A Summer Internship Report on IFB

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A Summer Internship Report on IFB

  1. 1. A Project report for IFB Industries LimitedOn improvement of secondary distribution model at Chandigarh region Submitted to Mr. Indroneel Goho In partial fulfilment of the requirements of the course Post Graduate Program in Business Management On May 28th ‘2011 By Nahid Anjum Praxis Business School Kolkata (2010-2012) 1
  2. 2. AcknowledgementI express my sincerest gratitude to Mr. Mohit Chawla (Regional Manager, IFBChandigarh), Mr. Sunil Kumar Sharma (Regional Service Manager), Mr.Saptrishi Manjumdar (Regional Accountant), Mr. Manoj Gupta (RegionalService Accountant), Mr. Ashish Kaushal (Branch Manager), Mr. SanjayDhawan (Branch Accountant), Mr. Gobinder (Branch Service Incharge) and Mr.Pawan Rana (Godown Incharge, Chandigarh) for their valuable guidancethroughout the duration of this training project. The quality of this work owes agreat deal to the help rendered by them and their critical reviews throughvarious stages of the project. I would also like to express my sincere thanks toall the employees of IFB Chandigarh who have been instrumental in thesuccessful completion of this project.I also express my deep gratitude to our faculty Prof. Rajeev Mishra for histeaching sessions which helped me in the completion of the project successfullyand Prof. Anindra Kumar Haldar for giving me such a nice opportunity to workwith IFB and get a lot of learning and experience from here.Finally I express my sincere thanks to all those people who have contributedtowards the completion of this project and cannot be mentioned here.Nahid Anjum 2
  3. 3. Executive SummaryThe objective of this report is to summarize the activities I undertook as part ofmy summer internship at IFB Industries Ltd, Chandigarh. I had to work incoordination with the company’s logistics and operations team to minimise thecost of secondary distribution model by implementing a new improved modeland to assess the benefit derived from it. It includes the secondary distributionmodel of finished goods as well as spare parts. It is acceptable that allElectronics products are of technical nature and effective after sales services arerequired. Customer purchases product by keeping in mind all the factorsincludes Product features, Quality, Price but most important is after sale service.―To be customer’s first choice‖ customer needs proper attention and after saleservice, which in fact has posed a big challenge to every organization.Customers are more concerned about after sale service from their vendor and atthe right time. That is why company is serving their customers with warranty,annual maintenance contract and extended warranty. So this project alsoincludes all the transportation cost which comes under these activities of servingthe customers with the best services.This project includes the cost and expenses of the previous model as well as thereduced cost benefits, which the company has availed by implementing the newone. 3
  4. 4. PrefaceWith great pleasure I am presenting my project report on ―Improvement ofsecondary distribution model at Chandigarh region‖ of IFB Industries Limited,Chandigarh. It was an amazing experience to get exposed to a corporate worldwith immense learning at every step of the project and to know about the workculture and how an organisation works.The project which was assigned to me is to study the existing secondarydistribution model, to identify the gaps and improvement areas and to come upwith a new improved and beneficial model. It was weekly divided in twomonths. The data was collected from each and every resource which can beproved beneficial for the implementation of new improved secondarydistribution model.Therefore, I take this opportunity to present the project report and sincerelyhope that it will be as much knowledge enhancing to the readers as it was to useduring the fieldwork and the compilation of the report. 4
  5. 5. Contents1. Objectives of the project……………………………………………..72. Industry Overview……………………………………………………83. Company Overview………………………………………………….12 a. The IFB Group……………………………………..………….13 b. Company Profile………………………………..……………..18 c. Financials of the company…………………………………….19 d. IFB Home appliances division i. The Products and its features……………….………….20 ii. New launches……………………………………………30 iii. Competitors……………………………………………..31 iv. Multi level marketing……………………………………324. IFB Chandigarh a. Location on map………………………………...…………….33 b. Organisation structure…………………………..…………….345. Analysis a. Porter’s Five Forces Model……………………………….…...35 b. PEST Analysis………………………………………………….37 c. SWOT Analysis…………………………………………………38 5
  6. 6. d. BCG Matrix……………………………………………………..42 e. Product Life Cycle………………………………………………43 f. Ansoff Matrix……………………………………………………446. Project Description a. Overview…………………………..…………………………... 46 b. Situational Analysis………………………………………………46 c. Observation……………………………………………………..48 d. Problem Statement………………………………………………50 e. Options…………………………………………………………..50 f. Criteria……………………………………………………………50 g. Evaluation of options……………………………………………507. Recommendations……………………………………………………..528. Action Plan…………………………………………………………….539. Benefit derived…………………………………………………………5410.Learning…………………...…………………………………………..5511.Reference………………………………………………………………56 6
