Bhagwati Products Limited - Making in India for Micromax Case Study Solution & Analysis

Case Description of Bhagwati Products Limited - Making in India for Micromax Case Study
Emerging markets have become an attractive destination for multinationals as they provide these companies with high
growth potential due to low product penetration and also help them in reducing costs of production due to reduced labour
costs. The case brings out the trajectory of growth of Micromax Informatics Limited which started as a company depending
on China and Taiwan for manufacturing of their handsets because of better technological infrastructure, stronger supply
chain and cost effective workforce. As the government enhanced import duty on CBU (Completely Built Unit) electronic
products and reduced excise duty and import duty on SKD (Semi Knocked Down) units required for manufacturing of
electronic products, Micromax started its production facility, Bhagwati Products Limited in India and reduced import of
finished electronic products to a large extent. To keep the cost low all across the value chain, it focused on development of
indigenous design and manufacturing capabilities to achieve higher localization. This helped Micromax in keeping the cost
of the products low and thus being a cost leader in the market. The case also brings out how costs can be kept low by
utilizing central and state government initiatives in providing subsidies that helped the company build competitive advantage
and how these specific actions resulted in creation of a vibrant electronics industry in the country. This case focuses on the
specific issues faced by Bhagwati Products Limited, the production arm of Micromax in production of mobile phones
locally, with regard to sourcing of raw material, manpower, research and development, competition and reduction in cost of
production. The case also discusses the decision dilemma faced by the chairman on diversification of products to consumer
electronics or to move into new territories with the core product in context of increased competition from multinationals in
India.

What are the strength and weaknesses of Micromax Bhagwati (SWOT Analysis)

What are external factors that are impacting the business environment (PESTEL Analysis)
Should Micromax Bhagwati enter new market or launch new product (Opportunities & Threats from SWOT Analysis)
What will be the expected profitability of the new products or services (Porter Five Forces Analysis)
How it can improve the profitability in a given industry (Porter Value Chain Analysis)
What are the resources needed to increase profitability (VRIO Analysis)
Finally which business to continue, where to invest further and from which to get out (BCG)
What are the Four Elements of SWOT Analysis? How to use them for Bhagwati Products Limited - Making in India
for Micromax case study?
The four key elements of SWOT analysis are - Strengths, Weaknesses, Opportunities & Threats. Micromax Bhagwati
can use strengths to create niche positioning in the market, can strive to reduce & remove weaknesses so that it can better
compete with competitors, look out to leverage opportunities provided by industry structure, regulations and other
development in external environment, and finally make provisions and develop strategies to mitigate threats that can
undermine the business model of Micromax Bhagwati.

Opportunities Threats
Strengths Strength Opportunities (SO) Strategies Strength Threats (ST) Strategies
Using Micromax Bhagwati strengths to Micromax Bhagwati can use two approaches - building on present strengths, or
consolidate and expand the market position. analyze the trend and build processes to two pronged market penetration
approach.
Weaknesses Weakness Opportunities (WO) Strategies Weaknesses Threats (WT) Strategies
Building strategies based on consumer oriented Micromax Bhagwati should just get out of these business areas and focus on
product development and marketing approach. strength and threats box , or on weakness and opportunities box.
Strengths - Bhagwati Products Limited - Making in India for Micromax
Strengths are the Micromax Bhagwati capabilities and resources that it can leverage to build a sustainable competitive
advantage in the marketplace. Strengths come from positive aspects of five key resources & capabilities - financial
resources, human resources, past experiences and successes, activities & processes, and physical resources such as land,
building .

- First Mover Advantage – Micromax Bhagwati has first mover advantage in number of segments. It has experimented in
various areas . The Strategy & Execution solutions & strategies has helped Micromax Bhagwati in coming up with unique
solution to tap the un-catered markets.

- Strong Brand Equity and Brand Awareness – Micromax Bhagwati has some of the most recognized brands in the domestic
market it operates in. According to Sunita Mehta, Surya Kant Sharma, Arun Pereira , brand recognition plays a significant
role in attracting new customers looking for solutions in adjacent industries.

- Successful Go To Market Track Record – Micromax Bhagwati has a highly successful track record of both launching new
products in the domestic market but also catering to the various market based on the insights from local consumers.
According to Sunita Mehta, Surya Kant Sharma, Arun Pereira , Micromax Bhagwati has tested various concepts in different
markets and come up with successful Strategy & Execution solutions.
- Intellectual Property Rights – Micromax Bhagwati has garnered a wide array of patents and copyrights through innovation
and buying those rights from the creators. This can help Micromax Bhagwati in thwarting the challenges of competitors in
various industries .

- High Margins – Micromax Bhagwati charges a premium compare to its competitors. According to Sunita Mehta, Surya
Kant Sharma, Arun Pereira of Bhagwati Products Limited - Making in India for Micromax case study, this has provided
Micromax Bhagwati resources to not only thwart competitive pressures but also to invest into research and development.

- Robust Domestic Market that Micromax Bhagwati Operates in - The domestic market in which Micromax Bhagwati is
operating is both a source of strength and roadblock to the growth and innovation of the company. Based on details provided
in the Bhagwati Products Limited - Making in India for Micromax case study – Micromax Bhagwati can easily grow in its
domestic market without much innovation but will require further investment into research and development to enter
international market. The temptation so far for the managers at Micromax Bhagwati is to focus on the domestic market only.

- Managing Regulations and Business Environment – Micromax Bhagwati operates in an environment where it faces
numerous regulations and government diktats. In areas, the firm needs to navigate environment by building strong
relationship with lobby groups and political network.

Weakness- Bhagwati Products Limited - Making in India for Micromax

Weaknesses are the areas, capabilities or skills in which Micromax Bhagwati lacks. It limits the ability of the firm to build a
sustainable competitive advantage. Weaknesses come from lack or absence of five key resources & capabilities - human
resources, past experiences and successes, financial resources, physical resources such as land, building, and activities &
processes .

- Implementation of Technology in Processes – Even though Micromax Bhagwati has integrated technology in the backend
processes it has still not able to harness the power of technology in the front end processes.

- Lack of Work force diversity – I believe that Micromax Bhagwati is not diverse enough given that most of its growth so far
is in its domestic market. According to Sunita Mehta, Surya Kant Sharma, Arun Pereira , this can reduce the potential of
success of Micromax Bhagwati in the international market.

- Low Return on Investment – Even though Micromax Bhagwati is having a stable balance sheet, one metrics that needs
reflection is “Return on Invested Capital”. According to Sunita Mehta, Surya Kant Sharma, Arun Pereira in areas that
Micromax Bhagwati operates in the most reliable measure of profitability is Return on Invested Capital rather than one
favoured by financial analysts such as – Return on Equity & Return on Assets.

- Project Management is too focused on internal delivery rather than considering all the interests of external stakeholders.
This approach can lead to poor public relation and customer backlash.

- Micromax Bhagwati business model can be easily replicated even with the number of patents and copyrights the company
possess. The intellectual property rights are very difficult to implement in the industry that Micromax Bhagwati operates in.
According to Sunita Mehta, Surya Kant Sharma, Arun Pereira , Intellectual Property Rights are effective in thwarting same
size competition but it is difficult to stop start-ups disrupting markets at various other levels.

