IIBM MBA EXAM CASE STUDY ANSWERS
FOR FULL AND DETAILED ANSWER
CONTACT
DR. PRASANTH BE BBA MBA PH.D. MOBILE / WHATSAPP: +91 9924764558 OR +91 9447965521 EMAIL: prasanththampi1975@gmail.com WEBSITE: www.casestudyandprojectreports.com
CASE STUDY 1
Ms. Priyanka is a store manager of one of the fourteen Hàppy Home Furniture outlets that are
located at all the major cities in the country. Her staff consists of twelve salespersons and
support personnel. Each salesperson. is paid commission based on sales. All the salespersons
are expected to do other tasks, such as assisting the merchandise manager, arranging the
displays, and handling customer complaints. These tasks, and a few others, are to be shared
equally among the sales persons.
The store's sales target is established at the headquarters of the furniture chain. This target is
divided by the number of salespersons and each is expected to meet his or her personal target
Mr. Ranjan, is the top salesperson at the outlet. When he misses his sales goal, which seldom
happens, the store's target is usually not met. Ranjan, however, often does not help in doing the
common tasks, much to the frustration of the other eleven salespeople, who feel that if they do
not handle the common tasks, they will be fired.
Recently, Ms. Priyanka noticed that one of her salespeople, Mr. Manish„ made careless errors,
neglected clients, and did not do his share of the common tasks. When confronted by the store
manager, he complained about Mr. Ranjan., who, in his opinion, got away with doing almost
nothing. After this discussion, Ms. Priyanka began to observe the salespersons more closely
and noticed that most of them neglected their work and were not cooperative.
The store manager felt that something had to be done. A talk with Mr. Ranjan had little effect.
Yet, the store needed Ranjan because of his excellent sales record. On the other hand, the
morale of the other salespersons had begun to deteriorate.
Questions:
Mr. Priyanka should think about the moral training of sales persons first then think about the following aspects
All quality training begins with a training needs analysis. In the case of ethics training for employees, you might consider focusing on one or more of the following areas:
Standard of performace are the establishment of organizational or system standards, targets, and goals to improve public health practices. Standards may be set based on national, state, or scientific guidelines, benchmarking against similar organizations, the public’s or leaders’ expectations, or other methods.
CASE STUDY 2
inventor and innovator, in basic frequency-modulated continuous wave (FM-CW) Doppler
radar technology. This Fm-cw technology gave Avionics a world leadership position in Doppler
radar equipment design and production, All Avionics equipment design were state of the art at
the time of their design, a result of the importance research and development engineering for
the department's future.
As the division grew and Avionics's success with Doppler systems brought large increases in
sales, Mr. Ketan's preoccupations became considerably more managerially than technical. He
began to reassess some of his own thinking about organizations. The organization appeared
too weak, both structurally and managerially, to cope with the increasing complexity of his division's activities. Mr. Ketan was finding it impossible to cope with the number of major
decisions that had to be made. Six major programs and several minor ones were in different
stages of design and/or production. All had different customers, sometimes in different
countries. Every program's product although they were all Doppler radar systems, was
significantly different from every other one, particularly in its technology. Nevertheless the
programs had to share manufacturing facilities, major items of capital equipment, and
specialized functions. Mr. Ketan felt he had to find some way to force the whole decision
process down to some level below his own.
Question:
ANSWER
A company with a strong organizational structure benefits from improved communication, a well-defined hierarchy and the ability to create a unified company message. As efficient as organizational structure can be, it can also create problems that can lead to loss of productivity and internal conflict. In order to maintain a robust company framework, you need to be able to identify issues within an organizational structure and deal with them as they occur.
Matrix form retain an organization's functional structure, they allow for the rapid creation of efficient large-scale, project structures that employ many members of the organization's functional structure but without disrupting or destroying the structure in the process.
CASE STUDY 3
Mr. Sachin, the Sales manager of the Blue Ridge Furniture Company, had just completed a two-
week trip auditing customer accounts and prospective accounts in the southern states. His
primary intention was to do follow-up work on prospective accounts contacted by sales staff
members during the past six months. Prospective clients were usually furniture dealers or
large department stores with furniture departments.
