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Caselet 1
Mr. and Mrs. Sharma went to Woodlands Apparel to buy a shirt. Mr. Sharma did not read the
price tag on the piece selected by him. At the counter, while making the payment he asked for
the price. Rs. 950 was the answer.
Meanwhile, Mrs. Sharma, who was still shopping came back and joined her husband. She was
glad that he had selected a nice black shirt for himself. She pointed out that there was a 25%
discount on that item. The counter person nodded in agreement.
Mr. Sharma was thrilled to hear that “It means the price of this shirt is just Rs. 712. That‟s
fantastic”, said Mr. Sharma.
He decided to buy one more shirt in blue color.
In no time, he returned with the second shirt and asked them to be packed. When he received the
cash memo for payment, he was astonished to find that he had to pay Rs. 1,900 and Rs. 1,424.
Mr. Sharma could hardly reconcile himself to the fact that the counter person had quoted the
discounted price which was Rs. 950. The original price printed on the price tag was Rs. 1,266.
Questions
1. What should Mr. Sharma have done to avoid the misunderstanding?
2. Discuss the main features involved in this case.
Caselet 2
I don‟t want to speak to you. Connect me to your boss in the US,” hissed the American on the
phone. The young girl at a Bangalore call centre tried to be as polite as she could. At another call
centre, another day, another young girl had a Londoner unleashing himself on her, “Young lady,
do you know that because of you Indians we are losing jobs?”
The outsourcing backlash is getting ugly. Handling irate callers is the new brief for the young
men and women taking calls at these outsourced job centres. Supervisors tell them to be „cool‟.
Avinash Vashistha, managing partner of NEOIT, a leading US-based consultancy firm says,
“Companies involved in outsourcing both in the US and India are already getting a lot of hate
mail against outsourcing and it is hardly surprising that some people should behave like this on
the telephone.” Vashistha says Indian call centre‟s should train their operators how to handle
such calls. Indeed, the furor raised by the Western media over job losses because of outsourcing
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has made ordinary citizens there sensitive to the fact that their calls are being taken not from
their midst, but in countries such as India and the Philippines.
The angry outbursts the operators face border on the racist and sexist, says the manager of a call
centre in Hyderabad. But operators and senior executives of call centres refuse to go on record
for fear of kicking up a controversy that might result in their companies‟ losing clients overseas.
“It‟s happening often enough and so let‟s face it,” says a senior executive of a Gurgaon call
centre, adding, “This doesn‟t have any impact on business.”
Questions
1. Suppose you are working as an operator in a call centre in India and receiving calls
from Americans and Londoners. How would you handle such calls?
2. Do you agree with the view such abusive happenings on the telephone do not have any
impact on business?
THE EU’S LAGGING COMPETITIVENESS
In a report produced for the European Commission, published in November 1998, it was argued that
the EU lags behind the USA and Japan on most measures of international competitiveness. Gross
domestic product per capita, sometimes used as an indicator of international competitiveness at the
country level, was 33 per cent lower in the EU as a whole than in the USA and 13 per cent lower
than in Japan. The EU‟s poor record in creating employment was singled out for particular criticism.
As this appeared to apply across the board in most industrial sectors, it suggested that the EU‟s poor
performance related to the business environment in general and, in particular, to the inflexibility of
Europe‟s labour markets for goods and services. A shortage of risk capital for advanced
technological development and high cost and inefficiency of Europe‟s financial services were also
highlighted by the report. For one reason or another, European industries generally lag behind in
technology industries. If measured by the number of inventions patented in at least two countries, the
USA is well ahead of most European countries, as well as Japan. Despite these shortcomings, the
report‟s authors focus attention on flexible markets, market liberalisation, and the creation of a
competitive business environment rather than on targeted intervention by the EU or national
authorities.
Questions:
1. Is gross domestic product per capita a useful indicator of International competitiveness in the EU?
2. Is it fair to point the blame for the EU‟s poor international competitiveness at inflexible labour
markets, regulated goods and services markets, and a general lack of competition? What
alternative explanations might be suggested?
Caselet 2
PERU
Peru is located on the west coast of South America. It is the third largest nation of the continent (after
Brazil and Argentina), and covers almost 500,000 square miles (about 14 per cent of the size of the
United States). The land has enormous contrasts, with a desert (drier than the Sahara), the towering
snow-capped Andes mountains, sparkling grass-covered plateaus, and thick rain forests. Peru has
approximately 27 million people, of which about 20 per cent live in Lima, the capital. More Indians
(one half of the population) live in Peru than in any other country in the western hemisphere. The
ancestors of Peru‟s Indians were the famous Incas, who built a great empire. The rest of the
population is mixed and a small percentage is white. The economy depends heavily on agriculture,
fishing, mining, and services. GDP is approximately $115 billion and per capita income in recent
years has been around $4,300. In recent years the economy has gained some relative strength and
multinationals are now beginning to consider investing in the country. One of these potential
investors is a large New York based that is considering a $25 million loan to the owner of a Peruvian
fishing fleet. The owner wants to refurbish the fleet and add one more ship. During the 1970s, the
Peruvian government nationalised a number of industries and factories and began running them for
the profit of the state. In most cases, these state-run ventures became disasters. In the late 1970s, the
fishing fleet owner was given back his ships and are getting old and he needs an influx of capital to
make repairs and add new technology. As he explained it to the NEW YORK banker: “fishing is no
longer just un art. There is a great deal of technology involved. And to keep costs low and be
competitive on the world market , you have to have the latest equipment for both locating as well
as catching and then loading and unloading the fish.”Having reviewed the fleet owner‟ operation, the
large multinational bank believes that the loan is justified. The financial institution is concerned ,
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however , that the Peruvian government might step in during the next couple of years and again
take over the business . If this were to happen, it might take an additional decade, for the loan to be
repaid. If the government were to allow the fleet owner to operate the fleet the way he has over the
last decade, the loan could be rapid within seven years. Right now, the bank is deciding on the
specific terms of the agreement. Once these have been worked out , either a loan officer will fly
down to lima and close the deal or the owner will be asked to come to NEW YORK for the signing.
Whichever approach is used, the bank realize that final adjustments in the agreement will have
to be made on the spot. Therefore, if the bank sends a representative to Lima, the individual will have
to the authority to commit the bank to specific terms. These final matters should be worked out within
the next ten days.
Questions:
1. What are some current issues Facing Peru? What is the climate for doing business in Peru today?
2. Would the bank be better off negotiating the loan in New York or in Lima? Why?
Caselet 1
The competitive advantage of nations and the competitiveness of locations have become important
topics in economic policy. Competitiveness is productivity; competitiveness is what the world
economic forum defines as the set of institutions and policies that determine the level of
productivity. There is no single determinant of competitiveness, there‟s no single determinant of
productivity.
Things that matter for example are the macroeconomic stability of a country, the soundness of
institutions whether the judiciary for example is independent or favors particular sectors or
businesses, whether the government acts in efficient ways or in sectarian ways, other determinants of
competitiveness involve market efficiency, labour market flexibility, and financial market flexibility.
The whole growth competitiveness index that is the index that has been used over the least five or
six years by the world economic forum captures the three big concepts: macroeconomic stability,
government institutions and innovations.
1. What are the indicators of global competitiveness? Discuss the new tools to determine global
competitiveness.
Caselet 2
In this new millennium, few business houses can afford a turn a blind eye to global business
opportunities. According to the latest Mckinsey Global Survey, top global executives believe that the
growing number of consumers in emerging markets will be the most important trend for global
business during the next five years. On 15th April 1994, trade ministers of 123 countries signed the
final Act of the GATT Uruguay Round of negotiations at Marrakech, bringing the WTO into being
on 1st January 1995.
The object of the Act is the liberalization of world trade. By it member countries undertake to apply
fair trade rules covering commodities, services and intellectual property. It provides for the lowering
of tariffs on industrial goods and tropical products; the abolition of import duties on a variety of
items; the progressive abolition of quotas on garments and textiles; the gradual reduction of trade
distorting subsidies and import barriers, and agreements on intellectual property and trade in
services.
1. Discuss the provisions of world Trade Organization (WTO). What are implications of WTO,
agreements on international business?
Caselet 1
Export Marketing:
The trade in black pepper is unhappy that exports may not show a sign of revival in prices in the
immediate future. World prices have been showing a downward trend for eighteen months and this has
resulted in much lower earnings for exporters. The UK, West Germany and the Netherlands have cut
their import requirement though the American demand has shown some growth. Brazil has been
resorting to aggressive selling at lower prices and the expectations are that its exports will reach an alltime
peak of 32,000 tones in the 1981-82 season. The 1981-82 Indian season is only about six weeks
away. The Brazilian offensive has forced India to withdraw so to any from the US and West European
markets and increase its reliance on communist buyers. As many as 1980-81.the Soviet Union alone
accounting for 12,647 tones. But exporters are concerned at the diversion on such a scale of this trade.
Questions:
1. Had you been the pepper exporter, what would be your short term and medium-term export
marketing strategy in the above environment?
2. Could you examine the weak points in this case study?
Caselet 2
SMART KIDS – SELLING EDUCATIONAL GAMES AND
RESOURCES TO THE WORLD
Smart Kids Ltd. An Auckland company that makes educational games and resources to read and
understand math‟s has won a Trade New Zealand Export Award for its success in international markets
in 2003.Established eight years ago in the family home basement, Smart Kids is led by husband and
wife team, joint chief executives David and Sun Milne and their sons Duncan and Frase. She Milne, an
ex-teacher, says from just 30 products when it started, the company produces more than 200 produces
catering for student‟s activities, grammar concepts and numeracy. She says the international appeal of
Smart Kids products was highlighted recently, when company‟s SMART PHONICS was listed amongst
the top five products out of almost 100 in the education trade show in the United Kingdom. The key
requirement for every new Smart Kids products is that it stimulates student‟s minds in the classroom,
teaches them a specific concept easily, enjoyably and permanently and enables problem solving. David
Milne says Smart Kids started selling its educational games and resources to New Zealand schools in
1995, drawings an immediate and strong response. It quickly became apartment that the New Zealand
market was not large enough to sustain considerable investment in product development, and secondly,
that their products have done so well that they deserved wider exposure.”Our export research came
down to two options. Find educational distributors in other countries or set-up our own operations. The
first option was less risky and easy to manage but it meant that Smart Kids products were lost in a wide
range of materials. So we went for the second option and over the next few years established offices in
Australia, in UK and Canada”. This has successfully branded Smart Kids as a leading supplier of
educational resources in these countries. Mr. Milne says the Smart Kids product catalogue is now sent
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regularly to teachers in more than 50,000 schools across the UK, Ireland, Canada and Australia. “We
also sell to schools in the US. In that market we elected to work through a distributor, we didn‟t have
the financial resources to set-up an operation that could cover almost 70,000 schools and compete with
every established educational publisher”. He says annual exports now exceed $2.2 million and account
for more than 90% of turnover. In order to grow the business, surplus profits are reinvested back into
product development, infrastructure – the company recently moved its Auckland operation into new
20,000 square feet premises in Ellerslie. Mr. Milne says the Smart Kids brand is now well established
internationally with the company enjoying many competitive advantages, including its New Zealand
origin. New Zealand education is highly regarded overseas and we find that international teachers to get
hold of educational products made in this country.
Questions:
1. What are the major considerations for a firm in order to while deciding its markets entry
strategy?
2. To what extent direct control and ownership are critical for Smart kids export distribution
strategy
Caselet 1
Swastika Computer System was established in 1981 at Delhi to provide computer training. In 1980s
computer education was relatively new in India. Personal computers 286 existed and MS DOS was the
operating system. Languages like Basic, Pascal, COBOL, FORTRAN were used in programming.
