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Case 1 :-
“ Left or Right?”
Rajinder Kumar was a production worker at Competent Motors Limited (CML), which made components and accessories for the automotive industry. He had worked at CML for almost seven years as a welder, along with fifteen other men in the plant. All had received training in welding, both on the job and through company-sponsored external programmes. They had friendly relations and got along very well with one another. They played volleyball in the playground regularly before retiring to the quarters allotted by the company. They ate together in the company canteen, cutting jokes on each other and making fun of anyone who dared to peep into their privacy during lunch hour. Most of the fellows had been there for quite some time, except for two men who had joined the ranks only two months back.
Rajinder was generally considered to be the leader of the group, so it was no surprise that when the foreman of the department was transferred and his vacancy was announced, Rajinder applied for the job and got it.
There were only four other applicants for the job, two from mechanical section and two from outside. When there was a formal announcement of the appointment on a Friday afternoon, everyone in the group congratulated Rajinder. They literally carried him snacks and celebrated the event enthusiastically.
On Monday morning, Rajinder joined duty as Foreman. It was company practice for all foremen to wear blue jacket and a white shirt. Each man’s coat had his name badge sewn onto the left side pocket. The company had given two pairs to Raijnder. He was proud to wear the coat to work on Monday.
People who saw him from a distance went upto him and admired the new blue coat. There was a lot of kidding around calling Rajinder as ‘Hero’, ‘Raja Babu’ and ‘Officer’ etc. One of the guys went back to his locker and returned with a long brush and acted as though he were removing dust particles on the new coat. After about five minutes of horseplay, all of the men went back to work.
Rajinder went back to his office to get more familiar with his new job and environment there.
At noon, all the men broke for lunch and went to the canteen to eat and enjoy fun as usual. Rajinder was busy when they left but followed after them a few minutes, later. He bought the food coupon, took the snacks and tea and turned to face the open canteen. Back in the left side corner of the room was his old work group; on the right hand side of the canteen sat all the other foremen in the plant all observed in their blue coats.
At that point of time, silence descended on the canteen. Suddenly both groups looked at Rajinder anxiously, waiting to see which group he would eat with.
QUESTIONS:
- Whom do you think Rajinder will eat with? Why?
- If you were one of the other foremen, what could you do to make Rajinder’s transition easier?
- What would you have done if you were in Rajinder’s shoes? Why?
Case No : 1
PUBLIUS
Although many people believe that the World Wide Web is anonymous and secure from censorship, the reality is very different. Governments, law courts, and other officials who want to censor, examine, or trace a file of materials on the Web need merely go to the server (the online computer) where they think the file is stored. Using their subpoena power, they can comb through the server’s drives to find the files they are looking for and the identify of the person who created the files.
On Friday June 30, 2000, however, researches at AT & T Labs announced the creation of Publius, a software program that enables Web users to encrypt (translate into a secret code) their files – text, pictures, or music – break them up like the pieces of a jigsaw puzzle, and store the encrypted pieces on many different servers scattered all over the globe on the World Wide Web. As a result, any one wanting to examine or censor the files or wanting to trace the original transaction that produced the file would find it impossible to succeed because they would have to examine the contents of dozens of different servers all over the world, and the files in the servers would be encrypted and fragmented in a way that would make the pieces impossible to identify without the help of the person who created the file. A person authorized to retrieve the file, however, would look through a directory of his files posted on a Publius – affiliated website, and the Publius network would reassemble the file for him at his request. Researchers published a description of Publius at www.cs.nyu.edu/waldman/publius.
Although many people welcomed the way that the new software would enhance freedom of speech on the Web, many others were dismayed. Bruce Taylor, an antipornography activist for the National Law Center for Children and Families, stated : “It’s nice to be anonymous, but who wants to be more anonymous than criminals, terrorists, child molesters, child pornographers, hackers and e-mail virus punks.” Aviel Rubin and Lorrie Cranor, the creators of Publius, however, hoped that their program would help people in countries where freedom of speech was repressed and individuals were punished for speaking out. The ideal user of Publius, they stated, was “a person in China observing abuses of human rights on a day – to – day basis.”
