HAVELI RAM TO HAVELLS: A GLOBAL GIANT’S CHALLENGE
CASE STUDY SOLUTION
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SYNOPSIS
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Fedders Lloyd had been a strong household brand in the air conditioner market in India for several years.
Lloyd enjoyed strong brand recall, and Indian consumers traditionally regarded it as their first choice for
window room air conditioners, in the same league as Voltas (Tata group) and Blue Star, the two other major
Indian players. The entry of Japanese (Daikin, Hitachi, Panasonic), Korean (Samsung, LG), and American
n
(Carrier) players into the Indian market created a major upheaval. Split air conditioners became more
popular, consumers began to understand the benefits of energy savings, and greater room comfort became
tio
sought after—all of which pushed Lloyd down on the customers’ list of preferred brands.
Havells had started out as an electrical goods company. It enjoyed a preeminent position in this market and was
lu
known for its reliable quality and after-sales service. In 2017, Havells expanded its business by acquiring the
Lloyd consumer durables division. Havells decided to retain the Lloyd brand name for its consumer durables.
So
The Lloyd brand name had a strong association with window air conditioners. However, the company was
The Case Solution Starts From page 5
,OBJECTIVES
• Understand how a changing market scenario (in terms of a market opening to foreign investment, the
introduction of new technologies, and changes in consumer preferences) can affect a firm’s performance
• Create a differentiation strategy—for both the served and the underserved market
• Understand the importance of targeting the bottom of the pyramid and be able to apply the theory of
“disruptive innovation”
• Appreciate the art of creating a value proposition in a crowded market
• Create a strategy to regain profitability and market share
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pl
m
Sa
ASSIGNMENT QUESTIONS
1. What caused the sudden insurgence and rise of foreign brands?
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2. In a market crowded with domestic and foreign brands, how can Lloyd create a unique value proposition
tio
for customers?
3. In achieving a top market position, will technology be a differentiator? Can Lloyd apply the disruptive
innovation model?
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4. Are the Galaxy stores the correct way to reach customers?
5. How can Lloyd increase its profitability in both the short term and the long term?
So
The Case Solution Starts From page 5
,ANALYSIS
open the discussion by asking a question: What caused the sudden insurgence and rise of foreign
brands? The Indian market had been dominated by local players—brands like Voltas, Blue Star, and Lloyd had
been household names. These three brands effectively ruled the entire Indian market, however small it was.
1. What caused the sudden insurgence and rise of foreign brands?
use Political, Economic, Social, Technological, Environmental, and Legal (PESTEL)
analysis (see Exhibit -1) to provide a deeper understanding of the Indian market. After India gained
independence in 1947, a “licence” system formulated by the Indian government was introduced. In this
controlled environment, foreign players could only enter the Indian market via a joint venture, and the
maximum foreign ownership allowed was 49 per cent. Due to the political environment, domestic players
had an open playing field—the competition was low, and there were only a few domestic players. This
e
environment allowed local players to introduce low-quality products at very high price points. India’s gross
domestic product was low, and it was a developing economy. The consumer’s low buying power affected
pl
the development of the market, and there were only two branded players: Blue Start and Voltas. In the
absence of large foreign players and access to adequate capital, the level of technological development
m
was low. In such a situation, there were strong headwinds in the market—an unfavourable political
situation, low levels of technological development, and an unfavourable legal climate.
Sa
Once the Indian economy opened up in 1992, foreign brands like Daikin, Samsung, LG, Hitachi, and
Panasonic entered India and started their manufacturing operations. These foreign brands used technology to
directly attack Indian brands (Voltas and Blue Star). They targeted the high end of the market, which was the
most profitable. Before foreign players entered the market, Indian companies had become complacent—they
n
were in a sellers’ market and consequently made minimal efforts to understand customer needs. The box-type
tio
window air conditioner was the standard product, and the two leading companies seldom upgraded their
offerings. A parallel can be drawn with the automobile industry in India prior to the opening of the market to
foreign competition—Hindustan Motors, one of the leading car manufacturers, would make purely cosmetic
lu
changes to its Ambassador line of cars and market them as the Ambassador Mark 1, Mark 2, Mark 3, etc.
Box-type window air conditioners have many disadvantages. The first concerns its installation. A large opening
So
in the wall (1 metre by 6 metres) is required to install the box. Either an opening is made in the wall or the glass
window is cut open to fit the machine (see case Exhibit 6). This damages the aesthetics of the room, which is a
The Case Solution Starts From page 5
, EXHIBIT -1: PESTEL ANALYSIS
Political Economic Social Technological Environmental Legal
• India, as a • Growth in • An air • Entry of • An air- • In tall
party to the the middle- conditioner Japanese conditioned apartments,
Montreal income unit is players environment the dripping
Protocol segment seen as a provided provides of water by
since June (see consumers window air
1992, is Exhibit TN- with a wider conditioner
bound to 4) fuelled variety of units can
phase out demand •
ozone- for air
depleting conditioner
substances units. •
(refrigerants).
