Documente Academic
Documente Profesional
Documente Cultură
Havell’s India Limited was established in 1958 and is a part of the QRG group, a leading
solution provider in the power distribution-equipment industry in India. The company is one of
the foremost manufacturers and suppliers of low-voltage electrical equipment in the country.
The Havells group originated as a small trading business in Central Delhi’s Bhagirath Place,
which is a wholesale market for electrical goods. It was promoted by Mr. Qimat Rai Gupta and
Mr. Surjit Kumar Gupta, who commenced their trading operations in the year 1958.
A former teacher in Punjab, the entrepreneur Qimat Rai Gupta bought the Havells brand from
one Haveli Ram Gandhi, thereby moving up from trader to manufacturer. The Company was
incorporated as Havells India Private Limited on 8th August, 1983 under the Companies Act,
1956 and subsequently the name was changed to Havells India Limited vide certificate dated
31st March, 1992.
This company manufactures electrical and power distribution equipments ranging from building
circuit protection, Industrial & Domestic switchgear, cables & wires, energy meters, fans, CFL
lamps, luminaries for domestic, commercial & Industrial application and modular switches.
MILESTONES:
Year Achievements
Commenced trading operations in
1958
Delhi.
Set up the first factory for Changeover
1976
Switches at Kirti Nagar, Delhi
Set up a factory for HBC Fuses at
1979
Badli, Delhi.
Started manufacturing high quality
1980
Energy Meters at Tilak Nagar, Delhi.
Took over Towers and Transformers
1983 Ltd and turned it around in one year to
profitably.
Started manufacturing MCBs at Badli,
1987 Delhi in Joint Venture with Geyer,
Germany.
1990 Set up a manufacturing unit at
Sahibabad in UP for Changeover
Switches.
1992 Anil Gupta joined family Business
Set up another factory at Faridabad,
1993
Haryana for Control gear Products.
1995 Ameet Gupta joined family Business
VISION STATEMENT:
To be a globally recognized corporation that provides best electrical & lighting solutions,
delivered by best-in-class people
.
MISSION STATEMENT:
To achieve our vision through fairness, business ethics, global reach, technological
expertise, building long term relationships with all our associates, customers, partners,
and employees.
PESTLE ANALYSIS (PEST analysis)
Political (Global, national, regional, local community and trends)
PESTLE Analysis is a simple technique which can be used in a fairly sophisticated way,
particularly when it is combined with Risk Analysis, SWOT Analysis, an Urgency/Impotency
Grid and expert knowledge about the organisation and its external factors.
PESTLE Analysis is normally used to help organisations identify and understand the external
environment in which they operate and how it will operate in the future.
PESTLE Analysis can be used by the individual for personal development planning. Some
people will argue that this is a use for which it was never designed and for which it may be
inappropriate.
The shorter version is a PEST Analysis – missing out Legal and Environmental factors. At the
end of this document is an explanation of the use of PESTLE for organisational change.
SOCIAL FACTOR
Havell acquires companies and builds internally, havells Group never loses sight of its
responsibility as a good corporate citizen. Havells believes that serving people with meager or no
means is the duty of every well-to-do person. It consistently puts that philosophy into action and
has initiated several projects for social causes. This has greatly increased the number of children
attending school regularly and also alleviates hunger.
Corporate Social Responsibility (CSR) at havells portrays the deep symbiotic relationship that
the group enjoys with the communities it is engaged with. As a responsible corporate citizen, we
try to contribute for social and environmental causes on a regular basis.
The company has acquired land for constructing a large kitchen with all the modern facilities to
serve the meal to around 40000 to 50000 students.
Being a responsible and concerned corporate citizen, QRG also undertakes other welfare
activities in and around its plant locations, In Alwar region; the company is providing mid-day
meal close to 15000 students of primary schools.
Check-up Camps
TECHNOLOGICAL FACTOR
Innovation is the hallmark of every vital development at havells Group. New ideas, inventions
deepen scientific knowledge and give its work force a new impetus towards technical progress.
Havells’s technological strengths and its endeavour towards continuous research & development
have allowed it to fulfils its responsibilities towards its customers. The responsibility of
providing its customers the best products and zero defect services to enable them to be
comfortable and secure in usage of electricity.
Havells has recently invested 50 crores in the QRG Center for Research and Innovation,
set-up at the company's Head Office premises in Noida, U.P.
The objective of this centre is to provide the theoretical & experimental foundations for all
segments of electrical engineering. The centre closely cooperates with the various departments
so as to provide the best and the latest in terms of technology and design.
Quality Control
The essence of quality is closely wrapped in the way we think, plan and work. It finds its true
expression when we extend beyond ourselves to exceed our customer’s expectations. To deliver
products those are safer, faster and simply better.
Each time, every time. Building customer confidence through teamwork is a top priority to
provide a wide variety of products and services.
Realising and respecting the basic needs of customers to feel more secure, we've committed
ourselves to make our products better, safer and smarter than what he or she is looking for. That's
a passion that began 30 years ago and that's how it continues to be even today. Our customers
rely on us and it is our responsibility to give them the very best. All our products are as per IEC
standards.
