INTRODUCTION:

Havell’s India Limited was established in 1958 and is a part of the QRG group, a leading solution provider in the power distribution-equipment industry in India. The company is one of the foremost manufacturers and suppliers of low-voltage electrical equipment in the country.

Havells India was incorporated in 1983 is a billion-dollar company. It is engaged in manufacturing of electrical and power distribution equipments. Havells has created brands like Crabtree, Sylvania, Concord, Luminance, Linolite, and SLI Lighting that are known globally.

The Havells group originated as a small trading business in Central Delhi’s Bhagirath Place, which is a wholesale market for electrical goods. It was promoted by Mr. Qimat Rai Gupta and Mr. Surjit Kumar Gupta, who commenced their trading operations in the year 1958.

A former teacher in Punjab, the entrepreneur Qimat Rai Gupta bought the Havells brand from one Haveli Ram Gandhi, thereby moving up from trader to manufacturer. The Company was incorporated as Havells India Private Limited on 8th August, 1983 under the Companies Act, 1956 and subsequently the name was changed to Havells India Limited vide certificate dated 31st March, 1992.

This company manufactures electrical and power distribution equipments ranging from building circuit protection, Industrial & Domestic switchgear, cables & wires, energy meters, fans, CFL lamps, luminaries for domestic, commercial & Industrial application and modular switches.

MILESTONES:

Year Achievements

1958Commenced trading operations in Delhi.

1976Set up the first factory for Changeover Switches at Kirti Nagar, Delhi

1979Set up a factory for HBC Fuses at Badli, Delhi.

1980Started manufacturing high quality Energy Meters at Tilak Nagar, Delhi.

1983Took over Towers and Transformers Ltd and turned it around in one year to profitably.

1987Started manufacturing MCBs at Badli, Delhi in Joint Venture with Geyer, Germany.

1990 Set up a manufacturing unit at

Sahibabad in UP for Changeover Switches.

1992 Anil Gupta joined family Business

1993Set up another factory at Faridabad, Haryana for Control gear Products.

1995 Ameet Gupta joined family Business

1996

Entered a Joint Venture with Electrium, UK for manufacturing Dorman Smith MCCBs and Crabtree Modular Plate Switches.

1997

Took over Electric Control & Switchboards at NOIDA for manufacturing customized packaged solutions customized packaged solutions

1998Introduced high-end Ferraris Meters in Joint Venture with DZG, Germany.

2000

Acquired controlling stake in Duke Arnics Electronics (P) Limited and an industry major-Standard Electricals Ltd.

2001

Acquired business of Havells Industries Ltd, MCCB of Crabtree India LimitedMerged ECS Limited in the company to consolidate in its area of core competence.

2002Standard Electrical Company becomes a 100% Subsidiary of the company.

2004

Set up factory at Badli (H.P.) for manufacturing of Domestic Switchgea Set up a plant for manufacturing of CFL at existing Faridabad Works

Set up a plant for manufacturing of Ceiling Fans at NoidaSet-up marketing office in London through wholly owned subsidiary Company Havells U.K. Ltd.

2005 Set up factory at Haridwar (Uttaranchal) for manufacturing of

Fans.

Acquired a Greek Company : First International AcquisitionCrabtree India merged with Havells India.

2007

Acquire SLI Sylvania’s lighting business, head quartered in Frankfurt

acquired 70% stake in a 140-bed super specialty hospital - Central Hospital and Research   Centre, Faridabad

VISION STATEMENT:

To be a globally recognized corporation that provides best electrical & lighting solutions,delivered by best-in-class people.

MISSION STATEMENT:

To achieve our vision through fairness, business ethics, global reach, technologicalexpertise, building long term relationships with all our associates, customers, partners, and employees.

PESTLE ANALYSIS (PEST analysis)

Political (Global, national, regional, local community and trends)

Economic (world, national and local trends)

Social (development in society – culture, behaviour, expectations).

Technological (developments: computer hardware, software, applications)

Legal (world/ EU/ national legislation).

Environmental (global / EU/ National issues).

PESTLE Analysis is a simple technique which can be used in a fairly sophisticated way, particularly when it is combined with Risk Analysis, SWOT Analysis, an Urgency/Impotency Grid and expert knowledge about the organisation and its external factors.

PESTLE Analysis is normally used to help organisations identify and understand the external environment in which they operate and how it will operate in the future.

PESTLE Analysis can be used by the individual for personal development planning. Some people will argue that this is a use for which it was never designed and for which it may be inappropriate.

The shorter version is a PEST Analysis – missing out Legal and Environmental factors. At the end of this document is an explanation of the use of PESTLE for organisational change.

SOCIAL FACTOR

Havell acquires companies and builds internally, havells Group never loses sight of its responsibility as a good corporate citizen. Havells believes that serving people with meager or no means is the duty of every well-to-do person. It consistently puts that philosophy into action and has initiated several projects for social causes. This has greatly increased the number of children attending school regularly and also alleviates hunger.

Corporate Social Responsibility (CSR) at havells portrays the deep symbiotic relationship that the group enjoys with the communities it is engaged with. As a responsible corporate citizen, we try to contribute for social and environmental causes on a regular basis.

Kitchen with Modern Facilities

The company has acquired land for constructing a large kitchen with all the modern facilities to serve the meal to around 40000 to 50000 students.

Mid Day Meal

Being a responsible and concerned corporate citizen, QRG also undertakes other welfare activities in and around its plant locations, In Alwar region; the company is providing mid-day meal close to 15000 students of primary schools.

Check-up Camps

Blood Donation Camps

Contribution towards Tsunami and Kargil National Relief Fund.

TECHNOLOGICAL FACTOR

Research and Development

Innovation is the hallmark of every vital development at havells Group. New ideas, inventions deepen scientific knowledge and give its work force a new impetus towards technical progress.

Havells’s technological strengths and its endeavour towards continuous research & development have allowed it to fulfils its responsibilities towards its customers. The responsibility of providing its customers the best products and zero defect services to enable them to be comfortable and secure in usage of electricity.

Havells has recently invested 50 crores in the QRG Center for Research and Innovation, set-up at the company's Head Office premises in Noida, U.P.

The objective of this centre is to provide the theoretical & experimental foundations for all segments of electrical engineering. The centre closely cooperates with the various departments so as to provide the best and the latest in terms of technology and design.

Quality Control

The essence of quality is closely wrapped in the way we think, plan and work. It finds its true expression when we extend beyond ourselves to exceed our customer’s expectations. To deliver products those are safer, faster and simply better.

Each time, every time. Building customer confidence through teamwork is a top priority to provide a wide variety of products and services.

Realising and respecting the basic needs of customers to feel more secure, we've committed ourselves to make our products better, safer and smarter than what he or she is looking for. That's a passion that began 30 years ago and that's how it continues to be even today. Our customers rely on us and it is our responsibility to give them the very best. All our products are as per IEC standards.

QRG has a simple rule on quality. If it doesn't exceed customer expectation, it's not quality

ECONOMIC FACTOR

The Havells Group defines corporate governance strategically, which encompasses not only what we do as a company with our profits, but also how we make them. It goes beyond philanthropy and compliance and addresses how our company manages its economic, social, and environmental impacts, as well as its relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm.