- Customer Dissatisfaction – Even though the demand for products have not gone down but there is a simmering sense of
dissatisfaction among the customers of Micromax Bhagwati . It is reflected on the reviews on various on-line platforms.
Micromax Bhagwati should focus on areas where it can improve the customer purchase and post purchase experience.

Opportunities- Bhagwati Products Limited - Making in India for Micromax

Opportunities are macro environment factors and developments that Micromax Bhagwati can leverage either to consolidate
existing market position or use them for further expansion. Opportunities can emerge from various factors such as - changes
in consumer preferences, political developments & policy changes, technological innovations, economic growth, and
increase in consumer disposable income .

- Growing Market Size and Evolving Preferences of Consumers – Over the last decade and half the market size has grown at
brisk pace. The influx of new customers has also led to evolution of consumer preferences and tastes. This presents
Micromax Bhagwati two big challenges – how to maintain loyal customers and how to cater to the new customers.
Micromax Bhagwati has tried to diversify first using different brands and then by adding various features based on customer
preferences.

- Lucrative Opportunities in International Markets – Globalization has led to opportunities in the international market.
Micromax Bhagwati is in prime position to tap on those opportunities and grow the market share. According to Sunita
Mehta, Surya Kant Sharma, Arun Pereira , growth in international market can also help Micromax Bhagwati to diversify the
risk as it will be less dependent on the domestic market for revenue.

- E-Commerce and Social Media Oriented Business Models – E-commerce business model can help Micromax Bhagwati to
tie up with local suppliers and logistics provider in international market. Social media growth can help Micromax Bhagwati
to reduce the cost of entering new market and reaching to customers at a significantly lower marketing budget. It can also
lead to crowd sourcing various services and consumer oriented marketing based on the data and purchase behaviour.

- Changing Technology Landscape – Machine learning and Artificial Intelligence boom is transforming the technology
landscape that Micromax Bhagwati operates in. According to Sunita Mehta, Surya Kant Sharma, Arun Pereira , Micromax
Bhagwati can use these developments in improving efficiencies, lowering costs, and transforming processes.

- Reducing Cost of Market Entry and Marketing into International Markets – According to Sunita Mehta, Surya Kant
Sharma, Arun Pereira, globalization along with boom in digital marketing and social media has considerably reduced the
risks of market entry and marketing in international market.

- Increasing Standardization – Micromax Bhagwati can leverage this trend to reduce the number of offerings in the market
and focus the marketing efforts on only the most successful products.

Threats- Bhagwati Products Limited - Making in India for Micromax

Threats are macro environment factors and developments that can derail business model of Micromax Bhagwati. Threats can
emerge from various factors such as - increase in consumer disposable income, economic growth, changes in consumer
preferences, technological innovations, and political developments & policy changes.

- US China Trade Relations – Micromax Bhagwati has focused on China for its next phase of growth. But there is growing
tension between US China trade relations and it can lead to protectionism, more friction into international trade, rising costs
both in terms of labour cost and cost of doing business.

- Increasing costs component for working in developed market because of environmental regulations – Micromax Bhagwati
has to deal with these costs as governments are trying to levy higher environmental taxes to promote cleaner options. For
Micromax Bhagwati it may result into higher logistics costs and higher packaging costs.

- Growing Protectionism - Micromax Bhagwati should hedge the risk against growing protectionism ranging from – storing
data into international market to diversifying risk by operating into countries at different economic cycle.

- Credit Binge post 2008 Recession – Easy access to credit can be over any time, so Micromax Bhagwati should focus on
reducing its dependence on debt to expand. The party has lasted for more than a decade and rollback from Fed can result in
huge interest costs for Micromax Bhagwati.

- Threats of New Entrants because of Reducing Costs and Increasing Efficiencies – As Micromax Bhagwati can leverage
low cost of reaching customers using social media and e-commerce, so can the competitors – both local and international
competitors.

- Squeezing Middle Class in Developed and Developing World – The growing inequality is one of the biggest threat to not
only globalization but also to capitalism. Micromax Bhagwati first hand witnessed the impact of it where it has seen lower
demand of its products from middle class customers in US and EU market.

What are Political Factors in PESTEL / PEST Analysis

The political factors play a huge role in not only investment decision by transnational corporations but also by companies
such as – Micromax Bhagwati. Political environment and other factors not only impact the cost of doing business but also
long term sustainability. Some of the political factors are – governance system, democracy & institutions, military coup
chances, probability of armed conflict, law and order in market etc.

Political Factors that Impact Bhagwati Products Limited - Making in India for Micromax
- Transition of Government and Changes in Policy – There is consistency in policy making from one government to another.
Secondly governments from all parties adhere to the treaties made by the previous governments.

- Likelihood of Entering into an Armed Conflict – From the information in the Bhagwati Products Limited - Making in India
for Micromax case study, I don’t think there is a likelihood of country entering into an armed conflict with a neighboring
country.
- Judiciary Independence – In the matter of commercial and business decisions, judiciary of the country is independent to a
large extent. Business do face problem when the conflict is between public interest and proprietary technology similar to
ruling in South Africa where government & judiciary allowed generic AIDS drug irrespective of patents of global
companies.

- Unrest within the Country & Chances of Civil Unrest – We don’t think that Micromax Bhagwati business operations are
facing any dangers from any kind of civil unrest or internal militant operations in the country.

- International Trade & Other Treaties – The country has a good record of adhering to international treaties it has done with
various global partners. The government of each party has adhered to the treaties done by previous governments, so there is a
consistency in both rule of law and regulations.

- Size of Government Budgets – both Local Governments and National Government – The government at both national level
and local levels are running deficit budgets which is boosting growth in the short term but may lead to increase in inflation
over medium term. The bond rating of national government is investment grade.

- Segregation of Political Responsibilities between Different Government Agencies – There are numerous government
agencies which reduces the risk of overwhelming pressure by one agency. But on the flip side it does increases both time and
cost of doing business and getting certifications and clearances.

- Role Local Governments Play – Local governments are highly influential in the policy making process and implementation
as most of the policies and regulations are implemented by the local government as enforcement agencies mostly report to
local government in their own states regarding various laws.

What are Economic Factors in PESTEL / PEST Analysis

Economic factors of a country and region have a direct impact on the potential attractiveness of a given market. Some of the
economic factors that Micromax Bhagwati should evaluate both in the present market and one in which it wants to enter are
– inflation rate, GDP growth rate, disposable income level etc.

Economic Factors that Impact Bhagwati Products Limited - Making in India for Micromax
- Inflation Rate – The inflation rate can impact the demand of Micromax Bhagwati products. Higher inflation may require
Micromax Bhagwati to continuously increase prices in line of inflation which could lead to lower levels brand loyalty and
constant endeavours to manage costs. Cost Based Pricing could be a bad strategy under such conditions.

