BT gets many responses to its case studies. Below is the best one on Havells's acquisition of Sylvania (August 18, 2013).
Tapas Rastogi, Student, Indian Institute of Management, Kozhikode
Havells was not the only company in 2007 which was feeling the heat after eating a fish bigger than itself. Tata Steel was in a similar predicament after its Corus deal. There are times when decisions go wrong because of external factors. Not much can be done in such situations. But aggregation, adaptation and arbitrage - the 3As explained by Pankaj Ghemawat in his book Redefining Global Strategies - can help.
Havells chose the latter two. The acquisition of Sylvania was a strategic move - diversifying Havells's portfolio, harnessing new technologies, and leveraging Sylvania's brand presence and market reach in 50 countries. A series of prior joint ventures and acquisitions in Europe had nurtured the Havells management over time in dealing with cross-cultural teams. Leadership was the key factor behind this successful turnaround.
The strategy was to reduce the employee strength, procure raw materials from countries where it was cheaply available, and relocate back-office jobs to low-cost countries like India and China. Though many western companies followed a similar strategy in 2008/09, Havells showed how it can be done smoothly and efficiently. The company did not face any staff strike after the layoffs. It optimised its supply chain operations. The company also decentralised decision making, which gave its foreign subsidiaries a sense of responsibility. This was supplemented with the audacious step of raising Sylvania product prices that led to increased revenue and prevented a dilution of the brand.
Tapas Rastogi wins a Harvard Business School Press pocket mentor
Published on: Oct 07, 2013, 5:25 PM IST
Posted by: Navneeta N, Oct 07, 2013, 5:25 PM IST