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GMSI581: STRATEGIC MANAGEMENT
MODULE LEADER: Prof. ASHWANI GOEL
: Submitted By : Devender Makkar Gaurav Gupta Harsh Ramani Misha Gupta ShellY Tewatia 1|Page

JAI GRAPHICS (OFF-SET PRINTING PRESS)


Jai Graphics is a dynamic company of hi-tech operations; it contributes to the growth of client from printing & publishing segment. Its range includes offset printing machine (4 colour printing & 6+ colour printing machine). Jai Graphics is a leading provider of digital offset printing solutions to the graphic arts markets. Multiple printing machines & web gives the company flexibility to offer the cost effective and efficient printing solutions to meet the client needs. And continuous investment in printing technology keeps the company equip with latest techniques and effects. The high-speed, hi-tech equipment provides company with consistent superior quality & lead over its competitors. Jai Graphics a well trusted Offset Printing Press with fully equipped graphic design studio which provides clear, reasonable and accessible quality solutions to Small & medium enterprises, and large corporate clients to enhance the image or sales of their business. The company has been successful in achieving this since more than twenty years. The company believes that professional, high-quality print media is very important for the business image, therefore it continuously focus on improving its service level using state of art equipments. VISION Its vision is to maintain and be endorsed leader in printing through uniform improvement in quality, in an eco-friendly manner. MISSION To deliver the customer right Quality, Services, Timely delivery at a nominal cost. To certify maximum satisfaction to the clients To persist fair practices adhering to legal, social, personal conscience framework To encourage company growth to fullest potential To preserve high degree of efficiency & effectiveness Quality through technology & workforce

OVERVIEW OF THE BUSINESS


Jai Graphics is a leading firm in the market since 1989. The company has the net worth of approx 10crores. The machines under the production house are: Heidelberg Machine (4 colour offset printing machine) Heidelberg SM 52-6 P2 (6-colour offset) Triumph 5550 EP Hydraulic and Programmable Paper Cutter Welbound 2000 - 6 CLAMP (Paper Binding Machine) It has an existing labour force of 50 employees. With the per day (24*7) press- running expense of: Employees salary (day & night shift) : 20000 Building maintenance : 3000 Raw Material : 3500(Ink expense) 25000 (Plate expense) Production Capacity : 1,20,000 sheets per day (4 colour)

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To recover the expenses, company needs to do the sales of 2, 50,000 per day. The companys current sales per month are 62, 50,000 & the profit share stands for (20%) i.e. 12, 50,000. The company has edge over its competitors because of its goodwill, service efficiency, attractive price range and credit lending capacity. The credit provided to the company by the raw material suppliers is two months, and the credit provided by the company to its clients is 1.5 months (to recover the cost). As the production of bulk output consumes approximately 15 days, which have to be adjusted in the credit duration offered. DRAWBACKS PAPER LOSS WORKER STRIKE MACHINE BROKEDOWN INCREASING COST OF RAWMETERIALS 5% BADDEBTS PA. 15% DEPRETIATION PA.

CLIENTS (CORPORATE HOUSES & ADVERTISEMENT AGENCIES)

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THE FOUR Ps OF JAI GRAPHICS

PRODUCT

PRICE

PLACE

PROMOTION

The 4Ps concept analysis is developed to help the marketers to manage the four most important aspect of the companys marketing. These are: Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support. Jai Graphics offers product range like brochures, flyers, newsletters, magazines, journals, catalogues, prospectus, posters, cartons, calendars, formal proposals, and many more with the size range of 32" x 42". The Company offers both, coloured as well as black & white printing using only the finest papers and materials. Pricing: Pricing refers to the process of setting a price for a product, including discounts. The price need not be monetary - it can simply be what is exchanged for the product or services, e.g. time, energy, psychology or attention. Jai Graphics quotes prices of the products in such a manner that it is affordable to all kinds of clients thereby giving an edge over its competitors. Style Glossy/Matte Textured Metallic 4" x 6" 4.50 7.50 9.00 6" x 8.5" 8.00 14.00 18.00 8.5" x 12" 35.00 45.50 55.00 12" x 17" 75.00 95.00 115.00

Promotion: The various methods of promotion that Jai Graphics follows includes representing their product by personally visiting the clients, advertising through media like magazines (various printing & local area magazines), flyers, consultancies(Jus-dial),

