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DR.
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Xaviers Institute
of Business Management Studies
MARKS: 80
SUB: Business Communication
N. B. : 1) Attempt any Four
Case studies
2) All case studies carry equal marks.
No: 1
A REPLY SENT TO
AN ERRING CUSTOMER
Dear Sir,
Your letter of
the 23rd, with a cheque for Rs. 25,000/- on account, is to hand.
We note what
you say as to the difficulty you experience in collecting your outstanding
accounts, but we are compelled to remark that we do not think you are treating
us with the consideration we have a right to expect.
It is true that
small remittances have been forwarded from time to time, but the debit balance
against you has been steadily increasing during the past twelve months until it
now stands at the considerable total of Rs. 85,000/-
Having regard
to the many years during which you have been a customer of this house and the,
generally speaking, satisfactory character of your account, we are reluctant to
resort to harsh measures.
We must,
however, insist that the existing balance should be cleared off by regular
installments of say Rs. 10,000/- per month, the first installment to reach us
by the 7th. In the meantime
you shall pay cash for all further goods; we are allowing you an extra 3%
discount in lieu of credit.
We shall be
glad to hear from you about this arrangement, as otherwise we shall have no
alternative but definitely to close your account and place the matter in other
hands.
Yours
truly,
Questions:
1. Comment on the appropriateness of the
sender’s tone to a customer.
2. Point out the old – fashioned phrases and
expressions.
3. Rewrite the reply according to the principles of effective
writing in business.
NO. 2
WAVE
(ATV : Advertising Radio FM Brand)
A young, gorgeous woman is standing
in front of her apartment window dancing to the 1970s tune, “All Right Now” by
the one – hit band free. Across the
street a young man looks out of his apartment window and notices her. He moves closer to the window, taking
interest. She cranks up the volume and
continues dancing, looking out the window at the fellow, who smiles hopefully
and waves meekly. He holds up a bottle
of wine and waves it, apparently inviting her over for a drink. The lady waves back. He kisses the bottle and excitedly says,
“Yesss.” Then, he gazes around his
apartment and realizes that it is a mess. “No !” he exclaims in a worried tone
of voice. Frantically, he does his best
to quickly clean up the place, stuffing papers under the sofa and putting old
food back in the refrigerator, He slips on a black shirt, slicks back his hair, sniffs his armpit, and lets
out an excited , “Yeahhh!” in eager anticipation of entertaining the young
lady. He goes back to the window and
sees the woman still dancing away. He
points to his watch, as if to say “ Come on.
It is getting late.” As she just
continues dancing, he looks confused.
Then a look of sudden insight appears on his face, “Five,” he says to
himself. He turns on his radio, and it
too is playing “All Right Now.” The man
goes to his window and starts dancing as he watches his lady friend continue
stepping. “Five, yeah,” he says as he
makes the “okay” sign with his thumb and forefinger. He waves again. Everyone in the apartment building is dancing
by their window to “All Right Now.” A
super appears on the screen: “Are you on the right wavelength ?”
Questions
:
1. What is non – verbal communication ? Why do you suppose that this commercial
relies primarily on non-verbal communication between
a young man and a gorgeous woman ? What types of non – verbal communication are being used in this case ?
2. Would any of the non-verbal
communications in this spot (ad) not work
well in another culture ?
3. What role does music play in this spot ?
Who is the target market ?
4. Is the music at all distracting from the
message ?
5. How else are radio stations advertised on
TV ?
NO. 3
ARVIND PANDEY CAUGHT IN BUSINESS WEB
Arvind Pandey is a project manager
at Al Saba Construction Company in Muscat.
It s a flourishing company with several construction projects in Muscat
and abroad. It is known for completing
projects on time and with high quantity construction. The company’s Chairman is a rich and a highly
educated Omani. A German engineer is
Arvind’s Vice – President for urban and foreign construction projects.
Three months ago, Al Saba had
submitted a tender for a major construction project in Kuwait. Its quotation was for $ 25 million. In Kuwait the project was sponsored and
announced by a US – based construction company called Fuma. According to Al Saba, their bid of $ 25
million was modest but had included a high margin of profit.
On 25 April, Arvind was asked to go
to Kuwait to find out from the Fuma project manager the status of their
construction proposal. Arvind was
delighted to know that Fuma had decided to give his company. (Al Saba) the construction project work. The project meant a lot of effort and money
in planning the proposed construction in Kuwait.
But before Arvind could tank the
Fuma project manager, he was told that their bird should be raised to $ 28
million. Arvind was surprised. He tried
to convince the Fuma project manager that his (Arvind company had the bast
reputation for doing construction work in a cost effective way . However, he could always raise the bid by $ 3
million. But he wanted to know why he was required to do so.
The Fuma manager’s reply was,
“That’s the way we do our business in this part of the world, $ 1 million will
go to our Managing Director in the US, I shall get $ 1 million, you, Mr.
Pandey, will get $ 1 million in a specified account in Swiss Bank.
Arvind asked, “ But why me ?”
“ So that you never talk about it to
any one.” The Fuma Project Manager said.
Arvind promised never to leak it out to any one else. And he tried to bargain to raise the bid by $
2 million. For. Arvind was familiar with
the practice of “ pay – offs” involved in any such thing. He thought it was against his loyalty to his
company and his personal ethics.
Arvind promised the Fuma project
manager that the bid would be raised to $ 28 million and fresh papers would be
put in. He did not want to lose the job.
He came back to Muscat and kept
trying to figure out how he should place the whole thing before his German Vice
President. He obviously was at a
loss.
Questions
:
1. Analyse the reasons for Arvind Pandey’s
dilemma.
2. Does Arvind Pandey really face a dilemma
?
3. In your view what should Arvind Pandey do
? Should he disclose it to his German Vice President ?
NO. 4.
COMPANY ACCEPTING A CONTRACT
A computer company was negotiating a
very large order with a large size corporation.
They had a very good track record with this client.
In this corporation, five different
departments had pooled their requirements and budgets. A committee was formed which had
representation from all the departments.
The corporation wanted the equipment on a long lease and not outright
purchase. Further, they wanted all the
hardware and software form one supplier.
This meant that there should be bought – out items from many suppliers
since no one supplier could meet all the requirements of supply from its range
of products.
The corporation provided an
exhaustive list of very difficult terms and conditions and pressurized the
vendors to accept. The computer company
who was finally awarded the contract had agreed to overall terms that were fine
as far as their own products were concerned but had also accepted the same
terms for the brought – out items. In
this case, the bought – out items were to be imported through a letter of
credit. The percentage of the bought – out items versus their own manufacture
was also very high. One of the terms
accepted was that the “system” would be accepted over a period of 10 days after
all the hardware had been linked up and software loaded.
The computer company started facing
trouble immediately on supply. There
were over 100 computers over a distance connected with one another with
software on it. For the acceptance
tests, it had been agreed that the computer company would demonstrate as a
pre-requisite the features they had claimed during technical discussions.
Now, as you are aware, if a Hero
Honda motorcycle claims 80 km to a litre of petrol, it is under ideal test
conditions and if a motorcycle from the showroom were to be tried for this test
before being accepted, it would never pass the test. In corporation’s case, due to internal
politics, the corporation persons from one department – who insisted on going
exactly by the contract – did not sign acceptance since the “ system” could not
meet the ideal test conditions.
Further, in a classic case of, “ for
want of a horse – shoe, payment for the horse was held up”, the computer
company tried to get the system accepted and payment released. The system was so large that at any point of
time over a period of 10 days something small or the other always gave problems. But the corporation took the stand that as
far as they were concerned the contract clearly were concerned the contract
clearly mentioned that the “system” had to be tested as a whole and not module
by module.
Questions
:
1. Comment on the terms and conditions
placed by the corporation.
2. What factors influenced the computer
company’s decision to accept the contract ?
3. Was it a win – win agreement ? Discuss ?
NO. 5
EMPLOYMENT INTERVIEW OF R P SINHA
Mr. R P Sinha is a MBA. He is being interviewed for the position of
Management Trainee at a reputed company.
The selection committee’s is chaired by a lady Vice – President. Mr. Sinha’s interview was as follows :
Committee :
Good morning !
Mr. Sinha :
Good morning to Sirs and Madam !
Chairperson :
Please, sit down.
Mr. Sinha :
Thank you (sits down at the edge of the chair, keeps his portfolio on the
table)
Q. Chairperson
: You are Mr. R. P. Sinha
A Sinha : Yes,
Madam. This is how I am called.
Q. Chairperson
: You have passed MBA with 1st Division.
A. Sinha : Yes,
Madam.
Q. Chairperson
: Why do you want to work in our organization ?
A Sinha : It is
just like that. Also, because it has
good reputation.
Q. Member A :
This job is considered to be quite stressful.
Do you think you can manage the stress involved.
A. Sinha : I
think there is too much talk about stress these days. Sir, would you tell clearly what you mean by
stress ? I am very strong for any stress.
Q. Member B :
What are your strengths ?
A. Sinha : Sir,
who am I talk boastfully about my strengths.
You should tell me my strengths.
Q. Member C :
What are your weaknesses ?
A. Sinha : I
become angry very fast.
Q. Member A :
Do you want to ask us any questions ?
A Sinha : Yes
Sir ! What are the future chances for
one who starts as a management trainee ?
The member tells M. Sinha the
typical career path for those starting as Management Trainee. The Chairperson thanks Mr. Sinha. Mr. Sinha promptly says in reply, “you are
welcome,” and comes out.
Questions
:
1. Do you find Mr. Sinha’s responses to
various questions effective ? Give reasons
for your view on each answer given by Mr. Sinha.
2. Rewrite the responses that you consider
most effective to the above questions
in a job interview.
3. Mr. Sinha has observed the norm of
respectful behaviour and polite
conversation. But, do you think there is
something gone wrong in his case
? Account for your general impression of Mr. Sinha’s performance at the interview.
NO. 6
Comment on the form and structure of the Report.
Xaviers Institute
of Business Management Studies
MARKS : 80
SUB
: BUSINESS ETHICS
N. B. : 1) Attempt any Four Cases
2) All cases carries equal marks.
No : 1
PUBLIUS
Although many
people believe that the World Wide Web is anonymous and secure from censorship,
the reality is very different.
Governments, law courts, and other officials who want to censor,
examine, or trace a file of materials on the Web need merely go to the server
(the online computer) where they think the file is stored. Using their subpoena power, they can comb
through the server’s drives to find the files they are looking for and the
identify of the person who created the files.
On Friday June 30, 2000, however,
researches at AT & T Labs announced the creation of Publius, a software
program that enables Web users to encrypt (translate into a secret code) their
files – text, pictures, or music – break them up like the pieces of a jigsaw
puzzle, and store the encrypted pieces on many different servers scattered all
over the globe on the World Wide Web. As
a result, any one wanting to examine or censor the files or wanting to trace
the original transaction that produced the file would find it impossible to
succeed because they would have to examine the contents of dozens of
different servers all over the world, and the files in the servers would be
encrypted and fragmented in a way that would make the pieces impossible to
identify without the help of the person who created the file. A person authorized to retrieve the file,
however, would look through a directory of his files posted on a Publius –
affiliated website, and the Publius network would reassemble the file for him
at his request. Researchers published a description
of Publius at www.cs.nyu.edu/waldman/publius.
Although many people welcomed the
way that the new software would enhance freedom of speech on the Web, many
others were dismayed. Bruce Taylor, an
antipornography activist for the National
Law Center
for Children and Families, stated : “It’s nice to be anonymous, but who wants
to be more anonymous than criminals, terrorists, child molesters, child
pornographers, hackers and e-mail virus punks.”
Aviel Rubin and Lorrie Cranor, the creators of Publius, however, hoped
that their program would help people in countries where freedom of speech was
repressed and individuals were punished for speaking out. The ideal user of Publius, they stated, was
“a person in China
observing abuses of human rights on a day – to – day basis.”
Questions
:
1. Analyze the ethics of marketing Publius
using utilitarianism, rights, justice,
and caring. In your judgement, is it
ethical to market Publius ? Explain.
2. Are the creators of Publius in any way
morally responsible for any criminal
acts that criminals are able to carry out and keep secret by relying on Publius ? Is AT & T in any way morally responsible for
these ? Explain your answers.
3. In your judgment, should governments
allow the implementation of Publius
? Why or why not ?
NO. 2
A JAPANESE BRIBE
In July 1976,
Kukeo Tanaka, former prime minister of Japan, was arrested on charges of
taking bribes ($ 1.8 million) from Locjheed Aircraft Company to secure the
purchase of several Lockheed jets.
Tanaka’s secretary and serial other government officials were arrested
with him. The Japanese public reacted
with angry demands for a complete disclosure of Tanaka’s dealings. By the end
of the year, they had ousted Tanaka’s successor, Takeo Miki, who was widely
believed to have been trying to conceal Tanaka’s actions.
In Holland that same year, Prince Bernhard,
husband of Queen Juliana, resigned from 300 hundred positions he held in
government, military, and private organizations. The reason : He was alleged to have accepted
$ 1.1 million in bribes from Lockheed in connection with the sale of 138 F –
104 Starfighter jets.
In Italy, Giovani Leone, president in
1970, and Aldo Moro and Mariano Rumor, both prime ministers, were accused of
accepting bribes from Lockheed in connection with the purchase of $ 100 million
worth of aircraft in the late 1960s. All
were excluded from government.
Scandinavia,
South Africa, Turkey, Greece,
and Nigeria
were also among the 15 countries in which Lockheed admitted to having handed
out payments and at least $ 202 million in commissions since 1970.
Lockheed Aircraft’s involvement in
the Japanese bribes was revealed to have begun in 1958 when Lockheed and
Grumman Aircraft (also an American firm) were competing for a Japanese Air
Force jet aircraft contract. According
to the testimony of Mr. William Findley, a partner in Arthur Young & Co.
(auditors for Lockheed), in 1958 Lockheed engaged the services of Yoshio
Kodama, an ultra right – wing war criminal and reputed underworld figure with
strong political ties to officials in the ruling Liberal Democratic Party. With Kodama’s help, Lockheed secured the Government
contract. Seventeen years later, it was
revealed that the CIA had been informed at the time (by an American embassy
employee) that Lockheed had made several bribes while negotiating the contract.
In 1972, Lockheed again hired Kodama
as a consultant to help secure the sale of its aircraft in Japan. Lockheed was desperate to sell planes to any
major Japanese airline because it was scrambling to recover from a series of
financial disasters. Cost overruns on a
government contract had pushed Lockheed to the brink of bankruptcy in 1970. Only through a controversial emergency
government loan guarantee of $ 250
million in 1971 did the company narrowly avert disaster. Mr. A. Carl Kotchian, president of Lockheed
from 1967 to 1975, was especially anxious to make the sales because the company
had been unable to get as many contracts in other parts of the world as it had
wanted.
This bleak situation all but
dictated a strong push for sales in the biggest untapped market left-Japan.
This push, if successful, might well bring in revenues upward of $ 400 million.
Such a cash inflow would go a long way towards
helping to restore Lockheed’s fiscal health, and it would, of course, save the jobs of thousands of firm’s
employees. (Statement of Carl Kotchian)
Kodama
eventually succeeded in engineering a contract for Lockhed with All – Nippon
Airways, even beating out McDonnell Douglas, which was actively competing with
Lockheed for the same sales. To ensure
the sale, Kodama asked for and received from Lockheed about $9 million during
the period from 1972 to 1975. Much of
money allegedly went to then – prime minister Kukeo Tanaka and other government
officials, who were supposed to intercede with All – Nippon Airlines on behalf
of Lockheed.
According to Mr. Carl Kotchian, “ I
knew from the beginning that this money was going to the office of the Prime
Minister.” He was, however, persuaded
that, by paying the money, he was sure to get the contract from All-Nippon
Airways. The negotiations eventually
netted over $1.3 billion in contracts for Lockheed.
In addition to Kodama, Lockheed had
also been advised by Toshiharu Okubo, an official of the private trading
company, Marubeni, which acted as Lockheed’s
official representative. Mr. A. Carl
Kotchian later defended the payments, which he saw as one of many “Japanese
business practices” that he had accepted on the advice of his local
consultants. The payments, the company
was convinced, were in keeping with local “ business practices.”
Further, as I’ve noted, such
disbursements did not violate American laws.
I should also like to
stress that my decision to make such payments stemmed
from my judgment that the (contracts) …… would provided Lockheed workers with jobs and thus redound to the benefit of their
dependents, their communities,
and stockholders of the corporation. I should like to emphasize that the payments
to the so-called “ high Japanese
government officials” were all requested y Okubo and were not brought up from my side. When he told me “ five hundred million yen is
necessary for such sales,” from a purely ethical and moral standpoint I would have declined such a request. However, in that case, I would most certainly have sacrificed commercial
success….. (If) Lockheed had not remained competitive by the rules of the game
as then played, we would not
have sold (our planes) ……… I knew that if we wanted our product to have a
chance to win on its own merits, we had to follow the functioning system.
(Statement of A. Carl Kotchian)
In August, 1975, investigations by
the U.S.
government led Lockheed to admit it had made
$ 22 million in secret payoffs.
