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Nuts Nutty Business: Growth Strategies of Family-Owned Business – Zantye Cashews*

CASELET, STRATEGY
ET Cases - FLAME, 5 Pages
AUTHOR(S) : Shweta D Shirolkar - Assistant Professor, Dr. Varsha Nerlekar, Associate Professor - MIT School Business, Pune

Case Preview

Nuts Nutty Business: Growth Strategies of Family-Owned Business – Zantye Cashews

 

Introduction

For anything worth achieving one has to pay the price and the price is always sweat, grind and hard work. The factory christened M/s Achyut Cashew Factory (ACF), result of the untiring efforts of Achyut Madhukar Zantye (Madhukar) and his elder son Vasudeo Madhukar Zantye (Vasudev).

After a thorough SWOT analysis, Achyut Zantye (Achyut - grandfather of Madhukar) was aware of the opportunities in the business as cashew was the commonly found crop in western Maharashtra. He thought of starting a small scale business of cashew processing in his village, Tulas.

The strengths were easy availability of raw material and labour from the village itself. Weaknesses were that he was totally new to this market and did not have any knowledge about cashew processing opportunities. As cashew was an easily available crop in western Maharashtra, cashew industry had a bright future. Threats were other emerging competitors and inadequate availability of finance.

Achyut inspired his grandson with this idea. In 1979, Vasudeo started his first factory in Tulas and subsequently both the younger brothers, Achyut Madhukar Zantye (Madhukar) and Shrikrishna Madhukar Zantye (Shrikrishna), joined the business. After overcoming all the difficulties and having set up a good business they started four more new factories in the same district which were looked after by the entire family..........

Global & Domestic Industry Overview

India was the first country to bring cashew kernels in the global market and also pioneered cashew processing as an industry. India is also one of the largest cashew consuming countries in the world. In India, cashew was first introduced in Goa, then it later spread to other parts of the country. In India, cashew was grown in Maharashtra, Karnataka, Kerala, Goa, Tamil Nadu, West Bengal, Orissa and Andhra Pradesh. India and Vietnam were major producers and exporters of cashew accounting for 40% and 33% market shares respectively. India exports cashew kernels to over 60 countries. Cashew ranks third5 in world production of edible nuts that are traded globally. The other products and by-products of cashew are Cashew apple, Cashew apple juice, Cashew syrup, Cashew apple jam, Cashew apple candy and Cashew Nut Shell Liquid...........

Achyut Cashew Factory

The head office of M/s Achyut Cashew Factory is situated in Tulas, a small village in Sindhudurg district. In 2015-2016 they had a capacity of processing 10,000kg raw cashew per day which is much more than their rivals in Western Maharashtra.

Zantye cashews had segmented their retail markets on the basis of geography which are in Goa/ Sindhudurg and Mumbai region.............

Product Mix

The Company started the business with basic cashews as a category in 1979. In cashews there are two types NW (natural whole covered) and FW (uncovered). Under White Whole type, there are different grades like W180, W210, W240, and W320.........

Product Diversification

By the year 2004, the company had started the product diversification by taking up forward integration (Exhibit III).........

Innovation and Quality Control

The company had a strong presence in the market because of its quality, freshness and strong distribution channels, which it achieved through different processes involved in its operations. Initially, the processes like grading and peeling were done manually by hiring the workers but in due course of time the company has made these processes automated by installing color sorters, high speed cameras and peeling machine.........

Distribution

One of the major factors behind the success of the company was its sound distribution channel, which it had developed over the years. The Company had its own transportation to Goa. After keeping the product in the drying yard for 3 days the product would be transported to the warehouses..........

Corporate Social Responsibility

As a part of CSR, the company had shown its concern for environment and health in particular and donated 25,000 cashew plants/saplings every year........

Challenges Ahead

One of the major issues the company faced was related to labor, as this was a female-oriented job. Primarily the male members are involved in fishing and agricultural activities where in hard manual labor is required and these activities are also more rewarding hence the females are left for these jobs which does not involve much hard labor...............

