CASE ANALYSIS: MAHAGUTHI SHOPS

Submitted to: Dr. Rajendra Suwal (Instructor)

Submitted By: Sunita Bista Term 6, MBA

March 2, 2011

Q.1 What should the mission of the organization be? The mission of the Mahguthi shops should be: To contribute for development of Nepalese handicraft products for desired customers within Nepal and all over the world, providing product development and design assistance to the craft producers, offering an effective retail outlet linking producers & markets and also to work for social benefits by creating income generating activity for poor & disadvantaged group within Nepal and by supporting the rehabilitation program for destitute women and children with proper compensation & benefits programs. Q.2 Perform a SWOT analysis for MahaGuthi Shops Strength:
i) First mover advantage: Mahaguthi shops were established in 1944 as a Nepalese

handicraft retailer, wholesaler and exporter. It enjoyed the monopoly as Handicrafts retailer for about fifteen years thus, it has probably more experience and knowledge in related field.
ii) Well developed network of suppliers: Mahaguthi has a well developed network of

supplier who were charitable and commercial, rural and urban, men and women so that they can offer a diverse assortment of products.
iii) Provider of

financial assistance :Mahaguthi shops provide moral encouragement,

production advice and financial support to new producer groups who are attempting to enter in the saturated market. This shows their expertise and knowledge in the handicraft field which might not be available to competitors. I) Weakness: i) Lack of understanding and awareness of quality issues by rural producers: This can be weakness of an organization since its rural producer are not aware of maintaining quality.

ii) Lack of awareness about production capabilities: Since the producers do not have knowledge of production capabilities, the organization often faced low stock level.

iii) Ineffective marketing strategies: Marketing strategies of Mahaguthi does not seem

promising due to which competitors are able to seize market opportunities.

iv) Not aggressive sales personnel

v) Lack of training and policies for sales personnel/ stores.

II)

Opportunity

i) Growing export: Since receiving the first export order, Mahaguthi has been enjoying an

increasing number of exports from oversees.

ii) Rising demand for handicrafts products in foreign countries: This can be opportunity for Mahaguthi since their export can be increased which in turn increases their total revenue.

iii) Attraction of people toward handicraft products: The tourists and expatriates living in Nepal are attracted toward handicrafts products hence can be opportunity for Mahaguti to sell more products. iv) Grants: Mahaguthi received grants from time-to-time to implement producer program through which they can promote more craft producer and establish more retails.

v) Technology: Internet has made goods available for people all around to the world. So, for Mahaguthi, going online for selling its products can be opportunity to attract more customers who are abroad.

III)

Threats

i)

Increasing competition: Mahaguthi has been facing intense competition. since there were 250+ handicraft stores plus numerous street vendors. Other two NGOs that emerge as its closest competition were Hastakala and Dhukuti that has not only captured domestic market share but also export market share of Mahaguthi shops. Similarly, these competitors are producing quality products at low price as well.

ii) iii) iv)

v)

Lack of government support Unreliable suppliers and producer groups Dependent of market supply on good relations with India Lack of Infrastructure: Transportation problems and bad condition of roads for rural producers (that comprises of 30% of Mahaguthi producer and produce 50% of items sold by the shop) can be threat .

Q.3 If you were being consulted by Surendra, what strategies would you recommend him to revitalize Mahaguthi Shops? Suggest a strategic plan that includes functional plans and policies to be adopted by the organization. Strategies that I would recommend Mr. Surendra to revitalize Mahaguthi shops are as follows: i) Background Integration: I think Mahaguthi has been suffering from unreliable and inconsistent raw material supplier and producer that have degraded its export potential. So, through backward integration, it could seek control over the firms suppliers so that supply becomes more reliable. Strategies plan including functional plans and policies could be: i) Forming appropriate marketing strategies: Mahaguthi has to adopt aggressive marketing strategies rather than relying on its first mover advantage and experience. It has to allocate some more budgets for appropriate marketing using marketing mix like

Product: Mahaguthi can include

brass ornaments besides wood carving, silver

jewelery, Nepali Paper, bamboo baskets, ceramics etc. Price: After including above mentioned products that attract tourist, it can charge price on par with products of its competitors like Hastakal and Dhukuti.

Place: It should open its retail in Lazimpat, thamel which is the prominent destination for every tourists and expatriates locating in Nepal.

Promotion: Mahaguthi can adopt other promotion methods like emphasis on personal selling, giving advertisements on popular magazines

ii) Attention to design: For handicraft business, it is necessary for organization to appoint full time designer with attractive salary and incentives to retain him.

iii) HRM stategy: Mahaguthi should provide appropriate training for its sales personnel/ store on how to deal with customers.

It should motivate its staffs by giving incentives based on their sales performance It should encourage its staff to be technology friendly by teaching them how to do sales through Internet and Web.

iv) Making new policies regarding customer service: I think Mahaguthi should make clear policies regarding customer service policies for returns, discounts or lay away so that sales personnel/ stores feel no complication in dealing with such issue.