BHARAT SANCHAR NIIGAM LIMITED

INTRODUCTION

Bharat Sanchar Nigam Ltd (BSNL), the corporate version of erstwhile DOT, came to
existence on 1st October 2000 with its headquarters at NewDelhi. Ever since the formation of
BSNL, the Indian telecommunications scenario has been transforming itself into a multi-
player, multi-product market with varied market sizes and segments. Within the basic phone
service the value chain has split into Basic services, long distance players, and international
long distance players.

BSNL’s POSITIONING IN TELECOM INDUSTRY

To understand and suggest – how strategic management can help BSNL – the first thing is to
understand the Telecom industry environment and the stakeholders involved. Apart from
having to cope with the change in structure and culture (government to corporate), BSNL has
had to gear itself to meet competition in various segments – basic services, long distance
(LD), and International Long Distance (ILD), and Internet Service Provision (ISP), and
Mobile services. With the advent of competition the private operators have been impacting
the strategic matrix by influencing regulatory bodies, adopting intelligent media strategies,
and by targeting the creamy layer of customers. While, political control over the public sector
remains a contentious strategic issue in the country; with the formation of a company, the
internal strategy of the BSNL board will be of gaining considerable autonomy. Labour unions
are powerful internal stakeholders, as are the middle managers/ other staff that have the
primary responsibility for customer care. The following stakeholders diagram gives an insight
about the changing telecom industry environment for BSNL

PRODUCT MIX:

  Basic Telephone Services

 The Plain old, Countrywide telephone Service through 32,000
electronic exchanges. Digitalized Public Switched Telephone Network
(PSTN) with a host of Phone Plus value additions.

BSNL launched Data One broadband service in January 2005 which

shall be extended to 198 cities very shortly. The service is being
provided on existing copper infrastructure on ADSL2 technology. The
minimum speed offered to the customer is 256 Kbps at Rs. 250/- per
month only. Subsequently, other services such as VPN, Multicasting,
Video Conferencing, Video-on-Demand, Broadcast application etc will
be added. 
Keeping the global network of Networks networked, the countrywide
Internet Services of BSNL under the brand name includes
Internet dial up/ Leased line access, CLI based access (no account is
required) and DIAS service, for web browsing and E-mail applications.
You can use your dialup sancharnet account from any place in India
using the same access no ‘172233’, the facility which no other ISP has.
BSNL has customer base of more than 1.7 million for sancharnet
service.

BSNL also offers Web hosting and co-location services at very cheap
rates.  
ISDN

Integrated Service Digital Network Service of BSNL utilizes a unique

digital network providing high speed and high quality voice, data and
image transfer over the same line. It can also facilitate both desktop
video and high quality video conferencing. 
Intelligent Network

Intelligent Network Service (In Service) offers value-added services,

such as:

Free Phone Service (FPH)

India Telephone Card (Prepaid card)
Account Card Calling (ACC)
Virtual Private Network (VPN)
Tele-voting
Premium Rae Service (PRM)
Universal Access Number (UAN) and more

I-Net

India s x.25 based packet Switched Public Data Network is operational

in 104 cities of the country. It offers x.25 x.28 leased, x.28 Dial up
(PSTN) Connection) and frame relay services.
Leased Lines & Datacom

BSNL provides leased lines for voice and data communication for
various applications on point to point basis. It offers a choice of high,
medium and low speed leased data circuits as well as dial-up lines.
Bandwidth is available on demand in most cities. Managed Leased Line
Network (MLLN) offers flexibility of providing circuits with speeds of
nx64 kbps up to 2mbps, useful for Internet leased lines and International
Principle Leased Circuits (IPLCs).
 Cellular Mobile Service  

BSNL’s GSM cellular mobile service Cellone has a customer base of

over 5.2 million. CellOne provides all the services  like MMS, GPRS,
Voice Mail, E-mail, Short Message Service (SMS) both national and
international, unified messaging service (send and receive e-mails) etc.
You can use CellOne in over 160 countries worldwide and in 270
cellular networks and over 1000 cities/towns across India. It has got
coverage in all National and State Highways and train routes. CellOne
offers all India Roaming facility to both pre-paid and post-paid
customers (including Mumbai & Delhi).

Wireless in Local Loop

This is a communication system that connects customers to the Public

Switched Telephone Network (PSTN) using radio frequency signals as
  a substitute for conventional wires for all or part of the connection
between the subscribers and the telephone exchange.

Countrywide WLL is being offered in areas that are non-feasible for

the normal network.
Helping relieve congestion of connections in the normal cable/wire
based network in urban areas.
Connecting the remote and scattered rural areas.

Limited mobility without any air-time charge

BSNL’s SWOT ANALYSIS

The changing external environment for BSNL can be well captured by the Potter’s model
diagram which shows that the industry structure has become bit unfavorable .

