Micromax, once a rising star, now struggles

Micromax started as an embedded software design firm in 1998.

On 29th of March 2000, Micromax was incorporated as an Indian IT company in
the domain of the embedded device. In this case study, we will see the rise and
fall of Micromax.
In 2000, Micromax Started by selling computers, software courses and fixed
wireless public phones (PCOs).
In 2008, they began selling mobile phones. Micromax made an entry into mobile
market with their first phone Micromax X1i.
In 2010, Micomax became one of the largest mobile handset company with a
low-cost feature phone segment. They also launched fun book series in Tablet
computers.
In 2013, they made Hugh Jackman is the brand ambassador and appeared in a
commercial for Canvas Turbo A250 and other Canvas series. Also in the same
year Ericsson sued Micromax for infringement of their eight patents registered
in India.
In 2014, Micromax became Tenth largest smartphone vendor in the world. On
the same year, Sales of OnePlus One blocked in India by the Delhi High Court as
Micromax complained that OnePlus had infringed on Micromax’s exclusive
rights by launching OnePlus mobiles running cyanogen OS.
In 2015, a Reddit user found adware installing itself on their Micromax A093
Canvas Fire Telephone.
In March 2016, Micromax CEO Vineet Taneja resigns .
“Vineet has moved on to pursue other interests. We would like to thank him for
his contribution and wish him good luck.” — Micromax
In October 2017, Micromax launched Bharat 1 at Rs. 2200 in partnership with
BSNL. On the same year Micromax sales in the mobile market fall by up to 30%
due to demonetization.
In 2018, Micromax along with Lava, Intex and others to lay off in -shop
promoters and slashed salaries to cut costs in the bitterly competitive market.
Why sudden downfall? And how they will revive?
Unfortunately, due to intense competition from the Chinese companies, their
mobile market sales went down but their products in consumer electronics and
home appliances kept them from the downfall. Also, the revival of Yu and the
One Plus series still have a great impact on the mobile market. Micromax’s
multi-brand strategy helps them to regulate the production of low and mid -
range smartphones and the flagship phones thus, adding benefit in market
competition. Micromax continues to pursue their vision for brighter tomorrow.

Introduction

Micromax is an Indian consumer electronics company headquartered

in Gurugram, Haryana, India. It was established as an ITSoftware company
operating in the Embedded Devices Domain. It later entered
the Mobile Handset business. By 2010, Micromax was one of the largest
domestic companies making handsets in the low -cost feature phone segment
in India. As of Q3 2014, Micromax is the Tenth Largest Smartphone vendor in
the world. The company is facing stiff competition from Chinese companies that
are penetrating the Indian market. The company also owns YU Televentures,
which sells the products under the brand name YU.

The key problems and issues of sudden fall of Micromax:

 The quality of the products manufactured were unsatisfactory.

 Promised more, failed miserably in deliverance.
 Chased behind quantity instead of quality.
 Didn't study the Indian market carefully, and set foot in the biggest
electronics market of the world under prepared.
 Weren't a big name in their own country, but still decided to expand
the business overseas.
 Touted customers to wait for their next great line-up of products, took
Hugh Jackman as the brand ambassador, still failed miserably.
 The biggest reason why they failed was not because some of their
products underperformed, but that their products were so mighty
cheap that every other person walking past you had the same phone as
you, it created discomfort, and hence people started ditching
Micromax.
 Summary of the case study:
Yes, from a customer’s perspective, they failed to introduce products in
the market. Micromax was doing great, its products were the best value
for money, and there was a time when a mobile handset got sold out i n a
few minutes. It was the nascent stage of Xiaomi entering the m arket, it
was bogged down by not being available at stores, and only at flash sales.
People were apprehensive, this is when they should have worked harder
as a competition. Although the products of each company were similarly
priced, Xiaomi started becoming popular, because of the amount of
handsets, and Micromax not really producing new stuff. That mistake cost
them dearly, now Micromax isn’t what it used to be, there was a time
when Micromax made fun of Samsung whose phones were so expensive
that they had to be gotten on EMI’s, and now it placed too much faith on
its customers, and underestimated the competition, the result being
obvious.