We as a company have been in lead in offering a portfolio of eco responsible products and services that deliver powerful, sustainable, energy-efficient solutions that don't compromise on capacity and security. Our eco responsibility initiative also focuses on how we run our business, and includes efforts to develop an alternative-energy strategy, and thus reduce the environmental impact of our operations. We strive to bring corporate responsibility to every aspect of our business. We're committed to managing a responsible and diverse supply chain that's consistent with our high standards for environmental and business practices.

Breaking down the barriers that constrain innovation is a challenge; we have readily embraced right from the start. Our ability to build communities and promote the exchange of ideas through assistive technologies, participation programs, and standardization is transforming the way people experience our products. We offer our customers holistic energy-efficient solutions, enabling them to not only save money and protect their capital investment, but also lower their energy usage and protect the environment, thus fulfilling our CSR responsibility of sustenance of depleting environmental resources.

CORPORATE GOVERNANCE AND ETHICS

An implicit sense of ethical business conduct has been the cornerstone of the havells way on corporate governance. On issues ranging from customer care and business excellence to financial propriety and more, explicit rules and regulations supplement the traditional values on which our group companies have been shaped. This is what we have endeavored to do in the 50 years of our existence. Our values of understanding, trust, integrity and ethics have served us in good stead.

Corporate governance as practiced by our Group translates into being fair and civic-minded, fulfilling our duties to the entire spectrum of stakeholders, and, most importantly, making integrity an article of faith across all our operations. The group's adherence to ethical business conduct is rooted in the vision of its Founder Mr Qimat Rai Gupta. We started on sound and straightforward business principles, considering the interests of our shareholders and welfare of our employees as foundation of our long term success.

The 'leadership with trust' philosophy that has come to play such a vital role in how our customers perceive us is all the more remarkable given the climate of unparalleled public distrust of people in positions of authority today both in business and politics.

Employee Relations

Our people are the key to our success. Their skills, knowledge, ideas and enthusiasm drive our business. We have high-quality, diverse workforce and employees who fulfill their potential. We have achieved this by giving them development and advancement opportunities along with competitive compensation and benefits that appropriately reward performance

We communicate widely with employees to demonstrate how their efforts contribute to our success and to listen to their concerns. We also encourage them to align with our vision. We are committed to open communications and a workplace where everyone's voice is heard.

We use several channels to communicate with employees, including an internal web portal and company website along with communication sessions with the top management of the company. These sessions provide assessment of employee satisfaction and are inputs for business planning, management decision-making and company strategy development. They also help employees implement company policies, meet high standards of conduct and ensure their behavior reflects company values and policies.

We seek to meet leading health, safety and wellness standards to enhance our business performance while optimizing employee health. Our facility policies are designed to continually reduce the risk of occupational injury and illness while promoting employee health and well-being. We wish to be a company that is known for its leadership in corporate ethics and

responsibility. A company where employees are proud to work, and customers, partners and suppliers want to do business with.

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. Strategic Planning, including SWOT and SCAN analysis, has been the subject of much research.

• Strengths: attributes of the person or company that are helpful to achieving the objective.

• Weaknesses: attributes of the person or company that are harmful to achieving the objective.

• Opportunities: external conditions that are 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.

The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats [citation needed]. It is particularly helpful in identifying areas for development [citation needed].

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.

Evidence on the Use of SWOT

SWOT analysis may limit the strategies considered in the evaluation. J. Scott Armstrong notes that "people who use SWOT might conclude that they have done an adequate job of planning and ignore such sensible things as defining the firm's objectives or calculating ROI for alternate strategies." Findings from Menon et al. (1999) and Hill and Westbrook (1997) have shown that SWOT may harm performance. As an alternative to SWOT, Armstrong describes a 5-step approach alternative that leads to better corporate performance.

These criticisms are addressed to an old version of SWOT analysis that precedes the SWOT analysis described above under the heading "Strategic and Creative Use of SWOT Analysis." This old version did not require that SWOTs be derived from an agreed upon objective. Examples of SWOT analyses that do not state an objective are provided below under "Human Resources" and "Marketing."

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 company's unique value chain. SWOT analysis groups key pieces of information into two main categories:

• Internal factors – The strengths and weaknesses internal to the organization.

• External factors – The opportunities and threats presented by the external environment to the organization. - Use a PEST or PESTLE analysis to help identify factors

The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective.

The factors may include all of the 4P's; 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.

It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that

produces valuable strategies is important. A SWOT item that generates no strategies is not important.

Use of SWOT Analysis

The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. Examples include: non-profit organizations, governmental units, and individuals. SWOT analysis may also be used in pre-crisis planning and preventive crisis management. SWOT analysis may also be used in creating a recommendation during a viability study.

SWOT - landscape analysis

The SWOT-landscape systematically deploys the relationships between overall objective and underlying SWOT-factors and provides an interactive, query-able 3D landscape.

Changes in relative performance are continually identified. Projects (or other units of measurements) that could be potential risk or opportunity objects are highlighted.

SWOT-landscape also indicates which underlying strength/weakness factors that have had or likely will have highest influence in the context of value in use (for ex. capital value fluctuations).

Corporate planning

As part of the development of strategies and plans to enable the organization to achieve its objectives, then that organization will use a systematic/rigorous process known as corporate planning. SWOT alongside PEST/PESTLE can be used as a basis for the analysis of business and environmental factors.

• Set objectives – defining what the organization is going to do

• Environmental scanning

o Internal appraisals of the organization's SWOT, this needs to include an assessment of the present situation as well as a portfolio of products/services and an analysis of the product/service life cycle

• Analysis of existing strategies, this should determine relevance from the results of an internal/external appraisal. This may include gap analysis which will look at environmental factors

• Strategic Issues defined – key factors in the development of a corporate plan which needs to be addressed by the organization

• Develop new/revised strategies – revised analysis of strategic issues may mean the objectives need to change

• Establish critical success factors – the achievement of objectives and strategy implementation

• Preparation of operational, resource, projects plans for strategy implementation

• Monitoring results – mapping against plans, taking corrective action which may mean amending objectives/strategies.

Marketing:

In many competitor analyses, marketers build detailed profiles of each competitor in the market, focusing especially on their relative competitive strengths and weaknesses using SWOT analysis. Marketing managers will examine each competitor's cost structure, sources of profits, resources and competencies, competitive positioning and product differentiation, degree of vertical integration, historical responses to industry developments, and other factors.

Marketing management often finds it necessary to invest in research to collect the data required to perform accurate marketing analysis. Accordingly, management often conducts market research (alternately marketing research) to obtain this information. Marketers employ a variety of techniques to conduct market research, but some of the more common include:

• Qualitative marketing research, such as focus groups

• Quantitative marketing research, such as statistical surveys

• Experimental techniques such as test markets

• Observational techniques such as ethnographic (on-site) observation

• Marketing managers may also design and oversee various environmental scanning and competitive intelligence processes to help identify trends and inform the company's marketing analysis.