Swastika Computer Systems was established with their support departments namely computer
assembly, faculty training and computer servicing department. In the first financial year, it recorded a
turnover of Rs 11.5 lakhs. Within a few years of its existence, Swastik Computer System opened its
branches in eight major cities of India and had a gross annual turnover of Rs 86 lakhs. The organization
was highly centralized. The head office at Delhi handled all accounts, recruitment, and placement of
students and servicing of computers. The Bhopal branch of Swastik Computer Systems was set up in
May 1987. The branch was headed by a dynamic branch manager Hemant Gupta. He was a BSc in
computers and had previously worked in the data processing department of a manufacturing concern.
To establish the Bhopal branch, Hemant Gupta realized the need for making Swastik Computer
Systems, Bhopal known to the younger generation. With this in mind he introduced some innovative
promotional schemes like offering scholarships to students doing well in the intelligence tests
administered by the branch, giving personal computers to students to deposit term fees at their
convenience. Hemant Gupta also ensured that teaching standards were high and computers at the
branch were well maintained, so a student once enrolled felt that he had made the right decision by
joining Swastik Computer Systems. He also made himself available from 8.00 am to 7.00 p.m at the
branch. Students were free to go to him with their problems, which he took pains to solve. Soon
Swastik Computer Systems was one of the leading computer training centres in Bhopal. As the Bhopal
branch prospered, the head office at Delhi started taking an active interest in the running of this branch.
The Regional Manager who visited Bhopal once a month started making frequent visits. During one of
his visits, his attention was drawn to rumors that branch funds were being misappropriated. When the
Regional Manager informed the Delhi office about the rumor, a team was sent to the Bhopal Branch to
look into the matter. On investigation, the term was convinced that the rumors had some truth in them.
It was found that a larger number of students attended the classes than were enrolled. It was felt that this
fraud was not possible without the consent of Hemant Gupta, and without any further inquiry a decision
was taken to remove him forthwith. Amit Verma who was a senior faculty at Swastik Computer
Systems, Delhi was asked to take over the Bhopal branch as Manager. He was an MCA and had been
associated with the organization since its inception. Amit Verma‟s appointment at Bhopal was
welcomed at the Bhopal branch by both, staff and faculty as he had the reputation of being an easy
going person. After he joined the Bhopal, it was observed that Amit Verma, although academically
sound, was not an effective administrator. His approach towards staff and faculty was lenient. He was
not particular about punctuality and was not available during office hours. This had an adverse effect on
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faculty in general and classes in particular. Not only did classes suffer but even administrative work
was affected. Monthly reports to the head office were not sent on time, as a result requisitions for
computer servicing, reading material and funds were unduly delayed. Due to lack of maintenance,
computer breakdowns became common, students did not receive their reading material on time and
payment of building rent, and telephone bills etc were unnecessarily delayed. The symptoms of
deterioration at the Bhopal branch were obvious. The branch which had an annual turnover of Rs 30.7
lakhs fell to Rs. 4 lakhs. As enrollments decreased the head office at Delhi started feeling the pinch. It
started delaying transfer of funds to the Bhopal branch. As a result faculty salaries were unduly delayed.
The faculty started leaving for greener pastures.
Worried by the number of faculty turnover, the head office started a practice of recruiting only
those faculties willing to sign a bond of 3 years. The organization started a practice of taking a deposit
of Rupees 5000 from the joining faculty, which would be refunded after 3 years. In case the faculty left
before this duration, the deposit stood forfeited. This policy further reduced the quality of faculty
joining Swastik Computer Systems, Bhopal.
Questions:
1. What according to you went wrong at the Bhopal branch?
2. What can be done to revive the Bhopal branch?
Caselet 2
Mind tree which was founded in 1999 in India by a group of IT professionals who wanted to chart a
somewhat distinctive path. Today, it has a top line of $269 million and is rated as one of the most
promising mid-sized IT services companies. Creditable as that is, Mind Tree does not want to be just
that. There is an element of serendipity about what it has been doing over the last year. In 2008, it
designated one of its founders Subroto Bagchi „Gardener‟, a gimmicky signal, intended to declare that
he was moving out of the day-to-day running of the company to nurture talent which would run the
company in the future. He has now a report card ready on a year as gardener. During this one year, he
has also spent around 45 days travelling round the world talking to clients and prospective ones which
has yield remarkable insights into what firms are doing in these traumatic times. Lastly, Mind Tree as
a whole has spent the last year going through the exercise of redefining its mission statement and
vision for the next five years. Quite fortuitously these processes have come together with a unifying
thread, presenting a coherent big picture. Mind Tree wants to seed the future while still young, and
executive chairman Ashok Soota has declared that by 2020, it will be led by a non-founder. So a year
ago the gardener Bagchi set out to “touch” 100 top people in the organization, with a goal of doing 50
in a year so as to eventually identify the top 20 by 2015. From among them will emerge not just the
leader but a team of ten who would eventually, as group heads, deliver $200 million of turnover each.
That will give a turnover of $2 billion. To put it in perspective, one one VC-funded company, which
has not closed or been bought over, has been able to get to $2 billion and that is Google. But to get
there it has to periodically redefine its mission (why we exist) and its vision – measurable goals for the
next five years. Its redefined mission is built around “successful customers, happy people, and
innovative solution”. Its new vision targets a turnover of $1 billion by 2014. It wants to be among the
globally 20 most profitable IT services companies and also among the 20 globally most admired ones.
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Admired in terms of customer satisfaction (pay for the course), people practices (creditable),
knowledge management (exciting) and corporate governance (the Enron-Satyam effect). The really
interesting bit about Mind Tree in the last one year is what Bagchi has been up to. He has been
embedding himself in the 50 lives, working in a personal private continuum, making it a rich learning
process “which has helped connect so many dots.” Of the hundred who will be engaged, may be 50
will leave, of them 25 may better themselves only marginally, and from the remaining 25 ten will
emerge who will carry the company forward.
Questions:
1. What do you analyse as the main reason behind the success of Mind tree?
2. Do you think that redefining the mission statement shows the lacunae on the part of the founder
members of an organization? Why?
Caselet 1
Orion is a global co. That sells copiers. Orion currently sells 10 variants of a copier, with all inventory
kept in finished-goods form. The primary component that differentiates the copiers is the printing
subassembly. An idea being discussed is to introduce commonality in the printing subassembly so
that final assembly can be postponed and inventories kept in component form. Currently, each copier
costs $1,000 in terms of components. Introducing commonality in the print subassembly will increase
component cost to$1.025.One of the 10 variants represents 80 percent of the total demand. Weekly
demand for this variant is normally distributed ,with a mean of 1,000 and a standard deviation of
200.Each of the remaining nine variants has a weekly demand of 28 with a standard deviation of
20.Orion aims to provide a 95per level of services .Replacement lead time for components is four
weeks. Copier assembly can be implemented in a matter of hours. Orion manages all inventories
using a continuous review policy and uses a holding cost of 20 percent.
1. How much safety inventory of each variant must Orion keep without component commonality?
What are the annual holding costs?
2. How much safety inventory must be kept in component form if Orion uses common components
for all variants? What is the annual holding cost? What is the increase in component cost using
commonality? Is commonality justified across all variants?
3. At what cost of commonality will complete commonality be justified?
4. At what cost of commonality will commonality across the low-volume variants be justified?
Caselet 2
An electronic manufacturer has outsourced production of its latest MP3 player to a contract
manufacturer in Asia. Demand for the players has exceeded all expectations whereas the contract
manufacturers sell three types of players- a 40-GB player, a 20-GB player, 6-GB player. For the
upcoming holiday season, the demand forecast for the 40-GB player is normally distributed, with a
mean of 20,000and a standard deviation Dard deviation of 11,000, and the demand forecast for the 6-
GB player has a mean of 80,000 and a standard deviation of 16,000. The 40-GB player has a sale
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price of $200, a production cost of $100, and a salvage value of $80 .The 20-GB player has a price of
$150, a production cost of $70, and a salvage value of $50.
1. How many units of each type of player should the electronics manufacturer order if there are no
capacity constraints?
2. How many times of each type of player should the electronics manufacturer order if the available
is 140,000? What is the expected profit?
END OF
Caselet 1
ADAPTABILITY IN ACTION: A CASE OF RSL
Rajasthan Synthetics Ltd. (RSL) was established in the year 1994 at Bhilwara, Rajasthan to
manufacture synthetic yarn with a licensed capacity of 29,000 spindles. Manish Kumar, a Harvard
Business School graduate, established RSL with 8% equity participation from Itochu Corporation
Japan to manufacture synthetic yarn for shirting, a promising business at that time. The demise of the
NTC textile mills was fresh in the minds of the promoters and therefore, state of the art technology
imported from U.K., Germany, Japan and France was used in the manufacturing facility. By the time
the company started manufacturing yarn the competition in shirting yarn had become fierce and the
returns had diminished. The company incurred losses in the first four years of its operations and the
management was looking for opportunities to turn things around. The manufacturing plant started
functioning with an installed capacity of 26,000 spindles, a small unit considering yarnmanufacturing
industry, in the year 1996 to manufacture synthetic yarn for shirting only. Initially, the
major fabric manufactures of India such as Raymonds, Donear, Grasim, Amartex, Siyaram, Pantaloon
and Arviva were the main customers of the company and the total produce of the company was sold
within the domestic market. These fabric manufactures used to import the premium quality yarn
before RSL started supplying the yarn to them. The company in the first year of its operations
realized that shirting yarn was one of the fiercely competitive products and the company with its high
interest liability was unlikely to earn the desired profits. Also, the company had a narrow product mix
limited to only two more blow room lines were installed in the first quarter of 1997. The addition of
two blow room lines helped RSL to manufacture four different types of yarns at the same time.
Utilizing this added flexibility, RSL began manufacturing yarn for suitings.Since the suiting yarn was
providing better returns, the company was keen to increase manufacturing of suiting yarn but was
hampered by the two for one doubling (TFO) facility, which was limited to only 40% of the total
produce. To remove this bottleneck, 12 more TFO machines were added to the existing 8 TFO
machines. The addition of these machines increased the doubling capacity to 70% of the production
providing additional product mix flexibility to the company. This enabled the company to
manufacture yarn to cater to the requirements of suiting, industrial fabric and carpet manufacturers. In
the initial years of its operations, RSL realized that the promises made by the Government of
Rajasthan to provide uninterrupted power supply of the required quality (stable voltage and
frequency) and ample quantity of water were unlikely to be met through the public distribution
system. The voltage and frequency of electric power provided through the public distribution system
were erratic and frequent announced and unannounced power cuts stopped production on a regular
basis. In these circumstances, meeting quality requirements of the customers and adhering to delivery
schedules was a herculean task. To ensure smooth and uninterrupted operations RSL installed inhouse
power generation facility of 4 megawatts capacity and dug 10 tube-wells.RSL faced stiff
competition in the domestic market from Gujarat Spinning and Weaving Mills, Surat, Rajasthan
Textile Mills, Bhawani Mandi, Charan Spinning Mills, Salem and Indorama Synthetics Ltd.,
Pithampur in all their product categories and the returns were low. In order to combat stiff
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competition in the domestic market and improve returns the company started developing export
markets for their products in the year 1998. Initially, RSL started exporting carpet yarn to Belgium
and till 2001; carpet yarn formed the major component of their exports. A trade agreement was signed
with Fibratex Corporation, Switzerland to share profits equally for expanding their overseas
operations. During the same period, RSL continued to scout for new export markets and was
successful in entering top-of-the-line fancy for premium fashion fabric manufactures of international
repute like Mango and Zara. Rajasthan Synthetics Ltd. also exported fancy yarn to a number of fabric
manufacturers located in Italy, France, England, Spain and Portugal. Yarn manufacturers from
Indonesia, Korea and Taiwan gave stiff competition to RSL when it entered the international market.
The companies from South Asian countries had a major cost advantage over RSL because of cheap,
uninterrupted availability of power and high labour productivity. Currencies had been sharply
devalued during the South Asian financial crisis, which rendered the products manufactured by these
companies still cheaper in international markets. Despite all these disadvantages, RSL was able to
gain a foothold through constant adaption of their products according to the customer requirements in
the highly quality conscious international yarn market and was exporting 95% of its total produce by
the beginning of the year 2002.
