Featured case: Agarwal Packers and Movers:
Competing for “Moving” Experiences

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The case

Who – the protagonists

Ramesh Agarwal, Chairman and Managing Worker at the family-managed business Agarwal Packers and Movers Limited (APML).

AgarwalWhat?

APML offered a range of services, including domestic relocation, international moving, home storage, warehousing, air terminal management and cargo import and export. However, domestic relocation was its flagship service, contributing more than 60 per cent of its 2014 revenues.

Why?Agarwal

APML was facing increasing competition from several large and numerous small moving companies that were fighting for business. In addition, many of the smaller companies were using the APML name to get more customers.

When?

Ramesh Agarwal, an airman with the Indian Air Force, set up APML in 1987. By 2013, it had reached total sales of $62.6 million, owning more than 1,000 trucks and employing 2,500 people directly, and about 3,000 indirectly. The company had also acquired over 139,000 square metres of warehouse space on government-approved lands as part of its forward planning to store a large number of potential consignments.

AgarwalWhere?

Originally named Agarwal Household Carriers, the company’s first office was located in Hyderabad, India. In the 1990s, the company expanded its reach and established its headquarters in New Delhi with 60 offices across India.

Key quote

‘There is hardly any requirement to get into this segment, least of all capital. One can just hire a truck and you are in business. It’s not just about our losing business; the greater damage is the loss of credibility of the Agarwal name by such fly-by-night operators.’ – Ramesh Agarwal.

What next?

What strategy should APML pursue in the fragmented and largely unorganised household relocation segment of the Indian logistics industry? The company’s Chief Financial Officer had proposed a hike in prices for inter-city relocations, but was this the best way to compete in such a market? Were there other non-price strategies that could be pursued? And, more fundamentally, would the household relocation business continue to be profitable in the short and long term?

 
The protagonist

Ramesh AgarwalRamesh Agarwal, Chairman at Agarwal Packers and Movers Limited, explains why he welcomed the opportunity to take part in this case.

More understandable

This was a pure learning experience; it is always good to discuss aspects pertaining to business as it lets us know every business detail expressed in terms of facts and figures making it more understandable and to the point.

Introspection and insight

A case study gives the opportunity of introspection and helps to gain an insight into business processes which are so infinitesimal that they go unnoticed. I have gained a lot by sharing what was already there in my system. 

Delighted

We extend our hearty regards to Tulsi Jayakumar who has selected Agarwal Packers and Movers Limited for developing the case; we would be delighted to be a part of any other study like this in the future. I feel the experience that I have got and the ways in which I have benefited, should be experienced by others.

The author

AuthorsTulsi Jayakumar

Tulsi explains how she met the protagonist, Ramesh, and why the case demonstrates that success requires 99% perspiration and 1% inspiration.

Industry doyen

Ramesh Agarwal is a doyen of the logistics industry in India and we invited him to speak at our post-graduate programme in family managed business at our School. His humility, sincerity, compassion and patriotism were appreciated by the students, who gave him a standing ovation.

Pleasure to work with

His customer-centric approach in this largely unorganised sector, as well as his strategic interventions in what is a monopolistically competitive industry, made me interested in writing this case. Mr Agarwal and his entire team were a pleasure to work with. He epitomises the culture of hard work and ‘customer is king’ attitude that is the hallmark of great companies.

Living examplesAgarwal

The case and the protagonist are living examples of the human-centric innovations that lie at the heart of current cutting-edge Western concepts such as ‘design thinking', or even open innovation. It exemplifies success being 99% perspiration and 1% inspiration. Critically, it suggests the importance of taking all customer needs and complaints seriously, and being ready to address them.

AgarwalDifferentiation versus price competition

This case explores the merits of methods such as differentiation vis-à-vis using price competition in unorganised, monopolistically competitive markets. The lessons from this case can be applied to other industries in monopolistically competitive market structures, especially in emerging markets, such as clothes, toys, and beauty products. It is also applicable to oligopolistic market structures.

Local championsAgarwal

In addition, the case is a good example of how emerging market economy firms (EMEs) use their knowledge of local customers to gain competitive advantage and emerge as ‘local champions’ with hugely successful brands. In an era where EMEs are increasingly opening up to foreign competition, multinational firms can learn lessons from these ‘local champions’.

Learning objectives

The main learning objectives of this case are to understand:

  • monopolistically competitive market structures and the elements of perfect competition and monopoly power
  • demand-supply dynamics in markets, such as the relocation segment of logistics and their implications for price as a competitive weapon
  • differentiation strategies as a means of enhancing monopoly power in monopolistically competitive markets
  • the rationale and significance of selling costs in such markets
  • profits in the short and long run in monopolistically competitive markets.

About the author

Tulsi Jayakumar is Professor – Economics and Programme Head, PGP-Family Managed Business at S. P. Jain Institute of Management & Research (SPJIMR). Published by Ivey Publishing.

e tulsijayakumar@gmail.com; tulsi.jayakumar@spjimr.org
tw @TulsiJayakumar

 
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Agarwal Packers and Movers: Competing for “Moving” Experiences
Ref 9B16M008

 

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