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exhibitions etc. Another promotion strategy which the company should implement is creating its website & launching itself on web (e-commerce). Place or distribution: Jai Graphics is located in okhla region, which is a hub of business organizations, and has around 150 off-set small and big presses in this region. Distribution refers to the channel by which a product or services is sold (e.g. online vs. Personal visits), i.e. methods adopted to reach maximum clients. As Jai Graphics is a B2B selling firm, hence most of the clients prefers to be visited (needs service at their door-step), which doesnt give much importance to the place factor, but because of their existence in an industrial area the company has conquered the place factor. (The 4 ps, 2008)

SWOT ANALYSIS OF JAI GRAPHICS


STRENGTHS Advanced Technology: Jai Graphics has been using highly automated production process and advanced technology than its competitors, which saves money and make their functioning effective. Companys Experience (Goodwill): The Company has an invaluable experience of more than 20 years which has helped it to outperform its rival companies. Adaptability: The Company is highly adaptable and is in uniform with demand of its customers. The company has a huge capacity to print in any colour, size and design etc., as per the demand of its customers. Pricing Policy: The Company has a highly negotiable pricing policy, and this has helped in attracting & retaining the customers. Thus, avoiding the customers from switching to its rival counterparts. Prices are adjustable and negotiable. Wide range of products: There is a huge range of products available (like brochures, flyers, newsletters, magazines, journals, catalogues, prospectus, posters, cartons, calendars, formal proposals). This gives variety to the customers & sustainability to the company. Quality of Work: The Company is well known in the nearby area (Okhla) for its quality work at affordable prices. WEAKNESSES Attrition rate is very high among employees in this industry as a whole. As the labours involved in running machines are un-skilled, and have only money as their motivational factor. Hence small increments influence them to switch their jobs. This results into huge operational cost for the company. Company is not investing required attention towards its marketing strategy. The biggest drawback is that it hasnt launched its website as yet, hence is unable reach global market. This has given an edge to its competitors, who have enhanced their client list and have reached global. Credits & Bad debts: The general credit period provided by Jai Graphics is 1.5 months, which gets expanded to three- four months, as the publishers (clients) pay the printers when they get money recovered from the market, and same is with other clients. Hence, the money gets stuck into the market for long, which causes difficulty to the company in meeting its expenses & buying of raw material. Hence, many other competitors, who have failed to recover their expenses from the market, were forced to leave this industry.

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OPPURTUNITIES There is huge scope in printing press industry in general since; media has been expanding at a rapid rate. As India being one of the fastest growing economies, it reflects huge potential for printing business as every business requires it for informational & promotional purpose. Thus the huge demand for products like pamphlets, calendars, leaflets, brochures etc will continue in near future. Web-ordering opens up new opportunities in terms of sales. The company has not utilized this platform till yet but it reflects huge prospect, if the company launches its website or register its business on various business sites like Google business, etc.; it can vouch for its products range nationally as well as globally to a large. THREATS Zero company loyalty: The Company has huge risk involved as there is high attrition rate among employees. It becomes difficult and costly for the company to hire and train employees again and again. Obsolesce Of Technology: The investment in Offset printing machine is huge (in crores). And on an average there is advancement in technology in every 2.5 year span. This leads to risk of huge investment as its comparatively tough to recover such a huge amount in a small duration of time. Since the government has been focusing only on government owned presses; therefore, least attention is paid towards the printing presses in small scale industry. These constitute one of the major threats. Threat from rival counterparts who have been charging very less prices in order to gain high market share and penetrate in the market. The cost of raw material, labours and other expenses are increasing at a constant rate, whereas the price in the market for the service (output) has turned negotiable (is declining) because of huge competition, which makes difficult to sustain in the market. This has forced many press owners to exit the market in recent years.

GENERIC STRATEGIES
Porters Generic strategies model helps to analysis competitive advantage of the firm. If a firm is able to position itself optimally in the market, then it can generate excellent results. As per the Porters model, firms strength mainly falls under two headings: Cost advantage, differentiation. On applying these strengths, in different scopes (broad & narrow); result into three generic strategies i.e. Cost Leadership, differentiation and focus.

