The problem, is” THE PROBLEM”

Not many people have what it takes to differentiate basking in old glory and failure. When you actually think of it, what is the difference between the two? Let us walk down memory lane a bit, I remember a colleague, he had graduated from school, went ahead to get an MBA and then set up a business. I mean why not? He had an MBA and was good with numbers. But then along the line, he noticed relatively low margins in his books, mostly because of the nature of his business. The business did not record any profit after indirect expenses were allocated to them. What would be his next line of action?

His business is a departmental store, and the only one with that kind of unique product in the whole city at the time. He is located just in the heart of the central shopping district and also is the largest shopping mall in the city (MBA folks are not playing) with sales valued at approximately 4,000,000,000.It catered to a broad clientele, people of various income groups, and also had the reputation of carrying the most exquisite and complete stock of any store in the city. Once you are able to make it to Jashan’s, you wouldn’t need to make another stop just to get all that you want.

Jashan’s has a frozen food department and a grocery department. They just introduced the frozen foods department a while back because business conditions were poor at the time and they were hoping that the new department would attract customers who would buy groceries and then head to somewhere else to buy other frozen food items. They hoped to serve their customers better by making the business a one-stop location for everything grocery and frozen foods.

They grocery department was well known for very specialized and high quality groceries, not the type you stumble upon in just any store. Infact, just two or three other stores had identical goods in the metropolitan area. The whole point was to stand out and Jashan’s  stores, did stand out in every sense of the word. The executives of this business believed that they should keep the sale of common groceries to the minimum and concentrate majorly on specialty groceries of high quality and luxurious items. This they agreed would help avoid direct price competition. What we did not know was if this decision would make the numbers better.

Customers had something to say about the store, some said the products in Jashan’s were so varied and unusual. Some others said the products were only from the best brands and had high quality. While these brands were not the popular brands and people were not really receptive of them, the store kept stocking up on them because the executives felt it would bring about customer loyalty, return customers and greatly minimize competition.

This is where I come in, Jashan is also my friend, not just a colleague. We were in school together for our MBA, very brilliant guy. Believe me when I say ,I was kind of surprised when he invited me to help him analyze what the problem could be with his business. At first, I thought he just wanted a different opinion, which is kind of my specialty. But having gone through all of these, I must say, I am as confused as he is. I cannot exactly say what the problem is. I don’t know if it is a customer-brand problem, product range problem or a business owner-decision problem.#MMBA5