de la rue fortronic_final

8/2/2019 De La Rue Fortronic_Final

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Presented By : Group 6

Akash Vaswani - 04

Bhakti Thakkar - 17

Hiren Bhanushali - 29

Kaustubh Satanekar - 37

Mrityunjay Singh - 48

Nitesh Amin - 57


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Case Facts

DLRF are a medium sized company that manufacture andsupplies electronic funds transfer and point of sale equipment

and system(EFTPOS).

Fortronic was founded 20 years ago in Dunfermline, Scotland.

It initially supplied transaction processing equipment to UK

banks.

It then identified the niche market for EFTPOS system inpetrol industry.


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Contd..

In 1987, the company was acquired by the De La Rue group,which service the banking and financial industries throughout

the world.

The group operates in over 100 countries, including china,

supplying wide range of products and services.

Over the years it has developed new products to support

SMART cards and electronic purse system.


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Organisational Structure

Dunfermline

(Corporate HQ)

UK

Frankfurt

Sales and Services

(Eastern Europe)

Manchester

Support

(UK)

Hartland

Sales and Services

(North America)


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Contd..

De La Rue Group

Security and Print Cash SystemTransaction

System


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Products and Services

EFTPOS products and market to banking and retail

environment contributes substantial part of its turnover

New products like state of art terminals and Pin-pads

incorporating Smart card support

Helped company to enter growth markets like electronic cash

customer loyalty and utilities pre-payment


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Contd..

Developed number of services to complement its products

Offers data gathering and processing options

Includes simple transaction collection to fully managed

payment network


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Product Range

Eclipse TT41

Equinox EP41

F95 Micropos EFTPOS Terminal

F105 electronic Purse Terminal

Tripos internet payment solutions


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Eclipse TT41

Regarded by DLRF as the revolutionary product

Can handle various cards

A powerful and cost effective product

Flexibility


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Equinox EP41

A new generation PIN-Pad

Can handle range of electronic purses

2 ways of verification

In U.K. a common to verify signatures

In Germany verification by PIN


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F95 Micropos EFTPOS Terminal

For first time users

Fully programmable and self install

Flexibility to connect various peripherals

Card transactions at POS

Easy to use

Speeds up the process of payment


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F105 electronic Purse Terminal

An offline method of transaction

Transfers cash value from customer to retailer

Without authorization

A modem for onward transmission to banks


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Tripos internet payment solutions

Internet payment solution

Payment gateway

3 stages

1st stage has a payment server located in a secure location

2nd

stage is the message server which establishes acommunication link

3rd stage is the dispatch trigger mechanism


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Magnetic Stripe Cards

Magnetic stripe cards have black magnetic stripe at back of the

card

Read by POS (Point Of Sales) machines

Records all the transactions taken place throughout the day

and updates them to your account through main frame

computer

Allows information to be read from card


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Smart Payment

Successors of magnetic stripe cards

Contains micro chip enabling to carry more information like

account details and additional security information

Enables reading and writing of transactions which take place

Availability of encryption facility

Cost ranges from one to five pounds


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Customer Loyalty Schemes

Companies attempt to reward customers who give them repeatbusiness

Cost of finding new customer is higher than gaining repeat business

Issued more than 4 million cards in UK in Shell Smart scheme

Banks in Asia/Pacific are increasing credit/debit business through

customer loyalty

Asia/Pacific region biggest user of Smart cards for customer loyalty


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Existing Competitors


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VERIFONE HYPERCOM INGENICO SCHLUMBERGER / DIEBOLD

Its strategy is tobe in allmarkets. It isseen as havinga productionorientedphilosophy

Its strategy is todevelop highspecification, highquality productswhich addressactual marketrequirements

N.A. Schlumberger(European)

joined withDiebold(American) aspart of itsstrategy forexpansion

Warranty: 13months

Warranty: 5 years N.A. N.A.

Mainmanufacturing

facility is inTaiwan, openeda new factory inChina where ithas 30% of themarket share.

it is active inChina with an

office in Beijingand claims to have40% of thismarket

It has in office inChina however it

market share inChina is tiny

It has no plansto move into

the Chinese orAsia-Pacificmarket


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VERIFONE HYPERCOM INGENICO SCHLUMBERGER /

DIEBOLD

N.A. its strength isthe productrange

Its strength isits experiencewith SMARTcardapplication,portableterminals andradiocommunications

It hasconsiderableSMART cardexperiencesince it is alsoa majorsupplier ofSMART cards

N.A. its weakness islack of SMARTcard or electronicpurse experience

N.A. N.A.


