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Strategic Case AnalysisGATI
Project Report Submission
By Group 7
Mohammad Thanveer M091/12
NNS Manogana M092/12
Nakul Bindlish M093/12
Neha Upadhye M094/12
Nikita JohariM095/12

3/19/2013
STRATEGIC R E P O R T
P R O J E CT MANAGEMENT Y G R O U P 8 , S E CT I O N B
B

PAGE 1

Strategic Case Analysis (Gati)
19/03/2013

All about GATI
Inside This Issue
1

All about GATI (Situation Analysis)

Gati Ltd started operations in 1989 as a door-to-door cargo company. A

2
Vision – Strategy – Business
Model Congruence
1) Do an External / Industry
Analysis using PESTLE / 5 Forces approaches
2) Do an Internal Analysis using
Balanced Scorecard approach
3) Do a Business Model Analysis

division of Transport Corporation of India (TCI), Currently, Gati is one of the

3

distribution and SME logistics support. In 2010-11, Gati came up with the Go-

Portfolio Decisions
1)

2)
3)

Do an analysis using the BCG
and GE Matrix of the assigned
industry in terms of the products
/ brands available for all the
players taken together
Construct a composite GE
Matrix (both the axes) for the
above purpose
Develop a product portfolio
strategy for the leader of the
assigned industry

You may use the IFE and EFE
approaches
4

Do a Growth Options Assessment

using Ansoff Matrix

Strategic growth analysis
of GATI as it is one of the
leading distribution and
Supply chain companies
in India

leading express distribution and supply chain solution companies in India.
The company's scale of operations is large, ranging over a wide network
connecting 603 districts across India. Gati provides multi-modal transport
services with connectivity across air, road, ocean and rail. During 2009-10,
the company introduced a new division called ‗RedSun‘, which offers
services related to weather sensitive items, reengineering items; value added
To-Market strategy under the Express Distribution Service segment, which
offers differential pricing option based on distance and time sensitivity.

Gati was introduced in the market as a door-to-door cargo company with
commitment on delivery and money back guarantee. The first experiment
was conducted between Chennai and Madurai. Gati operated its business
with a group of front-end entrepreneurial delivery set-up. Members of this
set- up were known as Gati Associates (GAs). This concept was new.
Some of the key clients are Sony, Hitachi, LG, Samsung, Onida, Nokia,
Electrolux, Titan, HUL, Dabur, Cummins, Ingram Micro, DataCraft, ABB,
Siemens, Schneider Electric, Asian Paints, Cadila, Wipro, UTI Bank, Ashok
Leyland, HDFC Bank, Mahindra Group, Hero Honda, Tata Motors etc.

Main business segments
1. Coast-to-coast shipping
2. Express Distribution and Supply Chain (EDSC)
PAGE 2

STRATEGY PROJECT

Coast to coast Shipping
Gati's shipping division - was established in 1986. The company has four ships
providing liner and break bulk services between Chennai, Andaman,
Vishakhapatnam in India and Yangon and Ranong (Thailand). During 200809, the company added two container vessels aggregating to a capacity of
about 18,000 dead weight tons (DWT). The shipping industry continues to

Vision is to be a globally
preferred provider of Indiacentric Supply Chain Services
and Solutions and a leader in
the Asia Pacific region.

face a slowdown as freight rates have not improved in line with the increase
in fuel costs. This coupled with the decline in cargo volumes adversely
impacted the division. During 2011-12, the shipping division recorded a
revenue of Rs 163 million and an operating loss of Rs 1,263 million as against
a revenue of Rs 910 million and operating loss of about half a million in the
previous year.

Express Distribution and Supply Chain
Gati is one of the leading road freight transport operators in India. The road
transport business of the company provides both bulk and container
services. It has an online cargo tracking facility, which helps customers track
the movement of their cargo. The company also provides services like doorto-door pick-up and delivery, documentation, etc. under express distribution
segment. In addition, Gati provides integrated logistics solutions, linking all
stages of business i.e. procurement, production, delivery, after sales service
and reverse logistics. In December 2007, Gati acquired Kausar India Ltd, a
company which has been in the business of transportation of perishable
goods since the last 25 years. The company has made Kausar a part of its
new division RedSun so as to provide complete supply chain solutions. In
2011-12, the company formed a 70:30 JV, Gati-Kintetsu Express Pvt. Ltd with
Kintetsu World Express (KWE). KWE, a Japanese company, is a global
provider of logistic services and solutions. During 2011-12, the segment's
revenues declined by 17 per cent y-o-y to Rs 6,812 million, while the PBIT
margins increased to 44.3 per cent from 12.5 per cent in 2010-11.2

Vision
Latest financial summary of GATI



Be a globally preferred provider of India-centric Supply Chain
Services and Solutions and aleader in the Asia Pacific region.



Delight customers with quality service by setting new trends through
innovation and technology



Be the most preferred organization for all stakeholders.



Be a responsible corporate citizen with unwavering commitment to
environmental protection andconservation.
STRATEGIC MANAGEMENT

PAGE 3

Strategy and Business Model
When Gati entered market the concept of door-to-door package delivery
did not exist in India. Gati got into express cargo business with the vision of
"Service first, cost next5". Based on the volume of traffic and the origin and
destination information, Gati systematically developed relationships with
airlines and railways to use their cargo capacity to deliver products and
services. Gati had a long-term contract on cargo capacity with Indian
Airlines and other airlines on the first flight from specific origin to destination
for a fixed price no matter what the actual traffic was. This enabled Gati to
deliver priority and courier bookings with remarkable ease and accuracy.
During 2001-2003, Gati undertook a major organization restructuring
exercise.
With restructuring


every division and region was expected to set its targets (in
consultation with the corporate office)



Region should manage their funds (making each region as a cost
center)



Each Region can resolve structural issues; modify procedures,
refund customer (claim) settlement, and damages. Virtually they
are independent subject to broad policy issues.

An ideal business model



Regions are now divided based on intensity of activity.



The new system is driven by performance measures and
empowerment.

Responsibilities

have

been

redefined

and

refocused, and reporting relationships have changed.

Asset Light Business Model
―Asset-Light‖— is an industry jargon for franchising out or managing
companies whose bricks-and-mortar belong to someone else, often an
individual or an investment fund6. The asset-light operations canbe
understood as follows: under conditions of inadequate resources, leverage
the use of other assets to thelowest input to achieve the Strategic
Management of maximizing shareholder value.
Some companies that have used Asset-Light Model are for example,
Motorola, Dow Chemicals Companyetc. In the hospitality industry, hotels
such as Hilton‗s or Marriott are applying successfully asset-lightbusiness
model. In Europe, the asset-light strategy has been a popular way to
unlock capital by selling theGati‘s own only a fleet of 200 trucks. The rest is
actually are sourced from vendors (intotal 2000 of them) with whom Gati
has a strategic relationship. This model helpscompany respond to client
demand more quickly by expanding its fleet on short notice. In
warehousing, the company strategies to maintain a balance between
private andleased warehouses so as to reduce its capital expenditure and
focus on offering servicesthan managing assets.
PAGE 4

STRATEGY PROJECT

Coast to coast Shipping
The pan-India network for express shipment gives Gati India-centric
distribution domain8 expertise. Development of warehousing in a hub and
spoke model will increase volume and margins going forward, in our view.

