November 2010

Section-A Group-2

Business Marketing Project Report

on Classic Packbox (India) Pvt.
Submitted to:
Dr. Vinod Kalia

By:

Amitesh Dayal   09P006

Parsva Saikia   09P040

Ruchira Khanna   09P050

Shailender Singh 09P053

Rinshul Pruthi 09P110

Benjamin Patte 10ESCP04

Contents
Acknowledgement.................................................................................................................................3
Executive Summary...............................................................................................................................4
About the Company...............................................................................................................................5
Introduction.......................................................................................................................................5
Existing Organization Structure.........................................................................................................5
Classic’s Existing business model...........................................................................................................6
The product.......................................................................................................................................6
The manufacturing Process...............................................................................................................7
Suppliers............................................................................................................................................8
Technological Developments Affecting Supply..............................................................................8
Buyers................................................................................................................................................8
The Competition................................................................................................................................8
Classic’s Quality Policy...........................................................................................................................9
Classic’s Sales Process...........................................................................................................................9
Acquiring a new customer.................................................................................................................9
Product Delivery Process...................................................................................................................9
Issues in the current business model of Classic Packbox.....................................................................11
Possible Strategies to meet current goals of Classic............................................................................12

BM Project Report: GROUP 2 Section-A

 Acknowledgement

We take this opportunity to thank Prof. (Dr.) Vinod Kalia for providing incessant
knowledge on the subject. Without his guidance it would not have been possible for
us to do this piece of work on Business Marketing.

Group -2
Section-A

BM Project Report: GROUP 2 Section-A

 Executive Summary

Classic Packbox (India) Private Limited is a small albeit up and coming firm in the corrugated
boxes space. The company has achieved reasonable success in North Indian markets. A
small company, the chain of command is simple and the organization on a whole is heavily
manufacturing-oriented. The company prides itself on its client relations and the clients in
turn are highly loyal. The management is cross –functional, taking up a part of the sales role
and the sales function itself is limited to order taking.

However, given the growth of the company and the low level of differentiation of the
product in a highly competitive market, the director has envisioned changes that have put
him at odds with the rest of the management. These changes include expanding into
geographically new markets and adoption of a departmentalized and process driven
approach to business.

The company is also experiencing typical growing pains – the managers are being forced to
focus more on the internal working of the company rather than personally calling on clients.
However the reins cannot yet be passed on to the inexperienced sales force. Also, every
member of the organization is on a fixed income which is proving to be ineffective for both
talent retention and employee motivation in a variable-pay world.

A fascinating phase in any organization’s growth, we have identified the current challenges,
potential pitfalls that the company might face as well as solutions of both a preventive and
curative nature.

BM Project Report: GROUP 2 Section-A

 About the Company

Introduction
Classic Packbox is a regional manufacturer of all types of corrugated boxes. Founded in
1996, Classic Packbox has established itself as a highly trusted brand in its region of
operation. It offers quality products to some of the leading companies like Perfetti India
Ltd., Indonesian Foods Ltd., Becton Dickinson’s India Ltd. etc.
Classic Packbox is driving sustainable regional growth through high quality products and
services, leading technology and innovation, and manufacturing excellence to exceed
customer, shareholder and employee expectations. 
The company has a complete plant and machinery with offset printing for manufacturing
quality corrugated boxes and also has complete laboratory for testing Kraft paper &
corrugated boxes. It has well trained staff and sufficient space for assuring timely delivery of
material to the customers. It is engaged in supply to the number of industries including
multinationals, 100% export oriented units and food processing unit.
They initially started operations by setting a plant in Palwal, Faridabad. Recently they have
established a new unit in the name of Uttrakhand Industrial Corporation at Rudrapur. The
company is also planning to set-up a plant in Chennai by 2011.

Existing Organization Structure

Classic Packbox is a relatively small organization when it comes to the B2B space, with total
employee strength of only 60. This is explained by the fact that they are established only at
two places (Palwal and Rudrapur) and also those they maintain a more personalised way of
business when dealing with their small base of customers.

