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Reboot Systems
Submitted by-
Pulkit Bohra | Pulkit Mathur| Tarun Gupta
Team Iguanas, IIM Ranchi
Composition:
Cover Slide - #1
Main Slides - #15
Appendix - #7
Recommen-
dation
Entry Strategy & Business
Opportunities
Financial AnalysisIndustry Analysis Value Chain Analysis
To identify market potential of
used PCs in India
Market growth trends in used PC
market and e-waste management
were observed
Lack of affordable PCs is a major
hindrance in market growth
Leading players in the segment
were interviewed
Value chain was broken to
understand specific nodes and
relevant issues were identified
Warranty and after sales service
are important decision makers
Phase 1: Target Metro Cities
Establish hold in big
Industrialized zones
Phase 2: Target tier 1 & major
tier 2 cities
Create wider customer network
To analyse the minimum margin
and penetration required for a
profitable business
Strategic
objectives
Analysis
Insights
Reboot Systems is well poised to grow its market share in the expanding Used PC market. Scaling up operations using the suggested
Phase Wise Expansion & GTM strategy followed by entry into E-Waste Management will help them leverage First Mover Advantage.
To dissect the value chain and
identify nodes for improvement
To outline a Go-to-Market
strategy and identify future
business prospects
Reasons for low penetration of
PCs were analysed
Short and long term strategies
were mapped with phase wise
market entry
Projection of USED PC market in
the urban and rural regions.
Calculations of margins per
computer and ROI in “Most
likely” scenario
Go-to-market strategy was
outlined to come up with a
three stage model for each of
the identified regions
Reboot should focus on
collection, refurbishment and
redistribution in short term;
Long term market opportunities
in e-waste management
To maintain a consistent ROI of
greater than 30%, the
penetration and margin should
be greater than 0.38% and 15%
respectively.
The present margin per PC for
Reboot Systems is 23%
(approximately)
Executive Summary
“Used” PC Market is naïve. Offers
scope for First Mover Advantage
High growth rate forecast for
adoption of used PCs in both rural
and urban markets
Short and long term
implementation plan designed
Phase 2: Target tier 3 & villages
Penetrate the underserved rural
markets & fight digital divide
ENTRY STRATEGY
& BUSINESS
OPPORTUNITIES
Agenda
INDUSTRY
ANALYSIS
PRIMARY
RESEARCH
VALUE CHAIN
ANALYSIS
FINANCIALSINDUSTRY
ANALYSIS
Refurbished Computer Industry holds strong potential driven by expanding domestic market
Sources: Case Exhibit 3c & 5
REASONS TO ENTER
GROWING
AWARENESS
4
LARGELY
UNORGANIZED
MARKET
2
SCOPE FOR
INNOVATION
3
E-waste
Market
90% of the e-
waste finds its
way in the
unorganized
sector.
90%
10%
E-waste Market
Unorganized
Organized
EXPANDING MARKET
1
PC use
forecast-
Compounde
d annual
growth rate
0
10
20
30
China India US Japan
CAGR
PC use is slated
to have the
highest CAGR in
India
Share of
Market
Used computers
have 15% share
of the total
market.0
5
10
15
20
0
10
20
30
40
50
60
70
Reasons for No Internet Access
0
10000
20000
30000
40000
50000
60000
70000
80000
2011 2012 2013 2014 2015 2016
Market that can be captured by Reboot in “Most Likely”
scenario (No. of Used PC’s)
Rural Urban Total
• Lack of affordable PC’s/Laptops result in a “No PC at
home situation”
• Low internet penetration and lack of usability pose
greater challenges.
• ICT adoption has been majorly by the affluent section
of the society.
• Majority of the market lies in Urban (tier I and tier II)
cities.
• Even with a .25% market share in urban cities and 1%
market share in rural, Reboot can sell more than 70
thousand units by 2016
• The growth rate towards adoption of used computer is
high in both rural and urban cities.
Reboot systems is well poised to face the challenges posed by the used computer business
Sources: Case (Exhibit 8), Appendix (Exhibit 1)
Agenda
INDUSTRY
ANALYSIS
PRIMARY
RESEARCH
VALUE CHAIN
ANALYSIS
FINANCIALSPRIMARY
RESEARCH
ENTRY STRATEGY
& BUSINESS
OPPORTUNITIES
Warranty and
after sales service
are critical to
purchase decision.
Primary Research was conducted at ECORaksha, Bangalore
• Corporates either rent their computers or
buy them, majority of our e-waste comes
from corporates that buy laptops/Pc’s.
• My customers are Entrepreneurs, small
business owners and individual buyers.
• Majority of the market is unorganized, an
organized player with an innovative approach
can really leave a mark on the business.
