Vijayakrishna Spice and Seed Farms ( Vkspice ) was established in 1990 and over the past 20 old ages the company gained a batch of possible purchasers such as Avt McCormick, Synthite, Plantlipids, etc. , because of its high production value. It produces a broad assortment of spices, but it is chiefly known for production of IMP Chilli ( organic chili ) and turmeric which are chiefly adapted because of favorable conditions conditions. Vkspice is headquartered in Guntur, Andhra Pradesh, India and has gross revenues, procurance and other supply concatenation operations in assorted parts of the province.
This study critically analyses Vijayakrishna Spice and Seed Farms, the schemes adapted by the company and the issues faced by them. It besides analyses the impact of information and cognition on the spice exporters in India, with a peculiar focal point on the company Vkspice ( spice industry ) on its strategic environment. Some constructs in this study are drawn by the silent cognition gained during my 3 old ages experience of working as Sr. Procurement director, with this company.
2. Industry Context
The Indian spice industry is dining with a significant addition in exports over the past few old ages. India histories for about 45 % and 30 % in footings of volume and value in the universe spice trade. The blooming planetary spice market besides poses good chances for the Indian spice industry to supply quality spices at competitory monetary value ( Spice trade 2010 ) .
Recently, the domestic and international spice industry is witnessing a singular growing attributable to the fluctuations in the lifestyle forms of the consumers worldwide. Application of spices in assorted industries like pharmaceutical, medical specialty, drinks and nutrient processing made consumers to tend more towards them, which in bend increased planetary demand of spices and culinary herbs.
Developing states like India, China and Indonesia are the premier manufacturers and bargainers of a assortment of high quality spices ( largely organic ) in the universe. Most of the domestic and international trade takes topographic point in the dried signifier.
Culinary herbs are the other natural merchandises consumers are most attracted to these yearss. The market of these merchandises is invariably turning with the major supplies from India to USA and EU. A sound cognition of the methods and procedures involved in the production of herbs and spices is ever required for a labor-intensive industry like this.
In agribusiness the application of Information and Communication Technology ( ICT ) is all the clip more of import. Identifying the betterment countries and use of information and communicating engineerings in agribusiness has gained importance and precedence in our cognition driven society. The above mentioned parametric quantities act as the support for the agricultural development in line with environmental sustainability standards.
The cardinal job in all human activities within organizational and inter-organisational context is entree to relevant, accurate and handiness of the complete cognition. Adoption of effectual job schemes by all agricultural establishments might decide the increasing jobs at community, national, regional and international degrees.
Vkspice operates with in rural agricultural sector of India. This sector is largely run by the silent cognition passed over by coevalss. Hence the demand for bring forthing organic spices makes this sector competitory. As mentioned in Ifda ( 2004 ) Swaminathan has noted that conventional agriculture is more chemical and capital intensive whereas organic agriculture is chiefly knowledge intensive. It is necessary for Vkspice to maintain the husbandmans updated with the latest agricultural patterns to run into the demand and derive competitory advantage. Information and cognition sharing across the supply concatenation and usage of IT engineerings are the cardinal factors that provide typical advantage in this sector.
3.1. Information and the Five Forces
Vkspice and the industry it operates in can be understood better by executing Porter ‘s five forces analysis. Fig 3.1 illustrates the
Figure 3.1: Information and the sector
Spices are the cardinal ingredients in most of the culinary arts which purely need the usage of specific spices. Although there are no natural replacements to spices there are few replacements like the usage of Artificial or Synthetic Flavours which give about the same gustatory sensation of the spices. However, due to the wellness consciousness most of the people are inclined towards the usage of reliable natural, organic spices over man-made spices. More loosely, other signifiers of merchandises can be considered as replacements. Some might reason that the growing in usage of readymade nutrient merchandises pose a menace to the market, but this seems improbable given the mark market.