In such an environment BSNL definitely requires to redefine its strategies. What is required
is to identify the potential opportunities and threats implied by this changing environment for
the BSNL. In changing trends, situations, and events gaining an accurate understanding of
BSNL’s strengths and limitations will help in better strategic management of organization.
The SWOT analysis for BSNL is as follows –

BSNL – SWOT ANALYSIS

STRENTHS WEAKNESSES
 Pan-India reach  Non-optimization of network capabilities
 Experienced telecom service provider  Poor marketing strategy
 Total telecom service provider  Bureaucratic organizational set up
 Huge Resources (financial & technical pool) Inflexibility in mindset (DOT period
 Huge customer base legacies)
 Most trusted telecom brand  Limited number of value added services
 Transparency in billing  Poor franchisee network
 Easy deployment of new services  Legacy of poor service image
 Copper in last mile can be used for easy  Huge and aged manpower
broadband deployment  Procedural delays
 Huge Optical Fibre network and associated  Lack of strategic alliances
bandwidth  Problems associated with incumbency like
outdated technologies, unproductive rural assets,
social obligations, political interference,
 Poor IT penetration within organization
 Poor knowledge Management

OPPORTUNITIES THREATS

 Tremendous market growing at 20 lac  Competition from private operators

customers per month  Keeping pace with fast technological
 Untapped broadband services changes
 Untouched international market  Market maturity in basic telephone segment
 Can capitalize on public sector image to  Manpower churning
grab government’s ICT initiatives  Multinational eyeing Indian telecom market
 ITEB service markets  Private operators demand for sharing last
 Diversification of business to turn-key mile
projects  Decreasing per line revenues due to
 Leveraging the brand image to source funds competitive pricing
 Almost un-invaded VSAT market  Private operators demand to do away with
 Fuller utilization of slack resources ADC can seriously effect revenues
 Can make a kill through deep penetration  Populist policies of government like
and low cost advantage “OneIndia” rates
 Broaden market expected from convergence
of broadcasting, telecom and entertainment industry
BSNL should change its very strategy of acting as follower to that of leader. Instead of
reacting to other operators move it should start acting proactively. BSNL should adapt greater
standardization and flexibility in systems. Only then new service rollouts will be faster, and
ideas will be converted into revenue streams. The overall strategy of BSNL can be of
concentrating on the mobile and broadband business in near future and to immediately phase
out loss making businesses like telegraph, VSAT communication etc. BSNL can leverage on
its pan India reach and economies of scale to achieve overall cost leadership. At the same
time capital investments can be made in next generation networks where stress should be on
Wi-Max, content based data service and VOIP. Emphasis on organizational restructuring
coupled with customer orientation and operational efficiency can help BSNL find place in
Asian Telecom market.
TELECOM INDUSTRY POTTER’S MODEL

BCG MATRIX

STAR QUESTION MARK

- Cellular service - Broadband

- Leased circuit - Rural operations

- Intelligent network
CASH COWS DOGS

- Landline service - Satellite communications

- Internet service

ANSOFF MATRIX

MARKET PRODUCT
PENETRATION DEVELOPMENT

- Landline service - Broadband based

content oriented services
- Internet service

- Cater rural demand

MARKET DIVERSIFICATION
DEVELOPMENT
- Turnkey projects for
- Cellular service ITES companies

- Leased circuit - International market

 - Intelligent network

- Broadband
How should marketers insulate themselves from sudden shocks?
There is a revolution spreading across the business landscape. Across every industry customers are
becoming more demanding and less loyal. There is a sea change occurring in terms of what satisfies
customers and what keeps them coming back for more. What worked yesterday cannot be
presumed to work today, and what satisfies well today almost assuredly will not satisfy tomorrow.
The key trends noticed in the market can be encapsulated as:

* Refusing to pay prices presumably inflated by layers of middlemen

* Turning up their noses at sellers' limitations on delivery periods, warranties and payment
standards
* Opting for generic or clone products instead of brand leaders
* Negotiating harder for the absolute best deal

But, this new world of change need not unsettle us, so long as we are willing to understand its
demands and rethink our products and services and ways of coming to market. Today, the operative
word in business is customer loyalty, which is defined as "an act of binding the customer -
intellectually or emotionally - to a course of action." If a product or service meets buyer's needs at
the first occasion, and is offered at a fair price, that buyer has compelling reasons to come back for
more, in a quest for "value" that suits him.
Thus, loyalty is a combination of three crucial elements:

Product or Service quality: It deals with the

tangible aspects of product performance and service delivery.
Price: Simple! It's what the customer paid for the product or service.
Intellectual or emotional bonding: It involves the essence of how we choose to spend or time,
money and effort.

what impact this buyer's revolution can have for individual businesses
* Excellent quality alone is no longer a differentiator.
* Low prices alone are not a differentiator.
* Excellent service alone is no longer a differentiator.
* Customer satisfaction is passé.

The path for tackling unpredictability of the new information age is two-fold: 1] Knowing your
customers, 2] Enticing them to stay with you.

