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White Goods Industry Management Of Information Systems Marketing
Essay
For assignment help please contact
at [email protected] or [email protected]
Heavy consumer durables such as air conditioners, refrigerators, stoves,
etc., are referred to as White Goods or White-ware. They are called as
"White" goods as previously they used to be painted only in white enamel
finish. Although they are available in different colors now, they are still
called white goods. They can be divided into two distinctly different
groups:
Household linens
Household appliances: These include Water Heater, Refrigerator, Clothes
Dryer, Air Conditioner, Dish Washer, Microwave Oven, Washing Machine
etc.
We will be focussing on Household Appliances only through the course of
this project.
The major players in the White goods sector are:
Single Brand Outlets: LG Electronics India Ltd., Samsung India,
Whirlpool, and Videocon.Â
Multiple Brand Outlets: Tata Croma, Reliance Mart, Future Bazaar.
White Goods Industry Status
The White goods sector is characterized by emergence of MNCs and
intense competition. There is also growing importance given to exchange
offers, discounts and customer service by customers. India will have the
fastest growth of any nation annually through 2013, benefiting from low
penetration rates and rising standards of living. Also, microwave
ovens will post the fastest gains of any product group due to their
shorter lifespan compared to other major household appliances.
Refrigerators, freezers and other conventional ranges will continue to
benefit from rising income levels. But dishwasher demand will be limited
by price, size and cultural considerations that will prevent these items
from becoming commonplace in most areas where they are not already
established. The market share of MNCs in White goods segment is 65%.
MNCs mainly target the growing middle class of India and offer superior
technology to the consumers; while the Indian companies compete on the
basis of firm grasp in the local market, their well-acknowledged brands,
and their hold over wide distribution network.
The industry has seen significant transition from one stop shops with all
locally assembled appliances being sold along with few available branded
appliances to the emergence of dedicated branded stores which houses
all possible appliances available of one brand under one roof. These
stores only take care of after sales service and customer complaints. With
advancement and new emerging consumer class, the mixed stores are
becoming a new buzz today. They house all products of all brands along
with their own brand and offer special discount deals. The consumers
love this concept as they get to compare the features, the products and
prices without having to move from one shop to another.
White goods appliances account for 70% of the energy consumed in
homes. Along with this, their greenhouse gas emission levels are usually
high. So, there is emerging focus on recycling of electronic waste and
many exchange offers can be popularly seen nowadays. E-waste
management and energy saver appliances are gaining popularity. With
the advent of technology, homes are being transformed into "smart"
homes with a wide range of home appliances covering the home space.
Now, sixth-sense technology is available in air-conditioners, refrigerators
and televisions. All these can be operated with a message sent from a
cell-phone. Technology is changing every minute by leaps and bounds
and effective application of Information technology in ensuring better
relationship with suppliers, employees and customers along with proper
supply chain management can play a huge role in differentiating one
brand from another.
Typical parameters of the Industry
The USP of the industry is that: Seems difficult to live without them.
These goods have become an integral part of our lives and modern
households. They have made our lives more comfortable and easy by
replacing human labour by machines. The industry is continuously
improving with the invention of more sleeker and better products with
each passing day giving the consumer better choice and variety.
The following are the key performance indicators of the industry:
Maximum age of hardware assets: This indicates the maximum useful life
of the hardware. This parameter is very useful in accessing the repair
cost, maintenance and service that has to be provided. Companies can
estimate their service costs also. More the maximum age of hardware,
better will be the product.
% of hours devoted to training technical staff: Training costs form an
integral part of the costs of labour. Efficient utilization of working hours
can help a company reduce cost. IT systems can help in better training
facilities for the staff members.
Risk Level matrix: Risk indicates the probability of the success or failure
of a particular event. Decision trees are drawn to access the risks
involved in decision making and the risks are computed through complex
statistical estimates. This calculation for risk is made easier by using
available statistical software.
Resolution time of identifying capacity bottlenecks: Resolution time is the
time taken to resolve issues. Bottlenecks are the barriers in the process
and the resolution of the problems in the process basically depends on
the resolution of the problems of the bottlenecks.
Ratio of IT management and prevented IT incidents cost: IT management
costs relate to the amount of costs a firm invests in setting up and
maintaining the Information technology required to assist in all its
processes. The prevented IT incidents costs relate to the opportunity cost
that the firm has gained by the setting up of IT infrastructure.
