The twelfth case study for CMA (Final) Group 3 students-

Paper 15 - Business Strategy and Strategic Cost Management

CASE STUDY ON PORTER’S FIVE FORCES MODEL

Taifa Bank, a subsidiary of an International Bank has experienced a serious decline in its business performance. The deposits are down, the loan portfolio has a lot of bad debts and head office is planning to slash the level of investment in the bank. Use Porter‘s Five Forces of Competition Model to establish the impact of competition on the overall performance of the bank. Explain how Taifa Bank can use Porter‘s Five Forces Model in evaluating why there has been a decline in performance.

Answer:

The Five Forces model can provide useful information in regard to the decline in performance of the bank. It is worth assuming that forces in the market such as competition has resulted in declining profits, inability to attract quality clients and general poor reaction to competitive moves in the market. Michael Porter's 5 forces analysis is a framework for industry analysis and business strategy development developed by Michael Porter of Harvard Business School in 1979. It uses concepts developed in Industrial Organization (IO) economics to derive 5 forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.

Strategy consultants use Porter's five forces framework when making a qualitative evaluation of a firm's strategic position. The framework is textbook material for modern business studies and therefore widely known. Porter's Five Forces include three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers, bargaining power of customers. Each of these forces has several determinants.

The Bargaining power of suppliers

Every organization has suppliers of services which are used to produce the final services and porter suggested that the suppliers are more powerful when; there are only a few suppliers, there are no substitute for the products supplied, when suppliers price form a great part of the total cost of the organization, (Richard lynch 2003.). The major suppliers of fund to Taifa bank are the depositors. The customers‟ deposit form a huge part of the banks working capital, however the bank has investment in overseas countries with a competitive advantage of sourcing for funds from overseas. In order to increase its customers deposit and maintain its sustainability there is a need to offer higher interest rate to its customers, and maintain its tenacity in the corporate world.

The Bargaining power of buyers

 Buyers‟ bargaining power increases in situations where; there are higher concentration of buyers than suppliers, there is ability to easily switch to undifferentiated substitute products, availability of market information to the buyer. The customers have more bargaining power due to higher concentration and market knowledge, however Taifa bank should have an advantage in term of product offered; free credit cards along with e-banking and insurance services, which are different from what is offered by its competitors making it uneasy for buyers to switch.

The threat of potential new entrants

According to (John L Thompson 2002) “where barriers to entry are high new entrants are likely to be deterred”, however he also stated that, “if there is an attempted entry there are likely to be reaction from existing competitors.” Barriers to entry can be caused by the following factors; economies of scale, product differentiation, capital requirement, switching cost. There are statutory capital requirement to entry into the banking sector which stands as barrier to new firm entering the industry, also over the years the Taifa bank has invested huge funds from its years of operation to build a huge capital base, which new entrants would find very difficult to meet.

However microfinance banks can pose a threat to Taifa bank by targeting the low income earners and the small business owners which Taifa could not reach due to high transaction cost.

The Threats of Substitute

If there are close substitutes, demand for a particular brand will increase or decrease as its price move upwards and downwards relative to competitors, (John L Thompson 2002). Furthermore, (Richard lynch 2003), is of the opinion that substitutes do not entirely replace existing products, but may limit the profit in an industry by keeping prices down. Key issues analysed are; the possible threat of obsolescence, the ability of customers to switch to the substitute, the cost of providing some added services to prevent customers switching. Taifa bank operates in an environment where competitors offer identical products, for Taifa to be ahead of its competitors it offers different products, which ranges from; insurance, mutual funds or fixed income securities. However the presence of non-banking financial institution providing the same services poses a great threat to the sustainability of Taifa bank.

The extent of competitive rivalry

Competition among companies may take the form of price competition, innovations, advertising and promotions, or value added services. However before deciding upon competitive actions firms must attempt to predict how their competitors will react. (John L Thompson 2002). The intensity of competition, according to (John L Thompson 2002), depends on; the number of competitors and degree of concentration, the rate of growth in the industry, degree of differentiation, the extent of which competitors are aware of the strategies of their rivals and exit barriers.

The analysis of the competitive advantage of Taifa bank shows that;

The bargaining power of the suppliers is high;

The bargaining power of the buyers is high;

The threats of potential new entrants are medium;

The threat of substitutes is high;

The extent of competitive rivalry is high.

