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Corporate Plan

TATA DoCoMo
Submitted By:

Tarun Kandarpa Suraj Jain Saurabh Thadani Srikanth Konduri

10DM-162 10DM-163 10FN-102 10FN-109

Submitted To:

K Chander Professor, Strategic Management

TAT Do TusharAGuptaC o M o 10FN-115

Nikhil Gupta Anirudh Verma

10FN-121 10IB-069

7/21/2011

TATA DoCoMo 2 Strategic Analysis

Table of Contents
1 ENVIRONMENTAL SCANNING (PESTEL ANALYSIS) ............................................................................... 4 1.1 POLITICAL ...................................................................................................................................... 4 1.1.1 ANALYSIS ................................................................................................................................ 4 1.1.2 IMPLICATIONS ........................................................................................................................ 4 1.2 ECONOMIC .................................................................................................................................... 4 1.2.1 ANALYSIS ................................................................................................................................ 4 1.2.2 IMPLICATIONS ........................................................................................................................ 5 1.3 SOCIAL ........................................................................................................................................... 5 1.3.1 ANALYSIS ................................................................................................................................ 5 1.3.2 IMPLICATIONS ........................................................................................................................ 5 1.4 TECHNOLOGY ................................................................................................................................ 6 1.4.1 ANALYSIS ................................................................................................................................ 6 1.4.2 IMPLICATIONS ........................................................................................................................ 6 1.5 ENVIRONMENTAL ......................................................................................................................... 6 1.5.1 ANALYSIS ................................................................................................................................ 6 1.5.2 IMPLICATIONS ........................................................................................................................ 6 1.6 LEGAL ............................................................................................................................................ 7 1.6.1 ANALYSIS ................................................................................................................................ 7 1.6.2 IMPLICATIONS ........................................................................................................................ 7 2 The TATA Group ................................................................................................................................... 8 2.1 Mission and Vision ........................................................................................................................ 8 2.2 Core Values ................................................................................................................................... 8 3 Strategic Intent..................................................................................................................................... 9 4 Tata Teleservices Limited (TTSL) .......................................................................................................... 9 4.1 Corporate Strategy:..................................................................................................................... 10 4.2 TTML Vision: ................................................................................................................................ 10 4.3 TTML Maharashtra Vision: .......................................................................................................... 10 4.4 TTML Mission: ............................................................................................................................. 10 4.5 TATA Teleservices positioning in the group business portfolio .................................................. 11 4.6 TATA Teleservices Business Portfolio.......................................................................................... 12 4.7 Joint ventures, subsidiaries, associates ...................................................................................... 12 5 BCG Matrix ......................................................................................................................................... 13 6 Strategic Advantage Profile................................................................................................................ 14

TATA DoCoMo 3 Strategic Analysis 6.1 Marketing & Distribution ............................................................................................................ 14 Product .......................................................................................................................................... 14 Price .............................................................................................................................................. 14 Place .............................................................................................................................................. 14 Promotion ..................................................................................................................................... 14 6.2 Research and Development ........................................................................................................ 14 6.3 Production and Operations ......................................................................................................... 14 6.4 Human Resource ......................................................................................................................... 15 6.5 Finance ........................................................................................................................................ 15 7 Future Outlook: .................................................................................................................................. 16 8 Big question for Tata Group: .............................................................................................................. 16 9 APPENDIX ........................................................................................................................................... 17

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1 ENVIRONMENTAL SCANNING (PESTEL ANALYSIS)


1.1 POLITICAL
1.1.1 ANALYSIS

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

1.1.2 IMPLICATIONS

Political lobbying is prevalent and many companies have resorted to this to gain undue advantages this trend has become ubiquitous and creates a lot of hassles for firms that do not support such lobbying. But due to unearthing of the 2G scam there would be tighter audit and control. Also UPA will try to bring in some policy changes due to social pressures (Anna Hazare's fast and large public pressure) and to revamp their tarnished image. Politics in India is bound to undergo some changes some bills and policies might be introduced in the near future increasing transparency and accountability in the entire system. Firms such as TATA would be duly benefited by their inherent policy of no form of corruption. As a policy of the TATA group no form of corruption is appreciated or promoted, other competitors might indulge in such activities and get undue advantages in the short term. TATA Docomo would have to be ready for a patient game and should hold on to its high corporate values.