% of planned and unplanned failures: Often a lot of planning goes into
planned activities that are put on hold, whilst money is thrown at
unplanned interruptions. It is easy to compile a budget for scheduled
activities. But allowing for the unplanned- how do you do that. Most
people use experience and make some contingency or have a "bucket"
they can draw from. Random failures quite often fall into the category of
unplanned failures. But a random failure leading to "Fix on Failure"Â is a
legitimate strategy where monitoring or inspection activities, and
redesign/modifications are not applicable.
Critical time failures and outage: Number of failures of IT services during
so-called critical times. Critical time is the time that a service must be
available, for example for financial systems during closing of the books
(at the end of month, or end of quarter). Mean time between failures
(MTBF) is the predicted elapsed time between inherent failures of a
system during operation. MTBF can be calculated as the arithmetic mean
(average) time between failures of a system. The MTBF is typically part
of a model that assumes the failed system is immediately repaired (zero
elapsed time), as a part of a renewal process. This is in contrast to the
mean time to failure (MTTF), which measures average time between
failures with the modeling assumption that the failed system is not
repaired.
Lead time to change execution: Measures the amount of lead time from
the point a change is submitted to the point at which execution will
occur. It is a measurement of an organizations ability to plan while being
reactive.
% growth of IT budget vs. the growth of revenues, % IT outsourced:
Measures the ratio of IT growth to business growth. When IT growth is
less than business growth it can indicate economies of scale, improved
efficiencies or underinvestment.
% of current initiatives driven by the business - Percentage of current
business initiatives that are considered innovations that are driven by the
business, i.e., the idea originates within the business functions i.e. not
within IT.
% of IT labour outsourced - Percentage of IT labour (e.g. in FTE) that is
outsourced.
% of current initiatives driven by IT - Percentage of current business
initiatives that are considered innovations that are driven by IT, i.e., the
idea originates within the IT function or IT leadership or from a group in
which IT plays a dominant role
% of IT time associated to IT investment - Percentage of time (from
workforce) associated to IT investment (instead of IT maintenance of
existing IT services) relative to all IT time within the measurement
period.
% of growth of IT budget - Percentage of growth of the IT budget relative
to the previous measurement period (for example quarterly or yearly).
% of IT costs associated to IT maintenance - Percentage of costs
associated to IT maintenance (instead of IT investment in new initiatives)
relative to all IT costs within the measurement period
% of IT costs associated to IT investment - Percentage of costs associated
to IT investment (instead of IT maintenance of existing IT services)
relative to all IT costs within the measurement period.
% of IT initiatives/projects championed by the business - Percent of IT
initiatives/projects championed by business owners
% IT Budget of Total Revenues - Percentage of IT budget of total
revenues of the company.
% IT Capital Spending of Total Investment - Percentage of IT investments
of total investment of company.
IT Spending per Employee - Average IT spending per employee (in FTE)
CRITICAL SUCCESS FACTORS OF THE INDUSTRY
Brand Image
After Sales Service
Technology
Pricing
Quality
Distribution Strengths
Features & aesthetics
CHALLENGES
Quantifying category attractiveness of sales territory
Identifying trade-price points which indicate change in the buying
behaviour
Product categories sensitive towards trade promotion investment
Points at which loyalty membership lifecycle, promotions should be
targeted
Detecting fraud stockists and ensuring optimum inventory levels
"Best-in-class" organization
Major players: LG Electricals, Samsung, Videocon, Philips, Voltas, Blue
star, Whirlpool, Bajaj Electricals, Haier.
All companies are not available in all categories.
There is no specific "best-in-class" organization in this sector as different
companies have different strengths and customers opt for a particular
brand based on their requirements.
For e.g. the preferred are:
Refrigerators - LG, Videocon, Whirlpool.
Air Conditioners - LG, Voltas, Blue Star
Washing machines - Whirlpool, Samsung, IFB.
Microwave ovens - LG, Samsung
An organization in the industry
First of its kind: Croma is India's first national, large format, specialist
retail chain for consumer electronics and durables
Widest range of products: 6000 products across eight categories
They help you buy: Sound and knowledgeable advice from well-trained
advisors to help one make informed buying decisions.
