A case study on Titan

Introduction:The big question- should a company stay focused on its core competencies and competitive
advantages that made it great or should it diversify to keep up with, surpass its peers?
Experts say it is one of the trickier questions to answer. But answer lies in the gains that a
company reaps after diversification.
Corporate strategies expand the scope of operations through diversification into new
businesses. Diversification into new business can reduce variations in corporate profits by
expanding the corporation's lines of business. Diversification is a form of growth strategy.
Growth strategies involve a significant increase in performance objectives (usually sales or
market share) beyond past levels of performance. Many organizations pursue one or more
types of growth strategies.
Diversification leads to improved financial performance. Large firms generate cash that can
be invested in other ventures. That is, the core business sustains itself on its money making
ventures, and uses this cash flow to create new ventures that generate additional profits.
One of the primary reasons is the view held by many investors and executives that "bigger
is better." Growth in sales is often used as a measure of performance. Even if profits remain
stable or decline, an increase in sales satisfies many people. The assumption is often made
that if sales increase, profits will eventually follow.
Titan industries, the watch and jewellery major is also changing its approach to its portfolio.
Titan, Rs. 3,000 crore industry is moving towards a new segment what we call the life
space. The strategy of Titan is discussed in the case study with an objective to find out and
discuss its success in enhancing shareholders' value over the years.
Case Body
The foundation of the Tata Group was laid in 1868 by Jamsetji Nusserwanji Tata He learned
the ropes of business while working in his father's banking firm and he established a trading
company in Bombay.
Tata helped pave the path to industrialization in India by seeding pioneering businesses in
sectors such as steel, energy, textiles and hospitality. The Tata Group expanded regularly
into new spheres of business. The more prominent of these ventures were Tata Chemicals
(1939), Tata Motors and Tata Industries (both 1945), Voltas (1954), Tata Tea (1962), Tata
Consultancy Services (1968) and Titan Industries (1984).
Titan, a joint venture between Tamil Nadu Industrial Development Corporation (TIDCO) and
the renowned Indian business group Tatas, entered the watch market in 1984. Titan
changed the watch market in India completely by making quartz watch the centerpiece of
its strategy. Titan Company is the unquestioned leader in Indian Watch Industry. Titan is
one of the most powerful brands in the Indian market, scoring very high on brand
awareness, brand image and brand preference.
The watch market in India recorded an approximate volume turnover of 23 million units
(1998-99). It is growing at 9% per annum. The organized sector contributes to half the

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volume turnover of the industry and rest by the unorganized sector. Titan has 60% share in
organized sector
Since its inception, Titan decided that it would be the shaper of the watch industry and not
an adapter. The Tatas took two decisions that paid them well as well and changed the face
of Indian watch market. They decided to manufacture only quartz (analog and digital) and
not mechanicals and they projected as fashion accessory. Titan was first in India to
introduce the style concept and was successful in projecting its watches as more than a time
keeping machine.
Titan initially pioneered the concept of "Gifting watches". The ads captured the essence of
gifting and along with the trendy music, easily caught the imagination of the market.
Customers who were fed up with ugly time machines welcomed the brand and Titan had a
dream run for many years.
Titan entered the watch market as a premium watch. But the unorganized sector and low
priced options from HMT gave Titan serious competition. With the import duty reduced to
25% (earlier 50%) and with the import license for watch movement being easy to obtain,
many smalltime players cropped up. These small players offered competition to Titan on the
price front.
Titan made a big mistake. It wanted to play the volume game. For that Titan launched
another brand Sonata. Sonata was a huge success because it was a cheap product but at
the cost of the mother brand Titan. Titan was perceived to be a premium brand but with
Sonata (at that time "Sonata from Titan") endorsed by Titan took away the premium image
from the mother brand. It was a big costly mistake.
Another problem with Titan has been that it mainly operates in the mid-priced segment and
competitors accuse Titan of keeping the segment underdeveloped on account of its sheer
dominance.
Titan realizing that the market wanted something to be excited about watches and carefully
segmented the market and developed different sub brands for each segment. Sub brands
like Edge, Steel, Dash, Nebula, Classique, Royale, Fast Track, Raga, and the recently
launched Wall street . By having various products / models and sub brands, Titan was able
to create freshness about the brand.
Titan launched Tanishq in 1995, India's largest, most desirable and fastest growing jewelry
brand in India. Diligent care and quality processes ensure that the Tanishq finish is
unmatched by any other jeweller in the country.
Tanishq challenged the age-old jeweller's word with TATA's guaranteed purity. It exploded
the market with facts about rampant impurity across India. It introduced technology-backed
challenge in a category completely governed by individual trust. Tanishq introduced
innovations like Karat meter, the only non destructive means to check the purity of gold.
Titan now is trying to be more contemporary and more relevant to the consumers by
establishing more firmly in the minds of the consumers. "Be more" the new concept of Titan
is attempts to build a larger life connect between the Titan brand and consumers.

