Links and Notes

Links
1. http://www.fao.org/docrep/w5973e/w5973e0b.html
Strategic Analysis of the Maldives Market for
Manpasand Beverage Maldives (MBM)
Analyse the appropriateness of different strategies relating to market entry, substantive
growth, limited growth or retrenchment for a given organization. (P3.1)
You should:
Outline a strategy for the selected organization.

When an organization decides on expanding to an international market, there are a lot strategies
available to them. These options may vary depending on the costs, risks and the amount of control
available to them and their products.

Objectives of expanding business globally:

 Increase its market share in all new markets
 Geographic advantages give the organization access to talented employees, technological
advancements and government incentives.
 To be on the same level as the Competition;

Market Entry is the activities associated with bringing a product or service to a targeted market. The
simplest form of market entry is direct exporting of goods to the market and selling them using
direct methods such as distributors. However, there are a few issues to consider;

Key Issues Faced:

Any business looking to expand internationally, faces the following issues;

1. Marketing:
- What are the products to focus on?
- What are the interests of the local people? What products have the most appeal?
- How to gain data about the sales data in the country?

2. Raw Materials and Production:

- How to source the raw materials?
- Should we import the raw materials and produce?
- Should the finished goods be imported directly and sold? What are the Costs associated?

3. Control of the Investment:

- Direct Selling
- Joint-venture
- Acquisition
While making international expansion decisions, more details should be considered before a decision is
made. During the planning stage, a company will consider the barriers to entry, the costs of marketing,
sales and delivery, and the expected outcomes of entering the market. As Manpasand Beverages is
looking to invest in the Maldives, the most ideal market entry strategy for them would be to team up
with in a Joint-Venture.

Manpasand Beverages is a popular fruit drink manufacturer in India and its core objectives lie in
providing customers with a differentiated and affordable product. Mergers and acquisitions are
not viable for the Maldivian Market, and instead moving forward with this strategy will help and
guide them in becoming more successful.

Market Entry Strategy: Joint Venture

A joint venture is defined as "an enterprise in which two or more investors share ownership and control
over property rights and operation” – (Fao.org)

A joint venture gives Manpasand Beverages a more active role and control in the operation of its
Maldivian business, which is not possible while licensing or using a distributor. Countries such as the
Maldives also have legal restrictions which prohibit foreign companies to have a controlling share of a
business – making a joint venture the most ideal market entry strategy.

Advantages of Joint-Ventures

- Risks and losses are shared by all partners; as opposed to just one investor of a
company.
- Joint financial strength of all partners gives the investment a better chance of
success, while minimizing the chances of business failure.
- Joint-ventures may also be the only chance of entry in some countries (in most Asian
Countries)
- Sharing and combining the knowledge of both parties, i.e. the local knowledge and
the preferences of the new market and acquiring the technological know-how of the
international brand, can greatly benefit both partners.
- Better access to greater resources such as specialized staff, technology and
government incentives for foreign investments.

Other advantages of a joint venture include the ability to use the partner’s business contacts and
customer database to market the new products. Joint ventures also benefit both parties by being
able to join forces to expand purchasing power, research and development and technological
know-how to create more efficient process. However, partnering with another business is risky
and can be complicated. It takes a lot of time and effort to build a strong business relationship.

Disadvantages of Joint-Ventures
 - Partners do not have the full control of management or employees, and should work together
to create cohesion within the organization.
- Capital invested may be impossible to fully recover as the business includes investments from
both parties.
- Partners may have different objectives for the future of the business and may not be clear
unless communicated
- There will be an imbalance in the levels of expertise, such as the local party not being able to
function as efficiently as its international counterpart.
- Different cultures and management styles can result in poor integration of services and
products.

If all partners carefully map out in their objectives and future goals, then many of the above issues can be
overcome.

Analyse alternative strategies relating to substantive growth, limited growth and

retrenchment for the selected organization.

1. Substantive Growth:
Substantive growth is the primary method of growth for most organizations. Benefits of growing
the business include understanding how different functions of a business work. True substantive
growth also helps in making up for the lack of many other scarcities in the business.

