Private FM Radio Industry In India

Recently I finished uploading my analysis of Radio Industry in India. It was long due but took some time and some pushing to get this done.

In India the private radio industry is experiencing rapid growth. Though the industry was privatized in late 1990s, the business model was not viable until the phase II of licensing came into force. The phase II fostered competition and brought in new players into the industry.

As part of the overall growth experienced in the Indian economy during last decade, the media and the advertising industry has experienced good growth. While the share of radio industry is far below the international standards, the industry is experiencing good growth. Because the model of the industry is advertisement driven, the radio industry largely mirrors the contours of the advertising industry.

While there are several promising factors that support the growth of the Indian radio industry, there are quite a few factors that might actually delay or dampen the growth. The competition for listeners and advertisers that ushers in price war without any strong differentiating factor among players is not good for the long term health of the industry. The undifferentiated content issue should be addressed immediately and even though the players might be ready now, the regulator has to address the concern.

The phase III licensing will surely enable the industry to move forward and resolve some long standing issues but it is still some time away and the new and existing players should adopt wait, watch and prepare policy until it is announced to make new moves.

The presentation is embedded below.

Feel free to comment and share your feedback.

Private FM Radio Industry In India

View more presentations from Amit Bhargava.

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My research paper

My research paper that I conducted on the diversification strategy of the companies as part of my MBA was due long ago to be published, but paucity of time and other resources did not permit. I am now putting the document online on this blog. It is a long paper and some sections are omitted but still it is long. The document titled - "The case of Diversification: Case Study analysis of the nature of competition in emerging markets" is linked here. This is my main research paper and I will be publishing a concise version of the same soon.

The abstract of the document is available in this blog post

Document Abstract

"This paper explores the nature of competition in emerging markets, specifically in the context of India, in a regulated environment. The paper identifies various contextual strategic factors for diversification and proposes a diversification framework to achieve customer lock-in, in a regulated environment. Through an ethnographic case study, the characteristic of the private Indian Radio industry are examined and various factors that influence competition in such an industry are identified. The main characteristics of the industry are that it is an oligopoly, faces regulatory barriers to entry and witnesses fierce competition.

The heavy competition forces firms to constantly innovate to develop competitive advantage which is temporary – a hypercompetitive characteristic. Various theoretical frameworks besides hypercompetition, including oligopoly and Porter’s competitive advantage framework, are studied to identify the explanation behind the nature of competition.

The literature, despite making rich contributions, does not collectively explain the competition observed in the radio industry raising a new question to answer. If business groups are aware about the competition in the industry then why do they get into it in the first place? Is diversification a defensive strategy by spreading the risk or an offensive strategy to lock-in the customer so as to earn superior rents by monetising every touch point?

The findings suggest that competition observed in radio industry is a function of the process of diversification. The regulatory barriers do act as hurdle when the players are outside the industry, once they get the license the barriers act as insurance against future competition. The players need to be able to sustain operations for long terms before the benefits can be enjoyed. This requires players with large resources who look at diversification as long term hedging strategy to earn superior rents. The business groups, which are resource-rich, do not get into an industry to compete but to lock-in the customer enabling them to mitigate their risks. A locked-in customer presents an opportunity to monetise various touch points of the customer with the business group, representing a long term competitive advantage.

Even though certain other industries may exhibit characteristics similar to radio industry, the diversification by business groups is not a simple phenomenon. Future research can try to identify other factors that prompt business groups to diversify and test the applicability of the framework proposed."

You are welcome to critique the document and also email me if you feel to discuss the same.his blog.

Happy Diwali

It is that time of the year when lights are lit and the colourful display of lights and fire begins all around. Yes, it is Diwali time, the Hindu festival of lights.

To my friends from MBA, I hope they remember the celebrations we had last year during the course of study to celebrate this festival. Wishing all my readers and visitors and everyone a very Happy Diwali and a prosperous new year.

McKinsey survey - Business and Web 2.0. What is social networking?

I was going through the McKinsey survey about usage of Web 2.0 by businesses all around. Few things that struck me were

1. Blogs and Social Networking are highly preferred medium of both customers and employees in the value chain of the business.

2. Videos are extensively used for providing training and customer support.

3. Social Networking and blogs are used extensively by large set of businesses for almost everything.

The usage of social networking and blogs raises an interesting thought. Is social networking (Facebook, linkedin, myspace) really helping businesses do better. Blogs are interesting medium to share, interact and engage with the audience (partners, customers, employers and other stakeholders) but as I understand social networking, which despite being important to individuals and also to companies, consumes lot of productive time of the enterprise. The loss may be argued as an investment by companies but there does not seem to any conclusive study on the benefits of such an investment.

Is social networking hype? How have businesses embraced social networking that provides value. Is this an investment by companies to remain blue eyed within its value chain or is it an investment in anticipation of something better in future?

I don't know the answer and I may be shooting in air. Despite being fan of linkedin which allows personal benefit of connecting with various individuals and facebook which again allows interaction among friends and acquaintances. I am keen to understand the economic value derived by using such 2.0 networking sites by the enterprise.