At the head of their organization is the director. His subordinates comprise of three general
managers, who basically look after the whole sales process once the lead is generated by
one of the two sales executives. In addition, there are two accountants who look after the
accounts of Classic Packbox.

Almost 90% of their employees currently work on the shop floor as Classic Packbox, as 52 of
their 60 employees are manufacturing workers. This also highlights Classic Packbox’s focus
on quality, as majority of their workforce is centred towards production of quality
corrugated boxes.

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Figure 1: The Classic Organization Structure

Classic’s Existing business model

The product
Corrugated boxes are designed to be very strong. They are made of corrugated paperboard,
which is different from the stiff paper known as “cardboard.” The edge of corrugated
paperboard consists of a row of air columns. The air acts as a cushion, while the paper
columns make the material strong. Each box is made to hold something just right, protect it
from banging around, and keep it from spilling. Boxes are made with important information
printed on them about what’s inside, or how to lift or move them. Carefully designed inserts
hold items in place so they won’t spill or become damaged.

The wavy paper inside the corrugated board is called the corrugating medium. The flat
sheets on the outside are called liners. Liner paperboard can be a natural brown color,
mottled white, or all white. Most is made with about 35 percent recycled fiber, but recycled
content can be up to 100 percent. There are standard sizes of ridges in the corrugated
medium. Some corrugated boards have small numbers of very large flutes; others have
higher numbers of very small flutes. The use of the box determines which flute style is best.
There are three types of boxes manufactured at Classic Packbox:

 A single liner, glued to corrugating medium, creates single-face corrugated board.

This flexible material is sometimes used to cushion items such as light bulbs.

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  Corrugating medium glued between two fl at liners forms a single wall corrugated
board. Most of the boxes we see every day are made of this material, and in fact
about 90 percent of corrugated board is single wall.

 Adding another corrugating medium and a third flat liner creates a double wall
corrugated board. Stronger than the single wall board, it’s also heavier and more
expensive. Furniture, appliances and products such as nails, meat, and bulk peanuts
are packed in boxes made from double wall corrugated board.

Due to the advantages like light weight, case in fabrication and good preferability as per the
requirement of end users, the demand of corrugated boxes is encouraging. The demand for
corrugated boxes is growing mainly where there is scope for packing, like in FMCG industries
and processed product companies.

However, the product as a whole is very lowly differentiated from all of Classic Packbox’s
competitors. In fact, some of the competitors even make triple wall corrugated boxes.
Hence, given the product and its select set of variants given above, most of Classic Packbox’s
business relies on long-terms deals with a select set of trusted clients.

The manufacturing Process

The raw materials for corrugated boxes are linerboard (the flat facings), corrugating medium
(the wavy material separating the facings), and adhesive. These materials go through the
following steps to manufacture corrugated boxes:

 The materials are combined on a machine called a corrugator to form a flat product
called combined board. The board is also cut on this machine to the desired size for a
specific box.

 The cut combined board is called blanks, and next moves to a machine called a
Flexo-folder-gluer, where the blanks are printed, folded into a 4-sided tube, and the
vertical seam is applied. The product, known as a knocked-down box, is then shipped
to the customer for filling with a product.

 Since boxes take up a lot of space, customers do not want to carry an inventory, and
insist upon just-in-time deliveries (often for next day use). Thus it is hard for a box
plant to plan more than 2 weeks ahead. Finished boxes are rarely inventoried at
Classic Packbox’s plants, and if so, in only small amounts.

For the manufacturing process, Classic Packbox’s plant normally carries 2-4 weeks of
inventory of containerboard.

BM Project Report: GROUP 2 Section-A

Suppliers
The suppliers for the Raw materials of corroborated packaging are mainly large and small
scale paper mills. Classic Packbox source most of their raw materials from such mills and
factories in the north zone. Their monthly purchase of Raw materials is around Rs. 50 lakhs,
which comprises mainly of 250 tonnes of Recycled paper.

