Strategic Management

Sunil Chandra Saha

sunilchandrasaha@gmail.com

Lecturer- IMT Ghaziabad CDL

Work ex:

Bharti Airtel, Aditya Birla MFL, Bestseller India, Network 18

Healthcare Start Up- Spinalogy Clinic

Unit I: Strategic managementHistory and Introduction

Introduction of Strategy

What We Do Best

What We Do Better

Than Other Competitors

1. Where Do we COMPETE?2. How do We COMPETE?3. How do We EXECUTE

Resources

Execution -Use of Resources

Strategy Mgmt Course Outline

Strategy Have it Here or Take-Away

External Analysis

Strategy Formulation- Internal Analysis

Strategy Implementation

Diagnostic Reasoning

SkillsFor Complex Business Env.

& Competitor s

Agenda- Lecture 1

• Strategy- Introduction of Holistic Approach

• Decision Making Process

• Vision Mission Goals

• SWOT analysis

• Porter’s 5 Forces Model- Indian Small Car Market

• BCG Matrix

• 7s Framework- Competitive Advantage

• Competitive Advantage

• CASE STUDY: 2014 Scenario- KFA Vs INDIGO

STRATEGY- What , Where & Why?

WHAT ARE WE NOW?Future Customer NeedsMarket Analysis

WHERE and WHY DO WE WANT TO GO?Vision and Mission

HOW WILL WE GET THERE?Plan Development

Delivery- Competitive Advantage

Types of STRATEGY

• Corporate Level Strategy– Diversification

– Acquisition

– New Market- Global Strategy

– New Ventures and Market Exits (Disinvestment)

• Business Unit Level Strategy– Competitive Strategy for same Industry

– Cost Leadership

– STP

– Product Differentiation

– Vertical Integration

• Function Level Strategy – Execution

– Operational Excellence

Strategic Decision Making Process

Difference between Strategy –Tactics- Policy

Strategy Tactics Policy

Planning Doing Guiding

Why to Do How to Do Rules – How to Do It

Long Term- Documented Short Term- NonDocumented

Very Long Term- Documented and Signed by People

Competition and Business Environment

Competition and Business Environment

Mostly Only limited to Internal Resources

Can be Changed with Lot of Thought

Very Frequently Changed Conservative and Difficult to Change

Related to Goals Related to Goals Related to Vision

Vision, Mission & Goals

CustomersPeople of the Co., Owners, Trustees

Shareholders, Investors

Unit II: Internal & Resource AnalysisBrain Storming Tool: STRATEGIC PLANNING

Competitive analysisInterpreting the five forces model- PORTER’s MODEL

• Competitor’s analysis.

• External analysis - Environment analysis

• Components of External environment

• Components of Internal environment

• Environmental scanning.

• Industry Analysis

Porter’s 5- Forces MODEL

COMPETITIVENESSIntensityWITHIN

INDUSTRYIn Existing

Players

Customers

SMALL CAR MARKETINDIA

Unit IV: Portfolio Approach & Analysis- BCG Matrix

7s Framework Competitive Advantage

Kingfisher Indigo- Case Study- 20142013 Oct- IndiGo has a market share - a shade under 30 per cent – that must be

telling a story of KINGFISHER Airlines’ failure to Indian Aviation Industry.

From the tag of India’s first Five Star Airlines, has now come down to the verge of Permanent Closure! On the contrary, the baby step start of Indigo in 2005, is now taking giant strides in aviation and taking it to International Skies to fight Bigger Players of the Industry. Now Indigo, stands as the most profitable in the Indian airline business.

Indigo is looking forward for an IPO in 2014-15 as the market valuations are on high. Being a Non-listed Airlines, its not mandatory that Indigo reveal revenues and profits, however the company going public soon revealed revenues as 11000 Cr and Net Profits of 787 Cr in 2013-14. Just the opposite, Kingfisher is yet to post any Profit since the inception year and has reported a loss of Rs. 4300 crore with a revenue of just 683 Cr (against 5832 cr in 2012-13). Net Losses has reached 13000+ Crores.

Kingfisher Airlines has been grounded and facing the heat from the Law and Investors for a while now. The flying licence of the Airlines too has been cancelled. The banks like SBI and Almost all banks in Indian banking scenario has given Loan to Kingfisher and have considered Dr. Mallya a defaulter.

