Bharti Enterprises the Success of Bharti Airtel - Case Study Example

Bharti Enterprises – the Success of Bharti Airtel Introduction Bharti Enterprises is headquartered in New Delhi, India and provides mobile technology service to local businesses and Indian consumers. The business has nearly 67 million customers and profited 7.8 million Indian dollars in 2007 (Annual Report, 2007). Bharti Enterprises is a large conglomerate company comprised of company-owned brand names such as Bharti Airtel and Bharti Teletech (among several others). Bharti Enterprises is currently a growing company and provides mobile service to customers in larger degree than competition, making this the largest mobile service company of its kind in India. The business has a strong management system and ability to measure market environments to determine which strategies to use in the future. The business appears to understand its customers and maintains a great deal of competitive advantage due to quality business systems and strong marketing focus. In fact, this understanding of the competition and of customers is one of the largest strengths for Bharti Enterprises and its many product lines. This report highlights Bharti Enterprises, focusing largely on Bharti Airtel, to describe why the company is so successful. Management and systems Bharti Enterprises is largely about oversight and establishes management so that accountability is focus. At the very top levels of the business, there is a board of directors consisting of various experiences and skills, including Chairman of the Board Sunil Bharti Mittal (Bhartiairtel.in, 2007). What makes this company different is that it has a wide variety of oversight and audit committees, at the senior level, which report on successes and failures in the business and provide solutions for dealing with them. The company has established the Human Resource Committee, ESOP Compensation Committee, Investors Grievance Committee, and even Memorandum of Association (Bhartiairtel.in). This suggests a company that makes sure its leadership is performing their jobs according to company direction and that high-level governors are bringing value to Bharti Enterprises and its many brands. Bharti Enterprises does not appear to publicise its information regarding internal management and organisation, however the company has multiple divisions of management (over 70) including product branding, auditing, support, people excellence, infrastructure, technology and certification; among many others (Erpdmz.airtel.in, 2007). Each of these divisions will require management staff to oversee employee responsibilities and make sure that organisational goals are complied with and followed. Bharti Enterprises is very human resources-focused, providing many jobs in this career path. One of their most successful systems is in recognising human talent and making business steps to diversify their talents and develop management and leadership skills. In fact, one job description identifies that the primarily role in a management role at the middle layers of the business involves training and development as well as talent management (Erpdmz.airtel.in). This represents a company which is always focused on human workers as a large contribution to the business and are developed as assets rather than merely workers. This would be a source of competitive advantage by having a staff that understands multiple job roles and skills and can be of better use to the business. Operations, market opportunities and strategy The largest strength of Bharti Enterprises is the company’s ability to see opportunities related to the consumer and marketing. In India, it has only been in recent years that wealth patterns have changed and the poor have been given opportunities. Also, in 1992 less than one percent of the entire population of India had a mobile phone. Today, 16.6 percent have need for air service (Babu and Lath, 2007); and most of this growth is from Bharti marketing efforts. Growth in commercialism have made improvements in infrastructure at India and given people chances to become more educated and have career options. Bharti has created a series of customised marketing messages designed to appeal to the Indian buyer who now has money to spend. The business always invests in understanding what makes Indian citizens buy goods and services through marketing research in order to profit on growing consumerism in the country. This is a perfect opportunity for business growth which is likely why Bharti is seeing such improvement in profitability and cash availability. Bharti also takes advantage of new marketing theory which suggests the ability to position products in a way that makes them stand out from competitor products. When there is a great deal of competition in a similar marketplace, like mobile technology, it is important to make a product look different than others. Even if they have similar features, the product can be positioned so that focus is not on the product itself, but the user and their lifestyle preferences. For example, if some Indian buyers are into family lifestyle and cherish the home, then Bharti Enterprises can create marketing information which makes the phone, also, value the family. If a buyer was into the night life scene in India, Bharti can make the phone appear positioned as a modern and interesting phone. This is excellent chance for building positive image for Bharti and to make customers see their product as better than competitor products and make more sales revenue in the situation. What is interesting about marketing opportunity and Bharti involves the Indian buyer. Since they are not yet used to receiving many consumer marketing messages like other Western countries, it is a new and exciting concept for them. Indian buyers likely appreciate the positive changes which retail and commercialism have brought to the country and are willing to buy products which will also enrich their lives and make living easy. Being able to increase demand from less than one percent to over 16 percent in such a short period of time speaks to Bharti marketing success and focus as strategy for long-term sales increase. It is also a very competitive environment