COMPETITIVE STRATEGIES
1. Competitive strategies in newly established markets
 Restrict commitment of resources to specialized uses.
 Limit the level of fixed costs in the organization.
 Spend time becoming street-wise. It is important to have an ear close to the ground when
market conditions are so volatile. That is, sensitive to the market conditions and trends.
 Scan technology alternatives - Technology can be utilized effectively in several different aspects
of an organization’s operations varying form administration, to information processing, to
operations management.
2. Competitive strategies in consolidating markets
 During this phase the boundaries of the market become apparent and specific segments begin
to appear.
 Resist haphazard growth. Focus on finding the key success factors in the industry and the
associated means of achieving sustainable competitive advantage within this growth area.
 Focus on the internal value chain - Methods, procedures, polices and rules are ad hoc and
informal at best. At this stage, therefore, it is important to refocus on internal efficiency and to
organize the elements of the value chain in such a way that they become an integral part of the
competitive strategy.
 Perform some ‘blue skies’ planning (Long-term Planning). To establish a vision of the industry
and its prospects, they will have a much better idea of where the organization should go in the
future and how it should get there.
3. Competitive strategies in growth markets
 At this stage, it is usually quite clear what customer requirements are and the technology
associated with the industry is well known. The critical factor, therefore, becomes the extent to
which an organization can outperform its competitors using the known technology to satisfy
customer needs.
 It is important for management to be aware of the likelihood of new competitors entering the
market, of substitute products being developed, and of the changing nature of the industry
itself as it approaches maturity.
 Strategies
 Build market share to dominate a major segment of the market. During this phase,
competitors are enjoying increasing sales levels and many cannot cope with the level of
demand for their products. Under these conditions, their own prosperity makes them
less concerned about conceding market share to their more effective rivals. So,
provided the necessary skills and resources, market share is there for the taking by
growth minded competitors.
 Look for developing market segments. Apart from obvious core segments, exploring
new segments can provide a convenient target for organization seeking to grow at a
faster rate than the industry average.
 Reorganize distribution channels. Distribution channels must be carefully selected in
the anticipation of the mass-marketing strategy required in the forthcoming maturity
stage.
 Lock in supplier. By supporting and locking in the right suppliers at this early stage of
industry development, an organization can develop a strong and sustainable
competitive advantage.
 Select target competitors. An organization needs to identify which of those
competitors are pursuing similar strategies to its own and to design specific marketing,
financial, operations and human resources activities that will ensure that its value
chain is more effective than those of its competitors.
4. Competitive strategies in mature markets
 The most obvious identifying characteristic of industry maturity is a slowing of demand to such
an extent that competitive rivalry is affected.
 As a result of the intensive competition for customers and relative increase of supply over
demand, the buyer power is enhanced, and customers use this power to drive down prices or to
demand extra performance in terms of product quality, features or servicing.
 During industry maturity, it is imperative that the organization identifies and adheres to a
specific generic strategy.
 Strategies
 Rationalize Operations - By reducing costs through product stripping, pruning
unprofitable products from the product line, withdrawing from unprofitable market
segments, and focusing on creating efficiency in all aspects of the value chain, it is
possible to ensure that profit margins remain high.
 Product Rejuvenation - By matching product characteristics more closely to customer
requirements and by focusing more tightly on growth segments, it is possible to
maintain profit margins and to carve out a viable niche in the industry.
 Hold Market Share - During industry maturity, as competition increases, it is unwise to
embark on a market share gaining strategy. Even if the organization has survived
industry maturity well and is cash rich, these funds can be more profitably spent
elsewhere than by attempting to take market share form competitors who are now
jealously guarding every sale they make.
 Vertical Integration - If diversification is seen as being too risky, management may wish
to attempt to turn cost centers into profit centers by embarking on backward or
forward vertical integration.
 International Strategy - As the local competitive situation worsens, many organizations
should consider repeating their previously successful strategies in a foreign market.
5. Competitive strategies in declining markets
 For many years, the only solution to a declining market is to pursue a harvesting strategy and
then leave the industry altogether. However, it get drawbacks including:
 This strategy is of little value to organizations with single business.
 It does little for morale of management and staff.
 In a declining market, the organization cannot sell their assets at any price.
 It is first necessary for management to clearly identify the reason behind the decline in the
industry.
 Strategies
 Become the market leader - This strategy is based on the assumption that the market
leader will have a lower cost structure due to the experience curve and economies of
scale, and will be able to dominate the market, causing other smaller competitors to
withdraw. As long as the market is viable enough to support one large competitor, such
a strategy is feasible.
 Find a profitable segment - If it is not possible to dominate the market, the
organization should seek a segment of the market that holds greater prospects than the
rest. Given that all markets can be segmented in a prospects than the rest. Given that
all markets can segment in a variety of ways, a new and creative approach to the
market may hold the key to the continued survival and success of the organization.
Note: With both of these strategies, it is important for an organization not to become too
dependent on one customer.

6. Competitive strategies in global industries

 A global organization is usually defined as one whose operations in different countries are
systematically integrated for the purpose of gaining competitive advantage on a global
basis.
 The global approach to strategy is becoming critical in industries that sell a standardized
product in many different countries.
 The strategy requires an organization to take advantage of the relative strengths and
opportunities presented in each country to contribute to the overall value chain.