Business Values Report On Corporate Social Responsibility5

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Chapter 1: Introduction

1.0 Introduction

The need to stay connected has become one of the most prominent features for human existence in the present era and telecommunication thus plays an important part for the mankind to stay in touch with the world. The subscriber base in India has seen a quadruple jump in the last decade. The total number of subscribers presently stands approximately at 927 million, as stated by the TRAI report of 2015. The telecom companies of India are thus trying to retain the customers as, the mobile subscribers have a number of options before them. Therefore, the research paper aims to present the factors that affect customer loyalty in Indian telecommunication sector, by taking the example of the telecom giant, BSNL. As the  Indian telecom providers are reeling under immense pressure to retain the customers, the companies are striving hard to take every possible step to make the customers happy. Only contented customers would stay with the present company. Thus, various factors influencing the loyalty of the customers need methodical elucidation in order to understand the loopholes. The paper would also like to present the way the Indian customers’ choice regarding the selection of the telecom service providers vary.

1.1 Background of the research

Indian telecom sector has seen tremendous growth and the present strength of mobile Europeusers of well above 900 million validate that fact. The teledensity of India also stands at a staggering rate of 74% (Griffin & Herres, 2012). Therefore, the high rate of returns for the companies has also attracted the foreign companies to invest here. The continuous positive growth in this sector has therefore brought forth several foreign collaborations too. The competition has been increasing and the telecom companies are trying their best to retain the loyal customers. However, Miller & Washington (2013) have opined that customer loyalty depends on great many factors and the competitive market warrants that the companies provide every possible benefit to the customers in order to stay ahead of the rival companies.

The telecom sector of India is unevenly balanced due to the overwhelming number of mobile phone users. The number of landline subscribers is getting low continuously and at the end of 2013, the number stood only at 28.78 million. As the number of service providers is increasing significantly, the companies are facing increasing challenges to retain the customers, along with attracting the new ones (Jacoby & Chestnut, 2009). The aspect of highly volatile telecom market means that shifting customer loyalty becomes a strategic challenge for the companies. In addition, the customers now have the provision of using a number of connections simultaneously. This gives the chance to the customers to compare the service quality of the companies first hand. Zeleke (2015) has opined that service quality and perceived customer value are the two most important factors to enhance the satisfaction quotient of the customers. Therefore, the paper aims to evaluate these factors along with other important ones to ascertain whether the Indian telecom companies are fulfilling the norms or not.

1.1.1 Background of the company

BSNL is a state-owned organisation catering to the Indian customers from the year of 2000 (Bhote, 2009). The telecom company is headquartered in New Delhi and has more than 216,000 employees  of 2015. The company is the largest player in the sector of fixed and broadband service. Although, the company has been going through severe loss in the recent year, the management has taken a  number of positive steps to mitigate the problem. One of its subsidiaries is MTNL, providing exclusive service to New Delhi and Mumbai. The organisation is currently facing the problem of retaining the existing customers for various issues. First, the lack of technological orientation towards the modern advancements has deterred the prospects of BSNL. Apart from that, the organisation has not been able to increase its cell density in the metropolitan cities due to the stiff competition from the private enterprises. Several other companies have tried to manipulate the thinking process of the customers by offering cheaper service with better coverage. This has resulted into the company losing its existing customers to the rival companies. Back in 2011, BSNL was the largest telecom service provider in the country and had the market share of approximately 26% (Atkinson, 2009). However, after the entrance of the private players, the scenario changed. Those companies, with their huge expertise and resources, have captured the imagination of the customers. The private entities have adopted the latest technological advancements in order to reduce the service gaps and they have also been able to reach the remotest corners of the country to appease the customers with their service quality.

Therefore, the latest trend has seen the decreasing number of customers for BSNL and the company is striving hard to hold on to its existing customers by providing specialised offers and reward packages. Although, the move has not produced the desired result, the management is optimistic that it would retain the existing customers, along with attracting newer ones. The stiff competition has also catapulted the growth prospect of the company as, the private operators have to pay lesser amount of Access Deficit Charges (ADC), which relates to the charge payable by the private companies to BSNL for operating in non-lucrative areas (Jacoby & Chestnut, 2009). This also has dented the prospect of revenue generation, which has in turn deteriorated the service quality of BSNL. The existing customers have been fretting over the lack of quality service from the operator as, the company rarely has the equipments to expand its grasp in the yet to be reached areas. This may be prove to be fatal for the long term growth of the company as, the loyalty of the customers cannot be taken for granted (Pezeshki, Mousavi & Grant, 2009). The customers have a number of options before them and therefore, do not find it customary to stick with BSNL. Therefore, the issue of loyalty of the customers arises now. Looking at the prospect of competitive rivalry in the Indian telecom market, the researcher has observed that the aspect of new entry for the private entities is not easy as, the Indian market is already teeming with various operators (Punniyamoorthy & Raj, 2009). BSNL being the first mover has achieved a considerable amount of advantage from the market. However, this may not be true for other new entrants entirely.

The aspect of competitive rivalry hampering the aspect of retaining the existing customers is huge as, the customers now have more number of options to chose from. In addition, Atkinson (2009) has opined that the aspect of low switching costs make the customers habituated to change their loyalty to other companies. The aspect of buyer power has been keeping the companies on tenterhooks and thus, BSNL along with other telecom service providers tries to appease the buyers by offering lucrative deals. Therefore, the aspect of buyer power is huge and that is hampering the market prospect of the telecom provider such as, BSNL. In addition, Bansal & Taylor (2012) have opined that the threat of substitution for the services offered by BSNL is also keeping the company on high alert as, the loyalty of the customers would go for a toss if, they get better service at a cheap rate from others. Therefore, the market analysis of the Indian telecom sector has presented that although, the customers have a number of choices before them, the companies have the chance to attract them by relaying out detailed plans. On that note, Bansal & Taylor (2012) have remarked that if the companies can look after the prospect of providing quality care to customers irrespective of the price, they can retain the customers.

The present market penetration of BSNL stands out to be the diminishing gradually for the severe onslaught from the more powerful private entities. With their revamped business model and client relationship, the companies have been able to dislodge BSNL from its numero uno position (Jacoby & Chestnut, 2009). The market penetration of BSNL has been upped though with the introduction of 3G services. The company is also vying for 4G services in the metropolitan areas to cope up with the demand of the present tech savvy generation. On the other hand, the product development sector of BSNL has seen the firm existence of high speed broadband along with the introduction of mobile tv. This aspects have attracted the existing and potential new customers to try out the offers of BSNL. Babakus & Boller (2011) have however argued that unlike other private players, BSNL does not have the technological strength to roll out latest modules of technology in its services. On the other hand, the aspect of market development from the side of BSNL has taken place by the inception of foreign tie ups. The company has recently tied up with two South African technological farms to revamp its technological expertise and attain global standard. Atkinson (2009) has opined that this move may prove to be quite fruitful to retain the existing customers as, refurbished service quality would automatically imply that the customers would ahun the lucrative offers of other telecom companies to stay with BSNL.

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