A name you can trust: Croma is promoted by Infiniti Retail Ltd - a 100%
subsidiary of Tata Sons, a brand that stands for trust and reliability
globally. Woolworths, one of the world's leading retailers, provides
technical and strategic sourcing support.
Great deals and offers: Croma periodically offers exciting deals on all
customer's favourite products.
Customer commitment: Croma not only offers a world-class shopping
experience, but also backs it with great after-sales service.
It also manufactures its own electronic items which include- kettles, iron
boxes, washing machines, dryers, I-pods, microwave ovens, fridges etc.
apart from a host of other gadgets.
Business Operations of the Organization
CromÄ � is an Indian retail chain for consumer electronics and durables.
Tata Group Company Infiniti Retail runs Crom� stores in India.
Presently, there are a total of 42 Crom� and 5 Croma Zip stores in India.
The stores are spread across the states of Maharastra (Mumbai, Pune,
Aurangabad), Gujarat (Ahmedabad, Rajkot, Surat, Vadodara), Delhi NCR,
Karnataka (Bangalore), Tamil Nadu (Chennai) and Andhra Pradesh
(Hyderabad). The CromÄ � Zip stores are an outlet for portable electronic
items and meant for the mobile consumer. The first Zip store was opened
on Jun 22, 2007 at the Mumbai domestic airport. CromÄ � claims to offer
6000 products across 8 categories.
Croma is India's first national, large format, retail chain for consumer
electronic and durables. Croma simply believes in the philosophy "We
help you buy." At Croma, well-trained store advisors, who have an in-
depth knowledge of the products, guide, and advice and help their
customers, choose a product that's just right.
The aim of Croma is to ensure that their shoppers make informed
purchases.
Croma stores are large (15,000-20,000 sq ft), well-planned and designed
to make shopping a pleasure. The world class in-store experience is
backed by robust after-sales service.
Croma is owned and run by Infiniti Retail Limited, a 100% subsidiary of
Tata Sons. Woolworths Ltd, the Australian retail giant, provides technical
support and strategic sourcing facilities from its global network.
Croma's first store opened on October 9, 2006 at Juhu in Mumbai, and
it's rolling out many more stores across India. So, no matter where you
are, if you want high-quality products, backed by advice you can trust,
head for the nearest Croma store.
Technology simplifies life. Croma simplifies technology. It offers shoppers
one of widest ranges of products and brands in consumer electronics and
durables and a shopping experience that's truly world-class. One can
choose from over 6000 products across eight categories. Croma's trained
and knowledgeable advisors help one arrive at an informed decision with
their personalized advice.
Whether you want to increase your productivity with the latest notebook,
tune into your favorite music on the go, keep your cool in steamy weather
with an AC, talk nineteen to the dozen on your mobile phone or do your
laundry in a jiffy with a fully-automatic washing machine, Croma can help
one make the right choice.
Products Offered:
Appliances
Imaging
Music & DVD's
Commutations
Gaming
Home Entertainment
Computers
IT Implementation Track Record
Time line
Croma's first store that was opened in Mumbai in 2006 has installed
AS/400 - for inventory management and purchase order management and
POS for billing purposes. Croma's website was up in the same year and
some of the operations and marketing was also done through the
website. From 2006-2011, croma has replicated the same IT
implementation in all other centres across India. By end of 2011, Croma
is planning to implement SAP in all the retail stores. The time-line of IT
implemented is represented pictorially below.
Point of Sales System (POS):
An ordinary checkout till is called a point of sale (POS) terminal. The one
present at Croma is an EETPOS (Electronic funds transfer point of sale)
includes a computer, cash drawer, receipt printer, customer display and
a barcode scanner along with an integrated credit/debit card processing
system. The POS system currently present at Croma is an outdated one
and doesn't have touch screen facilities.
Croma has installed AS/400 (Application system/400) server to manage
its POS and inventory management applications. AS/400 is a
midrange server developed by IBM and is designed for small businesses
and departments in large enterprises. Though now it is redesigned so
that it will work well in distributed networks with Web application,
Croma has not upgraded the old server. The one installed at CROMA
uses the PowerPC microprocessor with its reduced instruction set
computer technology. Its operating system is called the OS/400.
Purchase Order Management System
Interfaced with the Inventory management system
Online entry of purchase orders and receipts and updates the stock file
Daily goods ordered and stock received reports printed
Master files in this system are:
Supplier name and address
Warehouses address
Supplier items
Item No.
