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Zari Boxes India: Need to Think Inside the Box?*

CASE STUDY, MARKETING MANAGEMENT
ET Cases (GSMC 2014), 9 Pages
AUTHOR(S) : Subhadip Roy, Asst. Professor, IIM Udaipur and Subhalaxmi Mohapatra, Research Associate, IIM Udaipur

Case Preview

Zari Boxes India: Need To Think Inside The Box?

 

It was a scorching afternoon of May 2014, and a significant meeting was going on at the Zari Boxes office in Agra, Uttar Pradesh, India. Zari Boxes, founded in 2011, was a brand name under the company Aditya Overseas in Agra that offered an exquisite range of hand embroidered, highly decorative boxes embellished with Zari (gold thread), sequins, beads, mirrors, semi-precious stones, etc. Aditya Chandra Agarwal (Aditya), the Founder and CEO of Zari Boxes was having a discussion with a freelance consultant Subhasish Sen (Sen). Sen had just been hired by Aditya on a part-time basis to help him in his business. Aditya was elaborating the vision of Zari Boxes and putting forth the challenges faced by his firm at the same time. The company that was started by Aditya in Agra, India, majorly for catering to the international markets was facing challenges in the same by 2013.

Moreover, by 2013, he had already invested in scaling up his business and a drop in demand would create a dual loss for him both in revenues and in recovering the investment incurred for upgrading the scale of production. One of the ways out was to explore additional international markets where Aditya had not ventured before. The other option was to explore the domestic market where demand was there for his product, but the product form and positioning had to be changed. Aditya had faced mixed success in the domestic market but had not really explored its potential until 2013 (Exhibit I). On the brighter side, the change in the product form and positioning may help Zari Boxes to recover the foothold in the international market. Aditya had, therefore, hired Sen to get an external perspective on his business strategy. He was aware that the future of his business depended on the option he was about to take..................

Zari Boxes: Background

Zari Boxes was Aditya’s brainchild, born out of the urge to start his own handicrafts export business. Sharing his thoughts, Aditya expressed, “the Indian handicrafts won’t fade away. It is something which is unique, indigenous and its demand abroad would be always there.” After graduating with an engineering degree from Agra, his hometown, he did his MBA from IBS Dehradun in India. After finishing his MBA in 2009, he worked for Dell, India, for almost a year and then quit his job to pursue his passion for handicrafts. “I belong to a business class family and so the passion was always there to start a business of my own...........

Period 1 (2011-2013)

There were quite a few challenges that Aditya faced since he founded Zari Boxes. The initial hurdle was in terms of getting finances and the support. The initial financing was done by his father. However, Aditya faced problems in procuring samples of wooden boxes. Aditya reminisces, “Initially I had to do sourcing because I did not know anything about it. Thus, I approached big suppliers in Agra and procured samples from them. If the cost of sample was 100, they used to charge 250 for that same sample. I was a new entrant into the industry and was not much aware of that.”..............

Export Avenues

Sen was interested to know the various ways through which Aditya procured orders. Aditya started explaining, “the most important platform is through my website, which I consider as a 24 hours global shop” (Exhibit II). The customers could order directly using the website or they could contact Aditya for placing their order. Aditya described further, “Since the transportation costs are expensive, the packaging costs mentioned in the website are high............

The Ordering Process

Sen was now interested to understand the buying/selling process starting from an order being placed until its delivery. Aditya replied that the most complex process was for the clients who approached him directly or through the website. He started describing, “First the buyer comes to the store (online or offline) and if it is a big buyer like Wal-Mart, their purchase officers directly come to meet us. They spend less time in deciding what to buy since they are very much sure as to what they want. However, they spend majority of their time in ensuring that the product they select has the desired quality that they were looking for..........

Pricing

Aditya had tried to keep the prices for Zari Boxes very simple. The company’s role finishes once it delivers the product in either Delhi or Mumbai shipping points. The price covers all the expenses till the delivery at the port. All the other expenses beyond that are taken care of by the client itself. Aditya explained, “the price of our product is inclusive of the price of the basic box, the packaging cost which may include any special kind of packaging that the client needs, the labeling cost..........

Period 2 (2013-2014): The Shift

Aditya was young and enthusiastic and wanted to expand his company to greater heights. At the same time, he was apprehensive about the plight of the artisans who were in most of the cases only seasonally employed because of the nature of the business. Therefore, he decided to employ the artisans on time-based wages with a promise to give them employment throughout the year. However, his major export markets (Exhibit IV) had seasonal demand for his boxes. Aditya reminisces, “The demand was majorly in and around the Christmas time and spring time..........

A Smooth Shift?

Aditya decided to focus on the domestic market as a trial run. The first major change that was required was in the product form. Until this time, he was selling decorative boxes majorly used as a product for storage (of anything) that was decided by the buyer. Now, he needed to modify the same according to its end use. Thus, he needed to change the features of the box to make it suitable for other uses. The problem was complex since now he had to think of both end consumer uses and business uses for his boxes............

Early Success

Zari Boxes had some early success in its trial run in the domestic market. The major industries that bought from Aditya were hospitality, confectionary (mainly sweets and chocolates), event companies and handicraft emporiums (Exhibit V). Apart from these, he had retail buyers as well. However, each industry/buyer had its own requirement..........

