Archies Case Analysis

Archies vs Vintage
P R E S E N T E D B Y:
A R JU N C H A U H A N
M U K E S H T IW A R I
A YA N C H A R A B O R T Y
B H A R A T S H A N D ILYA
S ATYEN D R A KU M A R
V A IB H A V D IX S H IT
SYNOPSIS
• The case outlines the growth of two entrepreneurial firms
that started in 1979 and 1983 respectively.
• Archies started with an investment of Rs. 1000 for selling
posters through mail order.
• But, over a period of 25 years, the growth in the greetings
segment slowed down, while the market for gifts was
picking up.
• This led the entrepreneur to rethink whether by focusing
more on gifts rather than greetings, he could continue
profitably in the Business of Emotions or would that take
the business away from its vision and mission.
• Vintage Cards and Creations was the brainchild of Anil
Kapur and Vaishnav when a few cards made by them
were appreciated by the customers for quality and
design.
• Initially it was a part time business, but soon became a full
time occupation with local artists to create new designs
and distributors and retail outlets expansion for future
growth.
• Archies proactively responded to technology changes in
form of e-cards, SMS and MMS, which were taking the
market away from traditional greeting card by
diversifying into gifts as they were another means of
expressing emotions.
• Vintage , on the other hand did not respond to change and
found itself burdened with a huge inventory of cards with
no market for them.

Core business : greeting cards
Complementary business : gifts and

perfumes
Vision of ANIL
MOOLCHANDANI
“We are in the business of selling
emotions”
Re-quoted his statement in 2000
The statement says: "Archies is all set
to satisfy untapped potential. With
brand launches and new products,
the thrust is on reaching every
individual, satisfying various
emotions and being within varying
budgets. Basing its operations on this
vision, Archies is charting a new
course of action. With the product,
place, price, promotion and
distribution synergies working in
tandem, it won't be long before we
Corporate vision of ANIL
MOOLCHANDANI
TO BE THE WORLD LEADER
IN POSTERS AND GREETING
CARDS.
“BUT FAILED TO RETAIN
THAT VISION AFTER THE
INTRODUCTION OF
E-CARDS”
TRIED TO OVERCOME BY
BRINGING ITS E-CARDS ON
YAHOO.
CHANGED ITS NAME TO
ARCHIES strategy over time
 Innovation was a continuous process.

 offers and promotional schemes were introduced.

 Tap all the Indian festivals and occasions.

 Popularize western occasions in India.
 Associated with HELPAGE INDIA,CRY for shaping its

corporate value.
 Promoted their props through Bollywood movies.


“Business of Emotions”
The key to Archies' success is the fact that the company has consistently
focussed on emotions and feelings, which is summed up in its marketing
strapline: 'The most special way to say you care'. Archies' product
portfolio contains all-occasion greeting cards, gift items such as curios, photo
albums, photo frames, soft toys, mugs, quotations, key chains and a wide range
of stationery. Emotions are at the heart of the Archies collections.
Archies has played a significant role in advancing the social expressions market
by creating a special collection of greeting cards and gifts for different
occasions.
Today the main aim of Archies in the next three to four years to be present in
every significant shopping real estate in the country. With a view to better
control the ultimate experience for the customer, the focus will be on company
owned or company managed stores as opposed to the pure franchising route
that has been followed so far.
PROMOTIONS AND ADVERTISEMENTS
• PROPS USED IN MOVIES
•
• CHANGING FRANCHISE
STORES INTO
GALLERIES
•
• ORGANIZING EVENTS
AND HONOURING
WINNERS

• PROVIDING ONLINE
SERVICE


The distribution revamp of
ARCHIES
During the financial year

1999-00, Archies decided to

revamp its distribution
network and replace existing
distributors by a C&F agent
network. According to the new
distribution system, in place of
68 distributors in 21 states,
Archies appointed 10 C&F
agents in 10 states who
catered to distributors who in
turn reached out to the
The retail revamp of
ARCHIES
In 2001, Archies began an
'exclusivity drive,' by way of
which all existing Archies
Gallery franchisees were
asked to keep only Archies
range of products. If they did
not want to be an exclusive
outlet, they were given the
option of converting into an
Archies Paper Rose Shoppe
on a 'non-exclusive' basis.
Bolo dil ki zuban……… through cards. Be it puja or holi,

pongal or diwali, its time to express your feelings in

your matribhasha!
• With the language card’s popularity going up the
Indian charts, major players like Archies and
Vintage are now trying to expand their portfolio
from Hindi, Marathi everyday cards to an array of
Indian languages like Bengali, Assamese, Tamil
and others.
• The segment growth is pegged at nearly 7% by
industry estimates which is higher than the growth
(5%) of the greeting card category as a whole
which it is estimated to be around Rs 250 crore.


The future shifting focus of
ARCHIES
The Moolchandani’s believed that the distribution and

retail revamp exercises will yield positive results after

the transition phase. Archies decided to focus more on
the gifts segment, as it believed the segment was
under-exploited. The company planned to develop
and introduce new lines in the gift segment including
higher end items, which were lacking in the present
setup. The idea was to make an Archies gallery a 'one
stop gift shop' for people from all walks of life. The
company had already begun importing high-end gift
articles such as crystal, soft toys and Feng Shui items
from China, Hong Kong and Korea in addition to
outsourcing from local vendors...

