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Master Program in Business Administration (MBA)

Note :- Solve any 4 Case Study
             All Case Carry equal Marks.
CASE I

Sunder Singh
Sunder Singh had studied only up to high school. He was 32-years of age, lived alone in a rented room, and worked eight-hour shift at one petrol pump, then went to the other one for another eight-hour shift. He had a girl friend and was planning to marry.

One day when he returned from work, he got a note from his girl friend that she was getting married to someone else and he need not bother her. This was a terrible shock to Sunder Singh and he fell apart. He stopped going to work, spent sleepless nights, and was very depressed. After a month, he was running Iowan his savings and approached his earlier employers to get back his job, but they would not give him a second chance. He had to quit his rented room, and sold few things that he had. He would do some odd jobs at the railway station or the bus terminal.

One day, nearly two years ago, he was very hungry and did not have any money and saw a young man selling newspapers. He asked him what he was selling and he told him about Guzara (an independent, non-profit, independent newspaper sold by the homeless, and economically disadvantaged men and women of this metro city). Sunder Singh approached the office and started selling the newspaper. He did not make a lot of money, but was good at saving it. He started saving money for a warm jacket for next winter.

He was reasonably happy; he had money to buy food, and no longer homeless and shared a room with two others. One day, with his savings he bought a pair of second-hand Nike shoes from flea market.

Sunder Singh is not unique among low-income consumers, especially in large cities, in wanting and buying Nike shoes. Some experts believe that low-income consumers too want the same products and service that other consumers want.

The working poor are forced to spend a disproportionate percent of their income on food, housing, utilities, and healthcare. They solely rely on public transportation, spend very little on entertainment of any kind, and have no security of any kind. Their fight is mainly day-to-day survival.



QUESTIONS
1. What does the purchase of a product like Nike mean to Sunder Singh?
2. What does the story say about our society and the impact of marketing on consumer behavior?
 
CASE II
Key to Buyers' Minds

Consumer buying research has turned a new leaf in India. The era of demographics seems to be on the backbench. Now, Marketing Research people are less likely to first ask you about your age, income, and education etc. Instead, there is a distinct shift towards inquiries about attitudes, interests, lifestyles, and behaviour - in short towards a study of consumers' minds called psychographics.

Pathfinders, the marketing research wing of Lintas, occasionally came out with its highly respected "Study on Nation's Attitudes and Psychographics (P:SNAP). The first in this series was released in 1987 with an objective to develop a database of lifestyles and psychographics information on the modem Indian women. The second was in 1993, and the third in 1998. Pathfinders choose woman for the study because of the belief that more often than not, in urban areas, it is the woman who makes buying decision.

The Pathfinders' study involves interviewing over 10,000 women over the entire country and segmenting them in clusters according to their beliefs, attitudes, lifestyles, and lastly their demographics profile. The idea is to identify groups of consumers with similar lifestyles who are likely to behave towards products or services.

For advertisers and advertising agencies, this profile helps enormously. For example, an advertiser may want to give a westernised touch to a commercial. The profile of the target customer, as revealed by this study, tells the advertising people the perimeter within which she/he must stay, otherwise the ad may become an exaggerated version of westernised India.

For the purpose of this study, Pathfinders divided the Indian women in 8 distinct cluster of varying values and lifestyles. Figures from two studies are available publicly and are given below:

Cluster 1987 (%) 1993 (%)
Troubled homebody 15.9 18.3
Tight-fisted traditionalist 14.8 10.0
Contended conservative 7.0 9.3
Archetypal provider 13.0 8.8
Anxious rebel 14.1 15.8
Contemporary housewife 19.2 22.1
Gregarious hedonist 8.7 6.6
Affluent sophisticate 7.3 9.1

The studies seek to track the macro level changes and movements within these 8 clusters in a period of time.

We note from the table that in 1987, 8.7% of the women could be classified as "gregarious hedonist" - those who consider their own pleasure to be supreme in life. 'In 1993, this figure fell to 6.6%. The "troubled homebody" segment - those with large families and low-income, increased from 15.9% in 1987 to 18.3% in 1993.

Information, such as this, is obviously useful to assess the collective mood. That's why Pathfinders have an impressive list of clients fort heir P:SNAP, which includes Hindustan Lever, Cadbury, Johnson and Johnson, and Gillette.

SOME PSYCHOGRAPHICS PROFILES OF INDIAN WOMEN

Rama Devi, the Contended Conservative
The lady lives a 'good' life - she is a devoted wife, a dotting mother of two school-going sons, and a God fearing housewife. She has been living her life by the traditional values she cherishes - getting up at the crack of dawn, getting the house cleaned up, having the breakfast of 'Aloo Parathas' ready in time before the children's school-bus honks its horn, laying down the dress her 'government servant' husband will put on after his bath, and doing her daily one-hour Puja. She fasts every Monday for the welfare of her family, looks at the 'freely mixing' and 'sexually liberal' youngsters with deep disdain and cannot understand the modem young woman' s 19reed' for money, jewellery, and jobs.

Her one abiding interest outside the household is the Ganesh Mandir that she has visited every Wednesday, ever since she got married. She lacks higher education and hence has little appreciation for the arts, the literature, and the sciences. Her ample spare time is spent watching the TV, which is her prime source of entertainment and information.

Shobha, the Troubled Homebody
Shobha married young to the first person she fell in love with, Prakash. Four children came quickly before she was quite ready to raise a family. Now, she is unhappy. She

is having trouble in making ends meet on her husband's salary who is employed as clerk in a private business and is often required to work up to late hours. She is frustrated, as her desire for an idyllic life has turned sour. She could not get education beyond high school and hence there are hardly any job opportunities for her. Her husband also keeps on complaining of the long hours of backbreaking work he has to put in. He consumes country-made liquor routinely.

Shobha finds escape in Black and White TV soap operas and films that transport her into the world of her dreams. She watches TV almost all through the day and her children roam around in the locality streets and cannot expect any help from their' ever-grumbling' mother. Purchases are mostly limited to 'essentials' and any discretionary purchases are postponed till it becomes possible.

Neeru, the Archetypal Provider
Neeru epitomises simplicity. Her life is untangled. It runs on a set timetable with almost clockwork precision. She works as a primary school teacher in a rural government school about 50 kilometers from her district town residence. She is married to a social worker in an NGO whose income is erratic. Her three children, two teenaged sons and l0-year old daughter are getting school education.

The day begins with the lady getting up before anybody else and finishing the household chores as fast as she can. There is no room for delay as the State government 'Express' bus, on which she ravels to her school will be at the bus stop across the road precisely at 8.00 A.M. If she misses that, the next ordinary bus comes at 11.15 A.M, quite useless as it will reach her school only at 1.00 P.M. The school closes at 2.00 P.M. There are private Jeeps running sporadically, but the fare is high and Neeru does not believe in wasting hard earned money. Besides, she travels on husband's 'free pass'. Neeru prides herself on her monthly savings ofRs.1000 for the last many years. The money will go toward the wedding of her daughter.

Vandana, the tight-fisted traditionalist
For Vandana, saving money is 'in-born' discipline. When she was young and unmarried, she remembers her mother was extremely tight-fisted and ran the household in under Rs.800 per month. It was the necessity of those times as her father retired at a princely salary of Rs.1800 per month. All through her childhood, she saw deprivation and hardship. She would not join the annual class picnic in her school days as it meant' avoidable expenditure'.

Now she is married and mother of two school going children. The husband works in a bank as a clerk. He has taken all the loans that he could from the bank and invested the money in real estate. As a result of monthly deductions toward repayment of loans, his take home salary is now very little. But Vandana can manage. The school dresses are sewn by her at home, the stationary required comes from a wholesale market, and the books are second-hand from 'friends', cultivated for the purpose. On birthdays, Vandana prepares a sweet dish at home and they spend on a film. There is a cow and calf at home, being kept as a source of revenue and milk. She sells half the milk to a neighbour and the family consumes the rest. Life in general is hard and frugal. There is a colour TV at home, but they disconnected the cable connection ever since the rates went up. Now they watch Doordarshan only.

Aditi, the Anxious Rebel
Daughter of a Freedom Fighter, Aditi has always fought her values and principles.
People still remember when she walked out of the exam half in a huff as a mark of protest against mass cheating' sanctioned' by the centre superintendent in a tough paper. While every body else passed with high marks, Aditi failed.

Even though she repeated the paper, Aditi never learned to swim along the flow. She always swam against the current. She joined the Communist Party in her college and gave rousing speeches against the teachers and authorities. This resulted in her getting very poor marks and left her jobless.

Later, Aditi joined an NGO and now works on social issues. She says she is a creature of the mind, not materialism. Her favourite dress is a long flowing Kurta, and slacks. She wears loosened hair and chappals. She reads voraciously. Financially, she is independent and lives with her parents. Her disdain for the institution of marriage and contempt for the modern Indian male keep her single and unattached. She will continue-to be so as she prefers this status, but may adopt a baby later in life.

Reema, the Gregarious Hedonist
Just 19, and Reema is already divorced. Her father is a wealthy businessman. During Reema's childhood, her father was mostly away in Dubai and Africa, trying to amass a fortune. That he did but he lost on his chance to be a good father. Both his children started feeling like' orphans' after their mother got involved with another man.

Reema was ever longing for her family when alone came Harsh, her private high school tuition teacher. Harsh was all of 22 and very caring. He was tall, handsome, and very popular in school and many girls had a crush on him. Reema was sixteen then and a great fan of Harsh. For her, Harsh was a prize catch as he combined the loving qualities of a father with a mix of being a good teacher. She was soon dazzled and surrendered in a physical relationship.

Marriage followed. She never understood how Harsh changed overnight from a caring father figure to a demanding husband. And she could never cope with the six hours she had to spend in the kitchen everyday. Why should she do the cooking, she asked Harsh, as it was something that the 'Ayas' did? The reality of a humdrum middle-class existence hit her hard and she soon walked out of 'the hell'.

Her father understood her need to recover and made her allowance rather generous. He bought her a Red Sports Car and got her an admission in a private college.

College is entertainment for her. She attends college only on days when there is some function like a cultural evening or the sports meet. Now, Reema spends on alcohol, dresses, parties, and holidays. She consumes a mood elevating drug every evening and keeps sending SMS messages on her mobile to her friends all through the night. For her, life means 'buying pleasure endlessly'.

Shruti, the Contemporary Housewife
Shruti is an urbane woman. She is well educated and genteel. She is an officer in a national bank, and active in her club affairs and community activities. Socialising is an important part of her life. She is a doer, interested in watching cricket, politics, and current affairs. Her life is hectic as she has a lot to do for home and office everyday. Still she often enjoys viewing movies on TV every week.

Shruti shops for Sarees, jewellery, and cosmetics for herself on a regular basis. However, family needs come before her own needs. Her home is a double income household and she has one kid. All the modern gadgets are present and the standard of living is upper middle-class.





