Question

Give a TOWS analysis of Indian QSR chain WOW MOMO!

Answer 1

Answer

A TOWS analysis of Indian QSR chain WOW MOMO!

Introduction

The story of how Sagar Daryani, co-founder-CEO, Wow! Momo, settled on the momo (a type of dumpling native to Tibet, Bhutan, Nepal, and the Northeast region in India) as his business proposition is the kind Bollywood might lap up. To begin with, it is based on a tiny white lie—the kind that did no harm to anyone, but helped give the then 21-year-old the foundation for his dreams. Add to that the narrative with the pace of a blockbuster, reaching its climax in a mere 45 days. It began when the self-admittedly restless Daryani, having finished his final-year Bachelor of Commerce examinations from St.Xavier’s College in Kolkata, purposefully made his way to Mumbai. This was in 2008, and he wanted to start a business in the food space. Daryani was open to a range of options—but some ideas were not viable because “to start a [for instance] bakery business would require about ₹30 lakh- ₹50 lakh of initial investment”, he says. “I couldn't arrange that much capital. And no bank would give a loan to a fresher without any collateral"

Strengths of WOW MOMO

Awards and Achievements Wow Momo

• Winners at ET Now Leaders of Tomorrow Regional Awards in Food & Agri Products from East India 2013 & also qualified for National Awards on 09.12.2013
• Winners at ET Now Leaders of Tomorrow Regional Awards 2013 as the Best SME of the Year from East India on 09.12.2013
• Winner of the Images Most Admired Retailer of the Year – Food service in the East India Retail Summit, ITC Hotel on 17.12.2013
• Sagar Daryani of Wow! Momo received a citation as the Top 50 Most Professional Retail Individuals of India for 2013 on 13.02.2014.
• Nominated in the Finals of the Coca Cola Golden spoon Awards under the CATEGORY – Images Most Admired Food Service Chain of the Year: QSR Indian Origin for 2013 & 2014.
• Nominated as Finalists in Et Now Leaders of Tomorrow for the Year 2012.
• Recipient of 1st Runners Up in ‘The Food Court ka Badshah’ organized by Spencer’s Retail Ltd. in Kolkata.
• Recognized by The Telegraph ‘Graphiti’ magazine as top 5 Young Entrepreneurs of Kolkata on 19th Dec 2011.

Weaknessess

• Not highly successful at integrating firms with different work culture. As mentioned earlier even though Momo Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
• Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Wow Momo Inc. needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.
• Investment in Research and Development is below the fastest growing players in the industry. Even though Momo Inc. is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.
• Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
• Limited success outside core business – Even though wow Momo Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
• High attrition rate in work force – compare to other organizations in the industry Momo Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
• Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of WOW Momo Inc.

Oppotunities

• New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for Wow Momo Inc. to drive home its advantage in new technology and gain market share in the new product category.
• The new technology provides an opportunity to Wow Momo Inc. to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.
• Organization’s core competencies can be a success in similar other products field. A comparative example could be - GE healthcare research helped it in developing better Oil drilling machines.
• New trends in the consumer behavior can open up new market for the Momo Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• Government green drive also opens an opportunity for procurement of Momo Inc. products by the state as well as federal government contractors.
• Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Wow Momo Inc. to capture new customers and increase its market share.
• The market development will lead to dilution of competitor’s advantage and enable Wow Momo Inc. to increase its competitiveness compare to the other competitors.
• Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Wow Momo Inc. in other product categories.

Threats

• Rising raw material can pose a threat to the WOW Momo Inc. profitability.
• Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Momo Inc.
• The demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of the company in short to medium term.
• Liability laws in different countries are different and Wow Momo Inc. may be exposed to various liability claims given change in policies in those markets.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
• As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.
• No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.

Conclusion

Above are the A TOWS analysis of Indian QSR chain WOW MOMO!