Aditya Birla Group

A US $28 billion corporation, the Aditya Birla Group is in the league of Fortune 500. It is a
multinational corporation based in Mumbai, India with operations in 25 countries. The group is a
major player in all the industry sectors it operates in. The Group has been adjudged the best
employer in India and among the top 20 in Asia by the Hewitt-Economic Times and Wall Street
Journal Study 2007. The origins of the group lie in the conglomerate once held by one of India's
foremost industrialists Mr. Ghanshyam Das Birla. He bequeathed most of these companies to his
grandson, Mr. Aditya Vikram Birla – the father of the current Chairman of the group, Mr. Kumar
Mangalam Birla. Mr. Kumar Mangalam Birla is the grandson of Mr. Basant Kumar Birla, who
heads his own independent business conglomerate. Several other members of the Birla Family
own and run their independent business groups.

Aditya Birla is organized into various subsidiaries that operate across different sectors. Among
these are viscose staple fibre, non-ferrous metals, cement, viscose filament yarn, branded
apparel, carbon black, chemicals, Modern retail (under the 'More' brand of supermarkets, and
also under the Trinethra, and Fabmall brands until recently), fertilizers, sponge iron, insulators,
financial services, telecom, BPO and IT services. The Group consists of four main companies,
which operate in various industry sectors through subsidiaries, joint ventures, etc. These are
Hindalco, Grasim, Aditya Birla Nuvo, and UltraTech Cement.

We have focused on the Idea Cellular SBU of Aditya Birla Group. It is One of India's leading
GSM mobile service operators; IDEA Cellular is headquartered in Mumbai and has over 30
million subscribers. Innovation is central to IDEA's Value Added Service products. It was the
first to offer 'Global SMS' in over 540 networks across all technology platforms. It has also
acquired Modi family’s Spice. But then it even faces tough competition from various major
players. The leading Mobile Networks today in India are Airtel, Vodafone (sold by Hutchinson
Essar to Vodafone), BSNL, MTNL, Orange, Aircel, Tata Indicom, Idea, BPL etc. Each of these
companies has a tough competition with one another. BSNL & MTNL being government sectors
have more advantages than other Private sector Companies.

Strategic Business Unit- Idea Cellular Limited

Idea Cellular Limited has a

share of 12% in the total
GSM telecom market in
India (as on Mar’08). 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
30
Market Growth Rate (in %)
HIGH
15
LOW

HIGH
0

10X 1X 0.39X 0.1X

Relative Market Share

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.

Plotting the Competitors

1. Bharti Airtel: Bharti Airtel is the market leader in the telecom sector with a market share
of 31%. The market challenger in this industry is Vodafone. So we plot the BCG matrix
of Airtel with respect to Vodafone. Taking the market share of Vodafone (i.e. 23%) as
1X, the relative market share of Airtel comes as 1.35X. The BCG matrix of Airtel will
look as under:
 BCG Matrix of Bharti Airtel with respect to Vodafone

30
Market Growth Rate (in %)
HIGH
15
LOW

HIGH
0

10X 1.35X 1X 0.1X

Relative Market Share

Analysis of BCG matrix:

In the above matrix, Bharti Airtel falls in the quadrant of “STAR” with respect to the market
challenger. The circle size represents the absolute market share (i.e. 31%) of Airtel in the
telecom sector.
2. Vodafone Essar: Vodafone is the market challenger in the telecom sector with a market
share of 23%. The market leader in this industry is Vodafone and so we plot the BCG
matrix of Vodafone with respect to Airtel. Taking the market share of Airtel (i.e. 31%) as
1X, the relative market share of Vodafone comes as 0.74X. The BCG matrix of Airtel
will look as under:
BCG Matrix of Vodafone with respect to Airtel
30
Market Growth Rate (in %)
HIGH
15
LOW

HIGH
0

10X 1X 0.74X 0.1X

Relative Market Share

Analysis of BCG matrix:
In the above matrix, Vodafone falls in the quadrant of “QUESTION MARK” with respect to the
market LEADER. The circle size represents the absolute market share (i.e. 23%) of Vodafone in
the telecom sector.