- Fiscal and Monetary Policies – The Republican government tax break culture has increased the deficit and it can lead to
fiscal trouble for the economy in coming years.

- Price Fluctuations in both Local and International Markets – Compare to the level of quantitative easing in last decade the
prices of Micromax Bhagwati products and prices of overall products have remained sticky in the US market. Micromax
Bhagwati should consider the fact that at deficit levels of United States in an emerging economy can lead to rampant
inflation and serious risks of currency depreciation.

- Inequality Index / Ranking on Gini Index – Gini Index and level of inequality are a great barometer for harmony and
development of a society. If there is huge income inequality in the society then the likelihood of conflict and crime increases.
It can lead to uncertainty and suppression of consumption in both short term and long term.

- Demand Shifts from Goods Economy to Service Economy – The share of services in the economy is constantly increasing
compare to the share of manufacturing, goods, and agriculture sector.

- Level of Household Income and Savings Rate – Increasing consumption and stagnant household income in United States
had led to credit binge consumption. It has decimated the culture of savings as people don’t have enough to save. Micromax
Bhagwati needs to be careful about building marketing strategy that is dependent on “Purchase on Credit” consumer
behavior.

- GDP Trend & Rate of Economic Growth – The higher GDP growth rate signals growing demand in the economy.
Micromax Bhagwati can leverage this trend by expanding its product range and targeting new customers. One way to start is
by closely mapping the changes in – consumer buying behavior and emerging value proposition.

What are Social Factors in PESTEL / PEST Analysis

Social factors such as demography trends, power structure in the society, women participation in workforce etc have
immense impact over not only the country's economy but also on workforce talent availability and level of consumer
demand.
Social Factors that Impact- Bhagwati Products Limited - Making in India for Micromax

- Attitude towards Leisure – Micromax Bhagwati should conduct an ethnographic research to understand both attitude
towards leisure activities and choice of leisure activities. Experience economy is one of the fastest growing segments both
among millennials and among baby-boomers.

- Immigration Policies and Level of Immigration – What are the immigration policies of the country, what is the level of
immigration, and in which sectors immigration is encouraged. This will enable the Micromax Bhagwati to determine – if
required can it hire talent globally to work in that particular market.

- Attitude towards Savings – The culture of saving in US and China is totally different where savings rate in China is around
30% , it is well below 15% in United States. This culture of consumption and savings impact both type of consumption and
magnitude of consumption.

- Attitude towards Health & Safety – The attitude towards health and safety is often reflected in the quality of the products
and cost structures of manufacturing processes. Micromax Bhagwati has stringent norms for health and safety norms so in
emerging economies it may have to compete with players who don’t have high cost structures that of Micromax Bhagwati.

- Types of Immigration & Attitude towards Immigrants – Given the latest developments such as Brexit and Immigrant
detention on Southern border of United States. Attitude towards immigration has come under sharp focus. Micromax
Bhagwati should have capabilities to navigate under this hyper sensitive environment.

- Demographic Trend – The demographic trend is one of the key factors in demand forecasting of an economy. For example
as the population of USA and EU is growing old the demand for products mostly catering to this segment will grow.
Micromax Bhagwati should consider demographic trends before new product developments and integrate features that cater
to this segment. As population is ageing it will require less tech intensive products.

- Gender Composition in Labour Market Micromax Bhagwati can use gender composition of labour market to understand
the level of liberal nature of the society, women rights, and women’s say in matter of societal issues and consumption
decisions. The gender composition of labour market is a good indicator of disposal income of household, priorities of the
households, and related needs.

- Birth Rate – Birth rate is also a good indicator of future demand. USA has avoided the European Union style stagnant
economy on the back of slightly higher birth rate and higher level of immigration.

What are Technological Factors in PESTEL / PEST Analysis

Technology is fast disrupting business models across various industries. Some of the technology trends that are impacting
the macro environment are – developments in artificial intelligence, use of machine learning and big data analytics to predict
consumer behaviour, growing importance of platforms over service providers etc.

Technological Factors that Impact Bhagwati Products Limited - Making in India for Micromax
- Likelihood of Technology Disruption – If the country is hub of technology companies then there is a high chance of
technology disruption among various industries. Micromax Bhagwati has to assess whether it can live with the fast pace of
technology disruption in its industry.

- Acceptance of Mobile Payments and Fintech Services – One of the areas where US are lacking behind China is Mobile
Payments. Micromax Bhagwati should assess what are preferred choice of mobile payments in local economy and chose the
business model based on it.

- Integration of Technology into Society & Business Processes – Uber failed in China because it tried to enter before
smartphone were widespread in China. Micromax Bhagwati should build a strategy that can integrate societal values,
infrastructure, and Micromax Bhagwati business model.

- Empowerment of Supply Chain Partners – Micromax Bhagwati should analyze areas where technology can empower
supply chain partners. This can help Micromax Bhagwati to bring in more transparency and make supply chain more
flexible.

- Technology transfer and licensing issues for Micromax Bhagwati – laws and culture of licensing of IPR and other digital
assets should be analyzed carefully so that Micromax Bhagwati can avoid shakedowns and IPR thefts.

- E-Commerce & Related Infrastructure Development – As E-Commerce is critical for Micromax Bhagwati business model.
It should evaluate the e-commerce infrastructure, technology infrastructure etc before entering a new market.
- Transparency & Digital Drive – Micromax Bhagwati can use digitalization of various processes to overcome corruption in
the local economy.

- Preparedness for 5G Related Infrastructure – Countries across the world are trying to prepare themselves to install 5G
infrastructure. Micromax Bhagwati should assess to what level the local market is prepared to roll out the 5G connectivity.

What are Environmental Factors in PESTEL / PEST Analysis

Environmental factors are fast gaining traction not only among consumers but also among regulators and policy makers.
Climate change and changing ecosystem is leading to the extinction of more than 20% of species on the planet by the turn of
this century.

Environmental Factors that Impact Bhagwati Products Limited - Making in India for Micromax
- Influence and Effectiveness of Environmental Agencies – The role of environment standards enforcement agencies is
critical in safeguarding norms. But often in emerging countries these agencies delay the process as a tactic to extract bribes.
Micromax Bhagwati should be aware of presence of such practices in a country.

- Per Capita and National Carbon Emission – What is the per capita carbon emission of the country and what is the overall
level of carbon emissions of the country. This will help in better predicting the environment policy of the country.

- Influence of Climate Change – How climate change will impact Micromax Bhagwati business model and supply chain. For
example if the supply chain is not flexible it can lead to bottlenecks if shipments from one part of the world are delayed
because of sudden climate shift.

- Waste Management – What is the policy of waste management in the prospective market and how Micromax Bhagwati can
adhere to the waste management requirements in that market.

- Focus & Spending on Renewable Technologies – How much of the budget is spend on renewable energy sources and how
Micromax Bhagwati can make this investment as part of its competitive strategy.

- Environmental Standards and Regulations both at National & Local Levels – Often the environment policy at national and
local level can be different. This can help Micromax Bhagwati in numerous decisions such as plant location, product
development, and pricing strategy.

