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Marketing Mix By SAMRAT R.

PATHAK 108070592044

The SIP project report submitted In Partial fulfillment of the requirements For the degree of MASTERS OF BUSINESS ADMINISTRATION (MBA) 2 years Full Time Program of Gujarat Technological University

Internal Guide Mr. Benarjee SAL Institute of Management Ahmedabad.

External Guide Mr. Pankaj Purohit Kamlesh Engineering Company, Rakhial, Ahmedabad.




Summer Internship Report SAL MBA



This is to certify that the project work title Marketing Mix Is the bonafide work of Samrat Pathak, 108070592044. Carried out in the partial fulfillment of the SIP of Masters of Business Administration At SAL Institute of Management Academic Session June-July 2011.

Mr. Benarjee Professor, SAL Institute of Management Sign : __________________

Dr. Viral Bhatt Principal, SAL Institute of Management Sign : __________________


Summer Internship Report SAL MBA


We are extremely thankful to Mr. Pankaj Purohit for their valuable guidance and the helpline they have provide us throughout our completion of the project we have undertaken as our SIP. They were always there to lend a helping hand & directed us towards proper attitude to develop the project. They have always welcomed our queries and doubts regarding the project work and also in the subjects, they have taken with a great interest to teach us. Without their help and right guidance, the completion of the project would have been very difficult.

The level of knowledge they possess has covered entire aspects of the management expertise in different fields particularly in our project related Marketing. We are also thankful to our college SAL Institute of Management for offering us such a great subject that binds all the knowledge we have gained through this SIP. And last but not the least we would like to thank all our friends who have provided their thoughts about our project during development and for the further enhancement.

Thanking you,

Samrat R. Pathak 108070592044

Summer Internship Report SAL MBA


MBA is stepping - stone to Management career. In order to achieve practical, positive and concrete results the theoretical knowledge must be supplemented with exposure to real environment. Theoretical knowledge without practical knowledge is of little value. Theoretical studies in classroom are not sufficient to understand the functioning of complex and large sized organization. Therefore, it becomes necessary to undergo any project work. Practical supplements the theoretical studies i.e.; it covers what is left uncovered in the classroom. It exposes a student to invaluable treasure of experiences. I took my project work with KEC. Project work is a part of our curriculum, which helps us to correlate our theoretical concepts with practical experiences. The topic that I have taken for project is "MARKETING MIX" which was assigned by the marketing head of Kamlesh Engg. Co. Accomplishment and achievement of goals are the major aim of any organization. These goals are achieved by proper planning. Proper allocation of Marketing Mix components may help in improving goodwill of the company.

Summer Internship Report SAL MBA


Contents of Report:

Sr. No 1. 2.

Topic Introduction
Concept & Characteristics of Marketing Mix

Page No.
7 8

Elements of Marketing Mix

Product Price Promotion Place

11 13 16 21 27 38 40 43 62 63 64 65 66 67

3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Company Profile Objectives of Project Research methodology Case Study Conclusion Limitation Bibliography Executive summary Recommendations Strategy formulation

Summer Internship Report SAL MBA



Marketing is a set of activities by which the demand for goods, ideas, and services is managed to facilitate exchange. (Markin, 1982).It is a planned strategic approach of bringing together consumers and products. A marketing oriented organization takes its marching orders from its customers; it provides products and services based on its customers needs, wants and levels of satisfaction. This kind of activities allows a marketing oriented organization to perform and continuous growth. Marketing is an organizations ability to produce customer satisfaction depends on its marketing strategy. Marketing strategy is a comprehensive plan of action designed to meet the needs of an organization operating in a particular environment.

Summer Internship Report SAL MBA


Concept and Characteristics of Marketing Mix:

The process of marketing or distribution of goods require particular attention of management of business because production has no relevance unless products are sold. Marketing mix, simply stated, is the process of designing and integrating various elements of marketing in such a way as to ensure the achievement of enterprise objectives. The elements of marketing mix have been classified under four heads - product, price, place and promotion. That is why marketing mix is said to be a combination of 4 Ps. Decisions relating to the product include product Designing, packaging and labeling and varieties of the product. Decision on Price is very important because sales depend to a large extent on product pricing. Whether uniform price will be charged or different prices will be charged for the same product in different markets are examples of decision pertaining to the price of the product. The third important element is place, which refers to decision regarding the market where products will be offered for sale. Promotion involves decisions bearing on the ways and means of increasing sales. Different tools or methods may be adopted for this purpose. The relative importance to be attached to the various methods is decided while concentrating on the element of promotion in marketing mix. Lastly, the marketing manager has to take into account the impact of external factors like consumer behavior, competitors strategy, and Government policy on each element of marketing mix. In short, marketing mix involves decisions regarding products to the made available, the price to be charged for the same, and the incentives to be provided to the consumers in the markets where products would be made available for sale. These decisions are taken keeping in view the influence of marketing forces outside the organization.

Summer Internship Report SAL MBA


Characteristics of Marketing Mix:

1. Marketing-mix is the crux of marketing process: Marketing mix involves many crucial decisions relating to each element of the mix. The impact of the mix would be the best when proper weightage is assigned to each element and they are integrated so that the combined effect leads to the best results.

2. Marketing mix has to be reviewed constantly in order to meet the changing requirements : The marketing manager is required to constantly review the mix and conditions of the market, and make necessary changes in the marketing mix according to changes in the conditions and complexion of the market.

3. Changes in external environment necessitate alterations in the Mix: Changes keep on taking place in the external environment. For many industries, customer is the most fluctuating variable of environment. Customers tastes and preferences change very fast. Brand loyalty and purchasing power too change over a period. The marketing manager has to carry out market analysis constantly to make necessary changes in the marketing mix.

4. Changes taking place within the firm too necessitate changes in marketing mix: Changes within the firm may take place due to technological changes, or changes in the product line, or changes in the size and scale of operation. Such changes call for correspondent changes in the marketing mix.

Elements of Marketing Mix:

Summer Internship Report SAL MBA


As mentioned above the elements or constituents of marketing mix may be grouped broadly under four heads:

1. Product 2. Price 3. Place 4. Promotion

Summer Internship Report SAL MBA


Product refers to a physical product or a service or an idea, which a consumer needs and for which he is ready to pay. Physical products include tangible goods like grocery items, garments etc. Services are intangible products, which are offered and purchased by consumers. Services may involve also an innovative idea on any aspect of operation. A product is the key element of any marketing mix. The decisions concerning product may relate to Product attributes Branding Packaging and labeling Product support service Product mix.

Product attributes refer to the quality, features and design of the product. A product should serve the purpose for which it is made, in terms of utility and quality. In a competitive market, products are differentiated based on certain features or design. Branding is a crucial decision. In a competitive market, many products are sold by brand names. Brand is an identification of product. It plays an important role in creation of demand while branding a product, it should be ensured that the name is simple, easy to read and pronounce and if possible, it should have an appeal. Packaging means putting the products in suitable containers or packets such as tin, plastic jar or cardboard box, etc. Packaging should be such that product is protected and easily handled. Sometimes, the container may have its own usefulness. Certain polythene and plastic are not considered good as packaging material from the environment point of view. Their usage should be avoided. Labeling serves the purpose of indicating the contents, weight or measure, instructions for use, price, name of the producer, date of manufacture and expiry, etc. The information on the label is essential for various reasons. For example, the date of expiry in case of medicines, and date of manufacture in the case of eatables prevent the sale of products, which may prove harmful.
Summer Internship Report SAL MBA


Product support service is another important element of product decision. It includes decision pertaining to the type of service and availability of the service. Service may be by way of installation service, training in product use, after sale service, credit and financing service, etc. It should be decided whether services would be provided free or against separate charge. Secondly, how the services would be made available by the producers or agencies, are also important decisions to be made particularly with respect to durable consumer goods like TV, washing machines electric fans, etc. The markets in which products will be offered are yet another important decision. A company may decide to a single or a variety of products, add new products, or withdraw certain products. Relevant decisions are made keeping in view the scope of marketing. Such decisions are called product line or product mix decisions.

Summer Internship Report SAL MBA


Price is the amount charged for a product or service. It is the consideration paid by consumers for the benefit of using any product or service. Price fixation is an important aspect of marketing. Pricing decisions of a company are affected by both internal as well as external factors.




o Internal factors :
Internal factors, affecting the price of a product, are many. Cost of the product sets the floor. Any company would like to charge a price, which covers the cost of the product and a fair rate of return. Cost of the product means total cost i.e., fixed plus variable costs. Fixed costs do not change with the change in volume of production up to a certain level. Variable costs change proportionately. In the period of recession, companies continue to supply at a rate, which covers variable costs, and as much of costs as possible. The Companys marketing objective is yet another important variable for price fixation. If it were survival, the company would stay in the market as long as it covers variable costs fully and fixed costs partly. In case it is market leadership, a low price will be fixed initially. Afterwards prices may be enhanced. Surf Excel is an example. At the time of introduction, its price was just equal to other close substitutes, but today it has its own market. It is bought by consumers without comparing its price with other substitutes. The relative importance of pricing decision in marketing mix, also affects price fixation. Sometimes pricing decision is the control decision and all other decisions are taken

Summer Internship Report SAL MBA


afterwards. It may also happen that other variables of marketing mix like promotion become more important. Price is fixed after considering other variables. Who will fix the price is yet another important decision. In small organizations, top management sets the price. In large companies, product line managers perform this job. For industrial markets, sales managers are permitted to negotiate prices within a specified range. These days many companies set up a separate department to handle pricing decision.

o External factors :
Besides internal factors, external factors also influence the pricing decision of a company. These factors are called environmental factors. Nature of demand, competitors costs, price offers and government policy are very important factors to be considered while fixing prices. The relationship between price and demand should be analyzed properly. No company can ignore the costs, prices and offers of substitute items from competitors. Economic factors, like rate of interest, state of industry (boom or recession), inflation, etc. affect the price-fixing decision. In case of certain products, e.g. products, which fulfill basic needs, government, may impose price control. Thus, it would also affect price of the product.

