Defining Entry Strategy in Distribution of Chemicals and Paper Kraft Board

distribution

Client Challenge

Started in 2012 client was the first buying club for Indian SMEs. Headquartered in Gurgaon, the company had six offices spread across Gurgaon, Mumbai, Chennai, Kolkata, Ahmedabad and Pune. The client was dealing in sales and distribution of a wide variety of raw materials such as steel, aluminum, polymers, paints, and inks to SMEs. The client wanted to explore opportunities in Chemicals and Paper & Kraft board segment. The top management at client requested UC Strategy to assist in identifying attractive segments in Chemicals and Paper & Kraft board sector and defining its entry strategy

 

Our Approach

  • We initiated the project with context building so as to understand client’s current capabilities and strategic intent for new markets. In this stage, we met the top management and other senior personnel to collect
  • Perspective on existing capabilities and business operations
  • Perspective on strategic intent for target entry into the selected segments, preferred position in the value chain, value proposition to SMEs, revenue and return expectations, etc.
  • UC Strategy identified 36 end-user segments for various chemicals. Multiple levels of filters were applied to identify 8 potential end-use segments for chemicals which were studied in detail (including Paper & Kraft board)
  • As part of deep dive analysis of above-shortlisted segments, UC Strategy conducted in-depth secondary research and discussions with various entities in the value chain (suppliers, distributors, SMEs, experts, associations, etc.) to understand
  • Size and growth of SMEs spend on focus products
  • Potential savings for SMEs for buying from client
  • Key purchase criteria, credit period norms, SMEs’ propensity to switch to new suppliers in each segment
  • Major consumption centers for focus segments in terms of clusters and size of opportunity across major clusters
  • Existing supply chain structure in the market areas of potential efficiency enhancement to be bought by client

 

Our Impact

Based on the findings, UC Strategy ranked the segments on their attractiveness for the client and developed a business model and the entry strategy attractive end-use segments.

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