Subsequent senate investigations in February 1976 made Lockheed’s
involvement with Japanese government officials public. Japan subsequently canceled their
billion dollar contract with Lockheed.
In June 1979, Lockheed pleaded
guilty to concealing the Japanese bribes from the government by falsely writing
them off as “marketing costs”. The
Internal Revenue Code states, in part. “
No deduction shall be allowed….. for any payment made, directly or indirectly,
to an official or employee of any government …. If the payment constitutes an
illegal bribe or kickback.’ Lockheed was
not charged specifically with bribery because the U.S. law forbidding bribery was not
enacted until 1978. Lockheed pleaded
guilty to four counts of fraud and four counts of making false statements to
the government. Mr. Kotchian was not
indicated, but under pressure from the board of directors, he was forced to
resign from Lockheed. In Japan,
Kodama was arrested along with Tanaka.
Questions
:
1. Fully explain the effects that payment
like those which Lockheed made to
the Japanese have on the structure of a
market.
2. In your view, were Lockheed’s payments to
the various Japanese parties “bribes”
or “extortions” ? Explain your response
fully.
3. In your judgment, did Mr. A. Carl
Kotchian act rightly from a moral point of view ? (Your answer should take into account the effects of the payments on the welfare of the
societies affected, on the right and
duties of the various parties involved, and on the distribution of benefits and burdens
among the groups involved.) In your
judgment, was Mr. Kotchian morally responsible for his actions ? Was he, in the end, treated fairly ?
4. In its October 27, 1980, issue, Business
Week argued that every corporation
has a corporate culture – that is, values that set a pattern for its employee’s activities, opinions and actions and
that are instilled in succeeding
generations of employees (pp.148-60) Describe,
if you can, the corporate culture of Lockheed and relate that culture to Mr. Kotchian’s
actions. Describe some strategies for changing that culture in ways that might make foreign payments less likely.
NO. 3
THE NEW MARKET OPPORTUNITY
In 1994,
anxious to show off the benefits of a communist regime, the government of China
invited leading auto manufacturers from around the world to submit plans for a
car designed to meet the needs of its massive population. A wave of rising affluence had suddenly
created a large middle class of Chinese families with enough money to buy and
maintain a private automobile. China was now eager to enter joint ventures with
foreign companies to construct and operate automobile manufacturing plants
inside China. The plants would not only manufacture cars to
supply China’s new internal market, but could also make cars that could be
exported for sale abroad and would be sure to generate thousands of new
jobs. The Chinese government specified
that the new car had to be priced at less than $5000, be small enough to suit
families with a single child (couples in
China are prohibited from having more than one child), rugged enough to endure
the poorly maintained roads that criss-crossed the nation, generate a minimum of pollution, be composed of parts that were
predominantly made within China, and be manufactured through joint – venture
agreements between Chinese and foreign companies. Experts anticipated that the plants
manufacturing the new cars would use a minimum of automation and wuld instead
rely on labor – intensive technologies that could capitalize on China’s
cheap labor. China saw the development of a new
auto industry as a key step in its drive to industrialize its economy.
The Chinese market was an
irresistible opportunity for General Motors, Ford and Chrysler, as well as for
the leading Japanese, European and Korean automobile companies. With a population of 1.2 billion people and
almost double digit annual economic growth rates, China estimated that in the next 40
years between 200 and 300 million of the new vehicles would be purchased by
Chinese citizens. Already cars had
become a symbol of affluence for China’s new rising middle class, and a craze
for cars had led more than 30 million Chinese to take driving lessons despite
that the nation had only 10 million vehicles, most of them government – owned
trucks.
Environmentalists, however, were
opposed to the auto manufactures’ eager
rush to respond to the call of the Chinese government. The world market for energy, particularly
oil, they pointed out, was based in part on the fact that China, with its large population,
was using relatively low levels of energy.
In 1994, the per-person consumption of oil in China
was only one sixth of Japan’s
and only a quarter of Taiwan’s. If China
were to reach even the modes per person consumption level of South Korea, China
would be consuming twice the amount of oil the United States currently uses. At the present time, the United States consumes one forth of
the world’s total annual oil supplies, about half of which it must import from
foreign countries.
Critics pointed out that if China were to eventually have as many cars on
the road per person as Germany
does, the world would contain twice as many cars as it currently does. No matter how “ pollution – free” the new car
design was, the cumulative environmental effects of that many more automobiles
in the world would be formidable. Even
clean cars would have to generate large amounts of carbon dioxide as they
burned fuel, thus significantly worsening the greenhouse effect. Engineers pointed out that it would be
difficult, if not impossible, to build a clean car for under $5000. Catalytic converters, which diminished
pollution, alone cost over $200 per car to manufacture. In addition, China’s oil refineries were
designed to produce only gasoline with high levels of lead. Upgrading all its refineries so they could
make low-lead gasoline would require an investment China seemed unwilling to make.
Some of the car companies were
considering submitting plans for an electric car because China had immense coal reserves
which it could burn to produce electricity.
This would diminish the need for China to rely on oil, which it
would have to import. However, China
did not have sufficient coal burning electric plants nor an electrical power
distribution system that could provide adequate electrical power to a large
number of vehicles. Building such an
electrical power system also would require a huge investment that the Chinese
government did not seem particularly interested in making. Moreover, because coal is a fossil fuel,
switching from an oil – based auto to a coal – based electric auto would still
result in adding substantial quantities of carbon dioxide to the atmosphere.
Many government officials were also
worried by the political implications of having China become a major consumer of
oil. If China were to increase its oil
consumption, would have to import all its oil from the same countries that
other nations relied on, which would create large political, economic and
military risks. Although the United States imported some of its oil from Venezuela and Mexico,
most of its imports came from the Middle East – an oil source that China
would have to turn to also. Rising
demand for Middle East oil would push oil prices sharply upward, which would
send major shocks reverberating through the economics of the United States and those of other
nations that relied heavily on oil.
State Department officials worried that China
would begin to trade weapons for oil with Iran
or Iraq,
heightening the risks of major military confrontations in the region. If China
were to become a major trading partner with Iran
or Iraq,
this would also create closer ties between these two major power centres of the
non-Western world – a possibility that was also laden with risk. Of course, China
might also turn to tapping the large reserves of oil that were thought to be
lying under Taiwan
and other areas neighboring its coast.
However, this would bring it into competition with Japan, South Korea,
Thailand, Singapore, Taiwan, the Phillippines, and other
nations that were already drawing on these sources to supply their own booming
economies. Many of these nations, anticipating
heightened tensions, were already puring money into their military forces,
particularly their navies. In short,
because world supplies of oil were limited, increasing demand seemed likely to
increase the potential for conflict.
Questions
:
1. In your judgment, is it wrong, from an
ethical point of view, for the
auto companies to submit plans for an automobile to China ? Explain your answer ?
2. Of the various approaches to
environmental ethics outlined in this chapter,
which approach sheds most light on the ethical issues raised by this case
? Explain your answer.
3. Should the U.S.
government intervene in any way in the negotiations
between U.S.
auto companies and the Chinese government
? Explain.
NO. 4
WAGE DIFFERENCES AT ROBERT HALL
Robert Hall
Clothes, Inc., owned a chain of retail stores that specialized in clothing for
the family. One of the Chain’s stores
was located in Wilmington, Delaware.
The Robert Hall store in Wilmington
had a department for men’s and boy’s clothing and another department for
women’s and girl’s clothing. The
departments were physically separated and were staffed by different personnel :
Only men were allowed to work in the men’s department and only women in the
women’s department. The personnel of the
store were sexually segregated because years of experience had taught the
store’s managers that, unless clerks and customers were of the same sex, the
frequent physical contact between clerks and customers would embarrass both and
would inhibit sales.
The clothing in the men’s department
was generally of a higher and more expensive quality than the clothing in the
women’s department. Competitive factors
accounted for this : There were few other men’s stores in Wilmington so the
store could stock expensive men’s clothes and still do a thriving business,
whereas women’s clothing had to be lower priced to compete with the many other
women’s stores in Wilmington. Because of
these differences in merchandise, the store’s profit margins on the men’s
clothing was higher than its margins on the women’s clothing. As a result, the men’s department
consistently showed a larger dollar volume in gross sales and a greater gross
profit, as is indicated in Table 7.11.
Because of the differences shown in
Table 7.11 women personnel brought in lower sales and profits per hour. In fact male salespersons brought in
substantially more than the females did (see Tables 7.12 and 7.13)
|
Men’s
Department
|
Women’s
Department
|
|
Year
|
Sales
($)
|
Gross
Profit
($)
|
Percent
Profit
($)
|
Sales
($)
|
Gross
Profit
($)
|
Percent
Profit
($)
|
|
1963
|
210,639
|
85,328
|
40.5
|
177,742
|
58,547
|
32.9
|
|
1964
|
178,867
|
73,608
|
41.2
|
142,788
|
44,612
|
31.2
|
|
1965
|
206,472
|
89,930
|
43.6
|
148,252
|
49,608
|
33.5
|
|
1966
|
217,765
|
97,447
|
44.7
|
166,479
|
55,463
|
33.5
|
|
1967
|
244,922
|
111,498
|
45.5
|
206,680
|
69,190
|
33.5
|
|
1968
|
263,663
|
123,681
|
46.9
|
230,156
|
79,846
|
34.7
|
|
1969
|
316,242
|
248,001
|
46.8
|
254,379
|
91,687
|
36.4
|
TABLE
7. 12
|
Year
|
Male
Sales per Hour
($)
|
Female
Sales Per Hour
($)
|
Excess
M Over F (%)
|
|
1963
1964
1965
1966
1967
1968
1969
|
38.31
40.22
54.77
59.58
63.18
62.27
73.00
|
27.31
30.36
33.30
34.31
36.92
37.20
41.26
|
40
32
64
73
71
70
77
|
As a result of these differences
in the income produced by the two departments, the management of Robert Hall
paid their male salespersons more than their female personnel. Management learned after a Supreme Court
ruiling in their favor in 1973 that it was entirely legal for them to do this
if they wanted. Wages in the store were
set on the basis of profits per hour per department, with some slight
adjustments upward to ensure wages were comparable and competitive to what
other stores in the area were paying.
Over the years, Robert Hall set the wages given in Table 7.14. Although the wage differences between males
and females were substantial, they were not as large as the percentage
differences between male and female sales and profits. The management of Robert Hall argued that
their female clerks were paid less because the commodities they sold could not
bear the same selling costs that the commodities sold in the men’s department
could bear. However, the female clerks
argued, the skills, sales efforts, and responsibilities required of male and
female clerks were “substantially” the same.
TABLE
7. 13
|
Year
|
Male
Gross Profits per Hour
($)
|
Female
Gross Profits Per Hour
($)
|
Excess
M Over F (%)
|
|
1963
1964
1965
1966
1967
1968
1969
|
15.52
16.55
23.85
26.66
28.74
29.21
34.16
|
9.00
9.49
11.14
1143
12.36
12.91
15.03
|
72
74
114
134
133
127
127
|
TABLE
7. 14
|
Year
|
Male
Earnings per Hour
($)
|
Female
Earnings Per Hour
($)
|
Excess
M Over F (%)
|
|
1963
1964
1965
1966
1967
1968
1969
|
2.18
2.46
2.67
2.92
2.88
2.97
3.13
|
1.75
1.86
1.80
1.95
1.98
2.02
2.16
|
25
32
48
50
45
47
45
|
Questions
:
1. In your judgment, do the managers of the
Robert Hall store have any ethical
obligations to change their salary policies ?
If you do not think they
should change, then explain why they have an obligation to change and describe the kinds of changes they should
make. Would
it make any difference to your analysis if, instead of two departments in the same store, it
involved two different Robert Hall Stores,
one for men and one for women ? Would it make a difference if two stores
(one for men and one for women) owned by different companies were involved ? Explain each of your answers in terms of the relevant ethical principles upon which
you are relying.
2. Suppose that there were very few males
applying for clerks’ jobs in Wilmington while females
were flooding the clerking job market. Would this competitive factor justify
paying males more than females ? Why ?
Suppose that 95 percent of the women in Wilmington who were applying for clerks’ jobs were single women with children
who were on welfare while 95 percent of
the men were single with no families
to support. Would this need factor
justify paying females more than males
? Why ?
Suppose for the sake of argument that men were better at selling than women; would this justify different salaries ?
3. If you think the managers of the Robert
Hall store should pay their male and
female clerks equal wages because they do “substantially the same work” then do you also think
that ideally each worker’s salary
should be pegged to the work he or she individually performs (such as by having each worker sell on
commission) ? Why ? Would a commission system be preferable from a
utilitarian point of view considering
the substantial book keeping expenses it would involve ? From
the point of view of justice ? What does
the phrase substantially the same
mean to you ?
NO. 5
NAPSTER’S REVOLUTION
Eighteen – year
old Shawn “NAPSTER” Fanning, then a freshman at Northeastern University,
dropped out of school and founded Napster Inc. (website was at
w.w.w.napster.com) in San Mateo, California in May 1999. Two months earlier, working in his college
dorm room, he had developed both a website that let users locate other users
who were willing to share whatever music files they had in MP3 format on the
hard drives of their computers and a software program (called “Napster) that
let users copy these music files from each other over the Internet. When an early free version of the program he
posted on Download.com received more than 300,000 hits and was named “Download of
the week,” he decided to devote himself full time to developing his program and
website. The final version of his
version of his program was officially released August 1999, and in May 2000,
with more than 10 million people – most of them students on college campuses
where Napster was especially popular – signed up at its website, Shawn’s
company received $ 15 million of start – up funds from venture capital firms in
California’s “Silicon Valley.”
Fanning grew up in Brockton, Massauchettes, the son of a nurse’s
aid and the stepson of a truck driver, in a family of four half-brothers and
half-sisters. He got the nickname “Napster” during a basketball game when a
player commented on his closely cropped sweaty head of hair. Fanning had taught himself programming and had
held several summer programming jobs.
The company Shawn helped establish
gave the Napster program away for free and charged users nothing to use its
website to post the URL addresses where personal copies of music could be
downloaded. Nevertheless, a month later,
Shawn found himself embroiled in a legal and ethical controversy when two
record tables, two musicians (Metallica and Dr. Dre), and two industry trade
groups of music companies (the National Music Publishers Association and the
Recording Industry Association of America) filed suits against his young
company claiming that Napster’s software was enabling other to make and
distribute copies of copyrighted music that the musicians and companies owned.
On June 12, the two industry trade
groups filed preliminary injunctions against the company demanding that it
remove all the songs owned by their member companies from Napster’s song
directories. According to the two
groups, a survey of 2555 college students showed a correlation between Napster
use and decreased CD purchases. College
students were outraged, especially fans of Metallica and Dr. Dre. Supporters of
Napster argued that Napster allowed people to hear music that they then went
out and purchased, so Napster actually helped the music companies. Music sales had increased by over $500
million a year since Napster had started to operate, but the music companies
claimed that this was a result of a booming economy. Supporters of Napster also argued that
individuals had a moral and legal right to lend other individuals a copy of the
music on the CDs that they had purchased.
After all, they argued, the law explicitly stated that an individual
could make a copy of copyrighted music he or she had purchased to hear the
music on another player. Moreover,
according to Fanning, Napster was not doing anything illegal, and the company
was not responsible if other people used its software and website to copy music
in violation of copyright law any more than a car company was responsible when
its autos were used by thieves to rob banks.
Much of the music that was downloaded using Napster, they claimed, was
in the public domain (i.e.not legally owned by anyone) and was being legally
copied. The music companies countered
that an individual had no right to give multiple copies of their music to others
even if the individual had paid for the original CD. If everyone was allowed to copy music without
paying for it, they charged, eventually the music companies would stop
producing music and musicians would stop creating it. Other musicians claimed, however, that
Napster and the Web gave them a way to put their music before millions of
potential fans without having to beg the music companies to sponser them.
In March 2000, the band Metallica
hired consultant PDNet to electronically “evesdrop” on users who assumed they
were anonymously accessing Napster’s website.
The following week the band’s lawyers handed Napster a list with the
names of 300, 000 people that Metallica claimed had violated its copyrights
using Napster’s service and that Metallica now wanted removed from Napster’s
services. Fanning complied with the
demand of Metallica, whose drummer, Lars Ulrich, was one of his musical
heros. “If they want to steal our
music,” said Ulrich, “ why don’t they just go down to Tower Records and grab them
off the shelves ?” Many young people
protested that the bands should not be alienating their own fans in this
way. One fan posted a note on an MP3
chat room : “Give me a break ! I have
been dropping 16 bucks an album for Metallica’s music since I was a
teenager. They made a fortune off us and
now they accuse us of stealing from them.
What nerve !” Howard King, a Los Angeles lawyer for
Metallica and Dr. Dre, stated that “I don’t know Shawn Fanning but he seems to
be a pretty good kid who came up with a sensational program. But this sensational program has allowed
people to take music without paying ………. Shawn probably had no idea of the
legal ramifications of what he created.
I’m sure the though never crossed his mind.”
In August 2000, a federal judge in San Francisco, Marilyn
Patel, responded to the suit against Napster.