QRG has a simple rule on quality. If it doesn't exceed customer expectation, it's not quality
ECONOMIC FACTOR
The Havells Group defines corporate governance strategically, which encompasses not only what
we do as a company with our profits, but also how we make them. It goes beyond philanthropy
and compliance and addresses how our company manages its economic, social, and
environmental impacts, as well as its relationships in all key spheres of influence: the workplace,
the marketplace, the supply chain, the community, and the public policy realm.
We as a company have been in lead in offering a portfolio of eco responsible products and
services that deliver powerful, sustainable, energy-efficient solutions that don't compromise on
capacity and security. Our eco responsibility initiative also focuses on how we run our business,
and includes efforts to develop an alternative-energy strategy, and thus reduce the environmental
impact of our operations. We strive to bring corporate responsibility to every aspect of our
business. We're committed to managing a responsible and diverse supply chain that's consistent
with our high standards for environmental and business practices.
Breaking down the barriers that constrain innovation is a challenge; we have readily embraced
right from the start. Our ability to build communities and promote the exchange of ideas through
assistive technologies, participation programs, and standardization is transforming the way
people experience our products. We offer our customers holistic energy-efficient solutions,
enabling them to not only save money and protect their capital investment, but also lower their
energy usage and protect the environment, thus fulfilling our CSR responsibility of sustenance of
depleting environmental resources.
CORPORATE GOVERNANCE AND ETHICS
An implicit sense of ethical business conduct has been the cornerstone of the havells way on
corporate governance. On issues ranging from customer care and business excellence to financial
propriety and more, explicit rules and regulations supplement the traditional values on which our
group companies have been shaped. This is what we have endeavored to do in the 50 years of
our existence. Our values of understanding, trust, integrity and ethics have served us in
good stead.
Corporate governance as practiced by our Group translates into being fair and civic-minded,
fulfilling our duties to the entire spectrum of stakeholders, and, most importantly, making
integrity an article of faith across all our operations. The group's adherence to ethical business
conduct is rooted in the vision of its Founder Mr Qimat Rai Gupta. We started on sound and
straightforward business principles, considering the interests of our shareholders and welfare of
our employees as foundation of our long term success.
The 'leadership with trust' philosophy that has come to play such a vital role in how our
customers perceive us is all the more remarkable given the climate of unparalleled public distrust
of people in positions of authority today both in business and politics.
Employee Relations
Our people are the key to our success. Their skills, knowledge, ideas and enthusiasm drive our
business. We have high-quality, diverse workforce and employees who fulfill their potential. We
have achieved this by giving them development and advancement opportunities along with
competitive compensation and benefits that appropriately reward performance
We communicate widely with employees to demonstrate how their efforts contribute to our
success and to listen to their concerns. We also encourage them to align with our vision. We are
committed to open communications and a workplace where everyone's voice is heard.
We use several channels to communicate with employees, including an internal web portal and
company website along with communication sessions with the top management of the company.
These sessions provide assessment of employee satisfaction and are inputs for business planning,
management decision-making and company strategy development. They also help employees
implement company policies, meet high standards of conduct and ensure their behavior reflects
company values and policies.
We seek to meet leading health, safety and wellness standards to enhance our business
performance while optimizing employee health. Our facility policies are designed to continually
reduce the risk of occupational injury and illness while promoting employee health and well-
being. We wish to be a company that is known for its leadership in corporate ethics and
responsibility. A company where employees are proud to work, and customers, partners and
suppliers want to do business with.
SWOT Analysis:
SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. It involves
specifying the objective of the business venture or project and identifying the internal and
external factors that are favorable and unfavorable to achieving that objective.
A SWOT analysis must first start with defining a desired end state or objective. A SWOT
analysis may be incorporated into the strategic planning model. Strategic Planning, including
SWOT and SCAN analysis, has been the subject of much research.
• Strengths: attributes of the person or company that are helpful to achieving the objective.
• Weaknesses: attributes of the person or company that are harmful to achieving the
objective.
Identification of SWOTs is essential because subsequent steps in the process of planning for
achievement of the selected objective may be derived from the SWOTs.
First, the decision makers have to determine whether the objective is attainable, given the
SWOTs. If the objective is NOT attainable a different objective must be selected and the process
repeated.
The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses,
opportunities and threats [citation needed]. It is particularly helpful in identifying areas for
development [citation needed].
SWOT analysis may limit the strategies considered in the evaluation. J. Scott Armstrong notes
that "people who use SWOT might conclude that they have done an adequate job of planning
and ignore such sensible things as defining the firm's objectives or calculating ROI for alternate
strategies." Findings from Menon et al. (1999) and Hill and Westbrook (1997) have shown that
SWOT may harm performance. As an alternative to SWOT, Armstrong describes a 5-step
approach alternative that leads to better corporate performance.
These criticisms are addressed to an old version of SWOT analysis that precedes the SWOT
analysis described above under the heading "Strategic and Creative Use of SWOT Analysis."
