Strategic Blueprint for Accelerated Expansion of Airway delivery

Assignment Taken

To create thorough business plan for company's new drone division, prioritizing swift break-even, brand establishment and innovative market leadership within a Rs. 10 Crore budget for FY 2023-2024.

Case Understanding

Problem statement: A leading courier company in India is planning to introduce drone-based hyper-local delivery services to enhance its existing portfolio. The company has already acquired necessary permissions from the Directorate General of Civil Aviation (DGCA) and successfully conducted trials for beyond visual line of sight (BVLOS) deliveries. Due to the high cost, the company intends to initiate short-range drone services initially. The primary objective is to achieve a break-even within the first year, establish a strong brand presence, and foster innovation to become a market leader in this segment. Challenges: 1. Regulatory Compliance: Ensuring continuous adherence to evolving aviation regulations while operating drones for commercial purposes. 2. Cost Management: Striking a balance between equipment costs, skilled personnel salaries, and operational expenses within the allocated budget. 3. Market Penetration: Designing innovative processes and effective marketing strategies to penetrate the hyper-local delivery market. 4. Technology Integration: Developing an efficient end-to-end operations platform, including software and IT infrastructure, for seamless management of the drone fleet and deliveries. 5. Talent Acquisition and Training: Recruiting and training skilled drone operators and a competent management team to oversee operations and ensure safety. 6. Competitive Landscape: Establishing the drone division as a market leader, considering the fierce competition in the hyper-local delivery space. Key Resources: 1. Skilled Personnel: Utilizing existing drone operators, management team, and support staff for initial operations. 2. Budget Allocation: The allocated budget of Rs. 10 Crore for FY 2023-2024 will serve as the primary financial resource for the division's establishment and growth. 3. DGCA Permissions: Obtaining necessary regulatory approvals in advance ensures smooth operations and facilitates expansion without hindrance. 4. Successful Trials: Leveraging the insights gained from successful beta testing with food delivery companies and pharma chains for enhanced service delivery. 5. Existing Infrastructure: Leveraging the company's extensive branch network and delivery capabilities across India for seamless integration of drone services into the current portfolio.

BCS Solution Summary

The company envisions a groundbreaking transformation in local logistics through the seamless integration of drone technology, facilitating swift, cost-effective, and environmentally friendly cargo deliveries. With a steadfast commitment to excellence, the firm places a premium on speed, innovation, and customer satisfaction, seeking to redefine the landscape of last-mile delivery. In line with these aspirations, the division sets ambitious objectives, aiming to achieve break-even within the first year, establish a strong reputation for drone services in the local market, drive innovation in products and processes to assume a leadership position, and judiciously allocate a budget of Rs. 10 Cr for FY 2023-2024 with a focus on cost-effectiveness. The context of this endeavor is set against the backdrop of a burgeoning Indian drone industry, projected to escalate from Rs 2,900 crore in 2022 to a staggering Rs 81,600 crore by 2025. This growth is propelled by surging demand, favorable government policies, and widespread technology adoption across diverse sectors, aligning with the government's vision of positioning India as a Global Drone Hub by 2030. The competitive landscape is dominated by IdeaForge, holding a substantial 50% market share, while the target customer base spans a spectrum of industries, including real estate, events, churches, and beyond. Operating strategies implemented: 1. Cost Leadership Strategy 2. Focus on cost-effective operations 3. Brand Positioning Strategies 4. Emphasize safety, reliability, and efficiency 5. Product & Process Innovation 6. Efficient Budget Allocation 7. Dynamic Pricing

Solution

Vision & Mission:

To revolutionize local logistics, the company’s vision is a future where drone technology seamlessly connects communities, enabling swift, cost-effective, and eco-friendly cargo deliveries.

Dedicated to exceeding expectations, this firm is committed to delivering excellence through cutting-edge short-range drone services. By prioritizing speed, innovation, and customer satisfaction, company aims to redefine the possibilities of last-mile delivery, contributing to a smarter, more connected world.

