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Caselet 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 of Strategic 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 of Strategic Management
Caselet 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?
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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
Examination Paper of Business Communication
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?
Caselet 1 Mr. Vincent, the Manager of a large supermarket,
was taking a management course in the evening programme at the local college.
The Professor had given an interesting but disturbing lecture the previous
night on the various approaches to management. Vincent had always thought that
management involved just planning, organizing and controlling. Now this
Professor was saying that management could also be thought of as quantitative
models, systems theory and analysis, and even something called contingency
relationships. Vincent had always considered himself a good manager, and his
record with the supermarket chain had proved it. He thought of himself, “I have
never used operations research models, thought of my store as an open system,
or developed or utilized any contingency relationship. By doing a little
planning ahead, organizing the store, and making some things got done, I have
been a successful manager. That other stuff just does not make sense. All the
professor was trying to do was complicate things. I guess I will have to know
it for the test, but I am sticking with my old plan, organize and control
approach to managing my store.” Questions: 1. Critically analyze Mr. Vincent‟s
reasoning. 2. If you were the professor and you knew what was going through
Vincent‟s mind, what would you say to Vincent? Caselet 2 The Regional
Administration Office of a company was hastily set up. Victor D‟Cuhna a young
executive was directly recruited to take charge of Data Processing Cell of this
office. The data processing was to help the administrative office in planning
and monitoring. The officer cadre of the administrative office was a mix of
directly recruited officers and promote officers (promotion from within the
organization). Females dominated the junior clerical cadre. This cadre was not
formally trained. The administrative office had decided to give these fresh
recruits on-the-job training because when results were not upto the
expectations blame was brought on the Data Processing Cell. Victor D‟Cuhna
realized that the administrative office was heading for trouble. He knew that
his task would not be easy and that he had been selected because of his
experience, background and abilities. He also realized that certain functional
aspects of the administrative office were not clearly understood by various
functionaries, and systems and procedures were blindly and randomly followed.
Feedback was random, scanty and controversial, and Data Processing Cell had to
verify every item of feedback. Delays were inevitable. D‟Cuhna sought the
permission of senior management to conduct a seminar on communication and feedback
of which he was an expert. The permission was grudgingly given by the senior
management. Everyone appreciated the seminar. Following the first seminar,
D‟Cuhna conducted a one week · This section consists of Caselets. · Answer all
the questions. · Each Caselet carries 20 marks. · Detailed
information should form the part of your answer (Word limit 150-200 words).
Principles and Practices of Management IIBM Institute of Business Management 4
training course for the clerical cadre, especially for the junior, freshly
recruited clerks. Amongst other topics, D‟Cuhna laid emphasis on Questions: 1.
Diagnose the problem and enumerate the reasons for the failure of D‟Cuhna? 2.
What could D‟Cuhna have done to avoid the situation in which he found himself?
Section C:
ABC Ltd CASE STUDY ANSWER PROVIDED MOB OR WHATSAPP 91 9924764558 OR 91
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Caselet 1
M/s. ABC Ltd is a medium-sized engineering company producing a
large-range of product lines
according to customer requirements. It has earned a good reputation as
a quick and reliable supplier to
its customers because of which its volume of business kept on
increasing. However, over the past one
year, the Managing Director of the company has been receiving customer
complaints due to delays in
dispatch of products and at times the company has to pay substantial
penalty for not meeting the
schedule in time. The Managing Director convened an urgent meeting of
various functional managers
to discuss the issue. The marketing manager questioned the arbitrary
manner of giving priority to
products in manufacturing line, causing delays in wanted products and
over-stocking of products
which are not required immediately. Production Control Manager
complained that he does not have
adequate staff to plan and control the production function; and
whatever little planning he does, is
generally overlooked by shop floor manager. Shop floor managers
complained of unrealistic
planning, excessive machine breakdowns, power failure, and shortage of
materials for scheduled
products because of which it is impossible to stick to the schedule.
Maintenance manager says that he
does not get important spares required for equipment maintenance
because of which he cannot repair
machines at a faster rate. Inventory control manager says that on one hand
the company often accuses
him of carrying too much stock and on other hand people are grumbling
over shortages. Fed up by
mutual mud-slinging, the Managing Director decided to appoint you, a
bright management consultant
with training in business management to suggest ways and means to put
his “house in order”.
