Business Communication MBA XIBMS EXAM CASE STUDY ANSWER PROVIDED WHATSAPP 91 9924764558

XIBMS EXAM CASE STUDY ANSWER PROVIDED

CONTACT:

DR. PRASANTH MBA PH.D. DME MOBILE / WHATSAPP: +91 9924764558 OR +91 9447965521 EMAIL: prasanththampi1975@gmail.com WEBSITE: www.casestudyandprojectreports.com

SUB:  Business Communication

                                N. B. :    1)            Attempt any Four Case studies

                                                                2)            All case studies carry equal marks.

No: 1

A REPLY SENT TO AN ERRING CUSTOMER

Dear Sir,

Your letter of the 23rd, with a cheque for Rs. 25,000/- on account, is to hand.

We note what you say as to the difficulty you experience in collecting your outstanding accounts, but we are compelled to remark that we do not think you are treating us with the consideration we have a right to expect.

It is true that small remittances have been forwarded from time to time, but the debit balance against you has been steadily increasing during the past twelve months until it now stands at the considerable total of Rs. 85,000/-

Having regard to the many years during which you have been a customer of this house and the, generally speaking, satisfactory character of your account, we are reluctant to resort to harsh measures.

We must, however, insist that the existing balance should be cleared off by regular installments of say Rs. 10,000/- per month, the first installment to reach us by the 7th.  In the meantime you shall pay cash for all further goods; we are allowing you an extra 3% discount in lieu of credit.

We shall be glad to hear from you about this arrangement, as otherwise we shall have no alternative but definitely to close your account and place the matter in other hands.

Yours truly, 

Questions:

1.            Comment on the appropriateness of the sender’s tone to a customer.

2.            Point out the old – fashioned phrases and expressions.

3.            Rewrite the reply according to the principles of effective writing in business.

NO. 2

WAVE

(ATV : Advertising Radio FM Brand)

                A young, gorgeous woman is standing in front of her apartment window dancing to the 1970s tune, “All Right Now” by the one – hit band free.  Across the street a young man looks out of his apartment window and notices her.  He moves closer to the window, taking interest.  She cranks up the volume and continues dancing, looking out the window at the fellow, who smiles hopefully and waves meekly.  He holds up a bottle of wine and waves it, apparently inviting her over for a drink.  The lady waves back.  He kisses the bottle and excitedly says, “Yesss.”  Then, he gazes around his apartment and realizes that it is a mess. “No !” he exclaims in a worried tone of voice.  Frantically, he does his best to quickly clean up the place, stuffing papers under the sofa and putting old food back in the refrigerator, He slips on a black shirt, slicks  back his hair, sniffs his armpit, and lets out an excited , “Yeahhh!” in eager anticipation of entertaining the young lady.  He goes back to the window and sees the woman still dancing away.  He points to his watch, as if to say “ Come on.  It is getting late.”   As she just continues dancing, he looks confused.  Then a look of sudden insight appears on his face, “Five,” he says to himself.  He turns on his radio, and it too is playing “All Right Now.”  The man goes to his window and starts dancing as he watches his lady friend continue stepping.  “Five, yeah,” he says as he makes the “okay” sign with his thumb and forefinger.  He waves again.  Everyone in the apartment building is dancing by their window to “All Right Now.”  A super appears on the screen: “Are you on the right wavelength ?” 

Questions :

1.            What is non – verbal communication ?  Why do you suppose that             this         commercial relies primarily on non-verbal communication   between a          young man and a gorgeous woman ?  What types of       non – verbal communication are being used in this case ?

2.            Would any of the non-verbal communications in this spot (ad) not           work      well in another culture ?

3.            What role does music play in this spot ? Who is the target market ?

4.            Is the music at all distracting from the message ?

5.            How else are radio stations advertised on TV ?

NO. 3

ARVIND PANDEY CAUGHT IN BUSINESS WEB

                Arvind Pandey is a project manager at Al Saba Construction Company in Muscat.   It s a flourishing company with several construction projects in Muscat and abroad.  It is known for completing projects on time and with high quantity construction.  The company’s Chairman is a rich and a highly educated Omani.  A German engineer is Arvind’s Vice – President for urban and foreign construction projects.

                Three months ago, Al Saba had submitted a tender for a major construction project in Kuwait.  Its quotation was for $ 25 million.  In Kuwait the project was sponsored and announced by a US – based construction company called Fuma.  According to Al Saba, their bid of $ 25 million was modest but had included a high margin of profit.

                On 25 April, Arvind was asked to go to Kuwait to find out from the Fuma project manager the status of their construction proposal.  Arvind was delighted to know that Fuma had decided to give his company.  (Al Saba) the construction project work.  The project meant a lot of effort and money in planning the proposed construction in Kuwait.

                But before Arvind could tank the Fuma project manager, he was told that their bird should be raised to $ 28 million.  Arvind was surprised. He tried to convince the Fuma project manager that his (Arvind company had the bast reputation for doing construction work in a cost effective way .  However, he could always raise the bid by $ 3 million. But he wanted to know why he was required to do so.

                The Fuma manager’s reply was, “That’s the way we do our business in this part of the world, $ 1 million will go to our Managing Director in the US, I shall get $ 1 million, you, Mr. Pandey, will get $ 1 million in a specified account in Swiss Bank.

                Arvind asked, “ But why me ?”

                “ So that you never talk about it to any one.”  The Fuma Project Manager said.

                Arvind promised never to  leak it out to any one else.  And he tried to bargain to raise the bid by $ 2 million.  For. Arvind was familiar with the practice of “ pay – offs” involved in any such thing.  He thought it was against his loyalty to his company and his personal ethics. 

                Arvind promised the Fuma project manager that the bid would be raised to $ 28 million and fresh papers would be put in. He did not want to lose the job.

                He came back to Muscat and kept trying to figure out how he should place the whole thing before his German Vice President.  He obviously was at a loss. 

Questions :

1.            Analyse the reasons for Arvind Pandey’s dilemma.

2.            Does Arvind Pandey really face a dilemma ?

3.            In your view what should Arvind Pandey do ?  Should he disclose             it to his German Vice President ? 

               

NO. 4.

COMPANY ACCEPTING A CONTRACT

                A computer company was negotiating a very large order with a large size corporation.  They had a very good track record with this client.

                In this corporation, five different departments had pooled their requirements and budgets.  A committee was formed which had representation from all the departments.  The corporation wanted the equipment on a long lease and not outright purchase.  Further, they wanted all the hardware and software form one supplier.  This meant that there should be bought – out items from many suppliers since no one supplier could meet all the requirements of supply from its range of products.

                The corporation provided an exhaustive list of very difficult terms and conditions and pressurized the vendors to accept.  The computer company who was finally awarded the contract had agreed to overall terms that were fine as far as their own products were concerned but had also accepted the same terms for the brought – out items.  In this case, the bought – out items were to be imported through a letter of credit. The percentage of the bought – out items versus their own manufacture was also very high.  One of the terms accepted was that the “system” would be accepted over a period of 10 days after all the hardware had been linked up and software loaded.

                The computer company started facing trouble immediately on supply.  There were over 100 computers over a distance connected with one another with software on it.  For the acceptance tests, it had been agreed that the computer company would demonstrate as a pre-requisite the features they had claimed during technical discussions.

                Now, as you are aware, if a Hero Honda motorcycle claims 80 km to a litre of petrol, it is under ideal test conditions and if a motorcycle from the showroom were to be tried for this test before being accepted, it would never pass the test.  In corporation’s case, due to internal politics, the corporation persons from one department – who insisted on going exactly by the contract – did not sign acceptance since the “ system” could not meet the ideal test conditions.

                Further, in a classic case of, “ for want of a horse – shoe, payment for the horse was held up”, the computer company tried to get the system accepted and payment released.  The system was so large that at any point of time over a period of 10 days something small or the other always gave problems.  But the corporation took the stand that as far as they were concerned the contract clearly were concerned the contract clearly mentioned that the “system” had to be tested as a whole and not module by module.

Questions :

1.            Comment on the terms and conditions placed by the corporation.

2.            What factors influenced the computer company’s decision to    accept the           contract ?

3.            Was it a win – win agreement ?  Discuss ?

NO. 5

EMPLOYMENT INTERVIEW OF R P SINHA

                Mr. R P Sinha is a MBA.  He is being interviewed for the position of Management Trainee at a reputed company.  The selection committee’s is chaired by a lady Vice – President.  Mr. Sinha’s interview was as follows :

Committee : Good morning !

Mr. Sinha : Good morning to Sirs and Madam ! 

Chairperson : Please, sit down.

Mr. Sinha : Thank you (sits down at the edge of the chair, keeps his portfolio on the table)          

Q. Chairperson : You are Mr. R. P. Sinha

A Sinha : Yes, Madam.  This is how I am called.

Q. Chairperson : You have passed MBA with 1st Division.

A. Sinha : Yes, Madam.

Q. Chairperson : Why do you want to work in our organization ?

A Sinha : It is just like that.  Also, because it has good reputation.

Q. Member A : This job is considered to be quite stressful.  Do you think you can manage the stress involved.

A. Sinha : I think there is too much talk about stress these days.  Sir, would you tell clearly what you mean by stress ? I am very strong for any stress.

Q. Member B : What are your strengths ?

A. Sinha : Sir, who am I talk boastfully about my strengths.  You should tell me my strengths.

Q. Member C : What are your weaknesses ?

A. Sinha : I become angry very fast.

Q. Member A : Do you want to ask us any questions ?

A Sinha : Yes Sir !  What are the future chances for one who starts as a management trainee ?

                The member tells M. Sinha the typical career path for those starting as Management Trainee.  The Chairperson thanks Mr. Sinha.  Mr. Sinha promptly says in reply, “you are welcome,” and comes out.

Questions :

1.            Do you find Mr. Sinha’s responses to various questions effective ?          Give       reasons for your view on each answer given by Mr. Sinha.

2.            Rewrite the responses that you consider most effective to the above questions in a job interview.

3.            Mr. Sinha has observed the norm of respectful behaviour and   polite conversation.  But, do you think there is something          gone wrong in his case ?  Account for your general           impression of    Mr. Sinha’s performance at the interview.

NO. 6

                Comment on the form and structure of the         Report. 

                 

Xaviers Institute of Business Management Studies

                                                                                                                                                                MARKS : 80

                                                                                                                                                          

SUB :  BUSINESS ETHICS 

                                N. B. :    1)            Attempt any Four Cases

                                                                2)            All  cases carries equal marks.

No : 1

PUBLIUS

Although many people believe that the World Wide Web is anonymous and secure from censorship, the reality is very different.  Governments, law courts, and other officials who want to censor, examine, or trace a file of materials on the Web need merely go to the server (the online computer) where they think the file is stored.  Using their subpoena power, they can comb through the server’s drives to find the files they are looking for and the identify of the person who created the files.

                On Friday June 30, 2000, however, researches at AT & T Labs announced the creation of Publius, a software program that enables Web users to encrypt (translate into a secret code) their files – text, pictures, or music – break them up like the pieces of a jigsaw puzzle, and store the encrypted pieces on many different servers scattered all over the globe on the World Wide Web.  As a result, any one wanting to examine or censor the files or wanting to trace the original transaction that produced the file would find it impossible to succeed because they  would  have to examine the contents of dozens of different servers all over the world, and the files in the servers would be encrypted and fragmented in a way that would make the pieces impossible to identify without the help of the person who created the file.  A person authorized to retrieve the file, however, would look through a directory of his files posted on a Publius – affiliated website, and the Publius network would reassemble the file for him at his request.  Researchers published a description of Publius at www.cs.nyu.edu/waldman/publius.

                Although many people welcomed the way that the new software would enhance freedom of speech on the Web, many others were dismayed.  Bruce Taylor, an antipornography activist for the National Law Center for Children and Families, stated : “It’s nice to be anonymous, but who wants to be more anonymous than criminals, terrorists, child molesters, child pornographers, hackers and e-mail virus punks.”  Aviel Rubin and Lorrie Cranor, the creators of Publius, however, hoped that their program would help people in countries where freedom of speech was repressed and individuals were punished for speaking out.  The ideal user of Publius, they stated, was “a person in China observing abuses of human rights on a day – to – day basis.”

Questions :

1.            Analyze the ethics of marketing Publius using utilitarianism,        rights, justice, and caring.  In your judgement, is it ethical to             market Publius ?  Explain.

2.            Are the creators of Publius in any way morally responsible for any            criminal acts that criminals are able to carry out and keep secret       by relying on Publius ?  Is AT & T in any way morally         responsible        for these ?          Explain your answers.

3.            In your judgment, should governments allow the implementation           of Publius ?  Why or why not ?

NO. 2

A JAPANESE BRIBE

In July 1976, Kukeo Tanaka, former prime minister of Japan, was arrested on charges of taking bribes ($ 1.8 million) from Locjheed Aircraft Company to secure the purchase of several Lockheed jets.  Tanaka’s secretary and serial other government officials were arrested with him.  The Japanese public reacted with angry demands for a complete disclosure of Tanaka’s dealings. By the end of the year, they had ousted Tanaka’s successor, Takeo Miki, who was widely believed to have been trying to conceal Tanaka’s actions.

                In Holland that same year, Prince Bernhard, husband of Queen Juliana, resigned from 300 hundred positions he held in government, military, and private organizations.  The reason : He was alleged to have accepted $ 1.1 million in bribes from Lockheed in connection with the sale of 138 F – 104 Starfighter jets.

                In Italy, Giovani Leone, president in 1970, and Aldo Moro and Mariano Rumor, both prime ministers, were accused of accepting bribes from Lockheed in connection with the purchase of $ 100 million worth of aircraft in the late 1960s.  All were excluded from government.

                Scandinavia, South Africa, Turkey, Greece, and Nigeria were also among the 15 countries in which Lockheed admitted to having handed out payments and at least $ 202 million in commissions since 1970.

