END SEM TAKE HOME EXAM - STRATEGIC MANAGEMENT

Final report

New Venture: Sheesh Mahal Glass Recyclers (SMGR)

Submitted by

Sohilpreet Singh Walia

Roll No. 401107028

Second Year

L.M Thapar School of Mangament, Chandigarh Campus

THAPAR UNIVERSITY

December 2015

Contents1. Description of the new venture............................................................................................................3

2. Value proposition................................................................................................................................4

3. VISION, MISSION, CORE VALUES AND OBJECTIVES...............................................................5

4. EXTERNAL AND INTERNAL ENVIRONMENTAL FACTORS....................................................7

5. PORTER’S FIVE FORCES ANALYSIS............................................................................................9

6. VALUE CHAIN ANALYSIS............................................................................................................11

7. Operational model.............................................................................................................................13

8. Revenue model..................................................................................................................................13

1. Description of the new ventureThe recycling of composite material such as glass is a growing environmental concern, and one

that doesn't have a concrete solution yet. Even most scrap metal recyclers aren’t suitably

equipped to deal with this issue. In our country, this problem is widespread. Recycling is

minimal and garbage heaps are there each and every nook in our towns and societies. The glass

is more dangerous as if broken it can harm the animals feeding on the garbage, the general public

at large.

13 Million tons of glass is being produced per year. Glass is one of the few materials that can be

recycled without loss of material. The container glass collection and recycling have seen a

dramatic acceleration over the last 20 years to reach 70 % recycling in Europe. It is a win – win

equation for the community and the glass producers. The European container glass industry has

achieved a record of 70 % recycling rate in 2010. However, there is still important potential for

growth with important differences between Europe and India. Currently, glass recycling in India

is in its early stage.

Glass recycling is the process which involves turning waste glass into usable products. The glass

is widely used in our daily life. It makes up a large component of household and industrial waste

due to its weight and density. The glass component in municipal waste is made up of bottles,

broken glassware, light bulbs etc. An interesting point about the glass recycling process is that

glass can be recycled as many times as required, without any deterioration in quality. The glass,

once recycled, can be used to construct concrete curbs but it will take time before the techniques

for recycling glass can become widespread.

The venture which would be created is SMGR. The “Sheesh Mahal Glass Recyclers (SMGR)” is

involved in recycling of the Glass, an important component used in our everyday life whether it

is a household or an industry. It consists of the team which is dedicated to increase glass

recycling in India. The venture would first focus on the major glass manufacturing districts such

as Kolkata, Faridabad and Mumbai.

Glass that is crushed and ready to be re melted is called cullet. Glass waste should be separated

by chemical composition, and then, depending on the end use and local processing capabilities,

might also have to be separated into different colors. Many recyclers collect different colors of

glass separately since glass retains its color after recycling. The most common types used for

consumer containers are colorless glass, green glass, and brown/amber glass.

The SMRG is passionate and we will try to ensure that every Indian realizes the value of

recycling glass and should actively embraces the practice of recycling. We endeavor to instruct,

empower, urge and move people to isolated their glass for reusing, yet don't physically gather or

reuse the glass. Our focus is on the consumers, communities, trade, industry and corporate India.

We additionally expect to elevate the unemployed and poor by making wage producing

opportunities in the recycling segment. We believe in the infinite potential of glass recycling to

make a real and positive contribution to society. At SMGR, we are committed to show that glass

recycling is worth the effort.

2. Value proposition The SMGR carries a unique value proposition for the community by reducing and eventually

eliminating the landfill disposal and he glass makers by diminishing the energy consumption and

emissions (C02 and Sox). There can be three types of stakeholders for this business:

Government, Society and Shareholders. The main value proposition is to simplify glass

recycling in India, and to start the building of an overall entrepreneurial approach to support

the Glass Crusher deployment in our country and to reduce the pollution. We will add value to

our society by making environment clean and green. This will help the people living in the

society by reducing harmful effects of glass which can harm their health. This will reduce health

disease and make environment more eco-friendly. The other advantages are-

Recycling glass saves scarce landfill space.

