Archies vs Vintage

P R E S E N T E D B Y: ARJ N CH AUH AN U M U K ESH TI A R I W A YA N C H A R A B O R T Y B H A R AT S H A N D I LYA S ATYEN D R A KU M A R V A I H AV D I SH I B X T

SYNOPSIS The case outlines the growth of two entrepreneurial firms that started in 1979 and 1983 respectively. Archies started with an investment of Rs. 1000 for selling posters through mail order. But, over a period of 25 years, the growth in the greetings segment slowed down, while the market for gifts was picking up. This led the entrepreneur to rethink whether by focusing more on gifts rather than greetings, he could continue profitably in the Business of Emotions or would that take the business away from its vision and mission.

Vintage Cards and Creations was the brainchild of Anil Kapur and Vaishnav when a few cards made by them were appreciated by the customers for quality and design. Initially it was a part time business, but soon became a full time occupation with local artists to create new designs and distributors and retail outlets expansion for future growth. Archies proactively responded to technology changes in form of e-cards, SMS and MMS, which were taking the market away from traditional greeting card by diversifying into gifts as they were another means of expressing emotions. Vintage , on the other hand did not respond to change and found itself burdened with a huge inventory of cards with no market for them.

Core business : greeting cards Complementary business : gifts and perfumes

Vision of ANIL MOOLCHANDANIWe are in the business of selling emotions Re-quoted his statement in 2000 The statement says: "Archies is all set to satisfy untapped potential. With brand launches and new products, the thrust is on reaching every individual, satisfying various emotions and being within varying budgets. Basing its operations on this vision, Archies is charting a new course of action. With the product, place, price, promotion and distribution synergies working in tandem, it won't be long before we

Corporate vision of ANIL MOOLCHANDANITO BE THE WORLD LEADER IN POSTERS AND GREETING CARDS. BUT FAILED TO RETAIN THAT VISION AFTER THE INTRODUCTION OF E-CARDS TRIED TO OVERCOME BY BRINGING ITS E-CARDS ON YAHOO. CHANGED ITS NAME TO

ARCHIES

strategy over time

Innovation was a continuous process. offers and promotional schemes were introduced.

Tap all the Indian festivals and occasions.

Popularize western occasions in India. Associated with HELPAGE INDIA,CRY for shaping its corporate value. Promoted their props through Bollywood movies.

Business of EmotionsThe key to Archies' success is the fact that the company has consistently focussed on emotions and feelings, which is summed up in its marketing strapline: 'The most special way to say you care'. Archies' product portfolio contains all-occasion greeting cards, gift items such as curios, photo albums, photo frames, soft toys, mugs, quotations, key chains and a wide range of stationery. Emotions are at the heart of the Archies collections. Archies has played a significant role in advancing the social expressions market by creating a special collection of greeting cards and gifts for different occasions. Today the main aim of Archies in the next three to four years to be present in every significant shopping real estate in the country. With a view to better control the ultimate experience for the customer, the focus will be on company owned or company managed stores as opposed to the pure franchising route that has been followed so far.

PROMOTIONS AND ADVERTISEMENTS PROPS USED IN MOVIES CHANGING FRANCHISE STORES INTO GALLERIES ORGANIZING EVENTS AND HONOURING WINNERS PROVIDING ONLINE SERVICE

During the financial year 1999-00, Archies decided to revamp its distribution network and replace existing distributors by a C&F agent network. According to the new distribution system, in place of 68 distributors in 21 states, Archies appointed 10 C&F agents in 10 states who catered to distributors who in turn reached out to the

The distribution revamp of ARCHIES

The retail revamp of ARCHIESIn 2001, Archies began an 'exclusivity drive,' by way of which all existing Archies Gallery franchisees were asked to keep only Archies range of products. If they did not want to be an exclusive outlet, they were given the option of converting into an Archies Paper Rose Shoppe on a 'non-exclusive' basis.

Bolo dil ki zubanthrough cards. Be it puja or holi, pongal or diwali, its time to express your feelings in your matribhasha! With the language cards popularity going up the Indian charts, major players like Archies and Vintage are now trying to expand their portfolio from Hindi, Marathi everyday cards to an array of Indian languages like Bengali, Assamese, Tamil and others.

The segment growth is pegged at nearly 7% by industry estimates which is higher than the growth (5%) of the greeting card category as a whole which it is estimated to be around Rs 250 crore.

The future shifting focus of ARCHIESThe Moolchandanis believed that the distribution and retail revamp exercises will yield positive results after the transition phase. Archies decided to focus more on the gifts segment, as it believed the segment was under-exploited. The company planned to develop and introduce new lines in the gift segment including higher end items, which were lacking in the present setup. The idea was to make an Archies gallery a 'one stop gift shop' for people from all walks of life. The company had already begun importing high-end gift articles such as crystal, soft toys and Feng Shui items from China, Hong Kong and Korea in addition to outsourcing from local vendors...

