Faculty Development Programme at Atria Institute of Technology, Bengaluru

Organized by Entrepreneurship Development Institute, Bengaluru

[Fourth Day Session on Tuesday, 16-10-2018 at 9.00 – 10.30 AM on “Market and

Essential Information prior to Setting-up the Enterprise”]

A Small Case Study

 Venkatesh Kurandawad

The Burning Chair...

Having worked for twenty years in Mumbai in the metal chair

manufacturing industry, Mr. Sukhdev decided to return to his native place
to settle and start his own metal chair manufacturing unit. His loyalty at
work had earned him goodwill of his company owner so much that
Sukhdev got all support and help from the owner to set up the unit.

Sukhdev’s strength lied in his technical expertise of manufacturing.

And financial and machinery supports were given by his owner and the
bank. He could get the land at reasonable terms from the Government in
the industrial area of the town. Before setting up the industry, Sukhdev
made a trip around the town and the entire district, met Industry
Department people, surveyed if there was any chair manufacturing unit. To
his pleasure and surprise, no chair manufacturing unit was there in the
entire district. He talked to some local metal hardware people to know if
they make chairs and came to know about its rarest possibility. He also met
the carpenters to assess the wooden chair market scenario and sensed that
preference to wooden chairs was almost diminishing. He also made small
observation about whether the plastic chairs have entered the market of
the area and felt that it may be too far for them to enter here and also
reasoned that the high price of and the large required space for and lesser
durability of such chairs, may not appeal to the most of the middle and
lower class people.

After getting the data on population, number of households, and

other demographic details of the district, Sukhdev set up the folding chair
manufacturing unit with full fanfare and publicity. And the days went by
and went by with the full production capacity utilization and the full stock
at disposal, with just a few numbers being kept at sellers’ place on credit.
 However, despite all his efforts in terms of advertising and publicity,
acceptable terms for sellers, undoubtedly the good quality of the chairs
with affordable price, etc., the production was hardly converted into
profitable sales and within less than a year he started feeling the heat of the
financial burden and sensed the possibility of not being able at least to
break even. And after two years, expectedly he sold the unit out of
bankruptcy. He always, thereafter, would doubt his expertise and
experience lamenting about his failure in his business.

Sitting alone in a small hotel one day, Sukhdev was sipping tea in
deep thoughts and suddenly he noticed that the owner at the counter was
revolving sitting on the tiny metal chair! Sukhdev was surprised and
inquired where he got that from. Owner told him that the local hardware
boy makes such chairs and also told that his small hotel has replaced the
old wooden bench with tiny metal chairs. Only then Sukhdev saw the
attractive tiny round seat folding chairs in the hotel, including the one he
was seated with! He also came to know that such chairs had entered the
market more than a year ago. Upon the further probe, he found out that the
hardware boy makes the chairs based on customization by the buyers at
affordable price. Now again, Sukhdev lamented with an annoying smile and
a deep sigh about his expertise and experience.

Analyze the case against the backdrop of where Mr. Sukhdev went
wrong and what probably he should have done before and after setting up
his chair manufacturing unit.

*****