Substantive Growth strategies include;

- Related Diversification is when a company expands it product portfolio to create goods that
are similar to those already offered by them. (i.e. Manpasand Beverage’s production facility
also produces bottled water, which is similar to their juice products)
- Unrelated Diversification is a form of diversification when the firm adds new, unrelated -
product lines in hopes of penetrating into new markets.
- Horizontal Integration is the process of integrating or acquiring the production activities
that are in the same part of the supply chain. (e.g. Acquisition of Cadbury by Kraft Foods)
- Vertical Integration is an arrangement when different companies involved in the production
of goods in same industry are combined. (e.g. Acquiring Production Factories to boost
productions)

2. Limited Growth:
Growth is often seen as a principal of success. However, some companies may be hesitant to
grow too quickly, and may prefer to adopt a more limited growth strategy.

Limited Growth strategies include;

- Market Penetration is the activity of increasing the market share of an existing product, or
promoting a new product through strategies such as volume discounts, promotions or
lowering prices.
- Market Development is when a firm introduces their existing products to a new market,
and promotes them to new customers.
 - Product Development is the process of developing new products to replace an existing line
of goods and marketing them to customers.
- Innovation is combined with the above three strategies; however, it involves dealing with
more important changes to the product or service. This includes significantly modifying the
existing product to create something entirely new, instead of just mending the faults in the
old product.

3. Retrenchment:

Retrenchment is to cut down or reduce something. Business activities are not always profitable, and many
are forced to decrease the scale of its business. This intentional act of reduction is a strategy to minimize
losses.

Retrenchment Strategies include;

- Divestment refers selling off parts of the business or pulling out of areas which are no longer
profitable. This strategy is also used to cut expenses and used as a mean of becoming a more
profitable business.
- Turnaround strategies involve converting a failing or underperforming company to a
profitable one. This method involves reviewing the management, root failure cause analysis
and a SWOT Analysis to determine as to why the company is in decline.
- Liquidation is a strategy taken by a firm when it reaches its final product cycle. Through this
strategy, all valuable assets are sold off and its return it used to pay off creditors.

Briefly explain the appropriateness of each strategy.

1. Substantive Growth
This is an appropriate strategy for businesses looking for rapid growth. With the ever-
changing dynamics of the business environment, using a substantive growth strategy such
as the diversification of product lines, helps the business to move ahead of competitors.
Substantive growth is also quintessential as with growth, the businesses’ revenue can
boost significantly. The added funds received from growth also assists the business to
expand with other prospective business ventures. Unlike other strategies, substantive
growth also allows the firm to incorporate its existing management styles and corporate
culture. One of the key disadvantages of substantive growth is that it acquires large debts
and if the business fails to ramp up sales, it could lead them to bankruptcy.

2. Limited growth
Growth is often seen as a sign of success. However, some businesses may be hesitant to
grow too big, too quickly. One of the key advantages of limited growth is that it allows a
firm to avoid the large sums of debt that accompany rapid expansion. This debt can also
be very risky for the future of a firm, as it can eventually lead to foreclosure of operations,
if sales revenue is not earned back. With limited growth strategies such as market
penetration and development, the firm uses its existing resources to make a profit.
Managers also find it easier to operate the existing operations while managing the new
expansion. However, a notable disadvantage is that competitors may instead rely on rapid
 expansion strategies to boost their business, leading the company to loose out on
untapped opportunities in new markets.

3. Retrenchment
Retrenchment, also known as down-sizing or reducing, involves in decreasing the
business activities. This deals with the reduction of work force, or sales activities by
terminating non-profitable production lines. A key advantage of retrenchment is that it
offers financial benefit to the business, such as offering direct incentives to shareholders.
Other key positives include faster decision making due to reduced overheads, more
efficient communication and lack of bureaucracy.
Certain retrenchment plans such as Turn-Around strategies, offer the firm a chance to
become profitable. Retrenchment strategies such as Liquidation, are appropriate for
businesses going through the final stages of its product life cycle. This involves sales of
assets to pay back creditors, and is useful if the firm wishes to regain competitiveness.
However, exit barriers such as managers failing to grasp the idea of insolvency, and
pressures from the government may hamper the decisions of the firm.

Select an appropriate future strategy from the strategies explained in P3.1 above for the
selected organization. Justify the selection of the strategy with valid reasons or evidence.

