LOVELY PROFESSIONAL UNIVERSITY

Topic: - Videocon Consumer Electronics & Home

Course No:-MGT 511
Course Title: - Business Environment
Section: - RQ206
Submitted to:-

MR. Sunil Budhiraja

Submitted by: Gyan Prakash

Roll No.:- A24
Reg No: - 11011236

History:

Videocon is an Indian multinational with interests in Consumer Electronics,

Home Appliances, Colour Picture Tube Glass, DTH, Mobile Phones and Oil
& Gas.

Videocon was founded in 1987 by Nandlal Madhavlal Dhoot. At that time it

used to manufacture TV and Washing Machine.

In 1989-90, Videocon started manufacturing Home Entertainment

Systems, Electric Motors & AC. Videocon entered Refrigerators and coolers
segment in 1991.

In1995, Videocon started manufacturing Glass shells for CRT and in 1996
it ventured into Kitchen appliances and crude oil segment.

In 1998, Videocon started manufacturing Compressors & Compressor

Motors. In the year 2000, Videocon took over Philips Color TV Plant.

In 2005, Videocon took over 3 plants of Electrolux India and acquired

Thomson CPT. Today; it has evolved into a giant conglomerate with annual
revenues of over U$4.1 billion.

The Videocon group emerges as a USD 2.5 Billion global conglomerate

continuing to set trends in every sphere of its activities from a conference
room sized assembly line in1979.

Headquarter :

Revenue:

After the acquisition of Thomson in 2005, Videocon has emerged as one of

the third largest Colour Picture tube manufacturers in the world.

Aurangabad, Maharashtra , India

127.565 billion (US$2.3 billion)(2011)

The group has 17 manufacturing sites in India and plants in Mexico, Italy,
Poland and China and manufactures a range of high- tech products such
as slim CPT, extra slim CPT and High Definition 16:9 formats CPT.

Videocon is one of the largest consumer electronic and home appliance

companies in India. New logo. Unveiled on 2nd July, 2009

Major Achievements of Videocon Industries Ltd:

The largest panel production facility in the world under one roof
providing very high economies of scale

One of the world's largest and most respected CRT glass

manufacturers

One of the few companies in the world to convert sand to TV

One of the largest and most acknowledged CPT manufacturer in

the world

Manufactured India's first rust-free Washing Machine

Issues and challenges

Poor customer retention

People perception
Technology up gradation rapid in market
Competition with other brands

PESTEL Analysis
Political Factors

Political factors are basically include areas such as tax policy, labour
law, environmental law, trade restrictions, tariffs, and political stability.
Labour unions effects a lot the production
Resolution to reduce emission of carbon footprints in the atmosphere
Allows automatic approval for foreign equity investment up to 100% in the
electronic sector.
Videocons facing trade barriers by politically, it is difficult expand Brand
product one country to another.

Government has imposed anti-dumping duty on imported color picture

tubes from china, Malaysia, Thailand and Korea after it found that
products from these countries were exported to India below their normal
value impacting the domestic industry.
Government is putting a lot emphasis on easy availability of credit which
is supported by various economic policies California is banning plasma
screen televisions 58 inches or smaller as they consume lot of electricity
with this becoming law a lot of countries in the world will also implement
it so Videocon should to come out with plasma TVs in synchronise with
their current R and D strategy of go green and electricity economic
products.

Economic Factors

Economic factors include economic growth, interest rates, exchange

rates and the inflation rate. These factors have major impacts on how
businesses operate and make decisions.
Growth of retail sector expected to reach 16% by 2011-12 from 4% in
FY07
Availability of finance
High investments are needed in the consumer durables.
Economic reforms by the government higher purchasing power like
increase in FDI level and NREGA schemes 6th pay commission are leading
to higher purchasing power among masses.
Emergence of organized retail market with large players like Croma, next,
reliance digital etc leading to lower prices and higher varieties
61 % of total urban income comes from households earning between
US$ 1,493 and US$ 9,955 a year.
World economy now is in bad shape because of recession that why it also
facing inflation rate problem in the market.
Rise in organised retail will set the growth pace of the Indian consumer
durables industry. According to a working paper released by the Indian
Council for Research on International Economic Relations, organised retail
which constituted a mere four percent of the retail sector in FY07 is likely
to grow at 45-50% per annum and quadruple its share in the total retail
pie 16% by 2011-2012.

