Download - B2B Case Study Star Engineering Company Ltd
Star Engineering Company Ltd.CASE Study
Presented byT Farzana
Vikram BaligaPritom Roy
Siddhartha Deshmukh
Case FactsStar engineering company limited manufactured 5
products.The company encountered problem deciding how to
allocate the funds to various productsThe company had limited financial resources so it was
important to allocate the funds in a balanced manner.
Product A : Transformer Coils
Product B : Cable Jointing Kits
Product C: Electric point Machines
Product D: Steel Forgings
Product E: Switch Mode Power Supply (SMPS)
Product portfolioProduct A: Transformer coils, sold to telecom
exchanges. Market of transformer coil was growing at a rate of 25% p.a
The coil was well accepted by the customers in terms of quality and they had market share of 20%
In order to increase production capacity additional investment 2 cr was required
Product B: Cable jointing kits which was used in telecom industries
Market of cable jointing kits was growing at a rate of 15%Market share of company had come down from 100 to 20%
because it was getting substituted by fiber optic cable and suitable jointing kits
Product C: Electric point machines used by railways for changing the tracks electrically
Market share of this product was 40% For expansion investment of 2.5cr required
Product D: Steel forgings required by diverse industries
Market of steel forgings was growing at 8 to 10%To make replacements in equipments it required
investment of at least 1.5crProduct E: Switch mode power supply (smps)Market of this product growing at the rate of 20%Market share of company was 6%To increase the production capacity they required 5cr
Total requirements of fund for all products was 11cr. The management could arrange only 5cr
POLITICAL Congress government was in the centre
P.V. Narasimha Rao was the prime minister of India
The nation was shaken by a series of bomb blasts in mumbai
ECONOMICEconomic growth in the world remained slow-moving in
1993Economy had consolidated itself in the initial years of
eighth five year planPrimary focus of eighth five year plan was human
developmentGDP was 4%Rate of inflation was between 7-8%
SOCIAL
Telecom industry was slowly growing in India giving rise to need for more transformer coils.
Indian Railways was also increasing its operations and hence demand for electric point machines was also high.
With the increase in manufacturing industries in India post liberalization demand for steel forgings was also increasing.
TechnologicalInfrastructure and technological changes had started
post liberalization.Manufacturing sector had grown 8-10% for last
few years.
SWOTStrength :
•product A was well accepted by the customers in terms of quality and it was considered as the market leader.
•Product ‘B’- Contributing to the expansion and diversification projects of the company.
•Product ‘C’(electric point machines)- Demand for the product is growing 7 to 8 percent . Also its market share are 40% highest among the competitors.
Weakness :
Product B : Jointing kits were getting slowly substituted by fibre optic cables and suitable jointing kits.
•Product ‘B’-Problems faced of substitution and competition.
•Product’D’- despite of giving the best management that unit was not growing.Problem was poor quality and high rejection rate.
Opportunities :
Product ‘A’ was having total market for the transformer coils was growing at an average rate of 25 percent per annum.
Product ‘B’ -Telecom industry growing at the rate of 15 percent per annum.
Product ‘E’ having a good potential to become a market leader.Because of lesser competition
Threats :
Because of unavailability of substitution in the Department of Telecommunication, Due to growing competition market share of company had come down from 100 percent.
Product ‘D’- Management issue.
Market Share Analysis
Product A - Transformer Coils -20% (Market Leader)
Product B – Cable jointing kits – 20 % (Market Leader)
Product C – Electric Point Machines – 40 % (Market Leader)
Product D - Steel Forgings - 5%
Product E - Switch Mode Power Supply (SMPS) - 6%
Industry Growth RateProduct A -Transformer Coils - Growing @ 25%Product B – Cable Jointing Kits – Substituted by Fiber
Optic Cables. Product C - Electric Point Machines - Demand Growth
@ 7% to 8%Product D - Steel Forgings – Domestic market 8% to
10% Product E - Switch Mode Power Supply (SMPS) -
@20% per annum
2 Factors that are affecting the demand of the product strategy:
PRODUCTS Investment Required
Product Life cycle
Transformer Coils 2 Crore -
Cable Jointing Kits, Jelly Filled Cables
- Decline
Electric point Machines
2.50 Crore Growth
Steel Forgings 1.50 Crore Growth
Switch Mode Power Supply (SMPS)
5 Crore Introduction
RecommendationsOption 1 – Go for investment in Product A and
Product DTotal investment – 2 cr + 1.5 cr = 4 crReasons – For Product A market growth rate was 25
percent per annum
For Product D domestic market was growing at 8 – 10 percent but tremendous demand in international market
RecommendationsOption 2 - Go for investment in Product ETotal investment – 5 cr
Reasons – For Product E market growth rate was 20 percent per annum
Good Potential of becoming a market leader.