Strategic Management Air Conditioners Market

Question: Describe about the Strategic Management for Air Conditioners Market. Answer: Introduction: This assignment is concerned about the analysis of the Indian market for Air Conditioners and the position of Blue Star Company. For this purpose the current position of Blue Star in the Indian market of Air Conditioners have been discussed along with the current growth strategies and how the strategic framework of the company can be developed. At the end of the assignment a plausible recommendation has also been provided. 1: Analysis of the Indian Air-conditioner Market (Opportunities and Challenges faced by Blue Star): It has been observed that the market for Air-conditioners in India is placed on a steady growth path since the last few years though there are certain exceptions. Peoples perception about this product has drastically changed and there is a paradigm shift in the category of this product. Previously Air-conditioners were considered as luxury goods while presently people are considering these products as necessary goods as the weather condition in India is hot and humid (Babar 2014). The demand for air-conditioners is increasing at an increasing rate by the residential sector and this leads to a fall in the price level of the products. However, this has instigated the manufacturers to target for a higher market share in the significantly high potential market of air-conditioners in India. On the other hand, the demand resulting from the commercial sector is also increasing as the number of commercial offices is increasing with the passage of time; there is also increase in the number of stores, business apartments as well. Therefore, the increase in the demand for air-conditioners is increasing in a twofold manner from the commercial sector as well as the residential sector (Shaligram and Deshpande 2013). As per the available statistics in the year 2013, the Indian market for air-conditioners accounted for 3.6 million units of sales. The air-conditioners (ACs) are characterized as high-end products, the status of current penetration is at 6.8% including both the window AC and split AC. The air-conditioner segment has drastically increased its share to 13 percent in the market for consumer appliances (Devotta et al. 2016). The key growth drivers of the market for ACs are the high growth rate of the income level as well as the increasing demand for split ACs. The room air-conditioning accounts for nearly 50 percent of the total market, while on the other hand the rest 50 percent is constituted by specialized air-conditioning and central air-conditioning systems. The market for room ACs can again be divided into two sub-sections which are residential sector and the commercial sector. The residential sector contributes to the major 60% of the total market share while the rest 40% is contr ibuted by the commercial sector (Ponde and Muley 2015). As per the India Air Conditioner Market Forecast and Opportunities, 2017 report the Indian market for air-conditioners is nonchalant will definitely grow at a significantly high rate in the upcoming five years. It has been forecasted that the Indian air-conditioner market will grow at a CAGR of 13.6% during the next five years (Chedwal et al. 2015). A significant rise in the level of disposable income, increasing weather condition and the rise in the cooling efficiency coupled with the technological progress in the AC industry are the main driving forces that are leading the Indian market for air-conditioners. However, from the above analysis it can easily be predicted that Blue Star is faced with a pool of opportunities as the Indian market for ACs is growing significantly. The company has the opportunity to get a better grip of the entire market segment by expanding its production. With the ever expanding AC market in India the company will also be able to target both the residential segment as well as the commercial sector and thereby produce relevant products which are uniquely designed for each of the segments (Raje et al. 2015). However, the main challenge in front of the organization is that there are a number of competitors in the Indian market for ACs and the number of competitors is increasing. However, if the company maintains its unique production design and strategies it will be convenient for the company flourish in the Indian market. 2: Evaluation of the resource and competencies of Blue Star: Blue Star produces and markets a vast range of refrigeration and air-conditioning products and systems. The products range from large plant for central air-conditioning, package air-conditioning systems, refrigeration systems used for commercial purposes such as water coolers, ice-cube machines, deep freezes and bottled water dispensers along with window and split air-conditioners (Panchal 2016). The other businesses of Blue Star includes maintenance and marketing of hi-tech industrial and electronic products such as the data communication products, testing machines special control valves etc. Therefore, it is quite evident that the organization is sufficiently competent and hence it has a sound standing in the market for air-conditioners as well as in the other market segments also. Presently, in India Blue Star is recognized as the single largest source of air-conditioning products. it offers the widest range of air-conditioning products from window AC, split AC, air cooled or water cooled packaged air-conditioning systems, absorption, centrifugal, reciprocating scroll, variable air volume systems, rotary screw chillers, air handling units, fan coil units etc (Panchal 2016). There are many products which are never seen, never heard but quite effectively implemented at work in houses, hotels, factories, airports, showrooms, hospitals even at the satellite launch stations in India and that is the Blue Star air-conditioning. One of the main competences of Blue Star is that the company has implemented various precautionary measures for controlling the environmental hazards caused by these machines particularly because of CFC (Chloro Fluro Carbon) which is used in certain refrigerators for cooling purposes (Lakshmi and Kavida 2016). It is a matter of fact that Blue Star is the only company in India that is selected for the funding of The Multilateral Fund for the implementation of the Montreal Protocol. The company in order to eliminate the environmental hazard has designed Ozone Friendly centrifugal chillers that use HCFC-123 instead of CFC (Lakshmi and Kavida 2016). All of the major industries, for example: three fourth of the total fibre plants in India uses Blue Star for air conditioning. A significantly large number of software companies, hotels, cinema halls, airports have been air-conditioned by Blue Star in India (Nath et al. 2014). Therefore, it is clear that the competencies of the company lie within its operation and management. The company operates in such an efficient and effective way that helps the company to sustain brightly in the competitive market of consumer appliances. Use of environment friendly materials, tie ups with larger companies and organizations along with the quality and uniqueness in the products has helped Blue Star to achieve prosperity in the market (Lakum 2014). 