Useful information that the Bank can derive is as follows:

Statistical Analysis

1.The Five Forces Analysis allows determining the attractiveness of an industry. The decline in profitability may be due to the industry becoming less attractive. 2. It provides insights on profitability. The model can assist determine how the forces have driven the costs up or reduced turnover that the bank can make. 3. Thus, it supports decisions about entry to or exit from an industry or a market segment. This is helpful for the bank in the context of whether it has been easy for new firms to enter or difficult for other banks to leave. The combination intensifies competition that may impact on the performance of the bank. 4. Moreover, the model can be used to compare the impact of competitive forces on their own organization with their impact on competitors. Taifa bank must evaluate the extent to which the forces have impacted on their operations in relation to competitors. 5. Competitors may have different options to react to changes in competitive forces from their different resources and competences. A comparison of how the bank has developed strategic options in response to the forces can be helpful.

Dynamical analysis

In combination with a PEST – Analysis, which reveals drivers for change in an industry, Five Forces analysis can reveal insights about the potential future attractiveness of the industry. Expected Political, Economical, Socio-demographical and Technological change can influence the five competitive forces and thus have impact on industry structures.

Analysis of Options

With the knowledge about intensity and power of competitive forces, organizations can develop options to influence them in a way that improves their own competitive position. The result could be a new strategic direction, e.g. a new positioning, differentiation for competitive products of strategic partnerships.

This, Porters model of five competitive Forces allows a systematic and structured analysis of market structure and competitive situation. The model can be applied to particular companies, market segments, industries or regions. Therefore, it is necessary to determine the scope of the market to be analysed in a first step. Following all relevant forces for this market are identified and analysed. Hence, it is not necessary to analyse all elements of all competitive forces with the same depth.

The five forces Model is based on microeconomics. It takes into account supply and demand, complementary products and substitutes, the relationship between volume of production and cost of production, and market structures like monopoly, oligopoly or perfect competition.

                                                                                                                                  Source: PTP - December 2013 of ICAI

The eleventh case study for CMA (Final) Group 3 students-

Paper 15 - Business Strategy and Strategic Cost Management

CASE STUDY ON BCG MATRIX

Hassan is one of the India‘s leading detergent manufacturing companies. The firm has more than twenty-five product types. These have been developed over a period of its ten year existence. Some products are very successful while others have not performed well. The challenge for the board has been the formulation of strategy policy in the way the company manages the portfolio of products. As a newly recruited qualified Cost Accountant, your advice is being sought to address the following questions the Product manager has prepared as input into his paper to the Board. 

(a) Describe the Boston Consulting Group (BCG) growth vector matrix. 

(b) Explain what strategic options are available to Hassan in accordance to the BCG Matrix. 

(c) Outline what limitations the model poses to the Product Manager as he prepares his paper to the Board.

Answer:

(a) The BCG Matrix is a model used to analyze the portfolio of strategic business units, investments and products according to their cash generating capabilities whose function is relative market share and market growth rate. This results into 4 categories being: question marks (future potential earners), stars (increasing good positive cash flow), cash cows (cash rich) and dogs (declining cash flows). 

The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. It is based on the observation that a company's business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name "growth-share". Market growth serves as a proxy for industry attractiveness, and relative market share serves as a proxy for competitive advantage. The growth-share matrix thus maps the business unit positions within these two important determinants of profitability. 

BCG Growth-Share Matrix

This framework assumes that an increase in relative market share will result in an increase in the generation of cash. This assumption often is true because of the experience curve; increased relative market share implies that the firm is moving forward on the experience curve relative to its competitors, thus developing a cost advantage. A second assumption is that a growing market requires investment in assets to increase capacity and therefore results in the consumption of cash. Thus the position of a business on the growth-share matrix provides an indication of its cash generation and its cash consumption. Henderson reasoned that the cash required by rapidly growing business units could be obtained from the firm's other business units that were at a more mature stage and generating significant cash. By investing to become the market share leader in a rapidly growing market, the business unit could move along the experience curve and develop a cost advantage. From this reasoning, the BCG Growth-Share Matrix was born. The four categories are:

 Dogs - Dogs have low market share and a low growth rate and thus neither generate nor consume a large amount of cash. However, dogs are cash traps because of the money tied up in a business that has little potential. Such businesses are candidates for divestiture. 

