George Yip's Globalization Model

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YIP’S GLOBALIZATION MODEL We have followed George Yip’s famous globalization model (1992) to analyse the forces behind attractiveness of globalization for telecom firms in India and more specifically Bharti Airtel. 1. MARKET GLOBALIZATION FORCES Every month about 8-10 million subscribers are being added in the Indian mobile database. India is likely to see ~80% teledensity (fixed +mobile users) by 2014 and is set to see waning demand there on. (source: Given the current level of saturation in urban market and cut throat competition among operators, the industry players are aiming to achieve the dual strategy of: • Widening telecom footprint by acquiring new subscribers in semi urban/ rural India to take advantage of its high growth potential. • Netting talkers in emerging markets is to replicate the Indian experience outside 2. COST GLOBALIZATION DRIVERS The margins of the telecom industry as a whole have shrunk, even though subscriber base is growing owing to competition and lower “Average Revenue per User” (ARPU) primarily due to major growth drivers being from the bottom of the pyramid, for which rates have been drastically reduced to make them affordable to the masses. The tariff structure in India is among the lowest globally at Rs.0.5 - 1 per minute vis-a -vis to the tariff in USA and UK (around Rs.13 and Rs7-8 respectively) .The inevitable commoditization of voice calls and shrinking ARPU, the next challenge lies in to develop alternative revenue
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