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Eat and Deliver: The Crisis at Tomato Ltd.

CASE STUDY, ORGANIZATIONAL BEHAVIOR
ET CASES, 9 Pages
AUTHOR(S) : Prof. Jatin Pandey, IIM Indore Young Faculty Research Chair and Assistant Professor, Organizational Behaviour & HRM Area and Ms. Preethi Allampalli, IIM Indore

Case Preview

Eat and Deliver: The Crisis at Tomato Ltd.

Just like any other evening, Deepak wrapped up his work at the office at 6:00pm and started for home. Extending his time in the office implied that he would miss the last shuttle that would take him home, leaving him with the only option of taking the metro, an inconvenient bet. As he started to leave his workstation, his phone suddenly buzzed with a Facebook notification. He was puzzled to have received a Facebook notification in this age of widespread popularity of Instagram, so Deepak immediately checked his phone for the notification. The buzzing did not cease for the next few minutes and his phone was completely flooded with several reposts and tags of his company. Very apprehensively, Deepak swiped across his Ramrung R10 to open Facebook. He saw that all the posts were based on a video of a Tomato .........

About Ravish

A 2004 alumnus of IIT Madras, Ravish Gupta was always an enthusiastic foodie who had an eye for innovation. While working in his first job at Gain & Company, Ravish had noticed that there always used to be a long queue in his company’s cafeteria to merely check the day’s menu. His colleagues also had a consistent demand for paper leaflets and menus of restaurants to order food........................

................

Deepak, who joined the company as a marketing associate six years back, rose through the ranks with his sheer dedication and creativity. He recalls how Ravish was more of a leader than a boss. He never demanded respect and rather carried an aura of charisma. With the able guidance of such a leader, Deepak today successfully manages and leads a team of more than 300 employees as the marketing director of Tomato.

...................

The Journey of Tomato

Three years into the functioning of Goodiebay, the partners decided to rebrand it as Tomato with the idea of broadening their horizons and changing the perception of Goodiebay. The partners also wanted to avoid the overstepping of ebay, hence the change in name. After the transition of Goodiebay to Tomato, the next major step initiated was to exploit the world of web..............

...............

He urges his employees to ‘stay in start-up mode.’ Ravish also believes that employees should be the company’s biggest brand evangelists implying that they should be proud to promote their work within their personal networks. Tomato employees are therefore asked to change their Facebook photos to incorporate a Tomato logo. This was vastly different at the time of Goodiebay which was more of an aberration than an inspiration.

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As part of its delivery system, Tomato partners with third party delivery agencies to hire delivery boys. The need for this rose with the onset of its competitors. Its major competitors are Comida presently and Tuber Cheats in the past. Comida presently has a market share of 36% which is the highest in the Indian foodtech market, followed by Tomato at 27% and Tuber Cheats at 13% (Exhibit II)...............

.................

Tomato offers its customer food free of cost, and heavy cashbacks if the food has not been delivered on time. This is translated as a salary cut for the delivery boy. So, either way, Tomato is off the hook. In the past as well, humanitarian concerns have been raised in favor of the delivery boys. They would often be treated as mules, carrying heavy bags and maneuvering through the heavy traffic in Indian cities. As a result, it took a severe toll on their health. Several reports have emerged raising concerns over this issue.

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In situations of crisis, rumors and half knowledge fly fast. Everyone tries to hold someone accountable. What might be difficult to acknowledge is how one differentiates genuine complaints from those of fraudsters. The barrage of complaints on social media lashing out at the company should have proved as indicators of poor management. Was the company lax in taking control of things?

With these thoughts in mind, Deepak now has to decide what to do.

Assignment Questions

I. Analyze the business model of Tomato.

II. .............

III. ..................

 

Exhibits

Exhibit I

Exhibit II

Teaching Note Preview

Eat and Deliver: The crisis at Tomato Ltd.

 

Synopsis

Through this case we understand how lines of communication might need to be crossed and overlapped in a situation of crisis. The marketing director, Deepak had to undertake various roles apart from the ones mentioned in his job portfolio to tackle the misfortune. As the company’s CEOs and founders, Pankaj and Ravinder, have always focused on keeping the culture at forefront. They try to inculcate and shape their policies with this in mind. For a foodtech to enter a market, various dimensions (monetary, social etc.) need to be considered and Tomato tries to meet up to those expectations......................

