Introduction to Strategic Management: Strategic Management is all about identification and description of the strategies that managers can carry so as to achieve better performance and a competitive advantage for their organization. An organization is said to have competitive advantage if its profitability is higher than the average profitability for all companies in its industry. Strategic management can also be defined as a bundle of decisions and acts which a manager undertakes and which decides the result of the firm’s f irm’s performance. The manager must have a thorough knowledge and analysis of the general and competitive organizational environment so as to take right decisions. They T hey should conduct a SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make best possible utilization of strengths, minimize the organizational weaknesses, make use of arising opportunities from the business environment and shouldn’t ignore the threats. Strategic management is nothing but planning
for both predictable as well as unfeasible contingencies. It is applicable to both small as well as large organizations as even the smallest organization face competition and, by formulating and implementing i mplementing appropriate strategies, they can attain sustainable competitive advantage. Strategic Management is a way in which strategists set the objectives and proceed about attaining them. It deals with making and implementing decisions about future direction of an organization. It helps us to identify the direction d irection in which an organization is moving. Strategic management is a continuous process that evaluates and controls the business and the industries in which an organization is involved; evaluates its competitors and sets goals and strategies to meet all existing and potential competitors; and then reevaluates strategies on a regular basis to determine how it has been implemented and whether it was successful or does it needs replacement. Strategic Management gives a broader perspective to the employees of an organization and they can better understand how their job fits into the entire organizational organizational plan and how it is co-related to other organizational members. It is nothing but the art of managing employees in a manner which maximizes the ability of achieving business objectives. The employees become more trustworthy, more committed and more satisfied as they can co-relate themselves very well with each organizational task. They can understand the reaction of environmental changes on the organization and the probable response of the organization with the help of strategic management. Thus the employees can judge the impact of such changes on their own job and
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can effectively face the changes. The managers and employees must do appropriate things in appropriate manner. They need to be both effective as well as efficient. One of the major role of strategic management is to incorporate various functional areas of the organization completely, as well as, to ensure these functional areas harmonize and get together well. Another role of strategic management is to keep a continuous eye on the goals and objectives of the organization. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is useful to talk about "strategic consistency" between the organization and its environment or "strategic consistency." According to Arieu (2007), "there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context." Strategic management includes the management team and possibly the Board of Directors and other stakeholders. "Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.". Strategic Management can also be defined as "the identification of the purpose of the organisation and the plans and actions to achieve the purpose. It is that set of managerial decisions and actions that determine the long term performance of a business enterprise. It involves formulating and implementing strategies that will help in aligning the organization and its environment to achieve organisational goals." Strategic management can depend upon the size of an organization, and the proclivity to change of its business environment. These points are highlighted below:
A global/transnational organization may employ a more structured strategic management model, due to its size, scope of operations, and need to encompass stakeholder views and requirements.
An SME (Small and Medium Enterprise) may employ an entrepreneurial approach. This is due to its comparatively smaller size and scope of operations, as well as possessing fewer resources. An SME's CEO (or general top management) may simply outline a mission, and pursue all activities under that mission.
Whittington (2001) highlighted four approaches to strategic management. These are Classical, Processual, Evolutionary and Systemic approaches. 2
Mintzberg stated there are prescriptive (what should be) and descriptive (what is) approaches. Prescriptive schools are "one size fits all" approaches that designate "best practice" while descriptive schools describe how strategy is implemented in specific contexts.
No single strategic managerial method dominates, and remains a subjective and contextdependent process.
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Introduction to Case Study Method: The Case Study method was first developed in 1871 by Christopher Langdell at Harvard Law School to make students learn for themselves by independent thinking and analyzing problems or situations. A supportive objective is to make the students to develop skills in using their knowledge. A case is a description about a problem or situation. The problem or situation may be real or hypothetical. A case sets forth in a factual manner, the events and organizational circumstances surrounding a particular managerial situation. The essence of the students role in the case analysis is to diagnose and understand the situation described in the case and then to recommend appropriate solution or action plan.
REASONS TO USE CASE STUDY METHOD: A student cannot learn the art of management only through the theoretical or textbook knowledge.For a real situation,there cannot be ready-made textbook answers.Each managerial situation has unique aspects, requiring its own diagnosis,judgement and specific actions.Case Study method provides to the students an opportunity to practice with the actual problems faced by managers in a real work environment. The following are the main objectives of case-study method:
To develop and enhance business judgment, and skills so as to utilize the textbook knowledge about management in practice.
To gain in-depth exposure to different managerial situations and problems in different industries and companies, thereby acquiring something close to actual business experience.
To enable the students to be active participants in the learning excersise rather than passive receivers of facts from textbooks and teachers.