BRAND VALUES OF ARCHIESFeelings and emotions have been at the heart of the Archies brand for the past 25 years. The company believes that so long as there are human emotions, Archies' brand positioning will remain fresh and fragrant. The brand is committed to providing its customers with opportunities to express their emotions. Archies is a medium through which they can say to their loved ones, they care.

SWOT ANALYSISSTRENGTH : FEW COMPETITORS People of India associate well with brand image of ARCHIES Developed a strong corporate image WEAKNESS: BETTER SUPPLIMENTS AVAILABLE.(E-CARDS) Excess inventory Continuous need for variety OPPORTUNITY: NEW PRODUCT CATEGORY Variety in merchandise industry THREAT: RAPID CHANGING DEMAND Piracy over the internet Low margins in merchandise industry

VINTAGE INTRODUCTION Ther company was founded as a partnership firm in 1983 by anil kapur and rajesh vaishnav for manufacturing and marketing greeting cards . By 1992, vintage had a collection of 3000 designs , 26 distributors and 3,000 independent retail outlets. To meet its future gorwth requirments , the company entered into agreement with Hallmark , one of the worlds largest greeting card manufacturer based in united states in1992 to use its brand

In 1996 the franchise stores were incresed to 67. In 1997-98 the company expanded its production capabilities and commissioned a plant at Goa. By the end of 1999, th e company had a franchaise network of 221 outlets spread over 94 cities. By 2001, the company had introduced cards in Hindi and Marathi and expanded the franchaise network to 343 stores across 115 cities.

Vintage strategy over time Concentrated on developing local artists to create new designs and on appointing distributors and setting up retail outlets for future growth Company entered into agreement with one of worlds largest greeting cards company , Hallmark, based in US in 92 Entered into an agreement with Walt Disney Consumer Products to use materials like Mickey, Minnie etc. for use in greeting cards, posters, gift wraps

Entered into a licensing agreement with Verkerke to use their designs trademarks Another brand licensing agreement with Mattel Inc. US gave them rights for the Barbie brand. Apart from these, company tied up with Cancer Patients Aid Association to establish its presence in the corporate segment.

Such analysis has two components: It provides important evidence of total organizational effectivness. The efficiency and effectivness of the finance function can be assessed in terms of the management of financial resources.

Relationship between strategical performance and financial analysis

Ratio analysisFour major areas may be defined as being of particular importance to strtegical performance:

accountancy terms 1. Is the business profitable? profitability 2. Is the trading position satisfactory? Trading 3. Is the buisness solvent? liquidity 4. Are sharholders earning satisfactory return? Shareholders ratios

Profitability

1.Return on capital employed (ROCE):MAR 05 MAR 0617.19

MAR 0715.99

MAR 0813.74

MAR 0910.19

Return On 17.22 Capital Employed(% ) Return On -6.09 Capital Employed( %)

Archies

-36.97

--

-44.3

-80.06

Vintage

2.

R ETU R N O N I V ESTM EN T O R R ETU R N O N A SSETS N MAR 05 MAR06 MAR07 6.79 -48.61 MAR08 6.14 -29.38 MAR09 --34.6 Archies Vintage 6.63 -19.66

Return on 6.96 Assets Return on Assets -5.77

TRADING POSITIONO P E R A T I G P R O FI M A R G I N T NMAR 05 Operating 15.77 Profit Margin(% ) Operating -27.35 Profit Margin(% ) MAR 06 15.29 MAR 07 13.95 MAR 08 13.64 MAR 09 8.61 Archies

-86.13

--

-59.02

-123.68

Vintage

LIQUIDITY POSITIONC U R R EN T R ATI OMAR 05 Current Ratio Current Ratio 1.81 0.91 MAR 06 2.05 1.05 MAR 07 1.77 2.67 MAR 08 1.78 1.95 MAR 09 2.47 1.35 Archies Vintage

Q U I K R ATI C OMAR 05 Quick Ratio Quick Ratio 1.15 1.48 MAR 06 0.92 1.58 MAR 07 1.03 1.25 MAR 08 1.05 0.84 MAR 09 1.12 0.54 Archies Vintage

Shareholders ratiosE a rn i g p e r sh a re nMar 05 Earnings 9.28 Per Share Mar 06 10.32 Mar 07 12.03 Mar 08 12.14 Mar 09 -1.61 Archies

Earnings -2.34 Per Share

-6.03

-10.67

-6.64

-9.79

Vintage

Conclusions and RecommendationsVintage Survival of the company is at stake Reconsider its unique selling ability and proposition of selling greeting card Archies Company going through a rough patch Facing a financial crunch Reconsider moving into new business avenues (Theme and Amusement park, Cakes and confectionaries, Play schools and crech for Children)