                Lockheed Aircraft’s involvement in the Japanese bribes was revealed to have begun in 1958 when Lockheed and Grumman Aircraft (also an American firm) were competing for a Japanese Air Force jet aircraft contract.  According to the testimony of Mr. William Findley, a partner in Arthur Young & Co. (auditors for Lockheed), in 1958 Lockheed engaged the services of Yoshio Kodama, an ultra right – wing war criminal and reputed underworld figure with strong political ties to officials in the ruling Liberal Democratic Party.  With Kodama’s help, Lockheed secured the Government contract.  Seventeen years later, it was revealed that the CIA had been informed at the time (by an American embassy employee) that Lockheed had made several bribes while negotiating the contract.

               

                In 1972, Lockheed again hired Kodama as a consultant to help secure the sale of its aircraft in Japan.  Lockheed was desperate to sell planes to any major Japanese airline because it was scrambling to recover from a series of financial disasters.   Cost overruns on a government contract had pushed Lockheed to the brink of bankruptcy in 1970.  Only through a controversial emergency government loan guarantee of  $ 250 million in 1971 did the company narrowly avert disaster.  Mr. A. Carl Kotchian, president of Lockheed from 1967 to 1975, was especially anxious to make the sales because the company had been unable to get as many contracts in other parts of the world as it had wanted.

                This bleak situation all but dictated a strong push for sales in the biggest                untapped market left-Japan.  This push, if successful, might well bring in    revenues upward of $ 400 million.  Such a cash inflow would go a long way                 towards helping to restore Lockheed’s fiscal health, and it would, of       course, save the jobs of thousands of firm’s employees. (Statement of Carl Kotchian)

                Kodama eventually succeeded in engineering a contract for Lockhed with All – Nippon Airways, even beating out McDonnell Douglas, which was actively competing with Lockheed for the same sales.  To ensure the sale, Kodama asked for and received from Lockheed about $9 million during the period from 1972 to 1975.  Much of money allegedly went to then – prime minister Kukeo Tanaka and other government officials, who were supposed to intercede with All – Nippon Airlines on behalf of Lockheed.

                According to Mr. Carl Kotchian, “ I knew from the beginning that this money was going to the office of the Prime Minister.”   He was, however, persuaded that, by paying the money, he was sure to get the contract from All-Nippon Airways.  The negotiations eventually netted over $1.3 billion in contracts for Lockheed.

                In addition to Kodama, Lockheed had also been advised by Toshiharu Okubo, an official of the private trading company, Marubeni, which acted as  Lockheed’s official representative.  Mr. A. Carl Kotchian later defended the payments, which he saw as one of many “Japanese business practices” that he had accepted on the advice of his local consultants.  The payments, the company was convinced, were in keeping with local “ business practices.”

                Further, as I’ve noted, such disbursements did not violate American laws.           I should also like to stress that my decision to make such payments              stemmed from my judgment that the (contracts) …… would provided    Lockheed workers with jobs and thus redound to the benefit of their         dependents, their communities, and stockholders of the corporation.  I    should like to emphasize that the payments to the so-called “ high          Japanese government officials” were all requested y Okubo and were not           brought up from my side.  When he told me “ five hundred million yen is necessary for such sales,” from a purely ethical and moral standpoint I   would have declined such a request.  However, in that case, I would most                 certainly have sacrificed commercial success….. (If) Lockheed had not remained competitive by the rules of the game as then played, we would                not have sold (our planes) ……… I knew that if we wanted our product to have a chance to win on its own merits, we had to follow the functioning              system.  (Statement of A. Carl Kotchian)

                In August, 1975, investigations by the U.S. government led Lockheed to admit it had made  $ 22 million in secret payoffs.  Subsequent senate investigations in February 1976 made Lockheed’s involvement with Japanese government officials public.  Japan subsequently canceled their billion dollar contract with Lockheed.

                In June 1979, Lockheed pleaded guilty to concealing the Japanese bribes from the government by falsely writing them off as “marketing costs”.  The Internal Revenue Code states, in part.  “ No deduction shall be allowed….. for any payment made, directly or indirectly, to an official or employee of any government …. If the payment constitutes an illegal bribe or kickback.’  Lockheed was not charged specifically with bribery because the U.S. law forbidding bribery was not enacted until 1978.  Lockheed pleaded guilty to four counts of fraud and four counts of making false statements to the government.  Mr. Kotchian was not indicated, but under pressure from the board of directors, he was forced to resign from Lockheed.  In Japan, Kodama was arrested along with Tanaka.

Questions :

1.            Fully explain the effects that payment like those which Lockheed             made to the Japanese  have on the structure of a market. 

2.            In your view, were Lockheed’s payments to the various Japanese            parties “bribes” or “extortions” ?  Explain your response fully.

3.            In your judgment, did Mr. A. Carl Kotchian act rightly from a        moral    point of view ?  (Your answer should take into account the               effects of the payments on the welfare of the societies affected, on      the right and duties of the various parties involved, and on the        distribution of benefits and         burdens among the groups involved.)    In your judgment, was Mr. Kotchian morally responsible for       his          actions ?  Was he, in the end, treated fairly ?

4.            In its October 27, 1980, issue, Business Week argued that every                corporation has a corporate culture – that is, values that set a          pattern for its employee’s activities, opinions and actions and that           are instilled in succeeding generations of employees (pp.148-60) Describe, if you can, the corporate culture of Lockheed and relate           that culture to Mr. Kotchian’s actions.  Describe some strategies        for changing that culture in ways that     might make foreign                 payments less likely.

NO. 3

THE NEW MARKET OPPORTUNITY

In 1994, anxious to show off the benefits of a communist regime, the government of China invited leading auto manufacturers from around the world to submit plans for a car designed to meet the needs of its massive population.  A wave of rising affluence had suddenly created a large middle class of Chinese families with enough money to buy and maintain a private automobile.  China was now eager to enter joint ventures with foreign companies to construct and operate automobile manufacturing plants inside China.  The plants would not only manufacture cars to supply China’s new internal market, but could also make cars that could be exported for sale abroad and would be sure to generate thousands of new jobs.  The Chinese government specified that the new car had to be priced at less than $5000, be small enough to suit families with a  single child (couples in China are prohibited from having more than one child), rugged enough to endure the poorly maintained roads that criss-crossed the nation, generate a minimum of  pollution, be composed of parts that were predominantly made within China, and be manufactured through joint – venture agreements between Chinese and foreign companies.  Experts anticipated that the plants manufacturing the new cars would use a minimum of automation and wuld instead rely on labor – intensive technologies that could capitalize on China’s cheap labor.  China saw the development of a new auto industry as a key step in its drive to industrialize its economy.

                The Chinese market was an irresistible opportunity for General Motors, Ford and Chrysler, as well as for the leading Japanese, European and Korean automobile companies.  With a population of 1.2 billion people and almost double digit annual economic growth rates, China estimated that in the next 40 years between 200 and 300 million of the new vehicles would be purchased by Chinese citizens.  Already cars had become a symbol of affluence for China’s new rising middle class, and a craze for cars had led more than 30 million Chinese to take driving lessons despite that the nation had only 10 million vehicles, most of them government – owned trucks.

                Environmentalists, however, were opposed to the auto manufactures’  eager rush to respond to the call of the Chinese government.  The world market for energy, particularly oil, they pointed out, was based in part on the fact that China, with its large population, was using relatively low levels of energy.  In 1994, the per-person consumption of oil in China was only one sixth of Japan’s and only a quarter of Taiwan’s.  If China were to reach even the modes per person consumption level of South Korea, China would be consuming twice the amount of oil the United States currently uses.  At the present time, the United States consumes one forth of the world’s total annual oil supplies, about half of which it must import from foreign countries.

                Critics pointed out that if China were to eventually have as many cars on the road per person as Germany does, the world would contain twice as many cars as it currently does.  No matter how “ pollution – free” the new car design was, the cumulative environmental effects of that many more automobiles in the world would be formidable.  Even clean cars would have to generate large amounts of carbon dioxide as they burned fuel, thus significantly worsening the greenhouse effect.  Engineers pointed out that it would be difficult, if not impossible, to build a clean car for under $5000.  Catalytic converters, which diminished pollution, alone cost over $200 per car to manufacture.  In addition, China’s oil refineries were designed to produce only gasoline with high levels of lead.  Upgrading all its refineries so they could make low-lead gasoline would require an investment China seemed unwilling to make.

                Some of the car companies were considering submitting plans for an electric car because China had immense coal reserves which it could burn to produce electricity.  This would diminish the need for China to rely on oil, which it would have to import.  However, China did not have sufficient coal burning electric plants nor an electrical power distribution system that could provide adequate electrical power to a large number of vehicles.  Building such an electrical power system also would require a huge investment that the Chinese government did not seem particularly interested in making.  Moreover, because coal is a fossil fuel, switching from an oil – based auto to a coal – based electric auto would still result in adding substantial quantities of carbon dioxide to the atmosphere.

                Many government officials were also worried by the political implications of having China become a major consumer of oil.  If China were to increase its oil consumption, would have to import all its oil from the same countries that other nations relied on, which would create large political, economic and military risks.  Although the United States imported some of its oil from Venezuela and Mexico, most of its imports came from the Middle East – an oil source that China would have to turn to also.  Rising demand for Middle East oil would push oil prices sharply upward, which would send major shocks reverberating through the economics of the United States and those of other nations that relied heavily on oil.  State Department officials worried that China would begin to trade weapons for oil with Iran or Iraq, heightening the risks of major military confrontations in the region.  If China were to become a major trading partner with Iran or Iraq, this would also create closer ties between these two major power centres of the non-Western world – a possibility that was also laden with risk.   Of course, China might also turn to tapping the large reserves of oil that were thought to be lying under Taiwan and other areas neighboring its coast.  However, this would bring it into competition with Japan, South Korea, Thailand, Singapore, Taiwan, the Phillippines, and other nations that were already drawing on these sources to supply their own booming economies.  Many of these nations, anticipating heightened tensions, were already puring money into their military forces, particularly their navies.  In short, because world supplies of oil were limited, increasing demand seemed likely to increase the potential for conflict.

Questions :

1.            In your judgment, is it wrong, from an ethical point of view, for                 the auto companies to submit plans for an automobile to China       ?              Explain your  answer ?

2.            Of the various approaches to environmental ethics outlined in this          chapter, which approach sheds most light on the ethical issues       raised by              this case ?  Explain your answer.

3.            Should the U.S. government intervene in any way in the              negotiations between U.S. auto companies and the Chinese                government ?  Explain.

NO. 4

WAGE DIFFERENCES AT ROBERT HALL

Robert Hall Clothes, Inc., owned a chain of retail stores that specialized in clothing for the family.  One of the Chain’s stores was located in Wilmington, Delaware.  The Robert Hall store in Wilmington had a department for men’s and boy’s clothing and another department for women’s and girl’s clothing.  The departments were physically separated and were staffed by different personnel : Only men were allowed to work in the men’s department and only women in the women’s department.  The personnel of the store were sexually segregated because years of experience had taught the store’s managers that, unless clerks and customers were of the same sex, the frequent physical contact between clerks and customers would embarrass both and would inhibit sales.

                The clothing in the men’s department was generally of a higher and more expensive quality than the clothing in the women’s department.  Competitive factors accounted for this : There were few other men’s stores in Wilmington so the store could stock expensive men’s clothes and still do a thriving business, whereas women’s clothing had to be lower priced to compete with the many other women’s stores in Wilmington.  Because of these differences in merchandise, the store’s profit margins on the men’s clothing was higher than its margins on the women’s clothing.  As a result, the men’s department consistently showed a larger dollar volume in gross sales and a greater gross profit, as is indicated in Table 7.11.

                Because of the differences shown in Table 7.11 women personnel brought in lower sales and profits per hour.  In fact male salespersons brought in substantially more than the females did (see Tables 7.12 and 7.13)

Men’s Department         Women’s Department

Year      

Sales

($)          Gross Profit

($)          Percent Profit

($)         

Sales

($)          Gross Profit

($)          Percent Profit

($)

1963       210,639 85,328   40.5        177,742 58,547   32.9

1964       178,867 73,608   41.2        142,788 44,612   31.2

1965       206,472 89,930   43.6        148,252 49,608   33.5

1966       217,765 97,447   44.7        166,479 55,463   33.5

1967       244,922 111,498 45.5        206,680 69,190   33.5

1968       263,663 123,681 46.9        230,156 79,846   34.7

1969       316,242 248,001 46.8        254,379 91,687   36.4

TABLE 7. 12

Year       Male Sales per Hour

($)          Female Sales Per Hour

($)          Excess M Over F (%)

1963

1964

1965

1966

1967

1968

1969       38.31

40.22

54.77

59.58

63.18

62.27

73.00     27.31

30.36

33.30

34.31

36.92

37.20

41.26     40

32

64

73

71

70

77

                As a result of these differences in the income produced by the two departments, the management of Robert Hall paid their male salespersons more than their female personnel.  Management learned after a Supreme Court ruiling in their favor in 1973 that it was entirely legal for them to do this if they wanted.  Wages in the store were set on the basis of profits per hour per department, with some slight adjustments upward to ensure wages were comparable and competitive to what other stores in the area were paying.  Over the years, Robert Hall set the wages given in Table 7.14.  Although the wage differences between males and females were substantial, they were not as large as the percentage differences between male and female sales and profits.  The management of Robert Hall argued that their female clerks were paid less because the commodities they sold could not bear the same selling costs that the commodities sold in the men’s department could bear.  However, the female clerks argued, the skills, sales efforts, and responsibilities required of male and female clerks were “substantially” the same.

