BUSINESS POLICY & STRATEGIC MANAGEMENT

PROFESSIONAL SKILL DEVELOPMENT ASSESSMENT (PSDA)

1. PORTER’S GENERIC COMPETITIVE STRATEGIES WITH RESPECT TO
AUTOMOBILE INDUSTRY
2. CHALLENGES FACED & STRATEGIES BY IT START-UP FIRMS
 PSDA 1: PORTER’S COMPETITIVE STRATEGIES
A firm position itself by leveraging its strength. Michael Porter has argued that a firm’s
strength ultimately fall into one of two headings: Cost advantage and differentiation. By
applying these strengths in either a broad or narrow scope. He suggested four “generic”
business strategies that could be followed in order to gain
competitive advantage. Those are: -
 Cost Leadership Strategy

 Differentiation Strategy

 Cost Focus Strategy

 Differentiation Focus Strategy

The differentiation and cost leadership strategies seek competitive advantage in a broad
range of market or industry segment.
The differentiation focus and the cost focus strategies are best used in niche market.
It helps the firms to compare their performance within its industry to determine whether a
firm's profitability is above or below the industry average.
Porter warns that companies who try to
accomplish both cost leadership and
differentiation may fall into the "hole in
the middle". A company's scope can be
either focused (providing its products to
specific parts of the market) or industry-
wide (selling its products to a wide range
of market sectors). The generic strategy
reflects the choices made in terms of both
the type and breadth of competitive
advantage. Michael Porter first described
the concept in 1980.

 If a firm is targeting customers in most or all segments of an industry based on

offering the lowest price, it is following a cost leadership strategy;
 If it targets customers in most or all segments based on attributes other than price
(e.g., via higher product quality or service) to command a higher price, it is pursuing a
differentiation strategy. It is attempting to differentiate itself along these dimensions
favourably relative to its competition. It seeks to minimize costs in areas that do not
differentiate it, to remain cost competitive.
  If it is focusing on one or a few segments, it is following a focus strategy. A firm may
be attempting to offer a lower cost in that scope (cost focus) or differentiate itself in
that scope (differentiation focus).

AUTOMOBILE INDUSTRY
The automobile industry includes a diverse range of businesses and organisations involved in
the design, development, manufacturing, marketing, and sale of automobiles.  It is one of the
world's most profitable industries.
In the 1860s, hundreds of manufacturers pioneered the horseless carriage, launching the
automotive industry. The United States led the world in total automobile production for many
decades. Before the Great Depression, the
world had 32,028,500 automobiles in use,
with the United States producing more than
90% of them. At the time, the United States
had one car for every 4.87 people. After 1945,
the United States produced roughly 75% of
the world's auto production. Japan overtook
the United States in 1980, but the United
States regained the world lead in 1994. Japan narrowly surpassed the United States in
production in 2006, a position it held until 2009, when China overtook Japan with 13.8
million units.
Manual assembly by a human worker was used in the early days of automobile
manufacturing. From engineers working on a stationary car to a conveyor belt system where
the car passed through multiple stations of more specialised engineers, the process evolved.
Beginning in the 1960s, robotic equipment was introduced to the process, and most cars are
now manufactured primarily with automated machinery.
For many developed economies, the automobile is the primary mode of transportation. The
Boston Consulting Group's Detroit branch predicted that by 2014, the four BRIC markets
would account for one-third of global demand (Brazil, Russia, India and China). Meanwhile,
the automotive industry in developed countries has slowed.  This trend is expected to
continue, especially as younger generations (particularly in highly urbanised countries) no
longer want to own a car and prefer other modes of transportation.  Iran and Indonesia are
two other potentially powerful automotive markets.  Emerging automobile markets are
already purchasing more vehicles than established markets.
 Cost Leadership Strategy
When a company projects itself as the cheapest manufacturer or provider of a specific
product or commodity in a competition, this is referred to as cost leadership. It is difficult to
implement the strategy because management must constantly work to reduce costs at all
levels in order to remain competitive.
It is a component of marketing strategy Although it is extremely effective at gaining market
share and attracting customers' attention, it is difficult to implement. The company's
management team must constantly work to reduce the cost of not just one product, but the
entire range of products in the company's portfolio. Cost leadership does not imply that a
company produces goods of inferior quality at comparatively low prices.
FOR EXAMPLE:

