1

TTK PRESTIGE LTD

WHISTLING ITS WAY TO THE TOPhellip

2

INDEX

SL No DETAILS PAGE No

1) EXECUTIVE SUMMARY 3

2) SITUATIONAL ANALYSIS

a) GRAND STRATEGIES 7

b) GENERIC 10

c) PORTFOLIO 14

d) PORTERrsquoS 5 FORCES MODEL 22

e) PESTLE 27

f) CAP 28

g) SWOT 30

h) VALUE CHAIN ANALYSIS 33

i) SOLUTIONSTATEGIES ALTERNATIVES 37

3) CONCLUSION 39

4) REFRENCES 39

3

EXECUTIVE SUMMARY

TTK PRESTIGE LTD

A TTK Group Chennai based company TTK prestige is one of the leading

players in the domestic kitchen appliances industry Its product portfolio spans

from domestic cooking vessels to electrical appliances and has recently forayed

into modular kitchen designing TTK‟s products include pressure cookers non-

stick cookware electrical appliances amp gas

stoves all of which command high brand recall and a price premium over competitors

The company‟s topline has grown at 150+ CAGR over the last 5 years Profitabilityalso improved and grew by 30+ over the same time period The strategy for maintaining growth and improving profitability has been product innovation brand building and financial prudence

The company has over the years evolved from being a mere pressure cooker

product brand to a full-fledged kitchen appliances brand Its wide product

portfolio and wide spread retail initiative will help company grow faster than

the industry while branded industry itself will grow at 5-6

The pressure cooker industry which has a penetration of mere 30-35 in India has a lot

of scope of growth with increased availability of LPG amp piped natural gas in the next

few years While the non-stick cookware segment will grow on the back of

4

replacement demand urbanization and growing health consciousness in cooking

styles

We believe the macro demographic trends in India will drive the growth of the kitchen

appliance industry per se The company‟s vision for new business opportunities such as

modular kitchens and its product innovation provides good business visibility for the

company

Mainstay Pressure Cooker Segment Growing at a Stable Rate

Pressure Cookers is TTK‟s single largest segment which contributes around 54 to the

topline currently TTK‟s pressure cookers are different from other cookers on account

of its outer lid-closing feature This feature provides the user with some additional

cooking capacity vis-agrave-vis inner lid cookers

The Indian pressure cooker market size is approx 9 million pieces pa which is

equally divided between organized and unorganized sector TTK enjoys 30+ market

share in the pressure cooker market of which it is the market leader in the outer lid

market segment with 65 market share and 5 of its recently entered into and a

highly competitive inner lid market

The branded cookers market has been growing at 5-6 over the last 4-5 years while

TTK has witnessed volumes growth at 13-15 We expect this segment to continue to

clock similar volumes growth over the next 2-3 years

Apart from that TTK has introduced a niche product through the launch of pressure

handi a few years back

5

TTK‟s strategy in this segment has been to innovate and give the user a better product experience TTK has introduced both aluminum and stainless steel cookers the latter of which has given boost to the overall average realization

TTK‟s product innovation superior quality and product technology has

always enabled it to command a superior price realization over its peers Prestige cookers are targeted towards middle class and the upper middle class and enjoy a 3-5 price premium over other branded manufacturers

De-Risking Business by focusing on the Non-Stick Cookware Range

In a bid to de-risk its business from single product dependence TTK forayed into the

cookware segment Over the years TTK has emerged as the market leader in the non-

stick segment It was only recently in FY07 when the company was flushed with

demand and hence operated at 200+ capacity utilization TTK increased it‟s

capacity from 500000 units to 1800000 units in FY08 TTK competes primarily

with local and regional players such as Premier in this segment

Growing urbanization health consciousness in cooking styles of customers and the

segments unique ability for bulky sales (majority consumers do not buy a single pan

but a set of non-stick items) will help TTK to grow at a healthy rate The life cycle for

the non-stick cookware is 2-3 years hence giving rise to a large replacement market

Hence we expect the cookware segment to grow at a CAGR of 15-17 for the next 2-3

years

Investing in setting up In-house Kitchenware (Electrical Appliances)

Factory in Uttarakhand

Electric kitchenware is the company‟s third business segment and has been

growing much more aggressively than the other segment This segment includes

all types of electric kitchen appliances such as mixer toaster chimneys etc

The company‟s strategy is mainly to offer complete range of kitchen appliances

while encashing on its existing retail network setup amp existing brand which

symbolizes quality reliability and safety for all kitchen products for a housewife

The finished products of this segment are primarily outsourced at present

The growing demand for TTK‟s electric kitchen appliances has enabled this

segment to grow much faster On the back volume growth the company plans to

set up its own unit in Uttarakhand at a cost of INR 11 crs This will enable

TTK to control outsourcing cost monitor quality and at the same time

aggressively penetrate this segment It is important to note that the contribution

of this segment to topline has gone up in the last one-year from 13 to 17 We

expect its contribution to go up to 20 once the new plant is commissioned by at

the end of this fiscal

6

Evaluation and Outlook

The company has over the years evolved from being a mere pressure cooker brand to a

full-fledged kitchen appliances brand Its wide product portfolio and wide spread retail

initiative will help company to grow faster than the industry

The pressure cooker industry which has a penetration of mere 36 in India has a lot of

scope of growth While the non-stick cookware segment will grow on the back of rising

urbanization amp growing health conscious trends We believe the macro

demographic trends in India will definitely drive the growth of the kitchen appliance

industry

TTK is one of the leading players in the Indian kitchen appliances industry

The company has seen topline growth of more than 20 over the last 5 years

with profitability also improving The company‟s increased profitability are set to

improve its cashflows as the company is almost debt-free

Company expect topline amp bottomline to grow in the range of 15-17+ for the next 2-3

years Margins are set to improve on the back of product mix insourcing of

electrical appliances and lower interest cost At the current CMP (Current Market

Price) of INR 29565- the stock trades at 91x and 81x its FY10E amp FY11E EPS of

INR 325 and INR 365

Company Profile

Corporate Office

11th Floor Brigade Towers

35 Brigade Road

Bangalore - 560 025

Karnataka

Website wwwttkprestigecom

Chariman T T Jagannathan

Business Group TTK

2

INDEX

SL No DETAILS PAGE No

1) EXECUTIVE SUMMARY 3

2) SITUATIONAL ANALYSIS

a) GRAND STRATEGIES 7

b) GENERIC 10

c) PORTFOLIO 14

d) PORTERrsquoS 5 FORCES MODEL 22

e) PESTLE 27

f) CAP 28

g) SWOT 30

h) VALUE CHAIN ANALYSIS 33

i) SOLUTIONSTATEGIES ALTERNATIVES 37

3) CONCLUSION 39

4) REFRENCES 39

3

EXECUTIVE SUMMARY

TTK PRESTIGE LTD

A TTK Group Chennai based company TTK prestige is one of the leading

players in the domestic kitchen appliances industry Its product portfolio spans

from domestic cooking vessels to electrical appliances and has recently forayed

into modular kitchen designing TTK‟s products include pressure cookers non-

stick cookware electrical appliances amp gas

stoves all of which command high brand recall and a price premium over competitors

The company‟s topline has grown at 150+ CAGR over the last 5 years Profitabilityalso improved and grew by 30+ over the same time period The strategy for maintaining growth and improving profitability has been product innovation brand building and financial prudence

The company has over the years evolved from being a mere pressure cooker

product brand to a full-fledged kitchen appliances brand Its wide product

portfolio and wide spread retail initiative will help company grow faster than

the industry while branded industry itself will grow at 5-6

The pressure cooker industry which has a penetration of mere 30-35 in India has a lot

of scope of growth with increased availability of LPG amp piped natural gas in the next

few years While the non-stick cookware segment will grow on the back of

4

replacement demand urbanization and growing health consciousness in cooking

styles

We believe the macro demographic trends in India will drive the growth of the kitchen

appliance industry per se The company‟s vision for new business opportunities such as

modular kitchens and its product innovation provides good business visibility for the

company

Mainstay Pressure Cooker Segment Growing at a Stable Rate

Pressure Cookers is TTK‟s single largest segment which contributes around 54 to the

topline currently TTK‟s pressure cookers are different from other cookers on account

of its outer lid-closing feature This feature provides the user with some additional

cooking capacity vis-agrave-vis inner lid cookers

The Indian pressure cooker market size is approx 9 million pieces pa which is

equally divided between organized and unorganized sector TTK enjoys 30+ market

share in the pressure cooker market of which it is the market leader in the outer lid

market segment with 65 market share and 5 of its recently entered into and a

highly competitive inner lid market

The branded cookers market has been growing at 5-6 over the last 4-5 years while

TTK has witnessed volumes growth at 13-15 We expect this segment to continue to

clock similar volumes growth over the next 2-3 years

Apart from that TTK has introduced a niche product through the launch of pressure

handi a few years back

5

TTK‟s strategy in this segment has been to innovate and give the user a better product experience TTK has introduced both aluminum and stainless steel cookers the latter of which has given boost to the overall average realization

TTK‟s product innovation superior quality and product technology has

always enabled it to command a superior price realization over its peers Prestige cookers are targeted towards middle class and the upper middle class and enjoy a 3-5 price premium over other branded manufacturers

De-Risking Business by focusing on the Non-Stick Cookware Range

In a bid to de-risk its business from single product dependence TTK forayed into the

cookware segment Over the years TTK has emerged as the market leader in the non-

stick segment It was only recently in FY07 when the company was flushed with

demand and hence operated at 200+ capacity utilization TTK increased it‟s

capacity from 500000 units to 1800000 units in FY08 TTK competes primarily

with local and regional players such as Premier in this segment

Growing urbanization health consciousness in cooking styles of customers and the

segments unique ability for bulky sales (majority consumers do not buy a single pan

but a set of non-stick items) will help TTK to grow at a healthy rate The life cycle for

the non-stick cookware is 2-3 years hence giving rise to a large replacement market

Hence we expect the cookware segment to grow at a CAGR of 15-17 for the next 2-3

years

Investing in setting up In-house Kitchenware (Electrical Appliances)

Factory in Uttarakhand

Electric kitchenware is the company‟s third business segment and has been

growing much more aggressively than the other segment This segment includes

all types of electric kitchen appliances such as mixer toaster chimneys etc

The company‟s strategy is mainly to offer complete range of kitchen appliances

while encashing on its existing retail network setup amp existing brand which

symbolizes quality reliability and safety for all kitchen products for a housewife

The finished products of this segment are primarily outsourced at present

The growing demand for TTK‟s electric kitchen appliances has enabled this

segment to grow much faster On the back volume growth the company plans to

set up its own unit in Uttarakhand at a cost of INR 11 crs This will enable

TTK to control outsourcing cost monitor quality and at the same time

aggressively penetrate this segment It is important to note that the contribution

of this segment to topline has gone up in the last one-year from 13 to 17 We

expect its contribution to go up to 20 once the new plant is commissioned by at

the end of this fiscal

6

Evaluation and Outlook

The company has over the years evolved from being a mere pressure cooker brand to a

full-fledged kitchen appliances brand Its wide product portfolio and wide spread retail

initiative will help company to grow faster than the industry

The pressure cooker industry which has a penetration of mere 36 in India has a lot of

scope of growth While the non-stick cookware segment will grow on the back of rising

urbanization amp growing health conscious trends We believe the macro

demographic trends in India will definitely drive the growth of the kitchen appliance

industry

TTK is one of the leading players in the Indian kitchen appliances industry

The company has seen topline growth of more than 20 over the last 5 years

with profitability also improving The company‟s increased profitability are set to

improve its cashflows as the company is almost debt-free

Company expect topline amp bottomline to grow in the range of 15-17+ for the next 2-3

years Margins are set to improve on the back of product mix insourcing of

electrical appliances and lower interest cost At the current CMP (Current Market

Price) of INR 29565- the stock trades at 91x and 81x its FY10E amp FY11E EPS of

INR 325 and INR 365

Company Profile

Corporate Office

11th Floor Brigade Towers

35 Brigade Road

Bangalore - 560 025

Karnataka

Website wwwttkprestigecom

Chariman T T Jagannathan

Business Group TTK

3

EXECUTIVE SUMMARY

TTK PRESTIGE LTD

A TTK Group Chennai based company TTK prestige is one of the leading

players in the domestic kitchen appliances industry Its product portfolio spans

from domestic cooking vessels to electrical appliances and has recently forayed

into modular kitchen designing TTK‟s products include pressure cookers non-

stick cookware electrical appliances amp gas

stoves all of which command high brand recall and a price premium over competitors

The company‟s topline has grown at 150+ CAGR over the last 5 years Profitabilityalso improved and grew by 30+ over the same time period The strategy for maintaining growth and improving profitability has been product innovation brand building and financial prudence

The company has over the years evolved from being a mere pressure cooker

product brand to a full-fledged kitchen appliances brand Its wide product

portfolio and wide spread retail initiative will help company grow faster than

the industry while branded industry itself will grow at 5-6

The pressure cooker industry which has a penetration of mere 30-35 in India has a lot

of scope of growth with increased availability of LPG amp piped natural gas in the next

few years While the non-stick cookware segment will grow on the back of

4

replacement demand urbanization and growing health consciousness in cooking

styles

We believe the macro demographic trends in India will drive the growth of the kitchen

appliance industry per se The company‟s vision for new business opportunities such as

modular kitchens and its product innovation provides good business visibility for the

company

Mainstay Pressure Cooker Segment Growing at a Stable Rate

Pressure Cookers is TTK‟s single largest segment which contributes around 54 to the

topline currently TTK‟s pressure cookers are different from other cookers on account

of its outer lid-closing feature This feature provides the user with some additional

cooking capacity vis-agrave-vis inner lid cookers

The Indian pressure cooker market size is approx 9 million pieces pa which is

equally divided between organized and unorganized sector TTK enjoys 30+ market

share in the pressure cooker market of which it is the market leader in the outer lid

market segment with 65 market share and 5 of its recently entered into and a

highly competitive inner lid market

The branded cookers market has been growing at 5-6 over the last 4-5 years while

TTK has witnessed volumes growth at 13-15 We expect this segment to continue to

clock similar volumes growth over the next 2-3 years

Apart from that TTK has introduced a niche product through the launch of pressure

handi a few years back

5

TTK‟s strategy in this segment has been to innovate and give the user a better product experience TTK has introduced both aluminum and stainless steel cookers the latter of which has given boost to the overall average realization

TTK‟s product innovation superior quality and product technology has

always enabled it to command a superior price realization over its peers Prestige cookers are targeted towards middle class and the upper middle class and enjoy a 3-5 price premium over other branded manufacturers

De-Risking Business by focusing on the Non-Stick Cookware Range

In a bid to de-risk its business from single product dependence TTK forayed into the

cookware segment Over the years TTK has emerged as the market leader in the non-

stick segment It was only recently in FY07 when the company was flushed with

demand and hence operated at 200+ capacity utilization TTK increased it‟s

capacity from 500000 units to 1800000 units in FY08 TTK competes primarily

with local and regional players such as Premier in this segment

Growing urbanization health consciousness in cooking styles of customers and the

segments unique ability for bulky sales (majority consumers do not buy a single pan

but a set of non-stick items) will help TTK to grow at a healthy rate The life cycle for

the non-stick cookware is 2-3 years hence giving rise to a large replacement market

Hence we expect the cookware segment to grow at a CAGR of 15-17 for the next 2-3

years

Investing in setting up In-house Kitchenware (Electrical Appliances)

Factory in Uttarakhand

Electric kitchenware is the company‟s third business segment and has been

growing much more aggressively than the other segment This segment includes

all types of electric kitchen appliances such as mixer toaster chimneys etc

The company‟s strategy is mainly to offer complete range of kitchen appliances

while encashing on its existing retail network setup amp existing brand which

symbolizes quality reliability and safety for all kitchen products for a housewife