Rajasthan Synthetics Ltd. had fine-tuned its distribution channels according to the type of markets
and size of orders from the customers. In line with this policy the export to Middle East, Far East and
Turkey was carried out through agents. Similarly, low volume export of fancy yarn requirements was
also catered through agents. While dealing with importers directly, RSL strictly followed the policy
of exports against confirmed Letter of Credits only. The company directly exported to important
clients in Belgium, England and France. The domestic market was also served through an agency
system. Rajasthan Synthetics Ltd. considered inventories as an unnecessary waste and kept minimum
possible inventories while ensuring required level of service. To ensure that the inventories were held
to a minimum, the manufacturing plan consisted of 60 to 70% against customer orders, 30 to 40%
against anticipated sales and 2% capacity was reserved for new product development. A Strategic
Management Committee (SMC) consisting of MD, CEO, GM (marketing) and GM (technical)
reviewed the production plan of the manufacturing plant on quarterly basis. The SMC also developed
the plans for profitability, product mix and cost minimization. Delivering high-quality products and
meeting delivery commitments for every shipment were essential pre-requisites to be successful in the
global market place. The company had understood this very early and to ensure that the products
manufactured by RSL met the stringent quality requirements of its international customers, the
company had developed a full-fledged testing laboratory equipped with ultra modern testing
machines like User Tester-3 and Classifault. The company had stringent quality testing checks at
every stage of tarn production right from mixing of fiber to packing of finished cones. Its in-house
Research and Development and Statistical Quality Control (SQC) divisions ensured consistent
technical specifications with the help of sophisticated state-of-the-art machines. A team of
professionally qualified and experienced personnel to ensure that the yarn manufactured by the
company was in line with international standards backed the company. The company continuously
upgraded its product mix and at the same time, new products developed by in-house research and
development department were added to the product mix form time to time. RSL‟s management was
quick to analyze the potential of these in-house developments and followed a flexible approach in
determining the level of value addition. The company had developed a new yarn recently and was
selling it under the Rajtang brand name. This new yarn was stretchable in three dimensions, absorbed
moisture quickly, was soft and silky and fitted the body. This yarn was extracted from natural
products and being body-friendly, was in great demand in international markets. Looking at the
higher value addition possibilities RSL decided to forward integrate and started manufacturing fabric,
using Rajtang and provided ready-made garments like swimming suit, tracksuit, undergarments, tops,
slacks and kids dresses. The ready-made dresses from the fabric were being manufactured on the
specifications and designs of RSL. The management decided to market these products under the
brand name “Wear-it” through Wearwell Garments Pvt. Ltd., an associate company of RSL, to ensure
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that RSL did not lose its focus. The Managing Director of RSL felt that continuous adaptability to
market requirements through a flexible approach, cost cutting in every sphere of operations and team
approach to management had taken them ahead. However, RSL had become highly dependent on the
volatile export market and if it was not able to retain the international market it would have to reestablish
itself in the domestic market, which was not an easy task.
1. What marketing strategy should RSL adopt to remain competitive in the international market?
2. Has the company taken the right decision to forward integrate and enter into the highly volatile
garment market?
Caselet 2
Popular mythology in the United States likes to refer to pre-World War II Japan as a somewhat
backward industrial power that produced and exported mostly trinkets and small items of dubious
quality bought by Americans impoverished by the Great Depression. Few bring up the fact that, prior
to the Pearl Harbor attack, Japan had conquered what are now Korea, Manchuria, Taiwan, and a large
portion of China, Vietnam, and Thailand; and by the end of 1942 Japan had extended its empire to
include Burma, the Philippines, Indonesia, Malaysia, Thailand, Cambodia, New Guinea, plus many
strings of islands in the eastern Pacific Ocean. Its navy had moved a large armada of worships 4,000
miles across the Pacific Ocean, in secret and in silence, to attack Pearl Harbor and then returned
safely home. Manufacturers capable of producing only low-grade goods don‟t accomplish such feats.
High-quality standards for military hardware, however, did not extend to civilian and export goods,
which received very low priority during the war years. Thus the perception in the United States for a
long time before and then immediately after the war had nothing to do with some inherent character
flaw in Japanese culture or industrial capability. It had everything to do with Japan‟s national
priorities and the availability of funds and material. Following Japan‟s surrender in 1945, General
MacArthur was given the task of rebuilding the Japanese economy on a peaceful footing. As part of
that effort an assessment of damage was to be conducted and a national census was planned for 1950.
Deming was asked in 1947 to go to Japan and assist in that effort. As a result of his association with
Shewhart and quality training, he was contacted by representatives from the Union of Japanese
Scientists and Engineers (JUSE), and in 1950, Deming delivered his now famous series of lectures on
quality control. His message to top industry leaders, whom he demanded to attend, and to JUSE was
that Japan had to change its image in the United States and throughout the world. He declared that it
could not succeed as an exporter of poor quality and argued that the tools of statistical quality control
could help solve many quality problems. Having seen their country devastated by the war, industry
and government leaders were eager to learn the new methods and to speed economic recovery.
Experience was to prove to Deming and others that, without the understanding, respect, and support
of management, no group of tools alone could sustain a long-term quality improvement effort.
1. How could have the SQC approach, been useful in solving the immediate problems of Japan?
2. If you were among one of the management members, what would have been your first insight?
Case let 1
National Competitive Advantage of IKEA Group, a Swedish company founded in 1943 with its
headquarters in Denmark, is a multinational operator of a chain of stores for home furnishing and
furniture. It is the world’s largest retailer, which specializes, in stylish but inexpensive Scandinavian
designed furniture. At the end of 2005 the IKEA Group of Companies had a total of 175 stores in 31
countries. In addition there are 19 IKEA stores owned and run by franchisees, outside the IKEA store
around the world.
In Sweden, nature and a home both play a big part in people’s life. In fact one of the best ways to describe
the Swedish home furnishing style is to describe nature-full of light and fresh air, yet restrained and
unpretentious.
To match up the artist Carl and Karin Larsson combined classical influences with warmer Swedish folk
styles .They created a model of Swedish home furnishing design that today enjoys world-wide renown. In
the 1950s the styles of modernism and functionalism developed at the same time as Sweden established a
society founded on social equality .The IKEA product range –The IKEA product range- modern but not
trendy, functional yet attractive, human-centered and child friendly – carries on these various Swedish
home furnishing traditions.
The IKEA Concept, like lots founder, was born in Samaland. This is a part of Southern Sweden where the
soil is thin and poor. The people are famous for working hard, living on small means and using their
heads to make the best possible use of the limited resources they have. This way of doing things is at the
heart of the IKEA approach to keeping prices low.
IKEA was founded when Sweden was fast becoming an example of the caring society, where rich and
poor alike were well looked after. This is also a theme that fits well with the IKEA vision. In order to give
the many people a better everyday life, IKEA asks the customer to work as a partner. The product range is
child-friendly and covers the need of the whole family, young and old. So together we can a better
everyday life for everyone.
In addition to working about around 1,800 different suppliers across the world, IKEA produces many of
its own products through sawmills and factories in the IKEA industrial group, Swedwood.
Swedwood also has a duty to transfer knowledge to other suppliers, for example by educating them in
issues such as efficiency, quality and environmental work.
Swedwood has 35 industrial units in 11 countries.
Examination Paper: Semester II
IIBM Institute of Business Management
Purchasing: IKEA has 42 Trading Service Offices (TSO’s) in 33 countries. Proximity to their suppliers
is the key to rational, long term cooperation. That’s why TSO co-workers visit suppliers regularly to
monitor production, test new ideas, negotiate prices and carry out quality audits and inspection.
Distribution: The route from supplier to customer must be as direct, cost- effective and environmentally
friendly as possible. Flat packs are important aspects of this work: eliminating wasted space means we
can transport and store goods more efficiently. Since efficient distribution plays a key role in the work of
creating the low price, goods routing and logistics are a focus for constant development.
The business Idea: The IKEA business idea is to offer a wide range of home furnishings with good design
and function at prices so low that as many people as possible will be able to afford them. And still have
many left! The company targets the customer who is looking for value and is willing to do a little bit of
work serving themselves, transporting the items home and assembling the furniture for a better price. The
typical IKEA customer is young low to middle income family.
The Competition Advantage: The competition advantage strategy of IKEA’s product is reflected through
IKEA’s success in the real industry. It can be attributed to its vast experience in the retail market, product
differentiation, and cost leadership.
IKEA Product Differentiation: A wide product range The IKEA product range is wide and versatile in
several ways. First, it’s versatile in function. Because IKEA think customer, shouldn’t have to run from
one small specialty shop to another to furnish their home, IKEA gather plants, living room furnishings,
toys , frying pans, whole kitchens i.e.; everything which in a functional way helps to build a home – in
one place , at IKEA stores.
Second, it’s wide in style. The romantic at heart will find choices just as many as the minimalist at IKEA.
But There is only one thing IKEA don’t have, and that is, the far- out or the over-decorated. They only
have what helps build a home that has room for good living.
Third, by being coordinated, the range is wide in function and style at the same time. No matter which
style you prefer, there’s an armchair that goes with the bookcase that goes with the new extending table
that goes with the armchair. So their range is wide in a variety of ways.
Cost Leadership: A wide range with good form and function is only half the story. Affordability has a part
to play – the largest part. A wide range with good form and function is only half the story. Affordability
has a part to play- the largest part. And the joy of being able to own it without having to forsake
everything else. And the customers help, too, by choosing the furniture, getting it at the warehouse,
transporting it home and assembling it themselves , to keep the price low.
Questions
1. Do you think that IKEA has been successful to utilize Porter’s Five force analysis?
Give reasons.
2. Where do you think can IKEA improve?
Examination Paper: Semester II
IIBM Institute of Business Management
Case let 2
For ITC Ltd., 2007-2008 continued to be year of quiet growth. Just more launches in its relatively new
segment of non-cigarettes fast moving consumer goods, and solid growth. As in the past few years, ITC’s
non-cigarettes businesses continued to grow at a scorching pace, accounting for a bigger share of overall
revenues. “The non-cigarette portfolio grew by 37.6% during 2006-2007 and accounted during that year
for 52.3% of the company’s net turnover.” An ITC spokesman said. In fact, over the first three quarters of
2007-08, ITC’s non-cigarette FMCG businesses have grown by 48% on the same period last year,
“Indicating that its plans for increasing market share and standing are succeeding.”
The branded packaged foods business continued to expand rapidly, with the focus on snacks range Bingo.
The biscuit category continued its growth momentum with the ‘Sun feast’ range of biscuits launching
‘Coconut’ and ‘Nice’ variants and the addition of ‘ Sunfeast BenneVita Flaxseed’ biscuits. Aashirwad atta
and kitchen ingredients retained their top slots at the national level, with the spices category adding an
organic range. In the confectionery category which grew by 38% in the third quarter, ITC cited AC
Nielsen data it claims market leader status in throat lozenges. Instant mixes and pasta powdered the sales
of its ready to eat foods under the kitchens of India and Aashirwad brands.
In Lifestyle apparel, ITC launched Miss Players fashion wear for young women to compliment its range
for men.
Overall, the biscuit category grew by 58% during the last quarter, ready to eat foods under the kitchens of
India and Aashirwad brands by 63% and the lifestyle business by 26%.
For the Industry, the most significant initiative to watch the ITC foray into premium personal care
products with its Fiama Di Wills range of shampoos , conditioners, shower gels, and soaps. In the popular
segment, ITC has launched a range of soaps and shampoos under the brand name Superia.
Ravi Naware, Chief executive of ITC’s food business was quoted recently as saying that the business will
make a positive contribution to ITC’s bottom line in the next two to three years.
