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Master of Business Administration-MBA Semester 4 MB0052 – Strategic Management and Business Policy Assignment Set- 1
Q.1 What similarities and differences do you find in BCG business portfolio matrix, Ansoff growth matrix and GE growth pyramid. Ans. The BCG matrix is a portfolio management tool used in product life cycle. BCG matrix is often used to highlight the products which get more funding and attention within the company. During a product’s life cycle, it is categorized into one of four types for the purpose of funding decisions. Figure 3.5 below depicts the BCG matrix.
BCG Growth Share Matrix Question Marks (high growth, low market share) are new products with potential success, but they need a lot of cash for development. If such a product gains enough market shares to become a market leader, which is categorised under Stars, the organisation takes money from more mature products and spends it on Question Marks. Stars (high growth, high market share) are products at the peak of their product life cycle and they are in a growing market. When their market rate grows, they become Cash Cows. Cash Cows (low growth, high market share) are typically products that bring in far more money than is needed to maintain their market share. In this declining stage of their life cycle, these products are milked for cash that can be invested in new Question Marks. Dogs (low growth, low market share) are products that have low market share and do not have the potential to bring in much cash. According to BCG matrix, Dogs have to be sold off or be managed carefully for the small amount of cash they guarantee.
The key to success is assumed to be the market share. Firms with the highest market share tend to have a cost leadership position based on economies of scale among other things. If a company is able to apply the experience curve to its advantage, it should able to produce and sell new products at low price, enough to garner early market share leadership. Limitations of BCG matrix: The use of highs and lows to form four categories is too simple The correlation between market share and profitability is questionable. Low share business can also be profitable. Product lines or business are considered only in relation to one competitor: the market leader. Small competitors with fast growing shares are ignored. Growth rate is the only aspect of industry attractiveness Market share is the only aspect of overall competitive position Igor Ansoff growth matrix The Ansoff Growth matrix is a tool that helps organisations to decide about their product and market growth strategy. Growth matrix suggests that an organisation’s attempts to grow depend on whether it markets new or existing products in new or existing markets. Ansoff’s matrix suggests strategic choices to achieve the objectives. Figure 3.6 depicts Ansoff growth matrix.
Ansoff Growth Matrix Market penetration – Market penetration is a strategy where the business focuses on selling existing products into existing markets. This increases the revenue of the organisation. Market development – Market development is a growth strategy where the business seeks to sell its existing products into new markets. This means that the product is the same, but it is marketed to a new audience.
Competitive strength – Competitive strength replaces market share. Diversification – Diversification is the growth strategy where a business markets new products in new markets. McKinsey/GE growth pyramid The McKinsey/GE matrix is a tool that performs a business portfolio analysis on the Strategic Business units in an organisation. It is more sophisticated than BCG matrix in the following three aspects: Industry (market) attractiveness – Industry attractiveness replaces market growth. External factors that determine market attractiveness are the following: Market size Market growth Market profitability Pricing trends Competitive intensity/rivalry Overall risk of returns in the industry Opportunity to differentiate products and services Segmentation Distribution structure (e. It includes market share as well as technological positions. among other possible strengths and weaknesses. retail.. This is an intrinsically riskier strategy because the business is moving into markets in which it has little or no experience. For a business to adopt a diversification strategy. profitability. It includes market growth. among other possible opportunities and threats. This strategy may need the development of new competencies and requires the business to revise products to appeal to existing markets. size. size and pricing practices. McKinsey/GE growth pyramid matrix works with 3*3 grids while BCG matrix is 2*2 matrixes. industry profitability. wholesale) Internal factors that affect competitive strength are the following: Strength of assets and competencies Relative brand strength Market share Customer loyalty Relative cost position (cost structure compared to competitors) Distribution strength Record of technological or other innovation Access to financial and other investment resources McKinsey/GE Growth Pyramid .Plaban Mukherjee Product development – Product development is a growth strategy where a business aims to introduce new products into existing markets. it should have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks.g. direct.
Entire college programs have been designed specifically to teach business investment strategies. Investing in other businesses can be an especially wise move for companies in shaky industries. but a few key tips can help lay groundwork for effective investing. Because business debt often reaches into double digit interest rates. paying off that debt guarantees an instant return of that percentage. As an added bonus. Invest in Other Businesses o Some businesses find success in investing their profits in other noncompeting businesses. . the business stands to gain additional profits as a result of the expansion. Ans. By reinvesting profits back into the business for expansion or improvement. These investments may be made as traditional cash investments. guaranteed return that is significantly higher than usual returns on other investments. and it's critical to ensuring the success of the business. An investment strategy is a key component of every conceivable business type. as spreading investments into other types of operations can help diversify a business's holdings and reduce the risk of a complete business loss. If a business has outstanding debt financed at a given interest rate. a guaranteed return on the investment will come in the form of tax not assessed on the reinvested funds. Reinvest Funds to Nurture the Business o Perhaps one of the most common ways businesses invest their funds involves purchasing additional equipment. as loans or by purchasing securities issued to business start-ups. debt elimination can equate to a financial return that outpaces even the best investments. paying off this debt can provide an instant. Use Income to Eliminate Debt o While the pay-down of outstanding debt may not seem like business investment on the surface.Plaban Mukherjee Q. remodeling customer-facing environments or opening additional locations.2 Discuss the investment strategies applicable for businesses and methods to rectify faulty investment strategies.