TABLE 7. 13

Year       Male Gross Profits per Hour

($)          Female Gross Profits Per Hour

($)          Excess M Over F (%)

1963

1964

1965

1966

1967

1968

1969       15.52

16.55

23.85

26.66

28.74

29.21

34.16     9.00

9.49

11.14

1143

12.36

12.91

15.03     72

74

114

134

133

127

127

TABLE 7. 14

Year       Male Earnings per Hour

($)          Female Earnings Per Hour

($)          Excess M Over F (%)

1963

1964

1965

1966

1967

1968

1969       2.18

2.46

2.67

2.92

2.88

2.97

3.13        1.75

1.86

1.80

1.95

1.98

2.02

2.16        25

32

48

50

45

47

45

Questions :

1.            In your judgment, do the managers of the Robert Hall store have any    ethical obligations to change their salary policies ?  If you do not think they should change, then explain why they have an obligation       to change and describe the kinds of changes they should make.        Would it make any difference to your analysis if, instead of two                 departments in the same store, it involved two different Robert Hall      Stores, one for men and one for women ? Would it make a difference if     two stores  (one for men and one for women) owned by different          companies were involved ?  Explain each of your answers in terms of        the relevant ethical principles upon which you are relying.

2.            Suppose that there were very few males applying for clerks’ jobs in        Wilmington while females were flooding the clerking job market.                Would this competitive factor justify paying males more than females   ?  Why ?  Suppose that 95 percent of the women in Wilmington who            were applying for clerks’ jobs were single women with children who       were on welfare while 95 percent of the men were single with no           families to support.  Would this need factor justify paying females    more than males ?  Why ?  Suppose for the sake of argument that men                 were better at selling than women; would this justify different                salaries ?

3.            If you think the managers of the Robert Hall store should pay their          male and female clerks equal wages because they do “substantially the same work” then do you also think that ideally each worker’s             salary should be pegged to the work he or she individually performs        (such as by having each worker sell on commission) ?  Why ? Would a              commission system be preferable from a utilitarian point of view             considering the substantial book keeping expenses it would involve ?        From the point of view of justice ?  What does the phrase            substantially the same mean to you ?

NO. 5

NAPSTER’S REVOLUTION

Eighteen – year old Shawn “NAPSTER” Fanning, then a freshman at Northeastern University, dropped out of school and founded Napster Inc. (website was at w.w.w.napster.com) in San Mateo, California in May 1999.  Two months earlier, working in his college dorm room, he had developed both a website that let users locate other users who were willing to share whatever music files they had in MP3 format on the hard drives of their computers and a software program (called “Napster) that let users copy these music files from each other over the Internet.  When an early free version of the program he posted on Download.com received more than 300,000 hits and was named “Download of the week,” he decided to devote himself full time to developing his program and website.  The final version of his version of his program was officially released August 1999, and in May 2000, with more than 10 million people – most of them students on college campuses where Napster was especially popular – signed up at its website, Shawn’s company received $ 15 million of start – up funds from venture capital firms in California’s “Silicon Valley.”

                Fanning grew up in Brockton, Massauchettes, the son of a nurse’s aid and the stepson of a truck driver, in a family of four half-brothers and half-sisters. He got the nickname “Napster” during a basketball game when a player commented on his closely cropped sweaty head of hair.  Fanning had taught himself programming and had held several summer programming jobs.

                The company Shawn helped establish gave the Napster program away for free and charged users nothing to use its website to post the URL addresses where personal copies of music could be downloaded.  Nevertheless, a month later, Shawn found himself embroiled in a legal and ethical controversy when two record tables, two musicians (Metallica and Dr. Dre), and two industry trade groups of music companies (the National Music Publishers Association and the Recording Industry Association of America) filed suits against his young company claiming that Napster’s software was enabling other to make and distribute copies of copyrighted music that the musicians and companies owned.

               

                On June 12, the two industry trade groups filed preliminary injunctions against the company demanding that it remove all the songs owned by their member companies from Napster’s song directories.  According to the two groups, a survey of 2555 college students showed a correlation between Napster use and decreased CD purchases.  College students were outraged, especially fans of Metallica and Dr. Dre. Supporters of Napster argued that Napster allowed people to hear music that they then went out and purchased, so Napster actually helped the music companies.  Music sales had increased by over $500 million a year since Napster had started to operate, but the music companies claimed that this was a result of a booming economy.  Supporters of Napster also argued that individuals had a moral and legal right to lend other individuals a copy of the music on the CDs that they had purchased.  After all, they argued, the law explicitly stated that an individual could make a copy of copyrighted music he or she had purchased to hear the music on another player.  Moreover, according to Fanning, Napster was not doing anything illegal, and the company was not responsible if other people used its software and website to copy music in violation of copyright law any more than a car company was responsible when its autos were used by thieves to rob banks.  Much of the music that was downloaded using Napster, they claimed, was in the public domain (i.e.not legally owned by anyone) and was being legally copied.  The music companies countered that an individual had no right to give multiple copies of their music to others even if the individual had paid for the original CD.  If everyone was allowed to copy music without paying for it, they charged, eventually the music companies would stop producing music and musicians would stop creating it.  Other musicians claimed, however, that Napster and the Web gave them a way to put their music before millions of potential fans without having to beg the music companies to sponser them.

                In March 2000, the band Metallica hired consultant PDNet to electronically “evesdrop” on users who assumed they were anonymously accessing Napster’s website.  The following week the band’s lawyers handed Napster a list with the names of 300, 000 people that Metallica claimed had violated its copyrights using Napster’s service and that Metallica now wanted removed from Napster’s services.  Fanning complied with the demand of Metallica, whose drummer, Lars Ulrich, was one of his musical heros.  “If they want to steal our music,” said Ulrich, “ why don’t they just go down to Tower Records and grab them off the shelves ?”  Many young people protested that the bands should not be alienating their own fans in this way.  One fan posted a note on an MP3 chat room : “Give me a break !  I have been dropping 16 bucks an album for Metallica’s music since I was a teenager.  They made a fortune off us and now they accuse us of stealing from them.  What nerve !”  Howard King, a Los Angeles lawyer for Metallica and Dr. Dre, stated that “I don’t know Shawn Fanning but he seems to be a pretty good kid who came up with a sensational program.  But this sensational program has allowed people to take music without paying ………. Shawn probably had no idea of the legal ramifications of what he created.  I’m sure the though never crossed his mind.”

                In August 2000, a federal judge in San Francisco, Marilyn Patel, responded to the suit against Napster.  Judge Patel called Shawn’s company a “monster” and charged that the only purpose of Napster was to copy pirated music without paying for it.  The judge ordered Napster to remove all URLS from its website that referenced material that was copyrighted.

                Judge Patel’s ruling would have shut down the company’s website immediately.  But a few days later, an appeals court reversed Judge Patel and allowed the company to continue operating.  The reprieve was only temporary.  On Monday February 12, 2001, the Ninth Circuit Court of Appeals in San Francisco affirmed Judge Patel’s ruling.  The company attempted to circumvent the ruling by negotiating agreements with the music companies that would pay them certain annual fees in return for withdrawing the suit.

                Napster was not the only software that allowed individuals to swap files from

One personal computer to another over the Internet.  The software program named “Gnutella”  let individuals swap any kind of files – music, text, or visuals – over the Internet, but Gnutella did not operate a centralized index like the website that Napster had established.  Observers predicated that if Napster was put out of business, numerous underground websites would be created providing the kind of listing service that the company had earlier provided on its website.  Already a website named zeropaid.com provided free copies of Gnutella and many other Napster clones that users could download and use to share digital music files with each other.  Unlike Napster, these software products did not require a central website to connect users to each other, making it impossible for music companies to find and target single entity whom they could sue.  Many observers predicated that Napster was only the beginning of an upheaval that would revolutionize the music industry, forcing music companies to lower their prices, make their music easily available on the Internet, and completely change their business models. 

Questions :

1.            What are the legal issues involved in this case, and what are the               moral issues ? How are the two different kinds of issues different               from each other, and     how are they related to each other ?  Identify    and distinguish the “systemic, corporate and individual issues”          involved in this case. 

2.            In your judgment, was it morally wrong for Shawn Fanning to     develop and release his technology to the world given its possible              consequences ?  Was it                 morally wrong for an individual to use    Napster’s website and software to copy              for free the copy righted              music on another person’s hard drive ? If you believe it was                 wrong, then explain exactly why it was wrong.  If you believe it was        not         morally wrong, then how would you defend your views against t        he claim that such copying is stealing ?  Assume that it was not I                illegal for an individual to copy music using Napster.  Would there      be anything immoral with doing so ?  Explain ?

3.            Assume that it is morally wrong for a person to use Napster’s website   and        software to make a copy of copyrighted music.  Who, then,                 would be morally responsible for this person’s wrong doing ?     Would   only the person himself be           morally responsible ?  Was          Napster,              the company, morally responsible ? Wash shawn Fanning                morally                 responsible ?  Was any employee of Napster, the company,       morally responsible ?  Was the operator of the server or that portion            of the Internet that the person used morally responsible ?  What if the                 person did not know that the music was copyrighted or did not                 think that it was                illegal to copy copyrighted music ?

4.            Do the music companies share any of the moral responsibility for             what has              happened ?  How do you think technology like Napster is                 likely to  change the music industry ?  In your judgment, are these           changes ethically good or ethically bad ?

NO. 6

WORKING FOR ELI LILLY & COMPANY

Eli Lilly, the discoverer of Erythromycin, Darvon, Ceclor, and Prozac, is a major pharmaceutical company that sold $6.8 billion of drugs all over the world in 1995, giving it profits of $2.3 billion.  Headquartered in Indianpolis, Minnesota, the company also provides food, housing, and compensation to numerous homeless alcoholics who perform short-term work for the company.  The work these street people perform, however, is a bit unusual.

                Before approving the sale of a newly discovered drug, the U.S. Food and Drug Administration requires that the drug be put through three phases of tests after being tested on animals.  In phase I, the drug is taken by healthy human individuals to determine whether it has any dangerous side effects.  In Phase II, the drug is given to a small number of sick patients to determine dosage levels.  In Phase III, the drug is given to large numbers of sick patients by doctors and hospitals to determine its efficacy.

                Phase I testing is often the most difficult to carry out because most healthy individuals are reluctant to take a new and untested medication that is not intended to cure them of anything and that may have potentially crippling or deadly side effects.  To secure test subjects, companies must advertise widely and offer to pay them as such as $250 a day.  Eli Lilly, however, does not advertise as widely and pays its volunteers only $85 a day plus free from and board, the lowest in the industry.  One of the reasons that Lily’s rates are so low is because, as a long time nurse at the Lily Clinic is reported to have indicated, “ the majority  of its subjects are homeless alcoholics” recruited through word of mouth that is spread in soup kitchens, shelters, and prisons all over the United States.  Because they are alcoholics, they are fairly desperate for money.  Because they alcoholics, they are fairly desperate for money.  Because phase I testes can run several months, test subjects can make as $4500 – an enormous sum to people who are otherwise unemployable and surviving on handouts.  Interviews with several homeless men who have participated in Lily’s drug tests and who describe themselves as alcoholics who drink daily suggest that they are, by and large, quite happy to participate in an arrangement that provides them with “easy money”.  When asked, one homeless drinker hired to participate in a Phase I trail said he had no idea what kind of drug was being tested on him even though he had signed an informed – consent form.  An advantage for Lilly is that this kind of test subject is less likely to sue if severely injured by the drug.  The tests run on the homeless men, moreover, provide enormous benefits for society.  It has been suggested, in fact, that in light of the difficulty of securing test subjects, some tests might be delayed or not performed at all if it were not for the large pool of homeless men willing and eager to participate in the tests.

                The Federal Drug Administration requires that people who agree to participate in Phase I tests must give their “ informed consent” and must take a “ truly voluntary and a uncoerced decision.”  Some have questioned whether the desperate circumstances of alcoholic and homeless men allow them to make a truly voluntary and uncoerced decision when they agree to take an untested potentially dangerous drug for $ 85 a day.  Some doctors claim that alcoholics run a higher risk because they may carry diseases that are undetectable by standard blood screening and that make them vulnerable to being severely named by certain drugs.  One former test subject indicated in an interview that the drug he had been given in a test several years before had arrested his heart and “ they had to  put things on my chest to start my heart up again.”  The same thing happened to another subject in the same test.  Another man indicated that the drug he was given had made him unconscious for 2 days while others told of excruciating headaches.

                In earlier years, drug companies used prisoners to test drugs in Phase I tests.  During the 1970s, drug companies stopped using prisoners when critics complained that their poverty and the promise of early parole in effect were coercing the prisoners into  “Volunteering”.  When Lilly first turned to using homeless people during the 1980s, a doctor at the company is quoted as saying, “ We were constantly talking about whether we were exploiting the homeless.  But there were a lot of them who were willing to stay in the hospital for four weeks.”   Moreover, he adds.  “Providing them with a nice warm bed  and good medical care and sending them out drug – and alcohol – free was a positive thing to do.”

                A homeless alcoholic indicated in an interview that when the test he was participating in was completed, he would rent a cheap motel room where I’ll get a case of Miller and an escort girl have sex.  The girl will cost me $ 200 an hour.”  He estimated that it would take him about two weeks to spend the $ 4650 Lily would pay him for his services.  The manager at another cheap motel said that when test subjects completed their stints at Lily, they generally arrived at his motel with about $ 2500 in cash : “ The guinea pigs  go to the lounge next door, get drunk and buy the house a round.  The idea is, they can party for a couple of weeks and go back to Lily and do the next one.”

Questions :

1.            Discuss this case from the perspective of utilitarianism, rights, justice     and        caring.  What insight does virtue theory shed on the ethics of       the events          described in this case ?

2.            “ In a free enterprise society all adults should be allowed to make            their own            decisions about how they choose to earn their living.”        Discuss the statement   in light of the Lily case.

3.            In your judgment, is the policy of using homeless alcoholics for test         subjects               morally appropriate ?  Explain the reasons for your       judgment.  What does   your judgment imply about the moral    legitimacy of a free market in labor ?

4.            How should the managers of Lily handle this issue ? 

Xaviers Institute of Business Management Studies

                                                                               

                                                                                                                                                MARKS : 80

                                                                                                                                               

SUB:  INTERNATIONAL BUSINESS

N. B.:     1)            Attempt any four cases                                                             2)                All cases carries equal marks.

No: 1

BPO – BANE OR BOON ?

