Summary

The case study revolves around Ketan Thakkar, the managing director of Nippon Distributors Private

Limited (Nipponply), who devised a strategic plan to expand his plywood business into the western

Indian states of Rajasthan, Maharashtra, and Madhya Pradesh. Thakkar's decision stemmed from his

extensive market research, which identified significant demand for plywood products in these

regions, driven by housing, corporate, and industrial projects. Thakkar aimed to leverage Nipponply's

reputation for quality and innovation, built over 25 years in Gujarat, to tap into these new markets.

Thakkar's expansion plan involved setting a production goal of 45,000 units per year, contingent

upon market demand. He outlined a hierarchical organizational structure to manage operations in

the target states, emphasizing the importance of local expertise and language proficiency. Thakkar's

rationale for expansion included capitalizing on economies of scale, preparing for his son's

involvement in the business, and reducing dependency on the local market.

To evaluate the feasibility of the project, Thakkar conducted a cost-volume-profit (CVP) analysis,

considering various expenses such as manufacturing, advertising, and promotional costs. He also

analyzed market potential, citing government initiatives for affordable housing and evolving market

trends driving demand for plywood products.

Thakkar estimated an investment of approximately €29.125 million for the expansion project, with

additional working capital requirements and personnel costs. He projected production capacities for

the first three years, factoring in different levels of capacity utilization.

Ultimately, Thakkar decided to proceed with the expansion plan, with an initial investment partially

funded through bank loans. The project's viability was assessed over a fifteen-year period,

considering factors such as salvage value and interest rates. Thakkar sought external consultation to

review his business plan before finalizing the investment decision.