Project report On Strategic Management

Submitted to :Prof. Neeraj Singhal

Submitted by:Rohit Batra IB/01/20

Table of contents
Sno. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Topics Name and logo Vision Mission Objectives SWOT analysis IFE Matrix EFE Matrix Competitive Profile Matrix TOWS Matrix SPACE Matrix BCG Matrix QSPM Porters five forces model Decisions Implementation Evaluation Strategy Control Page no. 3 3 3 3 4 5 7 10 13 14 17 20 23 29 29 30 30

NAME AND LOGO

The origin if the name comes from a land imagined by Jonathan Swift that was inhabited by tiny people as the brand is associated with kids. The logo is designed on a colorful theme which shows the different moods and colors associated with kids. The tagline WEAR IT, LOVE IT matches the fundamental of the organization that is, to provide a range of apparels and accessories which the tiny tots would love to wear.

VISION
To grow as an iconic name in the Asian kidswear segment in the coming times

MISSION
To be a generic yet exclusive value retailer of superior & chic wardrobe for kids.

OBJECTIVES
Provide the high quality products Gain the higher market share Compete with the international brand Earn more foreign currency through exports Position itself in international market

SWOT ANALYSIS
STRENGTHS
Production capacity Strong distribution channels Abundance of raw material Creative designing Growing international presence Produce high quality product at cheap prices Successful experience being competitive Strong roots in domestic market Skilled and cheap labor.

WEAKNESSES
Poor promotional strategies No celebrity spokesperson Lack of technological development that affects the productivity Poor employment practices at production plants Infrastructural bottlenecks and efficiency such as transportation time.

OPPORTUNITIES
Large, Potential domestic and International markets Market is gradually shifting towards Branded Readymade garments Product development and diversification to cater global needs Elimination of quota restrictions leads to greater market development Emerging retail industry and malls provide huge opportunities Growing awareness about the internet sales, so it can be used as a mode of selling.

THREATS
Competition from other developing countries, especially China Continuous quality improvement is need of the hour To balance the demand and supply Disputes with franchisees To make balance between price and quality.

INTERNAL FACTOR EVALUATION MATRIX

IFE matrix means Internal Factor Evaluation Matrix; is a popular strategic management tool for auditing or evaluating major internal strengths and internal weaknesses in functional areas of an organization or a business.

IFE matrix also provides a basis for identifying or evaluating relationships among those areas. The IFE matrix is used in strategy formulation. The IFE Matrix together with the EFE matrix is a strategy-formulation tool that can be used to evaluate how an organization or a company is performing in regards to identified internal strengths and weaknesses of an organization or a company. The IFE matrix method conceptually relates to the Balanced Scorecard method in some aspects.

IFE MATRIX OF LILLIPUT KIDSWEAR Sno . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 STRENGTHS Production Capacity Strong Distribution Channels Abundance of raw material Creative Designing Growing International presence Produce high quality product at cheap price Successful experience being competitive Strong roots in domestic market Skilled & Cheap labor WEAKNESSES Poor promotional strategies No celebrity spokesperson Lack of technological development that affects 0.09 0.08 0.06 0.05 0.07 0.09 0.08 0.07 0.06 0.07 0.04 0.08 3 4 3 3 3 4 3 3 3 2 2 1 2 1 0.27 0.32 0.18 0.15 0.21 0.36 0.24 0.21 0.18 0.14 0.08 0.08 0.18 0.07 2.67 Key Internal Factors Weight Rating Weighted Score

the productivity Poor employment practices at production plants 0.09 Infrastructural bottlenecks and efficiency such 0.07 as transportation time Total 1.00

The total weighted score for the organization is 2.67 which is just above average, so the organization is just above the average score which shows that the organization is strong internally.

EXTERNAL FACTOR EVALUATION MATRIX

The EFE matrix is the strategic tool used to evaluate firm existing strategies, EFE matrix can be defined as the strategic tool to evaluate external environment or macro environment of the firm include economic, social, technological, government, political, legal and competitive information. The EFE matrix is similar to IFE matrix the only difference is that IFE matrix evaluate the internal factors of the company and EFE matrix evaluate the external factors. The EFE matrix consists of following attributes mentioned below. External Factors External factors are extracted after deep internal analysis of external environment. Obviously there are some good and some bad for the company in the external environment. Thats the reason external factors are divided into two categories opportunities and threats. Opportunities Opportunities are the chances exist in the external environment, it depends firm whether the firm is willing to exploit the opportunities or may be they ignore the opportunities due to lack of resources. Threats Threats are always evil for the firm, minimum no of threats in the external environment open many doors for the firm. Maximum number of threats for the firm reduce their power in the industry.

