Case Study

LOOK BEFORE YOU LEAP

After completing his graduation in commerce from a local college in Delhi Rakesh

Khanna, the son of a wealthy shop owner was looking for a business venture. His father

advised him to visit some foreign countries before making his final choice. While on a

trip to the US Rakesh has a chance meeting with Phil Colins. As this meeting develops

into a close friendship Rakesh discovers that Colins is the owner of 'Luv', a very popular

brand of chocolates there. Surprisingly Colins is also interested in finding partners for

setting up a venture in India being greatly attracted by the huge Indian market for

chocolates. He promises all expertise to Rakesh who immediately returns to Delhi.

Bubbling with enthusiasm Rakesh tells his father about his new venture and about his

friendship with Colins. Seeing his enthusiasm Rakesh's father gives him a go ahead

signal promising all financial support. Soon Rakesh and Colins jointly set up a plant for

manufacturing chocolates in Delhi industrial area. Within a few months i.e. in early

Welcome to the Examinationsummers they launched a range of milk chocolates under the brand name "With Love" all

over the country. Initially they introduced two flavors -Rum and Pepper as Colins felt

these were the most popular ones in the US. The packaging was on the lines of 'Luv' and

looked novel. The results of test marketing in Bangalore were positive. Competitively

priced and with heavy advertising support directed towards children and teenagers the

results in March and early April were satisfying. Rakesh and Colins went on a pleasure

trip to Mahabaleshwar to celebrate their success. However, things went wrong on the

market front in May and the sales dropped drastically. A number of complaints were

received regarding softening of the chocolates on the shop shelves as many shops did not

have refrigerators. The sweltering Indian summers were too much for the chocolates.

Moreover, retailers also provided a feedback that the flavors were not very much liked by

children. The packaging was not strong enough to bear the rough transportation on Indian

roads. While Rakesh was heartbroken and searching for the causes of failure Colins

decided to withdraw from the project.

Questions

I) What mistakes do you think did Rakesh commit?

2) How should Rakesh have proceeded before launching the product in India?

3) How can Rakesh salvage the venture?