MYSORE DEEP PERFUMERY HOUSE: SCALING A FAMILY
BUSINESS CASE STUDY SOLUTION
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SYNOPSIS
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Mysore Deep Perfumery House (MDPH), led by Prakash Agarwal and his sons, has achieved significant
success in the incense stick market through competitive pricing and effective distribution. To reach their
₹10 billion turnover goal by 2026, MDPH faces the choice of expanding their existing business or
diversifying into related or new product lines.2 Expanding the business involves deepening market
n
penetration and offering variations of incense sticks. Diversification offers opportunities in complementary
tio
sectors such as home fragrances or personal care products. The chosen strategy should align with MDPH’s
economic and non-economic goals as a family business, considering factors like market dynamics,
competition, and consumer trends. By leveraging their brand recognition and distribution networks while
lu
staying true to their family values and long-term sustainability, MDPH can navigate industry challenges
and achieve their ambitious growth targets.
So
OBJECTIVES
• Analyze the industry structure to evaluate attractiveness.
• Identify and assess the sources of competitive advantage (moats) in a business.
• Assess the implications of pursuing specific growth strategies.
• Evaluate alternative growth strategies that the business could pursue.
• Understand the interlinkages between the family and business subsystems within a family business,
with respect to goal-setting and decision making for a family dynamics module.
The Case Solution Starts From page 6
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ASSIGNMENT QUESTIONS
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1. What is the market structure of the Indian incense stick industry? Evaluate the industry’s attractiveness.
2. What are MDPH’s sources of competitive advantage (moats) in the incense stick business?
How do you evaluate MDPH’s current growth strategies?
lu
3.
4. What growth strategies should MDPH pursue in the future?
So
5. As a family business, what have been MDPH’s goals?
6. How do MDPH’s strategies align with its goals as a family business?
The Case Solution Starts From page 6
,6. How do MDPH’s strategies align with its goals as a family business?
Family firm literature views goals of family businesses as being unique because of the presence of and need
to preserve SEW, as discussed above. Such literature also advances the view that strategic choices and
policy decisions in family-controlled firms are based on the need to preserve such SEW. Thus, any major
strategic choices or decisions will be evaluated as gains or losses in SEW (rather than financial wealth),
and as such will be accepted or rejected.13 The fulfillment of such SEW goals have trade-offs with financial
goals, which presents a paradoxical picture of strategic decision making in family businesses.
Exhibit TN-5 presents the various strategic decisions of MDPH and evaluates them in light of the family
business’s overarching goals—FWG and the SEW goals. Students should be prompted to assess whether
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The Case Solution Starts From page 6
,EXHIBIT -1: ANALYSIS OF THE ATTRACTIVENESS OF THE INDIAN INCENSE STICK INDUSTRY
A. High bargaining power of suppliers due to:
• Low domestic availability of raw materials (raw bamboo and jigit)
• Import restrictions on raw materials import
• Lack of input substitutes
• Small size of individual manufacturing firms, which further reduced their bargaining power vis-à-vis suppliers
B. High threat of potential entrants due to:
•
•
•
•
•
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C. Intense rivalry among existing firms due to:
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• Low sunk costs and hence low exit barriers
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D. High threat of substitute products due to:
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• Relative price differential between substitutes is not very high (close substitutes)
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•
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E. High buyer power due to:
• Buyers’ switching costs were low
•
•
•
The Case Solution Starts From page 6
, EXHIBIT -5: MDPH STRATEGIC DECISIONS AND ALIGNMENT WITH
FAMILY BUSINESS GOALS
Goal congruence/ conflict
Main
Strategic decision between financial and Specific goal
goal
SEW goals
Decision to enforce a system of advance
Financial Congruence To reduce credit receivables
payments rather than providing credit to buyers
Decision to follow a penetrative pricing strategy Financial Congruence To grow market share
Offer quantity purchase schemes to retailers Financial Congruence To grow sales
Decision to internationalize Financial Congruence To grow sales and profits
To improve brand recognition and
Engage high-profile brand ambassadors
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
BUSINESS CASE STUDY SOLUTION
e
pl
SYNOPSIS
m
Sa
Mysore Deep Perfumery House (MDPH), led by Prakash Agarwal and his sons, has achieved significant
success in the incense stick market through competitive pricing and effective distribution. To reach their
₹10 billion turnover goal by 2026, MDPH faces the choice of expanding their existing business or
diversifying into related or new product lines.2 Expanding the business involves deepening market
n
penetration and offering variations of incense sticks. Diversification offers opportunities in complementary
tio
sectors such as home fragrances or personal care products. The chosen strategy should align with MDPH’s
economic and non-economic goals as a family business, considering factors like market dynamics,
competition, and consumer trends. By leveraging their brand recognition and distribution networks while
lu
staying true to their family values and long-term sustainability, MDPH can navigate industry challenges
and achieve their ambitious growth targets.