In hotels, ITC’s Fortune Park brand was making the news during the year, with a rapid rollout of first
class business hotels.
In the agri-business segment, the e-choupal network is trying out a pilot in retailing fresh fruits and
vegetables. The e-choupals have already specialized in feeding ITC high quality wheat and potato, among
other commodities grown by farmers with help from e-choupal.
Questions:
Q1. Do you think the progress of ITC Ltd. is realistic?
Q2. After analyzing the above case, do you think every company should aim at cost leadership with high
quality product?
Caselet 1
Tech Knowledge is a start-up founded in 1997 by Robert Thyer. The company is a distributer of
presentation technologies, including computer based projection systems, video equipment, and
display technologies. The firm has 25 employees and does $5 million in sales. It is growing rapidly.
The owner, Robert Thyer, would like to netsource the back-office functions of the firm because the
company does not have an internal IT capability. The applications to be netsourced would include
sales and distribution, financial accounting, and inventory management.
TechKnowledge would like to source SAP or another ERP vendor via a hosting arrangement. It
does not expect to do much customization, and it does not have any legacy systems.
1. What factors should it use to evaluate each of these potential hosts?
2. What controls should be in place to monitor the hosting arrangement?
Caselet 2
ITM is a company specializing in network implementation and management. It provides networking
services to mid-sized companies, which do not have an internal networking analyst or IT manager.
These organizations include real estate companies, law offices, medical practices, architectural /
engineering firms, construction companies, business services providers, country clubs, community
organizations, and churches.
ITM uses a legacy accounting system to handle its financial accounting and financial
management functions. It has added on a billing package for client services. The next step is to
obtain a CRM capability to manage information about current and prospective customers more
effectively.
You have been assigned to identify potential sources for a net-sourcing arrangement with an ERP
vendor, which provides CRM capabilities.
1. Identify potential sources of software?
2. Determine five criteria you will recommend be used to evaluate each of alternative providers?
END OF
Case let 1
Overview of our Client’s Strategy
Our client had an online store. They were spending $15,000 each month on pay per click
advertising. This resulted in about $225,000 per month in sales. They didn’t know which clicks
were leading to sales because they didn’t track the clicks. There rankings in the natural listings was
minimal because they hadn’t done keywords research on what visitors were using to try to find a
site like there’s. They weren’t able to quantity results because their we statistics program only
showed very general traffic information. They were also doing an irregular email newsletter even
though they had more than 32,000 e-mails in their database.
Analysis of the situation
In the natural listings we suspected they were being penalized by the search enines for duplicate
content. The search engines frown on this because they feel this is trying to fool them. Google will
often give a site like this something called “Supplement Results”, which means that the search
engines know the page exists but doesn’t have any content in their database. We also suspected
their email newsletter was being blocked by many spam blockers because the names of the products
they sold were often on used in spam e-mails.
Implementation of a Solution
For the pay per click advertising we started tracking the clicks down to the individual terms and the
actual results that came from them. We were able to delete terms that were not getting enough sales
and increase the bids on ones that brought sales. For the natural listings we did keywords research
and focused on the main keywords on the content for the home page and in the META tags. We
also found that visitors search on product names rather than manufactures, so in the title tag for the
page we switched and put the product name before the manufacturer. With the newsletter, we used
a good mix of graphics and content to appease the spam blockers, as well as put the product names
in graphics so they wouldn’t be blocked. In order to analyze of the site’s traffic, we implemented a
powerful web statistics program.
Results of our work
Through our tactics, our clients were able to move up to #4 on Google for their main search term,
which got a lot of traffic. With pay per click, they went from $.43. They decrease their budget to
$10,000 per month, yet were able to increase their traffic by 33 percent. Through our optimization
of their pay per click, their cost per conversion to sale decreased by at least 45 percent. The
deliverability of their newsletter increased as well. Within a year, their sales increased to over
$600,000 per month.
Questions:
1. Discuss the client strategy for the success of store.
2. Suppose if you are the client maker what would you suggest for the client.
Examination Paper : Semester II
IIBM Institute of Business Management 4
Case let 2
Data Warehouse is a massive independent business database system that is populated with data that
has been extracted from a range of sources. The data is held separately from its origin and is used to
help to improve the decision-making process.
Many traditional Databases are involved in recording day to day operational activities of the
business, called Online Transaction Processing (OLTP), COMMONLY IMPLEMENTED IN
Airline Bookings and Banking Systems, for faster’s response and better control over data.
After establishment of OLTP Systems, reports and summaries can be drawn for giving inputs to
decision-making process and this process is called Online Analytical Processing (OLAP).
For better customer relationships management strategy, the call centre’s and data Warehouse works
as a strategic tool for decision-support which requires lot of time for establishment, and needs to be
updated with operational information on daily weekly or monthly basis.
Data Warehouse is used for proactive strategies formulation strategies formulation in critical and
complex situations. A number of CRM vendors are advocating for single integrated customer
database which includes call centre, web sites, branches and direct mail, but it lacks in analytical
functioning of data warehouse. This Database can’t be expanded also, and carry decision support
operations on call centre Database becomes slow & the query processing and inquiries andling
operations also become slow & inefficient for agents dealing with customers.
Data Warehouse is must for identifying most profitable & loyal customers and those customers can
be offered better customized services which increase the chances of additional profits.
Although call centre system & data warehouse are altogether different systems yet dependent on
each other to fully exploit their potential respectively.
Questions:
1. Explain the role of data warehousing in the functioning of a call centre.
2. How the response time in performing OLAP queries can be improved?
Case let 1
Managing Exchange Rate Risk
Mahindra International (India) imported spares of an engine from a US manufacturer for $ 5,000 per
annum at a price of $ 2.5 per piece. The average exchange rate during 2001-02 was Rs. 47.70/$. The
Indian company imported the spares also from a British manufacturer. In fact, it had diversified its
import in view of reducing the risk associated with the supply. The import from the USA was
competitive in view of the fact the same spares imported from the UK was slightly costlier. The
American spares cost Rs. 119.25 per piece, while the British spares cost Rs. 120.00 per piece. In
2002-03, US dollar appreciated to Rs. 48.40 with the result that the cost of American spares turned
higher than the British spares. In the sequel of the appreciation of US dollar, the Indian importer cut
its demand from 2,000 pieces to 500 pieces. The loss to the US exporter was colossal. But at the same
time, the Indian Importer suffered a lot. It had to pay a higher price for the US spares in terms of
rupee. And also, it had to divert its import from the USA to the UK insofar as the pound sterling did
not appreciate during this period. All this happened in the wake of the exchange rate changes.
Questions:
1. Mention the loss borne by the US exporter in the sequel of appreciation of dollar.
2. What strategy the Indian importer needs to follow to hedge the exchange rate risk?
Case let 2
ABN Amro Bank and Correspondent Banking in India
ABN AMRO bank has emerged as a major correspondent bank owing to a large network. In
India, it operates in six major cities, viz. Baroda, Chennai, Kolkata, Mumbai, New Delhi and
Pune. Being a correspondence bank, its product offerings are found primarily in the area of
trade and clearing. It is doing well in these owing to strong tie-up with local Indian banks
reaching 350 centres across the country. As a result, payments are effected speedily and
effectively.
Cash Management
The customized products in the area of cash management include cheques payable at par at all its
branches across the country, apart from traditional collection services, such as collection of
outstation/upcountry cheques drawn on other banks. ABN AMRO is a member of all major clearing
centers in the major financial centers. It has an electronic delivery system and structures multilateral
netting of cash.
Examination Paper: Finance Management
4
IIBM Institute of Business Management
Trade Services
Under trade services, the Bank offers a comprehensive range of products, such as:
1. LC reimbursement
2. Indian rupee trade payments
3. Handling documentary bills for collection
4. Bills negotiation
5. Letter of credit advising
6. Letter of credit confirmation
7. Guarantees
Treasury Services
Treasury services at ABN AMRO Bank (India) are available round-the-clock. Rupee funding at its
treasury desk is provided at competitive rates along with advice on market trends and rates. It
provides also advisory services on the request of financial institutions and corporate in the area of
regulatory, economic and financial matters including depository services.
Questions:
1. Describe the network of ABN AMRO Bank in India.
2. What role does it play for global cash management?
Case let 1
Export Marketing:
The trade in black pepper is unhappy that exports may not show a sign of revival in prices in the
immediate future. World prices have been showing a downward trend for eighteen months and this
has resulted in much lower earnings for exporters. The UK, West Germany and the Netherlands have
cut their import requirement though the American demand has shown some growth. Brazil has been
resorting to aggressive selling at lower prices and the expectations are that its exports will reach an
all-time peak of 32,000 tones in the 1981-82 season. The 1981-82 Indian season is only about six
weeks away. The Brazilian offensive has forced India to withdraw so to any from the US and West
European markets and increase its reliance on communist buyers. As many as 1980-81.the Soviet
Union alone accounting for 12,647 tones. But exporters are concerned at the diversion on such a scale
of this trade.
Questions:
1. Had you been the pepper exporter, what would be your short term and medium-term export
marketing strategy in the above environment?
2. Could you examine the weak points in this case study?
Case let 2
SMART KIDS – SELLING EDUCATIONAL GAMES AND
RESOURCES TO THE WORLD
Smart Kids Ltd. An Auckland company that makes educational games and resources to read and
understand math’s has won a Trade New Zealand Export Award for its success in international
markets in 2003.Established eight years ago in the family home basement, Smart Kids is led by
husband and wife team, joint chief executives David and Sun Milne and their sons Duncan and Frase.
She Milne, an ex-teacher, says from just 30 products when it started, the company produces more
than 200 produces catering for student’s activities, grammar concepts and numeracy. She says the
international appeal of Smart Kids products was highlighted recently, when company’s SMART
PHONICS was listed amongst the top five products out of almost 100 in the education trade show in
the United Kingdom. The key requirement for every new Smart Kids products is that it stimulates
student’s minds in the classroom, teaches them a specific concept easily, enjoyably and permanently
and enables problem solving. David Milne says Smart Kids started selling its educational games and
Examination Paper: Marketing Management
IIBM Institute of Business Management 4
resources to New Zealand schools in 1995, drawings an immediate and strong response. It quickly
became apartment that the New Zealand market was not large enough to sustain considerable
investment in product development, and secondly, that their products have done so well that they
deserved wider exposure.”Our export research came down to two options. Find educational
distributors in other countries or set-up our own operations. The first option was less risky and easy to
manage but it meant that Smart Kids products were lost in a wide range of materials. So we went for
the second option and over the next few years established offices in Australia, in UK and Canada”.
This has successfully branded Smart Kids as a leading supplier of educational resources in these
countries. Mr. Milne says the Smart Kids product catalogue is now sent regularly to teachers in more
than 50,000 schools across the UK, Ireland, Canada and Australia. “We also sell to schools in the US.
In that market we elected to work through a distributor, we didn’t have the financial resources to setup
an operation that could cover almost 70,000 schools and compete with every established
educational publisher”. He says annual exports now exceed $2.2 million and account for more than
90% of turnover. In order to grow the business, surplus profits are reinvested back into product
development, infrastructure – the company recently moved its Auckland operation into new 20,000
square feet premises in Ellerslie. Mr. Milne says the Smart Kids brand is now well established
internationally with the company enjoying many competitive advantages, including its New Zealand
origin. New Zealand education is highly regarded overseas and we find that international teachers to
get hold of educational products made in this country.
Questions:
1. What are the major considerations for a firm in order to while deciding its markets entry
strategy?
2. To what extent direct control and ownership are critical for Smart kids export distribution
strategy?
CONTACT: DR. PRASANTH MBA PH.D. DME MOBILE / WHATSAPP: +91 9924764558 OR +91 9447965521 EMAIL: prasanththampi1975@gmail.com WEBSITE: www.casestudyandprojectreports.com
Caselet 1
Mr. and Mrs. Sharma went to Woodlands Apparel to buy a shirt. Mr. Sharma did not read the
price tag on the piece selected by him. At the counter, while making the payment he asked for
the price. Rs. 950 was the answer.
