IIBMS MBA CASE STUDY SOLUTION | IIBMS MARKETING MANAGEMENT CASE STUDY SO...

Assignment

Subject: Behavioural Science

Q.1 Case study

Four years ago, the Texas Office of the Attorney General (OAG), which is the

state’s child support enforcement agency, began mailing letters to a small

number of incarcerated noncustodial parents (NCPs) with information on

how to apply for a modification of their child support order. NCPs often

become unable to make their monthly child support payments when they

are incarcerated, and, if they do not request and obtain a downward order

modification, they may leave prison with significant child support arrearages

that follow them for years. Despite the clear benefits of this pilot program for

NCPs, only a small percentage of incarcerated NCPs who were contacted by

OAG applied for a modification. The BIAS team has partnered with OAG to

determine whether the tools of behavioral economics can be used to increase

the overall response rate of incarcerated NCPs, as well as the accuracy and

timeliness of their application materials.

BIAS and OAG analyzed every step in the modification request process from

the wording of the outreach letter and application to the actions the NCP

must take within the prison to get an application notarized by a law

librarian and returned to OAG by mail. The team identified several potential

“bottleneck” points at which NCPs may not follow through with the process,

a few of which are discussed below:

The NCP may receive the letter but decide not to open it. Because the NCP

likely associates OAG with child support enforcement, seeing a letter from

this agency may stimulate a negative affective response and the ostrich

effect1 (the tendency to “put one’s head in the sand” and avoid undesirable

information). Or, the NCP may perceive the deliberation costs in time and

mental effort to be too high to fully examine the letter.

The NCP may not decide to act on the letter. The letter mentions the NCP’s

incarceration several times, identifying him as a prisoner rather than a

parent. This increases the saliency of their prisoner identity,2 which may

reduce their motivation to act.

The NCP may not follow through. Even if the NCP is interested in applying

for a modification, he may procrastinate3 in completing the application or

forget to request an appointment with the law librarian because this is not

part of his everyday routine.

The NCP may not successfully submit the application. After the NCP attends

the appointment, the law librarian may find that the application is

incomplete and the NCP will need to complete the application and return it

at another time. The NCP may forget to request notarization or even forget to

drop the completed application in the mail.

The NCP may see the future when they are released from prison as too

distant to plan for. NCPs may exhibit some degree of present bias —

overweighing the present with respect to the future. When the projected

release date is psychologically distant, the NCP may think about it

abstractly, and neglect to consider the negative effects of accrued arrears.

The team has redesigned the materials that are sent to incarcerated NCPs to

address these bottlenecks in ways that are informed by behavioral

economics.

include

2. How should an email to be managed?

Q u e s t i o n :

(10 × 2 = 20)

1. What are the changes according to you that should be include in it

Assignment

Subject: Behavioural Science

Q.2 Case study

A new report released by AIM Research and Hansa Cequity studies how and

to what extent organisations in India leverage behavioural science and data

science to analyse consumer behaviour across different industries and

functions.

The report titled “Impact of Behavioural Science and Data Science on

Consumer Behaviour” also dives into the connection between behavioural

and data science in comprehending consumer behaviour and makes a case

for their use in collaboration.

Data science has seen increasing popularity in the last couple of years and

is used extensively by most organisations to identify growth drivers. While

data is a critical input to improve customer satisfaction and increase

revenues, Behavioural Science plays a crucial role in studying and analysing

customer experiences, brand loyalty, and overall consumer journey.

According to the study, there is limited use of Behavioural Science

techniques by Indian organisations to study buying behaviour. Around one

in five respondents said they had none or rare utilisation, indicating a

significant scope for improvements across certain industries and functions,

some more than others. This includes studying consumers’ implicit

attitudes towards the brand or analysing the impact of celebrity

endorsements, ethnocentrism, the social image of inclusion or exclusivity,

etc.

The report provides detailed insights through a comprehensive analysis of

the survey. The study highlights cases where the utilisation of Behavioural

Science could see improved outcomes if two functions within the same

company worked together. Along with this, the study identifies areas in

which Behavioural Science and Data Science can be used in conjunction.

The study can be used by leaders or decision-makers to get insight into

where their companies stand in utilising Behavioural Sciences compared to

others and realise areas where they are falling behind. The study also helps

its readers identify future roadmaps in terms of using Behavioural Science

along with Data Science to their advantage.

Overall, almost every Behavioural Science technique (surveyed) had more

than two in five respondents (40%) agreeing to its high/very high utilisation.

Although, almost every technique also had more than 20% who said they

had none or rare utilisation. Respondents in the marketing function had

higher utilisation of most Behavioural Science techniques surveyed than all

the other functions. Almost every technique had more than/around two in

three (66%) Marketing respondents, saying that they have a high/very high

utilisation.

In terms of industry, different sectors had the highest share of respondents

claiming they have a high/very high utilisation of different Behavioural

Science techniques. However, Telecom & Media consistently performed

well—almost every technique had more than 50% of Telecom & Media

respondents saying yes to utilising it to a high/very high extent.

behavior.

Q u e s t i o n :

(10 × 2 = 20)

1. Write the factors that influence the behavior of an individual.

2. Discuss about the situation how behaviour science deals with consumer

Assignment

Subject: Behavioural Science

Q.3 Case study

Organizational behavior in this coca cola case study refers to the study of

activities or behavior of the employees inside a commercial enterprise. The

reflective case study has been made depending on the issues faced the

famous soft drink company Coca Cola. The aim of this coca cola case study

is to figure out the strategies with which the company can utilize it human

capital in order to make the organization a better place to work. At the same

time, I have described the opportunities through which the company can

continue its growth in the local market.

Coco Cola has been serving the world for more than 130 years however, the

organization is facing extreme problem in the market of the island country

like Sri Lanka. The company is facing a downtrend regarding its brand

value. In the year 2014 the brand value of Coca Cola a around 34 billion

dollar whereas it has decreased to nearly 32billion dollar in the year 2018. It

means the company has faced an acute loss of around 5.4 percent. In this

coca cola case study discovered certain factors that have caused such an

acute downfall of the branded organization. One of the factors is the

mismanagement inside the organization. In the following coca cola case

study, I have highlighted how the improper workforce management of Coca

Cola has leaded the company to such an adverse situation.

Reasons of the downfall of Coca Cola Company

Communication: In order to identify problem lied behind the downfall of the

Coca Cola Company discussed in this coca cola case study, I found certain

issues and communication is one of such issues. The entire set up of the

organization is so much corporate like that the employees hardly get time as

well as scope to share their opinion or thought with other. It has affected the

growth of the company in two different ways. First of all the staffs has could

not get chance to share their problem with their leader. As a result, they

could not develop their skill in order to improve their performance. On th

contrary, the company lost the opportunities of utilizing the innovative ideas

of the workers that could have been fruitful for the Coca Cola Company.

Feedback sharing: The HR of the team leader did not pay proper attention

on sharing the feedback with the staffs of the. As a result, the employees did

not get the chance to improve their skill. Sometimes, they lacked of the

proper knowledge of using the latest technology while producing the various

products. This situation had a negative repercussion on the company’s

growth as a lot of employee left the firm out of lack of dissatisfaction. As an

irreversible effect, the company had to face an acute shortage of labour that

has hindered the production rate. In my opinion the shortage of the human

capital is one of the most important factors that has affect the growth of

Coca Cola Company in a profound way.

Motivation: I think motivation is one of the factors that are responsible for

the shortage of the staffs inside the organization. It is true that Sri Lanka is

one of the densely populated area in South Asia. As per the recent report

held on 8th May, in the year 2019, which is refered in this coca cola case

study the entire population of the country is 21,008,582 (Chandrajith et al.,

2019, pp-12, pp-37) which is approximately 0.27 percent of the entire

population of the world (Wijesuriya et al., 2019). As a result of such huge

population the country enjoys the facility of plenty human capital. May be

that is the reason that the company treated its staff as a factor that

caneasily be replaced by some other employ. The management of the

company did not pay attention in order to motivate the employees. For

instance in this coca cola case study, they did not arrange proper

compensation or increment which was quite demotivating for the staffs. As a

result, theemployee showed less interest in order to enhance their

performance.