The finished products of this segment are primarily outsourced at present

The growing demand for TTK‟s electric kitchen appliances has enabled this

segment to grow much faster On the back volume growth the company plans to

set up its own unit in Uttarakhand at a cost of INR 11 crs This will enable

TTK to control outsourcing cost monitor quality and at the same time

aggressively penetrate this segment It is important to note that the contribution

of this segment to topline has gone up in the last one-year from 13 to 17 We

expect its contribution to go up to 20 once the new plant is commissioned by at

the end of this fiscal

6

Evaluation and Outlook

The company has over the years evolved from being a mere pressure cooker brand to a

full-fledged kitchen appliances brand Its wide product portfolio and wide spread retail

initiative will help company to grow faster than the industry

The pressure cooker industry which has a penetration of mere 36 in India has a lot of

scope of growth While the non-stick cookware segment will grow on the back of rising

urbanization amp growing health conscious trends We believe the macro

demographic trends in India will definitely drive the growth of the kitchen appliance

industry

TTK is one of the leading players in the Indian kitchen appliances industry

The company has seen topline growth of more than 20 over the last 5 years

with profitability also improving The company‟s increased profitability are set to

improve its cashflows as the company is almost debt-free

Company expect topline amp bottomline to grow in the range of 15-17+ for the next 2-3

years Margins are set to improve on the back of product mix insourcing of

electrical appliances and lower interest cost At the current CMP (Current Market

Price) of INR 29565- the stock trades at 91x and 81x its FY10E amp FY11E EPS of

INR 325 and INR 365

Company Profile

Corporate Office

11th Floor Brigade Towers

35 Brigade Road

Bangalore - 560 025

Karnataka

Website wwwttkprestigecom

Chariman T T Jagannathan

Business Group TTK

4

replacement demand urbanization and growing health consciousness in cooking

styles

We believe the macro demographic trends in India will drive the growth of the kitchen

appliance industry per se The company‟s vision for new business opportunities such as

modular kitchens and its product innovation provides good business visibility for the

company

Mainstay Pressure Cooker Segment Growing at a Stable Rate

Pressure Cookers is TTK‟s single largest segment which contributes around 54 to the

topline currently TTK‟s pressure cookers are different from other cookers on account

of its outer lid-closing feature This feature provides the user with some additional

cooking capacity vis-agrave-vis inner lid cookers

The Indian pressure cooker market size is approx 9 million pieces pa which is

equally divided between organized and unorganized sector TTK enjoys 30+ market

share in the pressure cooker market of which it is the market leader in the outer lid

market segment with 65 market share and 5 of its recently entered into and a

highly competitive inner lid market

The branded cookers market has been growing at 5-6 over the last 4-5 years while

TTK has witnessed volumes growth at 13-15 We expect this segment to continue to

clock similar volumes growth over the next 2-3 years

Apart from that TTK has introduced a niche product through the launch of pressure

handi a few years back

5

TTK‟s strategy in this segment has been to innovate and give the user a better product experience TTK has introduced both aluminum and stainless steel cookers the latter of which has given boost to the overall average realization

TTK‟s product innovation superior quality and product technology has

always enabled it to command a superior price realization over its peers Prestige cookers are targeted towards middle class and the upper middle class and enjoy a 3-5 price premium over other branded manufacturers

De-Risking Business by focusing on the Non-Stick Cookware Range

In a bid to de-risk its business from single product dependence TTK forayed into the

cookware segment Over the years TTK has emerged as the market leader in the non-

stick segment It was only recently in FY07 when the company was flushed with

demand and hence operated at 200+ capacity utilization TTK increased it‟s

capacity from 500000 units to 1800000 units in FY08 TTK competes primarily

with local and regional players such as Premier in this segment

Growing urbanization health consciousness in cooking styles of customers and the

segments unique ability for bulky sales (majority consumers do not buy a single pan

but a set of non-stick items) will help TTK to grow at a healthy rate The life cycle for

the non-stick cookware is 2-3 years hence giving rise to a large replacement market

Hence we expect the cookware segment to grow at a CAGR of 15-17 for the next 2-3

years

Investing in setting up In-house Kitchenware (Electrical Appliances)

Factory in Uttarakhand

Electric kitchenware is the company‟s third business segment and has been

growing much more aggressively than the other segment This segment includes

all types of electric kitchen appliances such as mixer toaster chimneys etc

The company‟s strategy is mainly to offer complete range of kitchen appliances

while encashing on its existing retail network setup amp existing brand which

symbolizes quality reliability and safety for all kitchen products for a housewife

The finished products of this segment are primarily outsourced at present

The growing demand for TTK‟s electric kitchen appliances has enabled this

segment to grow much faster On the back volume growth the company plans to

set up its own unit in Uttarakhand at a cost of INR 11 crs This will enable

TTK to control outsourcing cost monitor quality and at the same time

aggressively penetrate this segment It is important to note that the contribution

of this segment to topline has gone up in the last one-year from 13 to 17 We

expect its contribution to go up to 20 once the new plant is commissioned by at

the end of this fiscal

6

Evaluation and Outlook

The company has over the years evolved from being a mere pressure cooker brand to a

full-fledged kitchen appliances brand Its wide product portfolio and wide spread retail

initiative will help company to grow faster than the industry

The pressure cooker industry which has a penetration of mere 36 in India has a lot of

scope of growth While the non-stick cookware segment will grow on the back of rising

urbanization amp growing health conscious trends We believe the macro

demographic trends in India will definitely drive the growth of the kitchen appliance

industry

TTK is one of the leading players in the Indian kitchen appliances industry

The company has seen topline growth of more than 20 over the last 5 years

with profitability also improving The company‟s increased profitability are set to

improve its cashflows as the company is almost debt-free

Company expect topline amp bottomline to grow in the range of 15-17+ for the next 2-3

years Margins are set to improve on the back of product mix insourcing of

electrical appliances and lower interest cost At the current CMP (Current Market

Price) of INR 29565- the stock trades at 91x and 81x its FY10E amp FY11E EPS of

INR 325 and INR 365

Company Profile

Corporate Office

11th Floor Brigade Towers

35 Brigade Road

Bangalore - 560 025

Karnataka

Website wwwttkprestigecom

Chariman T T Jagannathan

Business Group TTK

5

TTK‟s strategy in this segment has been to innovate and give the user a better product experience TTK has introduced both aluminum and stainless steel cookers the latter of which has given boost to the overall average realization

TTK‟s product innovation superior quality and product technology has

always enabled it to command a superior price realization over its peers Prestige cookers are targeted towards middle class and the upper middle class and enjoy a 3-5 price premium over other branded manufacturers

De-Risking Business by focusing on the Non-Stick Cookware Range

In a bid to de-risk its business from single product dependence TTK forayed into the

cookware segment Over the years TTK has emerged as the market leader in the non-

stick segment It was only recently in FY07 when the company was flushed with

demand and hence operated at 200+ capacity utilization TTK increased it‟s

capacity from 500000 units to 1800000 units in FY08 TTK competes primarily

with local and regional players such as Premier in this segment

Growing urbanization health consciousness in cooking styles of customers and the

segments unique ability for bulky sales (majority consumers do not buy a single pan

but a set of non-stick items) will help TTK to grow at a healthy rate The life cycle for

the non-stick cookware is 2-3 years hence giving rise to a large replacement market

Hence we expect the cookware segment to grow at a CAGR of 15-17 for the next 2-3

years

Investing in setting up In-house Kitchenware (Electrical Appliances)

Factory in Uttarakhand

Electric kitchenware is the company‟s third business segment and has been

growing much more aggressively than the other segment This segment includes

all types of electric kitchen appliances such as mixer toaster chimneys etc

The company‟s strategy is mainly to offer complete range of kitchen appliances

while encashing on its existing retail network setup amp existing brand which

symbolizes quality reliability and safety for all kitchen products for a housewife

The finished products of this segment are primarily outsourced at present

The growing demand for TTK‟s electric kitchen appliances has enabled this

segment to grow much faster On the back volume growth the company plans to

set up its own unit in Uttarakhand at a cost of INR 11 crs This will enable

TTK to control outsourcing cost monitor quality and at the same time

aggressively penetrate this segment It is important to note that the contribution

of this segment to topline has gone up in the last one-year from 13 to 17 We

expect its contribution to go up to 20 once the new plant is commissioned by at

the end of this fiscal

6

Evaluation and Outlook

The company has over the years evolved from being a mere pressure cooker brand to a

full-fledged kitchen appliances brand Its wide product portfolio and wide spread retail

initiative will help company to grow faster than the industry

The pressure cooker industry which has a penetration of mere 36 in India has a lot of

scope of growth While the non-stick cookware segment will grow on the back of rising

urbanization amp growing health conscious trends We believe the macro

demographic trends in India will definitely drive the growth of the kitchen appliance

industry

TTK is one of the leading players in the Indian kitchen appliances industry

The company has seen topline growth of more than 20 over the last 5 years

with profitability also improving The company‟s increased profitability are set to

improve its cashflows as the company is almost debt-free

Company expect topline amp bottomline to grow in the range of 15-17+ for the next 2-3

years Margins are set to improve on the back of product mix insourcing of

electrical appliances and lower interest cost At the current CMP (Current Market

Price) of INR 29565- the stock trades at 91x and 81x its FY10E amp FY11E EPS of

INR 325 and INR 365

Company Profile

Corporate Office

11th Floor Brigade Towers

35 Brigade Road

Bangalore - 560 025

Karnataka

Website wwwttkprestigecom

Chariman T T Jagannathan

Business Group TTK

6

Evaluation and Outlook

The company has over the years evolved from being a mere pressure cooker brand to a

full-fledged kitchen appliances brand Its wide product portfolio and wide spread retail

initiative will help company to grow faster than the industry

The pressure cooker industry which has a penetration of mere 36 in India has a lot of

scope of growth While the non-stick cookware segment will grow on the back of rising

urbanization amp growing health conscious trends We believe the macro

demographic trends in India will definitely drive the growth of the kitchen appliance

industry

TTK is one of the leading players in the Indian kitchen appliances industry

The company has seen topline growth of more than 20 over the last 5 years

with profitability also improving The company‟s increased profitability are set to

improve its cashflows as the company is almost debt-free

Company expect topline amp bottomline to grow in the range of 15-17+ for the next 2-3

years Margins are set to improve on the back of product mix insourcing of

electrical appliances and lower interest cost At the current CMP (Current Market

Price) of INR 29565- the stock trades at 91x and 81x its FY10E amp FY11E EPS of

INR 325 and INR 365

Company Profile

Corporate Office

11th Floor Brigade Towers

35 Brigade Road

Bangalore - 560 025

Karnataka

Website wwwttkprestigecom

Chariman T T Jagannathan

Business Group TTK

7

SITUATIONAL ANALYSIS

GRAND STRATEGIES

GROWTH

Why no one will give their Prestige cooker awayhellip Prestige like other brands like Bata Godrej and Tata are part of growing up in modern India

If you think of pressure cooker Prestige is one name that will come to mind That the

brand has managed to sustain loyalty over the many years is because as T T

Jagannathan chairman of TTK group says ldquoWersquove always kept in touch with our

consumers and have constantly been innovatingrdquo

During this current financial year for instance it has launched a variety of products one

being Prestige Deluxe cooker that has a pressure indicator which the chairman says is a

result of customer research which indicated that cooks wanted to know when the cooker

could be opened Recently the group forayed into modular kitchens and launched its

trendy Prestige Smart Kitchen across major cities There are 100 such stores planned

Prestige started the chain of exclusive franchise stores with the following objectives To

create a retail ambience for kitchenware and showcase the vast range the brand has to offer

This was not happening in the multibrand traditional kitchenware outlet that was cramped and

far below expectations of the fast-changing customer

TTK also wanted to have a one-on-one contact with the end consumers to understand their

needs better and to rekindle interest in an otherwise low-involvement category The long-term

vision is to be the country‟s number one small appliance kitchenware company so they had

to move on from being just a pressure cooker company to a cookware company

There is very little differentiation in the category - beyond inner lid and outer lid and stainless

steel and aluminium - and despite some innovations like the Prestige Smart range of cookers

launched last year the urban market is almost saturated with some numbers only in the add-

on replacement and gift segments The rural market while largely unpenetrated remains the

preserve of unbranded products which account for roughly 40 per cent of the value share of

the total market besides most villagers still use firewood Kalro Senior Vice-President

(Marketing) says When more and more people have LPG in rural areas the first thing they

will do hopefully is buy a pressure cooker

Penetration of pressure cookers in the domestic urban market is very high and the future

8

growths have to come from rural households There are rural households who have disposable

incomes but the impulse to buy pressure cookers or other kitchenware has not been generated

due to inadequate distribution reach The company opened two Prestige Smart Kitchen outlets

in rural areas in Karnataka during the year under report and both the outlets have been

drawing good foot falls and are delivering good sales volume TTK Group has drawn up a

strategy for rural retail foray to deliver all the products of the group relevant to the rural

customer If this strategy works out well the Company will be a major supplier to these stores

This will be in addition to TTKs stand alone rural smart kitchen outlets

The company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established across the

length and breadth of the country TTKs proposed new ERP implementation will further

improve the internal controls

TTK Prestige is the first kitchenware company in India to receive the ISO 9001 certification

and the PED CE certification by TUV Germany TTK Prestige Ltd is listed on both BSE amp

NSE The company presently has manufacturing set-ups in Hosur Coimbatore and Bangalore

and 19 sales branches located across the country to cater to the needs of specific markets

Over the last few years modern retail formats like large format stores malls super markets

and hypermarkets have started attracting huge foot falls especially in the urban areas Some of

these outfits belong to one or more national chains They cater to a variety of customer

segments at several price points While this modern format currently covers hardly 3 of the

9

retail business this share is likely to become significant in the coming years especially in the

urban areas The company is in the process of ensuring its presence significantly in these

modern format stores

The Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing The dealer network which

has been largely supporting the traditional product categories consisting of pressure cookers

and cookware is now stocking a larger range of TTKs products and the dealers are keen to

increase the shelf space of its products

TTK witnessed a decline in the export sale during the current year especially in the US

market However the sales in the non US markets are encouraging There is a moderate

growth opportunity for pressure cookers in the non US markets As pressure cooker is not a

significant part of kitchen appliance market in USA the company is looking at opportunities

for tapping the high end cookware market in USA If this opportunity can be exploited then it

affords an opportunity to increase the distribution for pressure cookers also in this market As

the domestic economy is growing rapidly TTK will be committing larger resources to the

domestic market and hence export opportunities will be considered only step by step to

optimize the overall earnings of the company

FINANCES AND INTEREST RATE STRUCTURING During the year there was no change in the equity capital The company was

able to finance its growth through internal accruals without increasing debt

capital It may be noted that over the last three years prior to the year under

report TTK reduced its debt burden by over Rs20 crores There was a further

reduction in the interest burden as compared to the previous year by about

Rs86 lakhs The interest cost as a percentage to sales has dropped from 84

two years back to 24 during the year under report

INVESTMENTS The company further recapitalized its wholly owned subsidiary Manttra Inc by

investing

Rs441crores During the first quarter of 2005-06 the investments made in TTK Services Private Ltd

was also encashed which brought in cash of Rs130 crores With this TTK has dealt

with all its unrelated investments

10

EXPANSION AND CAPITAL EXPENDITURE The company has during the start of the current financial year ie April 2008 commenced

commercial production of pressure cookers in the new facility created at Myleripalayam

Village near Coimbatore The capacity has been established by adding new machinery as well

as transferring machinery that has been rendered surplus in the Bangalore facility As

mentioned in the earlier director‟s reports pursuant to right-sizing the Bangalore Unit is

being used a stand by unit as part of supply chain optimization measures This standby use

will be phased out during the next twelve months

TTK is also in the process of establishing a new manufacturing undertaking near Roorkee in the

State of Utharanchal This unit will manufacture all types of pressure cookers and

cookware Facility for assembly of other domestic kitchen appliances will also be

incorporated in this unit As the demand for company‟s products exist in northern India a

manufacturing facility in the North affords logistical advantages and incidental cost savings

Further a unit established in the notified areas in the State of Utharanchal is also entitled to

excise duty exemption and income tax concession for a period of 10 years This unit is

expected to commence commercial production during the course of the financial year 2009-

2010

All the above initiatives together with normal capital expenditure will result in a capital

expenditure spend of over Rs20 crores spread over the financial years 2009-10 and 2010-11 The Public Deposits aggregated to Rs310 lakhs as on 31st March 2008 There were no

unclaimed deposits which remained unpaid as on that date

As stated earlier the manufacturing activity in the Bangalore Unit will be phased out during

the course of next 12 months and the land therein admeasuring around 285 lakh square feet

11

will become available for development The Board has a massive opportunity to take

appropriate decisions in dealing with this property in the best interests of the shareholders to

ensure considerable revenue windfall

DEVELOPMENTS IN HUMAN RESOURCES

The direct employment strength stood at 724 as compared to 708 in the previous year

