Faze 3 Growth Strategy

Dr Amit Rangnekar

Head to Head
Estd
Sales

Fabindia
1958
3bn

Faze3
1985
2bn

Operations

India

US / EU 100% EOU

Status
Segments

Closely Held
Garments, Furnishing,
Organics, Body care

Listed
Home furnishing

Target
Range
Key driver

Indian Ethnic market

Economy to Medium
Supply Chain, Retail
presence

Global consumers
Full price range
Integrated facilities,
wide range, global
acceptance

Head to Head
Fabindia

Faze3

Management
bandwidth

Local

Global, in place

Customers /
Clients

Indian middle / upper

class

US & EU Retail
majors

Area of
expansion

India, Middle East

Existing & Emerging

markets

Retail reach
Facilities

85 own outlets
None, outsourced

No own retail outlets

Own, 5 in India, 2 in
EU

Capabilities

Local

World Class

Value Chain

Unintegrated

Fabindia
22,000
Weavers
&
Artisans

Fabricators

Value

Garments,
Furnishings,
Organics &
Body care

Own
85
Outlets

Integrated
Faze3

Integrated
Factories

Focus on
Furnishings

Value

Retail Majors

Retailers
Outlets

Market- Product Matrix

Markets
Existing

New

Existing

Market Development

New

Products

Market Penetration

New Product Development

Fabindia

Faze 3

Diversification

SWOT
S
Integrated facilities
Global acceptance
Full range
Design proficiencies
O
Allied segments
Build brand Faze 3
Retail presence
Penetrate EU / US

W
Emerging markets
presence

T
Weak $
Rising input costs
Regulatory

Gap Analysis
Desired Goal
er
v
i
D

n
o
i
t
a
c
i
f
si

Int

Strategic
Planning
Gap

e
v
i
t
a
egr

Sales

e
Intensiv

Current Portfolio

Period

Full Segment Coverage

Bath Mats

Carpets

Rubber
Mats

Rugs

Door Mats

Printed
Rugs

Bath

Tuffed

Cushions

Dyeing

Curtains

Sofa

Kitchen

The Next level- How

New Products

In Place

Future

Value adds

Brand, Allied

New Segments

Trade up / down

New Geographies

Emerging markets

M&A

EU

Scale / Scope

Strategic Alliances

Retail, technology,
manufacturing

Related
Diversification

Towels, Bed sheets

Capacities

India / EU

Cost leadership,
Outsourcing

Value Creation Options

Own Retail- India / West

Branding - India / West
Integrated SCM- Cost leadership
Segment focus- build / enter new/ allied

Forward Integration
Faze3
Retail Outlets
Faze3

Majors
Retail Majors
Faze3

PANA

Manufacture

Inputs ?

Industry Value Chain

Retail

Trade
M&A

Competitor

Manufacturing

Inputs

Industry Stages Forward Integration

Backward Integration

Horizontal Integration

Strategy Map- Reliance

8
Vimal

Yarn Trade

Polyester Manufacture

5
IPCL

Petrochemical

Refineries

Gas

Infocom
9
Retail

Strategy Map- Videocon

6
Next

CE Marketing

CE Manufacture

TV Tubes

Silica

Oil

Unrelated Diversification- ITC

Apparel

FMCG 8%

Lifestyle Retail

Personal Care

e-Choupal

Agri-Biz 18%

Foods

Greetings

IT

Staples

Biscuits

Matches

Snacks

Agarbattis

Finance

2.5 mn
retailers

Hotels 5%

Cigarettes 59%
Paper 10%

Confectionery
Ready to Eat

Pharma Strategy
M&A+S
A+
Organi
c

Strateg
y

Followe
rs

Stayer
s

Fringers
Ranbaxy

DrReddys

Surviv
ors
Pfize
GSK r
SanofiAventis

Roche
Novartis
BMS
AstraZeneca

UCB
Pliva

Organi
c

SA+
Organi
c

B Ingelheim
J&J
ScheringPlough
Cipla
NovoNordisk
EliLilly
Beijing DCLundbeck Baye
Natc
Merck(US)
o
ViPharm
Aurobindo
r
Wyeth
Merck(Ger)
Taro
AkzoNobel

BlueCross
<$1 Bn

Map not to scale, indicative

<$5 Bn
Scale

<$20
Bn

>$20
Bn

SA= Strategic Alliances & Acquisitions

Strategy Square
Conditions

Competition

Consumer

Corporation
(Faze3)

Costs

5 Forces- Furnishings (Attractiveness)

New Entrants MNC
Local majors
Suppliers
Local
Regional
National
international

Economies
Integration
Design

Fabindia
Faze 3

Substitutes
Technology
New fabrics

Retail
Brand

Buyers
Own outlets
Local majors
Global majors

18

5 Forces at Work- Flex Industry

New foreign
Barriers, Economies
Policy

Suppliers
Reliance
Du Pont

Duopoly
Essel,
Flex

Buyers
HUL
Nestle
P&G

Substitutes
Tie-ups
Buy Tech

19

Faze3 Value Flow

Acceptance by
discerning customers
US / EU

Quality &
delivery

Global
Retail
Majors

7 Integrated
Plants

Manufacturing
Prowess

Design
Capabilities
Full Range
Segment focus

Innovation

20

Challenge

Retail foray essential

But manufacturers do not retail?
And retailers do not manufacture?
How do we change this

Capture value?
Deliver value to stake holders
g
n
Lo

rm
e
T

Mi

rm
e
dT
rm
e
T
t
Shor

Capture
Value

Instant

Brand

India / Retail
Penetrate US / UK
/ New segments

High
Medium
Low

Competitive position

Business Position

Low
Medium
High
Product/market attractiveness

Strategic Options

Ally
Diversify

Buy
Build

Where to compete

Build- Own retail Chain- Long term &

expensive
Buy- Existing retail chain- none exist
Ally- With an Indian retailer major
Build own brand
New segments- Towels, Bed sheets
Key driver- Bath
Past driver- Carpets
Hi potential Carpets, bedding

24

Potential
Served
Unarticulated
Needs
Articulated
Needs

Faze3
Today

Unserved

Branding Decisions

Targeting
Which Product for which market
Single
segment

Single
market

Single
product segment

Selective
segments

Entire
Market

Brand Decision Making

Brands
Unknown

Overlooked

Known

Unacceptable

Indifferent

Not Prescribed

Acceptable

Prescribed

Faze3

What stage are our brands? How do we get them to be

Known, Acceptable, Prescribed

Anticipation of strategies
Action
Aggressive offense
Aggressive defense
Slow defensive response
Cut price to attack / defend
Increase promotion

Comp1

Comp2

Comp3 Faze3

Fabindia
Faze3
Platform in
place
Time to take-off
Retail thrust

Penetrate
through own
retail
Aggregate
supply chain

Key
Acceptance
Internalisation
Execution