nccl case
TRANSCRIPT
Term-V: Course: Business Policy and Strategic Management
Workload for Sections A and B students
Section-B:
25/11/2010: 1.15 – 4 PM (Thursday)
Balance two groups, (Groups 8 and 9) will complete their previous workload assignment as per my e-mail dated 12.10.2010, i.e.
Group-8:
Relevance of Structure : ITC Case study. (Which form have they taken? Why? Give your logic)
Group-9
Relevance of Structure : A.D.S.case. (Same as above: What will you recommend? Why?)
Later, Section-B’s workload is as per my e-mail dated 13/11/2010
Group-1:
Concentration Strategy and Crafting StrategyUse relevant models
- Define- Apply to given cases/caselet
Group-2
Integration:Use relevant models
- Define- Apply
Group-3
DiversificationIgor Ansoff / any other model
- Define- Apply
Group-4
Expansion Strategy (Cooperation – Internalisation – Digitalisation)Use relevant models
- Define- Apply
Group-5
Cooperation: Joint Ventures: Entry StrategyUse relevant models
- Define- Apply
Group-6
Licensing, Franchising, Joint VenturesUse relevant models
- Define- Apply
Group-7
Strategic Alliance, Mergers and Acquisitions/Entry StrategyUse relevant models
- Define- Apply
Group-8
Restructuring/Re-Engineering/ExitUse relevant models
- Define- Apply
Group-9
Leveraged buy-outs / Divestment/Closure or Insolvency/Sell-outUse relevant models
- Define- Apply
[Can use slides 4A, 4B or 4C or all]
Term-V: Course: Business Policy and Strategic Management
Section-A2/12/2010: 1.15 PM – 4 PM
Two groups (Groups 1 and 2) are already over as on 16.11.2010
Balance seven groups’ workload are as follows:
Group-3DiversificationIgor Ansoff / any other model
- Define- Apply
Group-4
Expansion Strategy (Cooperation – Internalisation – Digitalisation)Use relevant models
- Define- Apply
Group-5
Cooperation: Joint Ventures: Entry StrategyUse relevant models
- Define- Apply
Group-6
Licensing, Franchising, Joint VenturesUse relevant models
- Define- Apply
Group-7
Strategic Alliance, Mergers and Acquisitions/Entry StrategyUse relevant models
- Define- Apply
Group-8
Restructuring/Re-Engineering/ExitUse relevant models
- Define- Apply
Group-9
Leveraged buy-outs / Divestment/Closure or Insolvency/Sell-outUse relevant models
- Define- Apply
[You may use case or slide 4A, 4B or 4C]
Scenario Building Case-1INTEGRATED CASE STUDY
ON NCCL: CRITICALITY OF LINKAGE:BUSINESS POLITY – STRATEGIC MANAGEMENT-
FUNCTIONAL LEVEL IMPLEMENTATION
PREFACE:
This case study has been designed based on this author’s personal three year long involvement as a part time management consultant to M/s. Nicco Cable Corporation Ltd. (NCCL). This firm is a very well known organisation in the cable industry and it operates on an all India basis. It had three operating plants in the State of West Bengal.
All data, which have been presented in this case, are hypothetical in nature. However, this unique case study demonstrates:
- Over a three year long period (2000-2003), integrated business development has been presented for a Rs. 40 crore plus project, which involved local manufacturing and marketing of a unique type of Electron Beam Irradiated Cable (EB-IRC)
- Starting with a conceptual, qualitative marketing research, this case has demonstrated the critical need for a techno-commercial feasibility study, which alone could have pinpointed the financial viability of this capital-intensive new project concept
- Another marketing research had been attempted with a few prospective business organisations, which were pre-selected by the client’s management. Purpose was to quantify, to the extent possible, future potential of IRC for few specific end-usage applications
- Finally, in the third phase, the Management Consultants (M/s. CG) were given the part responsibility of initiating first-level business negotiations with the concerned managements of interested prospective business organisations.
What was missing? An integrated plan for Business Policy, Strategic Management and functional plan for implementation.
Relevance of quite a few well-known management concepts and theories have been highlighted in this case study. Also, all students and practitioners, who are interested in the field of integrated business development for sophisticated industrial products and services, will realise the critical need for internal “Smooth coordination” (Process), which is needed to ensure professional and commercial-level business launching – especially for an unknown product concept.
At the end of the case study, project assignments have been suggested for readers.
Background
A large cable manufacturing company in the Private Sector (With Head Office at Kolkata and three separate factories in different districts of West Bengal), with several other divisions (Projects, telecom, finance and cable etc) operated all over India with an impressive business turnover exceeding Rs 600 crores per year (Period: 2000-2003). Profitability, however, was quite low.
This case will deal only with the Cable Division (CD), whose divisional annual turnover was nearly Rs 280 crores. Several competitors existed – all over India – but not for IRC, yet.
Present organizational (Division-level) structure is presented in Table-1.
Table 1: Divisional structure in 2000 A.D.: Cable division
Reported to Deputy Managing Director
SB (’66 batch Mechanical Engineer)Director
Sumit Basu (’70 batch Chemical Engineer)President
Staff level Other Otherfunctional common
AB(Middle aged personnel departmentsElectrical Engineer) *1 (Two important (Finance,General manager, business development) officials) Personnel,
HRDetc.)
Dr P Dr KSandip A personal (Sr GM, Sr VP(Asst.: An Electrical secretary Production (R&D)Engineer with 10 located at years of relevant Shyam- Based atexperience in -nagar Kolkataa competitive firm) plant) office
*1 Coordinated with external agencies like Core Group (CG), Consultants.
Key: IRC: Irradiated Cable
Note: All data presented in this case are completely hypothetical. Purpose is to highlight the process ofintegrated business development – for any new project on IRC (Customised special cables).[Also, highlight: What all were missing conceptually, at the Top Management level].
Besides, for their standard cable division, there was a full fledged marketing unit, where a Senior Vice President, Marketing headed the all India team, besides a General Manager, Marketing and a retired Consultant on “Publicity and Promotion”, all based at their own Kolkata based head office building.
No clear cut plans existed, however, as how to organise and who will look after new business development via :-- New product development- New market development- Ensure :
Capacity optimisation Human resource optimisation
- If called for, look into :- Concentric diversification Or even non concentric diversification(Like ITC’s :-Edible Oil and other projects)
Hotel project Edible oils Financial services etc.)
[Please see Annexure 1 : Igor Ansoff’s Product market mix].
All in all, although their Chairman was reported to be a very well connected person and quite enlightened. The Managing Director was a highly respected Management luminary. Very strangely, tradition and lot of bureaucracy still existed in this firm – especially while evaluating totally new project concepts like the one on Irradiated Cable (IRC), which was conceptualised in 1999-2000. M/s CG, Management Consultants, were given the preliminary task of organising an exploratory market evaluation in two probable end usage areas of White Goods and Automobile sectors to generate sufficient data for decision making.
Based on these rather sketchy data (First level subjective opinions), generated on the basis of an exploratory research, firm’s Management had internally organised a detailed techno commercial feasibility study, as follows:
- Initial data base (Only in these two end usage sectors) which have to be :- Reliable Valid Consistent Substantial.
Few notable findings have been presented in Annexure 2.
In addition, simultaneous with this externally organised market survey, client’s Management had started separate dialogues with railways, defence authorities and other large, prospective end user firms like TISCO, Jamshedpur. Around first quarter of 2002, after production had started for this project, Indian Railways alone were on the verge of awarding a contract worth nearly Rs 25 million ! Similar large value orders were expected from other large Public Sector Undertakings and private organizations, as well as from very large “Harness manufacturers”.
