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
Commenced trading operations in
1958
Delhi.
Set up the first factory for Changeover
1976
Switches at Kirti Nagar, Delhi
Set up a factory for HBC Fuses at
1979
Badli, Delhi.
Started manufacturing high quality
1980
Energy Meters at Tilak Nagar, Delhi.
Took over Towers and Transformers
1983 Ltd and turned it around in one year to
profitably.
Started manufacturing MCBs at Badli,
1987 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
Set up another factory at Faridabad,
1993
Haryana for Control gear Products.
1995 Ameet Gupta joined family Business

Entered a Joint Venture with

Electrium, UK for manufacturing
1996 Dorman Smith MCCBs and Crabtree
Modular Plate Switches.

Took over Electric Control &

Switchboards at NOIDA for
manufacturing customized packaged
1997
solutions customized packaged
solutions

Introduced high-end Ferraris Meters

1998 in Joint Venture with DZG, Germany.

Acquired controlling stake in Duke

Arnics Electronics (P) Limited and an
2000
industry major-Standard Electricals
Ltd.
Acquired business of Havells
Industries Ltd, MCCB of Crabtree
India Limited
2001 Merged ECS Limited in the company
to consolidate in its area of core
competence.

Standard Electrical Company becomes

2002
a 100% Subsidiary of the company.
Set up factory at Badli (H.P.) for
manufacturing of Domestic Switchgea
Set up a plant for manufacturing of
CFL at existing Faridabad Works
2004
Set up a plant for manufacturing of
Ceiling Fans at Noida
Set-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 Acquisition
Crabtree India merged with Havells
India.
Acquire SLI Sylvania’s lighting
business, head quartered in Frankfurt
2007
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, technological
expertise, 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 better
2) Different people have different reference points. For how they evaluate the advantages
disadvantages
3) 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 suppliers
The 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 Rivalry/ Buyers

Bargaining Competitio Bargaining
Power n Among Power
LOW existing MEDIUM-
firms HIGH
MEDIUM

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 cows

IV. 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

Market

Growth

Rate

Cash Cow Dogs

H Relative Market share L

Relative Market Share

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 penetration
II. Market development
III. Product development
IV. 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
II. Market penetration
III. Market development
IV. Product development
V. 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 development
II. Concentric diversification
b). Weak position :- strategic options are
I. 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 Fixtures

During 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 & Others

Havells 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
20% M
pickup and organized players increase their share in the market.
18% A H

16% R Stars Question Marks

14% K • Switchgears as the number • Electrical consumer
one player in domestic Deliverables & Others
12% E switchboards with more products like CRABTREE
than 20% market share switches, Geyser, Air-
10% T With high growth rate. conditioner have the ability
to gain market share.
8% G

6% R

4% O

2% W

0% T

H
 Cash Cow Dogs
• Lighting and Fixtures • Cables and wires
L Products like Sylvania due to Low growth as well as market
cultural difference and cost shares in market.
rationalization undergo
retrenchment, and divestment
in Europe, basically outsource
its products from India.

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 advantage

b) 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. Structure

ii. Management and control systems

iii. Compensation policies

iv. Business processes

v. Complementary resources and capabilities

THE VRIO FRAMEWORK FOR CRABTREE

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

Resource/ Costly to Exploitable Competitive Economic

Valuable Rare Strengths or
capability Imitate by the implications performance Weaknesses
Organization

Marketing Yes No No Yes Competitive Parity Normal Strength

 Environmenta
l Temporary
strategy Yes Yes No Yes Competitive Normal Strength
advantage

Temporary Strength and

Product
Yes Yes No Yes competitive Above normal distinctive
reliability
advantage competence

Sustained Strength and

Leadership Yes Yes Yes Yes competitive Above normal sustainable distinctive
advantage competence

Temporary Strength and

Strategic Yes No Yes Yes competitive Above normal distinctive
alliance advantage 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.
 Research & Marketing
Customer
Primary Activities
Development Production & Sales
service

Materials
Company Information Human
Management
Infrastructure Systems Resources

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.
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 Advantage
A 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:

Resourc
es

Distinctive Cost Advantage

Competenci Or Value
es Creation
Differentiation
Advantage

Capabiliti
es
Resources and Capabilities

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.