Titan's STRATEGY- a view

THE WATCH INDUSTRY

The story of the watch in India goes back a long way to 1957. Pandit Jawaharlal Nehru, during his visit to Japan, received a watch as a gift inspiring him to bring watches closer home in his country. This dream became a reality in 1961 when Nehru commissioned the first watch factory in India in 1961. This was the watch division of HMT Ltd.
Citizen, the popular Japanese manufacturer, evinced interest to train select Indian people at their watch manufacturing plant in Japan. The year 1962 saw the manufacture of the first component and then began the slow but steady growth of watch manufacture in the country. The first watch model manufactured by HMT was the Janata model, which exists even today, was gifted by Pandit Nehru to the senior most employee of the company. The next 10 years saw the Indian-made watches carve a niche for themselves in the market. 15000 to 20000 mechanical watches were made every month.
Smuggling was on a rise during the 1970s and the 80s period. To counter this the watch manufacturing activities were beefed up. An assembly plant was set up and the concept of a mother plant with other units in various states was pioneered.
The early 80s was a period of technological revolution with drastic changes in tastes and preferences. The integrated chip was invented in the US and digitals were in demand and LED watches flooded the market. Japanese companies took over the manufacturing of LCD for digital watches. Quartz technology had picked up and there was a shift in focus from mechanical to quartz watches.
1987 saw the establishment of Titan watches, which was formed by the Tatas and TIDCO (Tamil Nadu Industrial Development Corporation). The Tata’s took two decisions- that they will manufacture only quartz (analog and digital) and not mechanicals, and they would set up a state of the art plant to manufacture watches in a wide variety of designs and prices.

TATA GROUP PROFILE

The Tata Group comprises 93 operating companies in seven business sectors: information systems and communications; engineering; materials; services; energy; consumer products; and chemicals. The Group was founded by Jamsetji Tata in the mid 19th century, a period when India had just set out on the road to gaining independence from British rule. Consequently, Jamsetji Tata and those who followed him aligned business opportunities with the objective of nation building. This approach remains enshrined in the Group's ethos to this day.

The Tata Group is one of India's largest and most respected business conglomerates, with revenues in 2004-05 of $17.8 billion (Rs 799,118 million), the equivalent of about 2.8 per cent of the country's GDP. Tata companies together employ some 215,000 people. The Group's 32 publicly listed enterprises — among them standout names such as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea — have a combined market capitalisation that is the highest among Indian business houses in the private sector, and a shareholder base of over 2 million. The Tata Group has operations in more than 40 countries across six continents, and its companies export products and services to 140 nations.

The Tata family of companies shares a set of five core values: integrity, understanding, excellence, unity and responsibility. These values, which have been part of the Group's beliefs and convictions from its earliest days, continue to guide and drive the business decisions of Tata companies. The Group and its enterprises have been steadfast and distinctive in their adherence to business ethics and their commitment to corporate social responsibility. This is a legacy that has earned the Group the trust of many millions of stakeholders in a measure few business houses anywhere in the world can match.


COMPANY PROFILE OF TITAN

The industry structure prevalent in the 1980s provided a golden opportunity for the Tata, who were one of the most respected names in the Indian industry. They not only had the financial muscle to enter the watch business but also had the feel of India as a market. This led to the birth of Titan Industries Ltd. in 1984.

Titan Industries is India’s leading manufacturer of watches and jewellery and the world’s sixth largest manufacturer brand of watches. Established in 1984 as a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation, the company transformed the Indian watch market, offering quartz technology with international styling, manufactured at its state-of-the-art factory at Hosur, Tamil Nadu. In 1995, the company diversified into jewellery under the brand Tanishq.

AREAS OF BUSINESS

Titan manufactures over 7 million watches per annum and has a customer base of over 65 million. The company has manufacturing and assembly operations at Hosur, Dehradun and Himachal Pradesh.

VISION

To be Innovative, World class, Contemporary and
build India’s most desirable brands.

ACHIEVEMENTS

Titan Industries has been awarded the following:
The President of India’s Award for employing the disabled.
Friends of BIL Award for employing the handicapped.
The Titan Design team received 7 accreditations at the NID — Business World Awards, including the 'Young Design Entrepreneur of the Year'.
Titan and Tanishq were adjudged 'Most Admired Brands' as well as 'Retailer of the Year' by Images Fashion Forum.
Titan retained it ranking as the 'No 1 Brand' in the Brand Equity Survey, in the Consumer Durables category.

CORPORATE SOCIAL RESPONSIBILITY

Titan has a clearly defined policy on social responsibility. Its CSR initiatives include children’s education, employing the disabled, women's empowerment, environment management programmes and other community initiatives. The company is a signatory to the Global Compact and has been awarded the Helen Keller and Mother Teresa awards. Its Watch and Jewellery Divisions are certified under ISO 9001 :2000 quality management system standards as well as the ISO 14001 environment system standard.
LocationTitan's headquarters are located in Bangalore.
ContactGolden Enclave, Tower A, Airport Road, Bangalore 560 017, India.Phone: +91(80) 2526 8551, 5660 9000Fax: +91(80) 2527 5756Email: webmaster@titan.co.in

CORPORATE LEVEL STRATEGY

Companies that are large enough to be organized into strategic business units face the challenge of allocating resources among those units. In the early 1970's the Boston Consulting Group developed a model for managing a portfolio of different business units (or major product lines). The BCG growth-share matrix displays the various business units on a graph of the market growth rate vs. market share relative to competitors:

BCG Growth-Share Matrix

· Cash Cow - a business unit that has a large market share in a mature, slow growing industry. Cash cows require little investment and generate cash that can be used to invest in other business units.

