Falfull: the picture
Although having had its roots in the market long back since 2013, Falfull only came into limelight in 2017 after its rebranding. Nischal Hirachan saw potential in the business when he decided to make more of the organic juice only distributed to hotels and restaurants in the valley as a brand. Royal Marpha Suppliers bottled organic juice with German technology strictly only for distribution purposes. Prior to the rebranding, this organic juice was a B2B model, but now, it is shifting towards retailing in the long run.
The juicing began in the beautiful city of Marpha which is ever so famous for its fruits. But as with other parts of this geographically challenged country, getting the goodies to the cities was quite a tedious task. Why? Because the transportation in Marpha can cost a handful. People were dependent on mules, donkeys and yaks as a means of transportation. So, it was a great opportunity for the fellow residential of Marpha when German Food Tech institution introduced a juicing facility in Marpha to assist with this very drawback so that juice from these fruits could be bottle and sold to the cities.
How it all started
Nischal Hirachan would gift these luscious juices to his friends in Kathmandu. His friends were so tempted with its taste that they encouraged him to start a venture on his own. And hence, the name Margo Nepal was born: the parent company of Falfull.
Marpha Organic Juice
With the juicing facility, Marpha organic juice was introduced in the market. The local fruits were pressed into bottles labelled Marpha Organic juice.
The 650 ml bottles of organic juice were only distributed to hotels and restaurants in the valley and did not receive much of recognition. Fortunately, this was not what Nischal Hirachan wanted the company to be in the long term.
M&S Next Venture Corp embraced the idea of rebranding Marpha Organic Juice and set the 3 months incubation period for it. During the phase, Royal Marpha Suppliers were given core training on marketing, finance, operation and strategy to emerge stronger.
Falfull: the brand
Ever wondered how the world has completely turned into a circle only to realize that the older generation had it right all along? We went from natural products to medicine to organic products again. And this is what is setting a place in the market. Organic juice, unadulterated, natural. This is exactly what Falfull is and exactly why it has reason to set itself apart. The pressed juice of Marpha fruits has no preservatives, no added sugar and no added water. A win-win for the customers. The Royal Marpha Suppliers are now shifting from the wholesale market to the retail market.
Bottle – 250 ml
Retail price- Rs.135
Wholesale price – Rs.100
Manufacturing cost – Rs.55
25 % of the company is owned by the M&S venture corporation
Distributed currently to 35 outlets (B2B model)
Strategic Management Process
Excuse me for going off topic here, but I read somewhere that if you know what your goal is; everything you do, everything you think from there should be directed to achieve that goal. Falfull is doing just that.
With Strategic management process, the manager makes a selection of the set of strategies that he wants to imply in accordance to his business concept and goal that will enable the organization to achieve better.
Question no 1.
Describe the process of strategic management.
We are familiar with the 5 stages of strategic management process. This process can be discussed in terms of Falfull:
This step would involve defining your objectives, both in the short team and in the long term. You want to see what your product can do and how you want to take it. The concept should be realistic, of course.
Falfull is pretty clear about its product placement and what can be done. The concept is of natural, unsweetened and unadulterated pressed fruit juice without any preservatives. This has potential to be successful in the long run because:
People are optioning for healthy and organic these days
They are utilizing fruits that would otherwise have not made it to the cities blaming the transportation.
Their goal is to become the number 1 beverage company in Nepal and export fruit juices at international level.
Gathering and analyzing information
In this stage, complimentary to the goal, one needs to collect as much information as possible relevant to what we want.
Nischal Hirachan, triggered from the encouragement he received from his friends, started to actually look up. He had a good network among the restaurants of Kathmandu. Mr Hirachan was successful in satisfying investigation regarding preferences of people towards organic juices in this network. Eventually, he got the go signal and started Margo Nepal Pvt. Ltd, the happy consequence we can see and taste today.
This stage would surpass the company keeping track of its resources, To start with, it is not that fruit juices are not available in the market. There are plenty, both local and foreign brands but most of them are processed. The market is flooded with excess brands that offer juices made from flavored concentrates and artificial preservatives. This is where Falfull stands out. It is competing not on the basis of price but on the basis of differentiation: healthy, local fruits grow in Marpha and only pressing.
This is the stage that everything actually thought up in our heads is put to action.
Falfull started off with a B2B model and much of what it is doing right now is also B2B because it mostly distributes to hotels and restaurants. But its rebranding has been very much successful as many people have come to know about it now.
They have been taking their social media promotion through storm, posting amazing and attractive photos on their Instagram and Facebook pages encouraging people to try the drink. They have story updates on Instagram. They do giveaways. They use the hash tags #healthlylifestyle #organicdrink to convince people. They use popular holidays as a theme.
For instance, a couple of months back, during Valentine week, on hug day; they would have a themed photo with a Falfull drink being highlighted. Talk about creativity!