Mr. Mithun
Garudapalli
Partner Ecoraksha
• Customers demand warranty while buying a
refurbished computer hence after sales
service plays an important part.
• Given the margins that we operate in
achieving Scale of operations is the key to
success.
• Majority of the players in the market do not
have the capital to invest in a recycling plant.
Mr. B S Mukund
Owner Ecoraksha
KEY TAKEAWAYS
Majority of
players still to set
up their recycling
plants
Our customers
include individual
buyers and small
businesses
47%
21%
8%
6%
6%
12%
E waste Management services Market
Infotrek
Trishiraya
E-parisaraa
INAA enterprises
Tessam Recyclers
Others
Agenda
ENTRY STRATEGY
& BUSINESS
OPPORTUNITIES
INDUSTRY
ANALYSIS
PRIMARY
RESEARCH
VALUE CHAIN
ANALYSIS
FINANCIALS
VALUE
CHAIN
ANALYSIS
Reboot Systems’ Strategy
Reverse Logistics Chain
Manufacturing
Distribution Reuse
Refurbish
Recycle
Redistribution
END OF
PRODUCT USE
/DISPOSAL
E-Waste
Handling
ISSUES
• Establish local Nodes
• Profit Sharing Scheme
for retailers
• Competitive Bidding for
Corporate Clients
• National & International
Regulations
• Supply From Individuals
• Local Retailers
• Recycling Industries
• Corporate Clients
• Non Profit Organizations
SUPPLIER
2
ISSUES
• Large Warehouses
• Inventory Management
• Human Health & Safety
• Environmental
Protection
• Handling- Transportation
• Cleaning/Data Security
• Asset Recovery/Testing
• Hardware Assembling
• Software Installation
SERVICES
ISSUES
• Identify potential clients.
• Target Government
Initiatives as supply
markets.
• Establish nodal centers
for regional penetration.
• Packaging
• Marketing &
Communications
• Distribution Channels
• Service Centers/Call
Centers
CHANNELS
4
ISSUES
• Huge Plant
establishment CAPEX
• Health Issues& safety
• Environmental
Protection &
Regulations
• Dismantling
• Extraction of pollutants
• Segregate the useful
waste.
FUTURE
Sources: UNESCO Guide to Computer Recycling -2008 ; Cognizant ‘s Reverse Supply Chain-Completing the Supply Chain
Implementation plan (short term, long term)
Manufacturing
Distribution
Recycle
Redistribution
END OF
PRODUCT USE
/DISPOSAL
Reuse
Refurbish
E-Waste
Handling
Staggered/Phased Market Entry
Establishment in
Supplier Rich Regions
Increase Customer
Base
Fill the Digital Divide in
Rural Areas
Phase 1 Phase 2 Phase 3
Top Metros & Tier
1 Cities
Expand in Tier 1 &
Tier 2 Cities
Expand in Tier 2 &
Associated Sub-
urbans
Phase 4
Forward Integration
into the E-Waste
Handling Business
Short Term (5 years) Long Term ( 10 years)
Increased Market to
Cater to
Reverse Logistics Chain
Sources: List of cities and towns in India – Wikipedia; Reverse Logistics Model –University Of South California
Agenda
INDUSTRY
ANALYSIS
PRIMARY
RESEARCH
VALUE CHAIN
ANALYSIS
ENTRY
STRATEGY
FINANCIALS
ENTRY
STRATEGY &
BUSINESS
OPPORTUNITIES
KEY FACTORS FOR CHOOSING CENTRES
Literacy Rate Per Capita Income
1 2
LUCKNOW
NEW DELHI
JAIPUR
PATNA
KOLKATA
HYDERABAD
CHENNAI
MUMBAI
AHEMDABAD BHOPAL
BUBANESHWAR
TRICHI
BENGALURU
kanpur
allahabad
Malda
hugli
vijaywada
guntur
madurai
coimbatore
mysore
davangere
pune
udaipur
ajmer
rajkot
surat
warangal
nagpur
Suggested Model For Selecting Collection Centres
Targeted regions
Rest of India
Sources: List of cities and towns in India – Wikipedia; Indiastat.com
• UP(Agra, Meerut, Varanasi)
• WB(Siliguri, Asansol, Khargpur)
• Bihar(Arwal, Gaya, Muzaffarpur)
• MP(Ujjain, Ratlam, Indore, Sagar)
• Rajasthan(Pali, Sikar, Alwar)
• AP(Vishakhapatnam, Eluru)
• TN(Thoothukudi, Vellore, Salem)
• Maharashtra(Thane, Dombivili)
• Karnataka(Gulbarga, Mangalooru)
• Gujarat(Vadodra, Bhavnagar)
• Orissa(Dhenkal, Debargh)
Phase 1
• Target metros & major Cities
• Establish hold in big Industrialized zones which will act
as suppliers
Phase 2
• Target tier 1 & major tier 2 cities
• Create a wider customer network
Phase 3
• Target tier 3 cities
• Cater to the digital divide by penetrating the under-
served rural market
Tier3Cities
Reboot should follow a Three Stage model for each of the identified Regions
Based on the product life
cycle and the target
market in a specific
geography, one or more of
the three pillars have
been chosen as focus to
meet our clients business
needs.