3. BSNL: BSNL is another competitor ahead of IDEA in the telecom sector with a market
share of 19%. The market leader in this industry is Airtel and so we plot the BCG matrix
of BSNL with respect to Airtel. Taking the market share of Airtel (i.e. 31%) as 1X, the
relative market share of BSNL comes as 0.61X. The BCG matrix of Airtel will look as
under:
BCG Matrix of Idea Cellular Limited with respect to Airtel
30
Market Growth Rate (in %)
HIGH
15
LOW

HIGH
0

10X 1X 0.6X 0.1X

Relative Market Share

Analysis of BCG matrix:

In the above matrix, BSNL falls in the quadrant of “QUESTION MARK” with respect to the
market LEADER. The circle size represents the absolute market share (i.e. 19%) of BSNL in the
telecom sector.
 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
Market Attractiveness Weightage Rating(1-5) Weighted Score
Overall Market Size 0.20 4 0.8
Market Growth Rate 0.15 4 0.6
Profitability 0.10 3 0.3
Technological
0.15 4 0.6
Development
Global Opportunities
0.05 5 0.25
Market Rivalry
0.20 5 1.0
Pricing 0.15 3 0.6
Total 1.00 4.05
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.

Factors considered for Market Attractiveness

The rating is done on a scale of 1-5 where the industry attractiveness is rated associated with the
industry as a whole. Here 1 represents very unattractive and 5 represents very attractive. We can
see the difference in weightage and type of rating varying in the different factors. The market
growth rate can have a low weightage as compared to market size but has the same rating
because growth rate is attractive for the players in the market. Also pricing may have much more
weightage as compared to global opportunities but the ratings are the other way round. This is
for the reason that pricing strategies are not that attractive to the company because of strong
competition and regulations whereas global opportunities are more attractive for the industry.
Based on the above assumptions substantiated by the industry facts and growth avenues, the
weighted total score for market attractiveness in case of Idea Cellular comes to be 4.05.

Business Strength:
1. Market Share: The market share of Idea Cellular is 12%. Well it just acquired Spice
Communications and is among the top 4 players in GSM sector. But being a market
follower its primary motive is profitability. Thus we gave less weight to market share.
2. Market Growth Rate: Idea being a small player has ample of scope to grow but its
growth rate puts little effect to market rate as compared to other players. So it has again
been given weightage of 0.10.
3. Profit margin relative to competitors: This is the most important aspect of Idea’s
competitiveness. IDEA’s profit margin increased about 4 percent from 2006-07(11%) to
current profit margin (15%) that is 2007-08. This is an area where it would like to have a
competitive edge.
4. Technological Innovation: Idea was the first telecom operator to launch GPRS and
EDGE technology. We have given high weightage to support its innovational outlook.
Recently it formed a alliance with “high tech computers” (HTC). It also launched and
secured a position of leader in value added services like “cellular jockey”, “background
tones”, and “group talk”.
5. Brand Reputation: IDEA already has a backbone “Aditya Birla group” which has
already established as a global and truthful image. Being a part of Aditya Birla Group, it
has to carry a brand name. But now its strategy would be more of brand building than
brand reputation. So we have given a low weight.
6. Sales Distribution Effectiveness: The breadth of the distribution network has grown by
over 30% in the past year. In addition to this the company is operating additional 589
Idea ‘n U and showrooms which supplement the distribution channels and provide
customer service.

7. Advertising and Promotional Effectiveness: Idea went for aggressive promotional

techniques such as having Abhishek Bachhan as the Brand Ambassador. The tag line
“What An Idea” was very successful proving the effectiveness of the advertising and
promotional activities carried by Idea.
 8. Pricing strategies and Customer Loyalty: By adopting different pricing strategy it
discriminates among its customers. For example it has different pricing strategies for
postpaid subscribers and prepaid subscribers.

Key Competitive
Weight Rating(1-5) Weighted Score
Factors
Market Share 0.10 4 0.4
Market Growth Rate 0.10 4 0.4
Profit Margin relative
0.15 5 0.75
to competitors
Technological
0.15 4 0.6
Innovation
Brand Reputation
0.10 4 0.4
Sales Distribution
Effectiveness 0.10 3 0.3

Advertising and
Promotional
0.15 4 0.6
Effectiveness

Pricing strategies
0.05 4 0.2
Customer Loyalty 0.10 3 0.3
Total= 3.95
STRONG MEDIUM WEAK
5

19%

1
HIGH

3.66
MEDIUM

2.33
OW
Market Attractiveness Weightage Rating(1-5) Weighted Score
Overall Market Size 0.20 4 0.8
Market Growth Rate 0.15 4 0.6
Profitability 0.10 3 0.3
Technological
0.15 4 0.6
Development
Global Opportunities
0.05 5 0.25
Market Rivalry
0.20 5 1.0
Pricing 0.15 3 0.6
Total 1.00 4.05

GE Matrix for Competitors- AIRTEL

Key Competitive
Weight Rating(1-5) Weighted Score
Factors
Market Share 0.10 4 0.40
Market Growth Rate 0.10 4 0.40
Profit Margin relative
0.10 3 0.30
to competitors
Technological
0.15 4 0.60
Innovation
Brand Reputation
0.15 4 0.60
Sales Distribution
Effectiveness 0.15 3 0.45

