MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1Master of Business Administration-MBA Semester 4Strategic Management and Business Policy MB0052 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 products life cycle, it is categorised into one of four types for the purpose of funding decisions.Figure 1 below depicts the BCG matrix.

Figure 1 BCG Growth Share MatrixQuestion 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 matureproducts 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 aremilked 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 managedcarefully 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 isable to apply the experience curve to its advantage, it should able to produce and sell newproducts 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 matrixThe Ansoff Growth matrix is a tool that helps organisations to decide about their product and marketgrowth strategy. Growth matrix suggests that an organisations attempts to grow depend on Page 2 of 15

MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1whether it markets new or existing products in new or existing markets. Ansoffs matrix suggestsstrategic choices to achieve the objectives. Figure 2 depicts Ansoff growth matrix.

Figure 2: Ansoff Growth MatrixMarket 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. Product development Product development is a growth strategy where a business aims to introduce new products into existing markets. This strategy may need the development of newcompetencies and requires the business to revise products to appeal to existing markets. Diversification Diversification is the growth strategy where a business markets new products in newmarkets. This is an intrinsically riskier strategy because the business is moving into markets in which ithas little or no experience. For a business to adopt a diversification strategy, it should have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks. McKinsey/GE growth pyramidThe 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. It includes market growth, industry profitability, size and pricing practices, among other possibleopportunities and threats. Competitive strength Competitive strength replaces market share. It includes market share as well as technological positions, profitability, size, among other possible strengths andweaknesses. McKinsey/GE growth pyramid matrix works with 3*3 grids while BCG matrix is 2*2 matrixes. 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.g., retail, direct, 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

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MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1Access to financial and other investment resources

Figure 3: McKinsey/GE Growth Pyramid

Q.2 Discuss the investment strategies applicable for businesses and methods to rectify faulty investment strategies.Ans. An investment strategy is a key component of every conceivable business type, and it's critical to ensuring the success of the business. Entire college programs have been designed specifically to teach business investment strategies, but a few key tips can help lay groundwork for effective investing. 1.Use Income to Eliminate Debt oWhile the pay-down of outstanding debt may not seem like business investment on the surface, debt elimination can equate to a financial return that outpaces even the best investments. If a business has outstanding debt financed at a given interest rate, payingoff that debt guarantees an instant return of that percentage. Because business debt often reaches into double digit interest rates, paying off this debt can provide an instant, guaranteed return that is significantly higher than usual returns on other investments. 2.Reinvest Funds to Nurture the Business oPerhaps one of the most common ways businesses invest their funds involves purchasingadditional equipment, remodeling customer-facing environments or opening additional locations. By reinvesting profits back into the business for expansion or improvement, the business stands to gain additional profits as a result of the expansion. As an added bonus,a guaranteed return on the investment will come in the form of tax not assessed on the reinvested funds. 3.Invest in Other Businesses oSome businesses find success in investing their profits in other noncompeting businesses. These investments may be made as traditional cash investments, as loans or by purchasing securities issued to business start-ups. Investing in other businesses can be an especially wise move for companies in shaky industries, as spreading investments into other types of operations can help diversify a business's holdings and reduce the risk of a complete business loss. 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.g. purchasing assets, keeping funds in a bank account etc) to generate future returns. A proper understanding of the investmentstrategies and a thorough analysis of the options helps an investor to create a portfolio thatmaximises returns and minimises exposure to risks.

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MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1Following are the ways to invest successfully: Leave a margin of safety Always leave a margin of safety in your investments to protect yourportfolio. The following are the two ways to incorporate the above principle in your investmentselection process. Be conservative in your valuation assumptions Only buy assets dealing at substantial discounts to your conservative estimate. Invest in business which you understand Invest in a business in which you have a thorough understanding of the customers, products/services etc. Make assumptions Make assumptions about your future performance by recognising your own limitations. Never purchase the stock until you understand the industrial economy and able to forecast the future of the company with certainty. Measure your success Evaluate your performance by the underlying measures in business. Have a clear disposition towards price The more you pay for an asset in relation to its earnings,the lesser is your return value. So have a clear outlook towards the price. Allocate capital by opportunity cost Allocate investments/assets to the choice which has been opted as the best among several mutually exclusive choices. Internal methods to rectify faulty investment strategiesIn this section we wil 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 Building core competencies and critical success factors Frequent assessment report assists in detecting the problems associated with faulty investmentstrategies in an organisation. Internal transformationInternal transformation takes place in an organisation to sustain constant growth, survival and maintain profitability. It includes corporate restructuring, downsizing of employees etc. The followingare 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. This is achieved by holding high quality level of productivity. 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, commitment and creativity towards work. 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. Corporate restructuring and re-organisation Layoffs and employee termination