Questions:-
1. What would you suggest to avoid delays in dispatch of products?
2. What action should be taken by various functional managers to meet
the scheduled dates?
Caselet 2
Rajender Kumar was a production worker at competent Motors Limited
(CML) which made
components and accessories for the automotive industry. He had worked
at CML for almost seven
years as a welder, along with fifteen other men in the plant. All had
received training in welding both
on the job and through company sponsored external programmes. They had
friendly relations and got
along very well with one another. They played Volleyball in the
playground regularly before retiring
to the quarters allotted by the company. They work together in the
company canteen, cutting Jokes on
each other and making fun of everyone who dared to step into their
privacy during lunch hour. Most
of the fellows had been there for some length of time, except for two
men who had joined the ranks
only two months back. Rajender was generally considered to be the
leader of the group, so it was no
surprise that when the foreman of the new was transferred and his job
was posted, Rajender applied
for the job and got it.
Examination Paper of Organizational Behaviour
There were only four other applicants for the job, two from mechanical
section and two from outside,
when there was a formal announcement of the appointment on a Friday
afternoon, everyone in the
group congratulated Rajender. They literally carried him on their
shoulders, and bought him snacks
and celebrated. On Monday morning, Rajender joined duty as Foreman. It
was company practice for
all foremen to wear blue jacket and a white shirt. Each man‟s coat had
his name badge sewn onto the
left side pocket. The company had given two pairs to Rajender. He was
proud to wear the coat to
work on Monday. People who saw him from a distance went up to him and
admired the new blue
coat. There was a lot of kidding around calling Rajender as „Hero‟,
„Raja Babu‟ and „Officer‟ etc.
One of the guys went back to his locker and returned with a long brush
and acted as though he were
removing dust particles on the new coat. After about five minutes of
horseplay, all the men went back
to work. Rajender went to his office to familiarize himself with the
new job and environment. At
noon, all the men broke for Lunch and went to the canteen to eat and
take a break as usual. Rajender
was busy when they left but followed after them a few minutes later. He
bought the food coupon,
took the snacks and tea and turned to face the open canteen. On the
left-side corner of the room was
his old work group; on the right-hand side of the canteen sat the other
entire foreman in the plant—all
in their smart blue coats.
At that point of time, silence descended on the canteen. Both groups
looked at Rajender anxiously,
waiting to see which group he would choose to eat with.
Questions:
1. Whom do you think Rajender will eat with? Why?
2. If you were one of the other foremen, what could you do to make
Rajinder‟s transition easier?
END OF SECTION B
Section C: Applied Theory (30 Marks)
· This section consists of Applied Theory Questions.
· Answer all the questions.
· Each question carries 15 marks.
· Detailed information should form the part of your
answer (Word limit 200 to 250 words).
1. What are Psychological games & why people play these games?
2. A good leader is not necessarily a good manager.” Discuss this
statement & compare leadership
with management
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Caselet 1
Ask the company top brass what „almost there‟ means. The answer: a
premier Indian retail company
that has come to be known as a specialty chain of apparel and
accessories. With 52 product categories
under one roof, Shoppers‟ Stop has a line-up of 350 brands. Set up and
headed by former Corona
employee, B. S. Nagesh, Shoppers‟ Stop is India‟s answer to Selfridges
and Printemps. As it proudly
announces, „We don‟t sell, we help you buy.‟ Back in 1991, there was
the question of what to retail.
Should it be a supermarket or a departmental store? Even an electronics
store was considered. Finally,
common sense and understanding won out. The safest bet, for the
all-male team was to retail men‟s
wear. They knew the male psyche and felt that they had discerning taste
in men‟s clothing. The
concept would be that of a lifestyle store in a luxurious space, which
would make for a great shopping
experience. The first Shoppers‟ Stop store took shape in Andheri,
Mumbai, in October 1991, with an
investment of nearly Rs. 20 lakh. The original concept that formed the
basis of a successful marketing
campaign for seven years is here to stay. And the result is an annual
turnover of Rs. 160 crores and
five stores, nine years later. Everything went right from the
beginning, except for one strange
happening. More than 60 per cent of the customers who walked into
Shoppers‟ Stop in Mumbai were
women. This gave rise to ideas. Soon, the store set up its women‟s
section. Later, it expanded to
include children‟s wear and then, household accessories. The second
store in Bangalore came in
1995. The store at Hyderabad followed in 1998 with the largest area of
60,000 sq. ft. The New Delhi
and Jaipur stores were inaugurated in 1999. All this while, the product
range kept increasing to suit
customer needs. The most recent experiment was home furnishings. Secure
in the knowledge that
organized retailing in global brands was still in its infancy in India,
Shoppers‟ Stop laid the ground
rules which the competition followed. The biggest advantage for
Shoppers‟ Stop is that it knows how
the Indian consumer thinks and feels while shopping. Yes, feeling – for
in India, shopping remains an
outing. And how does it compare itself to foreign stores? While it is
not modeled on any one foreign
retailer, the „basic construct‟ is taken from the experience of a
number of successfully managed retail
companies. It has leveraged expertise for a critical component like
technology from all over the
world, going as far as hiring expatriates from Littlewoods and using
state-of-the-art ERP models.
