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Strategic Management Dummy
Strategic Management Dummy
Strategic Management Dummy
1. You have been appointed as a Strategy Consultant to an Italian Luxury Sports Car
manufacturing brand namely “Pagani Huayra” wanting to enter India. Which one of
Porter’s Generic Strategies would you choose to be operational in India & explain the
reasons in detail behind your choice of strategy? Once the strategy has been chosen,
explain the categories of customers you would target along with the price points? (10
Marks)
Ans 1.
INTRODUCTION
Concerning Indian markets, I'll go for all four of Porter's strategies of strategic management,
namely which are as follows:
This is because the Indian market is very diverse. Due to such a high population of the country,
the Indian market is super diverse. People's income level varies a lot; some are rich, some are
poor, and many are middle class. So, by applying all strategies for strategic management in the
Indian market, we'll cover most parts of every segment. Not only is India a big market but a
fragmented one as well, so it would be a complex case to study it, but in the long run, it is one of
the best consumer markets in the World, with ever-rising market demand.
India is a market where people who can afford luxury do not mind paying a little extra. If your
product is differentiated properly and has something unique about it, the richer class will get
attracted to the same. Special features and differentiated features will make your product more
desirable, and hence, the rich high-income group people will get attracted to the product and buy
more of it. Also, by targeting the rich customers initially who wouldn't mind paying a little extra
for luxury, you'll be able to reach break-even early.
1. It is relatively easier to influence the mind of rich consumers than the middle class or
poor consumers to try a new product.
2. They have high disposable income, due to which they have more capacity to spend.
3. They prefer distinctive goods and don't hesitate to buy them.
4. They lurk luxury hence, more chances of them buying our product.
5. With increased consumerism and Internet growth, people might have an already
developed liking towards our brand.
6. The exceptions of the law of demand might work in this case.
7. Chances of achieving break-even soon and we'll start to get to earn profit soon.
8. It would become something that even the middle class and poor would want to buy; hence,
changing their desire to want will ensure more chances of it getting changed into actual demand.
So, focus differentiation would be applied first
Once we have applied this strategy, we would move onto the next one soon so that our consumer
base increases and we become a brand that runs after luxury and is meant for the common person
as well, i.e., cost differentiation.
● COST DIFFERENTIATION
To widen our consumer base and retain our customers, we'll focus on this next to reduce the cost
of production effectively and make our product available for all.
Of course, this will affect the luxury audience, but what we have to focus on strategically is that
it makes the old product with modifications available at a lower cost to the other consumers and
creates something new for the luxury customers.
This will ensure both parties are happy, and we have the following:
● More customers with different income groups
● More market share
● Wide customer base
● Product differentiation will make our company wholesome
● We'll be market leaders
● Earning more profits
So, we'll focus on these step by step, and our initial category of customers is the higher class.
We'll serve the higher-class customers first. This can be explained as follows as per the price
point:
1. Customers having a higher income will spend more and won't hesitate to spend on
something new in the market to ensure surety of purchase.
2. The exceptions to the demand case law might come true, and consumers will go for a
luxurious, expensive, and unique product. This would give them a sense of superiority or
status symbol in society.
3. People of higher-income groups have high disposable income, so their demand is always
more than people of the lower-income group. They won't hesitate to spend and try on a
new product as they have more income to spend.
4. With increased consumerism and Internet growth, people might already have a liking for
our brand in general, and our launching in India would give them a chance to buy the
same. So that would be a good sales booster too.
5. Our product would be a symbol of luxury, so people of higher income groups would not
mind buying at a higher price. Hence, it would be the new symbol of luxury in society.
6. So, as the price would be high and we'll have sales by the higher income group people,
this would ensure that we achieve break-even soon and start earning profit soon.
CONCLUSION
Hence, we would use focus differentiation mainly to create such a product that caters to the need
of the higher income group people, and we can charge more price from them for our product. So,
focus differentiation is.
Ans 2.
INTRODUCTION
A PESTEL analysis is a framework or tool used by marketers to analyse and monitor the Macro
environmental (external marketing environment) factors that have an impact on an organization.
This helps make highly informed decisions for the organizations that will ensure success in the
long run.