To train the participants to work out answers and solutions themselves instead of relying on others.
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CASE STUDY PROCESS: It is to be noted that not all cases require broad analysis as listed below. This is because, some cases need brief analysis relating to one or two aspects. However, in general the following guidelines may be followed while preparing for case study discussion: 1) Get an Overview of the Case: One should get a quick overview of the situation
presented in the case.This will help to find out the issues and the problems, which need to be looked into while discussing the case.At this stage, you may try list out the major and minor issues. 2) Read the Case thoroughly: One should read the case once again thoroughly.This will
help to get a full view of the situation.This part is more difficult as compared to the identification of the problem.In writing your analysis and evaluation, consider the following points:
You are supposed to offer analysis and evidence to back up your conclusions.Do not rely on unsupported opinions, and overgeneralizations as a substitute for logical argument backed up with facts and figures.
Your interpretations of the evidence should be reasonable and objective.Do not try to exaggerate the details.
If your analysis involves some important quantitative calculations,use tables and charts to present the calculations clearly.
Demonstrate that you have command over the theoretical concepts that you are exposed to. You may support your analysis with the theoretical concepts, wherever required.
3) Findings and Conclusions: Students may analyse the findings and draw conclusions from
such findings. 4) Recommendations: The last section of case study preparation process is to provide
suitable recommendations to solve the problem. The following points need to be noted while making recommendations:
Give priority to your recommendations and make sure they can be carried out in an acceptable time frame.
Do not make generalized recommendations such as “the Company should
undertake massive promotion”. Instead state exactly the areas or products, which require promotion, the means of promotion, the amount to be spent, and so on.In other words, be specific in your recommendations.
Avoid making imaginary and tall recommendations. Consider the ability and resources of the organization before making the recommendations.
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Support each recommendation with persuasive argument and reasons as to why it makes sense and should result in improved performance of the organization.
Review your recommended action plan to find out whether or not all the identified problems are suitably dealt with. Any set of recommendations that does not address all the identified problems, is incomplete and insufficient
Evaluate the pros and cons of your recommendations. Do not make any recommendations that may have adverse consequences on the company.
The HBS Case Method : Pioneered by HBS faculty and one of the highlights of the HBS experience, the case method is a profound educational innovation that presents the greatest challenges confronting leading companies, nonprofits, and government organizations —complete with the constraints and incomplete information found in real business issues —and places the student in the role of the decision maker. There are no simple solutions; yet through the dynamic process of exchanging perspectives, countering and defending points, and building on each other's ideas, students become adept at analyzing issues, exercising judgment, and making difficult decisions —the hallmarks of skillful leadership.
Over 80 percent of cases sold throughout the world are written by HBS faculty, who produce approximately 350 new cases per year.
How the HBS Case Study Method works ?
When students are presented with a case, they place themselves in the role of the decision maker as they read through the situation and identify the problem they are faced with. The next step is to perform the necessary analysis —examining the causes and considering alternative courses of actions to come to a set of recommendations. To get the most out of cases, students read and reflect on the case, and then meet in learning teams before class to "warm up" and discuss their findings with other classmates. In class —under the questioning and guidance of the professor—students probe underlying issues, compare different alternatives, and finally, suggest courses of action in light of the organization's objectives.
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As you watch a case study unfold in class, you'll see students doing 85 percent of the talking, as the professor steers the conversation by making occasional observations and asking questions. This classroom interaction is enriched by ninety classmates from diverse industries, functions, countries, and experiences. At the end of the class, you'll be amazed at what you learn from exchanging ideas with your classmates. Class participation is so important to the learning model at HBS that 50 percent of a student's grade in many courses is based on the quality of class participation. This requires students and faculty to work closely together —another hallmark of the HBS experience. During their time at the School, students study and prepare over 500 cases.