There may be two methods of price-fixation:

1. Cost-based approach 2. Competition-based approach

o Cost-based approach :
This is the simplest method of pricing. Generally, companies add a certain percentage of Profit, to the total cost of the product. The total cost of the product is calculated after taking all types of costs into consideration. While following this approach, no other factors e.g., prices of substitute goods, nature of demand, etc. are considered.

Summer Internship Report SAL MBA


o Competition-based approach :
In competitive market, cost-based approach is not always practicable. The prices are determined based on conditions in the market. Companies may follow any one of the following three approaches. a) Price-in-line b) Market-plus c) Market-minus Price-in-line means prices fixed nearly equal to the prices of close alternatives. Generally, this happens under free market conditions i.e. when the number of buyers and sellers is so large that they cannot affect the prices. Prices are decided by the market forces of demand and supply. When companies charge (fix up) a price which is more than the price of existing substitutes, it is called market plus pricing. This approach is adopted when the quality of a product is better, or it has a popular brand name, or its packaging is attractive and useful. Consumers will pay more only when they find distinctive differences in the product and its substitutes. Sometimes business enterprises get ready to supply products at a price lower than the market price. It may be adopted to grab a larger market share or to make a newly introduced product more popular. This approach is called market-minus approach. Companies having shorter channels of distributions or direct selling facilities can afford to fix a price lower than the prevailing market price.

Summer Internship Report SAL MBA


Promotion refers to using methods of communication with two objectives: 1. informing the existing and potential consumers about a product, and 2. to persuade consumers to buy the product. It is an important element of marketing mix. In the absence of communication, consumers may not be aware of the product and its potential to satisfy their needs and desires. Various tools of communication form part of promotion mix. Companies must decide which tool(s) should be used for larger sales and in what proportion. The tools should be combined. These decisions are known as promotion-mix decisions. There are four components of promotion-mix i.e., advertising, personal selling, sales promotion and public relations. Thus, promotion mix is a companys total communication programs which consist of different blends of its components and which are used to achieve the companys marketing objectives. There are four kinds of promotional activities: Advertising Personal selling Sales promotion Publicity and public relations.

o Advertising:
Advertising is an impersonal form of communication for which the seller pays in order to promote a physical product or service. It may be in print form as in newspapers and magazines, or in audio form as on the radio and other similar methods, or in audio-visual forms as on the Television, cinema screen, etc. The merits of advertising is that it reaches a larger number of people, the message can be repeated, its cost is not high, and with the development of art and computer graphics, simple statements can be transformed into forceful messages. The other side of advertising is that it does not provide any feedback, it is not as forceful as personal selling, it is not flexible, and good advertisements cost a lot.

Summer Internship Report SAL MBA


o Personal Selling:
Personal selling is a personal communication with one or more prospective buyers for selling a product or service. These days, personal selling is considered to be the most effective tool because of various characteristics which are listed below: It involves personal interaction; hence feedback is received immediately; It is quite flexible; salesperson can adjust communication according to the level of customers under-standing. It is more persuasive; buyers can be convinced about the utility of the product; Impressive salesperson leaves an impression on the prospective buyer; it may increase sales in the future. Personal selling suffers from a few drawbacks too. It is the most expensive tool of promotion. Secondly, it requires too much dependence on sales force.

o Sales Promotion:
Sales promotion means the use of short-term incentives which are designed to encourage immediate purchase of a product or service by the buyer. It may include offer of discounts, free gifts, free sample, coupons, demonstration, store display, etc. One toothbrush free with one 100gm. Close-up dental cream is an example of sales promotion. Generally, this tool supplements the efforts made through personal selling and advertisement. Most of the sales promotion activities come in the form of some incentive for the buyer; hence, sales generally increase immediately. Big business enterprises use sales promotion tools while introducing a new product. It adds to the effectiveness of total promotional efforts of a company. Sales promotion has certain demerits e.g. it does not leave a lasting effect. Some customers also feel that sales promotion schemes are launched to clear old stocks.

Summer Internship Report SAL MBA


o Publicity:
Publicity takes place when a favorable presentation is made through mass media about a product or service. People believe more on such news than in advertising. It covers people who do not entertain personal selling and sales promotion approaches. It is a non-paid form of communication but sometimes it is not regarded as a promotional tool within the reach of a company. Very few products or services are covered by publicity. Packaging is also considered as a powerful sales promotion tool these days. It immediately attracts the buyer and makes him buy the product. This tool has produced good results in case of consumer goods. To some extent, packaging has replaced the counter salesperson. We have now learnt about the various tools of promotion. Each tool has certain merits and demerits. It is very important that promotion mix is so devised that it achieves marketing objectives optimally. It is not an easy task. There are no hard and fast rules of promotion mix. Hence every factor should be paid due attention while deciding on the promotion mix.

Factors governing Promotion-mix:

1. Nature of product:
Different types of products require different promotion mix. In case of consumer goods, advertisement is considered to be the most important because the goods are non-technical and produced on a large scale. However, for industrial goods personal selling is regarded as the most important tool because the products are technical in nature, costly and persuasion is considered essential for their sale.

2. Type of the market:

If the number of customers is quite large and they are spread over a vast area, advertisement is more helpful because it can reach people everywhere. However if number of customers is not very large and they are concentrated geographically, personal selling and sales promotion may be more effective.

Summer Internship Report SAL MBA


3. Stage of the product life cycle:

The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution.

Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilize.

Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilize. Producers attempt to differentiate products and brands are keys to this. Price wars and intense competition occur. At this point, the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and uses a greater variety of media.

Summer Internship Report SAL MBA


At this point, there is a downturn in the market. For example, more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

4. Budget:
Funds available for promotion also decide promotion mix, e.g. advertisement is a costly tool. If sufficient funds are not available, this tool may not be adopted. Personal selling involves continuous spending. Thus, budget is a deciding factor for promotion-mix.

5. Push vs. Pull Strategy:

When the firm pushes the product to the intermediaries they in turn push it to the consumers, it is known as push strategy. In this case, personal selling or display should be more effective. Pull strategy refers to the policy of a company to strive to build up consumer demand without recourse to intermediaries. Generally, advertising is considered more important in case of pull strategy. To sum up, it may be said that all promotional tools are complementary and not competitive. The degree of emphasis on each tool will differ depending upon the influence of certain factors. A proper combination of promotional tools should be designed to attain better results.

Summer Internship Report SAL MBA


Place is another important element of marketing mix. Once the goods are manufactured, packaged, priced and promoted, they must be made available to the consumers. Activities related to placing the products are covered under this element of marketing-mix. It consists of decisions relating to channels of distribution and physical distribution. Channels of distribution refer to the individuals and organizations which facilitate moving the goods from manufactures to consumers. It is important that regular and smooth flow of goods is maintained so that products are not spoiled and supplies are not delayed. To ensure this, various facilitating services need to be arranged like transportation, warehousing, inventory control, and order processing. These are known as components of physical distribution. Let us now study the two sub-elements of place-

A. Channels of distribution
B. Physical distribution

Channels of Distribution:
Channel of distribution denotes the intermediaries involved in the process whereby a product passes from the manufacturer to consumers. It is very important for the producers to involve intermediaries in order to reach consumers. Intermediaries reduce the problems of both producers and consumers. Secondly, intermediaries help in distributing the products over a large area. Intermediaries also supply useful market information to the producer for improving the product. Involvement of intermediaries adds to the convenience of consumers because they are able to lay many items from a single store. Some people feel that by involving more intermediaries in the process of distribution, the final price of a product is considerably rose which is ultimately paid by the consumer. Therefore, the number of intermediaries involved should be limited, if at all necessary: There can be various levels of channel. It is for the producer to decide which level would suit the sale of his product.

Number of Channel Levels:

Distribution channel starts from the producer and ends with the consumer. Each layer of intermediary that performs some work in bringing the product closer to the final layer is a channel level. The diagram given below shows the various channel levels.

Summer Internship Report SAL MBA


Channel 1 Manufactur er

Channel 2 Manufactur er

Channel 3 Manufactur er

Channel 4 Manufactur er

Wholesaler Retailer Retailer


Jobbers Retailer





Channel 1 is called a direct marketing channel. It has no intermediary level. Producers sell
products directly to the consumers.

