FINAL REPORT BUSINESS POLICY AND STRATEGIC MANAGEMENT
Topic of study:R!"u#t$s %o"d&"p fo% '#o("# !t%y c"% i! I!di"
Su(&ittd to: P%of) N )R) Go*i!d" S+"%&" D"t: ,t+ Au'ust. /0,
Su(&ittd (y: T"& T "& No) - C1 T"& T "& N"& - St"%s+i! St"%s+ i! PGDM B"tc+: /0,2-,3
T"(# of Co!t!ts
Group C7
Renault India
Abstract.........................................................................................................................2 Introduction...................................................................................................................2 Strategy used by Renault Renault India Private Limited......................................................... ...3 Importance in Strategic terms......................................................................................4 Details o Strategic Issues.............................................................................................4 Internal and !"ternal Analysis #S$%& Analysis'...........................................................( Strengt)s #Internal'.................................................................................................... #Internal'.................................................................................................... ( $ea*ness #Internal'...................................................................................................+ %pportunities #!"ternal'............................................................................................, &)reat #!"ternal'..................................................................................................... #!"ternal'..................................................................................................... ...Analysis on t)e asis % /P0 0odel.............................................................................Strategic 0odel...........................................................................................................1 &)e ive ive 0aor !lements o Strategy.............................................................. .........1 ........ .1 SPA/! SPA/! 0A&RI 0A&RI #Strategic Position and Action !valuation'................................. .........13 ........ .13 5SP0 #5uantitative Strategic Planning 0atri"'6 A tool or obective assessment o easible alternatives....................................................................................................1( Approac)es to resolve t)e Issues...............................................................................1, inancial Analysis and orecasts6............................................................................... orecasts6............................................................................... .1, D78P%9& Analysis o Renault :roup...........................................................................1214 ; 21+ action plans............................................................................................1< Recommendations Recommendations or /)ange in %rganisational %rganisational Structure and /ulture6..... /ulture6............ ........... .......2 ...2 Reerences..................................................................................................................21
1
Group C7
Renault India
A(st%"ct Renault India Private Limited is a fully owned subsidiary of R!"u#t S)A)S). F%"!c and currently offers five models in the Indian market – the premium sedan Fluence the lu!ury "#$ %oleos the premium compact car Pulse t he SU4. Dust% and the premium sedan "cala Renault cars are manufactured in the manufacturin& facility located in 'ra&adam Chennai with a capacity of 50.000 u!its p% "!!u& ( Currently Renault India also has )*+ dealer outlets across the country( Dust% tod"y "ccou!ts fo% 56 p% c!t of R!"u#t I!di"7s p%oductio!. 5, p% c!t of its s"#s "!d ,00 p% c!t of its 8po%ts ( ,-ustin& off the Competition .+)*/ Renault India also e!ports the -uster to a &rowin& number of %i'+t-+"!d d%i* &"%9ts ( 0 "1'2 analysis has been carried out keepin& in view the view of their present endeavour to their opportunity to enter into the "#$ se&ment and bein& successful to capture the market3share of /2 p%c!t it+i! " y"% in the "#$ se&ment and their focus on offerin& of 734 models (1e have tried to present the "1'2 analysis of Renault takin& into consideration their ability to capture a market share of .* percent in the "#$ se&ment within a year of launch and their strate&y to offer 536 &od#s i!st"d of off%i!' /0 diff%!t &od#s ( ,Case "tudy Renault -uster success story .+)*/ 1e have tried to present a tentative solution to the challen&es usin& "P0C matri! and 8"P9 models by considerin& the nvironmental "tability Industrial 0nalysis Internal "tren&th and Financial "tren&th (1e have also recommended some of the chan&es in the o%'"!i;"tio!"# st%uctu% "!d cu#tu% towards the end of this report to help Renault India overcome these challen&es in the lon& run(
