LITMUS 2010 Team Name –  NSquare
Agenda <ul><li>Overview </li></ul><ul><li>Synthesis of Market Analysis </li></ul><ul><li>XYZ – Key Success Factors </li></...
Overview REVENUE AND MARKET SIZE  XYZ has high market share in Ethnic Bread Market but the  overall bread market is very s...
Strategic positioning of XYZ --- Synthesis of Market Analysis 4
XYZ- Key Success Factors 4 Attractive Investment in Long Run KEY Success Factors to be managed Remarks Attractiveness Prod...
Strategy - Existing Plant  Assumptions  <ul><li>Logistic Costs to remain constant at 15% of Revenue </li></ul><ul><li>Adve...
Which Division to enter ? According to AHP criteria Domestic Market should be chosen to enter first, however Institutional...
Strategy -New Plant  Assumptions  <ul><li>Location – North India  </li></ul><ul><li>Setting up time – 6 months </li></ul><...
Financing & Growth Forecast COMBINED PLANT  EMI of Rs .59 crores has to be paid for  60 months  for plant EMI of Rs .31 cr...
BRAND AWARENESS Gondola & Danglers Branding Modern Trade Branding Co- Branding Trade Fairs International Chains Domestic I...
Product & Business Development Industry is in growth stage, XYZ is a small player in growing industry.  Need for launching...
Distribution Implement Combination  of Both 61% of frozen foods  worldwide are sold through supermarkets & hypermarkets fo...
RapidBuy IS IT NECESSARY? Yes.    Differentiation in offering  |    Tap the growing e-commerce market of India  Study by...
Action Plan Operations FY1 -Q1 & Q2 FY 1- Q3 & Q4 FY 2 -Q1 & Q2 FY 2 –Q3 & Q4 Production & Operations <ul><li>Preparation ...
Contingency Plan SCENARIO PROBABLE REASON CONTINGENCY PLAN Adverse Market Conditions <ul><li>Sluggish economic growth </li...
Climax
<ul><li>Thank You  </li></ul>
Exhibits <ul><li>Financials </li></ul><ul><ul><li>Income Statement- Existing Plant </li></ul></ul><ul><ul><li>Income State...
Exhibits
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Litmus Case Study Competition

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Presented at NITIE Mumbai in Litmus Case Study Competition - 2010
1st Prize Winner

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  • All entries should be mailed to litmus10.nitie@gmail.com with the file name as “SyncQuest_&lt;CollegeName&gt;_&lt;TeamName&gt;” and subject line as “SyncQuest_&lt;College Name&gt;_&lt;Team Name&gt;”
  • To quantify the decision making process we have used the AHP model to decide – Identified 6 parameters according to their importance – Market size and current market share is important for all the 3 divisions &amp; organized retail , expansion of fast food , popularity of india are important in D – I - E respectively Relative importance b/w the parameters was given to the software and the results were tabulated. The result shows domestic should be entered however ins---------
  • ET - 3 brands are launched every day in india but only 5% succeed reason marketing Modren trade outlets are going to increase from 5-25% in next decade share in retail segment
  • Existing customers – focus group has to be done to understand their needs To acquire new customers products should be positioned as convenience foods Tyson foods and mccain planning to enter into india Food fortification is the public health policy of adding micronutrients (essential trace elements and vitamins) to foodstuffs to ensure that minimum dietary requirements are met.
  • In india cold chain infra is not developed therefore warehouse technique would provide impetus to the business (Agricultural and Processed Food Products Exports Development Authority)
  • As Micheal Porter says Information leads to Competitive Advantage Would help us improve inventory forcasting , reduce internal costs , increase customer satisfaction, helpful for exporters However in the long all stackholders will benefit from Rapidbuy
  • Across 5 verticles Production -&gt; 1 st year target-&gt; Commissioning of new plant 2 nd year-&gt; expansion of distribution network Product -&gt; 1 st Year-&gt; Launch of Frozen Peas n chicken n quality improvement 2 nd yr-&gt; Packaging Standards Finance-&gt; Raising capital for New plant, rapidBuy &amp;Export Certification across two years Marketing-&gt; 1 st yr-&gt; FGDs/Tie with HoReCa/ 2 nd Yr-&gt; Modern Trade/ Trade Fair Promotions HR-&gt; Training for emplyees/ Hiring of additional executives
  • Identified 3 scenarios - 1. 2.