Technological Developments Affecting Supply

 Very few new paper machines have been built in the past 10 years, so almost all
companies use similar technology to manufacture.
 Big differences exist within the industry with respect to productivity, operating costs,
and debt. The more efficient mills suffer less erosion of margin at the same market
price.
 Classic Packbox believes they are more efficient compared to other companies (in
the nearby locations)

Buyers
The buyers of corrugated boxes are mainly the nearby factories of the clients mentioned in
the introduction, with who Classic Packbox has been in a relation for a long time. These
relationships have helped Classic Packbox increase their set of buyers to member factories
in the north zone, which has been the base for their success in this business so far.

The Competition
Since the product is so lowly differentiated, the competition is very high in the corrugated
boxes business. The main competition for Classic Packbox is:

 Khemka Containers Ltd.

 Perfect Pack Ltd.
 BL Containers
 Packraft Containers India Pvt. Ltd
 A-One Packaging Co.

There are 7-8 companies manufacturing corrugated boxes in the north region, and each
company relies upon building long term relationships with their customers. Classic is one of
the most trusted companies in the region and has Perfetti India Ltd. and Indonesian Foods
Ltd. as the two of its biggest clients. Perfetti has its plant in Gurgaon and Rudrapur, which
are served by Classic’s plants in Palwal and Rudrapur. Indonesian Foods has its plants in
Rewadi and Bangalore. Classic’s boxes are delivered from Palwal to customer’s plant in
Rewadi.

Classic’s Quality Policy

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Classic’s value proposition is based on quality, wherein:

 "Classic" is committed to total quality in all aspects of its operations to provide total
customer satisfaction.
 Classic believes in continuous improvement of its processes and products through
“zero defects approach” for maximizing value for money for its customers.
 Classic tries to make conscious efforts to do its work right at the first time itself,
every time.

Hence, Classic actually aims to manufacture and supply packing material for safe and
reliable packaging of the customers’ products by the use of good quality inputs and
working with the best of available production technology in a harmonious and
motivating atmosphere for its employees. It aims to make the delivery just in time, to
reduce the inventory costs for both.

Classic’s Sales Process

Acquiring a new customer
 The Sales Executives approach the potential customer, with a catalogue containing
the company and product details and fix an appointment for meeting
 This is followed by the General Manager meeting the client and negotiating on Price
Quotes/ Time of Delivery etc
 If both parties agree on terms, Classic prepares a sample order
 The customer accepts/ rejects/ suggest changes in the product, and after the final
acceptance, GM closes the deal with the customer

Product Delivery Process

 Once the sales order has been procured, it is submitted to the production
department
 Production Department manufactures and maintains job cards at various production
stages
 Packing department then packs and the Dispatch department prepares invoice and
related documents pertaining to the sale

BM Project Report: GROUP 2 Section-A

 Figure 2: The sales process - players involved

In this model, the role of the sales executive is pretty restricted – he basically functions as an
order taker only. Throughout the sales process, from the time the order is taken by the
Sales Executives to the final delivery of the order, the whole process is overseen by the
concerned general manager who fixes the contract with the client. The general manager,
leveraging his cross-functional ability, is able to not only understand the client organization
and its needs well, but is also able to customize his sales pitch based on the same in order
to try and get the best possible deal from the client, and at the same time develop and
enhance his relationships with the client. In fact, one of the main advantages of this sales
process is that the personalized touch brought over by the general manager dealing with
the client leads to:
 Developing excellent relationship with the client
 Classic feel that this sales model has helped them form a client base which has
remained loyal to them till now

However, this model is capable only in this case as Classic is dealing with a handful of client,
and hence, having GMs deal with each client end-to-end is possible.