Social Factors

Social factors include the cultural aspects and include health

consciousness, population growth rate, age distribution, career attitudes
and emphasis on safety. Trends in social factors affect the demand for a
company's products and how that company operates.
Disposable Income roughly doubled since 1985
Changing perception of luxury to necessity

A trend of urbanization
In rural areas there are poor infrastructural facilities like availability of
electricity
Highly growing consumer durable market & Demand of the consumer
durables is seasonal and cyclic
Convenience and comfort are becoming a need for the urban Indian
citizens. This leads to increase in sales of consumer durables in the urban
India. The perception of these products is shifting from luxury to necessity.
Sales are maximum during festival season
McKinseys prediction that if India grows at the same rate, it will climb
from its position as the 12th largest consumer market to being 5th largest
consumer market by 2025

Technological Factors

Technological factors include technological aspects such

as R&D activity, automation, technology incentives and the rate
of technological change.
Improved electricity consumption
Higher quality products
Technological is changing at a very fast rate & Technology is becoming
cheaper
They giving more consideration on Research and Development and open
innovation that's why they invested 497.3 billion yen on R&D last year.
Home theatres - High-end models and HTIB Models & Other forms of TV
technology are emerging (LCD, Plasma, LED, 3D) Cosmetic design and
new out look to the TVs.
Manufacturing of components for CTV, Refrigerators and Air conditioners
Efforts to reduce power consumption of all its final products
Internet makes it easy to collect and analyse customer feedback

Environmental Factors

Environmental factors include ecological and environmental aspects such

as weather, climate, and climate change, which may especially affect
industries such as tourism, farming, and insurance.
Changes in leaving of standards of a person
Entry of global companies into the Indian market, advanced technologies,
both in product and production process have developed.
Few global companies have setup R &D centers in India
Major global players like Samsung, LG, Onida any many of other
companies have setup their manufacturing units in India

Legal Factors

Legal factors include discrimination law, consumer law, antitrust

law, employment law, and health and safety law. These factors can affect
how a company operates, its costs, and the demand for its products.
Legal provision relating to environmental and sound pollution
Ensure a balanced transition to open trade at minimal risk to the Indian
economy and local industry.
Legal requirement is very strong because of each country have their own
low and order. Under of law they always following country right, which
existing Consumer law, Employment law, health and safety law etc.

Porters Five Force Model: Threat to Entry

Entering market isnt very easy. One of the most important features
needed is a good distribution system which isnt something that can be
developed overnight.

The brand plays an important role in influencing the purchase decision.

For a new company then entering this market, not having a recognized
brand name is a threat to entry.

Rivalry among existing firms

There is strong competition among the current players. The main players
are LG, Samsung, Onida, Videocon, Philips, and Sansui.
This increased competition has ensured that advertising costs are an
integral part of the players total cost.
It is expected that realizations will fall with increased competition.

Bargaining Power of Buyers

The TV market today is a consumers market where the consumer has the
upper hand with him having the power of choosing from a variety if
brands.
This bargaining power of the buyer has forced the players to offer credit
facilities on sale, to provide lower EMIs and excellent after-sales service.
The intense dealer competition also benefits the consumer in terms of
prices and offers available.

 Threat of Substitutes

For a television, the substitute can only be a functional substitute

The functional use of a television is to watch programs, live events etc.
This today can also be done on a computer
Theaters too can be a substitute to watching movies at home

Determinant of supplier power

Cost of switching supplier

Presence of substitute input

Importance of volume to supplier

SWOT Analysis
Strength

Backward integration
Diversified goods portfolio across Consumer Durables Sector
Multi brand strategy
Global company
Videocon has a much wider variety of TV sizes than other competing
companies
High TV quality index compared to competing firms
Overall price position cheaper than competing firms

Weakness

Image of low to medium cost company

Significantly less advertising than competing firms
Diversification into too many sectors
Not much international recognition
Too much rebranding/ changing of positioning
Weak sales and service network

Opportunity

India is big consumer durables market and growing at 10 to 15 %.

Lifestyle of people has been change very much so there is demand for
premium products.

Consumer durable market will become $158 billion by 2015.

Overall number of rural households estimated to grow from 135 million in
2001-02 to 153 million in 2009-10

Threats

Stiff competition from MNCs like LG, Samsung, SONY.

Cheaply available of Chinese products.
Virtually not able to establish the products for online sales and marketing.
Local brands available in the market.

Recommendation:

Improve after sale service

Need to focus more on promotion of CTV
Establish better relationship with dealers and retailers
Focus on Technology Up gradation
Enhance brand reputation
Open exclusive showrooms
Relationship marketing through improved sales support
Organize demonstrations and exhibitions
Videocon is still not able to create a brand name in the international
market so the company should increase its marketing budget for making
its presence felt in the international market

References:

http://www.moneycontrol.com/financials/videoconindustries/profitloss/VLF#VLF
http://www.moneycontrol.com/financials/videoconindustries/balancesheet/VLF#VLF
http://www.kotaksecurities.com/stock-market-news/equity/5013/VideoconIndustries-Ltd.-cash-flow/14060139.00
http://profit.ndtv.com/news/earnings/article-videocon-q3-net-plunges-99per-cent-to-rs-1-crore-317972
http://www.moneycontrol.com/financials/videoconindustries/results/yearly/
VLF
http://en.wikipedia.org/wiki/Videocon

Reasons why selecting this company

Electronics Company Videocon today reported a whopping 98.79 per cent

fall in net profit at Rs. 1.04 crore for the third quarter ended December,
2012 due to huge finance cost. The company had posted net profit of Rs.
86.42 crore for the same period a year ago.
The total income from operations of the company declined by marginally
at Rs. 3,082.63 crore during the reported quarter from Rs. 3,087.99 crore
it posted in corresponding period a year ago, the company said in a filing
to the Bombay Stock Exchange (BSE).