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MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1Q.3. a. Distinguish policy, procedure and programmes with examples. b. Give a short note on synergy. Ans: Differences between policy, procedure, process and programmesIn the previous topic we discussed the definition and meaning of policy, procedure, process andprogrammes. Now we wil analyze how each concept is different from the other. 1.Policy is general in nature Procedure identifies the Process is a set Programme is a and identifies the company specific actions and of activities concrete scheme rules. explainswhen an conducted by of activities2.Policy explains the reason forexistenceofan action needs to be taken. peopleachieve to designedaccomplish to a organisation. 3.Policy shows how rules are enforced and describes its It describesemergency procedures which include warnings organizational goals. Process defines specific objective. It provides step consequences. and cautions. the method in by step 4.It defines an outcome or a It is systematic way of which the work approach to thegoal. 5.They are described by handlingactions. routine is done. It is a long term activities taken to achievethe using simple sentences. 6.Policies are guidelines for managerial actions. Procedure defines themeans to achieve thegoals. rule that drivesanorganization. goals. Programminghelps

in 7.It is a planned way to handle certain issues in theorganization. Procedures are written in an outline format. It is generally detailed developingan economical way of doing things in 8.It is framed by the top level and rigid. It is a part of a systematic management. 9.Policies are a part of the strategiesofthe organization. tactical tools. manner. Ans. b. Synergy is the energy or force created by the working together of various parts or processes. 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). Organizations strive to achieve positive synergy or strategic fit by combining multiple products, business lines, or markets. One way to achieve positive synergy is by acquiring related products, so that sales representatives can sell numerous products during one sales call. Rather than having two representatives make two sales calls to a potential customer, one sales representative can offer thebroader mix of products. Mergers and acquisitions are corporate-level strategies designed to achieve positive synergy. 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 ownoffering better coverage, improved quality and reliability, and a wide array of innovative services for consumers. Negative synergy is also possible at the corporate level. Downsizing and the divestiture of businessesis in part the result of negative synergy. For instance, 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. According to the company, the removal of the pulp mill wil enhance operational flexibility and eliminate distraction on periphery units, thus allowing the corporation to concentrate on a single, core business activity. The intended result of many business decisions is positive synergy. Managers expect that combining employees into teams or broadening the firm's product or market mix will result in a higher level of performance. However, the mere combination of people or business elements does not necessarily lead to better outcomes, and the resulting lack of harmony or coordination can lead to negativesynergy.

Q.4.Select any established Indian company and analyse the different types of strategies taken up by the company over the last few years.Ans :Cadbury plc, formerly known as Cadbury-Schweppes plc, before it demerged from its AmericasBeverages manufacturing business in 2008 (Peston, 2008), is the worlds leading confectionery