Momeeta, the Affluent Sophisticate
Momeeta was born Mamta, but elevated herself to Momeeta after marriage to a business tycoon. Momeeta is an elegant woman with style. She lives in Mumbai because that is where she wants to be. She likes the economic and social aspects of big city living and takes advantage of her' contacts'. She has built up friendship and cultivated the city bigwigs by inviting them to the numerous parties she throws in her luxurious penthouse.

Momeeta is a self-confident, on-the-go woman, and not a homebody. She is fashion conscious and clothes herself in the latest designer dresses. Even at 40, she can carry off a mini with aplomb. She is financial very secure and hence does not shop with care. She shops for quality, exclusivity, and the brand name, not the price. She frequently travels abroad, buys expensive gifts for friends, and has an international understanding on what is "chic" at the moment.


Three psychographics profiles of Indian women and their food shopping habits:

Type I Type II Type III
Money conscious Careful shopper Gourmet/satisfaction
Food shopping is done  on necessity and is postponed as long as possible.
Makes out shopping lists and makes weekly/ monthly purchases. General liking for food shopping and food related activities.
Minimum amount of money spent. This is enabled through comparative evaluation of many shops, even if it takes more time. Can purchase larger quantities if there is an incentive like lower prices or a gift scheme. Food budget is flexible. Collects and files food recipes. Experiments with new food products and methods of cooking. Likes to exhibit her culinary skills to her friends and family.

Operates within the food budget. Does not buy larger quantities to save money.
Checks labelling for price, nutrition and expiry date information Spends a lot of time in kitchen as preparing food is an enjoyable activity.
Price and immediate outflow of cash is the dominant purchase concern. Goes for tried and trusted brands even if they cost a little more. This is an important purchase concern. Food items are bought either based on the past satisfaction from them or for their novelty value. Unknown food items are purchased if they excite the senses. This is the dominant purchase concern.
Who fits in where?
Shobha, Neeru, and Vandana,
Shruti, Aditi, and
Rama Devi
Momeeta (she is a food lover).

(Prof Deepak Khanna, colleague, has developed these profiles based on his perceptions of certain personality types).








QUESTIONS
1. Explain how the above-mentioned information is likely to benefit a marketer?
2. Which of the above mentioned types are likely to respond to sales promotion? Explain.
3. A manufacturer of personal care products in the premium segment starts frequent sales promotions. What is likely to be the impact on the above-mentioned types?

 

Case III
Star Airways

Star Airways offered passengers air services within the country and served a territory of 18, 000 sq. miles with an expanding population of over 70 lakh of people who are potential users of the airline services. The geographic diversity and scattered business and commercial cities have led to steady increase in the number of people who use air travel. The clientele includes business people, as well as individuals on non-business trips, holidays, and leisure trips etc. As a result, the passenger traffic had been increasing steadily since the firm started operations in 1983. In the last three years, however, the growth has not been consistent with the growth pattern showed by the company in the last fifteen years - as against a healthy growth of 13 per cent, the sales have marginally improved, registering a growth of 6 per cent.

The company's early success was due to the pioneering concepts used by it in the airline industry, which was dominated by large private and government operators with little market orientation. The launch of the company's services coincided with a boom in the aviation sector and reduced government dominance, which opened up the skies for private operators. Besides this, the company offered a host of innovations in the customer service functions such as smaller and newer planes, convenient schedules, free gifts, comfortable seats, exclusive terminals, express baggage-check, and airport-to hotel transit for its first and business class clients. In turn the fares charged by the company were premium in the category and almost 15 per cent higher than the industry average. The company president in the following words justified this move: ''We are selling entirely on the basis of providing quality experience to our clients. Our services, ambience, and commitment to safety and time-bound schedule, all surpass the standards of the industry."

During the first ten years of operations the company faced no direct competition. The only problems faced by the marketing staff were (a) the price, (2) the need to convince clients that air service was more efficient than other alternatives, (c) identifying the customers, and more importantly (d) developing the image of a dependable service. The consumers, who till now were forced to put up indifferent service offered by large government operators, did not offer much resistance and were agreeable to try out new company. Once customers were convinced, retaining them was very easy. Hence the company enjoyed immense

loyalty from its clients with almost 40 per cent of them being regular users. Sales were handled by the sales division as well as by some independent sales representatives.

In early 1990s the company faced direct competition for the first time with a new company coming up with smaller planes and all other advantages which were previously associated with Star Airways. The growing business had made the market very lucrative and hence in the next three years, four major competitors were also vying for the market share. The company slowly lost to these competitors and could manage to retain only 30 per cent of market share by the end of 1994. All the competitors were engaged in aggressive promotion and soon started a 'price war' in order to outdo one another. For the next six months, each of them offered big discounts and gifts (such as TV / audio systems) with the return ticket on different routes. The most profitable and commercia1ly viable routes were the major targets of these price related competitions. The consumer was the ultimate beneficiary and in short time, the companies started facing losses due to this price-cutting.

Star Airways had so far remained out of this ‘price-war’ and lost its market share on the competitive routes very rapidly.  It was able to retain the clients on other routes, which were not a part of this intense competition.  Unhappy an anxious about this state of affairs, the company vice president, marketing, developed a marketing plan with several components.  The initial part of the plan consisted of a market research done on a cross-section of existing clients as well as the clients of competitors and the following observations were made :

• Star Airways was considered a quality-oriented company but many felt that it was getting stodgy.
• The satisfaction with crew and schedules had declined over the last 5 years amongst regular customers.
• The clients felt that the airline was losing its edge over customer service because it was non¬flexible.
• The prices offered by competitors are less and they provide only a fraction of services offered by Star Airways. This was the main reason of clients switching over to competitors. As many as 70 per cent respondents considered the costs as the most important factor in deciding on the airline.
• Some deciding factors and their relative importance to clients were found to be following this pattern.
•
Feature offered by airline Importance of feature as the deciding factor Rank of feature in decision making influence
Price 67% 1
Ambience and food 9% 3
Punctuality 14% 2
Services & convenience 7% 4
Free gifts etc. 3% 5

The second phase of the plan included a massive advertising and promotion plan. The VP marketing, Anil Saxena, felt that the company needed to advertise it's dedication to quality and rebuild an image of being a customer-oriented airline. He began discussions with the advertising agency to launch a campaign in the near future.

After a month, the agency came out with the following recommendations:

• The campaign is to be completed in four months time and the budget will be 351akh.
• The company would reach 85% of target audience, once in a month by direct mail.
• Four times a month a TV commercial will be aired on a business show time. The audience TRP is consistent and highest in this category of shows.
• Star Airways would build the campaign theme around 'quality and customer service initiatives' .
• The direct mail letter would be sent to a database of 85,000 clients in four months. The letter will contain information on the airline and again stress on the same theme of' quality and customer service'.

 
QUESTIONS

1. What is likely to be the decision process in case of choosing an airline?
2. Would this plan suggested by the vice president help in convincing the customers to use Star Airways? Give your reasons.


Case IV

Mouse-Rid

One hot May morning, Shobha, general manager of Innotrap India Ltd., entered her office in Delhi. She paused for a moment to contemplate the quote, which she had framed and hung on a wall facing her table.

"If a man can make a better mousetrap than his neighbour, the world will make a beaten path to his door." She vaguely recalled that probably it was Ralph Waldo Emerson who said this. Perhaps, she wondered, Emerson knew something that she didn't. She had the better mousetrap - Mouse¬-Rid - but the world didn't seem all that excited about it.

Shobha had just returned from a Trade Fair in Kolkata. Standing in the trade show display booth for long hours and answering the same questions hundreds of times had been tiring. Yet, this show had excited her. The Trade Fair officials held a contest to select the best new product introduced at the show. Of the more than 150 new products, her mousetrap had won first place. Two women's magazines had written small articles about this innovative mousetrap, however, the expected demand for the trap had not materialised. Shobha hoped that this award might stimulate increased interest and sales.

A group of investors who had obtained rights to market this innovative mousetrap in India had formed Innotrap India in January 2001. In return for marketing rights, the group agreed to pay the inventor and patent holder, a retired engineer, a royalty fee for each trap sold. The group then appointed Shobha as the general manager to develop and manage Innotrap India Ltd.

The Mouse-Rid, a simple yet clever device, is manufactured by a plastics firm under contract with Innotrap India Ltd. It consists of a square, plastic tube measuring about 6 inches long and one and one-half inches- square. The tube bends in the middle at a 30-degree angle, so that when the front part of the tube rests on a flat surface, the other end is elevated. The elevated end holds a removable cap into which the user places bait (piece of bread, or some other titbit). A hinged door is attached to the front endofthe tube. When the trap is "open", this door rests on two narrow "stills" attached to the two bottom corners of the door.


The trap works with simple efficiency. A mouse, smelling the bait enters the tube through the open end. As it moves up the angled bottom toward the bait, its weight makes the elevated end of the trap drop downward. This elevates the open end, allowing the hinged door to swing closed, trapping the mouse. Small teeth on the ends of stills catch in a groove on the bottom of the trap, locking the door closed. The mouse can be disposed of live, or it can be left alone for a few hours to suffocate in the trap.

Shobha felt the trap had many advantages for the consumer when compared with traditional spring-loaded traps or poisons. Consumers can use it safely and easily with no risk for catching their fingers while loading. It poses no injury or poisoning threat to children or pets.

Shobha's personal and informal inquiries with acquaintances and friends suggested that women are the best target market for the Mouse-Rid. Most women stay at home and take care of household chores and their children. Thus, they want a means of dealing with the mouse problem that avoids any kind of risks. To reach this market,

Shobha decided to distribute Mouse-Rid through grocery stores, and kitchenware stores. She personally contacted a supermarket and some departmental stores to persuade them to carry the product, but they refused saying that they did not sell such contraptions. She avoided any wholesalers and other middlemen.

The traps were packaged in a simple cardboard, with a suggested retail price ofRs.150 for a piece. Although this price made Mouse-Rid about five 1;0 six times more expensive than standard traps, those who bought it showed little price resistance.

To promote the product, Shobha had budgeted approximately Rs. 300,000 toward advertising in different women's magazines, such as Grah Shobha, and Good Housekeeping. Shobha was the company's only salesperson, but planed to employ sales people soon.

Shobha had forecasted Mouse-Rid's first year sales at 2 million units. Through Aril, however, the company had sold only few thousand units. She wondered if most new products got to such slow start, or if she was doing something wrong.

Shobha knew that the investor group believed that Innotrap India Ltd. had a "once-in-a¬ lifetime chance" with its innovative mousetrap. She sensed the group's impatience. To keep the investors happy, the company needed to sell enough traps to cover costs and make a profit.




QUESTIONS
1. Has Shobha identified the best target market for Mouse-Rid? Why or why not?
2. Does Shobha have enough needed data on consumer behaviour? What type of consumer research should Shobha conduct?
3. What type of advertising can influence consumers for this type of product?


