Capital Budgeting Management of Bharti Airtel - The Profitability Impact SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Capital Budgeting Management of Bharti Airtel - The Profitability Impact
Sound financial management is the most important element in the viability of any business undertaking, and capital investment decisions are the foundation stone of this process. A company can pursue either an internal, organic approach to its financing options or an external, inorganic approach that uses borrowed funds to make acquisitions it hopes will increase its business. This is the route taken by Bharti Airtel Limited, India's leading telecommunications giant. Beginning in 2010, it has borrowed heavily on the international market to invest in acquisitions of a 3G licence in India, in Zain Africa and in the broadband wireless access branch of Qualcomm Inc. However, due to many causes - including the effects of the global recession on the industry; the highly competitive Indian telecommunications market; restructuring and disorganization in the firm's top management; and lack of innovation in offering and delivering new services in India - the company has experienced not the growth it expected from its expansion strategy, but a steady decline in profits. How can the management turn this situation around and regain the company's position as a leader in the telecommunications market in India and globally? Author Sandeep Goel is affiliated with the Management Development Institute.
Swot Analysis of "Capital Budgeting Management of Bharti Airtel - The Profitability Impact" written by Sandeep Goel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Borrowed Airtel facing as an external strategic factors. Some of the topics covered in Capital Budgeting Management of Bharti Airtel - The Profitability Impact case study are - Strategic Management Strategies, IT and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Capital Budgeting Management of Bharti Airtel - The Profitability Impact casestudy better are - – central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions,
challanges to central banks by blockchain based private currencies, increasing energy prices, etc
Introduction to SWOT Analysis of Capital Budgeting Management of Bharti Airtel - The Profitability Impact
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Capital Budgeting Management of Bharti Airtel - The Profitability Impact case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Borrowed Airtel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Borrowed Airtel operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Capital Budgeting Management of Bharti Airtel - The Profitability Impact can be done for the following purposes –
1. Strategic planning using facts provided in Capital Budgeting Management of Bharti Airtel - The Profitability Impact case study
2. Improving business portfolio management of Borrowed Airtel
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Borrowed Airtel
Strengths Capital Budgeting Management of Bharti Airtel - The Profitability Impact | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Borrowed Airtel in Capital Budgeting Management of Bharti Airtel - The Profitability Impact Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Capital Budgeting Management of Bharti Airtel - The Profitability Impact Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Cross disciplinary teams
– Horizontal connected teams at the Borrowed Airtel are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Borrowed Airtel is one of the leading recruiters in the industry. Managers in the Capital Budgeting Management of Bharti Airtel - The Profitability Impact are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Borrowed Airtel
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Borrowed Airtel does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Borrowed Airtel in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Borrowed Airtel has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Capital Budgeting Management of Bharti Airtel - The Profitability Impact Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Strong track record of project management
– Borrowed Airtel is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Borrowed Airtel is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Borrowed Airtel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Capital Budgeting Management of Bharti Airtel - The Profitability Impact Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Capital Budgeting Management of Bharti Airtel - The Profitability Impact firm has clearly differentiated products in the market place. This has enabled Borrowed Airtel to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Borrowed Airtel to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Borrowed Airtel in the sector have low bargaining power. Capital Budgeting Management of Bharti Airtel - The Profitability Impact has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Borrowed Airtel to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Borrowed Airtel digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Borrowed Airtel has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Effective Research and Development (R&D)
– Borrowed Airtel has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Capital Budgeting Management of Bharti Airtel - The Profitability Impact | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Capital Budgeting Management of Bharti Airtel - The Profitability Impact are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact, in the dynamic environment Borrowed Airtel has struggled to respond to the nimble upstart competition. Borrowed Airtel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact, it seems that the employees of Borrowed Airtel don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow decision making process
– As mentioned earlier in the report, Borrowed Airtel has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Borrowed Airtel even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Increasing silos among functional specialists
– The organizational structure of Borrowed Airtel is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Borrowed Airtel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Borrowed Airtel to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Borrowed Airtel has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact, is just above the industry average. Borrowed Airtel needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Borrowed Airtel is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Borrowed Airtel has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Capital Budgeting Management of Bharti Airtel - The Profitability Impact should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Borrowed Airtel 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Borrowed Airtel has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Capital Budgeting Management of Bharti Airtel - The Profitability Impact can leverage the sales team experience to cultivate customer relationships as Borrowed Airtel is planning to shift buying processes online.
Opportunities Capital Budgeting Management of Bharti Airtel - The Profitability Impact | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact are -
Creating value in data economy
– The success of analytics program of Borrowed Airtel has opened avenues for new revenue streams for the organization in the industry. This can help Borrowed Airtel to build a more holistic ecosystem as suggested in the Capital Budgeting Management of Bharti Airtel - The Profitability Impact case study. Borrowed Airtel can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Borrowed Airtel can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Borrowed Airtel can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Borrowed Airtel has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Borrowed Airtel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Borrowed Airtel to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Borrowed Airtel to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Borrowed Airtel to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Borrowed Airtel can use these opportunities to build new business models that can help the communities that Borrowed Airtel operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Borrowed Airtel in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Borrowed Airtel in the consumer business. Now Borrowed Airtel can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Borrowed Airtel can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Capital Budgeting Management of Bharti Airtel - The Profitability Impact, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Borrowed Airtel can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Capital Budgeting Management of Bharti Airtel - The Profitability Impact suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Manufacturing automation
– Borrowed Airtel can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Better consumer reach
– The expansion of the 5G network will help Borrowed Airtel to increase its market reach. Borrowed Airtel will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Threats Capital Budgeting Management of Bharti Airtel - The Profitability Impact External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact are -
Stagnating economy with rate increase
– Borrowed Airtel can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Borrowed Airtel needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Borrowed Airtel is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Borrowed Airtel
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Borrowed Airtel.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Borrowed Airtel can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact .
Environmental challenges
– Borrowed Airtel needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Borrowed Airtel can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact, Borrowed Airtel may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Borrowed Airtel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Borrowed Airtel.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Borrowed Airtel can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Borrowed Airtel demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of Capital Budgeting Management of Bharti Airtel - The Profitability Impact Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Capital Budgeting Management of Bharti Airtel - The Profitability Impact is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Capital Budgeting Management of Bharti Airtel - The Profitability Impact is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Borrowed Airtel needs to make to build a sustainable competitive advantage.