Absence of proper training: I found in this coca cola case study that one of

the reasons of the downfall of Coca Cola Company is the lack of training the

needed to be provided to the employee in order to enhance their

performance. Like other country like Australia, UK and many more the

company did not have proper training facility for their employees. I think,

that is the reason why the staffs that were unable to perform well were

easily demotivated. In addition, the management did not take any measure

in order to increase the efficiency of their workers. This situation had a

adverse effect on their work performance which consequently followed by the

decrease in products’ quality.

Improper human resource management: Before writing this coca cola case

study, I had gone through certain researches, which illustrate the error of

the human resource management of Coca Cola Company. For instance, the

company has collaborated with four bottling firms that created a big issue

as the organization brought around ten thousand workers (Chiu, Fischer

and Friedman, 2019, pp-109). It was actually double of the entire work

force. As a result of such collaboration the company had to encounter with

the problem of complexity of the unnecessary staffs as well as resignation of

termination of employees (Chiu, Fischer and Friedman, 2019, pp-98). It

created an unstable situation inside the organization that had a negative

impact on the reputation of the company. In addition, the human resource

managers did not show proper interest in order to attract or retain the

quality employee who could play significant role in betterment of the

company.

Attitude of team leader: The team leader failed to motivate their team

members. Most of the time they could not encourage their subordinate staffs

and thus they could take proper initiative in order to achieve the company’s

target. In addition, the team leader r the supervisors did not perform the

proper monitoring of the tasks of their subordinate team members. Even

they showed reluctant to share proper feedback which could improve the

quality of the performance of their team members. The irresponsibility of the

team member or the management of the Coca Cola Company has increased

the uncertainty among the subordinate staffs of the organization. In my

opinion this kind of attitude of the higher authority was quite responsible for

the loss of status of the world famous Coca Cola Company.

Relation between the management and the staffs: I discovered that the

company management was failed to build a lateral relation between the

employees as well as the team leader inside the company premises. I have

discussed earlier in this report that the workers hardly got chance to talk

about their problems whatever they faced at the time of performing their

task. The management of Coca Cola Company hardly arranged meetings in

order to discuss the problems of their staffs as well as the possible remedies

to resolve those problems.

Proper working environment: The management failed to create the proper

working environment that can encourage or motivate the employees to give

their best performance (Jones and Comfort, 2018, pp-43). As I have earlier

mentioned that Coca Cola Company provided a strict corporate environment

to its employees. This situation created obstruction in building an emotional

attachment between the workers as well as the management of the

organization. As a result, the employees failed to understand that their

improvement was closely related to the success of the company (Jones and

Comfort, 2018). That was the reason in this coca cola case study why the

workers of the Coca Cola Company did not take enough enthusiasm in order

to provide their best performance for the organization’s upliftment.

Cont…

Q u e s t i o n :

(5 × 4 = 20)

1. What are the factors that are responsible for the downfall of the Coca Cola

Company in Sri Lanka?

2. Suggest some possible remedies through which the company can

overcome such situation?

3. Justify’ Coca Cola targets middle class people in rural areas”.

4. Discuss the attitude and related beliefs towards Coca-Cola of intensely

brand-loyal consumers.

5. What are the key success factors for Coca-Cola?

Assignment

Subject: Behavioural Science

Q.4 Case study

Pepsi Next was launched by PepsiCo into the US market in February 2012,

and has since been rolled out to various international markets (for instance,

it was launched in Australia in September 2012).

The new product is described as a mid-calorie cola beverage, having a mix of

sugar and artificial sweeteners, designed to deliver a full cola taste with

reduced calories. While filling the market gap between full sugar and diet

soft drinks, PepsiCo has indicated that its prime target market is lapsed cola

drinkers (giving them a reason to return to the product category). PepsiCo,

which owns range of high profile beverage brands in addition to its flagship

brand Pepsi, appear to be highly committed to Pepsi Next providing it with

strong launch and management support. In fact, according to PepsiCo

themselves, this is their most significant product launch for several years.

PepsiCo is the second largest food and beverage company in the world, with

revenues now in excess of $60 billion. The corporation has 22 brands that

achieve retail sales in excess of $1 billion each. As a result of their brand

diversification, around half of PepsiCo’s revenue is generated from their food

lines, such as Frito-Lay (snack food) and Quaker Oats.

In addition, they have progressively expanded internationally and now

access over 80% of the world’s population. Their international (non-US)

markets account for almost 50% of their total revenues and they still see

significant growth potential from these markets, on the basis that per capita

consumption of snacks and beverages in other countries is well below US

market levels.

As a result, PepsiCo has achieved solid growth is many international

markets. While their US beverage sales fell by 2% in 2011, this has

beenmore than offset by double-digit sales increases in Europe, Asia, the

Middle

East and Africa.

In terms of their overall strategic approach, PepsiCo (as highlighted on their

website) see themselves as innovative and adaptive, as stated in the

following website quote: “Pepsi is constantly on the lookout for ways to

ensure their consumers get the products they want, when they want them

and where they want them.”

“Pepsi is constantly on the lookout for ways to ensure their consumers get

the products they want, when they want them and where they want them.”

In their Annual Report, PepsiCo has structured their brands around three

related themes, as highlighted in the following table. This brand structure

gives some insight into the role of their brands and how they see their brand

portfolio developing in the future.

Emphasis of Brand Key Brands

Fun-for-you Pepsi, Mountain Dew, 7-Up, Lays, Doritos,

Cheetos,Red Rock

Better-for-you Pepsi Max, Diet Pepsi, Lays (oven baked), Quaker

bars

Good-for-you Tropicana, Quaker Oats, Gatorade, Nut Harvest

As you can see from PepsiCo’s classification of their brands, it appears that

the firm has the dual goals of supporting and leveraging its existing ‘fun’

brands, while moving towards a broader range of healthier offerings. While

this second goal may appear to be mainly related to improving their

corporate image, it does have commercial intent, as explained on the

PepsiCo website: “Because a healthier future for all people and our planet

means a more successful future for PepsiCo.”

To help implement this corporate goal, across their various brands, PepsiCo

has focused on providing a wider range of healthier choices, introducing

more natural ingredients, reducing fat content, reducing the environmental

impact of their packaging, and so on.

Recent Product Innovations

PepsiCo has a history of developing and launching a number of mid-calorie

beverages and Pepsi Next is by no means their first attempt with this style of

product. In addition to various Pepsi variations (described in the ‘Before

Pepsi Next’ section below), they have had some recent success with reduced

calorie versions within their Tropicana and Gatorade brands.

One very successful mid-calorie product initiate is Trop50, which was

launched in 2010. Trop50, as implied by its name, is a version of Tropicana

with 50% less sugar and calories. This new product was ranked as the 6th

most successful new food/beverage product in its launch year with retail

sales in excess of $70 million. Its initial success has continued over the last

two years, with the Trop50 product line now generating over $150 million in

sales. And even more successful was Pepsi’s launch of Gatorade G2 in 2007.

(Note: Pepsi acquired the Gatorade brand with their purchase of the Quaker

Company in 2001.) This low-calorie version of Gatorade was identified as the

most successful new food/beverage product in 2008 in the US market,

achieving sales over $150 million in its first year.

Clearly, these fairly recent product successes with reduced calorie offerings

under strong brands would have had the effect of buoying Pepsi’s confidence

regarding the viability of this style of product. Hence, they believed that it

was the right time to revisit a reduced calorie Pepsi variation.

However, as some commentators have pointed out, it should be noted that

their success (with Trop50 and G2) has occurred in their ‘good-for-you’

brand range, where consumers are already quite health-conscious and

probably more responsive to healthier options. Therefore, whether this

perceived benefit (of less sugar) will carry to ‘fun-for-you’ brands, like Pepsi,

is less certain for the firm.

Before Pepsi Next

Perhaps surprisingly, Pepsi Next is PepsiCo’s fifth attempt at a mid-calorie

beverage. In the 1970’s they introduced Pepsi Light, which was lemonflavored

and contained 70 calories (as opposed to a normal Pepsi can at 150

calories). (Not to be confused with the current Pepsi Light brand marketed in

various countries, which is a version of Diet Pepsi.)

Then in the late 1980’s the firm introduced Jake’s Diet Cola, which came in

at a mere 15 calories, but did not leverage the Pepsi brand name. At the

time, Pepsi stated that the beverage had the potential to “revolutionize” the

diet segment of the cola market. Prior to launch, Jake’s was extensively

taste-tested against Diet Coke and the firm had strong hopes for its success.