IRC project:- NCCL worked on an investment base, which was computed to be Rs 40 crores for this highly
sophisticated (first time in India) cable, which technically was superior to chemically cross linked additive (CV method). Another competitor was contemplating entry, as on May, 2002.
Few relevant and indicative technical aspects have been enclosed in Annexure 3, on following broad issues:
Electron beam Irradiated Cross Linked Cable project:
1. Technical particulars of cables for working voltage upto and including 4 KV range(Temperature range : 40 degree centigrade to 120 degree centigrade)
2. Electron beam Irradiation Cross Linked Cables versus usual CV method.3. Comparative report on EB versus Chemical cross linked products for customers4. EB cross linking properties (All features built in one).
Above were used to prepare the foundation for considering the market potential based new project evaluation versus costs involved for machinery importation, erection, installation, commissioning and start up in one of their plants in West Bengal.
Financial viability study was also organised internally by the cable division.
The latter two phases had been internally worked out by firm’s other divisional counterparts, all headed by firm’s Managing Director Dr AS, a highly renowned Management expert with specialisation in Financial Management aspects.
Reportedly, this brand new project will be financially viable only if following are organised :-
i) At least Rs 18 crores yearly turnover (Production, under Dr Panda, had started in the fourth quarter of 2001 AD) is achieved. It meant a major effort in new business development on a regular basis to :-
Convert large prospects to customers[This will need a total organisational effort]
- Select those end usage areas, where IRC will make an impact, as compared to existing, available substitutes. This will be a strategic decision, based on :-
Segmentation
Targetting
Positioning(The STP concept)
ii) Approx 46 percent (Average) was the planned gross margin (Revenue – direct variable costs), which obviously will vary, depending on :- End usage applications and degree of needed technological component versus those provided by
presently available substitutes. Costs versus benefits to actual users, who need to be fully convinced about IRC’s special features. Also, specific enquiries have to be generated.
In other words, approximate yearly gross margin needed to be Rs 8.280 crores (= Rs 18 crores 0.46). At this theoretical rate, at least five years will be the needed as pay back period to recover the capital employed.
Dr Shyam, Partner of M/s CG, leading marketing research firm in Kolkata, thought that several other financial parameters, like the following, should also have been considered :-
- Return On Investment (ROI)- Internal Rate of Return (IRR)- Discounted Cash Flow (DCF)- Cash Flow Statement etc.
However, Dr Shyam realised that for any highly capital intensive project, knowledge of market’s demand, potential, relevant potential is always an important factor, as also the concerned DMU’s (Decision Making Unit members)
willing acceptance, over a period of time, to use a new product, which was all along imported as on 2000 AD by a few large firms like :-
- BPL Appliances- Electronic Research Ltd. etc.(Please see Annexure II).
Dr Shyam also was well informed that even with often hastily drawn up market studies, many new product concepts failed commercially*2
For this, Dr Shyam repeatedly informed the concerned TOP Management personnel of M/s. NCCL that the following managerial steps should be taken with Dr. Shyam functioning as a neutral Facilitator;
At the Top Management level, preferably with concerned Board of Directors and top level functionaries, an internal SWOT analysis should be organized to clearly highlight the following conceptual aspects, ie.
- Needs & wants to be satisfied- SWOT exercise(Internal)
Using the concept of Business Policy and Strategic Management, which is critical for any Top Management to clearly highlight both policy guidelines and strategic route(s) to be chosen.
To start with, this internal brainstorming session MUST assess clearly:- Who are the Stakeholders? What are their expectations at the international level (Corporate), if
relevant, national (Business level) and, finally, at the departmental/functional level?- At the national level, as a follow up measure, this internal exercise has also to qualify as well as
quantify the present needs and future requirements, if any, of the ultimate buyers and users of this type of new Irradiated cable. The prospective buyers and users can be both within and outside India. This needs to be explored in-depth, if necessary, through collaborative efforts, which may even involve Expansion Strategy at the global level.[Define: Expansion Strategy].
To sum up:
SWOT is an internal exercise, which has to consider both relevant environmental factors, within and outside India (Concept: PESTLE), as well as presently available Core Competency (Strengths and weaknesses),. Then only, using cost-benefit analytical technique (CBA), Strategic Management decisionsshould be taken. [Study enclosed annexure-4: Integration – Business Policy – Strategy – Structure].
He suggested that, after completing the above mentioned exercise at the Top Management level, local as well as with international buyers-users, if any should be identified. Then, using specialized Marketing Research technique, their “Needs and Wants” should be explored in-depth, alongwith presently available competitive substitutes. This study will help in clearly identifying relevant segments, from which target segments, both within and outside India, need to be focussed. At a later stage, necessary Positioning exercise can be designed and implemented. [Concept: S-T-P].
*2: In 1958, a market study in North America came out with a research finding:“58% of new commercial (Product) launches failed, even after research studies”!!
At the functional level:
First level qualitative conceptual market study (Often without samples) needs to be organized to have a first-hand “Feel” of the new product and its possible old and/or new buyers-users.
This should be followed by development of new prototype, as a part of the second level of sampling exercise. Purpose is to find out from the prospective buyers-users, within and outside India, their acceptability from the
technical and commercial points of views. Simultaneously, needed service level inputs, to ensure customer satisfaction, have to be assessed by the specialized research team.
The next step of operation, after satisfactory sampling exercise, should be to quantify, to the extent possible, the present and/or future requirements of IRC, possible buyer segment wise – once again within and outside India..
Business strategy formulation (Leading onto marketing strategy)
Corporate level business plan, starting with the global level, needs to be thought through first.
Linkage has then to be established at the:
- National level (India)- And then to departmental level (Cable division).
Basic overriding concept:
Formulation and implementation of ‘Super Ordinate Goal” concept, which sets a set of common Goals (Business Policy level framework) to be achieved amongst corporate (Global), national (Here India) and, finally, inter-link with the cable department (Shyamnager Factory) in West Bengal. All the internal “Players” will be held responsible, as well as accountable; to reach the common set of Goals and specific Objectives arrived at before the very expensive new project launch.
What was actually done as per advice of NCCL’s Top Management?
Like in any Engineering or even Medical assignments, step wise market assessment has been conceptually suggested to minimise failure probability. Unfortunately, as in numerous Indian new product/concept launch cases, a conceptual exercise alone was carried out (As in this case) by M/s CG, under instructions from the client firm’s General Manager, Business Development.
In other words, systematic marketing researches were not organized and often these are substituted by “Know all Managers’ gut feeling”, hunch and sixth sense !!
How then should one go about ?
It is well appreciated that marketing researches do cost considerable time, money and often outsiders’ involvement and expertise, latter being not too popular in many large and medium sized firms, whose Senior Managers “Intuitively” knew anything worth knowing about market and its needs – a real “Id--centric” attitude.
For example, in a typical interaction, Dr Shyam’s mild corrective reminder to the President of a large company about Dr Peter Drucker’s oft related statement (Please see below) did not go too well, since the President verbalised about the same marketing definition from another Marketing Professor, who happened to be Dr Drucker’s student!
--- “Marketing and any business operation is all about :-
- Identifying a customer- Maintaining a customer”---.
[1955 statement of Dr Peter Drucker]
Id and ego often played “Hell with logic and common sense”, which is usually so uncommon.
In addition, Product Life Cycle (PLC) concept must be clearly understood (Please study Annexure-4.1), before going in for any new project’s total financial evaluation. It must be clearly understood that any new project/concept will :-
- Need time, energy, patience and perseverance, prior to ensuring its professional success.- This needs a fully thought out organisational structure to ensure the concept’s acceptance. The old
structure* may not be sufficient, since other existing product lines too needed to be looked after.[Organisation Structure: Study project assignments].