SWOT Analysis

A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.

The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in

strategy formulation and selection. The following diagram shows how a SWOT analysis fits into an environmental scan:

SWOT Analysis Framework

Environmental Scan

/ \

Internal Analysis External Analysis

/ \ / \

Strengths Weaknesses Opportunities Threats

|

SWOT Matrix

Strengths

A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. Examples of such strengths include:

• Patents

• Strong brand names

• Good reputation among customers

• cost advantages from proprietary know-how

• Exclusive access to high grade natural resources

• Favorable access to distribution networks

Weaknesses

The absence of certain strengths may be viewed as a weakness. For example, each of the following may be considered weaknesses:

• Lack of patent protection

• A weak brand name

• Poor reputation among customers

• High cost structure

• Lack of access to the best natural resources

• Lack of access to key distribution channels

In some cases, a weakness may be the flip side of strength. Take the case in which a firm has a large amount of manufacturing capacity. While this capacity may be considered a strength that competitors do not share, it also may be a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment.

Opportunities

The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include:

• An unfulfilled customer need

• Arrival of new technologies

• loosening of regulations

• Removal of international trade barriers

Threats

Changes in the external environmental also may present threats to the firm. Some examples of such threats include:

• Shifts in consumer tastes away from the firm's products

• Emergence of substitute products

• New regulations

• increased trade barriers

The SWOT Matrix

A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a better chance at developing a competitive advantage by identifying a fit between the firm's strengths and upcoming opportunities. In some cases, the firm can overcome a weakness in order to prepare itself to pursue a compelling opportunity.

To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below:

SWOT / TOWS Matrix

Strengths Weaknesses

Opportunities S-O strategies W-O strategies

Threats S-T strategies W-T strategies

• S-O strategies pursue opportunities that are a good fit to the company's strengths.

• W-O strategies overcome weaknesses to pursue opportunities.

• S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats.

• W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats.

SWOT Analysis

Discover New Opportunities.

Manage and Eliminate Threats.

SWOT Analysis is a powerful technique for understanding your Strengths and Weaknesses, and for looking at the Opportunities and Threats you face.

Used in a business context, it helps you carve a sustainable niche in your market. Used in a personal context, it helps you develop your career in a way that takes best advantage of your talents, abilities and opportunities. Click here for Business SWOT Analysis, and here for Personal SWOT Analysis.

Business SWOT Analysis

What makes SWOT particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well placed to exploit. And by understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares.

More than this, by looking at yourself and your competitors using the SWOT framework, you can start to craft a strategy that helps you distinguish yourself from your competitors, so that you can compete successfully in your market.

How to Use the Tool ?

To carry out a SWOT Analysis, start by downloading our free template. Then answer the following questions:

Strengths:

• What advantages does your company have?

• What do you do better than anyone else?

• What unique or lowest-cost resources do you have access to?

• What do people in your market see as your strengths?

• What factors mean that you "get the sale"?

Consider this from an internal perspective, and from the point of view of your customers and people in your market. Be realistic: It's far too easy to fall prey to "not invented here syndrome". (If you are having any difficulty with this, try writing down a list of your characteristics. Some of these will hopefully be strengths!)

In looking at your strengths, think about them in relation to your competitors - for example, if all your competitors provide high quality products, then a high quality production process is not sstrength in the market, it is a necessity.

Tip:

For help finding your company's Unique Selling Proposition (USP) or crafting your competitive edge, read our USP Analysis article.

Weaknesses:

• What could you improve?

• What should you avoid?

• What are people in your market likely to see as weaknesses?

• What factors lose you sales?

Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you do not see? Are your competitors doing any better than you? It is best to be realistic now, and face any unpleasant truths as soon as possible.

Opportunities:

• Where are the good opportunities facing you?

• What are the interesting trends you are aware of?

Useful opportunities can come from such things as:

• Changes in technology and markets on both a broad and narrow scale.

• Changes in government policy related to your field.

• Changes in social patterns, population profiles, lifestyle changes.

• Local events.

A useful approach for looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities.

Alternatively, look at your weaknesses and ask yourself whether you could create opportunities by eliminating them.

Threats:

• What obstacles do you face?

• What is your competition doing that you should be worried about?

• Are the required specifications for your job, products or services changing?

• Is changing technology threatening your position?

• Do you have bad debt or cash-flow problems?

• Could any of your weaknesses seriously threaten your business?

Carrying out this analysis will often be illuminating – both in terms of pointing out what needs to be done, and in putting problems into perspective.

Strengths and weaknesses are often internal to your organization. Opportunities and threats often relate to external factors. For this reason the SWOT Analysis is sometimes called Internal-External Analysis and the SWOT Matrix is sometimes called an IE Matrix Analysis Tool.

You can also apply SWOT Analysis to your competitors. As you do this, you'll start to see how and where you should compete against them.

Tip 1:

Make sure you visit our next article 'PEST Analysis' - this tool is useful for understanding the 'big picture' of the environment you are operating in and will help you identify the opportunities and threats within it.

Tip 2:

SWOT can be used in two ways – as a simple icebreaker helping people get together and "kick off" strategy formulation, or in a more sophisticated way as a serious strategy tool. If you're using it as a serious tool, make sure you're rigorous in the way you apply it:

• Only accept precise, verifiable statements ("Cost advantage of US$10/ton in sourcing raw material x", rather than "Good value for money").

• Ruthlessly prune long lists of factors, and prioritize factors so that you spend your time thinking about the most significant factors.

• Make sure that options generated are carried through to later stages in the strategy formation process.

• Apply it at the right level – for example, at product or product line level, rather than at the much vaguer whole company level.

• Supplement it with other option-generation tools – none is likely to be completely comprehensive.

Example

A start-up small consultancy business might draw up the following SWOT matrix:

Strengths:

• We can respond very quickly as we have no red tape, no need for higher management approval.

• We can give really good customer care, as the current small amount of work means we have plenty of time to devote to customers.

• Our lead consultant has strong reputation within the market.

• We can change direction quickly if our approach isn't working.

• We have little overhead, so can offer good value to customers.

Weaknesses:

• Our company has no market presence or reputation.

• We have a small staff with a shallow skills base in many areas.

• We are vulnerable to vital staff being sick, leaving.

• Our cash flow will be unreliable in the early stages.

Opportunities:

• Our business sector is expanding, with many future opportunities for success.

• Our local council wants to encourage local businesses with work where possible.

• Our competitors may be slow to adopt new technologies.

Threats:

• Will developments in technology change this market beyond our ability to adapt?

• A small change in focus of a large competitor might wipe out any market position we achieve.

The consultancy may therefore decide to specialize in rapid response, good value services to local businesses. Marketing would be in selected local publications, to get the greatest possible market presence for a set advertising budget. The consultancy should keep up-to-date with changes in technology where possible.

Key Points

SWOT Analysis is a simple but powerful framework for analyzing your company's Strengths and Weaknesses, and the Opportunities and Threats you face. This helps you to focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you.

Porter’s 5 force model

The Bargaining power of customers

How much customers can impose pressure on margins and volumes.