Shoppers‟ Stop went a step further by even integrating its financial
system with the ERP model.
Expertise was imported wherever it felt that expertise available
in-house was inadequate. But the
store felt there was one acute problem. A shortage of the most
important resource of them all was
trained humans. Since Indian business institutes did not have
professional courses in retail
management, people were hired from different walks of life and the
training programme was
internalized. By 1994, the senior executives at Shoppers‟ Stop were
taking lectures at management
institutes in Mumbai. The Narsee Monjee Institute of Management Studies
(NMIMS) even
restructured its course to include retail management as a subject.
Getting the company access to the
latest global retail trends and exchange of information with business
greats was an exclusive
membership to the Intercontinental Group of Department Stores (IGDS).
It allows membership by
invitation to one company from a country and Shoppers‟ Stop rubs
shoulders with 29 of the hottest
names in retailing – Selfridges from the UK, C.K. Tang from Singapore,
Lamcy Plaza from Dubai
and the like. With logistics I in place, the accent moved to the
customer. Shoppers‟ Stop conducted
Examination Paper of Marketing Management
surveys with ORG-MARG and Indian Market Research Bureau (IMRB) and
undertook in-house
wardrobe audits. The studies confirmed what it already knew. The Indian
customer is still evolving
and is very different from, say, a European customer, who knows exactly
what he wants to purchase,
walks up to a shelf, picks up the merchandise, pays and walks out. In
India, customers like to touch
and feel the merchandise, and scout for options. Also, the majority of
Indian shoppers still prefer to
pay in cash. So, transactions must be in cash as against plastic money
used the world over.
Additionally, the Indian customer likes being served – whether it is
food, or otherwise. The
company‟s customer profile includes people who want the same
salesperson each time they came to
the store to walk them through the shop floors and assist in the
purchase. Others came with families,
kids and maids in tow and expected to be suitably attended to. Still
others wanted someone to carry
the bags. So, the shops have self-help counters, with an assistant at
hand for queries or help. The inhouse
wardrobe audit also helped with another facet of the business. It
enabled Shoppers‟ Stop to
work out which brands to stock, based on customer preferences. In fact,
the USP of Shoppers‟ Stop
lies in judiciously selected global brands, displayed alongside an
in-house range of affordable
designer wear. The line-up includes Levi‟s, Louis Philippe, Allen
Solly, Walt Disney, Ray Ban and
Reebok, besides in-house labels STOP and I. Brand selection is the same
across the five locations,
though the product mix may be somewhat city-based to accommodate cuts
and styles in women‟s
wear, as well as allowing for seasonal variations (winter in Delhi, for
instance, is a case in point).
Stocking of brands is based on popular demand – recently, Provogue, MTV
Style, and Benetton have
been added. In-house labels are available at competitive prices and
target the value-for-money
customer and make up around 12 per cent of Shoppers‟ Stop‟s business.
Sometimes in-house brands
plug the price gap in certain product categories. To cash in on this,
the company has big plans for its
in-house brands: from re-branding to repositioning, to homing in on product
categories where existing
brands are not strong. Competition between brands is not an issue,
because being a trading house, all
brands get equal emphasis. The in-house brand shopper is one who places
immense trust in the
company and the quality of its goods and returns for repeat buys. And
the company reposed its faith
in regular customers by including them in a concept called the First
Citizen‟s Club (FCC). With
60,000 odd members, FCC customers account for 10 per cent of entries
and for 34 per cent of the
turnover. It was the sheer appeal of the experience that kept pulling
these people back. Not one to let
such an opportunity pass, the company ran a successful ad campaign
(that talks about just this factor)
in print for more than eight years. The theme is still the same. In
1999, a TV spot, which liked the
shopping experience to the slowing down of one‟s internal clock and the
beauty of the whole
experience, was aired. More recently, ads that spell out the store‟s
benefits (in a highly oblique
manner) are being aired.