1.2 ECONOMIC
1.2.1 ANALYSIS

Teledensity has improved from under 4% in March 2001 to around 53% by the end of March 2010. Cellular telephony has emerged as the fastest growing segment. The mobile subscriber base has grown from under 2 Mn. at the end of FY 00' to touch 584 m at the end of March 2010. (Average annual growth of nearly 76% during this ten year period)

TATA DoCoMo 5 Strategic Analysis 1.2.2 IMPLICATIONS

Due to high growth rate, increased teledensity and sustainable domestic demand, cellular telephony is sure to remain in the pink of health in India. There will be more and more subscriptions in the rural market and there would be a focus on increasing the usage in urban markets, data usage instead of voice usage would be the emphasis in the future as in the next few years the data usage(emails, mms, internet surfing) would account for 80% of the billing. There is vast potential to tap the unexplored rural markets as there are places and people in India that are still away from basic amenities and these regions are still developing, there is a large chunk of population in these regions where the usage would be low but volumes would be high. But due to immense competition and lowest call rates in the world there are wafer thin margins as well. The company will have to offer more value to customers and increase the subscriber base by aggressive marketing and technological advancements.

1.3 SOCIAL
1.3.1 ANALYSIS

Youth population is increasing, so is the adoption of new mobile technology in daily routine. While urban migration is favorable to increased activation of value added services, there is still a scope to tap rural markets through extended network infrastructure initiatives viz., mobile banking, and mobile farming tips.

1.3.2 IMPLICATIONS

The demographics of India clearly show that India would have one of the youngest populations in the world in the next 10 years. It is clear that the youth will drive the economy and the company will have to cater to the demands of the youth or runs the danger of being left behind, On this account TATA DOCOMO has played it very intelligently till now the 'Keep it simple silly' campaign and a brand ambassador like Ranbir Kapoor who is a hot favorite among the youth of India has helped in building a friendly Brand Image for TATA DOCOMO. Plans and tariffs will have to offered keeping in mind the current demands of the youth, As the rural market is a large portion of the pie the company will also have to offer plans specifically to serve this market better. TATA DOCOMO is very proactive in bringing out new plans and innovative ways to create a customer value.

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1.4 TECHNOLOGY
1.4.1 ANALYSIS

Tata DoCoMo is enjoying the distinct advantage of being backed by a proven innovative technology provider NTT DoCoMo, thus bringing in breakthrough mobile applications for engaging customers and making it the most sought after mobile service among youth & corporate markets. It is the first in India to roll out 3G services, resulted in a growth of 30%-40% in VAS and also planning to bring in 3G enabled mobile phones at affordable USD 100.

1.4.2 IMPLICATIONS

The company has to be technologically equipped and has to keep pace with the changes around the world. The company should leverage its collaboration with NTT DoCoMo of Japan and try to bring new technological advancements and capture more and more customers. It should try to capitalize on the capabilities of WiMax Technology, a high speed data connection, which is supposed to have 12 million subscriptions by 2012. As 3G technology has made inroads in India there is growing emphasis on speed and coverage. Huge investments to buy the 3G spectrum have been made and thus return on them is the priority for all companies right now, but TATA has to be on its toes and outplay its competitors by bringing in more technological advancements in their existing network, so that they are able to prove to the market that they are the pioneers and technology and anyone looking for high speed, coverage without any failures and disruptions should put its trust in TATA Docomo.