Customers bargaining power is likely to be high when

· They buy large volumes, there is a concentration of buyers,

· Bargaining Leverage- Customers could produce the product themselves,

· Bargaining Leverage- The product is not of strategically importance for the customer,

· The customer knows about the production costs of the product

· There is the possibility for the customer integrating backwards.

· Switching to an alternative product is relatively simple and is not related to high costs,

Switching Costs :- any impediment to a customer's changing of suppliers.

Examples of switching costs:-effort needed to inform friends and relatives-costs related to learning-time lost due to the paperwork necessary when switching-other costs include: exit fees, search costs, learning costs, cognitive effort, emotional costs, equipment costs, installation and start-up costs, financial risk, psychological risk, and social risk.

Gourville several rules: 1) People are sensitive to the relative advantages and disadvantages of any change from the

status quo. -product, must be significantly better2) Different people have different reference points. For how they evaluate the advantages

disadvantages3) People exhibit loss aversion. The pain of giving up a benefit is much more significant

than the pleasure of gaining that benefit. - consumer must see a clear benefit to offset the perceived sacrifice

Andy Grove’s 10x rule.

Due to switching costs- there must order-of-magnitude improvements in costs, efficiencies, and benefits to the consumer.

The Bargaining power of suppliers

Pressure suppliers can impose on sources for inputs that are needed in order to provide goods or services.

Supplier bargaining power is likely to be high when:

The market is dominated by a few large suppliers

There are no substitutes for the particular input,

The switching costs from one supplier to another are high,Threat of forward integration by suppliersThe buying industry has low barriers to entry.

The Threat of new entrants

Pressure of possible new competitors entering the market and changing environment (e.g. market shares, prices, customer loyalty).

Will depend on the extent to which there are barriers to entry.

>Economies of scale (minimum size requirements for profitable operations),>Capital Requirements- High initial investments and fixed costs>Cost advantages - due to experience curve effects of operation>Brand loyalty of customers>Protected intellectual property like patents, licenses etc,>Scarcity of important resources, e.g. qualified expert staff>Access to raw materials is controlled by existing players,>Distribution channels are controlled by existing players,>Existing players have close customer relations, e.g. from long-term service contracts,>High switching costs for customers>Brand Loyalty>Legislation and government action

The Threat of substitute products

Pressure from alternative product substitutive

Market volume and potential sales volume may be affected for existing players. This category also relates to complementary products.

Treat of substitutes is determined by factors like

>     Brand loyalty of customers,>       Close customer relationships,>       Switching costs for customers,>       The relative price for performance of substitutes,>       Current trends.

The Intensity of competitive rivalry

Competitive pressure on prices, margins, and hence, on profitability due to rivalry

Competition between existing players is likely to be high when

>      There are many players of about the same size

>       Players have similar strategies

>       There is not much differentiation between players and their products, hence, there is much price competition.

>      Low market growth rates (growth of a particular company is possible only at the expense of a competitor).

>       Barriers for exit are high (e.g. expensive and highly specialized equipment).

Concentration Ratio (CR) – Economic indicator of measure of rivalry by industry concentration. The Bureau of Census periodically reports the CR for major Standard Industrial Classifications (SIC's).

Shows percent of market share held by the largest firms

- A high concentration ratio indicates- only a few firms holding a large market share, the competitive landscape is less competitive (closer to a monopoly).

- A low concentration ratio indicates- that the industry is characterized by many rivals (competitive)

Profitability:-An industry’s profit potential is largely determined by the intensity of competitive rivalry

-As rivalry among competing firms intensifies, industry profits declines

Profitability highest in industries with:

1- low rivalry, 2- limited entry, 3- few substitute products, 4- low supplier power, 5- low power by the buyers

PORTER’S FIVE FORCE MODEL IN HAVELLS

Threat of New Entrants LOW

Supplier Bargaining Power LOW

Rivalry/ Competition Among existing firms MEDIUM

Buyers Bargaining Power MEDIUM-HIGH

Threat of Substitute Products LOW

Reference- altadynamics.com/Baruch/Porter%205%20forces%20analysis.doc

BCG Matrix

BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970’s. According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share.

Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms.

RELATIVE MARKET SHARE

RMS = Business unit sales this year

Leading rival sales this year

The higher your market share, the higher proportion of the market you control.

Market growth is used as a measure of a market’s attractiveness.

MARKET GROWTH RATE

MGR = Individual sales this year - individual sales last year

Individual sales last year

Markets experiencing high growth are ones where the total market share available is expanding, and there’s plenty of opportunity for everyone to make money.

It is a portfolio planning model which is based on the observation that a company’s business units can be classified in to four categories:

I. Stars II. Question marks

III. Cash cowsIV. Dogs

It is based on the combination of market growth and market share relative to the next best competitor.

The matrix comprises of four quadrants each describing the size and position of the strategic business unit owned by an organization.

Stars Question Marks

Cash Cow Dogs

On the vertical axis is the Market Growth rate of the market in which the business operates. A market growth rate above 10 percent is considered to be high.

On the horizontal axis is the Relative Market Share. It refers to the Strategic Business Unit’s market share as compared to the firm, which is its largest competitor in the segment under consideration. The relative market share serves a measure of the company’s strength in the market segment. The two axes are divided into high & low. The growth matrix is divided into four cells each indicating a different type of business profile.

1. QUESTION MARKS: - These are Businesses that operate in high- growth markets but have low relative market shares. A question mark requires a lot of cash because the company has to spend money on plant, equipment and personnel to keep up with the fast growing market and because it wants to overtake the market leader. The company has to think hard about whether to keep on investing money into this business or put an end. Strategic options for question marks include..

I. Market penetrationII. Market development

III. Product developmentIV. Which are all intensive strategies or divestment?

2. STARS: - It is a market leader in a high growth market. A star does not necessarily produce a positive cash flow for the company. The company must spend substantial funds to keep up with the high market growth and to fight off competitor attacks. A star is a potential business which has the competitive advantage to be a market leader in an industry that is growing fast. Strategic options for stars include.

I. Integration – forward, backward and horizontal

Relative Market share

Relative Market Share

LH

Market

Growth

Rate

H

L

II. Market penetrationIII. Market developmentIV. Product developmentV. Joint ventures

3. CASH COWS: - Stars with a falling growth rate that still have the largest relative market share and produce a lot of cash for the company is called a cash cow. The company does not have to finance expansion because the markets growth rate has slowed because the business is the market leader it enjoys economies of scale and higher profit margins. The company uses its cash cows to pay bills and support other business. a). Strong position:-strategic options are

I. Product developmentII. Concentric diversification

b). Weak position :- strategic options areI. Retrenchment

II. Divestment

4. DOGS: - Businesses that have weak market shares in low-growth markets are in the dog category. The company should consider whether they are expecting a turn around in the market growth rate or a new chance for market leadership else they should divest this business. It would be fruitless to spend and money on this matrix business. Strategic options for Dogs include

I. Retrenchment (if it is believed that it could be revitalized)II. Liquidation

III. Divestment (if you can find someone to buy!)Successful products may well move from question mark through star to Cash Cow and finally to Dog. Less successful products that never gain market position will move straight from question mark to Dog.

