Abstract
Karnavati Chemist Store, a popular store in the city of Ahmedabad, a successful entrepreneurial venture is at the crossroads. The case is an in-depth analysis of a range of growth options for this stand-alone store, known amongst its loyal customers for its ideal services in the heart of the city. The journey of the store, factors contributing to its sustainability and growth in the era of upcoming organized retail store formats throw light on a series of facets contributing to the success quotient of the store. Karnavati Chemist Store wanting to ride the growth wave had wished to extrapolate their learnings and experiences for their future stores, an inevitable decision under such conditions. Franchising seemed a good option, provision for financing had also been apportioned and a need for slight tweaking of the distribution system to ensure a flawless delivery system had been expressed. The case is an insightful explanation, with logical arguments and discussions of the various store formats, aspects contributing to the success to determine the new journey embarked on to become a prominent player in pharmacy retailing in the years ahead.
Keywords
Introduction
In January 2016, Pravinbhai, ‘Karnavati Chemist Store’s’ proprietor, sat in his office at Ashram Road in Ahmedabad and pondered over what changes his pharmacy retail store required to manage and sustain the growth in the state of Gujarat. 1 In the year 1996, ‘Karnavati Chemist Store’ started its operations as a small retail store owned by Pravinbhai’s family. Over the 20 years, it has evolved into one of the most favourable destinations for medicines and nurtured into a local brand owing to their local knowledge and experience. This local drugstore had been aiming to become one of the prominent players in pharmacy retailing and the members of the family had met to take a stock of their last 20 years’ journey and draw out a plan for the next phase of growth. One of the top priorities was also to decide on the growth in terms of franchising as an option. There were several pharmacy retailers in India who had chosen the franchising route to expand aggressively with lower financial investment and risk. However, the successes had been mixed. Pravinbhai was looking for a plan to manage the growth within the given resources and also on improving the selection, retention and success of the franchisees. One of the major issues for Pravinbhai was to devise a business model for his medical store which would lead to its increased regional presence. He had to evaluate the growth opportunities and strategies for ‘Karnavati Chemist Store’ as a pharmacy retail outlet operating in Ahmedabad district. He also presumed that one could open a medical store in almost every corner of town, but perhaps with several competitors offering similar products and services, there are fewer customers per location in the catchment area, which intensifies the need for further positioning and branding. He was deliberating on the existing growth opportunities available for the owner in terms of company-owned outlets alongside the franchised outlets. He examined the challenges faced in the 20 years of his journey to survive in the pharmaceutical industry in the Indian market while weighing various hurdles to target the right clientele while visualizing the complex business environment. Moreover, Pravinbhai had to overcome numerous challenges to build a local brand while facing the competitive pressures which showcases the entrepreneurial talent to anticipate the available business opportunities as well as strategic thinking in devising a growth strategy.
Industry Background
The Indian pharmaceuticals market has grown at a CAGR of 17.46 per cent in 2015 and is expected to expand at a CAGR of 15.92 per cent to US$ 55 billion by 2020 (IBEF Report). The Indian pharmaceutical industry is considered likely to be among the top 10 global markets in value terms, $55 billion, by 2020 as stated by the PwC-CII report, majorly driven by increased consumer spending, rapid urbanization as well as the ever-rising health care insurance. Due to competitive advantage of substantially lower cost of production when compared to US and almost half of that of Europe, India is expected to be among the top three pharmaceutical markets by incremental growth and sixth largest market in absolute size across the world by 2020 (IBEF Report). Indian pharmaceutical industry is considered to be highly potential industry, starting from passing of Indian Patent Act in 1970 to export initiatives due to development of production infrastructure during the 1990s. India became a major destination of generic drug manufacture and evolution of various government regulations starting from the National Pharmaceutical Pricing Policy, 2012, to allowing 100 per cent FDI in medical device industry to National Health Policy draft in 2015 which made Indian health care sector one of the fastest growing sectors (IBEF).