Rating in EFE matrix represent the response of firm toward the opportunities and threats. Highest the rating better the response of the firm to exploit opportunities and defend the threats. Rating range from 1.0 to 4.0 and can be applied to any factor whether it comes under opportunities or threats. There are some important point related to rating in EFE matrix.

Rating is applied to each factor.

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The response is poor represented by 1.0 The response is average is represented by 2.0 The response is above average represented by 3.0 The response is superior represented by 4.0

Weight attribute in EFE matrix indicates the relative importance of factor to being successful in the firms industry. The weight range from 0.0 means not important and 1.0 means important, sum of all assigned weight to factors must be equal to 1.0 otherwise the calculation would not be consider correct. Weighted score value is the result achieved after multiplying each factor rating with the weight.

EFE MATRIX OF LILLIPUT KIDSWEAR Sno . 1 2 3 4 5 6 OPPORTUNITIES Large, potential domestic & international market Market is gradually shifting towards branded readymade garments Product development and diversification to cater global needs Elimination of quota restrictions leads to greater market development Emerging retail industry and malls provide huge opportunities Growing awareness about the internet sales, so it can be used as a mode of selling THREATS Competition from other developing countries, especially china Continuous quality improvement is need of the hour To balance the demand and supply Disputes with franchisees To make balance between price and quality
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Key external factors

Weight

Rating

Weighted Score

0.11 0.09 0.10 0.07 0.08 0.07

3 3 4 3 3 2

0.33 0.27 0.40 0.21 0.24 0.14

7 8 9 10 11

0.11 0.10 0.09 0.08 0.10

4 3 2 1 2

0.44 0.30 0.18 0.08 0.20

TOTAL

1.00

2.79

The total weighted score is 2.79 which is above average that indicates the organization is responding in a steady manner to existing opportunities and threats in its industry.

COMPETITIVE PROFILE MATRIX

Competitive profile matrix is an essential strategic management tool to compare the firm with the major players of the industry. Competitive profile matrix show the clear picture to the firm about their strong points and weak points relative to their competitors. The CPM score is measured on basis of critical success factors, each factor is measured in same scale mean the weight remain same for every firm only rating varies. The best thing about CPM that it include your firm and also facilitate to add other competitors make easier the comparative analysis. IFE matrix only internal factors are evaluated and in EFE matrix external factors are evaluated but CPM include both internal and external factors to evaluate overall position of the firm with respective to their major competitors. The competitive profile matrix consists of following attributes mentioned below.

Critical Success Factors Critical success factors are extracted after deep analysis of external and internal environment of the firm. Obviously there are some good and some bad for the company in the external environment and internal environment. The higher rating show that firm strategy is doing well to support this critical success factors and lower rating means firm strategy is lacking to support the factor.

Rating Rating in CPM represent the response of firm toward the critical success factors. Highest the rating better the response of the firm towards the critical success factor ,rating range from 1.0 to 4.0 and can be applied to any factor. There are some important point related to rating in CPM. Rating is applied to each factor. The response is poor represented by 1.0 The response is average is represented by 2.0 The response is above average represented by 3.0 The response is superior represented by 4.0

Weight Weight attribute in CPM indicates the relative importance of factor to being successful in the firms industry. The weight range from 0.0 means not important and 1.0 means important, sum of all assigned weight to factors must be equal to 1.0 otherwise the calculation would not be consider correct.

Weighted Score Weighted score value is the result achieved after multiplying each factor rating with the weight.

Total Weighted Score

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The sum of all weighted score is equal to the total weighted score, final value of total weighted score should be between range 1.0 (low) to 4.0(high). The average weighted score for CPM matrix is 2.5 any company total weighted score fall below 2.5 consider as weak. The company total weighted score higher then 2.5 is consider as strong in position.The other dimension of CPM is the firm with higher total weighted score considered as the winner among the competitors.