  7. 7. Objectives of the projectThe major objectives of this project are as follows:  To get exposed to the practical situations of business  To know how things work practically in corporate world  To learn to interact with various people in corporate  To understand the importance of logistics and operations in business  To find out the problem and come up with a suitable solution  To get the cost benefit by using an appropriate model for secondary distribution  To know various details which are important in a company 7
  8. 8. Industry OverviewIntroductionDurable goods are those which don’t wear out quickly, yielding utility over timerather than at once. Examples of consumer durable goods include electronicequipment, home furnishings and fixtures, photographic equipment, leisureequipment and kitchen appliances. They can be further classified as either whitegoods, such as refrigerators, washing machines and air conditioners or browngoods such as blenders, cooking ranges and microwaves or consumerelectronics such as televisions and DVD players. Such big-ticket items typicallycontinue to be serviceable for three years at least and are characterized by longinter-purchase times.The Indian consumer durables segment can be divided into 3 consumerelectronics groups:White Goods Kitchen appliances/Brown Consumer Electronics goods Air conditioners Mixers Televisions Refrigerators Grinders Mobile phones Washing machines Microwave ovens MP3 players Sewing machines Iron DVD players Speakers and audio Electric fans VCD players equipments Cooking range Watches and clocks Chimneys Cleaning equipments Other domestic appliancesPerformanceIndia’s consumer durables market is riding the crest of the country’s economicboom. Driven by a young population with access to disposable incomes andeasy finance options, the consumer market has been throwing up staggeringfigures. The Indian durables market, with a market size of US$ 27.38 billion in2008-09, has grown by 7.1% over the previous year. 8
  9. 9. Indian durables industry-segments Air conditioners 6% Audio/video equipments 12% Components 7% Computer and peripherals 19% 1% 1% 6% Electric fans 1% 18% 12% Industrial electrical and 1% electronics 5% 2% 7% Mobile phones 20% 3% 4% Other domestic appliances 4% Others 3% 19% 20% Refrigerators 2% 5%1% Sewing machines 1% Telecommunication 18% Washing machines 1% Watches and clocks 1%In the past 10 years, the global market has witnessed a surge in demand aseconomies such as Brazil, Mexico, India and China have opened up and begunrapid development, welcoming globalization with élan. The consumer durablesindustry has always exhibited impressive growth despite strong competition andconstant price cutting, and the first contraction since the 2001 dot-com bust hasbeen due to the global recession. Given the strong correlation between demandfor durables (both new and replacements) and income, the industry naturallysuffered during the 2008-2009 period. However, projections for current yeargoing forward are very optimistic, as consumers resume spending, andproducers launch new enticing variants to grab new customers. 9
  10. 10. The Indian consumer durables industry has witnessed a considerable change inthe past couple of years. Changing lifestyle, higher disposable income coupledwith greater affordability and a surge in advertising has been instrumental inbringing about a sea change in the consumer behavior pattern.According to a research report ―Booming Consumer Electronics Market inIndia‖, with huge middle-class population and rapid economic growth, India isone of the largest spenders in consumer electronics in Asia. However still theconsumer electronics goods, have low penetration in the country leaving vastroom for future growth. The market is projected to grow at a CAGR of around15% during 2010-2013.According to recent reports, the Indian consumer sector is attracting moreinterest from both private equity (PE) and mergers and acquisitions (M&A).India ranks first in the Nielsen Global Consumer Confidence survey released inJanuary 2011. ―India is one of the fastest growing markets in the world and thecurrent consumer belief that recession would soon be a thing of the past hasfilled Indians with confidence,‖ said Piyush Mathur, Managing Director, SouthAsia, The Nielsen Co. With 131 index points, India ranked number one in therecent round of the survey, followed by Philippines (120) and Norway (119).ChallengesThe biggest threats to the local industry going forward are supply-related issuespertaining to distribution and infrastructure, as well as demand issues due tocompetition from imported goods. The lack of well developed distributionnetworks makes it especially challenging to penetrate the fastest growing ruralareas economically. In addition, regular power cuts and poor road linkagesmake systematic production, assembly and delivery problematic.On the demand side, customers have increasing choice from both domesticallyproduced and imported goods, with similar features. This homogeneity makes itdifficult for players to remain ahead of the competition.MNCs hold an edge over their Indian counterparts in terms of superiortechnology combined with a steady flow of capital, while domestic companiescompete on the basis of their well-acknowledged brands, an extensivedistribution network and an insight in local market conditions. The largestMNCs incorporated in India are Whirlpool India, LG India, Samsung India andSony India and home grown brands are Videocon, Godrej Industries and IFB. 10