Assignment Questions

I. Conduct a SWOT Analysis of the business.
II. Discuss the major issues surrounding the case.
III. Advise the company to create a sustainable competitive advantage.
IV............

Exhibits

Exhibit I: Matters that CEPC India Takes Care of

Exhibit II: Value-added Products of Zantye Cashews

Exhibit III: Forward Integration of Zantye Cashews

Teaching Note Preview

Nuts Nutty Business: Growth Strategies of Family-Owned Business – Zantye Cashews

 

Synopsis

The case can be used for Post Graduate Management courses on Business Processes and Strategic Business Management, Marketing & Brand Management. Besides it could be a preliminary case to introduce the course on Family-Owned Business.

Achyut thought of starting a small scale cashew business as cashew processing unit in his village Tulas and inspired his grandson with this idea. In 1979 Vasudeo started his first factory in Tulas subsequently both the younger brothers Achyut Madhukar and Shrikrishna Madhukar joined the business. After overcoming all the difficulties and having set up a good business they started four more new factories in the same district which are looked after by the entire family. Inspite of consistent business success for over three generations there are some upcoming challenges which the business is currently facing.

This case analyses the Indian and International Cashew Industry and the challenges faced by agro-based indigenous family-run business while highlighting the merits of family-run business.

Mandatory Readings before the Classroom Discussion

• http://www.researchandmarkets.com/reports/310379/global_cashew_nut_industry_report.pdf
• http://www.ibef.org/exports/cashew-industry-india.aspx
• http://www.fao.org/3/a-ac306e.pdf

Case Positioning and Setting

This case can be used in the MBA/MDP for the courses of Business Processes, Strategic Business Management, Marketing, Brand Management and Family-owned Business.

Pedagogical Objectives

• To conduct SWOT analysis of cashew business
• To understand and analyse the growth Strategies of Zantye Cashews
• To discuss the strategies for capturing domestic and international market with specific reference to rebranding
• To discuss the merits and challenges of family-owned businesses and strategies specific to the management of family-owned businesses

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Abstract

After a thorough SWOT analysis, Achyut Zantye (Achyut) was aware of the opportunities in the business as cashew was the commonly found crop in western Maharashtra. He thought of starting a small-scale cashew business and a cashew processing unit in his village Tulas. In 1979, Vasudeo Madhukar Zantye (Vasudev) started his first factory in Tulas subsequently both the younger brothers Achyut Madhukar Zantye (Madhukar) and Shrikrishna Madhukar Zantye (Shrikrishna) joined the business. This group has cashew manufacturing and processing units at five different places in western Maharashtra having capacity of processing 10,000 kg raw cashew per day and has retail outlet in six major townships in this area. They have been selling the processed cashew in metropolitan cities like Nagpur, Pune, Mumbai, Delhi and some parts of Gujarat, under the brand name of Zantye cashew.

Inspite of consistent business success for over three generations there were some upcoming challenges like consistently increasing prices of raw materials having cost implications, non- availability of labor, high automation cost, storage and warehousing issues, competition faced from unorganized retailers who were ready to sacrifice quality for lower prices.

The company was also facing challenges for Branding in Mumbai and Export challenges facing stiff competition.

The case is a primary case based on the data received during the discussions with the partners of Achyut Cashew Factory(ACF). This case discusses the environmental challenges faced by such agro-based and food processing Industries in Indian and international scenario.



Pedagogical Objectives

  • To conduct SWOT analysis of cashew business
  • To understand and analyse the growth Strategies of Zantye Cashews
  • To discuss the strategies for capturing domestic and international market with specific reference to rebranding
  • To discuss the merits and challenges of family owned businesses and strategies specific to the management of family-owned businesses

Case Positioning and Setting

This case can be used in the MBA/MDP for the courses of Business Processes, Strategic Business Management, Marketing, Brand Management and Family-owned Business.

* FLAME CASE CONFERENCE 2017

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- Teaching Note (**ONLY for Academicians)
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