Judge Patel called Shawn’s company a “monster” and charged that the only
purpose of Napster was to copy pirated music without paying for it. The judge ordered Napster to remove all URLS
from its website that referenced material that was copyrighted.
Judge Patel’s ruling would have shut
down the company’s website immediately.
But a few days later, an appeals court reversed Judge Patel and allowed
the company to continue operating. The
reprieve was only temporary. On Monday February 12, 2001,
the Ninth Circuit Court of Appeals in San
Francisco affirmed Judge Patel’s ruling. The company attempted to circumvent the
ruling by negotiating agreements with the music companies that would pay them
certain annual fees in return for withdrawing the suit.
Napster was not the only software
that allowed individuals to swap files from
One personal
computer to another over the Internet.
The software program named “Gnutella”
let individuals swap any kind of files – music, text, or visuals – over
the Internet, but Gnutella did not operate a centralized index like the website
that Napster had established. Observers
predicated that if Napster was put out of business, numerous underground websites
would be created providing the kind of listing service that the company had
earlier provided on its website. Already
a website named zeropaid.com provided free copies of Gnutella and many other
Napster clones that users could download and use to share digital music files
with each other. Unlike Napster, these
software products did not require a central website to connect users to each
other, making it impossible for music companies to find and target single entity
whom they could sue. Many observers
predicated that Napster was only the beginning of an upheaval that would
revolutionize the music industry, forcing music companies to lower their
prices, make their music easily available on the Internet, and completely
change their business models.
Questions
:
1. What are the legal issues involved in
this case, and what are the moral
issues ? How are the two different kinds of issues different from each other, and how are they related to each other ? Identify and
distinguish the “systemic, corporate and individual issues” involved in this case.
2. In your judgment, was it morally wrong
for Shawn Fanning to develop and release
his technology to the world given its possible consequences
? Was it morally wrong for an individual to use Napster’s website and software to copy for free the copy righted music on another person’s hard drive ? If
you believe it was wrong, then
explain exactly why it was wrong. If you
believe it was not morally wrong, then how would you defend your
views against t he claim that such
copying is stealing ? Assume that it was
not I illegal for an individual to copy
music using Napster. Would there be anything immoral with doing so ? Explain ?
3. Assume that it is morally wrong for a
person to use Napster’s website and
software to make a copy of
copyrighted music. Who, then, would be morally responsible for this
person’s wrong doing ? Would only
the person himself be morally
responsible ? Was Napster, the
company, morally responsible ? Wash shawn Fanning morally responsible
? Was any employee of Napster, the
company, morally responsible ?
Was the operator of the server or that portion of the Internet that the person used morally responsible ? What if the person
did not know that the music was copyrighted or did not think that it was illegal
to copy copyrighted music ?
4. Do the music companies share any of the
moral responsibility for what has happened ? How do you think technology like Napster is likely to
change the music industry ? In
your judgment, are these changes
ethically good or ethically bad ?
NO.
6
WORKING
FOR ELI LILLY & COMPANY
Eli Lilly, the
discoverer of Erythromycin, Darvon, Ceclor, and Prozac, is a major
pharmaceutical company that sold $6.8 billion of drugs all over the world in
1995, giving it profits of $2.3 billion.
Headquartered in Indianpolis,
Minnesota, the company also
provides food, housing, and compensation to numerous homeless alcoholics who
perform short-term work for the company.
The work these street people perform, however, is a bit unusual.
Before approving the sale of a newly
discovered drug, the U.S. Food and Drug Administration requires that the drug
be put through three phases of tests after being tested on animals. In phase I, the drug is taken by healthy
human individuals to determine whether it has any dangerous side effects. In Phase II, the drug is given to a small
number of sick patients to determine dosage levels. In Phase III, the drug is given to large
numbers of sick patients by doctors and hospitals to determine its efficacy.
Phase I testing is often the most
difficult to carry out because most healthy individuals are reluctant to take a
new and untested medication that is not intended to cure them of anything and
that may have potentially crippling or deadly side effects. To secure test subjects, companies must
advertise widely and offer to pay them as such as $250 a day. Eli Lilly, however, does not advertise as
widely and pays its volunteers only $85 a day plus free from and board, the
lowest in the industry. One of the
reasons that Lily’s rates are so low is because, as a long time nurse at the
Lily Clinic is reported to have indicated, “ the majority of its subjects are homeless alcoholics”
recruited through word of mouth that is spread in soup kitchens, shelters, and
prisons all over the United
States.
Because they are alcoholics, they are fairly desperate for money. Because they alcoholics, they are fairly
desperate for money. Because phase I
testes can run several months, test subjects can make as $4500 – an enormous
sum to people who are otherwise unemployable and surviving on handouts. Interviews with several homeless men who have
participated in Lily’s drug tests and who describe themselves as alcoholics who
drink daily suggest that they are, by and large, quite happy to participate in
an arrangement that provides them with “easy money”. When asked, one homeless drinker hired to
participate in a Phase I trail said he had no idea what kind of drug was being
tested on him even though he had signed an informed – consent form. An advantage for Lilly is that this kind of
test subject is less likely to sue if severely injured by the drug. The tests run on the homeless men, moreover,
provide enormous benefits for society.
It has been suggested, in fact, that in light of the difficulty of
securing test subjects, some tests might be delayed or not performed at all if
it were not for the large pool of homeless men willing and eager to participate
in the tests.
The Federal Drug Administration
requires that people who agree to participate in Phase I tests must give their
“ informed consent” and must take a “ truly voluntary and a uncoerced
decision.” Some have questioned whether
the desperate circumstances of alcoholic and homeless men allow them to make a
truly voluntary and uncoerced decision when they agree to take an untested
potentially dangerous drug for $ 85 a day.
Some doctors claim that alcoholics run a higher risk because they may
carry diseases that are undetectable by standard blood screening and that make
them vulnerable to being severely named by certain drugs. One former test subject indicated in an
interview that the drug he had been given in a test several years before had
arrested his heart and “ they had to put
things on my chest to start my heart up again.”
The same thing happened to another subject in the same test. Another man indicated that the drug he was
given had made him unconscious for 2 days while others told of excruciating
headaches.
In earlier years, drug companies
used prisoners to test drugs in Phase I tests.
During the 1970s, drug companies stopped using prisoners when critics
complained that their poverty and the promise of early parole in effect were
coercing the prisoners into “Volunteering”. When Lilly first turned to using homeless
people during the 1980s, a doctor at the company is quoted as saying, “ We were
constantly talking about whether we were exploiting the homeless. But there were a lot of them who were willing
to stay in the hospital for four weeks.”
Moreover, he adds. “Providing
them with a nice warm bed and good
medical care and sending them out drug – and alcohol – free was a positive
thing to do.”
A homeless alcoholic indicated in an
interview that when the test he was participating in was completed, he would
rent a cheap motel room where I’ll get a case of Miller and an escort girl have
sex. The girl will cost me $ 200 an
hour.” He estimated that it would take
him about two weeks to spend the $ 4650 Lily would pay him for his
services. The manager at another cheap
motel said that when test subjects completed their stints at Lily, they
generally arrived at his motel with about $ 2500 in cash : “ The guinea pigs go to the lounge next door, get drunk and buy
the house a round. The idea is, they can
party for a couple of weeks and go back to Lily and do the next one.”
Questions
:
1. Discuss this case from the perspective of
utilitarianism, rights, justice and
caring. What insight does virtue theory shed on the
ethics of the events described in this case ?
2. “ In a free enterprise society all adults
should be allowed to make their own decisions about how they choose to
earn their living.” Discuss the statement in light of the Lily case.
3. In your judgment, is the policy of using
homeless alcoholics for test subjects morally appropriate ? Explain the reasons for your judgment. What does your
judgment imply about the moral legitimacy
of a free market in labor ?
4. How should the managers of Lily handle
this issue ?
Xaviers Institute
of Business Management Studies
Human Resource Management
(i)
There are three Sections A and B and C.
(ii) Attempt any three
questions each from Section A and B. All questions carry 10 marks each.
(iii) Section C is
compulsory for all and carries 40 marks.
SECTION A
1. Define and differentiate between Job Analysis, Job Description and
Job Evaluation. Select an appropriate job evaluation method and create a plan
for evaluating jobs of scientists in different grades.
2. Discuss the role of indoctrination in organizations. How can
Performance Appraisal, and Training and Development be made an integral part of
Human Resource Planning? Discuss.
3. Discuss the scope of Human Resource Audit. While auditing Reward
systems for employees in a manufacturing organization, which factors should be
taken into account and why? Explain with suitable examples.
4. Define and discuss the need for Human Resource Planning in an
organization. Briefly discuss various approaches to HRP
5. Write short notes on any three of the following:
(a) Training methods
(b) Value determinants of HRP
(c) Human Resource accounting
(d) Labour Market Behavior
(e) Promotion and Reward Policies
SECTION B
1. Define and discuss the objectives of Human Resource Planning at
organizational level. How does it help in determining and evaluating future
organizational capabilities, needs and anticipated problems? Explain with
suitable examples.
2. Define and describe Job Analysis. Briefly discuss several methods in
which information about a job is collected and evaluated.
3. What is the purpose and process of recruitment function? Discuss
various methods of sourcing manpower.
4. How is monetary value assigned to different dimensions of Human
Resources costs, investments, and worth of the employees? Briefly explain Cost
and Economic value approaches of measurement.
5. Write short notes on any three of the following :
(a) MBO
(b) Succession Planning
(c) Competency Mapping
(d) Job Evaluation
(e) H.R. Inventory
SECTION C
1. Quality
control Department
Read the case given below and answer the questions given at the end.
Mr.
Kapil Kumar and Mr. Abbas Ali were working in a scooter manufacturing public
sector industry as Senior Quality Control Engineers in 1988. One post of Deputy
Chief Quality Controller has fallen vacant due to the retirement of the
incumbent and the management decided to recruit a qualified, knowledgeable and
experienced professional from outside so that the present quality standard may
be improved thus ensuring better marketability of their scooters in the face of
stiff competition. Mr. Kapil Kumar, who was a mechanical engineer with about 15
years experience in the Quality Control Department dealing with mopeds and
scooters, could have been promoted to fill the post on the basis of seniority.
However, the management was looking for a graduate in statistics with
experience in latest Quality Control (QC) techniques like statistical quality
control, quality assurance and other related areas rather than a mechanical or
automobile engineer with the routine experience in quality control. As such
instead of promoting Kapil Kumar, the management advertised for the post of
Deputy Chief Quality Controller - since as per company rules it was DR (Direct
Recruitment) vacancy also.
Selection of Outsider
Out of the applications received in response to the advertisement, six
candidates were called for interview including the two internal candidates, Mr.
Kapil Kumar and Mr. Abbas Ali. The person selected was an outsider, one Mr.
Ratnam, who had over 12 years experience SQC, quality assurance etc., in the
two-wheeler private manufacturing industry. Mr. Ratnam joined within 2 months
time expecting that in his new position he would be the main controller for
quality. However, after joining the organization he came to know that he would
be the second senior most person in the hierarchy for controlling the quality
and would be reporting to one, Kirpal Sing,. The Chief for Quality Controls.
Mr. Kirpal Singh had come up to this post by seniority and was basically a
diploma holder in automobile engineering. He had to his credit about 28 years
of industrial experience, out of which 20 years were spent in Quality Control
Department of two industries. He joined the present organization in its Quality
Control Department and had 17 years experience in the organization and was due
for retirement within the next 2 or 3 years. On learning about the retirement
time of Mr. Kirpal Singh, Mt. Ratnam had the consolation that he would be able
to take up the position of 'Chief Controller of Quality' very soon.
Interference from Top
Ratnam could not put forth many good suggestions (for quality control)
because of the interference and direct supervision of Kirpal Singh. He, however,
could pick up a good deal of knowledge about the working of the company, the
nature-and tendency of different production department heads particularly with
regard to care for quality, organization for 'QC' in the company, the various
components required for assembly of the company's two-wheeler scooter and the
expected quality standards, drawback in the present system of quality controls.
etc.
Right from the time the advertisement for the selection of Deputy Chief
Quality Controller appeared, the O.A. (Officers Association) of the
organization had been pressing the management to consider the case of Kapil
Kumar for promotion to the above post based on his seniority in the
organization.
Meanwhile, the management obtained a license in 1989 for producing Three-Wheeler
Autos. As a result of this and the pressure from O.A., Ratnam was transferred
to look after the Quality Control Department at the company's new Three-Wheeler
plant, whereas Kapil Kumar was promoted as Deputy Chief Quality Controller in
the present two-wheeler scooter plant in 1990 (after creating one additional
post of Deputy Chief Quality Controller for the new Project).
In 1991, the State Government, which controlled the company in question,
changed the Managing Director. During the regime of this new Managing Director,
Kapil Kumar was promoted as Chief (Quality Controls) next year, when Kirpal
Singh retired. This decision was based on the recommendations of Kirpal Singh
and partly attributed to pressure from O.A., for further promotion of Kapil
Kumar based on his vast experience in the Quality Control function of this
industry. Abbas Ali rose to the position held earlier by Kapil Kumar.
Allotment of Company Quarters
The Company had its own township near the factory. Its quarter allotment
scheme was based on the length of service, i.e., date of joining. Ratnam had
asked for a suitable quarter at the time of interview and was thus allotted a
tile quarter meant for the Senior Engineer's cadre. He learnt about this, after
occupying the quarter. Ratnam asked for a change of Quarter - preferably a
RCC-roof quarter, - but his request was turned down, since he had put in only
few months of service whereas many others senior to him, on the beds of their
longer length of service in the Company (having over 10 years service), were
staying in tiled-roof quarters and were awaiting a chance for a RCC-roof
quarter. Kapil Kumar and Abbas Ali were residing in RCC-roof quarters. Soon
after Kapil Kumar's promotion to the post of Chief (Quality Controls), he was allotted
a bungalow.
The management's decision in this case must be viewed in the context of
the downtrend in the demand for scooters and three-wheeler autos during 1993
following complaints from dealers about the deteriorating quality of components
as also their short life. Notably the complaints had risen ten-fold in that
year as compared to that in 1988.
Questions
(a) Was the management justified in taking a decision to recruit a
qualified and experienced person from outside as Deputy Chief Quality Controller?
(b) Was it in the interest of the organization to transfer Ratnam to the
new auto-wheeler plant and promote Kapil Kumar? What could have prompted the
management to take this decision?
(c) How do you view the role of O.A.s in supporting only the local and
internal candidates and overlooking the interests of direct recruits even when
they were family members of the Association, particularly at a time, when the
industry needed professionally qualified persons to fill key technical posts?
(d) How would you react to the management's scheme for quarter allotment
and why?
2. Pearl
Engineering
Pearl Engineering Company was a large heavy-engineering unit. It
attached great importance to the recruitment and training of its senior
supervisors. Apart from selecting them from within the organization, the
company recruited, every. Alternate year, about ten young engineering graduates
and offered them training for a period of two years, before they were appointed
as senior supervisors. Such appointments were made to about 40 per cent of the
vacancies of senior supervisors that occurred in the organization. This was
considered necessary by management as a planned programme of imparting vitality
to the organization. Besides, many of the old-timers, who had risen from the
ranks, did not possess the necessary academic background with the result that
they could not keep pace with the technological changes. Management also
believed that in the rapidly changing conditions of industry, a bank of
technically competent supervisors played a pivotal role, besides serving as a
pool from which to select future departmental managers.
Engineering Graduates were selected from amongst those who applied in
response to an all-India advertisement. For the selection of one engineer, on
an average, eight applicants were called for interview. A selection committee
consisting of the General Manager, the Production Manager, the Personnel
Manager and the Training Officer interviewed and selected the candidates. The
selection interview was preceded by a written test and only those who secured
40 per cent marks qualified for interview.
The engineers thus selected had to undergo a two year intensive
theoretical and practical training. A well-staffed and equipped Training
Institute was directly responsible for the training of the graduate engineers,
besides training trade apprentices and operatives required by the company.
Lectures on theoretical subjects were given at the Training Institute and
practical training was imparted in all the works departments under the guidance
of qualified and experienced instructors. A few lectures by senior officers of
the company were also arranged to acquaint them with the company policies on
different matters. During the last quarter of their two-year training programme
they were deputed to work fulltime to familiarize themselves with the
conditions in departments where they were to be absorbed eventually.
On successful completion of training, the graduate engineers were
offered appointments, depending on their performance and aptitude as revealed
during training. On placement in the work departments, however, most of them
faced some difficulty or the other.
According to management, some of the heads of departments, who were
themselves not qualified engineers, did not have sufficient confidence in these
younger men. They preferred the subordinates who came up from the ranks to hold
positions of responsibility. A few discredited them saying that it would take
years before these youngsters could pick up the job. Besides, some of the
employees, whose promotional opportunities were adversely affected by the
placement of graduate engineers, tried their best to run down the latter as a
class, sometimes working on the group feelings of the workers. Some of the
supervisors who were not graduate engineers also spoke derisively of them as
"the blue-eyed boys" of the organization. Management knew that many
of the graduate engineers were not utilized according to their capacity or
training, nor was any attempt made to test or develop their potentialities.
