Case Study Solution Sample for How to Solve a Case Ajanta Packaging

Start with facts given in the case in bullet points. If SWOT, Porter, Ansoff is asked in the questions given at the
end then explanation becomes essential. If they are not a part of the questions given in the end, then you may
substantiate your solution with any of them, if you find them relevant. In this case, all the three are a part of
questions, so explanation has been included.
ASSIGNMENT QUESTIONS

1.
2.
3.
4.

Discuss the major characteristics of the glass-bottle industry in India.

Conduct a SWOT analysis and Porters five forces analysis of Ajanta Packaging.
What should be Ajanta Packagings strategic objectives while considering diversification?
Suggest STP (Segmentation, Targeting and Positioning) for Ajanta Packaging to increase its PETbottle business.

ANALYSIS
1.

Discuss the major characteristics of the glass-bottle industry in India.

User Segments
Large buyers in each segment
Buyers are quality-conscious
Increase in the use of other forms of packaging materials
Aesthetics gaining importance
Demand is highly seasonal, especially for products such as soft drinks
Industry

Dominated by a few large players in each segment

Caters to a few large players in each segment
Plants located close to user industries
Long credit periods in the industry
Industry affected by increased use of PET bottles in user segments

1.

Conduct a SWOT analysis and Porters five forces analysis of Ajanta Packaging.

SWOT (Strengths, Weaknesses, Opportunities, Threats)

A SWOT analysis can be an effective tool for analyzing the current scenario of Ajanta.

Strengths (Internal)
Regarded as one of the primary glass-bottle
suppliers.
Net sales realization yields are good
(excellent distribution network).
Able to offer just-in-time supply to customers
via marketing offices (low lead times).
Quality-focused, customized and timebound
packaging.
Loyal customers (90 per cent of orders are
from repeat customers).
Good products and professional expertise,
coupled with a wide range of products.
Opportunities (External)
Packaging industry has estimated compound
annual growth rate of 3.1 per cent; Indias
industry has grown 15 per cent over the past
few years.
Growing middle class and urbanization with
changing consumer patterns.
Increased use of flexible packaging.

Weaknesses (Internal)
95 per cent of business is from glass
products (overrelianc e).
Rising operating expenses.
Slipping profit margins because of price
sensitivity.

Threats (External)
Product substitutes for glass, such as PET.
Growing PET-bottle market is effectively
shrinking glass-bottle usage.
Increased competition due to shrinking
market for glass packaging.
Increased inflation has negative impact on
raw material cost.
Reduction of duty on imported spirits and
wine.
Pharmaceutical industry is moving towards
substitute packaging and away from glass.

PORTERS 5 FORCES ANALYSIS

Industry
Rivalry
(High)

Bargaining
Power of
Buyer
(High)

Threat of
Substitutes
(High)

Industy
(Glassbottlepackaging
Industry)

Threat of
New
Entrants
(Low)

Bargaining
Power of
Suppliers
(Low)

Porters five forces analysis

The five forces model developed by Michael E. Porter identifies and analyzes five competitive forces that
define any industry. It allows an organization to discover opportunities and threats within the market, and
can be used with regard to the packaging industry in India.

Threat of New Entrants (Low)

In its current business model (95 per cent glass), the threat of new entrants in the glass-packaging industry
is low. Many companies are recognizing the decline of the glass-packaging industry and diversifying. As
such, Ajanta should maintain a certain percentage of its product portfolio in glass and charge a premium.
This is also an opportunity to strengthen its presence in the glass-packaging industry. On the other hand,
there is a huge threat of new entrants coming into PET packaging. Hence, the threat of new entrants can be
considered low for the glass-bottle-packaging industry.

Industry Rivalry (High)

There is very high industry rivalry because of the shrinking market for glass packaging. Ajanta has found
its competitors targeting the remaining glass bottle customers. This has led to intense price wars between
companies, which has pressured Ajanta to increase its operating costs to target profits.

Bargaining Power of Suppliers (Low)

Suppliers have less power, as they are fragmented and spread globally. With multiple suppliers, power
resides with Ajanta Packaging. Also, the supply of glass-bottle packaging has relied largely on returnable
bottles. With the decline in the use of glass bottles, there is a glut of supply, in the form of a floating stock
of approximately one billion bottles valued at INR6 billion. This could be seen as an advantage for the
company, but it also shows how much the industry has moved away from glass.
Threat of Substitutes (High)
The threat of substitutes for Ajantas glass products is very high. As discussed in the case, customers and
industries are moving towards other packaging materials that are lightweight, tough, easy to use, have better
shelf lives and are easy to stack, such as PET bottles, Tetra Pak and aluminium cans. In addition to the
major threat from PET bottles, Tetra Pak has been well received because of its low environmental impact.
Bargaining Power of Buyers (High)
Buyers have strong power and influence over glass bottles, which are typically seen as commodity products
without much value added. Also, many substitutes are available for the buyers in different industries. Many
buyers are also increasingly moving to new packaging like PET and Tetra Pak, and this is further increasing
buyers negotiation powers. Many customers have re-negotiated their deals with Ajanta to get better pricing
(see Exhibit TN-2).
2.

