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Mobile Van Fish Selling: A Project of

PAPFISH
A report submitted to
Instructor: Prof. Lalita Murty
Academic Associate: Ms. Diti Shah

In partial fulfilment of the requirements of the course


Written Analysis and Communication I (2015-16)

By
Abhik Paul
Roll No: 15004
Section: B
On
27 June 2015

INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD

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Memo

DATE

: April 10, 2010

TO

: Mr. D. M. Patankar, Senior Manager, PAPFISH

FROM

: Abhik Paul, Executive Assistant

SUBJECT

: Decision report of Mobile Van fish selling project of PAPFISH, Akbarabad.

As per your request, please find attached the decision report of Mobile Van fish selling project
of PAPFISH and its recommended future course of action.

The Mobile Van fish selling project must satisfy the vision of PAPFISH, which is to increase
the visibility of the organisation using providing fresh fish at doorsteps. Also, the activity of
the organisation, which is not a welfare activity to the fishermen, should not incur such
significant losses. It reflects that the project is poorly managed and is unable to deliver on its
goals.

I recommend that the Mobile Van fish selling project undergo appropriate restructuring in the
existing system and continue with the project.

Enclosure: Decision Report Mobile Van Fish Selling: A Project of PAPFISH.

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Executive Summary
Mobile Van fish selling project is incurring huge losses, and a decision has to be made about
its future course of action. PAPFISH has the option to shut down mobile van 1 and 3, and
continue with mobile van 2; or it could alternatively restructure the existing project and
continue by incorporating the appropriate changes. The decision taken must align with the
PAPFISHs objective, result in an increase in profitability, effectiveness and efficiency as well
as reflect positively to the locals.

I recommend incorporating appropriate and adequate restructuring of the mobile van fish
selling project and continue with the same.

Number of words: 100

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Table of Contents
Content

Page Number

Executive Summary

iii

Situational Analysis

The Problem Statement

The Options

Criteria for Evaluation

Evaluation of Options

Recommendations

Action Plan

Exhibits

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Situational Analysis

PAPFISH, an apex body of fishermen cooperatives, instituted the mobile van fish selling
project. This activity was the only retail activity that added visibility of PAPFISH. It suggests
the importance of the project as an integral part of PAPFISHs strategy to expand it in other
cities.
For that purpose, PAPFISH instituted three mobile vans in three locations. The number of vans
operating is adding to the expenses of PAPFISH by an amount of Rs. 2,43,600 per year per
van, whereas the van is unable to operate in full capacity. It implies the need to reduce the costs
of vans operating as well as operate the vans in its full capacity.
Presently, three employees handle the operations of each van. The skill sets of the driver were
not utilised fully, who can easily handle the work of the supervisor. Thus, the salary of
supervisor adds to the cost of the project by Rs. 2,40,516 per year per van, which needs to be
curtailed. Also, the number of working hours of employees is 11 hours with a break time of 4
hours. It adds to the expenses of the project by Rs. 3,10,000 (approx.) as salaries. The extra
costs incurred without any return to the project suggests the need to reduce the number of
working and break time hours.
After 2004, PAPFISH lost the fishing rights of the site. It impacted the supply of fishes. The
margin of the fishes were fixed, and it did not earn any premium on high valued fishes. The
constrained supply of fish and the uncompetitive pricing of fishes prohibited PAPFISH to
generate greater revenue.
It can be argued that the losses incurred are due to under-utilisation of human resources, static
pricing of fishes and unorganized planning of working hours and break time hours. Thus,
PAPFISH must choose a viable option which would provide highest return for absorbing the
deficit as well as for its future growth.

The Problem Statement


The objective is to increase the profit of the project that is in alignment with the governing
bodys expectation as well as to absorb the deficit of Rs. 11,00,000 from May 2010 onwards.

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The Options
1. Revive the existing mobile van fish selling project by transferring supervisors,
incorporating competitive pricing of fishes and reduce the number of working and break
hours and continue with it.
2. Shutdown the operation of mobile vans 1 & 3 but continue with mobile van 2 only.