According to one of their vice presidents at the time (Edward E. Jenkins),

“Jake’s represents a new taste concept in diet beverages and will provide

consumers in the booming diet soft drink category with a better-tasting,

lowcalorie cola”.

In the mid-1990’s, they then introduced Pepsi XL, another 70 calorie

formula. In their promotions, they indicated that X stood for ‘excellent taste’

and the L stood for ‘less sugar’. According to reports at the time, Pepsi XL

was a year in development at a cost of $1.5 million and was supported by an

$8 million advertising budget.

More recently, in 2004, PepsiCo released a 70-calorie beverage branded as

Pepsi Edge. Around the same time, Coca-Cola brought out a similar product

under the brand Coca-Cola C2. Coke supported C2 quite aggressively, with

an estimated launch promotional budget of somewhere around $40 million,

making it their most significant launch since Diet Coke. Both of these

brands only lasted around 18 months or so in the market before being

withdrawn.

About the Soft Drink (Soda) Market

The US soft drink market generates over $70 billion in sales. Volumes

(units) have weakened slightly since 2005, indicating that the market is in

late maturity-early decline stage of the product life cycle. Retail dollar sales

have been supported somewhat by price increases.

One of the biggest impacts on soft drink consumption has come from bottled

water, which now accounts for over 10% of beverage consumption. This is

up from just 2% in 2000. And the soft drink market has also been slightly

challenged by sports drinks and energy drinks that have seen a minor

increase in market share.

The trend towards diet soft drinks continues, with these offerings now

representing 30% of the carbonated soft drink (CSD) market, up from 25%

just 10 years ago. Overall, these movements indicate changing tastes of

consumers as a result of a stronger health focus. One of the brands most

impacted by these market changes has been the flagship Pepsi brand. In the

most recent market share figures available,

Pepsi now has less than 10% share of the US CSD market (which ranks the

brand 3rd behind Coke and Diet Coke). While still well positioned, keep in

mind that they were sitting at over 13% market share ahead of Diet Coke 10

years ago, at a time when the CSD market was still growing at 3% per year.

Their Diet Pepsi product enjoys a solid 5% market share. That product,

along with Pepsi’s other soft drink offerings (Mountain Dew in particular),

gives Pepsi an almost 30% share of the US CSD market, behind Coca-Cola

at 42% (with Coke at 17% and Diet Coke at 10%) and ahead of Dr Pepper

Snapple at 17%.

Competitor Offerings

Pepsi isn’t the only player seeking to tap into the perceived demand for

reduced sugar beverages. Dr Pepper Snapple (who has two products in the

top 10 in the US CSD market) has also introduced a low-sugar offering.

Their new product, Dr Pepper Ten (with 10 calories), is squeezed between

their normal Dr Pepper and their Diet Dr Pepper, much in the same way the

Pepsi Next product. Reportedly, Dr Pepper Snapple is pleased with the

performance of this new product to date. Independent to the Pepsi Next

offering, Coca-Cola is currently (mid-late 2012) in the process of test

marketing (in four American cities) mid-calorie versions of their Fanta and

Sprite brands. Carrying the sub-brand ‘Select’ (to make Fanta Select) the

concept is quite similar to Pepsi Next in that it uses a mix of sugar and

artificial sweeteners to cut the calorie count by half.

Obviously if these tests are successful and these products are fully rolledout

to the market as a standard product, it appears that there could be a third

sub-category of soft drinks; traditional, diet, and now mid-calorie beverages.

It would then be interesting to see how and if this sub-category develops,

particularly with more offerings and overall promotional support. But on the

other hand, it might be possible that Coke might be test marketing the midcalorie

Sprite and Fanta options as a form of market research only.

products.

2. What will be benefit if Pepsi compromise to the competitor offerings?

3. How do companies protect themselves against the nonstop allegation of

special interest group that have made them a target?

4. Identify the ongoing issues in this case with respect to issue management

crisis management, global business ethics, and stakeholder management.

Q u e s t i o n :

(4 × 5 = 20)

1. As per the above situation what would be the impact of substitute

Assignment

Subject: Behavioural Science

Q.5 Case study

Amway’s Relationship with Stakeholders

Amway is one of the largest direct sales companies in the world. It continues

to be a family owned business which was founded in 1959. Today, it

employs 14,000 people worldwide and markets over 450 product lines. Its

vision is to help people lead better lifes. Its success islargely due to its three

million ABOS Amway Business Owners) spread across 80 countries. Thanks

to Amway, these people have a business of their own. The only shareholders

of Amway are the families that own Amway. The communication channels

used by Amway to communicate regularly with its internal and external

stakeholders are websites, email, events, publications and membership of

trade bodies.

Amway sells directly to consumers, without the presence of retail outlets. It

has its own supply chain through the ABOs. Amway seeks regular feedback

from ABOs and customers to find out how well it is doing and to improve

services. The ABOs are independent small businesses, but depend on

Amway suppliers to produce quality products.

Amway’s involvement with communities is a part of its vision to help people

lead better lives’. It promotes its corporates social responsibilities (CSR) all

over the world. Corporate social responsibilities at Amway involve

supporting social causes, acting in an ethical manner by making good

product and supporting its stakeholders in a number of ways. For example,

Amway has partnered with the children’s charity UNICEF. It helps provide

vaccination to fight the world’s six most deadly diseases. It has chosen this

charity because of its ABOs’ concern about families.

Ethical businesses get actively involved in improving the communities where

they work. Amway’s business ethics not only provides a clear framework

within which to work, but also gives it a positive business advantage. Its

‘One by One’ program is good for both the environment and for business.

This program supports organic farming, seeks to reduce waste but this can

be balanced against the benefits derived by both the business and the

community. Amway has to balance the needs of its many different

stakeholders. It sets high standards of ethics and codes of conduct, in order

to make sure that these are upheld. Its CRS program helps the environment,

its own employees and underprivileged children all around the world.

from what is mentioned in the case and why?

3. Stakeholders are the consumer of Amway. Comment.

4. Who are the external stakeholders that Amway communicates with?

Q u e s t i o n :

(4 × 5 = 20)

1. Who are the external stakeholders that Amway communicates with?

2. What communication channels would you recommend to Amway, a part

Assignment

Subject: Marketing Management

Q.1 Case study

American Tourister re-positioning itself as a hip travel brand leveraging

Sports Partnership

American Tourister, Samsonite’s mass market label, is re-positioning itself

as a hip international travel brand; targeting the cool, young traveller.

In December 2016, as part of their India campaign, Virat Kohli was brought

onboard as a brand ambassador. Kohli is – for India - the ideal face for the

brand as he is the personification of American Tourister’s re-positioning.

Following the success in India, American Tourister took things to the next

level and in February 2018 appointed football star Cristiano Ronaldo, the

most followed male on social media, as their brand ambassador.

Anushree Tainwala, Executive Director, Marketing at Samsonite, said,

“There couldn’t be a better time to bring Cristiano on-board. His lively and

vivacious personality, on and off the field, resonates perfectly with our

funloving, vibrant brand personality. His presence will help bring American

Tourister to a whole new audience, allowing us to stand out from the

competition, and enabling us to take the Brand to the next level.”

In Kohli and Ronaldo, it has found two iconic sports personalities who have

strong personal brands & massive following in emerging markets. This helps

American Tourister win asymmetrically and leave competition in the dust. In

addition to transferring the sports stars' attributes to the brand, the

partnerships:

Elevate the brand from Samsonite's low end product to a contemporary,

practical international travel brand; targeting the aspiring, young

international traveller. Explode the reach: Getting the reach in India via

Kohli (81m social media followers) and globally through Ronaldo (315m

followers) -especially with the FIFA World Cup around the corner.

Engage audiences: Kohli with “I’m ready” & "Swagbag", Ronaldo with “Bring

back more” are examples of sharply positioning the brand leveraging the

ambassadors to provide differentiated, exciting engagement.

Top of Mind: Standing out in a commoditised travel accessary category,

American Tourister is positioning itself as closer to the hearts of young

travellers and in their purchase consideration. In February & March this

year it has activated both players - Ronaldo (here) & Kohli (here & here),

Let's see where the brand takes such partnerships as we get closer to the

Russia World Cup. It has achieved a strong cut-through even before the

world gets gripped by the World Cup fever.

Question:

(10 × 2 = 20)

1. How can your brand differentiate & asymmetrically win in a

commoditised category through sports?