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COST LEADERSHIP This generic strategy implies that the firm is enjoying advantage of low cost producer. Its product prices are somewhat around the average price of industry or below it. This is very important feature until and unless the company differentiate itself from its competitor because as the industry mature, price falls down thus only the firm with low cost structure can survive in long run. Print industry is characterised by high competition, thus it becomes necessary for firm to lower down its cost structure or differentiate itself from others. Jai Graphic since its inception concentrates on offering low prices to its clients. It mainly targets large corporate houses which orders in bulk, as in offset printing larger the size of order, cheaper is the cost per unit. Moreover, Jai Graphics is consistent leader in its field since more than 20 years, focusing mainly on bulk orders; this enables it to exert pressure on its supplier to provide materials on comparatively cheaper rates which gives an extra edge to the company over its competitors. In addition, Jai Graphics commitment toward technology advancement keeps it update to date with latest & cost efficient technology thereby enabling it to offer best possible prices. Apart from this, all the operations of Jai Graphics ranging from designing, creating metal plates, printing, binding etc. takes place under one roof which enables it to cut down its operational cost and ensure delivery of quality and timely service at much better prices. In an all, Jai Graphic enjoys cost leadership advantage using state of art equipment and effectively managing its operation.
DIFFERENTIATION

By differentiation strategy Porter claims that if a firm offers any additional attributes in the products or services, the value of product or services increases and the firm is able to charge a premium on them. Jai Graphics mainly focus towards its cost leadership strategy, but its highly skilled designing team makes a difference in the services offered by Jai Graphics. Jai Graphics believes in reverting back to the client with the final designs for approval within 48 hours of receiving order (varies with quantity). Moreover, after the design is finalized it is rechecked
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twice to avoid any possibility of mistakes because in case printing is done with mistakes or even the metal plate is created, it is of no use for the clients. This will not only result into huge monetary loss for Jai Graphics also in time loss for clients. Although Jai Graphics dont charge any premium for this superior service but still it makes difference, as customers are ensured with speedy & error free services thereby boosting their trust and loyalty. At the end; low cost structure of Jai Graphics gives competitive advantage over others, using which it offers cheap solution to its clients for marketing their products.

FIVE FORCE ANALYSIS OF JAI GRAPHICS Porters five forces model provides a framework to understand the industry competition and profitability. This analysis helps us to identify the intensity of competition, attractiveness and profitability of an industry by analysing the relative impact of each of the five forces on their industry structure. Five force model comprises of 5 elements i.e. suppliers, buyers, new entrants, existing competition and the buyers. Thus by determining the relations in the power of each of the element, it helps to identify the threats and opportunity to focus upon. (Johnson et.al, 2005). The configuration of the five forces differs from industry to industry. In the offset printing industry there is fierce rivalry which makes difficult for one to survive.

(5 Forces Model Michael E. Porter, 2007)