After all, types of marketing personality needed for existing product lines and new concepts (Being tested) may be quite different, a simple thought process hardly realised by many experienced professionals – either due to ignorance, cost considerations or both.
Total team effort needed (Synergy and concerted efforts):
Customer orientation is a two letter word, hardly appreciated by many Managements and often mis--interpreted.
It is not marketing, which is a functional job. It is understanding and then logically implementing the “Super ordinate goal” concept, which signifies total firm level involvement, as follows :-
- Pre specified “Goals & objectives” have been clearly defined and accepted in principle by concerned departmental heads, say from :- Corporate planning (International and local) R & D Local + Materials Management Departmental Production Finance & Accounts Marketing / After Sales Service etc.
Even “Brain storming sessions”, (Refer: Alex Osborn, 1958) can be used to arrive at a common work agenda, after problems have been identified and formulated [In this case, successful commercial launch of IRC]
How to reach objectives in India? [After all planning had been completed]
Rs 18 crores sales revenue needs to be generated every year with average 46 percent gross margin. The Central Coordinator will have to sit with the Corporate Planner and Marketing to work out how much of yearly business can be generated from :
- Existing end usages / customers- New prospects- Also, subjectively assess probable competitive reactions.
The “Gap” between possible market demand from above and firm’s expectations (Objectives) will be the basis for developmental business strategy, say from a scattered White Goods sector market. 42 names had been identified as a preliminary take off point, out of which 15 units had already been interviewed in the exploratory market survey (Please see Annexure 5 for list of initial prospective names). This will need an in depth descriptive marketing research by which aspects like the following have to be quantified :-
Plan for local business developmentFor White Goods : (Specific Information Bits : SIBs) : To generate data on:
1. Which firms will need how much of IRC and when ? Why will IRC be needed?
What specifications – for what end usage(s) ?
2. From whom and how much per year are they buying now ?
Imported sources Local substitutes.
3. Prices and financial terms4. Place : How IRC is supplied and via whom ?5. Promotion : Basis for awareness creation via :-
Advertising and publicity Sales promotion via :
Trials and demonstrations Sampling Knowledge upgradation via seminars, conferences etc.
Personal selling and interactions.
Most importantly, assessment of existing “Level of dissatisfaction”, if any, needs to be assessed first with presently used cables.
In the process, the Coordinator can also work out, in consultation with his team members, how to generate new business and from which end usages firms ?
Acceptable trial samples have to be developed in time. For example, at acceptable financial terms, internal Coordinator has to work very closely with external buyers users (To be) and simultaneously coordinate internally with concerned departmental officers (R & D, Production, Materials Management and the like). It is very easily said then done – since a lot of “Id related” human factors are likely to surface !!
Man Management is essential, as also clearly defined job descriptions – right from top Management, who too have to be involved. Usually, major emphasis is on “Today” and existing customers and presently available products, services.
Usually, much lesser resource allocation is invested on developmental projects like IRC, whose wide--spread probable usage will be highly dependent on:
(i) Table-2 (Enclosed):
It demonstrates, on eight separate criteria:
- What is actually being achieved in 2002?- What may be possible during 2002-2007 ? (Prognosis)- Objectives of the firm.
(ii) The Strategic Route(s) will be for filling up the “Gaps” between what is possible (Prognosis) and what are the firm’s expectations (Objectives)? This can be a combination of:
- Maintenance ManagementAnd
- Developmental Management for IRC.
Table 2
Corporate objectives *a five year perspective
Sr Corporate health Say in Actually ExpectationsNos “Indicators” 2002 possible
(Present status) (2002-2007) (2002-2007)[Prognosis]
1. Sales value Rs.X1 1.5x1 2x1Gap
(0.5x1)2. Growth rate (%) Y1 1.2 Y1 2 Y1
0.8Y1
Gap
3. Market share (%) MS1 1.2 MS1 1.5 MS10.30
Gap
4. Proffit before Rs. M Rs.1.5 M Rs.2 Mtax (PBT)
0.5 M
GapQualitative aspects
5. Corporate goodwill 1 CG1 1.1 CG1 1.3 CG1(Qualitative)
0.20 CG1 Gap
6. Employee morale EM1 1.2 EM1 1.5 EM1(Qualitative)
0.3 EM1 Gap
7. Image o.5 I 0.6 I 0.7 I(Qualitative) 0.10I
Gap
8. Add Customer 0.4 CS I 0.5 CS I 0.6 CS I satisfaction index 0.10 (CSI)Part quantification CS I : Gap
* Michigan survey Research Centre (1967) functioned as Management Consultants for 6 months with General Electric, USA. These were the output on the first 7 Indicators.
From the above, it should be clear to any reader that :
The process should be :-
Diagnosis Analysis and wherea firm “Stands” at a point of time vis a viscompetition in India and abroad.
Prognosis Actually possible status,given same/similarenvironmental & internalindicators.
Objectives Where the firm“Wants to go” ? Why?
Strategy formulation How to bridge the “Gaps”(Please study Table 2)
Tactical aspects Decision on which“Action plan” to follow ?Cost benefit analysis isthe basis.
Follow up, feedback A regularand replan cycle
Interestingly, several of the already mentioned Management concepts are known to many Executives like Mr AB of M/s NCCL, and his senior bosses, who may want to be marketing oriented – but, in reality, considerable “Delearning” needs to be organised, prior to fresh “Relearning” and further reinforcement – especially, for down to earth implementation. Though not too much of resource is allocated to assess to what extent actual efforts are really producing results, it does not need a genius to understand few basic home truths like the following :-
An alternative : [Strategy→ Structure→ Implementation]
1. One team has to concentrate on today’s market products (Cell 1 of Igor Ansoff : Annexure 1) so as to ensure total customer satisfaction (Via Maintenance Marketing) : Build on strength principle.
2. Same team, ideally, should not allocate time and energy for new prospects / concepts like IRC because the personality type(s) needs to be different. Development is always time consuming and usually very frustrating, at least initially. Hence, natural human tendency is to go in for the “Path of least resistance” and concentrate on existing product market mix.
For this firm, where its Management has already “Sunk”* Rs 40 crores, its commercial success is of critical importance – both to the senior management level of M/s NCCL, as also to the division’s several seniors, leading onto survival and then growth.
*: [A basic question for Readers: Why “Sunk” the entire capital before detailed feasibility study (Project Report) had been completed, starting with market exploration in India and abroad?]The 2002 May fiasco [What actually happened?]
The market development plans were not in consonance with actual order status! As mentioned earlier in this case, besides Rs 25 M probable business from the Indian Railways, few other new business prospects were being explored with :-
- Defence authorities (Indian Navy)- Few large “Harness manufacturers” like a well known Delhi based party with whom the full time
General Manager, Business Development of this firm was in regular, literally weekly contact.
However, considerable “Gap” existed between business objective and actuals – as on May, 2002, although orders were trickling in from few, very selective sources.
A major observation of their General Manager, Business Development to Dr Shyam of CG was :-
“We know from your preliminary market survey that White Goods sector, which is a fragmented market, may be a potential segment to the tune of Rs 5 crores business per year from large prospective firms like :-
- Godrej, Vikhroli,- Electronic Research Ltd, Bangalore- Indian Fine Blank, Goa,- BPL Sanyo & Appliances Ltd, Bangalore
The above figure was an educated “Guesstimate”, of Mr AB. This may be considerably modified. The $ 64 questions were :
- Phase one : Descriptive study is a must to estimate market (Present) demand and futurepotential – firmwise – since “All eggs in few baskets” may be a myopicapproach of any management.
- Phase two : How can a suitable marketing organization (Structure) be designed and
implemented ? Obvious best bet will be via their own set up.
