Q1. What are the reasons behind Fabindias growth?

Commitment to a social mission while focussing on growth-Fabindia aimed to

bring social good by empowering the artisans and craftsmen by creating
livelihood opportunities thereby making them a valuable part of their growth

Uniqueness of product- Fabindia was focussed on exclusivity of the product and
providing a unique shopping experience for its customers

Gradual Diversification of product portfolio- The portfolio was expanded
gradually from only home furnishings to ready-to-wear clothes and furniture

Willing support of local artisans and craftsmen- Fabindia enjoyed strong trust
equations with its suppliers who themselves found opportunities of livelihood and
growth through this alliance.

Economic Reforms of 1991- As the Indian economy opened up post-reforms an
upwardly mobile set of consumers began to show appetite for both basic and
lifestyle goods. Fabindia became a beneficiary of these reforms

Innovative Positioning- In 1977 Fabindia introduced contemporary design in its
products which was highly successful among lay and professional consumers

Vision- They launched vision plans to grow in a structured fashion and were
extremely successful at doing so. Under Vision Plan I the revenues grew from 360
mn $ in 2003 to 2 bn$ by 2005 which was 2 years before the estimated period.
The Vision Plan II which aims to increase revenues to 2 bn $ by 2009 and is likely
achieve this target too before the stipulated period.

Freedom in Operating Hierarchy- The store managers were encouraged to be
entrepreneurial. This helped them cater better to the needs of the consumers

Robust internal market analysis strategy- Fabindia performed their own
exhaustive market analysis to understand the competition and the trends in the
market. This helped to develop a finer understanding of the ground realities
consumer sentiment

Uniformity in store design- The store dcor and personnel uniforms had an
Indian feel to them. This helped establish a good connect with the consumer.

Employee satisfaction- The employees were content and they were more like a
family member. They shared excellent personal equations with the higher
management. One of their directors Madhukar Khera started as a supplier.
Q.2 Reasons why social goal is critical to the business of Fabindia?
1. As per the mission envisioned by John Bissell, Fabindia provides work and
employment to about 15,000 skilled weavers and artisans, thus abiding by their social
goal.
2. Fabindia is not ready to compromise on its mission and founding ideology for profit,
even through its phase of growth and expansion.
3. Moreover, several of its suppliers had grown with the firm and some of them held
shares in the company. Most of the suppliers shared a personal relationship with the
managers.
4. For a product to be included in the Fabindia mix, it should contain at least one
handmade element. Either the fabric had to be hand woven or if the cloth was made in
a mill, it had to be block printed by skilled artisans.
5. Most of the senior employees take the ideology very seriously and are never ready to
give up this mission
Are they achieving it?
Fabindia is trying to pursue profit as well as social goals.
1. In case of fabric, the company has a policy of never returning the goods for delayed
delivery or inconsistency it in terms of colour, weave or design and tries to reuse the
fabric.
2. Understanding the limitations of the suppliers, Fabindia has negotiated a deal with
one of Indias largest private-sector bank to provide capital loans to the weavers.
3. To meet the expansion requirements they discussed to use mill woven cloth to obtain
larger volume. But they ensured that this acted as a base for a handicraft such as block
printing or embroidery.
4. Even though achieving social cause was true in case of fabric, this was not achieved
in case of furniture where to meet the volume requirement supply was taken from
DAH workshops instead of artisans.
Q3. Can Fabindia grow further? How? What will be the effects of growth?
Fabindia has many unexplored avenues by exploring which it can achieve a substantial
change in profit:
1. Resume exports since previously there was a flourishing export market worth 2 mn $.
The same market could be tapped to increase sales.
2. Outlet Expansion Program- In India it needs to open more outlets as there are only 49
outlets currently. As per the Vision Plan III Fabindia has envisaged a total of 200
stores in India. Currently, the focus has been more on tier-I cities. However, as per
exhibit 12 the tier-II cities are good places to launch new stores.
3. Franchisee model- To achieve strategic depth a franchisee model can be adopted
where it is inconvenient or expensive to take stores on lease. The franchosee
agreements should be stringent and must ensure the franchisees maintain the Fabindia
brand name
4. Better means of transportation can also be used.
5. External Financing- Setting up new stores would involve huge amount of investment.
Self-funding will not be a prudent strategy as profitability will suffer. Fabindia can
look to have external investors to build scale

Q4. Should businesses have social goals? Is growth their best contribution societies?
Businesses should be linked with social goals. Business is no different to society. In fact, they
are part of society itself. Having nurtured from the society itself, it is the moral responsibility
of business houses to work for social upliftment. Having said that, it is also important for
business to focus on maximizing their profit, as profit is the essence of business. If
corporations can maximize their profit while providing some social good, it would be the best
practice.
Also, business with social goals does not mean a one way profit. Even corporations gain by
associating themselves with a social goal.
1. They do earn a good name in the market and increase their visibility in the market.
They can use this even to promote their produce.
2. Associating the companys vision with social goal will motivating the employees to
work in coherence to achieve a common goal
3. This may also attract socially active people to join in and contribute toward
companys goal.
4. It might help to develop good relations with government. Best case scenario,
industries might get goods at subsidized rate from government to achieve companys
goal
5. It helps in maintain good public relations and access to external investment becomes
easier.
Growth of a company certainly is one of the ways in which it can contribute to the society
because as the business grows, so does the employment opportunities which could further
provide for better living for the society.
1. If interpreted otherwise, growth of the company as a whole is not the only way in
which they can contribute to the society. Even if the company is growing in a steady
way, if they follow industry best practices of sustainable growth which means using
the natural resources in a way that they are not polluting the environment and leaving
behind the resources in the best shape that they can for the generations to come.