2. What other, more effective ways can brands use to reposition themselves?

Assignment

Subject: Marketing Management

Q.2 Case study

In August 2004, a leading business newspaper reported that Hyundai

Motors India Limited (HMIL), an Indian subsidiary of the South Koreabased

Hyundai Motors Company (HMC)3 was expected to reduce the price of its

flagship car - Santro - by as much as Rs 40,000. Industry experts were

expecting a reduction in Santro's price in response to the price war being

waged by the market leader in India - Maruti Udyog Limited (MUL),4 which

had reduced the price of its largest selling car in the B segment – Alto - by

Rs 58,000 in two price cuts starting from September 2003. This move had

resulted in Alto replacing Santro as the largest selling car in the B segment

in the period January to June 2004 (Refer Exhibit I for the market

segmentation of the Indian car industry).

Marketing Management Case Studies | Case Study in Management,

Operations, Strategies, Marketing Management, Case Studies Rebutting the

report on price cuts, HMIL's managing director, BVR Subbu (Subbu) said,

"We are not cutting prices on the Santro. We have allowed our competitors

the prerogative of cutting prices."5 Several dealers of HMIL also felt that the

company would not reduce Santro's price as it had not adopted such tactics

earlier.

Santro had been the most successful product of HMIL and was also the

largest selling car in the B segment till the fiscal year 2003-04. Introduced

in late 1998, Santro had emerged as the second largest selling car in India

after MUL's M800 and had retained its position till March 2004

(Refer Exhibit II for the total units and value sales of the top eleven car

models in India).

In mid 2004, HMIL with its four models, Santro, Accent, Sonata and

Elantra, was the second largest car company in India with 19% market

share in the industry. The company was planning to launch another model,

'Getz', in September 2004.

Analysts attributed HMIL's success to its ability to launch technologically

superior products and its innovative marketing strategies. However, they

expressed concerns that the company relied heavily on Santro and any fall

in demand for that model would hit the company.

It was felt that the introduction of new cars by the competitors and pgrading

& price reduction of existing cars in the B segment would affect Santro's

sales. This would lead to a loss in Santro's market share. (Refer Exhibit III

for the comparison of features of various models in the B segment).

For a long time after India became independent in 1947, the car market had

just two models to offer - the sturdy 'Ambassador' from Hindustan Motors

(HM) and the sleek 'Fiat' from Premier Automobiles (PA). This was the result

of Government of India's (GOI) decision to keep the car industry tightly

protected.

For HM and PA, the GOI dictated as to what type of vehicle the two

companies should manufacture. No other domestic or foreign car

manufacturer was allowed to enter the Indian car industry. The restriction

on foreign collaboration led to poor technological improvements in Indian

cars. As a result, car prices remained high while quality was inferior. This

affected the growth of the industry. The demand for cars in 1960 was

15,714 units and in the next two decades, this rose to 30,989 units, which

meant that the Compound Annual Growth Rate (AGR) was just 3.5 per cent.

In the 1980s, the GOI felt the need to introduce an affordable small car,

targeting the Indian middle class. As manufacturing a small and affordable

car required better technology than was available indigenously, the

government tied up with the noted Japanese company, Suzuki. The

government formed a joint venture with Suzuki and founded Maruti Udyog

Limited (MUL). It held 74% and Suzuki got 26% equity stake in MUL. In

1983, MUL launched the 'Maruti 800', priced at Rs 40,000 Hyundai's Entry

in India

One of the major players that entered the Indian car market was HMC

through its subsidiary HMIL. Before making its move, the company closely

studied the industry for a year. The company's officials talked to vendors,

dealers and customers to get a thorough knowledge of the industry...

Marketing Santro: Santro received an encouraging feedback from customers

who appreciated its unique design that gave more headroom and facilitated

easy entry and exit... Launch of Accent: By mid 1999, the major players

realized that the 'B' segment would be the fastest growing in the car

industry. To cash in, Telco re-launched its 'Indica' by introducing several

new features and solving the glitches in the original model...

Marketing Management Case Studies | Case Study in Management,

Operations, Strategies, Marketing Management, Case Studies Repositioning

Santro By late 2002, the competition in the B segment had increased

significantly. MUL's Alto which was launched in October 2000 had received

a good response. Although HMIL's Santro remained the largest selling car in

the B segment, MUL commanded the largest market share in this segment

due to the combined sale of its three cars - Zen, Wagon R and Alto... Status

in 2004: The financial year 2003-04 ended on a positive note for HMIL. The

company achieved revenues of Rs 50 bn and profit after tax (PAT) of Rs. 1.90

bn in the financial year 2003-04 compared to Rs 43 bn revenues and PAT of

Rs 1.65 bn in the fiscal 2002-03...

Question:

(10 × 2 = 20)

1. Examine and analyze the marketing mix of Hyundai Motors in the Indian

passenger car industry.

2. Compare and contrast the marketing strategy of Hyundai with other

leading players in the Indian passenger car industry.?

Assignment

Subject: Marketing Management

Q.3 Case study

The British Company, Woolworths is normally categorized as a variety store

dealing in retailing of a range of varying products. Historically it was

established as a subsidiary of an American Company F.W. Woolworth &Co,

in 1879 by Frank Winfield Woolworth It was incorporated in England on

23rd July, 1909 as private limited company with initial capital of 50,250

pound sterling. It, first time floated a new idea of selling all the products at a

cost not more than five cents. This idea gained popularity amongst the

customers resulting in fast growth of the subsidiary. Its first shop at

Liverpool attracted about 60,000 people in first two days because of

attractive one penny, three penny and six penny products put at sale. It

continued to open new shops at various cities that attracted heavy rush of

customers and visitors. It was company’s policy to purchase the products

directly from manufacturers, who also were very happy due to momentum in

their business as well. Some of the manufacturers started doing business

solely with the Woolworths and labeled their products with the company’s

name. Company’s business grew day by day and it had 31 shops in United

Kingdoms by the year, 1914. Due to inflationary trends after the World War

II, the company had to do away with its three pence and six pence price

limits. It introduced self service first time in its retail side in the year 1955.

Woolworth opened about 190 self-service stores by the year 1970. It created

new division in the stores by establishing Woolco departmental stores in the

year 1966. These stores had full range of quality products like, clothes,

groceries, car service and restaurants etc. available at affordable prices.

The Company continued to flourish very fast because of its stated aim to

remain at the customer’s heart and best kid’s retailer till 1966. But

thereafter its sales as well as profits started falling because of its

competitors, Marks & Spencer who overtook its sales as well as profits. The

results of the company were the worst in the year 1969, because it failed to

chalk out suitable strategies necessary to take on its competitors in the

market. Sales at Woolworth began to decline. Consumers were reportedly

not satisfied with the quality of customer services of the company. Many of

the business sites were not at prime locations. Its new products could not

attract the customers because of lack of well trained staff and availability of

‘A class service’. The company tried to improve its services in the year 1971

by introducing new system of centralized payments besides closing its 23

unprofitable shops, as an attempt to trade up. The profits of the company

increased to some extent as a result of these measures but it failed to boost

up its profits at the desired level. The competitors of Woolworth like Wal-

Mart, Argos and Next very soon became more prevalent in the market

because of low prices, better service and vast range of their products. The

Management of the company ultimately decided to sell out the Woolco stores

in 1977. In the year 1981 it sold-out some of its valuable prime located

properties to cover-up the losses suffered by the shops situated at these

locations. Even then its profits went down in the said year and the company

was forced to cut the dividends first time since its establishment. In the

normal restructuring process during the year 1985, the company decided to

abandon the sale of food and adult clothing that was contributing about

30% of its overall sales. The Management of the company sold out its 200

unprofitable shops out of about 990, during the years 1982-1991. During

this decade company made a number of acquisitions in order to become

more diversified in retail business. It launched Music and Video Club that

specialized in CDs, videos and other entertainment products. The company

succeeded in boosting its sales and turnover during 1990s and gave

impressive results despite the fact that some of major chains like Wilkinson

expanded their business in the Woolworth areas.

