Master of Business Administration-MBA Semester 4 MB0052 – Strategic Management and Business Policy - 4 Credits Assignment Set- 1 (60 Marks
Note: Each question carries 10 Marks. Answer all the questions.
Q.1 What similarities and differences do you find in BCG business portfolio matrix, Ansoff growth matrix and GE growth pyramid. (10 marks) Ans. The BCG matrix is a portfolio management tool used in product life cycle. BCG matrix is often used to highlight the products which get more funding and attention within the company. During a product’s life cycle, it is categorised into one of four types for the purpose of funding decisions. Figure 3.5 below depicts the BCG matrix.
Figure 3.5 BCG Growth Share Matrix Question Marks (high growth, low market share) are new products with potential success, but they need a lot of cash for development. If such a product gains enough market shares to become a market leader, which is categorised under Stars, the organisation takes money from more mature products and spends it on Question Marks. Stars (high growth, high market share) are products at the peak of their product life cycle and they are in a growing market. When their market rate grows, they become Cash Cows.
Cash Cows (low growth, high market share) are typically products that bring in far more money than is needed to maintain their market share. In this declining stage of their life cycle, these products are milked for cash that can be invested in new Question Marks. Dogs (low growth, low market share) are products that have low market share and do not have the potential to bring in much cash. According to BCG matrix, Dogs have to be sold off or be managed carefully for the small amount of cash they guarantee. The key to success is assumed to be the market share. Firms with the highest market share tend to have a cost leadership position based on economies of scale among other things. If a company is able to apply the experience curve to its advantage, it should able to produce and sell new products at low price, enough to garner early market share leadership. Limitations of BCG matrix: — The use of highs and lows to form four categories is too simple — The correlation between market share and profitability is questionable. Low share business can also be profitable. — Product lines or business are considered only in relation to one competitor: the market leader. Small competitors with fast growing shares are ignored. — Growth rate is the only aspect of industry attractiveness — Market share is the only aspect of overall competitive position 3.4.2 Igor Ansoff growth matrix The Ansoff Growth matrix is a tool that helps organisations to decide about their product and market growth strategy. Growth matrix suggests that an organisation’s attempts to grow depend on whether it markets new or existing products in new or existing markets. Ansoff’s matrix suggests strategic choices to achieve the objectives. Figure 3.6 depicts Ansoff growth matrix.
This means that the product is the same. but it is marketed to a new audience. Product development – Product development is a growth strategy where a business aims to introduce new products into existing markets. This strategy may need the development of new competencies and requires the business to revise products to appeal to existing markets. It is more sophisticated than BCG matrix in the following three aspects:
.3 McKinsey/GE growth pyramid The McKinsey/GE matrix is a tool that performs a business portfolio analysis on the Strategic Business units in an organisation. 3.4. This is an intrinsically riskier strategy because the business is moving into markets in which it has little or no experience. Diversification – Diversification is the growth strategy where a business markets new products in new markets.Figure 3. For a business to adopt a diversification strategy.6 Ansoff Growth Matrix Market penetration – Market penetration is a strategy where the business focuses on selling existing products into existing markets. it should have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks. Market development – Market development is a growth strategy where the business seeks to sell its existing products into new markets. This increases the revenue of the organisation.
size. direct. wholesale) Internal factors that affect competitive strength are the following: — Strength of assets and competencies — Relative brand strength — Market share — Customer loyalty — Relative cost position (cost structure compared to competitors) — Distribution strength — Record of technological or other innovation
. It includes market growth. profitability. It includes market share as well as technological positions.g.— Industry (market) attractiveness – Industry attractiveness replaces market growth. retail. External factors that determine market attractiveness are the following: — Market size — Market growth — Market profitability — Pricing trends — Competitive intensity/rivalry — Overall risk of returns in the industry — Opportunity to differentiate products and services — Segmentation — Distribution structure (e. — McKinsey/GE growth pyramid matrix works with 3*3 grids while BCG matrix is 2*2 matrixes. among other possible strengths and weaknesses. size and pricing practices.. — Competitive strength – Competitive strength replaces market share. among other possible opportunities and threats. industry profitability.
7 McKinsey/GE Growth Pyramid
.— Access to financial and other investment resources
Invest in Other Businesses
Some businesses find success in investing their profits in other noncompeting businesses. as spreading investments into other types of operations can help diversify a business's holdings and reduce the risk of a complete business loss. (10 marks) Ans. As an added bonus. debt elimination can equate to a financial return that outpaces even the best investments. Entire college programs have been designed specifically to teach business investment strategies. as loans or by purchasing securities issued to business start-ups. and
it's critical to ensuring the success of the business. paying off this debt can provide an instant.
Reinvest Funds to Nurture the Business
Perhaps one of the most common ways businesses invest their funds involves purchasing additional equipment. guaranteed return that is significantly higher than usual returns on other investments. Investing in other businesses can be an especially wise move for companies in shaky industries.
