Moser Baer: Growth through Diversification

PRESENTED BY : VIPUL CHAWLA Jaipuria Institute of Management, Lucknow

• “Moser Baer keeps on attempting to improve them. When their products start maturing or declining, they are ready with the next one. When the floppies went out, they moved onto CDs, and when CDs were in the mature phase, they moved onto DVDs, which are now in the growth phase. When the DVDs go into the next phase of maturity, they will be ready with the next product.”
- Raghavendra Rao, Analyst, Frost & Sullivan

• Moser Baer was founded by Deepak Puri in 1983 as a provider of time-keeping solutions in a joint venture with Moser-Baer AG of Switzerland. The venture did not succeed due to labor problems. • In 1986, Puri retained the Moser Baer name when he ventured into manufacturing floppy disks. Right from its initial days, the company concentrated on maintaining high quality standards at the lowest cost. • However, its long-term success was due to its ability to keep up with changes in storage media technology.

• Moser Baer started producing digital storage media (floppy disks) in the year 1986 and went on to become the second largest optical storage media (CDs, DVDs, etc.) company in the world by 2007.

• Moser Baer operates in a market which is highly dynamic and volatile. • This is a market which is full of disruptive innovations . One can never predict the lifecycle of a product. A small technological innovation can make a product irrelevant.

Anticipatory / Proactive Change
• To operate in such a volatile environment requireas high flexibility in operations and strategy and keep on innovation. • The simple fact that Moser Baer was able to handle the Floppy to CD and then DVD transition is a remarkable example of its Proactive approach & flexible product strategy.

Reactive Change
• The year 2006 has been very bad for the company owing to the increase in the production cost and decrease in demand due to competition from other categories. One of the raw material for CD/DVDs is polycarbonate which is a byeproduct of oil industry. The rise in oil prices has increased the cost for this raw material.

• Which forced Moser Baer to undertake many related and unrelated diversification. • The company launched an entertainment division which focused on distribution of movie CD/DVD. The company procured around 10,000 movie titles and aggressively started distribution.

Low Cost Leader Ship Strategy
• The company concentrated on maintaining high quality standards at the lowest cost. • Moser Baer shocked the movie industry by launching movie CDs and DVDs for as low a price as Rs 28 and Rs 34 respectively. At that time, a DVD used to cost minimum Rs 150 and CDs at around Rs 80. • The move made lot of sense because the expense for Moser Baer was limited to promotional and distributional expenses.

Change Strategy
• As I have already discussed company is proactive and the reason for the company to be proactive is because of the employees training & Development . • Also the big part of the success of the Moser Baer goes to its change strategy they follow.

Collaborative Change Strategy
• All employees are engaged in the change process, typically through cascading workshops or meetings. They will be kept up to date on the issues. Their views will be actively sought and acted upon. Feedback will demonstrate how their input has been acted upon.

Success Mantra
• “The factor responsible for the success of the company, namely, its ability to be proactive in the market is because of its organizational design while staying at the forefront of technology which it achieved through its strong research and development team.”

• Although the company was a little late in entering the CD-R market, it managed to quickly expand its CD-R production capacity by the late 1990s. • Hence by 2007, Moser Baer had become the world’s second largest manufacturer of optical storage media (CDs and DVDs).

• • • • Anticipate Change Monitor Change Be Ready To Change Quickly Enjoy the Change


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