The hug day theme of Falfull on their social media
They also promote their brand at famer’s market and local exhibitions. They have media figures like Milind Sonam posing with Falfull.
They have a Falfull tote bag that reads “eat your veggies and drink your Falfull”. This is all part of their implementation strategy.
This tote bag comes free with a dozen purchase of Falfull bottles or can be bought separately.
The tote bag
Evaluation and control
This stage would involve persistent reviewing and evaluation of system and taking corrective actions where necessary.
At Falfull, they are reviewing sales at yearly basis and also hiring help with their expansion. Since they are still at development stage, this phase has had not much to do.
The mission statement is a long-run vision of what the organization is trying to achieve; that unique factor that makes it distinct than all others. Here, the purpose is not meant for managers to feel good about what they are accomplishing. Rather, the need is for a mission stated to provide direction and motivation to all members concerned with the organization.
Question no. 2
Describe the essential characteristics of a mission statement. In what different ways can a mission statement be formulated?
The essential characteristics of a mission statement are most likely to include the following:
Market rather than products
A mission statement can be formulated in following way:
Describe what your company does
Describe how your company does what it does
Add why your company does what it does
Put your mission statement to work
‘With love from Marpha’
This is the way they promote their drink and the line that employees look up to. Keeping in mind that the ideal mission statement must be short and precise, Falfull has kept it short, meaningful and in a way that touches the hearts of their customers. This statement highlights that they keep it natural and local and straight to the end user. The statement is somehow self-explanatory. Without saying much, it says enough.
In a world of additives and preservatives and foreign brands, this is how Falfull establishes as different from the rest.
Question no 3.
Explain the comparative cost analysis in strategic management.
With reference to strategic management, comparative cost analysis is the comparison of one organization’s cost position to another. The said cost analysis would compare everything from the price paid for raw materials right to the price customers pay for the finished product. The goal of this analysis is to determine whether the cost of a company is competitive with that of another.
The price details of Falfull this year and for the following years are illustrated below.
Year 74/75 75/76 76/77 77/78 78/79
Apricot 100.00 68.13 65.00 65.00 65.00
Apple 105.00 70.00 68.00 68.00 65.00
Orange 90.00 90.00 85.00 80.00 80.00
Passion Fruit – 70.00 68.00 68.00 68.00
Watermelon – 70.00 68.00 68.00 65.00
With reference to the pricing of Falfull, currently and pricing plan of Falfull in the near future, I cannot help but say, that people would find it more expensive. While Falfull is sold of 250 ml in the market as of now, the end users get the organic drink for Rs.135. I did a little personal look out of my own. And this is because, while I was fortunately able to receive the costing and pricing details of Falfull, I could not find such details regarding other companies which are kept confidential, to be honest. We have all heard of the popular drinks Frooty and Real which have been around for ages. These drinks come in 200ml and 250 ml packs at Rs.25 and Rs.35 respectively. Even purchasing Falfull at wholesale level, these fruit drinks are way more reasonable in price for the end consumer. But news flash, Falfull is not competing on the basis of price. It is using differentiation strategy. In their defense, the organic drink, pure and unadulterated has to come all the way from Mustang pressed from German Technology. We also need to keep in mind that Falfull is still at its startup phase.
The costing details of Falfull are illustrated below:
Apricot Apple Orange Passion Fruit Watermelon
Cost per Kg 55.00 55.00 55.00 250.00 30.00
Efficiency 125% 70% 80% 370% 50%
Cost per Liter 44.00 78.57 68.75 67.57 60.00
Bottle Cost 12.00 12.00 12.00 12.00 12.00
Recovery Rate 50% 50% 50% 50% 50%
Adj. Bottle Cost 6.00 6.00 6.00 6.00 6.00
Printing 2.00 2.00 2.00 2.00 2.00
Cap 1.00 1.00 1.00 1.00 1.00
Carton 0.50 – Variable Cost per 250 ml 20.50 28.64 26.19 25.89 24.00
Other Direct Costs Depreciation 800,000 500,000 500,000 500,000 250,000
Direct Labor 480,000 480,000 480,000 480,000 480,000
Water Cost 50,000 50,000 50,000 50,000 50,000
Transportation – – – – –
Storage 75,000 75,000 75,000 75,000 75,000
Factory Rent 200,000 200,000 200,000 200,000 200,000
Total 1,605,000 1,305,000 1,305,000 1,305,000 1,055,000
Question no. 4
Discuss the implication for structure if organization growth is viewed in terms of stages of development.
Falfull has visualized what they want to do in the long term and are working their way towards it. It is appreciable how much they have done in a year, which is why; we can be affirmative towards their goal.
Falfull plans to increase the distributive outlets to 200 by the end of this year. Their aim is to reduce the current price eventually increase their production efficiency to supply all over Nepal.
