INDIAN INSTITUTE OF MANAGEMENT

AMRITSAR

TERM-5 /MBA-08

Business-to-Business Marketing
Case Analysis
"Ajanta Packaging-Key Account Management"

Submitted to- Submitted by-

Prof. Sanket Vatavwala GROUP-2(SEC
A)
Ankshuman Das (MBA/08/009)
Anjali Paliwal (MBA/08/071)
Pousali Mondal (MBA/08/165)
Vikas Yadav (MBA/08/184)
Yash Kaner (MBA/08/185)
Neha Shakya (MBA/08/212)

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EXECUTIVE SUMMARY

Ajanta Packaging is among the top suppliers of glass bottles in India, with net revenues of U.S.
$100 million. The case discusses the stiff competition the glass bottle industry faces from different
packaging options and materials that have entered the industry in the last few years. Many
companies were shifting to PET bottles Tetra packs—flexible packaging and other innovative
packaging solutions to improve the durability of products and reduce costs. Ajanta packaging
highly depended on glass-bottle sales as 95% of its revenue comes from them.
Ajanta Packaging (Ajanta), a prominent glass bottle packaging manufacturer in India, had to make
a crucial choice in the fall of 2017 on handling its business relationship with S.F. Foods (S.F.),
which accounted for 15% of its total sales as its largest client. Even though Ajanta had 1,700
customers, 50% of its business came from 10 critical accounts, which made the S.F. account even
more important.
There was good reason to be worried when S.F., in a desirable situation, made a challenging offer
to Ajanta. With an unsettlingly low profit margin of less than 7%, a $25 million order was placed.
Moreover, S.F. requested a rapid turnaround time and a 60-day payment timeframe. When
confronted with these unreasonable requests, an Ajanta director felt it was necessary to reevaluate
the company's relationship with S.F.
The director struggled to decide whether to accept S.F.'s demands and put Ajanta's financial future
at risk or to start talks to get better terms, such as a review of the order price, payment terms, and
delivery timetable.
This highlights the crucial dilemma that Ajanta Packaging is facing and highlights the importance
of the S.F. account to the company's revenue stream. The decision-making process entails
thoroughly assessing the financial implications, hazards, and strategic significance of preserving a
cordial but profitable relationship with its biggest client. The next course of action will
significantly affect Ajanta's long-term viability as a corporation and financial stability.

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SITUATION ANALYSIS
The leading glass bottle packaging company in India, Ajanta Packaging, was expanding quickly
and capturing market share. However, the business depended on a select group of significant
clients; 15% of its total sales came from S.F. Foods, its biggest client. Due to its dependence on
essential clients, Ajanta was exposed to shifts in client demand and price policies.

SWOT Analysis

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PROBLEM STATEMENT
Ajanta Packaging currently needs help in effectively managing its key account. One of its biggest
clients -S.F. Foods, is offering a $50 million order with a profit margin of less than 7 percent and
has set a payment period of 60 days. Ajanta already had orders worth $90 million from other
customers with a profit margin higher than 10 percent. In this scenario, supplying SF with a 60-
day payment period may lead to customer dissatisfaction and jeopardize relations with other
customers. They had a high chance of defaulting, with other orders having a high-profit margin to
supply to SF.

OPTION to CONSIDER
1. Ajanta accepting SF’s terms
2. Ajanta renegotiating the price, payment terms, and delivery schedule
3. Ajanta not supplying orders to SF Foods.

Evaluation of Options:
1. Ajanta accepting SF’s terms:

Pros:
• Immediate Revenue Boost: Accepting SF’s terms could provide a substantial infusion of
$50 million into Ajanta's revenue stream.
• Maintain Relationship: Accepting the order may help in maintaining a positive relationship
with SF Foods, a crucial client.

Cons:
• Low Profit Margin: The low profit margin of less than 7% raises concerns about the overall
financial viability.
• Cash Flow Strain: The 60-day payment period may strain Ajanta’s cash flow and impact
financial flexibility.

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 2. Ajanta renegotiating the price, payment terms, and delivery schedule:

Pros:
• Improved Profitability: Renegotiating terms could lead to a better profit margin, enhancing
the financial benefits for Ajanta.
• Customer Satisfaction: Successful negotiations can maintain positive relations with SF
Foods, ensuring long-term collaboration.
Cons:
• Cash Flow Challenges: Renegotiation might result in delayed payments, impacting short-
term cash flow.
• Uncertain Outcome: There's a risk that SF Foods may not agree to revised terms, leading
to potential dissatisfaction.