To his amazement, Mr. Sachin discovered that almost all the so-called prospective accounts
were fictitious. The people had obviously turned in falsely documented field reports and
expense statements. Company salespeople had actually called upon 3 of 22 reported furniture
stores or department stores. Thus. Mr. Sachin summarized that salespeople had falsely claimed
approximately 85 percent of the goodwill contacts. Further study showed that all salespeople
had followed this general practice and that not one had a clean record.
M r. Sachin decided that immediate action was mandatory although the salespeople were
experienced senior individuals. Angry as he was, he would have preferred, firing them. But
he was responsible for sales and realized that replacing the staff would seriously cripple the
sales program for the coming year.
Questions
ANSWER
As Mr. Sachin to resolve the problem of the false reports follow the following
1.Only send email to customers who have opted to receive them. Encourage them to sign up through some kind of promotion or newsletter.
Mr. Sachin have to prevent this problem by
CASE STUDY 4
Sanjay Nagpal is a new recruit from a reputed management institute. He is recruited as a
sales trainee in a sales office of a large computer hardware firm located in Chennai.
Raghvan is the zonal sales manager responsible for overseeing the work of sales officer, field
executives and trainee salesmen numbering over 50 of three areas namely Chennai,
Bangalore, and Trivandrum.
The sales growth of the products in his area was highly satisfactory owing to the
developmental initiatives taken by respective State Governments in spreading computer
education.
Raghvan had collected several sales reports, catalogues and pamphlets detailing the types of
office equipment sold by the company for Sanjay’s reference.
After short chat with Sanjay, Raghvan assisted him to his assigned desk and provided
him with the material collected. Thereafter Raghvan excused himself and did not return.
Meanwhile, Sanjay scanned through the material given to him till 5:00pmbefore leaving
office.
Questions
ANSWER
Employee training is one of the most critical parts of the employee experience. When a new employee starts, they’re a sponge, ready to absorb information about your company, your policies and procedures, and their role and responsibilities. Existing employees also need ongoing training to learn new skills, improve existing ones and continue to grow over time. But what’s the best way to facilitate the training process?
CASE STUDY 5
Preeti was promoted three months ago from reservations supervisor to front-desk manager for
Regency Hotel, an independent, 330-room hostelry. She enjoys her new management
responsibilities and is pleased that the occupancy rate averaged 94 percent last month, way
above the industry average. But at times she feels stressed by the confusion of managing all
front-end operations of the hotel, from reservations and cashiering to the bell desk and
concierge. She feels most at home handling the reservation function, a task she always enjoyed
as a trainee because she likes to help people. About once a week the staff in the reservation
function overbooks rooms, usually because of incomplete scans of conference sales files.
Customers with reservations w,0110 arrive late are upset when they have to be referred 1,
nearby hotels. Whenever overbooking occurs, Ms. eti takes over direct control of the
reservations operation herself, often personally handling reservations for two or three days
until order seems to return.
But sometimes while Ms. Preeti is off focusing on the reservations task, other problems arise.
On five days last month, clerks at the reception desk checked in every "walk-in" who appeared
without reservations. They assumed there would be ample no-shows among those holding
reservations. On one occasion, Regency ended up oversold by 24 rooms. Mr. Alex, the hotel
general manager, is concerned about Ms. Preeti's development into her new management
position. He knows Ms. Preeti is proud of the high occupancy levels (which mean greater
profits) and doesn't want to destroy that pride. However, he sees her as more interested in individual staff tasks (such as making reservations) than in the complexities of managing,
training, and motivating her staff. He has talked with Ms. Preeti about balancing her activities
as a manager. Alex emphasized that she needs to make sure her staff knows the systems and
guidelines and be firm with employees who continue to check in guests when the hotel
obviously will be overbooked. He plans to meet with her in a three-month performance review
to see if he can shift her motivational expectations about the job.
Question:
Yes. It will lead to lack of motivational immaturity for Ms. Preeti.
A drop in staff motivation can become contagious if the cause is not identified and addressed. Management needs to be conscious of employee motivation, and that means being able to identify the factors that cause a lack of motivation in the workplace. Become familiar with the factors that can degrade staff motivation and design plans to combat these productivity killers.