purchasing assets. Never purchase the stock until you understand the industrial economy and able to forecast the future of the company with certainty. — Invest in business which you understand – Invest in a business in which you have a thorough understanding of the customers. — Measure your success – Evaluate your performance by the underlying measures in business. Internal methods to rectify faulty investment strategies In this section we will explain the methods to rectify faulty investment strategies. Some of the methods are as follows: Internal transformation Corporate restructuring and reorganisation Financial restructuring Divestment strategy Expansion strategy Diversification strategy Vertical and horizontal integration strategy . The following are the two ways to incorporate the above principle in your investment selection process. — Allocate capital by opportunity cost – Allocate investments/assets to the choice which has been opted as the best among several mutually exclusive choices. Following are the ways to invest successfully: — Leave a margin of safety – Always leave a margin of safety in your investments to protect your portfolio. — Make assumptions – Make assumptions about your future performance by recognising your own limitations.g.Plaban Mukherjee Or Use of income to eliminate debt Reinvestment of funds to nurture the business Investment in other businesses Investment is defined as the commitment of money or capital (e. — Have a clear disposition towards price – The more you pay for an asset in relation to its earnings. keeping funds in a bank account etc) to generate future returns. the lesser is your return value. A proper understanding of the investment strategies and a thorough analysis of the options helps an investor to create a portfolio that maximises returns and minimises exposure to risks. So have a clear outlook towards the price. ° Be conservative in your valuation assumptions ° Only buy assets dealing at substantial discounts to your conservative estimate. products/services etc.
Internal transformation Internal transformation takes place in an organisation to sustain constant growth. The following are the reasons for internal transformation of a company: Pressure on owner to decrease costs Overstaffing Large and complicated company structure Low flexibility of staff Financial instability The main objective of a company which adopts internal transformation is to increase efficiency by reaching the standards in the global market. The essential components of a successful business transformation are as follows: — Achievement ° A new level of sustainably high performance emerges ° Extraordinary and unexpected results appear throughout — Improved synergy ° Collaboration naturally occurs across all levels ° Creativity and innovation flourishes — Aliveness ° Employees flourish as they openly express their passion. It includes corporate restructuring. — Corporate restructuring and re-organisation — Layoffs and employee termination .Plaban Mukherjee Building core competencies and critical success factors Frequent assessment report assists in detecting the problems associated with faulty investment strategies in an organisation. downsizing of employees etc. ° Growth and development occurs both personally and professionally — Shared future ° The entire organisation unites to accomplish the future and live consistently with core values We will now discuss the two internal transformation processes in the following section. commitment and creativity towards work. This is achieved by holding high quality level of productivity. survival and maintain profitability.
Plaban Mukherjee Q. procedure and programmes with examples. It provides step by step approach to the activities taken to achieve the goals. procedure. Policy explains the reason for existence of an organisation. 2.3. Distinguish policy. Now we will analyze how each concept is different from the other. a. Process defines the method in which the work is done. 1. b. Give a short note on synergy. Policy is general in nature and identifies the company rules. It is systematic way of handling Process is a set of activities conducted by people to achieve organizational goals. Differences between policy. . Policy shows how rules are enforced and describes its consequenc Procedure identifies the specific actions and explains when an action needs to be taken. process and programmes In the previous topic we discussed the definition and meaning of policy. procedure. Programme is a concrete scheme of activities designed to accomplish a specific objective. 3. It is a long term rule that drives an organization. process and programmes. It describes emergency procedures which include warnings and cautions.
5. Mergers and acquisitions are corporate-level strategies designed to achieve positive synergy. It defines an outcome or a goal. business lines. 4. and a wide array of innovative services for consumers. Procedures are written in an outline format. It is a part of tactical tools. one sales representative can offer the broader mix of products. It is framed by the top level managemen t. 8. routine actions. 7. b. They are described by using simple sentences. . Synergy is the energy or force created by the working together of various parts or processes. improved quality and reliability. or markets. Rather than having two representatives make two sales calls to a potential customer. 6. Procedure defines the means to achieve the goals. Policies are a part of the strategies of the organization. Organizations strive to achieve positive synergy or strategic fit by combining multiple products. One way to achieve positive synergy is by acquiring related products. It is a planned way to handle certain issues in the organization. Synergy in business is the benefit derived from combining two or more elements (or businesses) so that the performance of the combination is higher than that of the sum of the individual elements (or businesses). The 2004 acquisition of AT&T Wireless by Cingular was an effort to create customer benefits and growth prospects that neither company could have achieved on its own—offering better coverage. so that sales representatives can sell numerous products during one sales call. Programming helps in developing an economical way of doing things in a systematic manner. 9. Ans.Plaban Mukherjee es. Policies are guidelines for managerial actions. It is generally detailed and rigid.