Background

Micromax was incorporated as Micromax Informatics Ltd. in the year 1999. It

began selling mobile phones in 2008, focusing on democratising technology for
masses to compete with international players. Micromax is an Indian consumer
Electronics Company headquartered in Gurgaon. The company was established
as an IT software company operating in the embedded devices domain; it later
entered the mobile handset business. By 2010, it was one of the largest
domestic companies making handsets in the low -cost feature phone segment in
India. As of Q3 2014, Micromax is the tenth largest smartphone vendor in the
world.
The Idea:

In August 2007, in the powerless village of Behrampur in West Bengal, Mr Rahul

Sharma saw an Airtel PCO being power-driven by a truck battery. During night
hour, the PCO owner would drag the battery 12 km to an adjoining village on his
cycle, charge it there overnight, and drag it back in the morning to Behrampur.

This was the source of inspiration for its first product when Micromax dec ided
to diversify from PCO devices into the business of mobile handsets in late 2007.
The company designed a battery that could last for 30 days on a single charge
and give 17 hours of talk-time. This was implemented through vendors in China
and Taiwan to whom Micromax asked to manufacture 10,000 handsets with
these battery specs. Price Rs 2, 249, X1i, was an immediate hit in rural India,
and Micromax’s handset business was on its way. The four founders of
Micromax waited for eight years to come together to do business. After college,
Mr Jain relocated to the US and joined GE, Mr Arora linked with Blue Star and
Mr Sharma moved to an auto components company Bundy Engineering. In 1999,
the trio quit their jobs to join Mr Agarwal. They set up Micromax Technolog ies,
an IT education company dealing in e-commerce and embedded technologies.
Reasons for the success of the brand :

In the second quarter of 2014, Micromax became the top seller in India leaving
Samsung and Nokia behind. So what marketing strategies did Micromax
followed?

 Clear strategy: Delivering the right value at the right price seems to be
the core value of the company’s strategy. It did it by working over P’s of
marketing and doing this it has reached to 130,000 retail outlets covering
560 districts across India.
 The right funders: On 20 September 2010, Micromax announced that
Sequoia Capital and Sandstone Capital Llc had taken minority stakes in
the company, following which Mohit Bhatnagar, managing director of
Sequoia Capital, joined the company’s board. Madison India Capital also
participated in the investment round, which totaled Rs 200 crore
($43million). Earlier Micromax had raised $45 million in January 2010
from TA Associates.

Issues that affected the company:

The Electronics Company fell 12.1% to the growth of 15.4% in last quarter and
since then it has lost the market by almost half and is struggling badly now.

Management Tensions

Micromax, which was founded in New Delhi by four partners in 2000 but only
began selling mobile phones in 2008, built its market share by working with
Chinese manufacturers such as Coolpad, Gionee and Oppo to offer affordable
phones quickly. In 2015, it launched more than 40 new models. In 2014, the
founders brought in outside managers to lead the company at a time when
Micromax was challenging Samsung to become the largest mobile phone maker
in India. But tensions arose soon after between founders and the newly hired
executives, six former executives told Reuters. These conflicts undermined
Micromax’s attempts to raise funds for expansion, say former executives. Last
May, Alibaba walked away from a mooted $1.2 billion purchase of a 20 percent
stake, citing a lack of clarity on growth plan s, according to one executive
involved in the discussion. Micromax co -founder Vikas Jain said in an interview
with Reuters this week that the company and Alibaba disagreed on a future
roadmap.

Change of Executives for Micromax:

The four owners of Micromax brought in Executives from outside to fuel the
growth and expansion of the business. The main motive behind the hiring was
to expand the R&D of the organization. However, things look bleak as conflict
among the new executives, board members and investors f ell out and the
growth was shunted. The new R&D Center of Bangalore was even partially shut
down and the company was going nowhere all of a sudden. Moreover, the top
executives started quitting the organization amid fall out with the board
members and the investors .