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Case 1 : Maruti Udyog Ltd- The Competition Ahead Case Introduction: The Indian market is not penetrated well in terms of car ownership. In the countries like the U.S., penetration is around 800 per thousand, but in India, it is 7 cars per thousand of population which is lower than even countries like Sri-Lanka and Bangladesh. Maruti Udyog Ltd. came into being in the year 1982 when Suzuki Motor Corporation (SMC) entered into a joint venture with the Government of India to manufacture fuel-efficient passenger cars under the brand name Maruti.Suzuki Motors was chosen from seven prospective partners worldwide. This was done to actively bring to Maruti Udyog Ltd, contemporary technology and Japanese management practices. A liscence and a joint venture agreement was signed between the Government of India and the Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in Oct 1982.The company exceeded their targets and in March 1994 became the first Indian Company to produce over a million vehicles.Maruti had produced over 4 million vehicles by April 2003.MUL was the only company to lead its home market in terms of both market share and in the JD Power Customer Satisfaction study (JD Power Asia Pacific 2000 India Customer Satisfaction Studies).it was also the only car company to be ranked so five times in a row from 2000 to 2004. The company exports more than 50,000 cars annually and has domestic sales of 730,000 cars annually. Its manufacturing facilities are located at two facilities Gurgaon and Manesar in Haryana, south of Delhi. Maruti Suzuki’s Gurgaon facility has an installed capacity of 900,000
units per annum. The Manesar facilities, launched in February 2007 comprise a vehicle assembly plant with a capacity of 550,000 units per year and a Diesel Engine plant with an annual capacity of 100,000 engines and transmissions. Manesar and Gurgaon facilities have a combined capability to produce over 14,50,000 units annually. About 35% of [7] all cars sold in India are made by Maruti. The company is 54.2% owned by the Japanese multinational Suzuki Motor Corporation per cent of Maruti Suzuki. The rest is o wned by public and financial institutions. It is listed on the Bombay Stock Exchange and National Stock Exchange of India. During 2007 and 2008, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six million Maruti Suzuki cars are on Indian roads since the first car was rolled out on 14 December 1983. Maruti Suzuki offers 15 models, Maruti 800, Alto, Maruti Alto 800, WagonR, 8
Estilo, A-star, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Gypsy, Grand Vitara, Kizashi and the newly launched Ertiga. Swift, Swift DZire, A-star and SX4 are manufactured in Manesar, Grand Vitara and Kizashi are imported from Japan as completely built units(CBU), re maining all models are manufactured in Maruti Suzuki's Gurgaon Plant. ] The company is believed to be moving towards introduction of a new version of Maruti 800 by November 2012, which will be more fuel efficient, though slightly costlier than Alto and existing Maruti 800. The Suzuki Motor Corporation, Maruti's main stakeholder, is a global leader in mini and compact cars for three decades. Suzuki’s strategy is to utillise light-weight, compact engines with stronger power, fuel-
efficiency and performance capabilities. Nearly 75,000 people are employed directly by Maruti Suzuki and its partners. It has been rated first in customer satisfaction among all car makers in India from 1999 to 2009 by J D Power Asia Pacific.[12] Maruti Suzuki will be introducing new 800 cc model by Diwali in 2012.The model is supposed to be fuel efficient, hence more expensive.
Observations: This case study provides fascinating insights into various aspects of the Automobile Industry. The success of MUL can be distributed into the following aspects wherein it emerges as an innovator: 1) Company Structure: MUL was previously a public sector enterprise with the Government owning 51 % equity. However it soon became a subsidiary of Suzuki Motor Corp. when Suzuki increased its equity holding to 54.21 %.As on March 2005,Suzuki held 54.21% shares,GOI 18.28 % and rest were held by NRI’s Mutual Funds,Corporate bodies
and public at large.The Government raked in 1,567.6 crore oput of this equity sale,resulting in a successful divestment strategy.It also signaled an end to governmentcontrolled automobile industry and brought a new wave of competitiveness.This also resulted in an end of friction between Suzuki and the GOI with respect to new technology pricing.
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2) Adapting to Indian Car Industry: The passenger vehicle market is broadly divided into the following 3 categories:
Passenger Cars
Multi-Purpose Vehicles
Utility Vehicles Price-wise it could be classified as :
Segment A – Cars priced lower than 3,00,000
Segment B – Cars priced between 3,00,000 and 5,00,000
Segment C – Cars priced between 5,00,000 and 10,00,000
Segment D – Cars priced between 10,00,000 and 25,00,000
Segment E- Cars priced above 25,00,000 Segment A and B constitute over 80% of total passenger car sales. These are two segments from which MUL earned more than 90 % of its revenues.The Market Share was as follows: Market Share (%) Maruti Hyundai Tata Motors Others
FY02 58.6 15.2 11.1 15.1
FY03 54.6 16.1 14 15.3
FY07 51 18.1 16.6 14.2
Maruti was able to capture the imagination of Indian consumers by offering lower-priced cars and having the advantage of being first in the industry. Although it later face competition from Santro from Hyundai as well as Indica from TML. 3) Product and Process Technology: Maruti Udyog Limited,initially adopted both process and product technologies of Suzuki Motors Limited.Key Suzuki technicians came to SML plant for training and technology transfer.They introduced new technology and also increased skill of workers working in the Indian Automobile Sector.MUL was able to use this as a competitive advantage.It also bought a revolution in terms of client servicing by specially training Garage Mechanics who were new to the Japanese Technology.They also introduce N2N Fleet Management Solution which includes end-to-end back ups/solutions across vehicles life.