Question marks - Question marks are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash comsumption. A question mark (also known as a "problem child") has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

 Stars - Stars generate large amounts of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate; therefore the cash in each direction approximately nets out. If a star can maintain its large market share, it will become a cash cow when the market growth rate declines. The portfolio of a diversified company always should have stars that will become the next cash cows and ensure future cash generation. 

Cash cows - As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate, and thus generate more cash than they consume. Such business units should be "milked", extracting the profits and investing as little cash as possible. Cash cows provide the cash required to turn question marks into market leaders, to cover the administrative costs of the company, to fund research and development, to service the corporate debt, and to pay dividends to shareholders. Because the cash cow generates a relatively stable cash flow, its value can be determined with reasonable accuracy by calculating the present value of its cash stream using a discounted cash flow analysis.

 Under the growth-share matrix model, as an industry matures and its growth rate declines, a business unit will become either a cash cow or a dog, determined soley by whether it had become the market leader during the period of high growth. While originally developed as a model for resource allocation among the various business units in a corporation, the growth-share matrix also can be used for resource allocation among products within a single business unit. Its simplicity is its strength - the relative positions of the firm's entire business portfolio can be displayed in a single diagram.

(b) Hassan has four strategic choices when we look at the BCG Matrix. They include: Build - this is where Hassan uses funds from other products to invest in question marks or stars. These funds are usually harvested from cash cows. This is about moving excess cash around various product lines especially those with potential for growth but lacking own funds for reinvestments. Hold - this is where funds are ploughed back or profits reinvested. This is applicable to question marks and stars. Harvest - this is where funds are milked out of cash cows and used to build question marks and stars. Divest - this is applicable in cases where Hassan discontinues operations of product lines that are no longer profitable. 

(c) The limitations include: (i) Market information regarding aggregate demand and market shares held by competing firms may not be readily available or too expensive to obtain. (ii) Too simplistic by assuming that cash flow is affected by only market growth rate and relative market share. (iii) Assumes that only longer staying firms in the market can build competitive edge. In modern business environments, this is not possible. We have seen new entrants easily overtaking long established firms. . 

Source: PTP - December 2013 of ICAI

The tenth case study for CMA (Final) Group 3 students-

Paper 15 - Business Strategy and Strategic Cost Management

CASE STUDY ON STRATEGIC CHOICE

From its origin as an animated film producer, Walt Disney Company has moved into licensing characters for merchandised goods and developed theme parks and vacation and resort properties. What should be the best strategy for growth of Walt Disney Company?

Answer:

The Walt Disney Company, is an American diversified multinational mass media corporation headquartered in Walt Disney Studios, Burbank, California, United States. It is the largest media conglomerate in the world in terms of revenue. Walt Disney Productions established itself as a leader in the American animation industry before diversifying into live-action film production, television, and travel. The Walt Disney Company expanded its existing operations and also started divisions focused upon theatre, radio, music, publishing, and online media. In addition, it has created new divisions of the company in order to market more mature content than it typically associates with its flagship family-oriented brands.

The company is best known for the products of its film studio, the Walt Disney Studios, and today one of the largest and best-known studios in Hollywood.

The company finds profitable growth by targeting emerging businesses new to Disney’s existing portfolio, managing cross-divisional issues and opportunities, and evaluating new technology and business models. The group also resorted to mergers, acquisitions, and divestiture transactions as well.

                                                                                             Source: Suggested Answers - December 2012 by ICAI

The ninth case study for CMA (Final) Group 3 students-

Paper 15 - Business Strategy and Strategic Cost Management

CASE STUDY ON STRATEGIC POSITION

Critics of Nike often complain that it’s shoes cost almost nothing to make, yet cost the consumer so much. Identity the strategic marketing planning steps which provide value that add to Nike’s offering and result in the high price of Nike’s shoes.

Answer :

Critics of Nike often complain that its shoes cost almost nothing to make yet cost the consumer so much.

TRUE. The raw materials and manufacturing costs involved in the marketing of a sneaker are relatively cheap, but the process of selling the product to the consumer is expensive. Materials, labour, shipping, equipment, import duties and suppliers cost generally total fewer than for a pair of shoes. Nike must compensate its sales team, its distributors, its administrators and its endorsers, as well as pay for advertising & R&D. Finally Nike sells its products to retailers to make a profit. The retailer therefore pays some amount in order to put a pair of Nikes on the shelf.