Franchising in India
The concept of franchising was in nascent stages in India although the business model had been known in India for decades. Franchising was a form of legal business agreement between two partners which initially originated in France in the eighteenth century. The word ‘franchising’ is a French word meaning ‘a granting of right’ or an ‘exemption’. The International Franchisee Associatio (IFA) defined franchising as “Franchising is simply a method for expanding a business and distributing goods and services through a licensing relationship. In franchising, franchisors (a person or company that grants the license to a third party for the conducting of a business under their marks) not only specify the products and services that will be offered by the franchisees (a person or company who is granted the license to do business under the trademark and trade name by the franchisor), but also provide them with an operating system, brand and support”. The franchisor agrees to provide assistance in the form of operation, advice and constant support to the franchisee in return for an entrance fees and other services. Here, the franchisor (of a product, service or method) acquires distribution at the retail level through the franchisees. The franchisee gets a pre-packed business from the franchisor and thereby given exclusive access to a defined geographical area. The consumption of the product and service seems to be in the same manner as if the consumer had bought it from the franchisor only.
This concept started to pick up in late 1990s when the government amended some regulations to develop a free market economy. There were more than 600 franchising systems operating in the country. It spanned many retailers operating in a wide variety of products and services. Several international brands had entered the country through franchising. It had long been used by many undercapitalized entrepreneurs for growing rapidly. With changing lifestyles, income levels, customers’ preferences and with the rise in modern retailing, the franchise market was growing rapidly. The two major associations representing franchise sector in India were the Franchise Association of India (FAI) and the Indian Franchise Association (IFA). The FAI was formed in the year 2001 as a franchise advisory to establish standards of international best practice in business format franchising for Indian franchise systems. It provided information and education about franchising to existing plus potential franchisees as well as franchisors. It also educated state and central governments on issues relevant to the sector. Franchise Association of India’s long-term vision included becoming one of the top global associations by leveraging their expertise in the higher growth emerging markets (Franchise Association of India). Indian Franchise Association was a non-political and not-for-profit body with an objective ‘to promote, promulgate and popularize the concept of franchising as a mode of doing business across the industry verticals and to nurture the entrepreneurial skill of every Indian’ (Franchise India). There was an absence of specific laws relating to franchising in India (Wulff & Lingam, 2010). Franchising agreements in various countries around the world consist of different clauses and there is no fixed pattern other than a general desire for completeness. The legal structure is defined based on several factors, such as market trends, geography, culture variation, infrastructure development, availability of capital and so on. Franchising relationship also differs from country to country and region to region which needs to be understood on a personal basis. When it comes to India, consultants and associations help the companies in developing franchising system. The cross-border franchising was governed in India by Indian foreign exchange control law. The franchising agreement in India was based on approval from Foreign Investment Promotion Board (FIPB). The Indian government recently proposed to replace FIPB by the controls from RBI and Ministry of Finance for the use of trademarks and technology transfers. India also has the Competition Act 2002 to govern competition laws in the country. Under the Drug and Cosmetics Act 1940, pharmacy chains require obtaining licence before opening pharmacy outlets. The ownership and practice legislation in India was governed under the Pharmacy Act, 1948.
Karnavati Chemist Store—History, Background and Business Philosophy
Karnavati Chemist Store was started by Mr Pravinbhai after completion of school education in 1996 in Ahmedabad. He could not continue his further studies and had to involve himself in the business because of his family circumstances. The start-up capital was mainly supported by credit from relatives and friends in proportion of 70:30 for borrowed and proprietor’s funds. The major challenge during start-up was selecting the most appropriate location and possibly that turned out to be the biggest locational advantage for him even after 20 years of inception. There were four prominent hospitals around the area of Ahmedabad which were as follows:
Civil Hospital Vadilal Sarabhai Hospital Shardabai Hospital Lallubhai Gordhan Hospital
The store location could be finalized only by completing the site analysis and investigating into the trading area analysis. The property rates for all the four identified locations were compared and the catchment area was thoroughly evaluated. The catchment area near Vadilal Sarabhai Hospital (government hospital) also had another hospital in the vicinity by the name Karnavati Hospital (private hospital). This guided Pravinbhai to start a medical store nearby these hospitals as he could derive the advantage of winning customers from both the hospitals by strategically locating it in the surrounding locality. The other challenge was having no knowledge and expertise about the pharmaceutical business environment. Based on the same, the legal requirement he had to fulfil at that time was to recruit a pharmacist in his store. Hence, he fulfilled the mandatory requirement by recruiting just one employee who was a qualified pharmacist. In order to understand the business operations and the environment, he made sure that he contributed to the best of his abilities in the initial years. Over the years, lot of residential complexes emerged around the area of his store, which happened to be an added advantage for his store. He gradually expanded the human resource, once he started making some profits in this pharmacy retail business. Over the initial years, Pravinbhai made sure that the focus was majorly on core medical products, prescription drugs, only. He also attracted a lot of customers from nearby locations because he offered up to 10 per cent discounts to a regular customer which was seldom practiced by his competitors in the early years of existence. He put his customers’ satisfaction as his first priority regardless of bill amount involved which helped him a lot in building strong customer loyalty. Pravinbhai also provided value-added services for old customers by providing medical reminders through WhatsApp and home delivery in case of emergencies. There were also few regular customers who would send him images of prescription and he would keep the required stock of medicine ready for collection.
