NCERT Textbook - Enterprise Growth Strategies | Entrepreneurship Class 12 - Commerce PDF Download

 Page 1


 140 
UNIT –4: ENTERPRISE GROWTH STRATEGIES 
“Entrepreneurship is living a few years of your life like most people won’t so 
you can spend the rest of your life like most people can't.” 
– Warren G. Tracy’s student 
Learning Objectives: 
The learner would be able to: 
? Explain in detail about franchising 
? Understand the types of franchising 
? Understand how growth of a firm is possible 
through mergers and acquisitions 
? Enlist the types of mergers 
? Elaborate on the meaning and types of acquisitions 
? Understand the reasons for mergers and acquisitions 
? Understand the reasons for failure of mergers and acquisitions  
? Explain the concept of value addition 
? Understand the meaning of value chain 
? Understand the requirements for value chain management 
Case Study-I 
Goli Vada Pav 
Launched in 2004, Goli Vada Pav repackaged ‘Vada Pav’, a humble street-food popular in 
Mumbai, into a branded fast food concept. It follows franchise business model and today is 
uniquely positioned in Indian QSR (quick service restaurant) segment. Read on to discover 
more about the brand’s success and growth journey. 
    
Content 
? Franchising 
? Mergers and Acquisitions 
? Value Addition and 
moving up the Value 
Chain 
Page 2


 140 
UNIT –4: ENTERPRISE GROWTH STRATEGIES 
“Entrepreneurship is living a few years of your life like most people won’t so 
you can spend the rest of your life like most people can't.” 
– Warren G. Tracy’s student 
Learning Objectives: 
The learner would be able to: 
? Explain in detail about franchising 
? Understand the types of franchising 
? Understand how growth of a firm is possible 
through mergers and acquisitions 
? Enlist the types of mergers 
? Elaborate on the meaning and types of acquisitions 
? Understand the reasons for mergers and acquisitions 
? Understand the reasons for failure of mergers and acquisitions  
? Explain the concept of value addition 
? Understand the meaning of value chain 
? Understand the requirements for value chain management 
Case Study-I 
Goli Vada Pav 
Launched in 2004, Goli Vada Pav repackaged ‘Vada Pav’, a humble street-food popular in 
Mumbai, into a branded fast food concept. It follows franchise business model and today is 
uniquely positioned in Indian QSR (quick service restaurant) segment. Read on to discover 
more about the brand’s success and growth journey. 
    