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Titan is changing its portfolio by shifting its focus from product attributes to the yearnings,
emotions, experiences and aspirations. The Titan aviator is inspired by word war IInd fighter
plane, Titan Octave by cockpit of formula one car, wwf collection by endangered species and
Titan Raga Diva by beauty and sensuousness.
The picture that is emerging with this kind of collection is of the organization that is gearing
up to leverage its strengths in manufacturing, design capability and retailing to grab a larger
share in lifestyle market. With the success of Titan watches and jewellery segment and their
recent entry in eyewear they are more comfortable with developing lifestyle brands. Under
the brand Fastrack comprising watches and sunglasses Titan is now looking at the possibility
of adding accessories like bags and belts and so on. To make this segment more attractive,
Titan is planning to open exclusive Fastrack stores.
Eyewear is fast becoming a fashion statement and Titan is focusing on design and retail.
Titan has also entered in prescribed eyewear segment and has opened 30 stores across 12
cities. Each of them is positioned as a complete optical store where under one roof customer
can have a wide range of frames and lenses including some very famous global brands.
Tanshiq's makeover over the year as well is indicating the shift of Titan in life style segment.
From being a fashion brand for young people with its light weight jewellery Tanishq added
mainstream wedding jewellery to its portfolio. The association with Bollywood through
movie like Amol Palekar's Paheli and more recent Jodha Akbar has also brought the brand
close to the consumer.
The big factor that has been in Tanishq's favor is that it jewellery is now more of a lifestyle
product for urban consumers. It is no longer bought for investment purpose. The key drivers
in this sector are brand equity, design and retail experience. The Indian jewellery market is
estimated to be around Rs. 70,000 crore to Rs.80, 000 crore and organized sector a small
local players account only for 4,000 crore. So opportunity for a player like Tanshiq with
strong brand equity and first mover advantage is tremendous.
Tanshiq as a part of its expansion strategy has become global recently. It has opened a
showroom in Chicago, USA targeting the average American. US is the largest jewellery
market in the world and Tanishq has an opportunity to position itself between expensive
brand Tiffiny and discounted brand Wal-Mart.
Titan is going strong on all fronts but is equally aware of changing market dynamics and its
competitors. Titan is very closely watching its closest competitor Reliance. Reliance is the
only corporate house after Titan that has entered both in the jewellery and eyewear
markets.
For the year 2007-2008 of Titan's turnover of Rs 3041 crore, the jewellery business
accounted for Rs. 2027 crore while watches accounted for Rs. 918 crore. This is one of the
main reasons Titan is leaning on its jewellery business.

Segment

Sales (2008)

Sales (2007)

Watches

918.69

783.77

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Jewellery

2,028.00

1,291.96

Others

96.03

62.71

Total

3042.72

2138.44

Titan grew at 43% last year and crossed the sales of Rs. 3,000 crore. Net profit stood at Rs.
150 crore as compared to 94 crore last year. With these great figures, Titan is still going
strong..

Sr. no.

Year

Net profit

Net Sales*

2004

10.27

804.53

2005

24.95

1136.60

2006

73.62

1483.15

2007

94.13

2138.44

2008

150.27

3042.72

Net sales include watches, jewellery and others segments.

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market share) beyond past levels of performance. Did Titan's diversification into jewellery
business justify the above said statement?
3. How watches, jewellery and life space segment strategically fit in Titan's overall mission
and vision accomplishment?

Teaching Notes
Overview
Titan, a joint venture between Tamil Nadu Industrial Development Corporation (TIDCO) and
Tatas, entered the watch market in 1984. Titan changed the watch market completely by
making quartz and projecting its watches as a fashion accessory. Titan Company is the
unquestioned leader in Indian Watch Industry. Titan felt the need of expansion and
diversification due to growing competition and launched various sub brands in watches and
diversified in to jewellery segment with its branded jewellery Tanishq in 1994.
Diversification in the jewellery segment has been a fruitful investment which has been
reflected in the turnover of the company over the years. This is one of the reasons Titan is
leaning on its jewellery business. Recently Titan has shifted its focus from the core business
to a new segment called life space. The company during the course of diversification and
expansion managed reorganization of brands, products improvement, heightened
competition, reallocation of resources according to the revised priorities of businesses.
Management issues covered:

Strategic planning

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Managing risk across industries

Impact of diversification and expansion on financial performance

Brand reorganization to exploit financial resources and managerial capabilities.

Application
The study covers various management issues as discussed above. The case is well suited for
management students who have some practical experience in handling some of the
management aspects in large organization.
Objectives of the case:

To develop strategic plan for the change and managing it to the desired conclusion.

To make a student understand the issues related to diversification.

To understand and for see a need of change in the business strategy.

To study the impact of diversification on the financial performance of a company.

References:
"Reaching out for more" Business Today (November2, 2008)
Titan kicks of re-branding exercise: // www.dnaindia.com/
http://www.titanindustries.in/titan/default.aspx
http://www.titanworld.com/titan_stories
www.indiainfoline.com

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