Investor and Expansion Plan

Investor did not show any interest in the expansion plans of Micromax and
Alibaba backed away from it. The company has failed to attract any new major
investor and that is still a problem. The expansion plan is on the card including
new ranges of products but investor is buckling the company up at this stage.
Organization is already an established brand in Russia and it may be the time to
start investing there.

Competition

The competition was so huge for the organiz ation that it got crumbled. Samsung
started releasing affordable phones to tackle the organization. The company used
to outsource technology and manufacturing products from Chinese Companies
like Oppo, Coolpad and others. However, these companies started i nvesting
heavily on the fastest growing market in the world. New competitors like Xiaomi,
Lenovo, Gionee started hammering the business with the e -commerce deals.
Everything was so sudden and so huge that the Company could not bear it.
 Evaluation of the Case

Four years ago, Micromax’s office in Gurugram was at par with the likes of
Google. The multi-storeyed building had open spaces, rooms aplenty, and even
balconies and terraces where parties could be thrown.
Today, the company operates out of a single floor in a common office complex
in Gurugram. The once-swanky office now has only a few cabins, far fewer
employees, and is quite cramped. Incidentally, in 2014, Counterpoint Research
put Micromax at the helm of the booming Indian smartphone market. It even
surpassed Samsung, and shipped more phones than any other brand in India. In
fact, home-grown smartphone brands such as Micromax, Lava, and Intex once
cornered nearly 54% of the market share. The same brands have a less than 10%
market share today. What really happened?
A look back at the last few years shows home -grown smartphone brands losing
their dominance to a gradual Chinese onslaught. Today, the top player in India
is Xiaomi, accounting for 29.7% of all smartphone ship ments (IDC data). The
company—which introduced itself with competitively priced devices —has slowly
built its base in the country over the past five years, and is now reaping the
benefits.
In fact, according to data from IDC, four of the top five smartphone brands in
India are from China—Xiaomi, Vivo, Oppo and Transsion hold the 1st, 3rd, 4th
and 5th positions, respectively. Samsung, which ousted Nokia from the Indian
market, remains at number two, but is feeling the heat as well.
Meanwhile, Intex (which did not offer comment for this story) and Micromax
have both been selling consumer appliances. Micromax says it sells ne arly a
million TVs every year, while Intex’s website proudly declares itself to be the
number one Indian LED TV brand. Intex has also dabbled with air -conditioners
and speakers.
The offline story

Chinese brands have always offered low prices, and they continue to do so.
However, the market has also changed. Now, the low pricing of devices has
become the bar that others have to compete against.
In one of its launch events in China some months ago, Lei Jun, CEO of Xiaomi,
had said that if his company make s more than 5% net profit from its hardware
business, it would aim to pass that benefit on to its customers.
According to an industry source closely involved with smartphone sales, Oppo
and Vivo sell phones in India at a margin of about 12%. These two comp anies
have traditionally sold phones at higher prices than Xiaomi, since they plied
their trade in an offline-centric model in India.
In the offline space, companies incur higher overheads, which raise the overall
cost of the device, and hence, the final p rice too. According to a distributor who
requested anonymity, when Oppo and Vivo started dominating the offline
segment, they were paying lots of money to retailers and distributors to keep
their brands visible. Yet, that wouldn’t reflect on the prices of the actual
products. “They would even pay for redecorating a retailer’s store," the source
said.
Oppo and Vivo were not just paying for Indian Premier League (IPL)
advertisements and sponsoring the Indian cricket team, but also paying a lot of
money to retailers who would put up their boards; give their products prime
positioning; or sell their devices [Link] means retailers could make
easy money from Chinese brands by showing the number of devices sold, while
a brand like Samsung demands that the y sell phones worth a particular amount.
In a market that mostly buys cheaper phones, achieving value targets, like that
of Samsung’s, are more difficult.
Mudit Sethia, who runs smartphone distribution and retail channels in
Kishanganj, Bihar, said that some Chinese brands offer ₹ 150 per unit sold as an
incentive. This could go up to above ₹ 200 per unit, depending on how
expensive the phone in question is.
Furthermore, another source in Gurgaon said some distributors are wholesaling
Xiaomi, Vivo and Oppo’s phones to grey markets at nearly zero margins. This
allows them to fulfill the volume targets that these Chinese brands want, hence
earning the incentive they offer on those sales.
Selling to the grey market doesn’t just allow them to fulfill volumes —it also
gives them a much wider coverage than their current stores and networks can
offer.
He also said that distributors who were doing business worth ₹20 lakh per
month by selling Xiaomi’s phones earlier have suddenly seen a sharp increase in
business transactions—up to₹ 4 crore per month just ahead of the festive
season, thanks to this strategy. Another reason for this sharp increase is
because of financing plans, which allow customers to get phones today and pay
for them later.