Case V

Golden Glow Soap

Anil Mahajan absent -mindedly ran his finger over the cake of soap before him. He traced the name 'Golden Glow' embossed on the soap as he inhaled its unmistakable sesame fragrance. It was a small soap, almost like a bar of gold. There were no frills, no coloured packaging, and no fancy shape. Just a golden glow and the fragrance of sesame and Lucida font that quietly stated' Golden Glow'.

Mahajan smiled wanly and clasped the soap in his hands, as if protecting it from an unseen predator. He was wondering with quiet concern if the 30-year-old brand would last long. Sensi India, where Mahajan was marketing manager, was taking a long, hard look at the soap, as it was proving to be a strain on resources.

There were varying stories about how Golden Glow was launched. Some said the brand was a 'gift' from the departing English parent company. Others claimed that it was created for the then chairman's British wife, as the Indian climate did not agree with her skin. They also claimed that the lady also coined the copy "The honest soap that loves your skin" was also coined by the lady. The line had stuck through three decades. Only the visuals had changed, with newer models replacing the older ones.

Zeni was basically a speciality products company producing household hygiene, fabricare, and dental care products. Golden Glow was the only soap in its product mix, produced and marketed by Sensi. Its reliable quality and value delivery had earned it a lot of respect in the market. Golden Glow equity was such that Sensi was known as the Golden Glow Company. Indeed, the brand name Golden Glow denoted purity, reliability, and gentle skincare.

In 1994, Sensi UK increased its stake in the Indian subsidiary to 51%. Within months, all of Sensi's products were given a facelift, thanks to the inflow of foreign capital. New packaging, new fragrances, new formulations and more variants were introduced.





Only Golden Glow was left untouched. For, although it had a growing skincare business following some strategic acquisitions in Europe in the early eighties, Sensi UK was not a soap company. The UK marketing team ran an audit of every brand and product in the company's portfolio. But when it came to Golden Glow, it faltered. "We don't know this one," officials at the parent company said.

"We don't want this one to be touched," Mahajan had said protectively, a sentiment tliat was endorsed by the managing director, Rajan Sharma. "Golden Glow is too sacred, we will leave it as it is," he said.

But the UK marketing team was confounded. What was a lone soap doing in the midst of toilet cleaners and fabric protectors; they wondered, however they somehow agreed that their proposed revamp strategy would only look at up-gradation, not tinkering with what wasn't broken.

Indeed, for 30 long years no one had tampered with the Golden Glow brand. And Mahajan felt there was no reason to start now. Golden Glow, in his view, was a self-sustaining brand. That was a bit of an understatement because advertising for the brand was moderate and Sensi India had never used any promotional gimmick for it.

Now, after four years of nurturing the other categories, Sensi UK had decided to launch its Vio range of skincare products in India. But Golden Glow's presence and profile was a major roadblock to Vio's success. "It will create dissonance, confuse our skincare equity and deter the articulation of Vio's credo. It will stand out as a genetic flaw," argued the UK marketing head. "You need to do a rethink on Golden Glow."

Mahajan protested. "Why? It has such a strong equity and loyal following. So much has been invested in it all these years. Why give up all that?"

Rajan, however, had another idea. "Let us then extend the Golden Glow brand." He said It was the simplest solution. Companies were now investing heavily in creating new equities for their brands. But in Golden Glow's case, Sensi was already sitting on a brand with a terrific equity. He felt that extending this equity to other categories, such as skincare products would be successful.



But Golden Glow needed a new positioning before it could be extended. Till a few years ago, it had been in premium category, priced at Rs.15. Then new brands with specific positioning and higher price tags entered the market. This created a level above Rs.15 soaps and pushed Golden Glow down to the mid-priced range. So Golden Glow's price was not commensurate with its premium position and image.

Over the years, Golden Glow had become so sacred that Sensi India had been too scared to do anything to it. As a result, the soap was left with niche category of loyal users. This category neither shrank or increased, just kept getting older and older, and with it the brand also kept growing older. For example, when Mahajan's wife had her first baby at 25, her mother had recommended Golden Glow for her dry skin and also for baby's tender skin because it contained sesame oil. That was in 1979. Today, Mahajan's daughter had turned 21 and was being wooed by Dove, Camay, even Santoor, and Lifebuoy Gold, with their aggressive advertising. Golden Glow had begun to lose its image of being contemporary as newer brands came in with newer values.

Today, at 46, Mahajan's wife still used Golden Glow, but when she recommended Golden Glow to her daughter, she said, "But Golden Glow is a soap for mothers, for older people."

That was a major problem. The Golden Glow brand had aged, and Sensi India hadn't even been aware of it. While its equity had grown with its users, its personality had aged considerably in the last 30 years. "I don't think you can keep the personality young, unless you keep renewing the brand. The objective now is to widen your equity so that your image becomes young," continued Rajan. "For instance, if today you were to personify a Golden Glow user now, it would be a woman of 45 years using the same brand for many years, who is aver-se to experimenting, very skincare conscious, very trusting, and very one-dimensional. As you can see, this is not a very competitive personality. These are the strengths of our Golden Glow, but these are also its weaknesses," he analysed.







The context had changed. Today, youth demanded brands that stood for freedom and fearlessness. They demanded bold brands that dared to cure, not just p;eserve. "Preservation is for old people. Those are the attributes being presented in evolved markets," said Rajan. To make Golden Glow contemporary, the attributes had to be re-framed, he felt. "You can't make a young brand trusting caring, loving, without adding other attributes to it. Today, youth stands for freedom, for laughter, for frankness, for forthrightness. That's what Close Up, Lifebuoy Gold, Vatika, and other brands propagate. So, either come clean and say it is for older skin which needs trust and kindness, or reposition the brand," said Rajan.

Repositioning was also necessary to address another anomaly in Golden Glow's image: its perceived premium. Sensi India had been unable to do anything about Golden Glow slipping into the mid-price range following the entry of more expensive brands. Now, as Rajan mulled over the brand extension plan, Mahajan felt that Golden Glow's premium positioning was its core equity and that had to be maintained.

"If you are premium priced in the consumer's mind, your extensions are automatically perceived as premium. So, if you don't present the other products as premium, the consumer will not see them as extensions of the brand," he said. "For example, if you are to launch a shampoo which is priced lower than Sunsilk, but higher than Nyle and Ayur, then whatever the rationale, the consumer will not accept your product. "It is not the Golden Glow I know," will be the feeling," he said.

Mahajan felt that since premium positioning was one of Golden Glow's equity values, it would be very difficult to convince consumers that the brand was being extended without hanging on to this particular value. "Will they buy your rationale that the very same values and equity would now be available at a low price? To be in the premium segment now, you have to price it at Rs 35 or 40, almost on a par with Dove," he said. "With Dove retailing at Rs 45, Golden Glow will be perceived as a cheaper option."

"We can't simply raise the price," said Rajan. "What are we offering for that increase? You can 't add value because you don't want to tamper with the brand. The consumers will then ask, "Golden Glow used to be so cheap, what has happened now? The user will forget that 15 years ago, Rsl0 was expensive, because all her comparisons would be in today' s context," said Rajan.

"So what's the option?" asked Mahajan. "You don't have to be expensive to be premium," said Rajan. Golden Glow already has the image of a premium brand, thanks to its time-tested core values of purity, credibility, and reliability. What we can do is reinforce the premium through communication and positioning. In fact) we should have tinkered with Golden Glow long ago. That is what HLL did with Lux. It also launched a bridge brand, Lux International, in the premium category," said Rajan.

"How could we have done anything to the brand?" asked Mahajan. "The product had such a strong following. It stood for gold, for sesame oil, for its subtle earthy perfume. We changed the packaging periodically, but that's all we could do. Remember the time we brought out a transparent green Golden Glow with the fragrance of lime? It bombed in the market."

Rajan was not in favour of the premium positioning. It appeared very short sighted to him, given the bigger plan to extend the brand. "Where are the volumes in the premium segment? He asked. "For some reason, every manufacturer feels that skincare can be an indulgence of only the moneyed class. As a result, there is a crowd in the premium end of the market. Do we want to be yet another player in the segment?"

Fifteen years ago, Golden Glow was perceived as a premium product. But today, globa1brands like Revlon, Coty, and Oriflame were delivering specific premium platforms. Golden Glow did not have a global equity. 'Let us revisit the brand and examine what it stood for 15 years ago and examine the relevance of those attributes in today's context," suggested Rajan. "Golden Glow stood for care, consciousness, love, quality and all that. But today, are these enough to justify a premium position?" he asked Mahajan. "These attributes are viable in the mid-priced segment." He said.

"The mid-priced brand is the proverbial washer-man's dog," said Mahajan. "You don't know whether you are at the bottom end of the premium range or at the top-end of the low-priced range. You end up creating an image of being on the opportunity fence. It is a mere pricing ploy, with no strategic value."





QUESTIONS
1. Discuss the nature of problem(s) in this case?
2. Suggest the kind of consumer research needed?
3. How should Golden Glow be positioned/ repositioned to bring about the desired change among consumers? Give your reasons.
 
CASE VI


Impact of Retail Promotions on Consumers

Shoppers' Delight, a large retail store, had above-average quality and competitive prices. It advertised its retail promotions in local newspapers. Its TV advertising was mainly aimed at building store image and did not address retail promotions. The management knew it well that they had to advertise their retail promotions more, but they did not feel comfortable with the effectiveness of present efforts and wanted to better understand the impact of their present promotions.

To better understand the effectiveness of present efforts, a study of advertising exposure, interpretation, and purchases was undertaken. Researchers conducted 50 in-depth interviews with customers of the store's target market to determine the appropriate product mix, price, ad copy and media for the test. In addition, the store's image and that of its two competitors were measured.

Based on the research findings, different product lines that would appeal to the target customers were selected. The retail promotion was run for a full week. Full-page advertisements were released each day in the two local Hindi newspapers, and also in one English newspaper that devotes six pages to the coverage of the state.

Each evening, a sample of 100 target market customers were interviewed by telephone as follows:

1. Target customers were asked if they had read the newspaper that day. This was done to determine their exposure to advertisement.
2. After a general description of the product lines, the respondents were asked to recall any related retail advertisements they had seen or read.
3, If the respondents were able to recall, they were asked to describe the ad, the promoted products, sale prices, and the name of the sponsoring store.
4. If the respondents were accurate in their ad interpretation, they were asked to express their intentions to purchase.
5. Respondents were also asked for suggestions to be incorporated in future promotions targeted at this consumer segment.

Immediately after the close of promotion, 500 target market customers were surveyed to determine what percentage of the target market actually purchased the promoted products. It also determined which sources of information influenced them in their decision to purchase and the amount of their purchase.

