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 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. 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 Watches Jewellery Others Total Sales (2008) 918.69 2,028.00 96.03 3042.72 Sales (2007) 783.77 1,291.96 62.71 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. 1 2 3 4 5 Year 2004 2005 2006 2007 2008 Net profit 10.27 24.95 73.62 94.13 150.27 Net Sales* 804.53 1136.60 1483.15 2138.44 3042.72

Net sales include watches, jewellery and others segments. Questions 1. Titan has been a dominant player in mid price segment with its brands Titan and Sonata. What were the reasons for the expansion strategy led by Titan to launch various brands in different segments?

2. Titan diversified into jewellery business in the year 1995 as a part of its growth strategy. Growth strategies involve a significant increase in performance objectives (usually sales or 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 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 To To To develop strategic plan for the change and managing it to the desired conclusion. make a student understand the issues related to diversification. understand and for see a need of change in the business strategy. study the impact of diversification on the financial performance of a company.

Teaching suggestions:

Not required 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.titanindustries.in/News.aspx http://www.titanworld.com/titan_stories www.indiainfoline.com