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INDUSTRY SCENARIO
Express Industry comprised courier companies which offered domestic & international services. The consignments held by the express companies were broadly classified into : Documents Any material comprising paper such as correspondence, bill
Non Documents Items with or without commercial value like CKD units,
On overall basis, documents accounted 60% of total revenue & the rest 40% was non documents. The 1980s saw the entry of professional players into the express industry & since then the industry grew at a steady rate.
The Indian Express Cargo industry (organized & Un-organized both) had enormous prospects for growth in local well as international markets.
The express industry saw progressive growth in the last decade of 20th century due to trade & services. The elimination of trade barriers, globalization of markets & trade led to expansion in business
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The ingress of international players led to transition & growth as well as posed challenges by web based technology. Express market Scenario Over 2000 express companies in India. 20 in organized sector. 25 in semi-organized sector & others in unorganized sector.
Sector
Organized Semi Organized & Unorganized EMS Speed post Total
Revenue(Rs. In crore)
1628 618 247 2493
ORGANIZED SECTOR
Comprise of service providers with national & international reach fortified with fully equipped infrastructure & other value added services. The major consumer sectors are: Pharmaceuticals, IT, Readymade garments & FMCG products. Domestic companies act in consolidation to international service providers & some of them even have tie-ups with them.
Solutions like Just in Time & e-Commerce enabled considerable business opportunity for web enabled services.
The organized sector which was principally in the package segment of Cargo management illustrated high growth.
Unorganized / semi organized sector faced pressure because of unfavorable pricing environment.
The organized sector was by and large into documents business. The margins were much lower than package segment & also barriers to entry were also very less.
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The industry was not regulated therefore licensing was not requisite to setup a cargo management company.
Entry barriers in the Package segment were high because company needed strong distribution network, latest technology, well trained staff, strong brand image & economies of scale. (given the operating leverage of industry was very high)
Cargo management companies were leveraging on their strong distribution
Logistics management emerged as a new growth opportunity for these companies because a lot of manufacturing companies were outsourcing their logistics requirements to third parties.
There is very low switching cost for consumers in this industry making rivalry even more intense.
In addition, intense rivalry is also due to the fact that maintaining the infrastructure of an express delivery company presents an exit barrier due to high fixed costs.
Operates in three types of business segment viz. Logistics Shipping Fuel Stations
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into consideration for strategic management, they are likely to be more successful while putting in relatively lesser effort.
Impact On Business
High
High Distribution, Brand Image, Market, Technological International
Medium
Socio-Cultural, Economic
Low
-
Medium
Regulatory,
Low
Political
MARKET ENVIRONMENT:
India currently spends 13% of
its GDP on logistics, which is expected to come down to 8.10% due to logistics systems and acceptance of service providers. Indian logistics industry characterized by dominance of the unorganized market. Players can be broadly categorized as local transporters, transporters providing some kind of value added services such as warehousing services, and completely integrated players providing 3PL services. The transportation service service provider segment is completely dominated by small local trucking companies and individual truckers.
Technological Environment:
In this new age , with the high degree of sophistication in the
express segment in the transportation market, the old myths of outdated technology and static management systems have been dispelled.
Economic Environment:
India has witnessed a sharp increase in trade over the past five
years, led by strong economic growth and liberalization. With increasing exports and India's recognition as a manufacturing hub, international trade has also gone up considerably over the past five years. Consequently, the need for logistics has gone up sharply over the past few years across industries.
Express delivery industry witnessed 15% CAGR over the last 3
years.
Regulatory Environment:
The core issues for the firm include whether the highly competitive
EDS/courier industry, with no entry or exit barriers and multiple operators (more than 2500 companies) actually need a regulator. Express' courier operators are still seeking an independent regulatory authority to regulate the written communications sector.
It is incorrect to presume that the express industry is not regulated
by any other act, rules or norms of the country. They are subject to the jurisdiction of the Consumer Protection Act, 1986, whose jurisdiction the proposed amendment bill will take away.
Political Environment
Politics had no great role in the industry
Socio-cultural environment:
The express logistics sector, through its added-value
International Environment:
The competition in the package delivery service is very global. The
presence of FedEx Corporation, UPS, DHL, USPS as well as a host of other smaller companies at home and abroad. As well as competing against bigger players, GATI Ltd must also compete with regional delivery companies and international delivery companies that serve only their country.
Competition is not becoming more global due to the fact that
companies are merging and the industry is consolidating and companies are making alliances with each other. These are the visible signs of a shakeout occurring within an industry.
Environmental Sector
Nature of impact
Impact
Is dominated by the unorganized sector and Gati Ltd functions in the unorganized sector. High sophisticated technology usage. Liberalization and Globalization has made the industry favorable for investment. Lack of proper regulatory body results in inefficient functioning of industry.