Stage 1
Primary focus
Secondary focus
• Reboot Systems should
leverage the first mover
advantage
• Focus on Product and
capture the Market Share
Stage 1
Leveraging the First
Mover Advantage
Three Pillars for
GTM Strategy
• Competition would
increase as the market
gains traction
• Need to focus on
distribution channels to
reduce costs and fight
competition
Stage 2
Focus on Distribution
Channels to improve Efficiency
• Customer retention
becomes very important
• Reboot can offer All India
Helpline to offer online
resolution of problems
• Introduction of loyalty
programs
Stage 3
Significant emphasis
on Customer Retention
Customer
ChannelProduct
New
Product
Entry
Entry of
Competition
Mature
Markets
Stage 2 Stage 3
Sources: AT Kearney (Redifining GTM)
Tie ups with government agencies and After Sales Service are Critical for Success
Investment/
Expenses
HR Requirement Priority
Returns /
Impact
Direct Sales
Tie-ups with
government
agencies
Tie-ups with small
private enterprises
Promotions to
create Awareness
After Sales Service
Loyalty Programs
• Major mass market
consumer interface
• Lease program with
appropriate warranties
would encourage use
of refurbished
computers with such
establishments
• People are ready to
consume but are
unaware of such cos.
• This will help generate
trust and improve
customer satisfaction
• Critical for customer
retention
INDUSTRY
ANALYSIS
PRIMARY
RESEARCH
VALUE CHAIN
ANALYSIS
Agenda
ENTRY STRATEGY
& BUSINESS
OPPORTUNITIES FINANCIALS
FINANCIALS
ROI in 2012
Margin per PC
5% 10% 15% 20% 25%
Used PC
Market
Captured
0.13% -0.72 -0.44 -0.16 0.11 0.39
0.25% -0.44 0.11 0.67 1.23 1.79
0.38% -0.15 0.69 1.54 2.39 3.23
0.50% 0.11 1.23 2.34 3.46 4.57
0.63% 0.40 1.81 3.21 4.61 6.02
ROI in 2013
Used PC
Market
Captured
0.13% -0.78 -0.55 -0.33 -0.11 0.12
0.25% -0.55 -0.11 0.34 0.79 1.24
0.38% -0.32 0.36 1.04 1.72 2.40
0.50% -0.11 0.79 1.68 2.58 3.47
0.63% 0.13 1.25 2.38 3.51 4.63
ROI in 2014
Used PC
Market
Captured
0.13% -0.80 -0.60 -0.40 -0.20 0.00
0.25% -0.60 -0.20 0.20 0.60 1.00
0.38% -0.39 0.22 0.83 1.43 2.04
0.50% -0.20 0.60 1.40 2.20 3.00
0.63% 0.01 1.02 2.03 3.04 4.04
ROI in 2015
Used PC
Market
Captured
0.13% -0.80 -0.61 -0.41 -0.22 -0.02
0.25% -0.61 -0.22 0.17 0.56 0.95
0.38% -0.41 0.19 0.78 1.38 1.97
0.50% -0.22 0.56 1.34 2.13 2.91
0.63% -0.02 0.97 1.95 2.94 3.92
ROI in 2016
Used PC
Market
Captured
0.13% -0.80 -0.61 -0.41 -0.22 -0.02
0.25% -0.61 -0.22 0.18 0.57 0.96
0.38% -0.40 0.19 0.79 1.38 1.98
0.50% -0.22 0.57 1.35 2.14 2.92
0.63% -0.01 0.98 1.96 2.95 3.94
ROI sensitivity analysis w.r.t Margin per PC and Used PC market captured
To maintain a consistent ROI of
greater than 30% year on year,
Reboot should focus on maintaining a
margin of at least 15% per PC and
capture at least 0.38% of the Used PC
market.
