WELCOME TO OUR PRESENTATION

Rahman, Masudur 14-97415-1

Fazelish, Shad 14-97412-1

Sakil, Mohammad 13-96607-1

Mostaque, Sayeed 12-96049-3

paul prashanta 13-97345-3

GROUP MEMBERS

SUBHIKSHA

ABOUT SUBHIKSHA

GHOLIPOUR A. 2006. ORGANIZATIONAL BEHAVIOR. UNIVERSITY OF TEHRAN.

ICICI venture-23%Azim premji (Wipro)-10%ICICI prudential-5%

Major shareholders

Success Timeline of Subhiksha1997 - 1st grocery Store in Chennai2000 - 50 stores in Chennai2000 June - ICICI Venture 10% stake for 15 Cr

2001 - Increased Stake to 23%2002 - 120 Stores across Tamil Nadu2003 - Azim Premji 10% stake for 230 Cr

2006 - 500 Stores across the country2007 - 1000 Stores Across the country

Failure Timeline of Subhiksha2007 - 350 Crore IPO 2008 April - Enter into Wholesale Market

2008 April - Un-mindful Expansion

2008 July - Market Falls2008 Oct - Operating Difficulties

2009 - Major Financial Crisis 2009 March - Shut Down Operations

COMPETITORSBrand Name Outlet Type Level of

OperationSpencer’s Supermarkets NationalReliance Fresh Supermarkets NationalFood Bazar Supermarkets NationalMore Supermarkets NationalFood World Supermarkets South IndiaNiligiri’s Supermarkets South IndiaFabmall Supermarkets South IndiaSpar Supermarkets South India

.

Key success factors

Low priceCentralized purchasingMarketing CommunicationHome Delivery SystemOnline Retail SystemCost saving small store

Cost drivers

InventorySpaceEmployeeMarketingUtilities

SWOT AnalysisSTRENGTHS WEAKNESS Discount model Strong Top management team High Customer base High Brand Value Use of Information

Technology Strong supply chain

management

Lack of expertise in Indian Retail environment

Low grade lower management team

Strategy of debt‐led Rapid expansion on a small equity base

Long time taken in IT Implementation

OPPORTUNITIES THREATS World's most lucrative

retail market Heavy Investment industry

from FII’s and Venture Funds

Huge No. of customers Positioning on quality and

variety and not only on pricing

Economic uncertainty and Recession

Strong Competitors at National and Regional Level

Price war and shrinking margins

Risk in Retailing and rapid expansion

Different functional strategy implemented by Subhiksha

Functional strategy implemented by subhiksha

Operational They decided to operate from smaller stores all across the city rather than big stores located in the centre of the city.

It bought directly from distributors who sold at only a small margin above the mill prices and from around 150 manufacturing companies

It had three separate godowns for stocking pharmacy products, unbranded groceries and branded FMCGs.

It had ten tempo vehicles to supply its stores once a day.

All the stores were connected via Intranet to facilitate inventory planning.

Functional strategy implemented by subhiksha

Finance Huge quantity of purchase helped Subiksha to cut costs by bargaining discounts.

Initially, it resorted to cash purchase to avail maximum discounts.

In order to cut cost, along with bagging discounts on national brands it went a step further and aggressively promoted its private label.

By the end of 2004, around 25% of the company sales came from private labels.

Functional strategy implemented by subhiksha

MarketingInitially only print advertisements and mailers were used to promote its services

It began advertising on television before the Diwali firecracker scale.

Color coding was used in the TVC. The brand logo was shown prominently for brand visibility

The communication was based on the premises that small amounts saved today could mean a better life tomorrow.

Subhiksha became a household name among the middle class Indians with its emphatic punch lines like Fight against Expenses, Saving is my right , Subhiksha is my pride

Functional strategy implemented by subhiksha

HR A single head appointed to manage both IT and Marketing departments

Most of the experts hired lacked retail experience. It pulled people from banking, financial services, pharmaceutical, FMCG industries.

REASONS FOR DECLINE

Reason of failure Over expenditure of wages and rent.Over expenditure of advertisingExpansion of store without adequate systemSupplier bargaining powerNarrow market segment focus on Aam-AdmiGovernment interventionLack of strong HR policy & stuffThe wrong assumption that telecom segment is a sound & profit making segment.

Strong competition Over confidence & aggressiveness

Some financial highlights Expansion continued without sufficient capital backup with debt to equity ratio being high

By 2008, while major players were struggling to start new stores, Subhiksha became the largest retail chain with 1480 stores stretched in 110 cities across the country

The financial woes worsened when it was unable to pay around 15,000 employees for over 6 months

No banks came to the rescue because of the economic downturn

The overambitious plans landed the company in a debt of INR 7 billion

RESTARTING THE BUSINESS

Market segmentation

Geographic: City: select top 3 cities in any of the regions of India ( North, South, East, West)

Demographic: Age: 20+ with majority of ( 20-50)Gender: Male & FemaleFamily life cycle: married with children, single, young

Income: Middle class & AbovePsychographic: Social class: Middle class and upper classBehavioral: Occasions: Regular occasionUser Status: Regular user

.

Revenue model

SalesBulk Purchase

from vendor

BUSINESS LEVEL GOAL& STRATEGY

Goal: Regain brand value within 1 year We will keep at least 20% profit from our sales

Increase 10% market share in each yearStrategy: More focus on quality rather then the price

Focus on effective promotional activities so that customer know subhiksha is back again as a new entity.

Expansion of target market. Focus on the product line which is more suitable for the company

Offer discount only for some the occasions

BUSINESS LEVEL GOAL AND STRATEGY

FUNCTIONAL GOAL & STRATEGY

MarketingGoal:• Create a strong brand value within first 6 months of business

Capture at least 20% new customer each year from rivals

Strategy: TV & Newspaper advertisement Billboard Campaign at different location Provide attractive gift offer for huge amount of purchase.( more than 5000 rupees)

FUNCTIONAL LEVEL GOAL AND STRATEGY

Operational:Goal:Format a monitory unit from the very beginning of the business

Opening 10 new stores in each yearStrategy: Initially start operation in 3 big cities and with 20-25 stores.

Convert the one of the existing kirana store in to a Subhiksha store.

FUNCTIONAL LEVEL GOAL AND STRATEGY

Supply Chain:Goal: 20% cost minimize associated with supply chain within next year

Strategy: Create a good relationship with the supplier

No centralized purchase IT infrastructure development for inventory management.

FUNCTIONAL LEVEL GOAL AND STRATEGY

HR:Goal: To hire experienced & effective people and create a friendly relationship

Strategy: Recruit store managers with experience in retail

Ensure the employees are trained adequately to ensure proper functioning of the store

Strict guidelines to be setup for curbing unethical practices amongst the employees

FUNCTIONAL LEVEL GOAL AND STRATEGY

Finance:Goal: Make a handsome profit of 20% from sales. Making an income statement & balance sheet for each year

Strategy: increase the sales revenue Make sure the real time information about the cash, cost, revenue and the profit is available with in any given point of time

Monthly income & expenses worksheet Regularly update the transaction information.

FUNCTIONAL LEVEL GOAL AND STRATEGY

THANK YOU