They also knew that many of the graduate engineers were, therefore,
dissatisfied with their work life. Some of them who did not get equal
promotional opportunities as their colleagues placed in other departments, were
looking for better jobs elsewhere.
On the other hand, according to management, the young graduate engineers
were themselves partly responsible for the hostile attitude of others in the
organization. Some of them failed to appreciate that a newcomer invited
hostility in the beginning and it took time before he was accepted as a member
of the work-group. They did not realize that they would be fully productive
only after gaining about five to seven years experience in the organization. A
few thought that they belonged to a superior cadre and threw their weight
around. They did not bother to understand and appreciate the problems of the
rank-and-file of employees who worked under them.
In spite of these drawback, the General Manager of the company felt that
these men were a set of disciplined supervisors. They had a sense of pride in
their profession, and with the extensive training they had received, they would
be able to take up any responsible position in the organization in course of
time.
The General Manager could not allow the situation to continue especially
when it was a difficult and costly process to recruit and train young
engineering graduates of the requisite type and caliber. He knew that the
prosperity of the company, to a large extent, depended on these young men. In
addition, a large number of lucrative employment opportunities were available
to these young engineers elsewhere and there was a systematic raid on them, He,
therefore, called a meeting of all heads of departments to review the
situation.
Questions:
(i) Identify the issues related to manpower planning as evident in the
case.
(ii) Discuss the strategies to tackle the percentage of internal
promotion at the organizational level.
(iii)What type of additional training programmes should be imparted for
direct entrants?
(iv) Suppose you are the head of the personnel division. What would be your
suggestions in the meeting - Which has been called by the General Manager?
Xaviers Institute
of Business Management Studies
MARKS : 80
SUB: INTERNATIONAL BUSINESS
N. B.: 1) Attempt any four
cases 2) All
cases carries equal marks.
No: 1
BPO – BANE OR BOON ?
Several MNCs are increasingly
unbundling or vertical disintegrating their activities. Put in simple language, they have begun
outsourcing (also called business process outsourcing) activities formerly
performed in-house and concentrating their energies on a few functions. Outsourcing involves withdrawing from certain
stages/activities and relaying on outside vendors to supply the needed
products, support services, or functional activities.
Take Infosys, its 250 engineers
develop IT applications for BO/FA (Bank of America). Elsewhere, Infosys
staffers process home loans for green point mortgage of Novato, California. At Wipro, five radiologists interpret 30 CT
scans a day for Massachusetts
General Hospital.
2500 college educated men and women
are buzzing at midnight at
Wipro Spectramind at Delhi.
They are busy processing claims for a major US
insurance company and providing help-desk support for a big US Internet service
provider-all at a cost upto 60 percent lower than in the US. Seven Wipro Spectramind staff
with Ph.Ds in molecular biology sift through scientific research for western
pharmaceutical companies.
Another activist in BOP is
Evalueserve, headquarterd in Bermuda and having main operations near Delhi. It also has a US subsidiary based in New York
and a marketing office in Australia to cover the European market. As Alok Aggarwal (co-founder and chairman)
says, his company supplies a range of value-added services to clients that
include a dozen Fortune 500 companies and seven global consulting firms,
besides market research and venture capital firms. Much of its work involves dealing with CEOs,
CFOs, CTOs, CIOs, and other so called C-level executives.
Evaluserve provides services like
patent writing, evaluation and assessment of their commercialization potential
for law firms and entrepreneurs. Its
market research services are aimed at top-rung financial service firms, to
which it provides analysis of investment opportunities and business plans. Another major offering is multilingual
services. Evalueserve trains and
qualifies employees to communicate in Chinese, Spanish, German, Japanese and
Italian, among other languages. That
skill set has opened market opportunities in Europe
and elsewhere, especially with global corporations.
ICICI infotech Services in Edison, New Jersey, is
another BOP services provider that is offering marketing software products and
diversifying into markets outside the US. The firm has been promoted by
$2-billion ICICI Bank, a large financial institution in Mumbai that is listed
on the New York Stock Exchange.
In its first year after setting up
shop in March 1999, ICICI infotech spent $33 million acquiring two information
technology services firms in New Jersy-Object Experts and ivory Consulting –
and command Systems in Connecticut. These acquisitions were to help ICICI
Infotech hit the ground in the US
with a ready book of contracts. But it
soon found US companies increasingly outsourcing their requirements to offshore
locations, instead of hiring foreign employees to work onsite at their
offices. The company found other native
modes for growth. It has started
marketing its products in banking, insurance and enterprise resource planning
among others. It has earmarket $10 million for its next US market offensive, which would go towards R
& D and back-end infrastructure support, and creating new versions of its
products to comply with US
market requirements. It also has a joint
venture – Semantik Solutions GmbH in Berlin, Germany with the Fraunhofer Institute for
Software and Systems Engineering, which is based in Berlin
and Dortmund, Germany – Fraunhofer is a leading
institute in applied research and development with 200 experts in software
engineering and evolutionary information.
A relatively late entrant to the US
market , ICICI Infotech started out with plain vanilla IT services, including
operating call centeres. As the market
for traditional IT services started wakening around mid-2000, ICICI Infotech
repositioned itself as a “Solutions” firm offering both products and
services. Today , it offers bundied
packages of products and services in corporate and retail banking and include
data center and disaster recovery management and value chain management
services.
ICICI Infotech’s expansion into new
overseas markets has paid off. Its $50
million revenue for its latest financial year ending March 2003 has the US operations generating some $15 million, while
the Middle East and Far East markets brought
in another $9 million. It new boasts more than 700 customers in 30 countries,
including Dow Jones, Glazo-Smithkline, Panasonic and American Insurance Group.
The outsourcing industry is indeed
growing form strength. Though technical
support and financial services have dominated India’s outsourcing industry, newer
fields are emerging which are expected to boost the industry many times over.
Outsourcing of human resource
services or HR BPO is emerging as big opportunity for Indian BPOs with global
market in this segment estimated at $40-60 billion per annum. HR BPO comes to about 33 percent of the
outsourcing revenue and India has immense potential as more than 80 percent of
Fortune 1000 companies discuss offshore BOP as a way to cut costs and increase
productivity.
Another potential area is ITES/BOP
industry. According to A NASSCOM survey,
the global ITES/BOP industry was valued at around $773 billion during 2002 and
it is expected to grow at a compounded annual growth rate of nine percent during
the period 2002 – 06, NASSCOM lists the major indicators of the high growth
potential of ITES/BOP industry in India as the following.
During 2003 – 04, The ITES/BPO
segment is estimated to have achieved a 54 percent growth in revenues as
compared to the previous year. ITES
exports accounted for $3.6 billion in revenues, up form $2.5 billion in 2002 – 03.
The ITES-BPO segment also proved to be a major opportunity for job
seekers, creating employment for around 74,400 additional personnel in India
during 2003 – 04. The number of Indians
working for this sector jumped to 245,500 by March 2004. By the year 2008, the segment is expected to
employ over 1.1 million Indians, according to studies conducted by NASSCOM and
McKinsey & Co. Market research shows that in terms of job creation, the ITES-BOP
industry is growing at over 50 per cent.
Legal outsourcing sector is another
area India
can look for. Legal transcription
involves conversion of interviews with clients or witnesses by lawyers into
documents which can be presented in courts.
It is no different from any other transcription work carried out in India. The bottom-line here is again cheap
service. There is a strong reason why India
can prove to be a big legal outsourcing Industry.
India,
like the US,
is a common-law jurisdiction rooted in the British legal tradition. Indian
legal training is conducted solely in English.
Appellate and Supreme Court proceedings in India take place exclusively in
English. Due to the time zone
differences, night time in the US is daytime in India which means that clients get
24 hour attention, and some projects can be completed overnight. Small and mid – sized business offices can
solve staff problems as the outsourced lawyers from India take on the time –
consuming labour intensive legal research and writing projects. Large law firms also can solve problems of
overstaffing by using the on – call lawyers.
Research firms such as Forrester
Research, predict that by 2015 , more than 489,000 US lawyer jobs, nearly eight
percent of the field, will shift abroad..
Many more new avenues are opening up
for BOP services providers. Patent
writing and evaluation services are markets set to boom. Some 200.000 patent applications are written
in the western world annually, making for a market size of between $5 billion
and $7 billion. Outsourcing patent
writing service could significantly lower the cost of each patent application,
now anywhere between $12,000 and $15,000 apiece-which would help expand the market.
Offshoring of equity research is
another major growth area. Translation
services are also becoming a big Indian plus.
India produces some
3,000 graduates in German each year, which is more than that in Switzerland.
Though going is good, the Indian BPO
services providers cannot afford to be complacent. Phillppines, Maxico and Hungary are emerging as potential
offshore locations. Likely competitor is
Russia,
although the absence of English speaking people there holds the country back.
But the dark horse could be South Affrica and even China
BOP is based on sound economic
reasons. Outsourcing helps gain cost
advantage. If an activity can be
performed better or more cheaply by an outside supplier, why not outsource it ?
Many PC makers, for example, have shifted from in – house assembly to utilizing
contract assemblers to make their PCs.
CISCO outsources all productions and assembly of its routers and
witching equipment to contract manufactures that operate 37 factories, all
linked via the internet.
Secondly, the activity (outsourced)
is not crucial to the firm’s ability to gain sustainable competitive advantage
and won’t hollow out its core competence, capabilities, or technical know
how. Outsourcing of maintenance
services, date processing, accounting, and other administrative support
activities to companies specializing in these services has become common
place. Thirdly, outsourcing reduces the
company’s risk exposure to changing technology and / or changing buyer
preferences.
Fourthly, BPO streamlines company
operations in ways that improve organizational flexibility, cut cycle time,
speedup decision making and reduce coordination costs. Finally, outsourcing allows a company to
concentrate on its core business and do what it does best. Are Indian companies listening ? If they
listen, BPO is a boon to them and not a bane.
Questions:
1. Which of the theories of international
trade can help Indian services providers gain competitive edge over their
competitors?
2. Pick up some Indian services
providers. With the help of Michael
Porter’s diamond, analyze their strengths and weaknesses as active players in
BPO.
3. Compare this case with the case given at
the beginning of this chapter. What
similarities and dissimilarities do you notice? Your analysis should be based
on the theories explained.
No: 2
PERU
Peru is located on
the west coast of South America. It is the third largest nation of the
continent (after Brazil and Argentina) , and covers almost 500.000 square
miles (about 14 per cent of the size of the United States). The land has enormous contrasts, with a
desert (drier than the Sahara), the towering snow – capped Andes
mountains, sparkling grass – covered plateaus, and thick rain forests. Peru has approximately 27 million people, of
which about 20 per cent live in Lima,
the capital. More Indians (one half of
the population) live in Peru
than in any other country in the western hemisphere. The ancestors of Peru’s Indians were the famous
incas, who built a great empire. The
rest of the population is mixed and a small percentage is white. The economy depends heavily on agriculture,
fishing , mining, and services, GDP is approximately $15 billion and per capita
income in recent years has been around $4,3000.
In recent years the economy has gained some relative strength and multinationals
are now beginning to consider investing in the country.
One of these potential investors is
a large New York
based bank that is considering a $25 million loan to the owner of a Peruvian
fishing fleet. The owner wants to
refurbish the fleet and add one more ship.
During the 1970s, the Peruvian
government nationalized a number of industries and factories and began running
them for the profit of the state in most cases, these state – run ventures
became disasters. In the late 1970s the fishing fleet owner was given back his
ships and allowed to operate his business as before. Since then, he has managed to remain
profitable, but the biggest problem is that his ships are getting old and he
needs an influx of capital of make repairs and add new technology. As he explained it to the new York banker. “Fishing is no longer just
an art. There is a great deal of technology involved. And to keep costs low and be competitive on
the world market, you have to have the latest equipment for both locating as well
as catching and then loading and unloading the fish”
Having reviewed the fleet owner’s
operation, the large multinational bank believes that the loan is
justified. The financial institution is
concerned, however, that the Peruvian government might step in during the next
couple of years and again take over the business. If this were to happen, it
might take an additional decade for the loan to be repaid. If the government were to allow the fleet
owner to operate the fleet the way he has over the last decade, the fleet the
way he has over the last decade, the
loan could be repaid within seven years.
Right now, the bank is deciding on
the specific terms of the agreement.
Once theses have been worked out, either a loan officer will fly down to
Lima and close the deal or the owner will be
asked to come to New York
for the signing. Whichever approach is used, the bank realizes that final
adjustments in the agreement will have to be made on the spot. Therefore, if the bank sends a representative
to Lima, the
individual will have to have the authority to commit the bank to specific
terms. These final matters should be worked out within the next ten days.
Questions:
1. What are some current issues facing Peru?
What is the climate for doing business in Peru today?
2. What type of political risks does this
fishing company need to evaluate? Identify and describe them.
3. What types of integrative and protective
and defensive techniques can the bank use?
4. Would the bank be better off negotiating
the loan in New York or in Lima ? Why?
No: 3
RED BECOMING THICKER
The
Backdrop
There seems to
be no end to the troubles of the coloured – water giant Coca Cola. The cola
giant had entered India
decades back but left the country in the late 1970s. It staged a comeback in the early 1990s
through the acquisitions route. The professional management style of Coca Cola
did not jell with the local bottlers. Four CEOs were changed in a span of seven
years. Coke could not capitalize on the
popularity of Thums Up. Its arch rival
Pepsi is well ahead and has been able to penetrate deep into the Indian
market. Red in the balance sheet of Coke
is becoming thicker and industry observers are of the opinion that it would
take at least two decades more before Coke could think of making profits in India.
The
Story
It was in the
early 1990s that India
started liberalizing her economy.
Seizing the opportunity, Coca Cola wanted to stage a comeback in India. It chose Ramesh Chauhan of Parle for entry
into the market. Coke paid $100 million
to Chauhan and acquired his well established brands Thums Up, Goldspot and
Limca. Coke also bagged 56 bottlers of Chauhan as a part of the deal. Chauhan was made consultant and was also
given the first right of refusal to any large size bottling plants and bottling
contracts, the former in the Pune – Bangalore belt and the latter in the Delhi
and Mumbai areas.
Jayadeva Raja, the flamboyant
management expert was made the first CEO of Coke India. It did not take much time for him to realize
that Coke had inherited several weaknesses from Chauhan along with the brands
and bottlers. Many bottling plants were small in capacity (200 bottlers per
minute as against the world standard of 1600) and used obsolete technology. The bottlers were in no mood to increase
their capacities, nor were they willing to upgrade the trucks used for
transporting the bottle. Bottlers were more used to the paternalistic approach
of Chauhan and the new professional management styles of Coke did not go down well
with them. Chauhan also felt that he was
alienated and was even suspected to be supplying concentrate unofficially to
the bottlers.
Raja was replaced by the hard –
nosed Richard Niholas in 1995. The first thing Nicholas did was to give an
ultimatum to the bottlers to expand their plants or sell out. Coke also
demanded equity stakes in many of the bottling plants. The bottlers had their own difficulties as
well. They were running on low profit
margins. Nor was Coke willing to finance
the bottlers on soft terms. The
ultimatum backfired. Many bottlers switched their loyalty and went to
Pepsi. Chauhan allegedly supported the
bottlers, of course, from the sidelines.
Coke thought it had staged a coup
over Pepsi when it (Coke) clamed the status of official drink for the 1996
Cricket World Cup tournament. Pepsi took
on Coke mightily with the famous jingle “Nothing official about it”. Coke could
have capitalized on the sporty image of Thums Up to counter the campaign, but
instead simply caved in.
Donald Short replaced Nicholas as
CEO in 1997. Armed with heavy financial
powers, Short bought out 38 bottlers for about $700 million. This worked out to about Rs 7 per case, but
the cost – effective figure was Rs 3 per case. Short also invested heavily in
manpower. By 1997, Coke’s workforce
increased to 300. Three years later, the
parent company admitted that investment in India was a big mistake.
It is not in the culture of Coke to
admit failure. It has decided to fight
back. Coke could not only sustain the
loss, it could even spend more money on Indian operations. It hiked the ad budget and appointed Chaitra
Leo Burnett as its ad agency. During
1998 – 99, Coke’s ad spend was almost three times that of Pepsi.
Coke is taking a look at its human
resources and is taking initiatives to re – orient the culture and inject an
element of decentralization along with empowerment. Each bottling plant is expected to meet
predetermined profit, market share, and sales volumes. For newly hired management trainees, a
clearly defined career path has been drawn to enable them to become profit
centre heads shortly after completion of their probation. Such a decentralized
approach is something of a novelty in the Coke culture worldwide.
But Alezander “Von Behr, who replaced
Short as Chef of Indian operations, reiterated Coke’s commitment to
decentralization and local responsiveness.
Coke has divided India
into six regions, each with a business head.
Change in the organization structure has disappointed many employees,
some of whom even quit the company.
Coke started cutting down its
costs. Executives have been asked to
shift from farm houses to smaller houses and rentals of Gurgaon headquarters
have been renegotiated. Discount rates
have been standardized and information systems are being upgraded to enable the
Indian headquarters to access online financial status of its outposts down to
the depot level.