2008). Downsizing and the divestiture of businesses is in part the result of negative synergy.000 people” (Cadbury India Ltd. 2008).000 direct and indirect suppliers and employs around 50. before it demerged from its Americas Beverages manufacturing business in 2008 (Peston. Kimberly-Clark Corporation set out to sharpen its emphasis on consumer and health care products by divesting its tiny interests in business paper and pulp production. and the resulting lack of harmony or coordination can lead to negative synergy. “Cadbury means quality” as an integral part of its business’s activities (Superbrands. However. Q. For instance. Cadbury plc “operates in over 60 countries. Select any established Indian company and analyse the different types of strategies taken up by the company over the last few years. Managers expect that combining employees into teams or broadening the firm's product or market mix will result in a higher level of performance..4. Cadbury stresses the importance that it places on quality. Cadbury plc. . works with over 35. the mere combination of people or business elements does not necessarily lead to better outcomes. 2008). Apart from its mission statement. formerly known as Cadbury-Schweppes plc. it also references the slogan. The intended result of many business decisions is positive synergy. According to the company. thus allowing the corporation to concentrate on a single. is the world’s leading confectionery manufacturer and distributor. the removal of the pulp mill will enhance operational flexibility and eliminate distraction on periphery units.Plaban Mukherjee Negative synergy is also possible at the corporate level. core business activity.
2006). 2008). one year after the country was made independent from the British Empire) (Cadbury Dairy Milk. Products offered by Cadbury India Ltd.13 CAD). 2008). 2008). also utilizes the same mission and vision statements of its parent firm when operating in the Indian market. of which 30% is directly due to the success of its Dairy Milk product. (ii) Consumer segments served and advertising/promotional strategies used Cadbury India Ltd continuously markets Dairy Milk as a relatively inexpensive treat. Cadbury also aims to put “A Cadbury in every pocket” (Karvy Research. n.50 billion (around 1. Cadbury Dairy Milk bars are Cadbury India’s cash cow in the country’s 4000 tonne.. This report will examine two different products offered to the Indian market by Cadbury India: Cadbury Dairy Milk (chocolate category) and Cadbury Bournvita (milk drinks category). Part of Cadbury Dairy Milk’s success lies in its shared history with India’s identity (it was first sold in 1948. the 13 gram version. has made the Cadbury dairy Milk bar synonymous with high quality. affordable by many middle-class Indians as an occasional treat. 2008.d. n. 2008). has been designated its flagship brand (Cadbury India Ltd. candy and gums categories (Cadbury India Ltd. 2008. this report will simply examine the activities of Cadbury India Ltd in the Indian market. In the 1990’s. is priced at Rs. 2008). 2003). which averages sales of around 1 million bars per day (Cadbury Dairy Milk. Its history of operating in the country and its average level pricing of chocolate bars. the company stated promoting the chocolate for “the kid in everyone”. but in the Indian market.. Marketing Communications. Rs. albeit with different business strategies and approaches. 3) segment of the market (Chatterjee.6 billion CAD) chocolate market (Gupta. 2008). 2006) and is relatively affordable by the Indian masses. but not affordable for those who buy from the less-then-3-rupee (Rs. towards market segments divided by age. one of the fastest growing confectioneries markets in the world (Financial Express. Even its smallest Dairy Milk bar. 5 (about 0. as such. candy and chewing gum (Cadbury India Ltd. (a) Cadbury Dairy Milk (i) Pricing Cadbury India enjoys controlling 70% of the confectionery market in India. milk food drinks.. 6. Cadbury plc manufactures and sells three different kinds of confectionery: chocolate. as the Indian subsidiary of this confectionery giant.). . Chatterjee. income. in an attempt to appeal to adults as well as children (Cadbury Dairy Milk. its product line is split up into the chocolate confectionery. 2008) but also in the fact that it is priced relatively cheaply (Chatterjee.Plaban Mukherjee Lastly.d. technological knowledge and healthconsciousness. Cadbury India Ltd. 2000). Since Cadbury’s activities vary from country to country. affordable pure milk chocolate for many Indian customers (Cadbury Dairy Milk.) by targeting current consumers and encouraging them to make impulse purchases and by maintaining a superior marketing mix (Karvy Research.
