58725595 Kanpur Confectioneries Pvt Ltd

7/29/2019 58725595 Kanpur Confectioneries Pvt Ltd

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DECISION REPORT

FOR

Kanpur Confectioneries Pvt. Ltd. (KCPL)

Submitted by:Jaykishan Joshi (24)

Sem 1

Batch (Group 1) 2008-10


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Kanpur Confectioneries Pvt. Ltd

PROBLEM :

It is described as a situation which needs an action to be taken and keeping this in viewthe situations are:

Short term situation:

Offer of A One Confectioneries Pvt. Ltd.(APL)

Medium term situation:

Emerge as a strong competitor and reduce the cost of production

Long term situation:

Become a leader in the market of glucose biscuits and extend the market segment

to premier customers.Mohan Kumar Gupta had very good business foresight and skills but his sons who

handled the business were not so efficient as him.

SYMPTOMS:

Mohan Gupta captured the 2nd largest market share with production of 110

tonnes/month within 3yrs of commencement of KCPL but his sons were not able to

increase production beyond 120 tonnes/month even after expansion of prod. capacity to240 tonnes/month.

The HR Manager Vivek Gupta failed to reduce the rate of absenteeism.

Help of technicians was sought but improvement in production or other areas was notevident.

Net profits of the company were declining even after increase in turnover.

CRITERIA:In deciding criteria SWOT Analysis is used to evaluate various aspects of business:

{Internal factors}

{External factors}

Strengths:

Decision making is participative

Ethical values

Non-interference in management

Production capacity = 240tonnes/month

Weakness:

Under utilization of prod. capacity

High percentage of absenteeism

Wastage in more

Opportunities:

Explore new markets

Increase current share in market

Become CMU(Contract Man. Unit)

Threats:

Government taxes

Unorganized sector

Organized sector

Low cost ovens


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(Positive) (Negative)

On the basis of SWOT Analysis the following criteria are developed:

(1) Profit

(2) Advantages to business(3) Disadvantages to business

(4) Future of business and Brand name

OPTIONS :

i. Become CMU for A ONE CONFECTIONERYii. Re-structuring the production process and introduction of mechanized processiii. Increase productivity of current workforceiv. Supply to canteens of institutions

EVALUATION:

i. Become CMU for A ONE CONFECTIONERS PVT.LTD.:

(1)Profit:

Conversion charge of Rs.1500/tonne is paid and the fixed expenses are:

Rs. 3, 85,000(Salary=2, 75,000 + Interest=50,000 + Others=60,000)So to reach at break even point:

BEP= fixed cost / contribution per tonne

= 385000/1500= 257(approx.) tonnes/month

(2) Advantages:

No expenses on advertisement, attracting customers or brand building.

Regular income

Expertise in production

Low risk

(3) Disadvantages:

No independence in decision making

Contract will bind KCPL to continue business as CMU for 3yrs

Uncertainty of future relations with APL.

If ACL asked to change production process or equipments then capital expenditurewill have to be made by KCPL

(4) Future of Business and Brand name:If the company is successful in carrying out the orders regularly the company can be

associated with APL for a long time and assure its existence in the business. The Brand

name will get eliminated from the market

ii. Restructuring production process by introducing mechanical processes :

(1) Profit:


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The company will be able to utilize production capacity by increasing production and the

cost of production will reduce.

(2) Advantages:

Less labor will be required for production

Uniformity in quality

No restriction of time to use machinery

Production cost will reduce

(3) Disadvantages:

Capital will be required and at present company may not be able to afford capital

expenditure.

Availability of skilled labor to operate machines

High risk of investing in machinery

(4) Future of business and Brand name:The business will be able to compete with other competitors and emerge as a leader. The

brand name will also prosper owing to the quality and market share.

iii. Increase the productivity of current workforce:

(1) Profit:

The productivity of employees will improve significantly and cost of production willreduce as well as the production will increase.

(2) Advantages:

Improved efficiency of employees

Increase in production Reduction in production cost

Healthy working environment

Job satisfaction

Low absenteeism

High morale of employees

Emerge as leader in market with the competitive advantage of satisfied workforce

(3) Disadvantages:

Employees may ask for higher wages

Some employees may leave job if they have to become efficient and regular at work

(4) Future of business and Brand name:

The business will prosper by reaping benefits of motivated and efficient workforce and

the brand name will compete with the leaders in terms of low cost of production andpeople will prefer MKG Brand for its quality and competitive prices.

iv. Supply to canteens of institutions:

(1) Profit:


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The margins of profits will be low but if sales are made to only canteens of institutions

the expenses on advertisement and others to increase sales will reduce and so the profitswill increase.

(2)Advantages:

Increase in sales to canteens of institutions.

Reduction in promotion expenses.

Regular supply.

Production in accordance to requirements.

Potential to compete on quality and cost basis as the competitors have not entered this

market segment.

(3) Disadvantages:

In order to compete on cost basis the quality may be ignored

Canteens are not bothered about quality and only consider cost as important

(4) Future of business and Brand name:The business will be able to earn profits and continue the business The brand name willnot be so much important as the canteens give importance to cost not name. Also in the

market the customers will be diverted towards other brands as KCPL will be selling only

to canteens.

DECISION:

Increase the productivity of employees

And the offer of APL is not accepted as the company will not be able to reach to break

even sales at a very low conversion rate or Rs. 1500/tonne.The other two alternatives are not so attractive and reasonable keeping the financial

position and future of business in mind.

ACTION PLAN:

Identify the reasons for absenteeism and eliminate them as far as possible

Motivate employees for increase in production

Increase in wages

Introduce piece wage system

Provide entertainment to employees in their free time

Collect regular feedback of employees and review their complaints

Set standards for job processes

CONTINGENCY PLAN:

If the workforce does not respond favorably to the new changes then KCPL may think to

start supply to canteens of institutions


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58725595 Kanpur Confectioneries Pvt Ltd

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