Sources: Appendix (Exhibit 1 & 2)
Market Sizing : Exhibit 1 (Appendix)
ROI & Margin calculations : Exhibit 2 (Appendix)
Appendix
Overall Market in India, Growing at a CAGR of 26.5%
2011 2012 2013 2014 2015 2016
Used PC Market 8790127 11040400 13866742 17416628 21875285 27475358
Rural 182219 228867 287457 361046 453473 569562
Urban 8607908 10811533 13579285 17055583 21421812 26905795
Market that can be captured by 'Reboot' (No of used PC's)
Optimistic (market captured, Urban .5% & Rural 2%)
Rural 3644 4577 5749 7221 9069 11391
Urban 43040 54058 67896 85278 107109 134529
Total 46684 58635 73646 92499 116179 145920
Most Likely (market captured, Urban .25% & Rural 1%)
Rural 1822 2289 2875 3610 4535 5696
Urban 21520 27029 33948 42639 53555 67264
Total 23342 29318 36823 46249 58089 72960
Pessimistic (market captured, Urban .1% & Rural .25%)
Rural 456 572 719 903 1134 1424
Urban 8608 10812 13579 17056 21422 26906
Total 9063 11384 14298 17958 22555 28330
Overall Market Sizing and estimation of market captured by Reboot
Exhibit 1
Margin (per 100 PCs sourced)
Working PCs 70% 70 Not working PCs 30% 30
Pick up
price/computer 2500 Pick up price (Rs/Kg) 20
Refurbishment cost Weight per PC (Kg) 12
Material 2000 Selling price (Rs/Kg) 30
Labour 400 Margin (per PC) 120
logistics 100
Total Margin (Non
Working PCs)
Cost per PC 5000
Selling Price 6500
Margin Per PC 1500
Margin (Working
PCs) 105000
Margin (Non Working
PCs) 1440
Total Margin (100 PCs) 106440
*From 100 PCs sourced, 70 Pcs are in working condition and 30 are not.
*Average weight of a PC has been taken as 12 Kg's
2012 2013 2014 2015 2016
Rent (Rs 50000/Outlet) 9000000 16200000 24000000 31200000 39000000
No of outlets 15 27 40 52 65
Rent for Furbishment
space 100000 200000 300000 400000 500000
Marketing Spend 1910328 2399372 3013612 3785096 4754081
Store Employees
Salaries 4775821 5998431 7534029 9462741 11885202
Miscellaneous
(Electricity etc) 318388 399895 502269 630849 792347
Investment 16104537 25197699 35349909 45478686 56931630
Total operating Margin 31838805 39989539 50226861 63084938 79234682
Net profit 15734268 14791841 14876952 17606251 22303052
ROI 0.98 0.59 0.42 0.39 0.39
*Marketing Spend has been taken as 6% of the total revenue
*Employees salaries have been taken as 15% of the total revenue, based
on the no. of employees required to operate and outlet and an assumption
that each employee can refurbish at least 20 laptops everyday.
*An increase in number of outlets from 3 in 2011 to 65 in 2016, has been
taken as a linear growth.
*Operating margin has been calculated by using the Margin(100 Pcs)
calculated in table 1 and the total no. of expected PC sales by Reboot
calculated using Exhibit 3C, 5, 7 and data mentioned in case.
ROI & Margin calculations for “Most Likely” scenario
Exhibit 2
Margin per computer = 1500/6500
= 23.1%
Adding Value Decreasing Cost Differentiation
Providing affordable &
quality PC in India:
• Bridging the Digital
Divide
• Solving the E-waste
problem Of India
Decreasing cost of PC
heavily with:
• Refurbished
computers
• Selling E-waste to
big Recyclers.
Pioneering:
• Reverse Logistics Model
• Offloading E-waste
handling & recycling duty
from big enterprises.
Influencing Industry
Attributes
Negating Risk Gaining Knowledge
• Halving the cost of PC
• Increasing penetration
in Tier 2&3 cities.
• Handling E-waste
effectively &
profitably.
India’s high risk index is
overcome by the Increased
customer targeting &
including large corporates
as our major suppliers.
• Gaining knowledge of the
vastly untapped Tier2&3
• Gaining knowledge of E-
waste disposal business –
scope for backward
integration.
Reboot Systems is ADDING value by scaling up its operations
We see that scaling up &
expansion adds value &
Chowdhary-Subbarao should go
ahead with investing in Reboot
System’s growth in India.