Meanwhile, Mrs. Sharma, who was still shopping came back and joined her husband. She was
glad that he had selected a nice black shirt for himself. She pointed out that there was a 25%
discount on that item. The counter person nodded in agreement.
Mr. Sharma was thrilled to hear that “It means the price of this shirt is just Rs. 712. That‟s
fantastic”, said Mr. Sharma.
He decided to buy one more shirt in blue color.
In no time, he returned with the second shirt and asked them to be packed. When he received the
cash memo for payment, he was astonished to find that he had to pay Rs. 1,900 and Rs. 1,424.
Mr. Sharma could hardly reconcile himself to the fact that the counter person had quoted the
discounted price which was Rs. 950. The original price printed on the price tag was Rs. 1,266.
Questions
1. What should Mr. Sharma have done to avoid the misunderstanding?
2. Discuss the main features involved in this case.
Caselet 2
I don‟t want to speak to you. Connect me to your boss in the US,” hissed the American on the
phone. The young girl at a Bangalore call centre tried to be as polite as she could. At another call
centre, another day, another young girl had a Londoner unleashing himself on her, “Young lady,
do you know that because of you Indians we are losing jobs?”
The outsourcing backlash is getting ugly. Handling irate callers is the new brief for the young
men and women taking calls at these outsourced job centres. Supervisors tell them to be „cool‟.
Avinash Vashistha, managing partner of NEOIT, a leading US-based consultancy firm says,
“Companies involved in outsourcing both in the US and India are already getting a lot of hate
mail against outsourcing and it is hardly surprising that some people should behave like this on
the telephone.” Vashistha says Indian call centre‟s should train their operators how to handle
such calls. Indeed, the furor raised by the Western media over job losses because of outsourcing
Examination Paper of Business Communication
4
IIBM Institute of Business Management
has made ordinary citizens there sensitive to the fact that their calls are being taken not from
their midst, but in countries such as India and the Philippines.
The angry outbursts the operators face border on the racist and sexist, says the manager of a call
centre in Hyderabad. But operators and senior executives of call centres refuse to go on record
for fear of kicking up a controversy that might result in their companies‟ losing clients overseas.
“It‟s happening often enough and so let‟s face it,” says a senior executive of a Gurgaon call
centre, adding, “This doesn‟t have any impact on business.”
Questions
1. Suppose you are working as an operator in a call centre in India and receiving calls
from Americans and Londoners. How would you handle such calls?
2. Do you agree with the view such abusive happenings on the telephone do not have any
impact on business?
THE EU’S LAGGING COMPETITIVENESS
In a report produced for the European Commission, published in November 1998, it was argued that
the EU lags behind the USA and Japan on most measures of international competitiveness. Gross
domestic product per capita, sometimes used as an indicator of international competitiveness at the
country level, was 33 per cent lower in the EU as a whole than in the USA and 13 per cent lower
than in Japan. The EU‟s poor record in creating employment was singled out for particular criticism.
As this appeared to apply across the board in most industrial sectors, it suggested that the EU‟s poor
performance related to the business environment in general and, in particular, to the inflexibility of
Europe‟s labour markets for goods and services. A shortage of risk capital for advanced
technological development and high cost and inefficiency of Europe‟s financial services were also
highlighted by the report. For one reason or another, European industries generally lag behind in
technology industries. If measured by the number of inventions patented in at least two countries, the
USA is well ahead of most European countries, as well as Japan. Despite these shortcomings, the
report‟s authors focus attention on flexible markets, market liberalisation, and the creation of a
competitive business environment rather than on targeted intervention by the EU or national
authorities.
Questions:
1. Is gross domestic product per capita a useful indicator of International competitiveness in the EU?
2. Is it fair to point the blame for the EU‟s poor international competitiveness at inflexible labour
markets, regulated goods and services markets, and a general lack of competition? What
alternative explanations might be suggested?
Caselet 2
PERU
Peru is located on the west coast of South America. It is the third largest nation of the continent (after
Brazil and Argentina), and covers almost 500,000 square miles (about 14 per cent of the size of the
United States). The land has enormous contrasts, with a desert (drier than the Sahara), the towering
snow-capped Andes mountains, sparkling grass-covered plateaus, and thick rain forests. Peru has
approximately 27 million people, of which about 20 per cent live in Lima, the capital. More Indians
(one half of the population) live in Peru than in any other country in the western hemisphere. The
ancestors of Peru‟s Indians were the famous Incas, who built a great empire. The rest of the
population is mixed and a small percentage is white. The economy depends heavily on agriculture,
fishing, mining, and services. GDP is approximately $115 billion and per capita income in recent
years has been around $4,300. In recent years the economy has gained some relative strength and
multinationals are now beginning to consider investing in the country. One of these potential
investors is a large New York based that is considering a $25 million loan to the owner of a Peruvian
fishing fleet. The owner wants to refurbish the fleet and add one more ship. During the 1970s, the
Peruvian government nationalised a number of industries and factories and began running them for
the profit of the state. In most cases, these state-run ventures became disasters. In the late 1970s, the
fishing fleet owner was given back his ships and are getting old and he needs an influx of capital to
make repairs and add new technology. As he explained it to the NEW YORK banker: “fishing is no
longer just un art. There is a great deal of technology involved. And to keep costs low and be
competitive on the world market , you have to have the latest equipment for both locating as well
as catching and then loading and unloading the fish.”Having reviewed the fleet owner‟ operation, the
large multinational bank believes that the loan is justified. The financial institution is concerned ,
Examination Paper of International Business Management
4
IIBM Institute of Business Management
however , that the Peruvian government might step in during the next couple of years and again
take over the business . If this were to happen, it might take an additional decade, for the loan to be
repaid. If the government were to allow the fleet owner to operate the fleet the way he has over the
last decade, the loan could be rapid within seven years. Right now, the bank is deciding on the
specific terms of the agreement. Once these have been worked out , either a loan officer will fly
down to lima and close the deal or the owner will be asked to come to NEW YORK for the signing.
Whichever approach is used, the bank realize that final adjustments in the agreement will have
to be made on the spot. Therefore, if the bank sends a representative to Lima, the individual will have
to the authority to commit the bank to specific terms. These final matters should be worked out within
the next ten days.
Questions:
1. What are some current issues Facing Peru? What is the climate for doing business in Peru today?
2. Would the bank be better off negotiating the loan in New York or in Lima? Why?
Caselet 1
The competitive advantage of nations and the competitiveness of locations have become important
topics in economic policy. Competitiveness is productivity; competitiveness is what the world
economic forum defines as the set of institutions and policies that determine the level of
productivity. There is no single determinant of competitiveness, there‟s no single determinant of
productivity.
Things that matter for example are the macroeconomic stability of a country, the soundness of
institutions whether the judiciary for example is independent or favors particular sectors or
businesses, whether the government acts in efficient ways or in sectarian ways, other determinants of
competitiveness involve market efficiency, labour market flexibility, and financial market flexibility.
The whole growth competitiveness index that is the index that has been used over the least five or
six years by the world economic forum captures the three big concepts: macroeconomic stability,
government institutions and innovations.
1. What are the indicators of global competitiveness? Discuss the new tools to determine global
competitiveness.
Caselet 2
In this new millennium, few business houses can afford a turn a blind eye to global business
opportunities. According to the latest Mckinsey Global Survey, top global executives believe that the
growing number of consumers in emerging markets will be the most important trend for global
business during the next five years. On 15th April 1994, trade ministers of 123 countries signed the
final Act of the GATT Uruguay Round of negotiations at Marrakech, bringing the WTO into being
on 1st January 1995.
The object of the Act is the liberalization of world trade. By it member countries undertake to apply
fair trade rules covering commodities, services and intellectual property. It provides for the lowering
of tariffs on industrial goods and tropical products; the abolition of import duties on a variety of
items; the progressive abolition of quotas on garments and textiles; the gradual reduction of trade
distorting subsidies and import barriers, and agreements on intellectual property and trade in
services.
1. Discuss the provisions of world Trade Organization (WTO). What are implications of WTO,
agreements on international business?
Caselet 1
Export Marketing:
The trade in black pepper is unhappy that exports may not show a sign of revival in prices in the
immediate future. World prices have been showing a downward trend for eighteen months and this has
resulted in much lower earnings for exporters. The UK, West Germany and the Netherlands have cut
their import requirement though the American demand has shown some growth. Brazil has been
resorting to aggressive selling at lower prices and the expectations are that its exports will reach an alltime
peak of 32,000 tones in the 1981-82 season. The 1981-82 Indian season is only about six weeks
away. The Brazilian offensive has forced India to withdraw so to any from the US and West European
markets and increase its reliance on communist buyers. As many as 1980-81.the Soviet Union alone
accounting for 12,647 tones. But exporters are concerned at the diversion on such a scale of this trade.
Questions:
1. Had you been the pepper exporter, what would be your short term and medium-term export
marketing strategy in the above environment?
2. Could you examine the weak points in this case study?
Caselet 2
SMART KIDS – SELLING EDUCATIONAL GAMES AND
RESOURCES TO THE WORLD
Smart Kids Ltd. An Auckland company that makes educational games and resources to read and
understand math‟s has won a Trade New Zealand Export Award for its success in international markets
in 2003.Established eight years ago in the family home basement, Smart Kids is led by husband and
wife team, joint chief executives David and Sun Milne and their sons Duncan and Frase. She Milne, an
ex-teacher, says from just 30 products when it started, the company produces more than 200 produces
catering for student‟s activities, grammar concepts and numeracy. She says the international appeal of
Smart Kids products was highlighted recently, when company‟s SMART PHONICS was listed amongst
the top five products out of almost 100 in the education trade show in the United Kingdom. The key
requirement for every new Smart Kids products is that it stimulates student‟s minds in the classroom,
teaches them a specific concept easily, enjoyably and permanently and enables problem solving. David
Milne says Smart Kids started selling its educational games and resources to New Zealand schools in
1995, drawings an immediate and strong response. It quickly became apartment that the New Zealand
market was not large enough to sustain considerable investment in product development, and secondly,
that their products have done so well that they deserved wider exposure.”Our export research came
down to two options. Find educational distributors in other countries or set-up our own operations. The
first option was less risky and easy to manage but it meant that Smart Kids products were lost in a wide
range of materials. So we went for the second option and over the next few years established offices in
Australia, in UK and Canada”. This has successfully branded Smart Kids as a leading supplier of
educational resources in these countries. Mr. Milne says the Smart Kids product catalogue is now sent
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regularly to teachers in more than 50,000 schools across the UK, Ireland, Canada and Australia. “We
also sell to schools in the US. In that market we elected to work through a distributor, we didn‟t have
the financial resources to set-up an operation that could cover almost 70,000 schools and compete with
every established educational publisher”. He says annual exports now exceed $2.2 million and account
for more than 90% of turnover. In order to grow the business, surplus profits are reinvested back into
product development, infrastructure – the company recently moved its Auckland operation into new
20,000 square feet premises in Ellerslie. Mr. Milne says the Smart Kids brand is now well established
internationally with the company enjoying many competitive advantages, including its New Zealand
origin. New Zealand education is highly regarded overseas and we find that international teachers to get
hold of educational products made in this country.
Questions:
1. What are the major considerations for a firm in order to while deciding its markets entry
strategy?
2. To what extent direct control and ownership are critical for Smart kids export distribution
strategy
Caselet 1
Swastika Computer System was established in 1981 at Delhi to provide computer training. In 1980s
computer education was relatively new in India. Personal computers 286 existed and MS DOS was the
operating system. Languages like Basic, Pascal, COBOL, FORTRAN were used in programming.
