2. BRIEF ABOUT AJANTA PACKAGING
• Ajanta Packaging ranked among the top suppliers of glass bottles in India with
an employee base of more than 50 and net revenues of US$100 million
• The case discusses the stiff competition faced by the glass-bottle industry from
different packaging options and materials that had entered the industry in the
last Few years.
• With many companies shifting to PET bottles, Tetra Pak, flexible packaging and
other innovative packaging solutions, to reduce costs and improve the durability
of products. Ajanta Packaging was highly dependent on glass-bottle sales, as 95
per cent of its revenue came from them.
3. Q1. Conduct a Porter’s Five Forces
Analysis for the glass industry
based on the details in
the case.
4. THREATS OF NEW ENTRANTS- moderate
Factors that
reduce the threat
• requires substantial
capital and resource
investment.
• existing regulatory
framework imposes
certain challenges
• psychological switching
cost for consumers is
high
• access to the distribution
channels is restricted.
Factors that
increase the threat
• Existing regulations
support
• switch the brands due to
weak/no brand loyalty.
• Building a distribution
network is easy for new
players.
• Retaliation from the
existing market players
is not a discouraging
factor.
How they can tackle it!
• raise psychological
switching costs.
• long-term contractual
relationships with
distributors.
• introduce innovative
products/services
5. THREAT OF SUBSTITUTE
PRODUCTS/SERVICES- High
Factors that increase
the threat of
substitute
• A cheaper substitute
product/service is available
• The psychological
switching costs of moving
are low.
• Substitute product offers the
same or superior quality
Factors that reduce
the threat of
substitute.
• The switching cost
of using the
substitute product is
high
• Customers cannot
derive the same
utility in terms of
quality and
performance.
How they can tackle it!
• emphasize how its offering
product/service better than the
available substitutes.
• convincing reasons by offering a
better experience and high value for
money.
• It can raise switching costs by
working on loyalty.
• improve the quality, maximise value
for money and set strong
differentiation basis
6. RIVALRY AMONG EXISTING FIRMS- Intense
Factors that
increase the threat
of competitor
• If market players are
strategically diverse and
target the same market.
• If customers are not
loyal with existing
brands
• Competitors with equal
size and offering
Factors that reduce
the threat of
competitor.
• limited number of
players in the market
• There is a clear market
leader
• The products are highly
differentiated & targets
different sub-segments
• The exit barriers are
low,
How they can tackle it!
• Find needs and expectations of its
customers to strengthen the
differentiation basis.
• It should raise switching costs
• Invest in research and development
activities to identify new customer
segments.
• collaborating with competitors can
be mutually beneficial.
7. BARGAINING POWER OF SUPPLIERS- low
Factors that increase
bargaining power of
suppliers
• the cost to switch from one
supplier to other is high.
• When suppliers are few and
demand for their offered
product is high.
• Suppliers’ forward
integration
• not having adequate market
knowledge and lacks the
price sensitivity.
Factors that reduce
the bargaining power
of suppliers.
• Suppliers are not concentrated
• Switching costs are low
• Product lacks differentiation
• Substitute products are available
• highly price sensitive and has
adequate market knowledge
• There is no threat of forward
integration by suppliers.
How they can tackle it!
• decreasing the dependency on
one or a few suppliers.
• Developing the long-term
contractual relationships with
suppliers from different
regions
• alternate ways of producing the
product
8. BARGAINING POWER OF BUYERS- high
Factors that increase
bargaining power of
buyer.
• concentrated customer
base
• Buyers=less & supplier=
high.
• Low switching costs
• Consumers’ price
sensitivity, high market
knowledge and purchasing
standardized products
Factors that reduce
the bargaining power
of buyer.
• lower customer
concentration
• customers’ inability to
integrate backwards,
low price sensitivity,
lower market
knowledge.
• high switching costs
How they can tackle it!
• increasing and
diversifying their
customer base.
• Marketing and
promotional strategies
• Building loyalty by
embedding innovation
and offering excellent
customer experience
9. Q2. Conduct a SWOT analysis
for Ajanta Packaging based on
the details in the case?
10. SWOT FOR AJANTA PACKAGING
• STRENGTHS
• It is regarded as the primary glass supplier.
• Excellent distribution network.
• Able to offer just-in time supply to customers via
marketing offices.
• Quality-focused, customized, and time-bound
packaging.
• Loyal customers (90% order is from repeated
customers).
• Good products and professional expertise with
wide range of products.
• WEAKNESSES
• 90% of business from Glass-bottles (i.e. Active
inertia).
• Rising operating expense.
• Loosing profits because of price sensitivity
11. SWOT FOR AJANTA PACKAGING
• OPPORTUNITIES
• Packaging industry has estimated growth of about
3.1% annually. India’s industry has grown to 15%
over the period of time.
• Growing urbanization and middle-class and their
changing pattern.
• Increased pattern of flexible packaging usage.
• THREATS
• Product substitutes for glass, such as PET
• Growing PET-bottle market is effectively
shrinking the glass-bottle market
• Increased inflation has caused the raw material
cost increased
• Reduction on imported spirits and wine.
• Major industries are shifting to PET-bottles
12. Q3. What will you advice Deepankar
about his dilemma?
13. DEEPANKAR’S DILEMMA
• Glass-bottle packaging had
become saturated.
• Low ability to evolve with market
trends.
• Customer’s shifting to PET or other
substitutes.
• Big impact on Ajanta's future.
• Ajanta highly depended on glass-
bottle sales.
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