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INDUSTRY ANALYSIS

(Europe)

Electronic Funds transfer and pointof sale equipments Industry


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RIVALRY AMONG COMPETITORS

1 2 3 4 5

Large Small

Slow Fast

High Low

Low High

Low High

Secret Open

Large Small

High Low


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High Small

High Small

High Small


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High Low

Low High

Better Worse

High Low


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Small Large

Low High

Low High

Low High

Easy Limited

Small Large

Easy Restricted

Easy Restricted

None Substantial


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Small

Large

Many Few

Low High

High Low

Low High

Low High

High Low

Low High


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Small Large

Few Many

High Low

High Low

Low High

High Low

High Low

Low High


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INDUSTRY ANALYSIS

(North America)



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1 2 3 4 5

Large Small

Slow Fast

High Low

Low High

Low High

Secret Open

Large Small

High Low


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High Small

High Small

High Small


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Small Large

Low High

Low High

Low High

Easy Limited

Small Large

Easy Restricted

Easy Restricted

None Substantial


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High Low

Low High

Better Worse

High Low


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Small Large

Few Many

High Low

High Low

Low High

High Low

High Low

Low High


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Q1) Building on your

recommendations for De La Rues

long term strategy propose a plan forthe companys entry into the Chinese

market?


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INDUSTRY ANALYSIS

(CHINA)



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1 2 3 4 5

Large Small

Slow Fast

High Low

Low High

Low High

Secret Open

Large Small

High Low


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High Small

High Small

High Small


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Small Large

Low High

Low High

Low High

Easy Limited

Small Large

Easy Restricted

Easy Restricted

None Substantial


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High Low

Low High

Better Worse

High Low


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Small Large

Many Few

Low High

High Low

Low High

Low High

High Low

Low High


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Small Large

Few Many

High Low

High Low

Low High

High Low

High Low

Low High


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Predicted Terminal Shipments byCategory 1996-2000 (000s of Terminal)

1996 1997 1998 1999 2000

EFTPOS 50 75 112.5 168.8 253.1

Electronic Purse 5.6 11.1 18.5 27.8 33.3

CombinedEFTPOS/ElectronicPurse

10 15 22.5 33.8 60.6

CombinedEFTPOS/Loyalty

0.0 13.0 32.5 52 65

Total 65.6 114.1 186.0 282.4 412


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Current Credit/Debit cards and TransactionVolumes

Issuer Volume($Million)

Cards (000)

Industrial and CommercialBank

4422.4 4604

Bank of China 1558.1 1822

Construction Bank 951.7 2154

Agricultural Bank 177.3 2129

Other 9.3 202

Total 7118.8 10911


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China- Economic Factors

income growth by province1991(%)

Province Growth(%)

Xinjiang 116

Fujian 112

Yunnan 108

Guangdong 108Guangxi 82

Shandong 78

Shaanxi 68

A I fl ti i Chi 1983


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Average Inflation in China 1983-

1994

0

5

10

15

20

25

83 84 85 86 87 88 89 90 91 92 93 94

Series 1

Column1

Column2


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Growth in Consumer spending 1977-1994(billions of Yuan)

0

500

1000

1500

2000

2500

77 80 85 87 90 91 92 93 94

Amount

Amount


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Verifone

30%

Hypercom

40%

Others30%

Market share in China

STRATEGIC ADVANTAGE


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FOCUS

DIFFERENTIATON OVERALL COSTLEADERSHIP

STRATEGIC ADVANTAGE

uniquenessperceived by the

customerLow cost Position

STRATEG

IC

TARGET In

dustry

wide

ParticularSegment

only

4/23/2012 58

DLRF

Long Term Strategy of DLRF in


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Long Term Strategy of DLRF in

China

Cost leadership cannot be the genericstrategy used as the company does not havea large market share.

Strategy selected is of differentiation.

Differentiation (investment in the R&Dleading to product development)

Cost advantage (Increase in the volumes ofproduction by converting the assembly line tomodern cell manufacturing)

Advantages of differentiation for


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Advantages of differentiation for

DLRF Earning above average returns via providing

differentiated products.

Provides insulation against competitiverivalry.

Increase profit margins by charging apremium.

Provide entry barriers.

Initially the company will have lower marketshare but higher ROI.


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Risks of differentiation Buyers may sacrifice some of the features,

services or image possessed by thedifferentiated for large cost saving.

Buyers need for differentiating factor mayfall.

Imitation by competitor.


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Q2) Produce a strategic marketingplan for De La Rue Fortronic for theperiod 1998-2003. Justify your

recommendations.


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Mission:To be premier supplier of secure,authentic payment and transaction

systems.

Strategic objective:To expand

Objective:To achieve market share of 5% by 2003.


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Crafting Strategy: Setting up distribution channel

Direct selling through sales force

Buyer group- Banks, retailers, hospitality,petrol pumps.

Geographic market- Xinjiang, Fujian,Yunnan, Guangdong, Guangxi.


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For setting up operations and marketing the product cash is

required which could be acquired via debt or equity

Investments in R & D

Highly skilled labour

Use of IPR and Patents

Better customer service


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Q3) Based on this strategicmarketing plan draft a

promotional strategy for theTT41 terminal.


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Eclipse TT41

Regarded by DLRF as the revolutionary product

Can handle various cards

A powerful and cost effective product

Flexibility


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Promotional Plan

Trade shows

Customer seminars (Distributors and Customers)

PR campaigns

Advertising via business newspaper and magazines


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de la rue fortronic_final

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