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SM Havells India Case Study
Transcript of SM Havells India Case Study
SLI company overview
Case Questions About Havells India Ltd Billion-dollar organisation
One of the fastest growing electrical and power distribution equipment manufacturer in India
Switchgears, Cable & Wires, Lighting and Fixtures and Electrical Consumer Durables. Mission To achieve our vision through fairness, business ethics, global reach, technological expertise, building long term relationships with all our associates, customers, partners, and employees Vision To be a globally recognized corporation that provides best electrical & lighting solutions, delivered by best-in-class people. Strengths Weaknesses Opportunities Threats 1 2 3 Strategically Sound Acquisition? YES! SURVIVAL Above Normal Profits Risks involved? Integration difficulties differences in managerial practices and culture "Sylvania’s leadership didn’t make it any easy. “Their approach was, these guys from India don’t understand Europe. They would all sit down to thrash out strategies to fix things. But once they returned to India they would realise that nothing moved. "
Anil Gupta, Joint MD, Harvells India
in an interview with Forbes India Too Large Sylvania was almost 1.5 times that of Havells in size
“Sylvania was a large organisation. You get overwhelmed. So you won’t change the sail but make small changes,”
Rajiv Goel, senior VP, Sylvania secretariat.
in an interview with Forbes India Managers overly focused on acquisition First overseas acquisition
Lacked formal M&A personnel "Can we handle people? That should be our paramount question. If the answer is yes, then we can be confident that we can make this acquisition work. Let's not therefore think too much about culture and other issues."
Anil Gupta's note to the team as stated in the case. Inadequate evaluation of target fast bidding process where Havells had little time to think ahead Large Debt Deal was expected to cost more than $200million Came up to 300million bid price.
As of 2010, Sylvania was making operational losses to the tune of 30 million euros annually and the worried lenders wanted their money back or wanted the takeover keys to Sylvania. Inability to achieve synergy How to manage? Integration difficulties Conduct training programs for employees so that collective strength are leveraged towards shared vision and developing deep symbiotic relationship.
Study cultures seriously and comprehensively.
Project Prakram (enhanced management participation by Havells) Too Large Restructuring to gain profitability by pushing market positions and to leverage the Sylvania brand
Project Phoenix and Project Prakram About SLI Sylvania Started in 1901 as small entrepreneurial firm
Headquartered in Frankfurt
Leading global designer and supplier of lighting systems with world-wide operations.
International operations contribute 68% of company’s revenues
Strong dealer network of 4000 dealers and 94 branches which offer wide range of products.
Focuses its resources and technical know-how on innovative and customer orientated lighting solutions
Aims to provide customers with the best products, support and service in the lighting industry. Large Debt Strengthen financial structures
Restructuring Inability to achieve synergy Make changes to top management if necessary Only group in India to offer entire range of electronic & electro-magnetic meters to domestic, commercial and industrial consumers
International certifications in several markets
Sophisticated R&D facilities
Strong distribution channel
Lacks brand equity outside India
Bureaucracy of management International opportunities in Asia, Africa
Acquiring opportunities: China firms
Vertical integration into Havells retail outlets
Further diversifications- Other product categories Increase in costs: Raw materials
Governmental regulations/international certifications
Increasing competition in electrical industry:Domestic and abroad Intense R&D innovations vital in every development of Havells
Strive to provide best products and zero defect electrical services
Centre for Research and Innovation to provide best and latest designs and technologies Commited to quality control: Deliver safer, faster and better products
Strives to exceed customer expectations Q&A Conclusion Recommendations Forward vertical integration into retailing
Try to move away from family-style business
Strategic alliances or M&A to help venture into new markets