•
e
•
pl
m
Sa
•
n
tio
lu
So
The Case Solution Starts From page 5
CASE STUDY SOLUTION
e
pl
SYNOPSIS
m
Sa
Fedders Lloyd had been a strong household brand in the air conditioner market in India for several years.
Lloyd enjoyed strong brand recall, and Indian consumers traditionally regarded it as their first choice for
window room air conditioners, in the same league as Voltas (Tata group) and Blue Star, the two other major
Indian players. The entry of Japanese (Daikin, Hitachi, Panasonic), Korean (Samsung, LG), and American
n
(Carrier) players into the Indian market created a major upheaval. Split air conditioners became more
popular, consumers began to understand the benefits of energy savings, and greater room comfort became
tio
sought after—all of which pushed Lloyd down on the customers’ list of preferred brands.
Havells had started out as an electrical goods company. It enjoyed a preeminent position in this market and was
lu
known for its reliable quality and after-sales service. In 2017, Havells expanded its business by acquiring the
Lloyd consumer durables division. Havells decided to retain the Lloyd brand name for its consumer durables.
So
The Lloyd brand name had a strong association with window air conditioners. However, the company was
The Case Solution Starts From page 5
,OBJECTIVES
• Understand how a changing market scenario (in terms of a market opening to foreign investment, the
introduction of new technologies, and changes in consumer preferences) can affect a firm’s performance
• Create a differentiation strategy—for both the served and the underserved market
• Understand the importance of targeting the bottom of the pyramid and be able to apply the theory of
“disruptive innovation”
• Appreciate the art of creating a value proposition in a crowded market
• Create a strategy to regain profitability and market share
e
pl
m
Sa
ASSIGNMENT QUESTIONS
1. What caused the sudden insurgence and rise of foreign brands?
n
2. In a market crowded with domestic and foreign brands, how can Lloyd create a unique value proposition
tio
for customers?
3. In achieving a top market position, will technology be a differentiator? Can Lloyd apply the disruptive
innovation model?
lu
4. Are the Galaxy stores the correct way to reach customers?
5. How can Lloyd increase its profitability in both the short term and the long term?
So
The Case Solution Starts From page 5
,ANALYSIS
open the discussion by asking a question: What caused the sudden insurgence and rise of foreign
brands? The Indian market had been dominated by local players—brands like Voltas, Blue Star, and Lloyd had
been household names. These three brands effectively ruled the entire Indian market, however small it was.
1. What caused the sudden insurgence and rise of foreign brands?
use Political, Economic, Social, Technological, Environmental, and Legal (PESTEL)
analysis (see Exhibit -1) to provide a deeper understanding of the Indian market. After India gained
independence in 1947, a “licence” system formulated by the Indian government was introduced. In this
controlled environment, foreign players could only enter the Indian market via a joint venture, and the
maximum foreign ownership allowed was 49 per cent. Due to the political environment, domestic players
had an open playing field—the competition was low, and there were only a few domestic players. This
e
environment allowed local players to introduce low-quality products at very high price points. India’s gross
domestic product was low, and it was a developing economy. The consumer’s low buying power affected
pl
the development of the market, and there were only two branded players: Blue Start and Voltas. In the
absence of large foreign players and access to adequate capital, the level of technological development
m
was low. In such a situation, there were strong headwinds in the market—an unfavourable political
situation, low levels of technological development, and an unfavourable legal climate.
Sa
Once the Indian economy opened up in 1992, foreign brands like Daikin, Samsung, LG, Hitachi, and
Panasonic entered India and started their manufacturing operations. These foreign brands used technology to
directly attack Indian brands (Voltas and Blue Star). They targeted the high end of the market, which was the
most profitable. Before foreign players entered the market, Indian companies had become complacent—they
n
were in a sellers’ market and consequently made minimal efforts to understand customer needs. The box-type
tio
window air conditioner was the standard product, and the two leading companies seldom upgraded their
offerings. A parallel can be drawn with the automobile industry in India prior to the opening of the market to
foreign competition—Hindustan Motors, one of the leading car manufacturers, would make purely cosmetic
lu
changes to its Ambassador line of cars and market them as the Ambassador Mark 1, Mark 2, Mark 3, etc.
Box-type window air conditioners have many disadvantages. The first concerns its installation. A large opening
So
in the wall (1 metre by 6 metres) is required to install the box. Either an opening is made in the wall or the glass
window is cut open to fit the machine (see case Exhibit 6). This damages the aesthetics of the room, which is a
The Case Solution Starts From page 5
, EXHIBIT -1: PESTEL ANALYSIS
Political Economic Social Technological Environmental Legal
• India, as a • Growth in • An air • Entry of • An air- • In tall
party to the the middle- conditioner Japanese conditioned apartments,
Montreal income unit is players environment the dripping
Protocol segment seen as a provided provides of water by
since June (see consumers window air
1992, is Exhibit TN- with a wider conditioner
bound to 4) fuelled variety of units can
phase out demand •
ozone- for air
depleting conditioner
substances units. •
(refrigerants).
•
e
•
pl
m
Sa
•
n
tio
lu
So
The Case Solution Starts From page 5