1.5 ENVIRONMENTAL
1.5.1 ANALYSIS

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

1.5.2 IMPLICATIONS

There have been many articles all over the internet by independent bodies and researchers that the cellular waves are harmful to different body parts.

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Neither there has been unanimity nor there has been any concrete solutions proposed, The company should research about the matter clearly, provide scientific findings as they are because people understand that everything comes with a price. And TATA Docomo should be the first to acknowledge the concerns of the people by innovating ways that can make (like some devices that make the wave less harmful are already available in the market but by less trusted companies, even this can be a big market if TATA Docomo tries to address the concerns of the people) the waves harmless and thus The company would be able to garner customer trust, loyalty and a larger market share.

1.6 LEGAL
1.6.1 ANALYSIS

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 Unitechs and Telnors UNINOR.

1.6.2 IMPLICATIONS

Due to scams and public wrath against the government, 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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2 The TATA Group


The Tata Group is one of Indias largest and most respected business conglomerates, with revenues in FY 2011 of $72 billion, and operates in over 80 countries. Tata Companies together employ over 3, 95,000 people worldwide. The Tata Group comprises of 96 operating companies in 7 Business sectors: Information Systems and Communications Engineering Materials Services Energy Consumer Products Chemicals

The Group has the largest number of publicly listed companies, all of which have been pioneers in their perspective fields; Tata Motors, Tata Steel, Tata Consultancy, Tata Tea, Tata Chemicals, Tata Power and Indian Hotels. Going forward, the Group is focussing on new technologies and innovation to drive its businesses in India and globally, in tandem with the increasing international presence of its companies.

2.1 Mission and Vision


The broad vision of the Group is to be a truly global company regarded for its commitment, quality and trust. Ratan N Tata, the chairman of Tata Sons, the Tata promoter company outlines this vision with these words - "One hundred years from now, I expect the Tatas to be much bigger than it is now. More importantly, I hope the group comes to be regarded as being the best in India best in the manner in which we operate, best in the products we deliver and best in our value systems and ethics. Having said that, I hope that a hundred years from now we will spread our wings far beyond India..."

2.2 Core Values


The Tata name is a unique asset representing leadership with trust. Leveraging this asset to enhance group synergy and becoming globally competitive is the chosen route to sustained growth and long-term success. Tata Internationals values, as stated by them are: Integrity: We will conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny. Understanding: We will be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve.

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Excellence: We will constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide. Unity: We will work cohesively with our colleagues across the group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation. Responsibility: We will continue to be responsible, sensitive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.

3 Strategic Intent
The current strategic intent of Tatas is acquisition and mergers of other businesses globally. In an interview with Mckinsey Quarterly Mr. Ratan Tata said, The Tata group's strategy to enter overseas markets is mainly driven by "We want to expand into geographies where, as a group, we can have a meaningful presence. And further he added that the group is looking at opportunity to invest in steel industries, because of Tatas belief that owners of steel are going to rule the industry. In addition; he assured that we are making sure that, we have secure access of raw material. In a nutshell, the group aims to achieve the following objectives: The group chooses the opportunity of acquisitions and mergers to expand the business. The group intends to acquire the raw material industries in first place to serve the other industries with a value added and low price of material. With the acquisitions and mergers the group also intends to capture a high market share.

4 Tata Teleservices Limited (TTSL)


Tata Teleservices Limited spearheads the Tata Group's presence in the telecom sector. Some important milestones acquired along the way are: Incorporated in 1996, Tata Teleservices is the pioneer of the CDMA 1x technology platform in India. It has embarked on a growth path since the acquisition of Hughes Tele.com (India) Ltd [renamed Tata Teleservices (Maharashtra) Limited] by the Tata Group in 2002. It launched mobile operations in January 2005 under the brand name Tata Indicom and today enjoys a pan-India presence through existing operations in all of India's 22 telecom Circles. The company is also the market leader in the fixed wireless telephony market.