Existing organisational structure was far too occupied with existing market products/services and usual nonchalance to totally new projects, which were usually risky propositions and may not even take off!!
Mr AB had requested from M/s CG a “Proposal” as how they may like to handle, on a five year contractual basis, full business development during :-
- Short term (6 months – one year)- Medium term (One year – two year)
Phase three: Long term (Beyond two years)
Dr Shyam designed and submitted a comprehensive business development proposal for the consideration of firm’s Top Management (Please see Annexure-6).
CG’s suggested plan of action
PROBLEM SOLVING APPROACH:
Stages
1. Problem identification and formulation (Via identified symptoms)2. Objectives : Short term, quantifiable and achievable targets.3. Constraints : In firm4. Feasible alternative(s) identification5. Cost benefit approach (CBA)6. Decision7. Plan for implementation : How to go about ?8. Organisation for implementation. (Structuring)
CG: Well-known Research Organisation.
Present focus :
M/s CG have suggested to the management of M/s NCCL a three-pronged business development approach, as follows :
Stage 1 : A detailed, quantitative, descriptive research all over India to start with in theWhite Goods sector for which about 42 prospective firms have already beenidentified. From this study, it is expected that future relevant market potentialfor IRC will be available as follows :
Short term (6 months – one year) : few firms, which may number between 10-15* organisations.
Mid term (1-2 years) : Few more organisations Long term (Above 2 years) :For a few more organisations, which need to be specifically
identified.
During the process of this market research, CG expects to eliminate those organisations, which may not be interested at all in any type of Irradiated Cable due to reasons, which also have to be clearly pinpointed.
Stage 2 : Based on the above inputs, CG will have to enter into a long term businesscontract (At least for 5 years), by which they will be held responsible forgenerating, to start with, an yearly business of Rs 5 crores. This may increaseprogressively if the market needs so in future, during this 5 year long contractualperiod with the Management of M/s NCCL.
Reportedly, the average gross margin (Revenue minus direct variable costs) ranges between 40-46 percent ie approximately Rs 2 crores will be expected per year from this sector alone, as gross margin in the first year, at present rate ofgross contribution.
Stage 3 : Actual implementation – (As per plan) and continuous, planned follow up forbusiness generation.
Focus: Targetted prospects have to be converted to long term customers – atleast most of the parties from the original list of prospects.
The proposed arrangement :
M/s CG & NCCL, both legally and functionally, have to coordinate intimately as a team by which prospective parties can be converted to customers. Also, the following aspects of After Sales Service (ASS) have to be scrupulously and jointly organised to ensure long term business continuity :
Acceptable response rate : Before, during and after sales Strict adherence to needed delivery schedule. Timely availability of spare parts Ensure training of operators as a part of the total system Help in erection, installation, commissioning, start up Organise required frequency of visits by sales & service engineers Help in development of quality relationship between vendor’s representatives and concerned
Decision Making Unit members (DMUs) of each and every customer/prospect. Optimal “Marketing orientation” of the vendor’s management for all needed problem solving.
To organise the above, clear demarcation of functional, as well as managerial activities have to be worked out officially between these two organisations so that following are organized:
* Exact number of serious, short term oriented prospects will be known after the detailed marketing research is completed.
OTHER RELEVANT ISSUES:
Over lapping of responsibilities is strictly avoided (Between CG and NCCL) Problem solving approach must be the only approach to ensure within organisational
integration ie for internal conflict resolution CG’s all concerned marketing personnel have to be trained fully in all needed technical
aspects of this product line. Full “Product knowledge” is very necessary. For commercial consideration, based on market feed back provided by CG, it is suggested that
the method of “Relative Contribution Approach” (RCA) *is adopted to determine tailor made pricing and financial transaction mode (Customer specific).
One Coordinator, preferably on a full time basis, should be made available from NCCL’s Management. Ideally, CG’s marketing professionals should be allowed to interact directly with all concerned technical and professional personnel of M/s NCCL specially during the stages of :
Product development Trial launch Product modifications, as and when called for (For modified rebuy) Commercial launch Ensure regular supplies, over a period of time by organising needed :
Marketing strategy, Marketing mix parameters, Marketing organisation specially for after sales service by NCCL’s technical wing.
In short, only if market potential exists, to ensure first level orders and then regular continuity, regular “Client level servicing” has to be organised over a period of time. Objective is to develop and ensure “Customer Relationship Management” (CRM).
CG’s management also proposed a 2-day long Workshop after the marketing research findings have been made available to NCCL’s Management. Objectives were:
To appraise all concerned personnel of client regarding the relevant market findings. To suggest a Plan Of Action, which can be modified based on suggestions by NCCL’s
concerned personnel. To clearly work out, activity wise,
“Who will do what, when, how, through whom and at what cost ?” (Plan of action ie. implementation).
* For any new product development and initial trial launch, specially during the introductory phase (Refer Product Life Cycle concept), “What the market can bear” approach should be adhered to, rather than the usually applicable full costing base. This RCA can also be discussed in detail during the proposed two day long Workshop, after the quantitative market research is fully completed.
Customer specific pricing mechanism has to be organised. This is a must.
How CG functioned ?[Iinteractive action plan for new business development]
The suggested steps are as follows :
I Back up structuring :
1.1 Clear demarcation of :
Organisational allocation of authority and responsibilities Detailed contractual agreement between CG and NCCL for at least 5 year period specifying :
Yearly targets for sales value and volume and expected yearly gross margin over a 5 year period in pre defined end usage industries (Example : White Goods sector)
CG’s expectations on a yearly basis (Spread over 5 years : 1/8/2002 – 31/7/2007)
1.2 CG’s proposed organisational structure for this project, along with financial implications. (Please see enclosed annexure 7.1).
II Proposed functional activities :
2.1 Detailed work plan :
Short term (6 months – 1 year) Mid term (1-2 years) Long term (Above 2 years)
2.2 A proposed activity flow and sequence for business development (Please see annexure 7.2)
III Need for integration between the principal company and CG, who will be expected to market their products to customers and prospects in White Goods sector, to start with. Without completely clear and well defined functional flow, internal coordination may become a major stumbling block for any business development.
SUMMARY
“Strengths” of CG
M/s CG, a partnership firm and now under the effective leadership of Dr Shyam,Director, Marketing Services, started their operations from Kolkata city in 1982. Duringthis period, they have designed and organised :
More than one hundred, all India level marketing research assignments and a large number of regional projects, out of which more than 70% were concerned with industrial products and services.
17 all India level projects had been designed and organised from 1992 onwards for 6 large organisations like : BOC (I) Ltd. : (9 projects : 1993-1996) ITC Ltd. : (2 Projects) Exide Industries Ltd (3 projects) IBP Co Ltd Marubeni Corporation, New Delhi Nalco Chemicals : (1997-1998).
All the above 17 projects were involved with :“How to measure, quantify and then organise customer satisfaction?”
Several techno commercial feasibility studies have also been designed and organised – out of which 2 large projects were funded by World Bank.
Nearly one hundred, short duration in house Management level re orientation training programmes had been designed and conducted for 40 different large and medium organisations. In addition, 17 Workshops had been organised.
From July 1996 onwards, a separate division had been launched to identify, select and recruit, on behalf of our several all India level clients, both managerial, as well as supervisory level personnel.
In short, CG have developed their expertise as top grade specialists in the field of Management Consultancy (Generic) and specifically, as for this project, in the field of Industrial Buyer Behaviour.
For the project with NCCL :
Contractual arrangement, especially for identification, development and then maintenance of new prospects, dealers etc. had been an effective management strategy in many parts of the developed world.