How it happened?

The main reason behind the fall from grace for Indian brands, however, is the
failure to gauge a fundamental shift in the market —when India suddenly moved
from 3G to 4G in a matter of months and Reliance Jio changed the game
completely. According to Vikas Jain, co -founder, Micromax Informatics Ltd,
Micromax found itself with a huge stock of 3G smartphones across its supply
chain, which it had to get rid of at a time when the market was focusing on 4G
devices. “The total addressable market (TAM) went down," he said.
His inventory, which was meant for 60 -75 days, was extended to 365 days. Singh
agrees with this, saying that the Indian brands “had a lot of commitments" in
China for 3G phones, when Xiaomi and other brands were selling 4G devices.
Jain mentions that this was something that hit all Indian players, and since the
market leaders could not fulfill the consumers’ demand for 4G -enabled devices,
a huge gap was left to be filled. Their Chinese counterparts duly capitalised.
The Chinese firms were already coming fro m a 4G-dominant market and could
bring their 4G-enabled phones to India. When Reliance Jio forced telecom
players to adopt 4G connectivity and voice -over LTE (VoLTE) calling, Chinese
phones were already ready for it.
While these brands also offered better pricing at times, Jain says that it alone
cannot be the differentiator. “If I am able to do that (undercut somebody), then
somebody should be able to do that to me too. Price is not the only mantra," he
added.
An industry veteran who wished to remain anony mous further added that
Chinese brands have been known to even sell phones at a loss, just to gain
consumer interest.
Kapal Pansari, director of Rashi Peripherals, one of India’s top five IT
distributors, also said that Chinese firms gamed the distribution ecosystem well,
even while treating both offline and online channels on an equal footing. He
said, “Indian players did not manage distribution hygiene properly and created
discontent and mistrust among its distribution stakeholders. Chinese brands, on
the other hand, continued to improve on the channel front with new
experiments, and introduced innovative channel finance models in order to
build trust among the involved partners."
S.N. Rai, co-founder of Lava, further added that the Chinese brands also had
control over the value-chain of the business – the design and manufacturing
side. While Rai claims that Lava also had control over such aspects of the
business in India, the Chinese were more evolved.

What is working?

Micromax has revealed that it will launch almost 13 smartphones in India by

March 31, 2019.

Micromax strengthens international play, to foray into South Africa -

Micromax is foraying into the South African market as it looks to further bolster
its international operations, which it expects to contribute as much as 20 per
cent to its overall revenues by next fiscal.

The company is also looking at expanding its range of consumer durable

products like television sets and smart accessories to Russia and Middle East.

Micromax, which is facing intense competition from Samsung and Chinese

players like Xiaomi, Oppo and Vivo, among others in the Indian market,
operates in Russia, Middle East, Nepal, Bangladesh and Sri Lanka.

Micromax to invest Rs 200 cr to expand consumer electronics segments –

Micromax will invest Rs 200 crore into washing machines, refrigerators and air
coolers, over the next 12 to 18 months, as it diversifies into new segments and
moves towards becoming a consumer electronics brand.