In February 2012, GATI
joined hands with Kentetsu
World
Express,
Japan’s
leading
logistics
service
provider to form GATI-KWE,
latter having 30 pc stakes.
This tie-up will give Indian
enterprises
the
global
advantage. Gati’s bottom line grew at a CAGR of
~25% between FY08 and
FY12. In FY12, it increased 5X
year- on-year to Rs 72 crores
from Rs 14.30 crores.

Growth of air cargo business completes the express distribution chain: The
planned leasing of five Boeing 737 freighters should increase air freight
revenue from current levels.
Gati has a strong market presence in Asia-Pacific region and SAARC
countries, with offices in Bhutan, China, Dubai, Nepal, Malaysia, Hong Kong,
Singapore and Thailand. With increasing competition and cost pressures,
companies are progressively focusing on their core competencies by
outsourcing their logistics requirements to third party logistics (3 PL) players.
In a vibrant environment, where corporations seek competitive advantage,
asset-light approach becomes increasingly used, especially by companies
that invest in Asia or the Middle East and Gati has truly embraced the model
for its success in Asia Pacific.

Commitment to Environmental Protection

Operating Profit margins
increased by 14.11 percent
y-o-y to 24.38% on account
of
streamlining
of
IT
technology
and
strict
control
over
operating
expenses.

Some of the CSR initiatives of Gati include




Reg-3

Reg-4

Plantation of the Green Belt under Metro Track



Reg-2

Relief initiative to the Assam Flood survivors



Reg-1

Recycling of eWaste, an initiative towards Green IT



Each Regionwas managed
by Regional Managers

Support to Wealth out of Waste ("WOW") Project

Tsunami relief fund

Increased competition
forced Gati to focus
more on delivery and
Marketing

GATI

Reg-5

Reg-6

Reg-7

Reg-8

Reg-9

Reg-10
STRATEGIC MANAGEMENT

PAGE 5

PESTEL Analysis
POLITICAL
1. Legal permit to cross state and national borders High rail
tariffs and oversaturation of important rail networks due to

3. The industry suffers from structural inefficiencies and
high cost of capital. As a result investments for improving
logistics efficiency have been delayed.

the policy of subsidizing passenger traffic with freight traffic

4. High competition has led to price reduction strategies

has made roads (Trucks) the predominant mode of freight

not supported by efficiency improvements. This has

transportation even if it is much less efficient. Gati Ltd is the

seriously affected margins further eroding the industry‘s

first transport company in India to do parcel movement by

ability to invest in future growth.

rail in 2002-03. It has strengthened its ties over the years and
operates over 50 trains. It has helped it to be cost
competitive, with safer, secure delivery and a better transit
time.
2. Complex taxation policies, border, custom and control
delays, congested and inadequate highways and ports.
The multiple state and central taxes lead to a considerable
loss of time in transit especially for road freight.

5. The increase in agricultural food wastage has provided
an impetus to the developing of cold storage facilities.
The industry based benefits arising from the FY2012
budget has improved the investment landscape.
6. Exchange Rate Risk: Gati Ltd has international
operations which makes it susceptible to exchange rate
risk (the rupee has depreciated quite steeply over the
past year although it has more or less stabilized now). This

3. Dismal warehousing facilities: it is estimated 20-25% of the

should have boosted exports but has been hampered by

total logistics cost is from warehousing. More than 80-85% of

the

warehouses are only than 10,000 square feet. Fragmentized

manufacturing hub.

slow

development

of

India

as

a

global

warehouse space is a disincentive to the creation of
integrated warehousing spaces especially in the case of
low margin goods. There is a huge deficit of adequate
warehouse space.

SOCIAL
1. E- commerce: The rapid growth of e-commerce

4. Government agencies have the largest warehouses but

provides opportunities for the logistics industry to tap into

they are mainly for food grains. The state of cold storage is

new revenue streams. This industry is a 36 INR billion

dismal and lack of recognition of the concept of multi-

(FY2011) and is expected to reach 530 INR billion by

logistic has hampered their development and permissions

FY20I5.

have not been granted.

2. Sustainability: With India signing many MEA‘s there has

5. Declining foreign investment has stalled growth and

been

transformation due to delays in passing/approving key

emissions by switching to alternative, cleaner fuels.

increasing

pressure

reduce

greenhouse

gas

policies like the implementation of GST.
TECHNOLOGY
ECONOMIC

1. The logistics industry has low rates of technology

India spends around 13% of the GDP on logistics which

adoption. The industry has now started investing and

is much higher than that of developed countries.

developing its IT infrastructure (RIFD, Vehicle tracking,

Logistics include warehousing, transport etc. a look at

warehouse management) and Gati Ltd has one of the

India‘s distribution of logistic costs show that a large

1.

best IT infrastructures in the industry.

portion of the logistics cost is from losses. Also the cost
of logistics as a proportion of product cost is 4-5 times
higher than that in developed countries.
2.

The logistics industry has created employment foe
more than 43 million people and will grow as the
industry develops.

2. Low levels of Automation and standardization further
exacerbated by the high level of industry fragmentation.
3. The skill level is very low. Lack of professional institutes
offering courses on the logistics industry has made
recruitment of highly quality professionals daunting.
Logistics is a cost conscious industry at present in India
and the lack of easily available skilled professionals will
push up the personnel cost.
PAGE 6

STRATEGY PROJECT

Porter’s Five Forces

A structured framework for
industry analysis and business
strategy development

Threat of new entrants: Medium-High
On one hand barriers to entry is low in terms
of ease of getting a license; industry is
vulnerable to intense competition and easy
scale-up; Can be provided without assets.
However the cost of capital is high with
complex taxation laws, congestion of key rail,
raod and port networks.

Bargaining power of Suppliers: Medium
Government control of fuel prices makes it
difficult to control,predict and pass on the
fuel costs to customers

Rivalry among competitors: High
Highly fragmented- large number of local, regional and national players.
Commoditization of products due to lack of differenciation leading to further
price erosion. Gati's competitors have business models which allow them to
offer services at pricings to cost senstive customers which Gati cannot.

Threat of Substitutes: Medium
Highly customer oriented company with
multiple vendor options

Bargaining power of buyers: Medium
A few large sectors and companies like the
automobile sector are able to get significant
discounts.
STRATEGIC MANAGEMENT

PAGE 7

Balanced Scorecard
Internal Process
Strategic Objective
Global provider of India- centric
supply chain services

Services leader in the rapidly
growing online retail sector
Leader in Asia pacific region of
global SCM solutions

Responsible corporate citizen "Green Gati".

