Strategic Business Unit- Idea Cellular Limited

Idea Cellular Limited has a share of 12% in the total GSM telecom market in India (as on Mar08). The Entire Telecom Industry is growing at a rate of 25% 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. We are thus putting the middle line of the vertical axis in our BCG matrix as 15% as a division between low and high growth. The first BCG matrix will be plotted for Idea Cellular Limited, our chosen SBU, with respect to the market leader, Bharti Airtel. Taking the market share of Bharti as 1X, the relative market share of Idea comes as 0.39X. The BCG matrix thus, would look like as under.
BCG Matrix of Idea Cellular Limited with respect to Airtel

Analysis of BCG matrix: In the above matrix, Idea Cellular Limited falls in the first quadrant of QUESTION MARKS. The circle size represents the absolute market share (i.e. 12%) of our SBU in the telecom sector. We will formulate the strategies which Idea should follow in the later part of this project.

GE Matrix

The GE matrix for Idea Cellular will be made keeping the following two major dimensions: 1. Market Attractiveness 2. Business Strength

Market Attractiveness: This dimension forms the Vertical axis of the GE matrix. The factors which we have considered which may affect the industry attractiveness for our SBU are: 1.Overall Market Size: IDEA operates in an industry which has overall revenue of Rs. 125 billion and has a subscriber base of 261.07 million customers. Thus it has a huge target audience and we need to give substantial weightage to this factor. We have given it 0.20 out of 1.0. 2.Market Growth Rate: The telecom industry is growing at 25%. As previously stated, this can be considered as a moderately growing and having high growth opportunities with the growth of Indian economy. But in the current recession scenario, we decided to give it a little less weightage of 0.15 out of 1.0. 3.Profitability: Telecom industry net profits just increased from 12% to 14% from the last fiscal year. Due to no such significant increase in profitability as compared to sales, we have given it a weightage of 0.10 out of 1.0. 4.Technological Development: With new technologies like 3G knocking at the doors of Indian telecom sectors, technological development will be an important factor to be considered in the business policies towards our chosen SBU. Hence a weight of 0.15. 5.Global Opportunities: Bharti has started making forays into global markets. With the expected entry of many foreign players in the near future, this can open the door for global opportunities for Indian players. Hence the weightage of 0.10. 6.Market Rivalry: Indian telecom sector is an Oligopoly where 80% of the market share is picked by only 4 players. Also the future guarantees the entrance of several big global names in this sector. Hence clearly market rivalry weighs above others at 0.20 out of 1.0. 7.Pricing: Being an Oligopoly, pricing strategies are a key for any player to make profits in such a competitive sector. Thus we have given it equal weightage as technology and more than even factors like profitability and growth rate.

8. Market Growth Rate: The telecom industry is growing at 25%. As previously stated, this can be considered as a moderately growing and having high growth opportunities with the growth of Indian economy. But in the current recession scenario, we decided to give it a little less weightage of 0.15 out of 1.0.

9.Profitability: Telecom industry net profits just increased from 12% to 14% from the last fiscal year. Due to no such significant increase in profitability as compared to sales, we have given it a weightage of 0.10 out of 1.0 10. Technological Development: With new technologies like 3G knocking at the doors of Indian telecom sectors, technological development will be an important factor to be considered in the business policies towards our chosen SBU. Hence, a weight of 0.15. 11.Global Opportunities: Bharti has started making forays into global markets. With the expected entry of many foreign players in the near future, this can open the door for global opportunities for Indian players. Hence the weightage of 0.10. 12.Market Rivalry: Indian telecom sector is an Oligopoly where 80% of the market share is picked by only 4 players. Also the future guarantees the entrance of several big global names in this sector. Hence clearly market rivalry weighs above others at 0.20 out of 1.0. 13.Pricing: Being an Oligopoly, pricing strategies are a key for any player to make profits in such a competitive sector. Thus we have given it equal weightage as technology and more than even factors like profitability and growth rate.