Emerald Emerging Markets Case Studies
The journey of Blitz: challenges lie in running the family business
Sloksana Subramaiam, Farzana Quoquab, Jihad Mohammad,
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Sloksana Subramaiam, Farzana Quoquab, Jihad Mohammad, (2017) "The journey of Blitz: challenges lie in running
the family business", Emerald Emerging Markets Case Studies, Vol. 7 Issue: 4, pp.1-18, https://doi.org/10.1108/
EEMCS-09-2016-0199
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The journey of Blitz: challenges lie in
running the family business
Downloaded by DURBAN UNIVERSITY OF TECHNOLOGY At 03:27 18 November 2017 (PT)
Sloksana Subramaiam, Farzana Quoquab and Jihad Mohammad
Introduction
It was a cloudy morning on February 21, 2013. Hema was watching the busy roadside from
her house located at Permas Jaya, Johor Bahru. There were many people walking along
both sides of the street. It was about nine o’clock and many office-workers were out for their
breakfast. They were hurrying toward the eating places further down the street. The place
was full of various sounds. Although Hema was looking toward the street, she was hardly
noticing anything properly. Her mind was drowned with several questions: “how to gain
back the lost customers? What should be my next move to retain the existing customers?”
Sloksana Subramaiam,
Farzana Quoquab, and
Jihad Mohammad are
Senior Lecturers, all at
the International Business
School, Universiti
Teknologi Malaysia,
Kuala Lumpur, Malaysia
Hema was the only daughter of Encik Sittumalai and Puan Rani (subsequently known as
Sittumalai). After completing her diploma she started to work as a teacher in one of the
international schools. Her mother, Puan Rani (subsequently known as Rani) was running a
home-based business producing and selling home-made Indian cookies. She used to
make occasional cakes since 2005 under the name Blitz. Hema’s father was a chronic heart
patient. To ensure Sittumalai was stress-free, Rani used to manage the majority of the work
single handedly. The business started with only one employee, slowly increased to appoint
six employees. As the business progressed Rani bought a lorry with the purpose of
delivering products door to door. Sittumalai helped her in this regard. Besides producing
cookies and signature cakes, Rani also sold goody bags and exchanged gifts on special
occasions such as birthday parties and weddings. Slowly the couple began to supply their
products to the five main Indian restaurants around Johor Bahru.
In early March 2012, the company was hit by a disaster when Rani was diagnosed with
terminal colon cancer. This devastating news sent ripples through the family and the whole
company. The family business came to a standstill with no proper management system for
about six months. There was no choice left for Hema but to take the lead of the family
business to ensure its survival. At the beginning, she thought that she could handle her
teaching job along with managing the business. However, after 1 month she started to
realize the pressure of managing both jobs together. She had to make a decision to choose
one. She realized that she had to sacrifice her teaching career for the time being to fully
commit to her mom’s business. She resigned from her teaching job and took over her
mom’s position in Blitz in November 2012.
She did not have any prior experience in handling the business. More and more problems
waited for her, such as insufficient workers to handle the business, loss of customers, sales
decline and lack of sufficient capital. Hema felt stressed by thinking the about the whole
situation. She burst into tears, “I was happy with my teaching job. I never thought that I have
to handle Mom’s business. I would prefer to assess students’ exam papers rather than
handling this mess. Oh God! Please help me to find out the way”. Tears rolled down from
her eyes. She remembered that one week ago when she was sitting beside her mom’s bed,
DOI 10.1108/EEMCS-09-2016-0199
Disclaimer. This case is written
solely for educational
purposes and is not intended
to represent successful or
unsuccessful managerial
decision-making. The authors
may have disguised names;
financial and other
recognizable information to
protect confidentiality.
VOL. 7 NO. 4 2017, pp. 1-18, © Emerald Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES
PAGE 1
Rani clutched Hema’s hand and pleaded her to save the business from ruin. By thinking
about her mom’s request, she felt the urge to devote herself to saving the family business.