Initiative
Establishment of Gati-Kintetsu Express, a joint venture with
Kintetsu World Express (KWE) which has in 200 cities across
30 countries. Gain from KWE's operational expertise in
warehousing services and 3PL.
Dedicated e-commerce logistics services covering
warehouse, online and home delivery
requirements has been planned and is on track
Expansion with a number of locations across India and Asia
Pacific. Company has consolidated position in China,
Hongkong, Thailand & Singapore and re-structured
investment in international subsidiaries. Control will be
through the Singapore subsidiary company i.e. Gati Asia
Pacific Pte Ltd., (GAP) and it has closed Gati Holdings
Ltd.,(GHL) Mauritius, the erstwhile direct subsidiary.
The main focus areas are Education, Community &
Environment. Initiatives:
Gati MC High School, Nagore, Tamil Nadu
Relief Initiative to the Assam Floodvictims
Health checkup camp for drivers & handlers
Gati Government High School, Hyderabad, Andhra Pradesh
Green Belt Plantation
Blood Donation Camp

Financial
Strategy

Initiative

Grow shipping business
profitably

During FY2012 the shipping division recorded a revenue of
Rs. 180 mn and loss from operations of Rs. 288 mn against
Rs. 923 mn and Rs. 162 mn respectively in the previous
year. Gati has restructured the shipping business into a
wholly owned subsidiary -Gati Ship Private
Limited and inducted a strategic partner to raise
required capital.
Investment in increasing capacity to cater to this industry.

profitable growth of
e-Commerce, Cold Chain and
International Freight Forwarding
businesses
PAGE 8

STRATEGY PROJECT

Employee/ Learning and development
Strategy

Initiative

Best employer with latest HR
practices

Series of innovative Hr-practices including e-HR containing
information of every employee. Talent for tomorrowpromotion policy allowing high performers to achieve fast
track growth. Opportunities for lateral shiftinggeographical and functional
Training is a thrust area for Gati Ltd. Had it had co-opted
consultants from AIMA, XLRI, NIIT, FCCI etc

Manpower Skill enhancement

Customer
Strategy

Initiative

High quality valued service

ISO 9001:2000 company- certified for marketing and
providing logistics and cargo management services; valued
added service like door to door delivery, online tracking etc,
e-Pod.
Leveraging service advantage through technological
capabilities and supporting customersOperations.
Build forge long-term relationships with customer; almost
75% of top customers have been with the company for
more than three years.

Attract new customers and
retain old ones

BCG Matrix
Question-marks: Shipping industry is a question mark
for GATI as it has a relatively low market share in the
world with major players like UPS, Maersk, and FedEx
to compete with. However it is a growing sector as
increase in globalization increases trade to a great
extent implying a huge growth potential in this
sector.
Supply chain solutions: Gati solution division offers an
integrated supply Chain service to businesses across industry
verticals. It includes flexible point-to-point distribution
solutions or complex end-to-end integrated logistics
solutions or supply chain management. It is a relatively new
and a growing sector which has not reached its maturity in
growth cycle and hence has been classified as question
mark. These include Temperature Sensitive Services,
Warehouse Layout Design, and Logistics Process Reengineering and Logistics Network Optimization.
Both the above services need proper market penetration
and market development in order to survive in the sector.

Star: E-commerce and international services are on
an ever high currently because of increase in
globalization and technology advancement.
Cash Cow: express distribution and cold chain
solutions of Gati have a relatively high market share
in Asian markets and they generate major cash for
Gati. These sectors are responsible for GATI‘s steady
growth rate
Dog: Courier services can be rightly classified as
dog since there has been a steady decline in
courier and speed delivery services post the internet
era where major transactions are done online.
Internet usage boom has brought a downfall in this
part.
STRATEGIC MANAGEMENT

PAGE 9

Market growth rate

Star

Question Mark

International
Services

Shipping

E-commerce

Supply chain
solutions
Relative market share

Cash Cow
Express
Distribution
Cold Chain
Solutions

Dog
Courier
Services

Product Portfolio Analysis of Blue
Dart(Industry Leader)
Question-marks: Dart apex(speed delivery by air),
express pallet(above 100kg products delivered in
wooden boxes), airport-to-airport, smart
box(speedy delivery of 10/25kg boxes by air or road
as per time available)

Advantages:

Cash Cow: Domestic priority 1030, 1200(delivery of
goods less than 32kg by road by 10.30 next day or
12.00 next day), Dart surface line(timely delivery of
above 10kg goods, temperature controlled
services,

Dog: regional services

Proper classification of all land and air services
based on speed of delivery and quantity to be
delivered. This helps in a proper pricing structure to
maximize profits for the firm.


Star : International services



Proper documentation of their services and cost
online as compared to GATI
PAGE 10

STRATEGY PROJECT

GE Matrix

Protect Position

Market Attractiveness

Express distribution

Invest to build
International Services
E-commerce

Build Selectively
Shipping

Selectivity/manage for earnings
Build Selectively

Supply chain solutions

Limited expansion or harvest

Cold chain Solutions

Logistics network optimization

Courier services

Logistics process reengineering

Protect and refocus

Manage for earnings

Business Strength

Divest
STRATEGIC MANAGEMENT

PAGE 11

IFE Matrix
Internal Strength

6
7
8

One of the largest supply chain
solutions in Asia(major factor for
branding of logistics firm)
Supplies to all major firms
Speed of Delivery, timely delivery
price of services
strong management team
History of minimal service
complaints
good reputation and image
proper warehouse management

9
10

Local employees, hence less labour
cost
Financial ratios

1
2
3
4
5

Weight

Rating

Weighted
Score

10
8
8
7
4

4
3.5
3.5
2
3.5

0.4
0.28
0.28
0.14
0.14

5
7
7

3
4
4

0.15
0.28
0.28

6
6

4.5
3.5

0.27
0.21

6
5
5
4

2
3
2
4

0.12
0.15
0.1
0.16

6
6
100

2
3

0.12
0.18
3.26

Internal Weaknesses
1
2
3
4

Saturated market, Excessive
competition
Little or Improper marketing
little diversification
HR issues, labour cost problems

5
6

Sensitive to oil prices, exchange rate
fluctuations
improper inventory management

Rating on a 5 point Likert Scale
1-Major Weakness
2-Minor Weakness
3-Neutral positioning
4-Minor Strength
5-Major Strength
PAGE 12

STRATEGY PROJECT

Business Model of GATI
Gati's business model was vastly futuristic in comparison to
its competitors. It chose to focus on the customer‘s needs
from the start. Its key value proposition was time bound,
point to point delivery and premium priced cargo
management service. It developed the business partner
concept of ―Gati Associates‖ giving rise to a team of
entrepreneurs who were independent business partners of
Gati.

Empowering the network: Strategic alliances and
customized service offerings (2007- 2009)
Gati expanded its network in India, China and Europe
following strategic tie-ups with logistic service partners.
Sophisticated vehicle tracking systems, technologically
superior container vehicles and Service Quality
Standardization were all introduced to strengthen and
enhance Gati‘s promise of superior service delivery.

