Analysis of

Videocon’s Operations
(Consumer Durable Industry)

By
Joyner Gwendolyn Rodrigues.
Student Id – 3769537
 Analysis Of Videocon‟s Operations

UNIVERSITY OF WOLLONGONG in DUBAI

College of Business

Project report

Title: Analysis Of Videocon’s Operations.

(Consumer Durables Industry)

in partial fulfilment of requirement of the subject:

TBS984 – Strategic International Business

for the Master in International Business Program

Summer One 2010

By

Ms. Joyner Gwendolyn Rodrigues

Student ID: 3769537

Submitted to: Dr. Arijit Sikdar

Date: 30th June 2010

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 Analysis Of Videocon‟s Operations

EXECUTIVE SUMMARY
Videocon Industries Ltd is one amongst, India‟s major business conglomerates. The
corporation operates in four key sectors, namely – Consumer Electronics and Home
Appliances, Display Industry and its component, Colour Picture Tube Glass and lastly Oil
and Gas. (Company Profile - Videocon, 2009)

This report shall analysing the Consumer Electronics and Home Appliance sector of
Videocon Industries Ltd i.e. Videocon‟s Consumer Durable Operations.

In the second part of the report circles around the international business environment
of the Consumer Durable Industry, in terms of the products available, the market
segmentation and demand, and the structure of the industry‟s value chain.

The third part of the report will emphasise on the operations of Videocon Industries
Ltd, in terms of the strategies followed by the company, the structure of the company‟s value
chain and how the company has developed and evolved over the last couple of years.

The last part of the report i.e. the fourth part will state how the Global Consumer
Durable Industry is changing and the future trend the industry will face. Based on the altering
scenario of the industry, conclusions and recommendations have been made for Videocon
Industries Ltd – Consumer Electronics and Home Appliances sector, so that the company can
have a completive advantage.

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TABLE OF CONTENTS

I. GLOBAL CONSUMER DURABLES INDUSTRY – CONSUMER

ELECTRONICS AND HOME APPLIANCES ............................................5
A. Products and Market .................................................................................... 5
a) Consumer Electronics ............................................................................................................. 5
b) Home Appliances .................................................................................................................... 5
c) Market ..................................................................................................................................... 6

B. Integration and Responsiveness in the Industry .......................................... 6

C. Value Chain ................................................................................................. 7

II. VIDEOCON INDUSTRIES LTD ..........................................................9

A. Company Snapshot ...................................................................................... 9
B. Experience Change .................................................................................... 10
C. Operations .................................................................................................. 11
a) India ...................................................................................................................................... 13
b) Mexico .................................................................................................................................. 14
c) Italy ....................................................................................................................................... 15

III. THE FUTURE STRATEGY .........................................................17

A. Consumer Durable Industry – Consumer Electronics and Home
Appliances ................................................................................................. 17
B. Videocon Industries Ltd ............................................................................ 18

IV.REFERENCES .................................................................................19

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I. GLOBAL CONSUMER DURABLES INDUSTRY – CONSUMER

ELECTRONICS AND HOME APPLIANCES
Any manufactured goods purchased by consumers for long-standing and lasting use
are classified as Consumer Durables. They are merchandises which are planned to undergo
regular usage for a number of years or longer before substitution are required. (WiseGEEK,
2010) From Cars to Communication Devices, Furniture to Refrigerators can be classified
under Consumer Durables.

The Consumer Durables Industry can be three main categories specifically

 White Good - Refrigerators, Washing Machines, Air Conditioners, Speakers

and Audio Equipments
 Brown Goods - Mixers, Grinders, Microwave Ovens, Iron, Electric Fans,
Cooking Range, Chimneys
 Consumer Electronics - Mobile Phones, Televisions, MP3 Players, DVD
Players, VCD Players, etc. (Corporate Finance International, 2007)

For the purpose of this study, we shall only analysis the Consumer Electronic Industry
along with the Home Appliance industry as Videocon Industries Ltd is engaged in the
products of these two types of consumer goods.

A. Products and Market

a) Consumer Electronics

Electronics which are used for entrainment and communication everyday are
classified as consumer electronics. Televisions, Music Systems, MP3 players,
Personal Computers, Telephones, Camcorder etc are considered as Consumer
Electronics.

b) Home Appliances

Electronic that are primary for household use like cooking, cleaning and
ventilation are known as Home Appliances. Microwaves, Air Conditions,

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 Analysis Of Videocon‟s Operations

Refrigerators, Washing Machines etc are some of the commodities that come under
Home Appliances.

c) Market

All countries in the world are a market place for consumer electronics and
home appliances. There is no specific market place. Similarly they are no specific
production place, as manufactured by companies all over the globe. at present the
companies from Japan, South Korea and the USA control the International Consumer
Electronic Industry and Home Appliance Industry.

