SWOT Analysis of S Tel

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SWOT Analysis is very important tool for analyzing the overall position of the business and the environment at which operates. SWOT stands for Strengths, Weakness, Opportunities, and Threats.

SWOT Analysis can be further explained as 2 factors

1. Internal Factors which accumulates Strengths, weakness of the organization.

2. External Factors which accumulates Opportunities and Threats.

Strength

Weakness

Opportunity

Threats

SWOT Analysis for S Tel is explained below.

· Strengths

* S Tel has more than 1 million customers (Feb 2009) in Himachal Pradesh which is astronomically a record number among the telecom companies in that region.

* It is the largest cellular provider in India especially in C circle areas, and also supplies broadband and telephone services - as well as many other telecommunications services to both domestic and corporate customers.

* The company has covered the entire C circles of the nation with its network. This has underpinned its large and rising customer base in the rural areas.

* Greenfield network to have best coverage for GSM network

* More number of value added services (VAS)

* Public showed interest on the promotional offers of STel.

* It was offered at very low prices that even a common man could offer.

* Strategic alliance with Batelco company who are specialized in 3G technology.

* Maintains a debt equity ratio of 1:2

* Good distribution network compared to competitors

* Financial position: STel is in good financial position compared to other operators. It has got 200 million dollars as FDI investment from Batelco.

* Good marketing strategies and competitive pricing methods

* It boasts of superior quality product and strong brand name.

· Weaknesses

* An often cited original weakness is that when the business was started by Batelco and Shiva group, the business has little knowledge and experience of how a cellular telephone system actually worked. So the start-up business had to outsource to industry experts in the field.

* Until recently S Tel did not collaborate with reliance telecommunications for having its transmission towers, which was a particular strength of some of its competitors such as Airtel, Aircel, Hutch etc. Towers are important if any company wishes to provide wide coverage nationally.

* Very less average revenue per user (ARPU)

* Not a pan India operator. It just operates only in 6 c circles of india.

* Didn't try a hand in the CDMA technology while all other competitors have one.

· Opportunities

* Global telecommunications and new technology brands see S Tel as a key strategic player in the C circle regions telecom market.

* Despite being forced to outsource much of its technical operations in the early days, this allowed S Tel to work from its own blank sheet of paper, and to question industry approaches and practices - for example replacing the Revenue-Per-Customer model with a Revenue-Per-Minute model which is better suited to India, as the company moved into small and remote villages and towns.

* The company is investing in its operation in 120,000 to 160,000 small villages every year. It sees that less well-off consumers may only be able to afford a few tens of Rupees per call, and also so that the business benefits are scalable - using its 'Matchbox' strategy.

* STel has the biggest opportunity to participate in the 3G technology and Wimax technology.

* C circle where STel operates has 80% of untapped telecom market.

* There is a lot of scope for market diversification.

* Opportunity to become a global player

· Threats

* S Tel and Aircel seem to be having an on/off relationship. As brand telecom operators like Airtel, Aircel, Hutchison has been eyeing on rural areas, S Tel needs to regularly revise its strategies so as to stand against these brand telecom companies.

* The quickly changing pace of the global telecommunications industry could tempt S Tel to go along the acquisition trail which may make it vulnerable if the world goes into recession.

* S Tel could also be the target for the takeover vision of other global telecommunications players that wish to move into the Indian market.

* Government rule which often keep changing

* Competitors pricing strategy methods

* Mobile number portability (MNP): It is biggest threat where the current customers of STel will hold the same number but will move on to other network.

Suggestions:

Product:

* STel should try to bring some modifications in its products and services. Since telecom

industry in India is very competitive, STel has to think about improvising its products, and bring new innovative services for the customers.

* STel can introduce Video calling facilities as part of it Value added services which none of its competitors have tried.

* Though STel has variety of products targeting all segments, it should try to introduce more attracting products for the Youth segment.

* They should also bring in postpaid facilities and target the corporate sectors by introducing Closed user group (CUG) service.

Place and Distributions:

* STel should expand its operation to Pan India rather than not restricting only to C circles.

* They should rework on the distribution channel quite often depending upon the sales demand

* They can also introduce home delivery facilities in main cities to initially start with.

* More number of outlets near schools, colleges, parks, shopping malls, temples, etc which makes more convenient for the people.

* Allocate less number of days for stock clearing to the distributors and retailers

Price:

* STel should have some hidden cost for its products and services rather being transparent as they have adopted very low pricing strategy.

* After reaching maximum numbers of customers, STel should increase its price in order to increase its Average revenue per user (ARPU).

Promotion:

* Company must always continue their intensive promotional activities throughout their service

* They must concentrate in promoting more on their revenue generating products.

* They must work on the strategy of issuing free SIM cards and minting money in recharge cards and top ups.

* They should always try to establish their Brand name and keep up the reputations.

* They should provide more gifts to retailers on achieving the target, as they are very important in pushing the products.

* Create new commercial advertisements every 6 months to stay in the limelight.

Recommendations:

* Constant Allocation of part of the profit for promotions as it is a key factor in the competitive arena.

* Always be ready for any changes or consequences due to any Government rules or amendments.

* They should be ready to handle political and economic issues.

* Always maintain a debt equity ratio of 1:2

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