Content 
? Franchising 
? Mergers and Acquisitions 
? Value Addition and 
moving up the Value 
Chain 
 141 
Origin and Concept  
Goli Vada Pav, a quick serve food concept with authentic Indian touch, originated in Mumbai 
in 2004. The brand’s founders, Venkatesh Iyer and Shiv Menon, realised the huge scope of 
business in tapping the adult and lower income customers by selling widely popular local 
street food ‘Vada Pav’ to them, in an organised way. Thus, the idea of Indian finger food Goli 
Vada Pav Pvt Ltd was born that retailed the humble mouth watering spicy ethnic delicacy, 
which was pocket friendly as well as prepared and served in hygienic conditions.  Indian QSR 
market is flooded with brands like McDonald’s, Subway and Quiznos but the success of Brand 
– Goli Vada Pav No. 1 reaffirms the fact that a strong home grown concept can not only thrive 
but also compete with International Brands.  
What makes concept so special? 
Vada Pav is basically a spicy vegetable patty in bun sold by street-food vendors. The brand 
Goli Vada Pav No. 1 has pioneered the concept of selling vada pav through retail outlet. The 
brand’s stores offer quality and hygienic fast food which is quite affordable. It has successfully 
branded the traditional street food. It sells hygienically prepared food items made in fully 
automated ‘HACCP’ certified handsfree plant with an authentic touch. ‘Goli Vada Pav’ is a 
typical finger food made of spices, vegetables, and mashed potatoes packed in 'vada pav'. 
Today, it is known to be an established, reputed, and popular Indian fast-food brand that 
offers a clean and ethnic finger food for those who have less money and time.  
Popular products  
The brand offers wide assortment of items to cater to varied taste buds and preferences of 
customers. Its outlets serve different finger dishes like sweet chutney, dry chutney, and fried 
green chilly. Its famous dishes include Goli Schezwan Vada Pav, Goli Cheese Vada Pav, Goli 
Sabudana Vada, Goli Mix Veg. Vada Pav, Goli Tikki Vada Pav, Goli Palak Makkai Tikki, Goli 
Cheese Ungli, and Goli Masala Vada Pav. As the name suggests vada is a common thing, 
which is mixed with other thing for different taste. The company’s food offerings not only 
entice the taste buds of consumers, but they are also touted to be nutritional.  
Success journey till now   
The brand has opted for franchise business models to grab a quick bite into the Indian 
quick serve business. Today, Goli Vada Pav has extensive presence across 40 Indian cities in 
six states. Goli Vada Pav No. 1 outlets are spread across the length and breadth of the country. 
Its stores can be found in cities like Aurangabad, Ahmednagar,  Bangaluru, Belgaum,  
Chandrapur, Chennai, Coimbatore, Dhulia, Hubli, Hyderabad, Jalgaon, Kolhapur, Mumbai, 
Pune and many more. It operates about 150 stores, of which over 140 are via franchise route.  
Lucrative business opportunity 
The brand’s concept offers lucrative business opportunity for aspiring franchisees. The factors 
that make this concept a money spinner are:     
Vada Pavs are popular all-time favourite and convenient fast food. The product is hygienic 
and less oil fried snack having universal appeal. It’s a standard tasty food that can be 
Page 3


 140 
UNIT –4: ENTERPRISE GROWTH STRATEGIES 
“Entrepreneurship is living a few years of your life like most people won’t so 
you can spend the rest of your life like most people can't.” 
– Warren G. Tracy’s student 
Learning Objectives: 
The learner would be able to: 
? Explain in detail about franchising 
? Understand the types of franchising 
? Understand how growth of a firm is possible 
through mergers and acquisitions 
? Enlist the types of mergers 
? Elaborate on the meaning and types of acquisitions 
? Understand the reasons for mergers and acquisitions 
? Understand the reasons for failure of mergers and acquisitions  
? Explain the concept of value addition 
? Understand the meaning of value chain 
? Understand the requirements for value chain management 
Case Study-I 
Goli Vada Pav 
Launched in 2004, Goli Vada Pav repackaged ‘Vada Pav’, a humble street-food popular in 
Mumbai, into a branded fast food concept. It follows franchise business model and today is 
uniquely positioned in Indian QSR (quick service restaurant) segment. Read on to discover 
more about the brand’s success and growth journey. 
    