BRAND VALUES OF ARCHIES
Feelings and emotions have
been at the heart of the Archies
brand for the past 25 years. The
company believes that so long
as there are human emotions,
Archies' brand positioning will
remain fresh and fragrant. The
brand is committed to providing
its customers with opportunities
to express their emotions.
Archies is a medium through
which they can say to their
loved ones, they care.
SWOT ANALYSIS
STRENGTH :
FEW COMPETITORS
People of India associate well with brand image
of ARCHIES
Developed a strong corporate image
WEAKNESS:
BETTER SUPPLIMENTS AVAILABLE.(E-CARDS)
Excess inventory
Continuous need for variety
OPPORTUNITY:
NEW PRODUCT CATEGORY
Variety in merchandise industry
THREAT:
RAPID CHANGING DEMAND
Piracy over the internet
Low margins in merchandise industry
VINTAGE INTRODUCTION
• Ther company was founded as a
partnership firm in 1983 by anil
kapur and rajesh vaishnav for
manufacturing and marketing
greeting cards .
• By 1992, vintage had a collection
of 3000 designs , 26
distributors and 3,000
independent retail outlets.
• To meet its future gorwth
requirments , the company
entered into agreement with
Hallmark , one of the world’s
largest greeting card
manufacturer based in united
states in1992 to use its brand
• In 1996 the franchise stores were
incresed to 67. In 1997-98 the
company expanded its
production capabilities and
commissioned a plant at Goa.
• By the end of 1999, th e
company had a franchaise
network of 221 outlets spread
over 94 cities.
• By 2001, the company had
introduced cards in Hindi and
Marathi and expanded the
franchaise network to 343
stores across 115 cities.
Vintage strategy over time
• Concentrated on developing local
artists to create new designs and
on appointing distributors and
setting up retail outlets for future
growth
• Company entered into agreement
with one of world’s largest
greeting cards company ,
Hallmark, based in US in ’92
• Entered into an agreement with
Walt Disney Consumer Products
to use materials like ‘Mickey’,
‘Minnie’ etc. for use in greeting
cards, posters, gift wraps
• Entered into a licensing agreement
with Verkerke to use their designs
trademarks
• Another brand licensing agreement
with Mattel Inc. US gave them
rights for the “Barbie” brand.
• Apart from these, company tied up
with Cancer Patients Aid
Association to establish its
presence in the corporate segment.
Relationship between
strategical performance and
financial analysis
Such analysis has two components:

• It provides important evidence of

total organizational effectivness.
• The efficiency and effectivness of the
finance function can be assessed in
terms of the management of
financial resources.
Ratio analysis
Four major areas may be defined as

being of particular importance to

strtegical performance:

accountancy terms
1. Is the business profitable?
profitability
2. Is the trading position satisfactory?
Trading
3. Is the buisness solvent?
liquidity
4. Are sharholders earning satisfactory return?
Shareholders ratios

Profitability
 1.Return on capital employed (ROCE):
MAR 05 MAR 06 MAR 07 MAR 08 MAR 09

Return On 17.22 17.19 15.99 13.74 10.19 Archies
Capital
Employed(%
)
Return On -6.09 -36.97 -- -44.3 -80.06 Vintage
Capital
Employed(
%)
2. R E T U R N O N IN V E S T M E N T O R R E T U R N O N A S S E T S
MAR 05 MAR06 MAR07 MAR08 MAR09
Return on 6.96 6.63 6.79 6.14 -- Archies
Assets
Return -5.77 -19.66 -48.61 -29.38 -34.6 Vintage
on
Assets
TRADING POSITION
O P E R A T IN G P R O FIT M A R G IN
Operating 15.77 15.29 13.95 13.64 8.61 Archies

Profit
Margin(%
)
Operating -27.35 -86.13 -- -59.02 -123.68 Vintage

Profit
Margin(%
)
LIQUIDITY POSITION
C U R R E N T R A T IO
Current 1.81 2.05 1.77 1.78 2.47 Archies

Ratio
Current 0.91 1.05 2.67 1.95 1.35 Vintage
Ratio
Q U IC K R A T IO
Quick 1.15 0.92 1.03 1.05 1.12 Archies

Ratio
Quick 1.48 1.58 1.25 0.84 0.54 Vintage
Ratio
Shareholders ratios
E a rn in g p e r sh a re
Mar 05 Mar 06 Mar 07 Mar 08 Mar 09
Earnings 9.28 10.32 12.03 12.14 -1.61 Archies

Per Share
Earnings -2.34 -6.03 -10.67 -6.64 -9.79 Vintage

Per Share
Conclusions and
Recommendations
Vintage
• Survival of the company is at stake
• Reconsider its unique selling ability and
proposition of selling greeting card
Archies
• Company going through a rough patch

• Facing a financial crunch
• Reconsider moving into new business
avenues (Theme and Amusement park,
Cakes and confectionaries, Play schools
and crech for Children)

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Archies vs Vintage

Complementary business : gifts and

 Associated with HELPAGE INDIA,CRY for shaping its

 Promoted their props through Bollywood movies.

1999-00, Archies decided to

pongal or diwali, its time to express your feelings in

retail revamp exercises will yield positive results after

• It provides important evidence of

being of particular importance to

MAR 05 MAR 06 MAR 07 MAR 08 MAR 09

Operating 15.77 15.29 13.95 13.64 8.61 Archies

Operating -27.35 -86.13 -- -59.02 -123.68 Vintage

Current 1.81 2.05 1.77 1.78 2.47 Archies

Quick 1.15 0.92 1.03 1.05 1.12 Archies

Mar 05 Mar 06 Mar 07 Mar 08 Mar 09

Earnings 9.28 10.32 12.03 12.14 -1.61 Archies

Earnings -2.34 -6.03 -10.67 -6.64 -9.79 Vintage

• Company going through a rough patch

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