According to the company profile of Manpasand Beverages Pvt. Ltd, the firm’s core objective is
to become a more profitable and established brand, while offering customers with a value added
product. In order to achieve this, the business should implement a product development
strategy. A limited growth strategy such as this one, allows the business to manage its existing
operations, while developing new plans to aid in its expansion. It is also considered as the most
cost-effective strategy.
As stated in its company profile, the firm has a strong market presence with customers primarily
based in semi urban and rural markets. Unfortunately, due to its limited product portfolio, the
brand is only able to cater to customers primarily based in select markets, with a lot of lost
potential. However, the company has the capability to manufacture new products, with its
recently acquired facility from U.K. Agro at Dehradun, bringing their manufacturing plants to a
total of 4. This along with strong ties with over 654 distribution networks across 24 states in India,
helps to strengthen the chances of success with any new products.
Product development would allow Manpasand Beverages Ltd, to design, create and market
brand new products that reflect a wide range of consumer needs. Their strategic agreements
with their distributor networks should also help them to move the new products to existing
markets easily.
This strategy would also assist them in reaching profitability quicker, should they expand to new
markets such as Maldives. Creating products catered to a specific market, as opposed to using a
unified product line, has a much higher chance of success. After entering to a new market, using
a product development strategy allows the business to differentiate themselves from
competitors, who may all offer similar products.
Strategy Implementation – Comparison of roles and responsibilities for
strategy implementation
The successful implementation of a strategy, depends strongly on the performance of the
individuals working in an organization. Various employees within the company are involved in
strategy implementation. For an effective implementation of a strategy, the roles and
responsibilities of all the personnel should be defined clearly.

The board of an organization, for instance is responsible for overseeing and approving the main
strategic decisions of a company. Strategic leadership also requires the strong performance of a
Chief Executive Officer (C.E.O), who should be able able to embrace and apply the changes. The
C.E.O is also tasked with explaining the vision and Strategic Intent of the firm to various
stakeholders, such as its employees and investors. Strategic Intent of a business is a declaration
of the plans it looks towards undertaking, at a given future timeframe (BusinessDictionary.com).

Other aspects of the strategy implementation, such as dealing with customers are delegated over
to the sales staff. In order to gain the maximum performance out of these teams, certain Team
cohesion activities need to be undertaken. Team cohesion refers to the degree at which
individual members want to contribute to the group's ability to continue as a functioning work
unit (Boundless.com). Advantages of a cohesive teams include shared communication, working
towards a common goal and allegiance to the firm. Moving on, within junior levels of the
organization, the Financial department is held responsible to setting team targets based on sales
numbers, and ensuring the numbers are reached for ultimate profitability. Proper record keeping
is also essential to avoid any legal obstacles.

Proper monitoring is also vital in implementing a successful strategy. Monitoring and controlling
policies such as conducting periodic checks of staff performance could be undertaken. This allows
the organization to assess whether employees are performing according to the roles mentioned
in the Responsibility Charts.

Ultimately, the success of a strategy depends on the work of the personnel who are charged with
the implementation, and should be encouraged to share in the organization’s vision and mission.
Resource Allocation for Implementing a New Strategy
Johnson & Scholes' states that "Strategy is the direction and scope of an organization over the
long-term: which achieves advantage for the organization through its configuration of resources
within a challenging environment, to meet the needs of markets and to fulfil stakeholder
expectations". A business requires resources to successfully implement strategies to aid in its
growth and expansion.

Business resources can be grouped into 4 categories;

1. Financial Resources:

Financial resources deal with the organization’s ability to finance its selected strategy. Strategies
which require significant capital investment could harm the firm’s day to day management of its
current setup. Hence, an audit of all financial functions of the organization will need to be
undertaken before a strategy is selected. An audit would consist of an assessment of the
following;
Assessing Existing finance Options
 Cash balances
 Bank overdraft
 Bank and other loans
 Shareholders' capital
 Working capital (e.g. stocks, debtors) already invested in the business
 Creditors (suppliers, government)

Ability to Raise Finance

 The financial strength of the organization and reputation among financial institutions
 The relationship with potential and existing investors
 The strength of the markets which is the business operates in, or is looking towards
expanding to

2. Human Resources

Human resource is the heart and soul of an organization. The successful implementation of a
strategy depends on the performance of talented individuals. What skills does the employees
posses? Are they trained to undertake the chosen strategy? An audit of human resources would
include an assessment of the following aspects:

Existing Human Resource Options

 Number of staff by function, grade, experience, qualification, salary
 Staff Turnover
Changes required to the Resource
 What changes to the organization are proposed with the strategy, e.g. Move to a new
facility, new products?
 What kind of specialized or skilled labour is required?
 How should employees be sourced? (Outsourcing, Joint-ventures)

3. Materials and Physical Resources

Materials and physical resources concern the wide range of operational resources required to
deliver a successful strategy implementation; These include:

Production facilities
 Locations of existing production facilities, their capacities and investments required
 Current production procedures
 Extent to which the current setup can successfully deliver the proposed production
requirements

Marketing facilities
 Marketing and Managing processes
 Distribution Partners and channels

Information technology
- IT systems and Facilities are in place

4. Time

For the implementation of any strategy, time frames and targets are essential. They are critical
ways through which the effectiveness of a firm’s strategy may be measured. With set targets,
businesses are able to evaluate the performance of the organization, and analyse the causes of
any setbacks. These evaluations may help the business to identify the weaknesses to be dealt
with, so that it can meet them in the future. Timescales also provide the organization with an
ideal period to carry out strategic implementation. Such timeframes are also help the
organisation to stay on course of the strategy implementation, which enhances the chances of
its success.
Conclusion

Creating an effective business strategy is important in achieving an organization’s objectives. The

strategic planning, evaluation and implementation aspects in relation to Manpasand Beverages
Pvt. Ltd have been discussed in this report.

Manpasand is a beverage manufacturer based in India, with a core mission to provide its
customers with value added fruit drinks. Their key strengths include holding a large market of
loyal customers in the fairly underpenetrated rural, and urban markets within India. Manpasand
also has a strong strategic ties with a wide distributor network, allowing them to sell their
products across 24 states across the nation. However, the company has a limited product
portfolio that limits their appeal, and is yet to find great success in the premium drinks sector.

Despite these limitations, with a strong strategic plan, Manpasand Beverages can embark on a
course to expand its portfolio to foreign markets such as the Maldives. With recent acquisitions
of a new production facility, and its strong brands portfolio, allows the brand to move into new
markets easily.

In the case of a business breakdown, the firm can also diversify its products to expand into
untapped markets. As discussed in this paper, certain retrenchment plans such as turn-around
strategies allow the company to become profitable while using their core strengths.
Introduction
Johnson & Scholes' states that "Strategy is the direction and scope of an organization over the
long-term: which achieves advantage for the organization through its configuration of
resources within a challenging environment, to meet the needs of markets and to fulfil
stakeholder expectations”.

Business strategy deals with the various methods to implement organizational objectives, while
helping it to grow and expand.

This is a report done on a business strategies and their implications for Manpasand Bevarages
Ltd, India.

This paper contains a detailed reading into the different types of strategies, their advantages
and disadvantage. Key ideas discussed include the ways to plan and implement various
strategies and the resource requirements for a chosen strategy.

Abstract
Business strate-gy is a set of works that ena-ble an organiza-tion to achieve long term objec-
tives.Business strategy is the process of identi-fying vision, mis-sion and objec-tives of the or-
ganizationand developing plans and poli-cies to achieve these objec-tives. t is a vi-tal element
of anorganiza-tion because without a business plan the organiza-tion cannot run its
businesssuccessfully. !ere choose an or-ganization which name is "esco, #k and try to suggest
strate-gic planning for them. "esco has elaborat-ed its business around the world as a retail
company. t provides various types of services such as banking, online shopping, insur-ance
etc.

Business strategy is a set of principles that works towards enabling the organization to achieve
its objectives. Business strategy is a method of identifying vision, mission and objectives of the
organization, while developing plans and policies to achieve these objectives.

This report discusses an outlook of choosing a business strategy for Manpasand Beverages Ltd,
a leading fruit drinks manufacturer in India. Ideas discussed include selecting alternate
strategies, and ways to implement them.

Information and data found in this report are done with reading acquired through various
online mediums, resource articles, journals as well as the expected reading material provided
by the Maldives Business School.
Manpasand Beverages Ltd is a leading fruit drinks manufacturer based in Gujarat, India. Their
primary focus is on mango fruit, which is considered as the leading flavour for juice throughout
India. “Mango Sip” is currently the company’s flagship product, which commands a large market
share in the underpenetrated rural and urban sectors of the country.

With a strategy to reach even more customers, the company has recently released two new
brands of products, “Fruit Up” and “Manpasand ORS”. Under these new brands, the company
offers carbonated drinks and energy replenishing liquids, with a higher fruit content than any
leading competitor.

The company currently owns 4 production facilities across the country, including a recently
acquired plant from UK Agro. The firm has also signed an endorsement deal with leading
Bollywood actor, Mr. Sunny Deol, who appears in all marketing related activities of the brand.
Manpasand’s core strength lies in its strategic partnerships with a wide distributor network,
hosuing over 654 distributors spread across 24 states in India. The firm envisions a future,
where its drinks are served globally.