On 10 Mar ‘13 , DGCA ordered the airline to give money to clear out the dues, as well as the debts and the salaries of staffs and the vendors payments as well!

The man who turned around the aviation industry and made the base for a profitable airline and who bested Vijay Mallya was- Rahul Bhatia.

Who brought along some of the industry’s best people from Bar Council of India along with Airline business. Rakesh Gangwal as co-founder, J.B. Singh and Harish k. Gandhi etc.

He was quick to spot the opportunities and was sure enough not to repeat the strategical mistakes done by KFA. He saw India’s struggling Aviation as a industry which has an average Monthly 5 million people travel (Feb 2014), which is assumed to rise up to 35 million by 2020. India being highly under penetrated in Aviation sector for having 1 airline to about 2 Million People, where America has 1 airline per 50000 people. Rahul Bhatia and IndiGo strategically took good steps to make the airline a success story. IndiGo 1st Ordered 100 Airbus-320s in 2005 in Paris Airshow to be delivered in a span of 8 Years till 2015. And quite recently in 2011. IndiGo ordered 180 more aircrafts to be delivered between 2016 to 2025. IndiGo has gone global with its low cost Airline and is tapping the most popular destinations- Dubai, Kathmandu, Bankok, Muskat and a Few More.

By 2025 The Indigo will have 280 strong fleet, and if we have to compare the same with respect to some of the global Low Fair competitors, KFA’s ordered A-380s and A 350s has been cancelled and the Airline is grounded; Singapore Airline has 106 and has 116 in order along with Air Arab is has 25 now and has ordered 8 More. The airline started Delhi-Singapore; Kolkata- Bankok and Kerela Dubai Flights.

The Airline brought operational excellence by adhering to 90% On time record! Very Affordable Rates of Seats along with effective advertising and may the logo style – all have helped the airline to gain emotional space in Indian Flight Travellers.

Airline also has the inducted 3 level training in the people. The functional training which includes all employees with respect to their profile. The next level was Customer Service and Softs kills and the last level has been the game changer- The leadership training!

The risk which comes along in next phase will be to maintain growth, in economic environment which is slowing down, along with fighting bigger players with deep pockets!

KINGFISHER And INDIGO Fleet Status -2014

Aircraft Type

Current Future Historic

TotalActive On Order Other Operator

KFA Airbus A319 4

KFA Airbus A320 23

KFA Airbus A321 8

KFA Airbus A330 5

KFA ATR 42/72 28

Total 0 0 60 68INDIGO Airbus A320 80 2 98

Total 80 2 16 98Source: http://www.flykingfisher.com/pdf/KFA%20Annual%20Report%20-%202012-13.pdf)Source: http://www.moneycontrol.com/news/ipo-upcoming-issues/indigo-ipo-gathers-steam-co-mgmt-meets-bankers_1117321.htmlhttp://timesofindia.indiatimes.com/kingfisher-crisis/specialcoverage/10754352.cms

QUESTIONS

• What’s Your Take : What STRATEGICAL Mistakes KFA made to meet this Fate

• What are the Strategies used by Rahul Bhatia and Co. to make INDIGO this Success Stories

• What are Your Recommendations for KFA to REVIVE The CO. : For the Students to THINK!!!

What’s Your Take : What STRATEGICAL Mistakes KFA made to meet this Fate• Corporate Level Strategy Mistake:

– 6 types of Aircrafts: Different Pilots and Training needs

– Only Focusing on Business Class High End Customers

– Higher Pricing for majority of 5 years of Operations

• FUNCTIONAL Level Strategy Mistake:

– Function HR:

• Staff training was focused on functions

• No Leadership Developed to lead internally

– Function Finance:

• Kept Ordering Aircrafts, One of the Most Costly A 380s in the List

– Function Marketing:

• The Kingfisher Calender made from Hostesses photoshoots made the staffs being focused on photoshoots rather than the Jobs

• Integrated Marketing was Missing

What are the Strategies used by INDIGO to make it a SUCCESS

• Strategy to buy Same Aircraft saved huge resources and lead to standardization

• HR : Training needs were spot on

• Customer Needs Identified: Good Service and ON TIME

• Operational Excellence: On Time Strategies

Thank You

LECTURE 1 Ends

Next Session

Case Study on ZARA and Success

Strategies Across Globe with a Perspective of India

Scope: Lecture 2

• Business Level Strategy and Competitive Advantage

• Developing Resources and CapabilitiesLEARN>>>(Translate)>>> ACTION (Faster)

