CTC Individual assignment 1 Murugappa Group

From the very first makeover that Murugappa Group started with its businesses, the groups overall strategy seems to be focussed on trimming down the unwanted fat ineach business and strengthening their core competencies. With its NBFC Cholamandalam Investment & Finance, Murugappa group focused on concentrating on their core businesses, derisking and launching new products which had a similar target base as their commercial ve hicle financing division. With Cholamandalam MS General Insurance, the focus was on improving agent productivity and consolidating its branches. Tube investments had the revamp of its supply chain and improvement of process efficiency as a priority. For the sugar business, growth in scale was the strategy, Carborundim had focus on the value -end market as its agenda and Backward integration was what was planned for Coromandel. With the strategic focus being different with every business, the overall group strategy seems to be elimination of resourcedraining elements within each business and building on each businesss competitive advantage. Now Murugappa Group is re-defining their image by leveraging complementary capabilities that its businesses offer each other. This can be illustrated using the following example: If Murugappa Group quantitatively defines the % by which they should grow in market share, sales and profitability (for each business), then by looking at the businesses that Murugappa Group has, some of the synergistic elements that exist within the group are,
If high manufacturing costs are killing margins, M.G can use its expertise in manufacturing to cut costs
Manufacturing Efficiency

With expertise in financial markets, M.G can make smart investments to raise capital to invest in its businesses
Expertise in Financial markets

Employee productivity and branch consolidation

Paramount for higher revenues, managers at M.G have experience in pushing employee productivity and trimming out redundancies

If regional sales are low, an international customer base can be a source of promoting sales
International Presence

Murugappa Group

Highly profitable fertilizers and bicycles High market presence in South and West India

To make up for the lower margins that the sugar business or the insurance business rakes in

With high regional market presence, the launch of a new product can leverage this capability to get a foot in the door in the market

These are only some of the capabilities that Murugappa Group has developed recently to make itself a leaner organization with all its resource draining activities being trimmed down. Though there is an indication the group of companies is going for a focu ssed approach by limiting their operations to their stronghold markets, there is also a realization that the company must invest in strengthening its own capabilities to promote sustained, organic
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growt However, unless t ere is a way to promote, measure and reward t e use of complementary capabilities between businesses, t ey will be unable to exploit t e full potential of t e strategic linkages t at t ey provide each other. As a consultant, the first priority will be to understand the ground zero reality of what each business has to offer, and whether or not there is a possibility for these businesses to utilize each others strengths. However, it is an uphill task since it is not possible to ascertain Murugappa Groups overall strategy as a cost leadership one or differentiation based, due to the nature of products they sell (commodities to high margin products). With improving efficiency and empowering core businesses as the overall binding strategy, the research shall be carried out. We will make use the Strategic Integration Model as given in the reading by Fuchs, Mifflin et al. (2000) on Strategic Integration. The research methodology shall involve working in close conjunction with individual business heads as well as the head of Murugappa Group.A brief questionnaire of the kind of questions that can be asked is present in Exhibit 1. After getting information regarding all the various elements of the strategic integration model, we get an idea of whether or not the company has any complementary capabilities between business that it can leverage. An Integration Valuator can be used for determining the priority of tasks in integration. For an integration strategy to be successful, it is required that each element of the model is aligned with the long term vision of the company, understanding how various groups can align with each other, investigate the possibilities of inorganic capability development and emphasise of having an overall theme that the company follows. Since the senior management is involved in the research, one of the most vital elements to the research is to understand the awareness that these business heads have about the strengths of its sister businesses and whether or not, they find an opportunistic way to increase revenues, profitability or cut costs. It is only through this awareness that the Murugappa Group can achieve strategic integration by leveraging the complementary capabilities between sister businesses. For this purpose, an additional comprehensive document containing a SWOT analysis and key competitive capabilities for each business will be provided, which can help business heads understand the scope for creating synergies with other businesses. This awareness will be a Launchpad for creating strategic integration across the group. Another key element that will be discussed with the Group head, will be the possibility of setting up some measurement systems in place to measure how each business strengthens its market position by building on the capabilities that sister businesses have to offer. By measuring the incremental revenues or profitability that leveraging of complementary capabilities can provide, an appropriate scoring model can be used to find out which businesses are most keen on the concept of strategic integration, and those who are not. Finally, the concept of providing some kind of non-monetary reward/ recognition to businesses scoring high on the aforementioned scoring model should be considered to motivate healthy internal competition within the group to build on each others capabilities

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Exhibit 1 Research Questionnaire As a part of this model, the questionnaire that will be circulated will involve getting information on
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Direction o Whether or not the company is aware of its position in the market along with the competitive landscape o Does the company have a long-term vision of where it wants to be o Is the company taking necessary steps to work towards this vision (Murugappa Group has already initiated its new identity Energy unbound, which is an attempt to create Murugappa group as an umbrella brand under which all its businesses can enjoy their share of the groups Brand Equity) Product/ Market Focus o Does the business have a well-defined target market o Does the company create value-added products to service these segments (With a strong presence in South & West India, with international presence, Murugappa Group has very well defined target markets which it services through its varied portfolio of products) Resources and Capabilities o What are the human, technological and reputation resources that are at stake for each business o What unique resources (using the RBV system) does the company possess o What are the key competitive capabilities of each business o Is there a possibility of being able to find some synergy between seemingly complementary capabilities between businesses Organizational Culture o How aligned is the work force with the companys long term vision o Are roles and responsibilities clearly defined o What is the quality of work that employees aim for

In addition to the Positioning and Executional Capabilities, the following elements will have to be studied
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Competitive and Comparative advantage of each individual business o IT infrastructure o Operational efficiency o Strength of Sales force o Quality of services/ products sold o Awareness of the functioning of sister businesses Working culture of the entire firm o Allocation of resources within the firm Performance of the entire group of companies o Core competencies and capabilities of each business o Financials



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