INGERSOLL RAND (INDIA) LTD AIR COMPRESSOR BUSINESS AT CROSS ROADS

INGERSOLL RAND : COMPANY BACKGROUND• Started in Dublin, Ireland in 1871 is a global major in manufacturing

of industrial equipment.

• Deals mainly in production of air compressors, jackhammers, different types of drills, power tools, refrigeration systems and gulf cars.

• Highly diverse product profile with 4 different market segments: security & safety, infrastructure, industrial productivity & climate control.

• Established in India in 1921. Went public by 1977. Operates 2 plants in Bangalore & Ahmedabad.

• Current revenue is of 15 billion USD & more than 50000 employees and operates world-wide.

PROBLEM STATEMENT

•How Ingersoll Rand would react to the current market scenario where the commoditization of Air Compressor seems imminent, should it jump into the price war and forget about the bottom line or should it try to build a new strategy where it can grow its business and not compromise on profitability.

AIR COMPRESSOR BUSINESS OF IRL

• Amounts for 25% of total revenue in India.

• 3 types of air compressors Small, medium and large reciprocating.

• Company sells large air compressors directly to clients via its own sales team.

• Small & medium are sold through distributors too.

• Majorly used in heavy industries and complex process oriented industries like pharma, steel & cement.

• IRL has all variants of Air compressors from 4 CFM to 100 CFM without any product gap.

Competitors

Stiff competition.

Competitors are collaborating.

Gladiator syndrome.

PORTER’S 5 FORCE ANALYSIS OF IRL’S AIR COMPRESSOR BUSINESS

StrengthYears of

reputation as a quality leader.

Modern technology, no product gap,

skilled workforce and R&D capability.

WeaknessComparativel

y priced higher.Losing

market to unorganized

sector.Opportunity

Become solution oriented.

Stop importing from USA to reduce cost.Outsourcing.

ThreatEconomic slow

down and buyers negotiation powers are growing.

Competitors are collaborating with foreign

giants.

SWOT ANALYSIS OF IRL’S AIR COMPRESSOR BUSINESS

BUSINESS GOALS OF DECCAN TEXTILES

MD •Sales needs to be boosted to get more revenue.•Improvement of operational efficiency.

VP(Manufacturing)

•Reduction of cost of production.•New technology to improve efficiency & quality.

MaintenanceHead

•Air compressor performance needs to improve. •Losses due to maintenance amounting to 120 lacs per annum must be taken care of.

STAKEHOLDER ANALYSIS OF DECCAN TEXTILES

THE WAY FORWARD

1.More control over customer’s

business2.More cost

saving for client3.Long term

relationship and more reorders.

4.Customer will not negotiate on

price and profitability will be maintained.

Benefits

1.Solution providing firm

2.Cost of use approach

3. An in depth analysis of

customer needs and involvement

in related process.

4.Along with it focus should be

on value creation.

Desired

1.Product making firm

2.Cost of buy approach

3.No involvement in

Client’s business process and

needs.4.Focus on quality and innovation.

Current

DECCAN TEXTILE DEAL• IRL should close the sale and use this as a pilot project for the

new strategy for their air compressor business.

• The purchase team of Deccan must be convinced that their tactics of paying less and getting more is not so effective and how IRL’s air compressor is ultimately cot them less in cost-to-use approach.

• They need to show how the air compressor’s performance is related in achieving the business goals of different departments.

• Total Cost of Ownership (TCO) approach to be followed.

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