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4) Innovation and Technology: In TML 60 th AGM, Chairman Ratan Tata announced that the passenger vehicles industry has grown by 17 %. TML,following their company culture focused on Technology since 1950’s when they collaborated with Mercedes Benz.Maruti
Udyog Limited, meanwhile started focusing on Technological Innovation,reducing products costs by developing capabilities of Local suppliers and becoming a regional hub for SMCEngineers from MUL were trained at SMC for periods ranging from six months to two years, to build local R & D capability
Conclusion: The Maruti Udyog Limited case outlines the history of the Indian Automobile Sector.It revolutionalised the sector when it was dominated by poor quality and poor customer service such as the the Ambassador by Hindustan Motors.From Maruti 800 to Omni in 1984 to other models such as Zen,Alt,Esteem,WagonR,Gypsyetc it bought newer models to fit into different market segments for different customers and their budgets.The MUL venture also proved profitable to the Government,which was in its phase of privatizing and disinvestment,who earned 1567.60 Crore in equity sale.MUL shpuld also be credited with having introduced newer technology via Suzuki .However MUL’s lack of emphasis on R & Dhas led to a decline in its Market Shar.For Instance,the Santro Xing produced by Hyundai was well manufactured and cleverly marketed to capture the imaginations of Indian Consumers.Along with Indica,it made a dent on MUL’s share in A and B segments reducing their market share from 82 % (at one time)
to 54.6 % in FY 03.To cope with this competiton MUL decided to invest 3721.9 crores in a new car manufacturing plant and a new engine and transmission plant.Their objective is to earn more revenue by reducing costs and becoming more self-sufficient for manufacturing parts.However with the turbulence in the Indian Automobile sector,Maruti has not been able to regain the upper hand as it had earlier.Moreover,the recent Manesar Violence Incident in July 2012 has left a deep impact on the company and its operations.In October 2007, while Tata Motors registered a growth of 10.14 %,Hyudai Motor India clocked a marginal decline, whereas Maruti suffered a setback and dropped 17 % in April -June 2007 Quarter.With,the introduction on the Nano and the congestion of Indian road the challenge now is to create cars smaller in size .Also with rise in petrol and diesel costs, people have begun to prefer cars with Compressed Natural Gas (CNG) which are also eco-friendly in nature. The objective would be to maintain the quality of the driving experience while taking into account all these factors.
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On the Job: Strategy Case for Naukri.Com: Case Introduction: Naukri in Indian terms means service, job or employment. On November 21 2006 Info Edge (India) Ltd, was listed on the Bombay Stock Exchange and the National Stock Exchange.Naukri.com got launched in April 1997.Info Edge (India) Limited is an online recruitment, matrimonial and real estate classifieds and related company. The company has 3 online businesses and one offline business. The three online businesses are: the online recruitment business operating through www.naukri.com(1997),online matrimonial classified business operating through www.jeevansathi.com(2004) and the online matrimonial classified operating through www.99acres.com (2005).The offline business is in executive search though the company’s division called the Quadrangle division acquired in 2000.A separate website
www.naukrigulf.com has been launched in 2006 to serve the lucrative middle-eastern job market. Consequent to the development of the World Wide Web and the opening up of the Internet to the commercial users, classified advertising also began to appear on the web in ever-expanding amounts. Online classifieds are probably as old as Internet news groups The new media of online classifieds scored over the print media classifieds in terms of relatively better and more convenient, fast and cheap way for prospective employers and employees, particular in the young socially and geographically mobile professional market segment, to check each other out.As of 2007-year end,the company had about 1500 employees working in its 61 offices in 41 cities in India and two offices in Dubai.The revenue stood at US$ 15 Million with a net profit of US$ 3.3 million.The company claims to have strong top and bottomline growth with a consistent record of profitability.
Observations: 1) Up-Coming Market: Sanjeev Bikhchandani got the idea of a recruitment website by noticing people read Business India where there were several pages of recruitment advertisements.However the idea of starting a website struck in October 1996 during an IT Asia exhibition where he grew interested in a “www” stall.In its 2
nd
year,Naukri.com’s
revenue jumped from 2.35 Lakhs to 18 Lakhs and the year hence,to 36 lakhs.This was all due to the increased popularity of the internet.Naukri.com was also one of the few companies to survive the internet meltdown and the post-9/11 depression. 12
2) Buisness Strategies: Info Edge facilitates growth through organic and inorganic routes. Organic Growth is perceived in the form of innovation and customization of services offered and by capitalizing on creating advertising revenue streams through company portals. The Company is also on the lookout to exploit opportunities for widening the scope and geographical expansion of its existing businesses. 3) What worked for Naukri.com ? .Naukri.com the most visible brand of InfoEdge,claims to have 12 million resumes in its databases and a clientele of 16000 companies as of December 2007.It had the advantage of being pre-eminent in the market which made it a front-runner in an upcoming field.It also has an advertising section which earns high revenue due to the large number of hits it receives along with high visibility.Also continous improvement with refrence to technology such as mobile services has also helped it become a front-runner among online job-search portals.It also provides other value-added services such as resume-writing,resume displayetc. 4) Identifying the Potential of Indian Marriage Market: Traditionally,Indians have married through Arranged Marriages.The breakdown of traditional networks,emergence of nuclear families creates a large market for online matrimony services.Online Matrimonial sites offer the advantages of easy accessibility,interactivity and low-cost services.Info-Edge however entered the market at a later stage when it was already crowded.In terms of business it is breaking-even at the most.However,this market does have the potential to expand as mor people become activated to the internet.