MARUTI SUZUKI FOLLOWS COST LEADERSHIP STRATEGY

Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is a New Delhi-
based Indian automobile manufacturer. It was founded in 1981 and was owned by the Indian
government until 2003, when it was sold to Suzuki Motor Corporation. Maruti Suzuki has a
49 percent market share in the Indian passenger car market as of September 2021.
Their cost leadership strategy is as follows: -
• They are Manufacturing Low-cost Cars with good fuel efficiency cars like Maruti
800, Alto, etc.
• They focus on affordability and easy
accessibility of its produce across the
globe, which leads towards high brand
awareness and high sales growth and
provides a strong competitive advantage
basis.
• They also frequently offer discounts
and coupons to achieve sales targets and
handle the competitive pressure by its
closest rival.
• They provide the best quality product in best possible price compared to their
competitors like Toyota, Hyundai.
• This strategy allows Maruti Suzuki India Limited Marketing to expand the market
share by targeting the middle class, which makes the largest proportion of overall
 consumer market mix in most of the countries. Middle class consumers generally
place high importance to the pricing factor and cost leadership is the best strategy to
cater the needs of this consumer segment.

SWOT ANALYSIS OF MARUTI SUZUKI

STRENGTHS
 Maruti Suzuki is India's largest passenger car manufacturer,
accounting for roughly 45 percent of the market.
 Good advertising, a diverse product portfolio, and self-contained
brands
 The most extensive dealer and after-sales service network
 Several awards in the automobile segment in India have been
bestowed upon the company.
WEAKNESSES
 Failure to break into the international market
 Employee management, strikes, and wage issues have all
harmed Maruti's brand image in the past.
OPPORTUNITIES
 Maruti Suzuki can target tapping emerging markets around the
world and building a global brand by developing hybrid cars and
fuel-efficient cars for the future.
 Increased purchasing power and a rapidly expanding automobile
market.
THREATS
 Government policies governing the automobile industry around the world
 Constantly rising fuel prices
 Maruti Suzuki's business may suffer as a result of intense
competition from global automobile brands and lower-cost brands
 Use alternative modes of public transportation such as buses, metro
trains, and so on.
 Differentiation Strategy
A differentiation strategy is an approach that business develop by providing customers with
something unique, different and distinct from items their competitors may offer in the
marketplace to increase the competitive advantage. Businesses that want to build a
differentiation strategy must create or design extremely unique or distinctive products or
services that add value to the consumer.
There are several ways for a company to gain a differentiation-based competitive advantage
for a single product or the entire company. Their main Focus is on image, community and
quality with expensive products that are built to last and maintain value.
FOR EXAMPLE:
TESLA FOLLOWS DIFFERENTIATION STRATEGY
Tesla is an American electric vehicle and clean energy company headquartered in Palo Alto,
California. Tesla designs and manufactures electric vehicles, battery energy storage systems
ranging from home to grid-scale, solar panels and solar roof tiles, as well as other products
and services. Tesla sold the most battery electric vehicles and plug-in electric vehicles in
2020, accounting for 16% of the plug-in market (which includes plug-in hybrids) and 23% of
the battery-electric (purely electric) market.
Their differentiation strategy is as follows:
• Tesla’s mission is to accelerate the world’s transition to sustainable energy.
• Tesla’s broad differentiation strategy is a long-term play, with a focus on electric
automobile automation, battery
technology, and environmentally
friendly products such as solar roof
tiles.
• Their product differentiation comes
in the form of customizable cars,
regular software updates, solar
panels, supercharging compatibility,
and self-driving features.
• They provide a variety of products and services all over the world, including
premium electric sedan Model S having different range from 250 miles to 370 miles
which justifies the cost also.
 SWOT ANALYSIS OF TESLA
STRENGTHS
 In the luxury electric vehicle market, it is a strong brand.
 It controls the lion's share of the luxury electric vehicle market.
 It's a great place to work for employees, and they want to stay.
 It controls the lion's share of the electric vehicle market in the United
States.
WEAKNESSES
 It does not produce enough of its components to meet customer
demand.
 It gets all of its batteries from a single source, and it rarely has
enough of them.
OPPORTUNITIES
 With its upcoming gigafactory, it will be able to benefit from
economies of scale.
 In the Asian market, it has billions of potential customers.
 By producing less expensive cars for the average consumer, it can
reach a larger customer base.
THREATS