- Corporate Social Responsibilities Culture – Are Micromax Bhagwati present CSR efforts applicable in the new market or
does it needs to have new initiative to cater to the prospective market.

What are Legal Factors in PESTEL / PEST Analysis

Legal factors often govern – conditions to enter the market, laws to operate in the market, and procedure to resolve any
dispute with other stakeholders. If the legal system is not strong then Micromax Bhagwati can face numerous challenges –
from consumer petitions to shakedowns from authorities.

Legal Factors that Impact Bhagwati Products Limited - Making in India for Micromax
- Time Taken for Court Proceedings – Even if the country has best of the laws, it doesn’t mean much if they can’t be
enforced in a timely manner. Micromax Bhagwati should do a primary research regarding how much time it often takes to
conclude a court case in the country given the sort of legal challenges Micromax Bhagwati can face.

- Health & Safety Laws – What are the health and safety laws in the country and what Micromax Bhagwati needs to do to
comply with them. Different countries have different attitude towards health and safety so it is better for Micromax
Bhagwati to conduct a thorough research before entering the market.

- Securities Law – What are the securities law in the country and what are the conditions to list the company on national or
regional stock exchange.

- Adherence to Common Law – Is the country following common law which is uniform for all parties – whether domestic or
international. If there is arbitrariness in the judicial process then Micromax Bhagwati can’t be sure of the judgments.

- Intellectual Property Rights Protection – Micromax Bhagwati should assess the level of protection that intellectual property
rights get under the legal system of the country.
- Employment Laws – What are the employment laws in the country and are they consistent with the business model of
Micromax Bhagwati. For example Uber employment system is not consistent with French laws and it is facing challenges in
the country.

- Data Protection Laws – Micromax Bhagwati needs to assess what are the data laws in the country and what it needs to do
to comply with them. For example most of EU countries now want the EU citizen data to be saved in EU countries only.

Porter Five Forces that Determine Industry Structure

Porter Five Forces model is heavily borrowed from the traditional field of micro economics. The five forces that determine
the industry structure of organization in casename case study are -

1. Threat of new entrants - if there is strong threat of new entrants then current players will be willing to earn less profits to
reduce the threats.

2. Threat of substitute products and services - If the threat of substitute is high then Micromax Bhagwati has to either
continuously invest into R&D or it risks losing out to disruptors in the industry.

3. Bargaining power of buyers of Micromax Bhagwati – If the buyers have strong bargaining power then they usually
tend to drive price down thus limiting the potential of the Micromax Bhagwati to earn sustainable profits.

4. Rivalry among existing players – If competition is intense then it becomes difficult for existing players such as
Micromax Bhagwati to earn sustainable profits.

5. Bargaining power of suppliers of Micromax Bhagwati - If suppliers have strong bargaining power then they will
extract higher price from the Micromax Bhagwati.

Why Porter's five forces analysis is important for casestudyname?

You can use Porter Five Forces model to analyze the competitiveness faced by protagonist in casestudy. Porter five forces
analysis of casename case study will help you in understanding and providing solution to – nature & level of competition,
and how Micromax Bhagwati can cope with competition.

Even though from outside various industries seem extremely different but analyzed closely these five forces determines the
drivers of profitability in each industry. You can use Porter Five Forces to understand key drivers of profitability of
Micromax Bhagwati in casename case study.

Porter’s 5 Forces, Competitive Forces & Industry Analysis

The core objective of strategists and leaders in an organization is to help the organization to build a sustainable competitive
advantage and thwart competitive challenges.

Step 1 – Defining relevant industry for Micromax Bhagwati in casestudy

Step 2 – Identify the competitors and group them based on the segments within the industry
Step 3- Assess the Porter Five Forces in relation to the industry and assess which forces are strong and which forces are
weak.
Step 4 - Determine overall industry structure and test analysis of consistency
Step 5 – Analyze recent and future changes in each forces
Step 6 – Identify aspects of industry structure based on Porter 5 Forces that might be influenced by competitors and new
entrants.

How is Porter's five forces framework used in developing strategies?

To achieve above average profits compare to other industry players in the long run, Micromax Bhagwati needs to develop a
sustainable competitive advantage. Industry analysis using Porter Five Forces can help Micromax Bhagwati in casename
case study to map the various forces and identify spaces where Micromax Bhagwati can position itself.
By doing Industry analysis using Porter Five Forces, Bhagwati Products Limited - Making in India for Micromax can
develop four generic competitive strategies.

The four generic competitive strategies that can be pursued in casename case study are -
Cost Leadership
In cost leadership, Bhagwati Products Limited - Making in India for Micromax can set out to become the low cost producer
in its industry. How it can become cost leader varies based on the industry forces and structure. In pursuing cost leadership
strategy, Micromax Bhagwati can assess – (pursuit of economies of scale, proprietary technology, supply chain management
options, diversification of suppliers, preferential access to raw materials) and other factors.  
Differentiation
Micromax Bhagwati can also pursue differentiation strategy based on the industry forces description in casename case study.
In a differentiation strategy Micromax Bhagwati can seek to be unique in its industry by providing a value proposition that is
cherished by buyers. Micromax Bhagwati can select one or more attributes that  can uniquely position it in the eyes of the
customers for a specific needs. The goal is to seek premium price because of differentiation and uniqueness of the offering.
Industry analysis using Porter Five Forces can help Micromax Bhagwati to avoid spaces that are already over populated by
the competitors.

Focus - Cost Focus & Differentiation Focus

The generic strategy of Focus rests on the choice of competitive scope within an industry. Micromax Bhagwati can select a
segment or group of segment and tailor its strategy to only serve it.  Most organization follows one variant of focus strategy
in real world.

The Focus Strategy has two variants.

(a) In cost focus a Bhagwati Products Limited - Making in India for Micromax can seek a cost advantage in its choses
segment in casecategory.
(b) In Differentiation strategy Bhagwati Products Limited - Making in India for Micromax can differentiate itself in a target
segment in its industry.

Both variants of the focus strategy rest on differences between a Bhagwati Products Limited - Making in India for Micromax
’s target segment and other segments in the industry.

VRIO Analysis of Bhagwati Products Limited - Making in India for Micromax

VRIO analysis of Micromax Bhagwati is a resource oriented analysis using the details provided in the Bhagwati Products
Limited - Making in India for Micromax case study. Resource-based strategic analysis is based on the assumption that
strategic resources can provide Micromax Bhagwati an opportunity to build a sustainable competitive advantage over its
rivals in the industry. This sustainable competitive advantage can help Micromax Bhagwati to enjoy above average profits in
the industry and thwart competitive pressures.