His biggest advantage was the repeat customers who were hard-core loyal customers for years. His tie-up with nearby hospitals led him to keep a regular stock of medicines which doctors were prescribing for different diseases to the patients. Another significant challenge during the initial years was handling the expired stock. Over the years, the relationship with wholesale agents helped him to return the sealed drugs maximum within 2 months. There were mainly four different segmentations of prescription drugs created by Pravinbhai, to cater to the medicinal needs of the target customers, which were based on the specialization of doctors around his store:
Neurologists Physicians Orthopaedics Oncologists
His entire inventory business model survived on these doctors’ prescribed drugs. Pravinbhai knew that if he ever expanded, his focus would have had to be on the regular and repeat nature of selling prescription drugs in order to get customer base as well as sufficient volume to cover up costs. The stock procurement mechanism was set in such a way that he could procure the required stock maximum in a period of half a day. After the prescription drugs, the share of over-the-counter (OTC) drugs that were sold was the largest. The highest selling OTC drugs were cold and cough medicines. Vitamins, anti-smoking drugs, cosmetics, toiletries and first-aid products were other best-selling products in the OTC segment. The general merchandise category was always anticipated to be a growing category but the share was not increased due to limited space. Pravinbhai knew that although the core of the store had to be pharmacy, a new store with larger space would pave way for general merchandise as well as consumables due to higher sales potential in the current business environment.
Prominent Pharmacy Retailers in India
The Indian pharmacy sector, a front runner in the list of growing industries, was segmented on the basis of organized and unorganized retail pharmacies, prescribed drugs, OTC, private labelled products and generic and patented drugs (Ken Research). The pharmaceutical industry in India witnessed a robust growth of the OTC drugs (over the counter drugs). There were around eight lakh pharmacies in India, organized retail pharmacies contributed up to 20–30 per cent and the rest was dominated by the traditional local pharmacists. The major players alongside Karnavati Chemist Store which were trying to make a mark in the Indian pharmaceutical market have been described below:
Apollo Clinic
Apollo Pharmacy is the largest branded pharmacy retail chain having more than 2100 retail outlets in key locations spread across the country (The Apollo Clinic
Planet Health (www.planethealth.in )
Established in 2001, Planet Health is a new pharma retail chain for medicines and wellness products and was christened as Planet Health in the state of Gujarat. Sagar Group of Industries opened up these successful specialty stores in the major cities of Ahmedabad, Gandhinagar and Vadodara to cater to the educated middle- and high-income group. This retail pharmacy chain aimed at getting visibility in residential areas predominated by high-rise buildings close to trading areas with ample parking space. Around its 23 stores in Gujarat, the privilege card for the frequent buyers gave the customers an additional benefit of maintaining their past records and the facility of managing their family accounts online and a hassle-free doorstep delivery (Jain et al., 2006).
98.4°™
98.4°™, a chain of retail chemist stores in the capital city Delhi and NCR is a recognized brand of Global Health Line promoted by Global Influence Group since 2002 (Global Health Line). This chain of aesthetically designed trustworthy chemist stores at 28 locations is known for its high-standard services discharged through educated and capable pharmacists. The store carries prescription medicines, OTC medicines also called as fast-moving health goods (FMHG), health supplements and fast-moving consumer goods (FMCG), baby care, personal care, cosmetics and high-end perfumes besides skin and hair products, and has tie-ups with Himalayan Drug Company, Gillette, Vichy, Proton, Dr. Scholl’s, Oniron and Red Bull.
Religare Wellness
Religare Wellness (RWL Healthworld Ltd) was rebranded as Fortis Healthworld (Religare Wellness). The Fortis Healthcare Group brought pharmacy, OTC, wellness, baby care, beauty care, personal hygiene products and several house utilities to their customers through their 110 stores in Delhi/NCR, Bangalore and Pune. The stores are either company-owned or franchise-owned retail stores. The e-commerce model named as Fortis Healthworld is also a popular and successful model aiming to provide access to quality products and much faster delivery than the others in the same category (Business Wire India).
