Name: Davinder Harcharan Student Number: 7664265 Assessment Reference: MAR/Jan10/1

Part A (1) 1

Incredible India! Truly, the statement cannot be more reflective of the changes that have taken place there in the past decade or so. The most distinctive change can be seen is in its demographics. Typical of a developing nation, India has a very young population as the largest segment is made up of age group 15-59 years. According to its president, Patil P. (2009)-Over 50 percent of our population is below 25 years of age. If we compare this data with fully developed nation such as Germany where 66% of population is at the age between 15-64 years (https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html), it clearly shows how India has a young market. And a significant portion of this young market is now concentrated in major metros such as Mumbai, Delhi, Kolkata and Bangalore, due to (but not limited to) population migration from rural to urban areas (India, 2009). The literacy rate in India is also at its highest now, 64.84% of Indians are literate compared to 52% in the 1990s. The major increase is in womans literacy rate from 39% in 1991 to 53% in 2001 (India, 2009). Improved literacy has given rise to a more professionally qualified population and in turn improving its spending power. Roles of women too have changed; thanks to improving literacy rates Indian women have left their traditional roles of staying at home and taking care of the family, more women now have taken to working and have professional careers of the own. In consequence this has given rise to the new urban family in India, if in the past the man as the leader of the family makes all the purchasing decisions for the family, today the whole family takes a decision. Even the new urban family child has a role in the purchase and consumption of all products and services, from household products to family vacations (Business Today 22 Feb. 1999).

The Indian consumer has also acquired new values from increased exposure to foreign media through satellite television such as BBC, CNN and print media like 2

Cosmopolitan magazine. The consumers, especially the new middle class are bombarded with images of mobility associated with newly available commodities such as cell phones and automobiles, for instance, served to create a standard, which the urban middle classes can and should aspire to (Fernandes, 2000). This has translated to consumers who want to spend more time and money on leisure and leisure goods such as travelling, automobiles, white goods etc. India has seen government policies that are more liberal in the past decade. Nowhere is this more obvious than in the telecommunication sector, according to the Cellular Operators Association of India (COAI) the number of telephone subscribers in India is currently at 562 million at the end of December 2009 compared to just over 5 million at the end of 2001(http://www.coai.in/statistics.php). In 2002, the Indian government liberalized the telecom sector, allowing private operators to offer telephone services across India. The objective was to provide universal access to basic telecom services at affordable prices and benchmark telecom services with global standards. The liberal policies of the government have also provided easy market access for telecom equipment manufactures. The government introduced positive investment policies and other lucrative incentives to foster foreign collaborations in the industry which in the end benefit the end consumer. Having said that, the growth of the telecom sector was so fast that the teledensity in urban areas has almost reached saturation levels of 101.38%, while the rural tele-density is 18.97% as compared to the countrys tele-density is 44.87% as on 31.10.2009 (Ministry of Communications & Information Technology, 2009).

Part A (2) Manufacturer

As a manufacturer, Nokia entered the Indian market in 1995(http://www.nokia.com). During that time importation of mobile phones was an expensive venture, the government enforced taxes as high as 27%. Nevertheless, Nokia remained in India and served its clientele of executives and highly affluent class of society who could afford its models. This was also not helped by the high call rates at that time Rs16 per minute ($0.40) (Sharma, 2004). The de-regulation in 2002 increased the demand for mobile connections for the masses and of course for mobile phones. Nokia realized that it had to adapt to the Indian market conditions by launching new products and enhancing its products with features designed specifically for local customers, as well as localized promotions targeted at Indian audience to gain a foothold in the market and at the same time strengthening its distribution network (Sharma, 2004) The launch of Nokia 1100 in late 2003 was major milestone on Nokias road to market leadership in India and effectively met the upward consumer demand. It was priced at less than $116, bringing it within reach of consumers from even lower-income groups. The 1100 was a no-frills basic phone and came with 3 unique features which were an instant hit with the Indian rural and sub-urban folk. It came with a built-in flashlight, dust and rain-proof non-slippery grip/cover and it was light weight and small in size (http://www.nokia.com). Nokia also timed the launch with an extensive Made for India promotion across India (Sharma, 2004). Not surprisingly, the 1100 is not just the world's best-selling cellular phone model, but also the best-selling consumer electronics device, having sold some 200 million units since 2003(Virki, T. 2007). Furthermore, in 2005 Nokia started manufacturing these handsets in it new manufacturing plant near Chennai, where 50% of the plants output is dedicated for the Indian market (http://www.nokia.com). Localization is one area where Nokia has outperformed its competition in India. They were the first to introduce local language capabilities along with regional language news service on the handsets. The Nokia Life Tools service, another unique innovation 4