Based on the findings from the first level exploratory market survey organised by M/s CG in 1999-2000, the Management of M/s NCCL had decided and then implemented a project for Irradiated Cables (IRC) at a total investment of Rs 40 crores. As on April 2002, production had already started and business had been obtained from the Indian Railways. Discussions were already on with other end-usage industries like automobiles for new business development.
Purpose of this detailed proposal was to convey to the management of M/s NCCL an overall modus operandi to:
Identify new business prospects, dealers etc to start with in the White Goods sector in India. After a proposed detailed descriptive research had been organised with 40-42 organisations only in this
segment, joint decisions needed to be taken for systematic and scientific business development as follows :
- Short term (6 months – one year) : 10-15 relevant parties, so that, to start with during 2002-2003 itself, an yearly business of Rs 5 crores (With average 40 percent gross margin) is generated by M/s CG via needed techno commercial consultation with concerned personnel of M/s NCCL
- Mid term (1-2 years) : Stabilisation of business with already established customers, dealers, via maintenance marketing should be the prime focus during this period. In addition, a few more organisations needed to be identified for additional business development so as to widen the customer base and increase the sales revenue as well as the profitability.
- Long term (Beyond 2 years) : The same above mentioned principle needed to be implemented. If called for, and as per advice of the management of M/s NCCL ie in direct consultation with each other, the much needed “Super ordinate goal concept” needed to be professionally and effectively implemented to ensure that this high capital intensive project, which was already implemented, starts producing specific results in terms of “Effective 8 Managerial Indicators” (Please refer to the observations by Michigan Survey Research Centre).
In conclusion, therefore, this proposed contractual arrangement, at least for 5 years, needed to take off from August 2002 onwards AFTER a scientifically designed descriptive research had been satisfactorily concluded during May-July 2002.
Decision from the Management of M/s NCCL was awaited.
LIST OF ANNEXURES
1 : Igor Ansoff’s Product Market mix
2 : Few notable findings from CG’s Exploratory Marketing Research (1999-2000 May) in :
- Automobile Sector
And
- White Goods sector
3 : Few relevant and indicative technical aspects on EB Irradiated Cross Linked Cable
4.1 : Product Life Cycle concept
4.2 Integration concept: Business Policy → Strategy→ Structure.
5 : List of 42 prospective firms in White Goods sector (Relevant Universe)
6. Outsourcing
CG’s total business development proposal for IRC project.
7. 7.1 CG’s proposed organisational structure7.2 Proposed activity flow and sequence for business development
ANNEXURE-I
PRODUCT MARKET GROWTH MATRIX /BUSINESS DEVELOPMENT MODEL[ADAPTED FROM IGOR ANSOFF]
Short term
I - Sales optimization
Medium term
II - New product development
- Increased sales,- Rate of usage,- New outlets/usage,- Elimination of non profitable product
lines,- Relevant product lines
(Width, depth, consistency)
Emphasis on existing (Technical)Capacities and strengths
(Capacity optimisation)
III - Long term
Market development (primarily available internal human resource optimisation)
IV - Very long term
Diversification
Concentric Non concentric
- SWOT analysis,- Idea Generation Technique
Four sub segments :-
I : Present markets – present products,
II : Present markets – new products,
III : New markets – present products,
IV : New markets – new products.
OrA combination of the above.
IRC projectANNEXURE 2
WHITE GOODS SECTOR:A probable application area in India.*Sr.Nos.
Names, addresses and Tel Nos
Names, designations of respondents
Level of awareness about IRC [Qualitative]
Present requirements – m/km per year- Typewise(Specifications)- Prices (Where available)
Present level of satisfaction with present suppliers
Supp- Satis--liers -fac-(Pre- -tion-sent) level
If IRC is imported, available & relevant details
How IRC can be introduced in this company?
Major criteria for purchase
Other aspects (If any)
1. Electronic Research Ltd., (Harness Manufacturer) 35-36, Bandapur Village Old Madras Road, Virgo Nagar Post, Bangalore-49.Tel. 8472275/304/310/632Mobile: 98450-30948Fax: 91080 8472244
P I ThomasDy General Manager (Manufacture) - 40 KV
20 KV75 KM/month
Electro Satis-Conso -fied rtiumPvt.Ltd.,(Delhi)
ImportTarrif3.5%
Provide samples to Mr Preman
1. Quality
2. Price
Supplying to Videocon, Philips, BPL, Onida & others.
2. BPL Sanyo Utilities & Appliances Ltd,1B, Sadaramangala Industrial Area, White field, Bangalore-66.
Tel.: 8452570/2186
K ParameswaranAssistant General Manager, R&D
- 22 AWG
Blue – 20000 metres/year
Brown – 20000 metres/year
18 AWG
White – 20000 metres/year
Black – 20000 metres/year
Not Satis-dis- -fied-closed
Import tariff 35%
Directly importing from SMO Corporation Ltd.
Provide samples & quotation to BPL
1) Price
2) Quality
Cable Harness for Microwave Oven (Cords and Audio spare)
Other cables used – Round Cable.
3. IFB Industri
Mr V S Kamath,
They are aware
4150 km/annum
Suppli- Satis--ers -fac-
N.A. Send details
1) Price2)
Will consi
es Ltd.,L-1, Verna Electronic Society, Verna, Salceter, Goa-403722
Tel.: 91-834- 783303/04/07
Fax : 91-834-783306
(Manager, Vendor Development)
about IRC Rs.1.80-
3.00/metredepending upon cross sections
(Pre- -tion-sent) level
about product alongwith quotation and samples
Quality der after seeing/testing quotation and samples.
4. Godrej GE Appliances Ltd.,Plant-03, Pirojshanagar, Vikhroli(W)Mumbai-79.
Tel. 5173131/41
Fax: 91-22-5172234
Rohit S BhatiaSr Manager (Purchase)
Ext. 6405
Mr.Rajeev C Joshi(Dy General Manager, PMQ)
Ext. 6761
No awareness
2.5meters /year(Harness)
Refrigerator 8000 PCS/annum
Washing Machine 10000 PCS/Annum
(Name notdisclo--sed)
FlatCablesSupplier
TarapurCables(Mum--bai)
N A Sent details about price, quality and sent samples
1) Nearby Located2) Quality3) Price
Would like to consider locally manufactured IR Cables.
Names of Harness manufacturers not disclosed.
5. Samsung India Electronics Ltd,B-1, Sector-81, Phase-II, Noida-201305
Tel. 4568251-55Ext. 2302,Fax: 4568250-57
Kamal BhargavaDy General Manager, Materials
Aware Mains Cord with connector 1.25 lacs./year.
24 strand .15 dia metre 3000-4000 metres/year
2-3 Satis-vendors -fied(Wouldnotdis--closenames)
N.A. Send
1) Company details2) Turn-over3) Factory4) Wire House5) Sample,6) Rate.
1) Quality2) Price3) Timely delivery.
After comparing C.D’s price with their present purchasing price will they think about purchase.
Key: % Percentage
IRC project AUTOMOTIVE & HARNESS SECTOR: ANOTHER PROBABLE APPLICATION AREA IN INDIA*
Sr.Nos
Names, addresses and Tel.Nos.
Names, designations of respondents
Level of awareness about IRC [Qualitative]
Present requirements – m/km per year- Typewise(Specifications)- Prices (Where available)
Present level of satisfaction with present suppliers
Supp- Satis--liers -fac-(Pre- -tion-sent) level
If IRC is imported, available & relevant details
How IRC can be introduced in this company?