MAIN STEPS OF BCG MATRIX

A. Identifying and dividing a company into SBU.B. Assessing and comparing the prospects of each SBU according to two criteria

1. SBU’S relative market share.

2. Growth rate OF SBU’S industry.

C. Classifying the SBU’S on the basis of BCG matrix.

D. Developing strategic objectives for each SBU.

BENEFITS

A. BCG MATRIX is simple and easy to understand.B. It helps you to quickly and simply screen the opportunities open to you, and helps you

think about how you can make the most of them.

C. It is used to identify how corporate cash resources can best be used to maximize a company’s future growth and profitability.

LIMITATIONS

A. Definition (qualitative and quantitative) of the market is sometimes difficult.B. It assumes that market share and profitability are directly related.C. The use of high and low to form four categories is too simplistic.D. Growth rate is only one aspect of industry attractiveness and high growth markets are not

always the most profitable.E. It considers the product or business in relation to the largest player only.F. It ignores the impact of small competitors whose market share is rising fast.G. Market share is only one aspect of overall competitive position.H. It ignores interdependence and synergy.I. Companies will frequently search for a balanced portfolio, since. Too many stars may

lead to a cash crisis too many Cash Cows puts future profitability at risk and too many question marks may affect current profitability.

BCG MATRIX IN HAVELLS:-

Indian Operations of the Company are divided into 4 key segments:

Switchgear:Havells is the largest manufacturers of MCBs, RCCBs, and distribution boards in India .With the market share of around 25% in the market for MCBs. In FY08, switchgear contributed 25% at Rs. 5420 million to its overall revenue. This segment is the most profitable one with operating margins to the tune of 33% in the FY08. The Company currently exports MCBs to over countries, including the quality conscious European countries. The Company is the number one player in domestic switchboards with more than 20% market share and is the 4th largest in Industrial switch boards. With continued investment in power sector they expect Company to grow at 15% CAGR over FY08-FY12.Switch Gear division had EBIT margins of 32% for Q3FY09. They expect margins in this business will remain stable above 30% over long term.

Cable and Wires:The cable & wire segment generated Rs 2133 million in the Q3FY09 registering y-o-y de-growth of 14% EBIT margins fell from 9.5% 9M YTD FY08 to 5.4% in FY09. Fall in revenues was registered due to drop in prices of cables and wires and huge margin drop in was due adjustment in inventory due to massive reduction in prices of Copper in this Quarter. Company had negative EBIT of Rs. -76 million on revenues of Rs. 2133 million for Q3.The Company is recognized as quality manufacturers of cable & wires and offers a complete range of low and high voltage PVC and XLPE cables, besides, domestic/FRLS wires, Co-Axial TV and telephone cables.

Lightning and FixturesDuring FY08, the turnover of the division grew at 25% y-o-y to Rs 2900 million, first quarter revenues stood at 650 million, 11% up from same period of previous year. The Company

generated operating profit of Rs.190 million with 26.7% margins as against 12.3% margin last year. In this division, the Company expanded its CFL capacity to become the largest CFL manufacturer in the country. They expect Company to aggressively pitch this segment by launching a range of products in lightings and fixtures as it brings products from the stable of Sylvania into the Indian markets. Currently 60% of the CFL and only 30% of the fixtures market is organized. Their estimates put Lightings and Fixtures business growth at 25% CAGR FY10E –FY12E as industrial growth is likely to pick up.

Electrical Consumer Deliverables & OthersHavells also offers products like electric fans, meters and ‘Crabtree’ brand bath fittings which are largely consumer products and add diversity to Havells product profile. With strong brand image among domestic consumers, Havells may launch new products like Geysers in this segment. They believe the electric fan segment, which contributes 10% to consolidated revenues, and generates operating margins in excess of 20%, is the key focus segment. The Company has increased its share form 3% to 13% in the organized fan market of INR 17 bn. from FY05 to FY08.They expect Company’s top line to grow at CAGR of 25% as industry growth likely to pickup and organized players increase their share in the market.

Stars Switchgears as the number

one player in domestic switchboards with more than 20% market shareWith high growth rate.

Question Marks Electrical consumer

Deliverables & Others products like CRABTREE switches, Geyser, Air-conditioner have the ability to gain market share.

Cash Cow Lighting and Fixtures Products like Sylvania due to cultural difference and cost rationalization undergo retrenchment, and divestment in Europe, basically outsource its products from India.

Dogs Cables and wires Low growth as well as market shares in market.

LH

20% M

18% A

16% R

14% K

12% E

10% T

8% G

6% R

4% O

2% W

0% T

H

H

L

Relative Market Share

Key focusing strategies for future growth –

• Since Construction and real Estate sector has slowed down, they expect demand to go down in near future and will pick up slowly.• Although investments in power sector will continue to rise but Havells will not be able to take complete advantage as it does not manufacture some range of High Tension cables.• During the FY08, the Company had almost doubled its capacity. Havells’ strong brand value and aggressive marketing to help it grow its top line for its cables and wires segment..

REFERENCE

http://www.csgstrategies.com/

www.valuenotes.com/fairwealth/fairwealth_havells_30Jan09.pdf

Books- Strategic management by Hill and Jones

VRIO Framework:-

A FRAMEWORK FOR ANALYSIS: VRIO

a) Resource-based analysis of the firm determines which resources and capabilities result in which strengths or weaknesses

b) Strategies are to be implemented which exploit (or build) strengths and avoid (or eliminate) weaknesses

c) What constitutes a strength or weakness is partially a function of the external environment

d) Framework for analysis: VRIO - resources and capabilities should be

Valuable 

 Rare Inimitable

Organization can effectively exploit them

VALUE of resources and capabilities

a) A VALUABLE resource or capability (or a combination thereof) must

I. Contribute to fulfillment of customer's needs

II. At a price the consumer is willing to pay, which is determined by

i. Customer preferences

ii. Available alternatives (including substitute products)

iii. Supply of related or supplementary goods

b) Thus, value is partially a function of external environment (product market, demand forces)

c) Changes in consumer tastes, industry structure, technology, etc. can result in changed value

d) Resources of different firms can be valuable in different ways (e.g., Timex versus Rolex)

e) Value = Lowered costs or increased revenues or both

SCARCITY of resources and capabilities

a) Resources and capabilities must be in short supply to create competitive advantage (and go beyond competitive parity)

b) An analysis of the firm's resources and capabilities must include critical assessment whether they are unusual when compared to those of competitors

c) How rare does a resource have to be in order to have potential for generating a competitive advantage?

d) To be a source of sustained competitive advantage the rarity of the resource must persist over time

INIMITABILITY of resources and capabilities

a) Requirement for sustained competitive advantageb) Ease of imitation depends on

i. Cost asymmetries ("Do firms without a resource or capability face a cost disadvantage in obtaining it compared to firms that already possess it?")

ii. Capabilities of competitors

c) Sources of cost asymmetries / cost disadvantages fall into two categories :

i. Impediments to imitation : Impede rivals from duplicating critical resources and capabilities.