BM Project Report: GROUP 2 Section-A

Issues in the current business model of Classic Packbox

1) A Single director is looking after Palwal and Rudrapur- and is now looking for
Chennai
a. Divided focus of mgmt.- leading to some dissatisfaction with clients

The organization is growing well and hence the director is keen on expanding
the business further. He is eyeing Chennai as the next market to cater to
given it potential sales; however this has not gone down well with the rest of
the management. Their reluctance arises from the fact that they have thus
far catered only to clients in North India markets and have a strong
understanding of this market. They are keen to continue to leverage this
rather than attempt to expand in unknown territory.

b. Customers are still with Classic because of their relationship with the
Director & also because they spent huge investments in time & money to
build this relationship & understanding

Managers in the organization had thus far played cross-functional roles.

While they were the overseers of the manufacturing process and other
functions within the company, they were also the one who approach clients
with their value proposition and once converted, worked on maintaining
relations by deeply understanding and fulfilling their needs. Now however
since the company is growing, the managers are finding that they are having
to dedicate more and more time towards the internal workings of the
company and are unable to create and sustain relations with the customers
like they used to.

2) Classic has no Business Development Managers, Key Acc. Managers etc. -

Therefore, the GMs handling everything- Business Dev., Day-to-Day
Manufacturing, Ensuring In time Delivery etc.

The only kinds of managers are General Managers – overseers with cross-
functional skills. Given that the company is expanding, managers will have to
be given specific roles such as Business Development Manager, Key Account
Managers etc. This however goes against the conventional wisdom of what is
essentially a conservative company.

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 3) An Untrained Sales Force- Their only task is to ask the client about order size,
specific requirements and fix meeting with GMs

The sales executive role so far has been limited to order-taking. These
members simply make appointments between the General Managers and the
clients, and take down orders in terms of size and specification. Hence the
burden on creating orders lies with the managers. Given the growth of the
company, the challenge before the company now is to evolve the sales
function to incorporate order-getting in addition to order-taking.

4) Everyone is working on fixed income - no incentives for business growth

While the company is doing well, the growth of the company is not tied in
with the growth of the employees. Even for the managers, there is no
concept of either variable pay or incentive payouts. Possible problems with
this approach in the future include retention of talent and employee
motivation.

Possible Strategies to meet current goals of Classic

1) To meet the customer demand in most effective manner:

As there is a high competition in the business the company have to meet the
customer demand in most effective manner. For this they have to integrate
the various functions mainly the production unit with the sales and marketing
department. As a result of which the production department can easily assess
the demand and can schedule the production accordingly. This can help them
reducing the inventory cost and they can also avoid any delay in delivery.
Also with the integration sales people will be able to give better commitment
to the customers and hence will be able to improve the customer
relationship.

2) To increase the customer base because of cut throat competition:

The Company needs to provide its customer best products at best prices so
that it can attract more customers and can increase its customer base and
become the leading corrugated boxes manufacturer.

3) To reduce manufacturing and inventory cost so as to maximize the profit:

Since boxes take up a lot of space, customers do not want to carry an
inventory, and insist upon just-in-time deliveries (often for next day use). So
the company needs to have a proper inventory management system so that

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 they can minimize the inventory level and hence inventory cost. They also
have to take care of the quality of the product so that they can minimize the
rework cost hence improving the overall productivity. They also have to
identify the expenses at each manufacturing process so as to increase the
productivity.

4) To provide the best quality corrugated boxes to the customer:

The Company needs to identify the sources of defects in the manufacturing
process so that they can improve the quality. They should also document
these causes of defects so that they are not repeated in future. Also SOPs and
maintenance guides for equipments can be maintained to avoid any
breakdown of the machine and insure smooth running production process.

5) To have highly motivated employees at workforce:

The employees can be motivated if they know about the various current
scenarios prevailing in the company along with current payrolls, incentives,
leave status etc. For this they can connect their employees through
information system so that the employees will be highly motivated to do
their work.

BM Project Report: GROUP 2 Section-A

BM Project Report: GROUP 2 Section-A