Content 
? Franchising 
? Mergers and Acquisitions 
? Value Addition and 
moving up the Value 
Chain 
 141 
Origin and Concept  
Goli Vada Pav, a quick serve food concept with authentic Indian touch, originated in Mumbai 
in 2004. The brand’s founders, Venkatesh Iyer and Shiv Menon, realised the huge scope of 
business in tapping the adult and lower income customers by selling widely popular local 
street food ‘Vada Pav’ to them, in an organised way. Thus, the idea of Indian finger food Goli 
Vada Pav Pvt Ltd was born that retailed the humble mouth watering spicy ethnic delicacy, 
which was pocket friendly as well as prepared and served in hygienic conditions.  Indian QSR 
market is flooded with brands like McDonald’s, Subway and Quiznos but the success of Brand 
– Goli Vada Pav No. 1 reaffirms the fact that a strong home grown concept can not only thrive 
but also compete with International Brands.  
What makes concept so special? 
Vada Pav is basically a spicy vegetable patty in bun sold by street-food vendors. The brand 
Goli Vada Pav No. 1 has pioneered the concept of selling vada pav through retail outlet. The 
brand’s stores offer quality and hygienic fast food which is quite affordable. It has successfully 
branded the traditional street food. It sells hygienically prepared food items made in fully 
automated ‘HACCP’ certified handsfree plant with an authentic touch. ‘Goli Vada Pav’ is a 
typical finger food made of spices, vegetables, and mashed potatoes packed in 'vada pav'. 
Today, it is known to be an established, reputed, and popular Indian fast-food brand that 
offers a clean and ethnic finger food for those who have less money and time.  
Popular products  
The brand offers wide assortment of items to cater to varied taste buds and preferences of 
customers. Its outlets serve different finger dishes like sweet chutney, dry chutney, and fried 
green chilly. Its famous dishes include Goli Schezwan Vada Pav, Goli Cheese Vada Pav, Goli 
Sabudana Vada, Goli Mix Veg. Vada Pav, Goli Tikki Vada Pav, Goli Palak Makkai Tikki, Goli 
Cheese Ungli, and Goli Masala Vada Pav. As the name suggests vada is a common thing, 
which is mixed with other thing for different taste. The company’s food offerings not only 
entice the taste buds of consumers, but they are also touted to be nutritional.  
Success journey till now   
The brand has opted for franchise business models to grab a quick bite into the Indian 
quick serve business. Today, Goli Vada Pav has extensive presence across 40 Indian cities in 
six states. Goli Vada Pav No. 1 outlets are spread across the length and breadth of the country. 
Its stores can be found in cities like Aurangabad, Ahmednagar,  Bangaluru, Belgaum,  
Chandrapur, Chennai, Coimbatore, Dhulia, Hubli, Hyderabad, Jalgaon, Kolhapur, Mumbai, 
Pune and many more. It operates about 150 stores, of which over 140 are via franchise route.  
Lucrative business opportunity 
The brand’s concept offers lucrative business opportunity for aspiring franchisees. The factors 
that make this concept a money spinner are:     
Vada Pavs are popular all-time favourite and convenient fast food. The product is hygienic 
and less oil fried snack having universal appeal. It’s a standard tasty food that can be 
 142 
consumed 365 days of the year. The store format and operations are relatively less 
cumbersome. The product is easy to make and it being a finger food one doesn’t require plates, 
spoons, tables and chairs to eat it. It is a mobile food that can be consumed while walking, 
talking, standing or travelling, and is therefore preferred by people on the move. Therefore, 
the franchisee store owner would not require huge investments like infrastructure, kitchen and 
restaurant etc which substantially cut the input costs.  
Franchising facts 
The company is looking to strengthen its pan India franchisee network. It is targetting 
especially tier I, tier II, tier III cities and small towns for expansion and opening more number 
of stores. It would like to partner with potential franchise partners who can invest  ` 10-20 
lakh. For opening a Goli Vada Pav No. 1 store, area requirement is about 350 sq ft. The 
preferred location for opening an outlet is a high street traffic areas like market, colleges, 
business areas and residential catchments.  
Franchisee training and support 
The franchisee will get the eight-year old well established brand name with standard operating 
procedures in all aspects of business. The company will provide initial and refresher training 
for business owners and store staff and end-to-end logistics support & regular replenishment 
of stocks and operational support to monitor and drive business.    
Franchising adds flavour to further growth 
The brand’s offerings are economical and for the masses, therefore it has access to a large 
customer base. It is committed to take vada pav from the Mumbai streets to a brand which will 
be known all over the world. Growing popularity of the concept has encouraged Goli Vada 
Pav No. 1 to continue with its expansion plans. The brand encourages entrepreneurship and 
offers lucrative franchise opportunities across India. The company plans to have 500 outlets by 
the end of the year 2015. 
Courtesy: Franchiseindia.com  
  
A. Growth and development of an enterprise 
Growth is always essential for the existence of a 
business concern. A concern is bound to die if it does 
not try to expand its activities. The entrepreneur is 
an endless challenge seeker. Once their small 
business is humming along, growth is the next 
exciting challenge. The decision to extend the scope 
of one’s business must be a result of thoughtful 
consideration of various factors, including the 
financial, logistical, even his/her emotional 
readiness. The rule of thumb is that one should only 
expand when there are untapped opportunities that 
can benefit the business. There may be a niche that 
Page 4