helps plug the information gaps and needs of farmers via their mobile and is purely a service to benefit the consumers of rural India (http://www.nokia.com). Nokia has also established multiple distribution channels to ensure it reached its market. To date Nokia has 90,000 distributors all around India with 90% footprint in the countrys retail stores. Furthermore, there are 30,000-35,000 stores exclusively selling Nokia phones (Smith, G. 2009) As a direct consequence of these strategies of reacting to consumer demand following Indian government policies to boost telecom growth, in 2007 Nokia announced that India has surpassed the U.S as its second biggest market next to China (Bhatnagar, S. 2007)

Part A (2) Service Organization 5

Airtel is Indias number one mobile services provider with almost 31% market share (http://www.coai.in/statistics.php). Recognizing the fact the Indian youth population is a significant segment of the overall population and seeing a saturation of new customers, Airtel's Deputy CEO Sanjay Kapoor set a new strategy for its next level of growth to focus on youth between the ages of 18 to 25 (Gupta, S. Russel, I 2009). In 2002 Airtel launched Youtopia, a tariff plan based product specifically designed to attract the youth. The Youtopia plan not only offered the lowest call rates at that time but also discounts on a number of apparel brands, restaurants and jewellery shops. Youtopia was a clear deviation from Airtel's earlier positioning as a brand for older people symbolizing dignity and power (positioning and repositioning). A special portal was also created, where young people could buy or bid for goods (http://www.thehindubusinessline.com/2002/02/16/stories/2002021600860700.htm).. Jagbir Singh, Airtels Group CTO, notes that youth population of today sees communication needs as essential as food and water and this is a huge potential market (Bharti Airtel: Restless Telecom). Teens and tweens are also the highest mobile generators of value-added-service revenue, in terms of average revenue per user, in India according to Prabhjot Jolly, executive director at Mobiphonica. Recognizing this fact Airtel launched many music related VAS services and applications. Among them Airtel Easy Music service, where mobile users simply walk into any of the 100000 Airtel Easy Music outlets, choose their favorite song and the retailer will download the desired song to their mobile in just 60 seconds either as Hello Tune or ringtone depending on customers choice. Airtel Easy Music is designed especially for customers who want to download their favorite song without having to navigate the traditional SMS or IVR route, thus simplifying the delivery process for its customers (Airtel Redefines the way you buy music, 21 March 2006). It is of little surprise that in May 2009, Airtel announced that it has become India's biggest music company, overtaking the industry leader Saregama, on the back of its music-related value-added mobile services. 6

Airtel also has signed on successful Indian icons-turned role models as it brand ambassadors. They include Indias top criketeer, Sachin Tendulkar, its top music composer and Oscar winner, A.R Rehman and the number one male movie star Shah Rukh Khan (Airtel Signs up Sachin as Brand Ambassador, 7 October 2003). According to Airtels president (mobility), Manoj Kohli, its brand ambassadors such those mentioned and AirTel both are leaders having similar values and personality traits like trustworthiness, friendliness, youthfulness and trend-setters ( Tendulkar New Brand ambassador for AirTel, 7 October 2003). These icons give Airtel the visibility it needs to maintain its stay as India top mobile service provider and appeals to the young generations that see the ambassadors as their heroes.