By recycling, we can prevent waste glass from filling up already overfilled ‘dump sites’, landfills

in India.

Keeping India clean.

By recycling instead of littering, we are ensuring our natural environment is kept clean and

beautiful.

Recycling reduces carbon footprint.

Taking into account the transportation and processing, for every ton of glass made out of

recycled glass, 670kg of CO2 emissions are saved. Recycling also reduces the need for raw

materials to be quarried thus saving non-renewable, natural resources.

Glass recycling saves energy.

Recycling can save a lot of energy. Already we have limited electricity production in India, so it

can play a part by saving some electricity.

Recycling conserves our natural resources.

For every ton of waste glass used to manufacture new glass, 1.2 tons of natural resources are

saved.

Collecting glass for glass recycling can serve as a source of income.

Unemployed people and poor people will be able to earn a source of income by collecting and

selling the glass to our company.

Target market Industries using glass as a product or a

byproduct

Benefits Functional, Symbolic, recycled galss,

environmental friendly

3. Vision, Mission, Core values and ObjectivesVision

Sheesh Mahal Glass Recyclers (SMGR) aims to develop a profitable glass recycling company

and a clean living environment. By recovering glass from waste, we are making a tangible

contribution to resolve the issue of raw materials shortage and contribute substantially to

achieving climate targets

Mission

Sheesh Mahal Glass Recyclers (SMGR) would play a leading and connecting role in the value

chain from waste to raw materials. We work with our customers, suppliers and other supply

chain partners on an ongoing basis to build cycles and create environmental and economic value

from glass waste. . We will try to be the leader in our industry through individual and combined

dedication, innovation, and integrity

Values Statement:

The core values of SMGR are-

Act with honesty.

Always work effectively and efficiently

Treat everyone including employees with respect

Do the business by following all laws and norms.

Focus on CSR

Strive for customer satisfaction

Improve and innovate continuously

Minimize the waste

Objective:

The various objectives are mentioned below:

Reduce production cost and improve our nation's ability to compete.

Reduce greenhouse gas emissions

Save landfill space

Create Employment

Provide raw materials for industry

Prevent air and water Pollution

Save limited natural resources

4. External and internal environmental factors

Internal environmental factors:-

Strengths: -

The biggest strength of our business is that it is helping the environment become cleaner.

Huge potential as there are very less competitors.

The garbage waste is increasing as our country becomes more and more advanced.

Maslow's Hierarchy of needs are fulfilled. Shareholders meet physiological (pays enough

to buy basics), safety (safe environment Mission Zero, healthcare, job security), social

(teamwork, sense of belonging, newsletters), esteem (acknowledgment, promotions -

recognition and status), Self-actualization (challenging - for new innovation areas) needs.

1 bottle can be recycled to exactly 1 new bottle.

STRENGTHSCradle to cradle( 1 bottle collected= 1 bottle produced.

Very less competitionGrowing waste

People's attitude is changing towards recycles productsFocus on Environmeny.

Focus on qualityMaslows hierarchy of needs

WEAKNESSESMarketing issues

Heavy investmentPoor corporate culture

Labour unionsHigh turnover rate

Lawsuits

OPPORTUNITIESSupport by the government.More technolgy investment

Increasing demandGood market segmentation

THREATSLow R&D in India

Bureaucratic hiccupsIncreasing contamination of waste

Color sorting techniques.Extensive government regulations

Dynamically Continuous and Discontinuous innovation

SWOT Analysis

Weakness: -

A very high initial investment is required for setting up the whole project. This will lead

to high product cost.

Lawsuits regarding improper waste disposal can hurt the company’s reputation.

Marketing is very essential. People and industries need to understand the benefits of

glass recycling.

The corporate culture in India is very poor.

Labor unions often disrupt the work.

External environmental factors: -

Opportunities: -

The societies and government are getting more concerned about the pollution. This is the

biggest opportunity for our business. This will help our business to grow as government

will also support our venture.

