SOLUTION TO CASE STUDIES

6.2 AND 7.2

Ajmal
BBA 8TH SEMESTER GROUP (A)  
 6.2 Volvo’s different Indian buses
1. Rank the elements of Passey's strategy for Volvo in order of importance:

Based on the information provided, the elements of Passey's strategy for Volvo can be
ranked in the following order of importance:

1. Product Differentiation: Offering buses with superior features, such as more powerful engines,
quieter ride, air conditioning, roomier interiors, and internal storage for bags. This sets Volvo
apart from the existing products in the market and appeals to customers looking for a luxury bus
experience.

2. Post-sale Maintenance Services: Providing maintenance services to bus operating companies,

increasing the life expectancy of the buses and relieving the operators from the burden of
maintaining their own expensive workshops. This value-added service enhances customer
satisfaction and reduces operating costs for the bus operators.

3. Free Training for Drivers: Offering free training to drivers, promoting safer driving practices
and better care of the buses. This not only improves the overall performance and longevity of the
buses but also enhances passenger safety and satisfaction.

4. Direct Customer Advertising: Promoting the benefits of Volvo buses directly to customers
through cinema advertisements, rather than solely targeting bus operators. This approach creates
brand awareness and generates demand from end customers, potentially increasing ticket prices
for Volvo buses.

5. Price Premium: Selling buses at a significantly higher price compared to the prevailing market
price. This strategy positions Volvo as a luxury brand and targets business people and middle-
class customers who value speed, comfort, and reliability.
2. How sustainable is Volvo's luxury bus strategy?

Volvo's luxury bus strategy in India appears to have been successful and sustainable, considering
the following factors:

a) Market Position: Volvo has established itself as a leading luxury bus brand in India, with its
name becoming synonymous with luxury bus services. This indicates a strong market position
and customer preference for Volvo buses.

b) Customer Satisfaction: The strategy's focus on superior features, post-sale maintenance

services, and driver training contributes to customer satisfaction. Positive customer experiences
can lead to brand loyalty and sustained demand for Volvo buses.

c) Competitive Advantage: Volvo's early entry into the luxury bus segment allowed it to
establish a strong presence and differentiate itself from existing players. The strategy's unique
elements, such as maintenance services and direct customer advertising, have helped Volvo
maintain a competitive advantage.

d) Innovation: Volvo's continuous innovation, such as introducing hybrid buses running on

electric motors and batteries alongside diesel, demonstrates a commitment to sustainability and
aligning with changing market demands. This adaptability enhances the long-term sustainability
of Volvo's strategy.

e) Expansion and Export: Volvo's investment in a state-of-the-art bus factory and subsequent
capacity expansion, along with exporting buses to Europe, showcases growth potential and
diversification beyond the Indian market.

Based on the information provided, Volvo's luxury bus strategy appears to be sustainable, driven
by its strong market position, customer satisfaction, competitive advantage, innovation, and
expansion efforts.
 easyCouncils: A strategy for low cost council services
1. Advantages and disadvantages of the low-cost approach to council services:

Advantages:
- Cost savings: The primary advantage of adopting a low-cost approach is the potential for
significant cost savings. By streamlining processes, reducing unnecessary services, and
introducing user-pay options, councils can aim to operate more efficiently and effectively
allocate resources.

- Increased choice and personalization: The low-cost approach allows for greater choice and
personalization of services. Residents can choose the level and type of services they require,
paying accordingly. This approach shifts the responsibility to the residents and empowers them
to make decisions based on their specific needs and preferences.

- Potential for innovation: Adopting a low-cost strategy may encourage councils to seek
innovative solutions and explore alternative service delivery models. This can lead to greater
efficiency and better outcomes for residents.

Disadvantages:
- Impact on vulnerable populations: One major concern is that vulnerable populations, such as
those dependent on care services, may suffer as a result of reduced services or lower quality. The
focus on cost-cutting may lead to reduced support for those who need it the most, potentially
compromising their well-being.

- Resistance and backlash: Implementing a low-cost strategy may face resistance from council
workers and the community. Job cuts, outsourcing, and facility closures can lead to protests,
strikes, and dissatisfaction among employees and residents who depend on the services.