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MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1manufacturer and distributor. Cadbury plc operates in over 60 countries, works with over 35,000direct and indirect suppliers and employs around 50,000 people (Cadbury India Ltd., 2008). Cadbury stresses the importance that it places on quality. Apart from its mission statement, it also references the slogan, Cadbury means quality as an integral part of its businesss activities(Superbrands, 2008). Lastly, Cadbury also aims to put A Cadbury in every pocket (Karvy Research, n.d.) by targeting current consumers and encouraging them to make impulse purchases and by maintaining a superior marketing mix (Karvy Research, n.d.). Cadbury India Ltd, as the Indian subsidiary of this confectionery giant, also utilizes the same mission and vision statements of its parent firm when operating in the Indian market, albeit with differentbusiness strategies and approaches. Since Cadburys activities vary from country to country, thisreport will simply examine the activities of Cadbury India Ltd in the Indian market, one of the fastest growing confectioneries markets in the world(Financial Express, 2008). Products offered by Cadbury India Ltd. Cadbury plc manufactures and sells three different kinds of confectionery: chocolate, candy and chewing gum (Cadbury India Ltd., 2008), but in the Indian market, its product line is split up into the chocolate confectionery, milk food drinks, candy and gums categories (Cadbury India Ltd., 2008). 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). (a) Cadbury Dairy Milk (i) Pricing Cadbury India enjoys controlling 70% of the confectionery market in India, of which 30% is directly due to the success of its Dairy Milk product, which averages sales of around 1 million bars per day (Cadbury Dairy Milk, 2008; Marketing Communications, 2008). Cadbury Dairy Milk bars are Cadbury Indias cash cow in the countrys 4000 tonne, Rs. 6.50 billion (around 1.6 billion CAD) chocolate market (Gupta, 2003), as such, has been designated its flagship brand (Cadbury India Ltd., 2008;Chatterjee, 2000). Part of Cadbury Dairy Milks success lies in its shared history with Indias identity (it was first sold in 1948, one year after the country was made independent from the British Empire) (Cadbury Dairy Milk, 2008) but also in the fact that it is priced relatively cheaply (Chatterjee, 2006) and is relatively affordable by the Indian masses. Even its smallest Dairy Milk bar, the 13 gram version, is priced at Rs.5 (about 0.13 CAD), affordable by many middle-class Indians as an occasional treat, but notaffordable for those who buy from the less-then-3-rupee (Rs. 3) segment of the market (Chatterjee,2006). Its history of operating in the country and its average level pricing of chocolate bars, hasmade the Cadbury dairy Milk bar synonymous with high quality, affordable pure milk chocolate formany Indian customers (Cadbury Dairy Milk, 2008). (ii) Consumer segments served and advertising/promotional strategies usedCadbury India Ltd continuously markets Dairy Milk as a relatively inexpensive treat, towards market segments divided by age, income, technological knowledge and health-consciousness. In the 1990s, the company stated promoting the chocolate for the kid in everyone, in an attemptto appeal to adults as well as children (Cadbury Dairy Milk, 2008). In order to appeal to potential lower-income customers in the villages of India, further marketing in the form of the Real taste of life campaign (Cadbury Dairy Milk, 2008) attempted to absorb thesecustomers into its market share. By using opinion leaders from Bollywood and using extensive advertising in newspapers, television, magazines and massive billboards across the country, Cadbury managed to capture the attention of the nation and cement its market share superiority in India (Cadbury Dairy Milk, 2008; Marketing Communications, 2008). Nowadays, Cadburys is trying to tap into the potential market of younger generation Internet users by offering contests and hosting competitions online, the most notable being its Pappu Pass Ho Gaya (Pappu Passed!) joint venture operation with Reliance India Mobile, a branch of Indias largest network service provider, which allowed students across the country to check their examination grades online and celebrate with Cadburys Dairy Milk if they did well (Cadbury DairyMilk, 2008). Furthermore, Cadbury India continuously develops new versions of its Dairy Milk brand in order to keep its adult and children consumers satisfied and interested. Variations include the Fruit & Nut and Crackle & Roast Almond variations (Cadbury Dairy Milk, 2008) which are meant for snacking, as well as the Cadbury Dairy Milk Desserts, to cater to the urge for something sweet after meals (Cadbury Dairy Milk, 2008). The Cadbury Bournville Dark Chocolate bar, similar to the Dairy Milk bar,targets the health-conscious market segment of the chocolate market, who wish to enjoy the taste Page 7 of 15

MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1of dark chocolate but also its health benefits (Financial Express, 2008). Lastly, Cadbury Dairy Milk Wowie, with Disney characters embossed on each chocolate square (Cadbury Dairy Milk, 2008) clearly targets the child segment of its market. Cadburys market segmentation is quite effective because it allows them to target al three major market segments: children, adults andtechnologically-savvy consumers, but it does not serve those segments of the market that have been divided by income levels. Although Dairy Milk is affordable to the upper and middle-incomeconsumers who view it as a mid-priced item (Kochhar, 2007), lower income consumers who buy from the less-than-3-rupee range of chocolate cannot afford to buy Cadbury Dairy Milk regularly. Cadbury will need to address the needs of this market segment in order to boost its sales of Dairy Milk. Indian consumers seem to be satisfied with Cadbury Dairy Milk as its marketing promotes it as an occasional indulgence, despite popular opinion that it is a relatively expensive luxury product(Cadbury India Ltd. Analysts Meet, 1999). This restrained marketing has al owed the chocolate to slowly become a measure of quality for many Indians, as Cadbury Dairy Milk is their Gold Standardfor chocolate, where the pure taste of Cadbury Dairy Milk defines the chocolate taste for the Indian consumer (Cadbury India Ltd., 2008). In fact, Cadbury Dairy Milk was voted one of theIndias most trusted brands in a poll conducted in 2005 (Cadbury Dairy Milk, 2008). (iii) Product PositioningCadbury India Ltds main sources of competition come from Amul, Indias own dairy company andNestle India, Nestles subsidiary in India. As seen in Appendix B, Cadbury India controls around 70% (Cadbury India Ltd., 2008) of the chocolate market, whereas Amul controls around 2% (Dobhal, n.d.) and Nestle India around 27% (Nestle to expand, 2008). As mentioned earlier, Cadburys main strength comes from it ability to market Dairy Milk productsthrough altering the theme and functionality of the product as the time demands (Cadbury India Ltd Analysts Meet, 1999). Although this has allowed it to control more of the market than its closestcompetitors, the reasons for its success may also lie in the fact that many Indians stil view its chocolates as luxury products (Cadbury India Ltd Analysts Meet, 1999) and not as household goods. This contradicts Cadburys assertion that its leadership is maintained by a superior marketing mix (Karvy Research, n.d.). Cadbury India may have misinterpreted the popularity of Dairy Milk as a sign that the Indian public has accepted it as a household product. In fact, the booming economy andthe increasing affluence of the burgeoning middle class (Basu, 2004) has promoted the use of statussymbols, where the regular consumption of so-called luxury chocolates such as Cadbury Dairy Milk isviewed as fashionable (Kochhar, 2007). Despite Amuls longer history in India, its chocolates areviewed as being local and not luxurious, justifying a lower price tag (Chansarkar et al., 2006).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, 2006). Amuls origins as a community welfare program in Gujarat, one of Indias most industrialized states,to becoming a national enterprise (Amul, 2008) spanned the decades during which newly-independent India forged its identity, thus becoming an integral part of Indias identity and giving its marketing strategy a new source of authority. Cadbury simply cannot match this kind of national endorsement, so by at least promoting the fact that it has been operating in India for almost as longas Amul, it can try to be Indian too. This, in combination with the longest running advertising campaign that Amul is famous for gives it a brand awareness boost. Moreover, Amuls reputation for credibility, safety and consumer satisfaction was only reinforced when Cadbury Indias Chinese-made products were found to be contaminated with worms and melamine (Sinn and Karimi, 2008). The Gold Standard (Cadbury Dairy Milk, 2008) was no longergold, nor was it a standard anymore, as peoples confidence in its safety was shattered. In order to position its products as safe and affordable treats once again, Cadbury India should make attempts to be even more sensitive to consumer demands. Customer satisfaction must be given the utmost importance, even if the company has to run at a loss for a few months, as this will eventually allow itto negate some of the extensive damage that this negative publicity has to the firms reputation.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 publics trust (Vivek, 2004). Lastly, Amuls innovative ideas will be the bane of Cadbury. Their release of diabetic friendly chocolate and chocolates catering to different ethnic flavours (Janve and Dogra, 2007) as well aschocolates for festive seasons allow them to rapidly sway consumers over to their products. Thisaccounts for their soaring annual market growth rates of 18% annually (Indian Express, 1999).