● P – Political
● E – Economic
● S – Social
● T -Technological
● L – Legal
● E – Environmental
1. Political Environment: These are all about how and to what degree a government
intervenes in the economy. This can include – government policy, political stability or
instability in overseas markets, foreign trade policy, tax policy, labour law,
environmental law, trade restrictions, etc. It is clear from the list above that political
factors often impact organizations and how they do business. Organizations need to
respond to the current and anticipated future legislation and adjust their marketing policy
accordingly. In India's scenario, the company can easily establish its plant in India and
enter Indian because Indian markets are highly favourable for foreign investors
nowadays. There is a lot of tax relaxation available, and various other benefits are given
for FDI. So this is in favour.
● Environmental factors: These factors have only really come to the forefront in the last
fifteen years or so. They have become important due to the increasing scarcity of raw
materials, pollution targets, doing business as an ethical and sustainable company, carbon
footprint targets set by governments (this is a good example where one factor could be
classed as the political and environmental same time). These are just some of the issues
marketers are facing within this factor. More and more consumers are demanding that the
products they buy are sourced ethically, and if possible, from a sustainable source. It is
very important to consider this factor at this time.
CONCLUSION
India is a country where natural resources are available in abundance; this makes it easier for
foreign companies to set up India's operations. No doubt, the labour is easily available here at the
most affordable rates. Still, with the growth of pollution in the country, the government and the
authorities are strict about environmental troubles. Thus, this is unfavourable as well. So, doing
business in India is not advised.
3. You are the Chairman of a French FMCG company in India by the name of “French
Shine”. You are operating in the “Soaps & Detergents” category & are facing tough rivals
like HUL, Nirma & P&G. You have been operating in India since 2016. During 2020, there
has been a steady decline in your revenues & profitability. Your market share has also
fallen from 6% to 2.5% during 2020. Your competitors are eating into your market share
slowly & steadily during Covid-19 pandemic times.
a. What turnaround strategies can you suggest to arrest the decline of revenues &
profitability of your company? (5 Marks)
Ans 3a.
INTRODUCTION
Also, the need for a turnaround strategy arises because of the changes in the external
environment Viz, change in the government policies, saturated demand for the product, a threat
from the substitute products, changes in the tastes and preferences of the customers, etc.
Now namely there are the following types of turnaround strategies:
CONCLUSION
To maintain good revenues and end the problem of declining revenues and profitability of our
company we should adapt the above-listed turnaround strategies for solving our problem.
This would help us reduce costs, focus on what we are best at, get better leadership and manage
our assets well. Hence, this will help in increasing our revenues and profitability.
b. In your opinion, would it be considered appropriate to pursue a Strategic Alliance or a
JV Strategy or should “French Shine” go it alone in India? State your response with
appropriate justifications & reasons. What would be the advantages & disadvantages of
such a strategy? (5 Marks)
Ans 3b.
INTRODUCTION
Before understanding what strategies would be applied in Indian Market, let's discuss these
strategies. It can be explained as follows:
A company may enter into a strategic alliance to expand into a new market, improve its product
line, or develop an edge over a competitor. The arrangement allows two businesses to work
toward a common goal that will benefit both. The relationship may be short- or long-term, and
the agreement may be formal or informal.
Advantages:
Disadvantages
A joint venture is a business preparation in which more than two organizations or parties share
the ownership, expense, return of investments, profit, governance, etc. To gain a positive synergy
from their competitors, various organizations expand either by infusing more capital or by the
medium of Joint Ventures with organizations.
Joint Ventures can be with a company of the same industry or can be of some other industry.
Still, they will generate a competitive advantage over other players in the market with a
combination of both. In short, when two or more organizations join hands together for creating
synergy and gain a mutual competitive advantage, the new entity is called a Joint Venture. It can
be a private company, a public company or even a foreign company.
In India, many companies underwent joint venture with various foreign companies, which were
either technologically more advanced or geographically more scattered. India's major joint
ventures were done in sectors like Insurance, Banking, Commercial Transport vehicle, etc.
Advantages
Disadvantages
● Vague objections
● Flexibility can be restricted
● There is no such thing as equal involvement
● Clash of cultures
● Limited outside possibilities
CONCLUSION
So, by looking at all these, we can say that the company should go for a Joint venture than a
strategic alliance as it offers more advantages and is more favourable for the company than the
latter. So Joint Venture it is.