I!t%oductio! Renault India Private Limited is a fully owned subsidiary of Renault "(0("( France and currently offers five models in the Indian market – the premium sedan Fluence the lu!ury "#$ %oleos the premium compact car Pulse the "#$ -uster and the premium sedan "cala( Renault India also e!ports the -uster to a &rowin& number of ri&ht3hand drive markets such as #% %enya and other 0frican and 0sian countries( ,Renault to e!port India made -uster to #% market .+)./ Renault cars are manufactured in the manufacturin& facility located in 'ra&adam Chennai with a capacity of :4++++ units per annum( Currently Renault India also has )*+ dealer outlets across the country( ,Renault in India .+)*/ I! F(%u"%y /005. R!"u#t-Niss"! A##i"!c si'!d M&o%"!du& of U!d%st"!di!' it+ Go*%!&!t of T"&i# N"du to st up " &"!uf"ctu%i!' p#"!t i! O%"'"d"& !"% C+!!"i and work on the plant be&an in ;une later that year and was completed in a record .) months( R!"u#t Dsi'! I!di". t+ fi%st *+ic# dsi'! studio set up by a forei&n manufacturer in India was established in 9umbai in "eptember .++4( T+ dsi'! +ous is i!t'%"# to R!"u#t$s succss i! I!di" "s o! of its fu!ctio!s is to &o!ito% custo&% t%!ds "!d custo&is '#o("# p%oducts fo% I!di") ,Renault–
2
Group C7
Renault India
Chennai( stablished with an initial investment of Rs :5 billion ,#"=75+ million/ the plant has a combined annual capacity to produce :4++++ vehicles( ,Renault3 "uccess by Inte&ration .+)*/ 2he main idea behind the alliance to have a win3win situation for both by increasin& economies of scale( 0s of 9ay .+): Renault India has ,20 d"#%s+ips i! ,6 citis "c%oss < st"ts "!d . #nion 2erritories( ,Renault India Pvt Limited .+):/ 2he risin& demand of hybrid and ?ero emission &reen cars in India &ives a wide opportunity to Renault as they already a bi& players in uropean lectric and hybrid car se&ments(
St%"t'y usd (y R!"u#t I!di" P%i*"t Li&itd
Renault currently has a :*(: percent ,fully votin&/ stake in
2he &oal of the 0lliance is to increase co!o&is of sc"# for both Renault and
Collaboration between Renault and "uccess by Inte&ration .+)*/
3
Group C7
Renault India
;apanese manufacturer
I&po%t"!c i! St%"t'ic t%&s Renault desperately needed a Avolume driverA to shore up its operations( It identified a &ap in the "#$ se&ment( A2here were "#$s costin& Rs( .+ lakh and above manufactured by &lobal players and those priced from Rs( 6 lakh to Rs( )+ lakh produced by Indian companies( 1e saw an opportunity thereA says 0rmelle Guerin -irector and Product Plannin& at Renault India( 2he company launched the -uster priced between Rs( 4 lakh and Rs( ). lakh in ;uly .+).( 2he -uster took the Indian market by storm( It fuelled the se&ment of compact "#$s and &rabbed a .* percent market share within a year( 2he -usters success was such that Renault had to triple production within months of its launch from seven per hour to .+ per hour( 2oday one in three cars produced at the 'ra&adam plant is a -uster( 2hat is not all( 2he -uster today accounts for 46 per cent of Renault Indias production 4) per cent of its sales and )++ per cent of its e!ports( ,Case "tudy Renault -uster success story .+)*/ 2he core3model strate&y of Renault India is of havin& 734 models rather than offerin& a bunch of cars in India( T+ co&p"!y (#i*s if you +"* to suppo%t /0 &od#s of diff%!t c"%s. t+! it$s *%y difficu#t to f%"'&!t t+ !%'y "!d fi!"!ci"# %sou%cs of t+ co&p"!y p%op%#y ("o itDs better to focus on 734 models and makin& them e!tremely appealin& and competin& in that se&ments ( ,Renault India "#$ duster Chennai Plant .+)*/
Dt"i#s of St%"t'ic Issus
0 problem for Renault in India has been its inability to find products from its stable that are appropriate for the Indian market( For instance the &lobal team had shortlisted the Clio supermini and the 9e&ane small car for the mass market but they could @ust not meet Indian price parameters( ,-ustin& off the Competition .+)*/
Renault is facin& several challen&es on JR front in India like findin& the ri&ht competency and to work on its distribution model followin& the partin& of ways with Jover its distribution partner( ,"ou?a .+):/
Renault termination of its pact with Jover 0utomotive India Pvt Ltd ,its national distribution and sales firm/ ended up with Renault to work on its distribution channel more precisely(
4
Group C7
Renault India
I!t%!"# "!d E8t%!"# A!"#ysis >S?OT A!"#ysis@ Strengths(Internal) • • •
•
Strategic Alliance :lobal operations Strong focus on R=D Innovators
Opportunities(External) Positive outlook for •
•
•
Jybrid and eco3 friendly cars !tend distribution and service network ntrant into new se&ment
Weaknesses(Internal) Jeavy dependence on • •
uropean market Focused on sin&le model
Threats(External) •
Competition from e!istin& bi& players
St%!'t+s >I!t%!"#@ ,@ St%"t'ic "##i"!c Renault is a France3based automaker with a presence in all ma@or automobile markets around the world ("%%i!' t+ US) Niss"! is the third lar&est ;apanese automobile company after 2oyota and Jonda( In the late )KK+s "uccess by Inte&ration .+)*/ Renault3
(
Group C7
Renault India
/@ G#o("# Op%"tio!