5) Brand Management:Research and Technology is not a key area at Info Tech.The important aspect here is Brand Management.Naukri.com is a highly visible brand but Jeevansathi.com and 99acres.com are yet to be comparatively popular.It is important to maintain a good brand image
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as threat of new entrants in Online Services is very high due to lack of extensive capital requirements and easy accessibility. 6) Human Resource Management: The number of employees has been growing at Info Edge from 870 to 1200 to nearly 1500 in 2009.This has prompted the Management to set up an effective H.R.Department. Training is focused on continual upgrades of functional and domain knowledge across disciplines.A formal Induction programme is been put up for new recruits.An in-house newsletter,”Inside Edge” helps to disseminate current events and major developments to employees.There is also an employee stock option plan in operation to motivate and involve employees in sharing wealth generation.
Conclusion: The story of Sanjeev Bikhchandani is inspirational to many budding entrepreneurs,and his case can lead us to many conclusions such as: 1) Internet is the Future: The advantages of the Internet are many such as low entrant cost, easy accessibility, absence of heavy investment in Infrastructure etc. The future of an internet-based services company is intricately linked to the internet at one end and to markets they serve at the other..The growing Indian economy,rising internet penetration and increasing sophistication of usage are positive features on the horizon.Mounting competition from late-movers leveraging on the advancements of latest technologies is a big threat. 2) Recruitment Services Markets are likely to remain strong as most companies are growing and attrition rates in some industries are high, requiring continual replenishment of human resources.Naukri.com’s premier position and horizontal
growth in terms of geography as well as vertical growth in terms of service repertoire offers good prospects.Yet downturns in the recruitment markets, as have happened with the IT nad ITES markets presently, do hurt the prospects.Competitors may be behind but almost all of them are part of business groups that are larger than others.Matrimonial service markets are likely to experience tough competiton from existing players as well as new entrants. Real Estate service markets are still relatively less explored and thus offer good prospects but with considerable challenges ahead.
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Case 3: Reliance Retail: A fresh approach towards Retailing in India Case Introduction: India ranks first in A.T.Kearney’s study for top international destinations for retail
investment.The attractiveness of India is augmented by its US$ 350 Billion retail market in which 96 % maret share is held by 12 million family-run shops, making it a virgin territory for organized-retail investment.Unorganised retailers are typified as being small in scale, individual units who typically buy off invoice and evade formal taxes. With a growing middle class and rising urban i ncomes, India’s population is showing an insatiable appetite for consumerism.It is estimated that retail sales will surge 35% a year.Furthermore, India is he fourth largest economy in purchasing power parity terms after the U.S.A,China and Japan and the Indian GDP growth rate has been impressive. The main challenge facing the organized retail industry is the competition from unorganized retail sector.In India, the shopkeepers have a face and a identity. Marginal Retailers believe that allowing organized retail (including FDI) would put them out of business. The Idea of Reliance Retail came to the scion of Reliance Industries Limited (RIL) Mr Mukesh Ambani due to an offhand comment by about an increasing trend in the number of customers coming in to purchase groceries at gas stations instead of fuel.Reliance Industries latest Venture aims at investing US$ 5 Billion in a pan-india retail network that would be comprised of both small and super-size stores across the country, generating one million jobs and re aching annual sales of US$ 25 Billion, by the year 2011. From a theoretical point of view, Reliance’s latest venture can be explained by a strategic
contingency theory, which dictates that diversification involves finding the right fit between external factors such as government policies and internal factors such as firm risk reduction and uncertainty of future cash flows. The Reliance diversification strategy is an amalgamation of its vision which focuses on valuecreation, economics of scale and the sheer will and hard-work to create oppurtunities.The diversification into retail is considered its riskiest venture yet, since it is completely unrelated from its primary petro-chemical businessFrom a consumres point of view, the idea of an organized retail sector brings in much cheer as it adds accountability to retail services, can control the price fluctuations and will also help in reducing the delays in receipt of supplies. 15
Observations: 1) Retail Strategy: The first stage involved forming strategic partnerships with struggling government-owned co-operative stores,such as Sahakari Bhandar in Mumbai, by providing supply chain management services and revamping the stores.By adopting this strategy, Reliance gained two objectives, the first was to gain first-hand knowledge of the retail business in India. Secondly , small retailers are a powerful lobby in India and such strategic partnerships would enable Reliance to take on International Retail Giants hat will eventually enter India. 2) Supply-Chain Management: The lack of proper infrastructure leads to the decay of half of the country’s fresh produce before it reaches the stores. Reliance adopted an