Improved training and development programmes are in place to achieve improved

productivity in all departments Industrial relations were cordial throughout the year Your

company maintained its morale of human resource at the highest level which enabled the

growth possible The long term settlement with the union in the Hosur manufacturing

complex expires during

the financial year 2008-09 The directors must work toward concluding a settlement with

more thrust on employee productivity

THREATS

In the domestic market the threat continues to be from the mushrooming unorganized players

and regional brands These have two impacts namely commoditization of product categories

and unrealistically low pricing Though there is high mortality of these players they tend to

impair the rapid growth of quality conscious branded players by putting their legitimate

margins under pressure As has been the policy the company continues to invest in

innovation feature and value addition customer education and brand promotion to stay above

these unorganized players

The company operates in a single segment-Kitchen Appliances The products include

Pressure Cookers Non-stick Cookware Kitchen Electrical Appliances and Gas Stoves

although the company‟s revenue is still dominated by Pressure cooker sales The company

needs to be less dependant on one product by aggressively promoting amp consolidating rest of

its kitchenware products in the segment

2007-08 2006-07

Domestic Export Total Domestic Export Total

Pressure

Cookers

12249

1481

13730

9717

2463

12180

12

Non-stick

Cookware

3542

32

3574

2424

43

2467

Kitchen

Electric

Appliances

2163

2163

1136

--

1136

Gas Stoves 2254 2254 1766 -- 1766

Others 1375 87 1462 1336 52 1388

Total 21583 1600 23183 16379 2558 18937

13

In the export market the influx of cheaper supplies from China continues to put pressure on margins

as well as expansion of sales

Alternatives to combat these very problems are as follows

Option

1 Launch large-scale promotions to make consumers aware of advantages

of branded kitchenware appliances

2 Employ cost-cutting methods to further lower prices especially during recessionary

pressure

3 Investing more heavily in Research and Development so as to make more innovative

products to compete better

PORTFOLIO ANALYSIS FOR TTK PRESTIGE One of the most popular aids to developing corporate strategy in a multibusiness corporation

is the portfolio analysis Portfolio analysis is the wide set of tools to analyze elements of a

firms product mix to determine the optimum allocation of its resources Two most common

measures used in a portfolio analysis are market growth rate and relative market shareIn

portfolio analysis top management views its product lines and business units as a series of

investments from which it expects a profitable return The product linesbusiness units form a

portfolio of investments that top management must constantly juggle to ensure the best return

on the corporations invested money Two of the most popular approaches are the BCG

growth share matrix and the GE business screen The BCG MATRIX is a chart that had been created by Bruce Henderson for the Boston

Consulting Group in 1968 to help corporations with analyzing their business units or product

lines This helps the company allocate resources and is used as an analytical tool in brand

marketing product management strategic management and portfolio analysis Each of the

corporations product lines or business units is plotted on the matrix according to the 1gt

growth rate of the industry and 2gt its relative market share Placing products in the BCG

matrix results in 4 categories in a portfolio of a company

14

1 Stars (=high growth high market share) - use large amounts of cash and are leaders in the business so they should also generate large

amounts of cash

- frequently roughly in balance on net cash flow However if needed any attempt should be

made to hold share because the rewards will be a cash cow if market share is kept

2 Cash Cows (=low growth high market share) - profits and cash generation should be high and because of the low growth investments

needed should be low Keep profits high

- Foundation of a company 3 Dogs (=low growth low market share)

- avoid and minimize the number of dogs in a company

- beware of expensive bdquoturn around plans‟

- deliver cash otherwise liquidate

4 Question Marks (= high growth low market share)

- have the worst cash characteristics of all because high demands and low returns due to low

market share

- If nothing is done to change the market share question marks will simply absorb great

amounts of cash and later as the growth stops a dog

- Either invests heavily or sells off or invest nothing and generate whatever cash it can

Increase market share or deliver cash

MARKETS The markets of prestige products can be mainly divided on the basis of some

common characteristics into urban markets and rural markets Although the urban markets

are mostly saturated with low growth rates in the pressure cooker segment the rural

market is experiencing a rapid double digit growth rate with the penetration into rural

households being

the hope for this segment TTK prestige forayed into the rural markets in FY 06 in

the modular kitchen segment in rural Karnataka and is drawing heavy footfalls in the

retail outlets The modular kitchen and the electrical appliances markets are experiencing

a high growth rate in the urban markets The non stick cookware segment is one in which

prestige has a strong position and although the urban market is saturated the rural market is

growing at

a high rate

15

Thus in the BCG matrix the products of TTK Prestige can be divided into stars question

marks cash cows and dogs according to the markets in which they are in ie according to the

urban and rural markets

URBAN MARKETS

STARS NONE

QUESTION MARKS Electrical appliances modular kitchens CASH COWS pressure cookers non-stick cookware

DOGS Gas stoves

RURAL MARKETS STARS Pressure cookers electrical appliances modular kitchens non stick cookware gas

stoves

QUESTION MARKS none CASH COWS none

DOGS none

16

BCG MATRIX FOR TTK PRESTIGE URBAN MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET STARS

Electrical

appliance

s

ppliances

sss

GROWTH

LOW C CASH

Modular

kitchens

QUESTION MARKS

Pressure

cookers

CASH COWS

Non

stick

cookwar

Gas stoves

DOGS

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

8

growths have to come from rural households There are rural households who have disposable

incomes but the impulse to buy pressure cookers or other kitchenware has not been generated

due to inadequate distribution reach The company opened two Prestige Smart Kitchen outlets

in rural areas in Karnataka during the year under report and both the outlets have been

drawing good foot falls and are delivering good sales volume TTK Group has drawn up a

strategy for rural retail foray to deliver all the products of the group relevant to the rural

customer If this strategy works out well the Company will be a major supplier to these stores

This will be in addition to TTKs stand alone rural smart kitchen outlets

The company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established across the

length and breadth of the country TTKs proposed new ERP implementation will further

improve the internal controls

TTK Prestige is the first kitchenware company in India to receive the ISO 9001 certification

and the PED CE certification by TUV Germany TTK Prestige Ltd is listed on both BSE amp

NSE The company presently has manufacturing set-ups in Hosur Coimbatore and Bangalore

and 19 sales branches located across the country to cater to the needs of specific markets

Over the last few years modern retail formats like large format stores malls super markets

and hypermarkets have started attracting huge foot falls especially in the urban areas Some of

these outfits belong to one or more national chains They cater to a variety of customer

segments at several price points While this modern format currently covers hardly 3 of the

9

retail business this share is likely to become significant in the coming years especially in the

urban areas The company is in the process of ensuring its presence significantly in these

modern format stores

The Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing The dealer network which

has been largely supporting the traditional product categories consisting of pressure cookers

and cookware is now stocking a larger range of TTKs products and the dealers are keen to

increase the shelf space of its products

TTK witnessed a decline in the export sale during the current year especially in the US

market However the sales in the non US markets are encouraging There is a moderate

growth opportunity for pressure cookers in the non US markets As pressure cooker is not a

significant part of kitchen appliance market in USA the company is looking at opportunities

for tapping the high end cookware market in USA If this opportunity can be exploited then it

affords an opportunity to increase the distribution for pressure cookers also in this market As

the domestic economy is growing rapidly TTK will be committing larger resources to the

domestic market and hence export opportunities will be considered only step by step to

optimize the overall earnings of the company

FINANCES AND INTEREST RATE STRUCTURING During the year there was no change in the equity capital The company was

able to finance its growth through internal accruals without increasing debt

capital It may be noted that over the last three years prior to the year under

report TTK reduced its debt burden by over Rs20 crores There was a further

reduction in the interest burden as compared to the previous year by about

Rs86 lakhs The interest cost as a percentage to sales has dropped from 84

two years back to 24 during the year under report

INVESTMENTS The company further recapitalized its wholly owned subsidiary Manttra Inc by

investing

Rs441crores During the first quarter of 2005-06 the investments made in TTK Services Private Ltd

was also encashed which brought in cash of Rs130 crores With this TTK has dealt

with all its unrelated investments

10

EXPANSION AND CAPITAL EXPENDITURE The company has during the start of the current financial year ie April 2008 commenced

commercial production of pressure cookers in the new facility created at Myleripalayam

Village near Coimbatore The capacity has been established by adding new machinery as well

as transferring machinery that has been rendered surplus in the Bangalore facility As

mentioned in the earlier director‟s reports pursuant to right-sizing the Bangalore Unit is

being used a stand by unit as part of supply chain optimization measures This standby use

will be phased out during the next twelve months

TTK is also in the process of establishing a new manufacturing undertaking near Roorkee in the

State of Utharanchal This unit will manufacture all types of pressure cookers and

cookware Facility for assembly of other domestic kitchen appliances will also be

incorporated in this unit As the demand for company‟s products exist in northern India a

manufacturing facility in the North affords logistical advantages and incidental cost savings

Further a unit established in the notified areas in the State of Utharanchal is also entitled to

excise duty exemption and income tax concession for a period of 10 years This unit is

expected to commence commercial production during the course of the financial year 2009-

2010

All the above initiatives together with normal capital expenditure will result in a capital

expenditure spend of over Rs20 crores spread over the financial years 2009-10 and 2010-11 The Public Deposits aggregated to Rs310 lakhs as on 31st March 2008 There were no

unclaimed deposits which remained unpaid as on that date

As stated earlier the manufacturing activity in the Bangalore Unit will be phased out during

the course of next 12 months and the land therein admeasuring around 285 lakh square feet

11

will become available for development The Board has a massive opportunity to take

appropriate decisions in dealing with this property in the best interests of the shareholders to

ensure considerable revenue windfall

DEVELOPMENTS IN HUMAN RESOURCES

The direct employment strength stood at 724 as compared to 708 in the previous year

Improved training and development programmes are in place to achieve improved

productivity in all departments Industrial relations were cordial throughout the year Your

company maintained its morale of human resource at the highest level which enabled the

growth possible The long term settlement with the union in the Hosur manufacturing

complex expires during

the financial year 2008-09 The directors must work toward concluding a settlement with

more thrust on employee productivity

THREATS

In the domestic market the threat continues to be from the mushrooming unorganized players

and regional brands These have two impacts namely commoditization of product categories

and unrealistically low pricing Though there is high mortality of these players they tend to

impair the rapid growth of quality conscious branded players by putting their legitimate

margins under pressure As has been the policy the company continues to invest in

innovation feature and value addition customer education and brand promotion to stay above

these unorganized players

The company operates in a single segment-Kitchen Appliances The products include

Pressure Cookers Non-stick Cookware Kitchen Electrical Appliances and Gas Stoves

although the company‟s revenue is still dominated by Pressure cooker sales The company

needs to be less dependant on one product by aggressively promoting amp consolidating rest of

its kitchenware products in the segment

2007-08 2006-07

Domestic Export Total Domestic Export Total

Pressure

Cookers

12249

1481

13730

9717

2463

12180

12

Non-stick

Cookware

3542

32

3574

2424

43

2467

Kitchen

Electric

Appliances

2163

2163

1136

--

1136

Gas Stoves 2254 2254 1766 -- 1766

Others 1375 87 1462 1336 52 1388

Total 21583 1600 23183 16379 2558 18937

13

In the export market the influx of cheaper supplies from China continues to put pressure on margins

as well as expansion of sales

Alternatives to combat these very problems are as follows

Option

1 Launch large-scale promotions to make consumers aware of advantages

of branded kitchenware appliances

2 Employ cost-cutting methods to further lower prices especially during recessionary

pressure

3 Investing more heavily in Research and Development so as to make more innovative

products to compete better

PORTFOLIO ANALYSIS FOR TTK PRESTIGE One of the most popular aids to developing corporate strategy in a multibusiness corporation

is the portfolio analysis Portfolio analysis is the wide set of tools to analyze elements of a

firms product mix to determine the optimum allocation of its resources Two most common

measures used in a portfolio analysis are market growth rate and relative market shareIn

portfolio analysis top management views its product lines and business units as a series of

investments from which it expects a profitable return The product linesbusiness units form a

portfolio of investments that top management must constantly juggle to ensure the best return

on the corporations invested money Two of the most popular approaches are the BCG

growth share matrix and the GE business screen The BCG MATRIX is a chart that had been created by Bruce Henderson for the Boston

Consulting Group in 1968 to help corporations with analyzing their business units or product

lines This helps the company allocate resources and is used as an analytical tool in brand

marketing product management strategic management and portfolio analysis Each of the

corporations product lines or business units is plotted on the matrix according to the 1gt

growth rate of the industry and 2gt its relative market share Placing products in the BCG

matrix results in 4 categories in a portfolio of a company

14

1 Stars (=high growth high market share) - use large amounts of cash and are leaders in the business so they should also generate large

amounts of cash

- frequently roughly in balance on net cash flow However if needed any attempt should be

made to hold share because the rewards will be a cash cow if market share is kept

2 Cash Cows (=low growth high market share) - profits and cash generation should be high and because of the low growth investments

needed should be low Keep profits high

- Foundation of a company 3 Dogs (=low growth low market share)

- avoid and minimize the number of dogs in a company

- beware of expensive bdquoturn around plans‟

- deliver cash otherwise liquidate

4 Question Marks (= high growth low market share)

- have the worst cash characteristics of all because high demands and low returns due to low

market share

- If nothing is done to change the market share question marks will simply absorb great

amounts of cash and later as the growth stops a dog

- Either invests heavily or sells off or invest nothing and generate whatever cash it can

Increase market share or deliver cash

MARKETS The markets of prestige products can be mainly divided on the basis of some

common characteristics into urban markets and rural markets Although the urban markets

are mostly saturated with low growth rates in the pressure cooker segment the rural

market is experiencing a rapid double digit growth rate with the penetration into rural

households being

the hope for this segment TTK prestige forayed into the rural markets in FY 06 in

the modular kitchen segment in rural Karnataka and is drawing heavy footfalls in the

retail outlets The modular kitchen and the electrical appliances markets are experiencing

a high growth rate in the urban markets The non stick cookware segment is one in which

prestige has a strong position and although the urban market is saturated the rural market is

growing at

a high rate

15

Thus in the BCG matrix the products of TTK Prestige can be divided into stars question

marks cash cows and dogs according to the markets in which they are in ie according to the

urban and rural markets

URBAN MARKETS

STARS NONE

QUESTION MARKS Electrical appliances modular kitchens CASH COWS pressure cookers non-stick cookware

DOGS Gas stoves

RURAL MARKETS STARS Pressure cookers electrical appliances modular kitchens non stick cookware gas

stoves

QUESTION MARKS none CASH COWS none

DOGS none

16

BCG MATRIX FOR TTK PRESTIGE URBAN MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET STARS

Electrical

appliance

s

ppliances

sss

GROWTH

LOW C CASH

Modular

kitchens

QUESTION MARKS

Pressure

cookers

CASH COWS

Non

stick

cookwar

Gas stoves

DOGS

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

9

retail business this share is likely to become significant in the coming years especially in the

urban areas The company is in the process of ensuring its presence significantly in these

modern format stores

The Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing The dealer network which

has been largely supporting the traditional product categories consisting of pressure cookers

and cookware is now stocking a larger range of TTKs products and the dealers are keen to

increase the shelf space of its products

TTK witnessed a decline in the export sale during the current year especially in the US

market However the sales in the non US markets are encouraging There is a moderate

growth opportunity for pressure cookers in the non US markets As pressure cooker is not a

significant part of kitchen appliance market in USA the company is looking at opportunities

for tapping the high end cookware market in USA If this opportunity can be exploited then it

affords an opportunity to increase the distribution for pressure cookers also in this market As

the domestic economy is growing rapidly TTK will be committing larger resources to the

domestic market and hence export opportunities will be considered only step by step to

optimize the overall earnings of the company

FINANCES AND INTEREST RATE STRUCTURING During the year there was no change in the equity capital The company was

able to finance its growth through internal accruals without increasing debt

capital It may be noted that over the last three years prior to the year under

report TTK reduced its debt burden by over Rs20 crores There was a further

reduction in the interest burden as compared to the previous year by about

Rs86 lakhs The interest cost as a percentage to sales has dropped from 84

two years back to 24 during the year under report

INVESTMENTS The company further recapitalized its wholly owned subsidiary Manttra Inc by

investing

Rs441crores During the first quarter of 2005-06 the investments made in TTK Services Private Ltd

was also encashed which brought in cash of Rs130 crores With this TTK has dealt

with all its unrelated investments

10

EXPANSION AND CAPITAL EXPENDITURE The company has during the start of the current financial year ie April 2008 commenced

commercial production of pressure cookers in the new facility created at Myleripalayam

