Volvia Case Study

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It was the July of 2007, two brothers and co-owners, Faraz and Haris Sidiqui, sat in their FB area production plant with their heads joined together, trying to come up with the solution to the current dilemma they were facing. Faraz and Haris co-own a mineral water company called “Volvia” which produces water bottles in two main categories; returnable bottles (RBs) and non-returnable bottles (NRBs). The major chunk of their sales was on credit and the money recovery from NRBs took so long that they had to consider discontinuing the NRB category. Mineral water industry in Pakistan:

The Water Business is one of the most lucrative and profitable enterprises worldwide due to the fact that every human being on earth must have Safe Pure Water on a daily basis to stay alive. [4] The global bottled water sales have increased dramatically over the past several decades, reaching a valuation of around $60 billion and a volume of more than 115,000,000 cubic metres (3.0×1010 US gal) in 2006.[1] This trend has been more or less reflected in the Pakistani mineral water industry. The quality of tap water in Pakistan is unsatisfactory, to say the least, and this is the reason why gastrointestinal tract diseases are the most common kind in Pakistan. As the awareness and health consciousness increase in the Pakistani society a surge in the demand for bottled water could be observed. The demand for bottled water had gone up to 1.1 billion litres per year last year which was a 15% increase from the year before that. Deadly water borne diseases have surged not only the demand for bottled water but also the prices of mineral water have gone up with time. [2] Many companies do not print the price on small and bigger bottles which allows retailers to charge unilaterally higher prices in areas where demand overtakes supplies whereas in areas of low demand they sometimes offer discounts. Mineral water producers claim that they are increasing prices since Resin price (raw material used...
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