Professional Documents
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1 All about GATI (Situation Gati Ltd started operations in 1989 as a door-to-door cargo company. A
Analysis) division of Transport Corporation of India (TCI), Currently, Gati is one of
2 Vision Strategy Business the leading express distribution and supply chain solution companies in
Model Congruence India. The company's scale of operations is large, ranging over a wide
1) Do an External / Industry
network connecting 603 districts across India. Gati provides multi-modal
Analysis using PESTLE / 5 -
Forces approaches transport services with connectivity across air, road, ocean and rail.
2) Do an Internal Analysis using During 2009-10, the company introduced a new division called RedSun,
Balanced Scorecard approach
3) Do a Business Model Analysis which offers services related to weather sensitive items, reengineering
items; value added distribution and SME logistics support. In 2010-11,
3 Portfolio Decisions
Gati came up with the Go-To-Market strategy under the Express
1) Do an analysis using the BCG
Distribution Service segment, which offers differential pricing option
and GE Matrix of the assigned
industry in terms of the based on distance and time sensitivity.
products / brands available for
all the players taken together
2) Construct a composite GE
Matrix (both the axes) for the Gati was introduced in the market as a door-to-door cargo company with
above purpose commitment on delivery and money back guarantee. The first experiment
3) Develop a product portfolio
strategy for the leader of the was conducted between Chennai and Madurai. Gati operated its business
assigned industry with a group of front-end entrepreneurial delivery set-up. Members of this
You may use the IFE and EFE set- up were known as Gati Associates (GAs). This concept was new.
approaches Some of the key clients are Sony, Hitachi, LG, Samsung, Onida, Nokia,
Electrolux, Titan, HUL, Dabur, Cummins, Ingram Micro, DataCraft, ABB,
4 Do a Growth Options
Siemens, Schneider Electric, Asian Paints, Cadila, Wipro, UTI Bank, Ashok
Assessment using Ansoff Matrix
Leyland, HDFC Bank, Mahindra Group, Hero Honda, Tata Motors etc.
Vision
Latest financial summary of GATI Be a globally preferred provider of India-centric Supply Chain
Services and Solutions and aleader in the Asia Pacific region.
With restructuring
every division and region was expected to set its targets (in
consultation with the corporate office)
Some companies that have used Asset-Light Model are for example,
Motorola, Dow Chemicals Companyetc. In the hospitality industry,
hotels such as Hiltons or Marriott are applying successfully asset-
lightbusiness model. In Europe, the asset-light strategy has been a
popular way to unlock capital by selling theGatis own only a fleet of
200 trucks. The rest is actually are sourced from vendors (intotal 2000
of them) with whom Gati has a strategic relationship. This model
helpscompany respond to client demand more quickly by expanding its
fleet on short notice. In warehousing, the company strategies to
maintain a balance between private andleased warehouses so as to
reduce its capital expenditure and focus on offering servicesthan
managing assets.
STRATEGIC MANAGEMENT PAGE 5
G
R EachRegionwasmanagedbyRegionalManagers
Increased competition
forced Gati to focus
A
e
more on delivery and
Marketing
T
g
I
1
PAGE 6 STRATEGY PROJECT
PESTEL Analysis
Coast to coast Shipping
POLITICAL 3. The industry suffers from structural inefficiencies
The pan-India network for express shipment gives Gati India-centric
and high cost of capital. As a result investments for
1. Legal permit to cross state and national distribution
borders Highdomain8 expertise. Development of warehousing in a hub
improving logistics efficiency have been delayed.
rail tariffs and oversaturation of important rail
and networks
spoke model will increase volume and margins going forward, in our
due to the policy of subsidizing passengerview.traffic with of air 4.
Growth High
cargo competition
business has the
completes led express
to price reduction
distribution
freight traffic has made roads (Trucks) the chain:
predominant strategies
The planned leasing not Boeing
of five supported
737 by efficiency
freighters improvements.
should increase
mode of freight transportation even if it is much less This has seriously
air freight revenue from current levels. affected margins further eroding the
efficient. Gati Ltd is the first transport company in India industrys ability to invest in future growth.
Gati has a strong market presence in Asia-Pacific region and SAARC
to do parcel movement by rail in 2002-03. It has
5. in
countries, with offices The increase
Bhutan, in Dubai,
China, agricultural
Nepal,food wastage
Malaysia, Honghas
strengthened its ties over the years and operates over
Kong, Singapore and provided
Thailand.an impetus to the developing
With increasing of cold
competition andstorage
cost
50 trains. It has helped it to be cost competitive, with
pressures, companies facilities.
are The industry based
progressively benefits
focusing onarising
theirfrom the
core
safer, secure delivery and a better transit time.