Village near Coimbatore The capacity has been established by adding new machinery as well

as transferring machinery that has been rendered surplus in the Bangalore facility As

mentioned in the earlier director‟s reports pursuant to right-sizing the Bangalore Unit is

being used a stand by unit as part of supply chain optimization measures This standby use

will be phased out during the next twelve months

TTK is also in the process of establishing a new manufacturing undertaking near Roorkee in the

State of Utharanchal This unit will manufacture all types of pressure cookers and

cookware Facility for assembly of other domestic kitchen appliances will also be

incorporated in this unit As the demand for company‟s products exist in northern India a

manufacturing facility in the North affords logistical advantages and incidental cost savings

Further a unit established in the notified areas in the State of Utharanchal is also entitled to

excise duty exemption and income tax concession for a period of 10 years This unit is

expected to commence commercial production during the course of the financial year 2009-

2010

All the above initiatives together with normal capital expenditure will result in a capital

expenditure spend of over Rs20 crores spread over the financial years 2009-10 and 2010-11 The Public Deposits aggregated to Rs310 lakhs as on 31st March 2008 There were no

unclaimed deposits which remained unpaid as on that date

As stated earlier the manufacturing activity in the Bangalore Unit will be phased out during

the course of next 12 months and the land therein admeasuring around 285 lakh square feet

11

will become available for development The Board has a massive opportunity to take

appropriate decisions in dealing with this property in the best interests of the shareholders to

ensure considerable revenue windfall

DEVELOPMENTS IN HUMAN RESOURCES

The direct employment strength stood at 724 as compared to 708 in the previous year

Improved training and development programmes are in place to achieve improved

productivity in all departments Industrial relations were cordial throughout the year Your

company maintained its morale of human resource at the highest level which enabled the

growth possible The long term settlement with the union in the Hosur manufacturing

complex expires during

the financial year 2008-09 The directors must work toward concluding a settlement with

more thrust on employee productivity

THREATS

In the domestic market the threat continues to be from the mushrooming unorganized players

and regional brands These have two impacts namely commoditization of product categories

and unrealistically low pricing Though there is high mortality of these players they tend to

impair the rapid growth of quality conscious branded players by putting their legitimate

margins under pressure As has been the policy the company continues to invest in

innovation feature and value addition customer education and brand promotion to stay above

these unorganized players

The company operates in a single segment-Kitchen Appliances The products include

Pressure Cookers Non-stick Cookware Kitchen Electrical Appliances and Gas Stoves

although the company‟s revenue is still dominated by Pressure cooker sales The company

needs to be less dependant on one product by aggressively promoting amp consolidating rest of

its kitchenware products in the segment

2007-08 2006-07

Domestic Export Total Domestic Export Total

Pressure

Cookers

12249

1481

13730

9717

2463

12180

12

Non-stick

Cookware

3542

32

3574

2424

43

2467

Kitchen

Electric

Appliances

2163

2163

1136

--

1136

Gas Stoves 2254 2254 1766 -- 1766

Others 1375 87 1462 1336 52 1388

Total 21583 1600 23183 16379 2558 18937

13

In the export market the influx of cheaper supplies from China continues to put pressure on margins

as well as expansion of sales

Alternatives to combat these very problems are as follows

Option

1 Launch large-scale promotions to make consumers aware of advantages

of branded kitchenware appliances

2 Employ cost-cutting methods to further lower prices especially during recessionary

pressure

3 Investing more heavily in Research and Development so as to make more innovative

products to compete better

PORTFOLIO ANALYSIS FOR TTK PRESTIGE One of the most popular aids to developing corporate strategy in a multibusiness corporation

is the portfolio analysis Portfolio analysis is the wide set of tools to analyze elements of a

firms product mix to determine the optimum allocation of its resources Two most common

measures used in a portfolio analysis are market growth rate and relative market shareIn

portfolio analysis top management views its product lines and business units as a series of

investments from which it expects a profitable return The product linesbusiness units form a

portfolio of investments that top management must constantly juggle to ensure the best return

on the corporations invested money Two of the most popular approaches are the BCG

growth share matrix and the GE business screen The BCG MATRIX is a chart that had been created by Bruce Henderson for the Boston

Consulting Group in 1968 to help corporations with analyzing their business units or product

lines This helps the company allocate resources and is used as an analytical tool in brand

marketing product management strategic management and portfolio analysis Each of the

corporations product lines or business units is plotted on the matrix according to the 1gt

growth rate of the industry and 2gt its relative market share Placing products in the BCG

matrix results in 4 categories in a portfolio of a company

14

1 Stars (=high growth high market share) - use large amounts of cash and are leaders in the business so they should also generate large

amounts of cash

- frequently roughly in balance on net cash flow However if needed any attempt should be

made to hold share because the rewards will be a cash cow if market share is kept

2 Cash Cows (=low growth high market share) - profits and cash generation should be high and because of the low growth investments

needed should be low Keep profits high

- Foundation of a company 3 Dogs (=low growth low market share)

- avoid and minimize the number of dogs in a company

- beware of expensive bdquoturn around plans‟

- deliver cash otherwise liquidate

4 Question Marks (= high growth low market share)

- have the worst cash characteristics of all because high demands and low returns due to low

market share

- If nothing is done to change the market share question marks will simply absorb great

amounts of cash and later as the growth stops a dog

- Either invests heavily or sells off or invest nothing and generate whatever cash it can

Increase market share or deliver cash

MARKETS The markets of prestige products can be mainly divided on the basis of some

common characteristics into urban markets and rural markets Although the urban markets

are mostly saturated with low growth rates in the pressure cooker segment the rural

market is experiencing a rapid double digit growth rate with the penetration into rural

households being

the hope for this segment TTK prestige forayed into the rural markets in FY 06 in

the modular kitchen segment in rural Karnataka and is drawing heavy footfalls in the

retail outlets The modular kitchen and the electrical appliances markets are experiencing

a high growth rate in the urban markets The non stick cookware segment is one in which

prestige has a strong position and although the urban market is saturated the rural market is

growing at

a high rate

15

Thus in the BCG matrix the products of TTK Prestige can be divided into stars question

marks cash cows and dogs according to the markets in which they are in ie according to the

urban and rural markets

URBAN MARKETS

STARS NONE

QUESTION MARKS Electrical appliances modular kitchens CASH COWS pressure cookers non-stick cookware

DOGS Gas stoves

RURAL MARKETS STARS Pressure cookers electrical appliances modular kitchens non stick cookware gas

stoves

QUESTION MARKS none CASH COWS none

DOGS none

16

BCG MATRIX FOR TTK PRESTIGE URBAN MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET STARS

Electrical

appliance

s

ppliances

sss

GROWTH

LOW C CASH

Modular

kitchens

QUESTION MARKS

Pressure

cookers

CASH COWS

Non

stick

cookwar

Gas stoves

DOGS

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

10

EXPANSION AND CAPITAL EXPENDITURE The company has during the start of the current financial year ie April 2008 commenced

commercial production of pressure cookers in the new facility created at Myleripalayam

Village near Coimbatore The capacity has been established by adding new machinery as well

as transferring machinery that has been rendered surplus in the Bangalore facility As

mentioned in the earlier director‟s reports pursuant to right-sizing the Bangalore Unit is

being used a stand by unit as part of supply chain optimization measures This standby use

will be phased out during the next twelve months

TTK is also in the process of establishing a new manufacturing undertaking near Roorkee in the

State of Utharanchal This unit will manufacture all types of pressure cookers and

cookware Facility for assembly of other domestic kitchen appliances will also be

incorporated in this unit As the demand for company‟s products exist in northern India a

manufacturing facility in the North affords logistical advantages and incidental cost savings

Further a unit established in the notified areas in the State of Utharanchal is also entitled to

excise duty exemption and income tax concession for a period of 10 years This unit is

expected to commence commercial production during the course of the financial year 2009-

2010

All the above initiatives together with normal capital expenditure will result in a capital

expenditure spend of over Rs20 crores spread over the financial years 2009-10 and 2010-11 The Public Deposits aggregated to Rs310 lakhs as on 31st March 2008 There were no

unclaimed deposits which remained unpaid as on that date

As stated earlier the manufacturing activity in the Bangalore Unit will be phased out during

the course of next 12 months and the land therein admeasuring around 285 lakh square feet

11

will become available for development The Board has a massive opportunity to take

appropriate decisions in dealing with this property in the best interests of the shareholders to

ensure considerable revenue windfall

DEVELOPMENTS IN HUMAN RESOURCES

The direct employment strength stood at 724 as compared to 708 in the previous year

Improved training and development programmes are in place to achieve improved

productivity in all departments Industrial relations were cordial throughout the year Your

company maintained its morale of human resource at the highest level which enabled the

growth possible The long term settlement with the union in the Hosur manufacturing

complex expires during

the financial year 2008-09 The directors must work toward concluding a settlement with

more thrust on employee productivity

THREATS

In the domestic market the threat continues to be from the mushrooming unorganized players

and regional brands These have two impacts namely commoditization of product categories

and unrealistically low pricing Though there is high mortality of these players they tend to

impair the rapid growth of quality conscious branded players by putting their legitimate

margins under pressure As has been the policy the company continues to invest in

innovation feature and value addition customer education and brand promotion to stay above

these unorganized players

The company operates in a single segment-Kitchen Appliances The products include

Pressure Cookers Non-stick Cookware Kitchen Electrical Appliances and Gas Stoves

although the company‟s revenue is still dominated by Pressure cooker sales The company

needs to be less dependant on one product by aggressively promoting amp consolidating rest of

its kitchenware products in the segment

2007-08 2006-07

Domestic Export Total Domestic Export Total

Pressure

Cookers

12249

1481

13730

9717

2463

12180

12

Non-stick

Cookware

3542

32

3574

2424

43

2467

Kitchen

Electric

Appliances

2163

2163

1136

--

1136

Gas Stoves 2254 2254 1766 -- 1766

Others 1375 87 1462 1336 52 1388

Total 21583 1600 23183 16379 2558 18937

13

In the export market the influx of cheaper supplies from China continues to put pressure on margins

as well as expansion of sales

Alternatives to combat these very problems are as follows

Option

1 Launch large-scale promotions to make consumers aware of advantages

of branded kitchenware appliances

2 Employ cost-cutting methods to further lower prices especially during recessionary

pressure

3 Investing more heavily in Research and Development so as to make more innovative

products to compete better

PORTFOLIO ANALYSIS FOR TTK PRESTIGE One of the most popular aids to developing corporate strategy in a multibusiness corporation

is the portfolio analysis Portfolio analysis is the wide set of tools to analyze elements of a

firms product mix to determine the optimum allocation of its resources Two most common

measures used in a portfolio analysis are market growth rate and relative market shareIn

portfolio analysis top management views its product lines and business units as a series of

investments from which it expects a profitable return The product linesbusiness units form a

portfolio of investments that top management must constantly juggle to ensure the best return

on the corporations invested money Two of the most popular approaches are the BCG

growth share matrix and the GE business screen The BCG MATRIX is a chart that had been created by Bruce Henderson for the Boston

Consulting Group in 1968 to help corporations with analyzing their business units or product

lines This helps the company allocate resources and is used as an analytical tool in brand

marketing product management strategic management and portfolio analysis Each of the

corporations product lines or business units is plotted on the matrix according to the 1gt

growth rate of the industry and 2gt its relative market share Placing products in the BCG

matrix results in 4 categories in a portfolio of a company

14

1 Stars (=high growth high market share) - use large amounts of cash and are leaders in the business so they should also generate large

amounts of cash

- frequently roughly in balance on net cash flow However if needed any attempt should be

made to hold share because the rewards will be a cash cow if market share is kept

2 Cash Cows (=low growth high market share) - profits and cash generation should be high and because of the low growth investments

needed should be low Keep profits high

- Foundation of a company 3 Dogs (=low growth low market share)

- avoid and minimize the number of dogs in a company

- beware of expensive bdquoturn around plans‟

- deliver cash otherwise liquidate

4 Question Marks (= high growth low market share)

- have the worst cash characteristics of all because high demands and low returns due to low

market share

- If nothing is done to change the market share question marks will simply absorb great

amounts of cash and later as the growth stops a dog

- Either invests heavily or sells off or invest nothing and generate whatever cash it can

Increase market share or deliver cash

MARKETS The markets of prestige products can be mainly divided on the basis of some

common characteristics into urban markets and rural markets Although the urban markets

are mostly saturated with low growth rates in the pressure cooker segment the rural

market is experiencing a rapid double digit growth rate with the penetration into rural

households being

the hope for this segment TTK prestige forayed into the rural markets in FY 06 in

the modular kitchen segment in rural Karnataka and is drawing heavy footfalls in the

retail outlets The modular kitchen and the electrical appliances markets are experiencing

a high growth rate in the urban markets The non stick cookware segment is one in which

prestige has a strong position and although the urban market is saturated the rural market is

growing at

a high rate

15

Thus in the BCG matrix the products of TTK Prestige can be divided into stars question

marks cash cows and dogs according to the markets in which they are in ie according to the

urban and rural markets

URBAN MARKETS

STARS NONE

QUESTION MARKS Electrical appliances modular kitchens CASH COWS pressure cookers non-stick cookware

DOGS Gas stoves

RURAL MARKETS STARS Pressure cookers electrical appliances modular kitchens non stick cookware gas

stoves

QUESTION MARKS none CASH COWS none

DOGS none

16

BCG MATRIX FOR TTK PRESTIGE URBAN MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET STARS

Electrical

appliance

s

ppliances

sss

GROWTH

LOW C CASH

Modular

kitchens

QUESTION MARKS

Pressure

cookers

CASH COWS

Non

stick

cookwar

Gas stoves

DOGS

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

11

will become available for development The Board has a massive opportunity to take

appropriate decisions in dealing with this property in the best interests of the shareholders to

ensure considerable revenue windfall

DEVELOPMENTS IN HUMAN RESOURCES

The direct employment strength stood at 724 as compared to 708 in the previous year

Improved training and development programmes are in place to achieve improved

productivity in all departments Industrial relations were cordial throughout the year Your

company maintained its morale of human resource at the highest level which enabled the

growth possible The long term settlement with the union in the Hosur manufacturing

complex expires during

the financial year 2008-09 The directors must work toward concluding a settlement with

more thrust on employee productivity

THREATS

In the domestic market the threat continues to be from the mushrooming unorganized players

and regional brands These have two impacts namely commoditization of product categories

and unrealistically low pricing Though there is high mortality of these players they tend to

impair the rapid growth of quality conscious branded players by putting their legitimate

margins under pressure As has been the policy the company continues to invest in

innovation feature and value addition customer education and brand promotion to stay above

these unorganized players

The company operates in a single segment-Kitchen Appliances The products include

Pressure Cookers Non-stick Cookware Kitchen Electrical Appliances and Gas Stoves

although the company‟s revenue is still dominated by Pressure cooker sales The company

needs to be less dependant on one product by aggressively promoting amp consolidating rest of

its kitchenware products in the segment

2007-08 2006-07

Domestic Export Total Domestic Export Total

Pressure

Cookers

12249

1481

13730

9717

2463

12180

12

Non-stick

Cookware

3542

32

3574

2424

43

2467

Kitchen

Electric

Appliances

2163

2163

1136

--

1136

Gas Stoves 2254 2254 1766 -- 1766

Others 1375 87 1462 1336 52 1388

Total 21583 1600 23183 16379 2558 18937

13

In the export market the influx of cheaper supplies from China continues to put pressure on margins

as well as expansion of sales

Alternatives to combat these very problems are as follows

Option

1 Launch large-scale promotions to make consumers aware of advantages

of branded kitchenware appliances

2 Employ cost-cutting methods to further lower prices especially during recessionary

pressure

3 Investing more heavily in Research and Development so as to make more innovative

products to compete better

PORTFOLIO ANALYSIS FOR TTK PRESTIGE One of the most popular aids to developing corporate strategy in a multibusiness corporation

is the portfolio analysis Portfolio analysis is the wide set of tools to analyze elements of a

firms product mix to determine the optimum allocation of its resources Two most common

measures used in a portfolio analysis are market growth rate and relative market shareIn

portfolio analysis top management views its product lines and business units as a series of

investments from which it expects a profitable return The product linesbusiness units form a

portfolio of investments that top management must constantly juggle to ensure the best return

on the corporations invested money Two of the most popular approaches are the BCG

growth share matrix and the GE business screen The BCG MATRIX is a chart that had been created by Bruce Henderson for the Boston