Channel 2 includes one intermediary which is generally a retailer. Retailers buy products
directly from the manufacturer and sell these to the consumers. Generally electronic goods like televisions, computers, are sold through this channel level.

Channel 3 consists of two levels, typically a wholesaler and a retailer. This channel is often
used by small manufacturers of food items, and other products.

Channel 4 contains three intermediaries levels. Jobbers usually come between wholesalers
and retailers. They buy from wholesaler and sell to small retailers who generally are not served by wholesalers. There can be even more levels in distribution channel but from producers point of view, greater number of levels means less control and greater complexity of channel.

Summer Internship Report SAL MBA


Choice of Distribution Channel :

There are a number of factors which govern the choice regarding distribution channel. These are listed below-

1. Nature of product:
For perishable goods, shorter channel is preferred whereas for durable goods channel 3 is more popular. If goods are made to order, direct selling may be effected. For technical products and costly products, manufacturers generally go for direct selling through agents specially hired for this purpose.

2. Nature of market:
If the market is concentrated and not scattered, producers may go for direct selling but for scattered market, intermediaries are involved. If there are more buyers, there may be a need to include more intermediaries. For consumer product market, retailers are essential but in case of industrial products, a shorter channel is preferred, hence intermediaries may be eliminated.

3. Middlemen:
Intermediaries who can provide desired marketing services are given preference. The availability of intermediaries also affects channel decision. The intermediaries must be cooperative and honest. The channel which generates largest sales volume at lower unit cost will be given priority.

4. Size and Policy of the Company:

There are many factors related to company which influence channel decision. A big size company with broader product line can afford to have shorter channel. New companies heavily rely on intermediaries. A company with sufficient financial resources can spend heavily on advertisement and its own outlets. Hence, need for intermediary is reduced. Companies desiring efficient control over channel members will always prefer shorter channel.

Summer Internship Report SAL MBA


5. Marketing Environment:
During recession or depression, shorter channels are preferred because of being less costly. In times of prosperity, a wide choice is available. Technological inventions also have an impact e.g., distribution of perishable goods to distant places has become possible due to cold storage facilities in warehousing and transporting. Such facilities have expanded the role of intermediaries.

6. Competitors:
Channels of distribution used by competitors also influence this decision. Some organization may like to follow the same chains as used by competitors. On the other hand, some organization may avoid channels already customary. They may have their own decisions. Thus after visualizing the impact of the factors mentioned above a company adopts the best channel from among the available alternatives.

Physical Distribution :
Physical distribution is the set of activities concerned with efficient movement of finished goods from the end of the production operation to the consumer. Physical distribution takes place within numerous wholesaling and retailing distribution channels, and includes such important decision areas as customer service, inventory control, materials handling, protective packaging, order procession, transportation, warehouse site selection, and warehousing. Physical distribution is part of a larger process called "distribution," which includes wholesale and retail marketing, as well the physical movement of products.

Summer Internship Report SAL MBA


Small business owners can ask the following questions in addressing these components: 1. Customer servicewhat level of customer service should be provided? 2. Order processinghow should the orders be handled? 3. Inventory controlhow much inventory should be maintained at each location? 4. Warehousingwhere will the goods be located? How many warehouses should be utilized? 5. Protective packaging and materials handlinghow can efficient methods are developed for handling goods in the factory, warehouse, and transport terminals? 6. Transportationhow will the products be shipped?


1. Product Inquiry - Initial inquiry about offerings, visit to the web-site, catalog request 2. Sales Quote - Budgetary or availability quote 3. Order Configuration - Where ordered items need selection of options or order lines need to be compatible with each other 4. Order Booking - The formal order placement or closing of the deal (issuing by the customer of a Purchase Order) 5. Order Acknowledgment / Confirmation - Confirmation that the order is booked and/or received 6. Invoicing / Billing - The presentment of the commercial invoice / bill to the customer 7. Order Sourcing / Planning - Determining the source / location of item(s) to be shipped 8. Order Changes - Changes to orders, if needed 9. Order Processing - Process step where the distribution center or warehouse is responsible to fill order (receive and stock inventory, pick, pack and ship orders). 10. Shipment - The shipment and transportation of the goods 11. Delivery - The delivery of the goods to the consignee / customer 12. Settlement - The payment of the charges for goods / services / delivery 13. Returns - In case the goods are unacceptable / not require

Summer Internship Report SAL MBA


Inter relationship between different components of marketing-mix:

We have learnt that there are four elements of marketing mix, which are, product, price, promotion and place. We have also read in details about each element. Each element of the mix is so wide that it needs careful alteration and lot of concentration. Yet the job of the marketing manager is not over. What he has to design is an optimum marketing mix which takes care of both customers satisfaction and organizational objectives. Each element of marketing mix is related with other element. Thus, tools of promotion depend upon the nature of product, the price that can be charged for that product, and the process through which it would reach the consumer. Likewise while deciding on the price of product; the important considerations are manufacturing cost of the product, cost of promotion and money spent on distribution. Thus, all the elements are mutually inter-related. It would be unwise to take a decision on marketing mix without going deep into every elements of marketing mix. The marketing manager is a mixer of all the marketing elements or resources. Marketing mix should be such that it helps in achieving organizational objectives of profit, sales volume, market share, etc. It should meet the competition in the market. It must click with the demand from different markets. It must deliver consumer satisfaction. All this requires an ideal blending of all the elements of marketing mix, as the elements are complementary and mutually supporting.

Summer Internship Report SAL MBA



Summer Internship Report SAL MBA



Kamlesh Engineering Company was formed in 1973 by experts from the allied field with decades of business experience. We offer you a wide range of Industrial Valves available in Cast Iron, Cast Steel, Forged Steel, Stainless Steel, Alloy Steel as Material of Construction and Pressure Rating ranging from 150# to 2500#. We are an ISO 9001: 2000 company certified by BVQI. Every product carries our name and with it the assurance that every person in our organization subscribes to QUALITY. People in our group are with industrial experience, highly skilled and motivated. We work under cost, quality and time matrix. We have modern infrastructure to manufacture quality valves in CNC Machines as well as Semi Automatic Machineries. Our quality process is setup form the casting stage to finished goods to deliver the projects on time and every time. Our ability is to rapidly expand infrastructure to meet customers needs and dedicated engineering company backed by CAD / CAM Software. The company is committed to product innovation, engineering excellence, precision manufacturing, 100% quality testing and hands on technical assistance to the customer. We mark our products under the Brand name "Sap Mark". We have sound customer base through Dealer Network throughout the country and Direct Interaction with Government Department & Public Sector Undertakings.

Summer Internship Report SAL MBA


VISION & MISSION: VISION: Want to become manufacturer leader in valves. Want to make good mark in flow control products. MISSION: We think of ourselves as taking as progressive yet conservative approach to business, stressing service & inventory as our greatest assets, while continually looking for new & innovative ways to meet our customers changing needs. We employ friendly, knowledgeable people throughout the company who try to guarantee our customers total satisfaction. We produce valves with the safety of those who use them as our uppermost & defining goal. Provide our customers with valves which perform as promised, at a price that reflects their value to the user. Respond promptly & cautiously to all customers, distributor inquiries, questions & problems. This allows our customer to focus on their core businesses and dramatically improve their productivity and profitability. OBJECTIVE: We accomplish this mission through PRINCIPLE CENTERED MANAGEMENT, which holds the values at its core: QUALITY SAFETY SYNERGY EMPOWERMENT RESPECT LOYALTY.

Summer Internship Report SAL MBA




Kamlesh Bhai Purohit Brijesh Purohit Pankaj Purohit
Dispatch Head Ram Bhai Marketing Head Pankaj P. Purchase Head Surendra P. Design Head Sagar Bhai Production Head Yogesh P. QA/QC Head Nirav Bhai MR Brijesh Bhai

Dispatch Assistant Rohit Bhai

Marketing Executive

Design Engineer Sagar Bhai

QC Engineer Nirav Bhai

Training Engineer Akhtar Bhai

Hameed Bhai

Store In charge Sourabh Bhai

Purchase Assistant Vikash Bhai

Maintenance In charge Yogesh Bhai

Production Engineer Sagar Bhai

Summer Internship Report SAL MBA


Types of Departments:


Technical or Main Department,

Planning Department, Design Department, Production or Fabrications Department, Inspection and Quality Control Department, Store and Purchase Department, Finance Department, Marketing Department


Supported Department,
Packaging and labeling

Summer Internship Report SAL MBA




Gate Valve

Globe Valve

Ball Valve

Butterfly valve

Forged steel Valve

Non-Return Valve




Automation Valve

1 PC



3PC Pneumatic Electric

Summer Internship Report SAL MBA


NETWORK: KAMLESH ENGINEERING CO. has wide distribution network all over India. Ahmedabad (Head Office) Baroda Surat Ankleshwar Vapi Rajkot Mumbai Pune Kolhapur Aurangabad Hubli Bangalore Coimbatore Ernakulam Madurai Channai Hyderabad Vijayvada Rajahmundry
Summer Internship Report SAL MBA


Vishakhapatnam Bhubaneswar Kolkata Jamshedpur Kanpur Lucknow Indore Gwalior New Delhi Jaipur Panipat Chandigarh Amritsar

Summer Internship Report SAL MBA


CLIENTS: SECTORWISE CLIENT Pharmaceutical Sector: Zudus Cadila Intas Pharma Natco Pharma Ranbaxy Pharma Nector Life Science Torrent Pharma Vivimed Pharma Alembic Ltd. Bajaj Pharma Inogent laboratories Pvt. Ltd. Vegesna laboratories Pvt. Ltd. Avra laboratories Pvt. Ltd.