The company expects consumer electronics to contribute 30%, up from 20%

now, to the overall estimated revenue of Rs 5,400 crore by 2020, which will also
be a 20% growth over its revenue estimate for the year ending March 2019. The
share of mobile phones in revenue will come down to around 70%, from 80%.
What is not working?

Innovation-

Most Indian founders are business man not entrepreneur, Micromax and other
company did little innovation. They just repackaged the chinese phones. Anyone
could have told what is the exact model number of Micromax and their original
Chinese model. Their Customer service was so pathetic, they don’t care about
their existing customer base. During 2014–2015 CEO Sanjay Kapoor build a R&D
centre in Bengaluru, hired 80–90 engineers to build software, UI. Founders had
no interest in innovating.

Strategy-

Indian brand had 48% share in 2nd quarter of 2014, Micromax had 17% followed
by intex( 11%) and lava(7%).

Micromax was a privately held company, four Founders owned 80% of the
company. Once they face stiff competition from other chinese vendors in India,
they hired people from Airtel, Sequoa and even head of Samsung India but
founders never let them free hand to operate, denied stock options and thrown
people in charge of ‘misappropriating fuel bill”. There was internal strife among
founders, one of the founder Rahul sharma started his own venture YU.

1. When Samsung toppled Nokia in India as the largest mobile se ller, they
marketed their product aggresively, reportedly paid 12% commission to
retailer, Micromax also started doing same. But OPPO and VIVO paid
18% and also incentives to put their banner in stores. Retailer started
pushing these brands to customers (i think you have experience in
this).
2. Micromax competed in 5000-10000 price category. This category has
cut-throat competition, so little profit. They never tried to be in
premium phone market which is also most profitable [Link]
launched Micromax Turbo in mid-range segment, hired Hollywood star
Hugh Jackman. When Chinese brand was cutting cost by going online
and flash sale, Micromax wasted money.
3. Micromax has 40 something phones in 5000 –10000 segment! while
Xiomi had 3 or 4. Indian brands had no targeted customer [Link]
had little attention in building material, no update of newer software.
When Chinese started using metal body they still used [Link]
brand also offered updates regularly. Micromax has licence of
Cyanogen mod OS which was best customisable OS, sadly micromax did
not used this OS. I still use a yureka plus which i thought cyanogen
sadly it was 4.4 android (kitkat).
 4. India is a selfie crazy nation, in 2014, world’s 60% death related to
selfie happened in India, OPPO and VIVO adve rtise their phone as
selfie-phone, looks like Indian brands had no idea. I remember a
interview of Samsung India CEO, where he stated that they just copy
the trends and innovate.
5. Miromax and other indian brands missed the JIO fever,when JIO
building the optical cable network silently, Indian brands failed to
predict the Jio revolution. Once Jio launched, 70% of their phone were
3G, It took months to catch up while chinese were 4G ready. Jio brand’s
Lyf got a ride with the jio wave.
6. Demonetization also hit them, but how founders blame it is just tip of
iceberg, Oppo, Vivo and Samsung was also hit, but they changed their
strategy as such.
7. Micromax tried to raise money, Alibaba offered to buy 25% stakes for
one billion dollars. But soon both canceled the deal a s Alibaba want
controlling stakes and push its own AliYun os, which Micromax
rejected. Earlier Softbank also walked off from similar deal.