First Mover Advantage Framework
Most important reasons and methods of disposal
Most important reasons for replacement of
Computers
Methods of disposal of Computers
Important considerations while disposal
Sources: Frost & Sullivan (India waste management services market
1%
3%
3%
4%
2%
62%
25%
Financial Obsolence
As per Company's IT
Policy
Better Tech at cheaper
price
Latest Trends
Others
Technical Problems
Obsolete Technology
18% 3%
9%
13%
24%
33%
Sold in second hand
market
Sold to employees
Donations
Sold to scrap collectors
Exchange for new
products
Vendor buy backs
24%
9%
16%
42%
2% 7% Convinience
Quick pick up, no space to
store
Best exchange offer
Best Price
Environmentally frienly
disposal
Others
Suggested Design For The Refurbishment Facility
Sources: UNESCO- Entrepreneur’s Guide To Recycling Industry
Used Product From Suppliers
TEST 1:
Homogeneity
Of Inflow
In the long term, it is
more profitable to
process homogeneous
batches of equipment
than to maintain and
repair computers of
different
configurations and
brands.
Test 2:
Brand, Chip
Speed & Age
Decide on feasibility of
their refurbishment
and about the market
on which they could be
resold.
Inflow For Refurbishment
Facility Specifications
• 300 sq. m Storage area
• 200 sq. m Courtyard area
• 100 sq. m Workshop
• 10-15 employee
strength
• Utilities: Electricity, Water,
Telecomm
Key Takeaways
1. Design a Training Program for Employees for handling &
processing Inflow for refurbishment.
2. Careful Central Inventory Management System for:
• Recording in-out movements.
• Identifying Equipment asset.
• Maintaining supply of parts across Centres.
3. Maintain Traceability for legal & certification purpose.

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ISB Case Competition | Final round

  • 1. Reboot Systems Submitted by- Pulkit Bohra | Pulkit Mathur| Tarun Gupta Team Iguanas, IIM Ranchi Composition: Cover Slide - #1 Main Slides - #15 Appendix - #7
  • 2. Recommen- dation Entry Strategy & Business Opportunities Financial AnalysisIndustry Analysis Value Chain Analysis To identify market potential of used PCs in India Market growth trends in used PC market and e-waste management were observed Lack of affordable PCs is a major hindrance in market growth Leading players in the segment were interviewed Value chain was broken to understand specific nodes and relevant issues were identified Warranty and after sales service are important decision makers Phase 1: Target Metro Cities Establish hold in big Industrialized zones Phase 2: Target tier 1 & major tier 2 cities Create wider customer network To analyse the minimum margin and penetration required for a profitable business Strategic objectives Analysis Insights Reboot Systems is well poised to grow its market share in the expanding Used PC market. Scaling up operations using the suggested Phase Wise Expansion & GTM strategy followed by entry into E-Waste Management will help them leverage First Mover Advantage. To dissect the value chain and identify nodes for improvement To outline a Go-to-Market strategy and identify future business prospects Reasons for low penetration of PCs were analysed Short and long term strategies were mapped with phase wise market entry Projection of USED PC market in the urban and rural regions. Calculations of margins per computer and ROI in “Most likely” scenario Go-to-market strategy was outlined to come up with a three stage model for each of the identified regions Reboot should focus on collection, refurbishment and redistribution in short term; Long term market opportunities in e-waste management To maintain a consistent ROI of greater than 30%, the penetration and margin should be greater than 0.38% and 15% respectively. The present margin per PC for Reboot Systems is 23% (approximately) Executive Summary “Used” PC Market is naïve. Offers scope for First Mover Advantage High growth rate forecast for adoption of used PCs in both rural and urban markets Short and long term implementation plan designed Phase 2: Target tier 3 & villages Penetrate the underserved rural markets & fight digital divide
  • 4. Refurbished Computer Industry holds strong potential driven by expanding domestic market Sources: Case Exhibit 3c & 5 REASONS TO ENTER GROWING AWARENESS 4 LARGELY UNORGANIZED MARKET 2 SCOPE FOR INNOVATION 3 E-waste Market 90% of the e- waste finds its way in the unorganized sector. 90% 10% E-waste Market Unorganized Organized EXPANDING MARKET 1 PC use forecast- Compounde d annual growth rate 0 10 20 30 China India US Japan CAGR PC use is slated to have the highest CAGR in India Share of Market Used computers have 15% share of the total market.0 5 10 15 20
