INTRODUCTION TO VIDEOCON

A Study Of The BCG Matrix For VIDEOCON

VAIS ARTI SHANTILALM.COM (B&F) PART-1

Executive Summary

TheBCG matrixor also calledBCG modelrelates to marketing. The BCG model is a well-known portfolio management tool used in product life cycle theory. BCG matrix is often used to prioritize which products within company product mix get more funding and attention.

TheBCG matrixmodel is aportfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's.

The BCG model is based on classification of products (and implicitly also company business units)into four categories based on combinations ofmarket growthandmarket sharerelative to the largest competitor. This project is about Study of BCG Matrix of Videocon Industrial Ltd.

Videocon Industries Limited(BSE:511389,NSE:VIDEOIND) is a large diversified Indian company headquartered inGurgaon, Haryana. The group has 17 manufacturing sites in India and plants inMainland China, Poland, Italy and Mexico. It claims to be the third largestpicture tubemanufacturer in the world. The group is aUS$5 billion global conglomerate.The Videocon group's core areas of business areconsumer electronicsand home appliances. They have recently diversified into areas such asDTH, power,oil explorationand telecommunication. In India, the group sells consumer products like colour televisions, washing machines, air conditioners, refrigerators, microwave ovens and many other home appliances, through a multi-brand strategy with the largest sales and service network in India.

objectivesThe objectives of this study are following:-1. To analyse the product portfolio of Videocon Company with respect to BCG matrix. 2. To analyse the brands so placed and critically compare their placement.3. To compare the outcomes so obtained and generate suggestionsPurpose

The purpose of the study is to analyse the product portfolio of Videocon Company with respect to BCG matrix, to analyse the brands so placed and critically compare their placement, to compare the outcomes so obtained and generate suggestions.RESEARCH METHODOLOGYThe research will be based upon the secondary sources of data as the purview of the research is restricted to application of the BCG concept onto Videocon Company. The company is not involved in research methodology any way.In order to achieve the first objective secondary sources of data will be referred i.e. books, internet, magazines, articles, websites, etc.

To fulfil the last two objectives, the help of hard facts and statistical data will be taken, for such data collection various market surveys will be helpful. The data will be analysed and valuable inputs will be given in form of suggested strategies.Chapter 1:- bCG MATRIX

This framework applies two inputs, market growth and market share to a portfolio of segments, products or businesses, and then draws conclusions about how resources (e.g. talent, investment) should be allocated across the portfolio.Stars (high growth and market share) are the first priority for resources. Cash cows are also attractive businesses, but do not need as much investment. The hardest choices are in the "Problem Child" segment, where the market is attractive, but the company is weak relative to competition. These are "double-or-quit" businesses. Businesses in the "Exit" segment should be the lowest priority for scarce resources.The matrix was invented by Boston Consulting Group (BCG) in the 1970s to help organizations with their portfolio strategy.

When to use this framework:Use this matrix when you have to make decisions on resource allocation across a portfolio. It is versatile, able to be used for a portfolio of business units, products or market segments. Its clarity and ease of understanding makes it a powerful communication tool to explain difficult resource allocation decisions to the organization [see dangers].

Drawing insights:a) Individual business units - Check that the strategic objective of a business matches its quadrant:

Stars should receive the best people, and first priority for discretionary investments. Critical to the future of the business, they must be defended at all costs. Watch out for any loss of Relative Market Share.

Cash cows generate the funds required to invest in the higher growth parts of the portfolio. Ensure enough investment to sustain their leadership position - don't milk them dry!

For each of the Problem Children a binary decision must be taken. Selected bets will be made with heavy investment to grow market share and make them the Stars of the future. Because they are coming from behind, they will not deliver the short term returns of the stars. Therefore the business must make these bets very selectively where they genuinely believe they can achieve a leadership position, and make the tough decision to ignore other high growth opportunities.

