Shrizana Shrestha, 12133, EM Case Analysis May 8, 2014

Sustaining a new small firm in Nepal

The case is about a soap manufacturer in Bhairahawa who has to face several problems due to
many external factors as well as internal disturbances.
Core Problems
The core problem itself is that the entrepreneur himself is deprived of proper management
knowledge and skills. He has to work around his enterprise to make it profitable enough to pay
back all the obligations. Facing a shortage of palm oil without which the entrepreneur cannot
continue his production, he had to shift his manufacturing to detergent powder. For the detergent
powder as well, he had to face problems like lack of working capital, lack of competency and
lack of proper management. The person is currently operating his business solely with a burden
of unpaid loan, which he has to clear to save himself and his family with the land. Although he
has been able to work on a low cost operation, he is currently not being able to produce
economically due to lack of working capital
Solutions
In order to run his factory effectively, he should first of all focus on proper management of his
business and concentrate towards the industry which would be viable for him currently and in the
long run. Since importing palm oil is still an unsolvable problem for the entrepreneur, he could
focus on penetrating the market with his detergent. Being low on capital, he could carry out a
phase by phase planning of reaching his detergent to potential markets.
Phase I: For Phase I, he should focus on rural areas whereby he could introduce small sachet
packs of detergents selling for around Rs. 2 per pack. Doing this, the inventory would move
faster and his working capital would not be stuck and hence he could operate without shutting
down.
Phase II. For the next phase, he could focus on marketing aspect. After penetrating the rural area,
he could slowly move towards the sub-urban areas and go for door-to-door marketing, letting
people first try out the sachet packs and then increase the volume of production to come up with
higher quantity detergents.
Shrizana Shrestha, 12133, EM Case Analysis May 8, 2014

Phase III. In the next phase, he could gradually penetrate to the urban city areas. After forming a
good baseline in the rural areas and creating brand awareness, he would now also be able to
compete directly with other detergent manufacturers in Bhairahawa market.
He could also form alliance with other small soap and detergent manufacturers, which would
help in building distribution channel as well as strengthening competitive network. Forming an
alliance might collectively help the company to jointly import palm oil instead of depending on
NTL as well.
Conclusion
Hence, I would advise the entrepreneur to first focus on selling detergent in remote areas for
short term, after which he could run a phase by phase operation to slowly penetrate the urban
market and then also form alliance with other small companies to regain his soap business.