Indraprastha Cold Storage Ltd: Value Added Strategy in an Emerging Market
(10 pages of text)
This case examines the business strategies available to an Indian company, Indraprastha Cold Storage Ltd. (IPCSL). It has made substantial investments in upgrading its existing cold storage to differentiate itself from the competition based on the premise that by providing superior product quality, it could charge a premium for its value added cold storage service. However, competitors lowered their rates in an attempt to capture even more customers, and IPCSL was concerned about the long-term viability of the business. It must decide on a course of action, taking into consideration the constraints of growing, transporting, storing and selling fruit in India; the asymmetry in price information available to growers and commission agents in the market, coupled with the old-fashioned way of doing business through open and closed auctions; and the costs and benefits of vertical integration between grower and IPCSL.
This case also includes a two-part video which instructors may share with the class. The first part shows the buzz of daily activities in New Subzi Mandi, Azadpur - including market exchanges by open and closed auctions. The second is an interview with Sanjay Aggarwal about the challenges IPCSL faced and his immediate reaction to the crisis. Please refer to the teaching note for details.
This case has been developed for use in marketing management and marketing strategy courses for small and medium enterprises, pricing in emerging economies and international business or agri-business courses. It is appropriate for MBA, executive development programs and advanced undergraduate courses.
- To understand how to strike a balance between short-term challenges and long-term opportunities and to develop ways to cushion immediate losses.
- To appreciate the challenges in differentiation and repositioning strategies in a highly competitive environment, especially in an economy where old ways of doing business are firmly engrained.
- To explore how to assess the economic value to customers to justify a price premium. The challenge is to communicate this value to customers who may not be well educated but very experienced and set in their ways. The case also forces students to factor in the motivations of intermediaries.
Agriculture, Forestry, Fishing and Hunting
India, Small, 2002
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