Renault has a &lobal presence includin& a worldwide distribution system and manufacturin& facilities( 2he company has industrial and commercial presence in over ))4 countries( It has transform itself from a re&ional manufacturers to a &lobal company( Its &lobal presence &ives it an ed&e in technolo&ical and desi&nin& aspects( 2he company has a s"t##it dsi'! c!t%s located in "pain ,arcelona/ France ,Paris astille/ "outh %orea ,"eoul/ Romania ,ucharest/ ra?il ,"ao Paulo/ and India ,9umbai/( ,'ur alliance with
Renault is havin& a o%#d c#"ss '#o("# st"!d"%d RD c!t% i! Mu&("i ( In 'ctober .+)) an upscale compact car has been revealed and is scheduled to &o on sale in the be&innin& of .+).( 2he car was desi&ned by Renaults -esi&n Center in 9umbai and the production was done in the 0lliances plant in Chennai which will also manufacture its en&ine ,)(5 dCi best3 in3class for fuel efficiency/( ,Renault in India .+)*/ ven the *%y f"&ous R!"u#t Dust% &ot some sli&ht modification from its uropean model( 2he company had adopted *F strate&y3 Fast ,the adaptation to Indian needs must happen within ). months/ Fru&al ,on limited bud&et/ and Fantastic ,with no compromise on Buality/ and to achieve the *F ob@ective the modifications was done locally in Renault desi&n studio in 9umbai( 1hen the car finally hit the market which is a hu&e success( 2he -uster today accounts for 46 per cent of Renault Indias production 4) per cent of its sales and )++ per cent of its e!ports( ,-ustin& off the Competition .+)*/ @ I!!o*"to%s
0fter the Lo&anDs failure into the Indian market company !t ("c9 to its d%"i!' (o"%d to understand the Indian customer( 2he company at that point of time wants a $olume driver and they done some surveys and focuses to find out the needs of Indian buyers( 2he survey results said that APop# #o*d "! SU4 it+ %u''d #oo9s t+"t stood out i! " c%od. (ut "t t+ s"& ti& "!td it to op%"tio!"##y p%fo%& #i9 " sd"! - "sy to d%i* "!d off%i!' 'ood fu# ffici!cy M and they come up with a new se&ment of compact "#$( It &rabbed a .* percent market share within a year of its launch( Renault cate&ory innovation and success not only ama?ed ma@or and bi&&er player of Indian market but also forced them to enter into it( Companies like Jyundai 9aruti "u?uki and 2oyota is already workin& on their compact "#$ model whereas Ford already enter into the market with its model Nco"portM( ,-ustin& off the Competition .+)*/
?"9!ss >I!t%!"#@ ,@ "*y dp!d!c o! Eu%op"! &"%9t
+
Group C7
Renault India
0lthou&h Renault has e!panded to other international re&ions it still depends on the uropean market for ma@ority of its revenue( 2he company &enerate more than 13 p%c!t of its %*!u f%o& Eu%op"! &"%9t) 2his over3dependence on urope caused a dampin& effect on the companyDs revenue as recently currency shifts in the urope leads to the decline in RenaultDs revenue by ).( Concentrated operations could also make Renault uncompetitive a&ainst rivals who have &lobally di*%sifid op%"tio!s( ,Renault First38uarter Revenue Falls ). on uropean -rop .+)*/ /@ Focussd o! si!'# Mod#
In current scenario Renault seems very much focussed on its best3sellin& model Dust% +ic+ "ccou!ts fo% 56 of its p%oductio!) 2he other models ,Pulse "cala %oleos and Fluence/ are not doin& well in the market and even these models are unknown by the potential customers( ven the company neither doin& any promotional as well as marketin& activities in this re&ard(
Oppo%tu!itis >E8t%!"#@ ,@ Positi* out#oo9 fo% +y(%id "!d co-f%i!d#y c"%s
-ue to the increasin& population #rbani?ation and risin& livin& standards the demand of hybrid and ?ero emission &reen cars is &oin& to be rise soon in India( 2he &overnment of India which launched a national plan last year with the &oal of &ettin& 6 to 7 million hybrid and electric vehicles ,$s/ on the road by .+.+ is already workin& with the erkeley Lab researchers to further analyse their results( ,Chao .+):/ R!"u#t "#%"dy (! i!to &"!uf"ctu%i!' of ;%o &issio! *+ic#s fo% &"%9ts outsid I!di") "ome of its hybrid electric vehicles are Fluence O(( ,a family sedan/ 2wi?y a tandem3type of urban vehicle available in . versions ,5k1 3for drivers without a license or )5k1/ O' an ideal supermini for commutin& to work( "o Renault is well positioned to capitali?e on the &rowin& hybrid electric vehicles ,J$/ market of India( ,Chao .+):/ /@ E8t!d dist%i(utio! "!d s%*ici!' !to%9 to i!c%"s &"%9t s+"%
0lthou&h Renault has a &ood presence in 9etroDs and 2ier ) cities but still itDs lackin& in the 2ier * and many 2ier . cities( It has about )++ dealers across the country whereas its competitors 9ahindra has .5+ and 9aruti "u?uki has ).+6 dealers in India( "o to increase the sales volume and revenue in market they need to focus in increasin& the distributors and dealership( ,Renault -uster overtakes rivals aschallen&e looms from Ford co"port .+)*/ 2@ E!t%"!t i!to ! S'&!t
0t present Renault is havin& its presence in compact "#$ se&ment ,-uster/ Premium "#$ ,%oleos/ premium hatchback ,Pulse/ sedan ,"cala/ and lu!ury sedan ,Fluence/ but still they can diversify into many others se&ments( 2he concept "edan ,sedans with no more than :m in len&th/ one of the most emer&in& se&ment in Indian automobile industry where 9ruti "u?uki
,
Group C7
Renault India
,"wift -?ire/ Jonda ,0ma?e/ 2ata ,Indi&o C"/ and Jyundai ,cent/ havin& their presence while Renault completely lackin& its product in this cate&ory(
T+%"t >E8t%!"#@ 2he bi&&est player of Indian passen&er car se&ment is 9aruti "u?uki with a market share of nearly :7(:. followed by Jyundai 9otors with )5(7: share while ;apanese ma@or Jonda is in third position with a market share of 7(66 and 9ahindra 9ahindra ,7(5:/( In the stron& presence of these bi& players in market there always been a threat for new entrants like Renault. ,;une .+):> Indian Car "ales Fi&ures 0nalysis .+):/
A!"#ysis o! t+ B"sis Of CPM Mod# Renault has strate&ic alliance with Indian Car "ales Fi&ures 0nalysis .+):/
-
Group C7
Renault India
Sup%io% Hu"#ity
Sup%io% Effici!cy
Co&titi* Ad*"!t"'
Sup%io% Custo&% Rspo!si*! ss
Sup%io% I!!o*"tio!
