AJANTA PACKAGING

2/24/2017
WAC Report

Prepared By: Shreya Girotra (P16019) and Tejasvi Rana

(P16045)
INDIAN INSITITUTE OF MANAGEMENT, NAGPUR
 MEMO
To: Mr. Deepankar Agarwal, Partner, Ajanta Packaging
From: ABC, Executive Assistant, Ajanta Packaging
Subject: Analysis and recommendation on accepting or rejecting the option of diversifying into new
product portfolio of PET bottles
Please find below the report having an analysis of the options for accepting or rejecting the
opportunity of diversifying into a new product portfolio of PET bottles focussed on targeting new
customers and markets. Based on the analysis done, recommendation of rejecting the option of
diversifying into a new product portfolio has been provided along with the suggested action plan.
 Contents
Situation Analysis..................................................................................................................................4
Problem Statement...............................................................................................................................4
The Options...........................................................................................................................................4
Criteria for Evaluation...........................................................................................................................5
Evaluation of Options...........................................................................................................................5
Recommendation..................................................................................................................................6
Action Plan............................................................................................................................................6
Exhibits..................................................................................................................................................8
 Executive Summary
To evaluate the options of whether to diversify into a new product portfolio of PET bottles or
not, criteria for evaluation such as future market growth, competition, impact on suppliers
and impact on core business have been used.
Based on the above mentioned criteria, it is recommended to continue with their current
product range and not diversify into a new product portfolio of PET bottles. An action plan
has been put forward to increase their customer base by leveraging their existing strong
supply chain and distribution network and reduce the input costs by increasing the volume
and improving on their current technology with the help of R&D department of packaging
industry.
Situation Analysis

Problem Statement

Should Ajanta Packaging, with its existing products, diversify into a new product portfolio of PET
bottles by targeting new customers and markets?

Options available for evaluation

No
Yes

Criteria for Evaluation

Following are the criteria for evaluation ranked in decreasing order of importance:

1. Potential market growth

2. Impact on customers
3. Competition
4. Impact on core business

Evaluation of options

1. Do not diversify
Potential market growth

Currently, the market share of Ajanta packaging in the glass bottles industry of India is 9%
which is very less considering its 95% of the revenue coming from the sales of glass bottles.
Also, 90% of the revenue comes from repeat buying behaviour. Therefore, there is a huge
potential in expanding its customer base and increase the market share by a significant
number in upcoming years.

Competition

There are many competitors of Ajanta Packaging in the market having PET bottles as their
core competency whereas PET bottles sales contribute to only 5% of the total revenues of
our company. Moreover, huge investment, required set of skills and machineries make it
more difficult for Ajanta Packaging to compete with the companies having their core
competency in PET bottles.

Impact on customers

Shifting the focus to a new product portfolio would increase the risk of losing the customers
of glass bottles segment as already the prices are the cause of concern in the same segment
which requires immediate attention by investing in R&D department and bringing in
innovation and upgradation in the glass segment. Also, 90% of the total revenue comes from
repeated buying which would also be impacted as losing even one customer will result in
huge losses to the company.

Impact on core business

 Shifting the focus to a new product range will required huge investments in terms of skills,
machineries, market research and human resources. It will affect the core business of glass
bottles because already customers are moving to other suppliers due to the attractive prices
offered by them. Therefore, to compete at price level, Ajanta packaging needs to invest more
in R&D of packaging segment to find methods to reduce input costs.

2. Diversify
Potential market growth

Recommendation

Ajanta Packaging must not diversify into a new product portfolio of PET bottles because:

It will impact their core business of glass bottles as Ajanta packaging contributes to only 9. %
of the total glass industry of India and has huge growth potential in the same segment.
It will require huge investment in conducting the market research to tap new customers and
market for diversification into new product range.
Revenue coming from pharmaceutical PET bottles contributes to only 5% of the total
revenue of Ajanta packaging which is not comparable with the revenue earned by the
companies having PET bottles as their core competency.
Shifting their focus to PET bottles will increase the probability of losing customers in glass
bottles segment.

Action Plan

Based on the given recommendation, Ajanta packaging should adopt following action plan to exploit
the declining glass bottle industry:

Company should focus on expanding its market share in the total glass industry of India by
tapping more customer segments and market.
It should invest more in R&D of the packaging segment to bring in innovation and
upgradation in the glass industry and bringing it at par with the PET bottles industry.
It should focus on volume growth and reduction in input costs to decrease the overall prices
thus having a competitive advantage in the glass bottles industry.