Criteria for Evaluation


Criteria in decreasing order of importance
a. Alignment with PAPFISHs objectives
b. Increase in Profitability
c. Increase in Effectiveness & Efficiency
d. Impact of Locals

Evaluation of Options
1. Revive the existing mobile van fish selling project by transferring supervisors,
incorporating competitive pricing of fishes and reduce the number of working
and break hours and continue with it.

Alignment with PAPFISHs objectives: PAPFISH will break even after 5


years as per Exhibit 1. It suggests that PAPFISHs governing body can continue
and expand its activity in other cities as well.

Increase in Profitability: Incorporating competitive pricing, changes in salary


due to a reduction in the number of working hours and the transfer of supervisor
results in a profit of Rs. 1,82,236 (as per Exhibit 1).

Increase in Effectiveness & Efficiency: The extra human resource, i.e., the
supervisor incurs around Rs. 7.2 lakhs per year as per Exhibit 1. It can be easily
substituted by incentivising the driver to do the extra work @ Rs. 4000 per
month, which saves Rs. 6.72 lakhs per year.

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Impact of Locals: The local people and the leader will continue to oppose
parking of the mobile fish vans. The reduced number of parking hours will
certainly not have any negative impact on the sale of fishes.

2. Shut down the operation of mobile vans 1 & 3 but continue with mobile van 2.

Alignment with PAPFISHs objectives: Though the project will make a


profit of Rs. 98,238 per year (as per Exhibit 2), but the core objective of
PAPFISH to increase the visibility will hamper significantly.

Increase in Profitability: The shutting down of those two mobile van achieves
the purpose of cutting down on losses. Hence, the profitability of the project
increases to around Rs. 98,238 per year (as per Exhibit 2).

Increase in Effectiveness & Efficiency: Even though the loss-making vans


are shut down, the core problem of under-utilisation of resources will hamper
the effectiveness of mobile van 2. It would incur the extra cost of Rs. 2,40,516
per year (as per Exhibit 2).

Impact of Locals: The lone mobile van will not attract too much attention
from the locals. Hence, there will be less demand. But, this will also make the
locals believe that PAPFISH has succumbed to the opposition. This, in turn,
will encourage them to oppose the parking of the mobile van 2. Hence, the
project will be shut down completely due to continuous opposition from the
locals.

Considering the mentioned criteria, the restructuring of the existing system of mobile van fish
selling project by incorporating appropriate methods would be suitable.

Recommendation
It is recommended that PAPFISH restructure the mobile van fish selling project by
incorporating the appropriate restructuring methods and continue with it.

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Action Plan
1. Given the varying market demands, the margin should not be static. The open market
system demands the pricing to be competitive as well as be dynamic. The high valued
fish and fish weighing more than 2 kilos should be charged a premium of at least Rs. 10
per kg.
2. The number of employees assigned to each van be reduced to 2, i.e., the cutter and the
driver. The driver should be incentivised by paying an additional amount of Rs. 4000
per month to perform the extra work of the supervisor.
3. The number of working hours should be reduced to 9 hours from 11 hours. Also, the
break time should be reduced to 2 hours from 4 hours.

Number of Words: 985

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Exhibits
Exhibit 1: Profit for Option 1
New (in Rs.) Old (in Rs.)
1943838
1775358

Sales Margin
Expense
Supervisor
Driver

0
613387.6

721548
573696

Cutter

345413.5

422172

Ice
Wastage

72000
234000

72000
234000

Diesel
Maintenance

280800
108000

280800
108000

Miscellaneous

108000

108000

182236.9

-744858

Profit Before Tax

Incentive (Rs. pm)

4000

Margin
River Fish ( >2 kg)
Marine Fish
Assumed 40% fish in the
category

45
58

Exhibit 2: Profit for Option 2


New (in Rs.)

Old (in Rs.)

Sales Margin (1)

986310

1775358

Expenses
Supervisor
Driver
Cutter

240516
191232
140724

721548
573696
422172

Ice
Wastage

72000
78000

72000
234000

Diesel
Maintenance

93600
36000

280800
108000

Miscellaneous

36000

108000

Profit Before Tax

98238

-744858

Fish sold per


day (in kg) for
New (1)
75
Assumed the demand is maximum

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