To overcome the problems, Hema decided to analyze the root causes for the poor situation
of the business. With a sip of coffee from her favorite mug, she started to analyze the
situation one by one. She was determined to come up with a solution and to improve the
present situation of Blitz within 6 months.
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Malaysian bakery industry
Bread and cookies were the undeniable food for Malaysians. As a reflection, the bakery
industry in Malaysia showed great progress since year 2000. Bread was considered as one
of the most well-known substitutes of rice in the Malaysian diets (Anon, 2003). In 2003, the
Malaysian bakery industry earned approximately RM 2 billion which increased in 2005.
During 2005, the industry earned $23.8 billion dollars. In this industry, bread and pastry
items were very popular among Malaysians and this was expected to grow about 4 per cent
per annum in the following years. Indeed, bread items remained the second most favorite
staple food.
Although rice was the main staple food for Malaysians, the consumption of bread was
increasing day by day. Bread became one of the essential items for breakfast in the vast
majority of families. In many places, breads, cookies and sandwiches were replacing the
consumption of rice and noodles.
The distribution of bakery items became easier because of the improved transportation
facilities around the county. The development of expressways contributed to the smooth
distribution of bakery food items from where it was produced to where it was sold; from
urban areas to sub-urban and rural areas. The improved road systems meant bakery items
were comfortably transported to accommodation stores, standard merchants, markets and
smaller than usual markets.
There were different brands of bakery items in Malaysia. One of the famous brands was
Gardenia Bakeries. Gardenia Bakeries produced an assortment of delicious bread items,
such as Gardenia Twiggies, Gardenia Muffins and Fluffy Bun. The price was affordable for
all income groups. Additionally, the items produced by Gardenia Bakeries were healthy
and known for their low glycogenic record, while being full of protein and fiber. There was
one more famous bakery named High 5 Bakery, which declared their official procurement
of license for the production and dispersion of Roman Meal breads from The Roman Meal
Company in the USA. The company was best known for their dietary healthy bread
throughout the century. Both companies (High 5 and Gardenia Bakery) spent huge
amounts of cash on promoting their brands and items through different media. Media also
contributed significantly in developing the demand for bakery items in Malaysia. The
internet made western culture popular among different parts of the world which also
affected Asian culture. As a reflection, the western style of living was adopted by many
modern Malay families. Not only globalization, but also busy lives made bread consumption
popular among urban Malaysian families.
The marketplace – the wind of change
As mentioned earlier, the Malaysian bread industry was dominated by two big bakeries:
Gardenia and High 5. In 2005, these two companies occupied approximately 76 per cent
of the total market share. Gardenia started its journey in Malaysia during 1986 and offered
American style sandwich bread, using the customary wipe and batter technique (Anon,
2004). Gardenia offered more than 20 assortments of bread roll, buns, moves and nibble
cakes. On the other hand, Stanson Bakeries was the sister organization of the Stanson
Group under the Silver Bird Group Bhd. The Stanson Bakeries produced the European
PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES
VOL. 7 NO. 4 2017
assortment of breads, using their credible European Recipe. The company was
contributing about RM45 million per year (Dhesi, 2004).
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Apart from these two giant companies, there were some small bakery shops that used to bake
homemade breads, cookies, pastries and other bakery items. These small bakeries were family
owned and used to operate as a single shop before expanding to further outlets. These
family-owned bakeries not only offered bakery items, but also produced cookies and cakes.
Mostly, such small bakeries operated in comparatively high populated cities, more importantly,
in the areas where groups of working people used to reside. King’s Confectionary (started in
1973 in Kuala Lumpur and now with 49 retail outlets), the Season’s Confectionary and Bakery,
BreadStory, the Angle Cake House were some of the popular local small bakeries.