Questions :
- Analyze the ethics of marketing Publius using utilitarianism, rights, justice, and caring. In your judgement, is it ethical to market Publius ? Explain.
- Are the creators of Publius in any way morally responsible for any criminal acts that criminals are able to carry out and keep secret by relying on Publius ? Is AT & T in any way morally responsible for these ? Explain your answers.
- In your judgment, should governments allow the implementation of Publius ? Why or why not ?
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
- What does the purchase of a product like Nike mean to Sunder Singh?
- What does the story say about our society and the impact of marketing on consumer behavior?
Case NO. 2
COOKING LPG LTD
DETERMINATION OF WORKING CAPTIAL
Introduction :-
Cooking LPG Ltd, Gurgaon, is a private sector firm dealing in the bottling and supply of domestic LPG for household consumption since 1995. The firm has a network of distributors in the districts of Gurgaon and Faridabad. The bottling plant of the firm is located on National Highway – 8 (New Delhi – Jaipur), approx. 12 kms from Gurgaon. The firm has been consistently performing we.” and plans to expand its market to include the whole National Capital Region.
The production process of the plant consists of receipt of the bulk LPG through tank trucks, storage in tanks, bottling operations and distribution to dealers. During the bottling process, the cylinders are subjected to pressurized filling of LPG followed by quality control and safety checks such as weight, leakage and other defects. The cylinders passing through this process are sealed and dispatched to dealers through trucks. The supply and distribution section of the plant prepares the invoice which goes along with the truck to the distributor.
Statement of the Problem :
Mr. I. M. Smart, DGM(Finance) of the company, was analyzing the financial performance of the company during the current year. The various profitability ratios and parameters of the company indicated a very satisfactory performance. Still, Mr. Smart was not fully content-specially with the management of the working capital by the company. He could recall that during the past year, in spite of stable demand pattern, they had to, time and again, resort to bank overdrafts due to non-availability of cash for making various payments. He is aware that such aberrations in the finances have a cost and adversely affects the performance of the company. However, he was unable to pinpoint the cause of the problem.
He discussed the problem with Mr. U.R. Keenkumar, the new manager (Finance). After critically examining the details, Mr. Keenkumar realized that the working capital was hitherto estimated only as approximation by some rule of thumb without any proper computation based on sound financial policies and, therefore, suggested a reworking of the working capital (WC) requirement. Mr. Smart assigned the task of determination of WC to him.
Profile of Cooking LPG Ltd.
1) Purchases : The company purchases LPG in bulk from various importers ex-Mumbai and Kandla, @ Rs. 11,000 per MT. This is transported to its Bottling Plant at Gurgaon through 15 MT capacity tank trucks (called bullets), hired on annual contract basis. The average transportation cost per bullet ex-either location is Rs. 30,000. Normally, 2 bullets per day are received at the plant. The company make payments for bulk supplies once in a month, resulting in average time-lag of 15 days.
2) Storage and Bottling : The bulk storage capacity at the plant is 150 MT (2 x 75 MT storage tanks) and the plant is capable of filling 30 MT LPG in cylinders per day. The plant operates for 25 days per month on an average. The desired level of inventory at various stages is as under.
- LPG in bulk (tanks and pipeline quantity in the plant) – three days average production / sales.
- Filled Cylinders – 2 days average sales.
- Work-in Process inventory – zero.
3) Marketing : The LPG is supplied by the company in 12 kg cylinders, invoiced @ Rs. 250 per cylinder. The rate of applicable sales tax on the invoice is 4 per cent. A commission of Rs. 15 per cylinder is paid to the distributor on the invoice itself. The filled cylinders are delivered on company’s expense at the distributor’s godown, in exchange of equal number of empty cylinders. The deliveries are made in truck-loads only, the capacity of each truck being 250 cylinders. The distributors are required to pay for deliveries through bank draft. On receipt of the draft, the cylinders are normally dispatched on the same day. However, for every truck purchased on pre-paid basis, the company extends a credit of 7 days to the distributors on one truck-load.