2008). India’s own dairy company and Nestle India. 2008). Variations include the Fruit & Nut and Crackle & Roast Almond variations (Cadbury Dairy Milk. The Cadbury Bournville Dark Chocolate bar. Cadbury’s market segmentation is quite effective because it allows them to target all three major market segments: children. a branch of India’s largest network service provider.) and Nestle India around 27% (Nestle to expand. Cadbury will need to address the needs of this market segment in order to boost its sales of Dairy Milk. targets the healthconscious market segment of the chocolate market. This restrained marketing has allowed the chocolate to slowly become a measure of quality for many Indians.. Lastly. with Disney characters embossed on each chocolate square (Cadbury Dairy Milk. By using opinion leaders from Bollywood and using extensive advertising in newspapers. the most notable being its “Pappu Pass Ho Gaya” (Pappu Passed!) joint venture operation with Reliance India Mobile. as Cadbury Dairy Milk is their “Gold Standard” for chocolate. 2007). Cadbury managed to capture the attention of the nation and cement its market share superiority in India (Cadbury Dairy Milk. despite popular opinion that it is a relatively expensive luxury product (Cadbury India Ltd. Cadbury Dairy Milk was voted one of the India’s most trusted brands in a poll conducted in 2005 (Cadbury Dairy Milk.d. Nowadays. Analysts Meet. Although Dairy Milk is affordable to the upper and middle-income consumers who view it as a midpriced item (Kochhar. adults and technologically-savvy consumers. In fact. (iii) Product Positioning Cadbury India Ltd’s main sources of competition come from Amul. Cadbury India controls around 70% (Cadbury India Ltd. 2008) clearly targets the child segment of its market. 2008). but it does not serve those segments of the market that have been divided by income levels. whereas Amul controls around 2% (Dobhal. where the “pure taste of Cadbury Dairy Milk defines the chocolate taste for the Indian consumer” (Cadbury India Ltd. 2008. As seen in Appendix B. Cadbury Dairy Milk Wowie. 2008). television. 2008) attempted to absorb these customers into its market share. 2008). As mentioned earlier. 2008).Plaban Mukherjee In order to appeal to potential lower-income customers in the villages of India.. Indian consumers seem to be satisfied with Cadbury Dairy Milk as its marketing promotes it as an occasional indulgence. magazines and massive billboards across the country. Nestle’s subsidiary in India. 2008) which are meant for snacking. n. 2008). Marketing Communications. Cadbury’s is trying to tap into the potential market of younger generation Internet users by offering contests and hosting competitions online. “to cater to the urge for ‘something sweet’ after meals” (Cadbury Dairy Milk. 2008) of the chocolate market. 1999). Although this has allowed it to . as well as the Cadbury Dairy Milk Desserts. which allowed students across the country to check their examination grades online and celebrate with Cadbury’s Dairy Milk if they did well (Cadbury Dairy Milk. who wish to enjoy the taste of dark chocolate but also its health benefits (Financial Express. similar to the Dairy Milk bar. lower income consumers who buy from the less-than-3rupee range of chocolate cannot afford to buy Cadbury Dairy Milk regularly. Cadbury India continuously develops new versions of its Dairy Milk brand in order to keep its adult and children consumers satisfied and interested. Furthermore. further marketing in the form of the “Real taste of life” campaign (Cadbury Dairy Milk. 1999). Cadbury’s main strength comes from it ability to market Dairy Milk products “through altering the theme and functionality of the product as the time demands” (Cadbury India Ltd Analysts Meet.
Cadbury India should make attempts to be even more sensitive to consumer demands. as this will eventually allow it to negate some of the extensive damage that this negative publicity has to the firm’s reputation. such as chocolates for Diwali and Rakshabandan (two different Indian festivals) (Kochhar. The new extra-layer packaging of chocolate that is now being used in the manufacture of Dairy Milk is a good first step to take in reclaiming some of the public’s trust (Vivek. Lastly. In comparison to Nestle India however.). This. one way to do this would be to follow Amul’s lead and develop and market products that meet specific ethnic needs. namely. 2008) was no longer gold.Plaban Mukherjee control more of the market than its closest competitors. the production of chocolates specifically for the festive seasons of India. Cadbury has more of a brand recognition power than Nestle has. 2007) as well as chocolates for festive seasons allow them to rapidly sway consumers over to their products. 2006). In order to position its products as safe and affordable treats once again. 2007).. 1999). Despite Amul’s longer history in India. Cadbury India’s longer track history gives it a competitive edge.d. so by at least promoting the fact that it has been operating in India for almost as long as Amul. 2007) . n. The “Gold Standard” (Cadbury Dairy Milk. in combination with the longest running advertising campaign that Amul is famous for gives it a brand awareness boost. Amul’s innovative ideas will be the bane of Cadbury. Cadbury will be able to position its chocolates as chocolate specifically designed for . to becoming a national enterprise (Amul. Nestle still has to break into the Indian market. the reasons for its success may also lie in the fact that many Indians still view its chocolates as luxury products (Cadbury India Ltd Analysts Meet. In fact. This accounts for their soaring annual market growth rates of 18% annually (Indian Express. Cadbury India must maintain its current marketing strategy but slowly start to promote Dairy Milk as a household good so that consumers spend their rising disposable incomes on it and boost its sales (Rai. This contradicts Cadbury’s assertion that its leadership is maintained by a “superior marketing mix” (Karvy Research. Moreover. justifying a lower price tag (Chansarkar et al. where the regular consumption of socalled luxury chocolates such as Cadbury Dairy Milk is viewed as fashionable (Kochhar. Cadbury simply cannot match this kind of national endorsement. 2006). Cadbury India must counter this threat that Nestle and Amul pose. and it uses this extensively to promote Cadbury Dairy Milk all over the country. thus becoming an integral part of India’s identity and giving its marketing strategy a new source of authority. Amul’s reputation for credibility. Cadbury India may have misinterpreted the popularity of Dairy Milk as a sign that the Indian public has accepted it as a household product. one of India’s most industrialized states. concepts that Cadbury India has yet to explore. By doing so. 2004). 2004) has promoted the use of status symbols. 2008). as people’s confidence in its safety was shattered. its chocolates are viewed as being local and not luxurious. the booming economy and the increasing affluence of the burgeoning middle class (Basu. it can try to be “Indian” too. Their release of diabetic friendly chocolate and chocolates catering to different ethnic flavours (Janve and Dogra. 2008) spanned the decades during which newly-independent India forged its identity. nor was it a standard anymore. 1999) and not as household goods. safety and consumer satisfaction was only reinforced when Cadbury India’s Chinese-made products were found to be contaminated with worms and melamine (Sinn and Karimi. even if the company has to run at a loss for a few months. Customer satisfaction must be given the utmost importance. Amul’s origins as a community welfare program in Gujarat.