Part B (1)

The company that I work for, Nokia Siemens Networks views environmental scanning seriously as the telecom industry is highly competitive with a short product lifecycle. We undertake various activities to scan our marketing environment formally and informally. In 2009, Nokia Siemens organized a CEO Summit in Bali, inviting CEOs from our major customers, telecom service providers worldwide (http://iloveyouwhatsnext.com/). This was a proactive approach taken by Nokia Siemens to not only allow the leaders of the mobile industry to exchange ideas but also to engage them in a dialogue and understand the strategies that our customers are adopting in the near future. The event that was held over two days in an island resort ensured that the participants were not distracted and readily available for the complete summit agenda. Other formal methods of environmental also include scanning include periodic surveys sent to the top managers of our customers to gauge their satisfaction of our service and products Apart from that, Nokia Siemens also has a team of Business Intelligence managers operating in all its major regions such as China, Asia Pacific, India, Americas, Europe and Middle East Africa. These managers use informal scanning techniques such as scouring the media, both print and audio-visual; speak with industry analysts to identify critical trends and potential developments relating competition, customers and the geo-political environment where Nokia Siemens operates. Another example of informal scanning is the discussion that Nokia Siemens leaders have with our customers. The leadership of Nokia Siemens, CxO level, makes a point to visit our key customers when they travel overseas, thus obtaining up-to-date information on the telecom market scenario in a specific country. Internal environmental scanning is also conducted by Nokia Siemens to assess its availability of resources and how it operates. For example, human resource internal scanning is done informally through discussions with key managers and formally by

conducting employee attitude surveys. (no references available since information is from internal company documents) Part B (2) The goal of environmental scanning is to alert decision makers to potentially significant external changes before they crystallize so that decision makers have sufficient lead time to react to the change (Morrison, J.L. 1992). Taking cue from that Nokia Siemens has been successful in its environmental scanning strategy. In 2008, following feedback from its customers who were coping with cost challenges, Nokia Siemens launched the HSPA and LTE capable Flexi Base station. The radio allowed running multiple radio technologies in a single Base Station therefore reducing operating expenditure from fewer site visits, simplified logistics, reduced maintenance and a smaller requirement for trained staff. For end users, software defined base station promised faster access to new attractive mobile services and improved service experience through faster call setup time, better handset power consumption and lower latency. The product not only met customers requirements but at the annual GSMA Global Mobile Awards 2009 it was awarded the world's most progressive mobile network technology (http://www.nokiasiemensnetworks.com/press/press-releases/sexyflexi-takes-top-prize-worlds-most-energy-efficient-base-station-wins-best-) Espoo, Finland , February 18, 2009). It was a clear example the Nokia Siemens was ahead of the pack thanks to its market scanning activities. Apart from that, environment scanning has also helped Nokia Siemens make key decision to be part of the rapid growth in mobile subscribers in India. As Fahey and Narayanan (1986) suggest, an effective environmental scanning program should enable decision makers to understand current and potential changes taking place in their institutions' external environments. Nokia Siemens reacted to the Indian telecom market explosion and invested on a new facility for the manufacture and distribution of mobile 9

communications infrastructure in Chennai, India. As part of a transformation aimed at customer focus, the facility is aimed at increasing proximity to the local market while improving its responsiveness towards its customers. As a consequence, Nokia Siemens has joint leadership position in wireless networks in India (http://www.nokiasiemensnetworks.com/press/press-releases/nokia-siemens-networksopens-new-global-network-solutions-center) Although the market scanning activities have been successful so far, more can be done to improve further. Choo (2001) noted and important effect of scanning is to increase and enhance communication and discussion about future-oriented issues by people in the organization. The information from environmental scanning should be shared with more employees of Nokia Siemens, currently on a select few are privy to this information, this can generate more ideas and as Ptaszynski (1989) mentions it can have a positive effect on the organization in areas of communication, shared vision, strategic planning and management, and future orientation. The speed at which information from environmental scanning reaches strategic decision makers should also be increased in order for Nokia Siemens to react in time to the market or competition shift in trend.