Coke has great hopes in Indian as
the country has a huge population and the current per capita consumption of
beverages is just four bottles a year.
Right now, the parent company (head
– quartered in the US)
has bottle full of problems. The
recently appointed CEO-E Neville Isdell needs to struggle to do the things that
once made the Cola Company great. The problems
include –
Meddling
Board
Coke’s star- studded group of
directors, many of whom date back to the Goizueta era, has built a reputation
for meddling.
Moribund
Marketing
Once world class critics say that
today the soda giant has become too conservative, with ads that don’t resonate
with the teenagers and young adults that made up its most important audience.
Lack
of Innovation
In the US market, Coke hasn’t created a
best – selling new soda since Diet Coke in 1982. In recent years Coke has been outbid by rival
Pepsi Co for faster growing noncarb beverages like SoBe Gatorade.
Friction
with Bottlers
Over the past decade, Coke has often
made its profit at the expenses of bottlers, pushing aggressive price hikes on
the concentrate it sells them. But key
bottlers are now fighting back with sharp increases in the price of coke at
retail.
International
Worries
Coke desperately needs more
international growth to offset its flagging US
business, but while some markets like Japan remain lucrative, in the
large German market Coke has problems so far as bottling contracts go.
When its own house is not in order
in the large country, will the company be able to focus enough on the Indian
market?
Questions:
1. Why is that Coke has not been able to make
profit in its Indian operations?
2. Do you think that Coke should continue to
stay in India?
If yes, why?
3. What cultural adaptations would you
suggest to the US
expatriate managers regarding their management style?
4. Using the Hofstede and the value
orientations cultural models, how can you explain some of the cultural
differences noted in this case?
NO. 4
THE ABB PBS
JOINT VENTURE IN OPERATION
ABB Prvni Brnenska Stojirna Brno,
Ltd. (ABB-PBS), Czechoslovakia
was a joint venture in which ABB has a 67 per cent stake and PBS a.s. has a 33
per cent stake. This PBS share was
determined nominally by the value of the land, plant and equipment, employees
and goodwill, ABB contributed cash and specified technologies and assumed some
of the debt of PBS. The new company
started operations on April
15, 1993.
Business for the joint venture in
its first two full years was good in most aspects. Orders received in 1994, the first full year
of the joint venture’s operation, were higher than ever in the history of
PBS. Orders received in 1995 were 2½
times those in 1994. The company was
profitable in 1995 and ahead of 1994s results with a rate of return on assets of
2.3 per cent and a rate of return on sales of 4.5 per cent.
The 1995 results showed substantial
progress towards meeting the joint venture’s strategic goals adopted in 1994 as
part of a five year plan. One of the
goals was that exports should account for half of the total orders by 1999. (Exports had accounted for more than a quarter
of the PBS business before 1989, but most of this business disappeared when the
Soviet Union Collapsed). In 1995 exports
increased as a share of total orders to 28 per cent, up from 16 per cent the
year before.
The external service business, organized
and functioning as a separate business for the first time in 1995, did not meet
expectations. It accounted for five per
cent of all orders and revenues in 1995, below the 10 per cent goal set for it. The retrofitting business, which was expected
to be a major part of the service business, was disappointing for ABB-PBS,
partly because many other small companies began to provide this service in
1994, including some started by former PBS employees who took their knowledge
of PBS-built power plants with them.
However, ABB-PBS managers hoped that as the company introduced new
technologies, these former employees would gradually lose their ability to
perform these services, and the retrofit and repair service business, would
return to ABB-PBS.
ABB-PBS dominated the Czech boiler
business with 70 per cent of the Czech market in 1995, but managers expected
this share to go down in the future as new domestic and foreign competitors
emerged. Furthermore, the west European
boiler market was actually declining because environmental laws caused a surge
of retrofitting to occur in the mid -1980 s, leaving less business in the 1990
s. Accordingly ABB-PBS boiler orders
were flat in 1995.
Top managers at ABB-PBS regarded
business results to date as respectable, but they were not satisfied with the
company’s performance. Cash flow was not
as good as expected. Cost reduction had
to go further. The more we succeed, the
more we see our shortcomings” said one official.
Restructuring
The first round of restructuring was
largely completed in 1995, the last year of the three-year restructuring
plan. Plan logistics, information
systems, and other physical capital improvements were in place. The restricting included :
- Renovating
and reconstructing workshops and engineering facilities.
- Achieving
ISO 9001 for all four ABB-PBS divisions. (awarded in 1995)
- Transfer
of technology from ABB (this was an ongoing project)
- Intallation
of an information system.
- Management
training, especially in total quality assurance and English language.
- Implementing
a project management approach.
A
notable achievement of importance of top management in 1995 was a 50 per cent
increase in labour productivity, measured as value added per payroll
crown. However, in the future ABB-PBS
expected its wage rates to go up faster than west European wage rates (Czech
wages were increasing about 15 per cent per year) so it would be difficult to
maintain the ABB-PBS unit cost advantage over west European unit cost.
The Technology
Role for ABB-PBS
The joint venture was expected from
the beginning to play an important role in technology development for part of
ABB’s power generation business worldwide.
PBS a.s. had engineering capability in coal – fired steam boilers, and
that capability was expected to be especially useful to ABB as more countries
became concerned about air quality.
(When asked if PBS really did have leading technology here, a boiler
engineering manager remarked, “Of course we do.
We burn so much dirty coal in this country; we have to have better
technology”)
However, the envisioned technology
leadership role for ABB-PBS had not been realized by mid – 1996. Richard Kuba, the ABB-PBS managing director,
realized the slowness with which the technology role was being fulfilled, and
he offered his interpretation of events.
“ABB did not promise to make the
joint venture its steam technology leader. The main point we wanted to achieve
in the joint venture agreement was for ABB-PBS to be recognized as a
full-fledged company, not just a factory.
We were slowed down on our technology plans because we had a problem
keeping our good, young engineers. The annual employee turnover rate for
companies in the Czech
Republic is 15 or 20 per
cent, and the unemployment rate is zero.
Our engineers have many other good entrepreneurial opportunities. Now we’ve begun to stabilize our engineering
workforce. The restructing helped. We have better equipment and a cleaner and
safer work environment. We also had
another problem which is a good problem to have. The domestic power plant business turned out
to be better than we expected, so just meeting the needs of our regular
customers forced some postponement of new technology initiatives.”
ABB-PBS had benefited
technologically from its relationship with ABB.
One example was the development of a new steam turbine line. This project was a cooperative effort among
ABB-PBS and two other ABB companies, one in Sweden
and one in Germany. Nevertheless, technology transfer was not the
most important early benefit of ABB relationship. Rather, one of the most important gains was
the opportunity to benchmark the joint venture’s performance against other
established western ABB companies on variables such as productivity, inventory
and receivables.
Questions:
1. Where does the joint venture meet the needs of both the
partners? Where does it fall short?
2. Why had ABB-PBS failed to realize its technology leadership?
3. What lessons one can draw from this incident for better
management of technology transfers?
NO. 5.
CHINESE
EVOLVING ACCOUNTING SYSTEM
Attracted by its rapid
transformation from a socialist planned economy into a
market economy,
economic annual growth rate of around 12 per cent, and a population in excess
of 1.2 billion, Western firms over the past 10 years have favored China
as a site for foreign direct investment.
Most see China as an
emerging economic superpower, with an economy that will be as large as that of Japan by 2000 and that of the US before 2010, if current growth
projections hold true.
The Chinese government sees foreign
direct investment as a primary engine of China’s economic growth. To encourage such investment, the government
has offered generous tax incentives to foreign firms that invest in China,
either on their own or in a joint venture with a local enterprise. These tax incentives include a two – year
exemption from corporate income tax following an investment, plus a further
three years during which taxes are paid at only 50 per cent of the standard tax
rate. Such incentives when coupled with
the promise of China’s
vast internal market have made the country a prime site for investment by
Western firms. However, once established
in China, many Western firms
find themselves struggling to comply with the complex and often obtuse nature
of China’s
rapidly evolving accounting system.
Accounting in China has traditionally been rooted
in information gathering and compliance reporting designed to measure the
government’s production and tax goals.
The Chinese system was based on the old Soviet system, which had little
to do with profit or accounting systems created to report financial positions
or the results of foreign operations.
Although the system is changing
rapidly, many problems associated with the old system still remain.
One problem for investors is a
severe shortage of accountants, financial managers, and auditors in China,
especially those experienced with market economy transactions and international
accounting practices. As of 1995, there
were only 25,000 accountants in china, far short of the hundreds of thousands
that will be needed if China
continues on its path towards becoming a market economy. Chinese enterprises, including equity and
cooperative joint ventures with foreign firms, must be audited by Chinese
accounting firms, which are regulated by the state. Traditionally, many experienced auditors have
audited only state-owned enterprises, working through the local province or
city authorities and the state audit bureau to report to the government entity
overseeing the audited firm. In response
to the shortage of accountants schooled in the principles of private sector
accounting, several large international auditing firms have established joint
ventures with emerging Chinese accounting and auditing firms to bridge the
growing need for international accounting, tax and securities expertise.
A further problem concerns the
somewhat halting evolution of China’s
emerging accounting standards. Current
thinking is that China
won’t simply adopt the international accounting standards specified by the
IASC, nor will it use the generally accepted accounting principles of any
particular country as its mode. Rather,
accounting standards in China
are expected to evolve in a rather piecemeal fashion, with the Chinese adopting
a few standards as they are studied and deemed appropriate for Chinese
circumstances.
In the meantime, current Chinese
accounting principles present difficult problems for Western firms. For example, the former Chinese accounting
system didn’t need to accrue unrealized losses.
In an economy where shortages were the norm, if a state-owned company
didn’t sell its inventory right away, it could store it and use it for some
other purpose later. Similarly,
accounting principles assumed the state always paid its debts –
eventually. Thus, Chinese enterprises
don’t generally provide for lower-of-cost or market inventory adjustments or
the creation of allowance for bad debts, both of which are standard practices
in the West.
Questions:
1. What factors have shaped the accounting system currently in
use in China?
2. What problem does the accounting system, currently in sue in
China, present to foreign investors in joint ventures with Chinese companies?
3. If the evolving Chinese system does not adhere to IASC
standards, but instead to standards that the Chinese governments deem
appropriate to China’s “Special situation”, how might this affect foreign firms
with operations in China ?
NO. 6
UNFAIR PROTECTION OR VALID DEFENSE ?
“Mexico Widens Anti – dumping
Measure …………. Steel at the Core of US-Japan Trade Tensions …. Competitors in
Other Countries Are Destroying an American Success Story … It Must Be Stopped”,
scream headlines around the world.
International trade theories argue
that nations should open their doors to trade.
Conventional free trade wisdom says that by trading with others, a
country can offer its citizens a greater volume and selection of goods at
cheaper prices than it could in the absence of it. Nevertheless, truly free trade still does not
exist because national governments intervene.
Despite the efforts of the World Trade Organization (WTO) and smaller
groups of nations, governments seem to be crying foul in the trade game now
more than ever before.
We see efforts at protectionism in
the rising trend in governments charging foreign producers for “dumping” their
goods on world markets. Worldwide, the
number of antidumping cases that were initiated stood at about 150 in 1995, 225
in 1996, 230 in 1997 , and 300 in 1998.
There is no shortage of similar
examples. The Untied States charges Brazil, Japan,
and Russia with dumping
their products in the US
market as a way out of tough economic times.
The US steel industry wants the government to slap a 200 per cent tariff
on certain types of steel. But car
markers in the United States
are not complaining, and General Motors even spoke out against the antidumping
charge – as it is enjoying the benefits of law – cost steel for use in its auto
product ion. Canadian steel makers followed
the lead of the United
States and are pushing for antidumping
actions against four nations.
Emerging markets, too, are jumping
into the fray. Mexico recently expanded coverage
of its Automatic Import Advice System.
The system requires importers (from a select list of countries) to
notify Mexican officials of the amount and price of a shipment ten days prior
to its expected arrival in Mexico. The ten-day notice gives domestic producers
advance warning of incoming low – priced products so they can complain of
dumping before the products clear customs and enter the marketplace. India
is also getting onboard by setting up a new government agency to handle
antidumping cases. Even Argentina, China,
Indonesia, South Africa, South
Korea, and Thailand are using this recently –
popularized tool of protectionism.
Why is dumping on the rise in the
first place? The WTO has made major inroads on the use of tariffs, slashing tem
across almost every product category in recent years. But the WTO does not have
the authority to punish companies, but only governments. Thus, the WTO cannot pass judgments against
individual companies that are dumping products in other markets. It can only pass rulings against the
government of the country that imposes an antidumping duty. But the WTO allows countries to retaliate
against nations whose producers are suspected of dumping when it can be shown that : (1) the
alleged offenders are significantly hurting domestic producers, and (2) the
export price is lower than the cost of production or lower than the home –
market price.
Supporters of antidumping tariffs
claim that they prevent dumpers from undercutting the prices charged by
producers in a target market and driving them out of business. Another claim in support of antidumping is
that it is an excellent way of retaining some protection against potential
dangers of totally free trade.
Detractors of antidumping tariffs charge that once such tariffs are
imposed they are rarely removed. They
also claim that it costs companies and governments a great deal of time and
money to file and argue their cases. It
is also argued that the fear of being charged with dumping causes international
competitors to keep their prices higher in a target market than would other
wise be the case. This would allow
domestic companies to charge higher prices and not lose market share – forcing
consumers to pay more for their goods.
Questions
1. “You can’t tell consumers that the low
price they are paying for a particular fax machine or automobile is somehow
unfair. They’re not concerned with the
profits of companies. To them, it’s just a great bargain and they want it to
continue.” Do you agree with this statement? Do you think that people from
different cultures would respond differently to this statement? Explain your
answers.
2. As we’ve seen, the WTO cannot currently
get involved in punishing individual companies for dumping – its actions can
only be directed toward governments of countries. Do you think this is a wise policy ? Why or
why not? Why do you think the WTO was not given the authority to charge
individual companies with dumping? Explain.
3. Identify a recent antidumping case that
was brought before the WTO. Locate as many articles in the press as you can
that discuss the case. Identify the nations, products (s), and potential
punitive measures involved. Supposing you were part of the WTO’s Dispute
Settlement Body, would you vote in favor of the measures taken by the retailing
nation? Why or why not?
Xaviers Institute
of Business Management Studies
Logistics Management
[Max. Marks: 100]
Note: – Attempt five questions in all. All questions carry equal marks.
Section – A
Q-1. Explain
the cycle stock inventory model. Also explain the impact of service level on
safety stock with example. [20]
Q-2. Describe
the supply chain involved in making the bar of Lux soap that you have just
picked up from your neighborhood retail store. [20]
Q-3. (a) What are the advantages of moving from an
MTS to a CTO model? [10]
(b) Over a period of time, a product is
likely to move from introduction to growth and from growth to maturity. Would
this movement across different stages of the product life cycle affect supply
strategy and practices of the firm? [10]
Section – B
Q-4. (a) Why would a warehouse be used to perform
cross-docking operations? [10]
(b) What role can a warehouse play in
postponement strategies? [10]
Q-5. What
is time-based logistics? Describe manufacturing postponement and Logistics
postponement. [20]
Q-6. In
the planning of logistics systems, both internal and external review
assessments must consider a number of measures. What are they, and why are they
important?
[20]
Q-7. Compare
and contrast the focus of internal and external performance measures. [20]
Section – C
Q-8. CASE STUDY
Inventory Management at Dell Computers
Background
Dell
traces its origins to 1984; when Michael Dell created PCs Limited while a student
at the University of Texas at Austin.
The dorm-room headquartered company sold IBM PC-compatible computers built from
stock components.
Michael Dell started trading in the belief that by
selling personal computer system directly to customers, PCs Limited could better
understand customers’ needs and provide the most effective computing solutions to
meet those needs. Michael Dell dropped out of school in order to focus
full-time on his fledgling business, after getting about $300,000 in expansion-capital
from his family.
In 1985, the company produced the first computer of
its own design – the “Turbo PC”, sold for US$795. PCs Limited advertised its
systems in national computer magazines for sale directly to consumers and
custom assembled each ordered unit according to a selection of options. The
company grossed more than $73 million in its first year of trading.
The
company changed its name to “Dell Computer Corporation” in 1988 and began
expanding globally – first in Ireland.
In June 1988, Dell’s market capitalization grew by $30 million to $80 million
from its June 22 initial public offering of 3.5 million shares at $8.50 a
share. In 1992, Fortune magazine
included Dell Computer Corporation in its list of the world’s 500 largest
companies, making Michael Dell the youngest CEO of a Fortune 500 company ever.
When
managers discuss low inventory levels, Dell is invariably discussed. So why all
the commotion? Has their low inventory REALLY helped out that much? In short,
yes.
Reasoning Behind Need
For Lower Inventory
The
first thing that needs to be discussed is why low inventory has such a great
effect on Dell’s overall performance. The reason is quite simple: computers depreciate
at a very high rate. Sitting in inventory, a computer loses a ton of value.