                Several MNCs are increasingly unbundling or vertical disintegrating their activities.  Put in simple language, they have begun outsourcing (also called business process outsourcing) activities formerly performed in-house and concentrating their energies on a few functions.  Outsourcing involves withdrawing from certain stages/activities and relaying on outside vendors to supply the needed products, support services, or functional activities.

                Take Infosys, its 250 engineers develop IT applications for BO/FA (Bank of America). Elsewhere, Infosys staffers process home loans for green point mortgage of Novato, California.  At Wipro, five radiologists interpret 30 CT scans a day for Massachusetts General Hospital.

                2500 college educated men and women are buzzing at midnight at Wipro Spectramind at Delhi. They are busy processing claims for a major US insurance company and providing help-desk support for a big US Internet service provider-all at a cost upto 60 percent lower than in the US. Seven Wipro Spectramind staff with Ph.Ds in molecular biology sift through scientific research for western pharmaceutical companies.

                Another activist in BOP is Evalueserve, headquarterd in Bermuda and having main operations near Delhi.  It also has a US subsidiary based in New York and a marketing office in Australia to cover the European market.  As Alok Aggarwal (co-founder and chairman) says, his company supplies a range of value-added services to clients that include a dozen Fortune 500 companies and seven global consulting firms, besides market research and venture capital firms.  Much of its work involves dealing with CEOs, CFOs, CTOs, CIOs, and other so called C-level executives.

                Evaluserve provides services like patent writing, evaluation and assessment of their commercialization potential for law firms and entrepreneurs.  Its market research services are aimed at top-rung financial service firms, to which it provides analysis of investment opportunities and business plans.  Another major offering is multilingual services.  Evalueserve trains and qualifies employees to communicate in Chinese, Spanish, German, Japanese and Italian, among other languages.  That skill set has opened market opportunities in Europe and elsewhere, especially with global corporations.

                ICICI infotech Services in Edison, New Jersey, is another BOP services provider that is offering marketing software products and diversifying into markets outside the US. The firm has been promoted by $2-billion ICICI Bank, a large financial institution in Mumbai that is listed on the New York Stock Exchange.

                In its first year after setting up shop in March 1999, ICICI infotech spent $33 million acquiring two information technology services firms in New Jersy-Object Experts and ivory Consulting – and command Systems in Connecticut.  These acquisitions were to help ICICI Infotech hit the ground in the US with a ready book of contracts.  But it soon found US companies increasingly outsourcing their requirements to offshore locations, instead of hiring foreign employees to work onsite at their offices.  The company found other native modes for growth.  It has started marketing its products in banking, insurance and enterprise resource planning among others. It has earmarket $10 million for its next US market offensive, which would go towards R & D and back-end infrastructure support, and creating new versions of its products to comply with US market requirements.  It also has a joint venture – Semantik Solutions GmbH in Berlin, Germany with the Fraunhofer Institute for Software and Systems Engineering, which is based in Berlin and Dortmund, Germany – Fraunhofer is a leading institute in applied research and development with 200 experts in software engineering and evolutionary information.

                A relatively late entrant to the US market , ICICI Infotech started out with plain vanilla IT services, including operating call centeres.  As the market for traditional IT services started wakening around mid-2000, ICICI Infotech repositioned itself as a “Solutions” firm offering both products and services.  Today , it offers bundied packages of products and services in corporate and retail banking and include data center and disaster recovery management and value chain management services.

                ICICI Infotech’s expansion into new overseas markets has paid off.  Its $50 million revenue for its latest financial year ending March 2003 has the US operations generating some $15 million, while the Middle East and Far East markets brought in another $9 million. It new boasts more than 700 customers in 30 countries, including Dow Jones, Glazo-Smithkline, Panasonic and American Insurance Group.

                The outsourcing industry is indeed growing form strength.  Though technical support and financial services have dominated India’s outsourcing industry, newer fields are emerging which are expected to boost the industry many times over.

                Outsourcing of human resource services or HR BPO is emerging as big opportunity for Indian BPOs with global market in this segment estimated at $40-60 billion per annum.  HR BPO comes to about 33 percent of the outsourcing revenue and India has immense potential as more than 80 percent of Fortune 1000 companies discuss offshore BOP as a way to cut costs and increase productivity.

                Another potential area is ITES/BOP industry.  According to A NASSCOM survey, the global ITES/BOP industry was valued at around $773 billion during 2002 and it is expected to grow at a compounded annual growth rate of nine percent during the period 2002 – 06, NASSCOM lists the major indicators of the high growth potential of ITES/BOP industry in India as the following.

                During 2003 – 04, The ITES/BPO segment is estimated to have achieved a 54 percent growth in revenues as compared to the previous year.  ITES exports accounted for $3.6 billion in revenues, up form $2.5 billion in  2002 – 03.  The ITES-BPO segment also proved to be a major opportunity for job seekers, creating employment for around 74,400 additional personnel in India during 2003 – 04.  The number of Indians working for this sector jumped to 245,500 by March 2004.  By the year 2008, the segment is expected to employ over 1.1 million Indians, according to studies conducted by NASSCOM and McKinsey & Co. Market research shows that in terms of job creation, the ITES-BOP industry is growing at over 50 per cent.

                Legal outsourcing sector is another area India can look for.  Legal transcription involves conversion of interviews with clients or witnesses by lawyers into documents which can be presented in courts.  It is no different from any other transcription work carried out in India.  The bottom-line here is again cheap service.  There is a strong reason why India can prove to be a big legal outsourcing Industry.

                India, like the US, is a common-law jurisdiction rooted in the British legal tradition. Indian legal training is conducted solely in English.  Appellate and Supreme Court proceedings in India take place exclusively in English.  Due to the time zone differences,  night time in the US is daytime in India which means that clients get 24 hour attention, and some projects can be completed overnight.  Small and mid – sized business offices can solve staff problems as the outsourced lawyers from India take on the time – consuming labour intensive legal research and writing projects.  Large law firms also can solve problems of overstaffing by using the on – call lawyers.

                Research firms such as Forrester Research, predict that by 2015 , more than 489,000 US lawyer jobs, nearly eight percent of the field, will shift abroad..

                Many more new avenues are opening up for BOP services providers.  Patent writing and evaluation services are markets set to boom.  Some 200.000 patent applications are written in the western world annually, making for a market size of between $5 billion and $7 billion.  Outsourcing patent writing service could significantly lower the cost of each patent application, now anywhere between $12,000 and $15,000 apiece-which would help expand  the market.

                Offshoring of equity research is another major growth area.  Translation services are also becoming a big Indian plus.  India produces some 3,000 graduates in German each year, which is more than that in Switzerland.

                Though going is good, the Indian BPO services providers cannot afford to be complacent.  Phillppines, Maxico and Hungary are emerging as potential offshore locations.  Likely competitor is Russia, although the absence of English speaking people there holds the country back. But the dark horse could be South Affrica and even China

                BOP is based on sound economic reasons.  Outsourcing helps gain cost advantage.  If an activity can be performed better or more cheaply by an outside supplier, why not outsource it ? Many PC makers, for example, have shifted from in – house assembly to utilizing contract assemblers to make their PCs.  CISCO outsources all productions and assembly of its routers and witching equipment to contract manufactures that operate 37 factories, all linked via the internet.

                Secondly, the activity (outsourced) is not crucial to the firm’s ability to gain sustainable competitive advantage and won’t hollow out its core competence, capabilities, or technical know how.  Outsourcing of maintenance services, date processing, accounting, and other administrative support activities to companies specializing in these services has become common place.  Thirdly, outsourcing reduces the company’s risk exposure to changing technology and / or changing buyer preferences.

                Fourthly, BPO streamlines company operations in ways that improve organizational flexibility, cut cycle time, speedup decision making and reduce coordination costs.  Finally, outsourcing allows a company to concentrate on its core business and do what it does best.  Are Indian companies listening ? If they listen, BPO is a boon to them and not a bane.

Questions:

1.            Which of the theories of international trade can help Indian services providers gain competitive edge over their competitors?

2.            Pick up some Indian services providers.  With the help of Michael Porter’s diamond, analyze their strengths and weaknesses as active players in BPO.

3.            Compare this case with the case given at the beginning of this chapter.  What similarities and dissimilarities do you notice? Your analysis should be based on the theories explained.

No: 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 $15 billion and per capita income in recent years has been around $4,3000.  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 bank 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 nationalized 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 allowed to operate his business as before.  Since then, he has managed to remain profitable, but the biggest problem is that his ships are getting old and he needs an influx of capital of make repairs and add new technology.  As he explained it to the new York banker. “Fishing is no longer just an 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’s operation, the large multinational bank believes that the loan is justified.  The financial institution is concerned, 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 fleet the way  he has over the last decade, the loan could be repaid within seven years.

                Right now, the bank is deciding on the specific terms of the agreement.  Once theses 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 realizes 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 have 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.            What type of political risks does this fishing company need to evaluate? Identify and describe them.

3.            What types of integrative and protective and defensive techniques can the bank use?

4.            Would the bank be better off negotiating the loan in New York or in Lima ? Why?

No: 3

RED BECOMING THICKER

The Backdrop

There seems to be no end to the troubles of the coloured – water giant Coca Cola. The cola giant had entered India decades back but left the country in the late 1970s.  It staged a comeback in the early 1990s through the acquisitions route. The professional management style of Coca Cola did not jell with the local bottlers. Four CEOs were changed in a span of seven years.  Coke could not capitalize on the popularity of Thums Up.  Its arch rival Pepsi is well ahead and has been able to penetrate deep into the Indian market.  Red in the balance sheet of Coke is becoming thicker and industry observers are of the opinion that it would take at least two decades more before Coke could think of making profits in India.

The Story

It was in the early 1990s that India started liberalizing her economy.  Seizing the opportunity, Coca Cola wanted to stage a comeback in India.  It chose Ramesh Chauhan of Parle for entry into the market.  Coke paid $100 million to Chauhan and acquired his well established brands Thums Up, Goldspot and Limca. Coke also bagged 56 bottlers of Chauhan as a part of the deal.  Chauhan was made consultant and was also given the first right of refusal to any large size bottling plants and bottling contracts, the former in the Pune – Bangalore belt and the latter in the Delhi and Mumbai areas.

                Jayadeva Raja, the flamboyant management expert was made the first CEO of Coke India.  It did not take much time for him to realize that Coke had inherited several weaknesses from Chauhan along with the brands and bottlers. Many bottling plants were small in capacity (200 bottlers per minute as against the world standard of 1600) and used obsolete technology.  The bottlers were in no mood to increase their capacities, nor were they willing to upgrade the trucks used for transporting the bottle. Bottlers were more used to the paternalistic approach of Chauhan and the new professional management styles of Coke did not go down well with them.  Chauhan also felt that he was alienated and was even suspected to be supplying concentrate unofficially to the bottlers.

                Raja was replaced by the hard – nosed Richard Niholas in 1995. The first thing Nicholas did was to give an ultimatum to the bottlers to expand their plants or sell out. Coke also demanded equity stakes in many of the bottling plants.  The bottlers had their own difficulties as well.  They were running on low profit margins.  Nor was Coke willing to finance the bottlers on soft terms.  The ultimatum backfired. Many bottlers switched their loyalty and went to Pepsi.  Chauhan allegedly supported the bottlers, of course, from the sidelines.

                Coke thought it had staged a coup over Pepsi when it (Coke) clamed the status of official drink for the 1996 Cricket World Cup tournament.  Pepsi took on Coke mightily with the famous jingle “Nothing official about it”. Coke could have capitalized on the sporty image of Thums Up to counter the campaign, but instead simply caved in.

                Donald Short replaced Nicholas as CEO in 1997.  Armed with heavy financial powers, Short bought out 38 bottlers for about $700 million.  This worked out to about Rs 7 per case, but the cost – effective figure was Rs 3 per case. Short also invested heavily in manpower.  By 1997, Coke’s workforce increased to 300.  Three years later, the parent company admitted that investment in India was a big mistake.

                It is not in the culture of Coke to admit failure.  It has decided to fight back.  Coke could not only sustain the loss, it could even spend more money on Indian operations.  It hiked the ad budget and appointed Chaitra Leo Burnett as its ad agency.  During 1998 – 99, Coke’s ad spend was almost three times that of Pepsi.

                Coke is taking a look at its human resources and is taking initiatives to re – orient the culture and inject an element of decentralization along with empowerment.  Each bottling plant is expected to meet predetermined profit, market share, and sales volumes.  For newly hired management trainees, a clearly defined career path has been drawn to enable them to become profit centre heads shortly after completion of their probation. Such a decentralized approach is something of a novelty in the Coke culture worldwide.

                But Alezander “Von Behr, who replaced Short as Chef of Indian operations, reiterated Coke’s commitment to decentralization and local responsiveness.  Coke has divided India into six regions, each with a business head.  Change in the organization structure has disappointed many employees, some of whom even quit the company.

                Coke started cutting down its costs.  Executives have been asked to shift from farm houses to smaller houses and rentals of Gurgaon headquarters have been renegotiated.  Discount rates have been standardized and information systems are being upgraded to enable the Indian headquarters to access online financial status of its outposts down to the depot level.

                Coke has great hopes in Indian as the country has a huge population and the current per capita consumption of beverages is just four bottles a year.

                Right now, the parent company (head – quartered in the US) has bottle full of problems.  The recently appointed CEO-E Neville Isdell needs to struggle to do the things that once made the Cola Company great.  The problems include –

Meddling Board

                Coke’s star- studded group of directors, many of whom date back to the Goizueta era, has built a reputation for meddling.

Moribund Marketing

                Once world class critics say that today the soda giant has become too conservative, with ads that don’t resonate with the teenagers and young adults that made up its most important audience.

Lack of Innovation

                In the US market, Coke hasn’t created a best – selling new soda since Diet Coke in 1982.  In recent years Coke has been outbid by rival Pepsi Co for faster growing noncarb beverages like SoBe Gatorade.

