2. Explain how Airtel India configured the value chain.

Ans:- Outsourcing operations

 Bharti Airtel gave the contract of its IT operations to IBM starting from supplying,
installing and managing all of its hardware and software.
 Outsourcing of maintenance of towers to Nokia and Ericsson gave them the
technology competencies as Nokia and Ericsson having huge customers across the
world, they have far more superior domain expertise than Airtel could have had.
 They managed the company’s telecom towers under a separate company Indus
Towers and also partnered with its competitors like Idea and Vodafone so as they can
reduce duplication costs or other costs involved.

Marketing, Production and sales

 To get an access to the low-income market they focused on prepaid customers.
 Airtel sim cards and recharge cards were available anywhere starting from grocery
shops, mobile phone repairing shops, phone booths and every other small store across
the country. So, getting an Airtel sim card was the easiest job for an individual.
 Two-layer distribution model for urban areas and a three-layered distribution model
for rural areas.
 Expand production of principal output, minutes by keeping margins per minute more
or less constant. Any cost savings achieved would be passed onto the customers by
lowering tariffs which would increase the demand and would allow Airtel to go
deeper into the market and reach low income customers. This would also result in
rapid increase in minutes and consequently overall margin
 They adopted a high-volume low-cost incentive model to keep the costs low.
 Tie up with Indian Farmer Fertilizer Corporation to provide farmers voice updates
about crop diseases, market prices and other information.
 Tie ups with SKS Microfinance to provide free sim cards to SKS members.
 In partnership with Nokia they went into the villages in branded vans so as to make
people aware how mobiles could change their lives, offering them connections and
teaching them how to use mobiles.
 In rural areas they trained the distributors and retailers to teach the rural customers to
use mobiles as in rural areas people buying sim cards were mostly first-time users of
mobile phones.
 They built a tie up with the Department of post in South India.
 In Kerala they marketed their sim cards and recharge cards through the post offices.
 They made a partnership with state owned Indian Oil to distribute its sim cards to
numerous gas stations and cooking gas distribution centers. This is referred to as the
“matchbox strategy” which meant Airtel sim cards where available anywhere where
matchboxes can be found.
 Airtel was the first to launch private telecom services in Jammu and Kashmir.
 They had several tariffs for various levels of income group people, so they could meet
everyone’s demand.
 They also reduced their minimum cost of recharge in 2004 from $6.7 to $1.1 and
allowed the customers to top up their cards with any amount they wished.
 In 2008 they started selling talk times in denominations of 66 cents, 44 cents, 22 cents
in order to get users in the poorest of states in India such as Bihar.
 Lifetime recharge, whereby by paying a token amount for once the customer could
enjoy unlimited incoming calls for lifetime.