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The company's network has been rated as the 'Least Congested' in India for six consecutive quarters by the Telecom Regulatory Authority of India through independent surveys. Tata Teleservices Limited has also become the first Indian private telecom operator to launch 3G services in India under the brand name Tata DOCOMO, with its recent launch in all the nine telecom circles where it bagged the 3G license.

4.1 Corporate Strategy:


Consistent with the Groups Broad Vision and growth objectives, Tata Teleservices has adopted strategies in sync with these goals through a Combination of Stability, Expansion and Retrenchment Strategies.

4.2 TTML Vision:


TATA Teleservices wants to be the leader market player and the initiator of innovations in the Indian Telecom industry.

4.3 TTML Maharashtra Vision:


To be the most admired Telecom Service Provider in Maharashtra & Goa.

4.4 TTML Mission:


Balancing the needs of all stakeholders and encouraging value creation throughout the organization Continuously satisfying customers growing needs and expectations with innovative and customized cutting edge solutions

Creating an engaged and empowered workforce committed to delivering high performance

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4.5 TATA Teleservices positioning in the group business portfolio


Business Sectors Companies in Sector

Nelco

Tata Communications

Tata Sky Information Technlogy & Communications Engineering Products & Services

Tata Teleservices Tata Teleservices (Maharashtra)


Tatanet

Materials

TATA Group Businesses

Services

Energy

Consumer Products

Chemicals

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4.6 TATA Teleservices Business Portfolio

Tata Indicom

CDMA based mobile operations in all the 22 telecom circles of India Leader in fixed wireless telephony market Rated the lease congested in India for six consecutive quarters by TRAIs independent surveys Provides a variety of options for wireless mobile broadband access

Walky

The Photon family

Offers mobile telephony services on GSM platform


T24

GSM telecom services in all the allotted 18 circles First to launch 3G services in India (in the allotted 9 telecom circles where it TATA bagged the 3G license) DoCoMo

4.7 Joint ventures, subsidiaries, associates


Venture Virgin Mobile India Alliance Area Business Benefit A brand franchise arrangement with the Virgin Mobile group. Earned it a significant presence in Joint venture with Tokyo-based Tata DOCOMO GSM space, 1st mover advantage NTT DOCOMO. in 3G space. Strategic partnership with Future T24 Group. Merger of telecom tower Backward integration, portfolio of operations of TTSL (Wireless TT Viom 45000 towers and has the highest Info-Services) and Quippo occupancy ratio in the industry. Telecom Infrastructure. Formed by acquisition of Hughes Tata Teleservices Tele.com (India) by Tata group in (Maharashtra) 2002

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5 BCG Matrix

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6 Strategic Advantage Profile


6.1 Marketing & Distribution
Good range of services including GSM Can introduce similar to Airtel & Aircel( and 3G(introduced in India). association with iphone) to increase Product Recently introduced handsets in sell of its handsets and services. association with DOCOMO. Keeping low prices DOCOMO has captured a good amount of market but Price always is most appealing to has compromise its revenue, since capture customer. First to introduce now there is again an increase in call Price 1p/sec plan. rates DOCOMO can wait for some time to gain more brand loyalty and then can go for increase. Good range of channels of distribution. Can use sister branch channels. Also available the under the tag name Already has asked government to Place of Indicom allocate spectrum fast. Ranbir Kapoor saying Keep it Simple New branding is helping in penetrating Promotion Silly market.

6.2 Research and Development


DOCOMO has5 R&D centres 2 in Japan & in US, Europe, China. TATA & DOCOMO collaborated to share technology and establish a R&D centre in india with a strong focus on VAS Has already started cutting infrastructure cost by selling 12,000 towers and increasing its thrust on VAS through content and exclusive mobile broadcast partnerships. M&A could also be on cards since telecom industry is overcrowded with above ten players. Tata Teleservices Ltd. network has been rated congestion-free, by TRAI, 6 times in a row. Pay-per-use model first introduced by DOCOMO i.e. 1p/sec brought a revolution telecom sector. The company has also entered into International bi-lateral agreement with more than 40 operators across different countries to offer seamless international roaming facility to its subscribers. The company has undertaken ISO 9001:2008 certification to demonstrate its capability to consistently provide services that enhance customer satisfaction through effective deployment of a quality management system.

