VRIO ANALYSIS: Chandelkars Vaishali Foods

By group 2Akshar AlonekarJoyston Brito Ravina KuttikarSumedha.K.NarvekarRishikesh SartadekarShreya VastaVandita Nagvekar

Company Information and HistoryThe manufacturing unit of Vaishali Foods is located at Kundaim Industrial Estate. And it covers an area of about 300 sq. meters with built in area of 175 sq. meters. It is a partnership firm. It was started by Late Gopinath Chandelkar in 1970. He started his business along with his two elder sons. He was a great visionary to strike this idea because those were the days when people made pickles and spices at home and used for the entire year. That was not the time when people would buy packed food and readymade spices. The business was in infancy period then. It needed lots of experiments to gain expertise. With all those efforts in establishing the business, he suffered a great loss. He died in the year 1975 living behind a great challenge to his sons Srinivas, Govind, Raghunandan, Mohan and daughter Durga. . Though he had passed away, he had kept a great idea, a system to carry on the business systematically.Slowly, Chandelkars brand started blooming and occupied its space in every Goan kitchen. As the business started growing, they split the business into two units, Goa Pickles and Vaishali Foods for the sake of expansion and better administration. Vaishali Foods manufactures Masala products. Mr. Gopinath Chandelkar, grandson of Late Gopinath Chandelkar now manages this unit.

Vaishali Foods has recently received Lokmat Gaurav Puraskar Award in food category in for 2014.

Industry & Competition:Vaishali Foods serves the Goan market only. The firm faces a stiff competition in the Masala Manufacturing Industry from local Goan as well as national players.The Industry has a lot of players in the unorganized sectors which comprises of homemade Masalas prepared by the households for their consumption as well as for commercial purpose. In the organized sector, the Goan based competitors are Surya Agro Industries, Sushma Trading Company. Whereas nation brands include Suhana, Badsha, Everest etc. which due to their large capital and wide reach are giving tuff competition to Vaishali Foods.

Customers & DistributionGoa is the market for the firms products. Its end users are the households and hotels. The households are reached through retails channels comprising the mom & pop stores (local shops) throughout Goa. It also has its own shop located at Panjim. The hotel industry is reached via the agents in Vasco and Margao. The firm is not involved in aggressive mass promotional techniques like advertising, publicity etc. Since the business is Goan based and existing for a very long period of time, it has been able to develop a good network of retailing in the state because of improved product, goodwill and reputation, good margin to the retailers and agents.

Products & Raw MaterialsFollowing are the products that the firm manufactures:Major CategoryMinor Category

Pickle MasalaBlack Pepper

Mutton MasalaCumin seeds

Garam Masala

Xacuti Masala

Chilli Powder

Turmeric Powder

Coriander Powder

The pickle masala is manufactured from January to June. Others are manufactured all round the year as per the order.There are 15-20 kind of raw material which goes into manufacturing of the masala items. Raw Material is majorly acquired from outside the state. The black pepper is available from within Goa; chillies come from Andhra Pradesh & Karnataka, corianders from Rajasthan, and other materials from the state of Maharashtra.None of their products contain onions and garlic.

FinancingThe firm obtains short term credits like cash credit and overdraft from nationalized banks for their day to day operational activities. It has a debtor collection period of 30 to 45 days. Its creditor payment period is 15 to 30 days. This shows that the firm

Manufacturing & PackagingThe manufacturing process includes the following steps:Step 1: Heating or Frying of the spicesStep 2: Coarse GrindingStep 3: Fine grindingStep 4: Mixing The frying or heating is done a day before. The maximum time required for heating per lot of 400kg is around 5-6 hours. The spices are then grinded using a pulverizer into large pieces which are then pulverized into fine mixture. Once the fine mixture is ready, it is kept for 8 hours before packing it as per the requirement of customer. Packaging is done in two forms: Plain plastic packets & printed plastic packets. The former packets are for wholesale purpose and latter for retails via shops. The entire process of manufacturing and final delivery takes 2 days.

