CUMI India's Global Strategy detail of the economical detail and study

presentations

1. CUMI India's Global Strategy: The China Puzzle A Case Study Analysis

2. Introduction to Carborundum Universal Murugappa Limited (CUMI) Carborundum Universal Murugappa Limited (CUMI) is a leading company in the abrasives and ceramics industry in India. Founded in 1954 as a tripartite joint venture, CUMI has grown to become the flagship company of the Murugappa Group, with total revenue of US$4 billion in 2011. The company has a rich history, starting as a steel furniture manufacturing company in Chennai and later expanding into the abrasives industry through partnerships with global players.

3. strategic vision and growth targets CUMI's strategic vision is to become a global leader in the abrasives industry by 2020. The company aims to achieve this by expanding internationally, gaining access to resources such as raw materials, energy, technology, and markets. CUMI has set ambitious growth targets, including reaching sales in excess of $2.5 billion by 2020, with an annual growth rate of more than 20 percent.

4. Key Challenges in the Chinese Market The complexity and foreignness of the Chinese market facing issues with high costs cultural differences the need for local leadership

5. CUMI's strategic visioning exercise and the "Vision 2020" plan. CUMI's strategic visioning exercise involved a comprehensive analysis of the company's strengths and weaknesses, leading to the articulation of a new vision known as "Vision 2020." The vision aimed for CUMI to become a global ceramic/abrasive company with sales exceeding $2.5 billion by 2020. This ambitious plan required an annual growth rate of over 20% and an international expansion to access resources and global markets. The company recognized the need to step outside of India to gain access to resources such as raw materials, energy, technology, and brand, and to access global markets. The strategic vision also emphasized the importance of a resource-restricted expansion, given the company's cautious approach due to the absence of deep pockets compared to developed world multinationals.

6. Company's growth targets and expansion plans. CUMI's growth targets included expanding internationally to gain access to resources and markets, with a specific focus on acquisitions in Russia and South Africa to control input costs and access markets. The company aimed to grow more than 20% annually and recognized the need for a different approach to size and risk profile due to resource restrictions.

7. The need for international expansion and access to global markets. The need for international expansion was driven by the company's recognition of the challenges in the Indian market and the potential for growth in international markets. CUMI's global strategy involved product-specific, backward-integration strategies to access cheap sources of raw materials and country-specific strategies to leverage competitive advantages and access markets for their products.

8. challenges encountered by CUMI in the Chinese market. C ultural and business differences between India and China The struggles of CUMI's stand-alone operations in China

9. C ultural and business differences between India and China The language and cultural differences, as well as the Chinese government's insistence on joint ventures, presented significant barriers to CUMI's expansion in China.

10. The struggles of CUMI's stand-alone operations in China CUMI's stand-alone operations in China faced difficulties in reaching profitability. The company's original objective was to produce low-cost commodity products for export, but it struggled to compete with local companies that enjoyed certain advantages, such as preferred access to raw materials and capital. The high cost of capital, cultural differences, and the need to understand the nuances of doing business in China were among the challenges that hindered CUMI's success in the Chinese market.

11. Addressing Challenges Strategies implemented by CUMI to mitigate cultural and business differences in China CUMI initiated the recruitment of a Chinese executive to lead its operations in China. CUMI established a 100% subsidiary in China. Discussion on the recruitment of local leadership and the establishment of a subsidiary in China aimed at adapting to the Chinese business environment and positioning CUMI for success in the challenging Chinese market. Analysis of the shift from a cost strategy to a product performance strategy The company aimed to develop world-class products that were not currently available in China at a competitive cost

12. Market Access and Service CUMI's market access and service strategies CUMI's market access and service strategies have been integral to its international expansion and distribution approach. The company has focused on leveraging overseas partners and growth stories to establish a global presence and access new markets.

13. Analysis of the company's approach to international expansion and distribution. This approach has allowed CUMI to tap into resources and markets in countries such as Russia and South Africa, where the company made strategic acquisitions to control input costs and gain access to key raw materials for abrasives. The company has established marketing offices in various countries, including China, Thailand, the Middle East, and Europe, to provide application support to key customers and expand its presence in international markets. By carefully treading overseas and leveraging partnerships, CUMI has aimed to address customers' unique problems and establish a worldwide stance for its products.

14. T he importance of leveraging overseas partners and growth stories. CUMI has emphasized the importance of leveraging overseas partners and growth stories when pursuing acquisitions and identifying growth opportunities, and providing application support to customers in various international markets.

15. India/China Trade and Business: Cultural and language barriers Have been significant challenges for Indian companies entering the Chinese market. The cultural distance between India and China, as well as the language differences, have posed obstacles for Indian businesses. The Chinese government's insistence on joint ventures with local partners has also been a constraint for Indian companies, requiring them to navigate complex cultural and business differences.

16. The historical success of Western companies in China and its implications for Indian companies: The historical success of Western companies in China has implications for Indian companies seeking to enter the Chinese market. Many Western companies have mastered the art of joint ventures in China, leveraging their expertise to navigate the complexities of the Chinese market successfully. Indian companies have been advised to learn from the experiences of Western companies and adapt their strategies to align with the unique business environment in China.

17. Some recommendations Leverage Overseas Partnerships. Strategic Visioning. International Expansion Strategy . Understanding the Chinese Market. Product Performance Strategy . Addressing Workforce Challenges.

18. Thank You Presented by : Sadiq Mustafa