If we talk about these four parameters of competition in the automobile market in India( ven thou&h company has only .() market share in India still the Renault -uster was the hi&hest sellin& car in C se&ment in the Indian market( "o the company is &ood at Buality and innovation( "ince 9aruti "u?uki has the hi&hest number of service centres in India and it is there core competency because Indian customers are very conscious for after sales services( "o the company should consider this parameter also and plan to develop competitive ed&e( "ince it has stron& base and it is the market leader in urope the company can &ive stron& competition to the players in the Indian automobiles market( 2he Chinese market is also their focus because there is the demand of .+ million cars in Chinese market every year and it has
<
Group C7
Renault India
been &rowin& rapidly( "o they can frame collaborative strate&y for Indian as well as Chinese market to &et the competitive e&de(
St%"t'ic Mod# T+ St%"t'y Di"&o!d Mod# to so#* t+ issus co!c%!i!' R!"u#t I!di":
0 "trate&y -iamond is a crisp way to analyse visuali?e summari?e and share the strate&y for any product or business(
T+ Fi* M"=o% E#&!ts of St%"t'y
2he five key parts of a strate&y are> arenas vehicles differentiation sta&in& and economic value( y answerin& key Buestions in each area you paint a picture of your strate&y with increasin& clarity( ,@ A%!"s J?+% i## ( "cti* "!d it+ +o &uc+ &p+"sisK
0s far as Indian market is concerned it is +i'+#y p%ic s!siti* and they look for ma!imum value for the money invested with ma@or players like 9aruti Jyundia Jonda 9ahindra 2ata and 2oyota( "o If Renault India has to succeed in Indian 9arket hi&h emphasis has to be laid on the M"!uf"ctu%i!' costs so that the customer &ets ma!imum benefits( It should &o for #"! &"!uf"ctu%i!' "!d #oo9 fo% op%"tio!"# ffici!cy ( Renault also has to clearly define where it should concentrate its efforts in 3 that is to tar&et niche market se&ment or the value conscious middle class se&ment( Which core technologies?
Renault should focus its R- in developin& in efficient en&ines for cars as most of the Indian vehicles are &ood on milea&e which is also the #"P of the top manufacturer 9aruti "u?uki( 0ll the 9arutiDs vehicles hi&h success rate is because of the optimum pricin& with proper tar&et markets and also its hi&h emphasis on fuel efficient cars(
1
Group C7
Renault India
Which geographic areas?
Indian &eo&raphical area is hu&e and the consumer preferences also differ across &eo&raphies( 0lso India has different ta! policies in each of its states due to which the cost of the car varies si&nificantly across the states( "o Renault should clearly define whether its products should be launched across India or to focus first in certain states and then scale up the distribution network based in the e!periences &ained in each &eo&raphic area( Which market segments?
9arket se&mentation is one of the key areas to focus on while launchin& as to desi&n cars for value conscious consumers or to tar&et niche markets( 9ost of the Indian vehicles are se&mented based on its cost and in Indian market the number of se&ments is Buite hi&h as compared to other markets( For e!ample the market leader 9aruti has vehicles priced from Rs( .5++++ and has a product at every price points of Rs(.5+++ from then on( Which product categories?
9a@ority of cars in Indian markets are of hatchbacks and Renault has to define the product cate&ory whether where it needs its ma!imum resources to focus on( "ome of the ma@or product cate&ories are Jatchbacks "edans $ans "#$,"ports #tility $ehicles/9#$,9ulti #tility $ehicle/( /@ 4+ic#s Jo i## 't t+%K
Renault has ma@or plans of e!pansion in India and there are many strate&ic options available throu&h which it can achieve the same( Acquisitions?
2his may be a difficult approach for Renault as India consists of hu&e market players as far as automobile sector is concerned( "o acBuisition may not be a viable option( Joint ventures?
Renault–
11
Group C7
Renault India
2he Renault3
2@ Diff%!ti"tio! Jo i## i!K Customization?
In order to win in the Indian market Renault has to customi?e its product to Indian conditions( It has to spend considerable time understandin& the Indian customerDs need( India bein& a developin& country it has to customi?e its cars for I!di"! %o"ds "!d I!di"! t%"ffic ( It has to make various technical chan&es to its wheel base '%ou!d c#"%"!c suit"(# fo% I!di"! %o"ds) Price?
Renault has to &et its pricin& strate&y ri&ht to win over the market( It has to differentiate its features from its nearest competitors and also price close to its rivals in the same se&ment( It should not be too premium and also it has to make sure to avoid the cheap vehicle ta&( Product reliability?