for Bharti Enterprises with competition such as Vodafone, Reliance Communications and Hutchison Whampoa (Shellock, 2007, 38). Bharti does not appear to being outperformed by competition and actually create opportunity out of high competitive activity. For example, Bharti Enterprises created strategic partnerships with some of these firms where they are both investing in Bharti and in competition. Sharing mobile networks, one issue, provides less costs to Bharti (and to competition) and likely creates positive business relationships at same time. Gopalan (2007) offers that Vodafone holds a 4.4 percent economic stake in Bharti Airtel which also shows supports for the business where all competition believe all others in the same business have hope for longevity in the air mobile market. This is simply good for having a quality relationship in the situation where a business might have to rely on strategic partnerships when profits are low. Strategy is a major key to Bharti Enterprises success. Bharti experienced a 73 percent increase in profitability in 2007 due to higher subscriber demand (Burton, 2007). Because of this, the business focuses strongly on having strong investor relationships to keep the business profitable and performance-minded. In fact, most of the business’ strategic action is related to finance and investment. For example, the company does not dilute a great deal of stock which tends to drive down per-share stock value. This is good news for investors and makes this a quality company to invest. It has a very large market capitalisation which points toward business success in terms of profit and the ability to build a more powerful company. Maintaining good investor relationships is key to Bharti strategy. Understanding how to make the business grow is another strategic strength at Bharti Enterprises. Until only recently, India’s retail marketplace was made up of only a few large-scale retail stores with most business being undertaken in private stands on the street or in a few run-down shops. Mobile phone service is not a quality selling product in this environment. Because of this, Bharti Enterprises has teamed up with one of the most powerful retail businesses in the world, Wal-Mart, to increase sales of its air mobile products. This retail agreement with Wal-Mart includes opening stores owned by both Wal-Mart and Bharti where Bharti has 100 percent ownership of these stores however Wal-Mart will be supplying the shops and profits are split 50:50 for both (Yee, 2007). This points to a business which remains focused on expansion and entering new markets as strategic focus. Strategic focus at the company also involves giving back to the community where the business operates. In India, there is still a very inefficient infrastructure which makes issues of supply chain important and critical to companies like Bharti Enterprises. In food markets, 30 percent of food crops are rotted by the time they reach their intended customers (Yee). This represents a very long time between where the product is at the point of distribution to finally reaching stores. Because of this, Bharti Enterprises’ partnerships with other retail companies will give the community new infrastructure and distribution options and save Bharti money on getting phones delivered to different retail stores. This is a long-term investment on the infrastructure future of India which will benefit not only Bharti but the people too. More marketing concepts is also a strength at Bharti Enterprises. The company has recently developed an entirely new logo design which is not just brand-specific, it is for the entire business conglomerate. The point of this is to give the company a makeover and build buyer excitement about the many retail partnerships and brands owned and operated by Bharti (Mitra, 2008). The company logo is often considered one of the most important portions of a product because it is represented on packaging and it helps to assist the buyer in distinguishing the company from competition. If done properly, a good logo which is designed with a company’s target market in mind can create connections with customer lifestyle and build higher sales for the company. Since Bharti Enterprises is changing its logo and publicly presenting these changes, it is clear that the business remains focused on modernising the company and never being allowed to be thought of as an outdated or uninteresting brand name. Competitive advantage Since the business has been able to outperform all other competition, Bharti Enterprises maintains many competitive advantages. The first competitive advantage is being able to have agreements with large retailers like Wal-Mart when other businesses in India have limited areas to sell their products. Wal-Mart not only provides the money necessary to make improvements to the business by partnerships, however it gives Bharti Enterprises and all of its brands an entirely new environment to sell within. When other companies have trouble with too many days for the product to be delivered, Bharti Enterprises products can already be on the shelf selling to a willing consumer public. Competitive advantage, against other Indian competition, is also noticeable in how the company approaches its focus on marketing and sales promotions. Western countries have been able to adopt, develop and redevelop marketing strategies for years to build stronger sales and make customers more satisfied. The fact that modern marketing concepts are not being used by competition in India gives Bharti Enterprises this advantage. Each time logos are changed or the consumer information is distributed to create buyer connection with Bharti products, the company is outperforming competition in marketing and promotion each and every time. The company’s strong focus on human resources is also a good competitive advantage because when the company has a quality workforce, it can make changes quickly and effectively. The amount of educated citizens in India is growing, however there are far less talented workers with high education than there are citizens who are poor and without skills. When smaller companies cannot afford to hire the more expensive talents in India, who command