  11. 11. Future ProspectsOverall, the industry’s future remains robust, and interested applicants willbenefit from a holistic learning experience. Many of the research, sales,marketing and advertising related roles will necessitate a good on-the-joblearning of target audiences, who may well be a totally new segment, based innever-before visited Class II and III towns. In addition, those with technicalbackgrounds will be able to leverage their knowledge and experience toconstantly develop and innovate the product variants. With more MNCsgrowing their Indian businesses, there is great potential to also learn best-in-class systems and management skills.Emerging Consumer Demand in IndiaIndia is set to undergo a major transform over the next two decades withsustained growth resulting in dramatic poverty reduction and the formation of ahalf billion strong middle class.The unique period in India’s evolution will see total consumption in the countryquadrupling, making India the fifth largest consumer market in the world by2025.India’s consumer market is set to explode over the next two decades with totalprivate consumption growing from $370 billion today to over $1,500 billion by2025. Contrary to popular belief, this growth will not be driven by populationgrowth or by dramatic changes in household savings behaviour, but ratheralmost entirely by rising incomes. Geographically, urban India will account forover two-thirds of market growth, despite housing only 37% of the country’spopulation (in 2025). The size of India’s market will, however, still be tiedclosely to its large population, with average per capita consumption growing toonly about $1,000 by 2025.Source: McKinsey Global Institute 11
  12. 12. India’s consumer market will quadruple over the next two decades Total household consumption, billion, Indian rupees, 2000 69,503 48,677 2005 34,089 2010 2015 23,840 2020 16,896 2025 2005 2010 2015 2020 2025 Urban India will account for more than two-thirds of consumption growth over the next 20 years Aggregate annual consumption, billion, Indian rupees, 2000 consumption growth consumptionAll India consumption, 2005 growth 32% India consumption, 2025 Rural consumption consumption growth 68% Urban All 12
  13. 13. Company OverviewThe IFB GroupIFB Industries Limited originally known as Indian Fine Blanks Limited startedtheir operations in India during 1974 in collaboration with Hienrich Schmid AGof Switzerland. The product range includes Fine Blanked components, tools andrelated machine tools like Straighteners, Decoilers, Strip loaders and others.Mr. Bijon Nag, Chairman, IFB Industries Ltd, pioneered the fine blankingtechnology in India and set up the first unit in Kolkata. Since then, the companyhas evolved into one of the most respected and trusted engineering group tomeet the growing needs of domestic and international automotive and domesticinternational automotive market.IFB pioneered the production of fully automatic washing machine in India inagreement with BOSCH, Germany in the year 1989. Today IFB supplies FullyAutomatic Washing Machines, Micro Wave Ovens, Dish Washers & Dryerswith factories in Goa and Bhopal.The Engineering divisions are located at Kolkata & Bangalore. The Bangaloreunit, apart from Fine Blanked components, manufactures motors for Whitegoods as well as Automotive applications. 13
  14. 14. The group co.’s are:  IFB Industries Ltd.  Engineering Division.  Home Appliances Division.  IFB venture Capital Ltd.  IFB Agro Ltd.  IFB Securities Ltd.  IFB Leasing and Financing Ltd.  IFB SubsidiariesIFB even ventured abroad by setting up European Fine Blanking Plant atWrekhan, Northern Wales, UK along with Heinrich Schmidt.As mentioned before setup over two decades ago, IFB has moved beyond theworld of Fine Blanking and Tool making to machine tools, F.H.P Motors, Homeappliances, automotive sub assemblies and accessories and global training .IFB Engineering Division - Fine BlankingIFB is the Premier Fine Blanker in India having Fine Blanking Presses, rangingin size from 90 to 800 T. It has two manufacturing unit in Kolkata andBangalore. The 2nd unit Bangalore was established in 1988. The company hastotal of nine (9) Fine Blanking Presses, capacity range from 90T to 800T. - Machine ToolsThe company’s potential in tool design promoted it to diversify into themanufacture and supply of precision NC and CNC special purpose machinesused for coil processing.IFB Home Appliances DivisionThe IFB brand offers fully automatic washing machines, Microwaves, Domesticand Industrial dishwashers, clothes dryers. They have also recently launchedfully built up modular kitchens and kitchen equipments. 14
  15. 15. The IFB front loading design is based on German principles – for bothaesthetics as well as mechanical and electronic configuration.Having established the image of a high quality brand of fully automaticmachines, the company is to reach a wider section of buyers through anexhaustive dealer network spread all over India and 12 other countries. Themain washing machine production plant at Goa is poised for a major expansionand modernization program to meet the growing demand.IFB International DivisionThe company’s international business division has become a recognized ExportHouse dealing in not only IFBs own products but also third-party exports.The company’s customers include Maruti Udyog, Ford India, Fiat India, ToyotaKirloskar Motors, Lucas TVS, Brakes India, Autoliv India, Rane TRW, IFBAutomotive, Germany’s Takata Petri, BorgWarner, Avtec and Bosch chasis.IFB Venture Capital Finance Ltd.The company was incorporated in 1992 with a view to achieve long term