Kanpur Confectioneries By Gourav Pamnani.pptx

This case study tells you about how a small enterprise can make business decision without loosing it's brand name.

1. KANPUR CONFECTIONERIES PRIVATE LIMITED - 1987 PRESENTED BY : GOURAV PAMANANI

2. INTRODUCTION INTRODUCTION The case is mainly regarding “Kanpur Confectioneries Private Limited ” which is a family business established in 1945 in Jaipur, Rajasthan by Mohan Kumar Gupta. Now the business is controlled by Alok Kumar (eldest son) and his brother Vivek and Sanjay. Alok was to make a critical decision regarding a proposal from“ A-one Confectioneries Private Limited ” KCPL was operating under the brand MKG which is known to specialise in sugar candies and glucose biscuits and known for its quality and affordability. Despite of its success company faced lower profits because of increasing competition from various players in the market. APL’s proposal gave them an opportunity to reduce their costs but it also came with various concerns. So decision is to be made after weighing all pros and cons.

3. INTRODUCTION INTRODUCTION The case is mainly regarding “Kanpur Confectioneries Private Limited ” which is a family business established in 1945 in Jaipur, Rajasthan by Mohan Kumar Gupta. Now the business is controlled by Alok Kumar (eldest son) and his brother Vivek and Sanjay. Alok was to make a critical decision regarding a proposal from“ A-one Confectioneries Private Limited ” KCPL was operating under the brand MKG which is known to specialise in sugar candies and glucose biscuits and known for its quality and affordability. Despite of its success company faced lower profits because of increasing competition from various players in the market. APL’s proposal gave them an opportunity to reduce their costs but it also came with various concerns. So decision is to be made after weighing all pros and cons.

4. HOT POINTS

5. T Intense competition from both organized and unorganized players in the market. Risk of losing control over the "MKG" brand and its legacy. Fluctuations in raw material prices and labor costs could impact profitability. O Partnership with APL could provide financial stability and access to new markets. Opportunity to improve production efficiency and quality control. Potential to expand the "MKG" brand with the right strategic focus. W High absence of casual workers affecting production consistency. Limited brand presence outside the Northern region. Inability to respond effectively to competitive pressures. S Brand reputation for quality and affordability Experience in the confectionery industry with a strong production base. Potential to leverage existing distribution networks.

6. T Intense competition from both organized and unorganized players in the market. Risk of losing control over the "MKG" brand and its legacy. Fluctuations in raw material prices and labor costs could impact profitability. O Partnership with APL could provide financial stability and access to new markets. Opportunity to improve production efficiency and quality control. Potential to expand the "MKG" brand with the right strategic focus. W High absence of casual workers affecting production consistency. Limited brand presence outside the Northern region. Inability to respond effectively to competitive pressures. S Brand reputation for quality and affordability Experience in the confectionery industry with a strong production base. Potential to leverage existing distribution networks.

7. PROBLEMS CASE

8. PROBLEMS DECISION MAKING COST-BENEFIT ANALYSIS LEGACY TERMS AND CONDITIONS OF CONTRACT COMPETITION BRAND IMAGE MARKET RESPONSE QUALITY CONTROL MEASURES

9. LEARNING OUTCOMES

10. Conceptualize APL's Offer : To this extent, KCPL should consider APL's offer to supply glucose biscuits, which would help KCPL fully utilize the surplus capacity of its extra production amount and bring more profits without spending on marketing and distribution expenses. 2. Strengthen the "MKG" Brand : KCPL should simultaneously work on strengthening its own brand, "MKG" so that it can fight back better from the big players such as APL and International Biscuits. 3. Long-Term Objectives : The long-term objectives of KCPL should also be transparent - including what they are hoping for and envisioning for their company and brand heritage, balancing the pros of the APL offer with the pros of maintaining their own independence and brand identity.

11. DOMAIN KNOWLEDGE The case study of Kanpur Confectioneries Pvt. Ltd. (KCPL) provides valuable insights into the dynamics of the biscuit manufacturing industry, particularly in the context of contract manufacturing and family-run businesses and this case also illustrates critical aspects including market competition, production processes, strategic decision-making, family dynamics, and best practices for sustainability and innovation. These insights can guide similar businesses facing comparable challenges in navigating growth opportunities while preserving their core values and brand identity.