vitality and nutrition necessary for facing the challenges of the new millennium (Cadbury Bournvita. 2008). It focused on the “Good Upbringing. due to its long history with India. and is perceived to be quite expensive (Hawa. 2008). promotion and distribution have allowed Cadbury Bournvita to maintain its 17% market share over the years in India’s 220. Cadbury Bournvita does not control a large share of India’s malt-based food drinks market. Bournvita’s still remains popular (Hawa. This campaign was followed by the massively successful “Brought up right. BeverageDaily. pregnant women and athletes (Hawa. 2008) and allowed Cadbury Bournvita to keep “pace with the . 2004). Cadbury Bournvita enjoys a 17% market share of the malt-based food drink market (Cadbury Bournvita. The “Real Achievers who have grown up on Bournvita” campaign focused on preparing consumers with the health. Bournvita is largely sold in 500 gram bottles for around Rs.Plaban Mukherjee India. endearing it to the consumers and boosting its sales. a concept that appealed to many children. product design. In order to cement their consumer base and ensure brand loyalty. 95 (2. (ii) Consumer segments served and advertising/promotional strategies used Cadbury markets its Bournvita product in diverse market segments. Bournvita has been marketed mainly towards children. India alone accounts for 22% of the world’s malt-food milk drink retail sales (BeverageDaily. Continuous brand re-invention. 2002). Goodness that grows with you” campaign to promote Bournvita as an essential health drink for children (Cadbury Bournvita. a “rich brand heritage” and complete overhauls in packaging. This campaign was conducted mainly on the radio. soon after Cadbury India Ltd (then known as Cadbury-Fry) was incorporated (Cadbury Bournvita. 2008. 2007). combined with successful marketing strategies and promotional offers. 2008). newspaper and magazine campaign (Cadbury Bournvita. Bournvita challenged the public by promising complete physical and mental development for its consumers (Cadbury Bournvita. The most recent marketing campaign undertaken by Cadbury Bournvita is the one specially designed to harness consumers’ uncertainty about the challenges of the new millennium. Cadbury has marketed Bournvita in order to appeal to the change in perceptions and tastes of its consumers. Cadbury Bournvita. Over the years. and the fact that it is used a staple source of nourishment by Indian mothers for their children. However. 2004). 2002). Bournvita bright” television. but unlike Cadbury Dairy Milk. in the 1990s. As a result of being one of the first products offered on the Indian market by Cadbury. 2002.35 CAD) a piece despite other sizes being available.000 tonne malt-food market (Cadbury Bournvita. where the subsequent television marketing campaign secured Cadbury Bournvita’s place in the Indian market. 2008). but also finds followers amongst elderly people. 2008) to reach out to more children and promote the link between intelligence and Bournvita. 2008). the primary medium of communication for many Indians at the time (Ranjan. (a) Cadbury Bournvita (i) Pricing Cadbury Bournvita was first sold on the Indian markets in 1948.