Trust™ Chemist and Druggists
Trust Chemists and Druggists Limited (TCDL), a one-stop health care pharmacy retail chain in the states of Karnataka and Tamil Nadu, has around 105 retail stores to its credit since its inception in 2003 (Trust Pharmacy). The customer-centric approach makes them stand out as a preferable destination for prescription medicines, health/wellness solutions and other value-added services by their qualified pharmacist. Trust Chemists and Druggists Limited, the neighbourhood stores, came up with concepts like ‘Destination Stores’ which made available other health-related facilities, such as camps, acupressure, acupuncture, healthy food and recipes, other wellness activities as well as a sample collection lab. In keeping pace with the customer requirements, TCDL has a super-specialty and drive-in diabetic medical store called ‘Trust Diabetic World’.
Guardian Lifecare
Guardian Lifecare is known as ‘The Chemists India Trusts’ (Guardian Lifecare). This ISO 9001 retail chain houses wellness and beauty products besides health products. The pharmacy store is dedicated to selling only branded and genuine medicines through its high-street, airport, mall, neighbourhood, hospital, shop-in-shop store formats. Guardian was the franchisee for GNC Live Well in India which was the largest global specialty retailer of health food. There are more than 22 hospital stores and all these stores are serviced by qualified pharmacists. The retail stores also have ‘walk-in’ and ‘help yourself’ format with open and accessible shelf-space. It also has a strong supply and procurement chain and free home delivery service.
MedPlus
MedPlus, an independent Hyderabad pharmacy chain since 2006, runs around 1,240 stores across 12 cities in the country clocking approximately ₹1,430 crores in FY 2015 (MedPlus India). MedPlus operates both as the franchise model and also as the company–owned store format. In case of failure of operational break-even in 6 months, the stores were closed (MedPlus India). Keeping in mind the middle-class target segments, the MedPlus pharma chains chose to remain open from 8 am to 11 pm unlike their counterparts. MedPlus caters to the other special medical needs of the people through MedPlus pathlabs (chain of diagnostic centres), medplusmart.com (online medical store) and RiteCure (distribution of medical and surgical supplies). MedPlus mart, the new store format of click and prick, plans to get a 25 per cent market share of the pharma retail market. The stores sell prescriptive medicines and FMCG and other wellness products (Franchise India).
Viva Chemist
Viva is a successful pharmacy retail chain with 240 stores, across 27 cities spread in seven states (VIVA—Your Family Chemist). It is positioned as ‘Your Family Chemist’. It was a brand developed by Surya Healthcare, a subsidiary of Surya Pharmaceuticals Limited. Viva stores, operated under mid and large store formats, emphasizes on genuine medicines. Special attention is paid to the store ambience and design. The operational efficiency is based on the clustered approach to maximize availability and derive economies of scale (Franchise India).
Medicine Shoppe
Medicine Shoppe, a franchise-owned retail pharmacy chain was started by Medicine Shoppe International, Inc. (MSI) in 1970 which was acquired by Cardinal Healthcare Inc (Medicine Shoppe). USA in 1995. Medicine Shoppe International, Inc. offers a range of high-end nutraceuticals, supplements and other natural products. The pharmacy chain aims to provide products for enhancing the quality of life, and the products come with a money-back guarantee. It has more than 500 community pharmacy stores and about 200 international stores. In India, MSI began its operations from Mumbai through Melrose Trading Company Ltd.
Health & Glow
Health & Glow Retailing Pvt. Ltd is a retail pharmacy chain offering premium cosmetics and health care needs for women of all ages (Health & Glow). Around 116 stores have opened since its inception in 1997, and its presence is more in the southern states of India (especially Chennai, Bangalore and Hyderabad) and Mumbai. It is a joint venture between Dairy Farm International Holdings Ltd of Hong Kong and Arko Limited. The stores aim to provide unparalleled services in beauty and personal care.
Tulsi
Tulsi, the pharmacy retail unit of Future Group, sells medicinal products of all kinds—allopathic, ayurvedic and homeopathic (I Love India). It suggests alternative medicines prescribed by specialists and gives suggestions even over the phone. Tulsi is a health village brand developed for the lower- and middle-income group people. The other stores attached to the health village are Star & Sitara (salons), Turmeric (beauty stores) Roots (fitness centres) and Elaichi (health café’s).
