Bsnl Change Management Strategy

BSNL competitive portfolio & Change Management M Ramesh, [email  protected] com Synopsis: Bharat Sanchar Nigam Ltd. formed on 1st October „2000, is one of the largest & leading public sector units providing comprehensive range of telecom services in India. They operate under 13 different brands. Their customer base as on July 31, 2011 was at 95. 14 Million. BSNL has an installed Network in the country comprising about 43. 74 million line basic telephone capacity, 8. 83 million WLL capacity, 72. 60 million GSM capacity, 37,885 fixed exchanges, 68,162 GSM BTSs, 12,071 CDMA Towers, 197 Satellite Stations, 6,86,644 RKm. f OFC, 50,430 RKm. of microwave network connecting 623 districts, 7330 cities/towns & 5. 8 lakhs villages. However, with such a large base, excellent brand recall, political backing and huge workforce, the company has not been doing well and in fact has reported a loss in the previous financial year. BSNL had reported the highest net profit of over Rs10,000 crore in 2005-06 but since then its profits have been falling. The losses have more than tripled to about Rs. 6,000 crores during 2010-11 mainly due to hefty outgo for employees' salary and expenses borne by the PSU for procuring 3G and BWA spectrum. The company had registered a net loss of Rs. 1,823 crores during 2009-10. The total revenues of the company also declined to Rs 28,876 crore during the current year, down nearly 10% from Rs 32,072 crore in the previous financial year. Recipient of the Golden Eagle award in 2004 & 2005 for the most trusted brand in telecom sector, BSNL is today struggling to retain its identity. This article aims are preparing a competitive strategy for BSNL and select suitable competitive portfolio so that the company can emerge out of the crisis it is in. Further, the change management strategy that has to be adopted in order to implement the changes in the organisation is given in this section. 1. Competitive Strategy and suitable corporate portfolio: Before we embark upon suggesting a suitable corporate portfolio, it is important to analyse the current the functioning and management of BSNL. a) No doubt that its presence and reach across the country is its biggest strength. Established offices in all the metros, A, B & C class cities, and installations and offices in the remotest parts of the nation, especially J, North East is a strength they can easily exploit on their road to recovery. ) Long serving employees and excellent knowledge of the market, customers, tacit knowledge base of BSNL is unique. They are different from the competition since customers view BSNL as a 2|Page state run firm and profit not being the only motive, would be willing to trust them more than other competitors. c) Even today, they rule the land line conne ctions and command a market share of over 65% of the customer base and any of the revival and restructuring plans for BSNL has to pass through this channel. ) BSNL, being a completely government owned organisation, they can use their political affiliations to change the rules of the market, create entry barriers for competition, and lobby for influencing the market to leverage their strengths, policies that give them an edge, and those which do not violate TRAI and other fair trade practices, can be adopted. While we discuss the selection of suitable portfolio from the competitive strategies, apart from the strengths of BSNL highlighted above, it is important that the crucial questions of what can be done that is not being done at BSNL is pondered. Some of the questions that we have to ask and find answers that hold key to developing a competitive strategy and designing a suitable portfolio are: 1. BSNL has a vision ‘To become the largest Telecom Service provider in South East Asia’. For this it is important to understand the parameter for being the largest. Is it revenue, Av. Revenue per User, profit, subscribers, Network (no of exchanges, BTS etc)? Clarity in purpose and vision is essential to developing a suitable competitive strategy. 2. Is the mission aligned with its current position? Has it redefined its mission from a state run entity, interested in nation development to a corporate that has to deliver to its owners and stake holders? 3. What are the investments that have been made or planned to be made, in order to provide world class State-of-art technology telecom services on demand at affordable price and to provide world class telecom infrastructure to develop country's economy. 4. What has been done towards continuous innovation in product and delivery of services with the appropriate pricing is the key strategy for developing the trust in customer so that he keeps his loyalty with BSNL. . BSNL can target to acquire more than 50% of new acquisitions while maintaining existing clientele. How will this be done? 6. Today landline base is reducing across the globe, BSNL, to be a Significant Market Power (SMP), must increase it base to over 80%. 7. Ultimately it is the quality, customer care, and timely availability apart from price, which will matter. What are the actions being taken towards these critical success factors? 