B. Integration and Responsiveness in the Industry

Pressures of Global Integration Pressures Of Local Responsiveness

Cost reduction due to Economies of scale. Regional and local channel for distribution.

Convergence and similarities of consumers Regional and Local government standards.

taste and preference worldwide.

Competition face globally by all companies. Other local norms and standards.

The entire world a market, so new market

for a particular company to enter.

Gains access to raw materials and other

resources worldwide.

Cost reduction by investing in countries

according to its comparative advantage.

E.g. R&D in Europe while Manufacturing

in India or China

The learning curve and experience curve

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Each and every industry in the world is faced several pressures that oblige the
industry to integrate globally. While there are some pressure that make an Industry to act
more locally responsiveness towards a country. The table on the previous page distinguished
between pressures which force the Consumer Durable i.e. – Consumer Electronic and Home
Appliance Industry to integrate global and to be local responsiveness. From the table it is
visible that the Consumer Durable Industry in terms of Consumer Electronics and Home
Appliance is more of a global industry. However the products have some minute modification
made based on the local regional standards and small demand. E.g. India consumers demand
a higher level of cleaning in washing Machines as the whiteness of clothes represent
cleanliness, Danes prefer spin dry while Italian and Greek prefer clothes line.

C. Value Chain

When applying the Value Chain Analysis by Michael Porter

Michael Porter Value
chain Analysis to many of
the firms in the Consumer
Durable Industry (Consumer
Electronics and Home
Appliance) it becomes
visible that the value chain
of the industry is completely
global.

In term of the
Figure 2.1 (Bua Consulting , 2010)
supporting activities, the
companies within this industry have R&D centre across many countries in the world,
especially in Japan, Korea and Europe. Many firms Human Resource as most of the
companies establish them self as a diverse cultural company catering to the whole
world need. Procurement of components is also done true supplier who all spread
across the world.

Primary Activities of companies in this industry has integrated globally.

Manufacturing Plants of most companies are located in countries where labour cost

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are low in Mexico, China, India, Brazil and other low cost areas. The industry has a
standardize marketing plan for the entire globe, due to the convergence of customer
taste and preferences worldwide. Presently, various companies in the Industry give a
global warranty and after sales service.

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II. VIDEOCON INDUSTRIES LTD

“Experience change”– spot on to its tagline, Videocon Industries Ltd is a company
which positions its self as the a corporation which grows and changes as per the dynamic
scenarios of the global environment.

A. Company Snapshot

In 1985 Shri Nandlal Madhavlal Dhoot founded the Videocon Industries Ltd and
developed the first coloured television in India. With the passage of time the company got
engaged into developing, manufacturing and distribution of colour televisions, along with
other home appliances like refrigerators, washing machines, air conditioners, microwave
ovens etc. (Hem Securities Limited, 2010) Today Videocon Industries underneath the
umbrella of the Videocon Group, has emerged as the 2.5 billion USD company. (Company
Profile - Videocon, 2009) The Company, along with its subsidiaries, operates in Consumer
Electronics and Home Appliances, Display Industry and its component, Colour Picture Tube
Glass and lastly Oil and Gas. The company operates not only from India but also from other
main regions in the world. With new horizons on the break, there is merely no pause on the
company‟s growth and the world is the Videocon playing field.

Figure 3.1 (Milestone - Videocon, 2009)

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The Group is rated among India‟s Top 15 Business Houses along with being rated as
one of the 100 Emerging Giants of the World according to a Boston Consulting Group study
in addition to being rated amongst the Top 15 of India‟s „buzziest brands‟ by agencyfaqs in
2010. (Videocon Group, 2010)

B. Experience Change

Within two decades since its incorporation in 1985, Videocon has made many
changes in all aspects of it business. The company has changed its logo, appeal and also its
corporate strategy in order to adjust to the recent global environment and stay in the race.