***It is a broad analysis and not all factors are relevant to the company specific. For greater details connect with us.

Resources Value Rare Imitation Organization Competitive Advantage

Talent to Manage Yes No Can be imitated by Yes Not critical factor
Regulatory and Legal competitors
Obligations
Ability to Attract Talent Yes, Micromax Bhagwati Yes, as talent is Difficult to imitate To a large extent yes Providing Strong
in Various Local & strategy is built on critical to firm's Competitive Advantage
Global Markets successful innovation and growth
localization of products
Customer Network and Yes, 23% of the Yes, firm has Has been tried by Company is Provide medium term
Loyalty customers contribute to invested to build a competitors but none
leveraging the competitive advantage
more than 84% of the strong customer of them are as customer loyalty to
sales revenue loyalty successful good effect
Opportunities in the Can be valuable as they No Can be imitated byAll the capabilities Has potential
Adjacent Industries & will create new revenue competitors of the organization
New Resources Required streams are not fully utilized
to Enter those Industries yet
Vision of the Leadership Yes No Can't be imitated by Not based on Can Lead to Strong
for Next Set of competitors information Competitive Advantage
Challenges provided in the case
Sales Force and Channel Yes No Can be imitated by Still there is lot of Can provide sustainable
Management competitors potential to utilize competitive advantage.
the excellent sales Potential is certainly
force there.
Marketing Expertise Yes, firms are competing No, as most of the Pricing strategies are Yes, firm is Temporary Competitive
within the Micromax based on differentiation competitors also often matched by leveraging its Advantage
Bhagwati in the industry have decent competitors inhouse expertise
marketing know
how
Opportunities in the E- Yes, the e-commerce No, most of the The AI and inhouse It is just the start for In the long run it can
Commerce Space using space is rapidly growing competitors are analytics can be the organization provide sustainable
Present IT Capabilities and firm can leverage the investing in IT to difficult to imitate competitive advantage
 Resources Value Rare Imitation Organization Competitive Advantage
opportunities enter the space
Financial Resources Yes No Financial instruments Company has Temporary Competitive
and market liquidity sustainable financial Advantage
are available to all position
the nearest
competitors
Successful Yes, without a No, as most of the Can be imitated by One of the leading Digital strategy has
Implementation of Digital comprehensive digital firms are investing competitors player in the become critical in the
Strategy strategy it is extremely into digitalizing industry industry but it can't
difficult to compete operations provide sustainable
competitive advantage
Explainer

What is a Resource in VRIO? Classification of Resources for VRIO Analysis.

Resources of an organization can be categorized into two categories - Tangible resources and Intangible Resources. Tangible
resources of Micromax Bhagwati include - physical entities, such as land, buildings, plant, equipment, inventory, and
money. Intangible resources of Micromax Bhagwati are –skill and administrative level of managers, brand names and
goodwill of the company, intellectual property rights, copyrights, trademarks, and special relationship with supply chain
partners.

The four components of VRIO used in Bhagwati Products Limited - Making in India for Micromax analysis are –
Valuable – Is the resource valuable to Micromax Bhagwati. According to Sunita Mehta, Surya Kant Sharma, Arun Pereira of
the case study following are the critical resources that are valuable to the firm - financial resources, human resources,
marketing expertise, and operations management.

Rare – "Micromax Bhagwati" needs to ask is whether the resources that are valuable to the Micromax Bhagwati are rare or
costly to attain. If they are not rare than both present competitors and new entrants will easily able to get access to them and
enter the competitive landscape.

Costly to Imitate – At present most industries are facing increasing threats of disruption. According to the data provided in
Bhagwati Products Limited - Making in India for Micromax – it seems that the core differentiation of the Micromax
Bhagwati is difficult to imitate. On a broader scale – imitation of products of Micromax Bhagwati can happen in two ways –
Duplication of the products of the company, and competitors coming up with substitute products that disrupt the present
industry structure.

Organizational Competence & Capabilities to Make Most of the Resources – It measures how much the company has able to
harness the valuable, rare and difficult to imitate resource in the market place. The exploitation level analysis for Micromax
Bhagwati products can be done from two perspectives. Is the firm able to fully exploit the potential of the resource, or it still
has lots of upside.
Often the exploitation level is highly dependent upon execution team and execution strategy of the firm. So exploitation
level is a good barometer to assess the quality of human resources in the organization. Capabilities tend to arise or expand
over time as a firm takes actions that build on its strategic resources.

What is 5C Analysis of Bhagwati Products Limited - Making in India for Micromax – Definition & Explanation
5C Analysis is a marketing tool to do a situational analysis in which Micromax Bhagwati operates in. It inculcates both the
macro and micro environment factors that impacts Micromax Bhagwati. The 5C analysis allows marketing managers to put
probabilities to different types of risk exposure Micromax Bhagwati is facing in the marketplace and design marketing
strategies accordingly.

Marketing strategy is about making marketing decisions in the face of macro environment uncertainty, competitive pressures
& strategies, and other economic factors.

What are the Five C’s of the Marketing? How to Conduct a 5C Marketing Analysis of Bhagwati Products Limited -
Making in India for Micromax Case Study
The 5Cs of Marketing Analysis are -
1 - Company,
2 - Customers,
3 - Competitors,
4 - Collaborators, and
5 - Context.
Micromax Bhagwati faces 4 major types of risk exposures – risk corresponding to technological innovations, demand risks,
production or delivery risks, and international risks.
Company Analysis - 5C of Marketing
Key Question Answered – What are the strengths and weaknesses of the company and how marketing can improve
the effectiveness of its core strength and alleviate the impact of its weaknesses.

Marketing managers at Micromax Bhagwati needs to analyze the internal strengths and weaknesses of the company before
making marketing decisions. Each organization has different marketing budget, different skill sets to execute marketing
strategies and promotional campaigns. The company analysis will help the Micromax Bhagwati to optimize the use of the
marketing resources. In terms of the four risks mentioned above –Marketing managers at Micromax Bhagwati needs to focus
on risks corresponding to production and delivery risks. If the company fails to match the consumer expectations then no
amount of smart marketing can build a sustainable competitive advantage.

Company Factors
Quality of human resources to create and manage effective campaigns – Micromax Bhagwati attracts some of the best talent
in its industry and the skill level of Micromax Bhagwati existing workforce is very high. Micromax Bhagwati has strong
marketing department which helps it to design effective and successful marketing campaigns.

Ability to scale production – Micromax Bhagwati has a robust and flexible supply chain so it can meet the challenges of
managing success arising from highly successful marketing efforts that lead to surge in consumer demands for its products.

Financial position and availability of resources for marketing – The financial position of Micromax Bhagwati is strong and it
can afford to spend significant amount of resources on marketing for – launching new products and to better position
existing brands.

Brand Equity – Micromax Bhagwati has strong brand equity both among the existing customers and potential customers. It
can leverage this brand equity to expand into new segments.

Customers - 5C Marketing Analysis

Key question answered - How Micromax Bhagwati can identify attractive market segments and choose a market
targeting strategy.

Marketing strategy of Micromax Bhagwati needs to meet two broad objectives – carefully selecting target market and
designing marketing activities to achieve desired positioning in hearts and minds of the target market. Customer analysis by
marketing managers of Micromax Bhagwati can include – growth rate of the industry, potential market size of both the
overall market and target segment, tangible and intangible product features desired by consumers in the industry, core
purpose of buying the products, frequency of purchase, recent purchases, industry trends, income levels etc.

Based on our 4 broad risk framework for 5C analysis – marketing managers should focus on demand risk and technology
risk in customer analysis section.