 140 
UNIT –4: ENTERPRISE GROWTH STRATEGIES 
“Entrepreneurship is living a few years of your life like most people won’t so 
you can spend the rest of your life like most people can't.” 
– Warren G. Tracy’s student 
Learning Objectives: 
The learner would be able to: 
? Explain in detail about franchising 
? Understand the types of franchising 
? Understand how growth of a firm is possible 
through mergers and acquisitions 
? Enlist the types of mergers 
? Elaborate on the meaning and types of acquisitions 
? Understand the reasons for mergers and acquisitions 
? Understand the reasons for failure of mergers and acquisitions  
? Explain the concept of value addition 
? Understand the meaning of value chain 
? Understand the requirements for value chain management 
Case Study-I 
Goli Vada Pav 
Launched in 2004, Goli Vada Pav repackaged ‘Vada Pav’, a humble street-food popular in 
Mumbai, into a branded fast food concept. It follows franchise business model and today is 
uniquely positioned in Indian QSR (quick service restaurant) segment. Read on to discover 
more about the brand’s success and growth journey. 
    
Content 
? Franchising 
? Mergers and Acquisitions 
? Value Addition and 
moving up the Value 
Chain 
 141 
Origin and Concept  
Goli Vada Pav, a quick serve food concept with authentic Indian touch, originated in Mumbai 
in 2004. The brand’s founders, Venkatesh Iyer and Shiv Menon, realised the huge scope of 
business in tapping the adult and lower income customers by selling widely popular local 
street food ‘Vada Pav’ to them, in an organised way. Thus, the idea of Indian finger food Goli 
Vada Pav Pvt Ltd was born that retailed the humble mouth watering spicy ethnic delicacy, 
which was pocket friendly as well as prepared and served in hygienic conditions.  Indian QSR 
market is flooded with brands like McDonald’s, Subway and Quiznos but the success of Brand 
– Goli Vada Pav No. 1 reaffirms the fact that a strong home grown concept can not only thrive 
but also compete with International Brands.  
What makes concept so special? 
Vada Pav is basically a spicy vegetable patty in bun sold by street-food vendors. The brand 
Goli Vada Pav No. 1 has pioneered the concept of selling vada pav through retail outlet. The 
brand’s stores offer quality and hygienic fast food which is quite affordable. It has successfully 
branded the traditional street food. It sells hygienically prepared food items made in fully 
automated ‘HACCP’ certified handsfree plant with an authentic touch. ‘Goli Vada Pav’ is a 
typical finger food made of spices, vegetables, and mashed potatoes packed in 'vada pav'. 
Today, it is known to be an established, reputed, and popular Indian fast-food brand that 
offers a clean and ethnic finger food for those who have less money and time.  
Popular products  
The brand offers wide assortment of items to cater to varied taste buds and preferences of 
customers. Its outlets serve different finger dishes like sweet chutney, dry chutney, and fried 
green chilly. Its famous dishes include Goli Schezwan Vada Pav, Goli Cheese Vada Pav, Goli 
Sabudana Vada, Goli Mix Veg. Vada Pav, Goli Tikki Vada Pav, Goli Palak Makkai Tikki, Goli 
Cheese Ungli, and Goli Masala Vada Pav. As the name suggests vada is a common thing, 
which is mixed with other thing for different taste. The company’s food offerings not only 
entice the taste buds of consumers, but they are also touted to be nutritional.  
Success journey till now   
The brand has opted for franchise business models to grab a quick bite into the Indian 
quick serve business. Today, Goli Vada Pav has extensive presence across 40 Indian cities in 
six states. Goli Vada Pav No. 1 outlets are spread across the length and breadth of the country. 
Its stores can be found in cities like Aurangabad, Ahmednagar,  Bangaluru, Belgaum,  
Chandrapur, Chennai, Coimbatore, Dhulia, Hubli, Hyderabad, Jalgaon, Kolhapur, Mumbai, 
Pune and many more. It operates about 150 stores, of which over 140 are via franchise route.  
Lucrative business opportunity 
The brand’s concept offers lucrative business opportunity for aspiring franchisees. The factors 
that make this concept a money spinner are:     
Vada Pavs are popular all-time favourite and convenient fast food. The product is hygienic 
and less oil fried snack having universal appeal. It’s a standard tasty food that can be 
 142 
consumed 365 days of the year. The store format and operations are relatively less 
cumbersome. The product is easy to make and it being a finger food one doesn’t require plates, 
spoons, tables and chairs to eat it. It is a mobile food that can be consumed while walking, 
talking, standing or travelling, and is therefore preferred by people on the move. Therefore, 
the franchisee store owner would not require huge investments like infrastructure, kitchen and 
restaurant etc which substantially cut the input costs.  
Franchising facts 
The company is looking to strengthen its pan India franchisee network. It is targetting 
especially tier I, tier II, tier III cities and small towns for expansion and opening more number 
of stores. It would like to partner with potential franchise partners who can invest  ` 10-20 
lakh. For opening a Goli Vada Pav No. 1 store, area requirement is about 350 sq ft. The 
preferred location for opening an outlet is a high street traffic areas like market, colleges, 
business areas and residential catchments.  
Franchisee training and support 
The franchisee will get the eight-year old well established brand name with standard operating 
procedures in all aspects of business. The company will provide initial and refresher training 
for business owners and store staff and end-to-end logistics support & regular replenishment 
of stocks and operational support to monitor and drive business.    
Franchising adds flavour to further growth 
The brand’s offerings are economical and for the masses, therefore it has access to a large 
customer base. It is committed to take vada pav from the Mumbai streets to a brand which will 
be known all over the world. Growing popularity of the concept has encouraged Goli Vada 
Pav No. 1 to continue with its expansion plans. The brand encourages entrepreneurship and 
offers lucrative franchise opportunities across India. The company plans to have 500 outlets by 
the end of the year 2015. 
Courtesy: Franchiseindia.com  
  