3. Ajanta not supplying orders to SF Foods:

Pros:
• Higher Profit Margins Elsewhere: Focusing on orders with higher profit margins from
other clients can boost overall profitability.
• Preserve Other Relationships: Prioritizing other clients can help maintain positive relations
and safeguard long-term business prospects.

Cons:
• Immediate Revenue Loss: Rejecting SF’s order means forgoing a significant $50 million
business, impacting short-term revenue.
• Risk of Strained Relations: Refusing the order might lead to dissatisfaction and strain in
the relationship with SF Foods.

Recommendations
● Ajanta Packaging needs to carry out a comprehensive examination of the market patterns,
consumer inclinations, rivalry environment, and cost-benefit analyses of various packaging

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 alternatives and materials. Their ability to determine the most lucrative and long-lasting
market sectors and specializations will be aided by this.
● Tetra Pak, flexible packaging, biodegradable materials, and other cutting-edge packaging
options should all be offered by Ajanta Packaging in addition to expanding its selection of
PET bottles. This will enable companies to better meet the evolving requirements and
preferences of their clientele, particularly in the soft drink and pharmaceutical sectors,
where glass bottles are becoming less popular and gaining less market share.
● In the spirits and beer sectors, for example, where glass bottles are valued for their quality,
attractiveness, and recyclability, Ajanta Packaging should concentrate on these markets
and capitalize on its strengths and core skills in the glass bottle sector. In addition, Ajanta
Packaging ought to make investments to enhance the appearance, robustness, and use of
its glass bottles and provide its esteemed clientele with personalized solutions.
● Ajanta Packaging ought to use a crucial account management approach, designating
specialized sales teams and account managers to its most significant and tactical clients,
and cultivating enduring and mutually advantageous associations with them. They will be
able to boost cross-selling and up-selling opportunities as well as customer happiness,
loyalty, and retention as a result.
● Ajanta Packaging ought to delve into uncharted territories and markets, such as developing
nations, remote regions, or specialized sectors, where there is a substantial or increasing
need for glass bottles.

Action Plan
Handling a crucial account like S.F. Foods require a balanced approach that considers both the
profitability and the impact on existing customer relationships. Here are action plans for each
option:

Customer
Action Plan Profitability Cash flow
satisfaction

Ajanta accepting SF's terms Low Medium Low

Ajanta renegotiating the price, payment terms, and

delivery schedule Medium High Medium

Ajanta not supplying orders to SF Foods High Low High

● IF Ajanta accepts SF’s terms: They need to allocate resources to manage the financial
risk associated with the lower profit margin and extended payment period. They need to

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 carefully consider its cash flow situation before accepting this order, as the 60-day payment
period could put a strain on Ajanta's finances.
● IF Ajanta renegotiated the price, payment terms, and delivery schedule: This option
would be a more balanced approach, as it would allow Ajanta to improve the profitability
of the order while also maintaining some level of customer satisfaction with S.F. Foods.
They need to showcase the value Ajanta brings to the table and the mutual benefits of a
revised agreement and initiate negotiations that maintain profitability in mutually
beneficial terms.They should be prepared to present alternative solutions that could include
trade-offs beneficial to both parties, like volume discounts or adjusted delivery schedules.
● If Ajanta not supplying orders to SF Foods: Ajanta would need to be prepared to deal
with the potential fallout from losing this large customer. In order to maintain the
relationship Ajanta could provide an alternative solution like referring SF Foods to trusted
industry partners or suppliers who might be able to accommodate their needs without
compromising Ajanta's existing commitments.

Each action plan requires an in-depth review of the potential consequences and advantages. A
balanced approach that safeguards existing connections while exploring opportunities with S.F.
Foods can assist Ajanta Packaging in effectively overcoming this challenging situation through
using some common approach like:
1. Client Segmentation: To better allocate resources and manage expectations, consider
segmenting clients based on their strategic importance, profitability, and long-term
potential.
2. Risk Mitigation Strategies: Create contingency plans to deal with financial risks
connected with fluctuating payment times and profit margins.
3. Long-term Planning: Evaluate the existing approach to critical account management,
strategizing for a more sustainable and balanced client portfolio to avoid similar difficulties
in the future.

Conclusion
In conclusion, Ajanta Packaging faces a critical decision regarding S.F. Foods' order. The options
of accepting, renegotiating, or refusing the order demand a careful balance between immediate
financial gains and long-term relationship preservation. Considering financial impact, customer
relations, negotiation feasibility, and strategic alignment is crucial. The chosen path will not only
impact short-term stability but will also shape Ajanta's long-term viability in the competitive
packaging industry. A well-informed decision is imperative to navigate these challenges
effectively.