Chemical Sector: Aditya Birla Meghmani Chemical Kharavala Chemical Punjab Chemicals & Crop Protection Ltd. Bodal Chemicals Metrochem Chemical

Summer Internship Report SAL MBA


Steel Sector: TATA Steel Essar Steel Bhusan Steel Steel Strips Wheels Ltd. Aarti Steels Ltd. Shah Alloys

Gas Sector: L & T Gas Shell Gas (LPG) India Pvt. Ltd.

Cement Sector: Ambuja Cement Laxmi Cement Sanghi Cement Aarti Steel Ltd. Steel Strips Wheels Ltd.

Power Sector: Torrent Power Ltd.

OTHERS: Jaihind Projects Ltd. Pacific pipes Pvt. Ltd. Nahar group of Industry

Summer Internship Report SAL MBA



More than 50 highly skilled workers. Quality Delivery & Distribution Network Transparent Co. policy

Supply of raw material.

The Co. has ample of opportunity to expand its business outside India across the global market. API 6D/API 600 certification for direct marketing EIL Registration IBR Registration

A common threat facing any company in sales is competition. Its major competitors are Audco (L & T) Valves Ltd., Mark valves & BDK valves. Kamlesh Engg. has to make strategies to tackle problem in the present & the near future.

Summer Internship Report SAL MBA


Objectives of the Project: Understanding & developing knowledge in the field of marketing. Experiencing various issues in marketing under actual scenario.
The main objective of the Industrial Training is to experience and understand real life situations in industrial organizations and their related environments and accelerating the learning process of how students knowledge could be used in a realistic way. In addition to that, industrial training also makes one understand the formal and informal relationships in an industrial organization so as to promote favorable human relations and teamwork. Besides, it provides the exposure to practice and apply the acquired knowledge hands - on in the working environment. Industrial training also provides a systematic introduction to the ways of industry and developing talent and attitudes, so that one can understand how Human Resource Development works. Moreover, students can gain hands-on experience that is related to the students majoring so that the student can relate to and widen the skills that have been learnt while being in university. Industrial training also exposes the students to the real career world and accustoms them to an organizational structure, business operation and administrative functions. Furthermore, students implement what they have learned and learn more throughout this training. Besides, students can also gain experience to select the optimal solution in handling a situation. During industrial training students can learn the accepted safety practices in the industry. Students can also develop a sense of responsibility towards society. In conclusion, there is strong evidence that industrial training is highly beneficial to students development, and it is highly valued. The students undoubtedly gain useful experience of applying their specialist and technical skills, as well as developing their personal and communications skills. This internship also helps students to prepare for the work environment and also teach the ergonomics of organizations in the real world.

Summer Internship Report SAL MBA



Summer Internship Report SAL MBA


A. RESEARCH DESIGN I have used Descriptive Research as a tool to study components of Marketing Mix. Descriptive researches studies are those studies, which are concerned with observe & describe.

The task of data collection begins after a research problem is being defined and research design chalked out.

Data types
a) Primary Sources b) Secondary Sources

A. Primary Sources:
The primary data are those which are collects fresh and for the first time, and thus happen to be original in character.

B. Secondary Sources:
The secondary data are those which have already been collected by someone and which have already been passed through the statistical process.

Collection of Data for Project:

PRIMARY SOURCE - Personal talk (informal), Observation SECONDARY SOURCE Internet, Company Broacher, Internal Data.

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After the data collection, various parameters have been used for the purpose of data analysis & interpretation has been made & the same has been presented. SAMPLING DESIGN A sample design is a definite plan for obtaining a sample from a given population. There are many sample design from which a researcher can choose. Researchers must prepare /select a sample design which should be reliable and appropriate for their research only.

The first step in developing any sample design is to clearly define the set of objectives technically called universe to be studied. The universe of my study includes the corporate houses whether big or small. These are the organization which are indulged in providing welfare amenities to labor for their betterment thereby improving the lot of working class & make a worker a good employee and a good citizen.

Sample Size Instrument Used Area covered Type of Universe Sampling Techniques:

: : : :

10 Observation, Personal talk Kamlesh Engineering Company Finite

This refers to procedure by which the organizations have been chosen. This is: Non-Random Sampling : Convenience Sampling Judgment Sampling

Summer Internship Report SAL MBA



Summer Internship Report SAL MBA


The first market mix element is Product. A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or want. Product decision is normally based on Brand Name, Functionality, Styling, Quality, Safety, Packaging, Repairs and Support, Warranty, accessories and Services. These product attributes can be manipulated depending on what the target market wants. In addition, customers always look for new and improved things, which are why marketers should improve existing products, develop new ones, and discontinue old ones that are no longer needed or wanted by the customer. Kamlesh Engg. Co. has wide range of Industrial Valves. So, briefly the products can be categorized in the following major categories: Ball Valve Gate Valve Globe Valve Non Return Valves Forged Valve Butterfly Valve

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A. BALL VALVE: In the category of Ball Valve, Co. has further subdivided its product in different types according to their end connections & design. In this category, we have several other sub categories and design which are: I. II. Screwed end Flanged end


Ball Valve 1PC S/E


Ball Valve 3 PC S/E

Ball Valve 2 PC F/E

Ball Valve 3 PC F/E

The following options are available for Ball Valve category for the customization: For low temperature and cryogenic services (cold box and non-cold box applications extended bonnet as per BS 6364 Locking arrangement Gear, Electrical, Hydraulic or Pneumatic actuator Soft seats are recommended for service temperature up to 260C and for higher temperatures a metal to metal seating offered can be supplied

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In this category, following options are available. As per the customer demand, the customization is done in the product. Solid, flexible, split wedge, double disc and parallel Slide Gate configurations For low temperature and cryogenic services (cold box and non-cold box applications) extended bonnet as per BS 6364 Locking arrangement Gear, Electrical, Hydraulic or Pneumatic actuator.


Various features and specifications of GLOBE VALVE are described below: Sap Cast Steel Globe Valves have been designed to meet the requirements BS 1873 /ASME B 16.34 Face to Face and End to End dimensions conform to ASME B 16.10 / BS 2080 / DIN End flange dimensions conform to ASME B 16.5 / API 605 / BS 3293 / DIN Butt weld end dimensions conform to ASME B 16.25 Anti-frictional Ball bearings are provided in higher sizes and classes. Outside screw and yoke construction All the valves provided with backseat arrangement
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The gland is of self aligning two piece type Deep stuffing box The Seat-rings are shoulder seated type having ample cross section for strength are provided with welded in and threaded Seat-rings will be supplied on request. In case of SS valves the Seat-rings are integral to Body The Body to Bonnet joint is a male & female in ASME 150#, 300# & 600# valves and ring joint is used in higher classes. In addition, the options available in this category in the Company for customization are: Angle and Y type design available For low temperature and cryogenic services (cold box and non-cold box applications) extended bonnet as per BS 6364 available Locking arrangement Gear, Electrical, Hydraulic or Pneumatic actuator available Regulating, guided and soft seated plugs available Bellow Seal for critical service and hazardous media.


In this product category, we have three sub-categories of NRVs. The three are:

Swing Check Valve Wafer check valve Lift up NRV

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1. Swing Check Valve:

Features of this valve are: Sap Cast Steel Check Valves have been designed to meet the requirements of BS 1868 /ASME B 16.34/API 6D-ISO14313. Face to Face and End to End dimensions conform to ASME B 16.10 / BS 2080 / DIN End flange dimensions conform to ASME B 16.5 / API 605 / BS 3293 / DIN Butt weld end dimensions conform to ASME B 16.25 The Seat-rings are cylindrical bottom seated type having ample cross section for strength are provided with welded in and threaded Seat-rings will be supplied on request. In case of SS, valves the Seat-rings are integral to Body. The Body to Bonnet joint is a male & female in ASME 150#, 300# & 600# valves and ring joint is used in higher classes. Valves meet the requirements of fugitive emission levels Shell category B as per MESC SPE 77/312. In addition, the options available for customization are: Tilting disc design available Check Valves can be supplied with counter weight or dashpot arrangement.

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2. Wafer Check Valve:

Design features of Wafer Check Valve are: Economical, lightweight, compact design significantly lighter and less expensive than comparable swing check valves. Easy to install and maintain Smooth, spring-assisted closing reduces water hammer Long legged spring allow plates to open and close without seat scrubbing Rugged Inconel X-750 spring is standard in all steel and S.S valves Innovative 316 SS seat, standard in all WCB metal-seated valves, combined with standard 316 SS plates provide a true all SS seating area Manufactured to API 6D & tested to the same.