A. Growth and development of an enterprise 
Growth is always essential for the existence of a 
business concern. A concern is bound to die if it does 
not try to expand its activities. The entrepreneur is 
an endless challenge seeker. Once their small 
business is humming along, growth is the next 
exciting challenge. The decision to extend the scope 
of one’s business must be a result of thoughtful 
consideration of various factors, including the 
financial, logistical, even his/her emotional 
readiness. The rule of thumb is that one should only 
expand when there are untapped opportunities that 
can benefit the business. There may be a niche that 
 143 
you want to capture or a location not serviced even by your competitors. Expansion is often one 
of the most daunting challenges a successful business will face. 
Ron Sommer, former president, Sony Corporation of India: says "Where a company comes from 
is less important than where it is going, as boundaries are erased, corporate birth certificate 
won’t count much." The successful entrepreneur will make sure there is a constant flow of new 
ideas and a commitment to try out at least some of these new ideas. An organization has to 
maintain its momentum through interplay of flexibility and change. This calls for growth and 
development which in essence is achieved through constant strife. 
An entrepreneur has a dual role to play- one, that of a leader and the other of a manager. The 
former provides direction and energy while the latter processes the input and gives the output. 
To ensure the continued efficiency and profitable functioning and growth of enterprise, extra 
managerial ability is required. 
The expansion of a concern may be in the activities or acquisition of ownership and control of 
other concerns. Thus, expansion may be; 
? Internal Expansion 
? External Expansion 
i) Internal expansion 
 Internal expansion results from the gradual increase in the activities of the concern. The 
concern may expand its present production capacity by adding more machines or by 
replacing old machines with the new machines with higher productive capacity. The 
internal expansion can also be undertaken by taking up the production of more units or by 
entering new fields on the production and marketing sides. Internal expansion may be 
financed by the issue of more share capital, generating funds from old profits or by 
issuing long–term securities. The net result of internal expansion is the increase in 
business activities and broadening the present capital structure. 
ii) External expansion or business combination 
 External expansion refers to business combination where two or more concerns combine 
and expand their business activities. In the process of combination, two or more units 
engage in similar business or related process or stages. Sometimes stages of the same 
business join with a view to carry on their activities or shape, their polices on common 
basis some other or in coordination for mutual benefit or maximum profits. The 
combination may be among competing units or units engaged in different processes. After 
combination, the constituted firm pursues some common objectives or goals.  
In this unit, we will focus on the main forms of external expansion which are 
a) Franchising 
b) Mergers and Acquisitions 
Page 5