FY2012 budget
competencies by outsourcing has requirements
their logistics improved the investment
to third party
2. Complex taxation policies, border, customlogistics
and control landscape.
(3 PL) players.
delays, congested and inadequate highways and ports.
6. Exchange
In a vibrant environment, Rate corporations
where Risk: Gati Ltd has competitive
seek international
The multiple state and central taxes lead to a
operations which makes it susceptible to
advantage, asset-light approach becomes increasingly used, especially exchange
by
considerable loss of time in transit especially for road
rateinrisk
companies that invest (theorrupee
Asia has depreciated
the Middle East andquite
Gati steeply over
has truly
freight.
embraced the modelthe past
for its year although
success it has more or less stabilized
in Asia Pacific.
3. Dismal warehousing facilities: it is estimated 20-25% now). This should have boosted exports but has been
of the total logistics cost is from warehousing. More than hampered by the slow development of India as a
80-85% of warehouses are only than 10,000 square feet. global manufacturing hub.
Fragmentized warehouse space is a disincentive to the
creation of integrated warehousing spaces especially in
the case of low margin goods. There is a huge deficit of SOCIAL
adequate warehouse space.
1. E- commerce: The rapid growth of e-commerce
4. Government agencies have the largest warehouses provides opportunities for the logistics industry to tap
but they are mainly for food grains. The state of cold into new revenue streams. This industry is a 36 INR
storage is dismal and lack of recognition of the concept billion (FY2011) and is expected to reach 530 INR
of multi-logistic has hampered their development and billion by FY20I5.
permissions have not been granted.
2. Sustainability: With India signing many MEAs there
5. Declining foreign investment has stalled growth and has been increasing pressure reduce greenhouse gas
transformation due to delays in passing/approving key emissions by switching to alternative, cleaner fuels.
policies like the implementation of GST.
TECHNOLOGY
ECONOMIC
1. The logistics industry has low rates of technology
1. India spends around 13% of the GDP on logistics adoption. The industry has now started investing and
which is much higher than that of developed developing its IT infrastructure (RIFD, Vehicle tracking,
countries. Logistics include warehousing, transport warehouse management) and Gati Ltd has one of the
etc. a look at Indias distribution of logistic costs best IT infrastructures in the industry.
show that a large portion of the logistics cost is from
2. Low levels of Automation and standardization
losses. Also the cost of logistics as a proportion of
further exacerbated by the high level of industry
product cost is 4-5 times higher than that in
fragmentation.
developed countries.
3. The skill level is very low. Lack of professional
2. The logistics industry has created employment foe
institutes offering courses on the logistics industry has
more than 43 million people and will grow as the
made recruitment of highly quality professionals
industry develops.
daunting. Logistics is a cost conscious industry at
present in India and the lack of easily available skilled
professionals will push up the personnel cost.
STRATEGIC MANAGEMENT PAGE 7
TRhivraealrtofnwetrans:MediumHgh
y
among
compe
tiors:
High
Bargin powerfSupliers:Mdium
ThreatofSubsite:Mdium
Bargin powerfbuys:Medium
PAGE 8 STRATEGY PROJECT
Balanced Scorecard
Internal Process
Strategic Objective Initiative
Global provider of India- centric Establishment of Gati-Kintetsu Express, a joint venture
supply chain services with Kintetsu World Express (KWE) which has in 200 cities
across 30 countries. Gain from KWE's operational
expertise in warehousing services and 3PL.
Services leader in the rapidly Dedicated e-commerce logistics services covering
growing online retail sector warehouse, online and home delivery
requirements has been planned and is on track
Leader in Asia pacific region of Expansion with a number of locations across India and
global SCM solutions Asia Pacific. Company has consolidated position in China,
Hongkong, Thailand & Singapore and re-structured
investment in international subsidiaries. Control will be
through the Singapore subsidiary company i.e. Gati Asia
Pacific Pte Ltd., (GAP) and it has closed Gati Holdings Ltd.,
(GHL) Mauritius, the erstwhile direct subsidiary.