Exit quadrant. Frequently it will not make sense to divest or exit businesses rapidly in this quadrant. Rather they will be set up to operate with minimal resource drain on the rest of the portfolio, as the best people and all discretionary resources are diverted to more attractive businesses. Over time they will become a diminishing portion of the portfolio.

b) Overall portfolio health. The second decision that can be driven from this analysis is "Do we need to rebalance our portfolio?" Do we have enough Stars? Do we have too much deadwood in the Exit quadrant? Are we making too many long term bets on Problem Children? Should we divest some of our Cash Cows and invest the proceeds in higher growth businesses?

Limitations:The primary danger is that this framework is too simplistic and neat, determining major strategic decisions without considering other factors. For example, when a low growth, high share business follows a cash cow approach it may become a self-fulfilling prophecy. Lack of investment in innovation may be exactly what is holding growth back. It is frequently easier to grow market share from 40% to 45%, than to grow from 5% to 10%. Using alternative axes (e.g. Competitive Position) can adjust for this, but brings in more subjective judgment.This framework should not be used in isolation the decisions it indicates can be confirmed by other analyses e.g. incremental returns on capital.

Underlying assumptions of this framework:

1. High market share drives superior returns

2. Investment in higher growth markets delivers more attractive returns

3. Each part of the portfolio has similar resource/return dynamics

4. Resources can genuinely be allocated across the portfolio [this may not be possible e.g. it may be hard to allocate talent across businesses]

5. Resources are constrained trade-offs need to be made across the portfolio

Alternatives1) Alternative axis for market share could be Competitive Position a weighted composite measure (e.g. brand equity, profit share) if market share is not a good proxy for cash flow potential. This introduces more subjectivity.2) An alternative axis for Market Growth could be Market Attractiveness a weighted composite measure (e.g. business/product/segment profitability) if growth rate alone is poorly related to long term value potential. Key to note is that this axis is independent of company all competitors would rate this axis

the

same.3) Include current market size on the framework, as a bubble chart (with the market size proportional to the area of the circle). Market size makes no difference to the right strategic objective of the individual elements of the portfolio, but including it can provided an immediate visual picture of the overall strategic health of the portfolio.4) Use historic growth rates, not expected future long term expected growth rates. This removes more judgment from the matrix position, at the expense of relevance.

chapter 2 : introduction to videocon

Videoconis an industrialconglomeratewith interests all over the world and based in India. The group has 17 manufacturing sites inIndiaand plants inChina,Poland,Italy andMexico. It is also the third largestpicture tubemanufacturer in the world.

The Videocon group has an annual turnover ofUS$5 billion, making it one of the largestconsumer electronicandhome appliance companies in India. Since 1998, it has expanded its operations globally, especially in theMiddle East.

Today the group operates through five key sectors:Consumer electronicsIn India the group sells consumer products like Colour Televisions, Washing Machines, Air Conditioners, Refrigerators, Microwave ovens and many other home appliances, selling them through a Multi-Brand strategy with the largest sales and service network in India. Videocon Group brands include Kenstar, Next etc.

Mobile PhonesIn November 2009 Videocon launched its new line of mobile phones

DTHIn 2009, Videocon launched its DTH product, called 'd2h'. As a pioneering offer in theIndianDTHmarket, Videocon offeredLCDTVs with built-inDTHsatellitereceiver with sizes 19" and 32".This concept in the DTH service is relatively new in the presence of other players like ZEE TVs Dish TV, Tata Sky, Airtel Digital TV and Reliance's BIG TV providing only the set top box.Telecommunication

Videocon has subsidiary named Datacom Solutions Pvt Ltd which has license for Mobile Service operations across India. It is commercial launch on 7th march 2010 inMumbai.Company Background

Type

Public Company

TradedasBSE:532129NSE:VIDEOIND

IndustryConglomerate

Founded1979

FoundersVenugopal Dhoot

HeadquartersGurgaon,India

Key peopleVenugopal Dhoot

ProductsConsumer ElectronicsHome AppliancesComponentsOffice AutomationMobile phones WirelessInternetPetroleumSatellite televisionPower

Revenue181572.7 million(US$3.0billion)(201213)[2]

Profit-716.3 million(US$12million)(201213)[2]

Employees9,000(2012)

Websitewww.videocon.comvideoconworld.com

Videocon productsVIDEOCON LCD TV

Touch the true essence of multimedia entertainment with Videocon LCD TV & experience tv as you've never seen it before.