"ince Renault is comparatively new to the Indian market considerin& contemporary players like 9aruti and Jyundai it has to make sure their cars are as reliable as 9aruti or Jyundai( 0lso since it does not have a wide distribution and service covera&e it is important to focus on its product reliability(
@ St"'i!' J?+"t i## ( ou% spd "!d su!c of &o*sK Speed of epansion?
Followin& a successful first phase the &roup is aimin& at capturin& more than 4 market share in ra?il and Russia and 5 in India( 1ith
12
Group C7
Renault India
2hrou&h its alliance with
SPACE MATRI >St%"t'ic Positio! "!d Actio! E*"#u"tio!@
SL) NO )(
.( *(
E!*i%o!&!t"# St"(i#ity >ES@
7 of the top )+ companies considered to be technolo&yEproduct driven are from 2RI0- markets( RIC manufacturers not yet perceived as top technolo&y leaders
R"ti!' 3*
3. 3. -1 -/)22
#>P0:?s :lobal Automotive !"ecutive Survey 214@ 214'
SL) NO )(
I!dust%y A!"#ysis
.(
0 dele&ation of senior level "I09 ,"ociety of Indian 0utomobile 6 9anufacturers/ met ministers of Commerce Road 2ransport nvironment and Jeavy Industries announced stable policy framework to ensure sustained &rowth of the auto industry 6 protraction of the e!cise duty cut benefits new forei&n trade policy enhanced e!port incentive for vehicles streamlined and free inter3state movement of vehicle ,"I09 .+):/
*(
SL) NO )(
$ehicle sales across cate&ories re&istered an increase of ).()5 per cent to )57444: units from ):+7475 units in ;une .+)*( ,-omestic car sales in India .+):/
R"ti!' 6
Tot"# IS A*%"'
,5 6
Co&ptiti* Ad*"!t"'
R"ti!' 3.
Renault reported a mar&inal increase in its market share in India mainly
13
Group C7
due to sales of its "#$ -uster( Product life cycle( Renault a Freshness value of 7+(:6 .7 points above the market avera&e 3 ,India 0uto Report .+):/ Price offered by Renault was unbeatable Tot"# CS A*%"'
.( *(
S#) No ) ,
Renault India
Fi!"!ci"# St%!'t+ >FS@
3. 3) -3 -,)66
R"ti!'
RenaultDs revenue was H:+K*. million ,in .+)*/ down by 4()4(
.
/
RenaultDs net income was H6K5 million ,in .+)*/ down by 6+(
)
2
RenaultDs Cash and Cash Buivalents was H4*6 million ,in .+)*/ down by 7+( ,Finance . .+):/ Tot"#
)
FS A*%"'
,)22
I!t%!"# St%"t'ic Positio!s Fi!"!ci"#
St%!'t+
Co&ptiti*
Ad*"!t"'
: :
,)22 >6 (st to , o%st@ -,)66 >-, (st
to - 6 o%st@
E8t%!"# St%"t'ic Positio!s E!*i%o!&!t"#
St"(i#ity
I!dust%y
St"(i#ity
: :
-/)22
>-, (st to -6 o%st@
6
>6 (st to , o%st@
Di%ctio!"# 4cto% Co-o%di!"ts -"8is :
CA %"ti!' IS %"ti!' -,)66 6 )2
Y-"8is :
FS %"ti!' ES %"ti!' ,)22
-/)22 -,
14
Group C7
Renault India
2he -irectional $ector falls in the competitive Buadrant ,lower3ri&ht Buadrant/ 2he industry seems to have &ood &rowth Renault has a &ood &rowth compared to the industry standard( It can overcome its internal weakness and maintain its market share(
HSPM >Hu"!tit"ti* St%"t'ic P#"!!i!' M"t%i8@: A too# fo% o(=cti* "ssss&!t of f"si(# "#t%!"ti*s 8uantitative "trate&ic Plannin& 9atri! ,8"P9/ is a hi&h3level strate&ic mana&ement approach for evaluatin& possible strate&ies( 8uantitative "trate&ic Plannin& 9atri! or a 8"P9 provides an analytical method for comparin& feasible alternative actions( 2he 8"P9 method falls within "ta&e * of the strate&y formulation analytical framework( 1hen company e!ecutives think about what to do and which way to &o they usually have a prioriti?ed list of strate&ies( If they like one strate&y over another one they move it up on the list( 2his process is very much intuitive and sub@ective( 2he 8"P9 method introduces some numbers into this approach makin& it a little more Ae!pertA techniBue( 2he 8"P9 method uses inputs from sta&e ) analyses matches them with results from sta&e . analyses and then decides ob@ectively amon& alternative strate&ies(
Qy I!t%!"# F"cto%s
?i'+t
1(
St%"t'ic A#t%!"ti*s
Group C7
Renault India
Focus o! R!"u#t Dust% o!#y "s it +"s 52 &"%9t s+"% i! co&p"!y7s s"#s AS TAS St%!'t+ "trate&ic 0lliance Global 'peration Focus on R ?"9!sss Jeavy dependence on uropean market Inability to find products other than Renault -uster Su(tot"#
Focus o! "## fi* (%"!ds of Niss"! R!"u#t A##i"!c AS TAS
+(. +()5 +(*
) ) *
+(. +()5 +(K
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+(6 +(* )(.