Woolworth reviewed its entire business in the year 2002. It reconsidered its

further expansion and realignment and merger of its overall management

structure. It strengthened infrastructure and planned accurate management

of its stocks so as to maintain them at their optimum levels. It introduced

new till system in order to ensure its stock holding capacity besides

provision of improved and efficient services to the customers. The

management decided to cut the number of suppliers and enhance the use of

their own branded products. These improvements contributed a little in the

sales as well as profits. One of main money spinners of the company was its

music business that collapsed. The financial results for the year 2004

showed just 4.5% increase in the profits of the company. It had to compete

strongly with Argos in the sales of toys and gifts. In the year 2006, the

company introduced an in-store collection service for items ordered through

website. Company continued its business mainly in entertainment and

electronics till the year 2008. It expanded its chains and set up out of town

stores that were known as ‘Big W’. It announced considerable loss in its half

yearly statement of affairs as on 2nd August, 2008.

The management, therefore decide to sell out about 120 stores, cut jobs and

reduce web operations. At this stage reportedly the company rejected an

offer to buy its 815 stores. From September onwards the entire World

entered into worst ever economic and financial crises that resulted in

decrease in availability of necessary credit from the banks and financial

institutions besides decrease in consumer spending. The lending banks of

the company not only refused to give further credits, they also demanded

repayment of their existing loans towards the company. As a result of this

crisis the retail business badly suffered. Media also reported possible price

crashes, increased personal debts, unemployment, pension shortfalls, stock

market crashes and decrease in availability of disposable income.

Under these circumstances as well as in wake of market saturations,

coupled with economic downturn, it was highly difficult for the Woolworth to

maintain competitive pricing. Woolworth’s financial results for the first half

of the year 2008 showed 99.7 million pounds pretax loss. Decreased credit

availability, decreased public spending and pressure of creditors to pay off

debts of about 385 million pounds, forced the company to sell out its 120

shops that were going in loss besides reducing the web operations, cutting

the products and axing the employees. These measures could not help the

company to survive and ultimately it suspended trading of its shares on the

26th 0f November, 2009 and at last decided to close down its all 819 stores

and axe its 27000 highly dedicated employees. The parent company of

Woolworth also announced its intention to go into administration on the

19th of January, 2009.

Question:

(4 × 5 = 20)

1. Why Woolworths Failed as a Business?

2. What is the main focus or purpose of Woolworths?

3. What challenges are Woolworths facing now a day?

4. What are the advantages of Global Expansion in Retailing?

Assignment

Subject: Marketing Management

Q.4 Case study

Its Global Marketing Plans In the 1940’s itself PepsiCo started branching out

into the international arena. At first it was into Latin America, the Middle

East and the Philippines. Here too Coke had the early bird advantage. Yet

the product soon gained popularity. With the Arab countries boycotting

Coke, Pepsi enjoyed a monopoly for many years in the Middle East. In the

1950’s Pepsi went to Europe and this included Russia, with whom there

existed a Cold War by USA. Though there were initial difficulties, getting into

Russia was a major breakthrough which the company exploited. The

company posted pictures of the then leaders of the United States and Russia

sipping the drink. Its arch rival, Coca Cola, was able to enter the Russian

markets only after more than 25 years after Pepsi’s entry.

In many of the countries that Pepsi ventured into comparative advertising

was prohibited and in many countries it was not an accepted concept. For

example, Pepsi tried its “Pepsi challenge” promotional gimmick in Japan.

However, the country and its people were not aware of comparative

advertising and as such the campaign did more harm than good. Hence in

Japan they had to break their tradition of running with the global campaign

and come up with a campaign that the Japanese would identify with and

was more Japanese. The “Pepsiman” was a superhero like figure that was

devised by a Japanese person for the Japanese market. The commercial was

an instant hit and helped improve Pepsi’s share in the Japanese market by

as much as 14%. From Japan Pepsi learned a valuable lesson – the same ad

will not have the same effect everywhere. When it comes to cross national

advertising, there is always the inherent risk of alienating the people.

Question:

(20 × 1 = 20)

1. What challenges Pepsi had to face, If Pepsi would not follow the cultural

factors in international marketing environment? What is the good marketing

way for pepsi?

Assignment

Subject: Marketing Management

Q.5 Case study

In 1980, Peter A, Horekens, marketing director for Kellog company, was

faced with the problem of developing a market for ready-to-eat cereals in the

Latin American region. Although Kellog had no competition in the ready-to

eat cereal market in this region, they also had no market. Latin Americans

did not eat breakfast as the Americans did. The problem was especially

prominent in Brazil. To create a market and increase sales in this region,

Horekens had to create a nutritious breakfast habit.

Kellog Company, which headquartered in Battlecreek, Michigan, was

founded in 1906 by W.K. Kellog. The company continued to operate

successfully with sales in 1980 amounting to 2,150.9 million U.S. Dollars.

The Kellog Company manufactured and marketed a wide variety of

convenience foods with ready-to-eat cereals topping the list. The company’s

products were manufactured in 18 countries and distributed in 130

countries. The ready-to-eat cereals sales made up the majority of

international sales.

In 1980, Kellog International operations accounted for 38 percent of Kellog

Company’s sales of more than $ 2.0 billion. The United Kingdom was by far

Kellog’s largest market. Internationally, sales in the ready-to-eat cereal

market continued to increase, although in the past few years the

competition also had increased. But in Latin America, consumption of

ready-to-eat cereals was negligible.

The Latin American Market

The Latin American Market, mainly Mexico and Brazil, showed great

potential as a Kellog’s ready-to-eat cereal market. The demographics fit the

ready-to-eat market, the only problem was that Latin Americans did not eat

the traditional American-style breakfast.

The Latin American market included a growing number of families with

children. The population mix was becoming younger. The developing

economy enabled consumers to spend more of their income on food. Kellog

wanted to increase sales in this Latin American region, especially Brazil, but

consumers had turned their backs on the American style breakfast. How

was Kellog to create a nutritious breakfast habit among the Brazilians?

The company asked J. Walter Thompson, Kellog’s advertising agency, to

help instill the breakfast habit in Brazil. According to Horekens, “In general,

Brazilians do what people in novellas do”. Novellas are Brazilian soap

operas. J. Walters Thompsons tried to advertise Kellog ready-to-eat cereal

and instill the breakfast habit by advertising within a soap opera. The first

experience of advertising within a soap opera failed; the advertisement

portrayed a boy eating the cereal out of a package. Kellog wanted to teach

the Brazilians how to eat a complete, nutritious breakfast, not just Kelloy’s

cereal. The commercial did not work, because it made Kellog ready-to-eat

cereal seem more like a snack than a major part of a complete breakfast.

Kellog wanted to portray ready-to-eat cereal as a part of a complete, wellbalanced

nutritious breakfast. Thus, they needed the cereal to be eaten in a

bowl with milk alongwith other foods to make a complete breakfast.

The company believed that the growing population in this region would

reinforce the importance of grains as a basic food source. The 1980

population in Brazil was 119 million, which made it the sixth most

populated country in the world and the population was expected to grow to

165 million in the next few years. Within this population growth was an

increase in the number of women of childbearing age, which further

supported Kellog’s potential for a successful cereal market. The structure of

the population in Brazil in 1980 was:

 Thirty seven percent of population under age 15.

 Forty-eight percent of population under age 20.

 Twelve percent population over age 50.

 Six percent of population over age 60.

 These figures showed that the population of Brazil better fit the

market for a ready-to-eat cereal, with the increasing number of

children and elderly people as the two largest cereal consuming

segments.

The “cult of the family” continued to be the most important institution in the

formation of the Brazilian society. This culture ideal was reflected in the

ways they conceptualized and evaluated the range of personal and social

relations. This seemed to be the way Kellog would have to demonstrate the

importance of a nutritional breakfast – by playing up the family and its

importance. Through the use of the novellas, Kellog made a second attempt

to teach the Brazilians the importance of breakfast. Most Brazilian families

watched these soap operas, composed mostly of family scenes. In their

commercials, Kellog opted for scenes that showed the family at the breakfast

table. One member of the family, usually the father, took the cereal box,

poured the cereal, and then added milk. This scene represented a complete

“Kellog” breakfast in a way that Brazilians could relate to. The advertisement

focused first on nutrition, then on flavor, and finally on ease of preparation.

As a result of this campaign, sales in Brazil increased. Kellog controlled 99.5

percent of the ready-to-eat cereal market in Brazil; however, per capita

cereal consumption was less than one ounce or several spoonfuls per

Brazilian annually, even after advertising. Although Kellog controlled the

market, there was not much of a market to control. Brazilians had begun to

eat breakfast, but Horekens was not sure whether sales would continue to

increase. His problem was – how could Kellog further convince the

Brazilians of the importance of eating a nutritional breakfast in order to

establish a long-term market?