 140 
UNIT –4: ENTERPRISE GROWTH STRATEGIES 
“Entrepreneurship is living a few years of your life like most people won’t so 
you can spend the rest of your life like most people can't.” 
– Warren G. Tracy’s student 
Learning Objectives: 
The learner would be able to: 
? Explain in detail about franchising 
? Understand the types of franchising 
? Understand how growth of a firm is possible 
through mergers and acquisitions 
? Enlist the types of mergers 
? Elaborate on the meaning and types of acquisitions 
? Understand the reasons for mergers and acquisitions 
? Understand the reasons for failure of mergers and acquisitions  
? Explain the concept of value addition 
? Understand the meaning of value chain 
? Understand the requirements for value chain management 
Case Study-I 
Goli Vada Pav 
Launched in 2004, Goli Vada Pav repackaged ‘Vada Pav’, a humble street-food popular in 
Mumbai, into a branded fast food concept. It follows franchise business model and today is 
uniquely positioned in Indian QSR (quick service restaurant) segment. Read on to discover 
more about the brand’s success and growth journey. 
    
Content 
? Franchising 
? Mergers and Acquisitions 
? Value Addition and 
moving up the Value 
Chain 
 141 
Origin and Concept  
Goli Vada Pav, a quick serve food concept with authentic Indian touch, originated in Mumbai 
in 2004. The brand’s founders, Venkatesh Iyer and Shiv Menon, realised the huge scope of 
business in tapping the adult and lower income customers by selling widely popular local 
street food ‘Vada Pav’ to them, in an organised way. Thus, the idea of Indian finger food Goli 
Vada Pav Pvt Ltd was born that retailed the humble mouth watering spicy ethnic delicacy, 
which was pocket friendly as well as prepared and served in hygienic conditions.  Indian QSR 
market is flooded with brands like McDonald’s, Subway and Quiznos but the success of Brand 
– Goli Vada Pav No. 1 reaffirms the fact that a strong home grown concept can not only thrive 
but also compete with International Brands.  
What makes concept so special? 
Vada Pav is basically a spicy vegetable patty in bun sold by street-food vendors. The brand 
Goli Vada Pav No. 1 has pioneered the concept of selling vada pav through retail outlet. The 
brand’s stores offer quality and hygienic fast food which is quite affordable. It has successfully 
branded the traditional street food. It sells hygienically prepared food items made in fully 
automated ‘HACCP’ certified handsfree plant with an authentic touch. ‘Goli Vada Pav’ is a 
typical finger food made of spices, vegetables, and mashed potatoes packed in 'vada pav'. 
Today, it is known to be an established, reputed, and popular Indian fast-food brand that 
offers a clean and ethnic finger food for those who have less money and time.  
Popular products  
The brand offers wide assortment of items to cater to varied taste buds and preferences of 
customers. Its outlets serve different finger dishes like sweet chutney, dry chutney, and fried 
green chilly. Its famous dishes include Goli Schezwan Vada Pav, Goli Cheese Vada Pav, Goli 
Sabudana Vada, Goli Mix Veg. Vada Pav, Goli Tikki Vada Pav, Goli Palak Makkai Tikki, Goli 
Cheese Ungli, and Goli Masala Vada Pav. As the name suggests vada is a common thing, 
which is mixed with other thing for different taste. The company’s food offerings not only 
entice the taste buds of consumers, but they are also touted to be nutritional.  
Success journey till now   
The brand has opted for franchise business models to grab a quick bite into the Indian 
quick serve business. Today, Goli Vada Pav has extensive presence across 40 Indian cities in 
six states. Goli Vada Pav No. 1 outlets are spread across the length and breadth of the country. 
Its stores can be found in cities like Aurangabad, Ahmednagar,  Bangaluru, Belgaum,  
Chandrapur, Chennai, Coimbatore, Dhulia, Hubli, Hyderabad, Jalgaon, Kolhapur, Mumbai, 
Pune and many more. It operates about 150 stores, of which over 140 are via franchise route.  
Lucrative business opportunity 
The brand’s concept offers lucrative business opportunity for aspiring franchisees. The factors 
that make this concept a money spinner are:     
Vada Pavs are popular all-time favourite and convenient fast food. The product is hygienic 
and less oil fried snack having universal appeal. It’s a standard tasty food that can be 
 142 
consumed 365 days of the year. The store format and operations are relatively less 
cumbersome. The product is easy to make and it being a finger food one doesn’t require plates, 
spoons, tables and chairs to eat it. It is a mobile food that can be consumed while walking, 
talking, standing or travelling, and is therefore preferred by people on the move. Therefore, 
the franchisee store owner would not require huge investments like infrastructure, kitchen and 
restaurant etc which substantially cut the input costs.  