Swastika Computer Systems was established with their support departments namely computer
assembly, faculty training and computer servicing department. In the first financial year, it recorded a
turnover of Rs 11.5 lakhs. Within a few years of its existence, Swastik Computer System opened its
branches in eight major cities of India and had a gross annual turnover of Rs 86 lakhs. The organization
was highly centralized. The head office at Delhi handled all accounts, recruitment, and placement of
students and servicing of computers. The Bhopal branch of Swastik Computer Systems was set up in
May 1987. The branch was headed by a dynamic branch manager Hemant Gupta. He was a BSc in
computers and had previously worked in the data processing department of a manufacturing concern.
To establish the Bhopal branch, Hemant Gupta realized the need for making Swastik Computer
Systems, Bhopal known to the younger generation. With this in mind he introduced some innovative
promotional schemes like offering scholarships to students doing well in the intelligence tests
administered by the branch, giving personal computers to students to deposit term fees at their
convenience. Hemant Gupta also ensured that teaching standards were high and computers at the
branch were well maintained, so a student once enrolled felt that he had made the right decision by
joining Swastik Computer Systems. He also made himself available from 8.00 am to 7.00 p.m at the
branch. Students were free to go to him with their problems, which he took pains to solve. Soon
Swastik Computer Systems was one of the leading computer training centres in Bhopal. As the Bhopal
branch prospered, the head office at Delhi started taking an active interest in the running of this branch.
The Regional Manager who visited Bhopal once a month started making frequent visits. During one of
his visits, his attention was drawn to rumors that branch funds were being misappropriated. When the
Regional Manager informed the Delhi office about the rumor, a team was sent to the Bhopal Branch to
look into the matter. On investigation, the term was convinced that the rumors had some truth in them.
It was found that a larger number of students attended the classes than were enrolled. It was felt that this
fraud was not possible without the consent of Hemant Gupta, and without any further inquiry a decision
was taken to remove him forthwith. Amit Verma who was a senior faculty at Swastik Computer
Systems, Delhi was asked to take over the Bhopal branch as Manager. He was an MCA and had been
associated with the organization since its inception. Amit Verma‟s appointment at Bhopal was
welcomed at the Bhopal branch by both, staff and faculty as he had the reputation of being an easy
going person. After he joined the Bhopal, it was observed that Amit Verma, although academically
sound, was not an effective administrator. His approach towards staff and faculty was lenient. He was
not particular about punctuality and was not available during office hours. This had an adverse effect on
Examination Paper of Marketing Management
IIBM Institute of Business Management 8
faculty in general and classes in particular. Not only did classes suffer but even administrative work
was affected. Monthly reports to the head office were not sent on time, as a result requisitions for
computer servicing, reading material and funds were unduly delayed. Due to lack of maintenance,
computer breakdowns became common, students did not receive their reading material on time and
payment of building rent, and telephone bills etc were unnecessarily delayed. The symptoms of
deterioration at the Bhopal branch were obvious. The branch which had an annual turnover of Rs 30.7
lakhs fell to Rs. 4 lakhs. As enrollments decreased the head office at Delhi started feeling the pinch. It
started delaying transfer of funds to the Bhopal branch. As a result faculty salaries were unduly delayed.
The faculty started leaving for greener pastures.
Worried by the number of faculty turnover, the head office started a practice of recruiting only
those faculties willing to sign a bond of 3 years. The organization started a practice of taking a deposit
of Rupees 5000 from the joining faculty, which would be refunded after 3 years. In case the faculty left
before this duration, the deposit stood forfeited. This policy further reduced the quality of faculty
joining Swastik Computer Systems, Bhopal.
Questions:
1. What according to you went wrong at the Bhopal branch?
2. What can be done to revive the Bhopal branch?
Caselet 2
Mind tree which was founded in 1999 in India by a group of IT professionals who wanted to chart a
somewhat distinctive path. Today, it has a top line of $269 million and is rated as one of the most
promising mid-sized IT services companies. Creditable as that is, Mind Tree does not want to be just
that. There is an element of serendipity about what it has been doing over the last year. In 2008, it
designated one of its founders Subroto Bagchi „Gardener‟, a gimmicky signal, intended to declare that
he was moving out of the day-to-day running of the company to nurture talent which would run the
company in the future. He has now a report card ready on a year as gardener. During this one year, he
has also spent around 45 days travelling round the world talking to clients and prospective ones which
has yield remarkable insights into what firms are doing in these traumatic times. Lastly, Mind Tree as
a whole has spent the last year going through the exercise of redefining its mission statement and
vision for the next five years. Quite fortuitously these processes have come together with a unifying
thread, presenting a coherent big picture. Mind Tree wants to seed the future while still young, and
executive chairman Ashok Soota has declared that by 2020, it will be led by a non-founder. So a year
ago the gardener Bagchi set out to “touch” 100 top people in the organization, with a goal of doing 50
in a year so as to eventually identify the top 20 by 2015. From among them will emerge not just the
leader but a team of ten who would eventually, as group heads, deliver $200 million of turnover each.
That will give a turnover of $2 billion. To put it in perspective, one one VC-funded company, which
has not closed or been bought over, has been able to get to $2 billion and that is Google. But to get
there it has to periodically redefine its mission (why we exist) and its vision – measurable goals for the
next five years. Its redefined mission is built around “successful customers, happy people, and
innovative solution”. Its new vision targets a turnover of $1 billion by 2014. It wants to be among the
globally 20 most profitable IT services companies and also among the 20 globally most admired ones.
Examination Paper of Marketing Management
IIBM Institute of Business Management 9
Admired in terms of customer satisfaction (pay for the course), people practices (creditable),
knowledge management (exciting) and corporate governance (the Enron-Satyam effect). The really
interesting bit about Mind Tree in the last one year is what Bagchi has been up to. He has been
embedding himself in the 50 lives, working in a personal private continuum, making it a rich learning
process “which has helped connect so many dots.” Of the hundred who will be engaged, may be 50
will leave, of them 25 may better themselves only marginally, and from the remaining 25 ten will
emerge who will carry the company forward.
Questions:
1. What do you analyse as the main reason behind the success of Mind tree?
2. Do you think that redefining the mission statement shows the lacunae on the part of the founder
members of an organization? Why?
Caselet 1
Orion is a global co. That sells copiers. Orion currently sells 10 variants of a copier, with all inventory
kept in finished-goods form. The primary component that differentiates the copiers is the printing
subassembly. An idea being discussed is to introduce commonality in the printing subassembly so
that final assembly can be postponed and inventories kept in component form. Currently, each copier
costs $1,000 in terms of components. Introducing commonality in the print subassembly will increase
component cost to$1.025.One of the 10 variants represents 80 percent of the total demand. Weekly
demand for this variant is normally distributed ,with a mean of 1,000 and a standard deviation of
200.Each of the remaining nine variants has a weekly demand of 28 with a standard deviation of
20.Orion aims to provide a 95per level of services .Replacement lead time for components is four
weeks. Copier assembly can be implemented in a matter of hours. Orion manages all inventories
using a continuous review policy and uses a holding cost of 20 percent.
1. How much safety inventory of each variant must Orion keep without component commonality?
What are the annual holding costs?
2. How much safety inventory must be kept in component form if Orion uses common components
for all variants? What is the annual holding cost? What is the increase in component cost using
commonality? Is commonality justified across all variants?
3. At what cost of commonality will complete commonality be justified?
4. At what cost of commonality will commonality across the low-volume variants be justified?
Caselet 2
An electronic manufacturer has outsourced production of its latest MP3 player to a contract
manufacturer in Asia. Demand for the players has exceeded all expectations whereas the contract
manufacturers sell three types of players- a 40-GB player, a 20-GB player, 6-GB player. For the
upcoming holiday season, the demand forecast for the 40-GB player is normally distributed, with a
mean of 20,000and a standard deviation Dard deviation of 11,000, and the demand forecast for the 6-
GB player has a mean of 80,000 and a standard deviation of 16,000. The 40-GB player has a sale
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IIBM Institute of Business Management
price of $200, a production cost of $100, and a salvage value of $80 .The 20-GB player has a price of
$150, a production cost of $70, and a salvage value of $50.
1. How many units of each type of player should the electronics manufacturer order if there are no
capacity constraints?
2. How many times of each type of player should the electronics manufacturer order if the available
is 140,000? What is the expected profit?
END OF
Caselet 1
ADAPTABILITY IN ACTION: A CASE OF RSL
Rajasthan Synthetics Ltd. (RSL) was established in the year 1994 at Bhilwara, Rajasthan to
manufacture synthetic yarn with a licensed capacity of 29,000 spindles. Manish Kumar, a Harvard
Business School graduate, established RSL with 8% equity participation from Itochu Corporation
Japan to manufacture synthetic yarn for shirting, a promising business at that time. The demise of the
NTC textile mills was fresh in the minds of the promoters and therefore, state of the art technology
imported from U.K., Germany, Japan and France was used in the manufacturing facility. By the time
the company started manufacturing yarn the competition in shirting yarn had become fierce and the
returns had diminished. The company incurred losses in the first four years of its operations and the
management was looking for opportunities to turn things around. The manufacturing plant started
functioning with an installed capacity of 26,000 spindles, a small unit considering yarnmanufacturing
industry, in the year 1996 to manufacture synthetic yarn for shirting only. Initially, the
major fabric manufactures of India such as Raymonds, Donear, Grasim, Amartex, Siyaram, Pantaloon
and Arviva were the main customers of the company and the total produce of the company was sold
within the domestic market. These fabric manufactures used to import the premium quality yarn
before RSL started supplying the yarn to them. The company in the first year of its operations
realized that shirting yarn was one of the fiercely competitive products and the company with its high
interest liability was unlikely to earn the desired profits. Also, the company had a narrow product mix
limited to only two more blow room lines were installed in the first quarter of 1997. The addition of
two blow room lines helped RSL to manufacture four different types of yarns at the same time.
Utilizing this added flexibility, RSL began manufacturing yarn for suitings.Since the suiting yarn was
providing better returns, the company was keen to increase manufacturing of suiting yarn but was
hampered by the two for one doubling (TFO) facility, which was limited to only 40% of the total
produce. To remove this bottleneck, 12 more TFO machines were added to the existing 8 TFO
machines. The addition of these machines increased the doubling capacity to 70% of the production
providing additional product mix flexibility to the company. This enabled the company to
manufacture yarn to cater to the requirements of suiting, industrial fabric and carpet manufacturers. In
the initial years of its operations, RSL realized that the promises made by the Government of
Rajasthan to provide uninterrupted power supply of the required quality (stable voltage and
frequency) and ample quantity of water were unlikely to be met through the public distribution
system. The voltage and frequency of electric power provided through the public distribution system
were erratic and frequent announced and unannounced power cuts stopped production on a regular
basis. In these circumstances, meeting quality requirements of the customers and adhering to delivery
schedules was a herculean task. To ensure smooth and uninterrupted operations RSL installed inhouse
power generation facility of 4 megawatts capacity and dug 10 tube-wells.RSL faced stiff
competition in the domestic market from Gujarat Spinning and Weaving Mills, Surat, Rajasthan
Textile Mills, Bhawani Mandi, Charan Spinning Mills, Salem and Indorama Synthetics Ltd.,
Pithampur in all their product categories and the returns were low. In order to combat stiff
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IIBM Institute of Business Management
competition in the domestic market and improve returns the company started developing export
markets for their products in the year 1998. Initially, RSL started exporting carpet yarn to Belgium
and till 2001; carpet yarn formed the major component of their exports. A trade agreement was signed
with Fibratex Corporation, Switzerland to share profits equally for expanding their overseas
operations. During the same period, RSL continued to scout for new export markets and was
successful in entering top-of-the-line fancy for premium fashion fabric manufactures of international
repute like Mango and Zara. Rajasthan Synthetics Ltd. also exported fancy yarn to a number of fabric
manufacturers located in Italy, France, England, Spain and Portugal. Yarn manufacturers from
Indonesia, Korea and Taiwan gave stiff competition to RSL when it entered the international market.