Proposed Solution or Changes

Hopes of possible comeback-

Any disruptor in any industry knows, technological advantages do not last

forever and cash burn is not a long-term strategy. That is why Indian brands
have begun to sense the possibility of a comeback. According to Sethia, the
likes of Oppo and Vivo have stopped paying for putting up their boards, and
other such advertising tactics.
Rai from Lava said that distributors have been asking the company for products,
“now that Oppo is struggling."
Sethia currently runs distribution for Tecno, a brand owned by Transsion —the
fifth largest smartphone seller in India by shipment. He previously worked with
Oppo and Vivo devices. He explains that while Xiaomi is the top brand in India ,
it is still quite weak in terms of distribution channels.
There are rumours floating around in industry circles that Xiaomi executives had
met with Micromax to buy out its once -strong retail presence, and use that to
its advantage.
The company, today, thinks it’s at par with any global manufacturer, and the
government’s Phased Manufacturing Programme, which has a mix of import
tariffs and incentives for local assembly, will help them as well. Besides, while
Indian brands have lost their dominance within I ndia, they are still selling
phones in other countries, like Mexico.
Moreover, distributors are beginning to consider other brands as options too,
though none of those who spoke with Mint mentioned Indian brands,
specifically, as being under their consider ation.
But the unintended side-effect of the disruption unleashed by Jio, which caused
the temporary downfall of the feature phone, has been the massive expansion
in the market itself. Many of the first -time mobile internet users may get on
board via the feature phone—the erstwhile forte of the likes of Micromax and
Lava.
Feature phone is also a segment where Indian brands never really lost their
presence completely. In fact, in December 2017, Micromax claimed it had sold
three million handsets under its Bh arat range of cheap smartphones.
The launch of the Jiophone2 and Airtel’s nascent plans to launch its own low -
cost device means telcos may be on the look -out for a number of tie-ups with
phone makers.
Micromax’s Jain dreams of a future where the ideal smar tphone strategy is not
just new product launches, but tying up with telcos, so that consumers buy a
phone and get 4G plans bundled with it.
Micromax recently won a ₹ 15,00-crore deal from the Chattisgarh government
to distribute 50 lakh smartphones —part of an emerging trend in politics where
free phones are dangled to win over youth support.
But merely relying on such populist sops, or possible tie -ups with telcos, isn’t
much of a strategy. Unless Indian phone makers can quickly figure out a way to
go down the “relatively cheap premium route" —a segment OnePlus completely
dominates— their hopes of a dramatic return to the dominance of 2014 may be
dangling by a very tenuous thread.
The Comeback Strategy-

Telecom analysts are not surprised. Ignoring the upg rade or replacement
market, they reckon, above Rs 10,000 put Micromax on the mat. While
Micromax banked too much upon the entry level market, it didn’t play its cards
in the upgrade segment, says Faisal Kawoosa, principal analyst (telecoms) at
CyberMedia Research.

The Chinese brands, he lets on, had a better sense of the market and felt that
India has more potential for upgrades above Rs 10,000. “This is where it was
against the tide he adds.

Second, an overwhelming portfolio of 3G phones slowed down its transition to

4G handsets. Since Micromax anticipated that there is still room for entry -level
smartphones, it created a good pile of 3G smartphones. The Chinese, on the
other hand, gave even better 4G smartphones as consumers did not mind
shelling extra for a better experience.

“So, the whole idea that affordable sells did not work for them this time,” says
Kawoosa. Third, low-entry barriers meant that Mi Micromax’s advantage of
having a physical presence could be easily replicated by the rivals. And a
challenger mindset too played its role in scripting the downfall.

Affordable 4G Handests:
Its entire smartphone portfolio is 4G volte enabled now. While B harat 2 at
3499/- is there most affordable 4G Volte smartphone. Bharat 2 sold 0.5 million
units within the first 50 days of the launch.

Streamlining Customer Service:

Launched project PROMISE in October 2018 to track individual work and create
a transparent system. By November, only 13% product came back form the
service centre and rest were all serviced in the centres either on the same day
or within 7 days.

Personal Opinion about Micromax:

The fact is that not only Micromax, but hardly any Indian Smartphone compa ny
has the capability to design its own hardware and manufacture (CKD) here in
India. Micromax is trying to sell phones which it neither manufactures, nor have
complete knowledge of its micro components and Software. Yes, it’s true. I
believe that Micromax is not manufacturing the phone itself, and its staff
doesn’t have knowledge if its micro components properly. It was found that
someone tried to enable VoLTE feature of its modem through modem image of
another firmware of similar handset, but it caused touchscreen calibration to be
messed. But instead of providing solution, Micromax warned users to stay away
from such things. Micromax(YU) neither provided VoLTE update/patch nor tried
supporting such users. It was another developer who found and solved the
exact problem. Micromax/YU imports handsets/components from the country of
Xiaomi. Here Xiaomi has the benefit of its own country.

