COMPETITIVE &

COOPERATIVE STRATEGY
IN DEFENCE SECTOR
By Group 4:
Ankur Anand (X009-22)
Meenu Damani (X028-22)
Neeraj Panchal (X030-22)
Nitesh Kumar (X033-22)
Vijayant Gautam (X050-22)
 Ratio Analysis – A Competitive Advantage Study

3-Circle Model & Key Insights

Strategic Maps & Key Strategic Insights

Topics to be Key Resources and Capabilities

covered Industry's key Success Factor

Home base as India – A good choice? - Porter’s Diamond

Model Analysis
Strategic Recommendations
 3 Circle Model Analysis between HAL and BEL
E. White Space
• L1 procurement strategy between G2G entities.
• Lack of PPP model.
• Defence procurement guidelines
• The industry requires clear intergovernmental
collaborative frameworks, investments, policies and
an R&D strategy to fully exploit the sector and allow
the nation to build and drive military and civilian
capabilities.
D. Competitors: BEL- USP
• Developing and manufacturing a wide range of
advanced electronics and communication systems
in-house. An extensive range of products covers
multiple sectors, including defence, aerospace, and
telecom.
• 137 applications filed for IPRs
• BEL achieved a turnover of ₹1 billion from satellite
programmes in 1982.
B. Industry Standard :
• Electronic and communication standards like MIL-
STD-810 (environmental engineering
considerations) and MIL-STD-461 (electromagnetic
compatibility
• Environmental Standards
A. Company HAL USP F. Companys HAL internal resources and
capabilities
• One of Asia's largest aerospace companies, HAL has an annual
• Spends ~6% to 7% of the total revenue into the
turnover of over US$3 billion. research and development activity annually
• HAL currently has 11 dedicated
• Began aircraft manufacturing as early as 1942 with licensed
Research and development (R&D) centers and 21
production of Harlow PC-5, Curtiss P-36 Hawk and Vultee
manufacturing divisions under 4 production units
A-31 Vengeance for the Indian Air Force
spread across India.
• Only defense aircraft and equipment manufacturer in India and • Products - Transport aircraft, Fighter
SAARC nations. aircraft, Helicopters
C. Cost of doing business:
• Infrastructure Investment:
• Human Resources: Employee salaries, benefits,
training, and other human resource-related expenses
contribute to the cost of doing business.
• Research and Development (R&D) Costs
• Materials and Components
G Competitor internal resources and capabilities – BEL
• BEL spend ~7% of turnover on R&D, one of the
highest amongst defense PSUs.
 78% of turnover from indigenous products.
 90% of turnover from the defense.
• Products: Avionics, Radars, Weapon
Systems, Electronic Voting Machines, IFF
 Strategy Group Map Strategy Group Map
(Revenue, OPM, R&D Expenditure) (No. of Employees, No. of R&D Centres, R&D Expenditure)

1. Data Patterns has highest OPM% followed by MTAR Tech & Paras Defence but when we compare it along with the revenue HAL is 134 times than that of Paras (lowest
revenue in the group) and 1.6 times than that of BEL (second highest in the group).
2. In the Defence Sector in India, HAL has strongest at highest revenue, R & D expenditure, No of R & D Centers & No of Employees and has a decent OPM% which clearly
gives it a competitive advantage over other competitors. It is followed by BEL.
 KEY RESOURCES AND CAPABILITIES
HAL (Hindustan Aeronautics Limited) BEL (Bharat Electronics Limited)

Resources • Large manufacturing complex • Smaller and more agile company compared to
HAL
• Extensive infrastructure and facilities

• Strong relationships with key customers

Capabilities • Proven track record in developing and • Focus on research and development, ability to
manufacturing complex aerospace and defence quickly adapt to market changes
systems
Our Take • Well-established company with a strong track • Smaller and more agile with a focus on R&D
record of success
• Needs to address some resource and capability
• A major player in the global aerospace and gaps compared to HAL
defence market

• Needs to continue investing in research and

development to stay competitive
INDUSTRY'S KEY SUCCESS FACTORS

Research and
Technological Quality and
Development
expertise Reliability
(R&D)