In Johor Bahru, there were few bakeries that offered homemade breads, cookies and
traditional sweets. Such bakeries were situated in shopping centers and were well known
for their attractive layout to attract customers. In Johor Bahru, the first shop was BreadStory
which started in September 2002. Within three years, Breadtalk had opened 23 outlets in
Singapore and 15 in Malaysia. One of the marketing strategies such bakery shops relied
upon was their store-plan, which permitted clients to see items being arranged in the
kitchen in a hygienic way through vast glass windows.
Competitive landscape of Blitz
In Johor Bahru, there were not many shops producing Indian cookies. MANGGALAM used
to produce traditional Indian cookies and was one of Blitz’s competitors. Encik Ravi, the
owner of MANGGALAM, started the business in 2007. Similar to Blitz, they also marketed
laddu, halwa, murukku, etc. MANGGALAM had its own building (plant) in Pasir Gudang.
The plant was used for services such as manufacturing, packaging, arranging, taking
orders from customers and other services which were related to the business. The
company outsourced its delivery service and did not offer a door-to-door delivery service
such as Blitz. Other than that, MANGGALAM also had its own marketing team which was
responsible for promoting the product nationally and internationally. The marketing team
often advertised on the regional radio station which was minna.fm and THR Raaga and also
online advertisements. MANGGALAM’s cookies were available in hypermarkets such as
Giant and Econsave. MANGGLAAM also exported cookies to Singapore’s Indian
restaurants and small shops and covered seven main Indian restaurants in Johor Bahru.
Table I shows the competitive matrix among Blitz and MANGGALAM, whereas Table II
shows the product price comparison between the both companies.
Table I Competitive matrix of Blitz and MANGGALAM
Characteristics
Blitz
MANGGALAM
Product
Cookies
Snacks
Cake
Permas Jaya (house)
Personal orders
Five restaurants in Johor Bahru
Small shops
Event/occasion
Cookies
Snacks
Place of business
Product distribution
Promotion
Services
Word of mouth promotion
Tamil newspaper
Door gift
Goody bag
Door to door delivery
Number of employees
6 employees
Pasir Gudang (shop house building)
Personal orders
Seven restaurants in Johor Bahru
Three restaurants in Singapore
Small shops
Hypermarkets
Regional Radio
Online advertisements
Door gift
Goody bag
Online order
Catering
20 employees
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EMERALD EMERGING MARKETS CASE STUDIES
PAGE 3
Table II Average price comparison
Average price (per unit)
Cookies variety
Snacks variety
Cakes variety (1kg)
Floral cake
Vegetarian cake
Ice-cream cake
Sponge cake
Blitz RM’
MANGGALAM RM’
4.00
2.50
6.00
4.00
64.00
70.00
68.00
50.00
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All about Blitz
Blitz was a homemade Indian cookies manufacturing company located in Permas Jaya,
Johor Bahru. It was the pioneer organization in Johor Bahru in producing local Indian
homemade cookies, sweets and cakes which were sold under the brand name “Blitz”. The
organization was set up by Rani Sittumalai in 2005 with a dream to be one of the biggest
Malaysian Indian treats producers in Malaysia. Rani selected the name Blitz because the
meaning suggested a sudden or intensive attack; thus, she meant a sudden attack on the
market share of the cookies. She thought that it would be suitable for the 21st century.
Blitz used only natural ingredients. The example of cookies produced by Blitz are candy,
laddu, kesari, jalebi, halwa and many more (Exhibit 1). The recipes were collected from
family and friends; the Fruit Candy recipe was from Rani’s mother, the laddu was from her
grandmother and other cookies’ recipe Rani created by herself. Starting with one employee
in the bakery, in 2012 it had six employees who were engaged in preparing more than 10
types of cookies and floral cakes, all developed by the company. Table III shows the major
product line of Blitz.
Organizational structure of Blitz
Blitz’s, hierarchical structure comprised two directors: Rani herself and her husband
Sittumalai and six employees who worked under them. All six staff were Malaysians and
were in charge of production. Every one of them had been working under Rani’s
supervision. The remaining tasks such as scouting for raw materials, creating their own
designs up to packaging and delivering the goods were all done by Rani and her husband
themselves to reduce expenditure.
