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Executive Summary:: Short Term Goals
Executive Summary:: Short Term Goals
Executive Summary:: Short Term Goals
Kanpur Confectionaries Private Limited (KCPL) was started by Mohan Kumar in 1945, in Jaipur, Rajasthan.
KCPL started as a dealer of sugar candies before turning up into a production unit. In 1954, it shifted to
Kanpur to reduce the costs. KCPL, in 1970, entered into making glucose biscuits under the same brand MKG
for diversification and investment of surplus. However, it incurred a loss due to stiff competition and
mismanagement of resources. In 1987, they got an offer from APL, the national leader, for contract
manufacturing. Taking consideration of all of its options, KCPL found the APL offer as the most promising
one to withstand competition, earn profit and management of resources.
Options:
Evaluation of options:
Refer exhibit 1.
Option 1:
1
Pros:
Assured return on investment as APL’s conversion charge is Rs. 1.50 per kg to cover the expenses
on labour, overheads, and depreciation. Thus minimizing the business risks.
An opportunity to get the insight of the manufacturing process of the leading biscuit brand of India.
KCPL can get the secret ingredients of APL.
Distribution, branding and marketing will be taken care by APL. So, KCPL can save its money.
Cons:
Option 2:
Pros:
Workers would be motivated to do more work to get the extra benefits beside salary or wages as well
as to avoid the punishment.
A healthy competitive environment would be created in the organisation. This environment would
make workers to give their maximum, say 100%.
It may help to minimise the number of absentees as most of the people want to get more beyond their
salary, it can be recognition, gifts, promotion, etc.
Cons:
If the means of punishment used in excess, this can lead to slowdown in work process because of the
dissatisfaction among the workers.
If the employees who are performing well are not recognized properly, can de-motivate them to do
their best.
Option 3:
Pros:
2
Targeting the market according to segments will help KCPL to set their price accordingly. They can
charge less from the customer who is earning less and at the same time they can charge more from
those earning good by improving quality and changing packaging.
A new marketing strategy would enforce the other competitors to change their strategy as well. In
this process they might commit mistake like choosing a wrong segment, and their market share can
be of KCPL.
Cons:
Option 4:
Pros:
Cons:
Recommended option:
Although their brand MKG will get diluted and they will not be able to make their decisions independently
but accepting APLs offer will let them know the manufacturing processes of the national leader. Not only
this, APL is also disclosing their secret ingredients to them.
KCPL can also negotiate with the authorized suppliers of APL to later supply raw materials to it, once the
contract is over. As the total cost difference between APL and KCPL raw material for one tonne is:
(Refer exhibit 6)
3
= 15100 – 13711.67
= Rs. 1388.33
They can also learn from the APL that the key to successful business is its employees as it is quite evident
from the exhibit given in the case that wages per day paid by APL is Rs. 30 more than those of KCPL which
could be one of the reason of higher productivity of APL.
Action Plan:
Contingency Plan:
Identify reason of absenteeism and employee dissatisfaction and try to motivate them by giving rewards,
recognition on better performance. KCPL should also pay higher wages to its employees like the way APL is
doing.
Exhibits:
4
Option 1 Option 2 Option 3 Option 4
Objective 1
Objective 2
Objective 3
Objective 4
Objective 5
Other three sons of Mohan Kumar started their own trading concerns in metal parts and containers.
5
Exhibit 5: Offers by Pearson and APL.
6
and packaging tonne
Casual Labour Rs. 300 per NA Rs. 36,000 Rs. 4,32,000
tonne
Permanent Rs. 2.75 lakhs NA Rs. 2.75 lakhs Rs. 33,00,000
Salary Bill per month
Interest Rs. 10,000 per NA Rs. 10,000 Rs. 1,20,000
month
Other fixed Rs. 60,000 NA Rs.60,000 Rs. 7,20,000
commitments
Total Rs. 2,77,56,000