Use Income to Eliminate Debt
While the pay-down of outstanding debt may not seem like business investment on the surface. paying off that debt guarantees an instant return of that percentage. remodeling customer-facing environments or opening additional locations.Q. Because business debt often reaches into double digit interest rates. By reinvesting profits back into the business for expansion or improvement. a guaranteed return on the investment will come in the form of tax not assessed on the reinvested funds.2 Discuss the investment strategies applicable for businesses and methods to rectify faulty investment strategies. If a business has outstanding debt financed at a given interest rate. the business stands to gain additional profits as a result of the expansion. but a few key tips can help lay groundwork for effective investing. These investments may be made as traditional cash investments.
Or — Use of income to eliminate debt — Reinvestment of funds to nurture the business — Investment in other businesses
. An investment strategy is a key component of every conceivable business type.
Internal methods to rectify faulty investment strategies In this section we will explain the methods to rectify faulty investment strategies. ° Be conservative in your valuation assumptions ° Only buy assets dealing at substantial discounts to your conservative estimate. Some of the methods are as follows: — Internal transformation — Corporate restructuring and reorganisation — Financial restructuring — Divestment strategy
. A proper understanding of the investment strategies and a thorough analysis of the options helps an investor to create a portfolio that maximises returns and minimises exposure to risks.Investment is defined as the commitment of money or capital (e. — Have a clear disposition towards price – The more you pay for an asset in relation to its earnings. Following are the ways to invest successfully: — Leave a margin of safety – Always leave a margin of safety in your investments to protect your portfolio. — Invest in business which you understand – Invest in a business in which you have a thorough understanding of the customers. keeping funds in a bank account etc) to generate future returns. — Measure your success – Evaluate your performance by the underlying measures in business. purchasing assets. Never purchase the stock until you understand the industrial economy and able to forecast the future of the company with certainty. products/services etc.g. The following are the two ways to incorporate the above principle in your investment selection process. the lesser is your return value. — Make assumptions – Make assumptions about your future performance by recognising your own limitations. So have a clear outlook towards the price. — Allocate capital by opportunity cost – Allocate investments/assets to the choice which has been opted as the best among several mutually exclusive choices.
The following are the reasons for internal transformation of a company: — Pressure on owner to decrease costs — Overstaffing — Large and complicated company structure — Low flexibility of staff — Financial instability The main objective of a company which adopts internal transformation is to increase efficiency by reaching the standards in the global market. survival and maintain profitability. This is achieved by holding high quality level of productivity. downsizing of employees etc.— Expansion strategy — Diversification strategy — Vertical and horizontal integration strategy — Building core competencies and critical success factors Frequent assessment report assists in detecting the problems associated with faulty investment strategies in an organisation. Internal transformation Internal transformation takes place in an organisation to sustain constant growth. The essential components of a successful business transformation are as follows: — Achievement ° A new level of sustainably high performance emerges ° Extraordinary and unexpected results appear throughout — Improved synergy ° Collaboration naturally occurs across all levels ° Creativity and innovation flourishes — Aliveness
. It includes corporate restructuring.
— Corporate restructuring and re-organisation — Layoffs and employee termination
. commitment and creativity towards work.° Employees flourish as they openly express their passion. ° Growth and development occurs both personally and professionally — Shared future ° The entire organisation unites to accomplish the future and live consistently with core values We will now discuss the two internal transformation processes in the following section.
1. It is generally detailed and rigid. It is a long term rule that drives an organization. It is a part of tactical tools. Procedure defines the means to achieve the goals.Q. (5 marks)
Differences between policy. (5 marks) b. Process is a set of activities conducted by people to achieve organizational goals. It describes emergency procedures which include warnings and cautions. Procedures are written in an outline format. Policy shows how rules are enforced and describes its consequences. It is a planned way to handle certain issues in the organization. 4. procedure. Programming helps in developing an economical way of doing things in a systematic manner. 6.3. Policy explains the reason for existence of an organisation. procedure. procedure and programmes with examples. Now we will analyze how each concept is different from the other. 2. It provides step by step approach to the activities taken to achieve the goals. Process defines the method in which the work is done. process and programmes. Programme is a concrete scheme of activities designed to accomplish a specific objective. Policies are guidelines for managerial actions. It defines an outcome or a goal.
. Give a short note on synergy. 3. Distinguish policy. They are described by using simple sentences. It is systematic way of handling routine actions. Policy is general in nature and identifies the company rules. 5. 7. process and programmes In the previous topic we discussed the definition and meaning of policy. 8. a. It is framed by the top level Procedure identifies the specific actions and explains when an action needs to be taken.
and a wide array of innovative services for consumers. However. For instance. thus allowing the corporation to concentrate on a single. one sales representative can offer the broader mix of products. improved quality and reliability.management. the removal of the pulp mill will enhance operational flexibility and eliminate distraction on periphery units. Kimberly-Clark Corporation set out to sharpen its emphasis on consumer and health care products by divesting its tiny interests in business paper and pulp production.