 It is facing increasing competition from large automobile
corporations.
 It faces lawsuits as a result of its significant legal liability for
manufacturing its own components.
 Cost Focus Strategy
A cost focus strategy is when businesses aim to offer the lowest price for their product on
the market by undercutting their competitors’ prices. Companies that use this strategy often
target a focused segment of the market. Their products will generally be basic, vaguely
similar to average market-leading products (though more popular products can be charged a
higher price), and acceptable to a large enough number of customers to turn a profit. 
Focus differs from other business strategies in that it is segment-based and has a limited
competitive scope. This strategy entails identifying a market segment, or group of market
segments, in the industry and meeting the needs of that preferred segment (or niche) better
than the other market competitors. This is also referred to as a niche cost strategy.
FOR EXAMPLE:
MERCEDES-BENZ FOLLOWS COST FOCUS STRATEGY
Mercedes-Benz is a German automotive luxury brand headquartered in Stuttgart, Baden-
Württemberg, Germany (and a subsidiary of Daimler AG as Mercedes-Benz AG).  Mercedes-
Benz manufactures both luxury and commercial vehicles.  Formalized paraphrase In 1926,
the first Mercedes-Benz brand name vehicles were produced. Mercedes-Benz was the world's
largest seller of premium vehicles in 2018, selling 2.31 million passenger cars. 
Their cost focus strategy is as follows:
• Mercedes-Benz adopts the focus strategy in terms of low cost.
• The low-cost focus strategy is adopted by serving the
needs of a niche market segment at the lowest
possible price. While maintaining the design of the
product that could best match the customer’s needs
and requirements.
• The dedication of Mercedes-Benz to cutting-edge
technology, styling, and safety innovations has
made the firm’s vehicles prized by those who are
rich enough to afford them.
• But if we compare with their competitors like Audi,
BMW; they provide the best possible price out of three while maintaining the same
quality.
 SWOT ANALYSIS OF MERCEDES-BENZ
STRENGTHS
 Soaring Chinese demand for luxury Mercedes-Benz cars drove a
better-than-expected profit for Mercedes-Benz.
 They are the leader in product innovation.
 They have strong product portfolio in Indian market.
 The global networking gives advantages in the international
competitive field.
WEAKNESSES
 The maintenance and service cost of Mercedes-Benz is high
compared to the other players like BMW.
 The failure of the merger between Mercedes Benz (Daimler)
and Chrysler group.
OPPORTUNITIES
 Opportunities for EVs in the Chinese market.
 The sub-brand Mercedes-AMG’s link with Formula1 will be
intensified further next year to reinforce its identity as a high-
performance brand.
 Mercedes-Maybach is focusing on global growth opportunities, will
double its sales volume, and also offer electric models.
THREATS
 The rise of price for raw materials is one of the big risks to the
automobile industry.
 The competition from similar players in the same segment such as Audi,
BMW, etc.
 While comparing to model varieties and fuel efficiency, BMW is more
affordable than Mercedes-Benz.
 Differentiation Focus Strategy
An approach to competitive advantage in which a company attempts to outperform its rivals
by offering a product that is perceived by consumers to be superior to that of competitors
even though its price is higher.
It is a competitive advantage strategy in which a company attempts to outperform its rivals by
offering a product that consumers perceive to be superior to that of competitors despite its
higher price; when using a differentiation focus strategy, the company focuses on narrow
market coverage, seeking only to attract a small, specialised segment.
FOR EXAMPLE:
ROLLS-ROYCE FOLLOWS DIFFERENTIATION FOCUS STRATEGY
Rolls-Royce Motor Cars Limited is a British manufacturer of luxury automobiles. Rolls-
Royce Motor Cars Limited operates from purpose-built administrative and production
facilities in Goodwood, West Sussex, England, United Kingdom, which were opened in 2003
across from the historic Goodwood Circuit. Since 2003, Rolls-Royce Motors Cars Limited
has been the sole manufacturer of Rolls-Royce branded automobiles.
Their Differentiation focus strategy is as follows:
• A premium luxury automobile brand which focuses
their time and money on improving the features and
creating the next “can’t live without” luxury gadget.
• It has been the pivot point of high-class transportation.
• They paint a total of 23 coats of paint including the
special effects done as per the user demand. Detailing
works are done by hand and there is only one person at
RR who draws and it is done with a brush. The
detailing is done as per customer requirements, but if
the customer wants to make new modifications on the
detailing the Rolls Royce staff goes to the customer’s
destination and does the work.
 • A special foam-filled tyers is used for the Rolls Royce to reduce the sound from
the road and has 300-pound soundproofing to reduce the outdoor sound.