- Unforeseen costs and challenges: As seen in the case of Barnet, transitioning to a low-cost
model can incur unexpected costs, such as retraining staff, building in-house teams, and hiring
consultants. The actual savings may take longer to materialize, and the initial implementation
phase can be more complex and costly than projected.
2. Borough councils and competition:

Borough councils in the context of local government do not compete in the same way as
businesses in a market. However, there is a sense of competition among borough councils in
terms of providing efficient and effective services to their residents. The competition is more
about demonstrating successful governance, meeting residents' needs, and delivering value for
money.

Borough councils may seek to outperform each other in terms of service quality, responsiveness,
and cost-efficiency. They may benchmark their performance against other councils and strive to
be recognized as leaders in delivering public services. This competition can drive councils to
explore new approaches, adopt innovative strategies, and learn from each other's successes and
failures.

Ultimately, the goal of this competition is to improve the quality of governance and service
delivery for residents within each borough.
 7.2 Zodiac deflates: diversification and de-diversification
1. Relatedness in Zodiac's diversification strategy:

Zodiac's diversification strategy was informed by relatedness in several ways over time:

a) Technical Expertise: Zodiac leveraged its technical expertise in manufacturing inflatable

products, initially focusing on dirigible airships and later transitioning to inflatable boats. This
expertise in inflatables provided a foundation for diversifying into related markets such as
parachutes, life vests, inflatable life rafts, inflatable escape slides for airplanes, and aircraft
vacuum waste systems. The technical synergies between these products and inflatable boats
allowed Zodiac to transfer its knowledge and capabilities to new markets effectively.

b) Market Synergies: Zodiac identified markets with strong synergies to its core business. For
example, the acquisition of companies specializing in aircraft-related products like aircraft seats,
active components for aircraft, and cabin equipment allowed Zodiac to expand its presence in the
aerospace industry. These acquisitions provided market access and customer relationships with
major aircraft manufacturers such as Boeing, McDonnell Douglas, and Airbus, leveraging
Zodiac's existing expertise and reputation in the inflatables industry.

c) Product Portfolio Expansion: Zodiac pursued diversification by expanding its product

portfolio within the inflatable products domain. This included the acquisition of competitors in
the inflatable boat industry and the development of new product lines such as swimming pools,
inflatable beach gear, and air mattresses. These expansions allowed Zodiac to capture a broader
range of customer needs and diversify its revenue streams within related markets.

2. Advantages and potential dangers of focusing on the aircraft products market:

Advantages:
- Market Leadership: By focusing on the aircraft products market, Zodiac achieved a dominant
market position with a 40% market share in some airline equipment segments. This market
leadership provides significant opportunities for revenue growth and strengthens Zodiac's
position as a key supplier to major aircraft manufacturers. It allows the company to benefit from
economies of scale, long-term contracts, and customer loyalty.
- Technological Expertise: The aircraft products market requires high levels of technological
expertise and quality standards. Zodiac's specialization in aerospace products positions the
company as a trusted provider of critical equipment for aircraft, such as electrical power systems.
This expertise creates a competitive advantage and barriers to entry for potential competitors.

- Industry Partnerships: Focusing on the aircraft products market allows Zodiac to develop
strategic partnerships with leading aircraft manufacturers, such as Airbus and Boeing. These
partnerships provide opportunities for collaboration, joint research and development, and access
to new market opportunities. Zodiac's equipment being used in high-profile projects like NASA
Mars probes further enhances its reputation and visibility in the aerospace industry.

Potential Dangers:
- Dependency on the Aerospace Industry: By concentrating on the aircraft products market,
Zodiac becomes highly dependent on the performance and stability of the aerospace industry.
Economic downturns, geopolitical factors, or changes in industry dynamics can impact the
demand for aircraft and related equipment. A downturn in the aerospace industry could have a
significant negative impact on Zodiac's financial performance.

- Competitive Pressure: The aircraft products market is highly competitive, with several global
players vying for contracts and market share. Zodiac faces competition from both established
companies and emerging players, which could result in pricing pressures and reduced
profitability. Maintaining a competitive edge in terms of technology, quality, and cost will be
crucial to sustaining its market position.

