ASSIGNMENT

OF
MARKETING
MANAGEMENT

ASSIGNMENT NO.III

TOPIC:- MICHAEL PORTER’S FIVE FORCE MODEL USED

IN USHA MARTIN LTD.

SIBMITTED TO:- SUBMITTED BY:-

Sr. LECT. Mr. JAGJIT SINGH NAME:- BILALAHMAD

CLASS:- MBA 2ND SEM.
SEC.:- RT1001
ROLL NO.:- B49
REG. NO.:- 11011496
 Usha Martin Ltd.

Incorporated in 1986, Usha Beltron was jointly promoted by Usha Martin Industries
and the Bihar State Electronic Development Corporation. The company manufactures jelly-
filled cables in technical collaboration with AEG Kabel, Germany. The company has
developed PCM system cables used to transmit digital signals. It has developed foam-skin
type cables for the first time in India. The company also provides software application
services. Later in May 2001 the two subsidiaries viz Usha Martin Telecom Holding and UBL
Industries were merged with the company. Subsequent to this merger, the company name
was changed to Usha Martin Ltd in May,2003.

The manufacturing operation of the company cover Ranchi, Jamshedpur, Agra &
Bangalore, also distribution centre are spread across India, Europe, Africa & USA. The
company is among the largest telecom cables manufacturer in India, with an annual capacity
of 55 LCKM - rising to 64 LCKM recently. The company's other operation includes a
specialised machinery division catering to the wire, ropes and cable industry & also has a
rolling mill in Agra & division to make mechanical splicing equipment and fitting for wire
ropes in Ranchi.

Among the other industrial interest managed by the promoters of Usha Beltron are
Usha Telekom - a cellular service company in collaboration with Telekom Malaysia. Usha
Breco - designs, manufacturer and operates ropeways & Summit Usha Martin Finance - Joint
Venture with Sumitomo Corporation of Japan. During the year 2000, Usha Beltron demerged
its software division into a separate company - Usha Martin Infotech. The company also
acquired the wire rope business of Brunton Shaw, UK, a division of Carclo Plc of the UK in
an all cash deal for around Rs 8.50 cr.

The company entered into financial tie-up with IFC,Washington and DEG,Germany
for funding of new projects at Jamdshedpur and Ranchi which are under implementation
stage. IFC has awarded loan of USD 21 Mn and also has acquired 5264727 equity shares at a
premium of Rs.28 per share,and DEG-Deutsche Investitions-und Entwicklungsgesellschaft
mbH-Germany,is funding the project by way of loan Euro 10 Mn and in addition it has also
invested Rs.17.64 crores consisting 5345455 equity shares at a premium of Rs.28 per share.
 Understanding Usha Martin Ltd. using Michael Porter’s Five Forces
Model:-
Backed by robust volumes as well as realizations, Usha Martin Ltd. has registered a
phenomenal growth across the world over the past few years. The situation in the domestic
industry was no exception. In fact, it enjoyed a double digit growth rate backed by a robust
growing economy. However, the current liquidity crisis seems to have created medium term
hiccups. Michael Porter’s five force model so as to understand the competitiveness of the
sector.

Entry barriers: High

 Capital Requirement: Usha Martin Ltd. is a capital intensive business. It is estimated

that to set up 1 mtpa capacity of integrated steel plant, it requires between Rs 25 bn to
Rs 30 bn depending upon the location of the plant and technology used.

 Economies of scale: As far as the sector forces go, scale of operation does matter.
Benefits of economies of scale are derived in the form of lower costs, R& D expenses
and better bargaining power while sourcing raw materials. It may be noted that those
 steel companies, which are integrated, have their own mines for key raw materials
such as iron ore and coal and this protects them for the potential threat for new
entrants to a significant extent.

 Government Policy: The government has a favorable policy for steel manufacturers.
However, there are certain discrepancies involved in allocation of iron ore mines and
land acquisitions. Furthermore, the regulatory clearances and other issues are some of
the major problems for the new entrants.