. Organizations strive to achieve positive synergy or strategic fit by combining multiple products. Synergy is the energy or force created by the working together of various parts or processes. Rather than having two representatives make two sales calls to a potential customer. Synergy in business is the benefit derived from combining two or more elements (or businesses) so that the performance of the combination is higher than that of the sum of the individual elements (or businesses). the mere combination of people or business elements does not necessarily lead to better outcomes. According to the company. and the resulting lack of harmony or coordination can lead to negative synergy. Mergers and acquisitions are corporate-level strategies designed to achieve positive synergy.
Ans. Negative synergy is also possible at the corporate level. One way to achieve positive synergy is by acquiring related products. business lines. core business activity. or markets. b. The intended result of many business decisions is positive synergy. Policies are a part of the strategies of the organization. 9. Downsizing and the divestiture of businesses is in part the result of negative synergy. The 2004 acquisition of AT&T Wireless by Cingular was an effort to create customer benefits and growth prospects that neither company could have achieved on its own—offering better coverage. so that sales representatives can sell numerous products during one sales call. Managers expect that combining employees into teams or broadening the firm's product or market mix will result in a higher level of performance.
Cadbury also aims to put “A Cadbury in every pocket” (Karvy Research. is the world’s leading confectionery manufacturer and distributor. This report will examine two different products offered to the Indian market by Cadbury India: Cadbury Dairy Milk (chocolate category) and Cadbury Bournvita (milk drinks category). 2008). 2008). 2008). as the Indian subsidiary of this confectionery giant.. Marketing Communications. one of the fastest growing confectioneries markets in the world (Financial Express. candy and chewing gum (Cadbury India Ltd. n. 2008).. 2008).). Cadbury stresses the importance that it places on quality. (10 marks)
Cadbury plc. Cadbury plc “operates in over 60 countries. which averages sales of around 1 million bars per day (Cadbury Dairy Milk. Since Cadbury’s activities vary from country to country. Select any established Indian company and analyse the different types of strategies taken up by the company over the last few years. Apart from its mission statement..000 people” (Cadbury India Ltd. before it demerged from its Americas Beverages manufacturing business in 2008 (Peston. Cadbury plc manufactures and sells three different kinds of confectionery: chocolate. it also references the slogan. 2008).000 direct and indirect suppliers and employs around 50.d. this report will simply examine the activities of Cadbury India Ltd in the Indian market. but in the Indian market. milk food drinks. 2008. n. (a) Cadbury Dairy Milk (i) Pricing Cadbury India enjoys controlling 70% of the confectionery market in India. its product line is split up into the chocolate confectionery. Products offered by Cadbury India Ltd. Lastly. works with over 35.d.4. albeit with different business strategies and approaches. candy and gums categories (Cadbury India Ltd.) by targeting current consumers and encouraging them to make impulse purchases and by maintaining a superior marketing mix (Karvy Research. also utilizes the same mission and vision statements of its parent firm when operating in the Indian market.Q. of which 30% is directly due to the success of its Dairy Milk product. 2008). formerly known as Cadbury-Schweppes plc. “Cadbury means quality” as an integral part of its business’s activities (Superbrands. Cadbury Dairy Milk bars are Cadbury India’s cash cow in the country’s 4000
. Cadbury India Ltd.
2008. 2008) attempted to absorb these customers into its market share. 5 (about 0. has been designated its flagship brand (Cadbury India Ltd. in an attempt to appeal to adults as well as children (Cadbury Dairy Milk. 2003). television. the most notable being its “Pappu Pass Ho Gaya” (Pappu Passed!) joint venture operation with Reliance India Mobile. the 13 gram version. but not affordable for those who buy from the less-then-3-rupee (Rs. one year after the country was made independent from the British Empire) (Cadbury Dairy Milk. Its history of operating in the country and its average level pricing of chocolate bars. 3) segment of the market (Chatterjee. Lastly. Furthermore. Rs. technological knowledge and healthconsciousness. Chatterjee. 2008). 2008). Cadbury Dairy
. 2008). 2008). targets the healthconscious market segment of the chocolate market. 2008). who wish to enjoy the taste of dark chocolate but also its health benefits (Financial Express.tonne. which allowed students across the country to check their examination grades online and celebrate with Cadbury’s Dairy Milk if they did well (Cadbury Dairy Milk. Marketing Communications. Part of Cadbury Dairy Milk’s success lies in its shared history with India’s identity (it was first sold in 1948. Variations include the Fruit & Nut and Crackle & Roast Almond variations (Cadbury Dairy Milk. 6. “to cater to the urge for ‘something sweet’ after meals” (Cadbury Dairy Milk.. Nowadays. income. 2006). (ii) Consumer segments served and advertising/promotional strategies used Cadbury India Ltd continuously markets Dairy Milk as a relatively inexpensive treat. towards market segments divided by age. By using opinion leaders from Bollywood and using extensive advertising in newspapers.50 billion (around 1. affordable pure milk chocolate for many Indian customers (Cadbury Dairy Milk. In order to appeal to potential lower-income customers in the villages of India. has made the Cadbury dairy Milk bar synonymous with high quality.6 billion CAD) chocolate market (Gupta.13 CAD). Cadbury managed to capture the attention of the nation and cement its market share superiority in India (Cadbury Dairy Milk. 2000). 2008) which are meant for snacking. Even its smallest Dairy Milk bar. further marketing in the form of the “Real taste of life” campaign (Cadbury Dairy Milk. as such. as well as the Cadbury Dairy Milk Desserts. In the 1990’s. is priced at Rs. 2008. 2008) but also in the fact that it is priced relatively cheaply (Chatterjee. a branch of India’s largest network service provider. similar to the Dairy Milk bar. the company stated promoting the chocolate for “the kid in everyone”. Cadbury India continuously develops new versions of its Dairy Milk brand in order to keep its adult and children consumers satisfied and interested. 2006) and is relatively affordable by the Indian masses. affordable by many middle-class Indians as an occasional treat. magazines and massive billboards across the country. The Cadbury Bournville Dark Chocolate bar. 2008). Cadbury’s is trying to tap into the potential market of younger generation Internet users by offering contests and hosting competitions online.