This old version did not require that SWOTs be derived from an agreed upon objective.
Examples of SWOT analyses that do not state an objective are provided below under "Human
Resources" and "Marketing."
• External factors – The opportunities and threats presented by the external environment to
the organization. - Use a PEST or PESTLE analysis to help identify factors
The internal factors may be viewed as strengths or weaknesses depending upon their impact on
the organization's objectives. What may represent strengths with respect to one objective may be
weaknesses for another objective.
The factors may include all of the 4P's; as well as personnel, finance, manufacturing capabilities,
and so on. The external factors may include macroeconomic matters, technological change,
legislation, and socio-cultural changes, as well as changes in the marketplace or competitive
position. The results are often presented in the form of a matrix.
SWOT analysis is just one method of categorization and has its own weaknesses. For example, it
may tend to persuade companies to compile lists rather than think about what is actually
important in achieving objectives. It also presents the resulting lists uncritically and without clear
prioritization so that, for example, weak opportunities may appear to balance strong threats.
It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of
individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that
produces valuable strategies is important. A SWOT item that generates no strategies is not
important.
The SWOT-landscape systematically deploys the relationships between overall objective and
underlying SWOT-factors and provides an interactive, query-able 3D landscape.
Changes in relative performance are continually identified. Projects (or other units of
measurements) that could be potential risk or opportunity objects are highlighted.
SWOT-landscape also indicates which underlying strength/weakness factors that have had or
likely will have highest influence in the context of value in use (for ex. capital value
fluctuations).
Corporate planning
As part of the development of strategies and plans to enable the organization to achieve its
objectives, then that organization will use a systematic/rigorous process known as corporate
planning. SWOT alongside PEST/PESTLE can be used as a basis for the analysis of business
and environmental factors.
• Environmental scanning
o Internal appraisals of the organization's SWOT, this needs to include an assessment of the
present situation as well as a portfolio of products/services and an analysis of the product/service
life cycle
• Analysis of existing strategies, this should determine relevance from the results of an
internal/external appraisal. This may include gap analysis which will look at environmental
factors
• Strategic Issues defined – key factors in the development of a corporate plan which needs
to be addressed by the organization
• Develop new/revised strategies – revised analysis of strategic issues may mean the
objectives need to change
• Monitoring results – mapping against plans, taking corrective action which may mean
amending objectives/strategies.
Marketing:
In many competitor analyses, marketers build detailed profiles of each competitor in the market,
focusing especially on their relative competitive strengths and weaknesses using SWOT analysis.
Marketing managers will examine each competitor's cost structure, sources of profits, resources
and competencies, competitive positioning and product differentiation, degree of vertical
integration, historical responses to industry developments, and other factors.
Marketing management often finds it necessary to invest in research to collect the data required
to perform accurate marketing analysis. Accordingly, management often conducts market
research (alternately marketing research) to obtain this information. Marketers employ a variety
of techniques to conduct market research, but some of the more common include:
• Marketing managers may also design and oversee various environmental scanning and
competitive intelligence processes to help identify trends and inform the company's marketing
analysis.
SWOT Analysis
A scan of the internal and external environment is an important part of the strategic planning
process. Environmental factors internal to the firm usually can be classified as strengths (S) or
weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats
(T). Such an analysis of the strategic environment is referred to as a SWOT analysis.
The SWOT analysis provides information that is helpful in matching the firm's resources and
capabilities to the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection. The following diagram shows how a SWOT analysis fits into
an environmental scan:
Environmental Scan
/\
/\ /\
SWOT Matrix
Strengths
A firm's strengths are its resources and capabilities that can be used as a basis for developing a
competitive advantage. Examples of such strengths include:
• Patents
Weaknesses
The absence of certain strengths may be viewed as a weakness. For example, each of the
following may be considered weaknesses:
In some cases, a weakness may be the flip side of strength. Take the case in which a firm has a
large amount of manufacturing capacity. While this capacity may be considered a strength that
competitors do not share, it also may be a considered a weakness if the large investment in
manufacturing capacity prevents the firm from reacting quickly to changes in the strategic
environment.
Opportunities
The external environmental analysis may reveal certain new opportunities for profit and growth.
Some examples of such opportunities include:
• loosening of regulations
Threats
Changes in the external environmental also may present threats to the firm. Some examples of
such threats include:
• New regulations
To develop strategies that take into account the SWOT profile, a matrix of these factors can be
constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below:
Strengths Weaknesses
• S-O strategies pursue opportunities that are a good fit to the company's strengths.
• S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability
to external threats.
• W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it
highly susceptible to external threats.
SWOT Analysis
SWOT Analysis is a powerful technique for understanding your Strengths and Weaknesses, and
for looking at the Opportunities and Threats you face.
Used in a business context, it helps you carve a sustainable niche in your market. Used in a
personal context, it helps you develop your career in a way that takes best advantage of your
talents, abilities and opportunities. Click here for Business SWOT Analysis, and here for
Personal SWOT Analysis.
