Download - Big Bazaar strategic analysis
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BIG BAZAAR- THE CHANGE OF RETAIL INDPRESENTED BY GROUP 5
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Big Bazaar & Indian retail sector
Overview
Internal & External Analysis
Business & Corporate level Strategy
Conclusions
AGENDA
Group 5, Section C
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BIG BAZAAR- OVERVIEW
Started in 2001; Launched in 4 cities namely Kolkata,Indore , Bangalore and Hyderabad within 22 days
A one-stop destination for a wide range of categorieslike food, furniture, fashion, electronics, leisure etc.
Spread across more than 90 towns and cities
Aimed at providing local marketplace feel to theconsumers
Initially launched to sell goods in the fashion format,later a wide range of products were included in theportfolio
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3- C STRATEGY FOLLOWED BY THE GROUP
Consumption
Confidence
Change
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INDIAN RETAIL LANDSCAPE
Stands at USD 396 Billion; Likely to gro
Second Largest employer after agricultu
TRENDS
Emergence of Organized Retail
Spending Capacity of youth in India
Raising Incomes and purchasing power
Changing mindset of customers
Easy Customer credit
Higher Brand consciousness
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ORGANIZED RETAIL IN INDIA
Expected to be worth USD 175-200 Billion by 2016
Comprises only 3% of the total retail sector; rest 97%comprises of mom- and pop type shops
Delayed growth mainly due to lack of trained manpower, tax laws, Govt. regulations and entry restrictions
Expected to grow rapidly after change in the FDI policyin retail sector in 2012
FDI allowed upto 51% in multi-brand retail and 100%in single-brand retail
Can be categorized in different segments like food ,fashion and lifestyle, furniture, electronics etc
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EXTERNAL ANALYSIS- PORTERS 5 FORC
Competitive Rivalry withinIndustry
Reliance Retail
RPG Spencer Group
ABG's More Retail
Threat of Entrants
Huge Entrants once FDI is allowed
Ba
Threat of Substitutes
High
Bargaining power ofSuppliers
Low
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Product Differentiation- Strong brand identification & customer loyalty fo
Capital requirement- Large Investments create a barrier
Switching Costs- Low
Access to Distribution Channels & Govt. Policies
Threat ofEntrants
Differentiation of products & Switching Costs- products are diff. in form oprices which contributes to switching costs
Threat of Backward Integration- Not a likely threat
BuyersBargaining
Power
Dominated by large no. of players; scope to influence prices in less
Threat of forward Integration High threat as it easy for suppliers to mov
SuppliersBargaining
Power
Home Delivery, Credit Facility and E-retail are main substitutes
Trade-off of convenience and discount is already crossed by big bazaarThreat of
Substitutes
Industry Growth Has a growth of over 10.6%. Competition expected to drincrease
Exit Barriers High as investments involved is high
Threat ofRivals
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INTERNAL ANALYSIS- VRIO FRAME WO
VALUE
1.Trained Staff andTechnology
2. Brand Identity &innovation
3.Wide productrange
4. Aggressive Top
Mgmt.
RARITY
1. Motivatedworkforce
2. Customer Offers
3. High Service atlower costs
4. SchemeInnovation
IMITABILITY
1. 13 dayinduction for workforce
2. Point ofpurchasepromotions
3. DedicatedVisualMerchandize Dept. O
RGANIZATION
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VALUE CHAIN PRIMARY ACTIVITIES
INBOUNDLOGISTICS
Systems to keep tokeep track of vendorlogistics schedule
,scrap etc
OPERATIONS
High softwareautomation andtraining of workforcefor operations
OUTBOUNDLOGISTICS
Own system tohandle store tostore transfer,return of non-
salable items
MARKETING &SALES
Promotinal pricing
Differentiatedpricing
Bundling
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VALUE CHAIN- SECONDARY ACTIVITIES
FIRM INFRASTRUCTURE
Internal warehouse capacity is low
It is recommended to increase the warehouse capacity
HUMAN RESOURCE MANAGEMENTRetention Strategy
Customer Experience management model
TECHNOLOGY DEVELOPMENT
Uses software RayMedia HQ for chains of stores
Integrated analysis and consolidating real-time business information is done
PROCUREMENT
Sources from various manufacturing distributors & local suppli
Credit period varies from 3 -12 weeks depending on the produ
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BUSINESS LEVEL STRATEGY Follows a strategy of Cost- Leadership
Competitive price is the most important of the valueproposition of Big Bazaar 5 to 60% lower thanmarket prices
Follows 3 C Strategy
Segmented India into three groups
India One- Consuming Class
India Two- Serving Class
India Three- Struggling Class
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CORPORATE LEVEL STRATEGY
Diversification
Launched Food Bazaar & own jewelry lineNavaras
First group to introduce store-in storeconcept
Diversified into e-commerce & launchedpremium food chain Food Hall
Launched special credit card Shakti forHouse-wives
Offered value added services of cutting,grinding, roti making and vegetable cutting
Joint Ventu
Partenered with ICICI to laservices like ICICI Big Ba
JV with FutureBazaar.comshopping portal
Launched Exclusive rangeJV with Hidesign
JV with HUL for bakery anproducts
Parent company PantalooGenerali Group for Futurinsurance
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RECOMMENDATIONS
The forward strategy for Big Bazaar should consider tie-ups with different supplieexclusivity which in-turn would improve the delivery time between warehouses
Improved integration between warehouses and outlets and other systems
Large infrastructural improvements necessary in terms of IT, warehouses & vendofacilities; Collaborations to reduce costs
Pull Mechanism to be considered for distribution centres for order generation New Strategies to encourage buying in all categories of Indian and to shift the mind
from kirana stores
Consider diversification and change positioning to sophisticated stores to cater to
Offer more customized and convenience services to suit increasing expectations
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Quest
THY