  • Litmus Case Study Competition

    1. 1. LITMUS 2010 Team Name – NSquare
    2. 2. Agenda <ul><li>Overview </li></ul><ul><li>Synthesis of Market Analysis </li></ul><ul><li>XYZ – Key Success Factors </li></ul><ul><li>Strategy –Existing Plant </li></ul><ul><li>Which Division to Enter? </li></ul><ul><li>Strategy -New Plant </li></ul><ul><li>Financing & Growth Forecast </li></ul><ul><li>Brand Awareness </li></ul><ul><li>Product & Business Development </li></ul><ul><li>Distribution </li></ul><ul><li>RapidBuy </li></ul><ul><li>Action Plan </li></ul><ul><li>Contingency Plan </li></ul><ul><li>Climax </li></ul><ul><li>Exhibits </li></ul>
    3. 3. Overview REVENUE AND MARKET SIZE XYZ has high market share in Ethnic Bread Market but the overall bread market is very small , 107 crores only Huge Opportunities lies in Frozen Non Veg Snacks (750 crores ) & Frozen Veg ( 500 crores ) segments DIVISION WISE Key Drivers for Industry <ul><li>Urbanization </li></ul><ul><li>Convenience </li></ul><ul><li>Increase in no. of nuclear families </li></ul><ul><li>Rising population & income </li></ul><ul><li>Nutritional & Health Benefits </li></ul><ul><li>Growth in Freezer Space </li></ul><ul><li>Improvement in Packaging Technology </li></ul>
    4. 4. Strategic positioning of XYZ --- Synthesis of Market Analysis 4
    5. 5. XYZ- Key Success Factors 4 Attractive Investment in Long Run KEY Success Factors to be managed Remarks Attractiveness Products/ Services Limited Product Portfolio <ul><li>Chicken& Peas/ Affects Domestic Sales </li></ul><ul><li>Chicken- Affects Institutional Sales </li></ul><ul><li>Absence of Backend Infrastructure </li></ul>5 Limited Business Development - For Existing customers 4 Limited Product Development - Slow to Respond to requirement of Customers 4 Quality Issues - Issues with Regular Customers 4 Distribution / Sales Inappropriate Plant Location <ul><li>Increased Logistics Cost </li></ul><ul><li>Delay in fulfilling of orders </li></ul>5 Limited Distribution <ul><li>Competitors have strong network </li></ul>4 Lack of Certification - Not able tap into Rs 350 crores worth UK market 3
    6. 6. Strategy - Existing Plant Assumptions <ul><li>Logistic Costs to remain constant at 15% of Revenue </li></ul><ul><li>Advertising Cost to reach 3% in 3 years time </li></ul><ul><li>Employee Cost to fall by 1% every year & reach 4% in 3 rd year </li></ul><ul><li>COGS has to be reduced 2% annually </li></ul>Plant Inefficiency Factors Efficient Plant <ul><li>High Cogs </li></ul><ul><li>Lean Manufacturing & Maintenance </li></ul><ul><li>High Employee Cost </li></ul><ul><li>Low inventory </li></ul><ul><li>High Turnaround Time </li></ul><ul><li>Low Turnaround Time </li></ul>Efficient Plant becomes profitable in 3 rd year (2012-13) Competition from MNCs implies increasing capacity & distribution - New Plant set up mandatory New Plant set up will enable Market Access & Brand Awareness In all the scenarios maximum EBIDTA of only 3% can be achieved assuming its impossible to reduce Logistics cost from 15% Even though revenues has increased to 337 crores in 2014-15 but EBITDA values has remain fixed at 3% in last few years
    7. 7. Which Division to enter ? According to AHP criteria Domestic Market should be chosen to enter first, however Institutional offers synergies & good potential too src for AHP calculation: http://www.cci-icc.gc.ca/tools/ahp/index_e.asp Analytic Hierarchy Process Model .331 .043 .170 .258 .130 .069
    8. 8. Strategy -New Plant Assumptions <ul><li>Location – North India </li></ul><ul><li>Setting up time – 6 months </li></ul><ul><li>Loan of 30 crores for 5 years @ 7% is taken for new plant </li></ul><ul><li>Revenue for 1 st year – 50% of existing plant with improved efficiency </li></ul><ul><li>Costs are benchmarked to competitors from the 1 st year itself </li></ul><ul><li>Sale will be equally divided between domestic & institutional division </li></ul><ul><li>Advertising Cost is kept high initially at 5% </li></ul><ul><li>Export certification will be taken after 2 years in 2012-13 </li></ul><ul><li>Loan of 10 crores for 3 years @7% is taken in 2012-13 for certification </li></ul>EBITDA is increasing in all scenarios Plant Costs and Export Certification Principle payments New Plant leads to increased revenue The profitability increases with wider market reach Economic Profit i.e Brand Creation , access to New Export Markets (UK).