  • 5. 0 10 20 30 40 50 60 70 Reasons for No Internet Access 0 10000 20000 30000 40000 50000 60000 70000 80000 2011 2012 2013 2014 2015 2016 Market that can be captured by Reboot in “Most Likely” scenario (No. of Used PC’s) Rural Urban Total • Lack of affordable PC’s/Laptops result in a “No PC at home situation” • Low internet penetration and lack of usability pose greater challenges. • ICT adoption has been majorly by the affluent section of the society. • Majority of the market lies in Urban (tier I and tier II) cities. • Even with a .25% market share in urban cities and 1% market share in rural, Reboot can sell more than 70 thousand units by 2016 • The growth rate towards adoption of used computer is high in both rural and urban cities. Reboot systems is well poised to face the challenges posed by the used computer business Sources: Case (Exhibit 8), Appendix (Exhibit 1)
  • 7. Warranty and after sales service are critical to purchase decision. Primary Research was conducted at ECORaksha, Bangalore • Corporates either rent their computers or buy them, majority of our e-waste comes from corporates that buy laptops/Pc’s. • My customers are Entrepreneurs, small business owners and individual buyers. • Majority of the market is unorganized, an organized player with an innovative approach can really leave a mark on the business. Mr. Mithun Garudapalli Partner Ecoraksha • Customers demand warranty while buying a refurbished computer hence after sales service plays an important part. • Given the margins that we operate in achieving Scale of operations is the key to success. • Majority of the players in the market do not have the capital to invest in a recycling plant. Mr. B S Mukund Owner Ecoraksha KEY TAKEAWAYS Majority of players still to set up their recycling plants Our customers include individual buyers and small businesses 47% 21% 8% 6% 6% 12% E waste Management services Market Infotrek Trishiraya E-parisaraa INAA enterprises Tessam Recyclers Others
  • 9. Reboot Systems’ Strategy Reverse Logistics Chain Manufacturing Distribution Reuse Refurbish Recycle Redistribution END OF PRODUCT USE /DISPOSAL E-Waste Handling ISSUES • Establish local Nodes • Profit Sharing Scheme for retailers • Competitive Bidding for Corporate Clients • National & International Regulations • Supply From Individuals • Local Retailers • Recycling Industries • Corporate Clients • Non Profit Organizations SUPPLIER 2 ISSUES • Large Warehouses • Inventory Management • Human Health & Safety • Environmental Protection • Handling- Transportation • Cleaning/Data Security • Asset Recovery/Testing • Hardware Assembling • Software Installation SERVICES ISSUES • Identify potential clients. • Target Government Initiatives as supply markets. • Establish nodal centers for regional penetration. • Packaging • Marketing & Communications • Distribution Channels • Service Centers/Call Centers CHANNELS 4 ISSUES • Huge Plant establishment CAPEX • Health Issues& safety • Environmental Protection & Regulations • Dismantling • Extraction of pollutants • Segregate the useful waste. FUTURE Sources: UNESCO Guide to Computer Recycling -2008 ; Cognizant ‘s Reverse Supply Chain-Completing the Supply Chain
  • 10. Implementation plan (short term, long term) Manufacturing Distribution Recycle Redistribution END OF PRODUCT USE /DISPOSAL Reuse Refurbish E-Waste Handling Staggered/Phased Market Entry Establishment in Supplier Rich Regions Increase Customer Base Fill the Digital Divide in Rural Areas Phase 1 Phase 2 Phase 3 Top Metros & Tier 1 Cities Expand in Tier 1 & Tier 2 Cities Expand in Tier 2 & Associated Sub- urbans Phase 4 Forward Integration into the E-Waste Handling Business Short Term (5 years) Long Term ( 10 years) Increased Market to Cater to Reverse Logistics Chain Sources: List of cities and towns in India – Wikipedia; Reverse Logistics Model –University Of South California