Business SWOT Analysis
What makes SWOT particularly powerful is that, with a little thought, it can help you uncover
opportunities that you are well placed to exploit. And by understanding the weaknesses of your
business, you can manage and eliminate threats that would otherwise catch you unawares.
More than this, by looking at yourself and your competitors using the SWOT framework, you
can start to craft a strategy that helps you distinguish yourself from your competitors, so that you
can compete successfully in your market.
To carry out a SWOT Analysis, start by downloading our free template. Then answer the
following questions:
Strengths:
Consider this from an internal perspective, and from the point of view of your customers and
people in your market. Be realistic: It's far too easy to fall prey to "not invented here syndrome".
(If you are having any difficulty with this, try writing down a list of your characteristics. Some of
these will hopefully be strengths!)
In looking at your strengths, think about them in relation to your competitors - for example, if all
your competitors provide high quality products, then a high quality production process is not
sstrength in the market, it is a necessity.
Tip:
For help finding your company's Unique Selling Proposition (USP) or crafting your competitive
edge, read our USP Analysis article.
Weaknesses:
Again, consider this from an internal and external basis: Do other people seem to perceive
weaknesses that you do not see? Are your competitors doing any better than you? It is best to be
realistic now, and face any unpleasant truths as soon as possible.
Opportunities:
• Local events.
A useful approach for looking at opportunities is to look at your strengths and ask yourself
whether these open up any opportunities.
Alternatively, look at your weaknesses and ask yourself whether you could create opportunities
by eliminating them.
Threats:
• Are the required specifications for your job, products or services changing?
Strengths and weaknesses are often internal to your organization. Opportunities and threats often
relate to external factors. For this reason the SWOT Analysis is sometimes called Internal-
External Analysis and the SWOT Matrix is sometimes called an IE Matrix Analysis Tool.
You can also apply SWOT Analysis to your competitors. As you do this, you'll start to see how
and where you should compete against them.
Tip 1:
Make sure you visit our next article 'PEST Analysis' - this tool is useful for understanding the
'big picture' of the environment you are operating in and will help you identify the opportunities
and threats within it.
Tip 2:
SWOT can be used in two ways – as a simple icebreaker helping people get together and "kick
off" strategy formulation, or in a more sophisticated way as a serious strategy tool. If you're
using it as a serious tool, make sure you're rigorous in the way you apply it:
• Only accept precise, verifiable statements ("Cost advantage of US$10/ton in sourcing raw
material x", rather than "Good value for money").
• Ruthlessly prune long lists of factors, and prioritize factors so that you spend your time
thinking about the most significant factors.
• Make sure that options generated are carried through to later stages in the strategy
formation process.
• Apply it at the right level – for example, at product or product line level, rather than at the
much vaguer whole company level.
Example
A start-up small consultancy business might draw up the following SWOT matrix:
Strengths:
• We can respond very quickly as we have no red tape, no need for higher management
approval.
• We can give really good customer care, as the current small amount of work means we
have plenty of time to devote to customers.
Weaknesses:
Opportunities:
• Our business sector is expanding, with many future opportunities for success.
• Our local council wants to encourage local businesses with work where possible.
Threats:
• Will developments in technology change this market beyond our ability to adapt?
• A small change in focus of a large competitor might wipe out any market position we
achieve.
The consultancy may therefore decide to specialize in rapid response, good value services to
local businesses. Marketing would be in selected local publications, to get the greatest possible
market presence for a set advertising budget. The consultancy should keep up-to-date with
changes in technology where possible.
Key Points
SWOT Analysis is a simple but powerful framework for analyzing your company's Strengths and
Weaknesses, and the Opportunities and Threats you face. This helps you to focus on your
strengths, minimize threats, and take the greatest possible advantage of opportunities available to
you.
Porter’s 5 force model
The Bargaining power of customers
How much customers can impose pressure on margins and volumes.
· Bargaining Leverage- The product is not of strategically importance for the customer,
· Switching to an alternative product is relatively simple and is not related to high costs,
Switching Costs :
- any impediment to a customer's changing of suppliers.
> There is not much differentiation between players and their products, hence, there is much
price competition.
> Low market growth rates (growth of a particular company is possible only at the expense of
a competitor).
> Barriers for exit are high (e.g. expensive and highly specialized equipment).
- A high concentration ratio indicates- only a few firms holding a large market share, the
competitive landscape is less competitive (closer to a monopoly).
- A low concentration ratio indicates- that the industry is characterized by many rivals
(competitive)
Profitability:
-An industry’s profit potential is largely determined by the intensity of competitive rivalry
1- low rivalry,
2- limited entry,
3- few substitute products,
4- low supplier power,
5- low power by the buyers
Threat of
New
Entrants
LOW
Threat of
Substitute
Products
LOW
Reference- altadynamics.com/Baruch/Porter%205%20forces%20analysis.doc
BCG Matrix
Market share is the percentage of the total market that is being serviced by your company,
measured either in revenue terms or unit volume terms.
The higher your market share, the higher proportion of the market you control.