Political
Socio-cultural International
Products: Express (Document and non-document) :- this was the basic product of
all express service providers. The delivery time was time bounded and was assured depending upon the distance between pick up and delivery locations.
Door to Door (by air and surface) :- under this product, companies offered
an option selection of mode of transport (if the customer did not specify the mode of transport, the consignment were transported by air. In case of heavy consignments or destinations on the trunk route surface mode was used.).
Door to airport and airport to door :- Under these products the express
companies took the total responsibility of preparation of legal documentation and procedures.
Price: GATI
can be classified based on their general pricing strategy. GATI must decide whether their approach is to use price as a competitive advantage or to seek competitive advantage in non-price ways.
available for business needs Follow domino discipline in fund management & ensure that fund availability doesnt affect customer value delivery
Controlling Expenditure
Build a disciplinary system that ensure that the methods of
monitoring expenditure are reliable. Guidelines to the team members to how they can control expenditure.
Ludhiana, Jaipur, Indore, Kolkata and Pondicherry with multilevel stacking features for effectively space utilization. Equipped with stackers ,forklifts , etc , they also offers several benefits and services like online inventory control and monitoring , flexible hiring options and data collection.
In Sept. 2004 Gati entered into a special tie-up with India
airlines and launched Gati gold and Gati silver for speedy air delivery of time-sensitive consignments at several major airports in India.
It offers value-added services such as flexible delivery options ,
online tracking ,etc. Besides this it is more cost-effective in comparison to other services.
development initiatives including e-HR, which gives complete emoluments and related information of every personnel. manpower that is committed to the growth of the organization. Training continues to be one of the important part of area of HR.
GATI
implemented web based ERP called gati@web, comprising GEMS (Gati Enterprise Management System), a custom-developed application, Oracle CRM and Oracle Financial. This is completely a centralized and on-line application. In order to connect to this application, 120 plus locations have been networked through lease lines and VSAT companys central server at its Head Office, GATI.
SWOT Analysis
Strengths:
Dominant player in the surface cargo segment in India, which accounts for more than 55% of the total. Niche value additions such as third-party logistics, trucking and warehousing
solutions.
Re-engineered hi-tech warehouses and distributing infrastructure Advanced IT solutions to back up its services.
Weakness:
Insufficient regional and global presence as compared with its competitors. It has been neglecting courier segment
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Opportunity:
Expanding economy...WTO agreements Improvement in the logistics infrastructure in the country-better roads,
improved ports etc.. Entry of a large no. of global retailers Increasing investments, booming manufacturing and development of organized retail sectors-provides business potentials to express industries
Threats:
Global competitors Direct competition from unorganized sectors.. Space limitations
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Strategies
Business Policies
Purchase Policy
No question on purchase raw material The Gati lettering in an original and unique font which
represents Reliability Speed Discipline It progress in the areas of technology and automation is a response to changes in manufacturing systems, inventory management and supply chain practices across the world.
Financial Policy
It reports 73% increase in PBT (Q1 report) Last Dividend was 25%. Annual turnover of 12094 Million out of which 70% from logistics
division, 7% from shipping division and 23% from fuel station division. 70-80% turnover from courier business and 20-30% from cargo business. Growth of logistics, shipping and fuel station are 22.47%, 11% and 4% respectively. GDP is US$692 billion.
Personal Policy
Workforce of 2364 employee 512 trainees
reputed institutions such as IIM,NIIT, ICFAI, AIMA etc. Promotion policy opened a transparent career development map for all especially those on the Fast Track. It contributes to education, training and assistance to small industries
Marketing policy
622 out of 626 districts in India Value added services like warehousing, trucking, express and time-
bound cargo. Gati has always tried to stay one step ahead by innovating and transforming its processes, refining service offerings, redefining customer standards internally and externally and using technology to drive up customer satisfaction. It provide multi-modal transportation road, rail, sea and air. collaboration and co-operation with B2B customers and partners 24x7 call centres to understand and manage customer expectations, plan cargos, shipments & routes.
Operational policy
It was an ISO 9001:2000 certified company for design, marketing
and providing cargo management services. It offers an integrated Express Distribution and customized Supply Chain Solutions to customers across diverse industry verticals. connectivity across air, road, ocean and rail promise to stay Ahead in reach in service quality, wide network, technology, automation Information through the website, e-mail, SMS and toll free number. Gati launched the first exclusive Cargo Train between Mumbai and Kolkata in association with Indian Railways.
Future plan
Future Strategy
Aims to be one-stop service provider in logistics solutions, focusing
on warehousing and infrastructure, express distribution centers, central distribution center, information technology and human resources.
By providing contribution, it aimed at strengthening the society by
empowering the weaker segments with education, funding and technical assistance.
It is trying to grow at steady rate.