where the regular consumption of so-called luxury chocolates such as Cadbury Dairy Milk is viewed as fashionable (Kochhar. 2008) clearly targets the child segment of its market. 2006). Analysts Meet. whereas Amul controls around 2% (Dobhal. This contradicts Cadbury’s assertion that its leadership is maintained by a “superior marketing mix” (Karvy Research. 1999) and not as household goods. justifying a lower price tag (Chansarkar et al. 1999). Nestle’s subsidiary in India. Cadbury India must maintain its current marketing strategy but slowly start to promote Dairy Milk as a household good so that consumers spend their rising disposable incomes on it and boost its sales (Rai.. Cadbury’s market segmentation is quite effective because it allows them to target all three major market segments: children.d. As seen in Appendix B.) and Nestle India around 27% (Nestle to expand.). 2008). As mentioned earlier. with Disney characters embossed on each chocolate square (Cadbury Dairy Milk. India’s own dairy company and Nestle India. n. 1999). 2008). the booming economy and the increasing affluence of the burgeoning middle class (Basu.Milk Wowie. where the “pure taste of Cadbury Dairy Milk defines the chocolate taste for the Indian consumer” (Cadbury India Ltd. Although Dairy Milk is affordable to the upper and middle-income consumers who view it as a midpriced item (Kochhar. 2006).. Although this has allowed it to control more of the market than its closest competitors. 2008). 2008) of the chocolate market. 2007). Indian consumers seem to be satisfied with Cadbury Dairy Milk as its marketing promotes it as an occasional indulgence. Cadbury India controls around 70% (Cadbury India Ltd. In fact. Cadbury’s main strength comes from it ability to market Dairy Milk products “through altering the theme and functionality of the product as the time demands” (Cadbury India Ltd Analysts Meet. 2004) has promoted the use of status symbols. This restrained marketing has allowed the chocolate to slowly become a measure of quality for many Indians. 2007). but it does not serve those segments of the market that have been divided by income levels. Cadbury India may have misinterpreted the popularity of Dairy Milk as a sign that the Indian public has accepted it as a household product. adults and technologically-savvy consumers. its chocolates are viewed as being local and not luxurious.d. the reasons for its success may also lie in the fact that many Indians still view its chocolates as luxury products (Cadbury India Ltd Analysts Meet. (iii) Product Positioning Cadbury India Ltd’s main sources of competition come from Amul. n. In fact. Cadbury will need to address the needs of this market segment in order to boost its sales of Dairy Milk.. despite popular opinion that it is a relatively expensive luxury product (Cadbury India Ltd. Cadbury Dairy Milk was voted one of the India’s most trusted brands in a poll conducted in 2005 (Cadbury Dairy Milk. as Cadbury Dairy Milk is their “Gold Standard” for chocolate.
. Despite Amul’s longer history in India. lower income consumers who buy from the less-than-3rupee range of chocolate cannot afford to buy Cadbury Dairy Milk regularly.