Markets experiencing high growth are ones where the total market share available is expanding,
and there’s plenty of opportunity for everyone to make money.
It is a portfolio planning model which is based on the observation that a company’s business
units can be classified in to four categories:
I. Stars
IV. Dogs
It is based on the combination of market growth and market share relative to the next best
competitor.
The matrix comprises of four quadrants each describing the size and position of the strategic
business unit owned by an organization.
Market
Growth
Rate
1. QUESTION MARKS: - These are Businesses that operate in high- growth markets but
have low relative market shares. A question mark requires a lot of cash because the company has
to spend money on plant, equipment and personnel to keep up with the fast growing market and
because it wants to overtake the market leader. The company has to think hard about whether to
keep on investing money into this business or put an end.
Strategic options for question marks include..
I. Market penetration
II. Market development
III. Product development
IV. Which are all intensive strategies or divestment?
2. STARS: - It is a market leader in a high growth market. A star does not necessarily produce
a positive cash flow for the company. The company must spend substantial funds to keep up with
the high market growth and to fight off competitor attacks. A star is a potential business which
has the competitive advantage to be a market leader in an industry that is growing fast.
Strategic options for stars include.
I. Integration – forward, backward and horizontal
II. Market penetration
III. Market development
IV. Product development
V. Joint ventures
3. CASH COWS: - Stars with a falling growth rate that still have the largest relative market
share and produce a lot of cash for the company is called a cash cow. The company does not
have to finance expansion because the markets growth rate has slowed because the business is
the market leader it enjoys economies of scale and higher profit margins. The company uses its
cash cows to pay bills and support other business.
a). Strong position:-strategic options are
I. Product development
II. Concentric diversification
b). Weak position :- strategic options are
I. Retrenchment
II. Divestment
4. DOGS: - Businesses that have weak market shares in low-growth markets are in the dog
category. The company should consider whether they are expecting a turn around in the market
growth rate or a new chance for market leadership else they should divest this business. It would
be fruitless to spend and money on this matrix business.
Strategic options for Dogs include
I. Retrenchment (if it is believed that it could be revitalized)
II. Liquidation
III. Divestment (if you can find someone to buy!)
Successful products may well move from question mark through star to Cash Cow and finally to
Dog. Less successful products that never gain market position will move straight from question
mark to Dog.
B. Assessing and comparing the prospects of each SBU according to two criteria
BENEFITS
A. BCG MATRIX is simple and easy to understand.
B. It helps you to quickly and simply screen the opportunities open to you, and helps you
think about how you can make the most of them.
C. It is used to identify how corporate cash resources can best be used to maximize a
company’s future growth and profitability.
LIMITATIONS
A. Definition (qualitative and quantitative) of the market is sometimes difficult.
B. It assumes that market share and profitability are directly related.
C. The use of high and low to form four categories is too simplistic.
D. Growth rate is only one aspect of industry attractiveness and high growth markets are not
always the most profitable.
E. It considers the product or business in relation to the largest player only.
F. It ignores the impact of small competitors whose market share is rising fast.
G. Market share is only one aspect of overall competitive position.
H. It ignores interdependence and synergy.
I. Companies will frequently search for a balanced portfolio, since. Too many stars may
lead to a cash crisis too many Cash Cows puts future profitability at risk and too many
question marks may affect current profitability.
Switchgear:
Havells is the largest manufacturers of MCBs, RCCBs, and distribution boards in India .With the
market share of around 25% in the market for MCBs. In FY08, switchgear contributed 25% at
Rs. 5420 million to its overall revenue. This segment is the most profitable one with operating
margins to the tune of 33% in the FY08. The Company currently exports MCBs to over
countries, including the quality conscious European countries. The Company is the number one
player in domestic switchboards with more than 20% market share and is the 4th largest in
Industrial switch boards. With continued investment in power sector they expect Company to
grow at 15% CAGR over FY08-FY12.Switch Gear division had EBIT margins of 32% for
Q3FY09. They expect margins in this business will remain stable above 30% over long term.
6% R
4% O
2% W
0% T
H
Cash Cow Dogs
• Lighting and Fixtures • Cables and wires
L Products like Sylvania due to Low growth as well as market
cultural difference and cost shares in market.
rationalization undergo
retrenchment, and divestment
in Europe, basically outsource
its products from India.
H L
• Since Construction and real Estate sector has slowed down, they expect demand to go down in
near future and will pick up slowly.
• Although investments in power sector will continue to rise but Havells will not be able to take
complete advantage as it does not manufacture some range of High Tension cables.
• During the FY08, the Company had almost doubled its capacity. Havells’ strong brand value
and aggressive marketing to help it grow its top line for its cables and wires segment..