Videocon changed it logo from the traditional giant solid silver “V" to a more fluid
lava type “V”. (Videocon Group, 2009)

Figure 3.2 (Flubber-based Logo - Brand New, 2009)

The solid silver “V" with the two “E” symbol, which stood for strength and
robustness along with the passion for global impact by being a group that was interest in a
wide spectrum of interest ranging from „Electronics to Energy‟ was what how the brand
perceived itself before. (Videocon Group - Seth Nandlal Dhoot Hospital , 2006)

When one glances at the company‟s new logo, it is visible that the company is trying
to portray itself as an eco friendly company with a fresh outlook and to give a feel that the
Videocon always on the move. With its Videocon is trying to strike a chord with young
audience (Videocon Group, 2009) and thus targeting the present youth of the globe. The new

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logo also gives a feel that the company‟s going global. Using the colour of nature, i.e. green,
Videocon has give a feel that it product are environmentally aware and with respect to world
environmental standards.

According to Mr. Kim, C.E.O of Videocon, the rationale behind company‟s brand
change comes from the company‟s regular attempt to listen and respond to evolving market
dynamics all over the world. He also adds that the new tag line – “Experience Change”, will
mark the commencement of transform for customers of durable products. (Experience change
with eco-friendly identity of Videocon - Televisoinpoint.com, 2009)

In 2008 Mr Kim became the C.E.O of Videocon Industries, (Videocon Group, 2009)
this goes to show that the company changed its Corporate Structure which was a family
owned and managed business to a more global Corporate Structure.

C. Operations

Videocon Industries has emerged as a truly global company in last decade,

Integration – Responsiveness Framework explains why the company has gone global.

The Pressure for Global Integration for Videocon are

 New Market worldwide

 Gets Economies of Scale from Global Production
 Threat and Completion from other Foreign and Indian Multinationals in India.
 Getting worldwide technology by investing in R & D in developed countries.
 Corporate Vulnerability of Indian Firms to Foreign Firms.
 Need of Foreign Exchange
 Universal needs and demands of customers for white goods all over the globe.
 Having a universal supply chain helps to reduced cost.

The Pressures of Local Responsiveness for Videocon are

 Meet Indian Government‟s Rules and Regulations along with the standards of
other nations.
 Respond to Indian Local Competition.

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As seen from above the

pressures of globalizations for
Videocon is more than the pressure
of for Videocon to be a locally
responsiveness to Indian markets.
More over Videocon deal with
consumer durables which are
standardise products all over the
world. These products are not
influenced by culture or social
traits in a particular country. There
exist minute modifications

deepening on the product necessities Figure 3.3 Integration – Responsiveness Framework

in different countries. E.g. the power (Griffin & Pustay, 2009)
cord for the product may be
different in different parts of the world. Another example could be the language on the
packaging and on the manuals of the product may demand English and the country language.
(Aswathappa, 2005).

In order to fit a global strategy Videocon as segregated the company‟s value chain
across many countries, so that it can get the maximum profits and reduction of cost. Beside
India, the Group has several manufacturing and R&D Centres stretched across The Americas,
Europe and Australasia that are continuously functioning and operating towards establishing
universal quality products by deploying the most state-of-the-art technology. (Videocon
Group, 2010). Besides having its presence in India, the Indain Mulinational has its presence
in Poland, Italy, Korea , China , Dubai, Oman, and Japan.

Based on the Porter's Diamond of National Advantage by Michael Potter we view

why Videocon has set up certain regions of the world. For the purpose of this study ,I have
three main countries, Inda, Mexico and Italy.

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Figure 3.4 (Porter, 1980)

a) India

Vediocon is an Indain Mulinational, in this section we shall see how having its
headquaters and manufacturing units in India, has helped the company to have some
competive advantage based on the Poter Diamond.

 Demand Conditions – With the increse of disposal income in the in India,

the demand of consumer durables has also increased. The indian consumers
are demanding, new innovations in the consumer durable and also goods
with the latest technology. In the recent year, India consumer good market
has beeing growing at a very high pace.
 Factor Conditions – India is a labour intensive country and thus labour is
cheap in country. Thus is benfical for the Vediocon to set up manufacting
unit in India. Vediocon has set up manufacturing units in states of Gujrat
and Maharashtra in India. Vediocon has also and R&D centre in India at
Banglore, the technology hub of India. The location of India also help
Videocon, to trade outside India.