thereby giving Horlicks a larger market share than Bournvita (Karvy Research.). As seen in Appendix C. 2008). Cadbury Bournvita’s current marketing strategy is simply not enough.). 2008). The Contest spans 7 countries. As mentioned earlier. many customers still feel that Bournvita does not have the appeal that other brands. n.). However. 2006). Cadbury Bournvita has managed to appeal to an athletic market segment as well. one of the most famous Indian examples of Cadbury Bournvita’s ingenious marketing is its sponsorship of the Bournvita Quiz Contest. Cadbury Bournvita’s major source of competition comes from GlaxoSmithKline’s Horlicks and Heinz Food’s Complan. and amidst allegations of declining quality and taste of the Bournvita brand (Hawa. such as Horlicks do (refer to Appendix C) and thus the market is slowly switiching over to white malt-based food drinks such as Horlicks (Karvy Research. The new product is being aimed at the segment of children who want nutrition but also taste (Cadbury Bournvita. 2006) and then Complan with its 13% market share (Samajdar.Plaban Mukherjee evolving mindsets of the new age consumers” (Cadbury Bournvita. n. 1999). despite Cadbury Bournvita’s history of serving consumers in the Indian market. 2007). Recently. 2006). 2008). one of its caramel chocolates helps maintain consumer interest. followed by Cadbury Bournvita with its 17% market share (Chatterjee. Cadbury India Ltd Analysts Meet.). by supporting sports competitions and sponsoring athletes across the country. Given than Horlicks has been operating in the Indian market for longer than Cadbury (Horlicks. Karvy Research. has involved more than 4000 schools and more than 1 million students. Furthermore. having first been aired in 1972. the malt-drinks market is split up into the white and brown drinks categories.d. 2008). 2002). Lately. This marketing campaign was broadcast on television and published in newspapers in an effort to recruit contestants (Kapoor. n.d. The white drinks category is mainly led by Horlicks whereas the brown drinks category is led by Bournvita (Karvy Research. Horlicks is the market leader with a 44% market share (Chatterjee. The Bournvita Quiz Contest is the longest running quiz show in India.d. combining the flavour of the original chocolate Bournvita with the flavor of Cadbury 5Star (Cadbury Bournvita. The release of new versions of the original Bournvita such as Bournvita 5-Star. making it one of the most popular high school contests (Cadbury Bournvita. 2008).d. (iii) Product Positioning The malt-based food drinks market in India is divided into brown drinks and white drinks categories (Cadbury India Ltd Analysts Meet. this larger market share may be explained by . with white drinks being popular in the southern and eastern parts of the country. as well as one of Cadbury’s most successful marketing ventures till date. and the brown drinks being popular in the northern and western parts of the country (Karvy Research. 1999.. n.d. Cadbury Bournvita has managed to promote itself as a sports drink for athletes (Kapoor. 2008). By also sponsoring the Indian Olympic team to the Moscow Olympics of 1980 (Cadbury Bournvita. more consumers have started switching over to consuming white drinks than brown drinks. n. When competing with Horlicks. 2007).
this may possibly work against Complan as many families may feel that their child receives enough nourishment and does not require more. produces its products in factories spread geographically across India. but also sells its products through a chain of over 300. These distribution networks give Cadbury India its competitive edge in India’s massive consumer market. Furthermore. Horlicks’ extensive marketing campaigns may also have played a part. 2006). and thus cannot compete with Horlicks’ wider appeal. However. 2008). 2006). selling treats such as Cadbury Dairy Milk bars and Cadbury Bournvita powder will generate massive returns.d. Therefore. 2002). Meanwhile.d. 1999). Cadbury India Ltd. The efforts of these retailers are augmented by the support of 1900 distributor locations and 27 depots (Cadbury India Ltd Analysts Meet. in order to be able to sell these products to customers. almost 3100 locations are directly supplied by Cadbury India Ltd distributors at least thrice a month (Cadbury India Ltd Analysts Meet. even elderly and convalescent consumers can consume the product without feeling conscious of consuming a childonly product. its Cadbury Dairy Milk success will only be short-term in nature and Bournvita will not be able to reverse the . Complan’s market share of 13% (Samajdar. Thus. SWOT Analysis of Cadbury India Ltd. 2006) and the remaining 3% consisting of malls and shopping complexes.000 retailers spread across India (Cadbury India Ltd Analysts Meet. 2008).Plaban Mukherjee more consumer familiarity with Horlicks than with Bournvita. 2006).) rather than as a healthy drink for children. street corner stores” (Rai. of a total of 3600 locations that sell Cadbury products. it must continue to market itself as a child-friendly drink. in order to maintain its superiority. proper distribution channels must be identified.) can only be done if the company markets its Cadbury Dairy Milk as a household good and its Bournvita as a family-friendly drink. than Bournvita’s mainly child-oriented approach. however. 1999). The Indian retail sector is composed of 97% “family-run. Thus. mainly attracts more child consumers to its product (Radakrishnan. Only then will it be able to compete effectively with Horlicks. Since the words ‘nutritional supplement’ connote a need for extra nourishment. the solution lies in Cadbury India marketing Bournvita as an adult drink as well. such as Mother’s Horlicks (Horlicks. In a country where half a billion people are under the age of 25. n. effectively Bournvita’s longest running marketing campaign. disposable incomes are on the rise and the economy is growing at a rate of 8% annually (Rai. Although Cadbury Bournvita currently has a larger market share of the two. Even the Bournvita Quiz Contest. with products designed for different members of the family. and not as a nutritional supplement. is less than Bournvita’s. which is Bournvita’s approach. which makes it more appealing to a wider section of the market. 1999). Horlicks has always marketed itself as a “Great Family Nourisher” with products such as Mother’s Horlicks designed for different members of the family (Horlicks. n. Although both products are targeted at children. Cadbury India Ltd’s objective of putting a “Cadbury in every pocket” (Karvy Research. Until then. Delivering Cadbury products to customers India’s 300 billion USD retail market is growing at a rate of 30% per annum (Rai. Complan has marketed itself as a “perfect nutritional supplement” (Complan.