Blitz’S success and failure
After 5 years Blitz become one of the top homemade Indian cookie sellers in the Johor
Bahru area where they supplied their products to the five main Indian Restaurants. Rani
started to receive many orders for her homemade cakes for different types of occasion
such as Indian weddings, bangle ceremonies, birthday celebrations and many more.
Customers also started to order Blitz’s cookies to exchange as gifts and goody bags. Rani
Table III Major product line of BLITZ
Cookies
Snacks
Cake
Laddu (rawa laddu, sedame laddu, coconut laddu)
Gulab Jamun
Halwa
Kesari
Jalebi
Candy
Murukku
Achu murukku
Paguda
Ome podi
Floral cakes
Cup cakes
Vegetarian cakes
Fruit cake
Muffin
Ice-cream cake
Chiffon cake
PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES
VOL. 7 NO. 4 2017
had learnt to make her own unique design of cakes such as peacock and floral from a
baking course she attended.
Sugar was one of the major ingredients for Blitz’s bakery items. The rising cost of sugar was
one of the challenges that Rani faced. It increased the cost of treats and made it nearly a
luxury item. Because Blitz’s products were quite specialized, the prices were quite high. In
the event of extreme inflation or a recession, foods such as cookies and cakes and
decadent desserts became a luxury to a lot of people and became something that could
be avoided. Rani was afraid of losing her customers because it was not a staple food for
families.
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Products and services of Blitz
The primary products were cookies including a variety of pastries, snacks, cakes and etc.
Blitz offered a wide range of different flavors of cakes, cookies and snacks. These items
were grouped with sugar and spice items. The cookies had chocolate, mango, strawberry
and vanilla flavors to give them a sweet taste, while the snacks were prepared with special
chilies and pepper to give a spicy taste. These items were all homemade and all products
were made with the ingredients available in the local market.
In addition, Blitz offered goody bags in bulk for special occasions, parties and marriages.
The amount and type of item (cookies) in the goody bags were decided by the customer,
and Blitz used to cater according to the customer’s requirements. Blitz also offered free
door-to-door delivery within 20 km where the journey was within 30 min.
To attract customers, Blitz promoted its products during special occasions such as
Deepavali, Ponggal, etc. During festivals, Rani offered quantity discounts to its customers
if they placed an order in bulk. Although Rani did not have any proper marketing training,
she tried her best to grow the business based on her own thoughts and ideas.
Rani – the pioneer of Blitz
Rani was born in a big family. She was the eldest among six siblings. She lost her mother
in her early adulthood. Her father worked as a rubber taper in R.R.I Estate, Kuala Lumpur.
because of the difficult financial situation, she was unable to continue her high school
studies after year 6 examination. She took over her mother’s place and took on lots of
responsibility for her younger sisters. She tried her best to fulfill their requests and
necessities as much as she could. Because Rani was young, she used to bake cakes and
cookies for occasions such as Deepvali for her sisters. A few years later, she realized that
she had a passion in that field. In 1973, she met Sittumalai, who was 7 years her senior, at
a family function and became his wife 2 years later. Even though Rani was not well
educated, she passionate about having a better standard of living and to receiving a good
income to create a better life for her family.
Initially, Rani was only operating as a small family-based business from her home
producing Indian cookies to be sold to close friends and relatives. Years later, Rani took up
courses on entrepreneurship and sweet and cookie making and in the year 2010, she
managed to promote her cookies to the five main Indian restaurants and some other small
stalls around the town. In 2008, Rani managed to buy a four-wheel drive, small lorry, with
the purpose of expanding the business and providing home delivery of her products.
