Answer1 Fab India has come a long way from its humble beginnings as an export shop in 1960, with its transition from an export house to a retail store the business model of Fab India has been changing during this period. Initially Fab Fab India operated as a middleman between be tween abitat, a !"#based !"#based retail company and $harat %arpet &anufacturers. abitat became a ma'or customer, ma(ing up 60#6)* of Fab India+s reenue reenue and was a ma'or ma'o r drier of its growth for - years. /he business model was straightforward and simple as $%& was proiding something which was demanded by abitat. /he company only targeted foreign mar(et in its initial years. oweer, in 196 FabIndia FabIndia too( its rst step towards retails by setting up a small shop to chec( out the responses to the company, selling mainly the left oer supplies from export export orders of home furnishing. furnishing. In 19 the retail model expanded and company started collaborations with famous designers to ac2uire uniersity students. 3uring 19 the company decided to expand its operations by setting up a collectie with leather wor(ers, printers and durries weaers which turned out to be a setup for 3A. 4ith its declining relationships with abitat the focus of the company shifted from exports to more of retail oriented. /his also demolished the position of FabIndia as a middleman. /he new idea was to carry carry out business under their own brand brand name which would consolidate their position in the Indian mar(et. /his plan was bac(ed by setting up stores in 3elhi, $angalore, &adras and $ombay. $ombay. /he home mar(et sales were 5)* with a year on year growth of 0* and the home mar(ets too( oer exports 7)-.* s .*8. /he ision plans were were made in order to expand company+s operation in the Indian mar(et as the product was widely accepted by Indian consumer. consumer.
Highlights of vision plan 1: • • •
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Adding up a new store a year Increase monthly sales from -0 million to 0 million in four years &ore intensie use of capital 7hiring professional managers, renting stores instead of buying them8 %ustomiing garment range so to be widely w idely accepted by consumers in other cities Adding new organic products to their existing product line 7diersity factor8
Highlights of vision plan 2:
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Increasing turnoer from 0 million to -00 million in four years Actie problem soling to add competitie adantage :(ill based compensation and bonus plans to (eep employees motiated $ecoming lifestyle retailer with strong national presence %onerting companies into number of hubs
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:etting up :upplier region companies, &ar(et regions and ;lobal support practices 3ecentraliing the company+s management
The success factors include: • • • • •
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erentiated mar(etplace for di>erent customers ?uality oer 2uantity 3ecentralied management in later stages andmade products hae incredible demand, same goes for organic products which proide high margins /he extensie training process of the employee :etting and successful implementation of goals Flexibility in production process
Answer-
Strengths =igor depth and breadth of management and clarity in planning process •
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:uppliers as (ey sta(eholders
Inolement of store managers and sta> /rust and bond among all supply chain members.
Weaknesses :hortage of 2ualied personnel to power the growth. •
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%ommitment to the founding mission. :upply chain bottlenec(
/he brand is losing out on attracting new customers as it hugely depends on repeat purchases
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?uality control, mystery shopper program
4ide product range
/he autonomy gien to employees has helped induce accountability among them /he brand has maintained its Indian#ness with the authenticity of hand#woen fabric for oer years /he fact that the brand strongly beliees in word of mouth mar(eting which has proed ery e>ectie as the brand does not adertise Opportunities ;rowing organic products mar(et 7-#5 million potential consumers8
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@ot enough experienced personnel to push FA$I@3IA towards growth in the retail sector imited global penetration despite huge potential in @=I mar(et
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Threats Future competition in organic mar(et expected from bigger players li(e :hoppers :top and
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;rowing consumer incomes
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Flourishing suppliers
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Financial funding re2uired for growth %ompetition Foreign
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/he brand needs to tap the potential of organic foods by creating awareness about their merits 3isplay of FA$I@3IA products in &$C+s and collaborating with arious construction groups would gie greater isibility to the brand ;eographic expansion in !: and !" with huge Indian population
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:ocial mission s. %ompany growth
In my opinion there is a change re2uired at the micro leel as they lac( professional managers in the company which plays a crucial part in decision ma(ing processes. At the macro leel they hae done extremely well by establishing themseles as an ethnic Indian wear brand. /heir products are
widely accepted by the end consumer, although the bottlenec( in the supply chain management could be wor(ed upon to ma(e FabIndia a more e>ectie organisations. In my opinion FabIndia should remain in niche mar(et and rather than broadening their position they should focus on consolidating their position in the niche mar(et, the reason behind this would be as followsD •
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/hey hae ast experience which adds up to their expertise in this eld and in the long term they will be able to outperform competition
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/he rst step that I would recommend would be to sort out their supply chain bottlenec( due to which they are unable to proide large number of products to their existing customers. /hey can start with the customer loyalty program whereby the fre2uent isitors will get certain percentage of discount, this will help the company to retain their existing customers and attract the new ones If the company is targeting only the niche mar(et they can come up with personalied products for their customers whereby the customers can get what they desire Barieties of store outlets can be opened to cater the specic needs of the customers 7for exampleD wedding wears, festie wear and so on8
Answwer In my opinion if they broad base their positioning, then in that case they should be broadening in terms of both the type of customer and the type of product. 4hy should they broaden the type of product •
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/hey are selling premium products and to ac2uire the mass mar(et they should be able to produce products which hae less retail prices In the mass mar(et the number of players would be more and hence the competition would be higher, in order to oercome that they need to compete with their competitors at a price at which they are currently selling products Adding more types of products would help them diersify their portfolio which will eentually spread the ris( arge portfolio of product would gie them more isibility in the mar(et Crganic mar(et is already growing rapidly and to cater the increasing demand the company can come up with few additions in their already existing organic product range
4hy should they broaden the type of customer •
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/hey hae targeted people aboe certain income leel as they are selling premium products. In order to tap the mass mar(et, they should be able to fulll the demands of customers below those income leel at desired prices Foreign mar(ets with higher population of Indians is an area to explore for companies li(e FabIndia
aing products for di>erent classes of customers will create a brand awareness among the consumers