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MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1In comparison to Nestle India however, Cadbury Indias longer track history gives it a competitiveedge. Cadbury has more of a brand recognition power than Nestle has, and it uses this extensively to promote Cadbury Dairy Milk all over the country. Nestle still has to break into the Indian market; one way to do this would be to follow Amuls lead and develop and market products that meetspecific ethnic needs, such as chocolates for Diwali and Rakshabandan (two different Indian festivals) (Kochhar, 2007) , concepts that Cadbury India has yet to explore. Cadbury India must counter this threat that Nestle and Amul pose, namely, the production of chocolates specifically for the festive seasons of India. By doing so, Cadbury will be able to position its chocolates as chocolate specifical y designed for India, endearing it to the consumers andboosting its sales. (a) Cadbury Bournvita(i) Pricing Cadbury Bournvita was first sold on the Indian markets in 1948, soon after Cadbury India Ltd (then known as Cadbury-Fry) was incorporated (Cadbury Bournvita, 2008). As a result of being one of thefirst products offered on the Indian market by Cadbury, combined with successful marketing strategies and promotional offers, Cadbury Bournvita enjoys a 17% market share of the malt-basedfood drink market (Cadbury Bournvita, 2008). India alone accounts for 22% of the worlds malt-foodmilk drink retail sales (BeverageDaily, 2004), but unlike Cadbury Dairy Milk, Cadbury Bournvita doesnot control a large share of Indias malt-based food drinks market. Bournvita is largely sold in 500 gram bottles for around Rs. 95 (2.35 CAD) a piece despite other sizes being available, and is perceived to be quite expensive (Hawa, 2002). However, due to its long history with India, and the fact that it is used a staple source of nourishment by Indian mothers fortheir children, Bournvitas still remains popular (Hawa, 2002). (ii) Consumer segments served and advertising/promotional strategies usedCadbury markets its Bournvita product in diverse market segments. Bournvita has been marketedmainly towards children, but also finds followers amongst elderly people, pregnant women andathletes (Hawa, 2002; Cadbury Bournvita, 2008). Continuous brand re-invention, a rich brandheritage and complete overhauls in packaging, product design, promotion and distribution have allowed Cadbury Bournvita to maintain its 17% market share over the years in Indias 220,000 tonnemalt-food market (Cadbury Bournvita, 2008; BeverageDaily, 2004). Over the years, Cadbury has marketed Bournvita in order to appeal to the change in perceptions and tastes of its consumers. It focused on the Good Upbringing, Goodness that grows with you campaign to promote Bournvita as an essential health drink for children (Cadbury Bournvita, 2008).This campaign was conducted mainly on the radio, the primary medium of communication formany Indians at the time (Ranjan, 2007). This campaign was followed by the massively successful Brought up right, Bournvita bright television, newspaper and magazine campaign (Cadbury Bournvita, 2008) to reach out to more children and promote the link between intelligence andBournvita, a concept that appealed to many children. In order to cement their consumer base andensure brand loyalty, in the 1990s, Bournvita challenged the public by promising complete physical and mental development for its consumers (Cadbury Bournvita, 2008), where the subsequent television marketing campaign secured Cadbury Bournvitas place in the Indian market. 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. The Real Achieverswho have grown up on Bournvita campaign focused on preparing consumers with the health,vitality and nutrition necessary for facing the challenges of the new millennium (Cadbury Bournvita, 2008) and allowed Cadbury Bournvita to keep pace with the evolving mindsets of the new ageconsumers (Cadbury Bournvita, 2008). This marketing campaign was broadcast on television andpublished in newspapers in an effort to recruit contestants (Kapoor, 2007). The release of new versions of the original Bournvita such as Bournvita 5-Star, combining the flavourof the original chocolate Bournvita with the flavor of Cadbury 5-Star (Cadbury Bournvita, 2008), one of its caramel chocolates helps maintain consumer interest. The new product is being aimed at thesegment of children who want nutrition but also taste (Cadbury Bournvita, 2008). By also sponsoring the Indian Olympic team to the Moscow Olympics of 1980 (Cadbury Bournvita, 2008), Cadbury Bournvita has managed to appeal to an athletic market segment as well. Recently,by supporting sports competitions and sponsoring athletes across the country, Cadbury Bournvita hasmanaged to promoteitselfasa sportsdrink forathletes(Kapoor, 2007).

Furthermore, one of the most famous Indian examples of Cadbury Bournvitas ingenious marketing isits sponsorship of the Bournvita Quiz Contest. The Bournvita Quiz Contest is the longest running quiz