12. DOMAIN KNOWLEDGE The case study of Kanpur Confectioneries Pvt. Ltd. (KCPL) provides valuable insights into the dynamics of the biscuit manufacturing industry, particularly in the context of contract manufacturing and family-run businesses and this case also illustrates critical aspects including market competition, production processes, strategic decision-making, family dynamics, and best practices for sustainability and innovation. These insights can guide similar businesses facing comparable challenges in navigating growth opportunities while preserving their core values and brand identity.

13. MANAGERIAL IMPLEMENTATION Strategic Decision-Making : KCPL’s management was weighing the pros and cons of accepting a proposal from A-One Confectioneries Pvt Limited (APL). Managerial implementation would involve the strategic analysis of potential partnerships and the implications for KCPL’s brand autonomy, market positioning, and long-term goals. 2. Resource Allocation : The family discussion raised concerns about whether to allocate resources toward building the MKG brand or focus on the contract manufacturing for APL. Managerial implementation could involve balancing resource allocation between growing KCPL’s brand and leveraging partnerships for immediate revenue gains. 3. Risk Management : Management must evaluate the risk of dependency on a contract (APL) versus investing in their brand (MKG). This involves a long-term strategic vision and implementing decision-making frameworks that assess financial, market, and operational risks. PRACTICAL IMPLEMENTATION Operational Efficiency : The document mentions absenteeism among casual workers and challenges in production. A practical implementation would be improving workforce management, such as introducing better labour contracts or reducing absenteeism by providing incentives or automation where feasible. 2. Cost Management : KCPL faced cost pressures, especially with material costs. A practical implementation could include negotiating better supply deals, automating processes to reduce labour costs, and improving inventory management to minimize waste. 3. Quality Control : With competition using more modern, mechanized processes, KCPL could implement better quality control procedures to reduce wastage and improve the product's consistency. APL's offer also includes quality supervision based on Japanese quality practices, which KCPL could adopt.

14. MANAGERIAL IMPLEMENTATION Strategic Decision-Making : KCPL’s management was weighing the pros and cons of accepting a proposal from A-One Confectioneries Pvt Limited (APL). Managerial implementation would involve the strategic analysis of potential partnerships and the implications for KCPL’s brand autonomy, market positioning, and long-term goals. 2. Resource Allocation : The family discussion raised concerns about whether to allocate resources toward building the MKG brand or focus on the contract manufacturing for APL. Managerial implementation could involve balancing resource allocation between growing KCPL’s brand and leveraging partnerships for immediate revenue gains. 3. Risk Management : Management must evaluate the risk of dependency on a contract (APL) versus investing in their brand (MKG). This involves a long-term strategic vision and implementing decision-making frameworks that assess financial, market, and operational risks. PRACTICAL IMPLEMENTATION Operational Efficiency : The document mentions absenteeism among casual workers and challenges in production. A practical implementation would be improving workforce management, such as introducing better labour contracts or reducing absenteeism by providing incentives or automation where feasible. 2. Cost Management : KCPL faced cost pressures, especially with material costs. A practical implementation could include negotiating better supply deals, automating processes to reduce labour costs, and improving inventory management to minimize waste. 3. Quality Control : With competition using more modern, mechanized processes, KCPL could implement better quality control procedures to reduce wastage and improve the product's consistency. APL's offer also includes quality supervision based on Japanese quality practices, which KCPL could adopt.