2007) as well as chocolates for festive seasons allow them to rapidly sway consumers over to their products. and it uses this extensively to promote Cadbury Dairy Milk all over the country. By doing so. to becoming a national enterprise (Amul. 2004). nor was it a standard anymore. (a) Cadbury Bournvita (i) Pricing
. Cadbury will be able to position its chocolates as chocolate specifically designed for India. Cadbury has more of a brand recognition power than Nestle has. concepts that Cadbury India has yet to explore.Amul’s origins as a community welfare program in Gujarat. it can try to be “Indian” too. in combination with the longest running advertising campaign that Amul is famous for gives it a brand awareness boost. Lastly. The new extra-layer packaging of chocolate that is now being used in the manufacture of Dairy Milk is a good first step to take in reclaiming some of the public’s trust (Vivek. 2007) . the production of chocolates specifically for the festive seasons of India. namely. Amul’s reputation for credibility. Cadbury India must counter this threat that Nestle and Amul pose. endearing it to the consumers and boosting its sales. In order to position its products as safe and affordable treats once again. Cadbury India should make attempts to be even more sensitive to consumer demands. Amul’s innovative ideas will be the bane of Cadbury. so by at least promoting the fact that it has been operating in India for almost as long as Amul. 1999). thus becoming an integral part of India’s identity and giving its marketing strategy a new source of authority. one way to do this would be to follow Amul’s lead and develop and market products that meet specific ethnic needs. 2008). Their release of diabetic friendly chocolate and chocolates catering to different ethnic flavours (Janve and Dogra. as this will eventually allow it to negate some of the extensive damage that this negative publicity has to the firm’s reputation. In comparison to Nestle India however. one of India’s most industrialized states. Nestle still has to break into the Indian market. Customer satisfaction must be given the utmost importance. safety and consumer satisfaction was only reinforced when Cadbury India’s Chinese-made products were found to be contaminated with worms and melamine (Sinn and Karimi. 2008) was no longer gold. Moreover. 2008) spanned the decades during which newly-independent India forged its identity. This accounts for their soaring annual market growth rates of 18% annually (Indian Express. Cadbury simply cannot match this kind of national endorsement. even if the company has to run at a loss for a few months. such as chocolates for Diwali and Rakshabandan (two different Indian festivals) (Kochhar. This. The “Gold Standard” (Cadbury Dairy Milk. Cadbury India’s longer track history gives it a competitive edge. as people’s confidence in its safety was shattered.
India alone accounts for 22% of the world’s malt-food milk drink retail sales (BeverageDaily. newspaper and magazine campaign (Cadbury Bournvita. Cadbury Bournvita enjoys a 17% market share of the malt-based food drink market (Cadbury Bournvita. 2007). 2008. (ii) Consumer segments served and advertising/promotional strategies used Cadbury markets its Bournvita product in diverse market segments. The “Real Achievers who have grown up on Bournvita” campaign focused on preparing consumers with the health. 2008). 2008). Continuous brand re-invention. but unlike Cadbury Dairy Milk. Goodness that grows with you” campaign to promote Bournvita as an essential health drink for children (Cadbury Bournvita. Over the years. but also finds followers amongst elderly people. BeverageDaily.000 tonne malt-food market (Cadbury Bournvita. a “rich brand heritage” and complete overhauls in packaging. Cadbury has marketed Bournvita in order to appeal to the change in perceptions and tastes of its consumers. 2002). 2002. Bournvita has been marketed mainly towards children. The most recent marketing campaign undertaken by Cadbury Bournvita is the one specially designed to harness consumers’ uncertainty about the challenges of the new millennium. Cadbury Bournvita. combined with successful marketing strategies and promotional offers. 2008). the primary medium of communication for many Indians at the time (Ranjan. 2002). where the subsequent television marketing campaign secured Cadbury Bournvita’s place in the Indian market. 2008). In order to cement their consumer base and ensure brand loyalty. and is perceived to be quite expensive (Hawa. and the fact that it is used a staple source of nourishment by Indian mothers for their children.35 CAD) a piece despite other sizes being available. 2004). It focused on the “Good Upbringing. 2004). Bournvita challenged the public by promising complete physical and mental development for its consumers (Cadbury Bournvita. 2008) and allowed Cadbury Bournvita to keep “pace with the evolving mindsets of the new age consumers” (Cadbury Bournvita. However. Bournvita is largely sold in 500 gram bottles for around Rs. Cadbury Bournvita does not control a large share of India’s malt-based food drinks market. a concept that appealed to many children. Bournvita bright” television. vitality and nutrition necessary for facing the challenges of the new millennium (Cadbury Bournvita. promotion and distribution have allowed Cadbury Bournvita to maintain its 17% market share over the years in India’s 220. This campaign was followed by the massively successful “Brought up right. soon after Cadbury India Ltd (then known as Cadbury-Fry) was incorporated (Cadbury Bournvita. This campaign was conducted mainly on the radio. in the 1990s. pregnant women and athletes (Hawa. 2008) to reach out to more children and promote the link between intelligence and Bournvita. product design. 2007). This marketing campaign was broadcast on television and published in newspapers in an effort to recruit contestants (Kapoor.Cadbury Bournvita was first sold on the Indian markets in 1948. 95 (2. due to its long history with India. 2008). 2008). As a result of being one of the first products offered on the Indian market by Cadbury.
