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Amritanshu Shekhar WAC 1.1

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WAC report KCPL
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   School of Management and Entrepreneurship Gautam Budh Nagar, U.P., 201314 Written Analysis and communication I Assignment I: Kanpur Confectionaries Private limited Submitted to Dr. Gita Chaudhuri By Amritanshu Shekhar Roll No.14101200006 6 November 2014  Memo Date  –   September 20 th , 1987 To: Mr A. Gupta, Chairman& MD, KCPL From: Amritanshu Shekhar, Executive assistant to Chairman, KCPL Subject: Memorandum (Memo) Please find the attached report with the assessments and suggestions regarding the proposal from APL.    Summary Situation Analysis/Critical Issues -    Family business of glucose biscuits.    Biscuit industry    Competitor analysis    KCPL: Positioning, History    Market change    Pearson‟s Agreement      Offer of APL.   Problem statement What should KCPL choose, profit or dream or can they manage both? Options 1.   Accept APL offer 2.   Do not accept APL offer 3.   Improve its own market share Criteria 1.   Profit 2.   Heritage/Vision/family values 3.   Business nitty-gritty Recommendation  Based on the evaluation of different option, I would recommend “Do not accept APL offer”.   Situation Analysis Kanpur confectionaries private ltd (KCPL), a family business of glucose biscuits. The founder of KCPL has a strong bonding with the company. It is a proprietary business which has been running since 1945 by the founder and now by his sons. It is currently running its biscuit product under the brand name of MKG. The company owner had the vision of emerging as a leading national brand. The biscuit industry unlike some industry was easy to setup, it require low skilled labor and competition is very high. The competition of KCPL were from both organized and unorganized sector. 70 new units started in the unorganized sector between 1975 and1980. They either sold unbranded biscuits or sold them with brand names similar to the leading brands. In organized sector eight new units were setup in UP. KCPL is a popular brand in the north region, most of its consumer were middle class families in urban and semi urban areas. After it reached the number two position in 1973-1974, the higher management decided to increase the capacity to 240 tons from 120 tons in 1980-1981. The market was getting more and more competitive, 15 % increase in excise duty and 7% increase in sales tax has increased the labor and material cost required increase in price but competition didn‟t allow it. The company slowly begin to lose profit and was currently running at half of its capacity. To offset its unutilized resource, KCPL made an agreement with Pearson Health drinks limited for producing the health biscuit “Good Health” for it.  Pearson promised an off take of 100-125  per month and a convert rate of Rs.3 per kilogram after reimbursing fully the cost of material,  but orders from Pearson initially was for 50 tons per month between 1986 and 1987. Pearson didn‟t provide any technical guidance, it relied on the expertise of KCPL. The market response to Good health biscuits was not very encouraging. Now that Pearson was using only 50 tons. KPCL had a surplus of 70 tons (Total capacity- KCPL Own production- production for Pearson).
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