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Case : CavinKare Private Limited: Vision and

Strategy

Strategic Management

Batch: PGDM (PT) 2015-18

Group Members :
1. Kumar Vaibhav MP 15019
2. Kundan MP 15020
3. Sabas N Fernando MP 15036
4. Sachin kr Jha MP 15037
5. Saras Agrawal MP 15038
6. Saurabh Sinha MP 15039
Vision: To grow more than 10 times in 5 years, i.e. turnover from INR 5 Billion
to 52 Billion by 2012.
Key Persons:
Mr. C.K. Ranganathan - CMD
Mr. Ramesh Vishwanathan - VP (Marketing)

Analysis of the resources and capabilities of CavinKare w.r.t their


performance as well as vision/future plans :-

CAVINKARE's Potential to meet its Vision based on Resource Based View


The FMCG Industry provides scant opportunities to differentiate strategy and build
competitiveness based on resources alone. For the CavinKare's Vision of rapid growth from
Rs.5Bn to Rs.52 Bn in 5 years, competing on resources cannot play a more significant role
than other Capabilities. The primary competition is based on building sustainable
capabilities that continue to deliver differentiated products.
Resources in the nature of raw materials generally tend to be commodity-like in nature &
allow scant opportunities for building sustainable advantages from such resources. While
Capabilities and Sub-routines can be built which can capitalize marginally on short term
benefits from resources, an FMCG company would need to be continuously re-work the
approach to resources to suit its changing product portfolio and suit product innovations
that need to be done at a very high turnover rate.

To Meet such high growth rates as targeted by the Vision, CavinKare must compete more in
terms of Capabilities built around Product portfolio development and marketing
Test of With Lower Entry Barriers than many other Industries, FMCG
Inimitability companies cannot really hope to sustain Inimitability of Resource.
Physical Mainly Being commodities, Input resources can hardly provide
uniqueness opportunities for sustainable differentiation
Path Dependence It is possible, but very rare that any path dependency can be created
with sustainable differentiation being delivered solely on secrecy or
inimitability of Process, except in very small percentage of products like
Coke & Pepsi.
Causal Ambiguity There is an opportunity to evolve IPR that can protect product offering
uniqueness for some time, however, the presence of substitutes often
undermines sustainability of differentiation for a long period.
Economic Low barriers for entry make it difficult for FMCG companies to leverage
Deterrence Economic deterrence.
Test of FMCG products have some of the shortest Product Life cycles and long
Durability sustaining products are few and far in between. Both in terms of Raw
materials as resources, Technology, and manufacturing capabilities an
FMCG player cannot really differentiate for long on the resource based
view.

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Test of The commodity market does not lend itself to clear-cut differentiation
Appropriatablity by appropriability. Unless the product has its inimitable uniqueness in
raw materials used, appropriability cannot provide much
differentiation. Cavinkares Raw material appropriation strategy is
immediately immitable by competitors.
Test of The FMCG market is highly characterised by Substitutes and the
Substitutability presence of these do not allow any player to differentiate offerings for
any sustainably long period in terms of resources, be it materials, man
or technlogy
Test of Again, being mainly commodities in nature, raw materials and their
Competitive appropriability limitations do not allow for creation of sustainable
Superiority competitive advantage in FMCG Industry

Analysis of Capabilities:

SL.No. Capabilities
1 Voice of customer translated into voice of scientists
Research CRC and R&D team undertook the responsibility of evolving the
2
brand reason to believe and resultant claim substantiation.
For every gap that would be identified in the market, the
3
company creates new brand for the need.
4 Customer interaction is more
Product
Forward integration into Saloons served as major source of
5 Development
information on usage patterns of its product
Focus on consumer research and promotion to ensure & retain
6
its consumer base
To facilitate logistics, the company shifted its main contract
7 manufacturer to a location close to the source of raw
material(Food Business)
Operations-
Cross Functional Team ensured manufacturing was in constant
8 Sources, Logistics &
touch with the customer and channel requirements
Manufacturing
The logistics system leveraged the requirements of both foods
9 and personal care categories by consolidating the orders and
thereby reducing costs
They have unique strategy of recruiting regional stockiest which
10 can provide company and products a significant boost in the
market place
Sales and Primarily they choose those RS for whom CavinKare products
11
Marketing were the primary business
Manufacturing plant was prepared based on the sales data at the
12 RS which were logged into SAP system through an internet
based interface.
Speed of execution and taking decision was very fast due to
13 Intrapreneurship
active involvement of top management
14 Human Resources They had a culture of tasting the ideas given by their employees
and it encouraged people to take initiatives and take risks and
learn from experience

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15 Company spent significant effort in learning

Key Challenges:
1. Meeting the growth rate in the Mens Grooming Category
2. Reducing the gap between 1st and 2nd position in different categories.
3. Building the Cash Cow products.
4. Nurturing of new product categories which requires huge investment.

Meeting Challenges:

1. CavinKare had few flagship brands like Meera and Chik. They had called them as
SIGWIN products. They need to have better communication and advertising
strategy to differentiate the new products which they are aiming for e.g. Mens
grooming products.
2. They need to focus on their SIGWIN products which may become Cash Cow
products and can provide the huge investments requirement for new product
categories.

Conclusion:
Cavinkare from its very inception into the FMCG industry had embarked on a very strong
vision to sail above more than 10 times its present capacity. Seeing the industry trend of
increasing growth and touching the level of Rs 1500 billion by 2015 CavinKare had to be
well in command of its available resources and its capabilities to have competitive
adavantage. But here it is very imperative to understand that on the resource front the
firms in this FMCG industry are quite equitably placed as everyone can easily get the
resources. However it is the capability demonstrated by the firm in the available
environment which makes all the difference in such industries. Among the FMCG sector
CavinKare focused on the personal products, homecare and Culinary product markets and
they had been following strategies inline with these divisions.
The competencies developed across different functions were to provide competitive edge.
CavinKare was largely marketing driven ,with manufacturing being considered a support
function.Responsiveness of the manufacturing department was a key to address the
competitive realities. On the other hand,they placed utmost importance to their talents
giving them the authority to take initiatives, & learn from experience, inculcating passion
in the workplace.
The active involvement of CKR and the top management facilitated speed for execution of
the decisions.
They had delved into the positioning of brands to suit the taste & demands of the
customer & they had showcased this expertise with the Jasmine fragrance shampoo ,to
name a few. Their forward integration into the Salon business helped in accumulating
data for usage patterns & this was an important strategy & differentiator.
Overall we can say Cavinkare management was of a very firm mindset to embark on its
vision strategies.

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