The demand is continuously increasing as people become more concerned and sensitive

towards deteriorating environment.

Market segmentation can be done properly. Most of the glass manufacturers are located

in NCR region, Mumbai and Kolkata. Majority of glass waste is produced by the large

ceramic industries.

Threats: -

Differences in laws regarding waste handling and environmental concerns among

different states.

Very less research and development in our country.

The bureaucratic hiccups will be definitely faced

It is hard to get people to change and embrace new ideas. For glass waste management

this will include changing, what/how to recycle and how we throw away trash

The waste industry is subject to extensive government regulation; existing or future

regulations and/or enforcement actions may restrict our operations, increase our costs of

operations or require us to make additional capital expenditures.

Growing waste collection and continuous needs for heavy investment

Increasing contamination of the waste being collected is a problem

More stringent quality requirements as the cullet intake in the furnace batch is growing

Needs for color sorting technologies

Rapid growth of the waste elimination cost supported by the glass recyclers

5. Porter’s five forces model

Competitive rivalry:

There are very few players in this industry so there is low competitive rivalry within industry.

Bargaining power of Buyer:

Due to low competitive rivalry i.e. low competition; buyer doesn’t have enough option with

them so they can’t bargain. This will lead to low bargaining power of the buyer.

Bargaining power of the suppliers:

Municipals do not collect glass waste. Landfills sell glass waste at relatively less price.

Threats of new entrants:

This business requires huge amount of initial investment and knowledge. So because of all the

above reasons it will very difficult for the new entrant to enter in this business. So there is low

threat of new entrant.

Threat of substitute:

Landfills can be a substitute.

Figure 1 5 Porters model (Made as a template)

6. Value chain analysis

There are two activities in every value chain: -

Primary activities: - These are those activities that are involved in the creation, sale and

transfer of products (including after-sales service).

o Procurement of raw material

o Manufacturing of a product

o Distribution of product

o After-sale service.

Secondary activities: - These are those activities that merely support the primary

activities.

o General administration

o Human resource.

The value chin can be explained as follow:

Figure 2 Value chain

Waste glass is collected

Then purification processes are done.

Fining processes

are d

Cullet melting and purification

is done.

Re forming of the glass.

End products

are created.

New bottle

7. Operational model

India produces 11 million tons of glass waste annually and 72.5% of waste is produced by

Mumbai, NCR and Kolkata, hence we are going to target these cities where we can easily locate

our target customers and companies. Glass waste management will be implemented by targeting

a specific locality which would cover about 10000 households in the pilot phase. A government

tie-up for waste collection would also ensure a steady supply of revenue as a compensation for

the work done on their behalf.

Waste collection will be done by a team of workers who would collect domestic waste from the

specified households, landfills each day. We will also partner with local dealers and directly with

rag pickers for collection of waste. The waste collected will be sorted at source site and

transported to our ‘Waste Treatment Site’.

In order to increase the environmental awareness, we will partner with various Malls, Schools

and others to organize Recycling Drives, Awareness Campaigns, Environment Weeks and

Workshops to reach the people and spread our message of Clean Cities and Sustainable Living.

8. Revenue model

The business would take about 13 months to attain break even considering the high cost of waste

collection in the initial phases. The return on Investment (ROI) on an investment of 2.03 crores is

about 10.2% by 3 year of operation.

Costs Amount Revenues Amount

Fixed Costs  

Selling Recycled

bottles 15000000

Cost of buying 3 Mini Trucks 1500000

Land for setting up plant 3000000

Machine Costs 2000000

Government

Revenues 100000

Variable Costs   Total Revenues 15100000

Driver Annual Salary 54000

Helper Annual Salary 42000

Fuel Costs 45000

Factory 240000

Collection Agents (10) 360000

Machine Handling Employees salary 300000

Other expenditure 360000

Management Personnel 200000

Machines Maintenance Cost 200000

Electricity Cost 120000

Telephone Cost 12000

Other expenses 60000

Waste from dealers 1200000

Total 20313000