules and
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 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
substituted. There are many telecom service providers who offer services at 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:
Brand reputation: Idea cellular is a part of Aditya Birla Group, a multinational having
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)

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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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).

Technology innovation: Being the first player in the telecom industry to start GPRS services in
India, and even starting unique products, such as ‘My gang’ and ‘Idea radio’, the 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).

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 like Nokia. This shows that the organization is 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.

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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 like Reliance and Bharti Airtel have a strong presence in DTH services. 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

Weighted
Key Internal Factors: Weight Rating Score
Strengths:
Idea Cellular Dominates 70% of rural market 0.08 4 0.32
th
India’s 2 largest telecom service provider 0.07 3 0.21
Technological innovation like India’s first GPRS
service provider 0.09 4 0.36
Brand reputation like SBU of India’s first
multinational group 0.06 3 0.18
Superior inventory turnover ratio and current ratio 0.08 4 0.32
Strong advertising and promotion 0.07 3 0.21
Excellent Debt Equity ratio and therefore financial
agencies easily provide loan to the company. 0.08 4 0.32
Increase in service operational and network areas 0.07 3 0.21
Profit margin increasing at healthy rate 0.06 4 0.24
Strategic Alliance such as with IBM, Oracle, Nokia
Weakness:
Target only North India 0.09 1 0.09
Net operating profit ratio is decreasing 0.09 2 0.18
No presence in Broadband or internet service 0.09 1 0.09
Increase in the operating cost 0.09 2 0.18
Not a player of Direct To Home Service
0.02 1 0.02

TOTAL 1 2.93

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Importance of understanding competition:

When a company positions its product in the market, it tries to position its brand uniquely among
other brands present in the market. Therefore it is critical to understand the strengths,
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 easily
address in the future.

Rational behind identifying the competitors:

Analyzing the competitors is an essential component of 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
Idea Airtel Vodafone
CSF’s Wt Rating Wt’d Rating Wt’d Rating Wt’d Rating Wt’D
Score Score Score Score
Market Share 0.15 2 0.30 4 0.60 3 0.45 1 0.15
Brand Image 0.15 3 0.45 4 0.60 3 0.45 2 0.30

Financial Position 0.10 4 0.30 4 0.40 3 0.30 3 0.30

Service Quality 0.08 3 0.24 4 0.32 4 0.32 1 0.08

Customer Loyalty 0.06 2 0.12 2 0.12 2 0.12 2 0.12

Sales Channel 0.10 4 0.40 3 0.30 4 0.40 2 0.20

(Distributor, Outlets)

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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

Promotions 0.18 0.18 0.18 3 0.18

(advertisement) 0.06 3 3 4
Management. 0.07 3 0.21 4 0.28 3 0.14 3 0.21
experience
Company Image 0.05 3 0.15 4 0.20 3 0.15 2 0.10

Total 1 2.97 3.64 3.02 2.03

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 also recognized how the study of internal factor and competition will help in
determining the strategy for the organization.

TOWS MATRIX

The TOWS matrix is an important matching tool that helps in developing four types of
strategies;

1. SO strategies—use a firm’s internal strengths to take advantage of external

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.
4. WT strategies—are defensive tactics directed at reducing internal weaknesses and
avoiding external threats

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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: 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: 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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up (like strategic alliance with Nokia and other major software providers like IBM). Another
major threat can be the untrained workforce.

The strategy here the company can adopt is to see whether what kind of 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:
Market Growth Rate

Idea

Relative Market Share

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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. The company lies in the position of strong so it lies in the 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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Strategy in Global Context For Idea Cellular Ltd.
Scores
Grow And Build

Idea

Hold And Maintain

Harvest Or Divest

IFE Scores

Quantitative 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 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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services and provide good customer service. This strategy has the attractiveness score of

6.22.