• Functional Level Business Strategy and The Capabilities

• Organizational Capability Development– Merger, Acquisition & Strategic Alliance

– Internal Development

• Strategic Evaluation

• Case Study: Zara

Unit V: Business Level strategy : Competitive Advantage

COST Leadership Differentiation Leadership

LV, GUCCIAppleCancer Drugs

Focus Cost Leadership Focused Differentiation Leadership

Cost Leadership

Ma

rket

Sco

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>>>

Focu

sed

ta

rget

Larg

er

Ma

rket

COST >>>

Developing Resources and CapabilitiesLEARN>>>(Translate)>>> ACTION (Faster)

ResourcesKnowledge and

Behaviour

i. HR: Workforceii. Operations - Production- Systemsiii. Capital

Leadership-PhilosophyVision Values and PolicyOrg. Environment

Capabilities

FinancialFund Availability

Funds Sources

and Mgmt

OperationsProductn-Control

Process Excellence

R&D

HR CapabilitiesTalent Acquisition &

Mgmt: Training,

Succession Planning,

Appraisal, Retention

MarketingDistribution,

Marcomm, Brand

Image, Product

Innovation

Financial Capability

- Bajaj - Cash Management

- LIC - Centralized payment, decentralized collection

- Reliance - high investor confidence

Marketing Capability

Hindustan Lever - Distribution Channel

IDBI/ICICI Bank - Wide variety of products

Tata - Company / Product Image

Facebook and Apple- Product InnovationOperations Capabilities:

-Indigo: On Time 90%

-Ebay and Amazon

- Buggati Veyron

HR Capabilities:

- Google: Retention, Development

- Infosys: Bench Strength

Organizational Capability Development

1. Merger, Acquisition& Strategic Alliance

2. INTERNAL DEVELPMENT

-Technical capability-Relationship Building-Time Factor-Market Size- Brand Building

-Eg. TATA and Jaguar LR- Myntra and Flipkart Merger

I. Knowledge Mgmt : GENERATION- Creation: R&D- Acquisition: Training, Patents, Recruitment

II. Knowledge Mgmt: APPLICATION-Integration and Sharing: Strategic Operations improvement, New Product Development- Replication and Storage: Database and SOP, On Job Training, Best Practice Transfers- Measurement and Identification: Reviews, Competency Modeling

Unit VI: Strategic Evaluation

Case Study

Meet Zara, the famous Fast fashion Spanish retail brand! The brand is owned by Inditex; Started in 1975, by Amancio Ortega who now is the 4th richest person on earth! Zara operates through 2000+ stores across 90 countries. India has 12 stores till now. By 2015 Zara will be opening 6 more stores.

Zara operated from Spain HQ The cube, where a much studied subject, “design-manufacturing- distribution” system has been revolutionized. Just outside Cube, Zara has its huge distribution centre. Cube works on a philosophy: Speed and Responsiveness more important than Cost.

Zara is known worldwide for a phenomenon which no other retailer has able to replicate nor achieve. Zara manages to do Twice a week, at precise times, to all stores across globe in response to the store managers’ system orders. The company is known to produce about 45 cr items in a financial year. China has just became the 2nd biggest market of Zara with 146 Stores. But being a global co. China seems to be a struggle for Zara with changes in business external environment. Whether a shirt is made in Portugal or Morocco, in China or Bangladesh, it still goes to Spain before being shipped to a store. Beyond the distribution center are the 11 Zara-owned factories. Every garment made is first sent directly to the distribution centervia an automated underground monorail. There are 124 miles of track within the centre.

2012 Zara accounted for €10.5 billion (1 Lac Cr) of that. Zara’s factories in Spain and those it uses in Portugal, Morocco, and Turkey produce its trendiest clothes, often taken directly from the fashion weeks & runways, after slight design alterations. This has led to furious reactions from the global high end fashion Brands and Designers. Zara brings along the same high end fashion to masses at almost economic pricing! The products from factory of Portgual and Morocco, account for about half of Zara’s inventory. Its more basic T-shirts, sweaters, and the like are ordered on a traditional schedule, about six months in advance, from factories in Asia, where labor costs are often cheaper, then sent by ship to Spain.

Once all the garments produced in all centres reach the Cube, the new items are inspected, sorted, tagged with prices, and hung on racks or folded, they’re packed overnight, loaded onto trucks, and taken directly to a store or the airport. The trucks and planes run on established schedules, delivering clothes to most stores within 48 hours.