Inventory Conversion details
Cost prices
Weights
Reports
Goods ordered reports
Goods received reports
Outstanding order reports
Purchase orders
Goods received notes
Payment register
Inventory Management System
Item Maintenance:
Items recorded at 1-999 warehouses
For an item at a warehouse, the following date is recorded.
Location
Unit of measure
Max balance
Min balance
Safety stock
EOQ
FOQ
Lead time(days)
Stock Transaction Entry:
The following values are recorded to maintain real time stocks
information.
Sales
Credits
Receipts
Issues
Adjustments
Purchase Orders
Returns to Suppliers
Reserve stock
Transfer stock
Reporting
daily stock movements
stock status by item
stock status by supplier
theoretical stock valuation by warehouse/supplier
stock movement history
Customer Relationship:
All manufacturers and retailers of white goods industry wish to maximize
repeat sales by retaining the loyalty of their customers. "White goods" is
an industry is characterized by longer inter-purchase time. Many
customers seek informal opinion from friends and well wishers before
buying expensive consumer durables. So, customer interaction, before,
during and after sales is extremely critical for white goods industry.
Many organizations have understood importance of providing profitable
after-sales service but Croma still didn't give much importance to CRM.
They do not have an installed CRM system. However, they manage their
customer service and delivery issues through a database and through
mails and Telephones manually.
Website:
The website is interactive and has updated information. A section "Help
Me Buy" takes a customer through a range of products offered in Croma
with details about the models, price range etc.
Future Plans:
Croma is planning to implement SAP in all the stores by mid 2011.
Systems Applications and Products (SAP) in Data Processing - software
allows businesses to track customer and business interactions efficiently.
SAP is well-known for its Enterprise Resource Management (ERM) and
data management programs. SAP creates a common centralised database
for all the applications running in an organization. It provides customers
with the ability to interact with a common corporate database for a
comprehensive range of applications. SAP applications, built around their
latest R/3 system, provide the capability to manage financial, asset,
and cost accounting, production operations and materials, personnel,
plants, and archived documents. The R/3 system of SAP runs on majority
of platforms including windows 2000 and it uses the client/server model.
Croma is planning to leverage the implementation of SAP through the
following enterprise applications offered by SAP
Customer Relationship Management (CRM) - helps companies acquire
and retain customers, gain marketing and customer insight
Product Lifecycle Management (PLM) - helps manufacturers with
product-related information
Supply Chain Management (SCM) - helps companies with the process of
resourcing its manufacturing and service processes
Supplier Relationship Management (SRM) - enables companies to
procure from suppliers
Human Resource Management System (HRMS)
Advanced Planner and Optimizer (APO)
Business Information Warehouse (BW)
Most promising IT implementation
Most crazy IT implementation
Competition and its contemporary status
Porter's Five Forces Model
Although the Indian Consumer electronics market is highly competitive,
the high growth rates that it promises make it a good industry to enter.
Threat of New Entrants
Capital Requirements and Economies of Scale:
In the case of retail stores, there is lack of good distribution network and
lack of knowledge of consumer buying patterns which calls for large
investment in distribution channels and research to improve the reach.
Economies of scale is required in as there are large fixed costs associated
with setting up a manufacturing plant as there are problems of under-
developed infrastructure, erratic supply of water and electricity in many
areas, a high cost of capital and continuous up gradation of technical and
managerial skills.
Supply Chain Issues:
The existence of too many intermediaries in the supply chain coupled
with issues in logistics, management of POS data, pilferage and
distribution and inventory management, eats away the profits of the
retailer, making it unattractive for new entrants.
Product Differentiation:
Though the awareness is increasing amongst the Indian consumers,
retailers and manufacturers are unable to increase brand loyalty. The
Indian consumer is very price sensitive and hence he keeps hoping from
one place to another, hunting for good deals.
Switching costs vary amongst the electronic categories. For instance, the
switching costs in mobile phones are high, as consumers who are used to
one brand find it difficult to use another brand. However, for televisions,
cameras, and even laptops, consumers are ready to try new brands based
on price for features offered and service quality or reputation of the
brand.