So
OBJECTIVES
• Analyze the industry structure to evaluate attractiveness.
• Identify and assess the sources of competitive advantage (moats) in a business.
• Assess the implications of pursuing specific growth strategies.
• Evaluate alternative growth strategies that the business could pursue.
• Understand the interlinkages between the family and business subsystems within a family business,
with respect to goal-setting and decision making for a family dynamics module.
The Case Solution Starts From page 6
, e
pl
m
Sa
n
ASSIGNMENT QUESTIONS
tio
1. What is the market structure of the Indian incense stick industry? Evaluate the industry’s attractiveness.
2. What are MDPH’s sources of competitive advantage (moats) in the incense stick business?
How do you evaluate MDPH’s current growth strategies?
lu
3.
4. What growth strategies should MDPH pursue in the future?
So
5. As a family business, what have been MDPH’s goals?
6. How do MDPH’s strategies align with its goals as a family business?
The Case Solution Starts From page 6
,6. How do MDPH’s strategies align with its goals as a family business?
Family firm literature views goals of family businesses as being unique because of the presence of and need
to preserve SEW, as discussed above. Such literature also advances the view that strategic choices and
policy decisions in family-controlled firms are based on the need to preserve such SEW. Thus, any major
strategic choices or decisions will be evaluated as gains or losses in SEW (rather than financial wealth),
and as such will be accepted or rejected.13 The fulfillment of such SEW goals have trade-offs with financial
goals, which presents a paradoxical picture of strategic decision making in family businesses.
Exhibit TN-5 presents the various strategic decisions of MDPH and evaluates them in light of the family
business’s overarching goals—FWG and the SEW goals. Students should be prompted to assess whether
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
,EXHIBIT -1: ANALYSIS OF THE ATTRACTIVENESS OF THE INDIAN INCENSE STICK INDUSTRY
A. High bargaining power of suppliers due to:
• Low domestic availability of raw materials (raw bamboo and jigit)
• Import restrictions on raw materials import
• Lack of input substitutes
• Small size of individual manufacturing firms, which further reduced their bargaining power vis-à-vis suppliers
B. High threat of potential entrants due to:
•
•
•
•
•
e
•
pl
C. Intense rivalry among existing firms due to:
m
•
o
Sa
o
o
•
• Low sunk costs and hence low exit barriers
n
D. High threat of substitute products due to:
tio
• Relative price differential between substitutes is not very high (close substitutes)
•
•
lu
•
So
E. High buyer power due to:
• Buyers’ switching costs were low
•
•
•
The Case Solution Starts From page 6
, EXHIBIT -5: MDPH STRATEGIC DECISIONS AND ALIGNMENT WITH
FAMILY BUSINESS GOALS
Goal congruence/ conflict
Main
Strategic decision between financial and Specific goal
goal
SEW goals
Decision to enforce a system of advance
Financial Congruence To reduce credit receivables
payments rather than providing credit to buyers
Decision to follow a penetrative pricing strategy Financial Congruence To grow market share
Offer quantity purchase schemes to retailers Financial Congruence To grow sales
Decision to internationalize Financial Congruence To grow sales and profits
To improve brand recognition and
Engage high-profile brand ambassadors
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
