Archies Vs Vintage
Archies Vs Vintage
Archies Vs Vintage
INTRODUCTION
HISTORY
A small carhop drive in restaurant in California.
It has simplified menu that offered just hamburgers and
cheese burgers, French fries, milkshakes, apple pies and soft
drinks.
But in 1954 Ray Kroc a salesman who supplied the McDonald
brothers multi mixer milkshakes machines decided to buy the
right from the brothers to set up McDonalds franchises across
the country as he saw it has a very good business opportunity.
FOUNDATION STAGE
Managemen
t science
Training
Managemen
t style
Supervising
franchises
Advertising
PROBLEMS FACED
During the tenure of turner McDonalds faced two major
problems:
1. Franchisee relations
2. Employee relations
FRANCHISEE RELATIONS
EMPLOYEE RELATIONS
EXPANSION
STAGE
MICHEAL QUINLAN(1987-1998)
Customer
service
Cost cutting
International
expansion
CRISIS IN MCDONALDS
CRISIS
STAGE
JACK GREENBERG(1998-2003)
New menu was prepared by him.
Acquisitions took place.
At this period mcdonalds faced various attacks from
several people.
Various issues like child obesity, undermining traditional
farming techniques etc were face by mcdonalds.
Mclibel trial had most damaged the reputation of
McDonalds.
FINANCIAL RESULTS
The introduction of new menu failed to increase the sales and the new
acquisitions produced disappointing results and the global attack turned
customers away.
The made for you menus was labour intensive and increased both
implementation and service cost.
The underperforming acquisitions were sold one by one in 6 years and
McDonalds decided to follow the divestiture strategy by selling of certain
business and focus on its hamburgers business.
Under the Greenberg's direction the sales of many restaurants fell and
its US market share was growing at a slow rate(2.2%)
In 2002 McDonalds stock price was trading at a seven year low. Its
earning declined and Greenberg announced its resignation.
COMEBACK
STAGE
JIM SKINNER
McDonalds then formed a turnaround team which Included James
Cantalupo, Charles Bell And Jim Skinner.
How ever due to uncertain medical reason only skinner was left and
became the CEO.
Skinner formed a new strategy plan to win which has 2 principal goals:
1. Upgrading the existing customer service
2. Introduction of nutritional, healthful and higher food qualities.
Improving
store
operations
Answering
critics
Financial
results
ANSWERING CRITICS
Skinner discontinued the super size me menu and substituted it with
healthier choice like milk and fruits instead of French fries and soft drinks
in kids meals.
In 2005-2006 it launched a balanced life style and fitness program.
It reduced its salt content in French fries and chicken nuggets by 25-30%.
It replaced it cooking oil by blend of canola, corn and soybean oils.
Also a shift from beef to chicken
FINANCIAL RESULTS
Skinners turnaround efforts did not got un noticed and his tenure as CEO
was the best financial results ever
Store sales increased by 10% and McDonalds market value doubled and
during depression when all companies were loosing its stock value
McDonalds stake increased by 6%.
Global revenue increased by 5% and its net income tripled and rate of
return on sales by 18%
Thus skinner further expansed by opening new outlets.
BACKGROUND
Case talks about two companies Archies and
Vintage who are mainly in the card segments they
started in 1980 and 1983 respectively.
There has been steep decline of sales of both the
companies and especially in the cards segment
and infact doing well in the gifts segment.
ARCHIES
Archies Greetings and Gift Ltd.(AGGL), is Indias largest
manufacturer and distributor of greeting cards, posters, soft
toys, gift items, cassettes or CDs and stationery items.
The card business started in 1980
The first Archies Gallery was set up in by Mr. Anil in the
year 1987 in the heart of the Delhi University campus.
Core Business- Greetings Card
Complementary Business- Gifts and Perfume.