Government Policy:
By encouraging manufacturing zones and improving the infrastructure,
the government is developing the entire manufacturing sector, which will
help in boosting the electronics production in India, which has
traditionally been a very small slice of the overall manufacturing
segment. While the government is trying to encourage the growth of the
retail and manufacturing industries in India, there are some policies
which need to be looked at.
The duty structure for electronics adds up to 30% which is a significant
amount. This is mainly due to the multiple tax structure which consists of
12% VAT, 8% excise, 4% Goods and Service Tax, 2% Central Sales Tax
and Local taxes.
The FDI policy limits to 51% stake for foreign investors, which forces
foreign retailers to use franchise arrangements, and in the
manufacturing sector, the FDI is 100% favouring foreign investors.
Existence of the grey market due to poor government regulations to keep
counterfeits at bay coupled with the lack of consumer knowledge and
legal recourse encourages manufacturers to churn out spurious products
which can lead to lost sales of the tune of 10-15%.
Red tapes and bribery in the Indian government system is also a
stumbling block for new retailers or manufacturers.
Taking into consideration the positives and negatives, India still offers a
good chance for new entrants and hence the threat is considered to be
low to moderate.
Bargaining Power of Buyers
With the emergence of new channels like the internet, auction sites like
rediff.com, the general consumer (buyers) who usually purchase
electronic goods from electronic retailers, hypermarts, music and book
stores, can easily compare prices and go for the best deals in town.
Though the better brands can command a higher price, buyers are
constantly comparing prices, service quality and product features and
hence commands a moderate to high power in this industry.
Large chain stores like Tata Croma, E-Zone have distinct advantage over
the smaller stand alone stores as they can demand good discounts
suppliers. As brands play an important role in the electronics market, the
retailers find it difficult to integrate backwards to produce their own
electronic goods as in the case of private food labels. Considering the
market dynamics and the size of the market, the buyers have moderate to
high power in the consumer electronics industry.
Bargaining power of suppliers
The biggest threat is the trend of large suppliers integrating forward as
in the case of Dell, Apple, Nokia, by setting up their own retail outlets.
However, in the Indian electronic context, there are a large number of
suppliers in the market who face overcapacities, poor distribution, large
duties, and declining margins and hence the bargaining power for
suppliers is less and competitive pricing comes into play. With more
companies setting up the manufacturing plants in India, like Nokia in the
south, the bargaining power of suppliers is definitely low to medium.
Product differentiation is more and more difficult in the consumer
electronics industry and the existence of cheap Chinese suppliers also
adds woes to the suppliers.
Intensity of Rivalry amongst existing players
There are few key players in the consumer electronic market, but as they
are part of big Indian business groups, they have a lot of muscle power
and hence the intensity of rivalry can be placed at a mid level. Though
factors such as high transport and storage costs, lack of differentiation,
large investments, and low switching costs tend to intensify the rivalry,
the fact that the market is only at the nascent stage with promises of
high growth rates of 16% coupled with the diverse needs of customer
groups, and an untapped rural market; the existing players seem to be
enjoying a relatively low rivalry.
Threat of Substitutes
The threat of substitutes for the manufacturers of these electronic goods
is medium to high unlike the case of white goods. As new technology
enters the market at increasing pace, the manufacturers and retailers
need to understand the consumer needs. For instance the VCR was
replaced by the DVD player which will soon be replaced by a Blue Ray
Player. The incorporation of camera in the mobile phones is definitely a
threat to the camera market. Hence product innovations in this segment
are very high and players in this industry need to mindful of this.
Consumer Electronics Retailers-Competition to Croma
Viveks - The Unlimited Shop
Viveks is one of South India's oldest consumer electronic retailer founded
in 1980s, which set up a retail outlet at Chennai, with humble beginnings
of housing fans, radios, fans, mixers, irons, heaters and other household
equipments. Till 1994, it had set up only 3 showrooms, however, with a
strategic initiative for rapid expansion, it established its dominance in the
two states on Tamil Nadu and Karnataka with 51 showrooms covering a
retail space over 1,75,000 sq.ft and boasting of a group turnover of Rs.
400 Crores and with wide product offerings. It plans of setting up of 50
more showroom.
E-Zone
E-Zone, an electronics specialty store, which has several brands all under
one roof, was launched by Future Group, in 2007 at Lucknow. They have
an interesting store format which consists of three dedicated zones -
Liberation Zone, Experience Zone and Home Zone to meet the electronic
needs of the entire family. E-Zone competes with Croma, by offering the
best deals and low prices and is positioned more towards the lower-
middle and middle class customer segment. The company has expanded
to 40 stores, all over India in about 2 years.