Dialforhealth India Limited
Dialforhealth India Ltd was incorporated as a subsidiary of Zydus Cadila Healthcare in 2001 (Dial for Health). It sells prescription drugs, OTC medicines, supplements, alternative medicines and personal care products. Dialforhealth stores were the first of their kind where pharmaceutical companies had set up their own stores despite the higher operating cost than their main businesses. Pilot stores were set up in Mumbai, followed by stores in Ahmedabad and Delhi. These retail pharmacies are indicative of the company’s movement up the value chain and for initiating the service concept in the pharma industry (Business-Standard).
Lifespring
Lifespring, the health and beauty chain of stores in the highly populated areas of Delhi, sells personal care, beauty and OTC and prescription drugs (Lifespring). Lifespring is the retail venture of Dr Morepen, subsidiary of Morepen Laboratories Limited, promoted by Jatias and Bodium International of Australia (Dr Morepen).
Reliance Retail
Reliance Health and Wellness Pharmacies, a part of Reliance Retail Group and Reliance Industries, started with its first specializing stores in Hyderabad (Financial Express). These prescription retails stores have the facility of consulting doctors and make available all types of allopathic, ayurvedic and homeopathic drugs along with health and fitness products. Reliance Retail plans to establish its rural presence along with other medical facilities, such as blood tests, medical insurance, health-related and veterinary consultancy.
Others Players
The oldest pharmacy chain of Kolkata, the Emami Ross is known for its quality pharma and health care products. These 123 exclusive stores mainly operate through hospitals, big corporate houses, NGO’s and nursing homes. The stores are spread across West Bengal, Karnataka and Gujarat. Zydus Wellness of the Zydus Cadila Group focuses on healthy lifestyles of individuals. The ayurvedic medicines made available by Himalaya Healthcare of the Himalayan Drug Company have spurred the proprietary formulations of herbal extractions. Muthu Pharmacy, the largest pharmacy chain in Chennai, has 14 stores to its credit. Lifeken is another popular pharmaceutical retail chain operating in Bangalore, Chennai and Mumbai.
Challenges and Opportunities
Even after more than 20 years in the marketplace, there is a huge potential for growth. The organized sector still constitutes a very small portion of the total pharmaceutical retail industry. The management is pondering over the choice of the structure to be followed. So far, Karnavati Chemist Store has not much examined the franchising option. Pravinbhai always agreed to the general practice that the franchising concept was a better option for a rapidly growing company. “This route has many advantages in terms of good quality manpower, costs, local regulations and low capital required for expansion. However, there were certain areas where he was never ready to compromise even if they opted for a franchise: (i) Ethical Practices, (ii) Customer satisfaction, (iii) Store Experience and (v) Customer Service’, said Pravinbhai.
Pravinbhai was also aware that there were always complexities in the process of acquiring supplies in the pharmacy retail sector. The distributors (who were also chemists) in this business had been very powerful. The rapid growth of organized players through more number of franchises rather than company-owned outlets had been prominent in the Indian market conditions.
Pravinbhai wanted someone as a franchisee who could share the burdens of his business towards the path of sustained growth. He did not want to compromise on the quality of service and delivery. Commenting on the situation, Pravinbhai said:
Till date we had been doing good business by managing the business affairs by ourselves. We had been interacting with a lot of people for taking our franchise options ahead and evaluating the pros and cons. We were still waiting for a right partner to come ahead and progressively contribute to our venture.
Franchising, being owners, offered to reduce high monitoring costs of the company to ensure that managers acted in the best interest of the company. He agreed to the fact that managers who possessed the required skill, abilities and motivation levels were hard to find and retain in the Indian retailing industry. Commenting on the situation of finding the right people for the right job, Pravinbhai said:
There was lack of professionalism in retail business when it came to India. The Indian players had tried out to the best of abilities to replicate the retail model from abroad but it did not essentially work here in the same manner. There was need for localization at a higher level. The bigger players had to work with street smart people because more than 60% of their staffs were under qualified. On the top of that, there was a high turnover of professionals in our business.
Karnavati Chemist Store always made sure that the employees at the store were trained as per prescribed guidelines. Training and development was expected to increase loyalty among the employees and also commitment. Commenting on the human resource development, Pravinbhai mentioned:
The recruitment and retention of the staff was a growing concern for pharmacy retailers in India. A new store would require the training of non-pharmacy employees for store operations as wells as for customer service. The overall demand for qualified pharmacists had also gone phenomenally higher because of competition and it required a larger proportion of budget to pay these employees. The usage of operating manuals, checklists was an integral part of our business thereby facilitating consistency and quality of our offerings. Slowly and gradually moving into the expansion mode, one had to have internalized the coaching/mentoring for driving the change.
