Bharti Airtel in Africa

Case analysis

Group 1 (Section B)

20061 Yash Sharma Mukund

20073 Beena N
20082 Rahul Raj
20092 Raksha S Bhat
20103 Rapolu Shivesh Rao
20113 Sofi Kushalappa M
 AIRTEL IN INDIA (VALUE CHAIN)

PRIMARY
Inbound:
• Data Management
• Development of Market strategy
• Economies of scale (Cutting down tariffs to increase demand)
• Creation of distributor network
 
Operations:
• They decided to expand production of their principle output, minutes, keeping margin per minute more or less constant.
• Scale up so cost savings and lower tariffs leading to more demand. Consequently increase margin.
• Understanding customers and Market place

Outbound:
• Focus on customers while improving quality services it offered
Sales and Marketing:
• focused predominantly on prepaid customers
• Mom and Pop stores, grocery stores, mobile stores
• tie up with Department of Posts, Indian Oil
• Matchbox theory
• two and three layer distribution model
• min cost recharge for prepaid cards
• cutting down tariffs to minimum
• Life time prepaid card

Services:
• Trainings for first time users
• Crop updates to Farmers (tie up with Indian Farmer's Fertilizer Coop)
• Tie up with SKS microfinance for micro loans
SUPPORT
 
Procurement
*First to get license to launch Mobile Telephony services in New Delhi in 1995.
*Through selling assets to raise funds, it acquired license for 15 out of India's 23 circles.
*Infrastructure required to setup Telco

Administrative and Finance Infra:

• Spent 220000 USD for bidding
• Sold equity interest to British telecom and warburg to raise funds
• Service costs
• Legal and Regulatory charges
 
Human Resource:
• Family and Friends occupied most of the executive positions
• Trainings provided to local distributors
• Appointment of Field staff for further assistance
 Outsourcing:
• Building and maintenance of network (outsourced to Nokia and Ericson)
• IT operations (Hardware and Software)- IBM
• Customer service- IBMdaksh and Mphasis
• Telecom towers- Indus Towers in a JV with Vodafone and Idea
Configuration of Value Chain:

Airtel understood the fact that It needed to modify the industry’s normal routine in order to gain competitive advantage. They realized it soon
that activities like setting up towers and other infrastructure, building and maintaining networks, IT and related customer services will hinder
its core activity- marketing and customer acquisition while improving service quality for consumers.
Related activities like Infrastructure, Network, IT, Customer services were all outsourced.
Since customer acquisition was extremely important for Airtel, they kept services like Training and Farmer Crop updates as one of their
primary services while they also developed various marketing strategies.

Did this succeed in Africa? Why?

In our opinion, this value chain did not work out quite as expected by Airtel executives and they had to introduce lot of modifications for the
following reasons:
• Struggle to find quality workforce
• Cultural challenges
• Political factor (1 country vs 17 countries)
• Inelastic demand
• Poor infrastructure and Monopoly