. Bournvita’s still remains popular (Hawa.
n. Cadbury Bournvita has managed to promote itself as a sports drink for athletes (Kapoor. By also sponsoring the Indian Olympic team to the Moscow Olympics of 1980 (Cadbury Bournvita.d. Karvy Research. and amidst allegations of declining quality and taste of the Bournvita brand (Hawa. 2006). as well as one of Cadbury’s most successful marketing ventures till date.). Cadbury Bournvita has managed to appeal to an athletic market segment as well. many customers still feel that Bournvita does not have the appeal that other brands. with white drinks being popular in the southern and eastern parts of the country. Furthermore. followed by Cadbury Bournvita with its 17% market share (Chatterjee. n. The new product is being aimed at the segment of children who want nutrition but also taste (Cadbury Bournvita. 2002). 2007). The Bournvita Quiz Contest is the longest running quiz show in India.). Cadbury India Ltd Analysts Meet. 2008). (iii) Product Positioning The malt-based food drinks market in India is divided into brown drinks and white drinks categories (Cadbury India Ltd Analysts Meet. n.The release of new versions of the original Bournvita such as Bournvita 5-Star. Cadbury Bournvita’s major source of competition comes from GlaxoSmithKline’s Horlicks and Heinz Food’s Complan. 1999. thereby giving Horlicks a larger market share than Bournvita (Karvy Research. such as Horlicks do (refer to Appendix C) and thus the market is slowly switiching over to white malt-based food drinks such as Horlicks (Karvy Research. As mentioned earlier. more consumers have started switching over to consuming white drinks than brown drinks. The Contest spans 7 countries. Horlicks is the market leader with a 44% market share (Chatterjee. one of its caramel chocolates helps maintain consumer interest. 2008). one of the most famous Indian examples of Cadbury Bournvita’s ingenious marketing is its sponsorship of the Bournvita Quiz Contest. and the brown drinks being popular in the northern and western parts of the country (Karvy Research. 1999)..). n. The white drinks category is mainly led by Horlicks whereas the brown drinks category is led by Bournvita (Karvy Research. by supporting sports competitions and sponsoring athletes across the country. the malt-drinks market is split up into the white and brown drinks categories.d. combining the flavour of the original chocolate Bournvita with the flavor of Cadbury 5Star (Cadbury Bournvita. 2006). making it one of the most popular high school contests (Cadbury Bournvita. 2008).
.d. n. Recently.d. despite Cadbury Bournvita’s history of serving consumers in the Indian market. 2008). has involved more than 4000 schools and more than 1 million students.d. However. 2006) and then Complan with its 13% market share (Samajdar. As seen in Appendix C.). Lately. having first been aired in 1972.
proper distribution channels must be identified. the solution lies in Cadbury India marketing Bournvita as an adult drink as well. Delivering Cadbury products to customers India’s 300 billion USD retail market is growing at a rate of 30% per annum (Rai.
. street corner stores” (Rai. mainly attracts more child consumers to its product (Radakrishnan. Since the words ‘nutritional supplement’ connote a need for extra nourishment. Cadbury India Ltd. Complan’s market share of 13% (Samajdar. Therefore. 1999). Thus. Even the Bournvita Quiz Contest. and thus cannot compete with Horlicks’ wider appeal. which is Bournvita’s approach. even elderly and convalescent consumers can consume the product without feeling conscious of consuming a child-only product. however. which makes it more appealing to a wider section of the market. Thus.d. The efforts of these retailers are augmented by the support of 1900 distributor locations and 27 depots (Cadbury India Ltd Analysts Meet. 1999). Horlicks has always marketed itself as a “Great Family Nourisher” with products such as Mother’s Horlicks designed for different members of the family (Horlicks. almost 3100 locations are directly supplied by Cadbury India Ltd distributors at least thrice a month (Cadbury India Ltd Analysts Meet. However. selling treats such as Cadbury Dairy Milk bars and Cadbury Bournvita powder will generate massive returns. 2008). Furthermore. Cadbury Bournvita’s current marketing strategy is simply not enough. n. 2006). produces its products in factories spread geographically across India. Horlicks’ extensive marketing campaigns may also have played a part. 1999). Given than Horlicks has been operating in the Indian market for longer than Cadbury (Horlicks. but also sells its products through a chain of over 300. 2008). in order to maintain its superiority. 2006). than Bournvita’s mainly child-oriented approach. of a total of 3600 locations that sell Cadbury products. is less than Bournvita’s. effectively Bournvita’s longest running marketing campaign. disposable incomes are on the rise and the economy is growing at a rate of 8% annually (Rai. 2006). in order to be able to sell these products to customers. Only then will it be able to compete effectively with Horlicks.) rather than as a healthy drink for children. 2008). In a country where half a billion people are under the age of 25. Complan has marketed itself as a “perfect nutritional supplement” (Complan. 2006) and the remaining 3% consisting of malls and shopping complexes. The Indian retail sector is composed of 97% “family-run. Meanwhile. Although both products are targeted at children. this may possibly work against Complan as many families may feel that their child receives enough nourishment and does not require more.000 retailers spread across India (Cadbury India Ltd Analysts Meet. and not as a nutritional supplement. this larger market share may be explained by more consumer familiarity with Horlicks than with Bournvita. 2002). Although Cadbury Bournvita currently has a larger market share of the two. with products designed for different members of the family. such as Mother’s Horlicks (Horlicks. it must continue to market itself as a child-friendly drink.When competing with Horlicks.