Results of the study showed that ad exposure was 75 per cent and ad awareness level was 68 per cent and was considered as high. Only 43 percent respondents exposed to and aware of the ad copy could accurately recall important details, such as the name of the store promoting the retail sale. Just 43 per cent correct interpretation was considered as low. Of those who could accurately interpret the  ad copy, 32 per cent said they intended to respond by purchasing the advertised• products ' and 68per cent sad they had no intention to buy. This yields an overall intention to buy of 7 per cent. The largest area of lost opportunity was due to those who did not accurately interpret the ad copy.

The post-promotion survey indicated that only 4.2 per cent of the target market customers made purchases of the promoted products during the promotion period. In terms of how the buyers learned of the promotion, 46 per cent mentioned newspaper A (Hindi), 27 per cent newspaper B (Hindi), 8 per cent newspaper (English), and 15 per cent learned about sale through word-of mouth communication.

The retail promotion was judged as successful in many ways, besides yielding sales worth

Rs 900,000. However, management was concerned about not achieving a higher level of ad comprehension, missing a significant sales opportunity: It was believed that a better ad would have at least 75 per cent correct comprehension among those aware of the ad. This in turn would almost double sales without any additional cost.










QUESTIONS

1. Why would some consumers have high-involvement levels in learning about this sales promotion?
2 Is a level of 75 per cent comprehension realistic among those who become aware of an ad?  Why or why not?
3. Do you think such promotions are likely to influence the quality image of the retail store? Explain.



 
Master Program in Business Administration (MBA)


Note :- Solve any 4 case study
           All case carries equal marks

Case I

PANDIT TO AFAUZI
The case is based on an actual incident which took place in an Army unit operationally deployed in a field area just a few months before the 1971 showdown with Pakistan. The opposing forces of India and Pakistan were taking their respective positions in a pre-war scenario. The clouds of showdown were looming large over the horizons of both the countries. The rumbling of own tanks and guns, the reconnaissance, leaders of different arms and services establishing liaison with one another in the process of formulating plans for both defence and attack, digging of main and contingency positions was in progress, complete war machinery was being mobilized, camouflaged, and concealed. Ammunition and other explosives were being unloaded and dug down. Junior leaders were being briefed and rebriefed, communications were being checked, and troops were being motivated and looked after as most of them were green because of their sudden induction in the Army in post war days of 1965. Such was the scene which convinced all and sundry that war was imminent. Most of the troops looked forward to a showdown mainly because they wanted to get rid of the heavy ammunition as also for the mere thrill of it. Those who had not seen a battle, seemed excited over the prospects of a war and those who had seen the war, took everything in their stride, displaying a perfect cool, calm and confident countenance.

One Ram Bali Mishra (RBM) was a raw and green jawan of about 20 years of age and two years' service and naturally had not seen a war. He was relatively tall, well built with fair complexion. He had pleasant manners, turned himself out well and spoke well. He was a complete teetotaler, non-smoker, and a vegetarian. He was well educated and well versed in religious affairs, particularly, of the religion to which most of the unit belonged. In the absence of the religious teacher of the unit, he held religious institute (dharamsthal) and gave religious discourses at the dharamsthal to all officers, junior commissioned officers JCOs), non-commissioned officers (NCOs) and jawans. During the pre-war days, he was performing the duties of a Sahayak (assistant, formerly known as orderly) to Gun Position Officer (GPO), a young officer, of the rank of a Second Lieutenant with one year of service.

RBM's charter of duties included:
(a) attending all the training activities of his trade (telephone operator) which were being organized in the sub-unit;
(b) making arrangements to get the food from the officers' mess and water from the tube- well for the office; and
(c) attending the telephone and noting down all the messages for the office.
By virtue of the nature and timings of these duties, RBM was excused physical training in the morning and games in the evening which all other jawans of the sub-unit attended. He was generally happy with these duties and working with the officer: After a short span of a week or so, the officer noticed some changes in the behavior of RBM. He also looked pale and worried. He was less talkative, less lively and his interaction with other jawans decreased. He started keeping aloof except where his duties warranted interaction with others. The officer tried to find the reasons from RBM but nothing emerged except a shy and coy smile and “aisi to koi baat Nai, Sahib". The officer tried to probe further to find out if some guilt conscience was bothering him because of some bad habit which young man of his age is likely to fall prey to, in the absence, of even visual contact of civil life and members of the opposite sex.

This was denied vehemently. After another week or so, it was noticed that RBM had developed constipation, ate very little, felt tired after walking even a few hundred yards and had become weak. He was interviewed by the officer but nothing emerged once again. He was sent to the Regimental Medical Officer (RMO). The RMO inspected him and gave some medicines. On being contacted by the officer, the RMO mentioned that there was nothing wrong medically with RBM except that he was scared of the prospects of war. He even disclosed that after having been medically examined, RBM even started giving a discourse to the RMO on the bad effects of a war on environment, economy, costs, etc. He stated that people would be loaded with sufferings; killed, injured, maimed, and would become homeless. The children would become orphans, women widowed, and the humanity would suffer. He vehemently advised the RMO to make all attempts to stop the war and if he could, at least oppose it. After a brief conversation, the RMO was convinced that all the symptoms pointed to a fear psychosis of war. He gave some medicines to RBM and sent him to the sub-unit.

The RMO told the GPO that because of the worry about the war, RBM had developed problems of digestion and hence, ate less, became inactive and felt tired quickly. He had earlier been feeling shy of expressing his apprehensions about the war to others, lest they consider him a coward. The GPO gave a thought to the whole problem and interviewed RBM, advising him to attend• all physical activities, including physical training, weapon training, games, etc. thence on. The officer also planned to keep RBM among the persons of his trade, specially in the command post which controlled the firing of the guns, where from the officer himself was expected to control the' fire in case of breakout of war.

A small cadre (class) was organized for all ranks of the sub-unit to apprise them of the organization of all arms and services in the army, starting from the level of a sub-unit. They were explained the tactics in the battlefields, the deployment patterns of different arms, the pattern and modes of support by the Air Force, the capabilities of weapons held by them, the comparative sizes of the countries, India versus Pakistan, and the level of forces held by them. They were also explained the cause for which they were there. They were there to make their contribution towards the liberation of Bangladesh (then East Pakistan), wherefrom about a crore refugees had entered India because of the repression by Pakistan forces. These refugees had become a burden on the Indian economy and social structure which India could not afford. Thus, India, the foremost leader of peace loving nations, had to prepare for war to ensure return of these refugees to liberated Bangladesh. At times, to maintain peace, it becomes necessary to resort to war.

The participants were also told about the strength of their Army and deployment in that area, of course, within the constraints of security requirements. They were also told that none of them would remain alone even during the war and that their sub-unit and the unit would always fight together. They would always have their weapons and ammunitions with them, which they were very good at firing. The process of medical care, the claim of evacuation in case of serious injuries and the enhanced benefits and compensation to families in case of death of a soldier, then announced by the government, were also communicated to them. The reliability of India's friends on the international scene was also intimated. The tactics, capabilities of aircrafts and weapons, and reliability of Pakistan's friends were also brought out. The disadvantages and difficulties of supply to the then East Pakistan were explained to the participants. The geographical location of East Pakistan in relation to our country was also described. Everybody was convinced of the great advantages and superiority we had vis-a-vis Pakistan.

Thence on, RBM was a totally changed man. He was noticed to be more active, intermingling with others at the slightest pretext and opportunity, giving discourses about loyalty to the country and martyrdom. He took keen interest in all the training activities, including the digging of a number of contingency gun positions. He volunteered to go with night patrols too, which operated to shoot bursts of rounds with light machine guns in trees and groves close-by, whenever the guns were deployed at a new place. He volunteered to venture out with the line party which was earmarked to lay telephone lines over long distances through sugarcane fields. He started watching the slaughtering of goats in the unit. Above all, he started eating eggs, though he did not touch meat.

This transformation in RBM was a welcome sight and appreciated by all. Everyone heaved a sigh of relief on seeing RBM becoming a brave "Fauzi" from a timid "Pandit". The RMO was informed of this transformation. He too felt happy. His contribution had been no less in diagnosing the cause of sickness correctly. The cadre was conducted for the whole sub-unit with a view to eradicate any apprehensions from the minds of others too, in case there were any, and to educate all. The cadre proved to be a great success. It motivated the whole lot, made them more confident and ready to face the challenge bravely. This was subsequently apparent when the hostilities started.
QUESTIONS:
1. What was the cause of fear in RBM?
2. What were the symptoms of fear displayed by RBM?
3. How did the RMO come to know of the war phobia of RBM?
4. What actions should be taken to avoid building up of fear among the troops? Which of these steps were taken by the officer?

Case II

HE WHO RIDES A TIGER

In the Year of the Youth, the author took up a research project on young industrial workers. It involved comparing young and old workers. Two industries producing the same machines at similar technological level were selected. One belonged to the private sector and the other to the public sector. While the latter was started a decade later than the former, it had achieved greater expansion. Both were located in the same state.

After we obtained necessary permission to conduct our study, we reached the mofussil town where the private sector industry was located. Before we could launch our study, as a matter of principle, we wanted to meet the General Secretary of the workers' union. The Personnel Department was not willing for this. On our insistence they called the union official. We talked to him for about half an hour but Personnel Department people were all the time hovering around.

So we fixed a time in the evening to meet him in the union office in the town. We visited the union office in the evening. The union was having problem regarding wage deduction of some workers who did not show up for overtime. The overtime notice was short and they had not consented either, even then the management was threatening wage deduction for one week.

The union could hardly do a thing' as they in the past had burnt their hands when they had to unilaterally call off the 106 day old strike in which even their Treasurer had committed suicide. They were scared to the extent that they had productivity linked bonus agreement for even 12% bonus. Moreover, a new minuscue union was recently started in the company.

We visited the new union's office next evening and held a long discussion. They asked for' our suggestions. The union believed in legal battles more than agitations. After a visit to the industry the author visited the state headquarters of the new union. There every office bearer was surprisingly a lawyer. In the HQ we learnt that after we left, their union took out a procession and held a meeting in the temple. Perhaps this was the result of our discussion. While the older union was a prisoner of its past, the new union was free to write its own history. Workers' interests were being served perhaps by both.


QUESTIONS FOR DISCUSSION
1. Discuss merits/demerits of the role of strike, agitation and legal approach in union¬management relations.
2. What role does mutual trust play in building union-management relations?

CASE III

COMPETITION AHEAD: VSNL AT CROSS ROADS

The telecom sector had been functioning as a typical government department right from its inception. With the Department of Telephones (DoT) being under the exclusive control of the Ministry of Communications, Government of India (GO!), the system functioned more as a monopoly., With the advent of the LPG process (liberalization, privatization and globalization) in the early nineties, the telecom department went through a phase of modernization. A number of new and sophisticated electronic exchanges were installed which enhanced the capacity and lead to the disappearance of waiting list for telephone connections. In a landmark decision in 1995-96, the Government of India threw open its gates for private players in the area of cellular services. LCG and ACG were the two major players to enter this area in Karnataka region, while DoT decided to remain as an observer and continued as a provider of basic services only. Subsequently the Internet, ISD and other services were also opened to private participation.