As
Dell’s CEO, Kevin Rollins, put it in an interview with Fast Company:
“The
longer you keep it the faster it deteriorates – you can literally
see the stuff rot,” he says. “Because of their short product lifecycles,
computer components depreciate anywhere from
a half to a full point a week. Cutting inventory is not just a
nice thing to do. It’s a financial imperative.”
We’re
going to assume that the depreciation is a full point per week (1% per week)
and use that to determine how much money high inventory turns can save Dell.
This
means that for every 7 days a computer sits in Dell’s warehouses, the computer
loses 1% of its value. Ok, now that we know how much Dell loses for each day,
let’s take a look at some of Dell’s data over the past 10 years that I pulled
from www.themanufacturer.com
What
I got from this was the inventory turns. An inventory turn, as this website
successfully describes it, is “cost of goods sold from the income statement
divided by value of inventory from the balance sheet”. Typically, this is
turned into a value showing how many days worth of inventory a firm has by
dividing inventory turnover by 365. I divided the inventory turnover by 52 in
order to show how many weeks worth of inventory Dell holds.
Here
are the results :
Table
5.1 Dell’s Inventory
Turnover Data
|
Year
|
Inventory Turnover
|
Week’s Inventory
|
|
1992
1993
1994
1995
1996
1997
1998
1999
2000
|
4.79
5.16
9.4
9.8
24.2
41.7
52.40
52.40
51.4
|
10.856
10.078
5.532
5.306
2.149
1.247
0.992
0.992
1.012
|
Key point to notice here
is that Dell was carrying over 10 weeks worth of inventory in 1993. By 2001,
Dell was carrying less than 1
week’s worth of inventory. This essentially means that inventory used to sit
around for 11 weeks and now it sits around for less than 1 week.
So what does this mean for Dell?
Remember,
computers lose 1 percent of their value per week. This isn’t like the canned
food industry where managers can let their supplies sit around for months
before anyone bats an eye. Computers aren’t canned goods, and as Kevin Rollins
of Dell put it, computers “rot”. The longer a computer sits around, the less it
is worth.
That
said, due to depreciation alone, in 1993 Dell was losing roughly 10% per
computer just by allowing computers to sit around before they were sold. In
2001, Dell was losing less than a percent. Base
on holding costs alone, Dell reduced costs by nearly 9%.
Since
2011, Dell has continued to lower inventory. Looking at their latest annual
reports, day’s inventory has dropped by approximately a day.
Case Questions:
1. What are the reasons of maintaining
small level of inventory by Dell
Computers?
2. What other ways of inventory management
can be suggested to Dell Computers?
[20]
MANAGEMENT INFORMATION SYSTEMS
Marks: 80
SECTION A
Answer any 4 sub Questions. Each question carries five marks. (4X5= 20)
1.
(a) What is Information system?
(b) What is prototyping?
(c) What is Web Based System?
(d) What is hyperlink?
(e) What is knowledge management system?
SECTION B
Answer any five Questions. Each question carries 6 marks. (5x6= 30)
2. What is EIS? Explain its advantages and disadvantages.
3. What are the major challenges involved in building, operating and
maintaining information system?
4. How does an organisation impact in IT? Explain.
5. Explain the four stage model of IT planning.
6. What are the steps involved in implementation and evaluation of a system?
7. What is DSS? What are the models? Explain its components.
8. What are the benefits and application of content management?
SECTION C
Answer any three Questions. Each question carries 10 marks. (3x10= 30)
9. What are the types of IS? Explain each of them.
10. Explain a) ERP b) SCM.
11. What are recent developments in MIS area?
12. How do you manage the multimedia content?
13. What are the ethics in IT?
14. Explain the features and characteristics of objects in object oriented
analysis and design.
Managerial Economics
Total Marks - 80
Answer any FIVE Questions. All
Questions carry equal marks
1. Managerial Economics is the application of Economic Theory to business
management. Discuss. [16]
2. What are the needs for demand forecasting? Explain the various steps
involved in demand forecasting. [16]
3. Define production function. How is it helpful while taking output decisions?
[16]
4. (a) ' The monopolist represents one man industry’? Comment and discuss how
equilibrium position can be attained by the monopolist.
(b) Use appropriate diagrams to supplement your answer. [10+6]
5. (a) Define partnership and explain its salient features and limitations.
(b) What are the qualities of a good partner? [8+8]
6. What are the components of working capital? Explain each of them. [16]
7. Give a brief account on the important records of Accounting under Double
entry system and discuss briefly the scope of each. [16]
8. (a) From the information (given with attachments), calculate [16]
i. Debt Equity ratio
ii. Current ratio
(b) Calculate Interest Coverage ratio from the information (given with
attachments) .
Xaviers Institute
of Business Management Studies
MARKS : 80
SUB: Marketing Management
N. B. : 1) Attempt all Four
Case studies
2) All questions carry equal marks.
Case
study 1
Case Study on
Segmentation, Targeting & Positioning
Profiles
Group is a leading interior decorator and designer in the country. Mr. Neerav
Gupta, one of the partners in the group has invested a good amount of money in
the business. The other two partners namely Mr. Pratham Gupta who is a distant
cousin of Neerav and Mr. Dev Suri are mainly into managing the firm’s country wide operations. Mr.
Stanley Pereira, who is more of a sleeping partner, looks after the
administrative and financial aspects of the firm.
Profiles
Group has around 44 service centers in the country including state capitals and
several developing cities. Since the firm’s inception in 1998, its progress
has been unstoppable. The clients include many reputed companies, hotel chains,
popular celebrities and even hospitals and commercial banks.
A
brief background of the Partners:
Neerav
Gupta had a family owned business that was into manufacturing wooden furniture
but Neerav‟s interest was more
into decorating. So, after completing a Master’s course in interior designing
from a reputed college abroad, he decided to start his own interior design
services. Meanwhile, the furniture manufacturing business was handed over to
Pratham Gupta due to property and family settlement issues. But, Pratham
decided to join Neerav and they both started a partnership firm.
Dev
Suri, a friend of Neerav who had been living abroad, sold out his real estate
business and had decided to settle on the Indian soil itself. He offered help
by providing additional capital and his knowledge of real estates did help the
firm although in a small way. Stanley Pereira, an experienced teacher and
consultant, had worked previously in leading interior designing colleges and
was instrumental in making required changes in syllabus structure and interior
designing courses. He has also written many books and articles on the topic. He
had retired early due to family commitments but landed up in Profiles Group as
a Partner through mutual contacts.
The
conversation:
All
the four partners are comfortably sitting face to face on a peach colored
cushioned sofa which is situated near the window corner inside Neerav’s well-structured office.
Pratham
Gupta feels that since their firm has invested large funds, they must enter into
more market segments especially the smaller ones. And, regarding this issue, a
professional conversation takes place among the partners. The talks are as
follows:
Pratham:
“So, what do you think about expanding our market segments to smaller more ordinary
markets?”
Stanley: “What are you
exactly trying to say, Pratham? Will you explain it?”
Pratham:
“Listen guys, right now, we have 44 centers and competent people to work under
us, but when we see our customer base, it looks small and limited. What I mean
to say is that we also need to have those individual household customers who
are looking for service expertise in this field. Most household customers don’t get the necessary information
as to how to go about the interiors or how to decorate their home/offices etc.”
Neerav:
“I agree with your points Pratham, but don‟t you think if we have to reach
the smaller segments of the market, we need a different approach to cater to
their needs. We would have to advertise and communicate to these segments in a customised
way. This will increase the promotion budget and our focus on the existing
customers may be compromised.” Dev: “I think we need to get a balance here.
Pratham‟s points are valid
enough and it will make Profiles group more productive. If need be, we may have
to take help of a service consultancy in order to penetrate deeper markets.”
Stanley: “Okay... so, even if
we allocate these segments, we need to target them in a way where we will know
the immediate impact of these segments. We have to position in such manner that
we get this customer base to keep moving towards us... however, the problem
lies in the demand for our product in these segments!”
Pratham:
“What is that problem you are talking about, Stanley?”
Stanley: “I will tell the
problem, we know our product... but these individual customer segments will see
our product as a one time purchase... Interiors and designing is done by a
household customer at one point... very rarely, he will seek for a change or
improvement. So, is it acceptable that we cater to their one time need and then
let go?”
Neerav:
“I do understand that point... But, that’s always the case in our
business. Interior decorations and designs are usually considered one-time
expenditure by household customers.... and as a matter of fact, that has not
affected the way we do our business or on our returns.”
Pratham:
“See, even otherwise it should not affect our firm because individual customer
segments are willing to pay or spend on interiors. If they need a good,
comfortable home along with a neat set of furniture then why don’t we cater to that need, even if
it’s a one time demand
from a particular customer? This is exactly what I meant earlier when I said,
given the expertise we have, why don’t we use it to expand
our customer base? Of course, we may have to develop suitable pricing
strategies, promotion strategies for these market segments which is according
to me, not a big thing to do.”
Dev:
“Let’s first consult with
our marketing hero and ask their opinion or suggestions as well”
Dev
takes out his cell phone to dial Mr. Sunil’s number and he immediately gets
the connection. Sunil is the head of the marketing section and he is very
efficient in his job. He also has an acceptable humour quotient. Dev asks Sunil
to come over to Neerav’s office.
Sunil
enters the office:
Sunil:
“What’s up, Bosses?”
Dev
gives a brief explanation to Sunil about the potential market.
Sunil:
“that’s a welcome sign
actually... we have the necessary resources and we are available to any customer
at any given point... So, I think it‟s a good idea that we
update our customer profiles also... Only thing is we have to make sure we are
targeting and positioning our customer segment in the way they feel comfortable
to approach us...”
Pratham:
“Nicely said Sunil... You are our man in this task.... We rely on you to make
our markets bigger and customer segments broader...”
Sunil:
“Always thinking in the interests of Profiles Group, Mr. Gupta... Not to
worry... You tell me the confirmed plans and leave the execution on me...”
Neerav:
“Well, what can I say? If we are sure about managing the newer segments which
is existing out there, then our work is just to target them and position our
product as per the given requirements”
Dev:
“There is one important suggestion I would like to present here.... We need to
ensure that we properly differentiate our existing customers from the newer
ones so that we are not overriding one another or our customers don’t feel compromised at any point.”
Stanley: “That’s a really valuable suggestion,
Dev... I completely agree with this point”
Sunil:
“Me too... Mr. Suri has stated an absolute theory... But, it’s not that we can’t take the benefits from the two
and use it for our purpose... Somewhere, we can link the newer segments with
the existing ones and gradually Profiles Group will mean the same to every one.
That is however applicable in the long term... For now, we need to attend our
customer base on a one-to-one basis... So, we do it slow and steady”
Neerav:
“Sunil, I don’t understand, but
whenever you speak you visualize the big picture as well... I admire your
quality and also that you are very loyal to Profiles Group”
Sunil:
“Anytime Mr. Gupta, I am at your service....Just give the command and it will
be done”
All
of them laugh at that comment and decide to have an official meeting regarding
the Segmenting, Targeting and Positioning strategies for the potential market.
Within a month, the scheduled meeting is done with the involvement of key
people and various points are noted down for implementation.
The
marketing team after a brainstorming session also comes up with a collective
idea about introducing Re-decorating and re-designing to be offered as a
part of Profile’s group’s services. This meant that
clients or customers can think about re-designing or re-decorating their
homes/offices with the already available possessions and existing furniture.
This also meant less cost to the clients. This idea was taken up seriously and
plans to implement such services were already underway.
The
Progress:
The
next six months in the Profiles Group has made everyone busy with different
tasks and agendas to be accomplished. Sunil is the busiest person around and he
is actively engaged in marketing activities related to the targeting and
positioning of their product to the new customer base.
Very
soon, the results are noticeable in the Profiles Group. After a considerable
amount of planning and hard work, the subsequent months showed positive results
as given below:
The markets are segmented based
on the income level of the household customers
Their needs, wants and demands
are analyzed
These markets are targeted
based on their desire, willingness and capabilities to attain the required
interiors and furnishings.
Sunil headed a separate section
namely Re-designing and Re-decorating Services at the firm’s main office. Sunil was
immediately involved in making special centers for Re-designing and
re-decorating services in different parts of the country.
Marketing section was taken
over by a competent person - Ms. Sneha Agarwal who has over 8 years of
experience in interior designing. She was chosen on the recommendation of
Stanley Pereira as Sneha had been a merit student previously and Stanley had been her
teacher.
Neerav had even managed to get
some MNC‟s as the firm’s clients.
Positioning of Profiles Group’s product and services was done
in three ways –
For the already existing
customer base which include the corporate and business houses, film industry
and celebrities and other big units who spend huge amounts on the interior
decorations.
For the newer segments also
termed as the individual household segments who have limited spending abilities
but have a desire for elegant interiors at reasonable rates.
For the collective market –
re-design and re-decor services were offered.
The structure of the firm’s web-site was made more
user-friendly and included several videos showing how proper layout and
interiors increased efficiency, easy movement, allowed more lighting and
ventilation and created a feeling of well-being and comfort.
A CD was also launched which included these videos and the necessary
information of the Profile’s firm with the
contact addresses and numbers. The CD also included interview with certain
well-known clients who were highly satisfied with the firm’s services. This established
trust and good communication in the market.
Soon enough, the firm launches
into environmental friendly interiors and develops „Go Green‟ initiatives that uses more
re-cycled and renewable substances.
There was a plan to begin annual contests and games which involved household
customer segments to give their ideas or suggestions for a well laid out
interiors using eco-friendly materials and “Go-Green‟ initiatives.
The
Partners and the interview:
It’s been two years now since
Profile’s Group had moved into
individual household segments.
All
four partners are seated on the sofa inside Neerav‟s office except this time the
sofa is of cream shade and a press reporter namely Namitha Goel is sitting on a
single sofa across them. Namitha Goel had scheduled this interview and later
will be published in the “Living Designs”, a new monthly magazine that
deals with interiors. She begins with a direct question to Neerav –
Namitha:
“Mr. Neerav Gupta, do you think the reason for the substantial increase in your
customer base is due to the Redesign and re-decoration services?
Neerav:
“Well, to a considerable extent, I believe it is so. Re-design is not about my
taste or your taste. It’s about working with
what the client owns and making them happy. Most people are good in
re-arranging their stuff but they don’t have time or energy
to do it. So, we offer them this assistance.”
Namitha:
“How come you got this thought about making these household segments as your
customers? I mean, your firm is associated with the influential clientele base
and considering that, why did you feel that these household segments would
prove to be a lucrative market for you?”
Neerav:
“The entire credit for making individual household segments as our customers
goes to my business partners here, my workforce and their efforts. Around two
and a half years back, we had just got into a conversation in this very same
office and Pratham suggested about tapping these markets with our available
resources. Let me clarify that we decided to target this segment not for
profits but we felt they too would benefit from our expertise in this field.”
Namitha:
“According to the market survey, it seems that there is no close competitor for
you in this business. So, your firm stands at the top like it’s been from a long time. What do
you say in this matter?”
Neerav
is about to answer but his cell phone rings and he attends to it quickly.
Neerav:
“Excuse me, Ms. Namitha.., I have urgent business call that can’t wait..., Carry on with your
questions and my team mates will answer. I have to go now.” He addresses his
partners and leaves the office in a hurry.
The
interview proceeds and remaining partners contribute their views. The interview
takes another 45 minutes and Namitha Goel is satisfied with her work as a press
reporter. She leaves the Profile’s Group office with a
sense of achievement.
The
next month’s issue of “Living
Designs” carries
the cover story of the Profiles Group with the partners‟ exclusive interview placed in
the shaded column of the magazine pages.
Questions: 1 Examine the progress of Profile’s Group as a leading interior
designer and decorator.
Questions: 2 What kind
of change was observed in the STP strategy of the firm and how was it useful?
Questions: 3 Evaluate the working of Profile’s group with respect to the
Segmenting, Targeting and Positioning of markets. Do you have any suggestions
for the firm?
Case
study 2
Determining the
Marketing 4 P’s
Any
business organization in order to be successful needs to have a clear picture
about the 4 P’s of marketing. This forms the basis on which business
functioning takes place. What are these 4 P’s and why are they important? Let’s
assume that we are interested to start up a small business enterprise and for
that we have the necessary capital, skills and people. And now, since we are in
the initial stage of enterprise formation, we need to answer the previous
question.
Marketing
mix comprises of the four basic elements or components which are termed
together as 4 P’s of marketing. They are:
Product:
what is it that we have to offer to the market? What can it include? In what
ways can it be modified, changed, expanded, diversified etc.? Will our products
be accepted in the market? If not, how do we create a market for our products?
Price:
at what value should the products be offered in the market? What should be the
returns? Will it be worth to the buyers? What variations, differences and
strategies can we adopt in order to earn a fair margin and also gain customer
satisfaction?
Place:
where must be our products available? How soon it’s demanded in the market? How
quick we can deliver it to the consumption points? Who do we need to involve in
the distribution of our products? How much will they charge for their services?