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TAS
AS
TAS
+(.5
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. 3
+(: 3
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* .
+(.5 +() +(4 2)63
Qy E8t%!"# F"cto%s Oppo%tu!itis Positive outlook for hybrid and eco 3 friendly cars
!tend distribution and servicin& network to increase market share ntrant into new se&ment T+%"ts
Relative N0ttractiveness "coresM ,0"/ are assi&ned for each alternative each factor y attractiveness we mean the e!tent to which a strate&y option compared to the other enables the firm to either captialise on the stren&th improve on the weakness e!ploit an opportunity or avoid the threat
• • • •
1+
Group C7
Renault India
App%o"c+s to %so#* t+ Issus
2he company has to hire new people with new profile but they must be those who understand RenaultDs strate&y( 'therwise they cannot sell the brand and then they must actually understand the brand itself so that they can understand the marketin& and dealer communication which is a key part of the business will resolve the challen&es on JR front faced by Renault in India(
0 cross3functional team is important comprises comprisin& of the Indian3;apanese3 French( From &lobal perspective diversity is a &reat asset to the or&ani?ation(
0 proper trainin& and motivation to the dealerDs network staff members and salesman will help the Renault to provide a better and world class service to its end3users(
2o meet the Indian price parameters the Renault have to &o more and more for locali?ation of parts and local assembly in India( 2he acBuisition cost as well as 2otal cost of ownership both have to be low to succeed in Indian market and it could only possible throu&h customi?in& its uropean product accordin& to Indian customers need and market demand(
Fi!"!ci"# A!"#ysis "!d Fo%c"sts: 'n February )* .+): Carlos Ghosn Chairman and C' of Renault draw a mid3term conclusion of Renault strate&ic plan( Renault e!ceeded its .+))3.+)* ob@ective and delivered H .(5 billion in cumulative free cash flow( 2he &roup has set new ambitious yet realistic tar&ets to be reached by the end of the plan N-rive the Chan&eM to be measured in .+)7>
2o &enerate 5+ billion euros in consolidated turnover 2o reach an operatin& mar&in &reater than 5 of turnover with a positive free cash flow each year(
2he Renault &roup increased its market share outside urope( 2he mi! of non3uropean sales increased from *4 in .+)+ to 5+ in .+)*( ra?il and Russia became respectively the second and third lar&est markets for the company( Led by -uster the companyDs most3sold vehicle in .+)* the uniBue 9+ ran&e has been the drivin& force behind the stron& &rowth in emer&in& markets(
1,
Group C7
Renault India
DU-PONT A!"#ysis of R!"u#t G%oup
RETURN ON EHUITY 2)01B Rtu%! o! Assts 0)<23B
AsstsEuity P
Nt Op%"ti!' M"%'i! ,)10B
Tot"# Assts Tu%!o* % 0)33
Nt I!co& 6<3 M!
1-<
S"#s
S"#s
Tot"# Assts
-0<2/ M!
-0<2/ M!
1-<
S"#s -0<2/ M!
Fi8d Assts
Tot"# Costs
2/2/, M!
-0/21 M!
Cu%%!t Assts -/56, M!
Du-Po!t A!"#ysis 0 method of performance measurement that was started by the -uPont Corporation in the )K.+s( 1ith this method assets are measured at their &ross book value rather than at net book value in order to produce a hi&her return on eBuity ,R'/( It is also known as A-uPont identityA(-u3Pont analysis considers Return on 0ssets and Return on Buity Return on 0ssetsSProfit 9ar&inT 2otal 0ssets 2urnover S
Group C7
Renault India
'r R'SProfit 9ar&inT2otal 0ssets 2urnoverTBuity 9ultiplier S
/0, /0,6 "ctio! p#"!s ,@ A sust"i!d %!"# "!d 8p"!sio! of t+ p%oduct #i!-up 2he Renault &roup is &oin& to accelerate the renewal and e!pansion of its product line3up startin& in the fall of .+): with the launch of an all3new 2win&o and 2raffic van( 2hese will be followed by the successors of space 9e&ane "cenic and a new - sedan which will all share the new alliance * million C9F C3- platforms(
"imultaneously the &roup is &oin& to e!tend its market covera&e with a complete line3up of cross3over vehicles an 03entry vehicle desi&ned for India and "outh 0merica as well as new pick3up trucks for emer&in& markets( /@ I!t%!"tio!"# 8p"!sio! "!d %!d '%ot+ i! Eu%op
Followin& a successful first phase the &roup is aimin& at capturin& more than 4 market share in ra?il and Russia and 5 in India( China will become a top priority in the comin& years with the construction of a new plant in 1uhan with an initial capacity of )5++++ units desi&ned to produce C and - se&ment cross3overs( 2he R!"u#t '%oup i## !=oy t+ (!fits of sc"# "!d i&p%o*d co&ptiti*!ss as a result of sharin& alliance platforms and modules ,C9F/ on which more than 4+ of future vehicles will be based( "tandardi?ed modules will account for two thirds of the value of future vehicles up from one third today(
1<
Group C7
Renault India
2he locali?ation of parts and components will increase in order to make better use of the companyDs &lobal manufacturin& footprint and contain costs( -urin& the period the company will also benefit from the effects of the competitiveness plans si&ned in France and "pain as well as manufacturin& vehicles for partners( y completion of the plan the &roup will reach a capacity utili?ation rate of )++ in urope ,based on . shiftsEday standard definition/( 2@
A##i"!c sy!%'is:
Increase syner&ies from the 0lliance will contribute to improvin& RenaultDs profitability( 2he conver&ence pro@ects recently announced in purchasin& en&ineerin& manufacturin& and supply chain and human resources will &enerate a minimum of H :(* billion by the end of .+)6( @ Cost co!t"i!&!t
2he strate&y of s+"%i!' costs "c%oss t+ A##i"!c and with partners will allow Renault to sustain a hi&h level of upstream development while maintainin& a ratio of R- and C0P below K of &roup turnover(
Actio! p#"!s to d#i*% to c%itic"# o(=cti*s:
y the end of the plan the Renault &roup aims to deliver two critical ob@ectives>
-eliver H 5+ billion U.V in consolidated &roup turnover at the current scope of
consolidation( Group turnover includes sales of vehicles and parts associated services and business with partners( -eliver a sustained level of profitability by achievin& an operatin& profit mar&in of at least 5 of &roup turnover while achievin& a positive free cash flow each year(
Rco&&!d"tio!s fo% C+"!' i! O%'"!is"tio!"# St%uctu% "!d Cu#tu%:
0s Renault India &rows and e!pands across new &eo&raphies &lobally a cross3cultural Intelli&ence Pro&ramme will have to be conducted to help create a multi3cultural work environment( 0n mployee Induction Centre will have to be conceptualised desi&ned constructed and operations commenced to impart compulsory induction and product trainin& to all new recruits( 0 number of innovative trainin& methodolo&ies and tools will be used in the centre( 2rainin& pro&rammes have to be streamlined focussed on creatin& and increasin& effectiveness of the value chain( 2he induction pro&rammes have to be developed on the basis of @ob knowled&e and skills(
2he core3model strate&y of Renault India is of havin& 734 models rather than offerin& a bunch of cars in India is not workin& well as beside its -uster none of the models are &ettin& customer in lar&e numbers( ven its -uster which accounts for 46 of its production and 4) of its domestic sales has been seen a decline of )5(6 with Wear3on3
2
Group C7
Renault India
year movement with *4)6 units sold out in ;une3): ,;une .+): > Indian Car "ales Fi&ures 0nalysis .+):/ If we see the sales fi&ure of others models of Renault than we find out that its Fluence in ;une3): havin& a sales decline of 47 with comparison to ;une3)* sales Pulse sales decline of 5K(6 and "cala with a sales decline of 7+(7( 'verall sales decline of the company is by .73.4 which is a matter of concern for Renault( 2he company have to come up with better marketin& and positionin& strate&ies for its vehicles( 9ore focus on R- is needed to be done to repeat the success like -uster( ven its not a lon& term beneficial strate&y to focus @ust on one model which Renault presently doin& which results to the sufferin& of its other models(
3, of I!di"! p"ss!'% c"% &"%9t is of "tc+("c9 and we see the present scenario
of Renault its havin& only a sin&le 9odel Pulse in this se&ment and that too not doin& well if we see the sales fi&ure of Pulse .+) cars is been sold in ;une3): with a decline of 5K(6 in comparison to last year sales( Renault needs to focus much in Pulse(
21
Group C7
Renault India
Rf%!cs A. R.@ = A. R. #213@ uly 1('. Renault, Nissan decide to stop sharing auto models in India. Retrieved rom Livemint6 )ttp6BBCCC.livemint.comBIndustryBLA+*cyDIoiuC)::mRb>&IBRenault89issan8 decide8to8stop8s)aring8auto8models8in8India.)tml Annual Report 2013. #214@ une'. Retrieved rom renault6 )ttp6BBgroup.renault.comBCp8contentBuploadsB214B+Brapport8annuel8 2131.pd Case Study Renault Duster success story . #213@ %ctober 2,'. Retrieved rom usiness &oday6 )ttp6BBbusinesstoday.intoday.inBstoryBcase8study8renault8 duster8success8storyB1B1<<321.)tml
/)ao@ . #214@ 0arc) 31'. Hyrid !ehicles more "uel e#cient in India, China than in $%S% Retrieved rom 9eCs/entre6 )ttp6BBneCscenter.lbl.govB214B3B31B)ybrid8 ve)icles8more8uel8eEcient8in8india8c)inaB Domestic car sales in India . #214@ une'. Retrieved rom ndtv6 )ttp6BBauto.ndtv.comBneCsBdomestic8car8sales8in8india8up8by8148,+8in8une8 2148(-(-, Dusting o& the Competition . #213@ %ctober 2,'. Retrieved rom usiness &oday6 )ttp6BBbusinesstoday.intoday.inBstoryBcase8study8renault8duster8success8 storyB1B1<<321.)tml Dusting o& the Competition . #213@ %ctober 2,'. Retrieved rom usiness &oday6 )ttp6BBbusinesstoday.intoday.inBstoryBcase8study8renault8duster8success8 storyB1B1<<321.)tml 'inance 2. #214@ une'. Retrieved rom Renault6 )ttp6BBgroup.renault.comBenBFnance8 2B India Auto Report . #214@ une'. Retrieved rom india auto report6 )ttp6BBindiaautoreport.comBacting8res)BGst)as)./d4lp&ic.dpu (une 201) * Indian Car Sales 'igures + Analysis. #214@ uly 11'. Retrieved rom team8 b)p6 )ttp6BBCCC.team8b)p.comBorumBindian8car8sceneB1(2<,<8une82148 indian8car8sales8Fgures8analysis.)tml (une 201)* Indian Car Sales 'igures + Analysis. #214@ une'. Retrieved rom team8 b)p6 )ttp6BBCCC.team8b)p.comBorumBindian8car8sceneB1(2<,<8une82148 indian8car8sales8Fgures8analysis.)tml -./s /loal Automoti!e ecuti!e Sur!ey 201) . #214@ une'. Retrieved rom *pmg6 )ttp6BBCCC.*pmg.comB/BcsBIssuesAndInsig)tsBArticlesPublicationsBPress8 releasesBDocumentsB>P0:8:lobal8automotive8e"ecutive8survey8214.pd .aruti oosts passenger !ehicle maret share to )24 in '51) . #214'. Retrieved rom usiness Standard.