EVOLUTION OF BUSINESS MODEL OF GATI
The Beginning Years (1989 – 1994)
Gati started its operations as a door-to-door cargo
company, a division of Transport Corporation of India (TCI)
in 1989. Mr. Mahendra Agarwal, founder & CEO of Gati
Ltd, wanted to rebuild TCI based on processes, systems
and manage it professionally to meet consumer implicit
and
explicit
delivery
needs.
From initial four years of its operation, delivery
commitments took priority over complete utilization of
capacity and Gati was focused on to its aim to provide
time bound and point to point delivery.

Innovation, Value-addition and growth (1994 – 2001)
Gati added innovative strategies to capture the market
and make the transition from a small cargo services
company to cargo management. Among many, it
introduced desk-to-desk service to meet the price sensitive
customer market in 1994, introduced toll-free numbers for
the first time in the Indian logistics segment and became
the first 3PL service provider in India. Gati was also the first
logistics company in India to be awarded an ISO 9001
certification.
Gati also expanded its transportation medium by taking
over TCI‘s shipping division(which was renamed as Gati
Coast to Coast) and the TCI Highways division. Gati also
tied up with Indian Airlines (IA) to deliver cargo across 550
locations. Gati also expanded its service network to
include multi-modal services, courier services and
international operations to SAARC countries.

Gati Process, technology, automation and awards (20012006)
To sharpen marketing focus, operational efficiency and
improve service quality, Gati reorganized itself right from the
zonal level and affected a separation of its verticals and
corporate functions. Gati became a process oriented
organization implementing performance metrics and
evaluations across the board – services, HR and operations.

Year of Transformation, Recognition & Growth (20102011)
In Jan 2010, Gati went a step forward to help its
customer by providing complete integrated Supply
Chain Solution hence becoming a knowledgeable
company by launching 'RedSun', Gati's Supply Chain
Division. In Nov 2010, Gati also ventured into ECommerce business by launching 'makemygiftz.com',
Gati's new web service to offer its customer a complete
e-commerce platform linked to a physical distribution
network.
STRATEGIC MANAGEMENT

PAGE 13

Ansoff Matrix
New Product

Existing Product

Market
Penetration

Existing
market

Product
development
Ansoff
Matrix

New market

Market
Development

Diversification

Market Penetration:
1. Eliminate Competition- GATI can follow an e-shopping type model where customers can place
their orders online be it couriers, refrigeration products or national and international
consignments andthen GATI can deploy transport on a daily basis for doorstep pick up of
orders. The current scenario is such that only doorstep delivery, especially in the case of couriers
is available there is no concept of doorstep pickup available for such services. Thus it will not
only eliminate competition but also capture a larger market share.
2. Rural Penetration-With the FDI in retail controversy resolved, more and more foreign investors will
look into India as a potential market. With the condition that a third of the raw material be
sourced from small and medium scale producers, they would inevitably look into the rural
market in India to source that raw material. GATI can quickly leverage this opportunity as its
competitive advantage if it has rural infrastructure in place and increase its present market
share by considerable numbers.
3. Cold Storage – GATI Kausar Cold chain solutions can form strategic alliances with the
government which at present lacks the proper infrastructure and transportation for proper
distribution and warehousing of grains, due which tons of food grains go wasted every year. By
providing them the required logistics support GATI can not only greatly enhance its revenues
but also a permanent and highly lucrative customer in the form of the Indian Government.
Product Development
1.

2.

Customized solutions- More customized solutions can be provided to each of the
customers. This can be done by outsourcing a part of the operations to 3PL or 4PL that is
third party logistics which will handle some particular part of operations for GATI and fourth
party logistics, which will handle multiple operations for GATI.
Reverse Logistics –Itis an emerging branch in logistics management and GATI can diversify
into a totally separate unit for reverse logistics management. Reverse logistics refers to the
PAGE 14

STRATEGY PROJECT
practice of taking the delivered product which may be in excess or which may be
defective or obsolete(in the case of electronics products) back to the manufacturer or at
least one step back in the supply chain for recycling, repair or for some other utilization.
Every year 4% to 6% of all retail purchases are returned, costing the industry about $40 billion
per year. Thus reverse logistics if done in a cost efficient manner is a huge source of
untapped revenue.
Market Development
1.

2.

Currently GATI has international operations in Singapore, Hong Kong, China, Nepal,
Thailand; the current financial scenario indicates that there will be more trade in terms
of both exports and imports in the developing nations. GATI already has its operations
in the south east and the Middle East;it can also expand its operations to Brazil, Russia,
and Mexico which have are developing nations with high degrees of demand for
logistics as they are in the expanding phase. Due to global recession trade is in a
contractionary phase in the developed nations so more focus should be given to the
developing nations.
Military logistics- GATI has yet to penetrate the market for military logistics supply which
requires a high degree of uncertainty since wartime supply of utilities will be much
different than those of peacetimes. Also it will require a specialized wing of
transportation to cater to the military
Diversification:
1. International refrigeration facilities-Currently GATI does not supply trans-boundary
refrigeration facilities to its international customers. When it is foraying into new
markets like Mexico, Russia and Brazil it can include this new service offering.
2. Green Logistics

Manufacturing

Procurement
Logistics

Product
Logistics

Green Logistics

Raw Material
Procurement

Consumption

Waste
Disposal

The concept of Green logistics is an emerging concept and can be employed in the
emerging markets for GATI. With stricter governmental regulations regarding the
environmental costs and total carbon footprint of the company more and more
customers will opt for such services since such services tend to be more fuel efficient
and process efficient.
STRATEGIC MANAGEMENT

PAGE 15

References
1.
2.

OUR TAKEAWAY FROM THIS
PROJECT

3.
4.

We learnt about identification,
analysis and description of
strategies so as to achieve a
competitive advantage for an
organization. It is all about
decisions one takes which decides
the limits of a firm’s performance.
We also learn that one must have a
through general and specialist
knowledge in order to properly
analyze a firm and decide on the
organizational environment so as
to take the right decisions. Right
decisions
involve
all
those
decisions
that
benefit
the
organizational stakeholders.

5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.

http://www.deloitte.com/assets/DcomIndia/Local%20Assets/Documents/Thoughtware/Logistics%20SectorPresent%20situation%20and%20way%20forward.pdf
http://www.gati.com/images/pdf/media-center/presskit/corporate_presentation_61211.pdf
http://www.gati.com/images/pdf/media-center/press-release/Gatitransport-solutions-strengthens-its-current-Rail-network.pdf
http://site.securities.com/cgibin/acerc/acerc/www/index.pl?app=Company&runmode=manage
ment_analysis&FinCode=16590029
http://www.deloitte.com/assets/DcomIndia/Local%20Assets/Documents/Thoughtware/Logistics%20SectorPresent%20situation%20and%20way%20forward.pdf
http://finance.yahoo.com/q?s=GATI.BO
http://www.gati.com/html/aboutus_gati-history.html
http://www.gati.com/html/corporate_social_responsibility.html
http://www.gati.com/html/aboutus_vision-values.html
http://en.wikipedia.org/wiki/Reverse_logistics
http://en.wikipedia.org/wiki/Military_logistics
www.gati.com/html/gati_international.html
http://en.wikipedia.org/wiki/Green_Logistics
http://www.gati.com/html/gati_international.html
Crisil Report
http://www.gati.com/html/aboutus_vision-values.html
Gati Limited: Evolution of a Third Party Logistics Organization by N.
Ravichandran, Indian Institute of Management Ahmedabad.
Case Analysis by G.R. Chandrashekhar,faculty of Strategic
Management at Indian Institute of Management
Indore,presentlyFaculty,Strategic Management at Indian Institute of
Management Ranchi.,
www.indiainfoline.com
The Economist
Romanian Economic and Business Review – Vol. 6, No. 1,The
Internationalization Process and the Asset-Light Approach
http://www.gati.com/html/corporate_social_responsibility.html ( in
tune to its vision)