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 Related and Supporting Industies – In India Videocon is supporeted by the

small Indian supplier who supply commponets to the manufacturing and
assembly units in India. Moreover the Indian governments supports the
Firm finalcialy. The Information Technology industry in Indai aslo
supports the firm.
 Firm Stratergy , Structure and Rivarly – Competition in India from both
domestic players as well as foreign companies like LG, Whirpool who have
entered into the Indian maerket, has helped Videocon to change it struture
and to enter in new venture, so that the company can face and sustain
compitition. This competion has helped Videocon, emerge as a vigrous
world leaders in counsumer durable.

b) Mexico

After the acquisition of Thomson's CPT, vediocon gain control of the

Thomson‟s plant in Mexico. Vediocon decided to keep the plant and manufacture
thre because -

 Demand Conditions – Demand for Slim and sleek consumer electronics in

the Americas. Demand for quality air condition in the Americas
 Factor Condition – The factor conditions in Mexico are the main reasons
by Videocon kept the Mexican plant. Labour cost are cheap in Mexico.
Mexican government has started to give insentive to companys to establish
in Mexico. Due to the free trade argrrement, between the America‟s
manufacturing in Mexcio has has help the company to enter the markets of
The United States of American as well as in Canada‟s Markets. Mexico is
also one of the low cost regions in the world.
 Related and Supported Industies – Mexico has many supporting indutries
for Videocon like its glass manufacturing industry and steel and metal
manufacturing industry. The presence of air conditionor compressors also
supports Videocon plant in Mexico.
 Firms Strategy, Suture and Rivalry - Many of Videocon‟s rival companies
have plant set up in Mexico, thus being close to competition helps. More
over as the firm re structures itself to become a global company, having

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manufacturing plant in Mexico helps them to enter the North America‟s

Market through NAFTA.

c) Italy

Videocon entered Italy by acquiring the Thomson CPT plant in January 2005
(Videocon, 2009). The factors that contribute to Videocon expansion in Italy are as
below

 Demand Conditions – The demand for high quality consumer durables

worldwide. Also the global demand of low cost but better quality product in
the world market. The LCD television segment is also growing rapidly in
Italy.
 Factor Condition – Italy is one of the low cost manufacturing sites in
Europe. Being a part of the European Union, Italy paved the way for
Videocon to enter the European market. Italy also gave the company an
access to advanced technology and thus Videocon has opened a R&D
centre in Italy. In Italy the company also has government support.
 Related and Supporting Industries – Close to the Poland plant of Videocon.
Italy has a network of Research and Development firms and the
technological savvy network of Italy also supports Videocon. The free
trade and common market between of European Union Nation which Italy
is a part of also supports Videocon
 Firms Strategy, Structure and Rivalry – The global competition in the
consumer durable industry is also a factor that has help Videocon establish
in Italy. By acquiring a plant in Italy, the firm can enter the European
Market.

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 VIDEOCON CONSUMER DURABLE
VALUE CHAIN ACROSS THE WORLD
Analysis Of Videocon‟s Operations

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III. THE FUTURE STRATEGY

A. Consumer Durable Industry – Consumer Electronics and Home

Appliances

I, re -quote Thomas Friedman words that the world is becoming flatter day by
day. Due to the integration and liberation economies of countries the globe has
becoming a levelled playing field for all companies to play on.

If at the present, the International Consumer Durable Industry in term of

Consumer Electronics and Home Appliance sis globally integrated, then due to the
increasing convergence of consumer needs and wants, cut throat competition between
various Multinationals...etc will drive the industry to be more globally integrated in
the future.

In terms of products, the industry looks to be developing new and innovative

products with the help of technology. E.g Televisions in the past last three year have
innovated itself from Plasma‟s, to LCD‟s and now to LED‟s and Blue Ray. Some
companies have made comment on a 3D television. With the pressure of reducing
carbon footprints in the world, many manufactures are planning and in the process of
developing eco – friendly goods. As water conservation is also a main issues across
the globe, many home appliance with water conservation will be developed. More
over even available water for drinking isn‟t always pure and clean and with a growth
in new germs and bacteria, the need for better water purifiers will be needed.

The industry in the future may continue to set up plans in even lower cost
production areas like Philippines, Brazil, Portugal, and Sri Lanka. R&D may even
move to countries like India, where the country is advancing a technological hub of
the future.

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B. Videocon Industries Ltd

As the global industry is changing, so will Videocon have to change so as to

withstand competition. In terms of products I recommend that the company along
with production of Television and Audio Video products, they should start
manufacturing communication devices like computers and laptops. The company
should start a line of eco friendly products also.

In terms of strategy, I recommend the company should open a production plant

in Brazil as it already has an oil plant there. Opening a plant in Brazil would give the
company the benefit of low cost production as well as an entry point into the Latin
American Market. The company must invest more in Research and Development that
company can come up with new innovative product. Videocon should be more cost
rationalized in various stages of its value chain.