capitalgains by investing in ventures having an attractive potential for growth andearnings has since started commercial activities. In view of the need for strongercapital base, the company went public in March 1995 and was considerablyoversubscribe, the allotment was made in May 1995.IFB Agro Ltd.IFB Agro Industries Limited is a reputed Public Limited Company. Thecompany has various consumer oriented products both for domestic & exportmarkets. The Corporate office is situated at EM Bypass, Kolkata, West Bengal.IFB Agro Industries Limited is a Public Limited Company, listed in the IndianStock Exchange. The company is one of the largest producer of alcohol inEastern India, having 6 large captive bottling plants situated in Bengal, Orissa &North East. The company is also engaged in the production of Carbon DioxideGas & processing of marine products for Export as well as for the Indianmarket.IFB Securities Ltd.The company has obtained the membership in both the wholesale and capitalmarket segments of the national stock exchange. In addition to the membershipof the O.T.C.E.I., it has already commenced full-fledged commercialoperations. 15
  16. 16. IFB Leasing and Financing Ltd.The increasing scope in money market operations prompted the company toventure into the relatively newer areas of Foreign exchange Brokering &Merchant Banking activities in addition to its existing line of activity in Hire,Purchase Financing & Leasing. The company has branch offices at Bangalore,Mumbai, Delhi and Madras. Resource mobilization activities have been steppedup substantially and public response to deposit mobilization has shown anencouraging trend.IFB SubsidiariesIFB, in collaboration with Germany’s RHW and Sweden’s Electrolux, has twojoint venture subsidiaries -- RHW India and RHW Autoliv India -- tomanufacture automotive seat recliners or seating systems and safetyequipments.  European Fine Blanking Ltd. U.K.  RHW India Ltd. (Collaboration with RHW, Germany)  RHW AUTOLIV INDIA Ltd. (auto live of Sweden) 16
  17. 17. Company ProfileVisionTo be customer’s first choiceMissionTO BE THE BEST IN THE EYESOF OUR CUSTOMERS,EMPLOYEES, BUSINESSPARTNERS & SHAREHOLDERS  For Our Customers – The best product to buy, an innovative product that consistently outperforms peers and outstanding service that makes every customer smile.  For Our People - An environment where individuals can constantly learn, grow and prosper.  For our Business Partners – IFB should be the first choice for their products and services.  For Our Investors - The Company should be acknowledged as one with the highest standards of corporate transparency that delivers on promises given to shareholders. • TO BE IN EVERY HOME VALUED AT Rs 15 LACS + (AND ACHIEVE OUR TARGET OF Rs 4000 CRORES TURNOVER BY 2013 – 14)Values―WE TREAT CUSTOMERS THE WAY WE WOULD WANT TO BETREATED‖ELEVEN IDENTIFIED BEHAVIOURS THAT MAKE THE ABOVE COMETO LIFE  Never let profit centre conflicts get in the way of doing what is right for the customer  Give customers a good, fair deal. Great customer relationships take time. Do not try to maximise short term profits at the expense of the building those enduring relationships.  Always look for ways to make it easier to do business with us  Communicate daily with your customers. If they are talking to you, they can’t be talking to a competitor. 17
  18. 18.  Don’t forget to say thank you Leaner is better Eliminate bureaucracy Cut waste relentlessly Operations should be fast and simple Value each other’s time Invest in infrastructure 18
  19. 19. Financials of the Company From April’10 to April’11 Share holding pattern Promoter holdings 5% 16% Govt. holding6% Domestic institutions1% 72% Foreign holdings0% Non promoter corporate holdings Public & others 19
  20. 20. Products and its featuresThere are various types of products in its Home Appliances Division. They are:  Front loaded Washing Machine  Top loaded Washing Machine  Microwave oven  Dishwasher  100% clothes dryer  Wash care productsFront loaded Washing MachineThe different models of front loaded washing machines are: Digital 7 Kg Digital SX 20
  21. 21. Senator DX SenatorDigital 5.5Kg 21
  22. 22. Elite DXSenorita DXSerena SXSerena 22
  23. 23. Elena DXEva DXDiva 23
  24. 24. Some other new models are: Washer Dryer 9/7 Kg Angular 6.5 Kg Red Angular 6.5 Kg Silver Digital 7 Kg Direct Drive Digital 8 Kg Direct Drive Elite Sx Seno Dx 5.5 KgTop loaded Washing MachineThere are 4 models of top loaded washing machine: AW 60 - 8061 AW 60 - 8062 24
  25. 25. AW 7233 AW 6563Microwave ovenThe different ranges of microwave oven are divided in 3 categories according totheir features:  Solo  Grill  Convection 25
  26. 26. Solo:17PM MEC20PM1SGrill:17PG2S20PG3S 26
  27. 27. 25PG3S1 more model of grill is 22DGBC1Convection:20BC323SC2 27
  28. 28. 25SC330SC330SRC1 28
  29. 29. 1 more new model of convection is 38 SC1Dishwasher ZEPHYR EX Neptune100% clothes dryerEASY DRYMAXIDRY 29
  30. 30. MAXIDRY EXWash care Products:  Protecta  Descal  Limo  Fabo  Autodish dish detergent  Autodish rinse aid New launchesThere are some more upcoming products in pipeline which are going to belaunched next year by IFB. These new launches are:  Water Filter  Combo kit Washing Machine  Combo kit Dish Washer  Combo kit Microwave Oven  Dry sheet  Electrical & Plumbing  Small Appliances  Refrigerator 30