8. Can’t there be just one brand i. e. BSNL? Has there ever been an examination of their revenue break-up? Currently there are 13 brands that have to be developed and positioned. |Page 9. There are certain distinctions that BSNL has, like being awarded the most trusted telecom brand in year 2003 & 2004. They received the Golden Peacock award for Best Corporate Social responsibility. How can these be leveraged? 10. There are over one-lakh retailers, 1000 franchisees, 3300 CSCs, 36000 exchanges and still BSNL is not visible like others? Why can’t the space and people be utilized? 11. How to leverage the franchisee and STD-PCO strengths? Can these outlets be their core strength? 12. Why are the recharge coupons, India Telephone Cards are in shortage when there is no capacity constraint? Is it bad inventory & supply chain management, or bad franchisee management? 13. Are there targets for the recharge coupons just like DELs & CellOne? Why can? t the huge network of franchises be leveraged for better customer care and improve collection efficiency? 14. With competition heating up, gone are the days when customers deposited money with BSNL in advance for connections and security money for value added services. There are no fixed deposits; and the working capital and other funds requirements have to be met from operating revenues. What is the plan to improve collections, realize bills early, not on the last day of payment and reduce bad debts? 15. In line with the market needs, does BSNL have a 24X7 culture in their organization, though operation and maintenance are provided on 24X7 basis? What about provisioning customer care and marketing on 24X7 basis? Competitive strategy: Pricing: On the pricing front, BSNL does not have a choice but to follow the market trend. They can only bundle the packages in such a manner that the premium services bring more revenue. Focus must not be on reducing charges, but upgrading each customer by RS 20 – RS 50 by offering them more add on relevant services. It is usually much easier to sell additional things to existing customers than to add new customer, and the customer base of BSNL is quite huge and substantive for this model. Differentiation: In order to differentiate itself from competition, BSNL Business development units have to be given the task to develop and nurture long-term relations with corporate houses. MoUs have to be signed for bulk bills, One-point payments for multiple service locations. Setting up Key Account Manager servicing different corporate and key accounts and offering single window approach to resolve all issues and prevent any unwanted issues. Focus: BSNL has a strong hold on land line telephones, an important requirement for ADSL connections. There are huge benefits of ADSL over Wi-Fi & is very cost effective way to access Internet. BSNL is in a 4|Page unique position to leverage this advantage and its revenues, customer base and profitability can improve multi-fold if it can capitalise on this one aspect alone. Merging government telecom companies ITI and MTNL with state-run BSNL is one of the options. This will give them a great advantage in terms of increased customer base, implementing change management and brining in changes and most importantly economy of scale, power of bargaining. Hybrid: In order to be more competitive in the present market BSNL must not only differentiate itself from competition, give a good and attractive price and have a focussed approach. The competitive strategy recommended is: Focus on improving ADSL services at attractive rates to households and offices, bundle it with land line connections and mobile connections. Offer central point billing PAN India. For e. g. If a corporate company has branch and regional network, they must have the option of consolidated billing when they want and where they want to the level of Head office control they want to implement. BSNL can also offer special rates and Closed User Group (CUG) for government sector and earn huge revenues, since this segment is very price sensitive and is a very high volume user segment. More aggressive media campaign focussed on the strategically selected segments will help BSNL increase its customer base. A change in its staff attitude making them focussed on customers rather than systems and procedures, fast and efficient decision making with empowered employees. Continuity in supply chains, procuring of quality equipment and products must be focussed on. After defence and railways, BSNL is the country’s largest landholder. Its properties span 3,500 towns across India worth thousands of crores, making it the largest state-owned companies in terms of land assets. A turn around policy of BSNL should have this huge source of revenue at its core. 2. Change management strategy to enable it turnaround. No change in BSNL can happen and can be implemented without change of mindset in addition to the skills of marketing & sales. In this regards it is important to note that a research paper submitted by Vishwakarma Institute of Management, Pune in July 2010 after conducting a survey in BSNL concluded 5|Page that â€Å"the introduction of change seems to be managed effectively in the organisation with proper care and commitment and was agreed by the respondent BSNL employees with a mean 1. 