Consulting Group in 1968 to help corporations with analyzing their business units or product

lines This helps the company allocate resources and is used as an analytical tool in brand

marketing product management strategic management and portfolio analysis Each of the

corporations product lines or business units is plotted on the matrix according to the 1gt

growth rate of the industry and 2gt its relative market share Placing products in the BCG

matrix results in 4 categories in a portfolio of a company

14

1 Stars (=high growth high market share) - use large amounts of cash and are leaders in the business so they should also generate large

amounts of cash

- frequently roughly in balance on net cash flow However if needed any attempt should be

made to hold share because the rewards will be a cash cow if market share is kept

2 Cash Cows (=low growth high market share) - profits and cash generation should be high and because of the low growth investments

needed should be low Keep profits high

- Foundation of a company 3 Dogs (=low growth low market share)

- avoid and minimize the number of dogs in a company

- beware of expensive bdquoturn around plans‟

- deliver cash otherwise liquidate

4 Question Marks (= high growth low market share)

- have the worst cash characteristics of all because high demands and low returns due to low

market share

- If nothing is done to change the market share question marks will simply absorb great

amounts of cash and later as the growth stops a dog

- Either invests heavily or sells off or invest nothing and generate whatever cash it can

Increase market share or deliver cash

MARKETS The markets of prestige products can be mainly divided on the basis of some

common characteristics into urban markets and rural markets Although the urban markets

are mostly saturated with low growth rates in the pressure cooker segment the rural

market is experiencing a rapid double digit growth rate with the penetration into rural

households being

the hope for this segment TTK prestige forayed into the rural markets in FY 06 in

the modular kitchen segment in rural Karnataka and is drawing heavy footfalls in the

retail outlets The modular kitchen and the electrical appliances markets are experiencing

a high growth rate in the urban markets The non stick cookware segment is one in which

prestige has a strong position and although the urban market is saturated the rural market is

growing at

a high rate

15

Thus in the BCG matrix the products of TTK Prestige can be divided into stars question

marks cash cows and dogs according to the markets in which they are in ie according to the

urban and rural markets

URBAN MARKETS

STARS NONE

QUESTION MARKS Electrical appliances modular kitchens CASH COWS pressure cookers non-stick cookware

DOGS Gas stoves

RURAL MARKETS STARS Pressure cookers electrical appliances modular kitchens non stick cookware gas

stoves

QUESTION MARKS none CASH COWS none

DOGS none

16

BCG MATRIX FOR TTK PRESTIGE URBAN MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET STARS

Electrical

appliance

s

ppliances

sss

GROWTH

LOW C CASH

Modular

kitchens

QUESTION MARKS

Pressure

cookers

CASH COWS

Non

stick

cookwar

Gas stoves

DOGS

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

12

Non-stick

Cookware

3542

32

3574

2424

43

2467

Kitchen

Electric

Appliances

2163

2163

1136

--

1136

Gas Stoves 2254 2254 1766 -- 1766

Others 1375 87 1462 1336 52 1388

Total 21583 1600 23183 16379 2558 18937

13

In the export market the influx of cheaper supplies from China continues to put pressure on margins

as well as expansion of sales

Alternatives to combat these very problems are as follows

Option

1 Launch large-scale promotions to make consumers aware of advantages

of branded kitchenware appliances

2 Employ cost-cutting methods to further lower prices especially during recessionary

pressure

3 Investing more heavily in Research and Development so as to make more innovative

products to compete better

PORTFOLIO ANALYSIS FOR TTK PRESTIGE One of the most popular aids to developing corporate strategy in a multibusiness corporation

is the portfolio analysis Portfolio analysis is the wide set of tools to analyze elements of a

firms product mix to determine the optimum allocation of its resources Two most common

measures used in a portfolio analysis are market growth rate and relative market shareIn

portfolio analysis top management views its product lines and business units as a series of

investments from which it expects a profitable return The product linesbusiness units form a

portfolio of investments that top management must constantly juggle to ensure the best return

on the corporations invested money Two of the most popular approaches are the BCG

growth share matrix and the GE business screen The BCG MATRIX is a chart that had been created by Bruce Henderson for the Boston

Consulting Group in 1968 to help corporations with analyzing their business units or product

lines This helps the company allocate resources and is used as an analytical tool in brand

marketing product management strategic management and portfolio analysis Each of the

corporations product lines or business units is plotted on the matrix according to the 1gt

growth rate of the industry and 2gt its relative market share Placing products in the BCG

matrix results in 4 categories in a portfolio of a company

14

1 Stars (=high growth high market share) - use large amounts of cash and are leaders in the business so they should also generate large

amounts of cash

- frequently roughly in balance on net cash flow However if needed any attempt should be

made to hold share because the rewards will be a cash cow if market share is kept

2 Cash Cows (=low growth high market share) - profits and cash generation should be high and because of the low growth investments

needed should be low Keep profits high

- Foundation of a company 3 Dogs (=low growth low market share)

- avoid and minimize the number of dogs in a company

- beware of expensive bdquoturn around plans‟

- deliver cash otherwise liquidate

4 Question Marks (= high growth low market share)

- have the worst cash characteristics of all because high demands and low returns due to low

market share

- If nothing is done to change the market share question marks will simply absorb great

amounts of cash and later as the growth stops a dog

- Either invests heavily or sells off or invest nothing and generate whatever cash it can

Increase market share or deliver cash

MARKETS The markets of prestige products can be mainly divided on the basis of some

common characteristics into urban markets and rural markets Although the urban markets

are mostly saturated with low growth rates in the pressure cooker segment the rural

market is experiencing a rapid double digit growth rate with the penetration into rural

households being

the hope for this segment TTK prestige forayed into the rural markets in FY 06 in

the modular kitchen segment in rural Karnataka and is drawing heavy footfalls in the

retail outlets The modular kitchen and the electrical appliances markets are experiencing

a high growth rate in the urban markets The non stick cookware segment is one in which

prestige has a strong position and although the urban market is saturated the rural market is

growing at

a high rate

15

Thus in the BCG matrix the products of TTK Prestige can be divided into stars question

marks cash cows and dogs according to the markets in which they are in ie according to the

urban and rural markets

URBAN MARKETS

STARS NONE

QUESTION MARKS Electrical appliances modular kitchens CASH COWS pressure cookers non-stick cookware

DOGS Gas stoves

RURAL MARKETS STARS Pressure cookers electrical appliances modular kitchens non stick cookware gas

stoves

QUESTION MARKS none CASH COWS none

DOGS none

16

BCG MATRIX FOR TTK PRESTIGE URBAN MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET STARS

Electrical

appliance

s

ppliances

sss

GROWTH

LOW C CASH

Modular

kitchens

QUESTION MARKS

Pressure

cookers

CASH COWS

Non

stick

cookwar

Gas stoves

DOGS

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

13

In the export market the influx of cheaper supplies from China continues to put pressure on margins

as well as expansion of sales

Alternatives to combat these very problems are as follows

Option

1 Launch large-scale promotions to make consumers aware of advantages

of branded kitchenware appliances

2 Employ cost-cutting methods to further lower prices especially during recessionary

pressure

3 Investing more heavily in Research and Development so as to make more innovative

products to compete better

PORTFOLIO ANALYSIS FOR TTK PRESTIGE One of the most popular aids to developing corporate strategy in a multibusiness corporation

is the portfolio analysis Portfolio analysis is the wide set of tools to analyze elements of a

firms product mix to determine the optimum allocation of its resources Two most common

measures used in a portfolio analysis are market growth rate and relative market shareIn

portfolio analysis top management views its product lines and business units as a series of

investments from which it expects a profitable return The product linesbusiness units form a

portfolio of investments that top management must constantly juggle to ensure the best return

on the corporations invested money Two of the most popular approaches are the BCG

growth share matrix and the GE business screen The BCG MATRIX is a chart that had been created by Bruce Henderson for the Boston

Consulting Group in 1968 to help corporations with analyzing their business units or product

lines This helps the company allocate resources and is used as an analytical tool in brand

marketing product management strategic management and portfolio analysis Each of the

corporations product lines or business units is plotted on the matrix according to the 1gt

growth rate of the industry and 2gt its relative market share Placing products in the BCG

matrix results in 4 categories in a portfolio of a company

14

1 Stars (=high growth high market share) - use large amounts of cash and are leaders in the business so they should also generate large

amounts of cash

- frequently roughly in balance on net cash flow However if needed any attempt should be

made to hold share because the rewards will be a cash cow if market share is kept

2 Cash Cows (=low growth high market share) - profits and cash generation should be high and because of the low growth investments

needed should be low Keep profits high

- Foundation of a company 3 Dogs (=low growth low market share)

- avoid and minimize the number of dogs in a company

- beware of expensive bdquoturn around plans‟

- deliver cash otherwise liquidate

4 Question Marks (= high growth low market share)

- have the worst cash characteristics of all because high demands and low returns due to low

market share

- If nothing is done to change the market share question marks will simply absorb great

amounts of cash and later as the growth stops a dog

- Either invests heavily or sells off or invest nothing and generate whatever cash it can

Increase market share or deliver cash

MARKETS The markets of prestige products can be mainly divided on the basis of some

common characteristics into urban markets and rural markets Although the urban markets

are mostly saturated with low growth rates in the pressure cooker segment the rural

market is experiencing a rapid double digit growth rate with the penetration into rural

households being

the hope for this segment TTK prestige forayed into the rural markets in FY 06 in

the modular kitchen segment in rural Karnataka and is drawing heavy footfalls in the

retail outlets The modular kitchen and the electrical appliances markets are experiencing

a high growth rate in the urban markets The non stick cookware segment is one in which

prestige has a strong position and although the urban market is saturated the rural market is

growing at

a high rate

15

Thus in the BCG matrix the products of TTK Prestige can be divided into stars question

marks cash cows and dogs according to the markets in which they are in ie according to the

urban and rural markets

URBAN MARKETS

STARS NONE

QUESTION MARKS Electrical appliances modular kitchens CASH COWS pressure cookers non-stick cookware

DOGS Gas stoves

RURAL MARKETS STARS Pressure cookers electrical appliances modular kitchens non stick cookware gas

stoves

QUESTION MARKS none CASH COWS none

DOGS none

16

BCG MATRIX FOR TTK PRESTIGE URBAN MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET STARS

Electrical

appliance

s

ppliances

sss

GROWTH

LOW C CASH

Modular

kitchens

QUESTION MARKS

Pressure

cookers

CASH COWS

Non

stick

cookwar

Gas stoves

DOGS

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

14

1 Stars (=high growth high market share) - use large amounts of cash and are leaders in the business so they should also generate large

amounts of cash

- frequently roughly in balance on net cash flow However if needed any attempt should be

made to hold share because the rewards will be a cash cow if market share is kept

2 Cash Cows (=low growth high market share) - profits and cash generation should be high and because of the low growth investments

needed should be low Keep profits high

- Foundation of a company 3 Dogs (=low growth low market share)

- avoid and minimize the number of dogs in a company

- beware of expensive bdquoturn around plans‟

- deliver cash otherwise liquidate

4 Question Marks (= high growth low market share)

- have the worst cash characteristics of all because high demands and low returns due to low

market share

- If nothing is done to change the market share question marks will simply absorb great

amounts of cash and later as the growth stops a dog

- Either invests heavily or sells off or invest nothing and generate whatever cash it can

Increase market share or deliver cash

MARKETS The markets of prestige products can be mainly divided on the basis of some

common characteristics into urban markets and rural markets Although the urban markets

are mostly saturated with low growth rates in the pressure cooker segment the rural

market is experiencing a rapid double digit growth rate with the penetration into rural

households being

the hope for this segment TTK prestige forayed into the rural markets in FY 06 in

the modular kitchen segment in rural Karnataka and is drawing heavy footfalls in the

retail outlets The modular kitchen and the electrical appliances markets are experiencing

a high growth rate in the urban markets The non stick cookware segment is one in which

prestige has a strong position and although the urban market is saturated the rural market is

growing at

a high rate

15

Thus in the BCG matrix the products of TTK Prestige can be divided into stars question

marks cash cows and dogs according to the markets in which they are in ie according to the

urban and rural markets

URBAN MARKETS

STARS NONE

QUESTION MARKS Electrical appliances modular kitchens CASH COWS pressure cookers non-stick cookware

DOGS Gas stoves

RURAL MARKETS STARS Pressure cookers electrical appliances modular kitchens non stick cookware gas

stoves

QUESTION MARKS none CASH COWS none

DOGS none

16

BCG MATRIX FOR TTK PRESTIGE URBAN MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET STARS

Electrical

appliance

s

ppliances

sss

GROWTH

LOW C CASH

Modular

kitchens

QUESTION MARKS

Pressure

cookers

CASH COWS

Non

stick

cookwar

Gas stoves

DOGS

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

15

Thus in the BCG matrix the products of TTK Prestige can be divided into stars question

marks cash cows and dogs according to the markets in which they are in ie according to the

urban and rural markets

URBAN MARKETS

STARS NONE

QUESTION MARKS Electrical appliances modular kitchens CASH COWS pressure cookers non-stick cookware

DOGS Gas stoves

RURAL MARKETS STARS Pressure cookers electrical appliances modular kitchens non stick cookware gas

stoves

QUESTION MARKS none CASH COWS none

DOGS none

16

BCG MATRIX FOR TTK PRESTIGE URBAN MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET STARS

Electrical

appliance

s

ppliances

sss

GROWTH

LOW C CASH

Modular

kitchens

QUESTION MARKS

Pressure

cookers

CASH COWS

Non

stick

cookwar

Gas stoves

DOGS

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

16

BCG MATRIX FOR TTK PRESTIGE URBAN MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET STARS

Electrical

appliance

s

ppliances

sss

GROWTH

LOW C CASH

Modular

kitchens

QUESTION MARKS

Pressure

cookers

CASH COWS

Non

stick

cookwar

Gas stoves

DOGS

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

BCG MATRIX FOR TTK PRESTIGE RURAL MARKETS

HIGH

RELATIVE

MARKET SHARE

LOW

HIGH

MARKET

GROWTH

Pressure

cookers

Modular

kitchen

QUESTION MARKS

Non

stick

cookwa

Gas

stoves

STARS

LOW CASH COWS

DOGS

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

GE MATRIX FOR TTK PRESTIGE

In consulting engagements with General Electric in the 1970s McKinsey amp

Company developed a nine-cell portfolio matrix as a tool for screening GEs large

portfolio of strategic business units (SBU) This business screen became known as the

GEMcKinsey Matrix

The GE McKinsey matrix is similar to the BCG growth-share matrix in that it maps

strategic business units on a grid of the industry and the SBUs position in the

industry The GE matrix however attempts to improve upon the BCG matrix in the

following two ways

The GE matrix generalizes the axes as Industry Attractiveness and

Business Unit Strength whereas the BCG matrix uses the market growth rate

as a proxy for industry attractiveness and relative market share as a proxy for

the strength of the business unit

The GE matrix has nine cells vs four cells in the BCG matrix

Industry attractiveness and business unit strength are calculated by first identifying

criteria for each determining the value of each parameter in the criteria and

multiplying that value by a weighting factor The result is a quantitative measure

of industry attractiveness and the business units relative performance in that

industry

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

19

COMPETETIVE STRENGTH

MARKET ATTRACTIVENESS

HIGH MEDIUM LOW

HIGH PRESSURE COOKERS

NON STICK COOKWARE

MEDIUM MODULAR KITCHENS

ELECTRICAL APPLIANCES

GAS STOVES

LOW

Criteria for market attractiveness

Size of market

Market rate of growth

Nature of competition and its diversity

Profit levels

Ability to differentiate

Impact of technology the law and energy effeciency

Criteria for competitive strength

Market share

Management profile

R amp D

Quality of products and services

Branding and promotions success

Place (or distribution)

Brand loyalty

Efficiency

Cost reduction

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

20

ADLITTLE MATRIX FOR TTK PRESTIGE

The Arthur D Little (ADL) Strategic Condition Matrix offers a different perspective on

strategy formulation ADL has two main dimensions - competitive position and industry

maturity

Competitive position is driven by the sectors or segments in which a Strategic Business Unit

