O Caso HBS: Capro Group: A Growth story (Ivey W12208)

FINANÇAS CORPORATIVAS

Caso HBS: Capro Group: a Growth story (Ivey W12208):

SÃO PAULO – SP

2024

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QUESTIONS

1.  Describe CAPRO and the environment it faces.

CAPRO is an electrical engineering firm established in India, initially focused on electrical distribution systems. Founded by R.K. Agarwal in 1987, the company expanded its operations to include custom manufacturing and production of low voltage (LV) panels, in addition to providing engineering design and consultancy services. By 1992, the CAPRO Group had experienced significant growth, handling projects involving complete low voltage (LV) electrification in industries, including turnkey ventures. Facing challenges such as economic recessions, labor issues, and increased competition in the Indian market, CAPRO diversified its client base across various sectors and expanded its operations internationally to countries such as Kenya, Sri Lanka, and Nigeria. The company operated in a competitive environment with a focus on low voltage (LV) electrical equipment but aimed to expand into high voltage (HV) projects. It was assessing the timing for this expansion due to the economic crisis.

1. What options does Varun Agarwal have to bring CAPRO out of its current slump?

Varun Agarwal, being appointed as a director, has several options to pull CAPRO out of its slump:

Implement cost-cutting measures to improve profitability.

Diversify into new markets or sectors to reduce dependency on the Indian market.

Invest in research and development to innovate new products or services.

Strengthen partnerships or alliances with other firms to leverage resources and expertise.

Focus on employee training and development to enhance skills and productivity.

1.  What analytical methods can be utilized to choose among the options? Analyze the various options on the basis of methods you have suggested.

 over the yearsAs the cash flow is done, it’s possible to project the Internal Rate of Return, assuming that the invest in any project offer a rate of return higher than the opportunity cost of capital. It’s even important to project when the investment is going to be bring return to the stakeholders. The Payback shows the number of the years needed to accumulate forecast cash flow until getting the inicial investmest. 

Analytical methods such as ….

1. Make some recommendations as to the course of action that Varun Agarwal should take.

Based on the analysis, Varun Agarwal should consider a combination of strategies:

Implement cost-cutting measures to improve short-term profitability.

Invest in research and development to innovate new products and services, potentially targeting emerging markets or sectors.

Strengthen partnerships or alliances to leverage resources and expertise, especially for expanding into HV projects.

Focus on employee training and development to enhance skills and productivity, ensuring the company is prepared for future growth and challenges.

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