India's Suguna Poultry FarmLtd.: Can it Go Pan- India with its Current Business Model?

Details

Themes: Strategy
Pub Date : 2009
Countries : India
Industry : Retailing

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Case Code : BSM0051
Case Length : 16 Pages
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Suguna: Pioneer of Contract Farming

About Suguna

"A simple innovation with great business model is more successful than a great innovation with simple business model."¹¹

Suguna's Vision

Energising rural India through a business process that creates and sustains innovation and strategy, by continuously adding value and care to its shareholders with a style of management that will be exemplary to the corporate world.

Suguna's Values

->Breeding trust and growing together
->Suguna believes in providing safe and hygienic, nutrient rich, quality products

->Suguna focuses on customer satisfaction
->Suguna believes in transparent and ethical business processes
->Suguna recognises human potential and meets the business relevant aspirations of all employees
->Suguna treats farmers as extension of their business and aims for their betterment
->Suguna behaves as a socially responsible corporate citizen
->Suguna treats everyone with dignity and respects the feelings.

Suguna was initially set up as a poultry farm by brothers B. Soundararajan (Soundararajan) and G.B. Sundararajan in 1986 in Udumalpet, a town near Coimbatore in Tamil Nadu (a state in south India). The brothers had borrowed INR 5,000 (about $120) from their parents to set up the farm with 200 layer (egg-laying) birds as well as a small shop to sell eggs, poultry feed and medicines. With no formal education to boast of (Soundararajan dropped out in class 11 and G.B. Sundararajan in class 12), the brothers have come a long way in establishing Suguna as the largest player in the Indian broiler market. It is currently the fourth largest in the world (broiler segment).¹² The company did not achieve this status instantly but has survived several challenges to establish itself

Troubled Times

Until 1989-1990, the farm was running smoothly. During this period, the localmarket was flooded with oversupply of birds, thus bringing down prices of poultry drastically. As a result, many of the poultry farmers, who had taken feed and medicines on credit from the companies, could not pay their dues and stopped operations. Though the industry was moving towards a state of depression, the brothers never thought of withdrawing from the game. The founders of Suguna saw an opportunity in this situation just as any other entrepreneur. According to founders of successful new ventures, nearly 41% businesses have no formal business plans and 71% of ideas to start up a venture come from replicated ormodified idea, which belong to past employment.¹³ Individuals possessing entrepreneurial streaks generate many ideas based on which strategies are formulated. In trying to find a solution to the problem at hand, the two brothers decided to adopt the contract farming model.

Next >>

11]"Suguna Presentation", http://www.sugunapoultry.com/presentation.html
12]N. Madhavan, "Radically Different", http://businesstoday.digitaltoday.in/index.php option=com_content&task=view&issueid=36&id=6053&Itemid=99999999§ionid=25,July 27th 2008
13]Jan W. Rivkin, "Where do successful strategies come from?", Harvard Business School, February 27th 2006