Summary- Session 4

Mysore Ghee Store Case Analysis

 Selecting an appropriate framework for analysis is important to study the environment.

As Porter’s five forces cater to all the elements of the external environment and it is
more specific as compared to ETOP which gives a Holistic view but not in detailed form.
 The impact of various factors can be creatively implemented in porter’s five force.
 For e.g- socio culture factors can be incorporated in bargaining power of the buyers
and the impact of government policies can be creatively incorporated in rivalry.
 Ghee market is fragmented with various leading players and some local players also.
With them 25% competition can be faced from spurious Ghee and Dalda Ghee, backed
by huge number of retailers.
 Opportunities in fragmented markets is through consolidation. Differentiation does not
apply here because it is a generic product: commodity, more homogeneity, no
importance of branding or logo.
 Case describes 4 options.
 Going retail
 Outsourcing
 Real Estate
 Export to Middle East
 Challenge in going retail in fragmented market of Generic product is there are lots of
local players and national players. The competition can also be faced from Spurious
ghee, Dalda ghee, Homemade ghee or indirectly the Olive oil.
 Porter’s Five Force Model
 Bargaining power of Buyers: high (Multiple brands at a competition price, no
brand loyalty and small capacity purchase). Bargaining power is fluctuating with
demand.
 Bargaining power of Suppliers: As fragmented market, higher no of players so
switching cost of suppliers is less so the bargaining power of the supplier is also
less. (if in B2B- Quality and price matters so brand building is not so important,
what matters is personal relationship, vice versa in B2C)
 Cost structure
 Comparing per cost of biryani plate and sweet shop, monthly or annually- more
profit margin is in Sweet shop.
 From the values of the growth in CAGR, selling price and Input cost- supplier
bargaining power is low.
 Income statements shows that B2B should be processed.
 Demand Sizing:
 2.14% - total market size for biryani, 37.14% - total market size for sweet shop.
So it states Sweet shop is better option to increase the hold in the market.
  Homemade ghee is less than 20% and from local sellers it is less than 5%
 Supplier base of MGS:
 If retail and wholesale is given at same point, then brand building becomes
important, then B2B improvement by improving margins on sweet shop as well
as biryani points, then you can head on the national players and enjoy largest
share.
 Outsourcing, Exports and Real estate should also be considered. Financial analysis of
real estate can also be calculated. Both Qualitative as well as quantitative aspects are
taken in mind as protagonist here is attached to the company. Full capacity utilization
can be considered for expansion of the business.