NMO S4 SPRINT ONE | BUSINESS CASE SCENARIO - 03
Submission BCS
Budgetary Allocation and Financial Projections for the expansion of Ramalingam foods
Submission Date & Time: 2021-11-25 12:25:50
Event Name: NMO S4 Sprint One - IIM Visakhapatnam
Solution Submitted By: Bhavesh
Assignment Taken
Develop and propose a financial plan with allocated budget for International expansionCase Understanding
A successful fast-food restaurant Ramalingam Foods, established in Bombay, 1965 by Mr. Ramalingam Venkatesh was famous for authentic south Indian fresh cooked food and filter coffee. During 1975, India went to some political issues and all companies had to follow some rules, even Ramalingam had to sale his food items at a minimum price. After considering emergency time, Ramalingam foods started selling idli/dosa batter for a better customer experience. His son Mr Vijay Ramalingam came up with new business idea. He wanted to expand his business territory but the problem was that the batter has a minimum shelf life. He decided to sell batter as powder, which consumable and people can enjoy the instant cooking. People liked this Instant mix and after buying domestically they were selling this instant batter in foreign countries as well. Ramalingam food’s operating revenue is Rs.152 Crore, and it’s EBITDA has increased by 3.16%. With this Ramalingam want to expand his business internationally, but he didn’t have permission & License, and not even enough capital. They hired our company for better suggestion and strategy. Expanding in a new country is a risky and uncertain venture. This may include unexpected costs and windfall losses given the unfamiliar territory.BCS Solution Summary
With the given budgetary and economic constraints, we have selected Oman, Saudi Arabia, and UAE for our international expansion. The Indian population would help us break into the market followed by gradual acceptance by the local population. With high weightage given to land and establishments, we plan to expand our production process followed by an aggressive Go to Market Strategy.Solution
With a 50 crore budget, the company is planning to expand in international markets and expand its footprint. The ideal location for expansion would be the Middle East region given the population of Indians in the region along with faster pace of life demanding instant food mixes. The 3 countries that would be an ideal destination based on the demographics and economic viability would be:
- Saudi Arabia
- United Arab Emirates
- Oman
|
Country |
Indian Population |
% of Total Population |
Per Capita Income |
|
Saudi Arabia |
2,594,947 |
23.22% |
49440 PPP |
|
UAE |
3,860,000 |
42.1% |
70300 PPP |
|
Oman |
840,000 |
16% |
26160 PPP |
Pricing Strategy
The pricing strategy is based upon on the per capita income of the three countries. UAE, having a highest per capita income commands the highest premium of 10% over the current prices.
The next highest per capita income is that of Saudi Arabia for which we have raised a premium of 5% above the current prices.
For Oman, the prices have not been changed given the low per capita income.
|
No. |
Name |
Weight |
Price in Oman |
Price in Saudi Arabia |
Price In UAE |
|
1 |
North Indian dishes Instant Mix |
200 Gms |
89 |
93 |
98 |
|
2 |
North Indian dishes Instant Mix |
500 Gms |
199 |
209 |
219 |
|
3 |
North Indian dishes Instant Mix |
1000 Gms |
389 |
408 |
428 |
|
4 |
Desert Mixes |
200 Gms |
110 |
116 |
121 |
|
5 |
Desert Mixes |
500 Gms |
249 |
261 |
274 |
|
6 |
Desert Mixes |
1000 Gms |
499 |
524 |
549 |
|
7 |
Chutney Powder |
200 Gms |
75 |
79 |
82.5 |
|
8 |
Chutney Powder |
500 Gms |
199 |
209 |
219 |
|
9 |
Chutney Powder |
1000 Gms |
329 |
345 |
362 |
|
10 |
South Indian Instant Mix |
200 Gms |
89 |
93 |
98 |
|
11 |
South Indian Instant Mix |
500 Gms |
199 |
209 |
219 |
|
12 |
South Indian Instant Mix |
1000 Gms |
389 |
408 |
428 |
|
13 |
Instant Coffee Mix |
200 Gms |
149 |
156 |
164 |
Revenue from Products
|
Product Type |
Revenue Percentage |
|
North Indian dishes Instant Mix |
33% |
|
Dessert Mixes |
12% |
|
Chutney Powder |
8.5% |
|
South Indian Instant Mix |
43% |
|
Instant Coffee Mix |
4.5% |
Budget Allocation
|
Total Budget |
50,00,00,000 |
|
IT |
5,20,00,000 |
|
Marketing |
10,00,00,000 |
|
HR |
46,00,000 |
|
R&D |
10,00,00,000 |
|
Real Estate Development |
15,00,00,000 |
|
Miscellaneous Expenses |
6,04,00,000 |
|
Emergency funds |
3,30,00,000 |
Conclusion
With a comprehensive account of expected revenue and costs, the expansion process for Ramalingam Foods can become smoother. The budget allocation of 50 crores has been done considering all the essential aspects of growth in such an industry. By focusing, the right amount on the right department, the penetration to the new area can increase significantly.Attached File Details
View Attachment file (Revenue Mix.png)Video
https://youtu.be/eaZna7MH4jYComments
Article Type: Business Case Scenario, Case Study Solution Submission
Business Case Detail
Title: NMO S4 SPRINT ONE | BUSINESS CASE SCENARIO - 03
Type: Case Study
Stream: Management
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