Kathmandu University

School of Management
Case Study: Can he be an Ice-cream Tycoon of
Nepal?

Submitted To:
Course Instructor
Prof. Dr Binod K. Shrestha
Entrepreneurial Management

Submitted By:
Pallavi Jogai (12113)
MBA V Term
12113

March 6, 2014
Case Synopsis
The case is about a businessman in Butwal who switched from retail of readymade clothes as the
market was not appropriate, to printing press which too didnt work as the assets were obsolete
and after exploring carbon paper and surgical cotton industry he finally settled with his ice-cream
business. His poor knowledge about the business, lack of full time mechanic, corruption etc were
the major obstacles. However, with time and experience the business started generating profits.
Problem Identification
A trend of trial and error can be seen in the case. Without prior planning and evaluating the
market he tried to set up business in different fields. Poor market knowledge and lack of
technical know-how was major problem. However the turbulence in the initial phase was
resolved and the company started collecting good returns. The business now has two alternatives.
With the available financial resources he can either expand his production capacity in Butwal or
he can go for geographical expansion by entering market in Nepalgunj.
Analysis
Before taking any concrete decision regarding accepting or rejecting an alternative there are few
decision criteria that should be considered. For example, a cost decision criterion is very crucial.
The cost of expanding the existing plant and the cost of entering to a new market i.e. Nepalgunj
should be compared. Details about the profit margin in ice cream industry in these two locations
should be generated. This can help to conduct cost benefit analysis for both the alternatives
which will further be useful to determine which alternative is more profitable.
Another important decision criterion is to find information about the ice cream market in both
the locations. For example, competitors profile, the market share of current ice cream dealers,
opportunities and threats in the market, scope for growth etc. If the market in Nepalgunj is
already saturated or surpassed the growth stage then it would not be beneficial for the company
to expand in that area.
Other important information required for the evaluation criteria is past financial data of the
company. From this the company growth rate can be figured. This can even help to predict the
future cash flow. The decision to retain the money in the business or take investment decision
can be made. Expanding in production capacity in Butwal or expanding to Nepalgunj both will
require additional sales force who work on sales commission. The information regarding the
general trend of such commission in Nepalgunj too can be helpful decision criteria. Higher
commission rates can decrease the profit margin for the company and vice-versa.
From the facts presented in the case we can assume that Butwals ice cream market is not
completely explored as there are unfulfilled demands. The market is still in growth stage. There
is great opportunity for him to gain higher profits and a larger market share. The surplus from
this investment can be used to hire maintenance personnel and adopt ice cream distribution
methods which could help reduce the incurred losses during delivery of the product. However,
in absence of data this is just an assumption.
Facts show that Nepalgunj has a hot climate which is suitable for the ice-cream business.
Geographical expansion can help boost the bottom line of the business. However, there could be

additional cost as he might have to hire Area Manager and few employees who would look after
the new area or otherwise he himself has to travel more frequently to ensure that the operations
are managed smoothly. Though Nepalgunj is an opportunity but the new venture requires a
thorough analysis of the market in order to figure out the external threats. He should ensure that
this market has regular supply of electricity and there is scope for the business to grow. Existence
of tough competition in Nepalgunj can push the business out of the market soon.
Conclusion
Before suggesting any decision we need information regarding the cost, profit margins,
competitors profile, market share, growth rate of the company, growth rate of the industry etc.
No decisions can be made in the absence of crucial data related to companys financial and non
financial data. However, with the details available I would suggest the company to stay in
Butwal and expand its production capacity in order to exploit the opportunities available in the
growing ice cream market.