- Technological Disruption: The aerospace industry is subject to rapid technological

advancements and innovation. Zodiac must continuously invest in research and development to
keep pace with evolving customer demands, regulatory requirements, and industry standards.
Failure to adapt to technological disruptions could result in losing market relevance and market
share.

Overall, while focusing on the aircraft products market offers significant advantages, Zodiac
needs to carefully manage the risks associated with dependency, competition, and technological
disruption to ensure its long-term success.
 7.5 ITC’s diverse portfolio: smelling sweeter
1. Evaluation of ITC's portfolio in terms of the BCG matrix:

The BCG matrix is a strategic tool used to analyze a company's portfolio of businesses based on
their market growth rate and relative market share. Let's evaluate ITC's portfolio:

a) Cigarettes (Cigarette Business): ITC's cigarettes business holds about two-thirds of the market
share in India, indicating a high relative market share. However, the market for cigarettes in
India is highly discouraged and heavily taxed, implying a low market growth rate. In terms of the
BCG matrix, the cigarettes business would likely be classified as a "Cash Cow" due to its high
market share and low growth rate.

b) Other FMCG (Fast Moving Consumer Goods): This segment includes ITC's diversification
into various FMCG products such as packaged foods, biscuits, snacks, personal care, etc. These
businesses have experienced growth, with brands like Aashirvaad, Sunfeast, and Bingo gaining
significant market share. Considering the FMCG sector's growth potential in India, this segment
could be classified as "Stars" or "Question Marks" in the BCG matrix, depending on their
individual market growth rates and relative market shares.

c) Hotels: ITC's hotel business is the country's second-largest operator, and it has a significant
presence with over 100 hotels. The hotel industry in India has shown substantial growth over the
years. Considering the growth potential and ITC's market position, the hotel segment can be
classified as a "Star" in the BCG matrix.

d) Agribusiness: ITC's agribusiness segment includes various agricultural products such as edible
oils, fruit pulp, spices, etc. The market growth rate for these products is relatively stable, and ITC
has a strong supply chain due to its own agri-businesses. This segment can be classified as a
"Cash Cow" or a "Dog" in the BCG matrix, depending on its market share and growth rate
within each product category.

e) Paperboard, Paper, and Packaging: ITC is the largest producer in India's paperboard industry,
accounting for a significant market share. The growth rate for this industry is relatively stable.
Therefore, this segment can be classified as a "Cash Cow" in the BCG matrix.

Overall, ITC's portfolio includes a mix of businesses that can be classified as "Cash Cows,"
"Stars," and potentially some "Question Marks" or "Dogs" depending on their individual
performance within the FMCG segment. It indicates a well-diversified portfolio with a
combination of stable, high-market-share businesses and those with growth potential.

2. Synergies in ITC's business:

ITC's business exhibits several synergies that contribute to its growth and value creation:

a) Supply Chain Synergies: ITC leverages its agri-businesses to supply raw materials to its
FMCG businesses, ensuring a consistent and quality supply of ingredients for its food and
personal care products. This integration allows ITC to have greater control over its supply chain
and reduce dependency on external suppliers.

b) Brand Synergies: ITC capitalizes on the strong brand values of its cigarette business to launch
new products in different categories such as clothing (Wills Lifestyle) and personal care
(Essenza Di Wills, Fiama Di Wills). The association with established cigarette brands helps in
creating brand recognition and trust among consumers, giving a competitive advantage in new
product categories.

c) Market Access Synergies: ITC's diversified portfolio allows for cross-selling and distribution
synergies. For example, the company can leverage its existing distribution networks and retail
presence for the launch of new FMCG products. This synergy enables ITC to penetrate the
market more efficiently and benefit from economies of

scale.

d) Research and Development (R&D) Synergies: ITC's R&D capabilities in areas such as
packaging and printing benefit its diverse businesses. The expertise developed in packaging
solutions supports its FMCG products' packaging requirements and enhances the overall product
quality and differentiation.

e) Financial Synergies: The cash generated from ITC's established businesses, such as cigarettes,
provides financial resources to support the growth of its other businesses. This internal funding
capability allows ITC to invest in new initiatives and diversification without solely relying on
external financing.
These synergies help ITC in optimizing its resources, reducing costs, enhancing operational
efficiencies, and leveraging its existing strengths to explore new growth opportunities across
different sectors.