Boxes to Break Ahead

There were several challenges that the company was facing in 2014. The major issue was the dilemma on the business strategy. Aditya had three options. First, maintain status quo and keep focusing on export market. Second, withdraw from the export market and focus on the domestic market. Third, focus on both export and domestic with varied emphasis on both.........

Exhibits

Exhibit I: Key Financials of Zari Boxes

Exhibit II: The Company Website

Exhibit III: Cost Allocations of Buyer/Seller Depending on Delivery Mode According to Incoterms 2010

Exhibit IV: Major Export Markets of Zari Boxes (Mainly Ornamental Boxes)

Exhibit V: Major Domestic Industries and Clients Served by Zari Boxes

Exhibit VI: Different Types of Boxes Offered by Zari Boxes India

Exhibit VII: Overview of Major Industries Targeted by Zari Boxes

Teaching Note Preview

Zari Boxes India: Need To Think Inside The Box?

 

Synopsis

Aditya Agarwal (Aditya) founded Zari Boxes India in 2011 as an export firm of boxes with Indian Zari Handicraft. Aditya started the company as a small business and with a unique HR policy and motivated employees; he could gain reputation as a seller of Zari decorated boxes to international buyers. However, post 2013 there were many challenges he was facing from the international market such as threat of losing market to cheap low quality competitors, buyers defaulting, shifting trends and the like. Moreover, by 2013, he had already invested in scaling up his business and a drop in demand would create a dual loss for him both in revenues and in recovering the investment incurred for upgrading the scale of production. One of the ways out was to explore additional international markets where Aditya had not ventured before. The other option was to explore the domestic market where demand was there for his product, but the product form and positioning had to be changed. Aditya had faced mixed success in the domestic market but had not really explored its potential until 2013. On the brighter side, the change in product form and positioning may help him to recover the foothold he lost in the international market. Thus, Aditya had to take a decision on his strategy that would decide the fate of his business.

Case Positioning and Setting

The present case can be discussed in a course on International Business (Entry Strategy, Product Strategy and International Business Environment). The case study can also be discussed in a course of Product Management and Product Strategy. The target audience for the case would include Post Graduate students in a Business Management Course (MBA). The case could also be discussed in an Executive Development Program on and International Business or Product Management.

Expected Learning Outcomes

The case study is structured in a manner so that the following learning objectives are fulfilled:

  • • Understanding the challenges faced by a firm in international business
  • • Analyze the production and delivery process of international business
  • • Understanding the role of a growth strategy and how it has to be modified according to different situations
  • • Realize the role of a product strategy and managing the same
  • • Evaluate market opportunities and make business decisions of the same

 

The instructor can also discuss this case to illustrate various issues in business strategy such as the role of alternative business strategies.

Before the Classroom Discussion

The case is meant for classroom discussion and can be delivered as an open class discussion where any student could participate. Alternately, the instructor could divide the class into groups of 3-5 members and have presentations made by each group (or randomly selected few) followed by discussion. In both cases, students will be provided the case in advance and asked to come prepared in the class.......

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Abstract

**IIM RAIPUR- ET CASES Award (GSMC 2014) – For a Case With Global Implications

Award Winning Case Study
Zari Boxes India's story is a clarion call to all those companies desirous of sustaining their market leadership. Aditya Chandra Agarwal (Aditya) founded Zari Boxes India, in 2011, as an export firm of Indian Zari Handicraft decorated boxes for special occasions. Aditya started the company as a small business. Zari Boxes followed a unique HR policy that kept employee motivation levels very high. Within few years he could gain a good reputation in the international market as the best-seller of Zari decorated boxes. However, post-2013 Zari Boxes was facing many challenges from the international market such as threat of losing market to cheap low quality competitors, buyers defaulting on payments, shifting trends and the like. Moreover, by 2013, he had already invested in scaling up his business and a drop in demand would result in a dual loss for him, both in revenues and in recovering the investment incurred for upgrading the scale of production. One of the ways out was to explore additional international markets where Aditya had not ventured before. The other option was to explore the domestic market where there was demand for his product, but the product form and positioning had to be changed. Aditya had faced mixed success in the domestic market but had not really explored its potential until 2013. On the brighter side, the change in product form and positioning may help him to recover the foothold he lost in the international market. Thus, Aditya had to take a decision on his strategy that would decide the fate of his business.



Pedagogical Objectives

  • To understand the challenges faced by a firm in international business
  • To analyze the production and delivery process of international business
  • To understand the role of a growth strategy and how it has to be modified according to different situations
  • To realize the role of a product strategy and managing the same
  • To evaluate market opportunities and make business decisions of the same

Case Positioning and Setting

The case study can be discussed in a course on International Business (Entry Strategy, Product Strategy and International Business Environment). The case study can also be discussed in a course on Product Management and Product Strategy. The target audience for the case would include post graduate students in a Business Management course (MBA). The case can also be discussed in an Executive Development Program on International Business or Product Management.

 



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


* GSMC 2014, IIM Raipur


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