CPM FOR LILLIPUT KIDSWEAR Critical success factors Market share Financial position Product quality Distribution channels Global expansion Production capacity Price competitiveness Customer loyalty Product diversity Totals Weights 0.05 0.10 0.13 0.12 0.20 0.09 0.12 0.11 0.08 1.00 Lilliput Adams kids Mother care Rating Weighted Rating Weighted Rating Weighted 2 2 4 3 2 4 2 3 3 score 0.10 0.20 0.52 0.36 0.40 0.36 0.24 0.33 0.24 2.75 2 3 3 3 3 2 4 3 4 score 0.10 0.20 0.39 0.36 0.60 0.18 0.48 0.33 0.32 2.96 4 4 3 4 4 3 3 4 3 score 0.20 0.40 0.39 0.48 0.80 0.27 0.36 0.44 0.24 3.58

The total weighted score of the three organizations are calculated above, by using the numbers above we can interpret that Mother care is relatively stronger internally and externally as compared to other two firms.

TOWS MATRIX
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SO- Strategies 1) Growing international presence as there is potential in international market (S5,O1).
2) Mix of Creative designing and

WO- Strategies
1) Lack of technological developments,

infrastructure and poor employment practices that limits the supply (W3,W4,W5,O1,O4,O5).

abundance of raw material as there is product development and diversification.(S3,S4,O3)

ST- Strategies
1) Organization has experience in dealing

WT- Strategies
1) Poor promotional strategies with no

with competition as the competition is growing from other countries like china (S7, T1).
2) Production of high quality products at

celebrity spokesperson in the world of increasing competition (W1,W2,T1).

2) Improvement in quality needed and on

cheap prices to keep balance between price and quality (S6,T6).

time delivery is required (W3,W4,W5,T2,T3).

SPACE MATRIX

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The SPACE matrix is a management tool used to analyze a company. It is used to determine what type of a strategy a company should undertake. The Strategic Position & Action Evaluation matrix or short a SPACE matrix is a strategic management tool that focuses on strategy formulation especially as related to the competitive position of an organization. To explain how the SPACE matrix works, it is best to reverse-engineer it. First, let's take a look at what the outcome of a SPACE matrix analysis can be. The SPACE matrix is broken down to four quadrants where each quadrant suggests a different type or a nature of a strategy: Aggressive Conservative Defensive Competitive

These outcomes are based on four factors that an organization deals with these are: Financial Strength (+Y -axis) Environmental Stability (-Y axis) Competitive Advantage (-X axis) Industry Strength (+X axis)

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SPACE MATRIX OF LILLIPUT KIDSWEAR

Financial strengths (+y axis)

Revenue generation Average

Ratings
4.00

4.00
-5.00 -6.00 -5.00 -5.33

Environmental stability (-y axis)

Risk Competition from other developing countries Elimination of quota restrictions Average

TOTAL of y axis Competitive Advantage (-x axis)

Higher quality products at cheap prices Strong distribution channels Strong roots in domestic market Average

-1.33 Ratings
-5.00 -4.00 -3.00

-4.00
4.00 6.00 5.00

Industrial strengths (+x axis)

Large, domestic & international potential markets Production capacity Average

TOTAL of x axis

1.00

FS
Conservative +5 +4 +3 +2 +1 0 Aggressive

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+1 +2 +3 +4 +5

CA
-5 -4 -3 -2 -1

IS -1 -2 -3 -4 -5
Defensive Competitive

ES The total of Y-axis is -1.33 and X-axis is 1, So the strategies lie in the fourth quadrant. Therefore, the organization will follow the competitive strategies. These all can be used as the competitive strategies:Backward integration Horizontal integration Forward integration Market development Product development Market penetration

BOSTON CONSULTANCY GROUP MATRIX

The BCG matrix (aka B.C.G. analysis, BCG-matrix, Boston Box, Boston Matrix, Boston Consulting Group analysis) is a chart that had been created by Bruce Henderson for the Boston Consulting Group in 1970 to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.
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To use the chart, analysts plot a scatter graph to rank the business units (or products) on the basis of their relative market shares and growth rates.

Cash cows are units with high market share in a slow-growing industry. These units

typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.

Dogs, or more charitably called pets, are units with low market share in a mature, slow-

growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off.

Question marks (also known as problem child) are growing rapidly and thus consume

large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

Stars are units with a high market share in a fast-growing industry. The hope is

that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from brief stardom to dogdom.