The campaign is based on entries entered in the Visitors‟ Book. None of
the ads has a visual or text –
or any heavy handedly direct reference to the store or the merchandise.
The ads only show shoppers
having the time of their lives in calm and serene locales, or elements
that make shopping at the store a
pleasure – quite the perfect getaway for a cosmopolitan shopper aged
between 25 and 45. The brief to
the agency, Contract, ensured that brand recall came in terms of the
shopping experience, not the
product. And it has worked wonders. Value-addition at each store also
comes in the form of special
care with car parks, power backup, customer paging, alteration service
and gift-wrapping. To top it
all, cafes and coffee bars make sure that the customer does not step
out of the store. In Hyderabad, it
has even created a Food Court. Although the food counter was not
planned, it came about as there
was extra space of 67,000 sq. ft. Carrying the perfect experience to
the shop floor is an attempt to
stack goods in vast open spaces neatly. Every store has a generic
structure, though regional customer
variances are accounted for. Each store is on lease, and this is
clearly Shoppers‟ Stop‟s most
expensive resource proposition – renting huge spaces in prime
properties across metros, so far
totaling 210,000 sq. ft of retail space. Getting that space was easy
enough for Shoppers‟ Stop, since
its promoter is the Mumbai-based Raheja Group, which also owns 62 per
cent of the share capital.
Questions:
1. What are the significant factors that have led to the success of
Shoppers‟ Stop?
2. How should Shoppers‟ Stop develop its demand forecasts?
Caselet 2
The rise of personal computers in the mid 1980s spurred interest in
computer games. This caused a
crash in home Video game market. Interest in Video games was rekindled
when a number of different
companies developed hardware consoles that provided graphics superior
to the capabilities of
computer games. By 1990, the Nintendo Entertainment System dominated
the product category. Sega
surpassed Nintendo when it introduced its Genesis System. By 1993, Sega
commanded almost 60 per
cent of Video game market and was one of the most recognized brand
names among the children.
Sega‟s success was short lived. In 1995, Saturn (a division of General
Motors) launched a new 32-bit
system. The product was a miserable failure for a number of reasons.
Sega was the primary software
developer for Saturn and it did not support efforts by outside game
developers to design compatible
games. In addition, Sega‟s games were often delivered quite late to
retailers. Finally, the price of the
Saturn system was greater than other comparable game consoles. This
situation of Saturn‟s misstep
benefited Nintendo and Sony greatly. Sony‟s Play Station was unveiled
in 1994 and was available in
70 million homes worldwide by the end of 1999. Its “Open design”
encouraged the efforts of outside
developers, resulting in almost 3,000 different games that were
compatible with the PlayStation. It too
featured 32-bit graphics that appealed to older audience. As a result,
at one time, more than 30 per
cent of PlayStation owners were over 30 years old. Nintendo 64 was
introduced in 1996 and had eyepopping
64-bit graphics and entered in more than 28 million homes by 1999. Its
primary users were
between the age of 6 and 13 as a result of Nintendo‟s efforts to limit
the amount of violent and adultoriented
material featured on games that can be played on its systems. Because
the company
exercised considerable control over software development, Nintendo 64
had only one-tenth the
number of compatible games as Sony‟s PlayStation did. By 1999, Sony had
captured 56 per cent of
the video game market, followed by Nintendo with 42 per cent. Sega‟s
share had fallen to a low of
1%. Hence, Sega had two options, either to concede defeat or introduce
an innovative video machine
that would bring in huge sales. And Sega had to do so before either
Nintendo or Sony could bring
their next-generation console to market. The Sega Dreamcast arrived in
stores in September 1999
with an initial price tag of $199. Anxious gamers placed 300,000
advance orders, and initial sales
were quite encouraging. A total of 1.5 million Dreamcast machines were
bought within the first four
months, and initial reviews were positive. The 128-bit system was
capable of generating 3-D visuals,
and 40 different games were available within three months of Dream
cast‟s introduction. By the end
of the year, Sega had captured a market share to 15 per cent. But the
Dreamcast could not sustain its
momentum. Although its game capabilities were impressive, the system
did not deliver all the
functionality Sega had promised. A 56K modem (which used a home phone
line) and a Web browser
were meant to allow access to the Internet so that gamers could play
each other online, surf the Web,
and visit the Dreamcast Network for product information and playing
tips. Unfortunately, these
features either were not immediately available or were disappointing in
their execution. Sega was not
the only one in having the strategy of adding functionality beyond
games. Sony and Nintendo
followed the same approach for their machines introduced in 1999. Both
Nintendo‟s Neptune and
Sony‟s PlayStation 2 (PS2) were built on a DVD platform and featured a
128-bit processor. Analysts
applauded the move to DVD because it is less expensive to produce and
allows more storage than
CDs. It also gives buyers the ability to use the machine as CD music
player and DVD movie player.