CASE STUDY 6
Casino is a large electrical construction company having a turnover of Rs.100 crores per
annum. Since a few years the company has not been doing well in terms of profits. In order to
find out the reason, a group of independent auditors were deployed to examine the operations
of the company. The item they felt that needed closer attention was the budget control of new
construction work. The audit showed that most electrical designs for new construction were
carried out at the headquarters of the company by a project manager. In preparing a budget for
a new project, he checked the expenses for similar jobs in the past, then simply multiplied them
by various factors. The auditors found that during the past two years, most budgets were
greatly overestimated. Incidentally, it was about two years ago that the project manager was
given the primary responsibility for budgeting. In this role, he would submit his budget to the
Expenditure Control Committee, consisting of higher-level managers who had only a limited
interest in budgeting. It was to this committee that the project manager submitted requests for
additional money whenever needed. Most of the requests were approved.
The chief auditor felt that the project team tended to "expand" the time needed to complete
the task whenever the members thought the budget made it possible. In other words, they
"adjusted" their productivity to match the money allocated to the project.
The auditors noted that other contractors could do similar jobs for 20% less money.
They concluded that a new control procedure was needed
Questions
2. What kind of control procedure should the auditors recommend?
CASE STUDY 7
Dabur is among the top five FMCG companies in India and is positioned successfully on the
specialist herbal platform. Dabur has proven its expertise in the fields of health care, personal care,
home care and foods. The company was founded by Dr. S. K. Burman in 1884 as small pharmacy in
Calcutta (now Kolkata), India. And is now led by his great grandson Vivek C. Burman, who is the
Chairman of Dabur India Limited and the senior most representative of the Burman family in the
company. The company headquarter is in Ghaziabad, India, near the Indian capital New Delhi,
where it is registered. The company has over 12 manufacturing units in India and abroad. The
international facilities are located in Nepal, Dubai, Bangladesh, Egypt and Nigeria. S.K. Burman, the
founder of Dabur, was trained as a physician. His mission was to provide effective and affordable
cure for ordinary people in far-flung villages. Soon, he started preparing natural remedies based on
Ayurveda for diseases such as Cholera, Plague and Malaria. Due to his cheap and effective remedies,
he became to be known as ‘Daktar’ (Indian izedversion of ‘doctor’). And that is how his venture
Dabur got its name—derived from Daktar Burman. The company faces stiff competition from many
multinational and domestic companies. In the Branded and Packaged Food and Beverages segment
major companies that are active include Hindustan Lever, Nestle, Cadbury and Dabur. In case of
Ayurvedic medicines and products, the major competitors are Baidyanath, Vicco, Jhandu, Himani
and other pharmaceutical companies.
Vision statement of Dabur says that the company is “dedicated to the health and wellbeing of every
household”. The objective is to “significantly accelerate profitable growth by providing comfort to
others”. For achieving this objective Dabur aims to:
Ayurveda and herbs with modern science.
Vivek C. Burman joined Dabur in 1954 after completing his graduation in Business Administration
from the USA. In 1986 he was appointed as the Managing Director of Dabur and in 1998 he took
over as Chairman of the Company.
Under Vivek Burman’s leadership, Dabur has grown and evolved as a multi-crore business house
with a diverse product portfolio and a marketing network that traverses the whole of India and
more than 50 countries across the world. As a strong and positive leader, Vivek C. Burman had
motivated employees of Dabur to “do better than their best”—a credo that gives Dabur its status as
India’s most trusted nature-based products company.
Leading brands
More than 300 diverse products in the FMCG, Healthcare and Ayurveda segments are in the product
line of Dabur. List of products of the company include very successful brands like Vatika, Anmol,
Hajmola, Dabur Amla Chyawanprash, Dabur Honey and Lal Dant Manjan with turnover of Rs.100
crores each.
Strategic positioning of Dabur Honey as food product, lead to market leadership with over 40%
market share in branded honey market; Dabur Chyawanprash is the largest selling Ayurvedic
medicine with over 65% market share. Dabur is a leader in herbal digestives with 90% market
share. Hajmola tablets are in command with 75% market share of digestive tablets category. Dabur
Lal Tail tops baby massage oil market with 35% of total share.