REFERENCE
http://www.csgstrategies.com/
www.valuenotes.com/fairwealth/fairwealth_havells_30Jan09.pdf
a) Resource-based analysis of the firm determines which resources and capabilities result in
which strengths or weaknesses
b) Strategies are to be implemented which exploit (or build) strengths and avoid (or
eliminate) weaknesses
c) What constitutes a strength or weakness is partially a function of the external
environment
d) Framework for analysis: VRIO - resources and capabilities should be
Valuable
Rare
Inimitable
Organization can effectively exploit them
i. Customer preferences
ii. Available alternatives (including substitute products)
iii. Supply of related or supplementary goods
b) Thus, value is partially a function of external environment (product market, demand
forces)
c) Changes in consumer tastes, industry structure, technology, etc. can result in changed
value
d) Resources of different firms can be valuable in different ways (e.g., Timex versus Rolex)
e) Value = Lowered costs or increased revenues or both
A. Impediments to imitation:
The following elements must be in place in order to effectively exploit the resource(s) and/or
capability(s):
i. Structure
All of the functions of the company –such as production, marketing, R&D, service, information
systems, material management, and human resources-have a role in lowering the cost structure
and increasing the perceived value of the products through differentiation. The term VALUE
CHAIN refers to the idea that a company is a chain of activities for transforming inputs into
outputs that customers value. The process of transformation is composed of a number of primary
activities and support activities that add value to the product.
Research & Marketing
Customer
Primary Activities
Development Production & Sales
service
Materials
Company Information Human
Management
Infrastructure Systems Resources
Support Activities
• Significant brand emphasis to create a strong differentiator with FMCG like packaging,
promotions and advertisements.
• Consumer pull evenly matched with a well entrenched distribution network
• High RoCE and RoE creating shareholder value.
Buoyant end user segments:
• Infrastructure, power and construction key user segments.
• Significant investment planned with greater focus on
infrastructure development.
• Large opportunities for quality, branded and well distributed product companies like
Havell’s.
Innovation is the hallmark of every vital development at QRG. New ideas, inventions deepen
scientific knowledge and give its work force a new impetus towards technical progress.
QRG technological strengths and its endeavor towards continuous research & development
has allowed it to fulfill its responsibilities towards its customers. The responsibility of providing
its customers the best products and zero defect services to enable them to be comfortable and
secure in usage of electricity.
The task of this centre is to provide the theoretical & experimental foundations for all segments
of electrical engineering. The centre closely cooperates with the various departments so as to
provide the best and the latest in terms of technology and design. The Group has also decided to
dedicate 2% of it's turnover towards R&D.
Diversification
Diversification is the process of adding new businesses to the company that are distinct from its
established operations. A diversified or multibusiness company is thus one that is involved in
two or more distinct industries. To increase profitability, a diversification strategy should enable
a company or one or more of its business units to
(1) Perform one or more of the value creation function at a lower cost,
(2) Perform one or more of the value creation functions in a way that allows for differentiation
and gives a company pricing options, or
The managers of a diversified company can boost profitability in five main ways:
The two main types of diversification are related diversification and unrelated diversification.
Related diversification is diversification into a new business activity in a different industry that
is related to a company’s existing business activity, or activities, by commonalities between one
or more components of each activity’s value chain.
Unrelated diversification is based on entry into industries that have no obvious connection to
any of a company’s value chain activities in its present industries.
CRABTREE
“Havells is not shy of investing in unrelated field. The acquisition marks the beginning of
our entry into the healthcare segment. We have spent over Rs 20 cr for the acquisition and
are investing an equal amount in expanding the existing facilities in the hospital. In the
next phase, we are likely to go for more such facilities”
1996: Acquired a Manufacturing plant for power cables and wires. JV with Electrium for
MCCBs and with Crabtree
for MPS.
1997: Acquired Electric control and switchboards Noida, for customized package solutions.
2000: Acquired controlling stakes in Duke Arnics Electronics meters, and in industry major
Standard Electricals.
2001: Acquired MCCBs business of Crabtree and merged ECS ltd in the company.
2002: Attained IEC & CSA certification. Standard electrical became 100%
2007: Acquired Lightning business of Sylvania group. QRG group entered healthcare business
acquiring majority
The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate
strategy, corporate finance and management dealing with the buying, selling and combining of
different companies that can aid, finance, or help a growing company in a given industry grow
rapidly without having to create another business entity.
Mergers and acquisitions are the third, and most widely used, vehicle that companies can use to
enter new industries or countries. How to implement structure, control systems, and culture to
manage a new acquisition is important because many acquisitions are unsuccessful. And one of
the main reasons acquisitions perform poorly is that many companies do not anticipate the
difficulties associated with merging or integrating new companies into their existing operations.
CRABTREE
• LEARNING FROM MISTAKES: Lost bid for Electrium to Siemens by 8 million pounds.
Learned how to mobilize funding and to deal with complex issues of merger and acquisitions.
Capital finances
Uttaranchal
• Can keep existing manufacturing facilities in Europe, but will create additional capacities in
low cost India
• Havells can use Sylvania multi brand strategy for different markets
"Sylvania's acquisition is a first step towards attaining leading position in the global lighting
industry with a strong presence in the developed markets of Europe and high growth Latin
American markets. This acquisition will provide us a platform with strong brands and established
distribution channels on which Havells can build on. Further, the management team responsible
for SLI Sylvania's turnaround will continue to remain with the business and grow the combined
organization"
"The management team is extremely excited about the Transaction and believes that SLI
Sylvania is well-poised to effectively exploit the opportunities ahead with significant synergies
to be realized by the combined organization”.