Only a handful of companies like Nike stand out as master marketers. These companies focus on the customer and are:

(1)    Organized to respond effectively to changing customer needs.

(2)    Have well-staffed marketing departments, and

(3) All their other departments- manufacturing, finance, research and development, personnel, purchasing; also accept the concept that the customer is king.

Strategic planning covers the entire activities of the organization, including all of the strategic business unit (SBUs) and each functional area. Developing functional strategies and plans is the fourth step in the strategic planning process. One technique for identifying opportunities is to seek strategic windows. A strategic window is the identification of an opportunity for a limited period in the future and managing the organization & opposes resources so that there is a fit between the key market needs and the ability of the organization to meet those needs at an optimum level. A marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at a strategic and tactical level.

Steps in planning process

To carry out their responsibilities, marketing managers- whether at the corporate, division, business or product level follow a marketing process. Working within the plans set by the levels above them, product managers come up with a marketing plan for individual products lines, brands, channels, or customer groups.

Tactical marketing - strategic marketing

The 1^st phase choosing the value represents the homework that marketing must do before any product exists. The marketing staff must segment the market and develop the offerings value positioning.

The 2^nd phase is providing the value. Marketing must determine specific product features, prices and distribution as part of tactical marketing. The task in the 3^rd phase is communicating the value. Further tactical marketing occur in utilizing the sales force, sales promotion, advertising, and other promotional tools to inform and promote the product.

                                                                                                   Source: Suggested Answers - June 2013 by ICAI

The eighth case study for CMA (Final) Group 3 students-

Paper 15 - Business Strategy and Strategic Cost Management

CASE STUDY ON TURNAROUND STRATEGY, ENVIRONMENTAL THREAT AND OPPORTUNITY PROFILE

A reputed public limited company, M/s XYZ & Co. with a strong brand image and goodwill in the market, manufactures Refrigerators. Last year it decided to take over an ailing public sector enterprise, located at Hyderabad named M/s ABC & Co. which is also manufacturing branded Refrigerators. The ailing unit had accumulated losses to the tune of Rs.90 crores and was having a huge work force of 5000, with production virtually coming to a grinding halt/stand-still statue at the time of takeover.

The management of M/s XYZ & Co. prepared a turnaround strategy and adopted a multi-pronged strategy for its taken over company viz., ABC & Co. As a result, over a period of one year:

-          Wasteful expenditure got curtailed considerably

-          Production increased

-          Production range got augmented

-          Investment in HRD had been stepped up

-          Costumer and dealer interaction had improved

Each of the above steps were taken up on a ‘war-footing’.

Ø  An analysis of job and personality profiles of all personnel from ‘workmen’ to ‘managers’ was undertaken by an outside consultant. This study revealed a lot of startling things including the fact that about 400 workers with union influence, were mostly on outdoor duty, where they could not be supervised all the time.

Ø  A voluntary retirement scheme (VRS) was introduce, which helped to reduce the workforce of 4000. Those workers, not willing to be a part of the ‘new work culture’, where targets had to be met, left under VRS.

Questions:

(i)                  Do you consider the Turnaround Strategy adopted by M/s XYZ & Co. satisfactory? Give reasons.

(ii)                Discuss the nature of synergistic effects, if any, resulting from M/s XYZ’s take over of M/s ABC & Co.

(iii)               Prepare an Environmental Treat and Opportunity Profile (ETOP) and a strategic advantage profile (SAP) for evaluation of the present strategy.

(iv)              What were the key factors underlying successful implementation of the strategy? Explain

You may take suitable assumption, as may be required, in this case study.

Analysis

(i)                  Adopted multi-pronged strategy yielded different desired results like-

·         Revenue generation of the company has increased due to the increase in production.

·         Wasteful expenditure got curtailed considerably. The essence of any good ‘turnaround strategy’ is cost reduction and cutting down of redundant discretionary cost in manufacturing and man power cost.

·         Helped to boost up declining trend in performance and paved way for improved long-run efficiency of operations.

·         Augmentation of product range has helped to shot up of company’s market share.

·         The study by the consultant has yielded stupendous results to eliminate a lot of unproductive work practices.

·         The VRS introduction has helped to reduce the work force by 20%. As XYZ &Co. has been able to proclaim their seriousness about the change. Those workers of erstwhile ABC & Co. not willing to be a part of the new work culture, where targets had to be met, left under VRS.