As Sony marketing director commented, “The full entertainment offering
from Play Station 2
definitely appeals to a much broader audience. I have friends in their
30s who bought it not only
Examination Paper of Marketing Management
6
IIBM Institute of Business Management
because it‟s a gaming system for their kids, but also a DVD for them.”
In addition, PlayStation 2 is
able to play games developed for its earlier model that was CD-based.
This gives the PS2 an
enormous advantage in the number of compatible game titles that were
immediately available to
gamers. Further enhancing the PS2‟s appeal is its high-speed modem and
allows the user‟s easy
access to the Internet through digital cable as well as over telephone
lines. This gives Sony the ability
to distribute movies, music, and games directly to PS2 consoles. “We
are positioning this as an allround
entertainment player,” commented Ken Kutaragi, the head of Sony
Computer Entertainment.
However, some prospective customers were put off by the console‟s
initial price of $360. Shortly
after the introduction of Neptune, Nintendo changed its strategies and
announced the impending
release of its newest game console, The GameCube. However, unlike the
Neptune, the GameCube
would not run on a DVD platform and also would not initially offer any
online capabilities. It would
be more attractively priced at $199. A marketing vice president for
Nintendo explained the
company‟s change in direction, “We are the only competitor whose
business is video games. We want
to create the best gaming system.” Nintendo also made the GameCube
friendly for outside developers
and started adding games that included sports titles to attract an
older audience. Best known for its
extra ordinary successes with games aimed at the younger set, such as
Donkey Kong, Super Mario
Bros, and Pokemon, Nintendo sought to attract older users, especially
because the average video
game player is 28. Youthful Nintendo users were particularly pleased to
hear that they could use their
handheld Game Boy Advance systems as controllers for the GameCube.
Nintendo scrambled to
ensure there would be an adequate supply of Game Cubes on the date in
November 2001, when they
were scheduled to be available to customers. It also budgeted $450
million to market its new product,
as it anticipated stiff competition during the holiday shopping season.
With more than 20 million
PlayStation 2 sold worldwide, the GameCube as a new entry in the video
game market would make
the battle for market share even more intense. For almost a decade, the
video game industry had only
Sega, Nintendo, and Sony; just three players. Because of strong brand
loyalty and high product
development costs, newcomers faced a daunting task in entering this
race and being competitive. In
November 2001, Microsoft began selling its new Xbox, just three days
before the GameCube made
its debut. Some observers felt the Xbox was aimed to rival PlayStation
2, which has similar functions
that rival Microsoft‟s Web TV system and even some lower level PCs.
Like the Sony‟s PlayStation 2,
Xbox was also built using a DVD platform, but it used an Intel
processor in its construction. This
open design allowed Microsoft to develop the Xbox in just two years,
and gave developers the option
of using standard PC tool for creating compatible games. In addition, Microsoft
also sought the
advice of successful game developers and even incorporated some of
their feedback into the design of
the console and its controllers. As a result of developers‟ efforts,
Microsoft had about 20 games ready
when the Xbox became available. By contrast, the GameCube had only
eight games available.
Microsoft online strategy was another feature that differentiated of
the Xbox from the GameCube.