Recommendation

SWOT analysis of Micromax to analyse company’s strengths and

weaknesses:

Strengths-

1. Economical Handset provider: After starting its operations in 2008, within

3 years of time it became the 3rd largest Handset manufacturer in India.
Initially it focused on rural market but over the period of time it became
leader in economical (Value for money) handsets in smartphones also.
2. Local market knowledge: After successfully excelling in
rural markets continuously for three years, Micromax has gained enough
experience to focus completely towards the urban market in their current
and future strategies. Due to this change in focus and the
increased customer base, Micromax has seen success in the last 2 years.
3. Celebrity endorsement: Micromax has sponsored many events like that of
cricket & football. Also its celebrity’s endorsements got bigger when it
signed Hollywood actor Hugh Jackman as its brand ambassador. Akshay
kumar & Twinkle Khanna (Micromax Bling) were the company’s brand
ambassador. However, Micromax has used brand ambassadors scarcely,
continuing with its Value for money strategy by avoiding over e xpenses.
4. Extensive distribution: Micromax made its products available through
distributors & resellers far and wide across the country and also exported
it to many countries. The advantage was that it gained many customers
due to its strong distribution channel. It also tied up with E-
commerce companies as exclusive partners.
5. First mover advantage – Micromax was one of the first phones in the
market to concentrate on penetrating the smartphone market. Samsung
was the clear leader when Micromax entered and Micromax penetrated
 the market with superb phones are very low cost. Thus, later on when
other mobile brands with the same strategy entered, Micromax was a
brand by that time.

Weaknesses-

1. Limited global presence: Micromax have operation only in SAARC

countries which is restricting their growth. Recently they have planned to
enter European Union.
2. Not preferred by Tech-Savvy people: Although Micromax is successful in
emerging as 3rdlargest handset player but they are no t able to create trust
among the tech-savvy users about the handset quality.
3. Low price means low quality – The price vs quality debate is always on in
the mind of the customer when purchasing electronic products. Because of
its low price, Micromax is several times considered as low in quality.

Opportunities-

1. Market Expansion: Entering in developed nations like US & Eur opean

nations will be the future strategy of Micromax which will bring advanced
capabilities to even home nations & this will help Micromax in creating
trust among its users.
2. Penetrating the Urban market: Further penetration in the urban market
just like they have done in rural market will help in the growth of the
company.
3. Improving the brand perception: Working on changing the
brand positioning will help the company in changing its brand image in the
urban markets where it is perceived as a low quality mobile.

Threats-

1. Competition from national & global players: Handset market is going

through intense transformation & all the national & international players
are leaving no stone unturned to increase their market share. Price wars &
eating up each other market share is a common scenario.
2. Dynamic tech environment: Continuously changing technological
environment can be serious threat to the Micromax. Since already
established players like Samsung, LG etc. can cope with this, it will difficult
for Micromax to handle this challenge.
3. Replication of business model: The strategy used by Micromax is itself
commendable but lots of other Local & Chinese ha ndset mobile makers
like Geonee, Lava etc. can imitate their business models which will have
adverse effect on existing players and Micromax will not be an exception
in such a scenario.
 Micromax Porter’s Five Forces Analysis:

Bargaining power of Buyers-Low to medium -

 Diverse customers
 Switching cost-Low
 The increasing number of choices and very little differentiation of
products
 Availability of information aids buyer’s bargaining ability
Threat of new entrants-Medium

 Patents- 250,000 Active Patents.