The year 1998 saw the entry of Vikas Telenet (VTNL) as a basic service provider in the state of Karnataka. It launched its basic services in Bangalore district, the commercial capital of the state, in January 1998. The impact of this entry was felt by DoT as it resulted in a mass customer churning, challenging the market leadership of DoT in basic services. This growing challenge from VTNL made General Manager DoT Indore, R.L. Rawat realized the need for a comprehensive review of the competitive scenario. The situation faced by the Bangalore district was one of its kind. It was the only city where four companies were providing telephone services. LCG and ACG were providing cellular services while VTNL and DoT were providing basic services. To attract the customers all the providers had attractive tariff plans. DoT's market share was not affected by the entry of LCG and ACG as - they operated only as cellular service providers and their services carried a premium price. But the entry of VTNL as a basic service provider with attractive tariff plans showed a marked shift in customer base from DoT to VTNL specially in case of heavy users make it necessary for DoT to come up with similar competitive tariff plans.

General Manager Operations DoT Bangalore, S.N. Dutt, felt that improved services, customer care and proper pricing would help in winning back the heavy users who accounted for almost 60 to 65% of the total revenue. Keeping this in mind, a review of VTNL's tariff plans was done (Annexure I). The review revealed that the customers were getting a distinct price advantage in the rentals and free calls given by VTNL.

Along with this, a discount ranging from 2.5 to 16% was also announced by VTNL. S.N. Dutt formulated a comprehensive plan to guard DoT's market share. Officers were appointed as account holders and were responsible for rendering personalized customer care to commercially important customers hoping to retain them with better services. He also formulated a proposal of discounts which was forwarded to the Circle Head Office (Annexure-II) and a presentation was made by DGM - Marketing K.K. Sen, highlighting the rate at which customer churning was taking place and the need for implementation of new tariff plan. He pleaded with the senior officers that DoT needed to be at least reactive if not proactive, to sustain itself in the market. The proposal was well received and forwarded to the Ministry of Communications for approval. Responding to the need of the hour, the Ministry decided to offer a comprehensive discount of 2.5 to 16% for its heavy users. The scheme was introduced in Bangalore, which was extended first to the state of Karnataka and later on to the entire nation.

VTNL, which had so far been concentrating only on the heavy users, decided to now expand its network to get a wider customer base. With this view in mind, a number of promotional schemes were introduced e.g., web phone, a facility for internet usage where access to the net was provided at a cost of 60 paise per call only. It also announced free Internet facility for a year on every new connection. Besides this, VTNL went in for heavy promotion of its schemes. The careful wording of the schemes and enhancement of the number of free calls made the customers feel that they were gainers as far as rentals were concerned. These schemes when launched created very difficult times for VTNL during May -August 2001. By then, DoT had been Corporatised (October 1, 2000) and came to be known as VSNL. The Bangalore office was extremely hopeful that the corporatisation would facilitate. the implementation of new innovative schemes. For drafting a proposal of innovative schemes, VSNL first conducted a market research where in -the database of surrendered connections was used as sample and effort were made to identify the cause of disconnections. The survey revealed that of the total number of disconnections 30% were due to economic recession while 40% were due to customer turning in favor of VTNL while the remaining were due to a multitude of factors interplaying with one another.

To redeem the situation, VSNL, Bangalore prepared an innovative plan known as Business Special Plan - Plan 600-800, which offered 800 free calls on a monthly rental of Rs.600 only. The plan was put forward to Chief General Manager at Bangalore for approval. The persistent efforts of K.K. Sen bore fruits and the proposal was approved at the Circle level.

However, at the time of launch K. K. Sen realized that they needed TRAI's (Telecom Regulatory Authority of India) approval for going ahead. To ensure the unhindered approval of TRAI, modified tariff plans called 500-700 and an economy plan were suggested and sent for approval. While formulating these plans, an attempt was made to segment the market with an intention to target each segment with a customized/specific set of services. Plan 500-700 was targeted at high end users. Here, 700 calls were offered free on a monthly rental of Rs. 500 only. The economy plan carried a rental of just Rs.160 per month with a rate of Rs.l.20 per call. This plan was specially targeted at customers who had more of incoming calls and needed a facility for meeting their specific requirements. The rolling out of these schemes had an immediate impact with nearly 8,000 customers coming over to VSNL Bangalore. Along with these new tariff proposals a number of innovative strategies were introduced by VSNL, Bangalore.


• The initial registration amount was reduced and new subscribers were offered the facility of paying the amount in installments.
• Call centre functioning since February 2001 to deal with customer grievances was made proactive to ensure better customer care.
• Training was given to the front-end-people for updating their skills and changing the mindsets.
• Tele-shopping service was started which provided a one stop shopping facility, giving the customers the option to choose their telephone numbers, instrument and service.. Installation was assured within 48 hours.
• Phone-on-Phone facility was started wherein customers could obtain a connection installed by simply ringing up for it.
• A bill collecting facility was also introduced to further assist the customers.
• VCC Le., prepaid cards were introduced and even delivered at the doorsteps of the customers.
• Bill collection in the rural areas by mobile vans was introduced.
• Linemen were given pagers to facilitate prompt servicing of faulty telephone lines.
• Regular meetings between call centre members and maintenance staff were held to exchange information and solve grievances.
• For motivating and facilitating their employees, free telephone service was provided to all the employees.
• An advertising budget of Rs.30,00,000 (0.2% of the total sales revenue) was outlined for launching a comprehensive promotion programme using both indoor and outdoor media ensuring a good coverage of the market.


VSNL – Tariff Structure
Scheme Rental (Rs.) Free Colis Facilities
Business Plan - 500-700* 500 (Monthly) 700 Without STD
Economy Plan ** 160 (Monthly) Nil With STD
Standard Plan* 500 (Bimonthly) 150 With STD
* 0.80 Per Call ** Rs.1 .20 Per Call

VTNL – Tariff Structure
Scheme Rental (Rs.) Free Calls
Silver 300 349 (Monthly) 300
Golden – 500 499 (Monthly) 500


Questions:

1. What were the strengths and weaknesses of VSNL?
2. Do you think that VSNL should have changed its thrust from basic telephony to cellular services?
3. If you were the Deputy General Manager, what strategies would you have undertaken to deal with the competition?

Case IV
DISNEY’S DESIGN
The Walt Disney Company is heralded as the world’s largest entertainment company.  It has earned this astounding reputation through tight control over the entire operation : control over the open – ended brainstorming that takes place 24 hours a day ; control over the engineers who construct the fabulous theme – park rides; control over the animators who create and design beloved characters and adventurous scenarios ; and control over the talent that brings the many concepts and characters to life.  Although control pervades the company, it is not too strong a grip.  Employees in each department are well aware of their objectives and the parameters established to meet those objectives.  But in conjunction with the pre-determined responsibilities, managers at Disney encourage independent and innovative thinking.
People at the company have adopted the phrase “Dream as a Team” as a reminder that whimsical thoughts, adventurous ideas, and all – out dreaming are at the core of the company philosophy.  The over all control over each department is tempered by this concept.  Disney managers strive to empower their employees by leaving room for their creative juices to flow.  In fact, managers at Disney do more than encourage innovation.  They demand it.  Projects assigned to the staff “ imaginers” seem impossible at first glance.   At Disney, doing the seemingly impossible is  part of what innovation means.  Teams of imaginers gather together in a brainstorming session known as the “Blue Sky” phase.  Under the “Blue Sky”, an uninhibited exchange of wild, ludicrous, outrageous ideas, both “ good” and “ bad”, continues until solutions are found and the impossible is done.  By demanding so much of their employees, Disney managers effectively drive their employees to be creative.
Current Disney leader Michael Eisner has established the “Dream as a Team” concept.  Eisner realized that managers at Disney needed to let their employees brainstorm and create with support.  As Disney president Frank Weds says, “If a good idea is there, you know it, you feel it, you do it, no matter where it comes from.”




Questions :
1. What environmental factors influenced management style at Disney?
2. What kind(s) of organizational structure seem to be consistent with “Dream as a Team” ?
3. How and where might the informal organization be a real asset at Disney ?


Case V
 “THAT’S NOT MY JOB” – LEARNING DELEGATION AT CIN-MADE
When Robert Frey purchased Cin – Made in 1984, the company was near ruin.  The Cincinnati, Ohi-based manufacturer of paper packaging had not altered its product line in 20 years.  Labor costs had hit the ceiling, while profits were falling through the floor.  A solid quarter of the company’s shipments were late and absenteeism was high.  Management and workers were at each other’s throats.
Ten years later, Cin – Made is producing a new assortment of highly differentiated composite cans, and pre-tax profits have increased more than five times.  The Cin – Made workforce is both flexible and deeply committed to the success of the company.  On-time delivery of products has reached 98 percent, and absenteeism has virtually disappeared.  There are even plans to form two spin – off companies to be owned and operated by Cin-Made employees.  In fact, at the one day “Future of the American Workforce” conference held in July 1993, Cin-Made was recognized by President Clinton as one of the best – run companies in the United States.
“ How did we achieve this startling turnaround ?”  mused Frey.  “Employee empowerment is one part of the answer.  Profit sharing is another.”
In the late spring of 1986, relations between management and labor had reached rock bottom.  Having recently suffered a pay cut, employees at Cin- Made came to work each day, performed the duties required of their particular positions, and returned home-nothing more.  Frey could see that his company was suffering.  “To survive we needed to stop being worthy adversaries and start being worthy partners,” he realized.  Toward this end, Frey decided to call a meeting with the union.  He offered to restore worker pay to its previous level by the end of the year.  On top of that, he offered something no one expected: a 15 percent share of Cin-Made’s pre-tax profits. “I do not choose to own a company that has an adversarial relationship with its employees.” Frey proclaimed at the meeting.  He therefore proposed a new arrangement that would encourage a collaborative employee-management relationship “Employee participation will play an essential role in management.”
Managers within the company were among the first people to oppose Frey’s new idea of employee involvement.  “My three managers felt they were paid to be worthy adversaries of the unions.”  Frey recalled.  It’s what they’d been trained for.  It’s what made them good managers.  Moreover, they were not used to participation in any form, certainly not in decision making.”  The workers also resisted the idea of extending themselves beyond the written requirements of their jobs.  “ (Employees) wanted generous wages and benefits, of course, but they did not want to take responsibility for anything more than doing their own jobs the way they had always done them,” Frey noted.  Employees were therefore skeptical of Frey’s overtures toward “employee participation.”   “We thought he was trying to rip us off and shaft us,” explained Ocelia Williams, one of many Cin-Made employees who distrusted Frey’s plans.
Frey, however, did not give up, and he eventually convinced the union to agree to his terms.  “ I wouldn’t take no for an answer,” he asserted.  “Once I had made my two grand pronouncements, I was determined to press ahead and make them come true.”  But still ahead lay the considerable challenge of convincing employees to take charge  :
I made people meet with me, then instead
Of telling them what to do, I asked them.
They resisted.