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MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1show in India, having first been aired in 1972. The Contest spans 7 countries, has involved more than 4000 schools and more than 1 million students, making it one of the most popular high school contests (Cadbury Bournvita, 2008), as well as one of Cadburys most successful marketing venturestil date. However, despite Cadbury Bournvitas history of serving consumers in the Indian market, and amidst allegations of declining quality and taste of the Bournvita brand (Hawa, 2002), many customers stil feel that Bournvita does not have the appeal that other brands, such as Horlicks do (refer to Appendix C) and thus the market is slowly switiching over to white malt-based food drinks such asHorlicks (Karvy Research, n.d.; Cadbury India Ltd Analysts Meet, 1999). (iii) Product PositioningThe malt-based food drinks market in India is divided into brown drinks and white drinks categories (Cadbury India Ltd Analysts Meet, 1999; Karvy Research, n.d.), with white drinks being popular in the southern and eastern parts of the country, and the brown drinks being popular in the northern andwestern parts of the country (Karvy Research, n.d.). Cadbury Bournvitas major source of competition comes from GlaxoSmithKlines Horlicks and Heinz Foods Complan. As seen in Appendix C, Horlicks is the market leader with a 44% market share(Chatterjee, 2006), followed by Cadbury Bournvita with its 17% market share (Chatterjee, 2006) andthen Complan with its 13% market share (Samajdar, 2006). As mentioned earlier, the malt-drinks market is split up into the white and brown drinks categories. The white drinks category is mainly led by Horlicks whereas the brown drinks category is led by Bournvita (Karvy Research, n.d.). Lately, more consumers have started switching over to consuming white drinks than brown drinks, thereby giving Horlicks a larger market share than Bournvita (Karvy Research, n.d.). When competing with Horlicks, Cadbury Bournvitas current marketing strategy is simply not enough. Given than Horlicks has been operating in the Indian market for longer than Cadbury (Horlicks,2008), this larger market share may be explained by more consumer familiarity with Horlicks than with Bournvita, however, Horlicks extensive marketing campaigns may also have played a part. Horlicks has always marketed itself as a Great Family Nourisher with products such as Mothers Horlicks designed for different members of the family (Horlicks, 2008), which makes it more appealingto a wider section of the market, with products designed for different members of the family, such asMothers Horlicks (Horlicks, 2008), than Bournvitas mainly child-oriented approach. Thus, even elderly and convalescent consumers can consume the product without feeling conscious of consuming a child-only product. Even the Bournvita Quiz Contest, effectively Bournvitas longest running marketing campaign, mainly attracts more child consumers to its product (Radakrishnan, 2002), andthus cannot compete with Horlicks wider appeal. Thus, the solution lies in Cadbury India marketing Bournvita as an adult drink as well. Only then will it be able to compete effectively with Horlicks. Meanwhile, Complans market share of 13% (Samajdar, 2006), is less than Bournvitas. Although both products are targeted at children, Complan has marketed itself as a perfect nutritional supplement (Complan, n.d.) rather than as a healthy drink for children, which is Bournvitas approach. Since the words nutritional supplement connote a need for extra nourishment, this may possibly work against Complan as many families may feel that their child receives enough nourishment and does not require more. Although Cadbury Bournvita currently has a larger market share of the two, it must continue to market itself as a child-friendly drink, and not as a nutritional supplement, in order to maintain its superiority. Delivering Cadbury products to customers Indias 300 billion USD retail market is growing at a rate of 30% per annum (Rai, 2006). In a country where half a bil ion people are under the age of 25, disposable incomes are on the rise and theeconomy is growing at a rate of 8% annually (Rai, 2006), selling treats such as Cadbury Dairy Milk bars and Cadbury Bournvita powder will generate massive returns. However, in order to be able to sell these products to customers, proper distribution channels must be identified. The Indian retail sector is composed of 97% family-run, street corner stores (Rai, 2006) and the remaining 3% consisting of malls and shopping complexes. Therefore, Cadbury India Ltd. produces its products in factories spread geographically across India,but also sells its products through a chain of over 300,000 retailers spread across India (Cadbury India Ltd Analysts Meet, 1999). The efforts of these retailers are augmented by the support of 1900distributor locations and 27 depots (Cadbury India Ltd Analysts Meet, 1999). Furthermore, of a total of 3600 locations that sell Cadbury products, almost 3100 locations are directly supplied by Cadbury India Ltd distributors at least thrice a month (Cadbury India Ltd Analysts Meet, 1999).

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MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1These distribution networks give Cadbury India its competitive edge in Indias massive consumer market. SWOT Analysis of Cadbury India Ltd.Cadbury India Ltds objective of putting a Cadbury in every pocket (Karvy Research, n.d.) can only be done if the company markets its Cadbury Dairy Milk as a household good and its Bournvita as a family-friendly drink. Until then, its Cadbury Dairy Milk success will only be short-term in nature and Bournvita wil not be able to reverse the trend towards the consumption of white malted drinks(Cadbury India Ltd Analysts Meet, 1999) and compete with Horlicks. As seen in Appendix D, ifCadbury Dairy Milk can be marketed extensively enough to break the luxury perception thatconsumers have of it currently (Cadbury India Ltd Analysts Meet, 1999), it can benefit from inelastic demand as a household product, thus generating a constant stream of revenue and cementing the Dairy Milk brand as a cash cow product. This objective can be accomplished by simply building on the good reputation and trust that it has earned, and by listening to the needs of its consumers. 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. Furthermore, the key threat thatcan affect Cadbury India Ltds success in India is Amuls innovative marketing strategy. As a result of its witty marketing strategies, length of time serving India and its ability to develop and marketproducts specifically tailored for Indian consumers, Amuls yearly growth rate of 18% may slowly startto eat away at Cadburys success (Indian Express, 1999). Conclusion Cadbury India Ltds position in India is relatively strong. In order to maintain its lead in such a large market, it must learn to address the specific needs of its consumers and continue to maintain their goodwill, while also analyzing its competitors marketing strategies. By doing so, it wil be able to isolate the benefits and drawbacks of its competitors marketing mix and use those to its own advantage. Cadbury must also appreciate the advantages of a positive reputation and always stress consumersatisfaction. One key aspect of this lies in maintaining the safety of its products so that the name ofCadbury is always synonymous with high quality safe products. Repeats of the recent melamine and worms issues cannot be allowed to happen as once consumer confidence in its brand name isshattered, Cadbury Indias brand recognition aspect will immediately work against it by highlighting the link between its name and contaminated food products. This will cripple sales and reverse the fruits of 70 years of hard work in the country, leaving the path open for more efficient local companies like Amul to learn from Cadbury Indias mistakes and take over its market share. Future Strategy In the branded impulse market, the share of chocolate in 6.6% and Cadburys share in the impulsesegment is 4.8% factor like changing attitude, higher disposable income, a large youth population, and low penetration of chocolate (22% of urban population) point towards a big opportunity ofincreasing the share of chocolate in the branded impulse among the costly alternative in the branded impulse market. 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. Various measures are undertaken in al areas of operation to create value for the future. 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. In terms of manufacturing management focus is on optimizing manufacturing efficiencies andcreating a world class manufacturing location for CDM and clairs. The company is today the second best manufacturinglocation ofCadburys Schweppesin theworld. Efficient sourcing of key raw material i.e. coca through forward purchase of imports, higher local consumption by entering long term contract with farmer and undertaking efforts in expanding local coca area development. The initiatives in the terms of development a long term domestic coca a sourcing base would field maximum gains when commodity prices start moving up. Use of it to improve logistic and distribution competitiveness Utilizing mass media to create and maintain brands. Expand the consumer base. 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, the company has been able to increase the width of its consumer base through launch of low priced products.