Friction with Bottlers

                Over the past decade, Coke has often made its profit at the expenses of bottlers, pushing aggressive price hikes on the concentrate it sells them.  But key bottlers are now fighting back with sharp increases in the price of coke at retail.

International Worries

                Coke desperately needs more international growth to offset its flagging US business, but while some markets like Japan remain lucrative, in the large German market Coke has problems so far as bottling contracts go.

                When its own house is not in order in the large country, will the company be able to focus enough on the Indian market?

Questions:

1.            Why is that Coke has not been able to make profit in its Indian operations?        

2.            Do you think that Coke should continue to stay in India? If yes, why?

3.            What cultural adaptations would you suggest to the US expatriate managers regarding their management style?

4.            Using the Hofstede and the value orientations cultural models, how can you explain some of the cultural differences noted in this case?

NO. 4

THE ABB PBS JOINT VENTURE IN OPERATION

                ABB Prvni Brnenska Stojirna Brno, Ltd. (ABB-PBS), Czechoslovakia was a joint venture in which ABB has a 67 per cent stake and PBS a.s. has a 33 per cent stake.  This PBS share was determined nominally by the value of the land, plant and equipment, employees and goodwill, ABB contributed cash and specified technologies and assumed some of the debt of PBS.  The new company started operations on April 15, 1993.

                Business for the joint venture in its first two full years was good in most aspects.  Orders received in 1994, the first full year of the joint venture’s operation, were higher than ever in the history of PBS.  Orders received in 1995 were 2½ times those in 1994.  The company was profitable in 1995 and ahead of 1994s results with a rate of return on assets of 2.3 per cent and a rate of return on sales of 4.5 per cent.

                The 1995 results showed substantial progress towards meeting the joint venture’s strategic goals adopted in 1994 as part of a five year plan.  One of the goals was that exports should account for half of the total orders by 1999.  (Exports had accounted for more than a quarter of the PBS business before 1989, but most of this business disappeared when the Soviet Union Collapsed).  In 1995 exports increased as a share of total orders to 28 per cent, up from 16 per cent the year before.

                The external service business, organized and functioning as a separate business for the first time in 1995, did not meet expectations.  It accounted for five per cent of all orders and revenues in 1995, below the 10 per cent goal set for it.  The retrofitting business, which was expected to be a major part of the service business, was disappointing for ABB-PBS, partly because many other small companies began to provide this service in 1994, including some started by former PBS employees who took their knowledge of PBS-built power plants with them.  However, ABB-PBS managers hoped that as the company introduced new technologies, these former employees would gradually lose their ability to perform these services, and the retrofit and repair service business, would return to ABB-PBS.

                ABB-PBS dominated the Czech boiler business with 70 per cent of the Czech market in 1995, but managers expected this share to go down in the future as new domestic and foreign competitors emerged.  Furthermore, the west European boiler market was actually declining because environmental laws caused a surge of retrofitting to occur in the mid -1980 s, leaving less business in the 1990 s.  Accordingly ABB-PBS boiler orders were flat in 1995.

                Top managers at ABB-PBS regarded business results to date as respectable, but they were not satisfied with the company’s performance.  Cash flow was not as good as expected.  Cost reduction had to go further.  The more we succeed, the more we see our shortcomings” said one official.

Restructuring

                The first round of restructuring was largely completed in 1995, the last year of the three-year restructuring plan.  Plan logistics, information systems, and other physical capital improvements were in place.  The restricting included :

•             Renovating and reconstructing workshops and engineering facilities.

•             Achieving ISO 9001 for all four ABB-PBS divisions. (awarded in 1995)

•             Transfer of technology from ABB (this was an ongoing project)

•             Intallation of an information system.

•             Management training, especially in total quality assurance and English language.

•             Implementing a project management approach. 

A notable achievement of importance of top management in 1995 was a 50 per cent increase in labour productivity, measured as value added per payroll crown.  However, in the future ABB-PBS expected its wage rates to go up faster than west European wage rates (Czech wages were increasing about 15 per cent per year) so it would be difficult to maintain the ABB-PBS unit cost advantage over west European unit cost.

The Technology Role for ABB-PBS

                The joint venture was expected from the beginning to play an important role in technology development for part of ABB’s power generation business worldwide.  PBS a.s. had engineering capability in coal – fired steam boilers, and that capability was expected to be especially useful to ABB as more countries became concerned about air quality.  (When asked if PBS really did have leading technology here, a boiler engineering manager remarked, “Of course we do.  We burn so much dirty coal in this country; we have to have better technology”)

                However, the envisioned technology leadership role for ABB-PBS had not been realized by mid – 1996.  Richard Kuba, the ABB-PBS managing director, realized the slowness with which the technology role was being fulfilled, and he offered his interpretation of events.

                “ABB did not promise to make the joint venture its steam technology leader. The main point we wanted to achieve in the joint venture agreement was for ABB-PBS to be recognized as a full-fledged company, not just a factory.  We were slowed down on our technology plans because we had a problem keeping our good, young engineers. The annual employee turnover rate for companies in the Czech Republic is 15 or 20 per cent, and the unemployment rate is zero.  Our engineers have many other good entrepreneurial opportunities.  Now we’ve begun to stabilize our engineering workforce.  The restructing helped.  We have better equipment and a cleaner and safer work environment.  We also had another problem which is a good problem to have.  The domestic power plant business turned out to be better than we expected, so just meeting the needs of our regular customers forced some postponement of new technology initiatives.”

                ABB-PBS had benefited technologically from its relationship with ABB.  One example was the development of a new steam turbine line.  This project was a cooperative effort among ABB-PBS and two other ABB companies, one in Sweden and one in Germany.  Nevertheless, technology transfer was not the most important early benefit of ABB relationship.  Rather, one of the most important gains was the opportunity to benchmark the joint venture’s performance against other established western ABB companies on variables such as productivity, inventory and receivables.

Questions:

1.            Where does the joint venture meet the needs of both the partners?  Where does it fall short? 

2.            Why had ABB-PBS failed to realize its technology leadership?

3.            What lessons one can draw from this incident for better management of technology transfers? 

NO. 5.

CHINESE EVOLVING ACCOUNTING SYSTEM

                Attracted by its rapid transformation from a socialist planned economy into a

market economy, economic annual growth rate of around 12 per cent, and a population in excess of 1.2 billion, Western firms over the past 10 years have favored China as a site for foreign direct investment.  Most see China as an emerging economic superpower, with an economy that will be as large as that of Japan by 2000 and that of the US before 2010, if current growth projections hold true.

                The Chinese government sees foreign direct investment as a primary engine of China’s economic growth.  To encourage such investment, the government has offered generous tax incentives to foreign firms that invest in China, either on their own or in a joint venture with a local enterprise.  These tax incentives include a two – year exemption from corporate income tax following an investment, plus a further three years during which taxes are paid at only 50 per cent of the standard tax rate.  Such incentives when coupled with the promise of China’s vast internal market have made the country a prime site for investment by Western firms.  However, once established in China, many Western firms find themselves struggling to comply with the complex and often obtuse nature of China’s rapidly evolving accounting system.

                Accounting in China has traditionally been rooted in information gathering and compliance reporting designed to measure the government’s production and tax goals.  The Chinese system was based on the old Soviet system, which had little to do with profit or accounting systems created to report financial positions or the results of foreign operations.

                Although the system is changing rapidly, many problems associated with the old system still remain.

                One problem for investors is a severe shortage of accountants, financial managers, and auditors in China, especially those experienced with market economy transactions and international accounting practices.  As of 1995, there were only 25,000 accountants in china, far short of the hundreds of thousands that will be needed if China continues on its path towards becoming a market economy.  Chinese enterprises, including equity and cooperative joint ventures with foreign firms, must be audited by Chinese accounting firms, which are regulated by the state.  Traditionally, many experienced auditors have audited only state-owned enterprises, working through the local province or city authorities and the state audit bureau to report to the government entity overseeing the audited firm.  In response to the shortage of accountants schooled in the principles of private sector accounting, several large international auditing firms have established joint ventures with emerging Chinese accounting and auditing firms to bridge the growing need for international accounting, tax and securities expertise.

                A further problem concerns the somewhat halting evolution of China’s emerging accounting standards.  Current thinking is that China won’t simply adopt the international accounting standards specified by the IASC, nor will it use the generally accepted accounting principles of any particular country as its mode.  Rather, accounting standards in China are expected to evolve in a rather piecemeal fashion, with the Chinese adopting a few standards as they are studied and deemed appropriate for Chinese circumstances.

                In the meantime, current Chinese accounting principles present difficult problems for Western firms.  For example, the former Chinese accounting system didn’t need to accrue unrealized losses.  In an economy where shortages were the norm, if a state-owned company didn’t sell its inventory right away, it could store it and use it for some other purpose later.  Similarly, accounting principles assumed the state always paid its debts – eventually.  Thus, Chinese enterprises don’t generally provide for lower-of-cost or market inventory adjustments or the creation of allowance for bad debts, both of which are standard practices in the West.

Questions:

1.            What factors have shaped the accounting system currently in use in China?

2.            What problem does the accounting system, currently in sue in China, present to foreign investors in joint ventures with Chinese companies?

3.            If the evolving Chinese system does not adhere to IASC standards, but instead to standards that the Chinese governments deem appropriate to China’s “Special situation”, how might this affect foreign firms with operations in China ?

NO. 6

UNFAIR PROTECTION OR VALID DEFENSE ?

                “Mexico Widens Anti – dumping Measure …………. Steel at the Core of US-Japan Trade Tensions …. Competitors in Other Countries Are Destroying an American Success Story … It Must Be Stopped”, scream headlines around the world.

                International trade theories argue that nations should open their doors to trade.  Conventional free trade wisdom says that by trading with others, a country can offer its citizens a greater volume and selection of goods at cheaper prices than it could in the absence of it.  Nevertheless, truly free trade still does not exist because national governments intervene.  Despite the efforts of the World Trade Organization (WTO) and smaller groups of nations, governments seem to be crying foul in the trade game now more than ever before.

                We see efforts at protectionism in the rising trend in governments charging foreign producers for “dumping” their goods on world markets.  Worldwide, the number of antidumping cases that were initiated stood at about 150 in 1995, 225 in 1996, 230 in 1997 , and 300 in 1998.

                There is no shortage of similar examples.  The Untied States charges Brazil, Japan, and Russia with dumping their products in the US market as a way out of tough economic times.  The US steel industry wants the government to slap a 200 per cent tariff on certain types of steel.  But car markers in the United States are not complaining, and General Motors even spoke out against the antidumping charge – as it is enjoying the benefits of law – cost steel for use in its auto product ion.  Canadian steel makers followed the lead of the United States and are pushing for antidumping actions against four nations.

                Emerging markets, too, are jumping into the fray.  Mexico recently expanded coverage of its Automatic Import Advice System.  The system requires importers (from a select list of countries) to notify Mexican officials of the amount and price of a shipment ten days prior to its expected arrival in Mexico.  The ten-day notice gives domestic producers advance warning of incoming low – priced products so they can complain of dumping before the products clear customs and enter the marketplace. India is also getting onboard by setting up a new government agency to handle antidumping cases.  Even Argentina, China, Indonesia, South Africa, South Korea, and Thailand are using this recently – popularized tool of protectionism.

                Why is dumping on the rise in the first place? The WTO has made major inroads on the use of tariffs, slashing tem across almost every product category in recent years. But the WTO does not have the authority to punish companies, but only governments.  Thus, the WTO cannot pass judgments against individual companies that are dumping products in other markets.  It can only pass rulings against the government of the country that imposes an antidumping duty.  But the WTO allows countries to retaliate against nations whose producers are suspected of  dumping when it can be shown that : (1) the alleged offenders are significantly hurting domestic producers, and (2) the export price is lower than the cost of production or lower than the home – market price.

                Supporters of antidumping tariffs claim that they prevent dumpers from undercutting the prices charged by producers in a target market and driving them out of business.  Another claim in support of antidumping is that it is an excellent way of retaining some protection against potential dangers of totally free trade.  Detractors of antidumping tariffs charge that once such tariffs are imposed they are rarely removed.  They also claim that it costs companies and governments a great deal of time and money to file and argue their cases.  It is also argued that the fear of being charged with dumping causes international competitors to keep their prices higher in a target market than would other wise be the case.  This would allow domestic companies to charge higher prices and not lose market share – forcing consumers to pay more for their goods.

Questions

1.            “You can’t tell consumers that the low price they are paying for a particular fax machine or automobile is somehow unfair.  They’re not concerned with the profits of companies. To them, it’s just a great bargain and they want it to continue.” Do you agree with this statement? Do you think that people from different cultures would respond differently to this statement? Explain your answers.

2.            As we’ve seen, the WTO cannot currently get involved in punishing individual companies for dumping – its actions can only be directed toward governments of countries.  Do you think this is a wise policy ? Why or why not? Why do you think the WTO was not given the authority to charge individual companies with dumping? Explain.

3.            Identify a recent antidumping case that was brought before the WTO. Locate as many articles in the press as you can that discuss the case. Identify the nations, products (s), and potential punitive measures involved. Supposing you were part of the WTO’s Dispute Settlement Body, would you vote in favor of the measures taken by the retailing nation? Why or why not?

Xaviers Institute of Business Management Studies

                                                                                                                                                MARKS : 80

                                                                                                                                                          

SUB:  Marketing Management 

                                N. B. :    1)            Attempt all Four Case studies

                                                                2)            All questions carry equal marks.

Case study 1

Case Study on Segmentation, Targeting & Positioning

Profiles Group is a leading interior decorator and designer in the country. Mr. Neerav Gupta, one of the partners in the group has invested a good amount of money in the business. The other two partners namely Mr. Pratham Gupta who is a distant cousin of Neerav and Mr. Dev Suri are mainly into managing the firm’s country wide operations. Mr. Stanley Pereira, who is more of a sleeping partner, looks after the administrative and financial aspects of the firm.