Cost of operation was also considered. ‘The real estate costs had been rising exponentially and erratically. The cost of electricity was also the highest in the state of Gujarat as compared to other states’, stated Pravinbhai. Moreover, costs might also go higher in future in setting an appropriate information technology system. Pravinbhai knew that it would be advantageous if he could have a composite database where he could possess the patient records electronically. There was also a limitation to this idea due to the privacy concerns of patients with respect to the shared information. The business concept of online selling was yet to be discovered and inclusion of the same was one of the top concerns for Pravinbhai.
Pravinbhai on the basis of his experience understood that though there was need to ensure that business processes were followed, a tighter level of controls by a franchisor could lead to a lower level of franchisee motivation. Pravinbhai reflected on the fact that it was also not that easy to punish or terminate the franchisee in case of lack of performance or disputes. Any type of punishment would bring down the level of commitment and termination would invite legal hassles and wastage of valuable time. The medicine laws were rigid in the health care industry compared to other industries. The enforcement of contractual rights was a challenge in the Indian judicial system and it resulted in enormous time delays.
However, whether franchising provided a viable solution to all these problems was the subject matter to be probed. Commenting on this, Pravinbhai expressed:
The foremost motive for franchises to come forward in Indian market conditions were either because they wanted to be involved with some profitable business or just because they wanted an assured return in the form of rental income.
Pravinbhai continued:
There was hardly any clarity to the rationale why franchises wanted to get involved with us in the business. It was more or less an extension of family business where the rich and established businessmen fancy doing something for their next generation. It becomes a daunting task to hunt for the potential franchisees.
Karnavati Chemist Store—The Journey Ahead
Pravinbhai wondered at this point whether to move slowly towards gradual change or to grab the bull by horns towards a dramatic turnaround. Pravinbhai’s entrepreneurship skills and commitment have seen Karnavati Chemist Store reach so far. Commenting on the progress so far, Pravinbhai said:
We were in the health care retailing business and we would never compromise with service quality just to expand by adopting franchise model. We were pretty sure from the day one that we would not negotiate on our service delivery to the end consumers. We would readily adopt franchise system and share our burden when we acquire confidence and commitment in the partnerships. Our customer conversion rate was high and capital investment was also not a hindrance. In the current business environment, a maximum Rs. 200000 would be sufficient to set up medical pharmacy store with optimum stock. Perhaps, how to open and manage 10 more stores is far more important than just opening 10 stores with an objective of rapid expansion. Consequently, it was not a number game for us and we would unquestionably never deviate from our business philosophy. It’s an obvious tradeoff between volume growths versus business value proposition.
The selection process followed by Pravinbhai needed to be dynamic as the recruitment strategies change with situation. He knew that the selection criteria here were based more on strategic need rather than basic needs. What were the factors that weigh over others to decide a potential franchisee and would the experience in this endeavour have a bearing on the future franchise decisions?
Pravinbhai had to set the right priorities for the coming years. He knew very well that the first smart mover advantage was much more significant than first mover advantage with respect to designing a retailer’s value proposition. There was also requirement of a very strong and efficient back-end technology which would help in purchasing, stocking, inventory tracking and managing the reorder/replenishment levels without which margins would be minimum. Pravinbhai has to think long and hard about the way to sustained growth. How to take a call on the prime decision of volume vs. value growth? What would be the value proposition for his new store? How will Karnavati Chemist Store find reliable and effective partners to franchise?
Although franchising appeared to be a more cost-effective and realistic option, Pravinbhai also needed to take a closer examination of any other form of expansion or operations and thoroughly search for emerging opportunities. Would any other form of expansion mode be a viable business alternative? Subsequently, Pravinbhai would have to even explore further and determine what made the most sense.
Issues for Discussion
What were the growth options available to Pravinbhai?
What were the challenges associated to these growth options, especially franchising in the current business environment with lots of competition from other players?
What were the factors that weigh over others to decide a potential franchisee and would the experience in previous endeavour have a bearing on the future franchise decisions?
How to take a call on the prime decision of volume vs. value growth?
To design a value proposition for the pharmacy store, what were the other factors to be considered?
Footnotes
Acknowledgements
The authors express their sincere thanks to Karnavati Chemist Store for their support to develop this case and publish the same in this journal, while retaining the anonymity of address.