  31. 31. CompetitorsIts competitors are:Washing machine Microwave oven Dishwasher DryerElectrolux Bajaj Faber Heatcraft HaierHaier Daewoo Kaff SiemensHitachi Electrolux LG WhirlpoolOnida Godrej Siemens BoschPanasonic Haier BoschSamsung InalsaWhirlpool KenstarLG LGGodrej OnidaSanyo PanasonicSharp SamsungSiemens SharpToshiba SiemensVideocon VideoconBosch Whirlpool Bosch 31
  32. 32. Multi level marketingCompany is launching its products innetwork marketing through multi levelmarketing. This multi level marketing isjust in its launching stage. The best partof networking is anyone can be a brandambassador of IFB. It is a very easy wayto earn and learn for the company, itsemployees as well as its customers.Actually in multi level marketing onecan register himself just for Rs. 1000/-and can be a brand ambassador. You will get your ID password and virtualoffice. He is just supposed to purchase a product or recommend it to anyoneelse and make two other members under him. Now those two other members aresupposed to do the same thing. By purchasing its products or recommending toothers he will earn some points on each product. Also he will get the products invery low price which cannot be offered by any dealer. The two members will behis right and left member and when both sides’ points will match then he willearn 1000 points on each pair which will give him Rs. 1000/-. One canrecommend 20 people to purchase its products each day. In this way, he gets anopportunity to earn up to Rs. 20,000/- per day and up to Rs. 6, 00,000/- permonth. Anyone including working, non-working, students, retired person oreven house wives can join this network and make money. It ultimately increasesthe brand loyalty of customers towards its products as they are supposed torecommend its product to everyone. This plan is known as ―IFB at home-earnfor life‖. 32
  33. 33. IFB ChandigarhLocation on mapIFB INDUSTRIES LTD, CHANDIGARH is located at Plot no.640-A, Phase-IX, Industrial area, Mohali. It comes in North II region which includes fourother states too. These are Punjab, Haryana, J&K and Himachal Pradesh. It hasa ware house in Mauli Jagran, Chandigarh to store the finished goods as well asspare parts to supply further to various dealers and customers. It has 17 dealersin whole Chandigarh which further supply the finished goods to the customerswhereas 2 franchisees and 1 direct service which deal with all the after salesservice complains. 33
  34. 34. Organizational Structure 34
  35. 35. AnalysisPORTER’S FIVE FORCES MODEL: Power of Suppliers Threat of New Competitive Power of Entrance Rivalry Buyer Availability of SubstitutesThreat of New Entrants (Moderate):  Most current players are global players  New entrants will need to invest in brand, technology, distributionPower of Suppliers (Low):  Indigenous supply base limited—most raw materials are importedPower of Buyers (High):  Multitude of brands across price points—wide variety of choice for customers 35
  36. 36. Availability of Substitutes (High):  Unbranded products and cheaper imports could enter the marketCompetitive Rivalry (High):  Number of well-established players; several new players entering  Good technological capability  Many untapped potential marketsOverall, the sector is a dynamic one, with significant growth opportunities. 36
  37. 37. PEST ANALYSIS:Political factor  High import duty  Plants in tax-incentive areas like Goa and Bhopal  Export promotion schemes of the Indian Government like EPCG (Export Promotion Capital Goods scheme) and EOQ (Export Oriented Unit) statusEconomical factor  Increase in per capita income  Growing GDP high disposable income  Increase in spending powerSocio-cultural factor  Manufacturing eco-friendly product  Increasing life style and comfortTechnological factor  Improvement in technology made the electronic product more featured  Quality of product has been increased 37
  38. 38. SWOT ANALYSISStrengths of the company Weaknesses of the company  Brand image in Home  Price of the products Appliances Division  Spare parts/AMC of the product  So many models to choose are costly  Healthy financial banking  No promotional activities  Innovative products  Less range of products in  Compatible workforce consumer durables  Strong after sales service  Products are for winter season  Wide distribution network in all but no product is specially for over the country summer seasonOpportunities for the company Threats for the company  Scope for growth in the rural  Competitive pressure on the market domestic market  New launches can give more  Threats from competitors in the benefit area of pricing  The trust in company’s product  Significant rise in material cost by valued customers and exchange fluctuationStrengths of the company  Brand image in Home Appliances Division IFB has a brand image in Home Appliances Division and it is leading market in this segment with the major number of customers of washing machines and microwave oven.  So many models to choose The products have variety of models with different features as well as prices to tap the customers of middle class, upper middle class and high class.  Healthy financial banking The company is financially sound and can grow well if it targets the rural areas as well. 38