CHD (Consumer Health Division), dealing with classical Ayurvedic medicines, has more than 250
products sold through prescription as well as over the counter. Proprietary Ayurvedic medicines
developed by Dabur include Nature Care Isabgol, Madhuvaani and Trifgol.
However, some of the subsidiary units of Dabur have proved to be low margin business; like Dabur
Finance Limited. The international units are also operating on low profit margin. The company also
produces several “me – too” products. At the same time the company is very popular in the rural
segment.
Questions
Objectives are:
Yes I think the growth of Dabur from a small pharmacy to a large multinational company is an indicator of the following advantages of joint stock company.
CASE STUDY 8
The Regina Company„ one of the largest inakets of vacuum cleaners recent') had scv cfc ptollkins
with the quality of its products. The market responsc to this 1ak of quality caused financial
problems for Ow company. in late 1995. Regina began having return rates as high as 30 to 50
percent on some of its Housekeeper and Housekeeper Plus models. These models were sold
primarily through discount stores. Further, Regina's Spectrum vacuum cleaner, an upgraded
version sold in specialty stores, was introduced in 1995 with many quality problems. ef The specific
problems identified for the Housekeeper and Housekeeper Plus models were associated with faulty
belts and weak suction. In the Spectrum model, the agitator was melting; and making a loud noise,
the foot pedals were breaking, and the steel-encased motor (which had been advertised as the power source for the vacuum cleaner) had been replaced with a less desirable. less reliable motor.
As a result of these problems, Target stores discontinued Regina's Housekeeper Plus model after
reporting that "at least half of those sold were returned." At Starmart, which accounts for about a
quarter of the Housekeeper sales, I. out of every 5 machines sold was returned. To help service
customer complaints, Regina set up an 800 telephone number for customers to contact the firm.
directly. The sales returns caused Regina's shareholders to question the 1995 fiscal earnings report.
Furthermore, both inventories and accounts receivable doubled during the 1995 fiscal year. At the
end of that period, Regina's chairman and 40 percent stockholders
Resigned. The chairman’s resignation was closely followed by a company announcement stating
that the financial results reported for the 1995 fiscal year were materially incorrect and had been
withdrawn. This announcement brought a suit from shareholders who had bought Reoina stock on
the basis of the 1995 camings report. It also prompted an audit of the 1995 results and a request to
another accounting organization to work on Regina's business and accounting controls. A few
months later, Regina 'agreed to be acquired by a unit of Magnum, a vacuum cleaner and Water-
purification Company. Under Magnum, Regina shut down production while engineers worked to
solve the problems inherent in the Housekeeper and Housekeeper Plus vacuums, particularly the
suction difficulties. In September 1998, Magnum and Regina decided to separate the two companies
again. Since then, Regina has been regaining market share with its Housekeeper models. The
'vacuums are popular because they carry on-board tools.
Questions:
Type of controls I would established to preclude the major returns experience by Regina are:
2.How would you have controlled the finished-goods -inventory to avoid its growing to twice the size that it was in the previous year.
ANSWER
I have controlled the finished goods inventory in the following ways
FOR FULL AND DETAILED ANSWER
CONTACT
DR. PRASANTH BE BBA MBA PH.D. MOBILE / WHATSAPP: +91 9924764558 OR +91 9447965521 EMAIL: prasanththampi1975@gmail.com WEBSITE: www.casestudyandprojectreports.com
CASE STUDY 1
Ms. Priyanka is a store manager of one of the fourteen Hàppy Home Furniture outlets that are
located at all the major cities in the country. Her staff consists of twelve salespersons and
support personnel. Each salesperson. is paid commission based on sales. All the salespersons
are expected to do other tasks, such as assisting the merchandise manager, arranging the
displays, and handling customer complaints. These tasks, and a few others, are to be shared
equally among the sales persons.
The store's sales target is established at the headquarters of the furniture chain. This target is
divided by the number of salespersons and each is expected to meet his or her personal target
Mr. Ranjan, is the top salesperson at the outlet. When he misses his sales goal, which seldom
happens, the store's target is usually not met. Ranjan, however, often does not help in doing the
common tasks, much to the frustration of the other eleven salespeople, who feel that if they do
not handle the common tasks, they will be fired.
