Problem Statement

To make a decision on whether or not to accept the proposal by APL to become one of its
contract manufacturing units (CMUs).

Criteria

1. Increase in Sales from 120 (Excluding pearson) MT per month.

2. Independence of the “MKG” Brand is maintained
3. The process improvement and technical expertise APL will bring by coming on board

ALTERNATIVES

● Take up APL's offer (we will have to cut ties with pearson if we do this?)
● Reject APL's offer and focus on building the MKG brand

ANALYSIS

SWOT Analysis of accepting APL’s Offer

Strengths

1. No branding, marketing, and distribution expenses

2. Business risk minimised
3. Assured return on investment
4. Strong market presence of APL, viewed as healthy by consumers
5. KCPL would be able to compete on both pricing and scale and image with other
competitors

Weaknesses

1. APL might ask them to invest in new equipment

2. Loss of family’s prestige
3. Might not be able to meet demand due to absenteeism of workers causing uneven
production
4. The last business collaboration they had didn’t work in their favor

Opportunities

1. Access to APL’s manufacturing expertise and utilise the same for their own brand
2. Potential of acquiring raw material at lower rates from APL’s authorised suppliers
3. Full Utilization of their surplus production capacity and learn quality control measures
4. Access to APL’s secret ingredient
Threats
1. Possible sacrifice to the MKG brand and its independence
2. Pearson might not agree with the deal between APL and KCPL
3. APL has aspirations of becoming the market leader in every region which is a threat
to the aspirations of Mohan Kumar (Founder of KCPL).

SWOT Analysis of not accepting APL’s Offer

Strengths

1. Preserving the brand “MKG” and family prestige

2. Independence in decision making
3. The goal of becoming national market leader remains intact (Vision of Mohan Kumar)

Weakness

1. Missing out on utilizing it’s surplus capacity

2. Business risk will remain intact due to lack of fixed orders

Opportunities

1. The proposition of becoming market leaders

2. Utilization of production capacity through other channels while not compromising on
their own Brand

Threats

1. The company might incur a loss because of increased competition from both
organized and unorganized players

Analysis Matrix

Accepting APL’s Offer Not accepting APL’s Offer

Increase in Sales from 120

(Excluding pearson) MT per
✔ ╳
month.

Independence of the “MKG”

Brand is maintained
╳ ✔

The process improvement

and technical expertise APL
✔ ╳
will bring by coming onboard
Q What has been company’s performance since you took charge in 1982? How does it
compare with KCPL’s performance when your father was in charge?

Ans:

Before Alok took over After Alok took over

Turnover Rs. 20 Million (1980-81) Rs. 30 Million (1983-84)

Profit/ Loss Profit of Rs. 2 million Profit of Rs. 2.5 million

(1980-81) (1983-84)

Loss of 1,41,000 per

month in 1986-87

Q. What does the proposal of APL mean to you and your family members? Why?

Ans. APL’s proposal presents itself as an opportunity to recover from the losses and
avoid further depletion of the company but this comes at the cost of dissolving
“MKG” which is strictly against the policy of the family and the Chairman of KCPL,
This scenario puts me (Alok Kumar) in a state of dilemma of because if i give the nod
to APL i’ll have to compromise on the family’s principles and vision for the business
but if i don’t take this opportunity there is a possibility that the business won’t be
sustainable.

Q. What will you do? Why?

SOLUTION

By doing the SWOT analysis of both the possible scenarios, we conclude that KCPL should
accept the offer made by APL in order to utilize their full production capacity to recover from
the losses that they incurred from 1983-84 to 1986-87. This move might force Alok and his
family to compromise on their vision and principles but it will address the bigger problem
which will help in making the business sustainable and since the contract isn’t very long (3
Years) there are possibilities of MGK’s revival.

Q. What challenges you see in going ahead with your decision?

1. The possible revival of the brand “MKG” will be a tough task

2. Over dependence on “APL” might backfire
3. Possible sacrifice to the MKG brand and its independence
4. Pearson might not agree with the deal between APL and KCPL
5. 50% absenteeism of daily wage workers is affecting production and might lead to
KCPL not being to able utilize its full production capacity