  39. 39.  Innovative products The products are actually innovative and new in Indian market so they have a near monopoly in dishwasher and clothes dryer with maximum market share. So it attracts the customers of higher class for more luxurious life style.  Compatible workforce The company has a compatible work force which works in team to give a new height to the company.  Strong after sales service The company is also providing best after sales service to its customers by the schemes like warranty, annual maintenance contract and extended warranty.  Wide distribution network in all over the country It has a wide distribution network which covers almost every state of the country having various dealers and franchisees in each state.Weaknesses of the company  Prices of the products The prices of the products are a bit high in comparison to other brands. So it will not be able to cover the lower middle class.  Spare parts/AMC of the product are costly Even the spare parts and annual maintenance contract of the products are costly which shows a chance of losing customers.  No promotional activities There are no promotional activities for the promotion of the products. Even there is not any advertisement which can show the features and variety of products. This is the reason that there are very less sales of hobs and chimneys because people are not aware of its new products. 39
  40. 40.  Less range of products in consumer durables It has less range of products which is not sufficient to capture the whole market. Though some new products are ready to be launch in coming year but some small consumer durables like iron, water heater, camera etc. can be added.  Products are for winter season but no product is specially for summer season The products like clothes dryer can be used in winter season mainly which comes just for 2 months in entire year. Such products can only be purchased by north people due to having very less temperature in winter season. There should be some summer products like refrigerator, AC, cooler, water cooler etc. so that it can be purchased in entire year and can capture the whole Indian market.Opportunities for the company  Scope for growth in the rural market IFB still have not covered the rural market of country. As India has its major population in rural areas, the company has a wider scope for growth in rural market by launching low price products useful for rural people which can also have chargeable features because rural area still don’t have full time electricity facility. For example - chargeable lamps.  New launches can give more benefit The new launches which are there in the pipeline can give more benefit to the company. Even some more launches in coming future can add more benefit to the company.  The trust in company’s product by valued customers The greatest opportunity of the company is its brand equity, product quality, latest technology and last but not least is the trust in company’s products by the valued customers. This trust will definitely be helpful in the promotion of other new products. 40
  41. 41. Threats for the company  Competitive pressure on the domestic market Growth of the Indian economy together with the reduction of import duties makes India increasingly a target market for many MNCs and therefore, competitive pressure on the domestic market will continue to grow.  Threats from competitors in the area of pricing As its competitors are also there in the market with some low price products the company is facing threats from those competitors.  Significant rise in material cost and exchange fluctuation The significant rise in material cost and exchange fluctuation drastically impacts margin of the company. 41
  42. 42. BCG MatrixIFB has high market growth rate as well as high relative market share.Therefore it is a star. Now being a star it leads to large amount of cashconsumption and cash generation. It also requires heavy investment, to maintainits market share. In the product life cycle it is at the growth stage. Therefore thecompany has a nice opportunity for growth in Indian market. 42
  43. 43. Product life cycle 43
  44. 44. ANSOFF MATRIXThe company should follow the four strategies depending on the demand andproduct as indicated in the matrix.  Market penetrationMarket penetration is the name given to a growth strategy where the businessfocuses on selling existing products into existing markets.It is been clear from the above definition that market penetration is the strategywere company try to maintain its share in the existing market with its existingproduct. Having wide range of product in market IFB is already following thisstrategy of market penetration.  Market developmentMarket development is the name given to a growth strategy where the businessseeks to sell its existing products into new markets. IFB is now almost coveredall states with its existing products. As far as rural market is concerned, itcannot capture it with its existing product due to high price. But still it is trying 44
  45. 45. to target B2B market with its B2B products like industrial dishwasher, washerand dryer.  Product developmentProduct development is the name given to a growth strategy where a businessaims to introduce new products into existing markets. Now the company isready to launch some new products like refrigerator, water filter etc. It isfollowing the product development strategy.  DiversificationDiversification is the name given to the growth strategy where a businessmarkets new products in new markets. The new products which are there in thepipe line can cover the new market also with its unique features and reasonableprices. 45