Besides having a good product line, the company needs to invest more on it
marketing, advertising and promotion techniques. It is mainly because if not
concentrating on it marketing strategy, that the company has lost market share in
India.

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IV. REFERENCES

 An Indian brand fights back - Asian Times. (2005, August 18). Retrieved June 19,
2010, from Asian Times Online:
http://www.atimes.com/atimes/South_Asia/GH18Df01.html
 Aswathappa, K. (2005). International Business. New Delhi: Tata McGraw-Hill.
 Bua Consulting . (2010). The Value Chain - A Framework for Business
Improvement - Bua Consulting. Retrieved June 20, 2010, from Bua Consulting
Website: http://www.buaconsulting.com/Value_Chain
 Company Profile - Videocon. (2009). Retrieved June 20, 2010, from Videocon's
Corporate Website:
http://videoconworld.com/index.php?option=com_content&view=article&id=2&It
emid=3
 Connect In.com. (2010). Videocon Brand Bio . Retrieved June 23, 2010, from
Connect In Website: http://connect.in.com/videocon-brand/biography-
303126.html
 Corporate Finance International. (2007). Corporate Finance International -
Consumer Goods. Retrieved June 20, 2010, from Corporate Finance International
Website: http://www.cfi-network.com/SubPage.aspx?id=3679
 Experience change with eco-friendly identity of Videocon - Televisoinpoint.com.
(2009, July 6). Retrieved June 22, 2010, from Televisonpoint.com:
http://www.televisionpoint.com/news2009/newsfullstory.php?id=1246884628
 Flubber-based Logo - Brand New. (2009, August 20). Retrieved June 21, 2010,
from Brand New: http://www.underconsideration.com/brandnew/archives/flubber-
based_logo.php
 Griffin, R. W., & Pustay, M. W. (2009). International Business. New Jersey:
Pearson Prentice Hall.
 Hem Securities Limited. (2010, March 3). Hem_Videocon.pdf. Retrieved June 20,
2010, from Money Control:
http://www.moneycontrol.com/news_html_files/news_attachment/2010/Hem_Vid
eocon.pdf
 Hem Securities. (2010). Company Profile - Videocon. Mumbai: Hem Research.

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 Krishnan, T., & Chandramohan, A. (2010). Videocon Industries. Kochi: Hedge

Equities Ltd.
 Milestone - Videocon. (2009). Retrieved June 20, 2010, from Videocon's
Corporate Website:
http://videoconworld.com/index.php?option=com_content&view=article&id=8&It
emid=11
 Mongabay.com. (2010). Mexico - Manufacturing Industry - Mongabay. Retrieved
June 26, 2010`, from Mongabay Website:
http://www.mongabay.com/history/mexico/mexico-manufacturing_industry.html
 Porter, M. E. (1980). The Competitive Advantage of Nations. New York: Free
Press.
 Pushparaj, A. (2009). What are the impact of globalization and liberalization on
business and industry? - Business Studies. Retrieved June 23, 2010, from Rajput
Brotherhood Blog: http://www.rajputbrotherhood.com/knowledge-hub/business-
studies/what-are-the-impact-of-globalization-and-liberalization-on-business-and-
industry.html
 Vaish, N. (2009). Businessworld - Reinventing Videocon. Retrieved June 23,
2010, from Business World: http://www.businessworld.in/index.php/Reinventing-
Videocon.html
 Videocon Group - Seth Nandlal Dhoot Hospital . (2006). Retrieved June 20, 2010,
from Seth Nandlal Dhoot Hospital : http://www.dhoothospital.com/videocon-
group/index.php
 Videocon Group. (2009, October 15). Vision. Volume 1 , I (Sept - Oct 09), p. 10.
 Videocon Group. (2010). Videocon - Media Room, Press Release. Retrieved June
23, 2010, from Videocon Corporate Website:
http://www.videocon.com/wps/wcm/connect/videocon.com/videocon/home/tamil
+nadu+including+chennai/media+room/pressreleases/pg_videocon+launches+gs
m+mobile+services
 Videocon. (2009). Videocon Industries Limited. Retrieved June 23, 2010, from
Videocon World : http://www.ibef.org/download\videocon-limited.pd
 WiseGEEK. (2010). What are Consumer Durables? Retrieved June 19, 2010, from
WiseGeek Website: http://www.wisegeek.com/what-are-consumer-durables.htm

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