“ How can we cut the waste on his run ?” I’d
say, or “How are we going to allocate the
overtime on this order ?”

“That’s not my job,” they’d say.

“But I need your input,” I’d say.  “How in the
World can we have participative management
If you won’t participate?

“I don’t know,” they’d say.  “Because that’s
not my job either.  That’s your job. ?”
Gradually, Frey made progress.  Managers began sharing more information with employees.  Frey was able slowly to expand the responsibilities workers would carry.  Managers who were unable to work with employees left, and union relations began to improve.  Empowerment began to happen.  By 1993, Cin Made employees were taking responsibility for numerous tasks.  Williams, for example, used to operate a tin-slitting machine on the company’s factory floor.  She still runs that same machine, but now is also responsible for ordering almost $ 100,000 in supplies.
Williams is just one example of how job roles and duties have been redefined throughout Cin-Made.  Joyce Bell, president of the local union, still runs the punch press she always has, but now also serves as Cin- Made’s corporate safety director.  The company’s scheduling team, composed of one manager and five lead workers from various plant areas, is charged with setting hours, designating layoffs, and deciding when temporary help is needed.  The hiring review team, staffed by three hourly employees and two managers, is responsible for interviewing applicants and deciding whom to hire.  An employee committee performs both short – and long – term planning of labor, materials, equipment, production runs, packing, and delivery.  Employees even meet daily in order to set their own production schedules.  “We empower employees to make decisions, not just have input,” Frey remarked. “I just coach.”
Under Frey’s new management regime, company secrets have virtually disappeared.  All Cin-Made employees, from entry-level employees all the way to the top, take part in running the company.  In fact, Frey has delegated so much of the company’s operations to its workers that he now feels little in the dark. “I now know very little about what’s going on, on a day-to-day basis,” he confessed.
At Cin-Made, empowerment and delegation are more than mere buzzwords; they are the way of doing business – good business. “We, as workers, have a lot of opportunities,” said Williams. “If we want to take leadership, it’s offered to us.”


Questions:
1. How were principles of delegation and decentralization incorporated into Cine – Made operations?
2. What are the sources and uses of power at Cin – Made?
3. What were some of the barriers to delegation and empowerment at Cin –Made?
4. What lessons about management in a rapidly changing marketplace can be learned from the experience of Cin – Made? 



Case VI
HIGH-TECH ANSWERS TO DISTRIBUTION PROBLEMS AT ROLLERBLADE
When a manger finds that demand exceeds inventory, the answer lies in making more goods. When a manager finds that inventory exceeds demand, the answer lies in making fewer goods.  But what if a company management finds that they just do not know which situation applies?
This is the situation that recently confronted management at Rollerblade, the popular skate manufacturer based in Minnetonka, Minnesota. Rollerblade has been one of the leading firms in the fast growing high performance roller skate marketplace, it matters a great deal for Rollerblade managers whether demand and inventory are in balance, or not.
Rollerblade was in a bind.  The product literally could not be shipped out the door.  The managers found that workers were not able to ship products because, as a result of poor storage structures, they could not find the products.  Once they were found, overcrowded aisles, in addition to other space constraints, still prevented efficient shipping because the workers could barely manage to get the products out the door.  “We were out of control because we didn’t know how to use space and didn’t have enough of it,” said Ian Ellis, director for facilities and safety.  “Basically, there was no more useable space left in the warehouse, a severe backlog of customer orders, and picking errors were clearly in the unacceptable range,” added Ram Krishnan, Principal of NRM Systems, based in St. Paul, Minnesota.
The answer for Rollerblade was found in technology.  High-tech companies have introduced a collection of computer simulations, ranging in cost roughly from $10,000 to $30,000, that assist managers in generating effective facility designs.  With the help of layout Master IV simulation software, developed by NRM, Rollerblade Management was able to implement a new distribution design.  As a result of the distribution improvement, Rollerblade was able to increase the number of customer orders processed daily from140 to 410 and eliminate order backlog.  “Now we have a different business,” says Ellis. “The new layout has taken us from being in a crunch, to being able to plan.

Questions:
1. With retailers as their primary customers, what customer competitive imperatives could be affected by Rollerblade’s inventory problems?
2. How appropriate might a just – in – time inventory system be for a product such as roller skates?”
3. What opportunities are therefore Rollerblade managers to see FOR themselves as selling services, instead of simply roller skates?




Masters Program in Business Administration (MBA)

Note :- Solve any 4 Case Study
             All Case Carry equal Marks.
CASE I
A GLOBAL PLAYER?

This is one game that India has permanently lost to its arch-rival Pakistan - manufacturing and exporting sports goods. Historically, when India and Pakistan were one before 1947, Sialkot, now in Pakistan, used to be the world's largest production centre for badminton, hockey, football, volleyball, basketball, and cricket equipment. After the creation of Pakistan, Jalandhar became the second centre after Hindus in the trade migrated to India. Soon Jalandhar overtook Sialkot and till the early 1980s it remained so. However when the face of the trade began to change in the 1980s and import of quality leather and manufacturing equipment became a necessity for quality production, Pakistan wrested the initiative as India clung it its policies of discouraging imports through high duties and restrictions. As it was, the availability of labor and skills was a common factor in both Sialkot and Jalandhar, but with Sialkot having the advantage of easier entry, most of the world's top sports manufactures and procedures developed an association with local industry in Sialkot that continues even today. Ten years later, in the early 1990s, when Manmohan Singh liberalised the norms for importing equipment and raw material required for producing sports goods, it was too late as majority of the global majors had already shifted base to Sialkot.

In 1961 the late Narinder Mayor started the first large scale sports goods manufacturing unit, Mayor & Company, thereby laying the foundation of an organized industry. Even today, more than 70 percent of the industry functions in an unorganized manner. Starting with soccer balls, Mayor expanded to produce inflatable balls like volleyballs, basketballs, and rugby balls. Today his two sons Rajan & Rajesh have built it up into five companies engaged in a wide array of businesses, though sports goods remain the group's core business. While the parent trading company, Mayor & Company, remains the leading revenue-earner to the tune of Rs. 55 crore annually out of a total group turnover of Rs. 85 crore-plus, Mayor's second venture, the Indo-Australian Mayor International Limited, is spinning another Rs. 15 crore. Mayor International is a 100 per cent export-oriented unit (EOU) exclusively manufacturing and exporting golf and tennis balls.




The product portfolio of the company comprises the following:
Inflatable Balls
• Soccer balls and footballs (Professional, Indoor, Match and Training, leisure toy)
• Volley balls, rugby balls (Volley balls and Beach Volley Balls)
• Australian rugby, hand balls (English League, Union and touch) (Australian rules, Australian Rugby League balls with laces)
Boxing Equipment
• Boxing and punching balls (Boxing and Punching Balls, Head Gear, Gloves, Punching Mitts and Kits Punching Bags & Bag Sets)
• Gloves
• Goal keeper's gloves (Football / Soccer)
• Boxing gloves
Cricket Equipment
• Worldwide distributor for Spading Cricket Bats, Balls and Protective equipment.

HOCKEY EQUIPMENT
• Worldwide distributor for Spading Hokey Sticks, Balls & Protective equipment

Based in Delhi, Rajan Mayor, 41 is the CMD of the group, which also comprises an IT division working on B2B and B2C solutions; Voyaguer World Travels in the tourism sector; a houseware exports division specializing in stainless steel kitchenware, ceramics, and textiles; and a high school. Younger brother Rajesh, 34, is the executive director and looks after all the divisions operating in Jalandhar. Technical director Katz Nowaskowski divides his time equally between India and Australia, where he looks after the group’s interests. “While inflatable balls are our prime competence in our core business, we are presently focusing on golf balls, for which we are the sole producers in South Asia. Out of a total Rs. 300 crore of sports goods business generated in domestic market, most of which is supplied by the unorganized players, golf balls constitute a miniscule amount and therefore we came up with a 100 per cent EOU for producing golf balls. Later the same facility was utilized with little moderation for tennis balls too,” says Nowaskowaski.

Clarifying that the sports good industry in India only includes playing equipment and not apparels or shoes, D K Mittal, chairman of the Sports Goods Export Promotion Council and joint secretary in the Ministry of Commerce, has certified Mayor group as the number one exporter since 1993 till date, barring 1996. However, SGEPC secretary Tarun Dewan points out that being the number one exporter does not mean that Mayor is the number one brand being exported. “Actually we have tie ups Dunlop, Arnold Palmer, and Fila for manufacturing golf balls. For footballs and volleyballs we have association with Adidas, Mitre, Puma, Umbro, and Dunlop. We manufacture soccer World Cup and European Cup replicas for Adidas, which is a huge market. Only 400 balls used for actual play in the World Cup are manufactured in Europe & that too only for sentimental reason, otherwise we are capable of delivering products of the same, if not better quality. Now since we manufacture balls for them, we cannot antimonies them by producing balls of similar quality with our own brand name. Secondly, I agree that competing with such big quaint in the world market in terms of branding is a task that is well beyond our reach at the moment. However, we are trying to brand ourselves in the domestic market and that is one of the prime focus in the coming year,” says Rajan.

Coca-Cola, Unilever, McDonald’s, American Airlines, Disney club, and other such big brands come up with huge orders at tines for golf balls with their logos for promotional schemes. However, there is no mention of the producing country since these companies do not want to show that balls they deliver in the US are being produced in Asia, “Not only is our quality good enough; labour in India is cheap enough to churn out a much less expensive product in the end. Yet, the main threat to our industry comes from countries like Taiwan and China, who have already cornered a chunk of world markets in tennis, badminton, and squash rackets. This is primarily because of two reasons – slow response to our needs in tune with the market requirements from the government and lack of infrastructure. And most importantly, tags ‘Made in China’ or ‘Made in Taiwan’ are more acceptable in the West than ‘Made in India’ or ‘Made in Pakistan’. One of the mottos of the Mayor group has been to make ‘Made in India’ an acceptable label in the West. For that we stress quality, timely delivery, and competent rates. Yet, a lot depends on perception value, which in our case is sadly on the negative side, much owing to our government’s stance over the years. Things might be improving, but the pace is very slow and as our economy drifts towards a free market scenario supinely, it might just prove to be too little too late in the end,” says Rajesh.

