Strategic Change and Flexibility Case of Moser Baer

Submitted by: Padam Tewani Pravir Saxena Sumit Tyagi Bhavika

Contents
Background Change continuity matrix
Where does it lies on CC matrix What continuity forces exists
Core competencies Continuity in offering products & services

What change forces

Recession Opportunities
Renewable energy business

Flowing stream depiction

Diversion and confluence
Diversified in solar voltaic cells

Strategic flexibility

Vision & Mission

Vision:
Touching every life across the globe through high technology products and services.

Mission:
We will drive growth through our excellence in mass manufacturing. We will move up the value chain through rapid development of technology, products and services. We will leverage our relationships, distribution, cost leadership and can do" attitude to become a global market leader in every business.

Businesses
Optical Storage
2nd largest in world in manufacturing & R&D First company outside Japan to develop and ship BDR 1x-6x Media Revenue
Fy 08-09 generate Rs. 4,917 million in operating cash.

Photovoltaic Business
Market share Revenue
Moser Baer's photovoltaic subsidiaries have grown from revenues of Rs. 87.1 crore in 2007-08 to Rs. 341.9 crore in 2008-09. Global investors commit to the tune of Rs. 400 Cr.

Investments Recent tie up with LDK Solar Largest in Indian Market Revenue Rs. 1,889 Mn. (March, 2009) Tie ups
Home video Licensing from UTV Motion Pictures

Content Business

Consumer Products
Market Share Revenue

Triggers of Change
Optical Storage 3 yr CAGR prior 2004 was 70%80% which fell down to 10%-15%. The petrochemical cycle which started to see an upsurge and that caused input costs to go up leading to a period of oversupply develop. So, 2004 onwards till about 2007, the industry was still trying to sort out its oversupply problems. Blu-ray which is a very critical factor, every five years the optical industry needs a new format to come in and drive growth. Blu-ray got caught in a series of difficulties. So, Blu-ray which was a new format that needed to come in and reinvorigate the market.

Optical Storage Business Characteristics

Every five years the optical industry needs a new format to come in and drive growth. Data storage requirements are doubling every 18 months especially for faster, bigger storage systems. Oversupply problems takes 2-3 years to settle down.

Core Competence
Strong R&D capability spanning three continents Coat more amorphous silicon on discs in comparison to any other company in the world. The process that we have laid out, we believe, gives us an extremely low cost advantage.

Businesses based on Core Competence

Home video Entertain ment Optical Storage Solar Photo Votaic Cells

Electroni c Consume r Products

Precision high technology mass manufacturing (Core Competence)

Investments: Solar PV
Ratul Puri invested Rs 850 crore on setting up his solar photo-voltaic (SPV) business between 200607 and 2008-09. The company had planned to invest about $1.5 billion (Rs 7,200 crore) in its manufacturing facility in Chennai and was hoping to generate 1 giga watt (1,000 MW, or one fourth the power Delhi needs) of electricity at its Greater Noida and Chennai facilities by the end of calendar year 2010.

PV Growth
Moser Baer Photovoltaic, an arm of Moser Baer India, is planning to invest $5 billion over the next 10 years to expand its solar photovoltaic manufacturing facilities in Chennai and Hyderabad. Solar energy is expected to be a $250 billion global business by the year 2020. Last year, Moser Baer Photovoltaic raised more than Rs. 400 crore from a clutch of global private equity investors such as Nomura, CDC Group, Credit Suisse, Morgan Stanley and IDFC Private Equity. (Moser Baer to invest $5
Billion in solar power By siliconindia news bureau Wednesday,11 November 2009, 06:45 hrs )

PV market grew between 2004 and 2008 at a CAGR of 55%. Very few businesses in size and scale potentially grow at a CAGR of 55%. PV globally is an 18-20 billion dollar industry that grew from 6 billion to 20 billion in a period of about three years. Along with that spent in extensive R&D facilities and link those together between the Netherlands, Japan and India. So, we built up a R&D hub which spanned three continents which have been the centers of PV innovation.

Moser Baer's photovoltaic subsidiaries have grown from revenues of Rs. 87.1 crore in 2007-08 to Rs. 341.9 crore in 2008-09.
The film entertainment sector is estimated to have grown at a CAGR of 17.7 per cent in the past three years, to a report by KPMG and FICCI. The industry has clocked revenues of around Rs 109.3 billion in 2008, a growth of 13.4 per cent over 2007. Over the next five years, the industry is projected to grow at a CAGR of 9.1 per cent and reach Rs 168.6 billion by 2013.

Home Video Entertainment

The home video market is expected to double from Rs 8.63 billion in 2008 to Rs 16.06 billion in 2013, thereby showing a growth of 13.2% CAGR.

Continuity and Change Forces

Continuity forces :
Cannibalized
Floppy, diskette Our core skills centers around the ability to coat very thin films on substrates and thats what we identified We were able to combine that history and the learnings we had from manufacturing technology and applied them to the PV landscape. Fungibility of equipment will reduce capital intensity while increasing sales of new formats. The Company works on strategic sourcing relationships and has long term agreements with key vendors for critical raw materials.

Core competence Technology & R&D

Suppliers

Change forces
Opportunities
Solar voltaic cells Entertainment Blu-ray storage Holography

Technology

Flowing Stream Strategy

Content Distribution Home video Entertainment Cannibalise Cannibalised DVD,CD-R/W 1983 2008 Magnetic Storage Divert 20 Divert to 03 Optical Storage 2006 Blu-ray optical storage

Solar Photo Voltaic Cells

Business Focus
Business Position

Market Attractiveness

High High

Medium

Low

Medium

Low

Recession
The credit crisis drove a slowdown in the installations of PV plants in Europe which then resulted in the oversupply. Subsidies in Spain, which made it the largest market in 2008, have been withdrawn. 30% rise in the cost of Raw Material which could not be passed to Customers.

Recession

Leveraging on Core Competence

According to a report by BCC Research, a Washington-based research firm, the market for optical storage systems is expected to touch $30.6 billion (Rs 1.48 crore) by 2010, compared to less than $20 billion (Rs 96,000crore) now. And as the world's secondlargest company in this sector -- after the Taiwan-based CMC Magnetics -- Moser Baer is likely to reap massive benefits from this.

Learning: Survival Strategies

Hasten the process of innovation Be transparent and keep communicating with employees Dont loose sight of larger picture Dont abandon the core area of business Look for opportunities in the crises

References
Ratul Puri: "PV has played out to the assumptions on a text book basis Ratal Puri of Moser Baer discusses his strategy as he switches focus from Optical storage to Photovoltaics by Ashish K Mishra | Jul 27, 2009