  • 12. KEY FACTORS FOR CHOOSING CENTRES Literacy Rate Per Capita Income 1 2 LUCKNOW NEW DELHI JAIPUR PATNA KOLKATA HYDERABAD CHENNAI MUMBAI AHEMDABAD BHOPAL BUBANESHWAR TRICHI BENGALURU kanpur allahabad Malda hugli vijaywada guntur madurai coimbatore mysore davangere pune udaipur ajmer rajkot surat warangal nagpur Suggested Model For Selecting Collection Centres Targeted regions Rest of India Sources: List of cities and towns in India – Wikipedia; Indiastat.com • UP(Agra, Meerut, Varanasi) • WB(Siliguri, Asansol, Khargpur) • Bihar(Arwal, Gaya, Muzaffarpur) • MP(Ujjain, Ratlam, Indore, Sagar) • Rajasthan(Pali, Sikar, Alwar) • AP(Vishakhapatnam, Eluru) • TN(Thoothukudi, Vellore, Salem) • Maharashtra(Thane, Dombivili) • Karnataka(Gulbarga, Mangalooru) • Gujarat(Vadodra, Bhavnagar) • Orissa(Dhenkal, Debargh) Phase 1 • Target metros & major Cities • Establish hold in big Industrialized zones which will act as suppliers Phase 2 • Target tier 1 & major tier 2 cities • Create a wider customer network Phase 3 • Target tier 3 cities • Cater to the digital divide by penetrating the under- served rural market Tier3Cities
  • 13. Reboot should follow a Three Stage model for each of the identified Regions Based on the product life cycle and the target market in a specific geography, one or more of the three pillars have been chosen as focus to meet our clients business needs. Stage 1 Primary focus Secondary focus • Reboot Systems should leverage the first mover advantage • Focus on Product and capture the Market Share Stage 1 Leveraging the First Mover Advantage Three Pillars for GTM Strategy • Competition would increase as the market gains traction • Need to focus on distribution channels to reduce costs and fight competition Stage 2 Focus on Distribution Channels to improve Efficiency • Customer retention becomes very important • Reboot can offer All India Helpline to offer online resolution of problems • Introduction of loyalty programs Stage 3 Significant emphasis on Customer Retention Customer ChannelProduct New Product Entry Entry of Competition Mature Markets Stage 2 Stage 3 Sources: AT Kearney (Redifining GTM)
  • 14. Tie ups with government agencies and After Sales Service are Critical for Success Investment/ Expenses HR Requirement Priority Returns / Impact Direct Sales Tie-ups with government agencies Tie-ups with small private enterprises Promotions to create Awareness After Sales Service Loyalty Programs • Major mass market consumer interface • Lease program with appropriate warranties would encourage use of refurbished computers with such establishments • People are ready to consume but are unaware of such cos. • This will help generate trust and improve customer satisfaction • Critical for customer retention
  • 16. ROI in 2012 Margin per PC 5% 10% 15% 20% 25% Used PC Market Captured 0.13% -0.72 -0.44 -0.16 0.11 0.39 0.25% -0.44 0.11 0.67 1.23 1.79 0.38% -0.15 0.69 1.54 2.39 3.23 0.50% 0.11 1.23 2.34 3.46 4.57 0.63% 0.40 1.81 3.21 4.61 6.02 ROI in 2013 Used PC Market Captured 0.13% -0.78 -0.55 -0.33 -0.11 0.12 0.25% -0.55 -0.11 0.34 0.79 1.24 0.38% -0.32 0.36 1.04 1.72 2.40 0.50% -0.11 0.79 1.68 2.58 3.47 0.63% 0.13 1.25 2.38 3.51 4.63 ROI in 2014 Used PC Market Captured 0.13% -0.80 -0.60 -0.40 -0.20 0.00 0.25% -0.60 -0.20 0.20 0.60 1.00 0.38% -0.39 0.22 0.83 1.43 2.04 0.50% -0.20 0.60 1.40 2.20 3.00 0.63% 0.01 1.02 2.03 3.04 4.04 ROI in 2015 Used PC Market Captured 0.13% -0.80 -0.61 -0.41 -0.22 -0.02 0.25% -0.61 -0.22 0.17 0.56 0.95 0.38% -0.41 0.19 0.78 1.38 1.97 0.50% -0.22 0.56 1.34 2.13 2.91 0.63% -0.02 0.97 1.95 2.94 3.92 ROI in 2016 Used PC Market Captured 0.13% -0.80 -0.61 -0.41 -0.22 -0.02 0.25% -0.61 -0.22 0.18 0.57 0.96 0.38% -0.40 0.19 0.79 1.38 1.98 0.50% -0.22 0.57 1.35 2.14 2.92 0.63% -0.01 0.98 1.96 2.95 3.94 ROI sensitivity analysis w.r.t Margin per PC and Used PC market captured To maintain a consistent ROI of greater than 30% year on year, Reboot should focus on maintaining a margin of at least 15% per PC and capture at least 0.38% of the Used PC market. Sources: Appendix (Exhibit 1 & 2) Market Sizing : Exhibit 1 (Appendix) ROI & Margin calculations : Exhibit 2 (Appendix)
  • 18. Overall Market in India, Growing at a CAGR of 26.5% 2011 2012 2013 2014 2015 2016 Used PC Market 8790127 11040400 13866742 17416628 21875285 27475358 Rural 182219 228867 287457 361046 453473 569562 Urban 8607908 10811533 13579285 17055583 21421812 26905795 Market that can be captured by 'Reboot' (No of used PC's) Optimistic (market captured, Urban .5% & Rural 2%) Rural 3644 4577 5749 7221 9069 11391 Urban 43040 54058 67896 85278 107109 134529 Total 46684 58635 73646 92499 116179 145920 Most Likely (market captured, Urban .25% & Rural 1%) Rural 1822 2289 2875 3610 4535 5696 Urban 21520 27029 33948 42639 53555 67264 Total 23342 29318 36823 46249 58089 72960 Pessimistic (market captured, Urban .1% & Rural .25%) Rural 456 572 719 903 1134 1424 Urban 8608 10812 13579 17056 21422 26906 Total 9063 11384 14298 17958 22555 28330 Overall Market Sizing and estimation of market captured by Reboot Exhibit 1