As seen in Appendix D. and by listening to the needs of its consumers. This will cripple sales and reverse the fruits of 70 years of hard work in the country. its Cadbury Dairy Milk success will only be short-term in nature and Bournvita will not be able to reverse the trend towards the consumption of white malted drinks (Cadbury India Ltd Analysts Meet. By doing so. it can benefit from inelastic demand as a household product. Cadbury India’s brand recognition aspect will immediately work against it by highlighting the link between its name and contaminated food products. 1999).These distribution networks give Cadbury India its competitive edge in India’s massive consumer market. if Cadbury Dairy Milk can be marketed extensively enough to break the ‘luxury’ perception that consumers have of it currently (Cadbury India Ltd Analysts Meet. Cadbury must also appreciate the advantages of a positive reputation and always stress consumer satisfaction.) can only be done if the company markets its Cadbury Dairy Milk as a household good and its Bournvita as a family-friendly drink. One key aspect of this lies in maintaining the safety of its products so that the name of Cadbury is always synonymous with high quality safe products.
Future Strategy In the branded impulse market. while also analyzing its competitors’ marketing strategies.6% and Cadbury’s
. Cadbury India Ltd’s objective of putting a “Cadbury in every pocket” (Karvy Research. This objective can be accomplished by simply building on the good reputation and trust that it has earned. thus generating a constant stream of revenue and cementing the Dairy Milk brand as a cash cow product. In order to maintain its lead in such a large market. leaving the path open for more efficient local companies like Amul to learn from Cadbury India’s mistakes and take over its market share. SWOT Analysis of Cadbury India Ltd. the key threat that can affect Cadbury India Ltd’s success in India is Amul’s innovative marketing strategy. 1999) and compete with Horlicks. Amul’s yearly growth rate of 18% may slowly start to eat away at Cadbury’s success (Indian Express. it will be able to isolate the benefits and drawbacks of its competitors’ marketing mix and use those to its own advantage. 1999). Until then. it must learn to address the specific needs of its consumers and continue to maintain their goodwill. Conclusion Cadbury India Ltd’s position in India is relatively strong. length of time serving India and its ability to develop and market products specifically tailored for Indian consumers. the share of chocolate in 6. n.d. Repeats of the recent melamine and worms issues cannot be allowed to happen as once consumer confidence in its brand name is shattered. As a result of its witty marketing strategies. Furthermore. Bournvita meanwhile needs to be extensively marketed in order to reduce the damaging effect that Horlicks’ family-friendly marketing mix is having on its market share.
which limit the opportunity to launch value for money products. The company would be able to not only provide greater variety. the company looks at the tree important as an opportunity. The initiatives in the terms of development a long term domestic coca a sourcing base would field maximum gains when commodity prices start moving up. At the same time the management is also aware of external changes taking place in the competitive environment and is taking steps to remain competitive in the future environment of free imports. coca through forward purchase of imports. The management is not unduly concerned about the huge deluge of imported chocolate brands in the market place. when sales usually dip due to the fact that the heat effects product quality and thereby consumption. Efficient sourcing of key raw material i.
.8% factor like changing attitude. In terms of manufacturing management focus is on optimizing manufacturing efficiencies and creating a world class manufacturing location for CDM and Éclairs. higher disposable income. • Use of it to improve logistic and distribution competitiveness • Utilizing mass media to create and maintain brands. a large youth population. where it could optimally use the global Cadbury Schweppes portfolio. • Improving distribution quality by addressing issues of product stability by installation of visi coolers at several outlets.e. Various measures are undertaken in all areas of operation to create value for the future.share in the impulse segment is 4. The company has added 8 million new consumer in the current year and how has consumer base of 60 million although the growth in absolute numbers is lower than targeted. but it would also be more cost effective to test market new product as well as improve speed of response to change in consumer preference through imports. and low penetration of chocolate (22% of urban population) point towards a big opportunity of increasing the share of chocolate in the branded impulse among the costly alternative in the branded impulse market. This would be really effective in maintaining consumption in summer. New channel of marketing such as gifting and child connectivity and low end value for money product for expanding the consumer base have been identified. The only concerns that the company has in this regard is the current high level of duties. lower barrier to trade and the advent of all global players in to the country. the company has been able to increase the width of its consumer base through launch of low priced products. It appears that company is likely to play the value game to expand the market encouraged by the recent success of its low priced ‘value for many packs’. It is of the view that size of this imported premium market is small to threaten its own volumes or sales in fact. • Expand the consumer base. higher local consumption by entering long term contract with farmer and undertaking efforts in expanding local coca area development. The company is today the second best manufacturing location of Cadbury’s Schweppes in the world. • The above are some steps being taken internally to improve future operation and profitability.
It is a concise and motivating statement that guides the employees to select the procedures to attain the goals. Vision statement A vision statement defines the purpose and principles of an organisation in terms of the values of the organisation. It must synchronise with the organisation’s principles. It is prepared for the organisation and its employees.