    9. 9. Financing & Growth Forecast COMBINED PLANT EMI of Rs .59 crores has to be paid for 60 months for plant EMI of Rs .31 crores has to be paid for 36 months for export certification Principle payment is deducted in calculating EBITDA Interest would be subject to tax benefits there by reducing cost of financing Cash Flow generated is positive and will suffice the repayment requirements. Profitability is positive in 2 years as seen in graph Revenue reaches 500 crores in 5 yrs in all scenarios EBITDA reaches 38 crores in 5 years in least growth case Projections signal positive outlook for XYZ
    10. 10. BRAND AWARENESS Gondola & Danglers Branding Modern Trade Branding Co- Branding Trade Fairs International Chains Domestic Institutional Export <ul><li>Partnerships with Modern Trade outlets (Hypermarkets/ Retail Chain) </li></ul><ul><li>Social Networking Sites and Ambient Marketing </li></ul><ul><li>In store Branding: Gondola Branding, FSUs, Danglers and Signage </li></ul><ul><li>Promotion through RapidBuy </li></ul><ul><li>B2B Promotion through Trade Fairs (IITF) & Direct Marketing </li></ul><ul><li>Co Branding & Tie Ups with HoReCa (Hotels/Restaraunts/ Catering) </li></ul><ul><li>Inviting for Discussions and conferences </li></ul><ul><li>Market promotion or fairs/events sponsored by APEDA </li></ul><ul><li>Innovative packaging tech to suit the International market. </li></ul><ul><li>Increased Branding through Online media </li></ul><ul><li>Sale promotion through Int. retailers & departmental stores </li></ul>
    11. 11. Product & Business Development Industry is in growth stage, XYZ is a small player in growing industry. Need for launching Innovative products to capture market. Domestic Retail Institutional Frozen Chicken Fresh Grilled Chicken Boneless Chicken Butter Chicken Chicken Kheema Sheek Kabab curries Pre cut Chicken in small quantity Pre cut chicken in large quantities Green Peas Bundling : Ethnic bread (specialty) can be sold with chicken curries for domestic customers . Small packs as sample Special Packaging : Portraying core benefits for North India & South India Focus on Nutritionally Enhanced & Fortified food products <ul><li>Hold conferences and seminars, inviting current satisfied customers </li></ul><ul><li>Hold product launch parties for important customers </li></ul><ul><li>Develop a speakers’ bureau and actively orchestrate speaking engagements at key industry events </li></ul><ul><li>Create and actively interact with strategic partner boards </li></ul><ul><li>Convenience Food- Frozen foods are used since they are simple and easy </li></ul><ul><li>Focus Group Discussions and Market Research to understand Customers Needs </li></ul><ul><li>International Packaging Standards to meet competition </li></ul><ul><li>International TIE ups for KNOW HOW transfer </li></ul><ul><li>Proactive Checkups for continuous improvement </li></ul><ul><li>Customer Feedback implementation </li></ul>
    12. 12. Distribution Implement Combination of Both 61% of frozen foods worldwide are sold through supermarkets & hypermarkets for which warehouse distribution strategy is apt. src: APEDA Report Modern Trade Institutional Exports Warehouse <ul><li>Greater Retailer Margin – Push Strategy in the market </li></ul><ul><li>Institutional Buyers prefer to buy directly to rule out middlemen </li></ul><ul><li>Implementation of RapidBuy will need warehousing for integrated SCM </li></ul><ul><li>Domestic market penetration difficult through warehousing </li></ul><ul><li>Warehouse facilitates exports </li></ul><ul><li>Increases Fixed cost </li></ul>Distributors <ul><li>Required for capturing North & Western India market </li></ul><ul><li>Increase distributor network in hinterland of new plant </li></ul><ul><li>Lowers margins – low retailer incentives </li></ul><ul><li>Brand building requires push from distributers to retailers </li></ul><ul><li>Company will be able to focus on its core competency rather than inventory management </li></ul>XYZ Strategy Setup distribution network in North & West India Use existing warehouses for Institutional buyers and exports Producer XYZ Distributor Retailer Consumer 8-10% Warehouse