6.3 Production and Operations

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6.4 Human Resource


The Human Resources (HR) function of the Company constantly strives to achieve the mission of the Company by creating a favourable work environment. Tata DoCoMo organization was created in a record time of less than six months, which required class talent and were provided empowered platform to perform of its abilities. Potential assessment is done regularly using MyPMS , Career Development Process keeping in mind employee career aspirations and work culture he wants the company is considered to be one of the best companies to work in owing to its employee friendly HR policies and their effective implementation. It created a record of sorts by winning 8 awards at the World HRD Congress, 2010 in the face of stiff competition from 189 companies and delegates from over 25 countries. Fourth largest telecom operator with market share of 11%. Telecom sector plays on game of volumes because of already existing completion and very low call rates, therefore DOCOMO has to capture as much market as possible keeping in mind his customers are generating revenue for it and not just occupying resources. Telecom sector is 2nd most attractive FDI sector in India. EBITDA was around 75 much lower compared to industry standard of 110-120, but still fine for a company just started competing with established players like Airtel, Vodafone, BSNL. Minutes of usage per sub was again very low of 93 which was way below compared to industry which makes DoCoMo flexible enough to increase its revenue in case it is able to increase its revenue by increasing market. To increase revenue and customer base it was necessary to introduce new innovative plans , supervise and renew old plans, which DOCOMO did and improved its balance sheet. Tata DoCoMo recently increased its tariff rates according to its innovative tariff process and achieves its breakeven by 2014.

6.5 Finance

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7 Future Outlook:
By 2012 3G services in India are projected to reach 50 million subscribers Over the next five years, market penetration of wireless services will grow from 13.4% to 31.0% in India. Tata Teleservices invested about $500 million (Rs.2,250 crore) for the 3G rollout in all the nine circles where we have secured airwaves in an all-India bid early this year (May). Similar kind of investments expected from other major players including Airtel, Vodafone and Reliance Communication. A number of factors like availability of low priced handsets, increased competition among telecom operators leading to affordable services and enhanced network coverage will play an important role driving the growth in the country's telecom sector. The disparity between high data consumption and low revenue contribution will largely be attributed to Indias emerging 3G networks, which will be major contributors to Asia-Pacifics overall mobile traffic. The Asia-Pacific region is expected to devour 2,400 petabytes of mobile data annually by 2015, an estimated 23 per cent of global data traffic. In India, where fixed Internet access is limited, mobile is the dominant means of accessing the Internet: mobile accounted for nearly 90 percent of all Internet users in 2008. Thus huge scope for 3G services. Percentage of mobile subscribers accessing mobile Web at least monthly in Urban India just 9%. Percentage of mobile Web users who never or infrequently use the desktop Web in India 59%. Thus 3G services to be a major substitute to desktop web services. A long haul service which will take considerable amount of time to become matured. Large investments needed and return would catch up later.

8 Big question for Tata Group:


The Tata group has so far invested more than Rs. 37,000 crore in the telecom business. Between its two companies, Tata Teleservices (TTSL) and the listed Tata Teleservices (Maharashtra) (TTML), the group has written off nearly Rs. 7,000 crore in losses, the biggest ever in recent times for the $80 billion group. Yet, last year (2009- 10), it

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declared fresh losses of over Rs. 2,000 crore. Tata Communications, the third group telecom company which took over assets of government-owned VSNL, made losses last year after a large acquisition. Will Tata remain a significant, profitable player in the telecom space or will the investment go down as one of Ratan Tata's worst ever business decisions? Or will the advent of 3G services in India bring new life to Tatas communication business?

9 APPENDIX

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