Coolex Case Study Solution

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The traditional process followed for developing a strategy and the problem being encountered by the management. Management is not clear as if they are having right kind of approach for developing the strategy or they need to change present practice. The case also discusses various strategy formulating approaches. Currently the company is following traditional approach

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Coolex Founded in 1965 Main business: Air conditioning manufacturing /services Main products: Central air conditioning, Unitary condition unit, Duct air condition units Market share: 40 % Close competitor: Airtemp 15 % CEO: Mr. T. R. Jagmohan Consultant/advisor: Asish Mahapatra Total Business: 620 Crore Present Strategy Formulation Approach: Traditional / Planning

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14 years ago Coolex had 55 % share of the local central air-conditioning business. Today, it stands at 40 %.

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Closest competitor, Airtemp, accounting for a 15 % share and growing.

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even Coolex customers are becoming, increasingly, unpredictable

How should Coolex evolve its strategy? Should it continue with the conventional approach, with its focus on the external environment, in the face of potential competition? 

The case study discusses the conventional approach that Coolex follows which sees only the static picture of the competition, underplays the role of innovation, exaggerates the role of the environment, and does not account for the varying resource and competence-levels across companies.

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In my views Coolex should not continue with the conventional approach and should evolve by not trying to find the most advantageous strategic position in relation to the environment and competitors. Instead, move towards building and exploiting own resources.

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They should base their strategy on core competency by being proactive rather than reactive

Is it feasible to link strategy-planning at Coolex to its core competencies? Or is the competencies-based approach to strategydevelopment old wine in a new bottle? Has Coolex got a grip on its core competencies at all? Yes it is feasible reason being 

If you adopt the industry-structure approach to quality, strategy-planning process becomes reactive. You look at your competitors, suppliers, or customers and react which can work as long as the going is good.

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If you adopt the competence-based approach, Coolex will look within itself, find your core strengths, and understand how you can leverage them to gain a competitive edge. It will help you realize which strategy is good for Coolex without blindly following every move that your competitors make.

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Coolex has set the right course but they are far from realizing their right core competency.

Is there an alternative to the traditional approach to strategy-formulation? The alternative is the proactive approach i.e. base your strategy on your core competencies instead of the environment and the industry. Are the managers of Coolex asking the right questions? What should the road-map for Jagmohan and his team be? Partly they have asked right ones but they left out that it could be their pooled knowledge and technical skills that predates time.

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Focus on a specific product segment: central airconditioning, unitary air-conditioners, or ducting systems Look at a particular customer segment: industrial or domestic customers. Adopt a mix-and-match approach, choosing to cater to the needs of customers in profitable segments in both markets. The ultimate choice would require the company to answer 4 questions: ›

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Does Coolex has, or can acquire, the resources (financial, technological & knowledge) in time to reach the set goal? What are the risks associated with each alternative? What are the financial implications of each alternative? What does the choice of a particular strategy mean for the company in the long run?