International Marketing

Electrosteel Castings Ltd. Case

Submitted To

Prof. Anuj Sharma

Submitted By:

Sumit Srivastava

Roll No. 10DM186

Section: M2

Q1. What are the key success factors for Electrosteel? Is international Expansion a good

idea?

Ans) Key Success Factors which lead to the success of Electrosteel are:

1. Biggest producer of CIP and DIP: Being the biggest producer of CIP and DIP in the

domestic market, they have a well established brand in India.

2. Operational Cost is very Low: In India operational cost is very low and the skilled

labour is available at very cheap cost

3. Policies that protect Local industry: Indian policies, politics, bureaucracy, tax structure

made it difficult for foreign companies to invest in Indian market and thus provide

competitive edge to local companies.

4. Huge market: The market for Electrosteel was huge not only in India but also in

International market. As they were the best amongst the production of DIP and CIP pipes

they had a huge market available in front of them to cover.

5. Well planned manufacturing, production and finishing line: Setting up a plant in

Kardah, near Kolkata offer them infrastructure support of the existing CIP and the

services of the existing staff. It also provides simplified Management control and

engineering support.

Yes, they should go for International expansion, because of following reasons:

1. International expansion will offer them strong opportunities for continued growth.

2. It will help them in building Electrosteel as a global brand and thus will help in

translating it as a Global competitor. It will also help them in setting up their operation in

foreign countries and thus they can effectively learn and use the technologies of different

countries.

3. As domestic market is stagnation, extending operation to international market would be a

better choice to stay in business.

4. In India small players are emerging and after few year they can be a potential tough

competitors to Electrosteel.

Q2.What is your evaluation of the opportunities to expand either in Vietnam or France?

Ans) Opportunities to expand in Vietnam can be explained by discussing its Pros and cons.

Pros Cons

Being close to India transportation cost will be saved

No proper infrastructure especially road, Transport facilities, scarcity of electricity and water supply.

First mover advantage in gaining the market share

Bureaucratic political system may cause problem while setting up the industry

Increase support for Vietnam Govt.Premium was offered to local suppliers by international agencies for the initial set up of industryIncentive of 3.1 million given by the Vietnamese GovernmentCMC’s offer to purchase DIP for other projects on contractual basis also provides more opportunities for growth

Opportunities to expand in France by discussing its pros and cons:

Pros ConsLarge markets in France, Germany and fastest growing market in Spain will help in gaining market share

High labour costs as compared to Indian and other markets (10 times higher than that of India and Vietnam)

By even setting up industry in one EU nation the company will be recognized as local supplier for the all EU nations and thus will adhere to the same laws and regulations everywhere

Fall in Demand in many countries (50% in UK) will also slow down the growth of the company

Stable Political and bureaucratic environment Language barrier is also present as most people do not prefer speaking English.

Source of funding is easy. Presence of competitors like Saint Gobain.

Q3. As Das, what is your recommendation going forward? How would you implement your plan?

Ans) Company should go for expansion in Vietnam market. Initially they should set up a finishing line in Vietnam and should do casting and other production in the Kardah plant. It will cut down their cost and will help in knowing about the market conditions. Later on they can shift their casting and finishing line facilities in Vietnam.

Reasons as to why only finishing line should be set up initially:

1. Since the sales forecast would be difficult it is better to start with the finishing line2. Foreign funding requirement is less.3. Transportation savings up to 10% if only finishing line is started there as raw iron is

almost equal to 90% of casting iron’s weight.