Vision statement of L&T L&T employees shall be innovative and the empowered team will constantly create values and attain global benchmarks. Vision and Mission statements A well-articulated strategic intent guides the development of goals and helps in inspiring the employees to achieve targets. L&T shall promote a culture of trust and continuous learning.Wal-Mart’s vision is to become worldwide leader in retailing.
. A vision statement describes the future ambition of an organisation. stakeholders and society. It integrates an understanding about the nature and aspirations of the organisation and develops this conception to lead the organisation towards a better objective. Example . It conveys an effective business plan. It should be implanted in the organisation being collectively shared by everyone in the organisation. Vision statement is the framework of strategic planning. It also facilitates in utilising the intent to allocate resources and in encouraging team participation. (10 marks)
Ans. A vision is the ability to view what the organisation wants to be in future. It comprises of the vision and mission statements. The ambition should be rational and achievable.Q. It shall meet the expectations of employees. 5 Why do you think it is necessary for organisations to have vision and mission statements and also core competencies? Support your answer with relevant examples.
Example -Wal-Mart’s mission is to provide ordinary customers the chance to buy the same thing as rich people. The statement distinguishes an organisation from its other competitors by explaining its scope of activities. 2008) by measuring its financial progress in the areas of growth. It should be practical and achievable. its products and services used to achieve the goals and objectives. It describes the present capabilities. technologies. It should be unique and different to leave an impact on everyone. It should be credible so that the stakeholders accept it. It conveys the purpose of the organisation to its employees and the public. delivered through our priorities. It is a concise description of the existence and fundamental purpose of an organisation.
Mission statement of IBM “At IBM. capabilities and sustainability from 2008 to 2011 (Cadbury plc. We are currently the biggest. developing and manufacturing most advanced information technologies. 2008). It is vital for the development and growth of the organisation. we strive to be the forerunner in inventing. Mission statement is the responsibility by which an organisation aims to serve its stakeholders.
Mission statement A mission statement is the extensive definition of the mission of an organisation. It describes the present potentials and activities of the organisation. and we have an enduring commitment to become the undisputed best. efficiency. the stakeholders and the reason for existence of an organisation. It should be clear and precise so that the actions can be taken based on it. sustainability commitments and culture Cadbury plans to “deliver superior shareholder returns” (Cadbury plc.(i) Cadbury’s Vision Statement Our objective is to deliver superior shareholder returns by realizing our vision to the be the world’s biggest and best confectionery company. It gives a framework on the operations of the organisation within which the strategies are devised. including computer systems. software. At the heart of our plan is our performance scorecard.”
. storage systems and microelectronics.
Core competency is the key strength of business because it comprises the essential skills. We collaborate and work as teams to convert products into brands. (ii) Cadbury’s Mission Statement Cadbury’s mission statement outlines its overall business objective and its commitment to its customers. The strategy is devised in a manner that an organisation can receive reasonable profit and attain strategic competitiveness. As an organisation progresses and adapts to new circumstances. Example – Infosys has a core competency in information technology. They are not rigid but flexible to advancing time. They change in response to the transformation in the environment of the company. As the organisation progresses and adapts to the new environment.
. These skills enable a business to deliver essential customer benefit like the selection of a product or service by a customer. the core competencies also adapt to the transformation. These are the central areas of expertise of the company where maximum value is added to its services or products. Core Competencies are not fixed. The organisation makes the maximum utilisation of the competencies and correlates them to new opportunities in the market. Core competencies are those skills that are critical for a business to achieve competitive advantage. Resources and capabilities are the building blocks on which an organisation builds and executes a value-added strategy. the core competencies also adjust to the change. They are adaptable and advance over time.The distinction between mission statement and vision statement is that the mission statement focuses on the present position of the organisation and the vision statement focuses on the future of the organisation. Our core purpose “Working together to create brands people love” captures the spirit of what we are trying to achieve as a business. It is a unique skill or technology that establishes a distinct customer value.
Q. Each Business Unit must meet the following criteria: 1. Have clearly definable set of competitors. Have a unique business mission. need to follow different strategies. Strategic Business Unit or SBU is understood as a business unit within the overall corporate identity which is distinguishable from other business because it serves a defined external market where management can conduct strategic planning in relation to products and markets. 2.SBUs are also known as strategy centers. Should have a Manager authorized and responsible for its operation. To ease its operation. Is able to carry out integrative planning relatively independently of other SBUs. 6. These strategic groups are called Strategic Business Units (SBUs). When companies become really large. corporate set different groups of product/product line regarding the strategy to follow (in terms of competition.
.Strategic Business Unit (SBU) is necessary when corporation starts to provide different products and hence. and impact of product withdrawal). Mention some of the successful SBU of MNC’s. 3. independent from other SBUs. substitutability. What is SBU? Explain its features. prices. functions and roles. they are best thought of as being composed of a number of businesses (or SBUs). Independent Business Unit or even Strategic Planning Centers. need to follow different strategies. Strategic Business Unit (SBUs) is necessary when corporation starts to provide different products and hence. The unique small business unit benefits that a firm aggressively promotes in a consistent manner. style/ quality. (10 marks) Incompelete