Prerequisite Conceptual Understanding

The reader must be equipped with basic management knowledge of frameworks such as SWOT and PESTEL to better understand how Tomato functions and thrives in the food tech business. Additionally, the reader needs to have general understanding of management principles.

Case Positioning and Setting

This case study can be used for either of the following courses in MBA or Executive MBA programs:

  • Principles of Management
  • Organizational Behavior
  • Human Resource Management
  • General Management

 Assignment Questions

I.   Analyze the business model of Tomato.

II.   ...................

III.  ..................

Preamble to the Case Analysis

The case provides a very interesting stepping stone to build on class discussion. A good approach is to first start with analyzing the company and its business model. The instructor may ask students to give examples of other companies that follow the aggregator model. They must then start on building the PESTEL and SWOT analysis of Tomato and see its applicability to other companies. ..................

. ........
 

Case Analysis

 I.          Analyze the business model of Tomato?

The core offering of Tomato is the platform it offers for its business clients. It acts as an aggregator for restaurants to collate their menus and extend their delivery services. The major revenue streams of Tomato include food delivery (33%), advertising (29%), ticket sales (11%), and consulting (6%). The other revenue sources are comprised of Tomato Gold and Tomato Treats. Coming to the cost structure,......................
 
...................

Political Dimension

Industry potential and Tomato’s standing in the industry with the current government in rule seems to be favourable. Additionally the encouragement provided in development of the startup environment by the government seems to play to Tomato’s favor. With the advent of the Digital India Campaign and other supportive government initiatives directed towards the development of the youth, new companies experience increased support...............

Economic Dimension

With regards to the economic dimension we look at factors like tax policies imposed or taxes the particular company is exempted from, the business environment the company is operating in, the benefits it receives, the trading regulations imposed,.................
..................

Environmental dimension

As part of Tomato’s functioning, their core business areas are in food delivery, dining out and sustainability. In sustainability, Tomato set up Hyperpure with the intention of providing fresh, clean ingredients and reducing wastage in the process as well. In July 2019, Tomato started collecting used cooking oil and delivering it........

Legal dimension

Tomato has to mandatorily comply with the FSSAI standards. The e-commerce food giants have also stepped up scrutiny under the new Act. This aside, all the other legal obligations hold as would hold for an e-commerce giant under the new e-commerce rules.

SWOT Analysis

A more commonly used framework to analyze the company would be through a SWOT analysis. The same has been summarized in Exhibit II of the case.

Strengths

Tomato has cleverly tapped into the market and the e-commerce industry by being the first to set foot in India as an online food delivery app. It was able to capture a significant portion of the market through its innovative technological offerings and has an immense global presence. .................

Weaknesses

The application needs to be made more user friendly and security issues must be addressed from time to time. This is a huge weakness for the organization as security issues have been raised as a concern time and again in the past. .............

.....................

The first stage talks about apologizing for the situation that arose. Deepak should take to the social media handles and apologize for the inconvenience caused due to this issue. This way, the users understand that the organization is prompt and respects the users’ time and commitment to the brand. The second stage is to either accept or deny the organization’s involvement in the matter. It could either accept that it was at fault and that the situation could have been under control provided timely measures and actions were adopted;................

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Abstract

One of India’s largest unicorn food tech companies, Tomato, with a valuation of $3billion has taken the food industry by storm. Quickly adapting to market changes, trends and undergoing acquisitions, Tomato has captured a significant portion of the market. However, it is often entangled in many controversies. One such controversy has been discussed in this case. In such crisis situations, the role of the management and employees is quintessential. The case can be used to extensively analyze the organization through PESTEL and SWOT analysis framework, examine the company’s current positioning in the market, and discuss how it reacted/should react under crisis and its way forward. This case is best suited for understanding an organization’s environment and its strategic and tactical choices. It could also be extended to analyze public relations in a firm.

Pedagogical Objectives

  • To learn about aggregator-based companies through a foodtech company’s business model and its broad organizational structure.
  • To apply PESTEL and SWOT analysis to aggregator companies.
  • To recognize crisis situations and respond to them through crisis handling frameworks.

Case Positioning and Setting

This case study can be used for either of the following courses in MBA or Executive MBA programs:

  • Principles of Management
  • Organizational Behavior
  • Human Resource Management
  • General Management
 


This Case Pack Includes:
- Abstract
- Caselet
- Teaching Note (**ONLY for Academicians)


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