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MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1Improving distribution quality by addressing issues of product stability by installation of visi coolers at several outlets. This would be really effective in maintaining consumption in summer, when sales usually dip due to the fact that the heat effects product quality and thereby consumption. The above are some steps being taken internal y to improve future operation and profitability. 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, lower barrier to trade and the advent of all global players in to the country. The management is not unduly concerned about the huge deluge of imported chocolate brands in the market place. It is of the view that size of this imported premium market is small to threaten its own volumes or sales in fact, the company looks at the tree important as an opportunity, where it could optimally use theglobal Cadbury Schweppes portfolio. The company would be able to not only provide greatervariety, but it would also be more cost effective to test market new product as well as improvespeed of response to change in consumer preference through imports. The only concerns that thecompany has in this regard is the current high level of duties, which limit the opportunity to launch value for money products.

Q. 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.Ans. Vision and Mission statementsA well-articulated strategic intent guides the development of goals and helps in inspiring the employees to achieve targets. It also facilitates in utilising the intent to allocate resources and in encouraging team participation. It comprises of the vision and mission statements. Vision statementA vision statement defines the purpose and principles of an organisation in terms of the values of theorganisation. It is a concise and motivating statement that guides the employees to select theprocedures to attain the goals. Vision statement is the framework of strategic planning. A vision statement describes the future ambition of an organisation. A vision is the ability to view what theorganisation wants to be in future. It is prepared for the organisation and its employees. It should beimplanted in the organisation being collectively shared by everyone in the organisation. It conveysan effective business plan. It integrates an understanding about the nature and aspirations of theorganisation and develops this conception to lead the organisation towards a better objective. Itmust synchronise with the organisations principles. The ambition should be rational and achievable. Example - Wal-Marts vision is to become worldwide leader in retailing. Vision statement of L&TL&T employees shall be innovative and the empowered team will constantly create values and attain global benchmarks.L&T shall promote a culture of trust and continuous learning. It shal meetthe expectations of employees, stakeholders and society. Cadburys Vision Statement Our objective is to deliver superior shareholder returns by realizing our vision to the be the worlds biggest and best confectionery company. We are currently the biggest, and we have an enduring commitment to become the undisputed best. At the heart of our plan isourperformancescorecard, delivered through ourpriorities, sustainability commitments and culture Cadbury plans to deliver superior shareholder returns (Cadbury plc, 2008) by measuring itsfinancial progress in the areas of growth, efficiency, capabilities and sustainability from 2008 to 2011 (Cadbury plc, 2008). Mission statement A mission statement is the extensive definition of the mission of an organisation. It is a concisedescription of the existence and fundamental purpose of an organisation. It describes the presentpotentials and activities of the organisation. It conveys the purpose of the organisation to its employees and the public. It is vital for the development and growth of the organisation. Mission statement is the responsibility by which an organisation aims to serve its stakeholders. It givesa framework on the operations of the organisation within which the strategies are devised. Itdescribes the present capabilities, the stakeholders and the reason for existence of an organisation. The statement distinguishes an organisation from its other competitors by explaining its scope ofactivities, technologies, its products and services used to achieve the goals and objectives. It should be practical and achievable. It should be clear and precise so that the actions can be taken based