Today, Mayor group is sitting pretty as its competitors, Soccer International Sakay Trades, Savi, Wasan, Cosco, Nivia and Spartan are only trying to catch up in the inflatables category. With 1.2 million dozen golf balls, Mayor is way ahead of its competitors. The company is planning to enhance its manufacturing capacity to 1.5 million dozen golf next fiscal. With approval from the world’s two top golf associations – the US PGA and RNA of Scotland, demand for its product is not a problem, the company’s senior marketing officials point out. With the markets in Mayor’s current export destinations – Europe, North America, Australia, and Nw Zealand – all set to expand in the coming years after the present slump, Mayor wants to expand its sports goods business that caters to 60 per cent of its overall exports. Though 40 per cent of exports come from house ware manufactured in Delhi and Mumbai, with export centres in the same countries for its sports goods, just about maintaining this business at its present state, and concerning entirely on sports goods is what the mayors are intent on.

With nearly 2000 skilled workforce; quality certification from ISO 9001:2000 and ISO 14001: 2004; and having spread to more than 40 countries, Mayor and Company is obviously sitting pretty.
Questions

1. What routes of globalization has the Mayor group chosen to go global? What other routes could it have taken?
2. What impediments are coming in the Mayor group’s way becoming a major and active player in international business?
3. Why is ‘Made in India’ not liked in foreign markets? What can be done to erase the perception?


CASE II
ARROW AND THE APPAREL INDUSTRY

Ten years ago, Arvind Clothing Ltd., a subsidery of Arvind Brands Ltd., a member of the Ahmedabad based Lalbhai Group, signed up with the 150-year old Arrow Company, a division of Cutlet Peabody & Co. Inc., US, for licensed manufacture of  Arrow shirts in India. What this brought to India was not just another premium dress shirt brand but new manufacturing philosophy to its garment industry which combined high productivity, stringent in-line quality control, and a conducive factory ambience.

Arrow’s first plant, with a 55,000 sq. ft. area and capacity to make 3,000 to 4,000 shirts a day, was established at Bangalore in 1993 with an investment of Rs. 18 crore. The conditions inside – with good lighting on the workbenches, high ceilings, ample elbow room for each worker, and plenty of ventilation, were a decided contrast to the poky, crowded, and confined sweatshops characterizing the usual Indian apparel factory in those days. It employed a computer system for translating the designed shirt’s dimensions to automatically mark the master pattern for initial cutting of the fabric layers. This was installed, not to save labour but to ensure cutting accuracy and low wastage of cloth.

The over two-dozen quality checkpoints during the conversion of fabric to finished shirt was unique to the industry. It is among the very few plants in the world that makes shirts with 2 ply 140s and 3 ply 100s cotton fabrics using 16 to 18 stitches per inch. In March 2003, the Bangalore plant could produce stain-repellant shirts based on nanotechnology.

The reputation of this plant has spread far and wide and now it is loaded mostly with export orders from renowed global brands such as GAR, Next, Espiri, and the like. Recently the plant was identified by Tommy Hilfiger to make its brand of shirts for the Indian market. As a result, Arvind Brands has had to take over four other factories in Bangalore on wet lease to make the Arrow brand of garments for the domestic market.

In fact, the demand pressure from global brands which want to out outscore from Arvind Brands, is so great that the company has had to set up another large for export jobs on the outskirts of Bangalore. The new unit of 75,000 sq. ft. has cost Rs. 16 crore and can turn out 8,000 to 9,000 shirts per day. The technical collaborates are the renowned C&F Italia of Italy.

Among the cutting edge technologies deployed here are a Gerber make CNC fabric cutting machine, automatic collar and cuff stitching machines, pneumatic holding for tasks like shoulder joining, threat trimming and bottom hemming, a special machine to attach and edge stitch the back yoke, foam finishers which use air and steam to remove creases in the finished garment, and many others. The stitching machines in this plant can deliver up to 25 stitches per inch. A continuous monitoring of the production process in the entire factory is done through a computerized apparel production management system, which is hooked to every machine. Because of the use of such technology, this plant will need only 800 persons for a capacity which is three that of the first plant which employs 580 persons.

Exports of garments made for global brands fetched Arvind Brands over Rs. 60 crore in 2002, and this can double in the next few years, when the new factory goes on full stream. In fact, with the lifting of the country-wise quota regime in 2005, there will be a surge in demand for high quality garments from India and Arvind is already considering setting up two more such high tech export-oriented factories.

It is not just in the area of manufacture but also retailing that the arrow brand brought a wind of change on the Indian scene. Prior to its coming, the usual Indian shirt shop used to be a clutter of racks with little by way of display. What Arvind Brands did was to set up exclusive showrooms for Arrow shirts in which the functional was combined with the aesthetic. Stuffed racks and clutter were eschewed. The products were displayed in such a manner that the customer could spot their qualities from a distance. Of course, today this has become standard practice with many other brands in the country, but Arrow showed the way. Arrow today has the largest network of 64 exclusive outlets across India. It is also present in 30 retail chains. It branched into multi-brand outlets in 2001, and is present in over 200 select outlets.

From just formal dress shirts in the beginning, the product range of Arvind Brands has expanded in the last ten years to include casual shirts, T-shirts, and trousers. In the pipeline are light jackets and jeans engineered for the middle age paunch. Arrow also tied up with the renowed Italian designer, Renato Grande, who has worked with names like Versace and Marlboro, to design its Spring / Summer Collection 2003. The company has also announced its intention to license the Arrow brand for other lifestyle accessories like footwear, watches, undergarments, fragrances, and leather goods. According to Darshan Mehta, President, Arvind Brands Ltd., the current turnover at retail price of the Arrow brand in India is about Rs. 85 crore. He expects the turnover to cross Rs. 100 crore in the next few years, of which about 15 per cent will be from the licensed non-clothing products.

In 2005, Arvind Brands launched a major retail initiative fir all its brands. Arvind Brands licensed brands (Arrow, Lee and Wrangler) had grown at a healthy 35 per cent rate in 2004 and the company planned to sustain the growth by increasing their retail presence. Arvind Brands also widened the geographical presence of its home-grown brands, such as Newport and Ruf-n-Tuf, targeting small towns across India. The company planned to increase the number of outlets where its domestic brands would be available, and draw in new customers for readymades. To improve its presence in the high – end market, the firm started negotiating with an international brand and is likely to launch the brand.

The company has plans to expand its retail presence of Newport Jeans, from 1200 outlets across 480 towns to 3000 outlets covering 800 towns.

For a company ranked as one of the world’s largest manufacturers of denim cloth and owners of world famous brands, the future looks bright certain for Arvind Brands Ltd.
Company Profile
Name of the Company : Arvind Mills
Year of Establishments : 1931
Promoters : Three brothers – Katurbhai, Narottam Bhai and Chimnabhai
Divisions : Arvind Mills was spilt in 1993 into three units – textiles, telecom and garments. Arvind Brands Ltd. (textile unit) is 100 per cent subsidiary of Arvind Mills.
Growth Strategy : Arvind Mills has grown through buying – up of sick units, going global and acquisition of Germanand US brand names.


Questions
1. Why did Arvind Mills choose globalization as major route to achieve growth when domestic market was huge?
2. Hoe does lifting of Country-wise quota regime’ help Arvind Mills?
3. What lessons can other Indain business learn from the experience of Arvind Mills?

CASE III

AT THE RECEIVING END ! 
Spread over 121 countries with 30,000 restaurants, and serving 46 million customers each day with the help of more than 400,000 employees, the reach of McDonald’s is amazing. It all started in 1948 when two brothers, Richard and Maurice ‘Mac’ McDonald, built several hamburger stands, with golden arches in southern California. One day a traveling salesman, Ray Kroc, came to sell milkshake mixers. The popularity of their $O. 15 hamburgers impressed him, so he bought the world franchise rights from them and spread the golden arches around the globe.

McDonald’s depends on its overseas restaurants for revenue. In fact, 60 percent of its revenues are generated outside of the United States. The key to the company’s success is its ability to standardize the formula of quality, service, cleanliness and value, and apply it everywhere.

The company, well known for its golden arches, is not the world’s largest company. Its system wide sales are only about one-fifth of Exxon Mobil or Wal-Mart stores. However, it owns one of the world’s best known brands, and the golden arches are familiar to more people than the Christian cross. This prominence, and its conquest of global markets, makes the company a focal point for inquiry and criticism.

McDonald is a frequent target of criticism by anti-globalization protesters. In France, a pipe-smoking sheep farmer named Jose Bove shot to fame by leading a campaign against the fast food chain. McDonald’s is a symbol of American trade hegemony and economic globalization. Jose Bove organized fellow sheep farmers in France, and the group led by him drove tractors to the construction site of a new McDonald’s restaurants and ransacked it. Bove was jailed for 20 days, and almost overnight an international anti-globalisation star was borne. Bove, who resembles the irrelevant French comic book hero Asterix, traveled to Seattle in 1999, as part of the French delegation to lead the protest against commercialization of food crops promoted by the WTO. Food, according to him, is too vital a part of life to be trusted to the vagaries of the world trade. In Seattle, he led a demonstration in which some ski-masked protestors transhed at McDonald’s/ As Bove explained, his movement was for small farmers against industrial farming, brought about by globalization. For them, McDonald’s was a symbol of globalization, implying the standardization of food through industrial farming. If this was allowed to go on, he said, there would no longer be need for farmers. “For us”, he declared, “McDonald’s is a symbol of what WTO and the big companies want to do with the world”. Ironically, for all of Bove’s fulminations against McDonald’s, the fast food chain counts its French operations among its most profitable in 121 countries. As employer of about 35,000 workers, in 2006, McDonald’s was also one of France’s biggest foreign employers.

Bove’s and his followers are not the only critics of McDonald’s. Leftists, anarchists, nationalists, farmers, labor unions, environmentalists, consumer advocates, protectors of animal rights, religious orders and intellectuals are equally critical of the fast food chain. For these and others, McDonald’s represents an evil America. Within hours after US bombers began to pound Afghanistan in 2001, angry Pakistanis damaged McDonald’s restaurants in Islamabad and an Indonesian mob burned an American flag.

McDonald entered India in the late 1990s. On its entry, the company encountered a unique situation.  Majority of the Indians did not eat beef but the company’s preparations contained cow’s meat nor could the company use pork as Muslims were against eating it.  This left chicken and mutton.  McDonald’s came out with ‘Maharaja Mac’, which is made from mutton and ‘McAloo Tikki Burger’ with chicken potato as the main input.  Food items were segregated into vegetarian and non-vegetarian categories.

Though it worked for sometimes, this arrangement did not last long.  In 2001, three Indian businessmen settled in Seattle sued McDonald’s for fraudulently concealing the existence of beef in its French fries.  The company admitted its guilt of mixing miniscule quantity of beef extract in the oil. The company settled the suit for $10 million and tendered an apology too.  Further, the company pledged to label the ingredients of its food items, and to find a substitute for the beef extract used in its oil.