extensive supply-chain network to gain supremacy o ver two of India’s most backward sectors: Agriculture and Retail..The distribution system “farm to fork supply chain”
entails capturing the entire supply chain.As per the plan , over 1600 rural hubs called Reliance Mandis will be created for procurement of dairy products and vegetables. This is done to obtain the produce at the lowest price thus eliminating the role of the middlemen and providing itself with more bargaining power. For the transport woes, it purchased a fleet of 35-tonne cargo planes for transporting its goods. Thus by controlling the entire supply chain and logistics system, Reliance aims at being the primary supplier to not only its own stores but also to rival retailers , including traditional corner shops. 3) Rapid Expansion: The group is moving towards its target of achieving 100 mill ion square feet of retail space, comprising of 6000 outlets in 784 cities and towns by 201011.Through its pan-India footprint,Relaince Retail can be compared to global retail giants such as Carrefour which owns 285 million sq feet of retail space globally and ahead of Tesco.By expanding rapidly,Reliance stands to achieve the first-mover advantage which will help it gain “non-trivial information advantages” over rival
retailers.Thus, first-hand information implie s “tacit knowledge”, which offers a unique transaction advantage because unlike trade secrets, such knowledge is non-transferable and cannot be duplicated”.
4) E-Commerce: The e-commerce business is purported to be a two-pronged business to business as well as business to consumer strategy. Reliance Retail is aiming at having cobranded credit cards and consumer financing schemes to further its e-commerce ventures.The company envisions a future retail scenario in India that is driven by ecommrece and for the same reason invested in this venture to stay in competition with the possible future entrance of foreign retail giants such as Tesco,Wal-Mart etc.
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Conclusion: The Reliance retail project outlines a few aspects about its management philosophy: 1) Instead of entering into a hitherto unknown market Reliance decided to smartly pair up with existing players in the market and gain experience which could help them understand the nuances of retail in the country. Credit must also go to Mr.Mukesh Ambani for entering into an unorganized market and seeing potential for high revenue growth in the future. 2) Another important aspect about this case was the focus on Logistics.The retail Market being unorganized did not have an efficient transportation system or a common wholesale system from which Reatilers could purchase their products.Reliance heavily invested in these areas knowing soon they would dominate the whole market as well supply to competitors
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Case 3 :Air Deccan - Revolutioning the Indian Skies Introduction Air Deccan was a wholly owned subsidiary of Deccan Aviation. It was started by Captain G. R. Gopinathas India's first low-cost carrier and its first flight took off on 23 August 2003 from Bangalore to Hubli. It was known popularly as the common man's airline, with is logo showing two palms joined together to signify a bird flying. The tagline of the airline was "Simplifly," signifying that it was now possible for the common man to fly. The dream of Captain Gopinath was to enable "every Indian to fly at least once in his lifetime." Air Deccan was the first airline in India to fly to second tier cities like Hubballi, Mangalore,Madurai and Visakhapatnam from metropolitan areas like Bangalore and Chennai. Air Deccan's phenomenal growth spurred the entry of more than half a dozen low-cost air carriers in India. Later, as Kingfisher Red, the airline faced stiff competition from SpiceJet, IndiGo Airlines, Jet Lite and GoAir. The growth of these low-cost air carriers has also forced mainstream domestic Indian airlines to lower their fares. On 25 January 2006, Deccan went public by filing a red herring prospectus with the Securities and Exchange Board of India. Deccan planned to offload 25 percent of its stake in the initial public offering (IPO) that opened on 18 May. However, due to the stock market downturn at that time, Air Deccan's IPO barely managed to scrape through, even after extending the issue closing date and reducing the price band. In a statement to the National Stock Exchange of India, Air Deccan reported a net loss of Rs 3.4 billion ($74 million) for the 15-month period between 1 April 2005 and 30 June 2006. It originally hoped to break even in the current financial year but executives were quoted in the local media saying it now did not expect to post profits until 2008 as a result of intense competition following the launch of several other new airlines. Air Deccan turned profitable on the back of a strong October –December 2006 quarter, posting a profit of Rs. 9.64 crores (a little more than US$ 2 million). On 27 February 2007, Air Deccan switched to US-based airline reservations hosting service provider Radixx International, becoming the second major domestic Indian carrier after GoAir to switch to the Radixx Air Enterprise reservation system.[7] Before moving to the Radixx reservation system, Air Deccan was using a reservation system provided by the Delhi-based InterGlobe Technologies.