15. DECISION MAKING

16. DIMENSIONS COST ( IN RS’000 ) PROFIT/LOSS ( IN RS’000 ) SALES 2172 MATERIAL COST 1812 PACKING AND PRESERVATIONS 120 CASUAL LABOUR 36 TOTAL COST 1968 PERMANENT SALARY 275 INTEREST PER MONTH 10 OTHER FIXED COMMITMENTS 60 TOTAL FIXED COST 345 (141) PEARSON OFF TAKE 50 CONVERSION FEE 3 CASUAL LABOUR 0.3 TOTAL SAVINGS 135 TOTAL PROFIT/LOSS (6) CURRENT CONDITION KCPL PRODUCTIVITY AND OWN RAW MATERIAL PEARSON OFF TAKE 50 MT CONVERSION COST 3/KG. END UP MAKING A LOSS OF RS 6000/MONTH

17. DIMENSIONS COST ( IN RS’000 ) PROFIT/LOSS ( IN RS’000 ) SALES 2172 MATERIAL COST 1758 PACKING AND PRESERVATIONS 120 CASUAL LABOUR 36 TOTAL COST 1914 PERMANENT SALARY 275 INTEREST PER MONTH 10 OTHER FIXED COMMITMENTS 60 TOTAL FIXED COST 345 (87) APL OFF TAKE 70 CONVERSION FEE 1.5 CASUAL LABOUR 0.3 TOTAL SAVINGS 84 TOTAL PROFIT/LOSS (3) CASE 1 KCPL PRODUCTIVITY AND APL RAW MATERIAL APL OFF TAKE 70 MT CONVERSION COST 1.5/KG. END UP MAKING A LOSS OF RS 3000/MONTH

18. DIMENSIONS COST ( IN RS’000 ) PROFIT/LOSS ( IN RS’000 ) SALES 2172 MATERIAL COST 1696 PACKING AND PRESERVATIONS 120 CASUAL LABOUR 36 TOTAL COST 1852 PERMANENT SALARY 275 INTEREST PER MONTH 10 OTHER FIXED COMMITMENTS 60 TOTAL FIXED COST 345 (25) APL OFF TAKE 70 CONVERSION FEE 1.5 CASUAL LABOUR 0.3 TOTAL SAVINGS 84 TOTAL PROFIT/LOSS 59 CASE 2 KCPL AT APL PRODUCTIVITY AND OWN RAW MATERIAL APL OFF TAKE 70 MT CONVERSION COST 1.5/KG. END UP MAKING A PROFIT OF RS 59000/MONTH

19. DIMENSIONS COST ( IN RS’000 ) PROFIT/LOSS ( IN RS’000 ) SALES 2172 MATERIAL COST 1654 PACKING AND PRESERVATIONS 120 CASUAL LABOUR 36 TOTAL COST 1801 PERMANENT SALARY 275 INTEREST PER MONTH 10 OTHER FIXED COMMITMENTS 60 TOTAL FIXED COST 345 26 APL OFF TAKE 70 CONVERSION FEE 1.5 CASUAL LABOUR 0.3 TOTAL SAVINGS 84 TOTAL PROFIT/LOSS 110 CASE 3 KCPL AT APL PRODUCTIVITY AND APL RAW MATERIAL APL OFF TAKE 70 MT CONVERSION COST 1.5/KG. END UP MAKING A PROFIT OF RS 110000/MONTH

20. The conclusion of this case study revolves around a strategic decision that Kanpur Confectioneries Pvt Limited (KCPL) must make regarding a proposal from A-One Confectioneries Private Limited (APL). The key considerations for KCPL's leadership include: Utilizing Surplus Capacity: APL's proposal provides KCPL with an opportunity to maximize its unused production capacity without the need for additional marketing or brand-building efforts, which could stabilize its financials after recent losses. 2. Loss of Independence: A major drawback of accepting the deal with APL is the potential loss of independence for KCPL, which may limit their focus on building their own brand, "MKG," which the founding family is emotionally invested in growing. 3. Cost and Risk Mitigation: The proposal from APL mitigates business risks for KCPL by ensuring reimbursement for raw material expenses and providing a stable income stream through conversion charges. This would allow KCPL to earn more with fewer business risks and cost reductions. 4. Strategic Trade-offs: The family discussion highlights broader concerns about long-term strategy, such as what they want from their business and the legacy of their family brand. They must decide between short-term financial security through the APL contract or the long-term ambition of growing "MKG" as a national competitor.

21. HAVE A COOKIE DAY