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Threat of New Entrants Arrival of new entrants to an industry can raise the level of competition, thereby reducing the attractiveness of an industry. New entrants to an industry not only bring a desire to gain market share but also puts pressure on price, costs, and rate of investment necessary to compete.It is the extent to which new competitors may decide to enter in an industry and reduce profits of incumbent firms (Anthony Henry, 2008). New entrants, leverage existing capabilities and cash flows as the threat would be more when competition is less. So, when competition is high, it will be more difficult for firms to enter the industry. Threat of new entry, this puts a cap on the profit potential of an industry. Barriers to entry are usually the factors that limit the threat of new entrants. Jai Graphics faces high level of competition even after being equipped with sophisticated and state of the art technology in its market region. This is because of the increase in number of competitors entering the market & forcing the company and the existing players to share their market position. The new entrants would certainly have to come up with sophisticated technology and cheaper price to retain. This would lead to drawing of customers from the existing players as every few years new technology comes up and with new entrants foray would certainly make give tuff competition to them. All this has lead to fall in the price of output, and increase in the price of technology and raw materials. Hence, the profit margin of existing players decreases, with every new entrant. Entry Barriers The buyers from the firms in the industry will be faced with one-offs costs when switching from one suppliers product to another. Where switching cost may cost them big. The new entrants would have to spent huge amount on installation of latest technology machines, labour, advertising and promotion for marking their entry and establishing themselves. At the same time they need to ensure that the prices are at par or cheaper than what the current market offers without compromising on quality. The need for capital investment can prevent new entrants. Though the present may have cost or quality advantage with their rivals, the first-movers benefits cant be enjoyed by the new entrants and this may lead to difficulty in imitating the existing players success. Threat of Substitutes Threat of substitutes faced by Jai Graphics is very low or it could also be said negligible as the company has earned its goodwill and marked its presence. Threat may arise only in the event of a prospective buyer makes use of online search engine for figuring out the players in this industry as Jai graphics hasnt registered itself with the popular search engine and even lacks its website. Thus the threat arises as they might lose potential clients and also to the possible substitute products available in the market can lower their charm and profitability. The threat of substitute products depends on: Buyers readiness to substitute The relative price & performance of substitute Cost of switching to substitutes The availability and threat of substitutes is another factor that can affect competition. It refers to the likelihood that customers may switch to another product or service that performs similar functions. (Stahl, M, Grigsby D 1997, pg 145). Substitutes for off-set printing include Flexography (surface printing), Relief print, screen printing, inkjet, dye transfer, laser printing, screen printing and digital printing. The degree of this threat depends on various factors such as money, convenience, time and personal
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preference. The competition from substitutes is affected by the ease of with which buyers can change over to a substitute. Offset printing is one of the cheaper option for printing and considering other options it may not be the right substitute as cost constrain arises and few such factors may discourage customers to adopt substitutes. Bargaining power of Suppliers Supplies are the business that supplies raw material and other product to the industry. Jai Graphics faces the heat of cost of items bought from the suppliers and this in turn has a impact on companys profitability. The company is forced to keep its printing prices the same even after increase in the costs of its raw material. The bargaining power of suppliers is moderate as they understand the industry situation and in the case of Jai graphics they have fair relation with them with timely supply of raw material and timely payment. Basically Suppliers power simply means what is the influence of suppliers on the firm. Whether the suppliers power is strong or weak it depends upon the bargaining power it can exert. If the power of suppliers is high, they can influence the business deal in their favour; in case power is low buyers will be in advantage. And in the case of Jai Graphics the buyers enjoys the advantage. Bargaining Power of buyers Buyers are the people who create demand in an industry. The bargaining power of the buyers is greater in the case of Jai Graphics as the company has large number of competitors which leads in giving buying power in the hands of buyers. Thus the company has competitive pricing and superior quality to offer to its buyers. Buyer power is one of the two horizontal forces that influence the appropriation of the value created through an industry. The crucial determinant of buyer power is the size and the awareness of customers, with Jai Graphics presence in the market since over 20 years has created fair awareness and continues to add on increase the customer base. The industry has high competition where large numbers of companies (large, medium and small) are competing with each other to gain more business. This high competition has created value for the customers as every company tries to provide best quality at reasonable price and Jai Graphics too follows the suit. Industry Competitors The off-set printing press industry has many distinguished players who have earned their reputation with Jai Graphics being one of them who have earned goodwill over the years since their foundation and have marked their presence and have been giving tuff competition. The industry in whole is making difficult for small scale companies to sustain the existence have also marked their presence in the industry. To name a few competitors they are Thompson press, Turtle print consultants, Ezee prints, 120 spice, Aegean printers, Pragati printers, etc. To sustain the competition Jai Graphics has been drawing strategy to overcome any takeover by compromising on profit percentage. Jai Graphics and the industry in general employ unskilled workers who may switch work; to retain them the Company has to meet their demands. There is a constant rise in the prices of raw material and stagnancy in the prices of printing. The same problem is faced by the competitors, who are too stick at the old prices and even in such cases they are forced to further reduce prices over negotiation from the clients.

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RECOMMENDATIONS
Company should focus upon improving its credit recovery methods as company at present is not able to collect back its credit efficiently because of company is suffering with high rate of bad debts. Company should revitalize its promotional strategies. In the era of information & technology it becomes vital for every business use various mean for marketing its product esp. Internet to sustain in long run. Apart from this company can think of investing in new range technology apart from offset printing (like digital). Moreover company dont have any problem of space and can easily install a new tech machine to its existing location. This will help the company to diversify its operation and also to cater small client efficiently. In order to control attrition, Jai Graphics can add a performance base monetary reward to outperforming employee of the month. This will pep up the working experience and will not motivate them to work hard but also not to shift their jobs.

BIBLOGRAPHY
The 4 ps, 2008, Available At: (http://www.aiu.edu/publications/student/english/Marketing%20Operations.html), Accessed on: 4th, December, 2010. Johnson, G., Scholes, K., Whittington, R., 2005. Exploring corporate strategy: text & cases. 7thed. New Delhi: Pearson Education. 5 Forces Model Michael E. Porter, 2007. Available at: (http://www.google.co.in/imgres?imgurl=http://blog.bootstrapbusiness.org/wpcontent/uploads/2009/02/porters-five-forcesmodel09.jpg&imgrefurl=http://blog.bootstrapbusiness.org/the-five-forces-model-18022009.html&usg=__IVt4f8fXDQNKWzg64cKRQyCaCvk=&h=400&w=488&sz=19& hl=en&start=1&zoom=1&tbnid=P3HT3aVHcuM6CM:&tbnh=107&tbnw=130&prev =/images%3Fq%3Dporters-five-forcesmodel09%26hl%3Den%26newwindow%3D1%26sa%3DG%26biw%3D1280%26bih %3D601%26tbs%3Disch:1&itbs=1), Accessed on: 5th, December,2010.

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