Franchising facts 
The company is looking to strengthen its pan India franchisee network. It is targetting 
especially tier I, tier II, tier III cities and small towns for expansion and opening more number 
of stores. It would like to partner with potential franchise partners who can invest  ` 10-20 
lakh. For opening a Goli Vada Pav No. 1 store, area requirement is about 350 sq ft. The 
preferred location for opening an outlet is a high street traffic areas like market, colleges, 
business areas and residential catchments.  
Franchisee training and support 
The franchisee will get the eight-year old well established brand name with standard operating 
procedures in all aspects of business. The company will provide initial and refresher training 
for business owners and store staff and end-to-end logistics support & regular replenishment 
of stocks and operational support to monitor and drive business.    
Franchising adds flavour to further growth 
The brand’s offerings are economical and for the masses, therefore it has access to a large 
customer base. It is committed to take vada pav from the Mumbai streets to a brand which will 
be known all over the world. Growing popularity of the concept has encouraged Goli Vada 
Pav No. 1 to continue with its expansion plans. The brand encourages entrepreneurship and 
offers lucrative franchise opportunities across India. The company plans to have 500 outlets by 
the end of the year 2015. 
Courtesy: Franchiseindia.com  
  
A. Growth and development of an enterprise 
Growth is always essential for the existence of a 
business concern. A concern is bound to die if it does 
not try to expand its activities. The entrepreneur is 
an endless challenge seeker. Once their small 
business is humming along, growth is the next 
exciting challenge. The decision to extend the scope 
of one’s business must be a result of thoughtful 
consideration of various factors, including the 
financial, logistical, even his/her emotional 
readiness. The rule of thumb is that one should only 
expand when there are untapped opportunities that 
can benefit the business. There may be a niche that 
 143 
you want to capture or a location not serviced even by your competitors. Expansion is often one 
of the most daunting challenges a successful business will face. 
Ron Sommer, former president, Sony Corporation of India: says "Where a company comes from 
is less important than where it is going, as boundaries are erased, corporate birth certificate 
won’t count much." The successful entrepreneur will make sure there is a constant flow of new 
ideas and a commitment to try out at least some of these new ideas. An organization has to 
maintain its momentum through interplay of flexibility and change. This calls for growth and 
development which in essence is achieved through constant strife. 
An entrepreneur has a dual role to play- one, that of a leader and the other of a manager. The 
former provides direction and energy while the latter processes the input and gives the output. 
To ensure the continued efficiency and profitable functioning and growth of enterprise, extra 
managerial ability is required. 
The expansion of a concern may be in the activities or acquisition of ownership and control of 
other concerns. Thus, expansion may be; 
? Internal Expansion 
? External Expansion 
i) Internal expansion 
 Internal expansion results from the gradual increase in the activities of the concern. The 
concern may expand its present production capacity by adding more machines or by 
replacing old machines with the new machines with higher productive capacity. The 
internal expansion can also be undertaken by taking up the production of more units or by 
entering new fields on the production and marketing sides. Internal expansion may be 
financed by the issue of more share capital, generating funds from old profits or by 
issuing long–term securities. The net result of internal expansion is the increase in 
business activities and broadening the present capital structure. 
ii) External expansion or business combination 
 External expansion refers to business combination where two or more concerns combine 
and expand their business activities. In the process of combination, two or more units 
engage in similar business or related process or stages. Sometimes stages of the same 
business join with a view to carry on their activities or shape, their polices on common 
basis some other or in coordination for mutual benefit or maximum profits. The 
combination may be among competing units or units engaged in different processes. After 
combination, the constituted firm pursues some common objectives or goals.  
In this unit, we will focus on the main forms of external expansion which are 
a) Franchising 
b) Mergers and Acquisitions 
 144 
Case Study-II 
It's natural. It's yummy: It’s NATURAL ICE CREAM 
 