4) Salaries and Wages : The following payments are made :
- Direct labour – Re. 0.75 per cylinder (Bottling expenses) – paid on last day of the month.
- Security agency – Rs. 30,000 per month paid on 10th of subsequent month.
- Administrative staff and managers – Rs. 3.75 lakh per annum, paid on monthly basis on the last working day.
5) Overheads :
- Administrative (staff, car, communication etc) – Rs. 25,000 per month – paid on the 10th of subsequent month.
- Power (including on DG set) – Rs. 1,00,000 per month paid on the 7th Subsequent month.
- Renewal of various licenses (pollution, factory, labour CCE etc.) – Rs. 15,000 per annum paid at the beginning of the year.
- Insurance – Rs. 5,00,000 per annum to be paid at the beginning of the year.
- Housekeeping etc – Rs. 10,000 per month paid on the 10th of the subsequent month.
- Regular maintenance of plant – Rs. 50,000 per month paid on the 10th of every month to the vendors. This includes expenditure on account of lubricants, spares and other stores.
- Regular maintenance of cylinders (statutory testing) – Rs. 5 lakh per annum – paid on monthly basis on the 15th of the subsequent month.
- All transportation charges as per contracts – paid on the 10th subsequent month.
- Sales tax as per applicable rates is deposited on the 7th of the subsequent month.
6) Sales : Average sales are 2,500 cylinders per day during the year. However, during the winter months (December to February), there is an incremental demand of 20 per cent.
7) Average Inventories : The average stocks maintained by the company as per its policy guidelines :
- Consumables (caps, ceiling material, valves etc) – Rs. 2 lakh. This amounts to 15 days consumption.
- Maintenance spares – Rs. 1 lakh
- Lubricants – Rs. 20,000
- Diesel (for DG sets and fire engines) – Rs. 15,000
- Other stores (stationary, safety items) – Rs. 20,000
8) Minimum cash balance including bank balance required is Rs. 5 lakh.
9) Additional Information for Calculating Incremental Working Capital During Winter.
- No increase in any inventories take place except in the inventory of bulk LPG, which increases in the same proportion as the increase of the demand. The actual requirements of LPG for additional supplies are procured under the same terms and conditions from the suppliers.
- The labour cost for additional production is paid at double the rate during wintes.
- No changes in other administrative overheads.
- The expenditure on power consumption during winter increased by 10 per cent. However, during other months the power consumption remains the same as the decrease owing to reduced production is offset by increased consumption on account of compressors /Acs.
- Additional amount of Rs. 3 lakh is kept as cash balance to meet exigencies during winter.
- No change in time schedules for any payables / receivables.
- The storage of finished goods inventory is restricted to a maximum 5,000 cylinders due to statutory requirements.
Q ) DETERMINE THE WORKING CAPTIAL ?
CASE I
NAVEEN FISHERIES LTD.
The managing director of Naveen Fisheries Ltd. (NFL) received a message from one of the members of the crew that their mechanized boats had sunk at sea off Paradeep Port Trust due to unfavorable weather. The other directors of NFL ascertained the detailed information regarding the incident. All the promoters were fresh graduates.
Naveem, Praveen, Nagain, Ravi and Chandra were the promoters of the organization (NFL at Vishakhapattanam) with a capital contribution of Rs. 25 lakh each. Three of them had an engineering background. The other two were commerce graduates. They had thought of designing the vessels themselves so that the cost each mechanized boat would be reduced from Rs. 30 lakhs (if they bought them) to Rs. 22 Lakh. They designed three boats and these were sent out with a newly – appointed crew. Two vessels were sent to Paradeep and the third to Kakinada. Unfortunately, the weather was unfavourable. All the vessels sank. The crew also did not have experience. Two workers were injured and the rest arrived sagely. There was significant damage to the vessels and the residue was considered scrap. The cost of scrap of the vessels was nominal. As their working capital was scarce, and they were unable to invest more capital, they were in a dilemma whether to continue the business or not.