ii. Early-mover advantages : Set in motion a dynamic that increases the magnitude of that advantage relative to other firms over time

A. Impediments to imitation :

a. Legal restrictions on imitation :

i. Patents, copyrights, trademarks

ii. Governmental control over entry into markets (licensing, certification, quotas on operating rights)

b. Superior access to inputs or to customers

c. Market size and scale economies

d. Intangible barriers to imitation

i. Causal ambiguity

ii. Dependence on historical circumstances

iii. Other path dependencies

iv. Social complexity

B. Degrees of resource and capability imitability

i. Cannot be imitated: Patents, unique assets, unique locations

ii. Difficult to imitate: Brand loyalty, employee satisfaction, reputation for fairness.

iii. Can be imitated (but may not be) Capacity preemption, economies of scale.

iv. Easy to imitate: Cash, commodities

ORGANIZING to exploit competitive potential of resources and capabilities

The following elements must be in place in order to effectively exploit the resource(s) and/or capability(s):

i. Structureii. Management and control systems

iii. Compensation policiesiv. Business processesv. Complementary resources and capabilities

THE VRIO FRAMEWORK FOR CRABTREE SWITCHES

Is a resource or a capability or a combination of resources & capabilities?

Resource/capability

Valuable RareCostly to Imitate

Exploitable by the

Organization

Competitive implications

Economic performance Strengths or

Weaknesses

Marketing Yes No No Yes Competitive Parity Normal

Strength

Yes Yes No Yes Temporary Normal Strength

Environmental strategy

Competitive advantage

Product reliability

Yes Yes No YesTemporary competitive advantage

Above normalStrength and distinctive

competence

Leadership Yes Yes Yes YesSustained

competitive advantage

Above normal

Strength and sustainable distinctive

competence

Strategic alliance

Yes No Yes Yes Temporary competitive advantage

Above normalStrength and distinctive

competence

Source: C. Montgomery, "Resources: The essence of Corporate Advantage", Harvard Business School Case N1-792-064

Source: Barney, 1997, Tables 1, p.163.

Value chain analysis

The Value Chain

All of the functions of the company –such as production, marketing, R&D, service, information systems, material management, and human resources-have a role in lowering the cost structure and increasing the perceived value of the products through differentiation. The term VALUE CHAIN refers to the idea that a company is a chain of activities for transforming inputs into outputs that customers value. The process of transformation is composed of a number of primary activities and support activities that add value to the product.

Primary Activities

Support Activities

Consistent value creation:

Consistent profitable growth over the last 10 years 40% CAGR

Sales - 27x and PAT - 58x 30 quarters of consecutive growth* 10-year EBDITA and PAT CAGR in excess of 40% Organic growth led by gaining market share in existing Products, launch of new branded, consumer products

Significant brand emphasis to create a strong differentiator with FMCG like packaging, promotions and advertisements.

Consumer pull evenly matched with a well entrenched distribution network High RoCE and RoE creating shareholder value.

Research & Marketing Customer

Development Production & Sales service

Company

Infrastructure

Information

Systems

Materials

Management

Human

Resources

Buoyant end user segments:

Infrastructure, power and construction key user segments. Significant investment planned with greater focus on infrastructure development.

Large investment in real estate and power sectors. Structural changes in the underlying buying patterns. Distinctive shift from un-organized to organized Segment.

Increased brand awareness for hitherto commoditized products –wires and cables.

Growing protection awareness. Increasing affordability and willingness to pay for quality products.

Large opportunities for quality, branded and well distributed product companies like Havell’s.

Innovation is the hallmark of every vital development at QRG. New ideas, inventions deepen scientific knowledge and give its work force a new impetus towards technical progress.

QRG technological strengths and its endeavor towards continuous research & development has allowed it to fulfill its responsibilities towards its customers. The responsibility of providing its customers the best products and zero defect services to enable them to be comfortable and secure in usage of electricity.

Centre For Research and Innovation (CRI)

QRG has recently invested 20 million dollars in a new center for research and innovation. This centre has been set-up at the company's H.O. premises in Noida.

The task of this centre is to provide the theoretical & experimental foundations for all segments of electrical engineering. The centre closely cooperates with the various departments so as to provide the best and the latest in terms of technology and design. The Group has also decided to dedicate 2% of it's turnover towards R&D.

Diversification

Diversification is the process of adding new businesses to the company that are distinct from its established operations. A diversified or multibusiness company is thus one that is involved in two or more distinct industries. To increase profitability, a diversification strategy should enable a company or one or more of its business units to

(1) Perform one or more of the value creation function at a lower cost,

(2) Perform one or more of the value creation functions in a way that allows for differentiation and gives a company pricing options, or

(3) Help the company to manage industry rivalry better.

The managers of a diversified company can boost profitability in five main ways:

1) Transferring competencies among existing business.2) Leveraging competencies to create new businesses.3) Sharing resources to realize economies of scope.4) Using diversification as a means of managing rivalry in one or more industries, and

5) Exploiting general organizational competencies that enhance the performance of all business units within a diversified company.

The two main types of diversification are related diversification and unrelated diversification.

Related diversification is diversification into a new business activity in a different industry that is related to a company’s existing business activity, or activities, by commonalities between one or more components of each activity’s value chain.

Unrelated diversification is based on entry into industries that have no obvious connection to any of a company’s value chain activities in its present industries.

CRABTREE

“Havells is not shy of investing in unrelated field. The acquisition marks the beginning of our entry into the healthcare segment. We have spent over Rs 20 cr for the acquisition and are investing an equal amount in expanding the existing facilities in the hospital. In the next phase, we are likely to go for more such facilities”

-- Qimat Rai Gupta

1976: Rewirable switches and changeover switches.

1979: HBC fuses at Delhi

1980: Energy meters

1983: Acquired towers and transformer ltd

1987: MCB’s JV with GEYER Germany

1990: Manufacturing plant for changeover switches.

1992: Technical JV with Schiele Industrieworke, Germany, for ELCBs.

1996: Acquired a Manufacturing plant for power cables and wires. JV with Electrium for MCCBs and with Crabtree

for MPS.

1997: Acquired Electric control and switchboards Noida, for customized package solutions.

1998: Introduced high-end Ferraris electronic meter in JV with DZG, Germany.

2000: Acquired controlling stakes in Duke Arnics Electronics meters, and in industry major Standard Electricals.

2001: Acquired MCCBs business of Crabtree and merged ECS ltd in the company.

2002: Attained IEC & CSA certification. Standard electrical became 100%

2004: Manufacturing plant for CFL’s and Ceiling Fans Noida

Ceiling fans Noida.

2005: Manufacturing plant for fans in Uttaranchal.

2006: CFL plant at Haridwar

2007: Acquired Lightning business of Sylvania group. QRG group entered healthcare business acquiring majority

Stakes (70%) in Central Hospital and Research centre Faridabad.

2008: Ventured into Motor business.

2009: Set up of fully automatic switchgear manufacturing plant at Baddi.

Consolidation of CFL manufacturing plant at Neemrana for

domestic and export purposes

MERGERS & ACQUISITION

The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.