Recently, Ms. Priyanka noticed that one of her salespeople, Mr. Manish„ made careless errors,
neglected clients, and did not do his share of the common tasks. When confronted by the store
manager, he complained about Mr. Ranjan., who, in his opinion, got away with doing almost
nothing. After this discussion, Ms. Priyanka began to observe the salespersons more closely
and noticed that most of them neglected their work and were not cooperative.
The store manager felt that something had to be done. A talk with Mr. Ranjan had little effect.
Yet, the store needed Ranjan because of his excellent sales record. On the other hand, the
morale of the other salespersons had begun to deteriorate.
Questions:
- What Should Ms. Priyanka do?
Mr. Priyanka should think about the moral training of sales persons first then think about the following aspects
- Identify The Different Types Of Ethical Training she Can Include
All quality training begins with a training needs analysis. In the case of ethics training for employees, you might consider focusing on one or more of the following areas:
- Ethical conduct, both in and out of the office
- Customer privacy and data protection
- Company code of ethics
- Common ethical dilemmas
- Company culture
- Customer relations
- Regulatory and compliance training
- Diversity training
- What are the standards of performance? Should they be changed? If so, in what ways? (10 )
Standard of performace are the establishment of organizational or system standards, targets, and goals to improve public health practices. Standards may be set based on national, state, or scientific guidelines, benchmarking against similar organizations, the public’s or leaders’ expectations, or other methods.
CASE STUDY 2
- Ketan Parekh had worked his way up through the technical arm of ANC Company to
inventor and innovator, in basic frequency-modulated continuous wave (FM-CW) Doppler
radar technology. This Fm-cw technology gave Avionics a world leadership position in Doppler
radar equipment design and production, All Avionics equipment design were state of the art at
the time of their design, a result of the importance research and development engineering for
the department's future.
As the division grew and Avionics's success with Doppler systems brought large increases in
sales, Mr. Ketan's preoccupations became considerably more managerially than technical. He
began to reassess some of his own thinking about organizations. The organization appeared
too weak, both structurally and managerially, to cope with the increasing complexity of his division's activities. Mr. Ketan was finding it impossible to cope with the number of major
decisions that had to be made. Six major programs and several minor ones were in different
stages of design and/or production. All had different customers, sometimes in different
countries. Every program's product although they were all Doppler radar systems, was
significantly different from every other one, particularly in its technology. Nevertheless the
programs had to share manufacturing facilities, major items of capital equipment, and
specialized functions. Mr. Ketan felt he had to find some way to force the whole decision
process down to some level below his own.
Question:
- What is the principal problem with ANC's existing organizational Structure?
ANSWER
A company with a strong organizational structure benefits from improved communication, a well-defined hierarchy and the ability to create a unified company message. As efficient as organizational structure can be, it can also create problems that can lead to loss of productivity and internal conflict. In order to maintain a robust company framework, you need to be able to identify issues within an organizational structure and deal with them as they occur.
- How can the matrix form of organization assist Mr. Ketan?
Matrix form retain an organization's functional structure, they allow for the rapid creation of efficient large-scale, project structures that employ many members of the organization's functional structure but without disrupting or destroying the structure in the process.
CASE STUDY 3
Mr. Sachin, the Sales manager of the Blue Ridge Furniture Company, had just completed a two-
week trip auditing customer accounts and prospective accounts in the southern states. His
primary intention was to do follow-up work on prospective accounts contacted by sales staff
members during the past six months. Prospective clients were usually furniture dealers or
large department stores with furniture departments.
To his amazement, Mr. Sachin discovered that almost all the so-called prospective accounts
were fictitious. The people had obviously turned in falsely documented field reports and
expense statements. Company salespeople had actually called upon 3 of 22 reported furniture
stores or department stores. Thus. Mr. Sachin summarized that salespeople had falsely claimed
approximately 85 percent of the goodwill contacts. Further study showed that all salespeople
had followed this general practice and that not one had a clean record.
M r. Sachin decided that immediate action was mandatory although the salespeople were
experienced senior individuals. Angry as he was, he would have preferred, firing them. But
he was responsible for sales and realized that replacing the staff would seriously cripple the
sales program for the coming year.