The industry faces intense competition since the concentration of providers is high and repute, good will of the company plays a major function in the purchaser ‘s determination devising procedure. Its competition is frequently at regional degree. There are besides many little local companies frequently runing in a specific location and as the demand for reliable organic spices increased the demand for keeping the quality of the merchandise raised. Hence the companies needs to be up-to-date with the information related to quality processs ( Spices board of India 2010 ) and good cognition about the organic agriculture, ( REF! ) where the companies require sharing information and cognition to their providers ( husbandmans ) by supplying sufficient preparation with the aid of experts. Having information and good cognition about different techniques, engineerings play a important function in this industry sector.
Vkspice was one of the first companies in local markets to get down the production of pesticide residue free spices. It recognised the demand in early phases and took necessary stairss to win among its rivals. This company started the usage of backward integrating and made the efficient usage of IPM ( Integrated Pest Management ) techniques in bring forthing organic spices and it besides conducted preparation Sessionss in giving information about new alterations in industry and to leave knowledge about new farming techniques and pest direction to supplier and husbandmans with the aid of agricultural scientists and support from the purchasers. Vkspice besides make better usage of the information engineering to keep assortment of informations such as fiscal and client informations by put ining accounting bundles like AIMS which was customised and developed specially for its ain intent and upgraded to Tally in the recent old ages. This gave Vkspice a strategic advantage over its rivals. However there is no dedicated testing lab installation for analyzing the green goods or stuff that was procured from the external unfastened markets while reassigning the cognition and information of advanced techniques in farming patterns to its providers.
Spice Industry requires big inputs of labor, natural stuffs and services. The cost of these inputs can hold a important consequence on profitableness. Whether the strength of providers is weak, moderate or strong depends on how much bargaining power they can exercise. As a consequence they have some flex in finding merchandise pricing, bringing, and distribution. In this sector some providers are smaller and do non hold much power over the pricing and distribution of their merchandises. However, in this sector most of the providers are husbandmans and local market agents. They get the information from Newspapers and other signifiers of print media and besides from the Audio and Video media. The companies have really high bargaining power over providers as the concentration of providers is high in local markets. They have less menace to the market. ( Talk about Supply chain- sharing info )
Spices are used throughout the universe and purchasers need to hold an huge cognition about the market. There are broad scopes of spices classified into different assortments depending on their features, most of the purchasers get information to do their purchase determinations through Market commission web sites and besides collect extra information from the local markets with the aid of their representatives. There is extra information available on the web sites of Spices board ( Spices board of India 2010 ) about different assortments and handiness of spices based on specific locations. Since they have less control over the forces and because of the raised demand for the organic spices they have really less dickering power over the providers and since demand is high the cost of exchanging really low.
3.1.5 Barriers to entry
Spice industry is a extremely competitory industry. Even though initial capital investing is less, the hazard for new entrants is really high. Sound experience and client database is a major barrier to entry and deficiency of cognition about the merchandise, market information is the cardinal barriers to entry. ( REF! abt trust ) The company ‘s repute and trust besides plays of import function edifice long term relationship with the purchasers and besides because of the high concentration of providers exporting the same goods normally competition in high and local political relations besides have a important consequence on markets. Technology plays a major function as pesticide free spices are of turning demand these yearss and usage of a merchandise proving lab is extremely indispensable in this sector, as it aids in increasing the value of the merchandise. Furthermore, labour inaccessibility is one more barrier that makes the hazard high for new entrants to come in this market.
3.2. Schemes Adopted:
Harmonizing to ( Mintzberg et al 1988 ) Strategy formation in entrepreneurial houses is a airy procedure, Vkspice being an entrepreneurial administration have peculiar concern schemes, human resource scheme and have no definite focal point on Information system scheme. From the analysis done in ( section3.1 ) it can be concluded that Vkspice needs to explicate schemes for all of its operations in order to derive a competitory advantage in the operating sector.