Whereas Nintendo had no immediate plans for Web-based play, the Xbox
came equipped with an
Ethernet port for broadband access to Internet. Microsoft also
announced its own Web-based network
on which gamers can come together for online head-to head play and for
organized online matches
and tournaments. Subscribers to this service were to pay a small
monthly fee and must have highspeed
access to the Internet. This is a potential drawback considering that a
very low percentage of
households world over currently have broadband connections. By contrast
Sony promoted an open
network, which allows software developers to manage their own games,
including associated fees
charged to users. However, interested players must purchase a network
adapter for an additional
$39.99. Although game companies are not keen on the prospect of
submitting to the control of a
Microsoft-controlled network, it would require a significant investment
for them to manage their own
service on the Sony-based network. Initially the price of Microsoft‟s
Xbox was $299. Prior to the
introduction of Xbox, in a competitive move Sony dropped the price of
the PlayStation 2 to $299.
Nintendo‟s GameCube already enjoyed a significant price advantage, as
it was selling for $100 less
than either Microsoft or Sony products. Gamers eagerly snapped up the
new consoles and made 2001
Examination Paper of Marketing Management
7
IIBM Institute of Business Management
the best year ever for video game sales. For the first time, consumers
spent $9.4 billion on video
game equipment, which was more than they did at the box office. By the
end of 2001 holiday season,
6.6 million PlayStation 2 consoles had been sold in North America
alone, followed by 1.5 million
Xbox units and 1.2 million Game Cubes. What ensued was an all out price
war. This started when
Sony decided to put even more pressure on the Microsoft‟s Xbox by
cutting the PlayStation 2 price to
$199. Microsoft quickly matched that price.
Wanting to maintain its low-price status, Nintendo in turn responded by
reducing the price of its the
GameCube by $50, to $149. By mid 2002, Microsoft Xbox had sold between
3.5 and 4 million units
worldwide. However, Nintendo had surpassed Xbox sales by selling 4.5
million Game Cubes. Sony
had the benefit of healthy head start, and had shipped 32 million
PlayStation 2s. However, seven
years after the introduction of original PlayStation, it was being sold
in retail outlets for a mere $49. It
had a significant lead in terms of numbers of units in homes around the
world with a 43 per cent
share. Nintendo 64 was second with 30 per cent, followed by Sony
PlayStation 2 with 14 per cent.
The Xbox and GameCube each claimed about 3 per cent of the market, with
Sega Dreamcast
comprising the last and least market share of 4.7 per cent. Sega, once
an industry leader, announced in
2001 that it had decided to stop producing the Dreamcast and other
video game hardware
components. The company said it would develop games for its
competitors‟ consoles. Thus Sega
slashed the price of the Dreamcast to just $99 in an effort to
liquidate its piled up inventory of more
than 2 million units and immediately began developing 11 new games for
the Xbox, four for
PlayStation 2, and three for Nintendo‟s Game Boy Advance. As the prices
of video game consoles
have dropped, consoles and games have become the equivalent of razors
and blades. This means the
consoles generate little if any profit, but the games are a highly
profitable proposition. The profit
margins on games are highly attractive, affected to some degree by
whether the content is developed
by the console maker (such as Sony) or by an independent game publisher
(such as Electronic Arts).
Thus, the competition to develop appealing, or perhaps even addictive,
games may be even more
intense than the battle among players to produce the best console. In
particular, Nintendo, Sony, and
Microsoft want games that are exclusive to their own systems. With that
in mind, they not only rely
on large in-house staffs that design games but they also pay added fees
to independent publishers for
exclusive rights to new games. The sales of video games in 2001 rose to
43 per cent, compared to just
4 per cent increase for computer-based games. But computer game players
are believed to be a loyal
bunch, as they see many advantages in playing games on their computers
rather than consoles. For
one thing, they have a big advantage of having access to a mouse and a
keyboard that allow them to
play far more sophisticated games. In addition, they have been
utilizing the Internet for years to
receive game updates and modifications and to play each other over the
Web. Sony and Microsoft are
intent on capturing a portion of the online gaming opportunity. Even
Nintendo has decided to make
available a modem that will allow GameCube users to play online. As
prices continue to fall and
technology becomes increasingly more sophisticated, it remains to be
seen whether these three
companies can keep their names on the industry‟s list of “high
scorers”.
Questions:
1. Considering the concept of product life cycle, where would you put
video games in their life cycle?
2. Should video game companies continue to alter their products to
include other functions, such as
email?
