Moser Baer: Growth through Diversification

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Case Details:

Case Code : BSTR283
Case Length : 14 Pages
Period : 1986-2008
Pub Date : 2008
Teaching Note :Not Available
Organization : Moser Baer
Industry : Consumer Electronics
Themes: Diversification
Countries : India

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

The Early Years

Puri, the promoter of Moser Baer, had experienced several failures before he created Moser Baer. He established his first business venture, Metal Industries Pvt. Ltd., which manufactured aluminum wires and pipes, in West Bengal, a state in east India. However, labor unrest forced him to shut down this business (Refer Exhibit I to know more about Puri)...

Charting a Growth Path

In the late 1990s, CD-Rs were fast replacing floppy disks as the preferred storage medium. Moser Baer was late in recognizing this trend. The company established a factory to manufacture CD-Rs (and DVDs) only in 1999...

The New Forays

Solar Power
In October 2005, Moser Baer announced its plans to enter the high growth business of solar energy and photo-voltaic (PV) technology (Refer Exhibit III to know more about solar energy). It created a subsidiary -Moser Baer Photo Voltaic Ltd. (MBPV) - in order to take up product and market development activities in this area...

Planned or Unplanned Growth?

Critics were of the view that Moser Baer had gone in for too much diversification too fast. However, the senior management at Moser Baer was clear in their vision for the company in terms of the growth paths and strategic investments (Refer Table I for Moser Baer's business strategies)...

Outlook

According to some estimates, the annual global demand for CD-Rs would fall to less than 5 billion units by 2010 and then taper off by 2015.

The demand for DVD-Rs, on the other hand, was expected to increase to 8.5 billion units by 2008, from 5.15 billion units in 2006.

The demand for Blu-ray Disks was also expected to increase in the coming years. Moser Baer was placed well to take advantage of these demand shifts...

Exhibits

Exhibit I: About Deepak Puri
Exhibit II: Financial Information on Moser Baer Ltd.
Exhibit III: A Brief Note on the Solar Energy Industry
Exhibit IV: Solar Energy Technologies

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4] Floppy disks or floppies are removable data storage media. They are composed of disks of thin, flexible magnetic storage medium encased in square/rectangular plastic shells.

5] CD-R or Recordable CD is a disk used to record digital information using a special recorder and pre-mastering software.

6] DVD or Digital Versatile Disk is an optical disk that can store information up to 4.7 Giga Bytes (single layer) and 8.5 GB (double layer).

7] CMC Magnetics Corporation is a Taiwanese company and is the world's largest optical disk manufacturer. It sells CD-R, CD-RW, DVD-R, DVD-RW, and floppy diskettes under the CMC brand. It is also the exclusive distributor of the Philips brand of optical storage media for the Americas (Source: www.cmcdisc.com)

8] Shalini S. Dagar, "Reinventing Moser Baer,"www.businesstoday.com, May 06, 2007.

9] Strategic minority investments refer to investments made by corporates in young companies that offer to bring something of value to the corporate itself. The aim may be to gain access to a particular product (raw material or finished product) or technology or to support young companies that could become future customers for the corporate's products. (Source: www.lse.co.uk)

10] A material structure assembled from a layer or cluster of atoms with size of the order of nanometers (one-billionth of a meter or 10-9 m).