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Gati case study group 7 section b

  • 1. Strategic Case AnalysisGATI Project Report Submission By Group 7 Mohammad Thanveer M091/12 NNS Manogana M092/12 Nakul Bindlish M093/12 Neha Upadhye M094/12 Nikita JohariM095/12 3/19/2013
  • 2. STRATEGIC R E P O R T P R O J E CT MANAGEMENT Y G R O U P 8 , S E CT I O N B B PAGE 1 Strategic Case Analysis (Gati) 19/03/2013 All about GATI Inside This Issue 1 All about GATI (Situation Analysis) Gati Ltd started operations in 1989 as a door-to-door cargo company. A 2 Vision – Strategy – Business Model Congruence 1) Do an External / Industry Analysis using PESTLE / 5 Forces approaches 2) Do an Internal Analysis using Balanced Scorecard approach 3) Do a Business Model Analysis division of Transport Corporation of India (TCI), Currently, Gati is one of the 3 distribution and SME logistics support. In 2010-11, Gati came up with the Go- Portfolio Decisions 1) 2) 3) Do an analysis using the BCG and GE Matrix of the assigned industry in terms of the products / brands available for all the players taken together Construct a composite GE Matrix (both the axes) for the above purpose Develop a product portfolio strategy for the leader of the assigned industry You may use the IFE and EFE approaches 4 Do a Growth Options Assessment using Ansoff Matrix Strategic growth analysis of GATI as it is one of the leading distribution and Supply chain companies in India leading express distribution and supply chain solution companies in India. The company's scale of operations is large, ranging over a wide network connecting 603 districts across India. Gati provides multi-modal transport services with connectivity across air, road, ocean and rail. During 2009-10, the company introduced a new division called ‗RedSun‘, which offers services related to weather sensitive items, reengineering items; value added To-Market strategy under the Express Distribution Service segment, which offers differential pricing option based on distance and time sensitivity. Gati was introduced in the market as a door-to-door cargo company with commitment on delivery and money back guarantee. The first experiment was conducted between Chennai and Madurai. Gati operated its business with a group of front-end entrepreneurial delivery set-up. Members of this set- up were known as Gati Associates (GAs). This concept was new. Some of the key clients are Sony, Hitachi, LG, Samsung, Onida, Nokia, Electrolux, Titan, HUL, Dabur, Cummins, Ingram Micro, DataCraft, ABB, Siemens, Schneider Electric, Asian Paints, Cadila, Wipro, UTI Bank, Ashok Leyland, HDFC Bank, Mahindra Group, Hero Honda, Tata Motors etc. Main business segments 1. Coast-to-coast shipping 2. Express Distribution and Supply Chain (EDSC)
  • 3. PAGE 2 STRATEGY PROJECT Coast to coast Shipping Gati's shipping division - was established in 1986. The company has four ships providing liner and break bulk services between Chennai, Andaman, Vishakhapatnam in India and Yangon and Ranong (Thailand). During 200809, the company added two container vessels aggregating to a capacity of about 18,000 dead weight tons (DWT). The shipping industry continues to Vision is to be a globally preferred provider of Indiacentric Supply Chain Services and Solutions and a leader in the Asia Pacific region. face a slowdown as freight rates have not improved in line with the increase in fuel costs. This coupled with the decline in cargo volumes adversely impacted the division. During 2011-12, the shipping division recorded a revenue of Rs 163 million and an operating loss of Rs 1,263 million as against a revenue of Rs 910 million and operating loss of about half a million in the previous year. Express Distribution and Supply Chain Gati is one of the leading road freight transport operators in India. The road transport business of the company provides both bulk and container services. It has an online cargo tracking facility, which helps customers track the movement of their cargo. The company also provides services like doorto-door pick-up and delivery, documentation, etc. under express distribution segment. In addition, Gati provides integrated logistics solutions, linking all stages of business i.e. procurement, production, delivery, after sales service and reverse logistics. In December 2007, Gati acquired Kausar India Ltd, a company which has been in the business of transportation of perishable goods since the last 25 years. The company has made Kausar a part of its new division RedSun so as to provide complete supply chain solutions. In 2011-12, the company formed a 70:30 JV, Gati-Kintetsu Express Pvt. Ltd with Kintetsu World Express (KWE). KWE, a Japanese company, is a global provider of logistic services and solutions. During 2011-12, the segment's revenues declined by 17 per cent y-o-y to Rs 6,812 million, while the PBIT margins increased to 44.3 per cent from 12.5 per cent in 2010-11.2 Vision Latest financial summary of GATI  Be a globally preferred provider of India-centric Supply Chain Services and Solutions and aleader in the Asia Pacific region.  Delight customers with quality service by setting new trends through innovation and technology  Be the most preferred organization for all stakeholders.  Be a responsible corporate citizen with unwavering commitment to environmental protection andconservation.
  • 4. STRATEGIC MANAGEMENT PAGE 3 Strategy and Business Model When Gati entered market the concept of door-to-door package delivery did not exist in India. Gati got into express cargo business with the vision of "Service first, cost next5". Based on the volume of traffic and the origin and destination information, Gati systematically developed relationships with airlines and railways to use their cargo capacity to deliver products and services. Gati had a long-term contract on cargo capacity with Indian Airlines and other airlines on the first flight from specific origin to destination for a fixed price no matter what the actual traffic was. This enabled Gati to deliver priority and courier bookings with remarkable ease and accuracy. During 2001-2003, Gati undertook a major organization restructuring exercise. With restructuring  every division and region was expected to set its targets (in consultation with the corporate office)  Region should manage their funds (making each region as a cost center)  Each Region can resolve structural issues; modify procedures, refund customer (claim) settlement, and damages. Virtually they are independent subject to broad policy issues. An ideal business model  Regions are now divided based on intensity of activity.  The new system is driven by performance measures and empowerment. Responsibilities have been redefined and refocused, and reporting relationships have changed. Asset Light Business Model ―Asset-Light‖— is an industry jargon for franchising out or managing companies whose bricks-and-mortar belong to someone else, often an individual or an investment fund6. The asset-light operations canbe understood as follows: under conditions of inadequate resources, leverage the use of other assets to thelowest input to achieve the Strategic Management of maximizing shareholder value. Some companies that have used Asset-Light Model are for example, Motorola, Dow Chemicals Companyetc. In the hospitality industry, hotels such as Hilton‗s or Marriott are applying successfully asset-lightbusiness model. In Europe, the asset-light strategy has been a popular way to unlock capital by selling theGati‘s own only a fleet of 200 trucks. The rest is actually are sourced from vendors (intotal 2000 of them) with whom Gati has a strategic relationship. This model helpscompany respond to client demand more quickly by expanding its fleet on short notice. In warehousing, the company strategies to maintain a balance between private andleased warehouses so as to reduce its capital expenditure and focus on offering servicesthan managing assets.
