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PRESENTED BY: ARJUN CHAUHAN MUKESH TIWARI AYAN CHARABORTY BHARAT SHANDILYA SATYENDRA KUMAR VAIBHAV DIXSHIT
SYNOPSIS
The case outlines the growth of two entrepreneurial firms that started in 1979 and 1983 respectively. Archies started with an investment of Rs. 1000 for selling posters through mail order. But, over a period of 25 years, the growth in the greetings segment slowed down, while the market for gifts was picking up. This led the entrepreneur to rethink whether by focusing more on gifts rather than greetings, he could continue profitably in the Business of Emotions or would that take the business away from its vision and mission.
Vintage Cards and Creations was the brainchild of Anil Kapur and Vaishnav when a few cards made by them were appreciated by the customers for quality and design. Initially it was a part time business, but soon became a full time occupation with local artists to create new designs and distributors and retail outlets expansion for future growth. Archies proactively responded to technology changes in form of e-cards, SMS and MMS, which were taking the market away from traditional greeting card by diversifying into gifts as they were another means of expressing emotions. Vintage , on the other hand did not respond to change and found itself burdened with a huge inventory of cards with no market for them.
Business of Emotions
The key to Archies' success is the fact that the company has consistently focussed on emotions and feelings, which is summed up in its marketing strapline: 'The most special way to say you care'. Archies' product portfolio contains all-occasion greeting cards, gift items such as curios, photo albums, photo frames, soft toys, mugs, quotations, key chains and a wide range of stationery. Emotions are at the heart of the Archies collections. Archies has played a significant role in advancing the social expressions market by creating a special collection of greeting cards and gifts for different occasions. Today the main aim of Archies in the next three to four years to be present in every significant shopping real estate in the country. With a view to better control the ultimate experience for the customer, the focus will be on company owned or company managed stores as opposed to the pure franchising route that has been followed so far.
Bolo dil ki zuban through cards. Be it puja or holi, pongal or diwali, its time to express your feelings in your matribhasha! With the language card s popularity going up the Indian charts, major players like Archies and Vintage are now trying to expand their portfolio from Hindi, Marathi everyday cards to an array of Indian languages like Bengali, Assamese, Tamil and others. The segment growth is pegged at nearly 7% by industry estimates which is higher than the growth (5%) of the greeting card category as a whole which it is estimated to be around Rs 250 crore.
SWOT ANALYSIS
STRENGTH : FEW COMPETITORS People of India associate well with brand image of ARCHIES Developed a strong corporate image WEAKNESS: BETTER SUPPLIMENTS AVAILABLE.(E-CARDS) Excess inventory Continuous need for variety OPPORTUNITY: NEW PRODUCT CATEGORY Variety in merchandise industry THREAT: RAPID CHANGING DEMAND Piracy over the internet Low margins in merchandise industry
VINTAGE INTRODUCTION
Ther company was founded as a partnership firm in 1983 by anil kapur and rajesh vaishnav for manufacturing and marketing greeting cards . By 1992, vintage had a collection of 3000 designs , 26 distributors and 3,000 independent retail outlets. To meet its future gorwth requirments , the company entered into agreement with Hallmark , one of the world s largest greeting card manufacturer based in united states in1992 to use its brand and intellectual property .
In 1996 the franchise stores were incresed to 67. In 1997-98 the company expanded its production capabilities and commissioned a plant at Goa. By the end of 1999, th e company had a franchaise network of 221 outlets spread over 94 cities. By 2001, the company had introduced cards in Hindi and Marathi and expanded the franchaise network to 343 stores across 115 cities.
Entered into a licensing agreement with Verkerke to use their designs trademarks Another brand licensing agreement with Mattel Inc. US gave them rights for the Barbie brand. Apart from these, company tied up with Cancer Patients Aid Association to establish its presence in the corporate segment.
Ratio analysis
Four major areas may be defined as being of particular importance to strtegical performance:
1. Is the business profitable? 2. Is the trading position satisfactory? 3. Is the buisness solvent? 4. Are sharholders earning satisfactory return? accountancy terms profitability Trading liquidity Shareholders ratios
Profitability
1.Return on capital employed (ROCE):
MAR 05
Return On Capital Employed(%) Return On Capital Employed( %) 17.22
MAR 06
17.19
MAR 07
15.99
MAR 08
13.74
MAR 09
Archies 10.19 Vintage
-6.09
-36.97
--
-44.3
-80.06
MAR06
6.63 -19.66
MAR07
6.79 -48.61
MAR08
6.14 -29.38
MAR09
--34.6
Archies Vintage
TRADING POSITION
OPERATING PROFIT MARGIN
MAR 05 MAR 06 MAR 07 MAR 08 MAR 09 Archies
Operating Profit Margin(%) 15.77 15.29 13.95 13.64 8.61
Vintage
Operating Profit Margin(%) -27.35 -86.13 --59.02 -123.68
LIQUIDITY POSITION
CURRENT RATIO
MAR 05 Current Ratio Current Ratio 1.81 0.91 MAR 06 2.05 1.05 MAR 07 1.77 2.67 MAR 08 1.78 1.95 MAR 09 2.47 Archies 1.35 Vintage
QUICK RATIO
MAR 05
Quick Ratio Quick Ratio 1.15 1.48
MAR 06
0.92 1.58
MAR 07
1.03 1.25
MAR 08
1.05 0.84
MAR 09
1.12 0.54
Archies Vintage
Shareholders ratios
Earning per share
Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Archies Earnings Per Share 9.28 10.32 12.03 12.14 -1.61 Vintage Earnings Per Share -2.34 -6.03 -10.67 -6.64 -9.79