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Solid Plastics India Limited

Group: 3

SPIL has a diverse and inefficient product


portfolio
Ideal
Positio
n

B&C

Ability
to
Compete

Genera
l
Engg.

Non-Commoditize
Commoditized
Railwa
ys

Liners

Paper

Market Attractiveness

Its commoditized products are a significant


loss driver
57% of Sales come from
Commoditized products

Commoditized products are


faring poorly in the market

SPIL
Cost

Commoditized

SPIL
Price

Market
Price

Railway

180

100

Liners

110

75

SPIL faces challenges across the various


functions of the company

Commoditized and NC products face very


different marketing challenges
Question
1

Commoditized

Non-Commoditized (NC)
Market Potential not yet judged
Decision to enter was based on suggestion
of SPIL-USA

Irrational Pricing by Competition


Pricing of competitors may not be rational
Difference in prices of ~30%

Market yet to be developed


Customers not educated about how UHMP
can replace their components

High degree of customization


Numerous visits; re-works need to be
made for customers

MPs marketing approach of boosting volumes


has compounded problems
Question
2

Commoditized
Poor Costing by SPIL
Railways ring costs miscalculated by 80%

Growth in such segments not


good for SPIL
Increase in accumulated losses
Decreased focus on high-margin NC
products

Non-Commoditized (NC)

Poor responsiveness
Increasing focus on smaller customers;
Small customers grew from 21% to 26%

Lesser flexibility
High degree of capacity utilization of 80%
Reduced available capacity for meeting
customized requirements

SPIL should now focus on decreasing costs in


commoditized products and developing the NC
Question
market
4

Commoditized
KSF: Costing

Non-Commoditized (NC)
KSF: Education, Customization
Target Key Accounts

Reduce wastage
Procure presses to manufacture longer
sheets

Increase penetration through


dealers
Ensure high utilization of presses
Address the potential untapped market

Branding?

Will reduce production job variability


required for each customer in production
Build relationship for replacement sales

Restructure marketing based on


industry
Key accounts that could have presence in
multiple regions
Learnings specific to industry should be
aggregated

Educate customers using


employees, not agents

Branding can benefit both Commoditized as


well as NC products
Question
5

Commoditized

Will justify price premiums


Branding could create a perceived
differentiation like in the Brazil business

Would support sales activities by


increasing awareness of offerings

Non-Commoditized (NC)

Would create entry barriers for


future entrants
Category could come to be identified by
the brand of the first major entrant. Eg.
Xerox
Would reduce customer apprehensions
attached to the transition to UHMP
components

Other functions can also contribute to


increasing profitability of SPIL

Operations

Reduce Wastage
Prefer moulding over
machining in products such
as Railway rings

Reduce cost per unit


Procure presses to
manufacture longer sheets

HR

Initiate programs to
motivate workforce
Define targets clearly for
each product category
Incentivize employees
based on individual
performance

Question
3

Finance/Strategy
Improve Cash Flow
position
Sell uncompetitive divisions
to retire debt

Liquidate Scrap
Scrap cannot be costed
based on value addition
Dispose at market value to
retire debt

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