Acquisition by Kingfisher and rebranding The "Less than expected" growth in the Indian aviation sector coupled with overcrowding and the resultant severe competition between airlines resulted in almost all the Indian carriers, 18
including Air Deccan, running into heavy losses. After initially trying to get in fresh capital for running the airline, Captain Gopinath eventually succumbed to pressures for consolidation. On 19 December 2007, it was announced that Air Deccan would merge with Kingfisher Airlines. Since Indian aviation regulations prohibited domestic airlines from flying on international routes until they had operated in the domestic market for five years, it was decided to instead merge Kingfisher Airlines into Deccan Aviation, following which Deccan Aviation would be renamed Kingfisher Airlines. This was because Air Deccan was the older of the two airlines, and therefore would be the first to qualify for flying on international routes. [8][9] The merger became effective April 2008, with Vijay Mallyabecoming the Chairman and CEO of the new company, while G. R. Gopinath became its Vice-Chairman. Kingfisher Airlines' parent company United Breweries Group acquired a 26 percent stake in Air Deccan's parent company Deccan Aviation. The combined fleet of 71 Airbus A320 family and ATR aircraft operated 537 flights to 69 Indian cities taking advantage of synergy benefits arising from a common fleet of aircraft that improved financial prospects for both carriers. Kingfisher Airlines continued to serve the corporate and business travel segment while Air Deccan focused on serving the low-fare segment. Air Deccan A320-200 cabin. The grey seats in all Air Deccan aircraft were changed to red as part of a rebranding effort. In October 2007, after the acquisition by Kingfisher Airlines, Air Deccan was renamed
"Simplifly Deccan" with its new tagline being "The choice is simple". The old logo was replaced by the Kingfisher logo and the same font of Kingfisher Airlines was also used on Simplifly Deccan. The old yellow and blue colors of Air Deccan were replaced by Kingfisher Airlines's red and white, supposedly to give the same premium look and feel to Deccan as well. The check-in counters at airports as well as the crew uniforms now had the same red and white colors as those for Kingfisher Airlines. The new look airline also promised excellent on-time performance, a wider network and "little delights all the way". Check-in staff would no longer be outsourced, but managed by the airline's own employees, to increase accountability and improve service delivery. Mr Mallya announced that the new airline would slowly phase out the ageing ATR 42 and A320 planes and replace them with new aircraft.Changes were also made in the flight schedule of Simplifly Deccan airlines to better align with that of Kingfisher Airlines. According to agencies, the re-branding was expected to cost around Rs 15 crore (approximately $3.8m). After its merger, Air Deccan switched to the Sabre reservation system used by Kingfisher Airlines, thereby replacing the previous solution provided by Radixx. In August 2008, the airline announced further changes in its branding to Kingfisher Red and said that it will begin operating under Kingfisher's IATA code IT.
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Observation
When the proposal to start a Low-cost Airline was initiated, the company was vauled at
Rs
100 crores.With a 20%dilution of equity, Rs20crore was raised initially. Air Deccan’s project was just Rs35crore, of which balance Rs15crore (subsequent to infusion of Rs20 crore after equity dilution) came from internal accruals. An audacious step to launch such an ambitious project with minimal funding was possible because of some very innovative measures. Air Deccan negotiated smartly with aircraft vendors such as ATR(for the smaller aircraft) and Airbus (for the larger aircraft). All aircrafts of Air Deccan are leased from a leasing company. Instead of normal six month’s lease deposit, Air Deccan convinced ATR of huge Indian markets and managed to have deposit waived. Gopi’s warning to them ‘miss the opportunity to provide
aircraft to Air Deccan ,and you will have missed the fastest growing avation market in the world’. Air Deccan managed to convince Airbus to waive this deposit as well, saving the
company US$1.2mn deposit per aircraft. Air Deccan , India’s first Low-cost Airline(LCA), started off with more of a whimper than a bang
in September 2003,with an abortedmaide flight from Hyderabad.As of March 2004, Air Deccan has recorded annual revenues of US$120mn,(Rs5520mn), with a passenger load as high as 83% across sectors and some routes like Bangalore-Hyderbad, and Bangalore-Goa, recording 100%loads. “What happens to the urban man with rural roots who wants tovisit his native small town?
