Expansion strategy for high growth family businesses: Lunar group

Abstract

This Contemporary Concerns Study revolves around the growth, evolution and challenges facing the Lunar Group, a family owned business group based out of Kerala. The author is a Director in one of the group companies and is privy to information that is otherwise unavailable in the public domain. Lunar group has seen tremendous growth in the last seven years. It has grown into a company with a turnover of INR 200 crores in 2009. The exponential growth has come from venturing into the plastics footwear business. The company’s traditional focus was on Hawai or rubber footwear and the new development has caused a change of focus and has brought with it certain implication which are hard to ignore. In the previous 5 years, two members of the second generation have joined the business as Managing Directors. A few more are expected to join the business in the next three years. The company’s change in focus from Hawai to Plastics has caused tensions between the Managing Directors of the respective units. The chairman is aware of all these issues and had decided to formalize the agreements and contracts between the various family members. It is in this scenario that a family constitution becomes relevant for the family. Fast paced growth and changes in the footwear industry has resulted in a peculiar market positioning in the South Indian footwear market. Lunar has captured the market leadership position in Karnataka, but has struggled in the Kerala and Tamil Nadu markets. The project aims at analyzing the reasons for this phenomenon and tries to find out whether it is beneficial for the company to exit from certain segments. Size of the company is a major advantage in the footwear market and Lunar aims at becoming a INR 1000 crore company within the next 5 years. Capital is not a constraint as the family estate has ensured sufficient funds for every member of the family. The project also analyses three different strategies of expanding the business and lists out the various options under each strategy. Finally, the findings from the report has been shared with the management and it has been agreed that the suggestions will be discussed in detail by the author at the next general body meeting.