A Small En­tre­pre­neur’s For­ward In­te­gra­tion Strat­egy

The Economic Times - - Career & Business Life/companies -

Deepak Thakral, a small en­tre­pre­neur from Nag­pur, had trans­formed his tra­di­tional fam­ily busi­ness of man­u­fac­tur­ing and sell­ing in­cense sticks and other fra­grance prod­ucts. Lever­ag­ing his ex­pe­ri­ence of sell­ing and dis­tribut­ing lo­cal brands in an un­or­gan­ised mar­ket, Deepak con­cep­tu­alised ‘Su­gandh Shoppe’, an in­no­va­tive model, a on­estop shop for all devo­tional prod­ucts in the year 2008.

In 2004, Deepak joined ‘TIE’, a non­profit as­so­ci­a­tion for en­trepreneurs and at­tended his first TIE pro­gram in Delhi. Deepak heard emi­nent per­son­al­i­ties like P Chi­dambaram, Nan­dan Nilekani speak about busi­ness on a larger scale with huge num­bers, which im­pressed Deepak and made him ques­tion him­self about the size and scal­a­bil­ity of his own busi­ness.

This be­came the foun­da­tion stone to take his busi­ness from ex­ist­ing dis­trib­u­tor model to a re­tail model, which even­tu­ally gave birth to the con­cept of Su­gandh Shoppe fran­chise sys­tem.

Deepak de­cided to mod­ernise and ex­pand his busi­ness us­ing fran­chis­ing ap­proach, very dif­fer­ent from the one used by tra­di­tional small play­ers in the in­cense stick in­dus­try. In early 2008, Deepak fi­nally launched his re­tail busi­ness of sell­ing fra­grances and re­lated items through fran­chise sys­tem as a pi­lot project in Nag­pur. Deepak reg­is­tered a new com­pany in the name of Su­gandh Shoppe Pvt. Ltd. By the year 2009, Sugndh Shoppe grew into 10 fran­chised out­lets. Get­ting into mul­ti­ple chan­nels helped the busi­ness in­crease its reach and sus­tain busi­ness in one chan­nel if the other was not work­ing.

The fam­ily busi­ness in­her­ited by Deepak was es­tab­lished in the year 1950. With over 50 years of ex­pe­ri­ence in in­cense stick man­u­fac­tur­ing, the busi­ness was well es­tab­lished within cen­tral In­dia. The core strengths of Deepak’s fam­ily busi­ness was the long num­ber of years of ex­pe­ri­ence in man­u­fac­tur­ing in­cense prod­ucts.

Core com­pe­tence in man­u­fac­tur­ing of in­cense sticks was re­tained by out­sourc­ing and re-brand­ing other re­lated prod­ucts. In­ter­nal learn­ing and growth led to favourable fi­nan­cial po­si­tion and a grow­ing cus­tomer base along with a clear vision that would unite peo­ple and lead them all to suc­cess. With only one store in Nag­pur to over 40 pooja spe­cial stores in the last 7 years, Deepak has been suc­cess­ful in re­tain­ing in­ter­est of fran­chisees and sup­pli­ers in this busi­ness for­mat.

How­ever, the fu­ture growth and suc­cess of this model de­pends on sev­eral crit­i­cal pa­ram­e­ters. Is this model repli­ca­ble in smaller cities and towns? Are there any strate­gic al­ter­na­tives avail­able to Deepak apart from fran­chis­ing Su­gandh Shoppe stores in or­der to ex­pand the busi­ness ge­o­graph­i­cally?

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