Promotion:
why do we need to promote our products? Will people be aware of our products if
we don’t do any promotion? If we need to promote our products, what kind of
message we should convey to the market? In what ways and methods we can carry
out the promotion?
Unless
we know the answers to the above questions, we cannot make our business
function. Therefore, after considering the strengths and weakness of our likely
enterprise and studying the market opportunities, we decide to manufacture wax
crayons.
The
main reason behind this decision is –
1. We can come up with an
effective 4 P’s either by marketing the crayons ourselves and if not, we can
take orders by being the suppliers to our clients.
2. We know that our market mainly
comprises of educational institutions, drawing and painting classes/centers,
artistes, even big companies use crayons extensively.
3. We realize the potential of
wax crayons as we can offer variety in sizes, quality, colors, price ranges,
wholesale and retail prices etc. We can even venture into related areas such as
wax artic rafts, wax candles, oil colors, paint etc.
4. We can have direct contact
with our clients and in the long term we can even engage an agency to market
the crayons.
5.
We know that promotion strategies can be based on the type of our customer
segment and we could easily do it through advertising on Television,
newspapers, children’s comics, notebooks, school notice boards, etc. We can
even sponsor or conduct drawing competitions, art exhibitions or we can have
contractual agreements with the stationery outlets, art schools etc. However,
we are still apprehensive about our marketing mix. We are yet to confirm about
our marketing mix and until then we are unable to finalize on our decisions or
start with the implementation process.
Question
1.How will you determine the marketing mix for our enterprise?
Question
2.Do you have any ideas to make our enterprise successful particularly by
enhancing or improving the marketing mix?
Question
3.What do you think will be the challenges in making an effective marketing mix
since our enterprise is a new one?
Case
study 3
Good Publicity
vs. Bad Publicity
Roger Twain walked as usual with a pleasant aura and
at a leisurely pace to his office. Roger is a PR Manager in one of the top FMCG
companies of the world. His office along with the PR staff was recently shifted
from sixth floor to the second floor of the building. The reason was simple
enough. Top management did not want external parties to wander around the whole
building in the excuse of meeting PR staff or the PR manager. Roger Twain in
fact, welcomed this shift and was glad that he didn’t have to wait for the lift
as he could now very well use the staircase. Roger has around 15 years of
experience in PR and handling Publicity related issues. He had worked with
several companies as well as non-business organisations and institutes.
Roger currently in his 53rd year has achieved lot of
success in his career as a professional expert in the field of PR and Publicity
handling. Although his plans to start his own PR Consultancy firm didn’t work
out the way he wanted, he was actively involved in several worldwide workshops,
seminars and presentations. He even wrote articles on PR strategies and
published some books on PR. Roger’s ideologies as a PR professional was –
“No News is not
good news… You have to be in the news – good or bad. And, the objective should
be to convert bad news
into good news.”
“You cannot
create bad news about your company. At the same time, you cannot create a good
one. You can only communicate it in good or bad way.”
“PR is about
being in the news – time and date don’t matter much.”
“It’s not about
being right or wrong – it’s about being clear and sticking to the truth and
using it positively.”
“Everyone has a
right to express… But, a PR person should consider it as a righteous Duty”
“Your Company can show only performance. PR has
to talk about it.”
A few of his career achievements in the different
organizations that he worked for are as follows:
Problem Situation 1: Some of the cosmetic
products of Jasper Ltd. were selling in the market beyond its expiry
date. A media report exposed and presented this story to the public that Jasper
Ltd. was desperate to increase its sales and did not consider consumers’
interests or their well-being. This led to decrease in sales volume even in the
other product categories of the company. Due to incorrect operations of some
channel members and retail outlets, old stock was sold to the consumers after
the expiry dates. The outcome was Jasper Ltd.’s low profit margins.
Challenge: Roger’s challenge was
to make consumers more aware and responsible while purchasing the company’s
products without ruining the distribution channel relations and at the same
time making the company socially responsible.
Solution: Roger suggested to the
advertising department to create a public awareness ad regarding the importance
of checking product expiry dates before buying. He advised the management to
take back old stock from the retail outlets and distributors by offering a
reasonable price and also prescribing the time limit within which those
products should reach the company. Roger’s view was that distributors will
mostly see their benefit and continue to sell the old stock. If they sell it
back to the company itself for a price, they would definitely make an effort to
get the new stock and sell those to the consumers. Roger’s logic was “it is
better to spend some money on getting back the old stock than let it sell in
the market at the risk of company’s reputation.” Meanwhile, consumers will
also be aware about expiry dates of cosmetics when they buy it.
Problem situation 2: Acorn Seeds
Company’s assistant
finance manager was involved in some fraudulent activity and was accused of
misappropriation of funds. This news became public and soon enough, company’s
investors and stakeholders began to question the integrity and trustworthiness
of the company. Company found it difficult to convince people that one person’s
immoral intentions does not mean that everyone in the company is beyond trust
and moral obligations. Furthermore, company’s products and services got
severely affected and consumers started opting for competing products. There
was bad publicity all around. Sales declined and situation got worse when
finance manager unable to handle pressure resigned. Even though finance manager
was not involved with his assistant, he was linked with him and given a bad
treatment from outsiders even including some of the employees. Media
accelerated this issue and created more hype than was necessary.
Challenge: Roger’s challenges in
this situation was handling bad press, dealing with media people with patience
and uplift the company’s integrity with good reputation. He also needed to make
the financial department integrated with other departments and boost the
employee morale. At the same time he had to take care that company’s products
do not suffer in the situation.
Solution: Roger suggested to the
top management to issue a public message in the newspapers/magazines and also
at the end of the Company’s product ads on TV. The message was - “We value
your trust in us as you value our commitment towards you.” Roger’s view was
that once the fraud was committed and was out in the open, there was nothing
much to be done but to move on accepting that such incident occurred and will
not happen again. Roger also advised for just one press conference regarding
this issue to put an end to this matter. The assistant finance manager had
confessed and was told to resign instead of being fired. Soon enough, people
forgave and forgot this issue, sales improved and company was on the track once
again.
Problem Situation 3: One of the women’s
facial creams produced by Jasper Ltd. was severely criticised by media
and women. The belief was that the product contained acidic substance causing
harmful chemical reactions on the skin. This belief was created when some women
claimed that their skin discoloured/scalded after using this facial cream.
Media reports provided some facts related to the product that made women who
were using this cream more alert. As a result sales dropped drastically.
Challenge: First of all, Roger
had to study the product and know its constituents. Secondly, he discussed with
product research team as to why such claims could be targeted towards the
product. Next, he had to face the media and women consumers addressing the
claims and product’s safety.
Solution: Roger collected those
facts provided in the media reports and sent them for verification with the
skin specialists, research team and for laboratory testing. It was verified and
proved that facts provided were immaterial in causing damaged skin. It was also
proved that the cream contained no acidic substance or any sort of harmful
chemical. Secondly, those women who claimed skin damage were questioned about
their application of the skin cream. Two women confessed that they combined
several other beauty products along with cream’s application. Others confessed
that they were interested in making some quick money if company provided any
compensation. Roger arranged a special press meet and provided all the relevant
facts and information regarding this issue.
Problem Situation 4: Homely
Anchor, a
charitable organisation that mainly looked after elderly people in several old
age homes was having a problem with its donations. There were anonymous
donations coming from several places that it was difficult to track the funds
and its allocation. The members of the organisation were themselves confused
with the amount collected and amount spent since proper records were not
maintained. There were gaps in the accuracy of the information and its updates.
Somehow, a magazine columnist/writer got to know about this state of affairs
and without much investigation published a small article in the magazine. The
article stated how Homely Anchor was unable to manage funds and money received
through anonymous donations remained anonymous. Although the article was not
accusing of fraud, it hinted the readers in that direction. Within a few months
of the article publication, some social activist groups and media started
questioning Homely Anchor. There were questions raised on who were the
anonymous fund raisers, amount of donations and what and how much was being
spent where.
Challenge: Since Roger was
working as a part-time Public Relations officer in Homely Anchor, he had to
face the social activists and media on behalf of the organisation. He had to
protect the privacy of anonymous donation givers and assure them as well as old
age homes that funds are raised, managed and used for good intentions.
Solution: He merely gave open
statements telling that a proper system will soon be in place that would ensure
the accuracy and safety of records related to donations and fund raising.
Shortly, he arranged for a small conference consisting of prominent social
activists, charitable workers and media representatives to discuss and debate
on the implementation of proper systems in charitable organisations. This
conference gained lot of popularity and free publicity for Homely Anchor which
resulted in more donations. An appropriate system was also implemented to
record the transactions.
Problem Situation 5: The research and
production team at Sparkly Company had designed a new and innovative
technology of purifying water in their product – “Sparkler water purifiers”.
This system was tested and proved that it was safe and that it purified water
without destroying its minerals. Once it was approved, production plants were
ready to manufacture water purifiers in the newly designed way. But,
information had leaked to the rival competitor “Visor” Ltd. who immediately
took advantage of the opportunity. Visor Ltd. issued statements in the press
about this new technology of purifying water and that soon they will be marketing
these products. There was a commotion in Sparkly Company due to this. Research
and production teams began to accuse each other on the information leakage.
Somehow, management was not able to control the situation. News spread about
the rivalry issues and information leakage. Media was too interested in finding
out which company would come out with the product first.
Challenge: Roger too found this
situation difficult to handle. There was definitely an information leakage
regarding the new method implemented in water purifiers. Roger’s immediate
tasks were to find how information was leaked out and who would have done it.
He knew the commitment levels of the company’s employees were not questionable.
Second, he had to ensure that Sparkling Company was the first to introduce this
technique and at the same time he could not accuse Visor Ltd. openly in public.
Solution: Since acquiring
patents (exclusive rights) to the new technique in water purifiers was in
process, Roger decided not to talk about it. He then released a statement in
the press as “Sparkly Company’s dedicated effort towards manufacturing
Sparkler Water purifiers with new technology was a long time process. It
involved continuous research and lab experiments by the team. This technology
shows our expertise and we will never compromise on our products.” After an
internal investigation, Roger found that company’s certain e-mails were hacked
and through that, information had leaked to Visor Ltd. So, systems and networks
were made more secure. Roger made it clear in his public appearance in the
media that crucial information did leak out due to the insecure network and
computer systems. But, he was careful not to mention names or make any
accusations. Media turned their attention to Visor Ltd. questioning its
integrity, ethical and business values.
Questions:
1) Identify the qualities of Roger as a PR
professional and analyse his role in the companies that he worked for.
2) In the above problem situations, was there any
other approach that Roger could have adopted? If yes, suggest some approaches.
If no, why do you agree with Roger’s approach?
3) List the PR tools and strategies that were
adopted by Roger in dealing with the problem situations.
Case
study 4
Personal
Selling – Professional approach
Background Information:
“Keep Fit” is a medium-sized outlet exclusively dealing in exercising
equipments/machines and fitness accessories and sometimes in sports equipments
also. It has 27 sales persons employed under it. Owners of the outlet – an
active middle-aged couple have several contacts abroad through which they place
orders for the necessary and required equipments. Once an order is placed for
particular equipment, it takes atleast 2 weeks for the equipment to reach the
outlet. Secondly, the sales force is involved in cold calls, constantly
checking upon new orders from the existing customers and getting new customers
to place orders for these equipments from in and around the city. Sometimes,
they travel to other nearby cities seeking orders and new customers.
Some of the equipments that Keep Fit sells are –
Cardio equipments
such as Treadmills, Stair climbers, Steppers, Bikes, Ellipticals, Rowers, so
on.
Strength equipments
such as Weight benches, Power racks and varieties, different kinds of Weight
machines which is supplied as per customer’s requirements, lifting accessories,
home gym systems, and other machines.
Fitness accessories
such as pedometers, ankle and wrist weights, jump ropes, stretch mats, hand
grips, exercise balls, pull and push up bars, so on.
Sports accessories
such as soccer balls, volleyballs, basketballs, poles, boxing gloves, track
pants and such other stuff if at all there is customer demand or they have
placed such orders.
The owners have already realized the growth
potential of these equipments/machines after analyzing the following:
a) Since most people
are becoming health and fitness conscious, there is lot of demand but supply is
comparatively low.
b) Due to heavy work
pressures and IT related jobs that require people to sit in front of their
computer systems for long, it has resulted into high demand for creating and
maintenance of gyms in the companies and at the workplaces.
c) The affluent class
or groups especially celebrities and sports stars don’t mind purchasing and
owning these equipments in their homes, the objective being creation of a
personal gym at home.
d) Fitness centers,
gymnasiums and sports clubs are increasing in number and so is the demand for
the exercising equipments and machines.
e) Encouragement given to different sports
requires the sports men and women to use such equipments and therefore, they
have to be provided with such resources so as to participate in national or
international sports events like Olympics.
Two more salespersons were recently recruited
and selected by the owners. After the training and several exposures to the
sales practices adopted by experienced salespersons, these two salespersons
were ready for the actual job.
The first salesperson namely Mr. Jagan Das is
hard-working and efficient in his work. It was observed in the training
programme that he was alert to the situations and environment around him. But,
at the same time he had a weakness of listening a lot to other people’s
opinions and not contributing his thoughts or ideas. However, he was enrolled
in a short-term communication course to improve his language skills and
expressing his thoughts. The second salesperson namely Mr. Tarun Mehra is an
enthusiastic and determined chap. He likes to share ideas and given the time,
he would talk his way out. In the training programme, he asked lot of questions
and after receiving answers would again question about why and how of things.
His only weakness was his tendency to get over-enthusiastic about things and
situations that he would forget about existing situation or problem.
In the first few months, Jagan and Tarun were
getting along fine as they were assigned the same sales territory. Sometimes,
they would go together to collect orders and even dispatch orders to the
customers. Together, they were able to deal with complicated clients and
achieve higher sales targets than what was assigned to them.
Lately, the owners observed small fights
happening between Jagan and Tarun. They were not sure as to what caused the
disagreements that led to fights but eventually, the couple decided that the
salesmen needed to sort it out by themselves. On Jagan’s request, their sales
territories were separated and now, Jagan and Tarun had to deal with different
customers at different locations.
After Reading the Background Information, analyse the following two situations and answer
the questions given at the end:-
Situation 1:
Jagan is at the outlet’s veranda listening to
how another sales person handled a customer’s complaint. He receives a call
from one of the old customers of the outlet. The telephonic conversation goes
as follows:
Customer: “From “Shape-up” Gym, I am Raghav
speaking... Two months back, I purchased this treadmill from you for our
gymnasium located at the city’s east and now it is causing some problem... till
now whatever gym equipments we purchased from you had no problems of any kind”
Jagan: “Please tell me your problem Sir...”
Customer: “See, actually I can fix the
problem... I know some people who can do it very easily... but that’s not my
point... I need to know why the machine caused problem.”
Jagan: “You tell me your problem Sir, and then
we will fix it for free...”
Customer: “I am not having a problem; your
machine has a problem”
Jagan: “I will come at your place Sir, tell me
your exact problem so I can note it down and solve it as soon as possible”
Customer: “I can solve the problem... I need to
know whether the treadmill comes with a guarantee period and why a brand new
machine is causing this problem”
Jagan: “I will come over there Sir and if it’s
possible, I will bring a technical member from my team along with me...”
Customer: “No Thanks for your help... I will
speak to your Boss about the treadmill’s inefficiency!”
Jagan: “Wait... let me know what I can do for...
...”
The call is dropped and Jagan is unclear as to
what he must do next. Should he call back the customer on the same number as
appearing on his mobile or should he find out if he can trace the customer
information from the sales records of the last two months or should his
superior know about this incident? The customer appeared to be in a hurry and
didn’t even tell about the problem. Jagan also wondered about how Tarun would
react to this kind of call.
Situation 2:
Tarun is busy entering some information into the
sales records. He is asked to pick up a call from the superior’s office and
following conversation takes place:
Customer: “Is this Keep Fit?”
Tarun: “Good evening Sir, yes it is... May I
know your name Sir?”
Customer: “Who am I speaking to? ... I am
Jonathan from Lance Sports Club”
Tarun: “Mr. Jonathan, this is Tarun and I am a
sales executive at Keep Fit... you can tell me your concern Sir,”
Customer: “I had placed an order for 7 pairs of
weight plates, 6 pairs of dumbbells, and 2 exercising bikes – one upright and
also 2 treadmills and volleyball”
Tarun: “I am listening Mr. Jonathan”
Customer: “Yes, good, now according to
price-list, it says 3 treadmills, 3 exercising bikes, 6 pairs or weight plates,
6 pairs of dumbbells.... the thing is number of items mentioned in the bill are
completely wrong”
Tarun: “Just tell me the Bill Number and I will
get back to you Jonathan... But, how many items have you received in actual
numbers?”
Jonathan: “Well, that’s the problem... I have
received the same numbers as I placed in the order... but, the bill and the
list says wrong numbers... and only that volleyball is not received”
Tarun: “Okay.... Just see on the top left of
your list... you will find the Bill Number... please tell me that...”
Jonathan: “There is no Bill number in this...”
Tarun: “Please check it once again... there is a
bill number mentioned at the top left or top right or somewhere at the top...