·         By stepping up investment in HRD to train the remaining workforce has ushered in a new working system and philosophy.

·         For the purpose of developing their market, the company is now drawing program to enter into the growing export market.

(ii)                Due to the all-round multi-pronged strategy of the company-

·         Operation synergy is evident through the introduction of new product, leading to increased use of its facilities with the reduction in unit fixed cost.

·         Sales synergy through the sale of additional product range with the existing marketing infrastructure and improved customer, dealer introduction.

·         Management synergy by way of showing managerial competence to solve different problems of the erstwhile ABC & Co.

·         The combined impact of all the above has jointly contributed to positive synergy for the company.

(iii)               Environmental Threat and Opportunity Profile

Business                              (+) New forms of competition

                                            (-) New entry of Global leader and MNC

Government                          (+) Globalization

                                            (-)  Liberalization

Socioeconomic                      (-) Resource constraints

     (+) All round infrastructure development in the country including more power supply for the industry

Technological                     (+) High growth envisaged in industrial production and technological upgradation.

(iv)              Strategic Advantage Profile (SAP)

Manufacturing              (-) Ageing plant facilities, requiring gradual replacement and upgradation.

(+) Machinery with robust design and proper maintenance are available to withstand the increased production.

                                Marketing                           (+) Capable sales force

                                R&D                                 (+) Backup from XYZ & Co.

Corporate resources                 (+) Result oriented management team with positive attitude and abundant talents with initiative and zeal.

(v)                Key factors constitute the important significant factors in the success of particular business. In the instant case, some of the key factors are:

Ø  New management team of XYZ & Co. with dedication

Ø  Implementation of multi-pronged strategies in its real earnest.

                                     Ø Augmented product range.

                                                                                                       Source: Suggested Answers - December 2002 by ICAI

The seventh case study for CMA (Final) Group 3 students-

Paper 15 - Business Strategy and Strategic Cost Management

CASE STUDY 7

Types of Strategic Integration

Identify the types of strategic integration in each of the following independent situations and state any two conditions when such an integration is not beneficial to a company.

(i) A soft drink manufacturing company "A" is facing stiff competition from another manufacturer. "A" buys bottle from a supplier. "A" wants to manufacture its own bottles and avoid a price mark-up on the bottles and thereby compete with lower cost of packaged drinks.

(ii) Company Comp makes laptops and it wants to acquire its competitor's laptop division "D" and sell under the one brand name "Comp".

 (iii) Agricult Company, which is currently engaged in efficient crop production with modern techniques, is planning to set up its own outlets to sell raw farm processed agricultural products.

Answer:

(i) Vertical backward integration:

 It is not beneficial when:  

a)   There are capacity building issues - for example, the firm may need to build excess upstream capacity to ensure that its downstream operations have sufficient supply under all demand conditions.

b)   Low efficiency lead to potentially higher costs resulting from lack of supplier competition.

c)        When previous upstream or downstream investment lead to decrease flexibility.

d)       Due to in-house development there is decreased ability for enhanced product variety.

e)      Development of new core competencies may compromise existing competencies.

(ii) Horizontal integration:

 It is not beneficial when:  

a)      The investment involved is huge.

b)      When the industry is saturated.

c)     There is inefficiency in the bought-out entity.

d) There is significant increase in overhead cost without corresponding revenue generation or increase in productivity.

(iii) Vertical forward integration:

 It is not beneficial when:
 a)      The company has to incur very high distribution costs.

 b)      There is likelihood of decrease in concentration of existing products.

 c)       The company will tend to become inefficient with regard to its existing strong operations.

 d)     There is considerable investment required.

                                                                                                Source: Suggested Answers - June 2014 by ICAI

The sixth case study for CMA (Final) Group 3 students-

Paper 15 - Business Strategy and Strategic Cost Management

CASE STUDY 6

Opportunities, Strengths, Threats and Business Strategies of a Central Government (Government of India (GOI)) Department

The postal department of GOI is trying to develop competitive strategies to make better profits. The chief of the postal department presents the following facts:

 (i) There are many couriers who operate in major cities and offer guaranteed delivery at very marginally higher prices than the postal department and yet manage to make a lot of profits.

(ii) Couriers offer tracking facilities on the e-computer so that a customer knows when his consignment is getting delivered or where it is located at any point of time.