Zara can afford the extra labor and shipping costs because it doesn’t have to discount as much as its competitors. Nor does it advertise. Zara gets 85 percent of the full price on its clothes, while the industry average is 60 percent to 70 percent.

Zara has achieved global success, with fashion affordable and prepackaged fashion. A business built on Speed, and designed for addiction!

Question

• Measure the success of Zara with respect to Competitive Advantage

• What Function Level Strategies Zara used to become to 100000 Cr Brand

• Are there any mistakes of Zara’s Rival brands you can find out?

MCQ• Withdrawal, consolidation and building are examples of ....

what?

a. Grand strategies

b. Strategy alternatives

c. Strategic directions

d. Corporate strategies

e. Directional strategies

• In strategic thinking, how long is the long term, approximately?

a. A week to a month

b. 1 to 12 months

c. 1 to 5 years

d. More than 5 years

e. Any of these

3. What are stages 2, 3 and 4 of the outline strategy process?

a. Appraisal of strengths and weaknesses; choice of strategic direction; strategy implementation

b. Generate options; select strategy; implement strategy

c. Deliberate strategy; emergent strategy; realised strategy.

d. Strategy selection; strategy implementation; strategic control

STRATEGICANALYSIS

4. The marketing strategy emphasises price as the key to good value; operations runs with tight cost control; development focuses on cost reduction. Which of Porter's competitive strategies is illustrated here?

a. Cost focusb. Divisionalisationc. Cost leadershipd. Differentiatione. Differentiation focus

5. . Two reasons for mergers and acquisitions are

a. to increase managerial staff and to minimize economies of scale.

b. to reduce tax obligations and increase managerial staff.

c. to create seasonal trends in sales and to make better use of a new sales force.

d. to provide improved capacity utilization and to gain new technology.

6. All of these, except__________, are part of Porter's competitive forces in industry analysis.

A. potential entry of new competitors

b. bargaining power of suppliers

c. development of substitute products

d. bargaining power of union

Lecture 3

• Product- Process Innovation Mode• Diversification Integration Strategy

– Forward Vertical Integration (Upstream)– Backward Vertical Integration (Downstream)– Horizontal Integration

• Global Strategies– Porter’s diamond framework

• Modes of Entry in Global Market– Direct Investment – Trade

Product Process InnovationStrategy Model

INNOVATOR- FOLLOWER Market Winner

Motive and Modes of Diversification

1. GrowthLocation, Markets and Globalisation

2. Risk Reduction- Economic slowdown and recession

- Lesser dependability on one sector

3. Value Creation- Produce products at lower cost- Better technology for customers

4. Change in Competitive StructureRemove comp. and economies of scale

5. Improve CapabilitiesTechnology, Innovation and Access to

talent pool

Diversification: Vertical Integration

Diversification: Vertical Integration

EXAMPLE : Forward Vertical Integration

EXAMPLE : Horizontal Integration

GLOBAL STRATEGIES: Porter Diamond Framework

Pattern of Industry Internationalization

MODES of ENTRY in OVERSEAS Market1. TRANSACTION

1. Transaction

Exporting

Spot Sales Foreign AgentLong Term Contract

Licensing

Licensing Patents and

IPsFranchising

MODES of ENTRY in OVERSEAS Market2. Direct Investment

2. DIRECT INVESTMENT

JV

Marketing and Distribution

Only

Fully Integrated

WHOLLY Owned

Marketing and Distribution

Only

Fully Integrated

Case StudyThe Tata acquisition of Jaguar Land Rover is a superb example to include in research notes on

takeovers and mergers. At the time (early 2008), Tata’s investment in JLR seemed to be poorly timed and there were many critics who questioned the strategic logic of the move as well as its timing. Shortly after the takeover, demand in the global market for luxury cars collapsed as a result of the financial crisis and Tata was forced to refinance to support its investment.

Several years later, however, the takeover appears to be a compelling example of a successful acquisition which is generating substantial shareholder value for Tata as well as continued support from JLR’s many stakeholder groups in the UK.