Questions
- As Mr. Sachin, what would you do now to resolve the problem of the false
ANSWER
As Mr. Sachin to resolve the problem of the false reports follow the following
1.Only send email to customers who have opted to receive them. Encourage them to sign up through some kind of promotion or newsletter.
- What could Mr. Sachin have done to prevent this problem? (10)
Mr. Sachin have to prevent this problem by
- Automated email sequencesthat drip on contacts over time to build trust and convert subscribers into active and happy customers.
CASE STUDY 4
Sanjay Nagpal is a new recruit from a reputed management institute. He is recruited as a
sales trainee in a sales office of a large computer hardware firm located in Chennai.
Raghvan is the zonal sales manager responsible for overseeing the work of sales officer, field
executives and trainee salesmen numbering over 50 of three areas namely Chennai,
Bangalore, and Trivandrum.
The sales growth of the products in his area was highly satisfactory owing to the
developmental initiatives taken by respective State Governments in spreading computer
education.
Raghvan had collected several sales reports, catalogues and pamphlets detailing the types of
office equipment sold by the company for Sanjay’s reference.
After short chat with Sanjay, Raghvan assisted him to his assigned desk and provided
him with the material collected. Thereafter Raghvan excused himself and did not return.
Meanwhile, Sanjay scanned through the material given to him till 5:00pmbefore leaving
office.
Questions
- What do you think about Raghavan’s training program? (10)
ANSWER
- What method of training would have been best under the circumstances? Would you consider OJT, simulation or experiential methods? (10)
Employee training is one of the most critical parts of the employee experience. When a new employee starts, they’re a sponge, ready to absorb information about your company, your policies and procedures, and their role and responsibilities. Existing employees also need ongoing training to learn new skills, improve existing ones and continue to grow over time. But what’s the best way to facilitate the training process?
CASE STUDY 5
Preeti was promoted three months ago from reservations supervisor to front-desk manager for
Regency Hotel, an independent, 330-room hostelry. She enjoys her new management
responsibilities and is pleased that the occupancy rate averaged 94 percent last month, way
above the industry average. But at times she feels stressed by the confusion of managing all
front-end operations of the hotel, from reservations and cashiering to the bell desk and
concierge. She feels most at home handling the reservation function, a task she always enjoyed
as a trainee because she likes to help people. About once a week the staff in the reservation
function overbooks rooms, usually because of incomplete scans of conference sales files.
Customers with reservations w,0110 arrive late are upset when they have to be referred 1,
nearby hotels. Whenever overbooking occurs, Ms. eti takes over direct control of the
reservations operation herself, often personally handling reservations for two or three days
until order seems to return.
But sometimes while Ms. Preeti is off focusing on the reservations task, other problems arise.
On five days last month, clerks at the reception desk checked in every "walk-in" who appeared
without reservations. They assumed there would be ample no-shows among those holding
reservations. On one occasion, Regency ended up oversold by 24 rooms. Mr. Alex, the hotel
general manager, is concerned about Ms. Preeti's development into her new management
position. He knows Ms. Preeti is proud of the high occupancy levels (which mean greater
profits) and doesn't want to destroy that pride. However, he sees her as more interested in individual staff tasks (such as making reservations) than in the complexities of managing,
training, and motivating her staff. He has talked with Ms. Preeti about balancing her activities
as a manager. Alex emphasized that she needs to make sure her staff knows the systems and
guidelines and be firm with employees who continue to check in guests when the hotel
obviously will be overbooked. He plans to meet with her in a three-month performance review
to see if he can shift her motivational expectations about the job.
Question:
- Do Ms. Preeti's problems seem to be the result of her lack of motivational immaturity or of her lack of motivational attention to her people?
Yes. It will lead to lack of motivational immaturity for Ms. Preeti.
A drop in staff motivation can become contagious if the cause is not identified and addressed. Management needs to be conscious of employee motivation, and that means being able to identify the factors that cause a lack of motivation in the workplace. Become familiar with the factors that can degrade staff motivation and design plans to combat these productivity killers.