Question:

(10 × 2 = 20)

1. Analyse the case to enable you to prepare a report about the given

situation.

2. What would be your advice – to continue or quit – to the board of

Directors of Kellog? Explain with reasons the factors which you would

consider essential in framing your report?

Assignment

Subject: Strategy Execution

Q.1 Case study

Discourse Analysis

Bill Corwin was employed by a large bank for several years. He started as a

messenger, and then was assigned to a branch. He progressed in this

branch from a bookkeeping clerk to a platform assistant. In this position he

had a variety of duties largely centring on administrative assistance to the

officers of the branch

The bank’s many branches were divided regionally, each region having a

group of officers responsible for the branches in that region. Bill was

transferred from the branch in which he had worked for 12 years to a

branch in another region. At the time of his transfer he was told that the

branch was completely “run down” as to operational procedures and

systems. The branch had a normal complement of 4 officers and 35 staff

members. One month prior to Bill’s transfer, one of the four officers had

retired, and two weeks after this retirement the branch manager was

hospitalized with serious illness. When Bill arrived at his new assignment,

he found a rather demoralized situation. Complete lack of interest was

shown by two remaining officers and the rest of the staff was not properly

trained or disciplined. The two officers did not know Bill, and they were

informed by the regional office that he was being assigned to the branch as

a platform replacement for only two weeks.

During his first week at the branch Bill discovered that the senior clerks

were not qualified to train other staff members, customer complaints were

rampant, there was both a record of excessive absenteeism and excessive

overtime, and the branch had received very poor audit report by the bank’s

internal auditors with the same major exception reported on the previous

four audits.

After two weeks Bill was called to the regional office and offered the job of

operations officer. He was told that he would receive the official title in two

months. He was also told that the present operations officer, who had held

the job at this branch for seven years, was to be relieved of all operational

responsibilities and that he would be instructed to work with Bill until the

branch was functioning effectively. Bill returned to the branch and started

on his assignment. He found the former operations officer cooperative for

about one week. Bill then decided to go ahead without the help of the former

operations officer. Over the next three months he worked almost every night

until 8:00 or 9:00p.m. He tried to correct the problem that had developed

over several years. The training of employees involved considerable time,

and he found it necessary to release 12 clerks who were causing trouble in

various ways. The remaining staff and replacements started to function

smoothly. He received his title as promised. Then the branch manager

returned to work after his prolonged illness. A week after his returned, he

called Bill to his office and questioned his efforts in this branch. He told Bill

that the former operations officer had mentioned that he was an upsetting

influence in the branch, had fired several good people, did not know his job,

and that he left his job early several days a week.

Questions

(4 × 5 = 20)

1. If you were Bill, how would you answer the branch manager?

2. Did the regional office handle Bill’s transfer properly?

3. What should be done by the regional office now?

4. Do you believe that Bill can function effectively as a manager in this

branch?

Assignment

Subject: Strategy Execution

Q.2 Case study

Successful execution of the strategy for developing markets requires a

degree of flexibility, an ability to adapt in often unforeseen ways to local

conditions, and a long-term perspective that puts building a sustainable

business before short-term profitability. In Nigeria, for example, a crumbling

road system, aging trucks, and the danger of violence forced the company to

re-think its traditional distribution methods. Instead of operating a central

warehouse, as is its preference in most nations, the country. For safety

reasons, trucks carrying Nestle goods are allowed to travel only during the

day and frequently under-armed guard. Marketing also poses challenges in

Nigeria. With little opportunity for typical Western-style advertising on

television of billboards, the company hired local singers to go to towns and

villages offering a mix of entertainment and product demonstrations.

China provides another interesting example of local adaptation and longterm

focus. After 13 years of talks, Nestle was formally invited into China in

1987, by the Government of Heilongjiang province. Nestle opened a plant to

produce powdered milk and infant formula there in 1990, but quickly

realized that the local rail and road infrastructure was inadequate and

inhibited the collection of milk and delivery of finished products. Rather

than make do with the local infrastructure, Nestle embarked on an

ambitious plan to establish its own distribution network, known as milk

roads, between 27 villages in the region and factory collection points, called

chilling centres. Farmers brought their milk – often on bicycles or carts – to

the centres where it was weighed and analysed. Unlike the government,

Nestle paid the farmers promptly. Suddenly the farmers had an incentive to

produce milk and many bought a second cow, increasing the cow population

in the district by 3,000 to 9,000 in 18 months.

Area managers then organized a delivery system that used dedicated vans to

deliver the milk to Nestle’s factory. Although at first glance this might seem

to be a very costly solution, Nestle calculated that the long-term benefits

would be substantial. Nestle’s strategy is similar to that undertaken by

many European and American companies during the first waves of

industrialization in those countries. Companies often had to invest in

infrastructure that we now take for granted to get production off the ground.

Once the infrastructure was in place, in China, Nestle’s production took off.

In 1990, 316 tons of powdered milk and infant formula were produced. By

1994, output exceeded 10,000 tons and the company decided to triple

capacity. Based on this experience, Nestle decided to build another two

powdered milk factories in China and was aiming to generate sales of $700

million by 2000.

Nestle is pursuing a similar long-term bet in the Middle East, an area in

which most multinational food companies have little presence. Collectively,

the Middle East accounts for only about 2 percent of Nestle’s worldwide

sales and the individual markets are very small. However, Nestle’s long-term

strategy is based on the assumption that regional conflicts will subside and

intra-regional trade will expand as trade barriers between countries in the

region come down. Once that happens, Nestle’s factories in the Middle

East should be able to sell throughout the region, thereby realizing scale

economies. In anticipation of this development, Nestle has established a

network of factories in five countries, in the hope that each will, someday,

supply the entire region with different products. The company currently

makes ice-cream in Dubai, soups and cereals in Saudi Arabia, yogurt and

bouillon in Egypt, chocolate in Turkey, and ketchup and instant noodles in

Syria. For the present, Nestle can survive in these markets by using local

materials and focusing on local demand. The Syrian factory, for example,

relies on products that use tomatoes, a major local agricultural product.

Syria also produces wheat, which is the main ingredient in instant noodles.

Even if trade barriers don’t come down soon, Nestle has indicated it will

remain committed to the region. By using local inputs and focussing on

local consumer needs, it has earned a good rate of return in the region, even

though the individual markets are small.

Despite its successes in places such as China and parts of the Middle East,

not all of Nestle’s moves have worked out so well. Like several other Western

companies, Nestle has had its problems in Japan, where a failure to adapt

its coffee brand to local conditions meant the loss of a significant market

opportunity to another Western company, Coca Cola. For years, Nestle’s

instant coffee brand was the dominant coffee product in Japan.

In the 1960s, cold canned coffee (which can be purchased from soda

vending machines) started to gain a following in Japan. Nestle dismissed the

product as just a coffee-flavoured drink rather than the real thing and

declined to enter the market. Nestle’s local partner at the time, Kirin Beer,

was so incensed at Nestle’s refusal to enter the canned coffee market that it

broke off its relationship with the company. In contrast, Coca Cola entered

the market with Georgia, a product developed specifically for this segment of

the Japanese market. By leveraging its existing distribution channel, Coca

Cola captured a 40 percent share of the $4 billion a year, market for canned

coffee in Japan. Nestle, which failed to enter the market until the 1980s, has

only a 4 percent share.

While Nestle has built businesses from the ground up, in many emerging

markets, such as Nigeria and China, in others it will purchase local

companies if suitable candidates can be found. The company pursued such

a strategy in Poland, which it entered in 1994, by purchasing Goplana, the

country’s second largest chocolate manufacturer. With the collapse of

communism and the opening of the Polish market, income levels in Poland

have started to rise and so has chocolate consumption. Once a scarce item,

the market grew by 8 percent a year, throughout the 1990s. To take

advantage of this opportunity, Nestle has pursued a strategy of evolution,

rather than revolution. It has kept the top management of the company

staffed with locals – as it does in most of its operations around the world –

and carefully adjusted Goplana’s product line to better match local

opportunities. At the same time, it has pumped money into Goplana’s

marketing, which has enabled the unit to gain share from several other

chocolate makers in the country. Still, competition in the market is intense.

Eight companies, including several foreign-owned enterprises, such as the

market leader, Wedel, which is owned by PepsiCo, are vying for market

share, and this has depressed prices and profit margins, despite the healthy

volume growth.