Machinery & Equipments1. Ovens for heating2. Frying equipment3. Pulverizer for coarse grinding4. Pulverizer for fine grinding5. Automatic packaging machines: Printed packets6. Manual packing machine: Plain plastic packets

Human ResourceThere are total 6 workers at the manufacturing unit for production and packaging. All are women workers. They work from 9am to 5.30pm. The manufacturing of the masalas is at its peak during January to May During this period additional workers, around 8, are required.Mr. Gopinath Chandelkar is the Manager at the factory. The sale, distribution, finance is looked into by other partners jointly for masala and pickle business.

Sales & ExpansionThe sales of the firm have been rising over the years. So has its cost. The prices are revised after 2 to 3 years due to rise in the raw materials. Rise in prices of raw material by large percentage has eaten a large share of their profits. Balancing rise in prices of raw materials with the share of profits is always a challenge. There also exists a threat from the many competitors in organized and unorganized sectors.The partners are working hard to maintain and grow its business. The firm has plans to expanding their business in neighboring states of Maharashtra & Karnataka. This will require huge finance, heavy marketing and adoption of new technology.

Applying VRIO framework to Vaishali FoodsAt Vishali Foods, valuable resources include its raw materials, suppliers, process and taste, machinery and equipments, human resources (female workers), managerial expertise, Channel of distribution, Customer relation.

Raw materials & suppliers:The firm uses a blend of 15-20 types of raw material for its different products. These raw materials are known easily in the market but the relationship that the firm has maintained with its supplies over the years is not easy to imitate. That gives the firm an edge over its competitors in the market.Process & taste:The method/process of making masala is the rare feature of the organization. This gives a unique taste to the firms product. Certain spices are heated where as others are fried in order to give them the required taste. The heating/frying is also done in certain combination. All of their masalas are without onion and garlic without compromising on the taste. Hence it can be consumed by vegetarians as well as non vegetarians and also during festival too in Goa.

Machinery & Equipments:The manufacturing unit is semi automatic in nature. There are machineries and equipments adopted to satisfy the production requirement and sales targets of the Goan market. These equipments are valuable to the firm because it has resulted in saving cost of labor (earlier more than 6 labors were required) but these machineries and equipments can be easy copied by the competitors thus bring a competitive parity in the market.

Human resources & Managerial expertiseThe firm has all women laborer. The work is mechanical in nature and involves skilled and unskilled work. But the cultural values inculcated by the firm in its employees are far from imitability. The expertise of the partners in areas of production, marketing, financing, and relationship building is beyond imitatbility by the competitors. Channel of distribution & Customer relation.The channel of distribution i.e. retailing and selling via agents can be easily copied by the competitors. Higher margins providing by national brands can pose a threat to the firms products. But the relationship built by the partners with these customers in Goa since 1970 difficult to challenge.

Table Showing VRIO Framework:RESOURCEVALUABLE?RARE?COSTLY TO IMITATE?EXPLOITED BY ORG.COMPETITIVE IMPLICATIONSTRENGTH/ WEAKNESS

Raw MaterialsYesNo--Competitive ParityStrength

Machinery & equipmentsYesNo--Competitive ParityStrength

Human Resources YesNo--Competitive ParityStrength

Channel of distributionYesNo--Competitive ParityStrength

SuppliersYesYesNo-Temporary Competitive AdvantageStrength & distinctive competence

ProcessYesYesYesYesSustained Competitive AdvantageStrength & sustainable distinctive competence

TasteYesYesYesYesSustained Competitive AdvantageStrength & sustainable distinctive competence

Managerial expertiseYesYesYesYesSustained Competitive AdvantageStrength & sustainable distinctive competence

Customer relation.YesYesYesYesSustained Competitive AdvantageStrength & sustainable distinctive competence