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Shiv Industries: Facing the
challenge of globalization
 Shiv Industries, an 100 crore corporate, based in

Raipur was facing a tough market in the year 2000.
 Background:
 Shiv was part of established business conglomerate of India.
 Focused on automabile industry and other 4-wheeler vehicle
segments for its business.
 It also had presence in automotive replacement market
 In moulded rubber industry Shiv had a high equity.
 Major concerns was it was facing tough competition, from both
the high-tech as well as the low-tech product markets.
The changing competitive scenario-
Trends in global auto-industry
 Fundamental changes in the industry were influenced by scale

economies, OEM strategies, new technology, globalization and
assorted business.
 According to ICRA-to remain competitive the auto component
suppliers would be required to be capable of:
 Providing OEMs with integrated systems rather than mere
components.
 Participating in the automotive supply chain globally.
 Raising quality to much higher levels.
 Seeking higher margins and revenues through increased participation
in the replacement market.
 Monitoring and absorbing a greater share of product warranty costs.
The Revolution within – Trends in
automotive component industry
 The automotive components secter was in the midst of

its third revolution in last 12 years.
 1st revolution:
 Vehicle manufacturers used the ‘Lopez’ concept of Reine
Preisdiktak ( Price as the only criterion).
 About 175 controlled almost 80% of the value of the total
supplied parts.
 2nd revolution:
 led to the growth of the mega suppliers, who specialized in
specific areas of supply.
 3rd revolution :
 globalisation
About Shiv
 The Shiv group was one of the largest industrial groups in India
 Established in 1900s
 It consisted of over 20 companies
 Turnover of US$ 1billion and a workforce of 37,000 people.
 Diversified into tea, auto parts, electronics, finance,
pharmaceuticals etc.,
 Emphasis on quality, service, reliability and ethics.
 Steadfastly ensured control over the management of its
companies in spite of various foreign collaborations and significant
external investments.
External environment (as relevant
for shiv)
 Primary focus – passenger car and other four wheeler vehicle
segments.
 International players who were bringing in their alliances in the
auto ancillary industry were rapidly replacing indigenous vehicle
manufacturers.
 Foreign auto manufacturers had relatively stricter quality issues
and perceived an advantage in dealing with their existing
international tie-ups.
 There existed a large segment controlled by counterfeit or
duplicate products.
 Shiv’s share in the replacement market was small and was
skewed towards the central India.( limited distribution network,
high prices and smaller portfolio of products)
 Some efforts had been made at shiv in establishing retailing
operations for moulded rubber parts but with limited success.
The Internal organisation at shiv
 Human Resource:
 Key strength-highly conscientious, relatively stable and reliable
management .
 Senior management staff were perceived to be more involved
in achievement of the completion of specific tasks rather than
driving the overall business objectives of their functional areas.
 Lacked aggressive attitude.
 Management style:
 Systematic analysis of non compliance was not executed.
 Lack of accountabilities were not well established.
 Excessive focus on systems and processes without much
appreciation of their impact on business objectives.
Consultants suggestions
 Tie up with a foreign principal and form a joint venture for high
value items for both domestic and international markets.
 Go alone without a tie-up and reconcile to being a Tier- II or Tier-
III player in the domestic market in the medium to long term.
 Develop an in house R&D capability to develop high-end products
in the long run for both domestic and international markets.
 Significantly increase presence in the replacement market.
 Look at the opportunity of being a supplier of low-end auto
components in the international market
Our suggestions
 Relocate the plants close to the markets in India.

 Concentrate on the business of auto components.
 Export auto components to Asia and Africa.
 Make a surgery to senior management.
 Try to capitalize on rubber technology.
 Marketing is essential to compete with the rivals.
 Try to develop in-house R&D in collaboration with
renowned research institute.
 Emphasize on “being the best-cost provider”.
 Relationship marketing

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Shiv Industries: Facing the

 Shiv Industries, an 100 crore corporate, based in

 Fundamental changes in the industry were influenced by scale

 The automotive components secter was in the midst of

 Relocate the plants close to the markets in India.

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