Customers Factors
Who the target customer is – Should Micromax Bhagwati go for a broader segment or position its product in niche segment.
My suggestion is that it should focus on the niche segment as it is highly profitable.

How to grow share of customers purchase basket – The decision marketing department at Micromax Bhagwati needs to take
– How it can grow the customer purchase basket share with Micromax Bhagwati products.

What are the features most desired by consumers – Marketing managers at Micromax Bhagwati needs to decide which are
the features most desired by consumers and how Micromax Bhagwati can position itself to deliver those 2-3 critical features.

What type of product Micromax Bhagwati is selling – High involvement product or low involvement product require
different marketing strategies. High involvement products often have higher brand loyalty and less price sensitivity compare
to low involvement products where industry players often compete on prices.

What is the Customer Life Time value – Rather than focusing marketing efforts around single purchase, Micromax Bhagwati
should develop marketing strategy that can maximize customer life time value.

Competitors - 5C Marketing Analysis

Key Question Answered – Who the competitors are, what their marketing strategy is, and how Micromax Bhagwati
can design its marketing strategy in view of competitive pressures and limited marketing resources.

The core function of marketing strategists and marketing managers is to design marketing activities that can help Micromax
Bhagwati to thwart competitive pressures from established players as well as potential entrants. Marketing managers of
Micromax Bhagwati has to make decisions regarding –

Where to position the brands respective to Micromax Bhagwati own brands portfolio and competing brands
What are the marketing strategies of competitors.
Should Micromax Bhagwati competes directly with the competitors or find niche positions within the segments.
What type of competition there is in the industry that Micromax Bhagwati operates in.

Based on our four risks exposure framework – In competitors analysis marketing managers of Micromax Bhagwati should
closely analyse – demand risks and technology innovation risks.

Competitors Factors
Intensity of rivalry among existing players – if the intensity is high then the profitability is usually low in any industry. Thus
it requires Micromax Bhagwati to spend higher resources on marketing efforts.

Threats of substitutes to Micromax Bhagwati – The threats of substitutes often arise either from economic cycle or
technological innovation. It may require repositioning of certain brands on part of Micromax Bhagwati in certain markets.

Product Line Depth Decisions for Micromax Bhagwati – Depth involves targeting different segments within the same
product range. Higher the depth, the more the company needs to spend on individual brands without putting too much focus
on the parent company.

Product Line Breath Decisions – This not only pertains to Micromax Bhagwati product strategy but also its distribution and
supply chain management strategy. Broader line requires more positioning strategies and higher marketing spending.

Positioning strategy vis a vis competitors – The critical marketing decisions for managers at Micromax Bhagwati is what
strategic position to choose which at same time is – different from competitors and relevant to the customers.

What will drive future growth and how competitors will try to take share of that future growth – technology innovations can
result in making present positioning less profitable so Micromax Bhagwati needs to continuously innovate and look for new
opportunities.

Countering Marketing Campaigns of Competitors – Often one competitor campaign has to be matched with a counter
campaign to stop the product trial of the competitor’s product by the firm loyal customers. It has to be done to control the
churn of customers.

Threats of new entrants to profits of Micromax Bhagwati – Marketing efforts are often barriers to entry in the industry and
new entrants not only have to have huge marketing resources to compete with the incumbents but also need high level of
marketing know-how.

Collaborators - 5C Marketing Analysis

Key Question Answered – How flexible & robust Micromax Bhagwati supply chain is and how much bargaining
power the collaborators in the value chain have.

Collaborators include the supply chain partners both upstream and downstream of the value chain. For doing Collaborators
analysis Micromax Bhagwati needs to critically evaluate the supply chain based on numerous factors such as – bargaining
power, what suppliers bring to table, flexibility & agility of supply chain, revenue sharing at each step of the value chain.

Based on risk exposure parameters under the collaborators analysis Micromax Bhagwati marketing managers should focus
on risk exposure to international risks (because Micromax Bhagwati has international operations), and production and
delivery risks. For example if the collaborators effectively able to meet the demand increased by effective advertising of
Micromax Bhagwati marketing department then it will go a long way in enabling the company to thwart new competition
and devise premium pricing strategy.

Collaborators Factors
Number of suppliers and abilities of the suppliers – If there are too many suppliers then it will become expensive for
Micromax Bhagwati to manage them but if the number of suppliers is too few then it will expose the company to supply
chain disruption risks.

Risks to intellectual property rights and patents – Operating in international markets can expose Micromax Bhagwati to theft
of Patents, Copyrights and other Intellectual Property Rights. Any marketing and diversification decision should be taken
after evaluating these risks.
Position and bargaining power in the value chain – If the collaborators have strong bargaining power then Micromax
Bhagwati will not able to sustain higher margins even with higher marketing expenditure.

Flexibility of supply chain and international risks – In international markets the critical question in front of Micromax
Bhagwati is how much localize based on local preferences. Rest of the decisions from production to marketing is based on
this critical decision. Opportunities to localize the production and other processes to reduce risk of organization wide supply
chain risk in international market.

Managing delivery and services in times of uncertainty – Most global organizations such as Micromax Bhagwati are
diversifying rapidly to reduce delivery and supply chain risks. Micromax Bhagwati should also focus on it.

Context - 5C Marketing Analysis

Key Question Answered – Which are the macro-economic factors that will significantly impact both the business
model and the marketing strategy.

Context Analysis encompass the diligent analysis of macro environment factors such as – political and social environment,
regulatory environment, economic conditions in the markets that the Micromax Bhagwati operates in, rate of technology
innovations in the industry, legal environment, environmental standards in the industry etc.
Two main forms of risk exposure in the context analysis are – International risks, and technology & innovation risks
exposure.

Context Factors
Foreign Exchange Exposure – International operations not only bring risks of marketing strategies that are not relevant to
specific market but also risk of foreign exchange exposure. In last 10 years most US organizations have lost money because
of FX exposure in countries such as Venezuela, Argentina, Turkey, Russia & Indonesia.

Economic – The consumer behaviour during boom time and recession time is often totally different so marketing managers
at Micromax Bhagwati has to decide how the consumers will behave in the present economic situation.

Regulatory Framework – It not only impacts the type of the advertising and marketing campaign a company can run but also
the type of products Micromax Bhagwati can sell. For example the standards & regulations for Micromax Bhagwati products
in US and European Union are vastly different.

Political Risks to Micromax Bhagwati – Geo-political risk have increased over the last three to four years with developments
such as US-China trade situation, Brexit, and rise of yellow vests in France.

Employment – Given the employment crisis in Western Europe and emergence of Gig economy and employment in US and
all the major western economies – employment has become a critical factor in designing marketing strategy. Employment
not only impacts the purchasing power of the customer but also impacts the self-esteem and brands she can associate with.

Inflation & Diversification – Inflation impacts the pricing strategy of Micromax Bhagwati as high inflation can result in
lower income from the present sales.