Major criteria for purchase
Others aspects (If any)
1. Dewoo Motors India Ltd.,On Noida Dadri Road, Surajpur-203207.Dist. Gautam Budh Nagar(U.P.)
Tel.: 91-569265
Fax: 91 011 569234/202
L K Pandey(Executive Materials)91456 9239)D)
Sudesh Khokar(Asst.Manager, Maintenance)
A.Kaul, Sr.Manager (Engg.Services)
Arun K.GoyelGeneral Manager (Power Plant) 91-569263 (D)
Aware PVC 500 metres/year
5-10 lakhs pcs/year(Harness)
Harness: Satis-Delphi -fied
OtherVendors:Not dis--closed
MainlyCCI
N A Send
1. Company details
2. Plantdata
3. Production
4. Sample
1) Dump point in Noida
2) Quality
3) Price
Will buy from CD if price is same s what they are giving now.
2. Motherson Sumi Systems Ltd,C-14A & 14B, Sector-I, Noida-201301.Dist.:Gautam Budh Nagar,U.P.
Tel. 91-4551823/1851/1855
Fax: 91-1191-4521966
S K Arora(Deputy Manager, Materials)
Aware as cross linked XLPE
10,000 km/month
Imported 200 km/month
Buys Satis-From -fied
JapanNotdisclo--sed
Localsupp--liers(2vendors)
Will notdisclo--sedimportprocess
N A Send1) Company details
2) Cost
3) Sample
1) Quality
2) Price
3) Prompt delivery
They give opportunity to new vendors.
ISO, QS, not a criteria for them.
They have their own quality control.
3. Delphi Automotive Systems42nd Mile Stone, Kherki Daula,Gurgaon-122001Haryana.
Tel.: 91-124 371040-41
Fax: 91-124 372356/196
Mr.Sandeep SinghAsst.Manager, Purchase
(Packard Electric Systems India)
Aware Supplies to:
General Motor : 100%
Maruti: 45%
Mahindra : 100%
Hind Motors: 100%
Dewoo : 100%
Mercedez : 80%
15% local purchase
85% import.
Not Satis-Disclo- -fied-sed
Will not disclose
1 / 2 vendors
Send
1) Company profile
2) They will visit all company’s plant.
3) Price
4) Send sample
ToSingapore(Test Lab)
1) Must be IS) 9000 and QS 9000
2) Gurgaon wire housing facility.
3) Quality.
Decision regarding cable source of supply taken by them.
Might be CD’s prospective client.
4. Sylea Automotive India Ltd.,(Harness Manufacturer)Godrej Soaps Administrative Building, Pirojsha Nagar,Vikhroli(E)Mumbai-79.
Tel.: 91-22-5181971-74
Mobile:
Poolo Ravicino
Head Commercial (Fiat Group)
Aware about Irradiated Cables.
20 kms/year (IRC) out of 120 kms/year(PVC + IR)
Tarapur Satis- Cables -fied (Mum-bai)
120000 metres/year (Imported)
Give details about
1) Infrastructure
2) Quotation
3) Sample
4) Relevant documents regarding
1) Quality
2) Price
3) Timely delivery
Would like to consider locally manufacture IR CablesPresently using Round Cables
98210 25446
Fax: 9122 - 5175037
production of IR Cables.
5. Ford India Ltd,S P Koil Post Chengalpattu-603204Tamil Nadu.
Tel.: 91-4114 54375
Extn.: 3379
Fax: 4114-53855
V Sukumar Plant Engineer
No Awareness
PVC : 1.1 kvXLPE : 11 kv
2 metres/car
(15000 units/year)
= 30,000 metres/year = 30 kms/year
Forma Satis-Electric -fied(Che--nnai)
Siemens
N A Send
1. Price
2. Terms & conditions
3. Superior than PVC
1. Just in time delivery
2. Quality
3. Price
It’s Harness manufacturer is Visteon (Chennai)
Willing to pay same price as PVC price.
Price of PVC 1.1 kv Re.1/metre.
*: Question: How about outside India?
ANNEXURE 3
3.1 Technical Particulars of Cables for Working Voltage upto & including 4 KV range
Temperature Range : 40 degree Centigrade to 120 degree Centigrade
Minimum Bending Radius: D<10mm = 3 x D, D>10mm = 4 x D
Sl.No.
Nominal Cross SectionSq.mm
Wire No. x Single wire dia (max.) (mm dia)
Conductor dia
mm
Minimum Wall Thickness
Insulation Sheath Totalmm mm mm
Cable Dia
(D)mm
DCResistance at 20 degree Centigradeohm/km
Current Rating(at 40 degree Centigrade Ambient)(amp)
1. 10.0 80 x 0.41 4.2 0.70 0.80 1.50 7.9 +_ 0.5
1.95 96
2. 16.0 126 x 0.41 5.5 0.85 0.95 1.30 9.8 +_ 0.5 1.24 133
3. 25.0 196 x 0.41 6.8 0.85 0.95 1.80 11.3 +_ 0.5 0.795 174
4. 70.0 348 x 0.51 11.5 1.05 1.15 2.20 17.0 +_ 0.5 0.277 348
5. 95.0 468 x 0.51 12.9 1.20 1.30 2.50 18.8 +_ 0.5 0.210 423
6. 120.0 589 x 0.51 14.8 1.30 1.40 2.70 21.1 +_ 0.5 0.162 570
7. 150.0 741 x 0.51 6.3 1.35 1.45 2.80 23.4 +_ 0.5 0.132 570
Note : Rope stranded conductor construction shall be adopted from cable sizes 10 sq mm and above.
3.2 COMPARISON OF CROSS LINKING BETWEEN IRRADIATION AND CHEMICAL METHOD
Description Irradiation Chemical Cross-linkMethod
EB Method Additive CV Method
High Energy Accelerator or Radio Isotope
Heat Source (Steam, Nitrogen or Infrared)
Application LDPE FRLDPE(Horizontal)
FRLDPE
HDPE
FRHDPE(Horizontal)
Rubber
PVC
Fluoro-Polymer
X
X
X
X
X
Extrusion Easy DifficultShelf life ofCompound
Excellent Good
Performance High Frequency
Deformation
Appearance
Excellent
Excellent
Excellent
Not Suitable
Excellent
Not so goodEquipmentneeded forcross linkingprocess
Sophisticated & Relatively Expensive
Rather simple & moderate cost
3.3 Comparative Report on EB versus Chemical Cross linked Elastomers
Tests Two Layers EB Cross linked
Two Layers Chemically Cross-linked
Reduce size (OD)(1x150 sq.mm)
21.9 29.3
Life of Cable (Yrs.)(Arrhenious Plot)
>35 15-18
Continuous Operating Temperature (Degree Centigrade) 125 90Current Rating (max) (Amp) 579 378Cold Bend at 65 Degree Centigrade Passed FailedRuggedness
Dynamic Cut Through (Kg) Crush Resistance (Kg)
(Kg to cause failure) Scrape Abrasion (nos.)
(No. of scrapes to failure)
169 3061
11850
64 1482
620
Minimum Bending Radii (mm) (flexibility) 62 80Oil Resistance (60 Degree Centigrade Diesel Oil ) (% swell) 15 20Acid Gas Generation (ppm)(ppm in one mg of compound burnt)
<50 1000
Limiting Oxygen Index 31 26Nuclear Radiation Resistance (Mrad) >200 100Weight of Cable kg/km 1365 1970
EB: Electron Beam
CV: Chemical cross-linked Elastomers
(V→ Vulcanisation for outside rubber jacket)
3.4 Electron Beam (EB)Cross Linking :
The cross linking of polymers with Electron Beam is an innovative process which improves the life of cable significantly compared to the conventional chemically cross linked cables.
