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CASE : ABC HANDLOOMS Ltd.
ABC Handlooms Ltd. (ABC) was established in the year 1991 to manufacture and market handloom furnishings throughout the country. Over the years, it has developed a wide network of handloom units in and around Delhi. ABC manufactures a wide range of furnishings catering to the needs of different strata of society. The pattern of sales of the company during the last three years was as under:
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State
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Percentage Sale
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Punjab
Haryana
U.P.
M.P.
Rajasthan
Other states and Union territories
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total
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65
5
10
10
5
5
100
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The market for furnishings was highly competitive. ABC had not only to face competition from well established houses but it had also to face competition from various state government corporations. Besides, the product had to face competition with the imported material, which was freely available. Prices of different types of furnishings differed widely. Private and cooperative channels marketed different brands. The Coops accounted for more than 60 per cent of material sold. Though there was no brand loyalty yet a large manufacturer in Western India was able to market similar products at a marginal premium in Rajasthan and Madhaya Pradesh.
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Questions:
1. How do you explain the present situation faced by the company?
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2. Was it a good idea to enter into a three-year contract with the Cooperative Society? Why?
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3. Is it possible to renew the contract with the Cooperative Society? If so, how? Suggest a detailed programme on a crash basis with the budget constraint of Rs. 50,00,000.
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