Costs and Good Health Biscuits
KANPUR CONFECTIONARIES PRIVATE LIMITED
By Venkatesh.G, NMIMS
Objective:
KPCL has to work out for the possible options to cover its losses and provide a sustainable business model. It also has to decide to act upon the proposal offered by A-One Confectionaries Pvt. Ltd.
SWOT Analysis:
Let us do a SWOT analysis first for KPCL to identify the internal and external monitoring environment that affects its business. Internal Factors: Strengths • • • • • Weakness • • • High Absenteeism among workers resulting in low and fluctuating productivity 50% utilization capacity (Under utilization of resources) Closure of sister business (Candy Sale) Running business on ethical lines Popular brand – ‘MKG’ Participative Decision Making High Production Capacity Ploughing back surplus
External Factors: Opportunities • Contracts with APL and Pearson (thereby ensuring utilization of waste resources and gaining technical expertise) • Explore new markets (currently present only in northern region) • Improve the current market share • Supply to Canteens in Institutions Threats • • Increased competition in the organized and unorganized sectors High Excise Duty and Sales Tax
Based on the analysis, KPCL can take either of the following decisions Status Quo – Do not accept the contract with APL and continue with the production of “Good health” by Pearson and “MKG” biscuits Accept the proposal by APL and become a CMU. Either of the decision should be taken as soon as possible. Hence, the advantages and disadvantages of KPCL accepting the proposal with APL should be carefully analyzed before a right decision is taken.
Merit – Demerit Analysis:
KPCL has tied up currently with Pearson in producing “Good Health” Biscuits. The conversion ratio provided by Pearson is also high. Hence it might seem to be a good option of continuing the same and increasing the production of “Good Health” biscuits. But the market response of “Good Health” biscuits is not attractive. It is
By Venkatesh.G, NMIMS
Objective:
KPCL has to work out for the possible options to cover its losses and provide a sustainable business model. It also has to decide to act upon the proposal offered by A-One Confectionaries Pvt. Ltd.
SWOT Analysis:
Let us do a SWOT analysis first for KPCL to identify the internal and external monitoring environment that affects its business. Internal Factors: Strengths • • • • • Weakness • • • High Absenteeism among workers resulting in low and fluctuating productivity 50% utilization capacity (Under utilization of resources) Closure of sister business (Candy Sale) Running business on ethical lines Popular brand – ‘MKG’ Participative Decision Making High Production Capacity Ploughing back surplus
External Factors: Opportunities • Contracts with APL and Pearson (thereby ensuring utilization of waste resources and gaining technical expertise) • Explore new markets (currently present only in northern region) • Improve the current market share • Supply to Canteens in Institutions Threats • • Increased competition in the organized and unorganized sectors High Excise Duty and Sales Tax
Based on the analysis, KPCL can take either of the following decisions Status Quo – Do not accept the contract with APL and continue with the production of “Good health” by Pearson and “MKG” biscuits Accept the proposal by APL and become a CMU. Either of the decision should be taken as soon as possible. Hence, the advantages and disadvantages of KPCL accepting the proposal with APL should be carefully analyzed before a right decision is taken.
Merit – Demerit Analysis:
KPCL has tied up currently with Pearson in producing “Good Health” Biscuits. The conversion ratio provided by Pearson is also high. Hence it might seem to be a good option of continuing the same and increasing the production of “Good Health” biscuits. But the market response of “Good Health” biscuits is not attractive. It is