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Features of Lift up Type NRV are: Check valve is a mechanical device, a valve that normally allows a fluid to flow through it in only one direction. Check valves are two-port valves, meaning they have two openings in the body, one for fluid to enter and the other for fluid to leave. There are various types of check valves used in a wide variety of applications. Although they are available in a wide range of sizes and costs, many check valves are very small, simple, and / or cheap. Check valves work automatically and most are not controlled by a person or any external control; accordingly, most do not have any valve handle or stem. The bodies (external shells) of most check valves are made of metal. An important concept in check valves is the cracking pressure which is the minimum upstream pressure at which the valve will operate. Typically, the check valve is designed for and can therefore be specified for a specific cracking pressure.

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There are main three products available in this category. These are:

Forged Gate Valve Forged Globe Valve Forged Check Valve

Forged Gate Valve

Forged Globe Valve

Forged Check Valve

Features of Forged Valve are described below: Sap Forged Steel Valves have been designed to meet the requirements of API 602 / BS 5352 / ASME B 16.34 Socket weld ends dimensions conforms to ASME B 16.11 Screwed ends dimensions conforms to ASME B 1.20.1 Outside screw and yoke construction The gland is of two piece self aligning type Back seat arrangement for Gate and Globe Valves. Valves meet the requirements of fugitive emission level Shell Category B as per MESC SPE 77/312 Options available for customization are: For low temperature and cryogenic services (cold box and non cold box) extended bonnet as per BS 6364 available

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Welded bonnet construction Locking arrangement Welded on flanges


Features of butterfly valve are: simple structure, small size, light weight, little material consumption, small installing size, fast switching 90back and forth rotation, small driving torque characteristics Used for cutting off, connecting, regulating the pipeline medium, with good fluid control features and closed sealing performance. When butterfly valve is in the fully open position, the disc thickness is the only resistance that the medium flows through the body, so the pressure drop through the valve is very small, so it has good flow control characteristics. Butterfly valve sealing types are flexible sealing and metal sealing types. Elastic sealing valves, sealing ring can be mounted on the body or attached to the around disc.

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The BRAND under which the Co. sells its products is SAP MARK which is certified by BVQI. The advantages of SAP Brand are:

# Proven track record of performance and reliability

Experience over four decades of manufacturing valves Investment in modern manufacturing technology

# Integrated manufacturer-supplier
Complete control over all critical processes including raw materials Preferred by reputed Oil majors and EPC contractors

# Design and Engineering capability

Highly skilled engineers for designing products with optimal performance Ability to design products with special requirements Customized product development working closely with the user groups

# Quality Assurance Program

Certified by international inspection agencies and also end users Valve performance exceeds many international standards

# Variety of products and Wide range

Carbon steel to stainless steel with sizes up to 64 Gate, Globe and Check valves both in bolted and pressure seal construction including Cryogenic

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# Wide distribution network

Alliance with the reputed distributors in the world Availability of valves from various locations including back up inventory at factories

# Logistics support
Customized packing and marking Shipment and tracking


Packaging of all valves is done using degradable plastic. Labeling of valves is done in-house of the company under the SAP MARK brand name. Labeling provides full technical specification of the particular product. It also includes type of material, dimensions & brand name & logo.


Co. provides after sale service and credit sale service. The after sale service provided by the company is fully free of charge.

Summer Internship Report SAL MBA


KAMLESH ENGINEERING CO. has decided the price of its various product lines & range on competitive base. Pricing is done taken in consideration the following factors which majorly affect the price of a product.

Internal Factors are: Cost of product (fixed + variable cost.) Marketing objectives (survival= covers variable cost fully & fixed cost partly.) Raw material transportation cost Finished goods transportation (in some cases) Discount policy Fixed by the top management of the company.

External factors are: Raw material price fluctuation Demand for product Competitors cost & price offer Govt. policy (excise duty, GST, etc.)

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The promotional strategy adopted by the Co. is Brochures, catalogs and fact sheets

Include-Descriptions of the various products and their specification How the products and services are delivered or accessible; Background and expertise of the organization

Be mailed to inquirers, Personal Selling, Brand Name,

Advertisements: Paid advertisement through internet in India-Mart, Google, Just Dial & other business magazines. Direct Mail Personal letter to specified target customers Brochure (soft copy)

The detailed information on advertisement promotion is described below: (1 year, 196 countries)

The facilities provided by are as follow: 1.) MDC 100 photo, 5 page, unlimited key word. 1. Home page 2. Product page 3. Profile page
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4. Contact page 5. Inquiry page

2.) Click to free trade call (196 countries) 3.) Click to free SMS (196 countries) 4.) Video Clip 5.) Show case 6.) Google Map 7.) Google image 8.) Rotator Banner 9.) Rotator sky scrapper 10.) 11.) Tender Trade offer(buy/sell leads)


21000+ Tax/23000/- (1 year)
The facilities provided by are as follows: provides the plan for advertising from Rs.100/day to Rs.8, 00,000/day. However, we have adopted the plan of Rs.150/day. The yearly spent on ads. In Google is Rs.54,000/The charge that Google apply to the company is as per the clicks for the keywords. o The keywords may be: Industry Ball Valve Gate Valve
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Globe Valve, etc.

The inquires come from are genuine buyers and the end users which have actual demand. However, we have some constraint of approvals & registrations. Hence, we have to lose some of them.

COMPARASION OF ADVERTISEMENTS PORTALS 50/month 15/month 15/month 15/month 21,000/ 35/month 4/month 4/month 4/month 23,000/ 20/month 2/month 2/month 2/month 15,000/-

Inquiries Genuine inquiries Ordered inq. Order acceptance Annual budget

Public relation:
The primary objectives of public relation are: Create user acceptance and presell ideas. Create goodwill between an organization and its publics. Provide wide exposure for new or existing products.

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PLACE: KAMLESH ENGINEERING CO. has wide network all over India. Ahmedabad(Head Office) Baroda Surat Ankleshwar Vapi Rajkot Mumbai Pune Kolhapur Aurangabad Hubli Bangalore Coimbatore Ernakulam Madurai Channai Hyderabad Vijayvada
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Rajahmundry Vishakhapatnam Bhubaneswar Kolkata Jamshedpur Kanpur Lucknow Indore Gwalior New Delhi Jaipur Panipat Chandigarh Amritsar

Summer Internship Report SAL MBA


The co. follows mainly following types of distribution channels:

Channel 1 Manufacturer Channel 2 Manufacturer




Channel 1 is the direct marketing channel in which no intermediary is involved. Channel 2 is a single level distribution channel. In this level only one intermediary, that is
dealer of the company involved.

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Indian Industrial Valve Market

1% 12% 32% 15% Kamlesh Engg. Marck Valve Audco Valve BDk Valve 40% Others

The Chart shows the positioning of Kamlesh Engineering Co. in Indian Industrial Valve market. The annual market for industrial valve in India is estimated to be of Rs.3000 Cr. According to these data, the co.s market share is shown in the above Chart.

Summer Internship Report SAL MBA


The study has its own importance in its own way. With the help of this study, one can know about the struggle and success of K.E.Co. Efforts, which is due to its efficient management. This study will definitely increase the morale of each employee and by studying this, managers come to know that what effective measures can be taken to maintain the effective use of MARKETING MIX in the organization and thus to achieve goals of the organization.

Summer Internship Report SAL MBA



The major limitations of my study are as under: -

1. LIMITED TIME: -Although the staff of KAMLESH ENGINEERING CO. was very efficient and highly cooperative and they devoted enough of their valuable time on us but because of time constraint we were not able to devote as much time with their employees.

2. SECRECY: -Some of the information was kept confidential and was not disclosed to any person whosoever.

3. LACK OF COMPARATIVE DATA:-Due to non-availability of other industries in the Valve market, we were not able to compare the data of one organization with another.

In spite of these difficulties, we still put our best efforts in try to do the full justice to the subject matter and in completion of the report.

Summer Internship Report SAL MBA


BIBLIOGRAPAHY Web (official site for K.E.Co.)

Summer Internship Report SAL MBA


Kamlesh Engineering Company is situated at Rakhial, Ahmedabad. The company was founded by Kamlesh Bhai Purohit in 1973. It took over years in the process of rebuilding and expansion The company employs 100 people and manufactures different types of quality valves. The unit has one CNC machine for faster and accurate work. The unit has also one hydraulic testing bench machine which is rarely seen at other valve manufacturer of Ahmedabad.

AREA & PRODUCTION Total Area Factory Area Turnover Production Dispatch : : : : : 1250 sq. yards 1000 sq. yards Rs. 12-15 crores per annum App. 2.50 lakh nos. per annum App. 2.20 lakh nos. per annum

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The company should increase its sales direct marketing channel. The company should provide after sale service up to the mark & customer

The co. should implement CRM system & through existing customer, it has

to increase customer base.

The co. should arrange distributors meeting for collecting feedback &

communicating information regarding improvements in existing products & for new product development.
The company must centralize its production units for efficient management

& better productivity.