    13. 13. RapidBuy IS IT NECESSARY? Yes.  Differentiation in offering |  Tap the growing e-commerce market of India Study by Microsoft Business Solutions & Microsoft Retail Management Solutions implementation of automated PO system can result in 5% ↑ in Sales 2% ↓ in expenses 5% ↑ in Profits Src : http://www.tricityretail.com/brochures/wp_posimplementation.pdf Helpful for Exports as foreign distributors buyers can directly order Go for RapidBuy Advantages <ul><li>Transaction Cost Savings Lowering the Cost of Sales </li></ul><ul><li>Improved Inventory Forecasting </li></ul><ul><li>Reduced Inventory Enhanced Working Capital </li></ul><ul><li>Reduced Internal Costs </li></ul><ul><li>Increased Customer Satisfaction </li></ul><ul><li>Expanded Market Opportunity </li></ul><ul><li>Competitive Advantage </li></ul><ul><li>Improvement in Backend Infrastructure </li></ul>Cons <ul><li>Institutional Buyers in India are not used to automatic PO system </li></ul><ul><li>Most of the players go by the sales representative route – he/she does stock checking regularly </li></ul><ul><li>Only Reliance Fresh has automatic PO system </li></ul><ul><li>Spencer's has automatic PO but they don’t order themselves a sales representative is sent </li></ul>
    14. 14. Action Plan Operations FY1 -Q1 & Q2 FY 1- Q3 & Q4 FY 2 -Q1 & Q2 FY 2 –Q3 & Q4 Production & Operations <ul><li>Preparation of DPR for new plant </li></ul><ul><li>Improve backend infrastructure </li></ul><ul><li>Commissioning of new plant </li></ul><ul><li>Logistics for north India </li></ul><ul><li>Kaizen implementation </li></ul><ul><li>Expansion of distribution network </li></ul><ul><li>Expansion of distribution network </li></ul>Product & Process <ul><li>Improvement in existing plant inefficiencies </li></ul><ul><li>Product development and quality issues for existing products </li></ul><ul><li>Launch of frozen Peas & Chicken product </li></ul><ul><li>Rapid Buy implementation </li></ul><ul><li>Nutritionally enhanced and fortified product launch </li></ul><ul><li>International packaging standards and regulations </li></ul>Finance <ul><li>Raising capital for new plant construction </li></ul><ul><li>Payment for RapidBuy </li></ul><ul><li>Raising capital for export certification </li></ul>Marketing / Communication <ul><li>Focus Group Discussions with existing customers </li></ul><ul><li>Low cost marketing </li></ul><ul><li>Tie ups with HoReCa </li></ul><ul><li>Launch of co branded products </li></ul><ul><li>B2B promotion through trade fairs (IITF, Delhi in Nov) </li></ul><ul><li>Communication of RapidBuy and its uses </li></ul><ul><li>Modern Trade marketing </li></ul><ul><li>Pallets Designing for differential offering </li></ul><ul><li>Market promotion or fairs/events sponsored by APEDA for Exports </li></ul>HR <ul><li>Training for development of skills for employees </li></ul><ul><li>Recruitment of employees for new plant </li></ul><ul><li>Training of Employees for RapidBuy </li></ul><ul><li>Hiring of additional sales executives </li></ul><ul><li>Training for understanding packaging and other requirements for Exports </li></ul>
    15. 15. Contingency Plan SCENARIO PROBABLE REASON CONTINGENCY PLAN Adverse Market Conditions <ul><li>Sluggish economic growth </li></ul><ul><li>Decrease in purchasing power </li></ul><ul><li>Emphasis on fresh & organic food </li></ul><ul><li>Maintain low inventory levels </li></ul><ul><li>Robust MIS for budgeting & forecasting </li></ul><ul><li>Long term contracts with Institutional Players </li></ul>Quality issues with respect to new products Chicken & Peas <ul><li>Supply side issues – e.g. Avian Flu , low quality produce </li></ul><ul><li>Stringent Packaging & Regulatory standards </li></ul><ul><li>Ensure proper quality checks at each level from procurement to production </li></ul><ul><li>Highly integrated supply chain to manage crisis </li></ul>Exports not growing as projected <ul><li>Change in UK export regulations </li></ul><ul><li>Increase in exports of competing countries in our exporting nations </li></ul><ul><li>Diversify exports – look for new targets </li></ul><ul><li>Regular checks on new exports requirements – packaging , quality standards etc. </li></ul>
    16. 16. Climax
    17. 17. <ul><li>Thank You </li></ul>
    18. 18. Exhibits <ul><li>Financials </li></ul><ul><ul><li>Income Statement- Existing Plant </li></ul></ul><ul><ul><li>Income Statement- New Plant </li></ul></ul><ul><ul><li>Market Forecast </li></ul></ul><ul><ul><li>EBITDA Growth From Both Plants </li></ul></ul>AHP Calculations
    19. 19. Exhibits

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