The value chain, also known as value chain analysis, is a concept from business management
that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive
Advantage: Creating and Sustaining Superior Performance.
A value chain is a chain of activities for a firm operating in a specific industry. The business unit
is the appropriate level for construction a value chain, not the divisional level or corporate level.
Products pass through all activities of the chain in order and at each activity the product gains
some value.
The chain of activities gives the products more added value than the sum of added values of all
activities. It is important not to mix the concept of the value chain with the costs occurring
throughout the activities. A diamond cutter can be used as an example of the difference. The
cutting activity may have a low cost, but the activity adds much of the value to the end product,
since a rough diamond is significantly less valuable than a cut diamond. Typically, the described
value chain and the documentation of processes, assessment and auditing of adherence to the
process routines are at the core of the quality certification of the business, e.g. ISO 9001.
The value chain categorizes the generic value-adding activities of an organization. The "primary
activities" include: inbound logistics, operations (production), outbound logistics, marketing and
sales (demand), and services (maintenance). The "support activities" include: administrative
infrastructure management, human resource management, technology (R&D), and procurement.
The costs and value drivers are identified for each value activity. The value chain framework
quickly made its way to the forefront of management thought as a powerful analysis tool for
strategic planning. The simpler concept of value streams, a cross-functional process which was
developed over the next decade, had some success in the early 1990s.
• Production
• Distribution
• Customer Service
Innovation is the hallmark of every vital development at havell’s Group. New ideas, inventions
deepen scientific knowledge and give its work force a new impetus towards technical progress.
Havell’s technological strengths and its endeavor towards continuous research & development
have allowed it to fulfill its responsibilities towards its customers. The responsibility of
providing its customers the best products and zero defect services to enable them to be
comfortable and secure in usage of electricity. Havells has recently invested 50 crores in the
havell’s Center for Research and Innovation, set-up at the company's Head Office premises in
Noida, U.P.
The objective of this centre is to provide the theoretical & experimental foundations for all
segments of electrical engineering. The centre closely cooperates with the various departments
so as to provide the best and the latest in terms of technology and design.
Quality Control
The essence of quality is closely wrapped in the way they think, plan and work. It finds its true
expression when they extend beyond themselves to exceed our customer’s expectations. To
deliver products those are safer, faster and simply better.
Each time, every time. Building customer confidence through teamwork is a top priority to
provide a wide variety of products and services.
Realising and respecting the basic needs of customers to feel more secure, they’ve committed
themselves to make their products better, safer and smarter than what he or she is looking for.
That's a passion that began 30 years ago and that's how it continues to be even today. customers
rely on havells and it is responsible to give them the very best. All their products are as per IEC
standards.
Havells has a simple rule on quality. If it doesn't exceed customer expectation, it's not quality
performance.
Company products
Havells manufactures products such as industrial and domestic circuit protection switchgears,
cables and wires, motors, fans, power capacitors, CFL lamps, luminaires for
domestic,commercial and industrial applications, modular switches, and bathfittings covering the
• Fans
• Ceiling Fans
• Table Fans
• Wall Mounting Fans
• Pedestal Fans
• Air Circulator Fans
• Ventilating Fans
• Industrial Circuit Protection
• Air Circuit Breaker
• MCCB
• Panel Board System
• Changeover Switch
• By-Pass Changeover Switch
• Automatic Transfer Switch
• Switch Disconnector
• Load Changeover Switch
• Control Gear
• Switch Disconnector Fuse
• Fuse Switch and Switch Fuse
• Chamber System
• Fuse Holder
• Nylon Fuse Base
• Fuse Link and Fuse Base
• Lighting
• LED Lighting
• Consumer Lighting
• COmmercial Lighting
• Down Lighter
• Landscape-Bunker Lighting
• Industrial Lighting
• Area Lighting
• Road Lighting
• Speciality lamps
• Accessories
•
• Aura Lighting
• Modular Plate Switches
• Havells Modular Switches
• Crabtree Modular Switches
• Motors
• Foot Mounting Flange Motor
• Flange Motor
• Foot Cum Flange
• Inverter Duty Motors with Forced Cooling
• Crane Duty Motors
• Brake Motors
• CFL
• Retrofit
• Non Retrofit
• Higher Range
• Liliput
• FPL
• Cables and Wires
• Power Cables - Aluminium
• Control Cables - Copper
• Copper Flexible Cables
• Integrated service: AIL have the ability to provide customers with an integrated range
of
• casting, machining and sub-assembly capabilities. The company makes a number of
• casting modules for engines and transmission components, which are typically
• complementary to each other. Moving down the value chain into casting has enabled the
• company to increase the product range, provide a budled service to its customers and
• control more effectively raw material prices, process and wastages.
