Star Engineering

Company Ltd.
CASE Study
Presented by
T Farzana
Vikram Baliga
Pritom Roy
Siddhartha Deshmukh

Case Facts
Star engineering company limited manufactured 5
products.
The company encountered problem deciding how to
allocate the funds to various products
The company had limited financial resources so it was
important to allocate the funds in a balanced
manner.

Product A : Transformer Coils

Product B : Cable Jointing Kits
Product C: Electric point Machines
Product D: Steel Forgings
Product E: Switch Mode Power Supply (SMPS)

Product portfolio
Product A: Transformer coils, sold to telecom
exchanges. Market of transformer coil was growing
at a rate of 25% p.a
The coil was well accepted by the customers in terms
of quality and they had market share of 20%
In order to increase production capacity additional
investment 2 cr was required

Product B: Cable jointing kits which was used in telecom

industries
Market of cable jointing kits was growing at a rate of 15%
Market share of company had come down from 100 to 20%
because it was getting substituted by fiber optic cable
and suitable jointing kits
Product C: Electric point machines used by railways for
changing the tracks electrically
Market share of this product was 40%
For expansion investment of 2.5cr required

Product D: Steel forgings required by diverse

industries
Market of steel forgings was growing at 8 to 10%
To make replacements in equipments it required
investment of at least 1.5cr
Product E: Switch mode power supply (smps)
Market of this product growing at the rate of 20%
Market share of company was 6%
To increase the production capacity they required 5cr
Total requirements of fund for all products was 11cr.
The management could arrange only 5cr

POLITICAL
Congress government was in the centre
P.V. Narasimha Rao was the prime minister of India
The nation was shaken by a series of bomb blasts in mumbai

ECONOMIC
Economic growth in the world remained slow-moving in

1993
Economy had consolidated itself in the initial years of
eighth five year plan
Primary focus of eighth five year plan was human
development
GDP was 4%
Rate of inflation was between 7-8%

SOCIAL
Telecom industry was slowly growing in India giving rise

to need for more transformer coils.

Indian Railways was also increasing its operations and

hence demand for electric point machines was also high.

With the increase in manufacturing industries in India

post liberalization demand for steel forgings was also

increasing.

Technological
Infrastructure and technological changes had started

post liberalization.
Manufacturing sector had grown 8-10% for last

few years.

SWOT
Strength :
product A was well accepted by the customers in

terms of quality and it was considered as the

market leader.
Product B- Contributing to the expansion and

diversification projects of the company.

Product C(electric point machines)- Demand for

the product is growing 7 to 8 percent . Also its

market share are 40% highest among the
competitors.

Weakness :
Product B : Jointing kits were getting slowly
substituted by fibre optic cables and suitable jointing
kits.
Product B-Problems faced of substitution and

competition.
ProductD- despite of giving the best management

that unit was not growing.Problem was poor quality

and high rejection rate.

Opportunities :
Product A was having total market for the

transformer coils was growing at an average rate

of 25 percent per annum.

Product B -Telecom industry growing at the rate

of 15 percent per annum.

Product E having a good potential to become a

market leader.Because of lesser competition

Threats :
Because of unavailability of substitution in the

Department of Telecommunication, Due to

growing competition market share of company
had come down from 100 percent.
Product D- Management issue.

Question
If you were Anant Kumar what would be your

recommendations to the CMD of the

company?

Market Share Analysis

Product A - Transformer Coils -20% (Market Leader)
Product B Cable jointing kits 20 % (Market Leader)
Product C Electric Point Machines 40 % (Market
Leader)
Product D - Steel Forgings - 5%
Product E - Switch Mode Power Supply (SMPS) - 6%

Industry Growth Rate

Product A -Transformer Coils - Growing @ 25%
Product B Cable Jointing Kits Substituted by Fiber
Optic Cables.
Product C - Electric Point Machines - Demand Growth
@ 7% to 8%
Product D - Steel Forgings Domestic market 8% to
10%
Product E - Switch Mode Power Supply (SMPS) @20% per annum

Product C and Product A

Product B

Product E and Product D

Product B

Product A
and C

Product B

Product E

Product D

2 Factors that are affecting the

demand of the product strategy:
PRODUCTS
Transformer Coils

Investment
Required

Product Life cycle

2 Crore

Decline

Electric point
Machines

2.50 Crore

Growth

Steel Forgings

1.50 Crore

Growth

5 Crore

Introduction

Cable Jointing Kits,

Jelly Filled Cables

Switch Mode Power

Supply (SMPS)

Recommendations
Option 1 Go for investment in Product A and

Product D
Total investment 2 cr + 1.5 cr = 4 cr
Reasons For Product A market growth rate was 25
percent per annum
For Product D domestic market was growing at 8

10 percent but tremendous demand in international

market

Recommendations
Option 2 - Go for investment in Product E
Total investment 5 cr
Reasons For Product E market growth rate was 20

percent per annum

Good Potential of becoming a market leader.