  46. 46. Project DescriptionOverviewThis project is basically on secondary distribution model of IFB, Chandigarh. Itwas weekly divided into 8 weeks. First we did the study of existing secondarydistribution model of Finished Goods and Spares to dealers and franchisees,study of agreements, fill rate etc, collate information on truck rates, size ofbranch and warehouses – rental rate – storage capacity etc. Then we identifiedthe gaps and improvement areas in the existing model and came up with animproved model. By implementing the new improved model we accessed thebenefit to the company.Situational AnalysisIFB Chandigarh is a branch of IFB which supply its product in Chandigarh andhandle internet customers around Chandigarh (Panchkula and Mohali). There isonly 1 warehouse in Chandigarh which gets its stock from Bhopal. The capacityof the ware house is 300 WM (only) or 900 MW (only).There are 4 types of vehicles used to transport the goods from Chandigarh warehouse. The capacity and the fixed remuneration for logistics equipment aredifferent as per the location. These vehicles are- 1) LPT 17 feet long Capacity-42 WM or 42*3 MW 2) Canter 14 feet long Capacity-36 WM or 36*3 MW 3) Tata 407 12 feet long Capacity-24 WM or 24*3 MW 4) Tata magic (Auto) 8 feet long Capacity-12 WM or 12*3 MW 46
  47. 47. This is the fixed remuneration for logistics equipment from June, 2008 to May,2011- Tata 407 canter LPT AutoJammu (J&K) 0 6820 7750 0Karnal (Haryana) 2300 3150 3400 1800Ludhiana (Punjab) 2000 2750 3100 1600Mohali (Chandigarh) 600 800 1000 400Parwanoo (HP) 1600 2150 2600 1300Now this fixed remuneration is going to change from June, 2011 and the newfixed costs are as follows- Tata 407 canter LPT AutoJammu (J&K) 0 7800 8800 0Karnal (Haryana) 2530 3465 3740 1980Ludhiana (Punjab) 2200 3025 3410 1760Mohali (Chandigarh) 1200 1500 1700 500Parwanoo (HP) 1760 2365 2860 1430There are 17 dealers in Chandigarh which deal with the IFB products and 2franchisees which are basically service centres of IFB. Now for thetransportation there is an Auto owned by company on rental basis agreement. Incase, when there is heavy transportation of goods to the dealers or stock transferto the other states of North II then they hire vehicles from outside which givesextra cost to the company.Information on transportation of spare partsThe information of transportation of spare parts by service centres are asfollows-  2 franchisees in Chandigarh  1 company on company operation (owned by the company)  2 rickshaws- 1 for drag service, 1 for godown service  Cost of rickshaws- drag service – 5000/- (fixed for 1 month) godown service – 4000/- (fixed for 1 month) 47
  48. 48.  Drag service – the service in which the spare parts to be taken to the customer’s home and repaired there only  Godown service – the service in which we get the defected machine to the godown and repair there due to heavy spare parts or major defect  Products which are under warranty period, annual maintenance contract or extended warranty period are serviced free of cost  Products out of warranty are serviced on charges  Spare parts dispatched from the warehouse to franchisees by the auto owned by the company and if load is more than the auto then it goes on hired transport vehicle  Service given to the customers through a systematic way  They get the spare parts to the customer’s place to repair the machines and repair them there only  In case the spare part needed is a huge one then they use a vehicle  In case the machine cannot be repaired there then they bring it to the service centre  Maximum 2000/- to 3000/- monthly cost on the transportation which is to be paid by the companyObservationThe whole situation seems to be interconnected here. The distribution is of twotypes- primary and secondary. The distribution from Bhopal to Chandigarhware house is called primary distribution whereas the further distribution to thevarious dealers from Chandigarh ware house is called secondary distribution. Asper the data studied there are many transportation which can be done on Canteras per the quantity but instead of using Canter, LPT is being used which is Rs.200 expensive than Canter. There is much transportation which is being donehalf loaded only. Though the capacity of the vehicle is more than it is beingused. The only vehicle can go to Jammu for stock transfer is LPT. Even whenthere is the order of minimum quantity of stock there will be transportation byLPT only. No other vehicle can go there. Most of the stock transfer is forLudhiana which incurred Rs. 22760 in March only. 48
  49. 49. The primary distribution depends on these points:  Stock of last month should be cleared from Chandigarh ware house  Outstanding of last month should be sent to the head officeAnd the secondary distribution depends on these points:  Sales target of each month given by the company  Outstanding of last month sales from each dealer should be collectedNow the demand from dealers’ side depends on these points:  Further sales to the customers  Stock left in their shopThe situation goes like this:  Sales people take order from the dealers each month  Now dealer further sale the product in the market  Within a specified time they pay the amount of the stock to the company  And then the company give outstanding of the branch to the head office  In some cases, it takes time till the end of the month  Sometimes it lead to late submission of outstanding to the head office and that is why stock move late from the Bhopal ware house  Due to this, major secondary distribution occur at the time of month closing which ultimately increase the cost  Sometimes late submission of outstanding lead to account closing of the branch  In such case, they get their stock from other states  It lead to the stock transfer which ultimately increase the cost of secondary distribution of that state  If the same case happens with Chandigarh branch then stock comes from other state to Chandigarh warehouse which gives extra cost to the secondary distribution  This whole system breaks at the festival season when there is heavy demand and high sales in the market 49