(SBU) operates The product or service which it markets and the accesses it has to a range of

geographically dispersed markets that are what makes up an organizations competitive

position ie product and place

Industry maturity is very similar to the Product Life Cycle (PLC) and could almost be

renamed an industry life cycle Of course not only industries could be considered here but

also segments

It is a combination of the two aforementioned dimensions that helps us to use ADL for

marketing decision-making Now lets consider options in more detail Competitive position

has five main categories

Dominant - This is a particularly extraordinary position Often this is associate with some

form of monopoly position or customer lock

Strong - Here companies have a lot of freedom since position in an industry is

comparatively powerful

Favourable - Companies with a favourable position tend to have competitive

strengths in segments of a fragmented market place No single global player controls all

segments Here product strengths and geographical advantages come into play Tenable - Here companies may face erosion by stronger competitors that have a

favourable strong or competitive position It is difficult for them to compete since

they do not have a sustainable competitive advantage

Weak - As the term suggests companies in this undesirable space are in an

unenviable position Of course there are opportunities to change and improve and

therefore to take an organization to a more favourable strong or even dominant

position

From here the strategic position of an organisation can be established Managers then need to

decide upon the best strategic direction for the business For example they might use a Gap

Analysis According to ADL there are six generic categories of strategy that could be

employed by individual SBUs Market strategies

Product strategies

Management and systems strategies

Technology strategies

Retrenchment strategies

Operations strategies

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

21

STAGES OF INDUSTRY GROWTH

COMPANYrsquoS

COMPETITIV

E POSITION

EMBRYONIC GROWTH MATURITY AGEING

DOMINANT PRESSURE

COOKER

STRONG NON STICK

COOKWARE

FAVOURABL

E ELECTRICAL

APPLIANCES

GAS

STOVES KITCHEN

ACCESORIES

TENABLE MODULAR

KITCHEN

WEAK

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

22

Porterrsquos 5forcesmodel-

Porter referred to these forces as the micro environment to contrast it with the more general

term macro environment They consist of those forces close to a company that affect its

ability to serve its customers and make a profit A change in any of the forces normally

requires a business unit to re-assess the marketplace given the overall change in industry

information The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability Firms are able to apply their core competencies business

model or network to achieve a profit above the industry average A clear example of this is

the airline industry As an industry profitability is low and yet individual companies by

applying unique business models have been able to make a return in excess of the industry

average

Porters five forces include three forces from horizontal competition threat of substitute

products the threat of established rivals and the threat of new entrants and two forces from

vertical competition the bargaining power of suppliers and the bargaining power of

customers

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

23

The threat of substitute products or services

The existence of products outside of the realm of the common product boundaries increases

the propensity of customers to switch to alternatives

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution Information-based products are more prone to substitution as

online product can easily replace material product

Substandard product

Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in many new entrants which

eventually will decrease profitability Unless the entry of new firms can be blocked by incumbents

the profit rate will fall towards a competitive level (perfect competition)

The existence of barriers to entry (patents rights etc)The most attractive segment is one

which entry barriers are high and exit barriers are low Few new firms can enter and non-

performing firms can exit easily

Economies of product differences

Brand equity

Switching costs or sunk costs

Capital requirements

Access to distribution

Customer loyalty to established brands

Absolute cost advantages

Learning curve advantages

Expected retaliation by incumbents

Government policies

Industry profitability the more profitable the industry the more attractive it will be to new

competitors

Internet era today competitors need only a website to enter a market

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

24

The intensity of competitive rivalry For most industries the intensity of competitive rivalry is the major determinant of the

competitiveness of the industry

Sustainable competitive advantage through innovation

Competition between online and offline companies click-and-mortar -v- brick-and-

mortar

Level of advertising expense

Powerful competitive strategy used by a company which can intensify competitive

pressures on their rivals

How will competition react to certain behavior by another firm Competitive rivalry is likely

to be based on dimensions such as price quality and innovation Technological advances

protect companies from competition This applies to products and services Companies that

are successful with introducing new technology are able to charge higher prices and achieve

higher profits until competitors imitate them Examples of recent technology advantage in

have been mp3 players and mobile telephones Vertical integration is a strategy to reduce a

business own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs the ability of

customers to put the firm under pressure which also affects the customers sensitivity to price

changes

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

RFM Analysis

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

25

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs Suppliers of raw

materials components labor and services (such as expertise) to the firm can be a source of

power over the firm when there are few substitutes Suppliers may refuse to work with the

firm or eg charge excessively high prices for unique resources

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Supplier concentration to firm concentration ratio

Employee solidarity (eg labour unions)

Supplier competition - ability to forward vertically integrate and cut out the buyer

New entrants

Prestige cooker is a brand of the company TTK which is known for its food kitchen utensils

The threat of new competitors is one of the forces of Porter‟s model which in this case is less

because of the cost advantage they provide to their customers on various sizes available in the

market It has established superior production operations and processes due to experience

patents and exercise huge control on particular inputs required for production such as labor

materials equipment or management skills On the other hand new entrants would have to

undertake huge capital investment to build out their networks and match the scale advantage

of established companies This is especially true as Prestige Cooker is already in fierce

competition with other more established brands like Hawkins kanchan Jaipan Increasing

urbanization and fast-changing demographics have led to a growing demand for additional

homes which in turn have increased demand for kitchen appliances TTK Prestige has

evolved from a pressure cooker company to a total kitchen solution provider It has

refurbished its product portfolio by introducing gas stoves mixer-grinders domestic kitchen

appliances non-stick cookware chimneys hobs and modular kitchen solutions

Competitive Rivalry

The competitive struggle is fought through price advertising and promotion spending and

direct selling efforts Prestige Cooker is affecting its rivals by its price and the technology of

being balanced cookers all through the world containing aesthetic styles and better

technology efficient TTK controls more than 60 of the pressure cooker market thus actions

of other companies affect the market share of it but the growing need for cookers tend to

moderate competition by providing scope for growth to the company Thus fierce competition

does exist but at the moment Prestige with its variety of ranges seems to have advantage of

price distribution perceived quality and thus market share TTK Prestige pioneered the

concept of pressure-cooking in India It has introduced many new concepts in pressure

cookers like new shapes non-stick pressure cookers and pressure indicator which have now

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

26

become standards for other manufacturers which makes difficult for other competitors for

rivalry

Bargaining power of buyers

When the buyers purchase in large quantities then buyer can use their purchasing power as

leverage to bargain for price reductions The switching costs are low so buyers can play off

the supplying companies against each other to force down prices As mentioned earlier the

retail chains are exercising sufficient power over major brands of cookers Prestige at present

has many outlets the company has entered the fast growing retail space with its exclusive

bdquoSmart Kitchen‟ outlets which has helped in boosting brand image and demand TTK

Prestige is aggressively expanding the number of exclusive outlets which is expected to go

up from 164 in 92 towns to over 200 outlets by the end FY07 The change in the family

structure in India is clearly reflected in the reducing number of persons per household which

has fallen from 57 persons in 1971 to 53 in 2001 Going forward we expect the trend

towards nuclear families to intensify with the average number of people in a household set to

fall to 51 by 2011India is also fast moving from an agriculture-based to a services-driven

economy

Bargaining power of suppliers

Suppliers are weak as the company has the opportunity to force down input prices and higher

quality inputs TTK Prestige is having a huge turnover nearly half of which comes from its

pressure cooker so it could threaten to enter the suppliers industry and make the inputs as a

tactic to lower down the prices of the input

Also it must be remembered that TTK not only has its manufacturing plants but also the

capability of importing with research and development units as for the urban woman

whether she is a working woman or a housewife the pressure cooker has become

indispensable The trend of pressure cooker has grown so widely that people from rural are

also using the pressure cookers as even the government is stressing upon these people to use

pressure cookers so that usage of liquid petroleum gas can be lessened Its varied variety and

its design which are very common and known to many people makes usability very easy

which tends the people to purchase also for its long time sustainable in the market makes

them the first priority to purchase

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

27

Threat of substitutes TTK Prestige cooker provides cookers with different sizes like pressure cooker pressure

kadai pressure handi etc therefore the threat of having substitute is reduced as customer can

buy according to his own preference within the same brand Also for the price conscious

customer who might migrate to cheaper TTK prestige cooker has low range or the low cost

brand variant Some brand concern persons who think that prestige cooker pressure is a low

class cooker might shift to other brands like Hawkins kanchan or Jaipan as these come with

some very good western aesthetic designs The threat is minimal as Prestige has some

flamboyant designs where all the utensils and other cookware are matched with to increase

the uniqueness

PESTLE [Political Economic Social Technological Legal and

Environmental Profile]

PESTLE analysis factors are Political Economic Sociological Technological Legal and

Environmental The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organization In this way they can prepare strategically for any

changes that need to be made in the organization or simply to have the awareness of the

external market to give them a competitive edge over other firms in the industry Examples

of each PESTLE analysis factor are

Political what is happening politically with regards to tax policies employment laws

trade restrictions tariffs

Economic what is happening within the economy ie economic growth decline

minimum wage unemployment (local and national) credit availability cost of living

etc

Sociological what are occurring socially ie cultural norms and expectations health

consciousness population growth rate career attitudes

Technological new technologies are continually being developed There are also

changes to barriers to entry in given markets

Legal changes to legislation This may impact employment access to materials

resources imports exports taxation etc

Environmental what is happening with respect to ecological and environmental

aspects

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

28

EXTERNAL

FACTORS

EXTERNAL FACTORS AFFECTING ORGANISATION

POLITICAL GOVERMENTS TAX POLICYAND OTHER SUBSIDARIES FOR USAGE OF

PRESSURE COOKERS

ECONOMIC INFLATION RECESSION DOWNTURN COST OF INPUTS

SOCIAL URBAN INDIA TRENDS TO EAT OUTSIDE

TECHNOLOGICAL ISO CERTFIED AND WITH US HELP TECHKNOWLEDGE KNOW HOW CAN

BE TRANSFERED

LEGAL MANTRAA- VARIANT OF COOKER WHICH IS EXPORTED TO US AND

LESS LAYOFF AT THE TIME OF RECESSION

ENVIRONMENTAL STRINGENT SPECEFICATIONS FOR MAINTENANCE OF PRODUCT

QUALITY AND OTHER METALLURGICAL MEASURES

Competitive Advantage Profile [CAP] of TTK Prestige Pressure

Cooker brand in India

TTK Prestige pioneered the concept of pressure-cooking in India It has introduced

many new concepts in pressure cookers like new shapes non-stick pressure cookers

and pressure indicator which have now become standards for other manufacturers

Over the years it has launched many unique and innovative products

TTK which was only into cookware now has around 33 of its revenues coming from

kitchen appliances

Company recognizes the immense value of its traditional dealer network Owing to a

dynamic trade policy which affords satisfactory return on investment to the dealer the

contribution through traditional dealer network is also growing

Penetration of pressure cookers in the domestic urban market is very high and the

future growths have to come from rural households There are rural households who

have disposable incomes but the impulse to buy pressure cookers or other kitchenware

has not been generated due to inadequate distribution reach

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

29

The company is also into the modular kitchen segment which is the single largest

brand

The company‟s current installed capacity in pressure cookers is 40 lakh units But as it

is running only at 50 per cent of its capacity there is room for scaling up production

with demand expected to rise in the coming years The company will enjoy higher

revenues as the market grows in size with no additional capexinterest

Company is continuously improving the internal control system in all the areas of

operation including the effective monitoring of Prestige Smart Kitchens established

across the length and breadth of the country Company‟s proposed new ERP

implementation will further improve the internal controls

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

30

SWOT analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths Weaknesses

Opportunities and Threats involved in a project or in a business venture It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieving that objective A SWOT analysis must first start with defining a desired end state or objective A SWOT

analysis may be incorporated into the strategic planning model

Strengths attributes of the person or company that is helpful to

achieving the objective

Weaknesses attributes of the person or company that is harmful to

achieving the objective

Opportunities external conditions that is helpful to achieving the

objective

Threats external conditions which could do damage to the objective

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs

First the decision makers have to determine whether the objective is attainable given the

SWOTs If the objective is NOT attainable a different objective must be selected and the

process repeated

Matching and converting

Another way of utilizing SWOT is matching and converting Matching is used to find

competitive advantages by matching the strengths to opportunities Converting is to apply

conversion strategies to convert weaknesses or threats into strengths or opportunities An

example of conversion strategy is to find new markets If the threats or weaknesses cannot be

converted a company should try to minimize or avoid them

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective These come from within the companys unique value

chain SWOT analysis groups key pieces of information into two main categories

Internal factors ndash The strengths and weaknesses internal to the

organization

External factors ndash The opportunities and threats presented by the

external environment to the organization

The internal factors may be viewed as strengths or weaknesses depending upon their impact

on the organizations objectives What may represent strengths with respect to one objective

31

may be weaknesses for another objective The factors may include all of the 4Ps as well as

personnel finance manufacturing capabilities and so on The external factors may include

macroeconomic matters technological change legislation and socio-cultural changes as

well

as changes in the marketplace or competitive position The results are often presented in the

form of a matrix

SWOT analysis is just one method of categorization and has its own weaknesses For

example it may tend to persuade companies to compile lists rather than think about what is

actually important in achieving objectives It also presents the resulting lists uncritically and

without clear prioritization so that for example weak opportunities may appear to balance

strong threats

SWOT ANALYSISOF PRESTIGE

S (Strength)

1 The product is treated as a matter of prestige which gave good brand image

2 Pioneers in this industry

3 Prestige has the largest range of pressure cookers in the country

4 with years of trust reliability and safety as our hallmarks

5 Price of these cookers ranges in all income group people

6 Customers review

32

W (weakness)

1 Unable to reach huge sales volume

2 Lacking in high diversified segmentation

3 Hawkins provide neck to neck competition in terms of market share 4 No innovative marketing strategy been adopted so as grab the market

O (Opportunities)

1 Currently the season which is going begin is marriage season so new families form they

can target those customers in bulk pack

2 They are declining the direct promotion to attain good market

3 Capture the range of market namely low-medium users

4 They have mudra communications as their marketing agent which is a good opportunity to

explore

5 Safety techniques like Gasket Release Systemrdquo and the ldquoGasket Offset Devicerdquo add points

in safe use for beginners

T (Threats)

1 Competitors future cookers are being planned to manufacture with Anodized aluminum

2 Wide range of availability of competitors products

3 The expected moving of high income group towards the black berry of Hawkins is nearly

threat

4 Launching of anodized cookers in front challenge before all pressure cookware

5 Unbranded cookers in market are swallowing 50 percent of market share

33

VALUE CHAIN ANALYSIS

The value chain is a systematic approach to examining the development of competitive

advantage It was created by M E Porter in his book Competitive Advantage (1980) The

chain consists of a series of activities that create and build value They culminate in the total

value delivered by an organization

Primary Activities

Inbound Logistics Here goods are received from a companys suppliers They are stored until they are needed on

the productionassembly line Goods are moved around the organisation

Operations This is where goods are manufactured or assembled Individual operations could include

room service in an hotel packing of booksvideosgames by an online retailer or the final

tune for a new cars engine

Outbound Logistics The goods are now finished and they need to be sent along the supply chain to wholesalers

retailers or the final consumer

34

Marketing and sales

In true customer orientated fashion at this stage the organization prepares the offering to

meet the needs of targeted customers This area focuses strongly upon marketing

communications and the promotions mix

Service This includes all areas of service such as installation after-sales service complaints handling

training and so on

INBOUND LOGISICS

MARKETING AND SALES The dealers and distributors played a very important role in success of prestige The dealers

and distributors are dealing with the prestige products alone

Prestige strongly believes in trade partners and is committed to strengthen them and prepare

them for the challenges ahead With the current trend of organized retail growing prestige

believes as the leader in the segment They educate and instigate change in the trade partners

and help them get to next level

Prestige smart kitchens have been one of the most innovative marketing moves by prestige

