Strategy Project Business Expansion

Aroma
A history of Perfume making

Group 7
Business Analysis
Business House
 Fifth generation currently heading the business
 3 brothers managing the complete business operations
 Sixth generation currently taking responsible positions but
not into major decision making roles
 Able to perceive danger but not ready to take action as at
About the Organization
 Objective: Serve customers with unique fragrances and
exceptional customer responsiveness
 Businesses
 Industrial Perfumes
 Therapeutic Aromas
 Retail
Manufacturing Process
Farmers Procurement
Traders Distillation Formulation
Third party
Oil Traders Blending Distribution
packaging
• Aroma handles the formulation, procurement, bending and distribution aspects of perfume
manufacture
•Third party packagers is a high human resource involved activity and thus is outsourced.
Organization Structure*
Owners
Industrial Sales Store Financial

Blending Procurement Formulation
and Dist. management Management
Procurement Sales Store sales Performed by Performed by

Floor Manager
managers personnel personnel Owners owners
Field Internet sales

Senior Blender
personnel personnel
Storage Internet order

Junior Blender
workers fulfillment
* Assumption from the discussions with the owner, unwilling to provide employee count or exact
organization structure
Business Functions
 Blending : Central portion of the business. Formulation kept
a secret through coding
 Formulation: Core capability of the family. A trade secret
retained by family members
 Procurement: Procure raw material from ‘mandi’s’ in the
various raw material belts. Ex: Rose is available in Eta, Orissa
 Distribution: The final product is distributed to the industrial
consumers as well as through their store
 Inventory Management: Seasonal procurement, and oils
stored for usage throughout the year. Buy additional oil
requirements on a need basis
HR Management
 Recruitment
 Mainly low level job works recruited
 Physical stamina, loyalty, enthusiasm are observed
 Lot of care is taken in recruiting the right individuals
 Training
 Apprentice type of training is adopted
 Junior workers are tagged on to senior workers
 Retrenchment
 Retrenchment is delayed until it is unavoidable
Technology
Low technology enabled organization
 Enterprise Solution – No ERP, CRM or SCM, vendor relationship
solutions currently being used by the organization
 Blending – No automation technology being used and the
operations are predominantly manual
 Accounting – Tally is being used
 Sales – Internet is being used for accepting online orders
 Inventory Management – Manual operation of calculating and
reassessing inventory levels on a day to day basis
 Procurement – Low technology implementation, managed by
owners
Demand and Supply Trends
 Demand
 Industrial consumer
 Strong demand through the year
 Small industrial organizations with low order quantity
 Retail consumers
 Strong demand through out the year
 Online purchase orders normally higher in quantity
 Supply
 Seasonal supply of raw materials
 Prefers to procure directly from farmers through rural mandi’s
 Oils are obtained from open market
 Oil is procured from traders during non seasons and imported as and when required
 Supply-Demand mismatch
 Supply is short in all raw materials, to the tune of 50% of the total requirement.
 Supply shortfall is handled through direct imports and local oil producers
 Impact of economic situation

 No much impact, as they maintain their prices lower.
Resources, Capabilities and
Competitive Advantage
 Resources
 Experience in fragrance segment resulting in new product development
 Huge product base
 Strong customer relationships
 Trade secrets of base ingredients
 Strong legacy
 Strong family support
 Capabilities
 Fast and Responsive organization
 Maintaining low cost of operations
 Competitive Advantages
 Extensive product portfolio
 Excellent customer responsiveness
SWOT Analysis
Opportunities
Strengths 125% YOY growth in certain segments
Formulation and blending Increasing consumerism in the perfume
Extensive product range segment
Strong brand and loyal customer base Preference for natural ingredients
Very short turn around times Consumers continued preference for
exclusivity
Weakness
Threats
Low manufacturing capability
Increasing imports of premier perfumes
Non existence of Lower level
Foreign players entry into Indian markets
management
Large players reducing minimum order
Low R&D capabilities in chemical
quantities
perfumes and base ingredients
Changing customer preferences
Geographically restricted brand
Value-net Analysis
Customer
1) Preference for natural ingredient
2) Increasing purchase power
3) Increasing discretionary spending
4) Branded products preferred
5) Preference for exotic fragrances
6) Ready to pay a premium
Substitutors Complementary organization

1) Strong branding 1) Perfume bottlers, large players
2) Increasing R&D in newer allow little flexibility
fragrances Company 2) Decoration stands and
3) Reducing price lines to remain accessories manufacturers,
competitive small unorganized players
4) Diversification into more
profitable segments
Supplier
1) Low supply and high demand causing
upwards price mobility
2) Imports becoming an increasing
part, thus increasing turn around
time
3) Unorganized sector
Critical Success Factors
Retail market
 Adaptability to changing customer preferences
 Regular new fragrances introduction
 Maintaining store ambiance
 Packaging, a proxy for premium perception
Industrial perfume market
 Competitive pricing
 Faster response time for supply requests (JIT)
 Responsiveness to new fragrance request
 Single supplier for multiple fragrances
Thank You

Strategy Project Business Expansion

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Strategy Project Business Expansion

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Aroma

A history of Perfume making

Traders Distillation Formulation

Industrial Sales Store Financial

Procurement Sales Store sales Performed by Performed by

Field Internet sales

Storage Internet order

 Impact of economic situation

Substitutors Complementary organization

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