It's natural. It's yummy. Those who have tasted it, swear by it. The unique feature of the ice 
creams manufactured by Natural Ice Cream is that they contain no artificial flavours, preservatives or 
stabilisers, only fresh fruit pulp or dry fruits. 
Started as a 300-sq-ft ice cream parlour at Juhu, a northwest Mumbai suburb, in 1984, the brand is a 
runaway success. It now has 89 franchise outlets across West and South India: 47 in Mumbai, 29 in the 
neighbouring urban clusters of Navi Mumbai, Thane and Pune, and the rest scattered across selected 
cities of Maharashtra and neighbouring states. Ten more will be opened in the current financial year. 
Natural's revenues have grown from ` 14 lakh in 1986 to ` 40 crore in 2010-11. The franchises may be 
many, but the manufacturing hub is just one, located in another Mumbai suburb, Kandivali. Every 
morning, a fleet of trucks rolls out from the factory carrying the ice cream to all the Natural outlets, thus 
ensuring quality is not compromised. 
The store at Juhu has been renovated and expanded repeatedly, and is now more than three times its 
original size. "It is a landmark in the area," says a beaming Kamath. It all began after Kamath broke 
away from his elder brother's ice cream business, Gokul Ice Cream, in 1983. "I took my share of the 
inheritance and set up Natural," says Kamath. From the start he was at enormous pains to keep to 
quality - a trait he maintains to this day. Seasonal fruits are bought in bulk daily from the market, with 
only the best quality ones being chosen. The extracted pulp is heated, to get rid of unwanted bacteria, 
and then stored in aluminium-sealed packages. 
Kamath, who from the start involved himself in every aspect of manufacture and distribution, says he 
has experimented with 60 different kinds of fruit. (In case of non-seasonal fruits, however, Kamath has 
no choice but to buy pulp and get it machine processed.) 
The means Natural uses to enforce quality control, however, impose their own limits on the brand's 
expansion. All the temperature control in the world cannot preserve the taste - and more importantly the 
freshness - of ice cream beyond a specified number of hours, during which Natural's trucks can cover 
only a finite distance. This explains why Natural's outlets are largely in Western India, and it has no 
outlet yet in the national capital, despite the obvious business opportunity Delhi presents. "The National 
Capital Region has remained an elusive destination," admits Pai. 
But the scenario may soon change. Though Natural officials are reluctant to share details of their 
financial relationship with the franchises, they do reveal that plans are afoot for a major change in 
operational strategy. The man responsible is Kamath's son, Srinivas, who was inducted into the 
business in 2009. Srinivas, 27, believes that since it is dealing in perishable products such as ice cream, 
Natural has to set up manufacturing units in other locations, if it wants to keep expanding.