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As a particular industry matures and its growth slows, all business units become either cash cows or dogs. The natural cycle for most business units is that they start as question marks, then turn into stars. Eventually the market stops growing thus the business unit becomes a cash cow. At the end of the cycle the cash cow turns into a dog. The overall goal of this ranking was to help corporate analysts decide which of their business units to fund, and how much; and which units to sell. Managers were supposed to gain perspective from this analysis that allowed them to plan with confidence to use money generated by the cash cows to fund the stars and, possibly, the question marks. As the BCG stated in 1970:

BCG MATRIX OF LILLIPUT KIDSWEAR Product Revenue in % Revenue millions Apparel Accessories Nightwear Swimwear Footwear +20 Innerwear Total 1237.60 327.60 91.00 36.40 54.60 72.80 1820.00 68 18 5 2 5 2 Profit in millions 348.89 98.28 14.74 4.91 9.82 14.74 491.40 71 20 3 1 4 1 % Profit Market Share in % 62 23 08 03 09 10 Industrial Growth Rate IN % 13 10 04 03 05 02

1.0

0.5

0.0

17 -20

A p2 are p ls9
% 7 1 %

Acces ories s
20%

80%
Industry Growth Rate (Y)
Relative Market Share (X)

Apparels comes under the category of STARS as they have the high relative market share and it competes in high growth industry. Market development and product development strategies will be used. Accessories consists of many different products such as Bags, Belts, Caps, Purses etc. This segment has the low relative market share, yet it compete in a high growth industry. The organization should invest in accessories. Footwear falls under the category of DOGS as they have a low relative market share position and they compete in a low growth industry.

THE QUANTITATIVE STRATEGIC PLANNING MATRIX

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Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic management approach for evaluating possible strategies. Quantitative Strategic Planning Matrix or a QSPM provides analytical method for comparing feasible alternative actions. The QSPM method falls within so-called stage 3 of the strategy formulation analytical framework. When company executives think about what to do, and which way to go, they usually have a prioritized list of strategies. If they like one strategy over another one, they move it up on the list. This process is very much intuitive and subjective. The QSPM method introduces some numbers into this approach making it a little more "expert" technique.

QSPM OF LILLIPUT KIDSWEAR

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Key Factors

STRATEGIC ALTERNATIVES Weight Rapid Expansion Internationally AS TAS

More focus on Product AS 3 2 4 3 4 2 4 TAS 0.33 0.18 0.40 0.33 0.40 0.18 0.40

Opportunities
Large, potential domestic & international markets Market is gradually shifting towards branded readymade garments Product development & diversification Elimination of quota restrictions leads to greater market development Emerging retail industry & malls provide huge opportunity Growing awareness about internet sales Threats Competition from other developing countries ,especially China Continuous quality improvement To balance the demand & supply

0.11 0.09 0.10 0.07 0.08 0.07 0.11 0.10 0.09 0.08 0.10 1.00

4 2 3 4 3 3 3

0.44 0.18 0.30 0.44 0.30 0.27 0.30

Disputes with franchisees To make balance between price & quality Total

Strengths Production capacity Strong distribution channels Abundance of raw material Creative designing Growing international presence High quality at cheaper prices Successful experience being competitive

0.09 0.08 0.06 0.05 0.07 0.09 0.08

3 2 4 3 -

0.27 0.10 0.28 0.27 -

2 2 3 4 -

0.18 0.10 0.21 0.36 -

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Strong roots in domestic market Skilled & cheap labor Weaknesses No celebrity spokesperson Poor promotional strategies Lack of technological development Poor employment practices at production plants Infrastructural bottlenecks and efficiency Sum Total Attractiveness Score

0.07 0.06 0.07 0.09 0.08 0.09 0.07 1.00

2 1 1

0.12 0.08 0.07 3.42

2 1 1

0.12 0.08 0.07 3.34

The two alternatives here are:Rapid expansion internationally after analyzing all the internal and external factors the Sum Total Attractiveness Score comes out to be 3.42 as compared to the other alternative that is more focus on product such as product development and diversification which gets the score of 3.34. Therefore, the first alternative is more attractive so the company should opt for rapid expansion in international market.

PORTERS FIVE FORCES

Porter's five forces analysis is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It uses concepts developed to derive five forces which determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition". Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. The overall industry attractiveness does not imply that every firm in
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the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models have been able to make a return in excess of the industry average.