Case I Questions:
- What were the reasons for the sinking of the vessels?
- How could they reorganize the businesses?
CASE I
EMPLOYEE MOTIVATION IN A GOVERNMENT ORGANIZATION"
Bhumika Services Ltd., one of the largest public sector companies of India, was serving more than 31 million customers. Along with its vast customer base, BSNL's financial and asset bases too were vast and strong. Changing regulations, converging markets, competition and ever demanding customers had generated challenges for BSNL. The Indore division of BSNL was the first in the country, which faced competition in basic telecom services from 1998. In spite of being a government department, Indore telephones had to face the competition, and relentless efforts were put in to improve the services and provide worldclass telecom services to its customers. Among the various services offered by Indore Telecom, 197 and 183 were two special services. 197 provided non-metered enquiry services to obtain telephone numbers by simply giving the name of person/name of organization/ name and designation of person, or by giving address. 183 on the other hand, was a nonmetered enquiry service that provided similar services for distant stations. There were a large number of complaints related to these services. Complaints were either directly forwarded to the district office by customers or raised during Telephone Adalats or pointed out by correspondents during press conferences, which were conducted quarterly. Complaints ranged from non-response, long waiting time to rude responses.
- S. Baheti took charge as Area Manager (North) on July 25, 2001 In the Indore Division. Immediately after taking charge, he realized that special services like 197 and 183 required urgent attention as they were directly affecting the image of the organization amongst customers. Since most of the complaints during Telephone Adalats and press conferences were related to these services, Baheti wanted to reach the root cause of the problem, to solve it forever. In this process, he looked at the background of the employees involved in the special services and found that most of the employees were office bearers of various unions that were active in the organization. The problem was more complicated than it seemed to during interactions, the employees indicated that they were not to be blamed for poor services since they were facing a number of problems in providing services and senior officials were not paying enough attention to alleviate their problems. Defective handsets, non-operating telephone lines, disturbance in lines, jacks not making proper connections, fans and air conditioners not working properly and non availability of typewriter/computer terminals were some of the problems brought to the notice of Baheti by operators.
Further investigation revealed that in addition to these technical problems, there were some Human Resource Management problems as well, such as frequent short leave, extended breaks, uninformed leave and indifferent attitude of employees towards customers. Baheti identified that despite technical problems, some operators were sincere towards their viork and tried their best to provide better services. To improve these services, Baheti decided to use multipronged strategies. Most of the technical problems were solved immediately, other problems that could not be solved at his level were forwarded to higher authorities and pursued rigorously. As the technical problems were taken care of, efficiency of sincere employees went up. Moreover, Baheti also began regular interaction with the operators, appreciating their good work, listening to their problems and explaining them the;-i. importance of their jobs. The employees were made aware of the facts that B5NL did not enjoy a sole monopolistic position any more and had to compete with private players. So the laidback attitude towards customer complaints was not only detrimental to the image of the organization, but also could lead to a reduced market share.
After gaining the confidence of operators, the next step was to motivate them. Towards this end, Baheti started announcing the best operator of the month and recognition was given to the operator by displaying his name on the board of honor. The criteria for award were minimum 200 calls attended per day and 20 days' attendance. In addition, based on last six months performance, three best performers were identified. Appreciation letters from Area Manager and General Manager were conferred upon these operators in a public function and prizes of their own choice were given to them. These efforts had a desired result and the performance of all the operators showed a marked improvement. The number of calls attended by some operators increased from 200 to 700 calls per day. Further, quick and polite response had reduced customer complaints. While reviewing the situation, Baheti was quite contended to see a remarkable change in the behavior of operators just four months. He wondered whether this change was a permanent phenomenon or he would have to strategize further.