The companies from South Asian countries had a major cost advantage over RSL because of cheap,
uninterrupted availability of power and high labour productivity. Currencies had been sharply
devalued during the South Asian financial crisis, which rendered the products manufactured by these
companies still cheaper in international markets. Despite all these disadvantages, RSL was able to
gain a foothold through constant adaption of their products according to the customer requirements in
the highly quality conscious international yarn market and was exporting 95% of its total produce by
the beginning of the year 2002.
Rajasthan Synthetics Ltd. had fine-tuned its distribution channels according to the type of markets
and size of orders from the customers. In line with this policy the export to Middle East, Far East and
Turkey was carried out through agents. Similarly, low volume export of fancy yarn requirements was
also catered through agents. While dealing with importers directly, RSL strictly followed the policy
of exports against confirmed Letter of Credits only. The company directly exported to important
clients in Belgium, England and France. The domestic market was also served through an agency
system. Rajasthan Synthetics Ltd. considered inventories as an unnecessary waste and kept minimum
possible inventories while ensuring required level of service. To ensure that the inventories were held
to a minimum, the manufacturing plan consisted of 60 to 70% against customer orders, 30 to 40%
against anticipated sales and 2% capacity was reserved for new product development. A Strategic
Management Committee (SMC) consisting of MD, CEO, GM (marketing) and GM (technical)
reviewed the production plan of the manufacturing plant on quarterly basis. The SMC also developed
the plans for profitability, product mix and cost minimization. Delivering high-quality products and
meeting delivery commitments for every shipment were essential pre-requisites to be successful in the
global market place. The company had understood this very early and to ensure that the products
manufactured by RSL met the stringent quality requirements of its international customers, the
company had developed a full-fledged testing laboratory equipped with ultra modern testing
machines like User Tester-3 and Classifault. The company had stringent quality testing checks at
every stage of tarn production right from mixing of fiber to packing of finished cones. Its in-house
Research and Development and Statistical Quality Control (SQC) divisions ensured consistent
technical specifications with the help of sophisticated state-of-the-art machines. A team of
professionally qualified and experienced personnel to ensure that the yarn manufactured by the
company was in line with international standards backed the company. The company continuously
upgraded its product mix and at the same time, new products developed by in-house research and
development department were added to the product mix form time to time. RSL‟s management was
quick to analyze the potential of these in-house developments and followed a flexible approach in
determining the level of value addition. The company had developed a new yarn recently and was
selling it under the Rajtang brand name. This new yarn was stretchable in three dimensions, absorbed
moisture quickly, was soft and silky and fitted the body. This yarn was extracted from natural
products and being body-friendly, was in great demand in international markets. Looking at the
higher value addition possibilities RSL decided to forward integrate and started manufacturing fabric,
using Rajtang and provided ready-made garments like swimming suit, tracksuit, undergarments, tops,
slacks and kids dresses. The ready-made dresses from the fabric were being manufactured on the
specifications and designs of RSL. The management decided to market these products under the
brand name “Wear-it” through Wearwell Garments Pvt. Ltd., an associate company of RSL, to ensure
Examination Paper of Supply Chain Management
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IIBM Institute of Business Management
that RSL did not lose its focus. The Managing Director of RSL felt that continuous adaptability to
market requirements through a flexible approach, cost cutting in every sphere of operations and team
approach to management had taken them ahead. However, RSL had become highly dependent on the
volatile export market and if it was not able to retain the international market it would have to reestablish
itself in the domestic market, which was not an easy task.
1. What marketing strategy should RSL adopt to remain competitive in the international market?
2. Has the company taken the right decision to forward integrate and enter into the highly volatile
garment market?
Caselet 2
Popular mythology in the United States likes to refer to pre-World War II Japan as a somewhat
backward industrial power that produced and exported mostly trinkets and small items of dubious
quality bought by Americans impoverished by the Great Depression. Few bring up the fact that, prior
to the Pearl Harbor attack, Japan had conquered what are now Korea, Manchuria, Taiwan, and a large
portion of China, Vietnam, and Thailand; and by the end of 1942 Japan had extended its empire to
include Burma, the Philippines, Indonesia, Malaysia, Thailand, Cambodia, New Guinea, plus many
strings of islands in the eastern Pacific Ocean. Its navy had moved a large armada of worships 4,000
miles across the Pacific Ocean, in secret and in silence, to attack Pearl Harbor and then returned
safely home. Manufacturers capable of producing only low-grade goods don‟t accomplish such feats.
High-quality standards for military hardware, however, did not extend to civilian and export goods,
which received very low priority during the war years. Thus the perception in the United States for a
long time before and then immediately after the war had nothing to do with some inherent character
flaw in Japanese culture or industrial capability. It had everything to do with Japan‟s national
priorities and the availability of funds and material. Following Japan‟s surrender in 1945, General
MacArthur was given the task of rebuilding the Japanese economy on a peaceful footing. As part of
that effort an assessment of damage was to be conducted and a national census was planned for 1950.
Deming was asked in 1947 to go to Japan and assist in that effort. As a result of his association with
Shewhart and quality training, he was contacted by representatives from the Union of Japanese
Scientists and Engineers (JUSE), and in 1950, Deming delivered his now famous series of lectures on
quality control. His message to top industry leaders, whom he demanded to attend, and to JUSE was
that Japan had to change its image in the United States and throughout the world. He declared that it
could not succeed as an exporter of poor quality and argued that the tools of statistical quality control
could help solve many quality problems. Having seen their country devastated by the war, industry
and government leaders were eager to learn the new methods and to speed economic recovery.
Experience was to prove to Deming and others that, without the understanding, respect, and support
of management, no group of tools alone could sustain a long-term quality improvement effort.
1. How could have the SQC approach, been useful in solving the immediate problems of Japan?
2. If you were among one of the management members, what would have been your first insight?
Case let 1
National Competitive Advantage of IKEA Group, a Swedish company founded in 1943 with its
headquarters in Denmark, is a multinational operator of a chain of stores for home furnishing and
furniture. It is the world’s largest retailer, which specializes, in stylish but inexpensive Scandinavian
designed furniture. At the end of 2005 the IKEA Group of Companies had a total of 175 stores in 31
countries. In addition there are 19 IKEA stores owned and run by franchisees, outside the IKEA store
around the world.
In Sweden, nature and a home both play a big part in people’s life. In fact one of the best ways to describe
the Swedish home furnishing style is to describe nature-full of light and fresh air, yet restrained and
unpretentious.
To match up the artist Carl and Karin Larsson combined classical influences with warmer Swedish folk
styles .They created a model of Swedish home furnishing design that today enjoys world-wide renown. In
the 1950s the styles of modernism and functionalism developed at the same time as Sweden established a
society founded on social equality .The IKEA product range –The IKEA product range- modern but not
trendy, functional yet attractive, human-centered and child friendly – carries on these various Swedish
home furnishing traditions.
The IKEA Concept, like lots founder, was born in Samaland. This is a part of Southern Sweden where the
soil is thin and poor. The people are famous for working hard, living on small means and using their
heads to make the best possible use of the limited resources they have. This way of doing things is at the
heart of the IKEA approach to keeping prices low.
IKEA was founded when Sweden was fast becoming an example of the caring society, where rich and
poor alike were well looked after. This is also a theme that fits well with the IKEA vision. In order to give
the many people a better everyday life, IKEA asks the customer to work as a partner. The product range is
child-friendly and covers the need of the whole family, young and old. So together we can a better
everyday life for everyone.
In addition to working about around 1,800 different suppliers across the world, IKEA produces many of
its own products through sawmills and factories in the IKEA industrial group, Swedwood.
Swedwood also has a duty to transfer knowledge to other suppliers, for example by educating them in
issues such as efficiency, quality and environmental work.
Swedwood has 35 industrial units in 11 countries.
Examination Paper: Semester II
IIBM Institute of Business Management
Purchasing: IKEA has 42 Trading Service Offices (TSO’s) in 33 countries. Proximity to their suppliers
is the key to rational, long term cooperation. That’s why TSO co-workers visit suppliers regularly to
monitor production, test new ideas, negotiate prices and carry out quality audits and inspection.
Distribution: The route from supplier to customer must be as direct, cost- effective and environmentally
friendly as possible. Flat packs are important aspects of this work: eliminating wasted space means we
can transport and store goods more efficiently. Since efficient distribution plays a key role in the work of
creating the low price, goods routing and logistics are a focus for constant development.
The business Idea: The IKEA business idea is to offer a wide range of home furnishings with good design
and function at prices so low that as many people as possible will be able to afford them. And still have
many left! The company targets the customer who is looking for value and is willing to do a little bit of
work serving themselves, transporting the items home and assembling the furniture for a better price. The
typical IKEA customer is young low to middle income family.
The Competition Advantage: The competition advantage strategy of IKEA’s product is reflected through
IKEA’s success in the real industry. It can be attributed to its vast experience in the retail market, product
differentiation, and cost leadership.
IKEA Product Differentiation: A wide product range The IKEA product range is wide and versatile in
several ways. First, it’s versatile in function. Because IKEA think customer, shouldn’t have to run from
one small specialty shop to another to furnish their home, IKEA gather plants, living room furnishings,
toys , frying pans, whole kitchens i.e.; everything which in a functional way helps to build a home – in
one place , at IKEA stores.
Second, it’s wide in style. The romantic at heart will find choices just as many as the minimalist at IKEA.
But There is only one thing IKEA don’t have, and that is, the far- out or the over-decorated. They only
have what helps build a home that has room for good living.
Third, by being coordinated, the range is wide in function and style at the same time. No matter which
style you prefer, there’s an armchair that goes with the bookcase that goes with the new extending table
that goes with the armchair. So their range is wide in a variety of ways.
Cost Leadership: A wide range with good form and function is only half the story. Affordability has a part
to play – the largest part. A wide range with good form and function is only half the story. Affordability
has a part to play- the largest part. And the joy of being able to own it without having to forsake
everything else. And the customers help, too, by choosing the furniture, getting it at the warehouse,
transporting it home and assembling it themselves , to keep the price low.
Questions
1. Do you think that IKEA has been successful to utilize Porter’s Five force analysis?
Give reasons.
2. Where do you think can IKEA improve?
Examination Paper: Semester II
IIBM Institute of Business Management
Case let 2
For ITC Ltd., 2007-2008 continued to be year of quiet growth. Just more launches in its relatively new
segment of non-cigarettes fast moving consumer goods, and solid growth. As in the past few years, ITC’s
non-cigarettes businesses continued to grow at a scorching pace, accounting for a bigger share of overall
revenues. “The non-cigarette portfolio grew by 37.6% during 2006-2007 and accounted during that year
for 52.3% of the company’s net turnover.” An ITC spokesman said. In fact, over the first three quarters of
2007-08, ITC’s non-cigarette FMCG businesses have grown by 48% on the same period last year,
“Indicating that its plans for increasing market share and standing are succeeding.”
The branded packaged foods business continued to expand rapidly, with the focus on snacks range Bingo.
The biscuit category continued its growth momentum with the ‘Sun feast’ range of biscuits launching
‘Coconut’ and ‘Nice’ variants and the addition of ‘ Sunfeast BenneVita Flaxseed’ biscuits. Aashirwad atta
and kitchen ingredients retained their top slots at the national level, with the spices category adding an
organic range. In the confectionery category which grew by 38% in the third quarter, ITC cited AC
Nielsen data it claims market leader status in throat lozenges. Instant mixes and pasta powdered the sales
of its ready to eat foods under the kitchens of India and Aashirwad brands.
In Lifestyle apparel, ITC launched Miss Players fashion wear for young women to compliment its range
for men.
Overall, the biscuit category grew by 58% during the last quarter, ready to eat foods under the kitchens of
India and Aashirwad brands by 63% and the lifestyle business by 26%.