Illustrated below is their sales forecast in the following years
Sales (in units) 74/75` 75/76 76/77 77/78 78/79
Apricot 15000 150,000 200,000 300,000 400,000
Apple 50,000 200,000 300,000 400,000 500,000
Orange – 50,000 100,000 200,000 300,000
Passion Fruit – 15,000 20,000 25,000 30,000
Watermelon – 20,000 25,000 30,000 40,000
This forecast seems realistic owing to the fact they sold 200 units of bottles in 1 week.
The implication for structure if organization is viewed in terms of stages of development can be discusses as below:
In this stage, the company is solely based on their issues and solving the issues. People are more likely to react to situations rather than enacting them. This stage is more short term based. There are informal routines and procedures.
Falfull is well past this stage because they are more focused on long term growth and forecasting rather than solving issues in short term.
In this stage, the firm is more consistent regarding its operations, goals and direction; policies and procedures become more concrete and a structure starts to emerge. It is all about predictability and control.
Falfull is at this stage currently, because they are being consistent with their goals and directions and predicting. If they want to keep intact with the forecasted sales and organizational growth, they will have to increase their manpower, storage, finance, manufacturing and marketing. Most of these they have already planned with plans to distribute in Pokhara, Biratnagar and other main cities. This would also mean a stable organizational structure with interdependent departments.
Once things start to settle down, employees being to take ownership for their part of successes and failures, and performance is consistent. The focus eventually shifts from stability to performance. Rather than solving problems, employees are more focused on the mission of the company.
Once all these things have been well past, the company moves to higher performance level through continual improvement, infusing the mission of the company in each element of its organization and structure.
The process of strategic control involves evaluating a strategy in its implication. It is concerned with detecting problems or changes in the strategies that are not in favor of the company and making adjustments in accordance. As a manager, we must ask ourselves questions like whether the company is moving in the right direction, or whether our assumptions about major trends and changes in the company’s environment are correct? Such questions emerge the establishment of strategic controls.
Question no. 5
Describe and explain the applications of techniques for strategic control.
For strategic control. We would need to conduct strategic evaluation among which SWOT analysis is one method.
The SWOT analysis comprises of analysis of the company’s environment; both external and internal.
The SWOT analysis stands for Strength, Weakness, Opportunity and Threat
Learning about Falfull, the SWOT analysis for the organic drink can be understood on following terms:
Strength of Falfull: local fruits, no preservatives, no additives, organic, healthy
Weakness of Falfull: seasonal, due to lack of additives, the color of fruits is uneven depending upon time of season and ripeness of fruit.
Announcing their end of the apricot season in a very creative and polite way!
Opportunity of Falfull: in the Nepali market, there is great opportunity as people are optioning for organic and local these days and they have very less competitors in terms of organic drinks.
Threat of Falfull: the expense of media ad as Falfull is still new to people, the possibility of other organic drinks in the market
Coming to terms of strategic control post the strategic control, there are generally four types of strategic control:
1. Premise Control: this technique would involve continually checking the system and premises and whether they are in sync with the planning. We would have to be concerned about the environmental factors and the industry factors.
2. Implementation Control: this technique would involve two ways namely:
a. monitoring strategic thrusts: agreeing to or changing particular thrusts concerned with the ongoing strategy of the company such as time and cots or R&D.
b. milestone reviews: reviewing the strategy and advisability of continuing ore refocusing the company’s strategy.
3. Special Alert Control: this technique revolves around the need to reconsider the firm’s strategy based on an unexpected event.
4. Strategic Surveillance Control: monitoring events inside and outside the company that are likely to threaten the firm’s strategy.
In the world of Margo Nepal, for Falfull, they have produced a brand new amber bottle. The reason for this could be its dark color of the bottle. Since it has been previously mentioned that Falfull adds no sugar, preservatives or anything for that matter, the juices pressed are not always of the same color, they are not consistent and this is entirely natural. However, the uneven colors could in fact, be noticed through the transparent bottles available in the market. Falfull took this step to keep up with its strategy and keep the freshness and organic taste alive. The initiative Falfull took can be termed as implementation control.
Regarding the product, I interrogated Mr. Jiten Shrestha, the project head of MNS Next venture Corp. 25% owner of Margo Nepal, parent company of Falfull and their mentor for the 3 month long incubation period.
The questions were discussed as follows:
When did Falfull start?
How did Falfull start?
What makes Falfull different?
Did the rebranding prove to be useful?
What is the mission statement of Falfull?
In what flavors is Falfull available?
How much does it normally cost to make one bottle of Falfull?
What is the manufacturing cost, wholesale price and retail price per bottle?
How long did the incubation period for Margo Nepal by Next venture Corp last?
What did the incubation period involve of?
As of now, how is Falfull distributed and where?
How many outlets does it distribute to?
Does Falfull only plan to do B2B sales?
In what way is Margo Nepal promoting Falfull?
What are the strengths and weaknesses of Falfull?
Do you think Falfull has made any progress in the last year?
What are the future plans of Falfull?
Does Falfull involve local people at Marpha unit?