Plan for next three years

The company is having high operating cost i.e. the company is not utilizing 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

Tata Docomo has come up “Billing per pulse rate” in order to increase the market share. In the BCG

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 target 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 WO Strategy
1. Can go for Marketing penetration: Target the 1. Can go for Forward Integration- Operate
urban segment; launch a new service with same other showrooms which supplement the

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brand name like Tata Docomo has come up “Billing

per pulse rate”, provide more good and fast
services like GPRS, mobile internet services and
provide good customer service distribution channels

ST Strategy WT Strategy
1. Can go for the horizontal integration
1. Can go for Backward integration such as Vodafone activities i.e. Airtel has gone for Dish TV,
acquire Hutch to increase market share Reliance has gone for Big TV

Annexure 2
Strategic Strategic Strategic
Alternative 1 Alternative 2 Alternative 3
Weight Weight Weight
Wei Sco ed Sco ed Sco ed
Strength ght re score re score re score

1 Brand reputation like SBU of

India’s first multinational group 0.15 4 0.6 2 0.3 2 0.3

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2. Strong advertising and

promotion 0.03 1 0.03 2 0.06 1 0.03
3 Superior inventory
turnover ratio and current
ratio 0.04 3 0.12 1 0.04 2 0.08
4. Wide distribution
network 0.1 4 0.4 4 0.4 4 0.4
5. Local and global
acquisitions 0.05 1 0.05 2 0.1 3 0.15
6. Technological innovation
like India’s first GPRS
service provider 0.06 3 0.18 3 0.18 2 0.12
7. Strategic Alliance such as
with IBM, Oracle, Nokia 0.08 2 0.16 3 0.24 3 0.24
8. Better understanding
of rural market 0.12 3 0.36 4 0.48 3 0.36
Weakness 0 0
1. Target only North India 0.12 3 0.36 1 0.12 2 0.24
2 Net operating profit ratio is
decreasing 0.09 3 0.27 2 0.18 2 0.18
3. No presence in Broadband
or internet service 0.06 2 0.12 4 0.24 3 0.18
4. Increase in the operating
cost 0.1 4 0.4 4 0.4 1 0.1
1 1 1
Opportunities 0
1. Growth in market size 0.15 4 0.6 3 0.45 2 0.3
2. Scope for new and
innovative service 0.05 2 0.1 3 0.15 1 0.05
3. Opportunities for M&A 0.04 1 0.04 2 0.08 3 0.12
4. Growth in rural market 0.12 3 0.36 2 0.24 3 0.36
5. Higher disposable
income of consumers 0.1 2 0.2 3 0.3 2 0.2
6. Levi on fringe tax 0.06 1 0.06 3 0.18 2 0.12
7. Increase in FDI 0.09 1 0.09 2 0.18 1 0.09
8. Export potential 0.04 1 0.04 1 0.04 2 0.08
Threats 0 0
1.Price sensitive
Unorganized market 0.1 4 0.4 4 0.4 2 0.2
2. Production
malpractices 0.05 2 0.1 2 0.1 3 0.15
3. Competition 0.04 1 0.04 1 0.04 1 0.04
4. Disputes with retailers 0.02 2 0.04 2 0.04 1 0.02
5. Volume dependency
for sales 0.07 1 0.07 2 0.14 3 0.21
6. Transportation
problem 0.07 2 0.14 2 0.14 2 0.14

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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, 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-second-
largest-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

Press Releases. (2009). Retrieved august 21, 2009, from Aditya Birla Nuvo:
http://www.adityabirlanuvo.net/media/press_releases/pressrelease.aspx?ID=BYPQa0lysY8=

Press Releases. (2009). Retrieved August 29, 2009, from Idea Cellular:
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

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Appendix

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

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 Strategy in Global Context For Idea Cellular Ltd.

2) GPS and GIS used by Idea Cellular:

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 Strategy in Global Context For Idea Cellular Ltd.

3) GPRS and VAN system used by Idea Cellular:

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