  • 19. Margin (per 100 PCs sourced) Working PCs 70% 70 Not working PCs 30% 30 Pick up price/computer 2500 Pick up price (Rs/Kg) 20 Refurbishment cost Weight per PC (Kg) 12 Material 2000 Selling price (Rs/Kg) 30 Labour 400 Margin (per PC) 120 logistics 100 Total Margin (Non Working PCs) Cost per PC 5000 Selling Price 6500 Margin Per PC 1500 Margin (Working PCs) 105000 Margin (Non Working PCs) 1440 Total Margin (100 PCs) 106440 *From 100 PCs sourced, 70 Pcs are in working condition and 30 are not. *Average weight of a PC has been taken as 12 Kg's 2012 2013 2014 2015 2016 Rent (Rs 50000/Outlet) 9000000 16200000 24000000 31200000 39000000 No of outlets 15 27 40 52 65 Rent for Furbishment space 100000 200000 300000 400000 500000 Marketing Spend 1910328 2399372 3013612 3785096 4754081 Store Employees Salaries 4775821 5998431 7534029 9462741 11885202 Miscellaneous (Electricity etc) 318388 399895 502269 630849 792347 Investment 16104537 25197699 35349909 45478686 56931630 Total operating Margin 31838805 39989539 50226861 63084938 79234682 Net profit 15734268 14791841 14876952 17606251 22303052 ROI 0.98 0.59 0.42 0.39 0.39 *Marketing Spend has been taken as 6% of the total revenue *Employees salaries have been taken as 15% of the total revenue, based on the no. of employees required to operate and outlet and an assumption that each employee can refurbish at least 20 laptops everyday. *An increase in number of outlets from 3 in 2011 to 65 in 2016, has been taken as a linear growth. *Operating margin has been calculated by using the Margin(100 Pcs) calculated in table 1 and the total no. of expected PC sales by Reboot calculated using Exhibit 3C, 5, 7 and data mentioned in case. ROI & Margin calculations for “Most Likely” scenario Exhibit 2 Margin per computer = 1500/6500 = 23.1%
  • 20. Adding Value Decreasing Cost Differentiation Providing affordable & quality PC in India: • Bridging the Digital Divide • Solving the E-waste problem Of India Decreasing cost of PC heavily with: • Refurbished computers • Selling E-waste to big Recyclers. Pioneering: • Reverse Logistics Model • Offloading E-waste handling & recycling duty from big enterprises. Influencing Industry Attributes Negating Risk Gaining Knowledge • Halving the cost of PC • Increasing penetration in Tier 2&3 cities. • Handling E-waste effectively & profitably. India’s high risk index is overcome by the Increased customer targeting & including large corporates as our major suppliers. • Gaining knowledge of the vastly untapped Tier2&3 • Gaining knowledge of E- waste disposal business – scope for backward integration. Reboot Systems is ADDING value by scaling up its operations We see that scaling up & expansion adds value & Chowdhary-Subbarao should go ahead with investing in Reboot System’s growth in India.
  • 22. Most important reasons and methods of disposal Most important reasons for replacement of Computers Methods of disposal of Computers Important considerations while disposal Sources: Frost & Sullivan (India waste management services market 1% 3% 3% 4% 2% 62% 25% Financial Obsolence As per Company's IT Policy Better Tech at cheaper price Latest Trends Others Technical Problems Obsolete Technology 18% 3% 9% 13% 24% 33% Sold in second hand market Sold to employees Donations Sold to scrap collectors Exchange for new products Vendor buy backs 24% 9% 16% 42% 2% 7% Convinience Quick pick up, no space to store Best exchange offer Best Price Environmentally frienly disposal Others
  • 23. Suggested Design For The Refurbishment Facility Sources: UNESCO- Entrepreneur’s Guide To Recycling Industry Used Product From Suppliers TEST 1: Homogeneity Of Inflow In the long term, it is more profitable to process homogeneous batches of equipment than to maintain and repair computers of different configurations and brands. Test 2: Brand, Chip Speed & Age Decide on feasibility of their refurbishment and about the market on which they could be resold. Inflow For Refurbishment Facility Specifications • 300 sq. m Storage area • 200 sq. m Courtyard area • 100 sq. m Workshop • 10-15 employee strength • Utilities: Electricity, Water, Telecomm Key Takeaways 1. Design a Training Program for Employees for handling & processing Inflow for refurbishment. 2. Careful Central Inventory Management System for: • Recording in-out movements. • Identifying Equipment asset. • Maintaining supply of parts across Centres. 3. Maintain Traceability for legal & certification purpose.