Operational Management CA 2

CA2 Answer sheet Submission

Submitted By Submitted To

Naman Jain – 1625 Dr. Archi Mathur

V Semester Faculty of Management

BBA LLB Operational Management

Q1. Elucidate with examples the applicability of the definition of hyper competition in
today’s business scenario.

Answer:

HYPER COMPETITION

Hyper competition can be defined as a scenario or process wherein the frequency, boldness, and
aggressiveness of the dynamic movement by the players accelerate to create a condition of
constant disequilibrium and change. The market stability is threatened by short product life-
cycles, short product design cycles, new technologies, frequent entry by unexpected outsiders,
repositioning by incumbents and tactical redefinition of market boundaries as diverse industries
merge. In other words, the environment escalates towards higher and higher levels of
uncertainty, dynamism, heterogeneity, and hostility of the players.

Short Product cycles – this means there are back to back launches of new products regularly,
making the old one useless, where the companies try to improve their designs as much as they
can. organization tries to come up with modification and up-gradation in the product.
Organization has the technology available with it – but they will slowly and steadily come out
with their innovation

Example.

In FMCG

Cadbury or Pepsi or Maggie

Organization came out with same product but removing the defects and providing better features

Mobile phone industry,

1. Old/established brands like One Plus, Samsung, Apple launches a new line of their
phones every year so that their phones remain the latest phones in the market.
2. Newer and smaller brands like Xiaomi, realme, oppo and Vivo also launch a new phone
every month, so that they do not lag behind in the competition.
Short Product design cycle: where the companies try to improve their designs as much as they
can. organization tries to come up with modification and up-gradation in the product.
Organization has the technology available with it – but they will slowly and steadily come out
with their innovation.

Example

1. The Maruti Suzuki swift, wagonR or Dzire in the starting looked completely different
from what it looks like now. The company improved the aerodynamics and other design
flaws to make the car more flawless and they are still improving it constantly.
2. The same can be taken for the iPhones, Samsung, One Plus etc the first generation
Phones looked completely different with big bezels, now they have introduced more
efficient and good looking designs with glass backs and thin bezels.

Heterogeneity of players – different organization coming into the particular market – apart from
branded products there are other organizations also which provide same product. Organization
which are into the sale of same product – they might have experience in other industries
[multiple product line – diversification] – the organization might have used their experience [and
goodwill or brand name] in other market to diversify in to our market.

For example in the case of speakers, a lot of generic unbranded Chinese speakers are also
selling on the online markets. This creates a lot of difficulty for the existing players to
differentiate their products. A lot of other tech companies are also now making Bluetooth
speakers like mobile phone companies, and mobile chargers and power bank manufacturing
companies like ambrane and intex.

New players entering the market –

for example in case of earphones and Bluetooth speakers,

1. boat
2. boult,
3. mivi,
4. pTron etc.

they have made entry with good quality products at half the process.
Repositioning – huge opportunity to grow in the market, the firms who are not doing well will
also enter the market and put new resources, rebrand their products, earn profit.

Eg. Nokia

Windows phone were not a success, came out with android phones.

Diverse industries – coming together – when there are organization operating in two different
industries and they come together then it will result in hyper competition.

Eg. Car manufacturer and financial intermediaries. Eg. Mahindra started financing its cars
through Mahindra finance division and giving attractive deals on car loans. This made the other
players also start some kind of joint partnerships with financing institutions.

Growth – the companies exploit the market as much as they can during the growth stage.

Eg. Pharma companies and mask companies. They all used the fear of COVID to their advantage
and exploited the demand growth of the products.

Mergers – in the hypercompetition, like in mobile network services,

1. Vodafone idea merged together to face challenges posed by Jio and airtel.
Q2. How Mondelez India is going to respond to the threat matrix for 5 Star or Cadbury’s
as prepared by you?

Answer:

Mondelez is the parent company of Cadbury’s and 5 Star is one of the product of Mondelez. To
analyse how Mondelez India is going to respond to the threat matrix for 5 Star or Cadbury’s, it is
pertinent to first identify the threat matrix of 5 star. Following is the threat matrix of 5 – Star.

Threat Matrix of 5 Star

    Probability of Occurrence

    High Low

1. Rise in price of cocoa 1. Health Consciousness

beans. of the people.
2. Transportation and 2. Reduction in
Hig Storage limitation in production of cocoa
h Rural areas. due to deforestation
3. Lockdown and legal and global warming
Seriousness restrictions
1. Availability of substitute  
products.
2. Restriction on import of
Low cocoa beans

Now, in order to determine how Mondelez will respond to this, we will do the SWOT analysis
and identify which strategy Mondelez should adopt.
According to the Matrices we have prepared, 5-Star or Cadbury’s have Substantial Internal
Strengths in the form of Market Share, brand loyalty, economies of scale, low switching costs
etc. Therefore, if we see Mondelez as a whole, it is clearly the market leader in India when it
comes to chocolate industry. However, there are some major environmental threats that
Mondelez has to take care of. These threats are as mentioned in the Threat Matrix above.

Mondelez also has a lot of opportunities in Indian Market and therefore, Mondelez should
choose Diversification Strategy.

Diversification strategy

This is adopted when Organization has lot many internal strengths but major external
environment threats. Here the organization will not be able to capitalize on the market or grow as
much as they anticipated because there are severe threats despite the strengths. Thus the
organization uses its strengths and enters a new market by diversifying into a new product line.

When we talk about Mondelez India, it has already adopted this strategy and has started coming
up with diverse products instead of just chocolates. Previously Mondelez used to produce only
chocolate confectionaries, but later on it acquired Bourn Vita. Now we see Mondelez has an
extensive product line inclusive of Cadbury Dairy Milk, Cadbury Dairy Milk Silk,
Bournvita, 5 Star, Perk, Bournville, Celebrations, Halls, Choclairs, Tang, Oreo and Gems.

Mondelez has created different products in the same line also. For example, it is producing dark
chocolates, milk chocolates, caramel based chocolates (5 Star) etc, and also, Mondelez has
diversified into biscuits and cookies, celebration, candies, energy drinks like Tang etc.

So in this way, the threats of 5 Star are not applicable on each and every product. The threat for
some acts as an opportunity for the other. For example, for all the threats related to cocoa beans,
Mondelez has come up with products which don’t even include cocoa. Example. Tang.

Therefore, the adoption of Diversification Strategy by Mondelez is already evident and

Mondelez should continue doing this in the future also in order to be able to gain the competitive
advantage and retain its position in the market.