EN
Uptron Electronics Limited CASE STUDY ANSWER PROVIDED MOB OR WHATSAPP
91 9924764558 OR 9447965521
Caselet 1
Uptron Electronics Limited, is a pioneering and internationally reputed
firm in the electronics
industry. It is one of the largest firm in the country. It attracted
employees from internationallyreputed
institute and industries by offering high salaries, perks, etc. It has
advertized for the position
of an electronic engineer recently. Nearly 150 candidates applied for
the jobMr. Sashidhar, an
electronics Engineering Graduate from the Indian Institute Of
Technology with 5 years working
experience in a medium sized electronics firm, was selected from among
the 130 candidates who took
tests and interview. The interview board recommended an enhancement in
his salary by Rs 5,000
more than his present salary at his request. Mr Sashidhar was very
happy to achieve this and he was
congratulated by a number of people including his previous employer for
his brilliant interview
performance, and wished him good luck.
Mr Sashidhar joined Uptyron Electronics Ltd., on 21st January, 2002,
with greater enthusiasm. He
also found his job to be quite comfortable and a challenging one and he
felt it was prestigious to work
with this company during the formative years of his career. He found
his superiors as well as
subordinates to be friendly and cooperative. But this climate did not
live long. After one year of his
service, he slowly learnt about a number of unpleasant stories about
the company, management, the
superior subordinate relations, rate of employee turnover, especially
at higher level But he decided to
stay on as he has promised several things to the management in the
interview. He wanted to please
and change the attitude of management through his diligent performance,
firm commitment and
dedication. He started maximizing his contributions and the management
got the impression that Mr.
Sashidhar had settled down and will remain in the company.
After some time, the superiors started riding rough- shod over Mr
Sashidhar. He was overloaded with
multifarious jobs. His freedom in deciding and executing was cut down.
He was ill treated on a
number of occasions before his subordinates. His colleagues also
started assigning their
responsibilities to Mr Sashidhar. Consequently there were imbalances in
his family life and
organizational life. But he seemed to be calm and contented. Management
felt that Mr Sashidhar had
the potential to bear with many more organizational responsibilities.
So the general manager was quite surprised to see the resignation
letter of Mr Sashidhar along with a
cheque equivalent to a month’s salary one fine morning on 18th January,
2004. The General Manager
failed to convince Mr Sashidhar to withdraw his resignation. The
General Manager relieved him on
25th January, 2004. The General Manager wanted to appoint a committee
to go into the matter
immediately, but dropped the idea later.
Questions:
1. What is wrong with the recruitment policy of the company?
2. Why did Mr. Sashidhar’s resignation surprise the General Manager?
Caselet 2
The contexts in which human resources are managed in today's
organizations are constantly,
changing. No longer do firms utilize one set of manufacturing
processes, employ a homogeneous
group of loyal employees for long periods of time or develop one set
way of structuring how work is
done and supervisory responsibility is assigned. Continuous changes in
who organizations employ
and what these employees do require HR practices and systems that are
well conceived and
effectively implemented to ensure high performance and continued
success.
1. Automated technologies nowadays require more technically trained
employees possessing
multifarious skills to repair, adjust or improve existing processes.
The firms can't expect these
employees (Gen X employees, possessing superior technical knowledge and
skills, whose attitudes
and perceptions toward work are significantly different from those of
their predecessor organizations:
like greater self control, less interest in job security; no
expectations of long term employment;
greater participation urge in work activities, demanding opportunities
for personal growth and
creativity) to stay on without attractive compensation packages and
novel reward schemes.
2. Technology driven companies are led by project teams, possessing
diverse skills, experience and
expertise. Flexible and dynamic organizational structures are needed to
take care of the expectations
of managers, technicians and analysts who combine their skills,
expertise and experience to meet
changing customer needs and competitive pressures.
3. Cost cutting efforts have led to the decimation of unwanted layers
in organizational hierarchy in
recent times. This, in turn, has brought in the problem of managing
plateau employees whose careers
seem to have been hit by the delivering process. Organizations are,
therefore, made to find alternative
career paths for such employees’
4. Both young and old workers, these days, have values and attitudes
that stress less loyalty to the
company and more loyalty to oneself and one's career than those shown
by employees in the past,
Organizations, therefore, have to devise appropriate HR policies and
strategies so as to prevent the
flight of talented employees
Question:-
1. Discuss that technological breakthrough has brought radical changes
in HRM.
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