if Cadbury Dairy Milk can be marketed extensively enough to break the ‘luxury’ perception that consumers have of it currently (Cadbury India Ltd Analysts Meet. it can benefit from inelastic demand as a household product. In terms of manufacturing management focus is on optimizing manufacturing efficiencies and creating a world class manufacturing location for CDM and Éclairs.8% factor like changing attitude.6% and Cadbury’s share in the impulse segment is 4. length of time serving India and its ability to develop and market products specifically tailored for Indian consumers. New channel of marketing such as gifting and child connectivity and low end value for money product for expanding the consumer base have been identified. 1999) and compete with Horlicks. The initiatives in the terms of development a long term domestic coca a sourcing base would field maximum gains . Cadbury India’s brand recognition aspect will immediately work against it by highlighting the link between its name and contaminated food products. Cadbury must also appreciate the advantages of a positive reputation and always stress consumer satisfaction. This objective can be accomplished by simply building on the good reputation and trust that it has earned. Bournvita meanwhile needs to be extensively marketed in order to reduce the damaging effect that Horlicks’ family-friendly marketing mix is having on its market share. it must learn to address the specific needs of its consumers and continue to maintain their goodwill. By doing so. Various measures are undertaken in all areas of operation to create value for the future.Plaban Mukherjee trend towards the consumption of white malted drinks (Cadbury India Ltd Analysts Meet. Future Strategy In the branded impulse market. This will cripple sales and reverse the fruits of 70 years of hard work in the country. a large youth population. higher disposable income. it will be able to isolate the benefits and drawbacks of its competitors’ marketing mix and use those to its own advantage. the key threat that can affect Cadbury India Ltd’s success in India is Amul’s innovative marketing strategy. thus generating a constant stream of revenue and cementing the Dairy Milk brand as a cash cow product. while also analyzing its competitors’ marketing strategies. It appears that company is likely to play the value game to expand the market encouraged by the recent success of its low priced ‘value for many packs’. Amul’s yearly growth rate of 18% may slowly start to eat away at Cadbury’s success (Indian Express. Repeats of the recent melamine and worms issues cannot be allowed to happen as once consumer confidence in its brand name is shattered. the share of chocolate in 6. 1999). Efficient sourcing of key raw material i. In order to maintain its lead in such a large market. higher local consumption by entering long term contract with farmer and undertaking efforts in expanding local coca area development. The company is today the second best manufacturing location of Cadbury’s Schweppes in the world. leaving the path open for more efficient local companies like Amul to learn from Cadbury India’s mistakes and take over its market share. One key aspect of this lies in maintaining the safety of its products so that the name of Cadbury is always synonymous with high quality safe products.e. and by listening to the needs of its consumers. As a result of its witty marketing strategies. Conclusion Cadbury India Ltd’s position in India is relatively strong. and low penetration of chocolate (22% of urban population) point towards a big opportunity of increasing the share of chocolate in the branded impulse among the costly alternative in the branded impulse market. coca through forward purchase of imports. Furthermore. As seen in Appendix D. 1999).
when sales usually dip due to the fact that the heat effects product quality and thereby consumption. Q. The company has added 8 million new consumer in the current year and how has consumer base of 60 million although the growth in absolute numbers is lower than targeted. Vision and Mission statements A well-articulated strategic intent guides the development of goals and helps in inspiring the employees to achieve targets. Vision statement . • Improving distribution quality by addressing issues of product stability by installation of visi coolers at several outlets. At the same time the management is also aware of external changes taking place in the competitive environment and is taking steps to remain competitive in the future environment of free imports. The only concerns that the company has in this regard is the current high level of duties. The company would be able to not only provide greater variety. This would be really effective in maintaining consumption in summer.Plaban Mukherjee when commodity prices start moving up. • The above are some steps being taken internally to improve future operation and profitability. • Expand the consumer base. The management is not unduly concerned about the huge deluge of imported chocolate brands in the market place. which limit the opportunity to launch value for money products. It also facilitates in utilising the intent to allocate resources and in encouraging team participation. but it would also be more cost effective to test market new product as well as improve speed of response to change in consumer preference through imports. the company has been able to increase the width of its consumer base through launch of low priced products. • Use of it to improve logistic and distribution competitiveness • Utilizing mass media to create and maintain brands. Ans. the company looks at the tree important as an opportunity. It comprises of the vision and mission statements. lower barrier to trade and the advent of all global players in to the country. where it could optimally use the global Cadbury Schweppes portfolio. 5 Why do you think it is necessary for organisations to have vision and mission statements and also core competencies? Support your answer with relevant examples. It is of the view that size of this imported premium market is small to threaten its own volumes or sales in fact.