Advertising and
Promotional
0.15 4 0.60
Effectiveness

Pricing strategies
0.05 4 0.20
Customer Loyalty 0.15 3 0.45
Total= 4.0
The factor for Industry attractiveness will remain same for market leader as well. Bur the
competitive strength will differ and so the weights and ratings. It is evident from our above
assumptions about Airtel that they will lesser rating to profit margins and more towards
advertising and promotional effectiveness and brand reputation. The GE matrix of Airtel will
look like as under:-

STRONG MEDIUM WEAK

5

31%

1
HIGH

3.66
MEDIUM

2.33
LOW

5 3.66 2.33 1
1

The GE matrix for Airtel indicates that it lies in the 1st quadrant corresponding to high market
attractiveness and strong competitive strength.

GE Matrix for Vodafone

The market challenger Vodafone will again have the same Market Attractiveness dimension as
the other players but will have an entirely different competitive strength dimension. Assuming
Vodafone’s company objectives to be more focused on building a customer loyalty, we assign it
a weight of 0.15. Also its sales and distribution effectiveness is much lesser than Airtel or Idea,
so give a weight of 0.05 to it. Vodafone has a brand reputation of the world’s largest telecom
provider which it has to maintain even in the Indian Telecom Industry. For that it would
definitely look to emphasize more on advertising and promotional effectiveness. So both these

Market Attractiveness Weightage Rating(1-5) Weighted Score

Overall Market Size 0.20 4 0.8
Market Growth Rate 0.15 4 0.6
Profitability 0.10 3 0.3
Technological
0.15 4 0.6
Development
Global Opportunities
0.05 5 0.25
Market Rivalry
0.20 5 1.0
Pricing 0.15 3 0.6
Total 1.00 4.05
factors are given 0.15 weights.
Vodafone may still assign lower rates brand loyalty as compared to sales distribution
effectiveness as they would like to put a competitive front in the distribution network. Moreover
they would find advertising effectiveness and pricing strategies more attractive than a higher
profit margin. The above assumptions led us to the different dimensions and the corresponding
GE matrix. Market Attractiveness

Key Competitive
Weight Rating(1-5) Weighted Score
Factors
Market Share 0.10 4 0.40
Market Growth Rate 0.10 4 0.40
Profit Margin relative
0.10 3 0.30
to competitors
Technological
0.10 4 0.40
Innovation
Brand Reputation
0.15 3 0.45
Sales Distribution
Effectiveness 0.05 5 0.25

Advertising and
Promotional
0.15 4 0.60
Effectiveness
 Pricing strategies
0.10 4 0.40
Customer Loyalty 0.15 3 0.45
Total= 3.60
Competitive Strength

STRONG MEDIUM WEAK

5

23%
HIGH

3.66
MEDIUM

2.33
LOW

5 3.66 2.33 11

Plotting the GE matrix for Vodafone, we found that it lies in the quadrant corresponding
to High market attractiveness but average internal evaluation, i.e. average business strength.
 STRATEGIES FOR IDEA CELLULAR

The Idea Cellular Limited falls in the “question mark” quadrant of BCG matrix and in the High
attractive and Strong Competitive strength category as per the GE Matrix. Thus they need to
formulate some strategies to try capturing some market share, growing and building their brand
image as well as brand value.

Market penetration
The company enters where the products and the market already exists. IDEA being a question
mark that means it is competing in a high growth market but with a relatively low share compare
to its competitors. Market penetration can be done by attracting competitor’s customers that
implies increase in market share. The strategy that IDEA can adapt under market penetration is
to attract non-users and convince to use their product more often. They are different market
penetration strategies like cutting price, increase in promotion, and creating innovative
distribution tactics. The target should be in such a way that IDEA sales volume relative to its
competitors should be high as expressed in percentage. IDEA’s present market share is about
12%, and competitors like airtel, Vodafone, and bsnl have a market share of about 31, 23, and 19
percent respectively. Though telecom industry is growing rapidly every year, there is always a
little increment in the percentage of sales for IDEA. To overcome this problem and to occupy the
competitor’s position we recommend following strategies.