  • 5. PAGE 4 STRATEGY PROJECT Coast to coast Shipping The pan-India network for express shipment gives Gati India-centric distribution domain8 expertise. Development of warehousing in a hub and spoke model will increase volume and margins going forward, in our view. In February 2012, GATI joined hands with Kentetsu World Express, Japan’s leading logistics service provider to form GATI-KWE, latter having 30 pc stakes. This tie-up will give Indian enterprises the global advantage. Gati’s bottom line grew at a CAGR of ~25% between FY08 and FY12. In FY12, it increased 5X year- on-year to Rs 72 crores from Rs 14.30 crores. Growth of air cargo business completes the express distribution chain: The planned leasing of five Boeing 737 freighters should increase air freight revenue from current levels. Gati has a strong market presence in Asia-Pacific region and SAARC countries, with offices in Bhutan, China, Dubai, Nepal, Malaysia, Hong Kong, Singapore and Thailand. With increasing competition and cost pressures, companies are progressively focusing on their core competencies by outsourcing their logistics requirements to third party logistics (3 PL) players. In a vibrant environment, where corporations seek competitive advantage, asset-light approach becomes increasingly used, especially by companies that invest in Asia or the Middle East and Gati has truly embraced the model for its success in Asia Pacific. Commitment to Environmental Protection Operating Profit margins increased by 14.11 percent y-o-y to 24.38% on account of streamlining of IT technology and strict control over operating expenses. Some of the CSR initiatives of Gati include   Reg-3 Reg-4 Plantation of the Green Belt under Metro Track  Reg-2 Relief initiative to the Assam Flood survivors  Reg-1 Recycling of eWaste, an initiative towards Green IT  Each Regionwas managed by Regional Managers Support to Wealth out of Waste ("WOW") Project Tsunami relief fund Increased competition forced Gati to focus more on delivery and Marketing GATI Reg-5 Reg-6 Reg-7 Reg-8 Reg-9 Reg-10
  • 6. STRATEGIC MANAGEMENT PAGE 5 PESTEL Analysis POLITICAL 1. Legal permit to cross state and national borders High rail tariffs and oversaturation of important rail networks due to 3. The industry suffers from structural inefficiencies and high cost of capital. As a result investments for improving logistics efficiency have been delayed. the policy of subsidizing passenger traffic with freight traffic 4. High competition has led to price reduction strategies has made roads (Trucks) the predominant mode of freight not supported by efficiency improvements. This has transportation even if it is much less efficient. Gati Ltd is the seriously affected margins further eroding the industry‘s first transport company in India to do parcel movement by ability to invest in future growth. rail in 2002-03. It has strengthened its ties over the years and operates over 50 trains. It has helped it to be cost competitive, with safer, secure delivery and a better transit time. 2. Complex taxation policies, border, custom and control delays, congested and inadequate highways and ports. The multiple state and central taxes lead to a considerable loss of time in transit especially for road freight. 5. The increase in agricultural food wastage has provided an impetus to the developing of cold storage facilities. The industry based benefits arising from the FY2012 budget has improved the investment landscape. 6. Exchange Rate Risk: Gati Ltd has international operations which makes it susceptible to exchange rate risk (the rupee has depreciated quite steeply over the past year although it has more or less stabilized now). This 3. Dismal warehousing facilities: it is estimated 20-25% of the should have boosted exports but has been hampered by total logistics cost is from warehousing. More than 80-85% of the warehouses are only than 10,000 square feet. Fragmentized manufacturing hub. slow development of India as a global warehouse space is a disincentive to the creation of integrated warehousing spaces especially in the case of low margin goods. There is a huge deficit of adequate warehouse space. SOCIAL 1. E- commerce: The rapid growth of e-commerce 4. Government agencies have the largest warehouses but provides opportunities for the logistics industry to tap into they are mainly for food grains. The state of cold storage is new revenue streams. This industry is a 36 INR billion dismal and lack of recognition of the concept of multi- (FY2011) and is expected to reach 530 INR billion by logistic has hampered their development and permissions FY20I5. have not been granted. 2. Sustainability: With India signing many MEA‘s there has 5. Declining foreign investment has stalled growth and been transformation due to delays in passing/approving key emissions by switching to alternative, cleaner fuels. increasing pressure reduce greenhouse gas policies like the implementation of GST. TECHNOLOGY ECONOMIC 1. The logistics industry has low rates of technology India spends around 13% of the GDP on logistics which adoption. The industry has now started investing and is much higher than that of developed countries. developing its IT infrastructure (RIFD, Vehicle tracking, Logistics include warehousing, transport etc. a look at warehouse management) and Gati Ltd has one of the India‘s distribution of logistic costs show that a large 1. best IT infrastructures in the industry. portion of the logistics cost is from losses. Also the cost of logistics as a proportion of product cost is 4-5 times higher than that in developed countries. 2. The logistics industry has created employment foe more than 43 million people and will grow as the industry develops. 2. Low levels of Automation and standardization further exacerbated by the high level of industry fragmentation. 3. The skill level is very low. Lack of professional institutes offering courses on the logistics industry has made recruitment of highly quality professionals daunting. Logistics is a cost conscious industry at present in India and the lack of easily available skilled professionals will push up the personnel cost.
  • 7. PAGE 6 STRATEGY PROJECT Porter’s Five Forces A structured framework for industry analysis and business strategy development Threat of new entrants: Medium-High On one hand barriers to entry is low in terms of ease of getting a license; industry is vulnerable to intense competition and easy scale-up; Can be provided without assets. However the cost of capital is high with complex taxation laws, congestion of key rail, raod and port networks. Bargaining power of Suppliers: Medium Government control of fuel prices makes it difficult to control,predict and pass on the fuel costs to customers Rivalry among competitors: High Highly fragmented- large number of local, regional and national players. Commoditization of products due to lack of differenciation leading to further price erosion. Gati's competitors have business models which allow them to offer services at pricings to cost senstive customers which Gati cannot. Threat of Substitutes: Medium Highly customer oriented company with multiple vendor options Bargaining power of buyers: Medium A few large sectors and companies like the automobile sector are able to get significant discounts.