SITUATIONAL ANALYSIS
Archies mission is being in the Business of emotions and their
vision is to see An Archies card in every hand
They have diversified and made strategical tie-up's with other
organization and expansion of flagship, premium stores and
adopting the Franchise model. Some of the distributors were
converted into C&F agents because margins were higher, and also
since the consumers and retailers directly chose the products,
Archies had a better grip on demand forecasting
They have expanded in new horizon of business such as gifts,
perfume, women fashion jewellery, toys and designer cards, etc.,
They have also supported different NGO such as HelpAge and
Child Relief and You which reflects their mission Business of
emotions
They have strategically expanded their business as per the Mission
and were successful when compared to Vintage cards
SITUATIONAL ANALYSIS
90
80
70
60
50
40
30
20
10
0
2000
2001
2002
2003
Greetings
Gifts
2004
2005
2006
Stationery
STRATEGIES FOLLOWED
Innovation of products
Occasion cards.
Complementary businesses
Alliance with cadbury india & taneja mines
Perfume business, gift articles, kids stationery.
Jewellery , fashion products through the
Tie up with normak.
STRATEGIES FOLLOWED
Promotions
Tie-up with Walt Disney.
Use of props in feature films like Maine Pyar Kiya, etc.
Expansions
Domestic; more than 450 franchisee stores.
Foreign; 425 franchisee stores across 6 countries.
Importance to C&F agents.
Introduction of archiesonline.com.
Weaknesses
Cheaper alternatives
available
Lower margins in case of
gifts due to outsourcing
Opportunities
New Product category
( Mobile
Phones/Cakes/Dresses)
Marketing via Social media
(e.g. Orkut)
Threats
Fluctuating demand
Unorganised sector
Very low margins(in some
cases) will make it difficult
in the long run
VINTAGE
A partnership firm founded by Anil Kapur and Rajesh
Vaishnav in the year 1983 for manufacturing and
marketing greeting cards.
By 1992, Vintage had a collection of 3000 designs,
26 distributors and 3000 independent retail outlets.
To meet its future gorwth requirments , the company
entered into agreement with Hallmark , one of the
worlds largest greeting card manufacturer based in
united states in1992 to use its brand and intellectual
property .
Situation Analysis
Vintage tied up with Hallmark Cards to distribute cards in India
Focused only on Local nearby customers
Agreement with Walt Disney to use their products Like Mickey,
33
Strategies Followed
Agreement with Hallmark cards.
Focused more on local customers.
Agreement with Walt Disney, to use their
products like Mickey, Minnie, Donald Duck for
use in greetings, posters, etc.
Agreement with Barbie Brand.
Tie-up with Cancer Patients & Associations.
35
Strength
Tie Up with Hallmark
Huge sales Driven by
after tie up with Walt
Disney
Weakness
Over Dependency on
Hallmark
Excess Inventory
Huge Operating Loss
Opportunities
Adopt new technology
to drive sales
Target customers
across the world by
online sales
Threats
Huge threat from
Archies
Change in trends
made it difficult for the
company to drive
sales.
36
2005
2009
2010
2011
Returns On Capital
Employed
(36.96)
(87.30)
(78.93)
(69.45)
Returns On Assets
6.41
1.15
(1.13)
(1.19)
Ratios
2005
2009
2010
2011
Returns On Capital
Employed
17.22
10.81
15.83
16.94
Returns On Assets
77.78
117.93
128.62
28.85
ARCHIES
2005
2009
2010
2011
Current ratio
1.05
1.02
0.95
1.38
Quick ratio
1.58
0.31
0.29
0.44
Ratios
2005
2009
2010
2011
Current ratio
1.81
2.39
1.85
1.46
Quick ratio
1.15
1.11
1.01
0.83
ARCHIES
2005
2009
2010
2011
Operating Profit
Margin
(86.13)
(15.35)
(148.08)
(1549.21)
Ratios
2005
2009
2010
2011
Operating Profit
Margin
15.77
9.36
12.07
11.69
ARCHIES
Ratios
2005
2009
2010
2011
VINTAGE
EPS
(6.03)
(4.29)
(2.28)
(0.06)
ARCHIES
EPS
9.28
(1.61)
3.21
13.03
ARCHIES
Ratios
2013
2014
2015
ROCE
11.11
8.56
8.09
ROA
32.77
33.81
31.99
EPS
2.07
1.55
1.22
12
EPS
ROCE
10
2.5
1.5
0.5
0
1
ROA
0
1
34
33.5
33
32.5
32
31.5
31
1
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