Objectives of the division:

• Ensuring that the drone division achieves break-even within 1 year.
• Building a reputable image for drone services in the local market.
• Product & process innovation to become the local market leader.
• Efficient allocation of budget (Rs. 10 Cr) for FY 2023-2024, focusing on cost-effectiveness.

Industry Overview:

The drone industry in India, valued at Rs 2,900 crore in 2022, is projected to surge to Rs 81,600 crore by 2025 and a staggering Rs 2.95 lakh crore by 2030. The Government of India envisions making the country a Global Drone Hub by 2030. In 2022, the Indian drone market exceeded US$ 1,020 million. While the military and defence sector remain a significant user, the drone market in India is diversifying into various sectors.
Drones find application in commercial activities such as weather monitoring, geographical mapping, firefighting, and military operations like anti-aircraft target practice and intelligence gathering. The Ministry of Civil Aviation anticipates an investment of over INR 5,000 Cr in the drones and drone components manufacturing industry over the next three years.

Key drivers of drone industry in India –

• Increasing demand - Demand for drone-based services such as aerial photography, mapping, surveying, crop management, and aerial surveillance is increasing.
• Favourable government policies - The central government of India aims to make the country a global drone hub by 2030. Also, some of the prominent players in India are beneficiaries of Indian government’s PLI scheme.
• Increased adoption of new technologies - Drone technology is being adopted in various sectors, including agriculture, logistics, and defence.

Market analysis & competition

Top Drone companies	Applications
IdeaForge	Surveillance, mapping, inspection
DJI India	Filmmaking, Agriculture
Asteria Aerospace	Telecom tower surveillance
Aarav Unmanned Systems (AUS)	Surveying, mapping, industrial inspection
Garuda Aerospace	Agriculture, infrastructure, disaster management
Skylark Drones	surveying, mapping, and inspection
Dhaksha Unmanned Systems (DUMS)	Agriculture, mining, defence, and surveillance
Quidich Innovation Lab	Aerial Cinematography and Photography

Among these players, IdeaForge is the market leader in India with around 50% market share.

In India, there are six major segments across which we have seen drone-based solutions being explored:

• Agriculture
• Insurance
• Energy & Utilities
• Media & Entertainment
• Infrastructure
• Mining

Below graph shows % addressable market size in each segment. With infrastructure being the major segment.

Target Customers –

The drone industry in India holds a lot of promise and can impact various areas such as defence, surveillance, security, managing disasters, agriculture, healthcare, mapping, mining, infrastructure, and capturing photos and videos from the air.

Some target customers for drone services include:

• Commercial real estate brokers
• Residential real estate brokers who specialize in selling properties with large lots or land
• Event planners of large corporate events
• Large churches
• Wedding photographers
• Children

Operating Strategies

Cost leadership strategy

• Strategy – Focus on cost-effective operations, prioritize high-margin services and implement efficient financial management practices.
• Action plan:
  • Monitor operational costs closely, especially drone maintenance, operator salaries, and software development expenses.
  • Implement targeted pricing strategies to optimize revenue and cover operational costs.

Brand positioning strategies

• Strategy -Emphasize safety, reliability, and efficiency in drone operations. Leverage marketing and customer service for positive brand perception.
• Action plan:
  • Conduct regular safety training programs for drone operators.
  • Utilize customer testimonials and case studies in marketing materials to showcase successful deliveries.
  • Implement a robust customer feedback mechanism to address concerns promptly.

Product- Process innovation strategy:

• Strategy - Stay ahead through continuous innovation in both technology and operational processes.
• Action Plan:
  • Allocate a portion of the budget to research and development for enhancing drone capabilities.
  • Encourage the software development team to introduce new features to the end-to-end operations system.
  • Regularly review industry trends and technology advancements for potential integration.

Efficient budget allocation :

• Strategy - Prioritize key areas such as technology, safety, and marketing while ensuring cost-effectiveness.
• Action Plan:
  • Allocate funds for regular drone maintenance to prevent unexpected downtime.
  • Invest in marketing campaigns targeting specific industries, leveraging digital platforms for cost-effective reach.
  • Implement cost-effective IT infrastructure solutions, considering scalability.