Background- Jaguar Land Rover (JLR):

Jaguar Cars and Land Rover bought by Ford from BMW for $1.4bn in 1989. A difficult relationship between the UK firm and its US owners ;saw the worst times of extremely respectable brand under US firm leadership. Jaguar fell into heavy losses whilst owned by Ford (reaching up to $600million per year). However, Ford invested heavily in new model development

Tata Group:

One of India’s largest private conglomerates - used to investing in the UK. Tata Bought Tetley Tea in 2000 And also Bought Corus Steel - a big supplier to JLR - in 2007 which raised eyebrows across globe. Tata made its presence felt in almost every economy by taking over Corus. Tata Motors - was already India’s third largest car-maker, but struggling with a poor image and hampered by rising raw material costs.

The Deal

Ford sells JLR to Tata in March 2008, just over £1bn - just a few months before a collapse in global demand in the international car market. Tata financed the takeover with $3bn of new long-term loans. The price paid by Tata was approximately half of what Ford paid to buy Jaguar and Land Rover.; + Ford had continued to incur heavy losses in Jaguar as it failed to turn the business around. The deal took over a year to agree - which may have helped with the post-merger integration. Tata recognised that it would continue to need support from Ford who are a main supplier of car components to the two brands. No significant change proposed to the businesses by Tata. They claimed that staff, trade unions and the UK government had been kept informed about the proposed takeover and supported the move. The deal has been endorsed by trade unions, which secured a commitment from Tata to continue with JLR’s production plans until the end of 2011. This includes development of new models.

What happened next?

Significant slump in new car sales in late 2008 as a result of the credit crunch; Tata had to refinance in order to keep JLR solvent. UK government considered a financial aid package, indicating the strategic importance of JLR to the UK economy. In February 2010: Tata secures a £340million loan from the European Investment Bank to support JLR through recession. And in May 2011: Tata announces £5b five year investment programme in JLR - focused on new product development & new equipment at JLR three UK plants + investment in a planned factory in China. November 2011: JLR announces 1,000 new jobs a Land Rover plant in Solihull boosted by rising demand for SUVs in China, Russia, India and Brazil. February 2012: Soaring sales of Jaguar and Land Rover cars have helped Indian firm Tata Motors to a huge rise in profits (up 41% on 2010). JLR arm saw sales rise 37%, helped by selling 32,000 of its new RangeRover Evoque. China overtakes the UK as JLR’s biggest market. April 2012: JLR announces that it will build a successor to its previous sports cars called the F-type at its factory in Birmingham.

Questions

• ENLIST the Key drivers of motives for the takeover of Financially broken JLR during RECESSION by Tata in 2007-08 w.r.t. – Product Process Innovation Strategy

– Global Strategy and Entry In Overseas Market

By 2014 Under Tata ownership, Jaguar Land Rover has launched new vehicles including the Range Rover Evoque, Jaguar F-Type, the Jaguar XF, the latest Jaguar XJ the Second-generation Range Rover Sport, the Fourth-generation Land Rover Discovery and the fourth-generation Range Rover.Jaguar Land Rover delivers best ever full year global sales performance retailing 425,006 vehicles in 2013, up 19%. Jaguar is the fastest growing brand in Germany, India and the USA in 8 countries.

Key drivers of / motives for the takeover:

i. Acquiring JLR giving Tata greater international distribution, broader product range and better customer service skills – Horizontal Integration

ii. Tata gains access to world-class engineering capability

iii. Strengthens relationship between Tata’s steel and motoring businesses: Vertical Integration

iv. LR also to link closer with Tata Steel to provide new lightweight steel alloys for new car models: Vertical Integration

v. March 2012: JLR and Chery Automobile agree a joint venture that should pave the way for production of Jaguar and Land Rover cars in China.

Session 4

• Current Trends in Strategic Management– The New External Env. : Economy, Technology, and Societal Pressures

– Managing Economic Crisis:• Diversification, Leadership(Change agents), ERP and Optimizing Supply

Chain

• Cost Advantage– Economies of Scale

– Drivers of Cost Advantage

– Cost Curves and Production Efficiencies

– Developmental Cost Examples

• Using Value Chain to Analyze Costs– Value Chain component and Cost Driver

• Differential Advantage– Value chain in Differentiation Analysis

– Differentiation: Demand Side and Supply Side

1. Current Trends in Strategic Management

The New External Env. – Economy: Fluctuating Economies and Recession

• Change in Managing the business: ERP- 24x7 approach

• Analytics based decision making

• Change in Process or Product- Cost/ Differentiation Advantage

• Change in Marketing and Customer Service

2. Current Trends in Strategic ManagementTechnology

TECHNOLOGY and CHANGE IN EFFICIENCYSCM Components: ERP integration

WMSPOS System

GPS, Tracking Systems, Replenishment

Request Processing SysOrder Processing Sys

Stock MgmtQuality Mgmt

Data Mgmt SysEfficient Demand

Prediction Sys

ERP

How SCM can Improve Efficiency

CURRENT SITUATION

SUPPLY CHAIN STRATEGY

SALES STRATEGY

Sales INR 10,00,000 INR10,00,000 INR12,50,000

Cost of materials INR 6,00,000 (60%) INR 5,50,000 (55%) INR7,50,000 (60%)