QUESTIONS
- Discuss the long-term relevance of motivational techniques used by Baheti in the light of prevailing environment in the organization.
- Had you been Baheti, what other techniques you would have used to improve the special services provided by the organization?
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
- What routes of globalization has the Mayor group chosen to go global? What other routes could it have taken?
- What impediments are coming in the Mayor group’s way becoming a major and active player in international business?
- Why is ‘Made in India’ not liked in foreign markets? What can be done to erase the perception?
Case No 1 :- MARKETING SPOTLIGHT- NIKE
Nike hit the ground running in 1962. Originally known as Blue Ribbon Sports, the company focused on providing high-quality running shoes designed especially for athletes by athletes. Founder Philip Knight believer that high-tech shoes for runners could be manufactured at competitive prices if imported from abroad. The company’s commitment to designing innovative footwear for serious athletes helped it build a cult following among American consumers. By 1980, Nike had become the number-one athletic shoe company in the United States.
From the start, Nike’s marketing campaigns featured winning athletes as spokespeople. The company signed on its first spokesperson, runner Steve Prefontaine, in 1973. Prefontaine’s irreverent attitude matched Nike’s spirit. Marketing campaigns featuring winning athletes made sense. Nike saw a `pyramid of influence’’ – it saw that product and brand choices are influenced by the preferences and behavior of a small percentage of top athletes. Using professional athletes in its advertising campaigns was both efficient and effective for Nike.
In 1985, Nike signed up then-rookie guard Michael Jordan as a spokesperson. Jordan was still an up-and-comer, but he personified superior performance. Nike’s bet paid off: The Air Jordan line of basketball shoes flew off the shelves, with revenues of over $100 million in the first year alone. Jordan also helped build the psychological image of the Nike brand. Phil Knight said. ``Sports are at the heart of American culture, so a lot of emotion already exists around it. Emotions are always hard to explain, but there’s something inspirational about watching athletes push the limits of performance. You can’t explain much in 60 seconds, but when you show Michael Jordan, you don’t have to.’’
In 1988, Nike aired its first ads in the ``Just Do It’’ ad campaign. The $20 million month-long blitz-subtly encouraging Americans to participate more actively in sports-featured 12 TV spots in all. The campaign challenged a generation of athletic enthusiasts to chase their goals; it was a natural manifestation of Nike’s attitude of self-empowerment through sports. The campaign featured celebrities and noncelebrities. One noncelebrity and featured Walt Stack, an 80-year-old long-distance nunnery, running across the Golden Gate bridge as part of his morning routine. The ``Just Do It’’ trailer appeared on the screen as the shirtless Stack ran on a chilly morning. Talking to the camera as it zoomed in, and while still running. Stack remarked, ``People ask me how I keep my teeth from chattering when it’s cold.’’ Pausing, Stack matter-of-factly replied, ‘’I leave them in my locker.’’
As Nike began expanding overseas to Europe, it found that its American style ads were seen as too aggressive. The brand image was perceived as too fashion-oriented. Nike realized that it had to ``authenticate’’ its brand in Europe the way it had in America. That meant building credibility and relevance in European sports, especially soccer. Nike became actively involved as a sponsor of soccer youth leagues, local clubs, and national teams. Authenticity required that consumers see the product being used by athletes, especially by athletes who win. The big break came in 1994, when the Brazilian team (the only national team fro which Nike had any real sponsorships) won the World Cup. The victory led Nike to sign other winning teams, and by 2003 overseas revenues surpassed U.S. revenues for the first time. Nike also topped $10 billion in sales for the first time in the year as well.
Today, Nike dominates the athletic footwear market. Nine of the 10 top-selling basketball shoes, for example, are Nikes. Nike introduces hundreds of shoes each year for 30 sports – averaging one new shoe style every day of the year. Swooshes abound on everything from wristwatches to golf clubs to swimming caps.