CASE STUDY 6
Casino is a large electrical construction company having a turnover of Rs.100 crores per
annum. Since a few years the company has not been doing well in terms of profits. In order to
find out the reason, a group of independent auditors were deployed to examine the operations
of the company. The item they felt that needed closer attention was the budget control of new
construction work. The audit showed that most electrical designs for new construction were
carried out at the headquarters of the company by a project manager. In preparing a budget for
a new project, he checked the expenses for similar jobs in the past, then simply multiplied them
by various factors. The auditors found that during the past two years, most budgets were
greatly overestimated. Incidentally, it was about two years ago that the project manager was
given the primary responsibility for budgeting. In this role, he would submit his budget to the
Expenditure Control Committee, consisting of higher-level managers who had only a limited
interest in budgeting. It was to this committee that the project manager submitted requests for
additional money whenever needed. Most of the requests were approved.
The chief auditor felt that the project team tended to "expand" the time needed to complete
the task whenever the members thought the budget made it possible. In other words, they
"adjusted" their productivity to match the money allocated to the project.
The auditors noted that other contractors could do similar jobs for 20% less money.
They concluded that a new control procedure was needed
Questions
- What do you think of the budgeting process?
2. What kind of control procedure should the auditors recommend?
CASE STUDY 7
Dabur is among the top five FMCG companies in India and is positioned successfully on the
specialist herbal platform. Dabur has proven its expertise in the fields of health care, personal care,
home care and foods. The company was founded by Dr. S. K. Burman in 1884 as small pharmacy in
Calcutta (now Kolkata), India. And is now led by his great grandson Vivek C. Burman, who is the
Chairman of Dabur India Limited and the senior most representative of the Burman family in the
company. The company headquarter is in Ghaziabad, India, near the Indian capital New Delhi,
where it is registered. The company has over 12 manufacturing units in India and abroad. The
international facilities are located in Nepal, Dubai, Bangladesh, Egypt and Nigeria. S.K. Burman, the
founder of Dabur, was trained as a physician. His mission was to provide effective and affordable
cure for ordinary people in far-flung villages. Soon, he started preparing natural remedies based on
Ayurveda for diseases such as Cholera, Plague and Malaria. Due to his cheap and effective remedies,
he became to be known as ‘Daktar’ (Indian izedversion of ‘doctor’). And that is how his venture
Dabur got its name—derived from Daktar Burman. The company faces stiff competition from many
multinational and domestic companies. In the Branded and Packaged Food and Beverages segment
major companies that are active include Hindustan Lever, Nestle, Cadbury and Dabur. In case of
Ayurvedic medicines and products, the major competitors are Baidyanath, Vicco, Jhandu, Himani
and other pharmaceutical companies.
Vision statement of Dabur says that the company is “dedicated to the health and wellbeing of every
household”. The objective is to “significantly accelerate profitable growth by providing comfort to
others”. For achieving this objective Dabur aims to:
- Focus on growing core brands across categories, reaching out to new geographies, within
- Be the preferred company to meet the health and personal grooming needs of target
Ayurveda and herbs with modern science.
- Be a professionally managed employer of choice, attracting, developing and retaining
- Be responsible citizen with a commitment to environmental protection.
- Provide superior returns, relative to our peer group, to our shareholders.
Vivek C. Burman joined Dabur in 1954 after completing his graduation in Business Administration
from the USA. In 1986 he was appointed as the Managing Director of Dabur and in 1998 he took
over as Chairman of the Company.
Under Vivek Burman’s leadership, Dabur has grown and evolved as a multi-crore business house
with a diverse product portfolio and a marketing network that traverses the whole of India and
more than 50 countries across the world. As a strong and positive leader, Vivek C. Burman had
motivated employees of Dabur to “do better than their best”—a credo that gives Dabur its status as
India’s most trusted nature-based products company.
Leading brands
More than 300 diverse products in the FMCG, Healthcare and Ayurveda segments are in the product
line of Dabur. List of products of the company include very successful brands like Vatika, Anmol,
Hajmola, Dabur Amla Chyawanprash, Dabur Honey and Lal Dant Manjan with turnover of Rs.100
crores each.