Profiles Group has around 44 service centers in the country including state capitals and several developing cities. Since the firm’s inception in 1998, its progress has been unstoppable. The clients include many reputed companies, hotel chains, popular celebrities and even hospitals and commercial banks.

A brief background of the Partners:

Neerav Gupta had a family owned business that was into manufacturing wooden furniture but Neerav‟s interest was more into decorating. So, after completing a Master’s course in interior designing from a reputed college abroad, he decided to start his own interior design services. Meanwhile, the furniture manufacturing business was handed over to Pratham Gupta due to property and family settlement issues. But, Pratham decided to join Neerav and they both started a partnership firm.

Dev Suri, a friend of Neerav who had been living abroad, sold out his real estate business and had decided to settle on the Indian soil itself. He offered help by providing additional capital and his knowledge of real estates did help the firm although in a small way. Stanley Pereira, an experienced teacher and consultant, had worked previously in leading interior designing colleges and was instrumental in making required changes in syllabus structure and interior designing courses. He has also written many books and articles on the topic. He had retired early due to family commitments but landed up in Profiles Group as a Partner through mutual contacts.

The conversation:

All the four partners are comfortably sitting face to face on a peach colored cushioned sofa which is situated near the window corner inside Neerav’s well-structured office.

Pratham Gupta feels that since their firm has invested large funds, they must enter into more market segments especially the smaller ones. And, regarding this issue, a professional conversation takes place among the partners. The talks are as follows:

Pratham: “So, what do you think about expanding our market segments to smaller more ordinary markets?”

Stanley: “What are you exactly trying to say, Pratham? Will you explain it?”

Pratham: “Listen guys, right now, we have 44 centers and competent people to work under us, but when we see our customer base, it looks small and limited. What I mean to say is that we also need to have those individual household customers who are looking for service expertise in this field. Most household customers don’t get the necessary information as to how to go about the interiors or how to decorate their home/offices etc.”

Neerav: “I agree with your points Pratham, but don‟t you think if we have to reach the smaller segments of the market, we need a different approach to cater to their needs. We would have to advertise and communicate to these segments in a customised way. This will increase the promotion budget and our focus on the existing customers may be compromised.” Dev: “I think we need to get a balance here. Pratham‟s points are valid enough and it will make Profiles group more productive. If need be, we may have to take help of a service consultancy in order to penetrate deeper markets.”

Stanley: “Okay... so, even if we allocate these segments, we need to target them in a way where we will know the immediate impact of these segments. We have to position in such manner that we get this customer base to keep moving towards us... however, the problem lies in the demand for our product in these segments!”

Pratham: “What is that problem you are talking about, Stanley?”

Stanley: “I will tell the problem, we know our product... but these individual customer segments will see our product as a one time purchase... Interiors and designing is done by a household customer at one point... very rarely, he will seek for a change or improvement. So, is it acceptable that we cater to their one time need and then let go?”

Neerav: “I do understand that point... But, that’s always the case in our business. Interior decorations and designs are usually considered one-time expenditure by household customers.... and as a matter of fact, that has not affected the way we do our business or on our returns.”

Pratham: “See, even otherwise it should not affect our firm because individual customer segments are willing to pay or spend on interiors. If they need a good, comfortable home along with a neat set of furniture then why don’t we cater to that need, even if it’s a one time demand from a particular customer? This is exactly what I meant earlier when I said, given the expertise we have, why don’t we use it to expand our customer base? Of course, we may have to develop suitable pricing strategies, promotion strategies for these market segments which is according to me, not a big thing to do.”

Dev: “Let’s first consult with our marketing hero and ask their opinion or suggestions as well”

Dev takes out his cell phone to dial Mr. Sunil’s number and he immediately gets the connection. Sunil is the head of the marketing section and he is very efficient in his job. He also has an acceptable humour quotient. Dev asks Sunil to come over to Neerav’s office.

Sunil enters the office:

Sunil: “What’s up, Bosses?”

Dev gives a brief explanation to Sunil about the potential market.

Sunil: “that’s a welcome sign actually... we have the necessary resources and we are available to any customer at any given point... So, I think it‟s a good idea that we update our customer profiles also... Only thing is we have to make sure we are targeting and positioning our customer segment in the way they feel comfortable to approach us...”

Pratham: “Nicely said Sunil... You are our man in this task.... We rely on you to make our markets bigger and customer segments broader...”

Sunil: “Always thinking in the interests of Profiles Group, Mr. Gupta... Not to worry... You tell me the confirmed plans and leave the execution on me...”

Neerav: “Well, what can I say? If we are sure about managing the newer segments which is existing out there, then our work is just to target them and position our product as per the given requirements”

Dev: “There is one important suggestion I would like to present here.... We need to ensure that we properly differentiate our existing customers from the newer ones so that we are not overriding one another or our customers don’t feel compromised at any point.”

Stanley: “That’s a really valuable suggestion, Dev... I completely agree with this point”

Sunil: “Me too... Mr. Suri has stated an absolute theory... But, it’s not that we can’t take the benefits from the two and use it for our purpose... Somewhere, we can link the newer segments with the existing ones and gradually Profiles Group will mean the same to every one. That is however applicable in the long term... For now, we need to attend our customer base on a one-to-one basis... So, we do it slow and steady”

Neerav: “Sunil, I don’t understand, but whenever you speak you visualize the big picture as well... I admire your quality and also that you are very loyal to Profiles Group”

Sunil: “Anytime Mr. Gupta, I am at your service....Just give the command and it will be done”

All of them laugh at that comment and decide to have an official meeting regarding the Segmenting, Targeting and Positioning strategies for the potential market. Within a month, the scheduled meeting is done with the involvement of key people and various points are noted down for implementation.

The marketing team after a brainstorming session also comes up with a collective idea about introducing Re-decorating and re-designing to be offered as a part of Profile’s group’s services. This meant that clients or customers can think about re-designing or re-decorating their homes/offices with the already available possessions and existing furniture. This also meant less cost to the clients. This idea was taken up seriously and plans to implement such services were already underway.

The Progress:

The next six months in the Profiles Group has made everyone busy with different tasks and agendas to be accomplished. Sunil is the busiest person around and he is actively engaged in marketing activities related to the targeting and positioning of their product to the new customer base.

Very soon, the results are noticeable in the Profiles Group. After a considerable amount of planning and hard work, the subsequent months showed positive results as given below:

 The markets are segmented based on the income level of the household customers

 Their needs, wants and demands are analyzed

 These markets are targeted based on their desire, willingness and capabilities to attain the required interiors and furnishings.

 Sunil headed a separate section namely Re-designing and Re-decorating Services at the firm’s main office. Sunil was immediately involved in making special centers for Re-designing and re-decorating services in different parts of the country.

 Marketing section was taken over by a competent person - Ms. Sneha Agarwal who has over 8 years of experience in interior designing. She was chosen on the recommendation of Stanley Pereira as Sneha had been a merit student previously and Stanley had been her teacher.

 Neerav had even managed to get some MNC‟s as the firm’s clients.

 Positioning of Profiles Group’s product and services was done in three ways –

 For the already existing customer base which include the corporate and business houses, film industry and celebrities and other big units who spend huge amounts on the interior decorations.

 For the newer segments also termed as the individual household segments who have limited spending abilities but have a desire for elegant interiors at reasonable rates.

 For the collective market – re-design and re-decor services were offered.

 The structure of the firm’s web-site was made more user-friendly and included several videos showing how proper layout and interiors increased efficiency, easy movement, allowed more lighting and ventilation and created a feeling of well-being and comfort.

 A CD was also launched which included these videos and the necessary information of the Profile’s firm with the contact addresses and numbers. The CD also included interview with certain well-known clients who were highly satisfied with the firm’s services. This established trust and good communication in the market.

 Soon enough, the firm launches into environmental friendly interiors and develops „Go Green‟ initiatives that uses more re-cycled and renewable substances.

 There was a plan to begin annual contests and games which involved household customer segments to give their ideas or suggestions for a well laid out interiors using eco-friendly materials and “Go-Green‟ initiatives.

The Partners and the interview:

It’s been two years now since Profile’s Group had moved into individual household segments.

All four partners are seated on the sofa inside Neerav‟s office except this time the sofa is of cream shade and a press reporter namely Namitha Goel is sitting on a single sofa across them. Namitha Goel had scheduled this interview and later will be published in the “Living Designs”, a new monthly magazine that deals with interiors. She begins with a direct question to Neerav –

Namitha: “Mr. Neerav Gupta, do you think the reason for the substantial increase in your customer base is due to the Redesign and re-decoration services?

Neerav: “Well, to a considerable extent, I believe it is so. Re-design is not about my taste or your taste. It’s about working with what the client owns and making them happy. Most people are good in re-arranging their stuff but they don’t have time or energy to do it. So, we offer them this assistance.”

Namitha: “How come you got this thought about making these household segments as your customers? I mean, your firm is associated with the influential clientele base and considering that, why did you feel that these household segments would prove to be a lucrative market for you?”

Neerav: “The entire credit for making individual household segments as our customers goes to my business partners here, my workforce and their efforts. Around two and a half years back, we had just got into a conversation in this very same office and Pratham suggested about tapping these markets with our available resources. Let me clarify that we decided to target this segment not for profits but we felt they too would benefit from our expertise in this field.”

Namitha: “According to the market survey, it seems that there is no close competitor for you in this business. So, your firm stands at the top like it’s been from a long time. What do you say in this matter?”

Neerav is about to answer but his cell phone rings and he attends to it quickly.

Neerav: “Excuse me, Ms. Namitha.., I have urgent business call that can’t wait..., Carry on with your questions and my team mates will answer. I have to go now.” He addresses his partners and leaves the office in a hurry.

The interview proceeds and remaining partners contribute their views. The interview takes another 45 minutes and Namitha Goel is satisfied with her work as a press reporter. She leaves the Profile’s Group office with a sense of achievement.

The next month’s issue of “Living Designs” carries the cover story of the Profiles Group with the partners‟ exclusive interview placed in the shaded column of the magazine pages.

Questions: 1 Examine the progress of Profile’s Group as a leading interior designer and decorator.

Questions:  2 What kind of change was observed in the STP strategy of the firm and how was it useful?

Questions: 3 Evaluate the working of Profile’s group with respect to the Segmenting, Targeting and Positioning of markets. Do you have any suggestions for the firm?

Case study 2

Determining the Marketing 4 P’s

Any business organization in order to be successful needs to have a clear picture about the 4 P’s of marketing. This forms the basis on which business functioning takes place. What are these 4 P’s and why are they important? Let’s assume that we are interested to start up a small business enterprise and for that we have the necessary capital, skills and people. And now, since we are in the initial stage of enterprise formation, we need to answer the previous question.

Marketing mix comprises of the four basic elements or components which are termed together as 4 P’s of marketing. They are:

Product: what is it that we have to offer to the market? What can it include? In what ways can it be modified, changed, expanded, diversified etc.? Will our products be accepted in the market? If not, how do we create a market for our products?

Price: at what value should the products be offered in the market? What should be the returns? Will it be worth to the buyers? What variations, differences and strategies can we adopt in order to earn a fair margin and also gain customer satisfaction?

Place: where must be our products available? How soon it’s demanded in the market? How quick we can deliver it to the consumption points? Who do we need to involve in the distribution of our products? How much will they charge for their services?

Promotion: why do we need to promote our products? Will people be aware of our products if we don’t do any promotion? If we need to promote our products, what kind of message we should convey to the market? In what ways and methods we can carry out the promotion?

Unless we know the answers to the above questions, we cannot make our business function. Therefore, after considering the strengths and weakness of our likely enterprise and studying the market opportunities, we decide to manufacture wax crayons.

The main reason behind this decision is –

1. We can come up with an effective 4 P’s either by marketing the crayons ourselves and if not, we can take orders by being the suppliers to our clients.

2. We know that our market mainly comprises of educational institutions, drawing and painting classes/centers, artistes, even big companies use crayons extensively.

3. We realize the potential of wax crayons as we can offer variety in sizes, quality, colors, price ranges, wholesale and retail prices etc. We can even venture into related areas such as wax artic rafts, wax candles, oil colors, paint etc.

4. We can have direct contact with our clients and in the long term we can even engage an agency to market the crayons.

5. We know that promotion strategies can be based on the type of our customer segment and we could easily do it through advertising on Television, newspapers, children’s comics, notebooks, school notice boards, etc. We can even sponsor or conduct drawing competitions, art exhibitions or we can have contractual agreements with the stationery outlets, art schools etc. However, we are still apprehensive about our marketing mix. We are yet to confirm about our marketing mix and until then we are unable to finalize on our decisions or start with the implementation process.

Question 1.How will you determine the marketing mix for our enterprise?

Question 2.Do you have any ideas to make our enterprise successful particularly by enhancing or improving the marketing mix?

Question 3.What do you think will be the challenges in making an effective marketing mix since our enterprise is a new one?

Case study 3

Good Publicity vs. Bad Publicity

Roger Twain walked as usual with a pleasant aura and at a leisurely pace to his office. Roger is a PR Manager in one of the top FMCG companies of the world. His office along with the PR staff was recently shifted from sixth floor to the second floor of the building. The reason was simple enough. Top management did not want external parties to wander around the whole building in the excuse of meeting PR staff or the PR manager. Roger Twain in fact, welcomed this shift and was glad that he didn’t have to wait for the lift as he could now very well use the staircase. Roger has around 15 years of experience in PR and handling Publicity related issues. He had worked with several companies as well as non-business organisations and institutes.

Roger currently in his 53rd year has achieved lot of success in his career as a professional expert in the field of PR and Publicity handling. Although his plans to start his own PR Consultancy firm didn’t work out the way he wanted, he was actively involved in several worldwide workshops, seminars and presentations. He even wrote articles on PR strategies and published some books on PR. Roger’s ideologies as a PR professional was –

 “No News is not good news… You have to be in the news – good or bad. And, the objective should

be to convert bad news into good news.”

 “You cannot create bad news about your company. At the same time, you cannot create a good one. You can only communicate it in good or bad way.”

 “PR is about being in the news – time and date don’t matter much.”