What are the 4P’s of Marketing Mix

The 4Ps of Marketing Mix are -

1. Product – The products Micromax Bhagwati is making or are in the pipeline to capture potential markets.
2. Price – Pricing strategy that Micromax Bhagwati is pursuing in various customer segments it is operating in.
3. Place (Channels of Distribution ) – Distribution mix of Micromax Bhagwati has taken a new dimension with the
emergence of Online Retailing & domination of players such as Amazon.
4. Promotion (Communication Strategy of Micromax Bhagwati) – The emergence of social media and online advertising has
changed the landscape of Micromax Bhagwati communication mix and communication strategy.

Products – 4Ps in Bhagwati Products Limited - Making in India for Micromax Case
In marketing strategy, product is not viewed as a tangible product, but the source of value to be delivered to the customers.
Value to the customers of Micromax Bhagwati can be delivered in numerous ways such as – quality assuring brand name,
point of sale equity, financing plans to purchase the products, word of mouth references, physical product , installation and
repair services, convenience of availability, pricing and pre purchase education provided by sales staff etc.

These numerous ways to understand product concept provide marketing managers of Micromax Bhagwati an opportunity to
differentiate its overall value proposition from that of the competitors.
4 Stages of Product Management as part of Marketing Process
Identification of Opportunity – Market research and customer research is done to identify the needs of the customers that
Micromax Bhagwati can cater to with its present and acquired resources.

Design and Testing – Product is designed based on the value proposition that customers are seeking and one that Micromax
Bhagwati can deliver. The key consideration regarding product design and testing are – customer value proposition,
regulatory requirements, Micromax Bhagwati skills and resources, opportunities for differentiated positioning, and
profitability.

Micromax Bhagwati Product Launch – It includes decision regarding pricing, communication strategy, distribution channel
management, and building infrastructure to provide post purchase services.

Product Life Cycle Management of Micromax Bhagwati products – Once the product is launched the company needs to
manage the life cycle of the product through its various stages such as – introduction, growth phase, cash cow stage, and
finally decline stage.

Product Line Planning Decision

There are three major product line planning decisions that Micromax Bhagwati can take – Product Line Breadth
decision, Product Line Length decision, and Product Line Depth decisions. Some of the considerations that marketing
managers at companyname need to take while making product line decisions are –

1. Does the product launch or product extension launch satisfy potential customer needs and wants in a way that can deliver
profits to the firm.

2. How the new product brand launch will impact the overall brand equity of the Micromax Bhagwati present brands and
products. For example often launching a no frill product may end up impacting the image of the company as an innovator in
the field. This is one of the reason why Apple stopped selling its plastic phones as it negatively impacted the image of the
company as a deliverer of superior hardware products.

3. Will the product will be viewed completely different from the existing products of the firm and how much is the risk of
cannibalization of the present brands by a new brand.

Product Line Breadth Decision for Micromax Bhagwati

As the position of Micromax Bhagwati in its industry well established it can expand to the adjacent segments where the
customers are using complimentary products from other brands to get the maximum value out of the products.

Product Line Length of Micromax Bhagwati

The decision regarding product line has to be balanced between complexity of the present products and service required, and
available niche space available in the market place. From my perspective at present Micromax Bhagwati should stick with
the present merchandise mix rather than launching new products to expand the product line.

Product Line Depth of Micromax Bhagwati

These are decisions regarding how many different Stock Keeping Units (SKU) of a given product. For example Apple has its
iPhone in various colours even though the hardware and software is the same.

Product - Broad Recommendations

1. Micromax Bhagwati can introduce a new brand in the existing product line or it can strive to establish a whole new
product line.

2. Micromax Bhagwati can think of ways - how features and value can be added to existing brands that help them in
consolidating and increasing their market position.

3. Micromax Bhagwati can stop selling the products that are either not profitable or not creating enough differentiation from
the existing products.

4. Micromax Bhagwati can try to reposition the products from the existing brands within one line.

Pricing – 4Ps of Marketing Bhagwati Products Limited - Making in India for Micromax
Pricing is a highly complex activity and we will cover only a very limited aspect of what goes into pricing decisions. To a
large extend pricing depends upon the other 3Ps of marketing – product, place and promotion. Conceptually perceived value
is the maximum price a customer is willing to pay for Micromax Bhagwati product in the given competitive context.
Cost Base Pricing
Under cost based pricing strategy – Micromax Bhagwati can work out what it takes to produce the product and put a markup
based on profit it wants earn. In a highly competitive strategy with dynamic pricing the strategy may not be feasible. For
example Uber running losses in billions can provide lower prices and sustain compare to individual taxi service provider
who is not backed by private equity and long term strategy.

Value Base Pricing

Value Base Pricing is a pricing strategy which is based on customer perception of value. It inculcates put the number on both
tangible and intangible benefits with a clear understanding of elasticity of demand and competitive pressures.

Market Penetration Pricing

Micromax Bhagwati can employ this pricing strategy where it launch a new product either at loss or at very low margin to
get a foothold in the segment.

Market Skimming Pricing

For certain well established brands, Micromax Bhagwati can increase the prices as customers can pay higher price.

Good Value Pricing

Offering right mix of product features, quality, and service combination at fair price. For example offering a limited frill
option - customers can have initial product experience at an accessible price. GoPro use this strategy extensively.

Competition Based Pricing

The pricing strategy is based on the competition in the market. Under this strategy Micromax Bhagwati focus is to match the
prices of the competitors and focus on reducing the cost of operations to increase profitability.

Pricing Recommendation
Based on the evidences at hand – we can choose the following pricing strategy
High Brand Awareness – The brand of Micromax Bhagwati is well respected in the market so it can fetch a slight premium
over the other competitive brands.
Innovative Product – With advanced features the product is perceived as innovative in the current market context. A slight
premium price will not only emphasize the features of the products but also stops other players entering into the present
segment. A high premium price may attract new entrants and thus lower the profitability.

Place – Distribution Channels - 4Ps in Bhagwati Products Limited - Making in India for Micromax Case
Place or Distribution Channel is a set of processes through which Micromax Bhagwati delivers its products to the customers.
Distribution & Marketing channels fulfill various purposes such as – after sales services and installation services, providing
customers information about the products , reducing purchase lot size thus enabling opportunities for individual customers to
buy products, easy availability of the products to end consumers , providing product quality assurance, providing extensive
product assortment using product line – breadth, length, and depth, enabling product customization options at the point of
sales,and logistics.

Designing Channels of Distribution for Micromax Bhagwati

There are two major Channel of Distribution related decision criteria –

1. Channel Design
Micromax Bhagwati needs to choose whether it wants to implement a distribution system which is – Direct, Indirect, or
Both. The channel design decision involves - understanding of customer value proposition, current customer convenience
points, length breadth and depth of Micromax Bhagwati product line, and competitors’ distribution systems.

Direct Distribution System – Micromax Bhagwati putting its own direct distribution channel and reach directly to the
customers. It can be through opening its own stores or just selling all the products online.
Indirect Distribution System – Micromax Bhagwati including channel partners such as wholesalers, retailers, logistics
companies, and distribution agents.
Hybrid Distribution System – Micromax Bhagwati should implement a hybrid model where the critical aspect of
distribution system are managed by Micromax Bhagwati, and secondary functions such as logistics, warehousing, store
management etc are delegated to various channel partners.