PSK was conceptualized to do three things To improve the visibility in terms of display the

entire range of products to improve the distribution of our new products and to offer the

customer right ambience to shop and educate and communicate the right things about

prestige

35

After three years of successful operation and over 100 stores PSK today offers that edge

over the competition which cannot be replicated Besides the three benefits that PSK

offered contributes 12 of the revenue It has prepared to take the challenges of organized

retail

PSK has instigated the nearby traders to keep the entire range of products The same traders

were not ready to stock and sell the entire range This has actually resulted in prestige

increasing its market share for its entire range in that area dramatically

They have plans to expand the stores across the country The concentration would be on the

tier 11 cities in south India and tier 1 in non south markets By the end of this fiscal they shall

be 400 in numbers with 80000sqft of retail space

Outbound Logistics The goods are now finished and they need to be sent along the supply chain to wholesalers

retailers or the final consumer

36

SERVICE

The Pressure Cooker Centre has been supplying and servicing pressure cookers since 1968

when we started in a little shop in West Perth Western Australia With a devotion to a

quality service to our customers our business has expanded to the point of supplying pressure

cookers now on a daily basis to all corners of Australia New Zealand various countries

throughout SE Asia (including Thailand Philippines Malaysia Indonesia) and beyond and

spare parts to all corners of the world The little store now in Subiaco WA still provides

the personal friendly service that helped us grow to a truly National dimension

We specialize in Pressure Cookers and their Spare Parts and have sourced quality products

from around the world (several brands are exclusive to the Pressure Cooker Centre) so that

we can offer you a complete choice of quality pressure cookers for all budgets

We also carry a select range of quality kitchenware and kitchen accessories so that we can

offer you world renowned top-of-the-range cookware and kitchenware You will find a large

range of SILAMPOS saucepans stockpots frypans steamer sets and double boilers This

top-of-the range cookware with Thermoplan base (guaranteed for 25 years) is made of the

finest 1810 stainless steel and is imported directly from Portugal The Silampos cookware

range is of excellent quality design and finish and is offered to our customers at the lowest

retail prices We also offer exclusive to Pressure Cooker Centre the top quality SILIT

cookware from Germany with its unique SILARGAN ceramic non-stick and scratch-proof

coating and ZWILLING HENCKELS knives also from Germany and much more Goto

Kitchenware

37

STRATEGIC ALTERNATIVES SOLUTIONS

The main issues for Prestige pressure cookers are regarding the threat from other kitchen

ware products ensuring growth in kitchenware market differentiating its products further so

as to fend off competition

Alternatives to combat these very problems are as follows

Option 1 Launch large-scale promotions to make consumers aware of advantages of

variant pressure cookers released by prestige

2 Employ cost-cutting methods to further lower prices while discontinuing

unsustainable products

3 Investing more heavily in Research and Development so as to make more

innovative products to compete better

4 With the improved research and development EXPORTING to USA according to

their standards may prove to be advantageous

Recommended Strategy

In spite of all the aforementioned strategies would help Prestige compete grow and sell

better the best option for now would be to employ cost-cutting methods to decrease prices

further This would not only ward off the significant competition from other players like

Hawkins Jaipan and Kanchan but would also help in wooing the 80 of the consumers of

India who rely on pressure cookers It is our understanding that the vast rural sectors

subscribe most to the cookers as they are seen to be cheaper and efficient than normal

cooking methodology By employing cost-cutting methods this price difference and the

associated perception can be bridged to increase Prestige market share It is also imperative

for the brand to discontinue the products in its portfolio that are not doing well Pouring

money into promotion of products that aren‟t selling in the market is unwise Increase in sales

and market share while further cutting down costs is also likely to increase TTK Prestige

Pressure cooker profit margins which at the moment is a luxury that none of the competing

others players enjoy Similarly with more revenue the rest of the strategies and alternatives

can be easily implemented post evaluation to find the best practices to make TTK Prestige

growth in India both sustainable and profitable

38

Conclusion

By studying products of TTK Prestige India specifically its cooker brand we have been able

to analyze the brand the value it has created the products the variants the problems faced

specifically by the brand and those faced by the industry as a whole in recent times We have

been able to evaluate to an extent the strategies that are conspicuous to us while noting

whether implementing these strategies have helped Prestige or not In light of our study we

have been able to formulate certain solutions to the issues identified by us while

recommending the most suitable on for a variety of reasons All in all it is certain that

Prestige brand of pressure cookers backed by the parent company TTK Ltd is here to stay

and its market share is only bound to soar with the definite shift towards packaged cookers by

the rural and urban population given to the growing density

39

REFRENCES

TTK_Prestige-Techno_Research_Report Pdf TTK Prestige reportpdf

wwwprestige cookwareState-of-art-Microwave-ovens-

launched-by-TTK-Prestigehtml wwwa-review-of-the-royal-prestige-hy-cite-corp-income-

opportunity-579302com wwwannual-report-ttk-prestige-2008-2009html

httpwwwprestigesmartkitchencom

httpwwwmouthshutcomproduct-

reviewsPrestige_Pressure_Cooker-925003557html httpcorporategiftseasy2sourcecomttkprestigeproductpr

ofile2htm httpwwwthehindubusinesslinecomiw20091019stories2

009101950210400htm httppressure-cookersblogspotcom200905prestige-

pressure-cooker-cheap-solutionhtml wwwhawkinscookerscomdownloadspc_catalogpdf

httpwwwreviewstreamcomreviewsp=25542

httpwwwamericanchroniclecomarticlesview105565

httpwwwreviewcentrecomproducts2171html

33

VALUE CHAIN ANALYSIS

The value chain is a systematic approach to examining the development of competitive

advantage It was created by M E Porter in his book Competitive Advantage (1980) The

chain consists of a series of activities that create and build value They culminate in the total

value delivered by an organization

Primary Activities

Inbound Logistics Here goods are received from a companys suppliers They are stored until they are needed on

the productionassembly line Goods are moved around the organisation

Operations This is where goods are manufactured or assembled Individual operations could include

room service in an hotel packing of booksvideosgames by an online retailer or the final

tune for a new cars engine

Outbound Logistics The goods are now finished and they need to be sent along the supply chain to wholesalers

retailers or the final consumer

34

Marketing and sales

In true customer orientated fashion at this stage the organization prepares the offering to

meet the needs of targeted customers This area focuses strongly upon marketing

communications and the promotions mix

Service This includes all areas of service such as installation after-sales service complaints handling

training and so on

INBOUND LOGISICS

MARKETING AND SALES The dealers and distributors played a very important role in success of prestige The dealers

and distributors are dealing with the prestige products alone

Prestige strongly believes in trade partners and is committed to strengthen them and prepare

them for the challenges ahead With the current trend of organized retail growing prestige

believes as the leader in the segment They educate and instigate change in the trade partners

and help them get to next level

Prestige smart kitchens have been one of the most innovative marketing moves by prestige

PSK was conceptualized to do three things To improve the visibility in terms of display the

entire range of products to improve the distribution of our new products and to offer the

customer right ambience to shop and educate and communicate the right things about

prestige

35

After three years of successful operation and over 100 stores PSK today offers that edge

over the competition which cannot be replicated Besides the three benefits that PSK

offered contributes 12 of the revenue It has prepared to take the challenges of organized

retail

PSK has instigated the nearby traders to keep the entire range of products The same traders

were not ready to stock and sell the entire range This has actually resulted in prestige

increasing its market share for its entire range in that area dramatically

They have plans to expand the stores across the country The concentration would be on the

tier 11 cities in south India and tier 1 in non south markets By the end of this fiscal they shall

be 400 in numbers with 80000sqft of retail space

Outbound Logistics The goods are now finished and they need to be sent along the supply chain to wholesalers

retailers or the final consumer

36

SERVICE

The Pressure Cooker Centre has been supplying and servicing pressure cookers since 1968

when we started in a little shop in West Perth Western Australia With a devotion to a

quality service to our customers our business has expanded to the point of supplying pressure

cookers now on a daily basis to all corners of Australia New Zealand various countries

throughout SE Asia (including Thailand Philippines Malaysia Indonesia) and beyond and

spare parts to all corners of the world The little store now in Subiaco WA still provides

the personal friendly service that helped us grow to a truly National dimension

We specialize in Pressure Cookers and their Spare Parts and have sourced quality products

from around the world (several brands are exclusive to the Pressure Cooker Centre) so that

we can offer you a complete choice of quality pressure cookers for all budgets

We also carry a select range of quality kitchenware and kitchen accessories so that we can

offer you world renowned top-of-the-range cookware and kitchenware You will find a large

range of SILAMPOS saucepans stockpots frypans steamer sets and double boilers This

top-of-the range cookware with Thermoplan base (guaranteed for 25 years) is made of the

finest 1810 stainless steel and is imported directly from Portugal The Silampos cookware

range is of excellent quality design and finish and is offered to our customers at the lowest

retail prices We also offer exclusive to Pressure Cooker Centre the top quality SILIT

cookware from Germany with its unique SILARGAN ceramic non-stick and scratch-proof

coating and ZWILLING HENCKELS knives also from Germany and much more Goto

Kitchenware

37

STRATEGIC ALTERNATIVES SOLUTIONS

The main issues for Prestige pressure cookers are regarding the threat from other kitchen

ware products ensuring growth in kitchenware market differentiating its products further so

as to fend off competition

Alternatives to combat these very problems are as follows

Option 1 Launch large-scale promotions to make consumers aware of advantages of

variant pressure cookers released by prestige

2 Employ cost-cutting methods to further lower prices while discontinuing

unsustainable products

3 Investing more heavily in Research and Development so as to make more

innovative products to compete better

4 With the improved research and development EXPORTING to USA according to

their standards may prove to be advantageous

Recommended Strategy

In spite of all the aforementioned strategies would help Prestige compete grow and sell

better the best option for now would be to employ cost-cutting methods to decrease prices

further This would not only ward off the significant competition from other players like

Hawkins Jaipan and Kanchan but would also help in wooing the 80 of the consumers of

India who rely on pressure cookers It is our understanding that the vast rural sectors

subscribe most to the cookers as they are seen to be cheaper and efficient than normal

cooking methodology By employing cost-cutting methods this price difference and the

associated perception can be bridged to increase Prestige market share It is also imperative

for the brand to discontinue the products in its portfolio that are not doing well Pouring

money into promotion of products that aren‟t selling in the market is unwise Increase in sales

and market share while further cutting down costs is also likely to increase TTK Prestige

Pressure cooker profit margins which at the moment is a luxury that none of the competing

others players enjoy Similarly with more revenue the rest of the strategies and alternatives

can be easily implemented post evaluation to find the best practices to make TTK Prestige

growth in India both sustainable and profitable

38

Conclusion

By studying products of TTK Prestige India specifically its cooker brand we have been able

to analyze the brand the value it has created the products the variants the problems faced

specifically by the brand and those faced by the industry as a whole in recent times We have

been able to evaluate to an extent the strategies that are conspicuous to us while noting

whether implementing these strategies have helped Prestige or not In light of our study we

have been able to formulate certain solutions to the issues identified by us while

recommending the most suitable on for a variety of reasons All in all it is certain that

Prestige brand of pressure cookers backed by the parent company TTK Ltd is here to stay

and its market share is only bound to soar with the definite shift towards packaged cookers by

the rural and urban population given to the growing density

39

REFRENCES

TTK_Prestige-Techno_Research_Report Pdf TTK Prestige reportpdf

wwwprestige cookwareState-of-art-Microwave-ovens-

launched-by-TTK-Prestigehtml wwwa-review-of-the-royal-prestige-hy-cite-corp-income-

opportunity-579302com wwwannual-report-ttk-prestige-2008-2009html

httpwwwprestigesmartkitchencom

httpwwwmouthshutcomproduct-

reviewsPrestige_Pressure_Cooker-925003557html httpcorporategiftseasy2sourcecomttkprestigeproductpr

ofile2htm httpwwwthehindubusinesslinecomiw20091019stories2

009101950210400htm httppressure-cookersblogspotcom200905prestige-

pressure-cooker-cheap-solutionhtml wwwhawkinscookerscomdownloadspc_catalogpdf

httpwwwreviewstreamcomreviewsp=25542

httpwwwamericanchroniclecomarticlesview105565

httpwwwreviewcentrecomproducts2171html

34

Marketing and sales

In true customer orientated fashion at this stage the organization prepares the offering to

meet the needs of targeted customers This area focuses strongly upon marketing

communications and the promotions mix

Service This includes all areas of service such as installation after-sales service complaints handling

training and so on

INBOUND LOGISICS

MARKETING AND SALES The dealers and distributors played a very important role in success of prestige The dealers

and distributors are dealing with the prestige products alone

Prestige strongly believes in trade partners and is committed to strengthen them and prepare

them for the challenges ahead With the current trend of organized retail growing prestige

believes as the leader in the segment They educate and instigate change in the trade partners

and help them get to next level

Prestige smart kitchens have been one of the most innovative marketing moves by prestige

PSK was conceptualized to do three things To improve the visibility in terms of display the

entire range of products to improve the distribution of our new products and to offer the

customer right ambience to shop and educate and communicate the right things about

prestige

35

After three years of successful operation and over 100 stores PSK today offers that edge

over the competition which cannot be replicated Besides the three benefits that PSK

offered contributes 12 of the revenue It has prepared to take the challenges of organized

retail

PSK has instigated the nearby traders to keep the entire range of products The same traders

were not ready to stock and sell the entire range This has actually resulted in prestige

increasing its market share for its entire range in that area dramatically

They have plans to expand the stores across the country The concentration would be on the

tier 11 cities in south India and tier 1 in non south markets By the end of this fiscal they shall

be 400 in numbers with 80000sqft of retail space

Outbound Logistics The goods are now finished and they need to be sent along the supply chain to wholesalers

retailers or the final consumer

36

SERVICE

The Pressure Cooker Centre has been supplying and servicing pressure cookers since 1968

when we started in a little shop in West Perth Western Australia With a devotion to a

quality service to our customers our business has expanded to the point of supplying pressure

cookers now on a daily basis to all corners of Australia New Zealand various countries

throughout SE Asia (including Thailand Philippines Malaysia Indonesia) and beyond and

spare parts to all corners of the world The little store now in Subiaco WA still provides

the personal friendly service that helped us grow to a truly National dimension

We specialize in Pressure Cookers and their Spare Parts and have sourced quality products

from around the world (several brands are exclusive to the Pressure Cooker Centre) so that

we can offer you a complete choice of quality pressure cookers for all budgets

We also carry a select range of quality kitchenware and kitchen accessories so that we can

offer you world renowned top-of-the-range cookware and kitchenware You will find a large

range of SILAMPOS saucepans stockpots frypans steamer sets and double boilers This

top-of-the range cookware with Thermoplan base (guaranteed for 25 years) is made of the

finest 1810 stainless steel and is imported directly from Portugal The Silampos cookware

range is of excellent quality design and finish and is offered to our customers at the lowest

retail prices We also offer exclusive to Pressure Cooker Centre the top quality SILIT

cookware from Germany with its unique SILARGAN ceramic non-stick and scratch-proof

coating and ZWILLING HENCKELS knives also from Germany and much more Goto

Kitchenware

37

STRATEGIC ALTERNATIVES SOLUTIONS

The main issues for Prestige pressure cookers are regarding the threat from other kitchen

ware products ensuring growth in kitchenware market differentiating its products further so

as to fend off competition

Alternatives to combat these very problems are as follows

Option 1 Launch large-scale promotions to make consumers aware of advantages of

variant pressure cookers released by prestige

2 Employ cost-cutting methods to further lower prices while discontinuing

unsustainable products

3 Investing more heavily in Research and Development so as to make more

innovative products to compete better

4 With the improved research and development EXPORTING to USA according to

their standards may prove to be advantageous

Recommended Strategy

In spite of all the aforementioned strategies would help Prestige compete grow and sell

better the best option for now would be to employ cost-cutting methods to decrease prices

further This would not only ward off the significant competition from other players like

Hawkins Jaipan and Kanchan but would also help in wooing the 80 of the consumers of

India who rely on pressure cookers It is our understanding that the vast rural sectors

subscribe most to the cookers as they are seen to be cheaper and efficient than normal

cooking methodology By employing cost-cutting methods this price difference and the

associated perception can be bridged to increase Prestige market share It is also imperative

for the brand to discontinue the products in its portfolio that are not doing well Pouring

money into promotion of products that aren‟t selling in the market is unwise Increase in sales

and market share while further cutting down costs is also likely to increase TTK Prestige

Pressure cooker profit margins which at the moment is a luxury that none of the competing

others players enjoy Similarly with more revenue the rest of the strategies and alternatives

can be easily implemented post evaluation to find the best practices to make TTK Prestige

growth in India both sustainable and profitable

38

Conclusion

By studying products of TTK Prestige India specifically its cooker brand we have been able

to analyze the brand the value it has created the products the variants the problems faced

specifically by the brand and those faced by the industry as a whole in recent times We have

been able to evaluate to an extent the strategies that are conspicuous to us while noting

whether implementing these strategies have helped Prestige or not In light of our study we

have been able to formulate certain solutions to the issues identified by us while

recommending the most suitable on for a variety of reasons All in all it is certain that