(iii) Many pick up points are available for customers. Even retail customers find it convenient to book their requirements without having to travel much. For bulk booking, the couriers provided pick up facility at no further cost.

 (iv) Couriers are not available in rural and sub-urban areas whereas postal network is very good in these places.

 (v) Couriers in the cities operate until 7 p.m. whereas the corresponding speed posts or registered posts close at 2-30 p.m. / 4 p.m. in most areas and 6 p.m. / 8 p.m. in big Post Offices in Metro Cities/GPO respectively. There are one or at most two centers which operate speed post counters for 24 hours, but there are no 24×7 courier facilities.

 (vi) Postal services for parcels are much cheaper than the courier services. (vii) International courier charges very highly priced for documents and parcels, whereas postal charges are up to 70% cheaper, but delivery is at least 50% slower. Retail customers prefer postal services while corporate houses prefer couriers.

(viii) International courier is mainly parcel services. Documents are not prominent revenue makers due to electronic mode of communication.

 (ix) Staff in courier services is more customer-friendly than the Postal Dept. staff, whereas the Postal Dept. staff are paid much more.

 (x) While wondering how different the scale of profits could be between similar services, the Chief of Postal Department considers that for a Post Office to operate, in addition to document/parcel bookings, banking services like MIS/PF/Savings Account, etc. telephone bill payment services, stamp sale services and other services are being rendered, requiring the necessary hierarchy of approving authority to be present. He is considering opening of more centers exclusively for the equivalent of courier services.

Required:

(a) Identify threats to the Postal Department, GOI.

(b) What would you consider as important strengths of the Postal Department, GOI?

(c) Mention the opportunities that the Postal Department, GOI can profitably consider.

(d) Apart from (x) suggest appropriate business strategies that the Postal Department, GOI may practically apply to successfully run a long-term profitable document/parcel service on the lines of the courier service.

Answer:

(a) Threats:

(i) Couriers are almost replacing document delivery by postal department.

(ii) Couriers could cut price to increase the market share in parcel delivery segment.

(iii) Couriers may fast expand to capture some of the more viable rural areas and satellite towns also. Loss of such customers is a big threat.

(iv) More courier operators could get together to achieve better coverage and lower cost and offer stiff competition as bundled operators.

 (v) International couriers may reset their prices and offer stiffer competition, since already in terms of delivery schedules they have a higher preference. The only prohibited aspect is the price, which may soon be reset.

(b) Strengths:

(i) There is a huge network in rural and sub-urban areas which is no easily affordable by couriers.

(ii) Cheaper pricing tactics with the help of government support and infrastructure usage and inter governmental rates.

(iii) International parcel/document services have a lot of retail customers who prefer this system.

(iv) 24×7 service in select centers which is yet to be copied by competitor effectively.

(c) Opportunities:

(i) Pick up facilities could lure more users.

(ii) Established 24×7 round the clock services in more centers to service more customers in different areas of the country.

(iii) Lower the rates for documents and offer stiffer competition like stay out pricing.

(iv) Parcel packing and pick up services at the customers' door step.

(v) Faster international delivery for embracing corporate clients from competing services, together with mobile phone updates on tracking.

 (vi) Extended working timings for collection centers, especially those that are near railway stations or airports.

(d) Business Strategy:

(i) Tie up with couriers for subcontracting delivery of bundled bulk bags to rural areas by train.

(ii) Set up shift system at strategic centers. Get data on volume of services at different times and enhance availability of services.

(iii) Establish tracking facility on the mobile phones at a price - for example, with BSNL at cheaper rates.

(iv)  Create better pick up facilities at more number of intervals, extend the last cut-off time.

 (v) Cut overhead costs by using skeletal staff at non-pick hours.

(vi)  Award incentives for timely service of staff at critical points. Extra reward for better customer satisfaction.

(vii)Establish a monitoring system and fix responsibility among staff - by customer analysis, repeat customers, customer feedback on why some bulk customers have shifted, etc.

(viii) Additional transport can be outsourced under proper supervision. Fixed costs can be reduced by removing staff without much work or by redistributing and aggregating work so that there no idle time.

(ix) Establish mobile counters in vans for many areas so that more comfort is given for nearby pick up facility and more customers are attracted.

                                                                                                    Source: Suggested Answers - June 2014 by ICAI