Answer to Question #198406 in Management for Nand Patel

Question

You are the Chairman of a French FMCG company in India by the name of "French Shine". You are operating in the "Soaps & Detergents" category & are facing tough rivals like HUL, Nirma & P&G. You have been operating in India since 2016. During 2020, there has been a steady decline in your revenues & profitability. Your market share has also fallen from 6% to 2.5% during 2020. Your competitors are eating into your market share slowly & steadily during Covid-19 pandemic times.

a. What turnaround strategies can you suggest to arrest the decline of revenues & profitability of your company?

b. In your opinion, would it be considered appropriate to pursue a strategic. Alliance or a JV strategy or should "French Shine" go it alone in India? State your response with appropriate justifications & reasons. What would be the advantages & disadvantages of Such a strategy?

Answer 1

a. Cost efficiency strategies

A wide range of actions targeted at generating rapid wins for a corporation are included in cost efficiencies. Before devising more complicated methods, the methods may help a company's cash flow or stabilize its finances. When it comes to recovering a competitive advantage, cost-cutting methods are frequently used initially. For example retrenchment strategy can be applied as turnaround strategy, though it is a demerit to employee it can help the business.

When an organization believes that a previous decision was incorrect and needs to be reversed before the company's profitability is jeopardized, it takes this action. Simply said, a turnaround strategy involves reversing or retreating from a bad decision.

b. strategic alliance

A strategic alliance is an agreement between two companies to work together on a project that benefits both parties while maintaining their independence. It also helps:

Advantages

1. The arrangement is less complicated and less enforceable than a joint venture, which involves two companies pooling resources to form a new company. Also helps
2. Gain a new client base and improve your competitiveness.
3. Expand your business into new areas.
4. Create a variety of new revenue streams.
5. Alternative to mergers and acquisitions that is less expensive.
6. Reduce the risk.

disadvantage

1. Involvement of management is weaker, or there is a lower equity stake.
2. Fear of market isolation as a result of the presence of a local partner.
3. Communication is inefficient.
4. Poor allocation of resources.
5. It's difficult to stay on track with objectives over time.