Question:

(5 × 4 = 20)

1. Does it make sense for Nestle to focus its growth efforts on emerging

markets? Why?

2. What is the company’s strategy with regard to business development in

emerging markets? Does this strategy make sense? From an organizational

perspective, what is required for this strategy to work effectively?

3. Through your own research on NESTLE, identify appropriate performance

indicators. Once you have gathered relevant data on these, undertake a

performance analysis of the company over the last five years. What does the

analysis tell you about the success or otherwise of the strategy adopted by

the company?

4. How would you describe Nestle’s strategic posture at the corporate level;

is it pursuing a global strategy, a multidomestic strategy an international

strategy or a transnational strategy?

5. Does this overall strategic posture make sense given the markets and

countries that Nestle participates in? Why?

Assignment

Subject: Strategy Execution

Q.3 Case study

Starbucks Growth Strategy

In 1971, three academics, English Teacher Jerry Baldwin, History Teacher

Zel Siegel and writer Gordon Bowker opened Starbucks Coffee, Tea and

Spice in Touristy Pikes Place Market in Seattle. The three were inspired by

entrepreneur Alfred Peet (whom they knew personally) to sell high-quality

coffee beans and equipment. The store did not offer fresh brewed coffee by

the cup, but tasting samples were sometimes available. Siegel will wore a

grocers apron, scooped out beans for customers while the other two kept

their day jobs but came by at lunch or after work to help out. The store was

an immediate success, with sales exceeding expectations, partly because of

interest stirred by the favorable article in Seattle Times.

Starbucks ordered its coffee-bean from Alfred Peet but later on the three

partners bought their own used roaster setting up roasting operations in a

nearby ramshackle building and developed their own blends and flavors. By

the year 1980s the company had four Starbucks Stores in Seattle area and

had been profitable every year. Later on, Siegel left the company and

Jerry Baldwin took over day-to-day management of the company. Gordon

Bowker remained as an owner but devoted most of his time in his Design

Firm. In 1981, Howard Schultz, the vice president of U.S operations for

Swedish Maker of stylish kitchen equipment and coffeemakers decided to

pay Starbucks a visit. He was curious about why Starbucks was selling so

many of his company products. He was impressed with the company

management and the quality products the make. Schultz asked Baldwin

whether there was any way he could fit into Starbucks and it took long time

to decide his request. He tried many times till one day he was given a job of

heading marketing and overseeing the retail stores.

Howard Schultz spent most of his working hours in the four stores learning

the retail aspects of the company business; Schultz was overflowing with

ideas for the company. His biggest inspiration and vision for Starbucks

future came during 1983 when the company sent him for an international

house wares show to Milan, Italy. There he spotted an espresso bar and

went to take a coffee. He was impressed with the coffeehouse services and

decided to stay at Milan for a week to explore all coffee bars and learned as

much as he could about the Italian passion for coffee drinks. He made a

decision to serve fresh brewed coffee, espressos, and cappuccinos in its

stores and try to create an American version of Italian coffee bar culture. He

shared his idea with Baldwin and it took nearly a year to convince Jerry

Baldwin to let him test an espresso bar. In April 1984, the first espresso bar

was opened and it was a successful too. Yet Baldwin felt something is

wrong. After Schultz failed to convince Baldwin for the expansion of

business, he left Starbucks in 1985. Schultz started the “Il Giornale” coffee

bar chain in 1985 and the coffeehouse was very successful. In 1987

Starbucks owner Jerry Baldwin and Bowker decide to sell the whole

Starbucks chain to Schultz’s Il Giornale, which rebranded the Il Giornale

outlets as Starbucks and quickly began to expand. Starbucks opened it’s

first locations outside Seattle at Waterfront Station in Vancouver, British

Columbia, and Chicago, Illinois, that same year. At the time of its initial

public offering on the stock market in 1992, Starbucks had grown to 165

outlets. In 2009 The Company plans to open a net of 900 new stores outside

of the United States.

Today, Starbucks coffee shops and Kiosks can be found in a variety of

shopping centers, office buildings, bookstores, and other outlets. Starbucks

is capitalizing on taste changes that predate the company’s founding. In the

early 1960’s, American adults consumed on an average ofthree cups of

coffee each day. Today, consumption has declined to less than two cups,

with only half of American adults as coffee drinkers. During this time,

decaffeinated coffee sales soared. In addition, a new category of intensely

loyal coffee drinkers was born. This group of adults consumes “specialty” or

“premium” coffees, including regular and decaffeinated versions with a

variety of origins and flavors. Sales of specialty coffee have climbed from

about $45 million annually to more than $2 billion today, accounting, for

about 20 percent of all coffee sales.

Because Starbucks markets whole beans and coffee beverages, its

competition comes from two distinct groups of firms. A number of regional

coffee manufacturers distribute premium coffees in local markets, while

several large national coffee manufacturers such as Nestle, Proctor &

Gamble, and Kraft General Foods market and distribution specialty coffees

in supermarkets. Coffee beverages are distributes by restaurants, grocery

stores, and coffee retailers. Seattle’s Best Coffee is a fierce competitor.

Chairman Howard Schultz projects that Starbucks will grow from its present

6,000 stores to more than 20,000, 75 percent of which are in the Unites

States. The company added 280 intentional locations in 2001 and is

targeting an additional 650 stores in Europe by 2004 and 900 locations in

Latin America predominantly Mexico by 2005, Starbucks is also moving into

China. Retail stores account for more than 80 percent of revenues, with

specialty operations accounting for the remainder.

Question:

(5 × 4 = 20)

1. What are some of the challenges associated with Starbucks aggressive

growth strategy?

2. Could an unanticipated change in coffee consumption patterns disrupt

Starbucks in the same way that it paved the way for the company’s growth

in the 1980s?

3. What problems might arise from Starbucks’ efforts to expand rapidly into

nations such as India?

4. Comment on the pricing strategies of Starbucks.

5. How would you see the competition of Starbucks in India, with players

like Costa Coffee?

Assignment

Subject: Strategy Execution

Q.4 Case study

In July 2013, Yasumori Ihara (Ihara), Executive Vice President of Toyota

Motor Corporation was readying plans to bolster Toyota's position in the

emerging markets by expanding operations into Cambodia, Myanmar, and

Kenya. According to Ihara, who was in charge of the company's emerging

markets business, "Compared with North America, Europe, or Japan, where

buyers are mostly replacement buyers, it's mostly first-time buyers in

emerging markets. It's where the future growth is."

The Japan-based Toyota was the world's largest automaker with a presence

in more than 170 countries. In March 2011, Toyota announced its ‘Global

Vision' in which emerging markets were given particular importance as part

of its strategy. The company wanted to get 50% of its global sales from the

rapidly growing emerging markets by 2015. The company considered China,

Southeast Asia, India, and Brazil as its key emerging markets. In 2012,

Toyota's consolidated vehicle sales was 8.7 million units, out of which 3.7

million were sold in emerging countries.

But in the second half of 2013, Toyota was facing intense competition from

its rivals both in the developed as well as the emerging markets. The

company had invested a huge amount in emerging markets, but key

emerging markets were facing a lot of volatility and sluggish growth. There

were concerns that these markets were no longer attractive enough. In

addition to getting Toyota's emerging markets strategy right, Ihara's main

responsibility was to reverse the disastrous sales decline in China, where

consumers were boycotting Japanese-built cars due to diplomatic tensions

over some disputed islands.

The global automotive market was highly competitive and competition was

likely to intensify further with continuing globalization. The factors affecting

competition included product quality and features, safety, reliability, fuel

economy, the amount of time required for innovation and development,

pricing, customer service, and financing terms. With growing economies and

a low vehicle penetration rate, emerging markets were considered as the key

source of growth for the global automobile industry.

According to the International Monetary Fund, between 1988 and 2011,

while the developed markets' of global GDP declined from 61% to 49%.

Toyota's presence in the emerging markets dated back to the 1960s when it

used to sell vehicles in markets like Taiwan, Brazil, South Africa, Thailand,

the Philippines, Malaysia, Russia, and China. In the initial years, Toyota

was mostly exporting vehicles from Japan to these countries as it only had

production facilities in Brazil, South Africa, and Thailand.

During the 1970s, Toyota started producing multipurpose vehicles in the

Philippines and Indonesia as families in these two countries tended to be

large and therefore vehicles that could be used both for business and family

were preferred. In 1976, Toyota launched the Tamaraw in the Philippines

followed by the Kijang in Indonesia in 1977. In the 1980s, Toyota started

producing vehicles in Taiwan and Malaysia followed by India in the 1990s.