· Star - a business unit that has a large market share in a fast growing industry. Stars may generate cash, but because the market is growing rapidly they require investment to maintain their lead. If successful, a star will become a cash cow when its industry matures.

· Question Mark (or Problem Child) - a business unit that has a small market share in a high growth market. These business units require resources to grow market share, but whether they will succeed and become stars is unknown.

· Dog - a business unit that has a small market share in a mature industry. A dog may not require substantial cash, but it ties up capital that could better be deployed elsewhere. Unless a dog has some other strategic purpose, it should be liquidated if there is little prospect for it to gain market share.

IN TATA

POSTION OF TATA : STAR
NO OF SBUs : 44
STRATEGY : Maintain the same position

WHY STAR?

TOTAL YARLY SALES UP 25.8 PERCENTATGE INCREASE IN EVER YEAR

CHAIRMAN MESSAGE

We should all feel proud of our achievements in 2005. It has been the best year in the history of the Tata Group — and this success has been mainly due to your personal commitment. I feel confident that in 2006 the Tata Group will see even greater growth and scale even greater heights.
The year 2006 will be a year of challenges. There will be greater competition from global companies, there will be greater pressure on costs and greater managerial challenges. This will call for your continued support and commitment to the goals we have set. I am sure that the tremendous spirit which you have always displayed and your dedication will enable us to achieve what we have set out to do. I look forward to working with you to face the challenges ahead — and to succeed! We should in the new year reinforce our quest for high quality and further improve our concern for our customers.

We must be bold in our actions. We must always lead — we must never follow!

BUSINESS LEVEL STRATEGY

SBU: TITAN

PORTER'S GENERIC STRATEGIES

If the primary determinant of a firm's profitability is the attractiveness of the industry in which it operates, an important secondary determinant is its position within that industry. Even though an industry may have below-average profitability, a firm that is optimally positioned can generate superior returns. A firm positions itself by leveraging its strengths. Michael Porter has argued that a firm's strengths ultimately fall into one of two headings: cost advantage and differentiation. By applying these strengths in either a broad or narrow scope, three generic strategies result: cost leadership, differentiation, and focus. These strategies are applied at the business unit level. They are called generic strategies because they are not firm or industry dependent. The following table illustrates Porter's generic strategies:

TITAN

Titan has established leadership in India by catering to every market segment. They pursue a strategy of cost focus and differentiation focus in the country.

FOCUS STRATEGY

The focus strategy concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. The premise is that the needs of the group can be better serviced by focusing entirely on it.

COST FOCUS

A firm using a focus strategy often enjoys a high degree of customer loyalty, and this entrenched loyalty discourages other firms from competing directly.
Because of their narrow market focus, firms pursuing a focus strategy have lower volumes and therefore less bargaining power with their suppliers.

DIFFERENTIATION FOCUS

However, firms pursuing a differentiation-focused strategy may be able to pass higher costs on to customers since close substitute products do not exist.
Firms that succeed in a focus strategy are able to tailor a broad range of product development strengths to a relatively narrow market segment that they know very well.
Some risks of focus strategies include imitation and changes in the target segments. Furthermore, it may be fairly easy for a broad-market cost leader to adapt its product in order to compete directly. Finally, other focusers may be able to carve out sub-segments that they can serve even well.

FUNCTIONAL LEVEL STRATEGY


PRODUCT: WATCH


The Marketing Mix
(The 4 P's of Marketing)

The major marketing management decisions can be classified in one of the following four categories:

• Product
• Price
• Place (distribution)
• Promotion

These variables are known as the marketing mix or the 4 P's of marketing. They are the variables that marketing managers can control in order to best satisfy customers in the target market. The marketing mix is portrayed in the above diagram.

PRODUCT

The product is the physical product or service offered to the consumer. In the case of physical products, it also refers to any services or conveniences that are part of the offering.
Product decisions include aspects such as function, appearance, packaging, service, warranty, etc.

IN TITAN

Ø They are having the lot of design like, Insignia, PSI2000, Regalia etc.,
Ø They are having good appearance and packaging also.
Ø They give good after sales service.

PRICE

Pricing decisions should take into account profit margins and the probable pricing response of competitors. Pricing includes not only the list price, but also discounts, financing, and other options such as leasing.

PLACE

Place (or placement) decisions are those associated with channels of distribution that serve as the means for getting the product to the target customers. The distribution system performs transactional, logistical, and facilitating functions.
Distribution decisions include market coverage, channel member selection, logistics, and levels of service.

PROMOTION

Promotion decisions are those related to communicating and selling to potential consumers. Since these costs can be large in proportion to the product price, a break-even analysis should be performed when making promotion decisions. It is useful to know the value of a customer in order to determine whether additional customers are worth the cost of acquiring them.
Promotion decisions involve advertising, public relations, media types, etc.