  • 8. STRATEGIC MANAGEMENT PAGE 7 Balanced Scorecard Internal Process Strategic Objective Global provider of India- centric supply chain services Services leader in the rapidly growing online retail sector Leader in Asia pacific region of global SCM solutions Responsible corporate citizen "Green Gati". Initiative Establishment of Gati-Kintetsu Express, a joint venture with Kintetsu World Express (KWE) which has in 200 cities across 30 countries. Gain from KWE's operational expertise in warehousing services and 3PL. Dedicated e-commerce logistics services covering warehouse, online and home delivery requirements has been planned and is on track Expansion with a number of locations across India and Asia Pacific. Company has consolidated position in China, Hongkong, Thailand & Singapore and re-structured investment in international subsidiaries. Control will be through the Singapore subsidiary company i.e. Gati Asia Pacific Pte Ltd., (GAP) and it has closed Gati Holdings Ltd.,(GHL) Mauritius, the erstwhile direct subsidiary. The main focus areas are Education, Community & Environment. Initiatives: Gati MC High School, Nagore, Tamil Nadu Relief Initiative to the Assam Floodvictims Health checkup camp for drivers & handlers Gati Government High School, Hyderabad, Andhra Pradesh Green Belt Plantation Blood Donation Camp Financial Strategy Initiative Grow shipping business profitably During FY2012 the shipping division recorded a revenue of Rs. 180 mn and loss from operations of Rs. 288 mn against Rs. 923 mn and Rs. 162 mn respectively in the previous year. Gati has restructured the shipping business into a wholly owned subsidiary -Gati Ship Private Limited and inducted a strategic partner to raise required capital. Investment in increasing capacity to cater to this industry. profitable growth of e-Commerce, Cold Chain and International Freight Forwarding businesses
  • 9. PAGE 8 STRATEGY PROJECT Employee/ Learning and development Strategy Initiative Best employer with latest HR practices Series of innovative Hr-practices including e-HR containing information of every employee. Talent for tomorrowpromotion policy allowing high performers to achieve fast track growth. Opportunities for lateral shiftinggeographical and functional Training is a thrust area for Gati Ltd. Had it had co-opted consultants from AIMA, XLRI, NIIT, FCCI etc Manpower Skill enhancement Customer Strategy Initiative High quality valued service ISO 9001:2000 company- certified for marketing and providing logistics and cargo management services; valued added service like door to door delivery, online tracking etc, e-Pod. Leveraging service advantage through technological capabilities and supporting customersOperations. Build forge long-term relationships with customer; almost 75% of top customers have been with the company for more than three years. Attract new customers and retain old ones BCG Matrix Question-marks: Shipping industry is a question mark for GATI as it has a relatively low market share in the world with major players like UPS, Maersk, and FedEx to compete with. However it is a growing sector as increase in globalization increases trade to a great extent implying a huge growth potential in this sector. Supply chain solutions: Gati solution division offers an integrated supply Chain service to businesses across industry verticals. It includes flexible point-to-point distribution solutions or complex end-to-end integrated logistics solutions or supply chain management. It is a relatively new and a growing sector which has not reached its maturity in growth cycle and hence has been classified as question mark. These include Temperature Sensitive Services, Warehouse Layout Design, and Logistics Process Reengineering and Logistics Network Optimization. Both the above services need proper market penetration and market development in order to survive in the sector. Star: E-commerce and international services are on an ever high currently because of increase in globalization and technology advancement. Cash Cow: express distribution and cold chain solutions of Gati have a relatively high market share in Asian markets and they generate major cash for Gati. These sectors are responsible for GATI‘s steady growth rate Dog: Courier services can be rightly classified as dog since there has been a steady decline in courier and speed delivery services post the internet era where major transactions are done online. Internet usage boom has brought a downfall in this part.
  • 10. STRATEGIC MANAGEMENT PAGE 9 Market growth rate Star Question Mark International Services Shipping E-commerce Supply chain solutions Relative market share Cash Cow Express Distribution Cold Chain Solutions Dog Courier Services Product Portfolio Analysis of Blue Dart(Industry Leader) Question-marks: Dart apex(speed delivery by air), express pallet(above 100kg products delivered in wooden boxes), airport-to-airport, smart box(speedy delivery of 10/25kg boxes by air or road as per time available) Advantages: Cash Cow: Domestic priority 1030, 1200(delivery of goods less than 32kg by road by 10.30 next day or 12.00 next day), Dart surface line(timely delivery of above 10kg goods, temperature controlled services, Dog: regional services Proper classification of all land and air services based on speed of delivery and quantity to be delivered. This helps in a proper pricing structure to maximize profits for the firm.  Star : International services  Proper documentation of their services and cost online as compared to GATI
  • 11. PAGE 10 STRATEGY PROJECT GE Matrix Protect Position Market Attractiveness Express distribution Invest to build International Services E-commerce Build Selectively Shipping Selectivity/manage for earnings Build Selectively Supply chain solutions Limited expansion or harvest Cold chain Solutions Logistics network optimization Courier services Logistics process reengineering Protect and refocus Manage for earnings Business Strength Divest
  • 12. STRATEGIC MANAGEMENT PAGE 11 IFE Matrix Internal Strength 6 7 8 One of the largest supply chain solutions in Asia(major factor for branding of logistics firm) Supplies to all major firms Speed of Delivery, timely delivery price of services strong management team History of minimal service complaints good reputation and image proper warehouse management 9 10 Local employees, hence less labour cost Financial ratios 1 2 3 4 5 Weight Rating Weighted Score 10 8 8 7 4 4 3.5 3.5 2 3.5 0.4 0.28 0.28 0.14 0.14 5 7 7 3 4 4 0.15 0.28 0.28 6 6 4.5 3.5 0.27 0.21 6 5 5 4 2 3 2 4 0.12 0.15 0.1 0.16 6 6 100 2 3 0.12 0.18 3.26 Internal Weaknesses 1 2 3 4 Saturated market, Excessive competition Little or Improper marketing little diversification HR issues, labour cost problems 5 6 Sensitive to oil prices, exchange rate fluctuations improper inventory management Rating on a 5 point Likert Scale 1-Major Weakness 2-Minor Weakness 3-Neutral positioning 4-Minor Strength 5-Major Strength
  • 13. PAGE 12 STRATEGY PROJECT Business Model of GATI Gati's business model was vastly futuristic in comparison to its competitors. It chose to focus on the customer‘s needs from the start. Its key value proposition was time bound, point to point delivery and premium priced cargo management service. It developed the business partner concept of ―Gati Associates‖ giving rise to a team of entrepreneurs who were independent business partners of Gati. Empowering the network: Strategic alliances and customized service offerings (2007- 2009) Gati expanded its network in India, China and Europe following strategic tie-ups with logistic service partners. Sophisticated vehicle tracking systems, technologically superior container vehicles and Service Quality Standardization were all introduced to strengthen and enhance Gati‘s promise of superior service delivery. EVOLUTION OF BUSINESS MODEL OF GATI The Beginning Years (1989 – 1994) Gati started its operations as a door-to-door cargo company, a division of Transport Corporation of India (TCI) in 1989. Mr. Mahendra Agarwal, founder & CEO of Gati Ltd, wanted to rebuild TCI based on processes, systems and manage it professionally to meet consumer implicit and explicit delivery needs. From initial four years of its operation, delivery commitments took priority over complete utilization of capacity and Gati was focused on to its aim to provide time bound and point to point delivery. Innovation, Value-addition and growth (1994 – 2001) Gati added innovative strategies to capture the market and make the transition from a small cargo services company to cargo management. Among many, it introduced desk-to-desk service to meet the price sensitive customer market in 1994, introduced toll-free numbers for the first time in the Indian logistics segment and became the first 3PL service provider in India. Gati was also the first logistics