SWOT ANALYSIS OF ROLLS-ROYCE

STRENGTHS
 Rolls Royce has a strong technological support from the parent
company
 Strong brand image globally existing since inception
 Strong aspirational value in minds of people for Rolls Royce cars
 Superior build quality not only for interiors but also the exterior, engine
& chassis
WEAKNESSES
 The design of Rolls Royce models is evolutionary in nature thus
they look similar.
 Many potential customers move to other brands due to the
profiling requirements.
OPPORTUNITIES
 Currently there is a rising trend for environment friendly cars, there
lies an opportunity for luxury brands as well.
 Also keeping the price premium, they should try & relax the customer
profiling procedure.
THREATS
 The protectionists trade policies of various countries
 2. Unwillingness of people to buy a vehicle of such high price
 PSDA 2: CHALLENGES FACED & STRATEGIES BY IT
START-UP FIRMS
INFORMATION TECHNOLOGY (IT)
IT is the use of computers to create, process, store, and exchange various types of electronic
data and information. In contrast to personal or entertainment technologies, information
technology is typically used in the context of business operations.   IT is regarded as a subset
of information and communications technology (ICT).
An information technology system (IT system) is a general term for an information system, a
communications system, or, more specifically, a computer system – which includes all
hardware, software, and peripheral equipment – that is operated by a small group of IT users.
START-UP FIRM
A start-up, is a company or project launched by an entrepreneur in order to seek, develop, and
validate a scalable business model.  Whereas entrepreneurship refers to all new businesses,
including self-employment and businesses that never intend to register, startups refer to new
businesses that intend to grow beyond the solo founder. Startups face high levels of
uncertainty and failure at the outset, but a small percentage of them go on to be successful
and influential.
COMPANIES TAKEN FOR ANALYSIS:

 CODE KARO YAARO

Code Karo Yaaro is India’s first online coding school presenting

specially designed courses for kids from 6 to 15 years of age. It
was started by under the famous academic advisors Dr. Sunita
Godara (the marathon queen of India) and Mr. Abhijit Gokhale
(Wing commander).

 VOLTFRACTION
Voltfraction is home to High School and College & Youth eSports.
It was started by a 20 years old Entrepreneur Mr. Sanskar Raj
(CEO) along with their 4 collegemates.

CHALLENGES FACED & STRATEGIES BY THE FIRMS

CODE KARO YAARO
CHALLENGES FACED
They teach coding to students of class 3 to class 9 but earlier students opt for coding in/after
Class 11. It was initially very difficult for them to actually convince parents that it can be
beneficial for young students also. After India’s new education system was came into
limelight which explains the importance of coding, their company grows rapidly.
STRATEGIES
They started a programme for under privilege kids who are keen to learn coding and
partnered with an NGO named “SUVIDHA FOUNDATION” in which they give free
webinar and 3 days’ workshop in schools. After 3 days they conduct an examination and the
top 3 winners will get the scholarship and learn for free which motivate students also to learn.
Till now they have done this in more than 100 schools to encourage young minds to learn
coding from starting.
Their little coders also design a website same as CO-WIN and also got published in
newspaper.

VOLTFRACTION
CHALLENGES FACED
It is relatively fresh industry and most of the people still don’t know much about this. During
the game’s tournament, despite having a good connectivity, they still find glitches during the
game which is the major drawback. Their server also got crashed during one of the
tournaments.
STRATEGIES
They have targeted mostly on colleges students. They collaborated with renowned colleges
starting with Engineering colleges like DTU, IIT ROORKEE, etc.
During lockdown they even collaborated with international E-sports community and even get
cash price which help them to get more funding.