McDonald’s succeeded in spreading American culture in the East Asian countries.  In Hong Kong and Taiwan, the company’s clean restrooms and kitchens set a new standard that elevated expectations throughout those countries.  In Hong Kong, children’s birthdays had traditionally gone unrecognized, but McDonald’s introduced the practice of birthday parties in its restaurants, and now such parties have become popular among the public.   A journalist set forth a ‘Golden Arches Theory of Conflict Prevention’ based on the notion that countries with McDonald’s restaurants do not go to war with each other.  A British magazine, The Economist, paints an yearly ‘Big Mac Index’ that uses the price of a Big Mac in different foreign currencies to access exchange rate distortions.

Questions :
1. What lessons can other MNCs learn from the experience of McDonald’s?
2. Aware of the food habits of Indians, why did McDonald’s err in mixing beef extract in the oil used for fries?
3. How far has McDonald’s succeeded in strategizing and meeting local cultures and needs?


CASE IV

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 BPO is Evalueserve, headquartered 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, CLOs and other so-called C-level executives.

Evalueserve 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 BPO 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 lvory 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 source planning among others. It has ear------- $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, 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 centers. As the market for traditional IT services started weakening around mid-2000, ICICI Infotech repositioned itself as a “Solutions” firm offering both products and services. Today, it offers bundled packages of products and services in corporate and retail banking and insurance, among other areas. The new offerings 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 now boasts more than 700 customers in 30 countries, including Dow Jones,  Glaxo – Smithkline, Panasonic and American Insurance Group.

The outsourcing industry is indeed growing from 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 BPO as a way to out costs and increase productivity.

Another potential area is ITES/BPO industry. According to a NASSCOM Survey, the global ITES/BPO 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/BPO 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 from $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-BPO industry is growing at over 50 percent.

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. Indian legal opinions are written 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 BPO 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 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 in Switzerland.

Though going is good, the Indian BPO services providers cannot afford to be complacent, Phillippines, Mexico 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 Africa and even China.

BPO 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 switching equipment to contract manufacturers 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 knowhow. Outsourcing of maintenance services, data 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 crore business and do what it does best. Are Indian companies listening? If they listen, BPO is a boon 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 in this chapter.


CASE V

THE SAGA CONTINUES

It was the talk of the town in Bangalore during the late 1970s and early 1980s. The plant was coming up on the Bangalore – Yelahanka Road, about 20 km from the city. Everything the people over three did became a folklore. The buildings were huge with wonderful architecture, beautifully built with wide roads and huge spaces. Should a situation demand, the entire plant could be dismantled, bundled up, loaded into trucks and ferried to other places. Lighting inside the building had to be seen to be believed. Interiors had to be seen to be believed. Washrooms, stores, reception, canteen, healthcare, had to be seen to be believed. It had never happened elsewhere. It was amazing, the boss was not addressed as Sir, he was called Mr. ---- and so ! The yellow painted buses on the city roads made a delightful sight. Legends were fold about the two gentlemen who founded the company.

An interesting story is told about how one of the surviving founders (Larsen who lived till 2003) visited the Bangalore plant once a year, he stayed in a hotel on his own, hired his own cab, went to the plant and greeted every employee, from the top brass down to the last person in the hierarchy. Story is also told about how, on one such visit Larsen went to the reception and asked for permission to enter the plant. Not knowing who he was, the young lass in reception room made him wait for half-an-hour. By luck, someone recognized him.

A budding author captured all these and many more in his first book, which became a big hit with all the teachers and students in different colleges buying and reading it.

If cannot be anything other than L & T, the huge engineering and construction multi-plant organization, founded in 1938 by two Danish engineers, Henning Holck – Larsen and Soren Kristin Toubro.

Henning Holck – Larsen and Soren Kristin Toubro, school – mates in Denmark, would not have dreamt, as they were learning about India in history classes that they would, one day, create history in that land. In 1938, the two friends decided to forgo the comforts of working in Europe and started their own operation in India. All they had was a dream. And the courage to dare. Their first office in Mumbai (Bombay) was so small that only one of the partners could use the office at a time! Today, L & T is one of India’s biggest and best known industrial organizations with reputation for technological excellence, high quality of products and services and strong customer orientation.

As on today, L & T is a 62 business conglomerate with turnover of Rs. 18,363 crore (2006-07), with the script commanding Rs. 2400 in the bourses.

No, L & T is not sitting pretty. It want to hit Rs. 30,000 crore turnover mark by 2010 and is busy restructuring, sniffing new pastures, grooming new talent and projecting the new company credo – “It’s all about Imagineering.” With the sole idea of creating several MNCs within, with footprints across nations, L & T is shedding the old economy and embracing the emergent opportunities and challenges.

Stagnant Revenues and Low Margins
Not everything went the L & T way.
In the late nineties, the macro environment was ----- inspiring with stagnant revenues and low margins, and L & T’s core strength, its engineers, were being constantly weaned away by the fast-growing software sector. So, the general comment around the bourses was about the credibility of the company, ‘L & T is a, good company but its stock price, for some reason or the other, is fixed at the Rs. 140-210 band. So the company had to change by keeping its core intact. As s senior executive remarks. “L & T was perceived to be un –sexy and we had to create a new buzz around the campuses.” The metamorphosis must echo through a whimper, not a bang. Even before the company divested its cement business in 2003, which accounted for 25% of its total sales, there were years of incremental and low visibility organizational moves towards a new L & T.

At a 52-week high of Rs. 2400, the L & T scrip today looks dapper, a far cry from the nineties when the stock price was in a state of flux. Much of the change started as a ripple way back in 1999 when Naik took over as the CEO. He visited employees at all levels across the organization and asked them what it took to transform the company. The insights were mapped and implemented. “None of our employees thought that we build shareholder value. They thought we build monuments,” the chairman reminisces. The focus on people became stronger and formed the basis of restructuring. It became the first old economy company to provide stock options to its employees.

When Naik came to the helm, he set upon himself a 90 – day transformational agenda. Portfolios were reviewed and a vision clearly chalked out. He drew up a simple, brief, “ L & T has to be a multinational company and it has to deliver shareholder value at any cost. At the end of 90 days, between July 22 and July 24, 1999, the company launched Project Blue Chip, which essentially fast – tracked projects. The moot point was to complete all projects by February of the new millennium. Strategy formation teams were formed, portfolios reviewed and structures were optimized. Young leadership was brought to the fore and the business streamlining process kicked in.

Hiving off from 1999-2001, L & T went about debottle- necking its cement plants. They were modernized and capitalized were raised from 12 million tones to 16 million tones annually, with minimum costs. The mantra really was to grow the business and then divest it as cement fell in the non-core category.

So, in September 2003, L & T sold its cement business to the Aditya Birla Group, which resulted in the company’s Economic Value Add (EVA), an important indicator of the financial health of the company, swinging from a negative Rs.350-crore to a positive Rs.50-crore immediately. The move also enabled L&T to reduce its debt-equity ratio from 1:1 to 0.2:1. Analysts took a positive view of the demerger, and re-rated L&T as AAA from AA+ in 2004. From then on, began L&T’s transformation into a lean and mean machine. In 2004, the company envisaged a growth curve for the next five years. This marked the beginning of Project Lakshya, which was centered around people, operations, capabilities and new ventures. The company set out with over 300 initiatives in hand, and also placed a rigorous risk management system. For instance, any project above Rs. 1,000-crore needed the signature of the chairman. Project Lakshya is known for targeting and selecting the right projects.

By now, the Indian economy had started witnessing unprecedented boom and despite divesting the cement business, the L&T turnover scaled the Rs. 10,000 crore mark. Alongside, the lucrative Middle East market was booming and L&T forayed into six countries in the Gulf with joint ventures. “The idea was to develop a mini L&T in the region,” observes a senior company executive. The company also set up manufacturing facilities in China to leverage the cost structure. Exports in 2007 constituted 18% of net sales. With soaring revenues and operating margins, L&T started benchmarking itself with the best in the world. Suddenly, the notion of an Indian MNC became a reality.

L&T has big plans to foray into new businesses. The new businesses are:

Ship-building: L&T is getting into ship-building by building a world-class facility, and already has a small shipyard in Hazira. Will build complex ocean going ships for the first time in India.

Power equipment: It is getting into power equipment in a big way. A JV with Mitsubishi for super critical boilers, formed another with Toshiba for turbines on the way.

Financial services: L&T is rapidly increasing its presence in infrastructure finance. It is also planning to come up with a $1 billion infrastructure fund.

Railways: A new area, L&T aims to be an end-to-end solutions provider for the railways, from track-laying to signaling to transmission, and others.

The global economic meltdown has hit L&T also, but lightly. Its order book at Rs. 71,650cr has not grown as expected. Delay in finalization of several government projects as well as the slowdown in the overseas markets are the key reasons for the lax in order inflow. The company, however, has maintained its forecast of a 25 percent growth in its order book for the fiscal 2010.

L&T’s, IT and financial subsidiaries too witnessed lackluster performance with profits remaining stagnant.

L&T’s focus areas in future would be the Middle East and China in view of the booming infrastructure market there.

Thus, for an institution that has grown to legendary proportions, there cannot and must not be an ‘end’. Unlike other stories, the L&T saga continues.




QUESTIONS
1. Having a strong presence in India, what drives L&T to think of emerging a strong MNC ?
2. What challenges lies ahead of L&T ? How does it prepare to cope with them ?
3. Will the L&T Saga continue ?

CASE VI
THE ABB PBS JOINT VENTURE IN OPERATION

ABB Prvni Brnenska Strojirna 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 21/2 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-1980s, leaving less business in the 1990s. 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. Plant logistics, information systems, and other physical capital improvements were in place. The restructing 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)
• Installation 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 realised by mid-1996. Richard Kuba, the ABB-PBS managing director, realised 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 recognised 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 stabilise our engineering workforce. The restructuring helped. We have better equipment and a clean 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 realized its technology leadership?
3. What lessons one can draw from this incident for better management of technology transfers?


CASE VII

PERU
Peru is located on the west coast 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, sparking grass-covered plateaus, and thick rain forests. Peru has approximately 27 million people, of which about 20 per cent live in Lima, the capital. More Indians (one half of the population) live in Peru than in any other country in the western hemisphere. The ancestors of Peru’s Indians were the famous Incas, who built a great empire. The rest of the population is mixed and a small percentage is white. The economy depends heavily on agriculture, fishing, mining, and services. GDP is approximately $115 billion and per capita income in recent years has been around $4, 300. In recent years the economy has gained some relative and multinationals are now beginning to consider investing in the country.

One of these potential investors is a large New York based that is considering a $25 million loan to the owner of a Peruvian fishing fleet. The owner wants to refurbish the fleet and add one more ship.

During the 1970s, the Peruvian government 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 and influx of capital to 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 believers 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 and additional decade for the loan to be repaid. If the government were to allow the fleet owner to operate the fleet the way he has over the last decade, the loan could be repaid within seven years.

Right now, the bank is deciding on the specific terms of the agreement. Once these have been worked out, either a loan officer will fly down to Lima and close the deal or the owner will be asked to come to New York for the signing. Whichever approach is used, the bank 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?