What should be Ajanta Packagings strategic objectives while considering diversification?

One way of analyzing the different strategies that Ajanta may use to grow the business is with Igor Ansoffs1
matrix. This matrix deals with the prospects of offering existing and new products within existing and/or
new markets and the levels of risk associated with each. Ansoffs matrix proposes four alternative marketing
strategies:

Market penetration: This strategy recommends market penetration by selling glass bottles in existing
markets, usually by increased promotion, price reductions or better routes to market.
Product development: This strategy involves developing new products for the packaging industry and
placing them in the existing markets of Ajanta.
Market development: This strategy suggests taking existing products and selling them in new
markets. The export of glass bottles in international markets can be an option for Ajanta Packaging.
Diversification: This strategy involves developing new products like PET bottles and promoting them
to new markets and new customers at the same time. Diversification is usually considered to be the
riskiest strategy, as the business has to expand into areas outside its core activities and experience as
well as target a new set of customers in many cases.

the following strategic objectives that Ajanta should achieve while considering any diversification plans:
Decrease overreliance on glass products over time
The main objective of the diversification plan for Ajanta Packaging should be to decrease overreliance on
its glass business. Currently, 95 per cent of its business is glass-based. As the packaging industry moves to
advanced and better packaging, Ajanta should consider launching new products to reduce its dependence
on glass bottles. Here, the company can also explore different product innovations to stay relevant and
modern for its customers.
Maintain good customer relationships and undertake product innovation
The company has always maintained a high standard of customer relationships and should strive to retain
its high percentage of repeat customers (90 per cent). The company could achieve this by analyzing its
customers portfolio of products and packaging options available and then exploring different product
innovations in packaging to retain its customers and get more business from current customers.
Increase the sales volume of glass bottles
In contrast to the option of decreasing overreliance on glass products over time, Ajanta also has the option
of increasing the sales volume of its glass bottles by targeting more customers in the current industry. The
company can follow a market/product development strategy to get more business from its current industry
and from new customers. This strategy can also be useful in getting orders from new customers for other
products that Ajanta Packaging has on offer.
Utilize current and proven distribution networks to gain an advantage over competitors
Ajanta Packaging has a proven distribution network with good net sales realization numbers and good lead
times. This is an asset and the company should utilize this in its diversification strategy. Its distribution
network can be strengthened to manage the distribution needs of its new PET portfolio. And where
overscaled for the distribution of glass, operations can be reworked to be lean and efficient for new PET
products.
Synergize marketing and logistics teams on diversification plans and new product portfolios
It is very critical to synergize the marketing and logistic teams in the diversification strategy. Ajantas four
marketing offices across India should be on board with the any strategy. Marketing policies should also be
updated to reflect the new objectives of its product portfolio. some of the following plans:

The company can also help its main customers in their transition from glass to PET packaging.
It should offer higher incentives for PET products instead of glass.
Switching customers from glass to plastics should be pursued; the company is involved in PET now.
Do not participate in intense price wars for glass. Instead, introduce customers to economical PET
alternatives.

3.

Suggest STP (Segmentation, Targeting and Positioning) for

Ajanta Packaging to increase its business of PET bottles.

Segmentation

Pharmaceutical industry
Soft drinks industry
Indian Made Foreign Liquor (IMFL) industry
Fast-moving consumer goods (FMCG) industry.

Also, these segments can further be divided into types of products they need:

PET bottles
Cans
Glass
Flexible packaging
Aluminium foils and blisters.

Targeting
targeting the pharmaceutical industry- the pharmaceutical industrys
growth over the last two decades and the expectations of it becoming a
US$15,490 million industry by 2014. Also, the Indian packaging industry
is estimated to be worth US$23 billion and growing at a rate of 15 per cent
annually. Ajanta already has a good presence in this industry and can further
strengthen its position.
targeting the FMCG and IMFL industries to increase its presence in these
markets.
targeting of the IMFL industry- negatives can be- as the liquor market still
has the majority of its packaging in glass. Assuming that the government
will reduce the levy on imported liquor, local manufacturers will need to
compete harder, which could leave Ajanta with very little scope for PET
packaging in this industry.
Positioning
Positioning is the act of designing a companys offering and image to
occupy a distinct place in the minds of consumers. Ajanta can position its
PET-bottle business on the basis of attributes such as good products,
excellent service quality, cost-effectiveness and offering timebound and
customized packaging solutions. These attributes, coupled with a wide
range of products and a good distribution network, have provided Ajanta
with competitive points of difference to position itself as a preferred
supplier in the target market.