22
Group C7
Renault India
6ur alliance 7ith Nissan. #214'. Retrieved rom renault.com6 )ttp6BBgroup.renault.comBenBour8companyBa8group8an8alliance8and8 partners)ipsBour8alliance8Cit)8nissanB
P&I. #214@ April 11'. .aruti oosts passenger !ehicle maret share to )24 in '51) . Retrieved rom usiness Standard6 )ttp6BBCCC.business8 standard.comBarticleBcompaniesBmaruti8boosts8passenger8ve)icle8mar*et8 s)are8to8428in8y148114411+(4H1.)tml Renault Duster o!ertaes ri!als as challenge looms "rom 'ord coSport . #213@ une 4'. Retrieved rom Livemint6 )ttp6BBCCC.livemint.comBIndustryB&ulRbd,570yDJc"yA%,4LBRenault8India8 )its8sCeet8spot8Cit)8Duster!coSport8maypose.)tml Renault 'irst9:uarter Re!enue 'alls 124 on uropean Drop . #213@ April 2('. Retrieved rom loomberg6 )ttp6BBCCC.bloomberg.comBneCsB213848 24Brenault8Frst8Kuarter8revenue8alls8128on8european8drop.)tml Renault in India. #213'. Retrieved rom Renault6 )ttp6BBCCC.renault.comBenBgroupeBrenault8dans8le8mondeBpagesBrenault8en8 inde.asp" Renault India -!t ;imited . #214'. Retrieved rom $i*ipedia6 )ttp6BBen.Ci*ipedia.orgBCi*iBRenaultHIndiaHPrivateHLimited Renault India S$< duster Chennai -lant . #213@ une 13'. Retrieved rom !conomic &imes6 )ttp6BBarticles.economictimes.indiatimes.comB2138+8 13BneCsB3<<(24-,H1Hrenault8india8suv8duster8c)ennai8plant Renault to eport India made Duster to $ maret . #212@ 9ovember 1+'. Retrieved rom business8standard6 )ttp6BBCCC.business8 standard.comBarticleBcompaniesBrenault8to8e"port8india8made8duster8to8u*8 mar*et8112111+131H1.)tml Renault=Nissan Alliance. #214'. Retrieved rom $i*ipedia6 )ttp6BBen.Ci*ipedia.orgBCi*iBRenault!2-<39issanHAlliance Renault9Nissan Alliance* Success y Integration. #213'. Retrieved rom IS /enter or 0anagement Researc)6 )ttp6BBCCC.icmrindia.orgBcasestudiesBcatalogueBusiness 2StrategyBRenault89issan2Alliance8/ase.)tm SIA.. #214@ une'. Retrieved rom ndtv6 )ttp6BBauto.ndtv.comBneCsBsiam8bries8neC8 ministers8about8auto8industry8s8current8situation8and8potential8(2(21-
SouMa@ . d. #214@ une 23'. >.y aim is to hire and maimise local talent%. Retrieved rom Autocar Proessional6 )ttp6BBCCC.autocarpro.inBintervieCB8aim8)ire8 ma"imise8local8talent8(-,2 Strategie. #n.d.'. Retrieved rom Renault6 )ttp6BBCCC.renault.comBenBgroupeBstrategieBpagesBstrategie.asp" ?he Renault 9 Nissan Alliance . #214'. Retrieved rom Renault6 )ttp6BBCCC.renault.comBenBgroupeBl8alliance8renault8nissanBpagesBl8alliance8 renault8nissan.asp"
23
Group C7
Renault India
24
Group C7
Sl No 1 2 3 $
)
Renault India
Criteria for evaluation Clear denition of the issue Alication of tools and frame!orks for resolving the issue and arriving at strategies "ualit# of strategic alternatives arrived at Selection of aroriate strateg# and suggestions for imlementation of strateg# %including control tools such as &SC' organisational change( "ualit# of referencing Pl note t)at reerencing is e"tremely important or an obective study. &)e Kuality o articles reerred s)ould be very good. &)ere is a Corld o *noCledge beyond t)e internetN *otal
2(
Max marks 3 3
Marks obtained
3 3
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3
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