Discussion Questions
- What have been the key success factors for Nike?
- Where is Nike vulnerable? What should it watch out for?
3. What recommendations would you make to senior marketing executives going forward? What should they be sure to do with its marketing
CASE I
A DIAMOND PERSONALITY
Ask Suraj bhai about the dot-com burst and he may grin at you as if to say, ``What burst?’’ Suraj bhai, a 38-year-old entrepreneur, owns an Internet business that sells loose diamonds to various buyers. Business is becoming for Suraj bhai. In 2004, he had sales of INR 3,500 million. Needless to say, Suraj bhai is optimistic about his business venture.
The future wasn’t always to bright for Suraj bhai, however. In 1985, Suraj bhai moved from his native town Suraj, to New Delhi, with little ability to speak English. There, he attended language courses and worked at the local mall to support himself. After graduation, his roommate’s girlfriend suggested that he work at a local jeweler. ``I thought she was crazy. I didn’t know anything about jewelry,’’ says Suraj bhai, who took her advice. Though he worked hard and received his Diamonds and Diamonds Grading certification from the Gemological Institute, he wasn’t satisfied with his progress. `I quickly realized that working there, I was just going to get a salary with a raise here and there. I would never become anything. That drove me to explore other business ventures. I also came to really known diamonds – their pricing and their quality.’’
In 1997, tired of working for someone else, Suraj bhai decided to open his own jewelry store. However, business didn’t boom. `Some of my customers were telling me they could find diamonds for less on the Interest. It blew my mind’’ Surajy bhai recognized an opportunity and began contacting well-known diamond dealers to see if they would be interested in selling their gems online. Suraj bhai recalls one conversation with a prominent dealer who told him, `You cannot sell diamonds on the Internet. You will not survive.’’ Discouraged, Suraj bhai then says that he made a mistake. ``I stopped working on it. If you have a dream, you have to keep working harder at it.’’
A year later, Suraj bhai did work harder at his dream and found a dealer who agreed to provide him with some diamonds. Says Suray bhai, ``Once I had one. I could approach others. Business started to build. The first 3 months I sold INR 20 million worth of diamonds right off the bat. And that was just me. I started to add employees and eventually closed the jewelry store and got out of retail.’’ Although Suraj bhai does have some diamonds in inventory, he primarily acts as a connection point between buyers and suppliers, giving his customers an extraordinary selection from which to choose.
Suraj bhai is now a savvy entrepreneur, and his company, Abhisaz.com, went public in October 2003.
Why is Suraj bhai successful? Just ask two people who have known Suraj bhai over the years. Yogesh bhai, a realtor who helped build Suraj bhai building, says, ``Suraj bhai is a very ambitious young man. I am not surprised at all how successful he is. He is an entrepreneur in the truest sense of the world.’’ One of Suraj bhai former real-estate instructors, Arun Jain, concurs. `I am not surprised at all at his success,’’ says Arun. ``Suraj bhai has always been an extremely motivated individual with a lot of resources. He has a wonderful personality and pays close attention to detail. He also has an ability to stick to things. You could tell from the beginning that he was going to persevere, and I am proud of him.’’
Suraj bhai is keeping his success in perspective, but he also realizes his business’ potential: ``I take a very small salary, and our overhead in INR 25 million a year. I am not in debt, and the business is breaking ever. I care about the company. I want to keep everything even until we take off, and then it may be another ball game.’’
Questions:
- What factors do you think attributed to Suraj bhai’s success? Was he merely ``in the right place at the right time’’, or are there characteristics about him that contribute to his success?
- How do you believe Suraj bhai would score on the Big Five dimensions of personality (extroversion, agreeableness, conscientiousness, emotional stability, openness to experience)? Which ones would he score high on? Which ones might he score low on?
- Do you believe that Suraj bhai is high or low on core self-evaluations? On what information did you base your decision?
- What information about Suraj bhai suggests that he has a proactive personality?
