Case Study on

NTT DOCOMO JOINT VENTURE WITH TATA TELE SERVICE LIMITED

Presented by

Name Md Jahedul Islam Anjuman Ara Shomi Ghosh Mr. Tamzid Rabby

ID 0921432 1020693 1127013 1130419

Introduction:
Company Overview

NTT DCCOMO

NTT DOCOMO is subsidiary of Nippon Telegraph and Telephone corporation NTT DOCOMO is Iconic brand in Japan Established in july 1992 Name of the CEO: Karou Katto Capital: 949.68 billion yen Employees: 23,289 lunched I-mode in February 1999 Lunched 3G service in October 2001

TTSL (Tata Tele Service Limited)

TTSL is subsidiary of TATA group Established in 1996 Its headquarter in Mumbai ,Maharashtra, India Name of chairman : Kishor Anant Chakar Products: Fixed line and mobile telephony, broadband services, digital television and network services

About Case
NTT DOCOMO Joint Venture with Tata Tele Service Limited:

Tata DoCoMo Limited

Type : Joint Venture Industry: Telecommunication Established: November 2008 Headquarters : New Delhi, India Area served : India Services : Mobile network, fixed wireless telephony, USB internet dongle Equity : TTSL 74% and NTT DOCOMO 26% ( after joint venture)

Problems

NTT DoCoMos revenue declined because of introducing discount program in current market. NTT DoCoMo could not enter the Indian market without joint venture. As NTT DoCoMo was holding the minority company share, so low involvement occurred in managing the joint venture DoCoMo wants to get more involvement in management decisions.

External Environment Analysis:

Pest Analysis Political:
Foreign company is not eligible to apply for a license in its own name. No foreign individual investment is allowed unless go for joint venture. A foreign company cannot acquire more than 74% company share. In Joint Venture Company, a majority of Directors and Board members including Chairman, and CEO must be Indian residence

Economical:
TATA is getting capital from a foreign investor. Capturing new market introducing 3G network. Rising up the GDP of the country

Social:
Reducing unemployment. Lifestyle of Indian people changed. Communication has become easier.

Technological: Faster internet access. Video calling. Faster downloading. Chatting.

Porter five Forces model Rivalry among Companies:

Telecom sector is highly competitive and generally earns low returns because the cost of competition is quite high. A highly competitive market results from: i) Many players of about the same size; there is no dominant firm ii) Little differentiation between competitors products and services iii) A mature industry with very little growth; companies can only grow by stealing customers away from competitors There are majorly 3 types of players in the telecom industry:i) State owned players. (BSNL and MTNL) ii) Private Indian players. (Reliance comm, Tata comm, Bharti Airtel) iii) Foreign invested companies. (Vodafone, Idea cellular) Competition has intensified with the entry of new cellular players in circles leading to reduced tariffs which have hurt major operators, as they will be unable to recover their high capital investment costs. BSNL is dedicated to performing its work as it drives India into the next league of telecom supremacy by providing technologically advanced services at an affordable cost. On the private side, there has been a tough competition between Bharti Airtel and Vodafone each having a market share of 30 % and 24% respectively. Idea cellular, Reliance comm. and Aircel are also in the race but they lack in the infrastructure when compared with Vodafone and Bharti Airtel.

Bargaining Power of Suppliers:

Fast changing technology such as 3G so bargaining power of suppliers is medium. If the company doesnt own tower infrastructure, then bargaining power of provider is high. Medium cost of switching since changing the hardware would lead to additional cost in modifying the architecture Limited pool of skilled managers and engineers especially those well versed in the latest technologies IT Vendors bargaining power is high as the telecom technical support and innovation is highly dependent on such suppliers.

A lot of technical assistance provided by NTT DoCoMo.

Bargaining Power of Suppliers:

Fast changing technology such as 3G so bargaining power of suppliers is medium. If the company doesnt own tower infrastructure, then bargaining power of provider is high. Medium cost of switching since changing the hardware would lead to additional cost in modifying the architecture Limited pool of skilled managers and engineers especially those well versed in the latest technologies IT Vendors bargaining power is high as the telecom technical support and innovation is highly dependent on such suppliers. A lot of technical assistance provided by NTT DoCoMo.

Threat of New Entrants:

Continuous entrance will make monopolistic -> perfect competition Factors that limit entrance : High loyalty of existing customers. High fixed costs and difficult access to finance. Scarcity of resources. Already existing very low tariff rates. Government restrictions or legislation. New technology provides entry for foreign entrant. M&A in telecom sector are giving to new entrants. Bharti zain, uninorunitech and telner, Aircel- maxis and reddy FDI has made it third largest sector.

Threat of Substitutes:
Non-Traditional Alternatives: Online Chat Satellite Phones Wireless land phones All of them have a huge potential in the future Between CDMA & GSM Issue of mobility & penetration with the substitutes. Cable TV and satellite operators now compete for buyers and internet telephony, delivered by ISPs and not telecom operators.

Price performance trade off is very high. Overall threat of substitutes is between Low to Moderate level.

Strategic Group Maps

120 100 80 60 40 20 0

market share%
no of subscriber in million

Functional Structure
Top Management Manufacturing Sales Finance Personnel

IFAS Matrix for NTT DoCoMo

Key Internal Factors
Strength Pioneer of 3g network

Weight

Rating

Weighted Score 1

Comments

0.20

Make more satisfaction to the subscriber

Introduced exclusive &unique technology on telecommunication Maintaining subscriber relationship and service Gives the best no. of subscriber Makes more reliable to the subscriber Reducing total revenue Reducing chance to gain properly like in Japan.

Strong technology

0.25

1.25

Distribution network Strong R&D department Well known brand in Japan Weakness Low market share Not allowed for individual investment

0.15

0.45

0.8

0.32

0.12

0.36

0.05

0.1

0.15

0.75

EFAS Matrix for NTT DoCoMo Strategic Factors Weight Rating Weighted Score Comments

Opportunities Common Industry Practice Using new technology and gaining capital India is a growing market

0.15

0.45

Already customer are willing to use.

Providing network makes higher capital For higher users company can get higher revenue Makes profit minimization Affects company growth Already Capture customer satisfaction

0.11

0.33

0.05

0.25

Threats Customer Loyalty Government policy Other Competitors

0.18

0.9

0.25

1.25

0.26

0.52

Recommendation
By reducing call rate they can retain their current customer. NTT DoCoMo should introduce their 3G services to new customer segment at a reduced rate to attract the other consumers. NTT DoCoMo can offer more money to develop the total infrastructure of the joint venture and thus it can be able to acquire more company share. NTT DoCoMo should do more advertisement of their strong 3G service and after grabbing a large consumer market DoCoMo can think to revise the joint venture terms to get more involvement in management decisions.