NEXT Retail India
NEXT Retail India, Ltd. is a subsidiary of Videocon Industries, Ltd and
opened its first retail electronic store at Indore in 1999. Today, NEXT
Retail India Ltd has more than 300 outlets across 16 states with a
presence in 145 towns spanning metros and large towns and claim to be
India's Largest Electronics Retail Chain; a giant in the organized
retailing of consumer electronics, and home appliances. NEXT has more
than doubled its last year's turnover in the current financial year. Their
plans ahead are more ambitious with a targeted turnover of 1800 Crores
for next year with 600 plus outlets.
Besides these top players, there are speciality stores dealing only with
mobile phones, laptops and exclusive dealers for the big electronic
brands.
Mobile Phones Speciality Retailers
The main players in the mobile phone retailer market are The
MobileStore, UniverCell, Cellucom, etc. The MobileStore currently has
more than 1050 outlets and plans to have a network of 2500 stores by
2010 across 650 cities, covering virtually every major town in every state
across India. Chennai-based mobile retail chain , UniverCell, currently
has 300 company-owned stores across the four southern states including
70 in Andhra Pradesh, and is trying to touch 400 stores by March 2010
through the franchisee mode. Cellucom which hosts mobile and laptops,
first outlet was opened in January 2007 at Gurgaon. Currently there are
120 stores across 15 cities including top four metros. These outlets cover
the entire value chain in formats like stand-alone stores in Malls, as well
as Shop-in-Shop within Shopper's Stop, Lifestyle and other large-format
chain stores
Laptop Speciality Stores
It is very interesting to note that there are very few multi-brand laptop
speciality retail chains in India. Most laptop showrooms are local players
or dealers for the big brands like Lenovo, HP, Acer, etc. Future scenario
building for the industry
Future Scenario Building for the Industry
Indian consumer goods market is expected to reach $400 billion by 2010.
India has the youngest population amongst the major countries. Rural
sector offers huge scope for consumer durables industry, as it accounts
for 70% of the Indian population. Rural areas have the penetration level
of only 2% and 0.5% for refrigerators and washing machines
respectively. The urban market and the rural market are growing at the
annual rates of 7%-10%and 25% respectively. A strong economy and
low interest rates have spurred on a steady increase in housing over the
past few years -- homes that new owners will want to fill with electronics
and appliances. A successful electronic retailer is one, who balances
product selection, store environment, customer service, targeted
advertising, good inventory management and low-price guarantees to
boost sales.
Growth Opportunities
The growth opportunities for the sector are:
The demand for white goods is increasing with rising income levels,
double-income families, changing lifestyles, availability of credit,
increasing consumer awareness and introduction of new models.
The biggest attraction for the industry is the growing Indian middle
class. Indian market is characterized with low penetration levels. MNCs
hold an edge over their Indian counterparts in terms of superior
technology combined with a steady flow of capital, while domestic
companies compete on the basis of their well-acknowledged brands, an
extensive distribution network and an insight in local market
conditions.Â
One of the other critical factors those influences durable demand is the
government spending on infrastructure, especially the rural
electrification programme. Any incremental spending in infrastructure
and electrification programmes could spur growth of the industry.
While CTVs and refrigerators have been around for many years, washing
machines, microwave ovens, air conditioners and vacuum cleaners are
beginning to make their presence felt in Indian households.
Globalization and digitalization is also one of the critical growth drivers
for the industry. Consumers are becoming more aware of the options
available through the development in Information Technology and
Communication sector.
Key Challenges
However, industry still faces many challenges. Some of them are:
Generation of e-waste: The preferred practice to get rid of obsolete
electronic items in India is to get them in exchange from retailers when
purchasing a new item. Managing this e-waste is a mammoth task.
According to a report of Confederation of Indian Industries, the total
waste generated by obsolete or broken down electronic and electrical
equipment in India has been estimated to be 1,46,000 tons per year.
Around 48% of the replaced computers enter E-waste stream exchange
and buy back scheme. Only 6% of the organizations were found to be
Next level of technology to meet thinner gauges requirements as
consumers' interest is moving towards compact models and sleek
designs.