 “It’s not about being right or wrong – it’s about being clear and sticking to the truth and using it positively.”

 “Everyone has a right to express… But, a PR person should consider it as a righteous Duty”

 “Your Company can show only performance. PR has to talk about it.”

A few of his career achievements in the different organizations that he worked for are as follows:

Problem Situation 1: Some of the cosmetic products of Jasper Ltd. were selling in the market beyond its expiry date. A media report exposed and presented this story to the public that Jasper Ltd. was desperate to increase its sales and did not consider consumers’ interests or their well-being. This led to decrease in sales volume even in the other product categories of the company. Due to incorrect operations of some channel members and retail outlets, old stock was sold to the consumers after the expiry dates. The outcome was Jasper Ltd.’s low profit margins.

Challenge: Roger’s challenge was to make consumers more aware and responsible while purchasing the company’s products without ruining the distribution channel relations and at the same time making the company socially responsible.

Solution: Roger suggested to the advertising department to create a public awareness ad regarding the importance of checking product expiry dates before buying. He advised the management to take back old stock from the retail outlets and distributors by offering a reasonable price and also prescribing the time limit within which those products should reach the company. Roger’s view was that distributors will mostly see their benefit and continue to sell the old stock. If they sell it back to the company itself for a price, they would definitely make an effort to get the new stock and sell those to the consumers. Roger’s logic was “it is better to spend some money on getting back the old stock than let it sell in the market at the risk of company’s reputation.” Meanwhile, consumers will also be aware about expiry dates of cosmetics when they buy it.

Problem situation 2: Acorn Seeds Company’s assistant finance manager was involved in some fraudulent activity and was accused of misappropriation of funds. This news became public and soon enough, company’s investors and stakeholders began to question the integrity and trustworthiness of the company. Company found it difficult to convince people that one person’s immoral intentions does not mean that everyone in the company is beyond trust and moral obligations. Furthermore, company’s products and services got severely affected and consumers started opting for competing products. There was bad publicity all around. Sales declined and situation got worse when finance manager unable to handle pressure resigned. Even though finance manager was not involved with his assistant, he was linked with him and given a bad treatment from outsiders even including some of the employees. Media accelerated this issue and created more hype than was necessary.

Challenge: Roger’s challenges in this situation was handling bad press, dealing with media people with patience and uplift the company’s integrity with good reputation. He also needed to make the financial department integrated with other departments and boost the employee morale. At the same time he had to take care that company’s products do not suffer in the situation.

Solution: Roger suggested to the top management to issue a public message in the newspapers/magazines and also at the end of the Company’s product ads on TV. The message was - “We value your trust in us as you value our commitment towards you.” Roger’s view was that once the fraud was committed and was out in the open, there was nothing much to be done but to move on accepting that such incident occurred and will not happen again. Roger also advised for just one press conference regarding this issue to put an end to this matter. The assistant finance manager had confessed and was told to resign instead of being fired. Soon enough, people forgave and forgot this issue, sales improved and company was on the track once again.

Problem Situation 3: One of the women’s facial creams produced by Jasper Ltd. was severely criticised by media and women. The belief was that the product contained acidic substance causing harmful chemical reactions on the skin. This belief was created when some women claimed that their skin discoloured/scalded after using this facial cream. Media reports provided some facts related to the product that made women who were using this cream more alert. As a result sales dropped drastically.

Challenge: First of all, Roger had to study the product and know its constituents. Secondly, he discussed with product research team as to why such claims could be targeted towards the product. Next, he had to face the media and women consumers addressing the claims and product’s safety.

Solution: Roger collected those facts provided in the media reports and sent them for verification with the skin specialists, research team and for laboratory testing. It was verified and proved that facts provided were immaterial in causing damaged skin. It was also proved that the cream contained no acidic substance or any sort of harmful chemical. Secondly, those women who claimed skin damage were questioned about their application of the skin cream. Two women confessed that they combined several other beauty products along with cream’s application. Others confessed that they were interested in making some quick money if company provided any compensation. Roger arranged a special press meet and provided all the relevant facts and information regarding this issue.

Problem Situation 4: Homely Anchor, a charitable organisation that mainly looked after elderly people in several old age homes was having a problem with its donations. There were anonymous donations coming from several places that it was difficult to track the funds and its allocation. The members of the organisation were themselves confused with the amount collected and amount spent since proper records were not maintained. There were gaps in the accuracy of the information and its updates. Somehow, a magazine columnist/writer got to know about this state of affairs and without much investigation published a small article in the magazine. The article stated how Homely Anchor was unable to manage funds and money received through anonymous donations remained anonymous. Although the article was not accusing of fraud, it hinted the readers in that direction. Within a few months of the article publication, some social activist groups and media started questioning Homely Anchor. There were questions raised on who were the anonymous fund raisers, amount of donations and what and how much was being spent where.

Challenge: Since Roger was working as a part-time Public Relations officer in Homely Anchor, he had to face the social activists and media on behalf of the organisation. He had to protect the privacy of anonymous donation givers and assure them as well as old age homes that funds are raised, managed and used for good intentions.

Solution: He merely gave open statements telling that a proper system will soon be in place that would ensure the accuracy and safety of records related to donations and fund raising. Shortly, he arranged for a small conference consisting of prominent social activists, charitable workers and media representatives to discuss and debate on the implementation of proper systems in charitable organisations. This conference gained lot of popularity and free publicity for Homely Anchor which resulted in more donations. An appropriate system was also implemented to record the transactions.

Problem Situation 5: The research and production team at Sparkly Company had designed a new and innovative technology of purifying water in their product – “Sparkler water purifiers”. This system was tested and proved that it was safe and that it purified water without destroying its minerals. Once it was approved, production plants were ready to manufacture water purifiers in the newly designed way. But, information had leaked to the rival competitor “Visor” Ltd. who immediately took advantage of the opportunity. Visor Ltd. issued statements in the press about this new technology of purifying water and that soon they will be marketing these products. There was a commotion in Sparkly Company due to this. Research and production teams began to accuse each other on the information leakage. Somehow, management was not able to control the situation. News spread about the rivalry issues and information leakage. Media was too interested in finding out which company would come out with the product first.

Challenge: Roger too found this situation difficult to handle. There was definitely an information leakage regarding the new method implemented in water purifiers. Roger’s immediate tasks were to find how information was leaked out and who would have done it. He knew the commitment levels of the company’s employees were not questionable. Second, he had to ensure that Sparkling Company was the first to introduce this technique and at the same time he could not accuse Visor Ltd. openly in public.

Solution: Since acquiring patents (exclusive rights) to the new technique in water purifiers was in process, Roger decided not to talk about it. He then released a statement in the press as “Sparkly Company’s dedicated effort towards manufacturing Sparkler Water purifiers with new technology was a long time process. It involved continuous research and lab experiments by the team. This technology shows our expertise and we will never compromise on our products.” After an internal investigation, Roger found that company’s certain e-mails were hacked and through that, information had leaked to Visor Ltd. So, systems and networks were made more secure. Roger made it clear in his public appearance in the media that crucial information did leak out due to the insecure network and computer systems. But, he was careful not to mention names or make any accusations. Media turned their attention to Visor Ltd. questioning its integrity, ethical and business values.

Questions:

1) Identify the qualities of Roger as a PR professional and analyse his role in the companies that he worked for.

2) In the above problem situations, was there any other approach that Roger could have adopted? If yes, suggest some approaches. If no, why do you agree with Roger’s approach?

3) List the PR tools and strategies that were adopted by Roger in dealing with the problem situations.

Case study 4

Personal Selling – Professional approach

Background Information:

“Keep Fit” is a medium-sized outlet exclusively dealing in exercising equipments/machines and fitness accessories and sometimes in sports equipments also. It has 27 sales persons employed under it. Owners of the outlet – an active middle-aged couple have several contacts abroad through which they place orders for the necessary and required equipments. Once an order is placed for particular equipment, it takes atleast 2 weeks for the equipment to reach the outlet. Secondly, the sales force is involved in cold calls, constantly checking upon new orders from the existing customers and getting new customers to place orders for these equipments from in and around the city. Sometimes, they travel to other nearby cities seeking orders and new customers.

Some of the equipments that Keep Fit sells are –

 Cardio equipments such as Treadmills, Stair climbers, Steppers, Bikes, Ellipticals, Rowers, so on.

 Strength equipments such as Weight benches, Power racks and varieties, different kinds of Weight machines which is supplied as per customer’s requirements, lifting accessories, home gym systems, and other machines.

 Fitness accessories such as pedometers, ankle and wrist weights, jump ropes, stretch mats, hand grips, exercise balls, pull and push up bars, so on.

 Sports accessories such as soccer balls, volleyballs, basketballs, poles, boxing gloves, track pants and such other stuff if at all there is customer demand or they have placed such orders.

The owners have already realized the growth potential of these equipments/machines after analyzing the following:

a) Since most people are becoming health and fitness conscious, there is lot of demand but supply is comparatively low.

b) Due to heavy work pressures and IT related jobs that require people to sit in front of their computer systems for long, it has resulted into high demand for creating and maintenance of gyms in the companies and at the workplaces.

c) The affluent class or groups especially celebrities and sports stars don’t mind purchasing and owning these equipments in their homes, the objective being creation of a personal gym at home.

d) Fitness centers, gymnasiums and sports clubs are increasing in number and so is the demand for the exercising equipments and machines.

e) Encouragement given to different sports requires the sports men and women to use such equipments and therefore, they have to be provided with such resources so as to participate in national or international sports events like Olympics.

Two more salespersons were recently recruited and selected by the owners. After the training and several exposures to the sales practices adopted by experienced salespersons, these two salespersons were ready for the actual job.

The first salesperson namely Mr. Jagan Das is hard-working and efficient in his work. It was observed in the training programme that he was alert to the situations and environment around him. But, at the same time he had a weakness of listening a lot to other people’s opinions and not contributing his thoughts or ideas. However, he was enrolled in a short-term communication course to improve his language skills and expressing his thoughts. The second salesperson namely Mr. Tarun Mehra is an enthusiastic and determined chap. He likes to share ideas and given the time, he would talk his way out. In the training programme, he asked lot of questions and after receiving answers would again question about why and how of things. His only weakness was his tendency to get over-enthusiastic about things and situations that he would forget about existing situation or problem.

In the first few months, Jagan and Tarun were getting along fine as they were assigned the same sales territory. Sometimes, they would go together to collect orders and even dispatch orders to the customers. Together, they were able to deal with complicated clients and achieve higher sales targets than what was assigned to them.

Lately, the owners observed small fights happening between Jagan and Tarun. They were not sure as to what caused the disagreements that led to fights but eventually, the couple decided that the salesmen needed to sort it out by themselves. On Jagan’s request, their sales territories were separated and now, Jagan and Tarun had to deal with different customers at different locations.

After Reading the Background Information, analyse the following two situations and answer the questions given at the end:-

Situation 1:

Jagan is at the outlet’s veranda listening to how another sales person handled a customer’s complaint. He receives a call from one of the old customers of the outlet. The telephonic conversation goes as follows:

Customer: “From “Shape-up” Gym, I am Raghav speaking... Two months back, I purchased this treadmill from you for our gymnasium located at the city’s east and now it is causing some problem... till now whatever gym equipments we purchased from you had no problems of any kind”

Jagan: “Please tell me your problem Sir...”

Customer: “See, actually I can fix the problem... I know some people who can do it very easily... but that’s not my point... I need to know why the machine caused problem.”

Jagan: “You tell me your problem Sir, and then we will fix it for free...”

Customer: “I am not having a problem; your machine has a problem”

Jagan: “I will come at your place Sir, tell me your exact problem so I can note it down and solve it as soon as possible”

Customer: “I can solve the problem... I need to know whether the treadmill comes with a guarantee period and why a brand new machine is causing this problem”

Jagan: “I will come over there Sir and if it’s possible, I will bring a technical member from my team along with me...”

Customer: “No Thanks for your help... I will speak to your Boss about the treadmill’s inefficiency!”

Jagan: “Wait... let me know what I can do for... ...”

The call is dropped and Jagan is unclear as to what he must do next. Should he call back the customer on the same number as appearing on his mobile or should he find out if he can trace the customer information from the sales records of the last two months or should his superior know about this incident? The customer appeared to be in a hurry and didn’t even tell about the problem. Jagan also wondered about how Tarun would react to this kind of call.

Situation 2:

Tarun is busy entering some information into the sales records. He is asked to pick up a call from the superior’s office and following conversation takes place:

Customer: “Is this Keep Fit?”

Tarun: “Good evening Sir, yes it is... May I know your name Sir?”

Customer: “Who am I speaking to? ... I am Jonathan from Lance Sports Club”

Tarun: “Mr. Jonathan, this is Tarun and I am a sales executive at Keep Fit... you can tell me your concern Sir,”

Customer: “I had placed an order for 7 pairs of weight plates, 6 pairs of dumbbells, and 2 exercising bikes – one upright and also 2 treadmills and volleyball”

Tarun: “I am listening Mr. Jonathan”

Customer: “Yes, good, now according to price-list, it says 3 treadmills, 3 exercising bikes, 6 pairs or weight plates, 6 pairs of dumbbells.... the thing is number of items mentioned in the bill are completely wrong”

Tarun: “Just tell me the Bill Number and I will get back to you Jonathan... But, how many items have you received in actual numbers?”

Jonathan: “Well, that’s the problem... I have received the same numbers as I placed in the order... but, the bill and the list says wrong numbers... and only that volleyball is not received”

Tarun: “Okay.... Just see on the top left of your list... you will find the Bill Number... please tell me that...”

Jonathan: “There is no Bill number in this...”

Tarun: “Please check it once again... there is a bill number mentioned at the top left or top right or somewhere at the top... Okay... tell me the date of the bill and your order placement date atleast”

Jonathan: “No, it’s alright, there must be a mistake... we will sort it out during the payment”

Tarun: “Mr. Jonathan... Please co-operate and tell me the bill number or the date so that I can verify it in the sales records and check the invoices also”

Jonathan: “No, that’s okay... do not bother about it... we will confirm later...”