• UNDEFLOOR BOX
• CASA
Havell's India operates in the business of switch gear, cable & wire and
etc.
Havells produces a complete range of low and high voltage PVC and
has a strong brand name in electrical consumer goods and a brand leader in
compact fluoresce
INVESTMENT RATIONALE:
power for distribution reforms. The eleventh five year plan has earmarked
of the Tenth Five-year Plan, the energy demand is expected to grow at 5%.
among the highest in the world spurred by sustained economic growth, rise
in income levels, and increased availability of goods and services. Havell’s is a company which
is poised to benefit from this.
Growing focus on exports: Havell’s caters its international clientele spread over 51 countries
with offices in London, Dubai, Dhaka, China, Nigeria, Sri Lanka and distribution networks in all
major countries. In March, the company bagged an export contract for 2 years from Eaton
Electrical group for supply of switchgear amounting US $10 million.
Despite the intense competition in the global electrical industry, Havell’s recorded a export
turnover of Rs. 75 Crores in FY06. Going forward it is expected to clock a turnover of Rs.120
Crore in FY07 and upto Rs 150 Crores in FY08.
through improvements in process using tools like six sigma, 5-S, TQM,
expenditure to the tune of Rs.60 crores in FY06 and is making capital expenditure amounting Rs.
130 Crores and Rs.70 Crores in FY07 & FY08 respectively. Capital expenditute will bring in
additional capacity resulting in increase in topline.
inorganic growth which will have synergies with their existing product
portfolio. Havell's has got the approval from its board of directors to
acquire a greek company for Euros 10 million. Crabtree India started out as a
jointventure between Crabtree UK and Havell's India Ltd. Crabtree India Ltd.
has been merged with Havell's India Ltd along with brandrights assignment
trade channel, and the company interacts with dealer on a regular basis to get
future. It is expected to incur a capex of Rs.50 Crores for this products nt lamp.
Competitive Advantage
A company has a competitive advantage over its rivals when its profitability is greater than the
average profitability for all companies in its industry.
The goal of much of business strategy is to achieve a sustainable competitive advantage.It has a
sustained competitive advantage when it is able to maintain above average profitability over a
number of years.
Competitive advantage can come in one or combination of the following factors: Price, service,
quality, location, or imbedded customer base. The better your business performs against one of
these factors, the more likely you are to succeed.
Two basic types of competitive advantage:
• Cost advantage
• Differentiation advantage
A competitive advantage exists when the firm is able to deliver the same benefits as competitors
but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products
(differentiation advantage). Thus, a competitive advantage enables the firm to create superior
value for its customers and superior profits for itself.
Cost and differentiation advantages are known as positional advantages since they describe the
firm's position in the industry as a leader in either cost or differentiation.
A resource-based view emphasizes that a firm utilizes its resources and capabilities to create a
competitive advantage that ultimately results in superior value creation. The following diagram
combines the resource-based and positioning views to illustrate the concept of competitive
advantage:
P.T.O
Capabiliti
es
Resources and Capabilities
According to the resource-based view, in order to develop a competitive advantage the firm must
have resources and capabilities that are superior to those of its competitors. Without this
superiority, the competitors simply could replicate what the firm was doing and any advantage
quickly would disappear.
Resources are the firm-specific assets useful for creating a cost or differentiation advantage and
that few competitors can acquire easily. The following are some examples of such resources:
• Proprietary know-how
• Brand equity
Capabilities refer to the firm's ability to utilize its resources effectively. An example of a
capability is the ability to bring a product to market faster than competitors. Such capabilities are
embedded in the routines of the organization and are not easily documented as procedures and
thus are difficult for competitors to replicate.
The firm's resources and capabilities together form its distinctive competencies. These
competencies enable innovation, efficiency, quality, and customer responsiveness, all of which
can be leveraged to create a cost advantage or a differentiation dvantage.
Value Creation
The firm creates value by performing a series of activities that are identified as the value chain.
In addition to the firm's own value-creating activities, the firm operates in a value system of
vertical activities including those of upstream suppliers and downstream channel members.
To achieve a competitive advantage, the firm must perform one or more value creating activities
in a way that creates more overall value than do competitors. Superior value is created through
lower costs or superior benefits to the consumer (differentiation).
Quality is important in almost every industry. People do not like to pay good money for
work/product that has to soon be redone or have to purchase a new unit that fails prematurely.
By that I mean faster than expected. Over the long term producing higher quality is almost
always less expensive as you don’t have to deal with as many returns, or as much scrap, or
rework.
Crabtree focuses a lot on producing quality switches, which can be felt by usage of its switches.
Some of the key features that they offer in terms of quality are:
Crabtree offers a premium segment product, they are bought in the market because of the brand
equity they have created with their customer base.
Crabtree switches have a differentiation advantage. It has resources and capabilities which can be
ascertained on the basis of following:
• Proprietary know-how
• Brand equity
Even the advertisements of the company focus on their core competency that is producing
quality product and creating value.
Last but not the least, the company has created a value chain with the series of activities, which
has helped in creating value amongst the customer base.