Intense competition from MNCs
Increased number of suppliers with increased complexity due to more
design variants/SKU's
Way Forward
This industry has huge growth potential. The way forward for white good
industry is by:
Putting in place an automatic price revision mechanism based on raw
material cost, conversion cost and profit margin
Adopting Green Supply Chain Management (It is discussed in detail in
next section)
Improving after sales services is very critical for white goods industry.
Consumers usually go for branded products as the inter-purchase time is
typically 10-15 years and also expensive. Good brand promises guarantee
and increase life time of the product.
Using Inventory Turnover is a key success driver - Retailers are turning
over inventory faster and faster and are working hard to upgrade stores
to make it easier for consumers to check out the latest in electronic
wares. Store redesigns are also helping electronics retailers to compete
more effectively with wholesale clubs, office supply superstores and mass
merchants like Wal-Mart.
Increasing consumer confidence - Consumer confidence represents one
of the larger risks to electronics retailers. When concerns grow about job
security and when wage growth slows down, consumers tend to purchase
fewer and fewer high-tech gadgets. Whenever the economy and
consumer confidence turn sour, one of the first things to go is
"discretionary" spending on items like consumer electronics.
Green Supply Chain Management:
GSCM is integrating environment thinking into supply chain
management, including product design, material sourcing and selection,
manufacturing processes, delivery of the final product to the consumers,
and end-of-life management of the product after its useful life.Â
In today's business world, the competition is very high. To make
customer impress, the company needs to make itself standing out from
others. Being environmental friendly is one way to differentiate from
the competitors.  Not only competitors, but even from customers'
perspective it is better to adopt the GSCM.Â
Benefits of adopting GSCM:
GSCM helps lower environmental load for environment, lower cost prices
for supplier, lower cost for producer, lower cost of ownership for
customer, and less consumption of resources for society.Â
GSCM helps overcoming prejudice and cynicism for environment, less
rejects for supplier, easier to manufacture for producer, convenience and
fun for customer, and better compliance for society.Â
GSCM helps motivation of stakeholder for environment, better image for
supplier and producer, feel good and quality of life for customer, and
make industry on the right track for society. He also provided examples
of company that were successfully adopted GSCM.
Strategic use of IT
The strategic grid:
The strategic grid model is an IT specific model that can be used to
assess the nature of the projects that the IT organization has in its
portfolio with the aim of seeing how well that portfolio supports the
operational and strategic interests of the firm.
The CIO plots projects and systems from the IT organization's portfolio
on a two dimensional graph. The X axis represents impact of the
project on IT strategy. One way of expressing what we mean by this is:
what options does this project offer the firm by way of affecting one of
Porter's five forces in our favor?  Does it change the nature of
competition in our market, affect the bargaining power of buyers or
suppliers, raise or lower the barriers to entry into our market, or change
switching costs for our products and services? Does it enable us to
offer completely new products and services, or enable us to substitute
one of ours for one of someone else's in the eyes of their customers?
The Y axis represents the impact of the project on IT operations.  One
way of expressing this is to say that projects that are high on this axis
improve the efficiency or quality of our existing systems and business
processes, or lower their costs.
McFarlan divides the grid made by these axes into four quadrants:
Support:Â low operational impact, low strategic impact. This quadrant is
about local process improvements for individual users.
Factory:Â high operational impact, low strategic impact. This quadrant is
about operational improvements that affect large portions of the firm,
and are aimed at improving performance or decreasing cost.
Turnaround:Â low operational impact, high strategic impact. This
quadrant is about exploiting new technologies to provide strategic
opportunities.
Strategic:Â high operational impact, high strategic impact. IT
organizations that have most projects in this quadrant understand that IT
can both improve core operations of the firm while simultaneously
generating strategic options.
Considering the above parameters we choose to place TATA Croma in the
Turnaround Quadrant. White Goods Industry as well as Tata Croma has
IT implementation in their priority list but the present applications do not
speak volumes about effective IT implementation
IS strategy is becoming centrally planned
IT has become the top priority of Top management for effective
management of stores
Demanding a lot of time and attention to get completely integrated with
business strategy
Used for both supply chain maintenance as well as customer satisfaction
Use of IT done to create competitive advantage and reach to the
customers at low cost and in less time
In White Goods Industry:
IT can be used to create defensible entry barriers
IT can help induce switching costs
IT can help change the ground rules of competition
IT can help change the competition from cost-based competition to
sustainable product differentiation and customer satisfaction
IT can help to build links to the suppliers
The 4 Cs of Digital Transformation
Commerce - transaction is generally done through traditional modes -
physical and personal delivery of goods and exchange of money either
through cash or credit/debit cards. Still, a negligible percentage of
customers buy white goods through internet
Content - The information provided to the customers and the suppliers is
through physical documents or one-to-one. No forum in place where
content can be shared.
