Small Town Business Strategy
Do you want to emulate this Small Town Business Strategy?
By following a strategy of steady and slow growth, a small town organization has become a tough competitor to the MNCS. The market leadership position with close to 60%+ market share, where it operates, is a significant achievement.
Balaji Wafers’ story is a real inspiration for those living in small town aspiring to be successful entrepreneurs. The Virani brothers’ journey is a case study for any Management College..
Small Town Business Strategy- Preamble
Preamble
Chandulal Virani and two of his brothers migrated in 1974 from their village. All they had on hand was a small amount of money given by their father who was a farmer. They shifted to Rajkot and tried their luck in a couple of ventures which failed. Then they ran a snack shop in a single screen theater. The theater closed unable to face multi-screen competition.
They realized that by making potato chips of their own instead of buying and selling they can earn a better margin. They seized that opportunity. Thus the home based business was started in 1979.
They faced problems on credit sales, establishing credibility with dealers and the need to introduce additional SKUs to win over the distributors. The entry of MNCs after liberalization in 1991 and their strong brand image made them devise suitable strategies to offset their brand pull.
Strategies
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ü Set up an automated plant at Rajkot
ü Sent a team to Israel and learnt their practices for growing potatoes with higher starch content
ü CSR practices by providing medical & transportation facilities to employees
ü Strong distribution chain- 8 large dealers,500 distributors and 700,000 shops
ü Introduced Nankeens; USP being special flavors
ü Pricing Strategy – 5 Rs./ Pack
ü Pack size- Double the quantity compared to MNCs
ü Negligible ad spends
üOwners stay close to the ground with close relationship with shopkeepers and customers
Small Town Business Strategy- Results
Largest Potato Chip makers in India
65% market share in the 5 states they operate.
Turnover from INR 50K in 1982 to 1200 Crores in FY 2015
Healthy CAGR of 25%
4000 crores valuation
Small Town Business Strategy- Future Plans
Setting up a third plant at Indore to cater to central and north India
Pan India presence by 2020
Going Public to fuel future growth
Next Generation leadership getting ready
Introducing healthy snacks
Online sales by tying up with e-commerce sites like Big Basket
Small Town Business Strategy- Future Challenges
Å Maintaining current growth rates.
Å Can they diversify their portfolio of products with healthy to eat snacks?
Å Will their efforts to become a public limited company be successful?
Å Inducting and Managing Professional Managers after public Issue
Å The ownership transition to next generation who are impatient to accelerate from steady and slow growth strategy of last three decades to rapid growth
Small Town Business Strategy- Conclusion
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VIRANIS ARE RIGHTLY CALLED SULTANS OF WAFER.
The Virani brothers’ success is based on building a robust business model. The visionary approach for steady growth through a step by step process is a practice any aspiring entrepreneur should learn from them. Virani brothers have given MNCs a run for their money.
The following entry barriers created by them has been a successful strategy in their growth.
v The knowledge of the market and very strong distribution chain has been their strong forte.
v Pricing strategy by offering double the quantity of wafers/ snacks compared to MNC
v Variety of SKUs
Source of Information:
I. Balaji Wafers Website
II. CNBC TV 18 interview -you tube video
III. Take me home book by Rashmi Bansal
IV. VTV you tube video