VIDEOCON Refrigerators

Experience the new revolution in freshness with Eco Fresh refrigerators.

VIDEOCON Air Conditioners

Intelligent technology, Intelligent design, Intelligent range. VIDEOCON Air Conditioners.

VIDEOCON Washing Machine

The power of Quanta Wash with the edge of U V Ray technology.STRATEGIC BUSINESS UNITAn SBU, in the strategic management sense, is normally an entire division in large corporations or one of the firms of a diversified company that carries out a certain business - in one of the business sectors the firm operates. This approach entails the creation of SBU's to address each market in which the company is operating.SBU OF VIDEOCON COMPANY

Key Steps Towards Strategic Planning

MISSION

To delight & deliver innovative product through ingenious strategy intrepid entrepreneurship, improved technology, insightful marketing and inspired thinking about the future.VISIONTo bring happiness in every home with global presence offering high quality e- products to ease & enrich human lifeGOAL

To provide a much higher level of service to all those who seek information

CHAPTER :3 BCG MATRIX OF VIDEOCON COMPANY IN COMPARISON TO OTHER ELECTRONIC COMAPNIES

BCG MATRIX OF VIDEOCON COMPANY ACCORDING TO ITS PRODUCTS

PRODUCT LIFE CYCLE OF VIDEOCON

VIDEOCON LCD AT INTRODUCTION STAGE VIDEOCON APPLIANCES IS AT STAR STAGE VIDEOCON MOBILE PHONES & TELECOMMUNICATION SERVICES IS AT CASH COW STAGE

VIDEOCON OIL & GAS DIVISION IS AT DOGS STAGECHAPTER 4 : REVIEW OF LITERATUREArticle 1:- Videocon launches nine mobile handsets; eyes 1 mn sale monthlyAuthor: - S. kaitherPublisher: - Times Of India

Year: - 2010In this article it has discussed that Videocon today launched nine mobile handsets and it plans to sell a million devices per month in the country same year. Videocon has been so far selling 2.5-3 lakh units a month. With the nine launches, its offering has risen to a total of 21 handsets from 12 at present. Thus the company plan to sell one million units every month as per the customer approachable price. At present, global brands like Nokia, Samsung, LG, and Sony Ericsson together with Indian players like Micromax have over 90 per cent market share. Mobile phone market has been one of the fastest growing markets. However, there is a big gap between the international brands and domestic ones. Videocon aimed to bridge the gap.Article 2:- Videocon plans 500MW power plant in Maharashtra

Author: - Amritha PillayPublisher: -Business TodayYear: - 2010The Videocon Group is planning to start a 500MW power plant in its homeland and is looking for suitable land as well as a coal-transportation solution in Maharashtra. It also expects to achieve financial closure for its Gujarat-based 1,200MW power plant by end-March. The financial closure for the first phase of 600MW has been achieved; the second phases financial closure is getting completed. After financial closure, power projects take another three and a half years to be commissioned.

CHAPTER 5 : CONCLUSION

Videoconis an industrialconglomeratewith interests all over the world and based in India. The group has 17 manufacturing sites inIndiaand plants inChina,Poland,Italy andMexico. It is also the third largestpicture tubemanufacturer in the world.

Today the group operates through five key sectors:

Consumer electronics

Mobile Phones

DTH

TelecommunicationIn BCG Matrix product or business unit are identified as Stars, Cash Cow,

Dogs, Question mark. BCG Matrix can use for resource allocation. Stars (high growth, high market share)

Cash Cows (low growth, high market share)

Dogs (low growth, low market share)

Question Marks (high growth, low market share)

BCG MATRIX Of Videocon according to its products:

VIDEOCON LCD at Introduction stage.

VIDEOCON APPLIANCES at Star stage.

VIDEOCON MOBILE PHONES & TELECOMMUNICATION SERVICES at Cash Cow stage.

VIDEOCON OIL & GAS DIVISION at Dogs stage.

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VIDEOCON

BCG Matrix

Stars (Appliances)

Question marks (LCD)

Cash Cows(Mobile Phones&Telecommunication)

Dogs (Oil & Gas Division)