2. Channel Management
Channel management is about managing various power centers within the delivery system and managing them based on
bargaining power of each player in the value chain. The channel management from marketing perspective can be done
considering three critical aspects –
Customer Willingness to Search & Travel to Purchase Good – If the customer willingness is high then company has a strong
brand awareness and brand loyalty. Micromax Bhagwati can design favorable channel policies vis a vis channel partners.

Market Development Requirement – One of the most prominent functions of channel is market development. If Micromax
Bhagwati needs higher market development efforts then it is sensible to include channel partners who have know how and
skills to expand into new markets.

Per Unit Cost of Stocking – If the cost is high then Micromax Bhagwati needs channel partners which can pool in resources.
Otherwise Micromax Bhagwati can do the operations on its own.

Promotion - Marketing Communication

Promotion Mix or Integrated Marketing Communication strategy is a mix of various promotion tools that are at disposal of
Micromax Bhagwati. They are – Advertising, Sales Promotion, Personal Selling, Public Relations, and Direct
Marketing.
Micromax Bhagwati can use all these five communication tools to persuasively communicate to customer – existence of the
product, price of the product, differentiating features of the product, places where people can buy the products, and finally
how consumers can effectively use the products or services.

What is Blue Ocean Strategy and how it is relevant to "Bhagwati Products Limited - Making in India for Micromax"
case study?
It is called Blue Ocean Strategy (BOS) because it provides managers a toolbox to create, identify uncontested market space
instead of competing in the prevalent market with cut throat competition and decreasing margins.  BOS makes competitors
irrelevant & creates new consumer value propositions.
What is the cornerstone of Blue Ocean Strategy?
The cornerstone of Blue Ocean Strategy is - "Value Innovation". Value Innovation puts equal emphasis on both Value
and Innovation. Micromax Bhagwati needs to not only redefine the value proposition it is providing to existing customers
(clients) but also needs to create new value proposition for target segments (customers) that at present are not Micromax
Bhagwati's clients. Value innovation can open up new uncontested market space for Micromax Bhagwati.

Four Critical Factors that Managers at Micromax Bhagwati can use for Value Innovation are -
Buyer Utility - It underlines the core values, features or utility Micromax Bhagwati's products or services deliver to the
buyer. The benefits can be both perceived and real.

Price - In traditional scenarios competitors compete in the Strategy & Execution following traditional approach of pricing -
‘Offer customer more for less’. This can provide serious challenge to company’s bottom-line (profitability).

Cost - Managers at Micromax Bhagwati can use value innovation to overcome limitations suggested by Michael Porter
(management guru, strategy guru) in his value cost trade-off as part of competition based strategy. Using Blue Ocean
strategy Micromax Bhagwati managers can pursue both differentiation and low cost simultaneously.

Adoption - When innovation is pursued in isolation of the value then it can lead to very low level of adoption no matter how
significant technological breakthrough is.

Red Ocean Vs Blue Ocean Strategy

What is the difference between Blue Ocean Strategy and Red Ocean Strategy? How can Micromax Bhagwati break
out of the red ocean of bloody competition?
In the present business environment , Red Ocean is often defined as a competitive environment where industry boundaries
are clearly defined, and existing and new players are trying to out-perform each other using Value-Cost Trade Off. This
leads to cut-throat competition and race to the bottom, resulting in lower profitability and higher cost structure as component
of total price.

Factors that are leading to Red Ocean of bloody competition -

Consumer behaviour in the Strategy & Execution is also fast evolving because of -market transparency, technological
innovations greater access to information, and promotional incentives by competitors)

Accelerated technological innovations and advances are improving industrial productivity, allowing suppliers to create vast
array of products and services. Various product categories in Strategy & Execution are becoming more similar, leaving
organizations to compete only through pricing strategy. Niche markets and local monopolies that company’s like Micromax
Bhagwati able to exploit are fast disappearing. The organizations in Strategy & Execution industry are required to
continuously come up with new solutions. Globalization has also opened doors to suppliers from China, India, Malaysia,
Brazil, Indonesia, Turkey, and other emerging economies to compete in the high cost market such as United States &
European Union. Increasing commoditization of the products and services have also put pressure on companies such as
Micromax Bhagwati.
Breaking out of Red Ocean of Bloody Competition
Examples of how Blue Ocean Strategy can be used for Micromax Bhagwati case study
Micromax Bhagwati can use following Blue Ocean Strategy (BOS) tools and techniques to overcome the red ocean of cut
throat competition in Strategy & Execution industry.

What is Eliminate-Reduce-Raise-Create Grid?

Eliminate-Reduce-Raise-Create
Mapping Micromax Bhagwati on Blue Ocean Strategy Canvas Grid

Eliminate Raise
Which are the factors that Micromax Bhagwati can eliminate that Which factors need to be improved well above the industry standards to
players in the industry has long competed on? provide enhanced value to the customers?

Reduce Create
Which factors Micromax Bhagwati can reduce well below the Which factors needs to be created by the Micromax Bhagwati that had
industry level to structure costs? never been offered by competitors in the industry
Six Path Framework for Micromax Bhagwati

Red Ocean Competition Blue Ocean Creation

Industry Focuses on rivals within Strategy & Execution Exploring opportunities & spot threats across
industry alternative industries
Strategic Group Focuses on competitive position within strategic Looks across strategic groups within Strategy &
group Execution industry
Buyer Group / Target Segments Focuses on better serving the buyer group Redefines the industry buyer group. It involves
redefining the consumer segments.
Value proposition offered by Core objective is to maximize the value of product Looks across to complementary product and service
Micromax Bhagwati's products and service offerings within the established context. offerings
and services
Functional-emotional Strive to improve the price performance within the Rethinks or repurpose the functional-emotional
Orientation functional-emotional orientation under prevailing orientation of the Strategy & Execution industry
norms.
Time Spend energy & resources on adapting to external Actively strive to shape external trends over time
trends.

Strategy Alignment
Micromax Bhagwati BOS should have three complementary qualities -- a compelling tagline, focus, and divergence .

The four actions of Micromax Bhagwati strategy canvas should be guided toward enforcing these critical qualities. Without
these critical qualities, Micromax Bhagwati strategy is most likely to be muddled, undifferentiated, and hard to communicate
with a relatively high cost structure.

The four actions of creating a new value curve should be well guided toward building a company’s strategic profile with
these characteristics. These three characteristics serve as an initial litmus test of the commercial viability of blue ocean ideas

Micromax Bhagwati Needs to Avoid these Six Red Ocean Strategy Traps
Trap 1 - Equating Market-Creating Strategies with Low-Cost Strategies

Trap 2 - Treating Market-Creating Strategies as Niche Strategies

Trap 3 - Making Existing Customers Happier

Trap 4 - Equating Creative Destruction with Market Creation

Trap 5 - Equating Market-Creating Strategies with Differentiation

Trap 6 - Confusing Technology Innovation with Market-Creating Strategies