References Bharti Airtel: Restless Telecom. Voice and Data Goldbook 2007. [online] Available http://voicendata.ciol.com/content/goldbook/goldbook07/107031209.asp [Accessed 20 February 2010]

10

Bhatnagar, S. 2007. Nokia's India Becomes Nokia's Second-Largest Market, Surpassing U.S.. Bloomberg. [online] Available http://www.bloomberg.com/apps/news? pid=20601091&sid=adz9SB4_EOIQ&refer=india [Accessed 16 February 2010] Business Today 22 Feb. 1999. NUFgen Marketing or, Selling to the New Urban Family. [online] Available http://archives.digitaltoday.in/businesstoday/22021999/cover2.html [Accessed 16 February 2010] Chun, W. C. , Environmental scanning as information seeking and organizational learning . Information Research, Vol. 7 No. 1. Fahey, L., King, W.R., & Narayanan, V.K. (1981). Environmental scanning and forecasting in strategic planning: The state of the art. Long Range Planning, Vol.14, No.1, p.32-39 Fernandes, L. 2000. Restructuring the new middle class in liberalizing India. Comparative Studies of South Asia 20(1 & 2), p. 89112. Gupta, S. Russel, I 2009, Bharti Airtels Big Dream. Rediff.com [online] Available http://business.rediff.com/special/2009/may/18/spec-bharti-airtel-big-dream.htm [Accessed on 15 February 2010] http://www.coai.in/statistics.php, Celular Statistics [online] [Accessed 19 February 2010] http://www.nokia.com, Nokia India Backgrounder [Accessed 19 February 2010] http://www.nokiasiemensnetworks.com/press/press-releases/sexy-flexi-takes-top-prizeworlds-most-energy-efficient-base-station-wins-best-. "Sexy Flexi" takes top prize:

11

world's most energy efficient base station wins Best Network Technology Advance at GSMA Global Mobile Awards 2009 http://www.nokiasiemensnetworks.com/press/press-releases/nokia-siemens-networksopens-new-global-network-solutions-center. Nokia Siemens Networks Opens New Global Network Solutions Center http://www.thehindubusinessline.com/2002/02/16/stories/2002021600860700.htm, Airtel Launches Youtopia in Chennai https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html , CIAWorld Factbook-Germany [online] [accessed 18 February 2010] India (2009). A Reference Annual, Research, Reference and Training Division Ministry of Information and Broadcasting, Government of India, 2009, pg 15 Ministry of Communications & Information Technology, 2009. Tele Density in Urban and Rural Areas [online] Available htttp://www.pib.nic.in/release/rel_print_page.asp?relid=55340, [Accessed 19 February 2010] Morrison, J. L. (1992). Environmental scanning. A primer for new institutional researchers. The Association for Institutional Research p. 86-99 Patil, P. (2009). Address by the Honble President of India, Shrimati Prathiba Patil, to the Parliament, New Delhi, 4th June, 2009. [online] Available http://presidentofindia.nic.in/sp040609.html, [accessed 16 February 2010] Sharma, S. 2004. Nokia Makes Connection. Business Standard 8 June.2004. [online] Available http://www.business-standard.com/india/news/nokiamakesconnection/153614 [Accessed 16 February 2010] 12

Smith, G. 2009, Sector Insight... Indians embrace mobile despite hard times . Media Asia. [online] Available http://www.media.asia/DigitalMedia/Analysisarticle/2009_01/Sector-Insight-Indiansembrace-mobile-despite-hard-times/34065 [Accessed 16 February 2010] Ptaszynski, J. (1989) . Ed Quest As an Organizational Development Activity: Evaluating the. Benefits Of Environmental Scanning. Unpublished Ph.d, The University Of North Carolina At Chapel Hill, NC Virki, T. 2004. Nokia's cheap phone tops electronics chart. UK Reuters 3May.2007. [online] Available http://uk.reuters.com/article/idUKL0262945620070503 [Accessed 16 February 2010]

13