Responsible corporate citizen - The main focus areas are Education, Community &
"Green Gati". Environment. Initiatives:
Gati MC High School, Nagore, Tamil Nadu
Relief Initiative to the Assam Floodvictims
Health checkup camp for drivers & handlers
Gati Government High School, Hyderabad, Andhra
Pradesh
Green Belt Plantation
Blood Donation Camp
Financial
Strategy Initiative
Grow shipping business During FY2012 the shipping division recorded a revenue of
profitably Rs. 180 mn and loss from operations of Rs. 288 mn against
Rs. 923 mn and Rs. 162 mn respectively in the previous
year. Gati has restructured the shipping business into a
wholly owned subsidiary -Gati Ship Private
Limited and inducted a strategic partner to raise
required capital.
profitable growth of Investment in increasing capacity to cater to this industry.
e-Commerce, Cold Chain and
International Freight
Forwarding businesses
STRATEGIC MANAGEMENT PAGE 9
Strategy Initiative
Best employer with latest HR Series of innovative Hr-practices including e-HR containing
practices information of every employee. Talent for tomorrow-
promotion policy allowing high performers to achieve fast
track growth. Opportunities for lateral shifting-
geographical and functional
Manpower Skill enhancement Training is a thrust area for Gati Ltd. Had it had co-opted
consultants from AIMA, XLRI, NIIT, FCCI etc
Customer
Strategy Initiative
High quality valued service ISO 9001:2000 company- certified for marketing and
providing logistics and cargo management services; valued
added service like door to door delivery, online tracking
etc, e-Pod.
Attract new customers and Leveraging service advantage through technological
retain old ones capabilities and supporting customersOperations.
Build forge long-term relationships with customer; almost
75% of top customers have been with the company for
more than three years.
BCG Matrix
Question-marks: Shipping industry is a question Star: E-commerce and international services are
mark for GATI as it has a relatively low market on an ever high currently because of increase in
share in the world with major players like UPS, globalization and technology advancement.
Maersk, and FedEx to compete with. However it is Cash Cow: express distribution and cold chain
a growing sector as increase in globalization solutions of Gati have a relatively high market
increases trade to a great extent implying a huge share in Asian markets and they generate major
growth potential in this sector. cash for Gati. These sectors are responsible for
GATIs steady growth rate
Supply chain solutions: Gati solution division offers an Dog: Courier services can be rightly classified as
integrated supply Chain service to businesses across dog since there has been a steady decline in
industry verticals. It includes flexible point-to-point courier and speed delivery services post the
distribution solutions or complex end-to-end integrated internet era where major transactions are done
logistics solutions or supply chain management. It is a
online. Internet usage boom has brought a
relatively new and a growing sector which has not
reached its maturity in growth cycle and hence has been downfall in this part.
classified as question mark. These include Temperature
Sensitive Services, Warehouse Layout Design, and
Logistics Process Re-engineering and Logistics Network
Optimization.
Both the above services need proper market penetration
and market development in order to survive in the sector.
PAGE 10 STRATEGY PROJECT
SD
Q
C
toau
agse
srh
t
i
C
Relative market share
o
n
w
M
a
r
k
IFE Matrix
GE Matrix
Market Attractiveness
Business Strength
Weighted
Internal Strength Weight Rating Score Rating on a 5 point Likert Scale
One of the largest supply chain 1-Major Weakness
solutions in Asia(major factor for 2-Minor Weakness
1 branding of logistics firm) 10 4 0.4 3-Neutral positioning
2 Supplies to all major firms 8 3.5 0.28 4-Minor Strength
5-Major Strength
3 Speed of Delivery, timely delivery 8 3.5 0.28
4 price of services 7 2 0.14
5 strong management team 4 3.5 0.14
History of minimal service
6 complaints 5 3 0.15
7 good reputation and image 7 4 0.28
8 proper warehouse management 7 4 0.28
Local employees, hence less labour
9 cost 6 4.5 0.27
10 Financial ratios 6 3.5 0.21
Internal Weaknesses
Saturated market, Excessive
1 competition 6 2 0.12
2 Little or Improper marketing 5 3 0.15
3 little diversification 5 2 0.1
4 HR issues, labour cost problems 4 4 0.16
Sensitive to oil prices, exchange rate
5 fluctuations 6 2 0.12
6 improper inventory management 6 3 0.18
100 3.26
PAGE 12 STRATEGY PROJECT
Ansoff Matrix
Existing Product New Product
MarA ketPenetration
ns
of
f
M
at
ri
x
Existing Productdevelopment
market
MarketDevelopment
New Diversification
market
Market Penetration:
1. Eliminate Competition- GATI can follow an e-shopping type model where customers can
place their orders online be it couriers, refrigeration products or national and international
consignments andthen GATI can deploy transport on a daily basis for doorstep pick up of
orders. The current scenario is such that only doorstep delivery, especially in the case of
couriers is available there is no concept of doorstep pickup available for such services. Thus
it will not only eliminate competition but also capture a larger market share.
2. Rural Penetration-With the FDI in retail controversy resolved, more and more foreign
investors will look into India as a potential market. With the condition that a third of the raw
material be sourced from small and medium scale producers, they would inevitably look into
the rural market in India to source that raw material. GATI can quickly leverage this
opportunity as its competitive advantage if it has rural infrastructure in place and increase
its present market share by considerable numbers.