Tarun: “Listen Mr. Jonathan, I can just.... ...” But, before Tarun tells anything more, the customer has cut off the call. Tarun feels uneasy about the conversation. He was being so helpful and wanted to clarify the figures but it looked like the customer was not interested to do so. Should he follow up on the customer after finding out the necessary details or should he just keep quiet till the customer raises the issue once again? Should he tell this to his superior? He tried to imagine Jagan’s way of tackling these types of customers.

Note:

In both the situations, the salespersons have not met the customers personally. In Situation 1, Jagan is dealing for the first time with one of the old customers of the outlet. In Situation 2, Tarun had spoken to some other member of the sports club previously.

Questions:

Question 1:- Identify the approach (plus points and negative points) of the two salespersons in the above situations and make a comparative analysis.

Question 2:- In both the situations, were the customers satisfied with how the salespersons handled their queries? Analyse the sales person’s and customer’s interactions in the above situations.

Question 3:- If you were a salesperson, how would you have handled the above two situations? Do you have any suggestions for Jagan and Tarun?

Xaviers Institute of Business Management Studies

Principles & Practice of Management

Marks - 80

(Please attempt any 4 of the below mentioned case studies. Each Case study is for 20 marks)

Read the following case and answer the questions given at the end of the case.

LOSING A GOOD MAN

Sundar Steel Limited was a medium-sized steel company manufacturing special steels of various types and grades. It employed 5,000 workers and 450 executives.

Under the General Manager operation, maintenance, and headed by a chief. The Chief of and under him Mukherjee Maintenance Engineer. The total was 500 workers, 25 executives, (Production), there were services groups, each Maintenance was Shukla was working as the strength of Maintenance and 50 supervisors.

Chatterjee was working in Maintenance as a worker for three years. He was efficient. He had initiative and drive. He performed his duties in a near perfect manner. He was a man of proven technical ability with utmost drive and dash. He was promoted as Supervisor. Chattejee, now a Supervisor, was one day passing through the Maintenance Shop on his routine inspection. He found a certain worker sitting idle. He pulled him up for this. The worker retaliated by abusing him with filthy words. With a grim face and utter frustration, Chatterjee reported the matter to Mukherjee. The worker who insulted Chatterjee was a "notorious character" , and no supervisor dared to confront him. Mukherjee took a serious view of the incident and served a strong warning letter to the worker. Nothing very particular about Chatterjee or from him came to the knowledge of Mukherjee. Things were moving smoothly. Chatterjee was getting along well with others But after about three years, another serious incident took place. A worker came drunk to duty, began playing cards, and using very filthy language. When Chatterjee strongly objected to this, the worker got up and slapped Chatterjee. Later, the worker went to his union - and reported that Chatterjee had assaulted him while he was performing his duties.

Chatterjee had no idea that the situation would take such a turn. He, therefore, never bothered to report the matter to his boss or collect evidence in support of his case.

The union took the case to Shukla and prevailed over him to take stern action against Chatterjee. Shukla instructed Mukherjee to demote Chatterjee to the rank of a worker. Mukherjee expressed his apprehension that in such a case Chatterjee will be of no use to the department, and. the demotion would adversely affect the morale of all sincere and efficient supervisors. But Chatterjee was demoted.

Chatterjee continued working in the organisation with all his efficiency, competence, and ability for two months. Then he resigned stating that he had secured better employment elsewhere. Mukherjee was perturbed at this turn of events. While placing Chatterjee's resignation letter before Shukla, he expressed deep concern at this development.

Shukla called Chief of Personnel for advice on this delicate issue. The Chief of Personnel said, "l think the incident should help us to appreciate the essential qualification required for a successful supervisor. An honest and hardworking man need not necessarily prove to be an effective supervisor. Something more is required for this as he has to get things done rather than do himself." Mukherjee said, "l have a high opinion of Chatterjee. He proved his technical competence and was sincere at his work. Given some guidance on how to deal, with the type of persons he had to work with, the sad situation could h.ave been avoided." Shukla said, "l am really sorry to lose Chatterjee, He was very honest and painstaking in his work. But I do not know how I could have helped him; I wonder how he always managed to get into trouble with workers. we know they are illiterates and some of them are tough. But a supervisor must have the ability and presence of mind to deal with such men. I have numerous supervisors, but I never had to teach anybody how to supervise his men."

Questions:

(a) Identify the problems in this case.

(b) Do you think the decision taken by shukla is in keeping with the faith, trust and creating developmental climate in the organisation? Critically evaluate

(c) How would you help in improving rough and tough behavior of employees?

Read the following case and answer the questions given at the end.

ABC manufacturing

The ABC Manufacturing Company is a metal working plant under the direction of a plant manager who is known as a strict disciplinarian. One day a foreman noticed Bhola, one of the workers, at the time-clock punching out two cards his own and the card of Nathu, a fellow worker. Since it was the rule of the company that each man must punch out his own card, the foreman asked Bhola to accompany him to the Personnel Director, who interpreted the incident as a direct violation of a rule and gave immediate notice of discharge to both workers. The two workers came to see the Personnel Director on the following day. Nathu claimed innocence on the ground that he had not asked for his card to be punched and did not know at the time that it was being punched. He had been offered a ride by a friend who had already punched out and who could not wait for him to go through the punch-out procedure. Nathu was worried about his wife who was ill at home and was anxious to reach home as quickly as possible. He planned to take his card to the foreman the next morning for reinstatement, a provision sometimes exercised in such cases. These circumstances were verified by Bhola. He claimed that he had punched Nathu's card the same time he punched his own, not being conscious of any wrongdoing.

The Personnel Director was inclined to believe the story of the two men but did not feel he could reverse the action taken. He recognized that these men were good workers and had good records prior to this incident. Nevertheless, they had violated a rule for which the penalty was immediate discharge. He also reminded them that it was the policy of the company to enforce the rules without exception.

A few days later the Personnel Director, the Plant Manager, and the Sales Manager sat together at lunch. The Sales Manager reported that he was faced with the necessity of notifying one of their best customers that his order must be delayed because of the liability of one department to conform to schedule. The department in question was the one from which the two workers had been discharged. Not only had it been impossible to replace these men to date, but disgruntlement over the incident had led to significant decline in the cooperation of the other workers. The Personnel Director and the Sales Manager took the position that the discha rge of these two valuable men could have been avoided if there had been provision for onsidering the circumstances of the case. They pointed out that the incident was costly to the company in the possible loss of a customer, in the dissatisfaction within the employee group, and in the time and money that would be involved in recruiting and training replacements. The Plant Manager could not agree with this point of view. "We must have rules if we are to have efficiency; and the rules are no god unless we enforce them. Furthermore, if we start considering all these variations in circumstances, we will find ourselves loaded down with everybody thinking he is an exception." He admitted that the grievances were frequent but countered with the point that they could be of little consequence if the contract agreed to by the union was followed to the letter.

Questions

(a) Identify the core issues in the case

(b) Place yourself in the position of the Personnel Director. Which of the following courses of action would you have chosen and why?

(i) Would you have discharged both men?

(ii) Would you have discharged Bhola only?

(iii) Would you have discharged Nathu only?

(iv) Would you have discharged neither of them? Justify your choice of decision.

(c) What policy and procedural changes would you recommend for handling such cases in future?

Read the case and answer the questions given at the end of the case.

PK Mills

PK Mills manufactures woolen clothes. Over the years, it has earned an envious reputation in the market. People associate PK Mills with high quality woolen garments. Most of the existing employees have joined the company long back and are nearing retirement stage. The process of replacing these old employees with younger ones, drawn from the nearby areas, has already begun. Recently, the quality of the garments has deteriorated considerably. Though the company employs the best material that is available, the workmanship has gone down. Consequently, the company has lost its customers in the surrounding areas to a great extent. The company stands, in the eyes of general public, depreciated and devalued. The production manager, in a frantic bid to recover lost ground, held several meetings with his staff but all in vain. The problem, of course, has its roots in the production department itself. The young workers have started resisting the bureaucratic rules and regulations vehemently. The hatred against regimentation and tight control is total. The old workers, on the verge of retirement, say that conditions have changed considerably in recent years. In. The days gone by, they say, they were guided by a process of self-control in place of bureaucratic control. Each worker did his work diligently and honestly under the old set-up. In an attempt to restructure the organizational set-up, the managers who have been appointed afterwards brought about radical changes. Workers under the new contract had very little freedom in the workplace. They are expected to bend their will to rules and regulations. Witnessing the difference between the two 'cultures' the young workers, naturally, began to oppose the regulatory mechanism devised by top management. The pent-up feelings of frustration and resentment against management, like a gathering storm, have resulted in volcanic eruptions leading to violent arguments between young workers and foremen on the shop-floor. In the process production has suffered, both quantitatively and qualitatively. The production manager in an attempt to weather out the storm, is seriously thinking of bringing about a radical change in the control process that is prevailing now in the organization.

Questions:

(a) What are the core issues the case?

(b) Do you agree with the statement "The problem, of course, has its roots in the production department itself”? Reason out your stand.

(c) Critically evaluate the finding that old supervisors complain and new workers to resist any type of control.

(d) What type of control system would you suggest to the company to improve the production?

The AB Steel Plant

The Vice President for Production at the AB Steel Plant was giving the Production Department Manager, Mr. Singh, a hard time for not doing anything about his work group which was perpetually coming late to work and was behind schedule in the performance quotas for several months now. The vice President's contention was that if the production' crew was consistently tardy, the production process was delayed by about 15 minutes on an average per member per day, and this was no way for the department to meet the assigned quotas. "They are losing about 6 to 8 hours of production time per member per month, and you don't seem one bit concerned about it," he yelled at the manager. He added that he was pretty upset about the 'lax management style' of the manager and very clearly stated that unless the manager did something about the tardiness problem, another manager who can manage the crew effectively' will have to be found.

Mr. Singh knows that he has an able and good group of workers but he also realizes that they are bored with their work and do not have enough incentives to meet the production quotas. Hence, they seem to respond to the situation by taking it easy and coming late to work by a few minutes every day. Mr. Singh has also noticed that they were taking turns leaving the workplace a few minutes early in the evenings. Even though Singh was aware of this, entire he pretended not to notice the irregularities and was satisfied that once the workers started their work, they were pretty good at their jobs and often helped to meet rush orders whenever they knew that Mr. Singh was in a bind.

Questions:

(a) What do you think is the real, problem in this case?

(b) How do you perceive the stand of Mr. Singh? Analyze critically.

(c) What intervention should Mr. Singh use to rectify the type, of situation he is presently confronted with? Discuss giving the reasons.

(d) Discuss the implications of effecting them with your recommendations.

Dealing with an Employee’s Problem

Ms. Renu had graduated with a degree in foreign languages. As the child of a military family, she had visited many parts of the world and had travelled extensively in Europe. Despite these broadening experiences, she had never given much thought to a career until her recent divorce.

Needing to provide her own income, Ms. Renu began to look for work. After a fairly intense but unsuccessful search for a job related to her foreign language degree, she began to evaluate her other skills. She had become a proficient typist in college and decided to look into secretarial work. Although she still wanted a career utilizing her foreign language skills, she felt that the immediate financial pressures would be eased in a temporary secretarial position.

Within a short period fo time, she was hired as a clerk/typist in a typical pool at Life Insurance Company. Six months later, she became the top typist in the pool and and was assigned as secretary to Mrs. Khan' manager of marketing research. She was pleased to get out of the pool and to get a job that had more variety in the tasks to perform. Besides, she also got a nice raise in pay.

Everything seemed to proceed well for the next nine months. Mrs. Khan was pleased with Renu's work, and she seemed happy with her work. Renu applied for a few other more professional jobs in other areas during this time. However, each time her application was rejected for lack of related education and/or experience in the area.

Over the next few months, Khan noticed changes in Renu. She did not always dress as neatly as she had in the past, she was occasionally late for work, some of her lunches extended to two hours, and most of her productive work was done in the morning hours. Khan did not wish to say anything because Renu had been doing an excellent job and her job tasks still were being accomplished on time. However, Renu's job behavior continued to worsen. She began to be absent frequently on Mondays or Fridays. The two-hour lunch periods became standard, and her work performance began to deteriorate. In addition, Khan began to suspect that Renu was drinking heavily, due to her appearance some mornings and behavior after two-hour lunches.

Khan decided that she must confront Renu with the problem. However, she wanted to find a way to held her without losing a valuable employee. Before she could set up a meeting, Renu burst through her floor after lunch one day and said:

"I want to talk to you Mrs. Khan"

"That's fine," Khan replied. "Shall we set a convenient time?"

"No! I want to talk now."

"OK, why don't you sit down and let's talk?"

Khan noticed that Renu was slurring her words slightly and she was not too steady.

"Mrs. Khan, I need some vacation time."

"I'm sure we can work that out. You've been with company for over a year and have two weeks’ vacation coming."

"No, you don't understand. I want to start it tomorrow."

"But, Renu, we need to plan to get a temporary replacement. We can't just let your job go for two weeks".

"Why not? Anyway anyone with an IQ above 50 can do my job. Besides, I need the time off. "

"Renu, are you sure you are all right ?"

"Yes, I just need some time away from the job."

Khan decided to let Renu have the vacation, which would allow her some time to decide what to do about the situation.

Khan thought about the situation the next couple of days. It was possible that Renu was an alcoholic.

However, she also seemed to have a negative reaction to her job. Maybe Renu was bored with her job. She did not have the experience or job skills to move to a different type of job at present. Khan decided to meet with the Personnel Manager and get some help developing her options to deal with Renu's problem.

Questions:

(a) What is the problem in your opinion? Elaborate.

(b) How would you explain the behavior of Renu and Mrs. Khan? Did Mrs. Khan handle the situation timely and properly?

(c) Assume that you are the Personnel Manager. What are the alternatives available with Mrs. Khan?

(d) What do you consider the best alternative? Why?