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Strategy Formulation
INTRODUCTION: It is useful to consider strategy formulation as part of a strategic management process that comprises three phases: diagnosis, formulation, and implementation. Strategic management is an ongoing process to develop and revise future-oriented strategies that allow an organization to achieve its objectives, considering its capabilities, constraints, and the environment in which it operates. Diagnosis includes: (a) performing a situation analysis (analysis of the internal environment of the organization), including identification and evaluation of current mission, strategic objectives, strategies, and results, plus major strengths and weaknesses; (b) analyzing the organization's external environment, including major opportunities and threats; and (c) identifying the major critical issues, which are a small set, typically two to five, of major problems, threats, weaknesses, and/or opportunities that require particularly high priority attention by management. Formulation, the second phase in the strategic management process, produces a clear set of recommendations, with supporting justification, that revise as necessary the mission and objectives of the organization, and supply the strategies for accomplishing them. In formulation, we are trying to modify the current objectives and strategies in ways to make the organization more successful. This includes trying to create "sustainable" competitive advantages -- although most competitive advantages are eroded steadily by the efforts of competitors. A good recommendation should be: effective in solving the stated problem(s), practical (can be implemented in this situation, with the resources available), feasible within a reasonable period, cost-effective, not overly disruptive, and acceptable to key "stakeholders" in the organization. It is important to consider "fits" between resources plus competencies with opportunities, and fits between risks and expectations.

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There are four primary steps in this phase: * Reviewing the current key objectives and strategies of the organization, which usually would have been identified and evaluated as part of the diagnosis * Identifying a rich range of strategic alternatives to address the three levels of strategy formulation outlined below, including but not limited to dealing with the critical issues * Doing a balanced evaluation of advantages and disadvantages of the alternatives relative to their feasibility plus expected effects on the issues and contributions to the success of the organization * Deciding on the alternatives that should be implemented or recommended.

In organizations, and in the practice of strategic management, strategies must be implemented to achieve the intended results. The most wonderful strategy in the history of the world is useless if not implemented successfully. This third and final stage in the strategic management process involves developing an implementation plan and then doing whatever it takes to make the new strategy operational and effective in achieving the organization's objectives.

The remainder of this chapter focuses on strategy formulation, and is organized into six sections: Three Aspects of Strategy Formulation, Corporate-Level Strategy, Competitive Strategy, Functional Strategy, Choosing Strategies, and Troublesome Strategies.

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The following three aspects or levels of strategy formulation, each with a different focus, need to be dealt with in the formulation phase of strategic management. The three sets of recommendations must be internally consistent and fit together in a mutually supportive manner that forms an integrated hierarchy of strategy, in the order given.

Corporate Level Strategy: In this aspect of strategy, we are concerned with broad
decisions about the total organization's scope and direction. We consider what changes should be made in our growth objective and strategy for achieving it, the lines of business we are in, and how these lines of business fit together. It is useful to think of three components of corporate level strategy: (a) growth or directional strategy (what should be our growth objective, ranging from retrenchment through stability to varying degrees of growth - and how do we accomplish this), (b) portfolio strategy (what should be our portfolio of lines of business, which implicitly requires reconsidering how much concentration or diversification we should have), and (c) parenting strategy (how we allocate resources and manage capabilities and activities across the portfolio -- where do we put special emphasis, and how much do we integrate our various lines of business).

Competitive Strategy (often called Business Level Strategy): This involves

deciding how the company will compete within each line of business (LOB) or strategic business unit (SBU).

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Functional Strategy: These more localized and shorter-horizon strategies deal with how
each functional area and unit will carry out its functional activities to be effective and maximize resource productivity.


This comprises the overall strategy elements for the corporation as a whole, the grand strategy, if you please. Corporate strategy involves four kinds of initiatives: * Making the necessary moves to establish positions in different businesses and achieve an appropriate amount and kind of diversification. A key part of corporate strategy is making decisions on how many, what types, and which specific lines of business the company should be in. This may involve deciding to increase or decrease the amount and breadth of diversification. It may involve closing out some LOB's (lines of business), adding others, and/or changing emphasis among LOB's. * Initiating actions to boost the combined performance of the businesses the company has diversified into: This may involve vigorously pursuing rapid-growth strategies in the most promising LOB's, keeping the other core businesses healthy, initiating turnaround efforts in weak-performing LOB's with promise, and dropping LOB's that are no longer attractive or don't fit into the corporation's overall plans. It also may involve supplying financial, managerial, and other resources, or acquiring and/or merging other companies with an existing LOB. * Pursuing ways to capture valuable cross-business strategic fits and turn them into competitive advantages -- especially transferring and sharing related technology, procurement leverage, operating facilities, distribution channels, and/or customers. * Establishing investment priorities and moving resources that are more corporate into the most attractive LOB's. It is useful to organize the corporate level strategy considerations and initiatives into a framework with the following three main strategy components: growth, portfolio, and parenting.

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What should be Our Growth Objective and Strategies? Growth objectives can range from drastic retrenchment through aggressive growth. Organizational leaders need to revisit and make decisions about the growth objectives and the fundamental strategies the organization will use to achieve them. There are forces that tend to push top decision-makers toward a growth stance even when a company is in trouble and should not be trying to grow, for example bonuses, stock options, fame, ego. Leaders need to resist such temptations and select a growth strategy stance that is appropriate for the organization and its situation. Stability and retrenchment strategies are underutilized. Some of the major strategic alternatives for each of the primary growth stances (retrenchment, stability, and growth) are summarized in the following three sub-sections. Growth Strategies: All growth strategies can be classified into one of two fundamental categories: concentration within existing industries or diversification into other lines of business or industries. When a company's current industries are attractive, have good growth potential, and do not face serious threats, concentrating resources in the existing industries makes good sense. Diversification tends to have greater risks, but is an appropriate option when a company's current industries have little growth potential or are unattractive in other ways. When an industry consolidates and becomes mature, unless there are other markets to seek (for example other international markets), a company may have no choice for growth but diversification. There are two basic concentration strategies, vertical integration and horizontal growth. Diversification strategies can be divided into related (or concentric) and unrelated (conglomerate) diversification. Each of the resulting four core categories of strategy alternatives can be achieved internally through investment and development, or externally through mergers, acquisitions, and/or strategic alliances -- thus producing eight major growth strategy categories.

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Comments about each of the four core categories are outlined below, followed by some key points about mergers, acquisitions, and strategic alliances.

1. Vertical Integration: This type of strategy can be a good one if the company has a strong competitive position in a growing, attractive industry. A company can grow by taking over functions earlier in the value chain that were previously provided by suppliers or other organizations ("backward integration"). This strategy can have advantages, e.g., in cost, stability and quality of components, and making operations more difficult for competitors. However, it also reduces flexibility, raises exit barriers for the company to leave that industry, and prevents the company from seeking the best and latest components from suppliers competing for their business. A company also can grow by taking over functions forward in the value chain previously provided by final manufacturers, distributors, or retailers ("forward integration"). This strategy provides more control over such things as final products/services and distribution, but may involve new critical success factors that the parent company may not be able to master and deliver. For example, being an excellent manufacturer does not make a company an effective retailer. Some writers claim that backward integration is usually more profitable than forward integration, although this does not have general support. In any case, many companies have moved toward less vertical integration (especially backward, but also forward) during the last decade or so, replacing significant amounts of previous vertical integration with outsourcing and various forms of strategic alliances.

2. Horizontal Growth: This strategy alternative category involves expanding the company's existing products into other locations and/or market segments, or increasing the range of products/services offered to current markets, or a combination of both. It amounts to expanding sideways at the point(s) in the value chain that the company is currently engaged in. One of the primary advantages of this alternative is being able to choose from a continuous range of

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choices, from modest extensions of present products/markets to major expansions -- each with corresponding amounts of cost and risk.

3. Related Diversification (aka Concentric Diversification): In this alternative, a company expands into a related industry, one having synergy with the company's existing lines of business, creating a situation in which the existing and new lines of business share and gain special advantages from commonalities such as technology, customers, distribution, location, product or manufacturing similarities, and government access. This is often an appropriate corporate strategy when a company has a strong competitive position and distinctive competencies, but its existing industry is not very attractive.

4. Unrelated Diversification (aka Conglomerate Diversification): This fourth major category of corporate strategy alternatives for growth involves diversifying into a line of business unrelated to the current ones. The reasons to consider this alternative are primarily seeking more attractive opportunities for growth in which to invest available funds (in contrast to rather unattractive opportunities in existing industries), risk reduction, and/or preparing to exit an existing line of business (for example, one in the decline stage of the product life cycle). Further, this may be an appropriate strategy when, not only the present industry is unattractive, but also the company lacks outstanding competencies that it could transfer to related products or industries. However, because it is difficult to manage and excel in unrelated business units, it can be difficult to realize the hoped-for value added.