company in India to be awarded an ISO 9001 certification. Gati also expanded its transportation medium by taking over TCI‘s shipping division(which was renamed as Gati Coast to Coast) and the TCI Highways division. Gati also tied up with Indian Airlines (IA) to deliver cargo across 550 locations. Gati also expanded its service network to include multi-modal services, courier services and international operations to SAARC countries. Gati Process, technology, automation and awards (20012006) To sharpen marketing focus, operational efficiency and improve service quality, Gati reorganized itself right from the zonal level and affected a separation of its verticals and corporate functions. Gati became a process oriented organization implementing performance metrics and evaluations across the board – services, HR and operations. Year of Transformation, Recognition & Growth (20102011) In Jan 2010, Gati went a step forward to help its customer by providing complete integrated Supply Chain Solution hence becoming a knowledgeable company by launching 'RedSun', Gati's Supply Chain Division. In Nov 2010, Gati also ventured into ECommerce business by launching 'makemygiftz.com', Gati's new web service to offer its customer a complete e-commerce platform linked to a physical distribution network.
  • 14. STRATEGIC MANAGEMENT PAGE 13 Ansoff Matrix New Product Existing Product Market Penetration Existing market Product development Ansoff Matrix New market Market Development Diversification Market Penetration: 1. Eliminate Competition- GATI can follow an e-shopping type model where customers can place their orders online be it couriers, refrigeration products or national and international consignments andthen GATI can deploy transport on a daily basis for doorstep pick up of orders. The current scenario is such that only doorstep delivery, especially in the case of couriers is available there is no concept of doorstep pickup available for such services. Thus it will not only eliminate competition but also capture a larger market share. 2. Rural Penetration-With the FDI in retail controversy resolved, more and more foreign investors will look into India as a potential market. With the condition that a third of the raw material be sourced from small and medium scale producers, they would inevitably look into the rural market in India to source that raw material. GATI can quickly leverage this opportunity as its competitive advantage if it has rural infrastructure in place and increase its present market share by considerable numbers. 3. Cold Storage – GATI Kausar Cold chain solutions can form strategic alliances with the government which at present lacks the proper infrastructure and transportation for proper distribution and warehousing of grains, due which tons of food grains go wasted every year. By providing them the required logistics support GATI can not only greatly enhance its revenues but also a permanent and highly lucrative customer in the form of the Indian Government. Product Development 1. 2. Customized solutions- More customized solutions can be provided to each of the customers. This can be done by outsourcing a part of the operations to 3PL or 4PL that is third party logistics which will handle some particular part of operations for GATI and fourth party logistics, which will handle multiple operations for GATI. Reverse Logistics –Itis an emerging branch in logistics management and GATI can diversify into a totally separate unit for reverse logistics management. Reverse logistics refers to the
  • 15. PAGE 14 STRATEGY PROJECT practice of taking the delivered product which may be in excess or which may be defective or obsolete(in the case of electronics products) back to the manufacturer or at least one step back in the supply chain for recycling, repair or for some other utilization. Every year 4% to 6% of all retail purchases are returned, costing the industry about $40 billion per year. Thus reverse logistics if done in a cost efficient manner is a huge source of untapped revenue. Market Development 1. 2. Currently GATI has international operations in Singapore, Hong Kong, China, Nepal, Thailand; the current financial scenario indicates that there will be more trade in terms of both exports and imports in the developing nations. GATI already has its operations in the south east and the Middle East;it can also expand its operations to Brazil, Russia, and Mexico which have are developing nations with high degrees of demand for logistics as they are in the expanding phase. Due to global recession trade is in a contractionary phase in the developed nations so more focus should be given to the developing nations. Military logistics- GATI has yet to penetrate the market for military logistics supply which requires a high degree of uncertainty since wartime supply of utilities will be much different than those of peacetimes. Also it will require a specialized wing of transportation to cater to the military Diversification: 1. International refrigeration facilities-Currently GATI does not supply trans-boundary refrigeration facilities to its international customers. When it is foraying into new markets like Mexico, Russia and Brazil it can include this new service offering. 2. Green Logistics Manufacturing Procurement Logistics Product Logistics Green Logistics Raw Material Procurement Consumption Waste Disposal The concept of Green logistics is an emerging concept and can be employed in the emerging markets for GATI. With stricter governmental regulations regarding the environmental costs and total carbon footprint of the company more and more customers will opt for such services since such services tend to be more fuel efficient and process efficient.
  • 16. STRATEGIC MANAGEMENT PAGE 15 References 1. 2. OUR TAKEAWAY FROM THIS PROJECT 3. 4. We learnt about identification, analysis and description of strategies so as to achieve a competitive advantage for an organization. It is all about decisions one takes which decides the limits of a firm’s performance. We also learn that one must have a through general and specialist knowledge in order to properly analyze a firm and decide on the organizational environment so as to take the right decisions. Right decisions involve all those decisions that benefit the organizational stakeholders. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. http://www.deloitte.com/assets/DcomIndia/Local%20Assets/Documents/Thoughtware/Logistics%20SectorPresent%20situation%20and%20way%20forward.pdf http://www.gati.com/images/pdf/media-center/presskit/corporate_presentation_61211.pdf http://www.gati.com/images/pdf/media-center/press-release/Gatitransport-solutions-strengthens-its-current-Rail-network.pdf http://site.securities.com/cgibin/acerc/acerc/www/index.pl?app=Company&runmode=manage ment_analysis&FinCode=16590029 http://www.deloitte.com/assets/DcomIndia/Local%20Assets/Documents/Thoughtware/Logistics%20SectorPresent%20situation%20and%20way%20forward.pdf http://finance.yahoo.com/q?s=GATI.BO http://www.gati.com/html/aboutus_gati-history.html http://www.gati.com/html/corporate_social_responsibility.html http://www.gati.com/html/aboutus_vision-values.html http://en.wikipedia.org/wiki/Reverse_logistics http://en.wikipedia.org/wiki/Military_logistics www.gati.com/html/gati_international.html http://en.wikipedia.org/wiki/Green_Logistics http://www.gati.com/html/gati_international.html Crisil Report http://www.gati.com/html/aboutus_vision-values.html Gati Limited: Evolution of a Third Party Logistics Organization by N. Ravichandran, Indian Institute of Management Ahmedabad. Case Analysis by G.R. Chandrashekhar,faculty of Strategic Management at Indian Institute of Management Indore,presentlyFaculty,Strategic Management at Indian Institute of Management Ranchi., www.indiainfoline.com The Economist Romanian Economic and Business Review – Vol. 6, No. 1,The Internationalization Process and the Asset-Light Approach http://www.gati.com/html/corporate_social_responsibility.html ( in tune to its vision)