3: Discussion of the growth strategies and evolution of Blue Star: Blue Star has successfully identified the mega air-conditioning projects within the country as well as in abroad as the key driver of its growth. However, on the other end the country has certain aggressive plans designed particularly for enhancing its share on the market for split and window ACs, along with a steady focus on the commercial and corporate customer base. Following are the strategies adopted by the company for the purpose of enhancing its growth, Product awareness: In order to make the consumers well aware about the product range advertising is the key tool in the hand of Blue Star and this has effectively informed the customers regarding the different types of products of Blue Star available in the market. However, according to Matani (2016), advertising is always healthy for an organization. Advertising actually acts as a market force that pushes the activity of selling and distribution. Blue Star mainly continues its advertising activities by means of Roadside hoardings, signboards and banners Advertising in the popular newspapers such as The Telegraph, The Times of India, Hindustan Times Advertising in popular magazines such as Business Outlook, India Today etc. The company is currently planning to start advertising through television (Latha and Akila 2016). The consumers will come across the advertisements of the company more or less everywhere- television, print media, internet etc. However, as the process of communication is rapidly changing with the passage of time the company is planning to use media specific advertisements. Strong Network of the Dealers: The dealer network of the company is drastically strong across all over the country and the products are also available in almost every town in India (Ministerial 2014.). Facilities of credit and Dealer discounts: Dealers, sub-dealers and retailers are important to the company and they are given due importance. It is also very necessary to develop a proper understanding with the dealers, sub- dealers and the retailers as they are the one who can push the sales of the company to a higher level. It has also been observed that the main requirement of dealers is they just want the company provides them with credit facilities (Pawar and Kumar 2012). Blue Star is the winner in its category of business and as per the company dealers are also the important controller of sales of the company. Researchers have found that interestingly the dealers generally ask the customers to wait and assure the customer about the delivery if the particular brand is not available. Customer care: The company always analyses the needs of the customers and determine what the customers are looking for and thereby try to incorporate those features in their products. Another key strategy of the company is that they provide quick and effective after sales service and support (Attia and Getu 2016). This in turn makes the customers satisfied and thereby the word of mouth marketing comes into action. Innovative products: The products of Blue Star are always appealing because of the innovative design of those products as well as the high end features incorporated in them. In the market for air-conditioners Blue Star is the first to introduce air-conditioners with fuzzy logic, programmable timer, sleep mode, auto restart and non volatile memory as well. There were air-conditioners designed by the company which were tested to sustain salt spray for 1000 hours. These were specifically designed for the coastal areas (Attia and Getu 2016). These strategies along with the very good reputation of the company have helped Blue Star to evolve and grow in the Indian market as well as in the foreign markets also. 4: Deigning the competitive strategies for Blue Star: From the above analysis it is quite evident that Blue Star possesses certain advantages and in accordance to those advantages the company should design its competitive strategies so as to maintain its current position in the Indian market for air-conditioners. Blue Star is the only company that produces open type centrifugal chillers and that too with ozone friendly refrigerant. Art from this the company also produces certain products which are not produced by the other organizations in this genre (Ananthanarayanan 2013). Only Blue Star produces variable air volume system for the economic and localized cooling control. The largest air-conditioning contract is held by Blue Star that worth 40 Crores and is with the RBI Note Mudran Private Ltd. The company should make use of these advantages while designing its competitive strategies. The strategic framework of the company should mandatorily be in line with the recent changes in the economic and policy changes. The Confederation of Indi an Industry has approached the government to reduce the special excise duty imposed over the air-conditioners from 16% to 8% in the upcoming budget. Therefore in response to this the company should react and may increase its production (Ananthanarayanan 2013). Again as the statistics depict that the middle class population of India is growing and the disposable income is also growing significantly and this will definitely increase the demand for air-conditioners and therefore the comp any should effectively charge a lower price for the products and this will evidently help the company to cope up with the competition. Extensively using the internet and the social media for targeting the appropriate segment of people will also be effective for the business of the company. Nowadays, most of the people use smart phones and internet connection and if the company opts for online marketing it will definitely help the company to reach a substantially large number of audiences at a lower cost and at lesser time as well. Conclusion: In order to conclude it can be said that the assignment has covered all the nooks and corners of the Indian market for Air Conditioners and the situational analysis of Blue Star. 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