What happens to working womam who wants to visit her family which lives far away from a metro”- Captian Gopinath ,quoted from an interview with the BBC in August 2004.
The low-cost airlines(LCA’s)usually operate on a3-pronged policy of low operational costs, appropriate positioning and no- frill services, to harness only those customers who value cheap fares. Low operating costs are ensured through cost containment on all aspects of the airline’s
operation such as by contracting non-core activities, lower airport fees, shorter time on the ground through quick turnarounds, simple boarding processes, higher percentage of on-line sales of tickets thus, reducing commission payable to travel agents, more number of seats on aircraft by optimally utilising space on the aircraft, elimination of the business class section on the flight and ensuring that the flights run to full capacities.
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Conclusion Air Deccan , like all low- cost airlines, follows a ‘no –frills’ approach on all its flights. Seats on its flights can be booked through the Internet. There are no in-flight services like other commercial airlines but on can buy food or drinks on-board. All seats are economy class and there is no prior allocation of seats. The company has implemented a number of innovative measures to maximise its revenues. Its Airbus 320 carries 180 passengers against 154 carried by Indian Airlines. The aircrafts are used as an advertising medium also and generats a revenue of Rs200mn per year at current level.(The airline currently makes about Rs2mn a month on each Airbus aircraft through advertisements). It sells advertisement space on seats, cabin interiors, as well as on the body of airplane.
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Case 4: Bharat Petroleum Corporation Limited Introduction Burmah Oil Refineries Ltd was incorporated in 1952 as a joint venture between Burmah Oil Company, UK and Shell Petroleum Company by an agreement with gthe Indian Government to set up a refinery at Mahul in Mumbai, which went on stream in 1957. In 1976, the Indian Government nationalised the petroleum industry and acquired 100% equity in Burmah Oil Refineries Ltd. The name was later changed to Bharat Petroleum Corporation Limited (BPCL) in 1977. BPCL’s Retail network was the third largest in the country with around 4500 retail outlets,
around 950 dealerships for kerosene and light diesel oil and 1200 LPG distributors. It markets a diverse range of products from petrochemicals, solvents, speciality lubricants, avation fuel and LPG. It had 22 LPG bottling plants, 3 lube blending and filling plants, 6 port installations, 13 aviation service stations, 67 company operated depots and 232 dispatch units. It had a market share of around 22% in petroleum products and 20% in LPG. In 2000, the total sales grossed over Rs36000 crore and 18.86 million tons of petroleum products. Industrial customers contributed to 27% of sales, LPG 7%, aviation fuel 3% and lubricants 0.5%of the total sales. BPCL acquisition was a part of Indian Government’s nationalisation programme. It was highly regulated and controlled by the government till economic reforms started in 1991.
Observation A changed Team was formed with thirty members for the project. The change project was titled CUSECS for CUstomer SErvice &Customer Satisfaction. The consultants of Arthur D Little(ADL) trained the CUSECS team. The training included topics like negotiations, interpersonal effectiveness, presentations, systems thinking and best practises. The CUSECS Team was provided with all the information and support required to develop skills in diagnosis, change strategy formulation, organisation design and implementation. The visioning exercise was conducted to develop clarity and a common understanding about the future of the organisation. Based on the inputs from the shared vision and current reality, a workshop was conducted to develop a change plan. The change plan included
Organisational assessment
Well defined corporate values
Vision articulated in terms of critical business process and 22
Areas of change to achieve the vision.
The informal channel of communication was also taken care of by including people from all the functional constituencies in the change & breakthrough teams. A topdown approach was used to communicate the change plan with assistance from breakthrough members. The new structure was rolled out in a phased manner to ensure effective implementation. The new structure was implemented in LPG SBU. Based on the experience, the new design was implemented across the organisation with necessary modifications. Further, in each of the proposed SBUs, specific regions were identified and the new structure was implemented to verify smooth functioning before full implementation.
Conclusion The new structure was focused on the business processes and the customers. Five SBUs- Retail, Lubes, Industry/Commercial, LPG and Aviation. The sixth SBU,Refinery. Along with two new departments IT &Supply chain and R&Dare under the Director(Refineries). Each SBU would have its own HR, IS, Finance, Logistics, Sales, Engineering, etc. Since the corporate and support functions are now located within the SBUs, the new design included lateral linkage mechanisms. Governance Councils, Process Councils and Task Forces (to address specific organisational issues) were teh mechanisms for integrating the different parts of the organisation. Some salient features of the new structure were:
Highly empowered work force
Decentralised decision making
De-linking of authority from hierarchical levels
Orientation towards internal and external customers
Regular market research and customer surveys
Conscious brand building efforts.
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