Properties – All features built in one :
High Withstand Temperature (Better Temperature Properties) High Current Ratings – Operating Temperature upto 230 Degree Centigrade Special Polymers to cover Wide Temperature range from –65 Degree Centigrade to +230 Degree
Centigrade No Risk of Deformation above Short Circuit Temperatures Excellent Electrical Arc Track Resistance Rugged Mechanical Properties – Superior Abrasion / Scrapes & Cut thru’ Resistance Outstanding Fluid Resistance – Resistant to variety of Reactive Chemicals, Oils and Solvents Resistant to Ultra Violent (UV) Rays & Impermeable to Moisture High-tech Polymer – Fire Resistant, Low Smoke, Low Toxic, Zero Halogen Emission Compact Design
- Low Insulation / Sheath Wall Thickness- Space Saving- Lighter in Weight- Flexible – Lower Bending Radii
High Nuclear Radiation Resistant No Environmental Hazard
Annexure-4.1
PRODUCT LIFE CYCLE (PLC)
Sales Maturitycurve
Growth Decline
IntroductionO O
Negative
Profit curve
Brief back-up:
Note:
Low business value/volume (Negative profitability) during stage of introduction
Strong R&D, marketing support are needed.
Stage of growth:
Usually very sharp if product/service is acceptable to prospects, customers, dealers.
Strong production and distribution are needed to “Make money in this phase”.
Stage of maturity:
Growth rate falls off
Reasonably stable business value, volume.
Strong marketing support is needed.
Stage of decline:
Better competitive product or substitute availability.
Time for new product introduction.
Detailed explanation :
Stage 1 : Introduction :
When any new product or service is introduced in any market, initial acceptance isusually very low – due to low level of awareness amongst targetted, prospective endbuyers-users, who are usually involved with standard substitutes, which are currentlyavailable. Since “Resistance to change” is high amongst many technical commercialpersonnel, a lot of effort, time and energy has to be invested by the marketingorganisation (In this case M/s CG), to convert the Decision Making Unit members (DMUs) of relevant
prospective firms through the stages of :
Awareness
(Internal) Interest Evaluation
Decision Trial
Adoption (Long term)
Usually, in this stage, it has been studied (Based on several past experiences), that the profit curve is negative. (Please see PLC curve).
Depending on the technical complexity and new technological status of Irradiated Cables, acceptance period will vary from party to party, depending on their relative “Degree of centralisation” (DOC) of the DMUs, further sub segmented as :
- Highly Centralised (HC)- Mixed Decentralised (MDC)- Highly Decentralised (HDC)
Hence, in this stage, vendor company’s Management needs to exercise patience and perseverance.
Stage 2 : Growth :
Once new prospects, at least few of them are converted to the status of customers, rapidgrowth is possible. During this phase, production and distribution should takeprecedence over all other in company functional activities. This is the time to make profits.
Stage 3 : Maturity :
After a considerable period of time, which may take years if not decades, a maturity stageis reached during which the rate of growth may be low, but sales value and volume aswell as profit before tax (PBT) have reached a certain plateau. Planned, systematicmarketing is essential to ensure and implement Maintenance Marketing in so far as thefollowing “Corporate health indicators” are concerned:
Sales value, Sales volume,
Market share and penetration (%) Profit Before Tax (PBT) Corporate Image and Goodwill Employee morale and satisfaction Level of rapport with the concerned political powers.
Add : * Level of customer satisfaction.
(Note : The above mentioned first seven Indicators were found out by Michigan Survey ResearchCentre in 1967 when they had undertaken a detailed Consultancy assignment for GeneralElectric, USA. (Dr PKG added the eighth dimension, based on his Doctoraldissertation at IIM, Ahmedabad).
Stage 4 : Decline :
Due to changing needs of customers and prospects, competitive onslaught, changes intechnical and technological complexity etc, over a period of time other, more acceptablesubstitutes may be available. All vendors, therefore, need to be constantly pro active andaggressive so that barriers to competitive entry are always ensured. This is possible byadopting a mix of the following strategic approach:
Maintenance Marketing with existing customers, dealers Developmental Marketing to identify and convert new prospects and dealers, keeping in
constant view regular competitive inroads.
To sum up :
A new product/service launch needs to be planned, organised, controlled, executed and implemented like any military level strategic approach, which always considers the SWOT system ie :
- Strengths, as well as weaknesses of the vendor organisation.- Opportunities in terms of relevant market demand and potential- Threats offered by direct, as well as indirect competitors – over a period of time.
To ensure the above, a highly proactive and effective marketing organisation needs to be developed so that market’s “Needs and wants” are identified and then translated in reality. This requires a continuous, regular, systematic and scientific Marketing Management approach.
Annexure-4.2Integration: Business Policy – Strategy – Structure
POLICY
Environmental Top Internal analysis Scanning (O.T) Management
Strengths & Weaknesses(S,W)
Political Economic Social Global Local Functional Global Local Business business (Departmen-
-tal) (Fit)
Global Global GlobalLocal Local Local Local Global
Technology Environment Mission Goals Global Other
“PESTLE” parameters Vision Objectives Local
Focus: Peter Drucker
What business What business am I in? do I want
to be in?Overall Policyguidelines
STRATEGY Top/Middle Management
Strategic options
How (Routes) to reach Goals → Objectives?
Few examples Scope - Alternatives [How to optimize?]Fit - Buy-out/exit Joint venturesStretch - Mergers+ acquisitions or
Concept - Leveraging entry - Crafting strategy strategy
STRUCTURE Middle/operational Management
Structural aspects: Global, local
→Functional optimisation
ANNEXURE 5
LIST OF THE PROSPECTIVE PARTIES IN
WHITE GOODS SECTOR(ALL INDIA)
Sr Nos Names of the organisations
1. BPL2. Salora International3. LG4. Sony5. Samsung6. Whirlpool7. Onida8. Videocon9. Godrej Appliances Ltd,10. Blue Star11. Kalyani Sharp India Ltd,12. IFB13. Western14. Molex India Ltd,15. Electronic Research Ltd,16. Finolex Cables Ltd,17. Kenwood18. Maharaja19. Kenstar20. Hitachi21. Oscar22. National Panasonic23. Sansui24. Thompson25. Akai26. Orpat27. Wipro28. Intel (Computer)29. Santosh30. Godrej31. Kelvinator32. Sansui33. WEBEL Nicco34. AIWA35. Sonodyne36. Philips37. Voltas38. Electrolux39. Greendig40. Usha41. Crompton Greaves42. Bajaj
Note: Above is a method of “Prospecting and Lead Generation”.(How to identify probable prospective buyers and users – in India, to start with?)
ANNEXURE 6
LONG TERM BUSINESS DEVELOPMENT PROJECTWITH M/S NCCL
AN INTEGRATED PROPOSAL
[PROJECT : IRRADIATED CABLES –WHITE GOODS SECTOR]
Conceptual background :[Based on NCCL Management’s “Myopic” feedback]*2
A Rs 40 crores investment project has been “On” from end 2001 onwards for manufacturing various types of Irradiated Cables (IRC), which needs to be tailor made for different end usages like :
- Indian railways- Ships- Indian fighter planes- General Electrical Cables & Wires for factories/automobiles- IRC for the White Goods sector- etc.
End usagewise, this product needs to be tailor made and customised. Hence, this is a fabricated industrial product, whose overall “Product Characteristics”* will be as follows :
Unit value : Medium to high Purchase significance to the buyers : Medium to high Effort in purchasing by buyers users : Medium to high Technical complexity : High Technological component : High Need for service before, during and after : High (Specially at the stage of initiation) Frequency of purchase : Medium Consumption pattern = 1
Product life : Low (High product life) Varieties and ways in which the product gives satisfaction : Major emphasis is on technical
specifications (As also source of supply).
* These product characteristics are as per the qualitative module propagated by Dr Gordon E Miracle
*2 To readers:
How will you/your group organize?