3.2.1. Business Strategy
Spice industry is presently confronting many challenges due to planetary life style alterations ( subdivision 3.1 ) , but at the same clip there is an increasing growing chance for the industry with the addition in demand for natural merchandises. `The gross revenues growing of organic spices are 35 % yearly, more than double the 16 per centum growing rate of spices farmed through chemically intensive methods ‘ ( Forestrade, 2004 ) . The recent alterations in life style of consumers are coercing the companies to bring forth good quality merchandises and this is taking to an extended competitory competition between the houses runing in same sector. Hence, Vkspice implemented some concern schemes in order to better the public presentation of the administration in bring forthing and securing reliable spices.
Vkspice took a strategic attack of ‘contract farming ‘ in bring forthing IPM or pesticide free spices. Farmers have been introduced to new farming schemes that intend to drive plagues off efficaciously, better harvest quality and raise productiveness. The company holding a good husbandman base formulated a procedure where the husbandman groups from different parts work in coaction with the company in turning demanded assortments. Vkspice, has trained the husbandmans with the latest accomplishments and techniques about incorporate pest direction, or IPM and started giving 25 % premium monetary value over the market rate. This allowed the husbandmans to provide the best quality merchandises on clip by giving precedence to Vkspice, whilst gaining good will, keeping professional relationship with the bing clients and spread outing the client base. Evidence in Croplifeasia ( 2007 ) has shown that husbandmans are successful in implementing IPM patterns.
3.2.2. Information Intensity in the Spice Industry
The differences in the function and strength of information among assorted industries are illustrated by Information Intensity Matrix ( Porter and Millar, 1985 ) . The matrix relates the strength of information content of the value concatenation with information content of the merchandise. Figure 3.2.2 shows the porter ‘s Information Intensity Matrix.
Degree centigrades: UsersspoorthiDesktopDiagram for Info & A ; Knowledge Assignment_IIM matrix.jpg
Beginning: Porter, Michael E and Victor E. Millar, “ How information gives you competitory advantage. ” Harvard Business Review, July-August, 1985, pg. 149 – 160.
Figure 3.2.2: Information Intensity Matrix
The usage of information communicating engineering ( ICT ) is extremely of import in this industry ( subdivision 2 ) . Vkspice gets the information from the purchasers about the merchandise, assortments required and besides purchaser ‘s base on ballss on the information of logistics and storage of the goods in warehouses. Information sharing in this industry is a uninterrupted procedure on both terminals of the supply concatenation. Besides, the company needs to update the lower degree directors and husbandmans with latest information and cognition that is received from the purchasers. Hence the strength of information content in the value concatenation is high in this industry. As the merchandises in this industry are spices, it has low information content. However, due to rapid development in the field of engineering the cost of hardware beads. So, Vkspice can administer the engineering among the lower terminals of the company.
From the information strength matrix it can be analysed that, Spice industry has a high usage of the information in the value concatenation, but comparatively low content in merchandise dimension. I.T has an of import function to play in this industry.
3.2.3. Administration and Information
Daft and Wieck ( 1984, see Mutch, p.59, 2008 ) suggest that ‘we can turn up organisational ways of knowing, which they term interpretative systems, against two sets of premises ‘ . First premise is about environment being analysable or unanalysable and the 2nd premise is about organisational meddlesomeness being inactive or active ( Figure 3.2.3 ) .
Organizations and Information
Degree centigrades: UsersspoorthiDesktopDiagram for Info & A ; Knowledge Assignment_IIM matrix_organisation.jpg
Figure 3.2.3: Organizations as readings systems
The entrepreneurial school provinces that scheme formation is a mental procedure of the main executive who is the designer of the scheme ( Mintzberg et al, 1998 ) . Vkspice is an entrepreneurial administration and the scheme formation was made by the main executive or the proprietor of company. As most of the purchasers are transnational companies like Avt-McCormick ( subdivision 1 ) , they will go through on the information of formulated scheme about the merchandise demands to Vkspice. Since, Vkspice being an entrepreneurial administration, there is no formal scheme made. Here, proprietor of the company makes the determinations by analyzing the information received and go through the informal informations down to the hierarchy. Low degree directors are non allowed to take determinations and they need to reach the main executive of the company at each portion of the operations in order to finalize. Hence, Vkspice falls into the adrift screening.