It should be implanted in the organisation being collectively shared by everyone in the organisation. Mission statement is the responsibility by which an organisation aims to serve its stakeholders. It shall meet the expectations of employees. The statement distinguishes an organisation from its other competitors by explaining its scope of activities. . technologies. stakeholders and society. Vision statement is the framework of strategic planning. delivered through our priorities. It gives a framework on the operations of the organisation within which the strategies are devised. the stakeholders and the reason for existence of an organisation. It is prepared for the organisation and its employees. It should be clear and precise so that the actions can be taken based on it. It is a concise description of the existence and fundamental purpose of an organisation. It describes the present potentials and activities of the organisation. and we have an enduring commitment to become the undisputed best. It is vital for the development and growth of the organisation.Plaban Mukherjee A vision statement defines the purpose and principles of an organisation in terms of the values of the organisation.Wal-Mart’s vision is to become worldwide leader in retailing. Vision statement of L&T L&T employees shall be innovative and the empowered team will constantly create values and attain global benchmarks. It integrates an understanding about the nature and aspirations of the organisation and develops this conception to lead the organisation towards a better objective. It is a concise and motivating statement that guides the employees to select the procedures to attain the goals. Example . Mission statement A mission statement is the extensive definition of the mission of an organisation. efficiency. capabilities and sustainability from 2008 to 2011 (Cadbury plc. (i) Cadbury’s Vision Statement Our objective is to deliver superior shareholder returns by realizing our vision to the be the world’s biggest and best confectionery company. It describes the present capabilities. It conveys an effective business plan. It should be unique and different to leave an impact on everyone. 2008). It should be credible so that the stakeholders accept it. sustainability commitments and culture Cadbury plans to “deliver superior shareholder returns” (Cadbury plc. its products and services used to achieve the goals and objectives. A vision is the ability to view what the organisation wants to be in future. At the heart of our plan is our performance scorecard. We are currently the biggest. The ambition should be rational and achievable. L&T shall promote a culture of trust and continuous learning. It must synchronise with the organisation’s principles. 2008) by measuring its financial progress in the areas of growth. It conveys the purpose of the organisation to its employees and the public. A vision statement describes the future ambition of an organisation. It should be practical and achievable.
We collaborate and work as teams to convert products into brands. These are the central areas of expertise of the company where maximum value is added to its services or products. The organisation makes the maximum utilisation of the competencies and correlates them to new opportunities in the market. As an organisation progresses and adapts to new circumstances. They are adaptable and advance over time. developing and manufacturing most advanced information technologies. storage systems and microelectronics. Our core purpose “Working together to create brands people love” captures the spirit of what we are trying to achieve as a business. Core competencies are those skills that are critical for a business to achieve competitive advantage.” The distinction between mission statement and vision statement is that the mission statement focuses on the present position of the organisation and the vision statement focuses on the future of the organisation. we strive to be the forerunner in inventing. software. It is a unique skill or technology that establishes a distinct customer value. Core Competencies are not fixed. The strategy is devised in a manner that an organisation can receive reasonable profit and attain strategic competitiveness. Resources and capabilities are the building blocks on which an organisation builds and executes a value-added strategy. Example – Infosys has a core competency in information technology. (ii) Cadbury’s Mission Statement Cadbury’s mission statement outlines its overall business objective and its commitment to its customers. They change in response to the transformation in the environment of the company.Plaban Mukherjee Example -Wal-Mart’s mission is to provide ordinary customers the chance to buy the same thing as rich people. As the organisation progresses and adapts to the new environment. including computer systems. They are not rigid but flexible to advancing time. Mission statement of IBM “At IBM. These skills enable a business to deliver essential customer benefit like the selection of a product or service by a customer. Core competency is the key strength of business because it comprises the essential skills. the core competencies also adapt to the transformation. . the core competencies also adjust to the change.
corporate set different groups of product/product line regarding the strategy to follow (in terms of competition.Plaban Mukherjee Q. Incompelete Ans. .SBUs are also known as strategy centers. Each Business Unit must meet the following criteria: 1. prices. When companies become really large. Have a unique business mission. These strategic groups are called Strategic Business Units (SBUs). What is SBU? Explain its features. 2. functions and roles. they are best thought of as being composed of a number of businesses (or SBUs). 3. independent from other SBUs. 6. substitutability. need to follow different strategies. Is able to carry out integrative planning relatively independently of other SBUs. need to follow different strategies. The unique small business unit benefits that a firm aggressively promotes in a consistent manner. Have clearly definable set of competitors. Should have a Manager authorized and responsible for its operation. Independent Business Unit or even Strategic Planning Centers. Strategic Business Unit (SBUs) is necessary when corporation starts to provide different products and hence. style/ quality.Strategic Business Unit (SBU) is necessary when corporation starts to provide different products and hence. and impact of product withdrawal). Mention some of the successful SBU of MNC’s. To ease its operation. Strategic Business Unit or SBU is understood as a business unit within the overall corporate identity which is distinguishable from other business because it serves a defined external market where management can conduct strategic planning in relation to products and markets.