- Business Policy guidelines?↓
- Strategic Route(s)↓
- Plan for implementation (PFI)
A total re-thinking (Scenario Building) is called for.
ANNEXURE-7
CG’S PROPOSED ORGANISATIONALSTRUCTURE FOR THIS PROJECT
STRUCTURE
DR SHYAM, B CH E, AMICHE,FELLOW IN MANAGEMENT (IIM, AHMEDABAD 1973-1977)
CHIEF OF PROJECTS
ONE ASSISTANT
FUNCTIONAL BACK UP STAFF
(TWO PROFESSIONAL BUSINESS DEVELOPERS) ONE TWO ONE
ACCOUNTANT PEONS RECEPTIONIST(TROUBLE CUM CLERK
ELECTRICAL/ELECTRONIC SHOOTER)ENGINEERS CUM MBA(S)
TOTAL : 8 PERSONS AND 1 DRIVER
YEARLY FINANCIAL IMPLICATONS(OF CG FROM NCCL’S MANAGEMENT)
First year : 1.8.2002 – 31.7.2003
Sr.Nos. Cost centers Rs./year Remarks
I] Functional
Two Engineers 5 lakhs First year (Cum MBAs) [Salary + only
incentives)
II] Back up staff
One Assistant 0.60 lakhs Note One Accountant 0.60 lakhs Two Peons 0.80 lakhs This estimation will One Receptionist be governed in cum Clerk 0.60 lakhs future by One Driver 0.40 lakhs
- Yearly targetsSub-total = 8.00 lakhs - Inflation & other
costs.III] Stationery & Communication 2.50 lakhs
IV] Furnished office space (Rs 50/sq.ft., 500 sq.ft./month) 3.00 lakhs
V] All India train travels, Assumptions :- boarding & lodging (Rs 1,000/day/head) At least 10-15 all India B/L Rs .5.4 lakhs parties – to start with travels Rs 2.00 lakhs (12 visits/year/party) Dr Shyam’s 120-180 visits travels Rs 3.00 lakhs 10.40 lakhs per year for, say,
3 days each ie Sub-total = 23.90 lakhs 360-540 mandays.
VI] Entertainment expenses 2.00 lakhs Look after new prospects.
VII] For Dr Shyam (Overall Coordinator) 8.00 lakhs
Total = 33.90 lakhs
VIII] Contingency expenses * 3.10 lakhs To be accounted for (Ex: In city travels) yearly.
Grand total = 37.00 lakhs
(Rupees thirty seven lakhs only)
* Two months brokerage, for example, has to be given to find a suitable and relevant office space, where clients can be looked after on a regular basis, in a sophisticated working environment.
Payment terms : (From NCCL to CG)By end of every month, proportionate monthly expenses have to be reimbursed.
“Some” advance (To be adjusted) will be needed initially.
Note : By 15.7.2002, marketing research is expected to be over and contractual agreementsigned and CG’s engineers have been fully trained in IRC.
COST BENEFIT ANALYSIS [FROM NCCL’S MANAGEMENT VIEWPOINT]
White Goods sector (To start with)
Expected revenue 5 crores *(Rs /year)
Expected gross margin(Av.: 40%) 2 crores
Expected expenses [Rs /year](Please see earlier)
For CG (Business Development Agency) 0.37 crores
Ratio of gross margin to Business Development expenses (%) 18.50
PBT for NCCL 1.63 crores
(Rs /year : 2002-2003) (81.50%)
Compare : With NCCL’s own set up, expected :-
Market penetration Quality of integrated service Quality of customer satisfaction Achievement of pre decided targets for sales revenue & PBT (Profit Before Tax).
* This figure will be fully detailed (Quantified) ONLY AFTER the proposed descriptive research has been completed and the findings have been analysed.
PROPOSED ACTIVITY FLOW ANDSEQUENCE FOR BUSINESS DEVELOPMENT
SR.NOS. CONCEPTUAL STEPS MODUS OPERANDIi) Clear target fixation : yearly plans CG & NCCL’s Management,
Production, R&D and Finance to discuss, as a team
ii) Start party wise market development
- Plans- All internal coordination
CGCG & NCCL, latter for all technical back up and support, samples, literature etc.
iii) Actual market development and emphasis on
- Trial runs- Try to be sole (Proprietary)
supplier- Organise regular, systematic
market feedback- Coordinate to ensure :-
- Handling of objections - Sales presentations - Close sales
As and when needed, NCCL’s technical and commercial staff have to be involved.
CG
With
NCCL’s supportStaff
iv) All regular follow up, feedback and replanning [Monthly feedback]
CG[Consult NCCL, as needed].
v) Coordinate for all needed ASS - partywise CG to coordinate both with each client and internally with NCCL’s personnel,
vi) Optimum customer satisfaction(Long term Customer Relationship Management)
CGwithNCCL
Note : 5 year period for business establishment.
Project assignments:(Group-1)1. What should be the Business Policy guidelines of NCCL’s Top Management, where concepts
propagated by international level scholars (Please see below) need to be considered?
- Prof.(Dr.) Peter Drucker: The Practice of Management: 1955* What business are we in at present?* What business should we be in?
In line with the above, Prof. C.K.Prahlad’s concept of “Core Competency” also needs to be kept inmind.
Third basic concept can be the role of: Business Scope – Business Fit – Business Stretch.
You are welcome to use any other relevant concepts like Figure-1 (Enclosed).
A hint:
Alongwith environmental scanning, as also internal assessment (SWOT), any Top Management should arrive at, very clearly, the Goals of the organization as a whole (Mission, Vision). Then only, clearly defined Objectives should be formulated as Basic Policy guidelines.
(Group-2)2. Using this case study as a background, what should be the Strategic Route(s), which should have been
considered by NCCL’s Top Management? Please identify clearly the five elements that make up any strategy, according to Hambrick and Fredrickson. Have these been considered at all? Be specific.
(i) Arenas: Where will we be active? Identify.(ii) Vehicles : How will we get their? For example, through acquisitions, alliances or
internal development, or any other Strategic Route? [CBA](iii) Differentiators : Basic question: How will we win in the marker place? Please refer to
Michael Porter’s 3 Competitive Strategies.(iv) Staging : Basic question: What will be our speed and sequence of Moves? This
denotes plan for implementation, based on available resources as wellas limitations, if any? P.F.I.: State clearly.
(v) Economic Logic: Basic question: How will we obtain our returns?
Please determine a comprehensive strategic plan.
(Group-3)3. Organisation Structure(s) [O.S.].
What O.S.(s) will you recommend for?
- CG- NCCL (IRC project)
How? Why? (Detailed structuring, communication, authority-responsibility patterns, structural forms, planning methods etc. need to be clearly highlighted)
(Group-4)4. Any re-thinking on?
- Models to be used: Which “Concepts” should be used? Why? How?- Process of planning and execution (Plan for implementation)
Be specific.
(Group-5)5. Suggest specific growth strategies, alongwith logic.
(Group-6)6. Will you like to go in for (If called for) Exit Strategies for say present (Highly competitive) cable industry set-up of M/s. NCCL?
Why? How?
(Groups 7,8,9) Combined session7. Scenario Building:
If you / your team had been given a totally free hand, how will you go about for this specific project, step by step?
Start with concepts, models you will have to use and giving logic thereof.
[Total (For point number-7) time for presentation: 60 minutes].
Specific, brevity and, to the point deliberations will be expected from all participants, who will function (As usual) in groups. (Except for assignment-7, where groups 7,8,9 should combine their presentations.
Structuring of this analysis (No.7)
Sub-group one: Planners and later “Audit”
Sub-group two: Deliverers
Sub-group three: Plan for implementation(20 minutes each)