Okay... tell me the date of the bill and your order placement date atleast”
Jonathan: “No, it’s alright, there must be a
mistake... we will sort it out during the payment”
Tarun: “Mr. Jonathan... Please co-operate and
tell me the bill number or the date so that I can verify it in the sales
records and check the invoices also”
Jonathan: “No, that’s okay... do not bother
about it... we will confirm later...”
Tarun: “Listen Mr. Jonathan, I can just.... ...”
But, before Tarun tells anything more, the customer has cut off the call. Tarun
feels uneasy about the conversation. He was being so helpful and wanted to
clarify the figures but it looked like the customer was not interested to do
so. Should he follow up on the customer after finding out the necessary details
or should he just keep quiet till the customer raises the issue once again?
Should he tell this to his superior? He tried to imagine Jagan’s way of
tackling these types of customers.
Note:
In both the situations, the salespersons have
not met the customers personally. In Situation 1, Jagan is dealing for
the first time with one of the old customers of the outlet. In Situation 2,
Tarun had spoken to some other member of the sports club previously.
Questions:
Question 1:- Identify the approach (plus points
and negative points) of the two salespersons in the above situations and make a
comparative analysis.
Question 2:- In both the situations, were the
customers satisfied with how the salespersons handled their queries? Analyse
the sales person’s and customer’s interactions in the above situations.
Question 3:- If you were a salesperson, how
would you have handled the above two situations? Do you have any suggestions
for Jagan and Tarun?
OPERATIONS MANAGEMENT
Maximum Marks: 100
Note: Attempt any five questions. All
questions carry equal marks. Assume any missing data suitably.
1. (a) Draw a systems view diagram of any service organization of your
choice. Identify its various components. Explain its interdisciplinary nature.
10
(b) What are the major characteristics of a Production system? Discuss
some of its upcoming issues that provide economies in production and efficiency
in the performance of the system. 10
2. (a) Explain with examples, how the TQM concept can integrate design
engineering, manufacturing and service. 10
(b) What are process capability studies ? Explain the process
capability index with applications to a real life example. 10
3. (a) Compare traditional process planning with Computer Aided
Process Planning (CAPP). Also explain a generative CAPP system. 10
(b) Explain the objectives of Total Productive maintenance. Give its
importance. Also comment on the concept of TPM promotion. 10
4. (a) Why is forecasting required in operations management ? Discuss
the concept of forecast error as applied to different conditions. 10
(b) How are quantitative models of forecasting different from
qualitative models ? Discuss in detail time-series model as used for
forecasting. 10
5. (a) What is facility planning ? Explain with examples different
types of layouts as used in manufacturing organisations. 10
(b) Discuss work measurement as a process to establish task time.
Explain the various techniques for developing time standards. 10
6. (a) Explain just in time manufacturing with the help of examples.
Discuss its advantages and disadvantages. 10
(b) For an independent demand
inventory model, derive the equation for Economic Order Quantity. List all
assumptions. 10
7. Write short notes on any four of the following: 4x5=20
(a) OPT
(b) Break even analysis
(c) Lean manufacturing
(d) Kanban system
(e) Line of Balance for Production Control
(f) Purpose of aggregate plans.
Xaviers Institute of
Business Management Studies
Organizational
Behaviour
Max. Marks: 80
Answer
any 8 questions. All questions carry equal marks
1. As a manager
how do you improve workers
perception in the organization?
2. Explain the factors affecting
individual differences.
3. Write
a short note on Hawthorne studies.
4. Discuss the need for studying OB.
5. Briefly explain defensive mechanisms.
6. Explain the factors influencing individuals’ personality development.
7. Explain two factor theory of motivation.
|
8.
|
|
How do you create
and sustain organizational culture.
|
|
|
|
|
|
9.
|
|
Explain the Managerial grid leadership style of Blake and Mouton.
|
10. Explain the various sources
of attitudes formation.
11. What is self concept? How you defend
yourself from various environment problems.
•••
Xaviers Institute
of Business Management Studies
Principles & Practice of Management
Marks - 80
(Please attempt any 4 of the below
mentioned case studies. Each Case study is for 20 marks)
Read the following case and answer the questions given at the end of the
case.
LOSING A GOOD MAN
Sundar Steel Limited was a medium-sized steel company manufacturing
special steels of various types and grades. It employed 5,000 workers and 450
executives.
Under the General Manager operation, maintenance, and headed by a chief.
The Chief of and under him Mukherjee Maintenance Engineer. The total was 500
workers, 25 executives, (Production), there were services groups, each
Maintenance was Shukla was working as the strength of Maintenance and 50
supervisors.
Chatterjee was working in Maintenance as a worker for three years. He
was efficient. He had initiative and drive. He performed his duties in a near
perfect manner. He was a man of proven technical ability with utmost drive and
dash. He was promoted as Supervisor. Chattejee, now a Supervisor, was one day
passing through the Maintenance Shop on his routine inspection. He found a
certain worker sitting idle. He pulled him up for this. The worker retaliated
by abusing him with filthy words. With a grim face and utter frustration,
Chatterjee reported the matter to Mukherjee. The worker who insulted Chatterjee
was a "notorious character" , and no supervisor dared to confront
him. Mukherjee took a serious view of the incident and served a strong warning
letter to the worker. Nothing very particular about Chatterjee or from him came
to the knowledge of Mukherjee. Things were moving smoothly. Chatterjee was
getting along well with others But after about three years, another serious
incident took place. A worker came drunk to duty, began playing cards, and
using very filthy language. When Chatterjee strongly objected to this, the
worker got up and slapped Chatterjee. Later, the worker went to his union - and
reported that Chatterjee had assaulted him while he was performing his duties.
Chatterjee had no idea that the situation would take such a turn. He,
therefore, never bothered to report the matter to his boss or collect evidence
in support of his case.
The union took the case to Shukla and prevailed over him to take stern
action against Chatterjee. Shukla instructed Mukherjee to demote Chatterjee to
the rank of a worker. Mukherjee expressed his apprehension that in such a case
Chatterjee will be of no use to the department, and. the demotion would
adversely affect the morale of all sincere and efficient supervisors. But
Chatterjee was demoted.
Chatterjee continued working in the organisation with all his
efficiency, competence, and ability for two months. Then he resigned stating
that he had secured better employment elsewhere. Mukherjee was perturbed at
this turn of events. While placing Chatterjee's resignation letter before
Shukla, he expressed deep concern at this development.
Shukla called Chief of Personnel for advice on this delicate issue. The
Chief of Personnel said, "l think the incident should help us to
appreciate the essential qualification required for a successful supervisor. An
honest and hardworking man need not necessarily prove to be an effective
supervisor. Something more is required for this as he has to get things done
rather than do himself." Mukherjee said, "l have a high opinion of
Chatterjee. He proved his technical competence and was sincere at his work.
Given some guidance on how to deal, with the type of persons he had to work
with, the sad situation could h.ave been avoided." Shukla said, "l am
really sorry to lose Chatterjee, He was very honest and painstaking in his
work. But I do not know how I could have helped him; I wonder how he always managed
to get into trouble with workers. we know they are illiterates and some of them
are tough. But a supervisor must have the ability and presence of mind to deal
with such men. I have numerous supervisors, but I never had to teach anybody
how to supervise his men."
Questions:
(a) Identify the problems in this case.
(b) Do you think the decision taken by shukla is in keeping with the
faith, trust and creating developmental climate in the organisation? Critically
evaluate
(c) How would you help in improving rough and tough behavior of employees?
Read the following case and answer the questions given at the end.
ABC manufacturing
The ABC Manufacturing Company is a metal working plant under the
direction of a plant manager who is known as a strict disciplinarian. One day a
foreman noticed Bhola, one of the workers, at the time-clock punching out two
cards his own and the card of Nathu, a fellow worker. Since it was the rule of
the company that each man must punch out his own card, the foreman asked Bhola
to accompany him to the Personnel Director, who interpreted the incident as a
direct violation of a rule and gave immediate notice of discharge to both
workers. The two workers came to see the Personnel Director on the following
day. Nathu claimed innocence on the ground that he had not asked for his card
to be punched and did not know at the time that it was being punched. He had
been offered a ride by a friend who had already punched out and who could not
wait for him to go through the punch-out procedure. Nathu was worried about his
wife who was ill at home and was anxious to reach home as quickly as possible.
He planned to take his card to the foreman the next morning for reinstatement,
a provision sometimes exercised in such cases. These circumstances were
verified by Bhola. He claimed that he had punched Nathu's card the same time he
punched his own, not being conscious of any wrongdoing.
The Personnel Director was inclined to believe the story of the two men
but did not feel he could reverse the action taken. He recognized that these
men were good workers and had good records prior to this incident.
Nevertheless, they had violated a rule for which the penalty was immediate
discharge. He also reminded them that it was the policy of the company to
enforce the rules without exception.
A few days later the Personnel Director, the Plant Manager, and the
Sales Manager sat together at lunch. The Sales Manager reported that he was
faced with the necessity of notifying one of their best customers that his
order must be delayed because of the liability of one department to conform to
schedule. The department in question was the one from which the two workers had
been discharged. Not only had it been impossible to replace these men to date,
but disgruntlement over the incident had led to significant decline in the
cooperation of the other workers. The Personnel Director and the Sales Manager
took the position that the discha rge of these two valuable men could have been
avoided if there had been provision for onsidering the circumstances of the
case. They pointed out that the incident was costly to the company in the
possible loss of a customer, in the dissatisfaction within the employee group,
and in the time and money that would be involved in recruiting and training
replacements. The Plant Manager could not agree with this point of view.
"We must have rules if we are to have efficiency; and the rules are no god
unless we enforce them. Furthermore, if we start considering all these
variations in circumstances, we will find ourselves loaded down with everybody
thinking he is an exception." He admitted that the grievances were
frequent but countered with the point that they could be of little consequence
if the contract agreed to by the union was followed to the letter.
Questions
(a) Identify the core issues in the case
(b) Place yourself in the position of the Personnel Director. Which of
the following courses of action would you have chosen and why?
(i) Would you have discharged both men?
(ii) Would you have discharged Bhola only?
(iii) Would you have discharged Nathu only?
(iv) Would you have discharged neither of them? Justify your choice of
decision.
(c) What policy and procedural changes would you recommend for handling such
cases in future?
Read the case and answer the questions given at the end of the case.
PK Mills
PK Mills manufactures woolen clothes. Over the years, it has earned an
envious reputation in the market. People associate PK Mills with high quality
woolen garments. Most of the existing employees have joined the company long
back and are nearing retirement stage. The process of replacing these old
employees with younger ones, drawn from the nearby areas, has already begun.
Recently, the quality of the garments has deteriorated considerably. Though the
company employs the best material that is available, the workmanship has gone
down. Consequently, the company has lost its customers in the surrounding areas
to a great extent. The company stands, in the eyes of general public,
depreciated and devalued. The production manager, in a frantic bid to recover
lost ground, held several meetings with his staff but all in vain. The problem,
of course, has its roots in the production department itself. The young workers
have started resisting the bureaucratic rules and regulations vehemently. The
hatred against regimentation and tight control is total. The old workers, on
the verge of retirement, say that conditions have changed considerably in
recent years. In. The days gone by, they say, they were guided by a process of
self-control in place of bureaucratic control. Each worker did his work
diligently and honestly under the old set-up. In an attempt to restructure the
organizational set-up, the managers who have been appointed afterwards brought
about radical changes. Workers under the new contract had very little freedom
in the workplace. They are expected to bend their will to rules and
regulations. Witnessing the difference between the two 'cultures' the young
workers, naturally, began to oppose the regulatory mechanism devised by top
management. The pent-up feelings of frustration and resentment against
management, like a gathering storm, have resulted in volcanic eruptions leading
to violent arguments between young workers and foremen on the shop-floor. In
the process production has suffered, both quantitatively and qualitatively. The
production manager in an attempt to weather out the storm, is seriously
thinking of bringing about a radical change in the control process that is
prevailing now in the organization.
Questions:
(a) What are the core issues the case?
(b) Do you agree with the statement "The problem, of course, has
its roots in the production department itself”? Reason out your stand.
(c) Critically evaluate the finding that old supervisors complain and
new workers to resist any type of control.
(d) What type of control system would you suggest to the company to
improve the production?
The AB Steel Plant
The Vice President for Production at the AB Steel Plant was giving the
Production Department Manager, Mr. Singh, a hard time for not doing anything
about his work group which was perpetually coming late to work and was behind
schedule in the performance quotas for several months now. The vice President's
contention was that if the production' crew was consistently tardy, the
production process was delayed by about 15 minutes on an average per member per
day, and this was no way for the department to meet the assigned quotas.
"They are losing about 6 to 8 hours of production time per member per
month, and you don't seem one bit concerned about it," he yelled at the
manager. He added that he was pretty upset about the 'lax management style' of
the manager and very clearly stated that unless the manager did something about
the tardiness problem, another manager who can manage the crew effectively'
will have to be found.
Mr. Singh knows that he has an able and good group of workers but he
also realizes that they are bored with their work and do not have enough
incentives to meet the production quotas. Hence, they seem to respond to the
situation by taking it easy and coming late to work by a few minutes every day.
Mr. Singh has also noticed that they were taking turns leaving the workplace a
few minutes early in the evenings. Even though Singh was aware of this, entire he
pretended not to notice the irregularities and was satisfied that once the
workers started their work, they were pretty good at their jobs and often
helped to meet rush orders whenever they knew that Mr. Singh was in a bind.
Questions:
(a) What do you think is the real, problem in this case?
(b) How do you perceive the stand of Mr. Singh? Analyze critically.
(c) What intervention should Mr. Singh use to rectify the type, of
situation he is presently confronted with? Discuss giving the reasons.
(d) Discuss the implications of effecting them with your
recommendations.
Dealing with an Employee’s Problem
Ms. Renu had graduated with a degree in foreign languages. As the child
of a military family, she had visited many parts of the world and had travelled
extensively in Europe. Despite these broadening experiences, she had never
given much thought to a career until her recent divorce.
Needing to provide her own income, Ms. Renu began to look for work.
After a fairly intense but unsuccessful search for a job related to her foreign
language degree, she began to evaluate her other skills. She had become a
proficient typist in college and decided to look into secretarial work.
Although she still wanted a career utilizing her foreign language skills, she
felt that the immediate financial pressures would be eased in a temporary
secretarial position.
Within a short period fo time, she was hired as a clerk/typist in a
typical pool at Life Insurance Company. Six months later, she became the top
typist in the pool and and was assigned as secretary to Mrs. Khan' manager of
marketing research. She was pleased to get out of the pool and to get a job
that had more variety in the tasks to perform. Besides, she also got a nice
raise in pay.
Everything seemed to proceed well for the next nine months. Mrs. Khan
was pleased with Renu's work, and she seemed happy with her work. Renu applied
for a few other more professional jobs in other areas during this time.
However, each time her application was rejected for lack of related education
and/or experience in the area.
Over the next few months, Khan noticed changes in Renu. She did not
always dress as neatly as she had in the past, she was occasionally late for
work, some of her lunches extended to two hours, and most of her productive
work was done in the morning hours. Khan did not wish to say anything because
Renu had been doing an excellent job and her job tasks still were being
accomplished on time. However, Renu's job behavior continued to worsen. She
began to be absent frequently on Mondays or Fridays. The two-hour lunch periods
became standard, and her work performance began to deteriorate. In addition,
Khan began to suspect that Renu was drinking heavily, due to her appearance
some mornings and behavior after two-hour lunches.
Khan decided that she must confront Renu with the problem. However, she
wanted to find a way to held her without losing a valuable employee. Before she
could set up a meeting, Renu burst through her floor after lunch one day and said:
"I want to talk to you Mrs. Khan"
"That's fine," Khan replied. "Shall we set a convenient
time?"
"No! I want to talk now."
"OK, why don't you sit down and let's talk?"
Khan noticed that Renu was slurring her words slightly and she was not
too steady.
"Mrs. Khan, I need some vacation time."
"I'm sure we can work that out. You've been with company for over a
year and have two weeks’ vacation coming."
"No, you don't understand. I want to start it tomorrow."
"But, Renu, we need to plan to get a temporary replacement. We
can't just let your job go for two weeks".
"Why not? Anyway anyone with an IQ above 50 can do my job. Besides,
I need the time off. "
"Renu, are you sure you are all right ?"
"Yes, I just need some time away from the job."
Khan decided to let Renu have the vacation, which would allow her some
time to decide what to do about the situation.
Khan thought about the situation the next couple of days. It was
possible that Renu was an alcoholic.
However, she also seemed to have a negative reaction to her job. Maybe
Renu was bored with her job. She did not have the experience or job skills to
move to a different type of job at present. Khan decided to meet with the
Personnel Manager and get some help developing her options to deal with Renu's
problem.
Questions:
(a) What is the problem in your opinion? Elaborate.
(b) How would you explain the behavior of Renu and Mrs. Khan? Did Mrs.
Khan handle the situation timely and properly?
(c) Assume that you are the Personnel Manager. What are the alternatives
available with Mrs. Khan?
(d) What do you consider the best alternative? Why?
