1. STRATEGIC MARKETING WORKSHOP TEAM - CONQUERERS KRISHNAN.P ASHWIN KUMAR SHRI SUPRAJHA.T LAKSHMI KSHATRIYA

2. Executive Summary Narnia Group which has been operating for over 30 years has a turnover of Rs.600 crores and mainly focussed on manufacturing men’s wear. It has two brands- home brand which is ‘Best Formals’ and newly acquired ‘First sports’. Best Formals being, the dominant brand in the category, offers a wide range of products with wide price range and also has other men’s accessories. It is believed that the wide range offering of Best Formals have made it to have the highest market share of 17% which is 4% more than its competitors.

3. Short Backgrounder Best Formals launched Best Casuals- targeting younger consumers about eight years ago. One of the core strength of Best Formals is its extensive distribution network owned and also known for its good quality and innovation. First sports was founded by Mr.Tathagat and was acquired by Narnia group as Mr.Tathagat believed that the brand would need more investments for scaling up in terms of expanding the retail points and its space and also its supply chain. Key strength is right distribution and became a premium brand. First sports was acquired by Narnia in order to increase the product range it is offering and also to expand its customer base. Also Narnia aimed to integrate the supply chains of Best Formals and First sports in order to reduce costs. However it was difficult to achieve due to the difference in their work culture.

4. Issues to be Addressed 1. Whether Narnia had done the right thing by acquiring First Sports? Yes Different category – sportswear. Advantages of First Sports - focused on customers, quality,detailed, unique style, innovations which satisfied the target consumers, well – trained staffs, systems and process, Right distribution, Good network of dealers, Successful campaigns. Profitable – Valuation and investments can still more increase profit margins MBO is the most preferred by retailers where first sports has the highest number of stores. High Market Share – 28 % First Sports showed significant revenue next to Best formals other than Best casuals and women wear and Industrial Lubricants. Overall Financial performance will increase further.

5. 2. Opinion on Narnia’s Post-integration steps and acquisition strategy Narnia did not have a strong hold with respect to operational matters post the acquisition of First sports ; therefore it was difficult to implement certain lean methods of manufacturing and cost optimization efficiently. The growth achieved post the acquisition was steered by heavy investment of capital and Narnia lost focus on innovation attracting negative feedback from retailers and customers. The multi-brand channel which emphasized on top-notch service an commitment levels died down slowly because of the expansion in the company leased and managed showrooms. The shift in priorities and management decisions lead to Staffs being changed frequently as a result of the talent crisis in our country.

6. Stepping into the shoes of Narnia – Post – integration steps The terms and agreements must be clearly stated wherein the parent company will have complete authority over financial an operational matters of the company thus establishing a strong hold over the management and control. Investing in R&D is extremely critical for an industry like garments / clothing mainly because of the changing customer tastes and trends over a period of time. Retaining customers in today’s competitive environment is possible only by standardizing the company’s service processes and by ensuring that the employees’ commitment levels are always high – Possible by incentivizing employees. Attrition is a major issue faced by many companies post a merger or an acquisition since they find it difficult to cope up with the newly formed priorities or change of cultures. It can be avoided by hiring the right talent who are adaptable.

7. 3. Way forward for First sports Due to changes in market scenario (increase in cost, service tax) the franchisees are backing out, company owned stores emerged and this affected the multi brand outlets. Absence of sufficient channel partners increased the gaps in competencies of company. Overlap of stores selling both First sports and Best formals leading to decrease in distinction between the two brands. Should the back end process of both companies be integrated? Whether the setup to be moved to Hong Kong? Deterioration in financial performance and operating parameters.

8. 4. Possible challenges Ram Lall will face if he decides to acquire Tiara. Tiara, being a women wear, have completely different material requirements and also other raw material requirements and hence will involve a separate backend supply chain for Narnia when compared to what it has for its men’s wear. This new supply chain will definitely consume more costs in future because of rapidly evolving women wear trends and hence the supply chain will need more innovation which will be new to Narnia. Also the back end integration which it thought with First sports, when Narnia acquired it, cannot be even considered for Tiara. Moreover, the trend and seasons driven merchandise are of a completely new concept for women’s wear when compared to men’s wear and hence Narnia needs to expand its core competencies like women fashion designing, ability to predict new fashion statements etc., in order to sustain with Tiara.

9. Contd.. However the positioning and leverage of various brands of Narnia definitely will help Tiara acquire more awareness and will add to increased goodwill of Tiara. Also the retail formats and their costs will be high and challenging given the current situation of Narnia’s First Sports and Best Formals.

10. Analysis Exhibit 3: Decrease in growth rate of clothes, textile from 39% in 2004 to 16% in 2015 Exhibit 4: Best casuals has grown at a faster rate than others. (64% from 2005-2008) Exhibit 5,6,9,11: Even though average MRP of First Sports and market share are higher, the company owned and franchisee showrooms are lower and so the sales are lower Exhibit 12: Even though the total income is increasing, the operating profit is decreasing due to increase in discounts and selling expenses. Exhibit 16,17: Product-wise sales volume (full price sales) of LFS has decreased for both Best formals and First sports but for value sales it has increased.

11. Recommendations Invest in R&D to cater to the changing customer tastes and trends. Standardizing the service process flow and incentivize employees to enhance their commitment level. Avoid having an overlap of stores selling both First Sports and Best formals. Narnia can leverage on its Brand awareness to ensure that Tiara’s good will increases in the market which enables the relationship to be mutually beneficial in the future Hiring talent becomes extremely critical to make sure that they are adaptable to changes in the culture of the organization post a merger or an acquisition in particular.