For the Industry, the most significant initiative to watch the ITC foray into premium personal care
products with its Fiama Di Wills range of shampoos , conditioners, shower gels, and soaps. In the popular
segment, ITC has launched a range of soaps and shampoos under the brand name Superia.
Ravi Naware, Chief executive of ITC’s food business was quoted recently as saying that the business will
make a positive contribution to ITC’s bottom line in the next two to three years.
In hotels, ITC’s Fortune Park brand was making the news during the year, with a rapid rollout of first
class business hotels.
In the agri-business segment, the e-choupal network is trying out a pilot in retailing fresh fruits and
vegetables. The e-choupals have already specialized in feeding ITC high quality wheat and potato, among
other commodities grown by farmers with help from e-choupal.
Questions:
Q1. Do you think the progress of ITC Ltd. is realistic?
Q2. After analyzing the above case, do you think every company should aim at cost leadership with high
quality product?
Caselet 1
Tech Knowledge is a start-up founded in 1997 by Robert Thyer. The company is a distributer of
presentation technologies, including computer based projection systems, video equipment, and
display technologies. The firm has 25 employees and does $5 million in sales. It is growing rapidly.
The owner, Robert Thyer, would like to netsource the back-office functions of the firm because the
company does not have an internal IT capability. The applications to be netsourced would include
sales and distribution, financial accounting, and inventory management.
TechKnowledge would like to source SAP or another ERP vendor via a hosting arrangement. It
does not expect to do much customization, and it does not have any legacy systems.
1. What factors should it use to evaluate each of these potential hosts?
2. What controls should be in place to monitor the hosting arrangement?
Caselet 2
ITM is a company specializing in network implementation and management. It provides networking
services to mid-sized companies, which do not have an internal networking analyst or IT manager.
These organizations include real estate companies, law offices, medical practices, architectural /
engineering firms, construction companies, business services providers, country clubs, community
organizations, and churches.
ITM uses a legacy accounting system to handle its financial accounting and financial
management functions. It has added on a billing package for client services. The next step is to
obtain a CRM capability to manage information about current and prospective customers more
effectively.
You have been assigned to identify potential sources for a net-sourcing arrangement with an ERP
vendor, which provides CRM capabilities.
1. Identify potential sources of software?
2. Determine five criteria you will recommend be used to evaluate each of alternative providers?
END OF
Case let 1
Overview of our Client’s Strategy
Our client had an online store. They were spending $15,000 each month on pay per click
advertising. This resulted in about $225,000 per month in sales. They didn’t know which clicks
were leading to sales because they didn’t track the clicks. There rankings in the natural listings was
minimal because they hadn’t done keywords research on what visitors were using to try to find a
site like there’s. They weren’t able to quantity results because their we statistics program only
showed very general traffic information. They were also doing an irregular email newsletter even
though they had more than 32,000 e-mails in their database.
Analysis of the situation
In the natural listings we suspected they were being penalized by the search enines for duplicate
content. The search engines frown on this because they feel this is trying to fool them. Google will
often give a site like this something called “Supplement Results”, which means that the search
engines know the page exists but doesn’t have any content in their database. We also suspected
their email newsletter was being blocked by many spam blockers because the names of the products
they sold were often on used in spam e-mails.
Implementation of a Solution
For the pay per click advertising we started tracking the clicks down to the individual terms and the
actual results that came from them. We were able to delete terms that were not getting enough sales
and increase the bids on ones that brought sales. For the natural listings we did keywords research
and focused on the main keywords on the content for the home page and in the META tags. We
also found that visitors search on product names rather than manufactures, so in the title tag for the
page we switched and put the product name before the manufacturer. With the newsletter, we used
a good mix of graphics and content to appease the spam blockers, as well as put the product names
in graphics so they wouldn’t be blocked. In order to analyze of the site’s traffic, we implemented a
powerful web statistics program.
Results of our work
Through our tactics, our clients were able to move up to #4 on Google for their main search term,
which got a lot of traffic. With pay per click, they went from $.43. They decrease their budget to
$10,000 per month, yet were able to increase their traffic by 33 percent. Through our optimization
of their pay per click, their cost per conversion to sale decreased by at least 45 percent. The
deliverability of their newsletter increased as well. Within a year, their sales increased to over
$600,000 per month.
Questions:
1. Discuss the client strategy for the success of store.
2. Suppose if you are the client maker what would you suggest for the client.
Examination Paper : Semester II
IIBM Institute of Business Management 4
Case let 2
Data Warehouse is a massive independent business database system that is populated with data that
has been extracted from a range of sources. The data is held separately from its origin and is used to
help to improve the decision-making process.
Many traditional Databases are involved in recording day to day operational activities of the
business, called Online Transaction Processing (OLTP), COMMONLY IMPLEMENTED IN
Airline Bookings and Banking Systems, for faster’s response and better control over data.
After establishment of OLTP Systems, reports and summaries can be drawn for giving inputs to
decision-making process and this process is called Online Analytical Processing (OLAP).
For better customer relationships management strategy, the call centre’s and data Warehouse works
as a strategic tool for decision-support which requires lot of time for establishment, and needs to be
updated with operational information on daily weekly or monthly basis.
Data Warehouse is used for proactive strategies formulation strategies formulation in critical and
complex situations. A number of CRM vendors are advocating for single integrated customer
database which includes call centre, web sites, branches and direct mail, but it lacks in analytical
functioning of data warehouse. This Database can’t be expanded also, and carry decision support
operations on call centre Database becomes slow & the query processing and inquiries andling
operations also become slow & inefficient for agents dealing with customers.
Data Warehouse is must for identifying most profitable & loyal customers and those customers can
be offered better customized services which increase the chances of additional profits.
Although call centre system & data warehouse are altogether different systems yet dependent on
each other to fully exploit their potential respectively.
Questions:
1. Explain the role of data warehousing in the functioning of a call centre.
2. How the response time in performing OLAP queries can be improved?
Case let 1
Managing Exchange Rate Risk
Mahindra International (India) imported spares of an engine from a US manufacturer for $ 5,000 per
annum at a price of $ 2.5 per piece. The average exchange rate during 2001-02 was Rs. 47.70/$. The
Indian company imported the spares also from a British manufacturer. In fact, it had diversified its
import in view of reducing the risk associated with the supply. The import from the USA was
competitive in view of the fact the same spares imported from the UK was slightly costlier. The
American spares cost Rs. 119.25 per piece, while the British spares cost Rs. 120.00 per piece. In
2002-03, US dollar appreciated to Rs. 48.40 with the result that the cost of American spares turned
higher than the British spares. In the sequel of the appreciation of US dollar, the Indian importer cut
its demand from 2,000 pieces to 500 pieces. The loss to the US exporter was colossal. But at the same
time, the Indian Importer suffered a lot. It had to pay a higher price for the US spares in terms of
rupee. And also, it had to divert its import from the USA to the UK insofar as the pound sterling did
not appreciate during this period. All this happened in the wake of the exchange rate changes.
Questions:
1. Mention the loss borne by the US exporter in the sequel of appreciation of dollar.
2. What strategy the Indian importer needs to follow to hedge the exchange rate risk?
Case let 2
ABN Amro Bank and Correspondent Banking in India
ABN AMRO bank has emerged as a major correspondent bank owing to a large network. In
India, it operates in six major cities, viz. Baroda, Chennai, Kolkata, Mumbai, New Delhi and
Pune. Being a correspondence bank, its product offerings are found primarily in the area of
trade and clearing. It is doing well in these owing to strong tie-up with local Indian banks
reaching 350 centres across the country. As a result, payments are effected speedily and
effectively.
Cash Management
The customized products in the area of cash management include cheques payable at par at all its
branches across the country, apart from traditional collection services, such as collection of
outstation/upcountry cheques drawn on other banks. ABN AMRO is a member of all major clearing
centers in the major financial centers. It has an electronic delivery system and structures multilateral
netting of cash.
Examination Paper: Finance Management
4
IIBM Institute of Business Management
Trade Services
Under trade services, the Bank offers a comprehensive range of products, such as:
1. LC reimbursement
2. Indian rupee trade payments
3. Handling documentary bills for collection
4. Bills negotiation
5. Letter of credit advising
6. Letter of credit confirmation
7. Guarantees
Treasury Services
Treasury services at ABN AMRO Bank (India) are available round-the-clock. Rupee funding at its
treasury desk is provided at competitive rates along with advice on market trends and rates. It
provides also advisory services on the request of financial institutions and corporate in the area of
regulatory, economic and financial matters including depository services.
Questions:
1. Describe the network of ABN AMRO Bank in India.
2. What role does it play for global cash management?
Case let 1
Export Marketing:
The trade in black pepper is unhappy that exports may not show a sign of revival in prices in the
immediate future. World prices have been showing a downward trend for eighteen months and this
has resulted in much lower earnings for exporters. The UK, West Germany and the Netherlands have
cut their import requirement though the American demand has shown some growth. Brazil has been
resorting to aggressive selling at lower prices and the expectations are that its exports will reach an
all-time peak of 32,000 tones in the 1981-82 season. The 1981-82 Indian season is only about six
weeks away. The Brazilian offensive has forced India to withdraw so to any from the US and West
European markets and increase its reliance on communist buyers. As many as 1980-81.the Soviet
Union alone accounting for 12,647 tones. But exporters are concerned at the diversion on such a scale
of this trade.
Questions:
1. Had you been the pepper exporter, what would be your short term and medium-term export
marketing strategy in the above environment?
2. Could you examine the weak points in this case study?
Case let 2
SMART KIDS – SELLING EDUCATIONAL GAMES AND
RESOURCES TO THE WORLD
Smart Kids Ltd. An Auckland company that makes educational games and resources to read and
understand math’s has won a Trade New Zealand Export Award for its success in international
markets in 2003.Established eight years ago in the family home basement, Smart Kids is led by
husband and wife team, joint chief executives David and Sun Milne and their sons Duncan and Frase.
She Milne, an ex-teacher, says from just 30 products when it started, the company produces more
than 200 produces catering for student’s activities, grammar concepts and numeracy. She says the
international appeal of Smart Kids products was highlighted recently, when company’s SMART
PHONICS was listed amongst the top five products out of almost 100 in the education trade show in
the United Kingdom. The key requirement for every new Smart Kids products is that it stimulates
student’s minds in the classroom, teaches them a specific concept easily, enjoyably and permanently
and enables problem solving. David Milne says Smart Kids started selling its educational games and
Examination Paper: Marketing Management
IIBM Institute of Business Management 4
resources to New Zealand schools in 1995, drawings an immediate and strong response. It quickly
became apartment that the New Zealand market was not large enough to sustain considerable
investment in product development, and secondly, that their products have done so well that they
deserved wider exposure.”Our export research came down to two options. Find educational
distributors in other countries or set-up our own operations. The first option was less risky and easy to
manage but it meant that Smart Kids products were lost in a wide range of materials. So we went for
the second option and over the next few years established offices in Australia, in UK and Canada”.
This has successfully branded Smart Kids as a leading supplier of educational resources in these
countries. Mr. Milne says the Smart Kids product catalogue is now sent regularly to teachers in more
than 50,000 schools across the UK, Ireland, Canada and Australia. “We also sell to schools in the US.
In that market we elected to work through a distributor, we didn’t have the financial resources to setup
an operation that could cover almost 70,000 schools and compete with every established
educational publisher”. He says annual exports now exceed $2.2 million and account for more than
90% of turnover. In order to grow the business, surplus profits are reinvested back into product
development, infrastructure – the company recently moved its Auckland operation into new 20,000
square feet premises in Ellerslie. Mr. Milne says the Smart Kids brand is now well established
internationally with the company enjoying many competitive advantages, including its New Zealand
origin. New Zealand education is highly regarded overseas and we find that international teachers to
get hold of educational products made in this country.
Questions:
1. What are the major considerations for a firm in order to while deciding its markets entry
strategy?
2. To what extent direct control and ownership are critical for Smart kids export distribution
strategy?
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