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MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1on it. It should be unique and different to leave an impact on everyone. It should be credible so thatthe stakeholders accept it. Example -Wal-Marts mission is to provide ordinary customers the chance to buy the same thing as rich people. Mission statement of IBMAt IBM, we strive to be the forerunner in inventing, developing and manufacturing most advanced information technologies, includingcomputersystems, software,storagesystemsand microelectronics. The distinction between mission statement and vision statement is that the mission statement focuseson the present position of the organisation and the vision statement focuses on the future of theorganisation. Cadburys Mission StatementCadburys mission statement outlines its overall business objective and its commitment to itscustomers. Our core purpose Working together to create brands people love captures the spirit of what we are trying to achieve as a business. We collaborate and work as teams to convert products into brands. Core competencies are those skills that are critical for a business to achieve competitiveadvantage. 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 itcomprises the essential skills. These are the central areas of expertise of the company where maximum value is added to its services or products. Example Infosys has a core competency in information technology. It is a unique skil or technology that establishes a distinct customer value. As the organisation progresses and adapts to the new environment, the core competencies also adjust to the change.They are not rigid but flexible to advancing time. The organisation makes the maximum utilisation ofthe competencies and correlates them to new opportunities in the market. Resources and capabilities are the building blocks on which an organisation builds and executes a value-addedstrategy. The strategy is devised in a manner that an organisation can receive reasonable profit andattain strategic competitiveness. Core Competencies are not fixed. They change in response to the transformation in the environment of the company. They are adaptable and advance over time. As an organisation progresses and adapts to new circumstances, the core competencies also adapt to the transformation.

Q. 6. What is SBU? Explain its features, functions and roles. Mention some of the successful SBU of MNCs.Ans. Strategic Business Unit orSBU is understood as a business unit within the overall corporateidentity 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. The unique small business unit benefits that a firm aggressively promotes in a consistent manner. When companies become really large, they are best thought of as being composed of a number ofbusinesses (or SBUs).Strategic Business Unit (SBU) is necessary when corporation starts to providedifferent products and hence, need to follow different strategies.SBUs are also known as strategy centers, Independent Business Unit or even Strategic Planning Centers. SBU is necessary when corporation starts to provide different products and hence, need to followdifferent strategies.

To ease its operation, corporate set different groups of product/product line regarding the strategy to follow (in terms of competition, prices, substitutability, style/ quality, and impact of productwithdrawal). These strategic groups are called Strategic Business Units (SBUs). Page 13 of 15

MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1

Strategic Business Units DefinedA strategic business unit is a significant organization segment that is analyzed to develop organizational strategy aimed at generating future business or revenue. Exactly what constitutes an SBU varies from organization to organization. In larger organizations, an SBU could be a company division, a single product, or a complete product line. In smaller organizations, it might be the entire company.1 Although SBUs vary drastically in form, they havesome common characteristics. All SBUs are a single business (or collection of businesses), have theirown competitors and a manager accountable for operations, and can be independently plannedfor. Why Divisional Structure?When organizations get large, they become slow, awkward, unmanageable, inflexible, and difficultto focus. They distance people from each other, and consume more energy than they release. Smart Business ArchitectDivision DefinedDivision is a business unit having a clear set of customers and competitors. A division can be independently planned for within the organization and has profit and loss responsibility. Case in Point Konosuke MatsushitaIn 1933, Konosuke Matsushita, founder of Panasonic, devised a new management system, dividing the company into three autonomous business units: radios, lighting & batteries, and synthetic resins/electro-thermal products Case in Point Hewlett-PackardHewlett-Packard set the pattern for a divisional structure of an innovative organization long ago. Divisions aggregated into units such as Test and Measurement Organization are the core dominantorganizational entities of the company. When John Chambers, President and CEO of Cisco Systemslooked around for large-scale organizational models that sustained innovation, customer intimacy and satisfaction, he found Hewlett-Packard to be the best. Strategies of Market leaders Shared Services OrganizationSome enterprises establish corporate-level functional groups to provide specialized services (e.g.,Corporate Marketing, Corporate Market Research, Central R&D) that act as a resource to their counterpart functions in the business units. These groups often offer specialized skill sets not Page 14 of 15

MBA 4th Sem Assignment Strategic Management and Business Policy MB0052 Set 1

available at the BU level. They may conduct ongoing research (e.g., scanning for emerging technologies, large-scale trend analysis) or short-term projects, or seek out and contract with specialized third party resources... Corporate Leader: Specific Responsibilities and Expertise RequirementsAs a corporate executive of your firm, you have a critical responsibility for the direction andsuccessful operation of all business units within your organization. Corporate leadership involves a complex set of issues that demands a certain cross-unit expertise, which seldom is achieved through management experience at the business-unit level. You must search for synergies and exploreachievements that are possible at the corporate level through cross-unit activity and the development of entirely new growth opportunities.

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