Core Competence and Competitive Advantage - Indigo Airlines and ITC
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Transcript of Core Competence and Competitive Advantage - Indigo Airlines and ITC
CORE COMPETENCE AND COMPETITIVE ADVANTAGE CASE ANALYSIS OF INDIGO AIRLINES AND ITC
ARJUN R (B15017) | DEEPSHIKHA DEB (B15020) | RAJAT GARG (B15040) | SHREY SHAH (B15051) | TATHAGATA GHOSH (B15059)
GROUP - 8
OBJECTIVES OF THE STUDY
1. Differentiation Strategy And 2. Low Cost Strategy
Activity Analysis1. Catalog Activities
1. Primary activities2. Support activities
2. Use activities to analyze Relative cost 1. Calculate cost associated with cataloged activities
2. Determine cost drivers (estimate competitors cost position)
3. Relative cost analysis (difference in individual activities)
4. sensitivity analysis (Honing the assumption)
3. Use activities to analyze Relative Willingness to pay
• Reason for willingness to pay (prod design and mfg activity / sale & delivery / Associated services / Advertisements Intangible factor or perception )
• Narrow the long list into manageable and impactful small list
• Who is the real buyer - what the buyer wants – what they r willing to pay
• How successful they and competitors are at fulfilling customer needs
• Relate the success back to activities identified
4. Explore options and make choices
CATALOG ACTIVITIES
Cost structure (per ASK) Industry Standard Indigo AirlinesFuel Cost (US cents) 3.25 3.07Employee Cost (10-6) 0.35 0.24Maintenance expenses (US cents)
0.63 0.18
Ownership costs (US cents) 1.77 0.97Aircraft Lease Rental Total Cost (US cent) 7.98 5.95
ANALYZE RELATIVE COSTS
COST DRIVERS
Single type of plane Airbus A320 Training of staff becomes cost effective
Low Maintenance costs maintains young fleet and lease back planes Use six year sale and lease back arrangements and constantly replaces the
aircrafts Low turnaround time
Turnaround time of 30 minutes Spends more than 11 hours a day in the sky against industry average of 8 to 10
hours Higher employee efficiency
one of industry's leanest workforces ASK / employee for indigo is 4.1 as compared to industry standard 2.9
ANALYZE WILLINGNESS TO PAY
REASONS FOR WILLINGNESS TO PAY
Economical airline High emphasis on On-time performance Low Flight cancellation rate Low Customer complaints Simplicity in operations
Indigo has simplicity in its operations as compared to competitors like Jet Airways
High frequency of flights Indigo has highest frequency of flights even between non-metro routes
Advertisement Simple message of low fares, on-time flights and a hassle free experience High Say-Do Ratio -> Do what they say
ANALYZE WILLINGNESS TO PAY
ON-TIME PERFORMANCE
CANCELLATION RATE CUSTOMER COMPLAINTS
COMPETITIVE ADVANTAGE
Indigo’s strategy to be a LCC by focusing on above mentioned drivers is reflecting on its financial results
Since last 6 years the company is making profit and its profit has more than doubled, while its competitors are struggling to for break even
Company’s operating expense has increased and its revenue also increased proportionately to maintain the value added
FINANCIAL RESULTS
COMPETITIVE ADVANTAGE
MARKET SHARE OF INDIGO
COMPETITIVE ADVANTAGE
Strategic Advantage
Indigo has started from routes like non-metro routes, where competition was less
Took strategic advantage and simultaneously expanded into other routes, which made it leader in Indian airline industry
Booked 180 A320neo aircraft, which consume up to 15% less fuel than current generation which will further reduce cost of fuel
COST COMPARISON
COST COMPARISON
CORE COMPETENCIES OF ITC
CORE COMPETENCIE
S
DEEP FARMER
LINKAGES
RURAL MARKET EXPERTISE
BRAND BUILDING
CAPABILITIES
UNMATCHED DISTRIBUTION
REACH
CORE COMPETENCY"a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace“ -- C. K. Prahalad and Gary Hamel
Provides potential access to a wide variety of markets
Should make a significant contribution to the perceived customer benefits of the end product
Difficult to imitate by competitors
ITC has an unmatched distribution infrastructure which increases the reach of its products
Warehousing space of over 6.5 million square feet
Presence of distribution channel in 20 states and more than160 districts,
Operates through 65 hubs and over 300 warehouses across India
Its products are available at 4.3 million of the estimated eight million retail stores in India
Minimum number of stocking points leading to lower costs and greater freshness of products
UNMATCHED DISTRIBUTION REACH
BRAND BUILDING CAPABILITIES
DEEP FARMER LINKAGES AND RURAL MARKET EXPERTISE The e-Choupal initiative empowers
Indian farmers with the help of Internet Cost-effective procurement system
through e-Choupal For its paper industry, ITC gets its raw
materials through a farm plantation program which also provides employment and income to farmers
More than 1,93,000 hectares of plantations have been added
Presence of dedicated retail and distribution infrastructure in Tier III and Tier IV cities (like Choupal Sagar, Choupal Haat, etc)
Customized below-the-line engagement platforms
Direct interaction and engagement with farmers and rural population through events like Choupal Mahotsav
MAP OF COMPETENCIES
FMCG HOTELSAGRI-BUSINESS INFORMATION TECHNOLOGY
PROCESSED FOOD, TOBACCOPAPER PULP HOSPITALITY &
SERVICES
UNMATCHED DISTRIBUTION REACH
BRAND BUILDING CAPABILITIES
FARMER LINKAGES AND CROP DEVELOPMENT
PROGRAMMES
RURAL MARKET EXPERTISE
PAPERBOARDS & PACKAGING
THANK YOU