Hema and her challenges
Hema completed her diploma in early childhood education from UTM-Johor. Right after her
diploma, she got the opportunity to work as a teacher in one of the private schools. She
married in 2006 and had her first baby girl in 2007.From her childhood, Hema never
involved herself in the family business. However, Rani could not trust anyone other than her
VOL. 7 NO. 4 2017
EMERALD EMERGING MARKETS CASE STUDIES
PAGE 5
only daughter, Hema to run the family business. Hema realized that she had to sacrifice her
own ambition to fulfill her mom’s to see the happiness in her mom’s ailing pale face.
On March 10, 2012 the organization was hit by the bad news that Rani had been
diagnosed with terminal colon cancer. This staggering news sent ripples through the
family and the entire organization. Business halted. Hema was shocked and went into
a deep depression, she found herself contained in sorrow. It took her family to help her
through and bring her to her senses. This devastating period nearly caused the
business to close down and when Hema came to her senses, the company was barely
surviving. Only her determination to fulfill her mother’s dream made her take the drastic
decision to take on the family business.
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Hema realized that the workers’ salaries had not been paid for the last two months. After
Rani fell sick, the management of the family business collapsed. Sometimes,
employees had to work more than 8 h without any pay for their over-time. As a result,
two out of six employees quit their job because of dissatisfaction and the extra work
load. Hema realized that, without the cooperation of the employees, she could not fix
the problem.
Blitz’s profits used to come from bakery items as well as from the sale of goody bags.
Nevertheless, another major portion of profits used to come from five main customers in
Johor Bahru. These customers were five popular Indian restaurants. After Hema took the
responsibility to run the family business, she realized that the company lost two of the major
customers. She made investigations to find out the root cause of this problem. She realized
that the late delivery of orders was one of the major issues in the loss of customers. After
two employees quit their job, the workload increased which led Sittumalai, who used to
deliver customer orders, to work harder. Because of his poor health and the extra work
load, he could not deliver the orders on time to the restaurants. As a result, two customers
finally decided to terminate their contract with Blitz. Not only this, they also lost a good
opportunity to market their bakery items to one of the largest and most famous Indian
restaurants, as they could not commit to the agreement to supply a constant large amount
of cookies for a particular period of time. Moreover, they were not capable of selling their
products to hypermarkets, as production costs had increased.
Hema faced the challenge of getting a loan from the bank because Blitz was an enterprise
company and the banks preferred to provide loans to Sendirian Berhad companies.
Another reason was that Blitz did not make any significant profit after 2012, which made it
difficult for Blitz to apply for bank loans, as they failed to show a growth in profit. Thus, the
company struggled to have sufficient money to purchase raw materials, other supplies and
equipment. The increased price of raw materials (i.e. sugar and fuel) made it more difficult
for Blitz to offer items at a lower price. This situation compelled Blitz to increase the price
of the products to cover the high expenses of raw materials.
Moving forward
Keywords:
Marketing,
Entrepreneurship,
Consumer behavior,
Market segmentation/target
markets
The thought of successfully establishing Blitz overwhelmed Hema’s thoughts. On one side,
she was very upset to resign from her teaching job and on the other side she wanted to
make her mom happy. Not only this, the major income for her parents’ house used come
from this business. “If I don’t help my mom in such situation, I will never forgive myself. I
need to be firm to take this new challenge. I always can join back my teaching job. It is just
for a certain time only”, she consoled herself. She looked toward her bedridden mom with
tearful eyes.
Although Hema had no prior experience in conducting and running a business, seeing her
mom’s pale face gave her renewed determination. She looked out of the window and felt
heartened by the sunny sky. She felt determined to deal with the situation and increase the
sales of the family business. She wondered where to start [. . .]!
PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES
VOL. 7 NO. 4 2017
Exhibit 1
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Plate E1 Rawa laddu
Plate E2 Gulab jamun
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EMERALD EMERGING MARKETS CASE STUDIES
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Plate E3 Jalebi
Corresponding author
Farzana Quoquab can be contacted at: fqbhabib@ibs.utm.my
PAGE 8 EMERALD EMERGING MARKETS CASE STUDIES
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