THE FIVE FORCES The threat of substitute products

The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases.
Buyer propensity to substitute Relative price performance of substitutes Buyer switching costs Perceived level of product differentiation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level.
The existence of barriers to entry (patents, rights, etc.) Economies of product differences Brand equity 22

 Switching costs or sunk costs Capital requirements Access to distribution Absolute cost advantages Learning curve advantages Expected retaliation by incumbents Government policies

The intensity of competitive rivalry

For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc.
Number of competitors Rate of industry growth Intermittent industry overcapacity Exit barriers Diversity of competitors Informational complexity and asymmetry Fixed cost allocation per value added level of advertising expense

Economies of scale Sustainable competitive advantage through improvisation

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The bargaining power of customers

Also described as the market of outputs. The ability of customers to put the firm under pressure and it also affects the customer's sensitivity to price changes.
Buyer concentration to firm concentration ratio Degree of dependency upon existing channels of distribution Bargaining leverage, particularly in industries with high fixed costs Buyer volume Buyer switching costs relative to firm switching costs Buyer information availability Ability to backward integrate Availability of existing substitute products 24

 Buyer price sensitivity Differential advantage (uniqueness) of industry products

The bargaining power of suppliers

Also described as market of inputs . Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources. supplier switching costs relative to firm switching costs degree of differentiation of inputs presence of substitute inputs supplier concentration to firm concentration ratio employee solidarity (e.g. labor unions)

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Porters model of Lilliput kidswear

Barriers to entry Low Organized kids wear business is a new trend in textile business so there are not so much barriers of entry in the industry. Major markets for these products are Eastern and African regions but policies of these govt. like antidumping policy and other policies related to enter in global market. Another problem related to quality standards as all international buyers required good quality and they set certain parameter for quality like six sigma, So for fulfilling this type of requirements companies need heavy investments in terms of a world class production facilities and the technology required to manufacture the clothes with the desired quality standards. Fluctuation in currency and forex market also demotivate new entrants. These are some barriers for new entrants in this business. Barriers of entry are initially high in this segment but as globalization increase, mind set of the governments also changed that helps in lowering barriers.

Bargaining power of buyers - Low The organization is into direct selling to the customers, So the bargaining power of buyers is low as the organization has the fixed price labels and their products pricing is very much competitive. So the organization has the control over the prices and it decreases the bargaining power of the buyers.

Bargaining power of suppliers Low There is abundance of raw material required, therefore every product like fabric, thread and buttons and are available in India. But there are number of suppliers for these types of products are so many so it decrease bargaining power of suppliers and companies have control over suppliers.
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Threats of substitute Low There are no substitutes available in market for kids wear.

Rivalry among the Existing competitors High Competition is very high in kids wear industry as in middle east there are three major players in market like Pumpkin patch, Adams kids and Mother care. So all big players are going with mergers and acquisition for minimizing cost and increasing revenue by tapping new potential markets and improving the quality by using the latest technology .

DECISIONS

Primary:- Focus is on expanding rapidly in international market especially in these regionsMiddle East South East Africa Far East

Alternative: Keep the focus on product development and diversification Increase the expenses on technology to improve the quality of product Devise aggressive advertising strategies.

Reasons behind this strategy

Expansion in different regions to generate revenues
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 To increase the market share and become a global player The domestic market is reaching its saturation point To opt for strategic alliances, to get the latest technology to increase the productivity.

IMPLEMENTATION
Define the regions where demand is high Find reliable franchisees Find the particular location Increase advertising expenses , design a specific campaign to reach the maximum number of people. Research in international market to find out new trends .

EVALUATION
Annual financial reports Sales report annually, monthly and weekly Conduct research to know the perception and satisfaction level of customers Frequent meetings between the M.D., V.P. and the regional managers .

STRATEGY CONTROL
Establishment of Standards The standards at Lilliput are established on the factors to evaluate the:Individuals Performance Stores Performance
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Regions Performance These factors on which the performance is measured are sales report- weekly, monthly and yearly. Revenue market share, Net profits and Relative market growth. Performance standards are also established and checked regularly.

Evaluation of Performance Lilliput makes comparison of past performance to the current performance on the basis of the performance standards mentioned earlier which helps the organization to implement strategies to meet or exceed performance standards. All these comparison helps in forecasting future results in these areas.

Correction of deviation Airtel has a slow process for correction of deviation, it is also a low time taking process. The company can be better served by a management team that can react more quickly to given information. Management takes less time to give response which can be attributed to the careful analysis that is performed before making decisions.

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