Strategic positioning of Dabur Honey as food product, lead to market leadership with over 40%
market share in branded honey market; Dabur Chyawanprash is the largest selling Ayurvedic
medicine with over 65% market share. Dabur is a leader in herbal digestives with 90% market
share. Hajmola tablets are in command with 75% market share of digestive tablets category. Dabur
Lal Tail tops baby massage oil market with 35% of total share.
CHD (Consumer Health Division), dealing with classical Ayurvedic medicines, has more than 250
products sold through prescription as well as over the counter. Proprietary Ayurvedic medicines
developed by Dabur include Nature Care Isabgol, Madhuvaani and Trifgol.
However, some of the subsidiary units of Dabur have proved to be low margin business; like Dabur
Finance Limited. The international units are also operating on low profit margin. The company also
produces several “me – too” products. At the same time the company is very popular in the rural
segment.
Questions
- What is the objective of Dabur? Is it profit maximisation or growth maximisation? Discuss.
Objectives are:
- Focus on growing core brands across categories, reaching out to new geographies, within and outside India, and improve operational efficiencies by leveraging technology.
- Be the preferred company to meet the health and personal grooming needs of target consumers with safe, efficacious, natural solutions by synthesising deep knowledge of ayurveda and herbs with modern science.
- Be a professionally managed employer of choice, attracting, developing and retaining quality personnel.
- Be responsible citizens with a commitment to environmental protection.
- Provide superior returns, relative to our peer group, to our shareholders.
- Do you think the growth of Dabur from a small pharmacy to a large multinational company is an indicator of the advantages of joint stock company against proprietorship form? Elaborate.
Yes I think the growth of Dabur from a small pharmacy to a large multinational company is an indicator of the following advantages of joint stock company.
CASE STUDY 8
The Regina Company„ one of the largest inakets of vacuum cleaners recent') had scv cfc ptollkins
with the quality of its products. The market responsc to this 1ak of quality caused financial
problems for Ow company. in late 1995. Regina began having return rates as high as 30 to 50
percent on some of its Housekeeper and Housekeeper Plus models. These models were sold
primarily through discount stores. Further, Regina's Spectrum vacuum cleaner, an upgraded
version sold in specialty stores, was introduced in 1995 with many quality problems. ef The specific
problems identified for the Housekeeper and Housekeeper Plus models were associated with faulty
belts and weak suction. In the Spectrum model, the agitator was melting; and making a loud noise,
the foot pedals were breaking, and the steel-encased motor (which had been advertised as the power source for the vacuum cleaner) had been replaced with a less desirable. less reliable motor.
As a result of these problems, Target stores discontinued Regina's Housekeeper Plus model after
reporting that "at least half of those sold were returned." At Starmart, which accounts for about a
quarter of the Housekeeper sales, I. out of every 5 machines sold was returned. To help service
customer complaints, Regina set up an 800 telephone number for customers to contact the firm.
directly. The sales returns caused Regina's shareholders to question the 1995 fiscal earnings report.
Furthermore, both inventories and accounts receivable doubled during the 1995 fiscal year. At the
end of that period, Regina's chairman and 40 percent stockholders
Resigned. The chairman’s resignation was closely followed by a company announcement stating
that the financial results reported for the 1995 fiscal year were materially incorrect and had been
withdrawn. This announcement brought a suit from shareholders who had bought Reoina stock on
the basis of the 1995 camings report. It also prompted an audit of the 1995 results and a request to
another accounting organization to work on Regina's business and accounting controls. A few
months later, Regina 'agreed to be acquired by a unit of Magnum, a vacuum cleaner and Water-
purification Company. Under Magnum, Regina shut down production while engineers worked to
solve the problems inherent in the Housekeeper and Housekeeper Plus vacuums, particularly the
suction difficulties. In September 1998, Magnum and Regina decided to separate the two companies
again. Since then, Regina has been regaining market share with its Housekeeper models. The
'vacuums are popular because they carry on-board tools.
Questions:
- What type of controls would you have established to preclude the major returns experienced by Regina?
Type of controls I would established to preclude the major returns experience by Regina are:
2.How would you have controlled the finished-goods -inventory to avoid its growing to twice the size that it was in the previous year.
ANSWER
I have controlled the finished goods inventory in the following ways
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