022. The change is introduced by the consent of top management. To keep up the pace with the dynamic environment the management encourages change by explaining and ensuring the minimization of adverse effects, and put efforts to convert employee resistance into the acceptance. Employees were found to be change oriented, as they have continuous learning attitude to keep match with the future organizational requirements. Respondents? shows resistance change in some issues due to some security and personal reasons, which can be taken care by proper change management initiatives†. BSNL must focus on improving its quality of employees and skilled manpower? They must focus the organizational setup more suitable for better results? The staff expense to revenue ratio could be a good indicator. Today, more than 47% of the revenue goes to paying salaries to employees and this is the first aspect of change that must be introduced. The decision making process must be based on scientific analysis of the precious customer data they already have such as calling pattern, payment habits, usage profile etc. Increased number of surveys, customer research and systematic and periodical analysis of Net growth in mobile and churn is to be conducted? Steps must be implemented to reduce the churn? Acquisition cost is usually said to be 5-8 times the retention cost, and hence BSNL must focus on retention of customers. Management must not threaten the employees, they have been long serving and loyal and at the same time demanding. The management should involve the employees in strategy and decision making and should help them to open their minds and apply it to improve the quality of service, network, and expansion of network in time; utilising and selling the products before the technology becomes obsolete (like WIMAX). Considering the current scenario a Revolutionary change is required in BSNL and they should modify their competitive strategy quickly in order to survive in the hyper competitive telecom market in India. If one has to apply the McKinsey 7S framework for the change management process in BSNL, it would be as under: 1. Strategic: BSNL has to revisit its mission and evolve competitive strategies that are in line with the market dominant position that they want to be, exploiting their current strength of market leadership in land line connections. All their activities must be reoriented towards this change of positioning. |Page 2. Substance: BSNL needs to revamp its board and its top management, to be more customer and market oriented, dynamic and profit driven. Culturally, it is established that BSNL is employees are open to adopting change and hence management should provide necessary training to ensure that the process of cultural change is deployed quickly across all levels. 3. Scale: Considering the strengths of BSNL presence and reach of BSNL, scale is never an issue. What the organisation needs today is not infusion of new technology or resources; it is reorientation of the employees and a cultural change. Retrenching employees is not the first and only option available. 4. Scope: Undoubtedly the scope of the change must involve all levels of the organisation and across all regions. BSNL is a homogeneous entity and changes at one level or within certain geography is not possible to implement. Certainly, depending upon the local customer bases, working conditions and cultural differences, adaptations can be allowed, but the change itself, must be pan organisation. 5. Speed: Communications, ICT, and internet industry relies on speed and there is no room for laggards in this. BSNL must implement change management as swiftly as possible. . Sequence: Since BSNL s confronted with many an issues to handle, the best place to start would be internal employee attitude and cultural change and external – customer satisfaction focus. If carefully and rapidly implemented, these two will have a cascading effect on other areas such as revenues, cash flows, asset management and so on that will t urn around the organisation. 7. Style: BSNL has the baggage of being a government owned company and attitude of staff cannot be changed overnight. Unions are strong and public opinion can be made and tarnished by the correct or wrong handling of union issues. Change management in BSNL has to carefully crafted and cannot be dictated or thrust upon. The style has to be one of collaborative effort and everyone involved must be clear with what is expected of them and how it impacts others, his / her results and overall company. Conclusion: BSNL is at cross roads of its existence. The need to refine its competitive strategy and implement change management has never been more urgent than it is today. If BSNL has to survive the tough market conditions, the change management process must be initiated immediately and aligned with the competitive strategies that must be reworked. |Page BIBLIOGRAPHY: ? ? ? ? ? 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