Mr Ashok Sethi

Chairman

Importance of TCM in

Service Sector

• Information Technology

• Hospitality

• Travel

• Transportation

• Media

• Entertainment

• Sports

• Healthcare

• Wellness

• Finance

• Retail / Ecommerce

• Insurance

• Professional Services

• Design

• Marketing & Sales

• Energy

• Education

• Asset or Facility Management

Service Industries – Importance to GDP Growth

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Mckensey Insights

Service Sector contributed 54.3% to India’s GVA in 2018-2019

Service Sector growing at 7.5%

• The Essence of Strategy is choosing what not to do.

• Consumers tend to be more price sensitive if they are purchasing products that are undifferentiated

• Competition on dimensions other than price is less likely to erode profitability because it improves customer value

• When all competitors aim to meet the same needs or compete on the same attributes , the result is zero sum competition

• Quality differentials have a tendency to erode as an industry matures

Quotes by Michael E Porter

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Porter’s Model of Generic Strategies

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• Greater Value through lower prices or through greater perceived service for the cost paid.

• Cost a source of competitive advantage when market has standard service and low differentiation.

• Low Cost Service Providers could be result of:

1. Economies of Scale

2. High Productivity & Efficiency

3. Use of Technology

4. Service Model

5. Cost culture

• Differentiation a source of competitive advantage when service provides differentiated value like convenience, speed, reliability, reach, etc

• Great Examples …. Jio, Electricity utilities, Low cost airlines, logistic companies, , courier companies, IoT, etc

TUTOR 2U

Achieving Sustainable Value based Competitive Advantage

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Air lines Industry

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• Globalization

• Consumer Behaviour

• Low cost business model evolutions Develop Differentiation/Value

• Low cost technologies Develop Cost Leadership

• Innovations Bundle Services

• Country Policies

• M&BD Consulting 01.11.2016

Elements of Pricing Pressure Impacting Corporate Strategy

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• Unmanned deliveries … use of drones

• Shared Economy through crowd sourcing … DHL tried

• RFID Tags and QR Codes

• AI Based delivery route optimizers

• Use of Points of Sales Devices… Personal Pick up

Cost Efficient Innovations driving Courier Industry Competitiveness

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The NEWSPACES TNS EDIORIAL MAY 2018

• DTDC – Invests in cloud solution and plans to have hand held devices in all its shop floors by 2020. Adoption of technology reduces manpower by 8-9%

• Blue Dart – Comes out with most innovative collection system of Cash on delivery through Mobile Point of sale and digital wallets during demonetization period not to hamper its business.

• FedEx – In 2019 tries pilot using drones for delivery

• First Flight to ground Air Express Operations … 2007

• TCS signs a deal with India Post to transform country’s mail delivery system

• India Post – Speed Post .. One India One Charge… High Serviceability… Using Internet for tracking …. 1.4 crore packets per month … most economical

Çourier Companies – Competitive Focus

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• Automation

• Robotics

• Wearable Technology / AI

• Drones

• Self Driving Vehicles

• Cloud Computing

• Internet of Things

• Block Chain

• Light Assets … Aggregation

Cost Efficient Innovations Driving Logistics Industry Competitiveness

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The Business Journal

• CTC Freight Carriers Pvt Ltd …. Considered no 1 in 2018 – considered efficient network operations

• Flex Port – uses multi purpose cloud software and data analytics software

• Convoy – Founded in 2015 , Convoy is a network of truck drivers connected through a mobile App.

• Soft-wares like Turvo and Haven becoming popular for efficient operations.

• Safe Express invests in Logistics Parks for efficient operations under GST regime.

• Aggarwal Movers & Packers launched two mobile Apps – APML Suvidha & APML Sathi in 2018

• Indian Railways – Keeps Growing the convenience at minimal costs ( normally transport is subsidized business)

• Ola / Uber set the trend of low cost aggregators in logistics

Logistics Companies Differentiated Cost Efficient Focus

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• Customers want banking to be easy

• Customers want options to how they bank

• Customers want responsive customer service

• Customer want to be better understood

• Customer want great value from their financial products and services

• Lower expense ratio, entry load and exit load in mutual funds

Financial Market & Banking Services -Customer Focus at No Extra Cost

Confidential 12

Microsoft Industry Blog 2017

HDFC launched – Missed Call Recharge, Humanoid Robot IRA, Biometric based Loan, Vahan Gyan, etc

• Web based management system can automate inventory management and decrease the costs

• E Commerce store has less overheads than physical store

• Efficient sales as you come to know your customer’s needs and likings

• No physical store required

• Expanding business is on marginal costs and does not require huge capexes

• E Commerce has better reach

• Running E commerce store is simple

Cost Advantages in E Commerce Industry

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Mckensey Insights

Hotels … 3 star , 4 star , 5 star , Luxury …. Porter’s competitive strategy

Taj Group .. Zinger, Gateway, Vivianta, Taj Mahal

Restaurants … Grade 1, grade 2

Trend … Budget Hotels and Luxury Hotels – DLF with Hilton started budget brand Garden Inn

Franchisee Models

Management Fee Models

Cost & Differentiation Strategy in Hospitality Sector

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Mckensey Insights

• Remote meter reading (AMR, Local area network technologies) – Smart meters, faster, no human intervention , eliminate commercial losses

• Bill variability – Analytics and AI based to deduct anomalies and attend complaints

• Billing and dispatch … On line … Go green

• Collection…. Wide choices

• Self healing grids

• GIS based design optimization

• Workforce on line optimization … SAP or other sales module

• GIS based asset inventory visibility

• CRM

• SMART DISCOMS

Electricity Distribution – Digitalization to be cost and time

efficient

Confidential 15

• “Pricing is actually pretty simple” … Customers will not pay literally a penny more than the true value

of the product – Ron Jhonson , Could not turn around J C Penny

• “Pricing is the exchange rate you put on all the tangible and intangible aspects of your business –

Value for Cash” – Patrick Campbell

• “ With the price of life these days , you’ve got to get everything for free you can” – Carl Rogers

• “The moment you make a mistake in pricing , you’re eating into your reputation or your profits” –

Katherine Paine

• “Price is what you pay. Value is what you get” – Warren Buffet

Pricing Strategy ---- Insight into Value for Money

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Cost Relevance and Buisness Cycle

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Article on net

Kondratiev Economic Cycle Wave - 1920

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Innovations cause Improvements

Wikipedia

US Economic (Unemployment) Cycle – Cost Relevance

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India’s Robust Growth Story & Cost relevance -

Market Share & Sailing through troughs in Economic Cycle

20World Bank Blogs & CEIC

• Economic downturns are impossible to predict and sure as sunrise. Build resilience now, because when the

sun comes up , you’d better be moving.

• Resilient cut costs ahead of the curve. By the first quarter of 2008, Resilient already had cut costs by 1%

compared with year before.

• The Resilient maintained and expanded their cost lead as the recession moved towards Trough.

• The Resilient primarily focused on operational effectiveness and aligning sales and administrative costs

movement.

• SOUTH WEST AIRLINES

• BIG BAZAR

• AMAZON

• INDIGO / SPICEJET

• TAJ BUDGET HOTELS

• DISCOMS – FRANCHISEES

Relevance of Cost Effectiveness – Business Longivity &

Health – Conclusion

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Mckensey Insights

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