more earnings, they are forced to hire less-expert staff members. This can lead to a wide variety of internal problems with the company when employees steal, are not motivated to perform, or simply cannot handle the job role perfectly. Bharti, because of the firm’s strong cash position, is able to hire top talent which only benefits organisational efficiency and performance. Top paid talent will only be more motivated to meet with company goals and serve Bharti’s long-term needs. This gives Bharti Enterprises a better internal staff who are capable and knowledgeable over competitive employees. Supply chain improvements, also based on Wal-Mart partnerships, gives the company high competitive advantage because it can use the strengths of Wal-Mart’s business model and distribution to save costs on delivering products. With Wal-Mart supplying the Bharti-Walmart store brand, this prevents Bharti Enterprises from having to invest any monies into distribution. Land trucking costs, ocean vessels and other individual transport mediums can be saved in the budget to give Bharti strong competitive advantage when other businesses are paying too much to get product into a difficult India. Competitive advantage also comes in the form of consumer research which is conducted by Bharti Enterprises in order to fully see what makes buyers happy. For example, do Indian consumers believe in quality first or are they more price-focused? Will consumers want the more modern-looking devices or will they prefer simple, basic mobile phone technology? These questions are what Bharti Enterprises is asking itself in an attempt to provide products which best suit the population and their needs. Since the company has a great deal of competition but still manages to make higher profit, the firm’s ability to reach Indian buyer needs is a very large competitive advantage. If the business were to lose focus on the Indian buyer it would likely lose this competitive advantage and have to put more effort into marketing research as new strategies. Understanding the buyer also creates community relationships for Bharti brands and the local consumers. When Bharti, unlike competition, continues to provide products and support which make their lives easier, this will make the Bharti brand name stand out over other companies. In many ways, this would be like taking Bharti and making it a common theme in the Indian household and a name that is remembered for making communications possible and removing limitations to the Indian buyer. This lifestyle connection with Bharti Enterprises is something which is not nearly as common in India as it might be in countries like United States and United Kingdom. In a relatively new consumer marketplace where consumers do not have preconceived notions about marketing messages, this gives Bharti the chance to start fresh with a new batch of customers and create connection with no negative sentiment about the growing organisation. This is why Bharti Enterprises has very much competitive advantage. Conclusion Bharti Enterprises has a very good business model and understands both the internal and external operating environment. In addition, the business continues to perform research about competitor activities and to relate to the Indian buying public. This is a strategy-minded company that considers its long-term profit potential and is well-positioned to become a success in the next decade. The company’s strong cash position gives it opportunities to expand the business outside of India (or create a stronger presence domestically) and make many improvements to the business that other competition cannot make. Bharti has opportunities for expanding on the infrastructure of India to make it a more interesting and profitable place to do business and can create a variety of partnerships with other businesses to save costs. This is a cost-savings business which seems to understand that partnerships can bring long-term value to the company even if it involves a short-term payment. This cash availability allows the business to have a broader air mobile network to help more customers and can accomplish this through partnerships to save money and save competitive relationships. Having a friendly business philosophy against competition is a good business strategy. Bharti Enterprises also considers operational issues such as supply chain and ensuring that there is a system of distribution in place to best benefit the local communities and the business’ expectations for profit. It gives employees opportunities to expand their job skills and provides them with high-paying jobs which benefit the Indian population and the community as a whole. This source of competitive advantage is human-resources based, however it is a unique organisation of skilled professionals who have likely given much support to the business’ total performance and financial successes. Bharti Enterprises should be the model which other companies in India benchmark for its commitment to the consumer and to keeping a quality business operating. The firm understands what it must do in terms of operations, marketing, and human support to remain the leading mobile provider in India. Not only does the business plan for the future, but recognises opportunities for improvement and acts on them as a means to help the business succeed. By today’s standards, this is a quality business model and should be recognised for its contribution to the Indian landscape and as a helper to the buying public in this area. Bharti Enterprises does not appear to have any large weaknesses which would suggest immediate improvement. It is well-managed and there are many systems and committees in place to make sure the whole company remains focused on goal-setting and goal-achievement. Bharti Enterprises is a success-oriented company with a real passion for its products and product development. This efficient business model has brought a new method of doing business to a rural India and showed the local culture all of the benefits that a strong business can bring to the buyer’s lives. All of this can be attributed to leadership and dedication to excellence at Bharti Enterprises. 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