5. Mergers, Acquisitions, and Strategic Alliances: Each of the four-growth strategy categories just discussed can be carried out internally or externally, through mergers, acquisitions, and/or strategic alliances. Of course, there also can be a mixture of internal and external actions. Various forms of strategic alliances, mergers, and acquisitions have emerged and are used extensively in many industries today. They are used particularly to bridge resource and
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technology gaps, and to obtain expertise and market positions more quickly than could be done through internal development. They are particularly necessary and potentially useful when a company wishes to enter a new industry, new markets, and/or new parts of the world. Despite their extensive use, a large share of alliances, mergers, and acquisitions fall far short of expected benefits or are outright failures. For example, one study published in Business Week in 1999 found that 61 percent of alliances were either outright failures or "limping along." Research on mergers and acquisitions includes a Mercer Management Consulting study of all mergers from 1990 to 1996 which found that nearly half "destroyed" shareholder value; an A. T. Kearney study of 115 multibillion-dollar, global mergers between 1993 and 1996 where 58 percent failed to create "substantial returns for shareholders" in the form of dividends and stock price appreciation; and a Price-Waterhouse-Coopers study of 97 acquisitions over $500 million from 1994 to 1997 in which two-thirds of the buyer's stocks dropped on announcement of the transaction and a third of these were still lagging a year later. Many reasons for the problematic record have been cited, including paying too much, unrealistic expectations, inadequate due diligence, and conflicting corporate cultures; however, the most powerful contributor to success or failure is inadequate attention to the merger integration process. Although the lawyers and investment bankers may consider a deal done when the papers are signed and they receive their fees, this should be merely an incident in a multi-year process of integration that began before the signing and continues far beyond.

Stability Strategies
There are a number of circumstances in which the most appropriate growth stance for a company is stability, rather than growth. Often, this may be used for a relatively short period, after which further growth is planned. Such circumstances usually involve a reasonable successful company, combined with circumstances that either permit a period of comfortable coasting or suggest a pause or caution. Three alternatives are outlined below, in which the actual strategy actions are similar, but differing primarily in the circumstances motivating the choice of a stability strategy and in the intentions for future strategic actions.

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1. Pause and Then Proceed: This stability strategy alternative (essentially a timeout) may be appropriate in either of two situations: (a) the need for an opportunity to rest, digest, and consolidate after growth or some turbulent events - before continuing a growth strategy, or (b) an uncertain or hostile environment in which it is prudent to stay in a "holding pattern" until there is change in or more clarity about the future in the environment.

2. No Change: This alternative could be a cop-out, representing indecision or timidity in making a choice for change. Alternatively, it may be a comfortable, even long-term strategy in a mature, rather stable environment, e.g., a small business in a small town with few competitors.

3. Grab Profits While You Can: This is a non-recommended strategy to try to mask a deteriorating situation by artificially supporting profits or their appearance, or otherwise trying to act as though the problems will go away. Either it is an unstable, temporary strategy in a worsening situation, usually chosen to try to delay letting stakeholders know how bad things are or to extract personal gain before things collapse. Recent terrible examples in the USA are Enron and WorldCom.

Retrenchment Strategies

Turnaround: This strategy, dealing with a company in serious trouble, attempts to resuscitate or revive the company through a combination of contraction (general, major cutbacks in size and costs) and consolidation (creating and stabilizing a smaller, leaner company). Although difficult, when done very effectively it can succeed in both retaining enough key employees and revitalizing the company.
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Captive Company Strategy: This strategy involves giving up independence in exchange for some security by becoming another company's sole supplier, distributor, or a dependent subsidiary.

Sell Out: If a company in a weak position is unable or unlikely to succeed with a turnaround or captive company strategy, it has few choices other than to try to find a buyer and sell itself (or divest, if part of a diversified corporation).

Liquidation: When a company has been unsuccessful in or has none of the previous three strategic alternatives available, the only remaining alternative is liquidation, often involving a bankruptcy. There is a modest advantage of a voluntary liquidation over bankruptcy in that the board and top management make the decisions rather than turning them over to a court, which often ignores stockholders' interests.

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In this second aspect of a company's strategy, the focus is on how to compete successfully in each of the lines of business the company has chosen to engage in. The central thrust is how to build and improve the company's competitive position for each of its lines of business. A company has competitive advantage whenever it can attract customers and defend against competitive forces better than its rivals defend. Companies want to develop competitive advantages that have some sustainability (although the typical term "sustainable competitive advantage" is usually only true dynamically, as a firm works to continue it). Successful competitive strategies usually involve building uniquely strong or distinctive competencies in one or several areas crucial to success and using them to maintain a competitive edge over rivals. Some examples of distinctive competencies are superior technology and/or product features, better manufacturing technology and skills, superior sales and distribution capabilities, and better customer service and convenience. Competitive strategy is about being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value. (Michael E. Porter) The essence of strategy lies in creating tomorrow's competitive advantages faster than competitors mimic the ones you possess today. (Gary Hamel & C. K. Prahalad) We will consider competitive strategy by using Porter's four generic strategies (Porter 1980, 1985) as the fundamental choices, and then adding various competitive tactics.

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Porter's Four Generic Competitive Strategies

He argues that a business needs to make two fundamental decisions in establishing its competitive advantage: (a) whether to compete primarily on price (he says "cost," which is necessary to sustain competitive prices, but price is what the customer responds to) or to compete through providing some distinctive points of differentiation that justify higher prices, and (b) how broad a market target it will aim at (its competitive scope). These two choices define the following four generic competitive strategies. Which he argues cover the fundamental range of choices. A fifth strategy alternative (best-cost provider) is added by some sources, although not by Porter, and is included below: 1. Overall Price (Cost) Leadership: Appealing to a broad cross-section of the market by providing products or services at the lowest price. This requires being the overall low-cost provider of the products or services (e.g., Costco, among retail stores, and Hyundai, among automobile manufacturers). Implementing this strategy successfully requires continual, exceptional efforts to reduce costs -- without excluding product features and services that buyers consider essential. It also requires achieving cost advantages in ways that are hard for competitors to copy or match. Some conditions that tend to make this strategy an attractive choice are: * The industry's product is much the same from seller to seller * The marketplace is dominated by price competition, with highly price-sensitive buyers * There are few ways to achieve product differentiation that have much value to buyers * Most buyers use product in same ways -- common user requirements * Switching costs for buyers are low * Buyers are large and have significant bargaining power

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2. Differentiation: appealing to a broad cross-section of the market through offering differentiating features that make customers willing to pay premium prices, e.g., superior technology, quality, prestige, special features, service, convenience (examples are Nordstrom and Lexus). Success with this type of strategy requires differentiation features that are hard or expensive for competitors to duplicate. Sustainable differentiation usually comes from advantages in core competencies, unique company resources or capabilities, and superior management of value chain activities. Some conditions that tend to favor differentiation strategies are: * There are multiple ways to differentiate the product/service that buyers think have substantial value * Buyers have different needs or uses of the product/service * Product innovations and technological change are rapid and competition emphasizes the latest product features * Not many rivals are following a similar differentiation strategy 3. Price (Cost) Focus: a market niche strategy, concentrating on a narrow customer segment and competing with lowest prices, which, again, requires having lower cost structure than competitors (e.g., a single, small shop on a side-street in a town, in which they will order electronic equipment at low prices, or the cheapest automobile made in the former Bulgaria). Some conditions that tend to favor focus (either price or differentiation focus) are: * The business is new and/or has modest resources * The company lacks the capability to go after a wider part of the total market * Buyers' needs or uses of the item are diverse; there are many different niches and segments in the industry * Buyer segments differ widely in size, growth rate, profitability, and intensity in the five competitive forces, making some segments more attractive than others do * Industry leaders do not see the niche as crucial to their own success

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* Few or no other rivals are attempting to specialize in the same target segment 4. Differentiation Focus: a second market niche strategy, concentrating on a narrow customer segment and competing through differentiating features (e.g., a high-fashion women's clothing boutique in Paris, or Ferrari).

Best-Cost Provider Strategy: (although not one of Porter's basic four strategies, this strategy is mentioned by a number of other writers.) This is a strategy of trying to give customers the best cost/value combination, by incorporating key good-or-better product characteristics at a lower cost than competitors incorporate. This strategy is a mixture or hybrid of low-price and differentiation, and targets a segment of value-conscious buyers that is usually larger than a market niche, but smaller than a broad market. Successful implementation of this strategy requires the company to have the resources, skills, capabilities (and possibly luck) to incorporate up-scale features at lower cost than competitors. This strategy could be attractive in markets that have both variety in buyer needs that make differentiation common and where large numbers of buyers are sensitive to both price and value. Porter might argue that this strategy is often temporary, and that a business should choose and achieve one of the four generic competitive strategies above. Otherwise, the business is stuck in the middle of the competitive marketplace and will be out-performed by competitors who choose and excel in one of the fundamental strategies. His argument is analogous to the threats to a tennis player who is standing at the service line, rather than near the baseline or getting to the net. However, others present examples of companies (e.g., Honda and Toyota) who seem to be able to pursue successfully a best-cost provider strategy, with stability.