 Capital requirement- Medium
 Time needed to set-up- Medium to High
 Brand loyalty-Low (But Brand name is important)
 Already existing competition to gain market share among the big players.
Bargaining Power of Suppliers-Medium to High

 Number of suppliers Chipset – Low(Qualcomm-66% and Mediatek-17% )

Operating System- Android(Open source),iOS, Windows
 Cost of switching- High
 Comparative share in the business-Medium to High
 Degree Of Rivalry- Medium
 The Concentration Ratio Top 4 companies have - 60% share Samsung-23%
Micromax-17.9%
 Smartphone Market growth-19%
 Competitors constantly at short intervals launch new variants , Models

Threat of Substitutes - LOW

 Communication tech has reached to stagnation

 Wire to Wireless Saturation
 Only disruptive substitutes : Touch Pads, BookPads with VoIP facilities
 Nascent emergence of Wearable Technology

BCG Matrix of Micromax :

Stars
The financial services strategic business unit is a star in the BCG matrix of
Micromax Scaling the Largest Indian Mobile Handset Company. It operates in a
market that shows potential in the future. Micromax Scaling the Largest Indian
Mobile Handset Company earns a significant amount of its income from this
SBU. Micromax Scaling the Largest Indian Mobile Handset Company should
vertically integrate by acquiring other firms in the supply chain. This will help it
in earning more profits as this Strategic business unit has potential.

Cash Cows

The supplier management service strategic business unit is a cash cow in the
BCG matrix of Micromax Scaling the Largest Indian Mobile Handset Company.
This has been in operation for over decades and has earned Micromax Scaling
the Largest Indian Mobile Handset Company a significant amount in revenue.
The market share for Micromax Scaling the Largest Indian Mobile Handset
Company is high, but the overall market is declining as companies manage their
supplier themselves rather than outsourcing it. The recomme nded strategy for
Micromax Scaling the Largest Indian Mobile Handset Company is to stop further
investment in this business and keep operating this strategic business unit as
long as it’s profitable.

Question Marks

The local foods strategic business unit i s a question mark in the BCG matrix for
Micromax Scaling the Largest Indian Mobile Handset Company. The recent
trends within the market show that consumers are focusing more towards local
foods. Therefore, this market is showing a high market growth rate. However,
Micromax Scaling the Largest Indian Mobile Handset Company has a low market
share in this segment. The recommended strategy for Micromax Scaling the
Largest Indian Mobile Handset Company is to invest in research and
development to come up with innovative features. This product development
strategy will ensure that this strategic business unit turns into a cash cow and
brings profits for the company in the future.

Dogs

The plastic bags strategic business unit is a dog in the BCG matrix of Micromax
Scaling the Largest Indian Mobile Handset Company. This strategic business unit
has been in the loss for the last 5 years. It also operates in a market that is
declining due to greater environmental concerns. The recommended strategy
for Micromax Scaling the Largest Indian Mobile Handset Company is to divest
this strategic business unit and minimise its losses.

Results

All the mentioned strategies will help Micromax in increasing its market share
and it penetrated deeper in the urban markets. It will also help to analyse their
inner strength and weaknesses.

Recommended further actions to solve some of the issues:

 Sponsoring Indian Cricket Matches
 Reach to Indian market
 Right product strategy
 Promotion strategy
 Place strategy:
 Distribution strategy
 Customer acquisition & retention:
 Use of Social Media
What should be done and who should do it?

To strengthen its business, Micromax diversified into other consumer

electronics categories -- flat panel televisions, air conditioners and washing
machines.
Data from Counterpoint also show that after making a brief comeback into the
top slot, Samsung has again slipped to the second spot. Xiaomi leads the market
with 27 per cent share; Samsung has 23 per cent. Vivo has 10 per cent and Oppo
is fifth with eight per cent.
Total shipment of smartphones during July-September rose five per cent from a
year before. Four of the top five - Xiaomi, Samsung, Vivo and Oppo - reported
record shipment, in anticipation of better sales during the festive season.

CEO should take the responsibility for the revival process and should invest on
Research and Development to invent more innovative products in the future.