By the 2000s, Toyota had production facilities in all these emerging

markets. In an effort to increase its presence in the emerging markets,

Toyota began strengthening its supply system in the emerging markets and

increasing localization. During the 2000s, the company set up a local parts

distribution network and a supply chain to provide greater autonomy to

affiliates in the emerging markets.

Toyota's presence in South East Asia dated back to the 1950s. By 2012,

Toyota had 14 production companies in Thailand, Indonesia, the

Philippines, Malaysia, and other Southeast Asian countries. Under the

Innovative International Multi-purpose Vehicle (IMV) project launched in

2004, Thailand and Indonesia became Toyota's global production centers.

By 2012, Toyota was the market leader in Thailand, Indonesia, the

Philippines, Taiwan, Brunei, and Vietnam. The IMV Project was intended to

create an efficient production and distribution structure for pick-up trucks

and multipurpose vehicles to meet the needs of consumers globally. Toyota

applied the ‘genchi genbutsu' approach to observe and analyze the needs of

each region and the types of vehicles used in those regions to develop and

introduce IMVs.

The IMV project included manufacturing diesel engines in Thailand, gasoline

engines in Indonesia, and manual transmissions in the Philippines and

India. The IMV project adopted a leaner development process based on a

common platform, and developed five vehicles: three pickup trucks, a

minivan, and an SUV, especially developed in 2004 for launch in over 140

countries. Though Toyota was still the #1 automaker in mid-2013, its

position was coming under threat from a resurgent GM and Ford in the US

market.

Competition was catching up in the hybrid car market too. In its home

market, the company was hit hard in late 2012, after government incentives

for consumers to buy fuel-efficient models expired. In 2013, the Yen

declined more than 12% against the dollar. In emerging markets, Toyota had

to contend with intense competition from other Japanese companies such as

Nissan, Honda, and Suzuki, some of which had managed to entrench

themselves in key emerging markets. Companies such as GM and Germanybased

Volkwagen were also pushing ahead with their own emerging

strategies.

In 2008 and 2009, analysts were expecting emerging markets to become a

safe haven for investors, considering the recession in the US and Europe

post the global financial crisis. But as of 2013, while developed economies

seemed to be strengthening, the emerging markets had underperformed in

the previous couple of years. Analysts were also concerned about the

vulnerability of the emerging markets which reacted strongly to modest

changes in the world economy. In mid-2013, many emerging markets were

struggling with rapid depreciation of their currencies. Countries such as

Brazil, India, South Africa, and Indonesia were among the worst affected.

Between May and September of 2013, while the Indian Rupee fell by 21%,

the Brazilian Real fell by 17%, followed by the Indonesian Rupiah (15%), the

Thailand Baht (8%), and the Russian Ruble (6%). Central banks in key

markets like Brazil and India were working frantically to prop up their

currencies.

As of mid-2013, Toyota pursued the emerging market strategy with Asia as

its ‘second mother base'. According to Toyota's Global Vision, the company

aimed to implement its IMV Project strategy in the emerging markets by

continuing to fortify its core models along with new hybrid models. It would

also strengthen its production and supply bases, and enhance its cost

competitiveness by 100% localized procurement.

Question:

(4 × 5 = 20)

1. Analyze the automobile industry in emerging markets and discuss and

debate whether automakers should focus on these markets.

2. Evaluate the strategies adopted by Toyota to increase its presence in

emerging markets.

3. Discuss ways in which Toyota could get its emerging markets strategy

right and bolster its position further in emerging markets.

4. Give your suggestion for better marketing strategy.

Assignment

Subject: Strategy Execution

Q.5 Case study

On December 14, 2012, French-Dutch airline, Air France KLM SA (Air

France-KLM), announced an addition of €500 million (USD654 million) to its

savings target for 2013-14, in an effort to match the margins of its

competitors. Earlier in 2012, the airline had announced a plan for a €1.4

billion investment in 2013, followed by a further €1.6 billion investment in

2014 as part of its "Transform 2015" plan. However, with the new savings

target, investment would be cut by €500 million, out of which Air France

would contribute €300 million while the remaining €200 million would be

cut from KLM's budget.

After the changes, Air France-KLM's capital expenditure would be €1.1

billion in 2013 and €1.4 billion in 2014. "This is a necessary reduction, but

given the group's younger fleet age versus competitors they have the

flexibility to do it. The Transform plan is gathering pace and should be well

on track to deliver," said analyst Donal O'Neill at Goodbody Stockbrokers.

Air France-KLM was formed through a merger of French and Dutch carriers

in 2004. With sound financials in the initial years, the merged entity became

an example of how a cross border merger could prove a success. However,

from 2009, the company was struggling to remain competitive in the

changing global aviation industry. In 2011, the company's net debt was at

€6.5 billion, €2 billion more than it had been the previous year. The

company also incurred a substantial operating loss for the fourth

consecutive year in 2011. It attributed its deepening indebtedness to

increasing fuel costs, competition from low-cost airlines, and the aftereffects

of the financial crisis. "We have been incapable of financing our investments

for the past three years, as we don't generate enough cash flow," said

Alexandre de Juniac (Juniac), CEO of Air France.

The company had announced the "Transform 2015" plan in January 2012.

This included reducing unit costs by 10 percent and slashing €2 billion from

its net debt by the end of 2014. The company also planned to cut some

5,000 odd jobs to turn around its short- and medium-haul business.

Aviation experts welcomed the restructuring initiatives of Air France-KLM.

However, they were worried about whether the company would be able to

achieve the targets mentioned in "Transform 2015". According to a Bank of

America report published in March 2012, "the core structural longer-term

issue of value destruction in this business remains unresolved".

On September 30, 2003, Air France and KLM announced their intention to

merge through a public exchange offer. In May 2004, the two merged to form

the largest European airline group, Air France-KLM. On May 5, 2004, Air

France-KLM shares were listed for trading on the Euronext Paris and

Amsterdam markets as well as on the New York Stock Exchange. Two days

later, Air France was privatized following a transfer of the majority of its

shares to the private sector, thus diluting the French government

shareholding. On September 15, 2004, the group's organizational structure

was finalized with the creation of the Air France-KLM holding company,

regrouping the two airline subsidiaries, Air France and KLM. The merger

between Air France and KLM was a unique example, not only because it was

a cross border merger, but also because two airlines with different cultures

formed one company where both companies kept their brands alive by flying

their planes under their respective names. In the initial years, the merger

was considered a success story, because of early anticipation of the needs of

consolidation in the European aviation industry.

In 2007, the company completed its first phase of integration and became

the best performing airline globally in terms of profitability. It was a global

leader covering 240 destinations in 105 countries with its 900 aircraft. In

the financial year 2006-07 ended March 31, 2007, Air France-KLM

generated revenues of € 23.1 billion, an increase of 7.6 percent year on year.

However, the company started facing problems from 2008. The global

financial crisis of 2008-09 affected the airline industry very badly. The

industry responded by reducing capacity and cutting costs. In the financial

year 2008-09, Air France-KLM reported revenues of €23.97 billion and an

operating loss of €129 million. From then onward, the airline started

struggling to improve its financials. In the financial year 2009-10, Air

France-KLM reported a 15 percent decline in revenues to €21 billion, and an

operating loss of €1.28 billion.

In 2012, Air France-KLM continued to counter the effects of downturns in

its domestic market as well as in several of its foreign markets: Japan, the

Middle East, and North Africa. In France, the company was grappling with

high costs due to increasing fuel prices. Moreover, weak economic growth

due to Europe's financial crisis aggravated the problems for the airline. On

October 8, 2012, Air France-KLM and Etihad Airways signed an agreement

to codeshare on flights across the airlines' networks. The codeshare

agreement would allow both airlines to offer joint codes on destinations in

Europe, the Middle East, Asia, and Australia. At the same time, Air France-

KLM also announced another codeshare agreement with Air Berlin , in

which Etihad Airways held a 29.21 percent stake

Question:

(4 × 5 = 20)

1. Analyze the problems faced by Air France-KLM

2. Evaluate the turnaround strategies adopted by the airline

3. Analyze the issues and challenges in transcontinental and cross-cultural

alliances.

4. Analyze the future challenges of the airline and how these can be

overcome.