Pricing strategies – Dynamic pricing
Dynamic pricing is a pricing strategy where the cost of a product or service is adjusted in real-time based on various factors such as demand, supply, competitor pricing, and other market conditions. The goal of dynamic pricing is to optimize prices to maximize revenue or profit in response to changing market dynamics.
 

Current Pricing
Category A	₹ 60
Category B	₹ 80
Category C	₹ 100 per kg
Category D	₹ 110 per kg

In this division, we can implement dynamic pricing techniques in various situations such as:

• Demand and Supply Dynamics – During peak hours when demand for drones increases, demand supply gap can be minimized using dynamic pricing.
• Weather conditions - Drone operations may be risky and difficult in bad weather. Increase prices during bad weather to offset risk and delays.
• Delivery distance & complexities - Complex deliveries or longer distances may demand more battery power, operating time, and danger. Adjust cost based on delivery distance and complexity to reflect operational issues.
• Service level & speed - Some clients want speedier delivery, while others are more flexible. Differentiate price by delivery urgency. Customers wanting to pay for faster delivery might pay more.
• Promotional periods & special events - In special events or promotions, the firm may provide discounts to entice consumers. Offer discounts or promotions at special events to boost demand.

Sales & Marketing Strategies

• Partnering with e-Commerce and pilot programs for local businesses
  Forge partnerships with e-commerce platforms for last-mile deliveries. Highlight the advantage of quick and reliable services using drones.
  Initiate pilot programs with local businesses, especially those in the food delivery and pharmaceutical sectors, showcasing the speed and efficiency of drone deliveries. Offer discounted rates for the initial sign-ups to encourage participation.
• Subscription models
  Introduce subscription-based models for businesses that require frequent and regular drone deliveries, offering them cost benefits and priority service.
• Promotional packages
  Create promotional packages for special events or occasions, offering discounted rates for bulk bookings during peak seasons.
• Referral programs
  Implement referral programs for existing clients, encouraging them to refer other businesses to use the drone delivery services. Offer incentives or discounts for successful referrals.
• Educational workshops
  Conduct workshops and webinars to educate businesses about the regulatory framework, safety measures, and the seamless integration of drone deliveries into their operations.
• Customer feedback
  Establish a feedback mechanism to collect input from clients and use it to continuously improve services. Highlight the responsiveness to customer feedback as a key aspect of the brand.

Department-wise Plan

All the departments play crucial role in any organization while implementing business strategies.

Finance department:

In any business, the finance department is crucial for managing financial resources, budgeting, financial reporting, and ensuring regulatory compliance. It plays a pivotal role in strategic decision-making, risk management, and maintaining financial health.

Responsibilities & strategies to be implemented by Finance department:

• Budget Management:
  Key Focus Areas: Drone operations, technology development, marketing, R&D, and administration.
  Key Activities: Allocation, monitoring, and ensuring cost-effectiveness of Rs. 10 Cr budget for division success.
• Financial Performance Optimization:
  Key Analyses: Break-even analysis for revenue, expenses, and profitability.
  Key Functions: Recommending adjustments, conducting ROI analysis for marketing campaigns, and guiding prudent technology
• Risk Mitigation and Reporting investments.
  Risk Management: Identifying and mitigating financial risks in drone operations, technology investments, and market dynamics.
• Reporting: Generating regular financial reports for the board, emphasizing key performance indicators for data-driven decision-making.

HR department

The HR department is integral in talent acquisition, employee development, and fostering a positive workplace culture. It ensures compliance with labour laws, handles employee relations, and plays a crucial role in organizational growth and employee well-being.