Prestige brand of pressure cookers backed by the parent company TTK Ltd is here to stay

and its market share is only bound to soar with the definite shift towards packaged cookers by

the rural and urban population given to the growing density

39

REFRENCES

TTK_Prestige-Techno_Research_Report Pdf TTK Prestige reportpdf

wwwprestige cookwareState-of-art-Microwave-ovens-

launched-by-TTK-Prestigehtml wwwa-review-of-the-royal-prestige-hy-cite-corp-income-

opportunity-579302com wwwannual-report-ttk-prestige-2008-2009html

httpwwwprestigesmartkitchencom

httpwwwmouthshutcomproduct-

reviewsPrestige_Pressure_Cooker-925003557html httpcorporategiftseasy2sourcecomttkprestigeproductpr

ofile2htm httpwwwthehindubusinesslinecomiw20091019stories2

009101950210400htm httppressure-cookersblogspotcom200905prestige-

pressure-cooker-cheap-solutionhtml wwwhawkinscookerscomdownloadspc_catalogpdf

httpwwwreviewstreamcomreviewsp=25542

httpwwwamericanchroniclecomarticlesview105565

httpwwwreviewcentrecomproducts2171html

35

After three years of successful operation and over 100 stores PSK today offers that edge

over the competition which cannot be replicated Besides the three benefits that PSK

offered contributes 12 of the revenue It has prepared to take the challenges of organized

retail

PSK has instigated the nearby traders to keep the entire range of products The same traders

were not ready to stock and sell the entire range This has actually resulted in prestige

increasing its market share for its entire range in that area dramatically

They have plans to expand the stores across the country The concentration would be on the

tier 11 cities in south India and tier 1 in non south markets By the end of this fiscal they shall

be 400 in numbers with 80000sqft of retail space

Outbound Logistics The goods are now finished and they need to be sent along the supply chain to wholesalers

retailers or the final consumer

36

SERVICE

The Pressure Cooker Centre has been supplying and servicing pressure cookers since 1968

when we started in a little shop in West Perth Western Australia With a devotion to a

quality service to our customers our business has expanded to the point of supplying pressure

cookers now on a daily basis to all corners of Australia New Zealand various countries

throughout SE Asia (including Thailand Philippines Malaysia Indonesia) and beyond and

spare parts to all corners of the world The little store now in Subiaco WA still provides

the personal friendly service that helped us grow to a truly National dimension

We specialize in Pressure Cookers and their Spare Parts and have sourced quality products

from around the world (several brands are exclusive to the Pressure Cooker Centre) so that

we can offer you a complete choice of quality pressure cookers for all budgets

We also carry a select range of quality kitchenware and kitchen accessories so that we can

offer you world renowned top-of-the-range cookware and kitchenware You will find a large

range of SILAMPOS saucepans stockpots frypans steamer sets and double boilers This

top-of-the range cookware with Thermoplan base (guaranteed for 25 years) is made of the

finest 1810 stainless steel and is imported directly from Portugal The Silampos cookware

range is of excellent quality design and finish and is offered to our customers at the lowest

retail prices We also offer exclusive to Pressure Cooker Centre the top quality SILIT

cookware from Germany with its unique SILARGAN ceramic non-stick and scratch-proof

coating and ZWILLING HENCKELS knives also from Germany and much more Goto

Kitchenware

37

STRATEGIC ALTERNATIVES SOLUTIONS

The main issues for Prestige pressure cookers are regarding the threat from other kitchen

ware products ensuring growth in kitchenware market differentiating its products further so

as to fend off competition

Alternatives to combat these very problems are as follows

Option 1 Launch large-scale promotions to make consumers aware of advantages of

variant pressure cookers released by prestige

2 Employ cost-cutting methods to further lower prices while discontinuing

unsustainable products

3 Investing more heavily in Research and Development so as to make more

innovative products to compete better

4 With the improved research and development EXPORTING to USA according to

their standards may prove to be advantageous

Recommended Strategy

In spite of all the aforementioned strategies would help Prestige compete grow and sell

better the best option for now would be to employ cost-cutting methods to decrease prices

further This would not only ward off the significant competition from other players like

Hawkins Jaipan and Kanchan but would also help in wooing the 80 of the consumers of

India who rely on pressure cookers It is our understanding that the vast rural sectors

subscribe most to the cookers as they are seen to be cheaper and efficient than normal

cooking methodology By employing cost-cutting methods this price difference and the

associated perception can be bridged to increase Prestige market share It is also imperative

for the brand to discontinue the products in its portfolio that are not doing well Pouring

money into promotion of products that aren‟t selling in the market is unwise Increase in sales

and market share while further cutting down costs is also likely to increase TTK Prestige

Pressure cooker profit margins which at the moment is a luxury that none of the competing

others players enjoy Similarly with more revenue the rest of the strategies and alternatives

can be easily implemented post evaluation to find the best practices to make TTK Prestige

growth in India both sustainable and profitable

38

Conclusion

By studying products of TTK Prestige India specifically its cooker brand we have been able

to analyze the brand the value it has created the products the variants the problems faced

specifically by the brand and those faced by the industry as a whole in recent times We have

been able to evaluate to an extent the strategies that are conspicuous to us while noting

whether implementing these strategies have helped Prestige or not In light of our study we

have been able to formulate certain solutions to the issues identified by us while

recommending the most suitable on for a variety of reasons All in all it is certain that

Prestige brand of pressure cookers backed by the parent company TTK Ltd is here to stay

and its market share is only bound to soar with the definite shift towards packaged cookers by

the rural and urban population given to the growing density

39

REFRENCES

TTK_Prestige-Techno_Research_Report Pdf TTK Prestige reportpdf

wwwprestige cookwareState-of-art-Microwave-ovens-

launched-by-TTK-Prestigehtml wwwa-review-of-the-royal-prestige-hy-cite-corp-income-

opportunity-579302com wwwannual-report-ttk-prestige-2008-2009html

httpwwwprestigesmartkitchencom

httpwwwmouthshutcomproduct-

reviewsPrestige_Pressure_Cooker-925003557html httpcorporategiftseasy2sourcecomttkprestigeproductpr

ofile2htm httpwwwthehindubusinesslinecomiw20091019stories2

009101950210400htm httppressure-cookersblogspotcom200905prestige-

pressure-cooker-cheap-solutionhtml wwwhawkinscookerscomdownloadspc_catalogpdf

httpwwwreviewstreamcomreviewsp=25542

httpwwwamericanchroniclecomarticlesview105565

httpwwwreviewcentrecomproducts2171html

36

SERVICE

The Pressure Cooker Centre has been supplying and servicing pressure cookers since 1968

when we started in a little shop in West Perth Western Australia With a devotion to a

quality service to our customers our business has expanded to the point of supplying pressure

cookers now on a daily basis to all corners of Australia New Zealand various countries

throughout SE Asia (including Thailand Philippines Malaysia Indonesia) and beyond and

spare parts to all corners of the world The little store now in Subiaco WA still provides

the personal friendly service that helped us grow to a truly National dimension

We specialize in Pressure Cookers and their Spare Parts and have sourced quality products

from around the world (several brands are exclusive to the Pressure Cooker Centre) so that

we can offer you a complete choice of quality pressure cookers for all budgets

We also carry a select range of quality kitchenware and kitchen accessories so that we can

offer you world renowned top-of-the-range cookware and kitchenware You will find a large

range of SILAMPOS saucepans stockpots frypans steamer sets and double boilers This

top-of-the range cookware with Thermoplan base (guaranteed for 25 years) is made of the

finest 1810 stainless steel and is imported directly from Portugal The Silampos cookware

range is of excellent quality design and finish and is offered to our customers at the lowest

retail prices We also offer exclusive to Pressure Cooker Centre the top quality SILIT

cookware from Germany with its unique SILARGAN ceramic non-stick and scratch-proof

coating and ZWILLING HENCKELS knives also from Germany and much more Goto

Kitchenware

37

STRATEGIC ALTERNATIVES SOLUTIONS

The main issues for Prestige pressure cookers are regarding the threat from other kitchen

ware products ensuring growth in kitchenware market differentiating its products further so

as to fend off competition

Alternatives to combat these very problems are as follows

Option 1 Launch large-scale promotions to make consumers aware of advantages of

variant pressure cookers released by prestige

2 Employ cost-cutting methods to further lower prices while discontinuing

unsustainable products

3 Investing more heavily in Research and Development so as to make more

innovative products to compete better

4 With the improved research and development EXPORTING to USA according to

their standards may prove to be advantageous

Recommended Strategy

In spite of all the aforementioned strategies would help Prestige compete grow and sell

better the best option for now would be to employ cost-cutting methods to decrease prices

further This would not only ward off the significant competition from other players like

Hawkins Jaipan and Kanchan but would also help in wooing the 80 of the consumers of

India who rely on pressure cookers It is our understanding that the vast rural sectors

subscribe most to the cookers as they are seen to be cheaper and efficient than normal

cooking methodology By employing cost-cutting methods this price difference and the

associated perception can be bridged to increase Prestige market share It is also imperative

for the brand to discontinue the products in its portfolio that are not doing well Pouring

money into promotion of products that aren‟t selling in the market is unwise Increase in sales

and market share while further cutting down costs is also likely to increase TTK Prestige

Pressure cooker profit margins which at the moment is a luxury that none of the competing

others players enjoy Similarly with more revenue the rest of the strategies and alternatives

can be easily implemented post evaluation to find the best practices to make TTK Prestige

growth in India both sustainable and profitable

38

Conclusion

By studying products of TTK Prestige India specifically its cooker brand we have been able

to analyze the brand the value it has created the products the variants the problems faced

specifically by the brand and those faced by the industry as a whole in recent times We have

been able to evaluate to an extent the strategies that are conspicuous to us while noting

whether implementing these strategies have helped Prestige or not In light of our study we

have been able to formulate certain solutions to the issues identified by us while

recommending the most suitable on for a variety of reasons All in all it is certain that

Prestige brand of pressure cookers backed by the parent company TTK Ltd is here to stay

and its market share is only bound to soar with the definite shift towards packaged cookers by

the rural and urban population given to the growing density

39

REFRENCES

TTK_Prestige-Techno_Research_Report Pdf TTK Prestige reportpdf

wwwprestige cookwareState-of-art-Microwave-ovens-

launched-by-TTK-Prestigehtml wwwa-review-of-the-royal-prestige-hy-cite-corp-income-

opportunity-579302com wwwannual-report-ttk-prestige-2008-2009html

httpwwwprestigesmartkitchencom

httpwwwmouthshutcomproduct-

reviewsPrestige_Pressure_Cooker-925003557html httpcorporategiftseasy2sourcecomttkprestigeproductpr

ofile2htm httpwwwthehindubusinesslinecomiw20091019stories2

009101950210400htm httppressure-cookersblogspotcom200905prestige-

pressure-cooker-cheap-solutionhtml wwwhawkinscookerscomdownloadspc_catalogpdf

httpwwwreviewstreamcomreviewsp=25542

httpwwwamericanchroniclecomarticlesview105565

httpwwwreviewcentrecomproducts2171html

37

STRATEGIC ALTERNATIVES SOLUTIONS

The main issues for Prestige pressure cookers are regarding the threat from other kitchen

ware products ensuring growth in kitchenware market differentiating its products further so

as to fend off competition

Alternatives to combat these very problems are as follows

Option 1 Launch large-scale promotions to make consumers aware of advantages of

variant pressure cookers released by prestige

2 Employ cost-cutting methods to further lower prices while discontinuing

unsustainable products

3 Investing more heavily in Research and Development so as to make more

innovative products to compete better

4 With the improved research and development EXPORTING to USA according to

their standards may prove to be advantageous

Recommended Strategy

In spite of all the aforementioned strategies would help Prestige compete grow and sell

better the best option for now would be to employ cost-cutting methods to decrease prices

further This would not only ward off the significant competition from other players like

Hawkins Jaipan and Kanchan but would also help in wooing the 80 of the consumers of

India who rely on pressure cookers It is our understanding that the vast rural sectors

subscribe most to the cookers as they are seen to be cheaper and efficient than normal

cooking methodology By employing cost-cutting methods this price difference and the

associated perception can be bridged to increase Prestige market share It is also imperative

for the brand to discontinue the products in its portfolio that are not doing well Pouring

money into promotion of products that aren‟t selling in the market is unwise Increase in sales

and market share while further cutting down costs is also likely to increase TTK Prestige

Pressure cooker profit margins which at the moment is a luxury that none of the competing

others players enjoy Similarly with more revenue the rest of the strategies and alternatives

can be easily implemented post evaluation to find the best practices to make TTK Prestige

growth in India both sustainable and profitable

38

Conclusion

By studying products of TTK Prestige India specifically its cooker brand we have been able

to analyze the brand the value it has created the products the variants the problems faced

specifically by the brand and those faced by the industry as a whole in recent times We have

been able to evaluate to an extent the strategies that are conspicuous to us while noting

whether implementing these strategies have helped Prestige or not In light of our study we

have been able to formulate certain solutions to the issues identified by us while

recommending the most suitable on for a variety of reasons All in all it is certain that

Prestige brand of pressure cookers backed by the parent company TTK Ltd is here to stay

and its market share is only bound to soar with the definite shift towards packaged cookers by

the rural and urban population given to the growing density

39

REFRENCES

TTK_Prestige-Techno_Research_Report Pdf TTK Prestige reportpdf

wwwprestige cookwareState-of-art-Microwave-ovens-

launched-by-TTK-Prestigehtml wwwa-review-of-the-royal-prestige-hy-cite-corp-income-

opportunity-579302com wwwannual-report-ttk-prestige-2008-2009html

httpwwwprestigesmartkitchencom

httpwwwmouthshutcomproduct-

reviewsPrestige_Pressure_Cooker-925003557html httpcorporategiftseasy2sourcecomttkprestigeproductpr

ofile2htm httpwwwthehindubusinesslinecomiw20091019stories2

009101950210400htm httppressure-cookersblogspotcom200905prestige-

pressure-cooker-cheap-solutionhtml wwwhawkinscookerscomdownloadspc_catalogpdf

httpwwwreviewstreamcomreviewsp=25542

httpwwwamericanchroniclecomarticlesview105565

httpwwwreviewcentrecomproducts2171html

38

Conclusion

By studying products of TTK Prestige India specifically its cooker brand we have been able

to analyze the brand the value it has created the products the variants the problems faced

specifically by the brand and those faced by the industry as a whole in recent times We have

been able to evaluate to an extent the strategies that are conspicuous to us while noting

whether implementing these strategies have helped Prestige or not In light of our study we

have been able to formulate certain solutions to the issues identified by us while

recommending the most suitable on for a variety of reasons All in all it is certain that

Prestige brand of pressure cookers backed by the parent company TTK Ltd is here to stay

and its market share is only bound to soar with the definite shift towards packaged cookers by

the rural and urban population given to the growing density

39

REFRENCES

TTK_Prestige-Techno_Research_Report Pdf TTK Prestige reportpdf

wwwprestige cookwareState-of-art-Microwave-ovens-

launched-by-TTK-Prestigehtml wwwa-review-of-the-royal-prestige-hy-cite-corp-income-

opportunity-579302com wwwannual-report-ttk-prestige-2008-2009html

httpwwwprestigesmartkitchencom

httpwwwmouthshutcomproduct-

reviewsPrestige_Pressure_Cooker-925003557html httpcorporategiftseasy2sourcecomttkprestigeproductpr

ofile2htm httpwwwthehindubusinesslinecomiw20091019stories2

009101950210400htm httppressure-cookersblogspotcom200905prestige-

pressure-cooker-cheap-solutionhtml wwwhawkinscookerscomdownloadspc_catalogpdf

httpwwwreviewstreamcomreviewsp=25542

httpwwwamericanchroniclecomarticlesview105565

httpwwwreviewcentrecomproducts2171html

39

REFRENCES

TTK_Prestige-Techno_Research_Report Pdf TTK Prestige reportpdf

wwwprestige cookwareState-of-art-Microwave-ovens-

launched-by-TTK-Prestigehtml wwwa-review-of-the-royal-prestige-hy-cite-corp-income-

opportunity-579302com wwwannual-report-ttk-prestige-2008-2009html

httpwwwprestigesmartkitchencom

httpwwwmouthshutcomproduct-

reviewsPrestige_Pressure_Cooker-925003557html httpcorporategiftseasy2sourcecomttkprestigeproductpr

ofile2htm httpwwwthehindubusinesslinecomiw20091019stories2

009101950210400htm httppressure-cookersblogspotcom200905prestige-

pressure-cooker-cheap-solutionhtml wwwhawkinscookerscomdownloadspc_catalogpdf

httpwwwreviewstreamcomreviewsp=25542

httpwwwamericanchroniclecomarticlesview105565

httpwwwreviewcentrecomproducts2171html