Production costs INR2,00,000 (20%) INR 2,00,000 (20%) INR2,50,000 (20%)

Fixed costs INR1,00,000 (10%) INR 1,00,000 (10%) INR1,00,000 (8%)

Profit INR1,00,000 (10%) INR 1,50,000 (15%) INR1,50,000 (12%)

RJ’s Furniture CHAIN

60% of sales goes in Sourcing and supply chainCurrent gross profit = INR 1,00,000TARGET : Increase profits to INR1,50,000 (50%)

TECHNOLOGY and Change Organizations

TECHNOLOGY and CHANGE in MARKETING

Managing Economic Crisis

• New Leadership– Analytical Decision Making

– Future Forecasting Planning and Present Strategies

– Strive for Innovation and Leadership (Cost and Differentiation)

– Preparedness for Economic Crisis from Top-Down

• Diversification– Vertical

– Horizontal

• ERP: System Integration: 24x7 approach– Control Mechanism

– Instant Decision making- better financial Management

• Higher C-SAT with System Integration: Customer Retention

FACTORS: Cost Advantage

Economies of SCALE

Economies of LEARNING

PRODUCTION Technique

PRODUCT Design

INPUT cost

CAPACITY Utilization

Residual Efficiency

Economies of Scale: Optimal Order and ProductionTi

me

Number of facilities1 2 3 4 5

Response time

(a) Response Time

INR

Number of facilities1 2 3 4 5

Lowest cost

(b) Cost INR

Total logistics cost

Facility costs

Inventory costs

Transportation costs

i. Response Timeii. Cost iii. Profit- Revenue- Cost

INR

Number of facilities1 2 3 4 5

Revenue

(c) Cost, Revenue, and Profit

Total logistics cost

Max profit

OPTIMAL ORDER: CB analysis

i. Response Timeii. Cost iii. Profit- Revenue- Cost

Development Costs: Differentiation Products

PRODUCT LEAD COMPANY Estimated Dev. Cost Launch

Using Value Chain to Analyze Costs DRIVERS

Differential Advantage in VALUE CHAIN

Differentiation: Demand SideIdentifying Potential

STP

Differentiation: Demand SideMultidimensional Scaling Mapping: Bollywood Brands

AC

TIN

G P

OTE

NTI

AL

Face Value Potential

Hrithik Roshan

RANBIR

Aamir

SRK

SALMAN

JOHN

ARJUN RAMPAL

Naseeruddin Shah

Pankaj kapoor

TIGER SHROFF

HIMESH

KATRINA

Deepika

Priyanka

Chitrangada

MALE STARS

FEMALE STARS

SHRADDHA

Differentiation: Demand Side (3D)

• Drivers of Uniqueness– Features and Performance

– Complimentary service (Credit, Delivery and Repair)

– Intensity of marketing

– Technology in design and manufacturing

– Quality of Input Supplies

– Skill, Exp employees and Process Followed (QC etc)

– Location (Retail Stores)

• Branding

• Product Integrity– System/ Product/Service /Commodity

Differentiation: Supply Side

Differentiation Potential: Supply Side

• Decision Making Process

• Vision Mission Goals

• SWOT analysis

• Porter’s 5 Forces Model

• 7s Framework- Competitive Advantage

• Business Level Strategy and Competitive Advantage

• Developing Resources and CapabilitiesLEARN>>>(Translate)>>> ACTION (Faster)

• Functional Level Business Strategy and The Capabilities

• Organizational Capability Development

– Merger, Acquisition & Strategic Alliance

– Internal Development

• Strategic Evaluation

• Product- Process Innovation Mode

• Diversification Integration Strategy

Global StrategiesPorter’s diamond framework

Modes of Entry in Global MarketDirect Investment Trade

Current Trends in Strategic ManagementThe New External Env. : Economy, Technology, and Societal PressuresManaging Economic Crisis:

Diversification, Leadership(Change agents), ERP and Optimizing Supply Chain

Cost AdvantageEconomies of ScaleDrivers of Cost Advantage

Using Value Chain to Analyze CostsDifferential Advantage

STRATEGIC PLANNING Product Innovation and Marketing

Today, the Pepsico commands about 60 per cent market share in the 'bridge' category, which is worth Rs 1,950 crore. Pepsico called it the 'bridge' category and Kurkure, the 'finger snack'. The total market for salty snacks in India is worth Rs 13,000 croreand traditional snacks account for Rs 5,200 crore. The puffed snack market too is valued at Rs 1,950 crore. The potato chips/wafer market is worth Rs 3,900 crorewhere Uncle Chips and PepsiCo's Lays are market leaders.

PepsiCo launched Kurkure 15 years ago and has retained a dominant market share for the brand despite intense competition from both organised and unorganised players. In this period the brand also overcame some challenges including allegations that the snack was unhealthy.

Though Kurkure created a new space in the market, the larger challenge for the company was to get the customers hooked to its unusually shape and crunchy texture. "In fact the brand name Kurkure was the outcome of a group discussion in which consumers sampled the brand and repeatedly said that it was nice and 'kurkura' (crunchy)”. Company used the advertising line Kya Karen Control NahiHota.

As part of this, in 2005, the company roped in actor Juhi Chawla as a celebrity brand ambassador. The brand also kept pace with the flavour of the season - teleserials. The tagline 'Kahani Mein Kurkure' was launched where Chawla spoofed the character of Tulsi in the Kyunki Saas Bhi Kabhi Bahu Thi soap and the brand humorously wedged itself into the mainstream. The 'Kya Family Hai' campaign tried to capture the dysfunctional family that came together at tea-time.

However, many local competitors were mushrooming. Significant among them were Balaji Foods, Yellow Diamond and established brands DFM Foods with Crax brand and Haldiram's and Bikanerwala.Between 2009 and 2011, the number of local players rose from 1,378 to 2,863 and PepsiCo lost two to three per cent market share. The competition forced it to be innovative again.

ndustry sources say Kurkure continues to hold 60 per cent of the market share in the segment. All others such as Bingo, Yellow Diamond, Balaji and Bikanerwalatogether accounts for less than 25 per cent.

Kurkure made a similar attempt with its campaign Meetha Sheetha Chodo, KurkureKha Ke Ho Jao Mast.

KING

of

SNACKS

QUES- KURKURESTRATEGIC Decisions

– Enlist the Strategies of Pepsico w.r.t. Product Innovation which lead the snack to be a 1000 cr brand

– Enlist the Marketing Initiatives which you would have taken to make this brand a great Success.

– If Not Juhi Chawla, Which Actor/ Actress You would have taken to take this brand to heights

Product and Brand Differentiation Strategy

• Potato chips at Rs 300/kg premium Out of Home Snack. To the namkeens, the traditional Indian salty snack, at Rs 100/kg.

• Patoto is carbohydrates , Product mix was –Lentils-Rice-Corn and Indian Masala

• Irregular shaped first snack-puffed extrusions or collette

• 1.7 Times bag size- International packaging• Crunchy Name- Kurkure- Indian Touch• Desi Kurkure and Westernized Lays were branded

separately

Marketing Initiatives

• All the three-wheelers carrying the product were painted orange.

• first in the segment to start selling ladis (string of packs) that we could hang out in our stores

• Campaign to counter Bingo’s ads- Tedha Hai Par Mera Hai- to Reaching out families- Kya family hai

• Rs 3 packs in 2004 and Rs 2 packs in 2011

The Content Info

• The Structure of presentation is directly taken from IMT Ghaziabad- CDL course- material

• The Content used in form of Pictures and content is taken from various education and business websites.

• The creation is to be used for education purpose only and not for business

Thank You

Sunil SahaLecturer, IMT Ghaziabad CDL

Corporate Exp: Bharti Airtel, Aditya Birla MFL, Bestseller India, Healthcare Start Up- Spinalogy Clinic

Email: sunilchandrasaha@gmail.com

Websites: www.candidreviewstreet.com and www.sportslolz.com

Facebook:https://www.facebook.com/pages/Sports-Lolz/447024152105002https://www.facebook.com/pages/Candid-Reviews/1377145209191670

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