Project Description
Background
Number crunching of feasibility report on excel sheet does not always provide guarantee that it would pan out like what was envisaged in the feasibility report whenever it comes to setting up a green field entity. Intent, unquestionable, as every company would want to set ambitious targets. Attention to detail & process followed is questionable.
The organisation is the largest & one of the best managed company in India in the industry. The company had already set up green field businesses in a few countries long back and had tasted success. It then wanted to expand its global footprint, organically as well as inorganically to become a large international player. In line with the vision it acquired a large company overseas which had foot prints across many geographies.
The Problems
The Parent decided to set up one such green field venture in a neighbourhood country which shares the border in India. The Parent by then had done all the work required to set up the Subsidiary. Number crunching, feasibility, financial projections, 3-year plan, product benchmarking etc. Everyone felt that the huge experience of the Parent would sure shoot steer the Subsidiary to deliver as per the feasibility report
This is where the hypothesis & planning went totally wrong
- The Local (Company (A)), in that country was by far controlling more that 50% market share and was extremely dominant almost tending towards monopoly
- The factory was commissioned. Delayed due to some external circumstances beyond one’s control
- A mega launch was conducted inviting all prospective customers, team and dignitaries from the Parent company as well as local dignitaries. Everything looked and sounded very positive
- This is where the problems started
- The Parent decided that it would do business only on advance cash basis. Obviously the country one is referring to has always been prone to credit risk. Entire local team unanimously felt that without credit, there would be no takers. Still one tried out to do business on advance cash basis. It became a futile exercise which resulted in not a single taker and the results of the gala launch faded.
- The Parent felt that the products made by competition was very similar to the product made in India. Despite having conducted product benchmarking exercise during the testing stages, one particular product which was a lead product was way off in comparison to the product attribute of Company (A). The Parent was proved wrong. One had to go back to the drawing board and reformulate the particular product to be in line with Company (A) if not better. This led to postponing of this particular product introduction in the market.
- The competition company entered into legal agreements with most of their dealers to ensure that they do not buy Subsidiary company product. Those who signed the agreement were blessed with additional discounts. It was an unwritten understanding that those who did not sign the agreement would not get supplies of Company (A) products
- Consequently, the green field project got into a severe crisis wherein nothing was in line with the feasibility report
- There was tremendous pressure on performance of the Subsidiary-plant ready, team ready, products ready but main product getting delayed due to improper product benchmarking
- There was a big challenge with regard to motivation of the team
How did the company get back to track again?
- The CEO and the Marketing head decided to split the entire country into two parts and started meeting up with all the major dealers of competition
- Conducted influencer meets across the country along with blind test results. Slowly confidence among the dealers of the Subsidiary company products was getting established
- Despite doing all this, we could only penetrate those dealers who were buying products other than the Company (A) or those who bought Company(A) products but did not have the financial strength to scale up
- This is when the Subsidiary company changed the strategy. Instead of trying to woo most of the dealers across the country, the Subsidiary company decided to focus. It found out through confidential sources that the top 3 dealers of the Company (A) contributed to close to 40 % of the Company (A) business. This was a major revelation
- This is when the CEO & the Marketing Head decided to regularly spend a good amount of productive time with each of the top 3 dealers. Over a short period of time one could build a very effective relationship. What one could establish was that the Subsidiary company team was trained to be friendly as well as effective. Difference between the Subsidiary company and the Company (A) was that Company(A) started taking things for granted and was becoming complacent. The team of Company (A) was becoming arrogant and over confident too. This resulted in the top 3 dealers helping team of the Subsidiary to influence other dealers on the behalf of the Subsidiary company.
- This is when the Subsidiary Company decided to buy out the top 3 dealers by assuring them that the company would compensate the losses which the 3 dealers otherwise would have gained from Company (A). This deal was unprecedented
- This was the gamechanger and once the news spread, many dealers got into the Subsidiary network
The key lessons learnt were as follows:
- Whatever reasons for success in one country need not be the same in another country
- Never underestimate any competition. Each country is very different from the other
- Do not tinker around standard policy & norms which are already established over many years
- Always ensure the products to begin with all are in line with the competition, if not better. Proper product benchmarking is extremely critical. And benchmarking should always be done periodically to ensure one is in line with the industry. Unfortunately, because of improper product benchmarking & unfriendly policies, the local sales team bears the brunt and the company always blames them for poor performance due to no fault of their own
- Last but not the least, there is always a solution for every problem/crisis. Never give up!