Responsibilities and Strategies to be implemented by HR division:

• Talent Acquisition and Development:
  Key Functions: Recruits qualified drone operators, software developers, and support staff.
  Training Focus: Comprehensive training programs ensuring skills and compliance.
• Culture and Performance Management:
  Cultural Emphasis: Fosters innovation and collaboration within the drone division.
  Performance Metrics: Establishes and evaluates performance metrics, implements competitive compensation, benefits, and engagement initiatives.
• Compliance and Diversity:
  Regulatory Focus: Ensures compliance with labour laws and aviation regulations.
  Diversity Initiatives: Promotes diversity and inclusion, recognizing their role in innovation within the drone industry.

IT department

The IT department is essential for managing technology infrastructure, software development, cybersecurity, and data analytics. It ensures seamless operations, innovation, and supports strategic business goals through technology solutions.

Responsibilities and Strategies to be implemented by IT department:

• Operational Excellence through Technology:
  Key System: Develops and maintains end-to-end drone operations system for efficient service management.
  Technology Focus: Innovates software, data analytics, IT infrastructure, and cybersecurity for real-time monitoring, compliance, and uninterrupted service.
• Customer-Centric Technological Innovation:
  User Experience: Designs user-friendly apps and websites for seamless customer interactions.
  Continuous Improvement: Integrates IoT devices, recommends technological upgrades, and establishes customer support systems for a competitive edge and enhanced service experience.

Marketing department

The marketing department is instrumental in promoting products/services, building brand image, and driving customer engagement. It strategically communicates value propositions, conducts market research, and shapes brand perception.

Responsibilities and Strategies implemented by Marketing department:

• Strategic Branding and Digital Presence:
  Brand Establishment: Develops strategies to establish the drone division as a reliable and customer-focused service provider.
• Digital Marketing Tactics:
  Utilizes online channels, content marketing, SEO optimization, and social media engagement to target and educate clients in key sectors.
• Business Development and Community Trust:
  Industry Partnerships: Forges partnerships with key sectors, sponsors events, and participates in industry-specific activities for live demonstrations.
  Client Engagement: Gathers positive testimonials, implements referral programs, promotional packages, and educational workshops to stimulate demand and build community trust.

Stepwise execution plan:

Phases	Duration	Action Plan
Phase I	1-2 months	Complete initial drone operator training. Launch a targeted marketing campaign to acquire first clients. Begin software development for necessary features.
Phase II	3-5 months	Conduct regular safety training programs. Implement initial technological upgrades. Initiate R&D projects for process innovation.
Phase III	5-10 months	Launch innovative service/product based on R&D findings. Analyse and adjust marketing strategies based on performance. Optimize drone operations for cost-effectiveness.
Phase IV	11-12 months	Evaluate financial performance and adjust strategies as needed. Finalize the budget for the next fiscal year based on learnings. Continue customer feedback and satisfaction initiatives.

 

Appendix & Exhibits:

Budget Allocation Proposed:

Reference Websites:
PwC India (https://www.pwc.in/industries/financial-services/fintech/fintech-insights/data-on-wings-a-close-look-at-drones-in-india.html)1

https://www.6wresearch.com/industry-report/india-commercial-drone-market

Conclusion

In conclusion, the company's ambitious vision to revolutionize local logistics through drone technology is strategically aligned with the burgeoning Indian drone industry. The proposed division objectives, industry overview, and competitive landscape analysis provide a comprehensive foundation for success. The key drivers of the drone industry, including increasing demand, favourable government policies, and technological adoption, underscore the immense potential for growth. The meticulous department-wise plan, encompassing finance, HR, IT, and marketing, reflects a holistic approach to ensure operational excellence, talent acquisition and development, technological innovation, and strategic marketing initiatives. By prioritizing efficient budget allocation, dynamic pricing strategies, and customer-centric service, the company positions itself for success in diverse sectors such as agriculture, insurance, energy, media, infrastructure, and mining. This multifaceted strategy, backed by a robust financial management approach and a commitment to customer satisfaction, not only addresses current market challenges but also positions the company as a leader in the evolving landscape of drone-based solutions in India.

Attached File Details

View Attachment file (NMO_Round 2_Team Agile Strategists_Shrutika Shelke.pdf)