Competitive Tactics Although a choice of one of the generic competitive strategies discussed in the previous section provides the foundation for a business strategy, there are many variations and elaborations. Among these are various tactics that may be useful (in general, tactics are shorter

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in time horizon and narrower in scope than strategies). This section deals with competitive tactics, while the following section discusses cooperative tactics. Two categories of competitive tactics are those dealing with timing (when to enter a market) and market location (where and how to enter and/or defend). Timing Tactics: When to make a strategic move is often as important as what move to make. We often speak of first-movers (i.e., the first to provide a product or service), secondmovers or rapid followers, and late movers (wait-and-see). Each tactic can have advantages and disadvantages. Being a first-mover can have major strategic advantages when: (a) doing so builds an important image and reputation with buyers; (b) early adoption of new technologies, different components, exclusive distribution channels, etc. can produce cost and/or other advantages over rivals; (c) first-time customers remain strongly loyal in making repeat purchases; and (d) moving first makes entry and imitation by competitors hard or unlikely. However, being a second- or late-mover is not necessarily a disadvantage. There are cases in which the first-mover's skills, technology, and strategies are easily copied or even surpassed by later-movers, allowing them to catch or pass the first-mover in a relatively short period, while having the advantage of minimizing risks by waiting until a new market is established. Sometimes, there are advantages to being a skillful follower rather than a first-mover, e.g., when: (a) being a first-mover is more costly than imitating and only modest experience curve benefits accrue to the leader (followers can end up with lower costs than the first-mover under some conditions); (b) the products of an innovator are somewhat primitive and do not live up to buyer expectations, thus allowing a clever follower to win buyers away from the leader with better performing products; (c) technology is advancing rapidly, giving fast followers the opening to leapfrog a first-mover's products with more attractive and full-featured second- and thirdgeneration products; and (d) the first-mover ignores market segments that can be picked up easily. Market Location Tactics: These fall conveniently into offensive and defensive tactics. Offensive tactics are designed to take market share from a competitor, while defensive tactics

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attempt to keep a competitor from taking away some of our present market share, under the onslaught of offensive tactics by the competitor. Some offensive tactics are: * Frontal Assault: Going head-to-head with the competitor, matching each other in every way. To be successful, the attacker must have superior resources and be willing to continue longer than the company attacked is. * Flanking Maneuver: attacking a part of the market where the competitor is weak. To be successful, the attacker must be patient and willing to carefully expand out of the relatively undefended market niche or else face retaliation by an established competitor. * Encirclement: usually evolving from the previous two, encirclement involves encircling and pushing over the competitor's position in terms of greater product variety and/or serving more markets. This requires a wide variety of abilities and resources necessary to attack multiple market segments. * Bypass Attack: attempting to cut the market out from under the established defender by offering a new, superior type of produce that makes the competitor's product unnecessary or undesirable. * Guerrilla Warfare: using a "hit and run" attack on a competitor, with small, intermittent assaults on different market segments. This offers the possibility for even a small firm to make some gains without seriously threatening a large, established competitor and evoking some form of retaliation.

Some Defensive Tactics are: * Raise Structural Barriers: block avenues challengers can take in mounting an offensive * Increase Expected Retaliation: signal challengers that there is threat of strong retaliation if they attack
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* Reduce Inducement for Attacks: e.g., lower profits to make things less attractive (including use of accounting techniques to obscure true profitability). Keeping prices very low gives a new entrant little profit incentive to enter. The general experience is that any competitive advantage currently held will eventually be eroded by the actions of competent, resourceful competitors. Therefore, to sustain its initial advantage, a firm must use both defensive and offensive strategies, in elaborating on its basic competitive strategy. Cooperative Strategies Another group of "competitive" tactics involves cooperation among companies. These could be grouped under the heading of various types of strategic alliances, which have been discussed to some extent under Corporate Level growth strategies. These involve an agreement or alliance between two or more businesses formed to achieve strategically significant objectives that are mutually beneficial. Some are very short-term; others are longer-term and may be the first stage of an eventual merger between the companies. Some of the reasons for strategic alliances are to: obtain/share technology, share manufacturing capabilities and facilities, share access to specific markets, reduce financial/political/market risks, and achieve other competitive advantages not otherwise available. There could be considered a continuum of types of strategic alliances, ranging from: (a) mutual service consortiums (e.g., similar companies in similar industries pool their resources to develop something that is too expensive alone), (b) licensing arrangements, (c) joint ventures (an independent business entity formed by two or more companies to accomplish certain things, with allocated ownership, operational responsibilities, and financial risks and rewards), (d) value-chain partnerships (e.g., just-in-time supplier relationships, and out-sourcing of major value-chain functions).

Functional strategies are relatively short-term activities that each functional area within a company will carry out to implement the broader, longer-term corporate level and business level strategies. Each functional area has a number of strategy choices that interact with and must be consistent with the overall company strategies.
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Three basic characteristics distinguish functional strategies from corporate level and business level strategies: shorter time horizon, greater specificity, and primary involvement of operating managers. A few examples follow of functional strategy topics for the major functional areas of marketing, finance, production/operations, research and development, and human resources management. Each area needs to deal with sourcing strategy, i.e., what should be done in-house and what should be outsourced? Marketing strategy deals with product/service choices and features, pricing strategy, markets to be targeted, distribution, and promotion considerations. Financial strategies include decisions about capital acquisition, capital allocation, dividend policy, and investment and working capital management. The production or operations functional strategies address choices about how and where the products or services will be manufactured or delivered, technology to be used, management of resources, plus purchasing and relationships with suppliers. For firms in high-tech industries, R&D strategy may be so central that many of the decisions will be made at the business or even corporate level, for example the role of technology in the company's competitive strategy, including choices between being a technology leader or follower. However, there will remain more specific decisions that are part of R&D functional strategy, such as the relative emphasis between product and process R&D, how new technology will be obtained (internal development vs. external through purchasing, acquisition, licensing, alliances, etc.), and degree of centralization for R&D activities. Human resources functional strategy includes many topics, typically recommended by the human resources department, but many requiring top management approval. Examples are job categories and descriptions; pay and benefits; recruiting, selection, and orientation; career development and training; evaluation and incentive systems; policies and discipline; and management/executive selection processes. CHOOSING THE BEST STRATEGY ALTERNATIVES Decision-making is a complex subject, worthy of a chapter or book of its own. This section can only offer a few suggestions. Among the many sources for additional information, I recommend Harrison (1999), McCall & Kaplan (1990), and Williams (2002). Here are some factors to consider when choosing among alternative strategies:

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* It is important to get as clear as possible about objectives and decision criteria (what makes a decision a "good" one?) * The primary answer to the previous question, and therefore a vital criterion, is that the chosen strategies must be effective in addressing the "critical issues" the company faces at this time * They must be consistent with the mission and other strategies of the organization * They need to be consistent with external environment factors, including realistic assessments of the competitive environment and trends * They fit the company's product life cycle position and market attractiveness/competitive strength situation * They must be capable of being implemented effectively and efficiently, including being realistic with respect to the company's resources * The risks must be acceptable and in line with the potential rewards * It is important to match strategy to the other aspects of the situation, including: (a) size, stage, and growth rate of industry; (b) industry characteristics, including fragmentation, importance of technology, commodity product orientation, international features; and (c) company position (dominant leader, leader, aggressive challenger, follower, weak, "stuck in the middle") * Consider stakeholder analysis and other people-related factors (e.g., internal and external pressures, risk propensity, and needs and desires of important decision-makers) * Sometimes it is helpful to do scenario construction, e.g., cases with optimistic, most likely, and pessimistic assumptions.


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Follow the Leader: when the market has no more room for copycat products and look-alike competitors. Sometimes such a strategy can work fine, but not without careful consideration of the company's particular strengths and weaknesses. (e.g., Fujitsu Ltd. was driven since the 1960s to catch up to IBM in mainframes and continued this quest even into the 1990s after mainframes were in steep decline; or the decision by Standard Oil of Ohio to follow Exxon and Mobil Oil into conglomerate diversification)

Count on Hitting another Home Run: e.g., Polaroid tried to follow its early success with instant photography by developing "Polavision" during the mid-1970s. Unfortunately, this very expensive, instant developing, 8mm, black and white, silent motion picture camera and film was displayed at a stockholders' meeting about the time that the first beta-format video recorder was released by Sony. Polaroid reportedly wrote off at least $500 million on this venture without selling a single camera.

Try to do everything: establishing many weak market positions instead of a few strong ones

Arms Race: Attacking the market leaders head-on without having either a good competitive advantage or adequate financial strength; making such aggressive attempts to take market share that rivals are provoked into strong retaliation and a costly "arms race." Such battles seldom produce a substantial change in market shares; usual outcome is higher costs and profitless sales growth Put More Money on a Losing Hand: one version of this is allocating R&D efforts to weak products instead of strong products (e.g., Polavision again, Pan Am's attempt to continue global routes in 1987)

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Over-optimistic Expansion: Using high debt to finance investments in new facilities and equipment, then being trapped with high fixed costs when demand turns down, excess capacity appears, and cash flows are tight

Unrealistic Status-Climbing: Going after the high end of the market without having the reputation to attract buyers looking for name brand, prestige goods (e.g., Sears' attempts to introduce designer women's clothing)

Selling the Sizzle Without the Steak: Spending more money on marketing and sales promotions to try to get around problems with product quality and performance. Depending on cosmetic product improvements to serve as a substitute for real innovation and extra customer value.

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