Strong Timely Execution Robust Supply

Relationships with and Project Chain
the Armed Forces Management Management

Adapting to
Changing Market
Dynamics

PORTER'S DIAMOND MODEL ANALYSIS
Government :
 Under the Atmanirbhar Bharat Initiative, Defence
solutions to be manufactured domestically f instead of
being sourced via imports.
 SRIJAN portal launched to promote indigenization.
19,509 defence items , have been displayed on the
portal for indigenization
Factor Conditions
 India has the world's 3rd largest defence
expenditure, as of 2021 & expects to
export equipment worth US$ 15b by
2026.
 Low manufacturing cost due to cheaper
manpower & use of innovative
technology
Chance:
 Russia-Ukraine war had created a sense of insecurity in
many smaller nations & they are aggressively buying
defence solutions
 Sense of rising nationalism & patriotism among common
people, paving way for make in India products.
Going by the Model, India is a good choice for both the companies, as
all the factors of porter diamond model are in favor of Defence
Industry to grow multifold in coming years.
Firm Strategy Structure & Rivalry:
 The Government of India opened the defence industry for private sector
participation to provide impetus to indigenous manufacturing.
 As per the Union Budget 2022-23, 25% of defence R&D budget has been
earmarked for private industry and start-ups which will pave the way for
innovation of new defence technologies in India.
Demand Conditions:
 Demand growth is likely to accelerate with rising
concerns of national security.
 Defence exports grew by 334% in last five years;
India now exporting to over 75 countries due to
collaborative efforts.
 The Ministry of Defence has set a target of
achieving defence exports worth Rs. 35,000 crore
(US$ 4.27billion) by 2024
Related & supporting Industries:
 Government has established 2 Defence Industrial Corridors in Uttar
Pradesh and Tamil Nadu.
 India has around 194 defence tech startups building innovative tech
solutions to empower and support the country’s defence efforts
STRATEGIC RECOMMENDATIONS
• Integrate defence and civilian requirements on a single platform by the GeM portal.

• Enable close collaboration between private players and Government Authorising body, by data sharing on
guidelines and policies

• Create an exclusive Make In India window for collaboration of private players with HAL and BEL for
knowledge and resource utilization.

• National Defence Manufacturing Policy for ease of business.

• Organize a workshop for private players to encourage their participation in government procurement.

• Organize a hackathon to work on problem statements involving emerging start-ups, which if successful can
be patented by HAL and BEL.
 THE TWO COMPANIES
COMPETING ON RESOURCES
Are they? (Yes / No)
What are they doing different to identify, acquire and compete on
resources? What are their key strategic resources? What does it cost?
Which all strategic decision the HAL has taken in the last 3 years to
acquire and compete on resources? How are they doing it? How long is it
going to last? Why?
Response / Analysis
Yes, they are competing.
BEL is more agile, on the other hand HAL is more focused on developing
extensive infrastructure and facilities. Focus on R&D is the key strategic
resource for both. R&D expenditure stands at 6 to 7% for both.
HAL Expenditure: Spent 21667 Lakhs (INR) in 11 R&D Centres
BEL Expenditure : Spent 7073 Lakhs (INR) in 9 R&D Centres
• Signed an MoU with Safran to set up a joint venture intended for
development, production, sales and support of helicopter engines
• MoU with the IAI, Israel Aerospace Industries on 4 March 2022 to
convert the civil passenger aircraft to multi-mission tanker aircraft.
• HAL and Zero Avia, entered into a development collaboration
agreement on 9th Nov 2021 for hydrogen‐electric powertrain
capable of flying the 19 seat Dornier 228 aircraft up to 500 NM
• Supplied the first batch of 'Ring Forgings' to GE Aviation’s LEAP
engine program. LEAP powers Airbus A320 neo family as well as the
Boeing 737 MAX, the most produced aircraft in the world
Till the MoU period and technology transfer timeline, HAL will have a
strategic advantage till 2030.
THANK YOU