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Case Code: CLBS154
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| Case Length: - |
| Period: 2016 |
| Pub Date: 2017 |
| Teaching Note: Not Available |
| Subject :Business Strategy |
| Price:Rs.100 |
| Organization :Welspun India Limited |
| Industry :Textile |
| Countries : India |
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Welspun: Can it Spin a Successful Comeback? |
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| The case focuses on Welspun India Limited (Welspun), the country’s largest home textile manufacturer which found itself confronted with a quality issue. US-based Target Corp (Target), Welspun’s second largest customer, had declared that it was severing its decade-old ties with the company after discovering that around 750,000 sheets and pillow cases supplied by Welspun and labeled as being made from Egyptian cotton, were actually made from a different grade of cotton. The case further unfolds Welspun’s response to the crisis. |
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Issues: |
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- Understand the impact of a quality issue on a textile company.
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- Debate on crisis management and communication strategy of organizations.
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| Introduction |
| On August 19, 2016, Welspun India Limited (Welspun), the country’s largest home textile manufacturer, found itself confronted with a serious quality issue. US-based Target Corp (Target), its second largest customer, had declared that it was severing its decade-old ties with the company after discovering that around 750,000 sheets and pillow cases supplied by Welspun and labeled as being made from Egyptian cotton, were actually made from a different grade of cotton. Egyptian cotton sheets made up 10% of Welspun’s business with Target. Target accounted for 10% of Welspun’s total revenue. Target also announced a refund to its customers for the sheets sold for as much as $75 a piece between August 2014 and July 2016.Welspun’s other big accounts like Walmart and JC Penny also began probing the issue. The first impact of Target’s drastic action was felt on the value of Welspun’s stock, which declined by more than 40% (Refer to Exhibit I) at the Bombay Stock Exchange (BSE) within 4 days of the disclosure. |
Keywords |
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Crisis Management,Quality Issue,Communication Strategy,Textile Industry,Welspun,Target
* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US
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