 Product differentiation: Steel has very low barriers in terms of product

differentiation as it doesn’t fall into the luxury or specialty goods and thus does not
have any substantial price difference. However, certain companies like Tata Steel still
enjoy a premium for their products because of its quality and its brand value created
more than 100 years back. Bargaining power of buyers: Unlike the FMCG or retail
sectors, the buyers have a low bargaining power. However, the government may curb
or put a ceiling on prices if it feels the need to do so. The steel companies either sell
the steel directly to the user industries or through their own distribution networks.
Some companies also do exports, Usha Martin Ltd. Is one of them.

Competition: High

 Usha Martin Ltd. is truly global in terms of competition with large producing
countries like China significantly influencing global prices through aggressive exports.

 Steel, being a commodity it is, branding is not common and there is little
differentiation between competing products.

 It is medium in the domestic steel industry as demand still exceeds the supply. India is
a net importer of steel. However, a threat from dumping of cheaper products does
exist.

Bargaining power of suppliers: High

  The bargaining power of suppliers is low for the fully integrated steel plants as they
have their own mines of key raw material like iron ore coal for example Usha Martin
Ltd. However, those who are non-integrated or semi integrated has to depend on
suppliers. An example could be SAIL, which imports coking coal.

 Globally, the Top three mining giants BHP Billiton, CVRD and Rio Tinto supply
nearly two-thirds of the processed iron ore to steel mills and command very high
bargaining power. In India too, NMDC is a major supplier to standalone and non–
integrated steel mills.

Threat of substitutes: Low

Plastics and composites pose a threat to Usha Martin Ltd. in one of its biggest markets —
automotive manufacture. For the automobile industry, the other material at present with
the potential to upstage steel is aluminium. However, at present the high cost of
electricity for extraction and purification of aluminium in India weighs against viable use
of aluminium for the automobile industry. Steel has already been replaced in some large
volume applications: railway sleepers (RCC sleepers), large diameter water pipes (RCC
pipes), small diameter pipes (PVC pipes), and domestic water tanks (PVC tanks). The
substitution is more prevalent in the manufacture of automobiles and consumer durables.

Bargaining power of Consumers: Mixed

Some of the major steel consumption sectors like automobiles, oil & gas, shipping, consumer
durables and power generation enjoy high bargaining power and get favorable deals.
However, small and retail consumers who are scattered and consume a significant part do not
enjoy these benefits.
 SWOT Analysis
SWOT ANALYSIS:-

The overall evolution of a company's strength, weakness, opportunities, and threat is called
SWOT analysis. UML's SWOT analysis is given below.

STRENGTHS:-

 UML ranked under No2 in world and in India No.l Company in manufacturing of the
wire rope.

 Market share is strong.

 Large distribution network.

 Dealers, Branch offices, Ware house is connected with internet in all over the India.

 UML has become brand equity in this field, customer first choice by UML.

 Its product is world class in quality; it is tested by several authorities.

 The company acquired BRUNT SHAW LTD.A leading U.K wire rope manufactures,
to source logically advanced rope and access the European market.

 UML has very good infrastructure and work force.

 Healthy financial position.

 Raw material available as it is produced by sister concern.

 UML has implemented TPM (Total productive management) and ERP (Enterprise
recourse planning) in 2000 - 01 with the objective, raising quality and reducing cost.

WEAKNESSES

 Machines and tools have become old and obsolete.

  UML has overlooked small customers.

 Highly bureaucrat.

 Semi-automatic plant.

 Inadequate expenditure of R&D.

 Non effective advertising image.

 High production cost.

 Less enterprising company.

 Demand of elevator ropes has increased due to global infrastructure development.

OPPORTUNITIES:-

 Fishing is developing in the southern coastal cities.

 Mushrooming of apartment in India and abroad.

 UML can increase its profit if it gives more emphasis on direct marketing with the
customer.

 Now present condition RELIANCE has found crude oil reserve in Krishana Godavari
basin in south. New opportunities present for the UML to produce rope.

 UML can develop device for measuring breaking load.

 (100 tones testing machine).

 Competitors are not much strong in the secondary market.

THREATS:-

 Low price of the rival's product are a great threat for the UML.

 Government always changes its policy, which bring the great threat the organization.
 European country imposed an antidumping duty in the company wire rope
production.

 High cost production.

 Local political instability.