* Identify the generic strategy adopted by a product or division of your firm and also a major competitor. Attempt to justify your answer by comparing with the industry average benchmarks (Price and Cost data). * Draw a value chain of your firm, mentioning key points of functional fit/ misfit with the above generic strategy. E.g. how will Operations /marketing support the identified strategy. Make recommendations for any change needed. -------------------------------------------------
At Cummins we have one strategy for all products, business units and regions. Base on corporate strategy, each Business unit (BU’s) and region (ABO) prepare initiatives and plan. 1b. Generic strategy adopted by Cummins is “Become the Low Cost Producer” (Overall Cost Leadership) Please find the Cummins Corporate strategy -
* Base on corporate strategy please find the Cummins India Goal Tree.
1c. Globally Caterpillar is the major competitor and In India Kirloskar Oil Engine Limited and Greaves.
Caterpillar has the strategy of differentiation base on extensive dealer network and excellent spare parts availability.
Kirloskar Oil Engine limited (KOIL) and Greaves generic strategy is not available in public domain. (On website, investor presentation, Annual report, AGM chairman speech.) There marketing action gives mixed signal of generic strategy. Its seems the firm struck in the middle.
1d. From the data below, it is clear that industrial EBIDTA average is 13% to 16% but Cummins EBIDTA is 21%. This is possible only by controlling cost. At Cummins we have special cost reduction drive for direct Material (ACE), for Indirect Materials (TRIMs) to keep all cost under control. Also our engines are built to international standards. These helps in increasing reliability of our engine and increases market share. By controlling other cost we are able to make more profit. This validates our strategy of “Become the Low Cost Producer”....
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