Mergers and acquisitions are the third, and most widely used, vehicle that companies can use to enter new industries or countries. How to implement structure, control systems, and culture to manage a new acquisition is important because many acquisitions are unsuccessful. And one of the main reasons acquisitions perform poorly is that many companies do not anticipate the difficulties associated with merging or integrating new companies into their existing operations.

CRABTREE

• Towers and Transformers Ltd in 1983.

• 1996 Joint Venture with Crabtree Modular Plate Switches, Duke Arnics, DZG Germany.

• LEARNING FROM MISTAKES: Lost bid for Electrium to Siemens by 8 million pounds. Learned how to mobilize funding and to deal with complex issues of merger and acquisitions.

• GRAND TAKEOVER March 2007:-

• SLI SYLVINIA: 235.5 million Euros led by Barclays

Capital finances

• Entry into Europe, Latin America and Asia Pacific

Factors for Success:

1. International approvals: such as CSA, KEMA, CB, CE,

ASTA, SEMKO, SIRIUM (Malaysia), AENOR (Spain), etc

For its various products.

Entry into international markets.

2. Strategic Alliances and Continuous enrichment of existing business

3. The production of Fans in tax free zones of

Uttaranchal

4. Integrating into stores

How Strategic the Acquisition was?

• Can keep existing manufacturing facilities in Europe, but will create additional capacities in low cost India

• Havells substitute Chinese export to Sylvania

• Havells will leverage Sylvania distribution in Europe,

USA and Latin

• America for margin rich switch gear products

• Sylvania R & D practices can transform Havells

• Havells can use Sylvania multi brand strategy for different markets

"Sylvania's acquisition is a first step towards attaining leading position in the global lighting industry with a strong presence in the developed markets of Europe and high growth Latin American markets. This acquisition will provide us a platform with strong brands and established distribution channels on which Havells can build on. Further, the management team responsible for SLI Sylvania's turnaround will continue to remain with the business and grow the combined organization"

"The management team is extremely excited about the Transaction and believes that SLI Sylvania is well-poised to effectively exploit the opportunities ahead with significant synergies to be realized by the combined organization”.

The value chain, also known as value chain analysis, is a concept from business management that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.

A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order and at each activity the product gains some value.

The chain of activities gives the products more added value than the sum of added values of all activities. It is important not to mix the concept of the value chain with the costs occurring throughout the activities. A diamond cutter can be used as an example of the difference. The cutting activity may have a low cost, but the activity adds much of the value to the end product, since a rough diamond is significantly less valuable than a cut diamond. Typically, the described value chain and the documentation of processes, assessment and auditing of adherence to the process routines are at the core of the quality certification of the business, e.g. ISO 9001.

The value chain categorizes the generic value-adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), outbound logistics, marketing and sales (demand), and services (maintenance). The "support activities" include: administrative infrastructure management, human resource management, technology (R&D), and procurement. The costs and value drivers are identified for each value activity. The value chain framework

quickly made its way to the forefront of management thought as a powerful analysis tool for strategic planning. The simpler concept of value streams, a cross-functional process which was developed over the next decade, had some success in the early 1990s.

Six business functions of the Value Chain:

• Research and Development

• Design of Products, Services, or Processes

• Production

• Marketing & Sales

• Distribution

• Customer Service

HAVELL’S RESEARCH AND DEVELOPMENT

Research and Development

Innovation is the hallmark of every vital development at havell’s Group. New ideas, inventions deepen scientific knowledge and give its work force a new impetus towards technical progress.

Havell’s technological strengths and its endeavor towards continuous research & development have allowed it to fulfill its responsibilities towards its customers. The responsibility of providing its customers the best products and zero defect services to enable them to be comfortable and secure in usage of electricity. Havells has recently invested 50 crores in the havell’s Center for Research and Innovation, set-up at the company's Head Office premises in Noida, U.P.

The objective of this centre is to provide the theoretical & experimental foundations for all segments of electrical engineering. The centre closely cooperates with the various departments so as to provide the best and the latest in terms of technology and design.

Quality Control

The essence of quality is closely wrapped in the way they think, plan and work. It finds its true expression when they extend beyond themselves to exceed our customer’s expectations. To deliver products those are safer, faster and simply better.

Each time, every time. Building customer confidence through teamwork is a top priority to provide a wide variety of products and services.

Realising and respecting the basic needs of customers to feel more secure, they’ve committed themselves to make their products better, safer and smarter than what he or she is looking for. That's a passion that began 30 years ago and that's how it continues to be even today. customers rely on havells and it is responsible to give them the very best. All their products are as per IEC standards.

Havells has a simple rule on quality. If it doesn't exceed customer expectation, it's not quality performance.

Company products

Havells manufactures products such as industrial and domestic circuit protection switchgears, cables and wires, motors, fans, power capacitors, CFL lamps, luminaires for domestic,commercial and industrial applications, modular switches, and bathfittings covering the

entire range of household, commercial and industrial electrical needs.

Building Circuit Protection Capacitors Fans Bath fittings and Accessories Industrial Circuit Protection Lighting Modular Plate Switches Motors CFL Cables and Wire

Building Circuit Protection Miniature Circuit Breaker Isolator Changeover Switch Residual Current Circuit Breaker RCBO Distribution Board Indicator Light Capacitors Normal Duty Heavy Duty Super Heavy Duty Agriculture Duty Motor Run Capacitors

Fans Ceiling Fans Table Fans Wall Mounting Fans Pedestal Fans Air Circulator Fans Ventilating Fans Industrial Circuit Protection Air Circuit Breaker MCCB Panel Board System Changeover Switch By-Pass Changeover Switch Automatic Transfer Switch Switch Disconnector Load Changeover Switch Control Gear Switch Disconnector Fuse Fuse Switch and Switch Fuse Chamber System Fuse Holder Nylon Fuse Base Fuse Link and Fuse Base Lighting LED Lighting Consumer Lighting COmmercial Lighting Down Lighter Landscape-Bunker Lighting Industrial Lighting Area Lighting Road Lighting Speciality lamps Accessories Aura Lighting Modular Plate Switches Havells Modular Switches Crabtree Modular Switches Motors Foot Mounting Flange Motor Flange Motor Foot Cum Flange Inverter Duty Motors with Forced Cooling Crane Duty Motors Brake Motors CFL

Retrofit Non Retrofit Higher Range Liliput FPL Cables and Wires Power Cables - Aluminium Control Cables - Copper Copper Flexible Cables Integrated service: AIL have the ability to provide customers with an integrated range

of casting, machining and sub-assembly capabilities. The company makes a number of casting modules for engines and transmission components, which are typically complementary to each other. Moving down the value chain into casting has enabled the company to increase the product range, provide a budled service to its customers and control more effectively raw material prices, process and wastages.