  50. 50. Problem Statement The major problem in this existing secondary distribution model is thatthe maximum sales and billing occurs at the end of the month which causeheavy transportation at that time for which there is a need to hire more vehiclesfor transportation and the challenge is to maintain the sales in whole monthevenly so that there can be the maximum utilization of the vehicle owned by thecompany.OptionsThe options that company has in hand-  Weekly billing  Proper distribution from Bhopal itself  Division of Chandigarh into different zonesCriteriaBefore coming to any decision these important points should be taken inconsideration-  Sales-The new model should not hamper the sales anyhow  Service-In order to minimise the cost of transportation service should not be hampered  Profitability-The profit that new model will give to the companyEvaluation of Options  Weekly billing o Pros  It will evenly distribute the sales for entire month  Maximum time vehicle will not move half loaded  Proper utilization of owned vehicle o Cons  The dealers don’t need the stock each week  It totally depend on the demand from customers’ side  Proper distribution from Bhopal itself o Pros  There will be no need of stock transfer  There will be no need to hire the extra vehicles o Cons  It may increase the cost of primary distribution 50
  51. 51.  The extra stock which is not in demand in Chandigarh will be lying in the warehouse and it will also capture the area of warehouse Division of Chandigarh into different zones o Pros  Each zone’s dealers can be asked to order on a fixed particular date  The same vehicle can be used for the distribution of goods to all the dealers of that particular zone o Cons  There are only 2 areas in Chandigarh where our maximum number of dealers exist so even the zones will not be equally distributed  Even after the division there are some areas where only 1 or 2 dealers exist and demand is low then the vehicle will still move half loaded 51
  52. 52. Recommendation There should be weekly billing so that sales could be evenly distributed in the entire month Area wise distribution can minimize the cost to some extent The collection from dealers should also be done at time to time and not at month closing only Stock from Bhopal should come till the second week of the month to distribute the products evenly in the entire month Products and its features are excellent but there should be some more promotional activities like TV ads to promote the products and its features in market Quality of products is good in dealers’ point of view Dealers want the new kitchen equipment products to be promoted because there is some demand from customers’ side There should be some products which can target the rural segment because still India has its major population in rural areas 52
  53. 53. Action Plan Area wise distribution gave some convenience in distribution This time secondary distribution is done in a very systematic way so that each vehicle don’t move half loaded This is done under the guidance and efforts of all concerned people We also tried to avoid the stock transfer as it is not needed now 53
  54. 54. Benefit derivedFebruary’11 March’11 April’11Auto fixed cost-19800/- Auto fixed cost-19800/- Auto fixed cost-19800/-Km charges- Km charges- Km charges-2149*2=4298/- 1800*2=3600/- 1408*2=2816/-Extra vehicles’ cost-14740/- Extra vehicles’ cost- Extra vehicles’ cost- 3360/- 2800/-No stock transfer Stock transfer-30860/- Stock transfer-4950/-Total cost-38838/- Total cost-57620/- Total cost-30366/- (All costs are in Indian rupees)  Total benefit derived in comparison to March’11 is Rs.27,254/-  Total benefit derived in comparison to Feb’11 is Rs.8,472/-  Maximum utilization of owned vehicle  Only three extra vehicles hired  Only two stock transfer occurred  For spare parts, a rickshaw vehicle is owned by the company on a monthly rental basis Rs. 4,000/-  The prices of vehicles are going to increase from the next month due to hike in petrol price 54
  55. 55. Learning Practical insights into the life and work in a body corporate. How to apply the management learning and soft skills while working atthe coalface. How to discuss an issue with the concerned people and come up with anagreed solution. Interacting with various dealers and franchisees to understand how wholelogistics and operations work. Various details on agreements and costing. Exposure to the fierce competition and the struggle, where only the fittestsurvive. How to remain patient and composed in the face of anxiety and pressure. Analysing each pros and cons related to various options of the solution . 55
  56. 56. Referencehttp://www.ifbindustries.com/http://www.ifbappliances.com/http://www.moneycontrol.com/financials/ifbindustrieshttp://www.tradeboss.com/default.cgi/action/viewcompanies/companyid/502722/http://www.mckinsey.com/mgi/publications/india_consumer_market/slideshow/main.asphttp://compareindia.in.com/products/washing-machines/http://www.indiainfoline.com/Markets/Company/IFB-Industries-Ltd/505726 56
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