3. Cold Storage GATI Kausar Cold chain solutions can form strategic alliances with the
government which at present lacks the proper infrastructure and transportation for proper
distribution and warehousing of grains, due which tons of food grains go wasted every year.
By providing them the required logistics support GATI can not only greatly enhance its
revenues but also a permanent and highly lucrative customer in the form of the Indian
Government.
Product Development
manufacturer or at least one step back in the supply chain for recycling, repair or for
some other utilization. Every year 4% to 6% of all retail purchases are returned, costing
the industry about $40 billion per year. Thus reverse logistics if done in a cost efficient
manner is a huge source of untapped revenue.
Market Development
1. Currently GATI has international operations in Singapore, Hong Kong, China, Nepal,
Thailand; the current financial scenario indicates that there will be more trade in
terms of both exports and imports in the developing nations. GATI already has its
operations in the south east and the Middle East;it can also expand its operations to
Brazil, Russia, and Mexico which have are developing nations with high degrees of
demand for logistics as they are in the expanding phase. Due to global recession
trade is in a contractionary phase in the developed nations so more focus should be
given to the developing nations.
2. Military logistics- GATI has yet to penetrate the market for military logistics
supply which requires a high degree of uncertainty since wartime supply of utilities
will be much different than those of peacetimes. Also it will require a specialized
wing of transportation to cater to the military
Diversification:
1. International refrigeration facilities-Currently GATI does not supply trans-
boundary refrigeration facilities to its international customers. When it is
foraying into new markets like Mexico, Russia and Brazil it can include this new
service offering.
2. Green Logistics
M an
u fa c t
u rin g
P ro c u re Pr
m e n t od
L o g is tic s uct
Green Logistics
R aw C on
M a te ria l su m
P ro c u re m p tio
ent n
W a ste
D is p o
sal
The concept of Green logistics is an emerging concept and can be employed in the
emerging markets for GATI. With stricter governmental regulations regarding the
environmental costs and total carbon footprint of the company more and more
customers will opt for such services since such services tend to be more fuel
efficient and process efficient.
STRATEGIC MANAGEMENT PAGE 15
References
1. http://www.deloitte.com/assets/Dcom-India/Local
%20Assets/Documents/Thoughtware/Logistics%20Sector-Present
%20situation%20and%20way%20forward.pdf
2. http://www.gati.com/images/pdf/media-center/press-
OUR TAKEAWAY FROM THIS kit/corporate_presentation_61211.pdf
PROJECT 3. http://www.gati.com/images/pdf/media-center/press-release/Gati-
transport-solutions-strengthens-its-current-Rail-network.pdf
4. http://site.securities.com/cgi-bin/acerc/acerc/www/index.pl?
We learnt about identification, app=Company&runmode=management_analysis&FinCode=16590
analysis and description of 029
strategies so as to achieve a 5. http://www.deloitte.com/assets/Dcom-India/Local
competitive advantage for an %20Assets/Documents/Thoughtware/Logistics%20Sector-Present
organization. It is all about %20situation%20and%20way%20forward.pdf
decisions one takes which 6. http://finance.yahoo.com/q?s=GATI.BO
decides the limits of a firms 7. http://www.gati.com/html/aboutus_gati-history.html
performance. We also learn that 8. http://www.gati.com/html/corporate_social_responsibility.html
one must have a through
general and specialist
9. http://www.gati.com/html/aboutus_vision-values.html
knowledge in order to properly 10. http://en.wikipedia.org/wiki/Reverse_logistics
analyze a firm and decide on the 11. http://en.wikipedia.org/wiki/Military_logistics
organizational environment so 12. www.gati.com/html/gati_international.html
as to take the right decisions. 13. http://en.wikipedia.org/wiki/Green_Logistics
Right decisions involve all those 14. http://www.gati.com/html/gati_international.html
decisions that benefit the 15. Crisil Report
organizational stakeholders. 16. http://www.gati.com/html/aboutus_vision-values.html
17. Gati Limited: Evolution of a Third Party Logistics Organization by N.
Ravichandran, Indian Institute of Management Ahmedabad.
18. Case Analysis by G.R. Chandrashekhar,faculty of Strategic
Management at Indian Institute of Management
19. Indore,presentlyFaculty,Strategic Management at Indian Institute of
Management Ranchi.,
20. www.indiainfoline.com
21. The Economist
22. Romanian Economic and Business Review Vol. 6, No. 1,The
Internationalization Process and the Asset-Light Approach
23. http://www.gati.com/html/corporate_social_responsibility.html ( in
tune to its vision)