 Increasing the mobile circles which are at present are only 11, so there is always a need to
expand its services.
 Target the rural segment in India which is expected to grow by 15% every year
 Launch different types of packages as per the requirements for different segments of the
customers
 Provide more high end services like GPRS, mobile internet services
 Collaboration with different service providers on global basis to provide better facility to
customers on roaming.
 Tracing out the search patterns which are left untapped by the competitors to reveal new
markets.
Backward Integration – In July 2008 Swedish equipment supplier entered into a contract to
provide technology “Ericsson Mobile organizer” to Idea cellular enabling its subscribers to serve
email facility on its cell phones.
Forward Integration – Company operate approximately 589 Idea” n “U and other showrooms
which supplement the distribution channels and provide customer service.
Horizontal Integration: Idea acquired the Modi family’s stake of 40.8% in spice which
ultimately in a way increased the market share of Idea. This can be seen as horizontal integration

Strategic Alliance
1) Product alliance
Idea should form product alliance with a company that has a strong brand image and
carry a promotion for one another. E.g. Acer in collaboration with Ferrari launched Acer
Ferrari laptops which are catering to high end niche segment having high specifications
and high price.
2) Promotional Alliance:
Idea should form promotional alliances in collaboration with big movie houses or big
retail brands to promote their products. Recently SONY Viao had a promotional alliance
with “James Bond” latest movie “Casino Royale”.
 ETOP

The Environmental factors are quite complex and it may be difficult for strategy managers
to classify them into neat categories to interpret them as opportunities and threats. A
matrix of comparison is drawn where one item or factor is compared with other items after
which the scores arrived at are added and ranked for each factor and total weight age score
calculated for prioritizing each of the factors.

This is achieved by brainstorming. And finally the strategy manger uses his judgment to
place various environmental issues in clear perspective to create the environmental threat
and opportunity profile.

Although the technique of dividing various environmental factors into specific sectors and
evaluating them as opportunities and threats is suggested by some authors, it must be
carefully noted that each sector is not exclusive of the other.

Each of the major factors pertaining to a particular sector of environment may be divided
into sub-sectors and their effects studied. The field force analysis goes hand in glove with
ETOP, as here also the contribution with regard to opportunities and threats posed by the
environment is also a necessary part of study.

ETOP Preparation:

The preparation of ETOP involves dividing the environment into different sectors and then
analyzing the impact of each sector on the organization. A comprehensive ETOP requires
subdividing each environmental sector into sub factors and then the impact of each sub
factor and the organization is described in the form of a statement.

Environmental factors Nature of Impact Impact of each sector

Economic factors  Current slowdown
is becoming a
threat for the
 company.
 Merger of Idea with
Vodafone is a
benefit.

Political Factors  Facing network

issues post merger
with Vodafone.
 Service quality
issues

Social Factors  Activities carried

out in rural areas
under the name
‘The Aditya Birla
Centre for
community
Initiatives and
Rural development.
 Also focus on
education sector by
running Aditya
Birla Vidya
Mandirs is also a
favourable thing.

Legal Factors  Regulatory body

TRAI is getting
stringent regarding
the quality.
Competitor  To hold its position
it needs to keep a
check on the
competitor and
develop new ideas
for capturing
market.
Shell’s Directional Policy Matrix (DPM)

The Shell Directional Policy Matrix (DPM) is another refinement upon the Boston
Consulting Group (BCG) Matrix. Along the horizontal axis are prospects for business
sector profitability, and along the vertical axis is a company’s competitive capability.
Business sector profitability includes the size of the market, expected growth, lack of
competition, profit margins within the market and other favourable political and socio-
economic conditions. On the other hand company’s competitive capability is determined by
the sales volume, the products reputation, reliability of service and competitive pricing. As
with the GE Business Screen the location of a Strategic Business Unit (SBU) in any cell of
the matrix implies different strategic decisions. However decisions often span options and
in practice the zones are an irregular shape and do not tend to be accommodated by box
shapes. Instead they blend into each other.
Directional Policy Matrix (DPM)

Divest: SBU’s running in losses with uncertain cash flows. They should be divested as the
situation is not likely to improve in the near future. These liquidate or move thee assets.

Phased withdrawal: SBU’s with weak competitive position in a low growth market with
very little chance of generating cash flows. They should be phased out gradually. The cash
realized should be invested in more profitable ventures.
Double or quit: Gamble on potential major SBU’s for the future. Either invests more to use
the prospects presented by the market or else better to quit the business.

Custodial: SBU’s are just like a cash cow, milk it and do not commit any more resources.
The corporate has to bear with the situation by getting help from other SBU’s or get out of
the scene so as to focus more on other attractive business.

Try harder: SBU’s could be vulnerable over a longer period of time, but fine for now. They
need additional resources to strength their capabilities. The corporate try harder to exploit
the business prospects thoroughly.

Cash Generator: Even more like a cash cow, milk here for expansion elsewhere. SBU’s may
continue their operations, at least for generating strong cash flows and satisfactory profits.
No further investments are made.

Growth: Grow the market by focusing just enough resources here. These SBU’s need funds
to support product innovations, R&D activities etc.

Market Leadership: Major resources are focused upon the SBU. It must receive top
priority.