Community - Customers, suppliers, employees & competitors
Collaboration - In stores during their visit, through websites, fliers,
complaints and requests, feedbacks, festival displays etc.
The key elements of the recommended sector development strategy are:
Agreement between the Government of India and India's white good
manufacturing businesses on the conclusions and recommendations in
this report.
The measure of international competitiveness is to be production unit
costs.
Annual targets of 5 - 10% reductions in production unit costs are to be
set with an overall target of a 30% reduction to be achieved over a 3 - 5
year period.
A mechanism is required to keep production unit costs under review in
each manufacturer to ensure the annual target reductions are being
achieved.
The 13 development issues described above are to be accepted as key
drivers for the implementation of the sector development strategy.
A programme of assistance is to be made available to the white goods
manufacturers, including:
Assistance with reducing production unit costs.
Assistance with opening-up new markets.
Support to develop new brands which are suitable for international
markets.
Assistance for manufacturers to meet the requirements of target export
markets, such as minimum energy efficiency levels.
Delivery of the National Supplier Development Programme into white
goods "mother" companies to accelerate the improvements in the
negative trade balance in parts that have already been reported.
Facilitation of the consolidation process based on requests made by
India's white goods manufacturers.
The delivery of the above areas of assistance should be dependent on
India's white goods manufacturers agreeing to annual targets, and
achieving these targets, for reductions in production unit costs.
Levels of Strategic Development four levels of strategic development are proposed:
The producers of relatively low tech products, such as manual and semi-
automatic washing machines, butagas cookers and basic gas and electric
water heaters.
The producers of higher tech white goods products that compete with the
product portfolios of the global companies, including: air conditioners;
refrigerators; automatic washing machines; and dishwashers.
Strategic alliances with regional players that result in mutual benefits to:
fund R&D; develop and new technology; develop new products; or open
new markets.
Strategic alliances with global companies that do not result in
restrictions on export markets.
New Business Models
Assess new business models which may be appropriate to structure the
next stage of development of India's white goods sector, which can
support the required improvements in international competitiveness,
while at the same time avoiding the downside of significant consolidation.
Indigenous Business Development
Technology, with options including: developing the existing approaches
to incremental product development; enter into strategic alliances with
existing global companies; establish a new White Goods Technology
Centre; buy existing technology development programmes and expertise,
see bold approach, below.
Market Development, alongside technology development, investment in
market development, in particular branding, is of equal, if not more
importance.
Production Licenses, which may restrict the exporting activities to avoid
competing with the licensor of the technology.
Risks of Relying On Indigenous Development
There is no certainty that the indigenous business development activities
will succeed to deliver export-led growth. If indigenous white goods
businesses are not capable of delivering export-led growth the
government will have to turn to other alternatives.
The main alternative to the development of indigenous manufacturing
businesses is to attract FDI, in particular from the global companies. It is
recommended that a FDI promotion initiative is implemented as a key
element of the development strategy for the sector.
Bold Approach
A bold approach would be to form an investment vehicle, possibly using
investment funds, to initiate a buy-out of one of the global companies.
IT vision and IT strategy for organization
IT vision
Our vision is to maximize customer and shareholder value by adopting
world class IT practices, striving for excellence in the products and
customer services we provide continually.
Our vision is to lead by example through a commitment that empowers
the organization at every level to strive for the highest levels of quality,
customer care and shareholder value.
IT strategy
Within the next 12 months evolve the existing method of service into an
environment that: Promotes and nurtures service excellence.
Builds and maintains a customer-oriented culture
Understands that service excellence at the front lines has to start with
the concept of service excellence at the level of top management
Acknowledge that the service excellence concept must be a key part of
the very structure and operation of the organization
Understands that people and systems in the organization must be
constantly tuned to customer needs and to management's evolving
concept of service excellence