Simple Solution
Decision Sheet
Problem Statement: Selection of set of services, products and distribution model in order to achieve operational break even quickly.
Situational Analysis:
In order to open 1200 stores by 2012, PC needs to increase cash inflow and speed up break-even of newly opened stores. There is a greater margin on non-agri products than agri products. However an increased focus on non-agri products may lead to a loss of core customer focus and trust. Further, it is seen that ‘spoke’ stores tend to break even in 2 years while ‘hub’ stores take 3 years. In addition to increasing sales, variable and fixed costs must be controlled. Increased competition must be tackled.
Solutions must be found to hasten operational breakeven without losing customer focus.
Options:
Modify the hub/spoke model.
Add more spokes so that there is greater market penetration. At the same time, there must be some hubs and distribution centre set up to service the spokes. At the start of 2006, more spokes should be established as the fixed costs involved are less. Once they achieve break even, more hubs can be established. The number of spokes established in the start should be reasonable so that they can be serviced by the distribution centre. The capacity of the DC should be increased.
Increase focus on non agri products
Improve IT infrastructure to increase efficiency
Add/develop services offered - Credit facility, courier service, entertainment at hubs, free advice, soil testing, insurance, etc.
Tie-up with ‘Greens’
Modify ‘Retail Mix’
Increase percentage of private labels for commodity products.
Relationship building Activities
Criteria: (↑↓)
Criteria Modify Model Increase focus on non agriImprove IT infra Add services Tie up with Greens Private Label Promotional
Perceived increase in Expenses
(Should be ↓) ↑ - ↑ ↑ ↓ ↑ ↑
Perceived increase in footfall and market penetration
↑ ↑ - ↑ ↑ ↓ ↑
Perceived increase in sales
↑ ↑ - ↑ ↑ ↓ for non-commodity products -
Core
Problem Statement: Selection of set of services, products and distribution model in order to achieve operational break even quickly.
Situational Analysis:
In order to open 1200 stores by 2012, PC needs to increase cash inflow and speed up break-even of newly opened stores. There is a greater margin on non-agri products than agri products. However an increased focus on non-agri products may lead to a loss of core customer focus and trust. Further, it is seen that ‘spoke’ stores tend to break even in 2 years while ‘hub’ stores take 3 years. In addition to increasing sales, variable and fixed costs must be controlled. Increased competition must be tackled.
Solutions must be found to hasten operational breakeven without losing customer focus.
Options:
Modify the hub/spoke model.
Add more spokes so that there is greater market penetration. At the same time, there must be some hubs and distribution centre set up to service the spokes. At the start of 2006, more spokes should be established as the fixed costs involved are less. Once they achieve break even, more hubs can be established. The number of spokes established in the start should be reasonable so that they can be serviced by the distribution centre. The capacity of the DC should be increased.
Increase focus on non agri products
Improve IT infrastructure to increase efficiency
Add/develop services offered - Credit facility, courier service, entertainment at hubs, free advice, soil testing, insurance, etc.
Tie-up with ‘Greens’
Modify ‘Retail Mix’
Increase percentage of private labels for commodity products.
Relationship building Activities
Criteria: (↑↓)
Criteria Modify Model Increase focus on non agriImprove IT infra Add services Tie up with Greens Private Label Promotional
Perceived increase in Expenses
(Should be ↓) ↑ - ↑ ↑ ↓ ↑ ↑
Perceived increase in footfall and market penetration
↑ ↑ - ↑ ↑ ↓ ↑
Perceived increase in sales
↑ ↑ - ↑ ↑ ↓ for non-commodity products -
Core