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This case study is about Bharti Airtel Ltd.

(BAL), the market leader in the Indian telecommunication industry and its globalization strategy. BAL's telecom model was considered as the new model for telecom and effective for emerging markets like India, according to experts. BAL had established itself as a dominant player in India with its innovative business processes and strong brand, but was witnessing tapering growth because of increasing competition and saturation of the more lucrative urban markets. While more and more players were eyeing the fast-growing Indian mobile market which was experiencing high growth, BAL put its sight on foreign shores. The acquisition of Zain Group's telecom business in fifteen African counties in 2010 gave it a footprint in the African continent. While concerns regarding whether BAL had overpaid for the deal remained, industry observers were keenly observing to see whether the company could replicate its successful telecom model in these developing and emerging markets. Africa posed an intriguing environment with different cultures, political forces and socioeconomic environment. After completing the deal, BAL was in the process of giving shape to its strategy for the African markets.

Issues:
Understand the issues and challenges in globalization, especially the critical success factors in emerging markets. Understand the importance of business process innovation and strategic partnerships. Appreciate the role of tailoring strategy to fit a specific industry and business environment . Analyze BAL's strengths, weaknesses and its external opportunities and threats. Understand and discuss cross-country differences in Cultural, demographic and market conditions and its possible impact on business. Probe the role, importance and pros and cons of legal and regulatory framework. Explore the ways a business can be successful in international markets.

FORAY INTO AFRICA


In June 2010, leading Indian mobile telecom company Bharti Airtel Ltd. (BAL) concluded a deal with Zain Group 2(Zain) to buy its businesses in fifteen African countries. Zain, Africa's second largest mobile telecom service provider, had operations in seventeen African countries, apart from six Middle Eastern countries3. The deal, valued at US$10.7 billion, was considered one of the biggest acquisitions in the emerging markets. With this, BAL's subscriber base rose by 42 million to reach 185 million, which made it the world's fifth largest mobile telecom operator4. BAL, which had earned a name for itself globally with its low cost model and strategic innovations, was actively looking to globalize itself since 2007. In the years 2008 and 2009, it was in advanced stages of negotiation to complete a deal with the MTN Group (MTN), Africa's largest telecom company, but the deal fell through both times. MTN had a presence in more than twenty African countries.5

FORAY INTO AFRICA Contd...


Many analysts felt that BAL had settled for the second best, and called the deal a forced marriage'. They said that the deal with Zain was nowhere as attractive as the one contemplated with MTN, especially at a price tag of US$10.7 billion. The reasons for this, they said, were declining profits and the low contributions of the fifteen acquired businesses to the group's revenues. Zain's African assets accounted for about 58% of its total subscriber base (71.8 million), but they made up only a fraction of its net profits6. Though BAL was able to acquire a

global footprint and a much larger customer base through this deal, industry experts believed it would be difficult for it to leverage on the business model and strategies which had kept it afloat and ahead of the competition in India. Africa represented diverse cultures with many of the countries having minimal infrastructural resources. Further, BAL had to function in fifteen different countries, each of which came with its own different regulatory requirements and geopolitical risks. Jaydeep Ghosh, Executive Director of KPMG 7, said, "Bharti has replicated the low-cost model through outsourcing in India, but depending upon different geographies (in Africa), it will not be easy."8

COMPANY OVERVIEW
From its humble beginnings in 1976 as a bicycle part manufacturing business, the Bharti Group had transformed itself into a successful business conglomerate with businesses such as telecom, retail, financial services, and food....

EMERGING AS THE MARKET LEADER


By the end of 2001, BAL had 1 million subscribers but was at strategic inflection point. Though the market reflected huge potential with the number of subscribers almost doubling each year...

COMPETITION
The competition in the Indian telecom market was increasing by the year. In 2007, Vodafone entered India by acquiring Hutch, while players such as Reliance that operated through the CDMA technology, were allowed to offer mobile telecom services using both GSM and CDMA Technology....

GLOBALIZATION INITIATIVES
BAL felt that its extensive experience in India, coupled with its unique business model, would help it tap the opportunity provided by other developing and emerging markets and create value for its customers...

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