MAJOR PRODUCTS OF CRABTREE:

MODULAR SWITCHES RANGE THAMES PICCADILLY ATHENA

UNDEFLOOR BOX CASA

DIGITAL DIMMING AND ENERGY MANAGEMENT SYSTEM AURA PRO AURA IWD AURA IWS MOTION SENSOR

HAVELL’S BUSINESS SEGMENT

Havell's India operates in the business of switch gear, cable & wire and

electrical consumer durables. This company is largest manufacturers of

MCBs, RCCBs and distribution boards in India. This company also

manufactures a comprehensive range of industrial switchgear products

including MCCBs, fuse switches, fuses, changeover switches, contractors

etc.

Havells produces a complete range of low and high voltage PVC and

XLPE cables besides domestic FR/FRIS wires, Co-Axial TV and Telephone

cables. The company is recognised as quality manufacturers of cable with a

major presence in the country, resulting in fast growth in volume. Havell's

has a strong brand name in electrical consumer goods and a brand leader in

compact fluoresce

INVESTMENT RATIONALE:

Huge investments in power sector: As a part of power sector reforms,

the Government has approved the strategy formulated by the ministry of

power for distribution reforms. The eleventh five year plan has earmarked

capacity addition of 62,000 MW of power from FY07 to FY12. Increasing

focus on transmission and distribution scheme, rural electrification and rural

electrical supply augment revenue visibility. Focus on utilities such as

power and infrastructure sector is expected to drive growth initiatives of the company.

High GDP Growth: With an expected GDP growth of 8% by the end

of the Tenth Five-year Plan, the energy demand is expected to grow at 5%.

India’s incremental energy demand for the next decade is projected to be

among the highest in the world spurred by sustained economic growth, rise

in income levels, and increased availability of goods and services. Havell’s is a company which is poised to benefit from this.

Growing focus on exports: Havell’s caters its international clientele spread over 51 countries with offices in London, Dubai, Dhaka, China, Nigeria, Sri Lanka and distribution networks in all major countries. In March, the company bagged an export contract for 2 years from Eaton Electrical group for supply of switchgear amounting US $10 million.

Despite the intense competition in the global electrical industry, Havell’s recorded a export turnover of Rs. 75 Crores in FY06. Going forward it is expected to clock a turnover of Rs.120 Crore in FY07 and upto Rs 150 Crores in FY08.

Cost Competitiveness – Cost competitiveness has been enhanced

through improvements in process using tools like six sigma, 5-S, TQM,

Kaizen at all units of the company.

Additional Capital expenditure- Havell's India has made capital

expenditure to the tune of Rs.60 crores in FY06 and is making capital expenditure amounting Rs. 130 Crores and Rs.70 Crores in FY07 & FY08 respectively. Capital expenditute will bring in additional capacity resulting in increase in topline.

Foreign subsidiary- Havell has incorporated Havell’s (UK) Limited

in London, a company registered under the company law of UK. It is a

wholly owned subsidiary company of Havell’s India Limited set up primarily

to promote the business in European market and will result in increasing

export turnover to a great extent.

Overseas acquisition - Managements of Havell's is actively looking for

inorganic growth which will have synergies with their existing product

portfolio. Havell's has got the approval from its board of directors to

acquire a greek company for Euros 10 million. Crabtree India started out as a

jointventure between Crabtree UK and Havell's India Ltd. Crabtree India Ltd.

has been merged with Havell's India Ltd along with brandrights assignment

for Indian subcontinent.

Strong trade network in electrical industry- Havell's has one of the

largest and strongest network in India. Havell's recognises the strength of

trade channel, and the company interacts with dealer on a regular basis to get

a fair pulse of the market.

New Product launch: The company is also diversifying into new

products of capacitors and motors. These products will be a growth driver in

future. It is expected to incur a capex of Rs.50 Crores for this products nt lamp.

Competitive AdvantageA company has a competitive advantage over its rivals when its profitability is greater than the average profitability for all companies in its industry.

The goal of much of business strategy is to achieve a sustainable competitive advantage.It has a sustained competitive advantage when it is able to maintain above average profitability over a number of years.

Competitive advantage can come in one or combination of the following factors:  Price, service, quality, location, or imbedded customer base.  The better your business performs against one of these factors, the more likely you are to succeed.

Two basic types of competitive advantage:

• Cost advantage

• Differentiation advantage

A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself.

Cost and differentiation advantages are known as positional advantages since they describe the firm's position in the industry as a leader in either cost or differentiation.

A resource-based view emphasizes that a firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation. The following diagram combines the resource-based and positioning views to illustrate the concept of competitive advantage:

P.T.O

A Model Of Competitive Advantage:

Resources and Capabilities

Resources

Distinctive Competencies

Capabilities

Cost Advantage

Or

Differentiation Advantage

Value Creation

According to the resource-based view, in order to develop a competitive advantage the firm must have resources and capabilities that are superior to those of its competitors. Without this superiority, the competitors simply could replicate what the firm was doing and any advantage quickly would disappear.

Resources are the firm-specific assets useful for creating a cost or differentiation advantage and that few competitors can acquire easily. The following are some examples of such resources:

• Patents and trademarks

• Proprietary know-how

• Installed customer base

• Reputation of the firm

• Brand equity

Capabilities refer to the firm's ability to utilize its resources effectively. An example of a capability is the ability to bring a product to market faster than competitors. Such capabilities are embedded in the routines of the organization and are not easily documented as procedures and thus are difficult for competitors to replicate.

The firm's resources and capabilities together form its distinctive competencies. These competencies enable innovation, efficiency, quality, and customer responsiveness, all of which can be leveraged to create a cost advantage or a differentiation dvantage.

Cost Advantage and Differentiation Advantage

Competitive advantage is created by using resources and capabilities to achieve either a lower cost structure or a differentiated product. A firm positions itself in its industry through its choice of low cost or differentiation. This decision is a central component of the firm's competitive strategy.

Another important decision is how broad or narrow a market segment to target.

Value Creation

The firm creates value by performing a series of activities that are identified as the value chain. In addition to the firm's own value-creating activities, the firm operates in a value system of vertical activities including those of upstream suppliers and downstream channel members.

To achieve a competitive advantage, the firm must perform one or more value creating activities in a way that creates more overall value than do competitors. Superior value is created through lower costs or superior benefits to the consumer (differentiation).

Competitive Advantages in case of Crabtree Switches:

Quality is important in almost every industry.  People do not like to pay good money for work/product that has to soon be redone or have to purchase a new unit that fails prematurely.  By that I mean faster than expected.  Over the long term producing higher quality is almost always less expensive as you don’t have to deal with as many returns, or as much scrap, or rework. 

Crabtree focuses a lot on producing quality switches, which can be felt by usage of its switches. Some of the key features that they offer in terms of quality are:

>Heavy plastic material>Simple and bold Looks>Safe locking system>No Colour Fading

Crabtree offers a premium segment product, they are bought in the market because of the brand equity they have created with their customer base.

Crabtree switches have a differentiation advantage. It has resources and capabilities which can be ascertained on the basis of following:

• Patents and trademarks

• Proprietary know-how

• Installed customer base

• Reputation of the firm

• Brand equity

Even the advertisements of the company focus on their core competency that is producing quality product and creating value.

Last but not the least, the company has created a value chain with the series of activities, which has helped in creating value amongst the customer base.