Automobile insurance: Paradigm Shift and DisruptionArjun Bardhan
The auto insurance industry is going through a phase of disruption that could potentially revolutionize the traditional model of insurance operations. There are multiple factors of the changing society that contribute to this paradigm shift. This white paper elaborates four such changes.
1. Millennials & the changing market
2. Telematics and Usage Based Insurance
3. Autonomous Vehicles
4. Technology in automobile claims
Automobile insurance: Paradigm Shift and DisruptionArjun Bardhan
The auto insurance industry is going through a phase of disruption that could potentially revolutionize the traditional model of insurance operations. There are multiple factors of the changing society that contribute to this paradigm shift. This white paper elaborates four such changes.
1. Millennials & the changing market
2. Telematics and Usage Based Insurance
3. Autonomous Vehicles
4. Technology in automobile claims
See the Roland Berger Strategy Consultants (http://www.rolandberger.us/) 2014 study on The Next Challenge Of The US Auto Industry.
http://tinyurl.com/NPAutomotive
http://www.linkedin.com/in/TonyLy
https://www.facebook.com/MechanicalMarketer
Market Intelligence Report: Online Personal Injury 2013 John McCambley
Stickyeyes' market report reveals that the abolition of referral fees is dramatically reshaping the search marketing landscape within the online personal injury sector.
Omnichannel Commerce & The Customer Experience - Featuring Don PeppersMargot Heiligman
In this presentation content, Don is taking the topic of omnichannel commerce and customer experience right to the core of their essence. What should businesses and management pay attention to in order to successfully transform their business digitally? And what is a good customer experience really about? Access the content now.
Visit "The Future of Customer Engagement and Commerce" by SAP Hybris to get more valuable content around commerce, marketing, and customer engagement here: http://www.the-future-of-commerce.com/
More than 100 Ecommerce managers from leading brands in the UK took part in the Bearing Partnership Digital Industry Confidence Report 2009 online survey during the spring of 2009. Between them, respondents manage £7.3 billion of Ecommerce revenue, more than 10 per cent of all UK ecommerce sales in 2008. This report looks at how the Head of Ecommerce felt they performed in 2008 as well as their predictions for 2009 with regards to remuneration, performance, and their confidence levels moving forward.
How Automotive Brand Affects Used Vehicles Prices.
Brand perception plays an important role in used
vehicle demand as well. Used vehicles from brands
with an established history of successfully meeting
buyers’ most critical needs usually sell for more
than the competition. This consistent ability to
satisfy core purchase drivers gives stronger brands
an innate advantage in cost-of-ownership and
residual value. To better explain this cause and
effect, this report explores the brand characteristics
that drive auto purchase behavior, and their impact
on used vehicle prices.
AT&T’s Announcement: "We've begun a formal advertising media and creative agency review that will cover all traditional and digital services in the U.S. for our Entertainment Group, Business Solutions and Corporate Brand work." (Adweek)
AT&T is looking to adopt "a single integrated media and creative operating model made up of affiliated agencies. Doing so will improve efficiencies, quality and consistency across our portfolio."
Current & Previous Agencies: The primary media incumbent is WPP’s MEC, which won a consolidation review back in 2007, when the client was spending an estimated $2.3 billion annually. Prior to that review, five shops handled the business including MEC, Digitas, GSD&M Idea City, Initiative and OMD.
In today’s connected world consumer experience IS your brand. Your brand is defined, not by a marketing team or agency, but by how people experience it. Our study shows unequivocally what we think the industry has known instinctively for some time; women are disenfranchised by the automotive industry.
In this ground-breaking research project, we surveyed over 48,000 women to establish the "state of the nation" of the female experience of automotive.
E-commerce in fashion industry
Apparel & accessories sales in US: Apparel has become an online success - Jeffrey Grau, eMarketer.
Fashion emerges as best-performing segment of ecommerce in UK - IMRG Capgemini e-Retail Sales Index.
Southeast Asia startup investments 2013: It’s all about e-commerce, fashion and women: Mobile commerce, online retail, payments, C2C marketplaces, flash sales.
eCommerce Benchmark for the Fashion Industry:
Where does the traffic come from in fashion? - Direct, Paid, Organic, CPS, CPC, Viral/Social, E-mail newsletter; social and viral media play a much bigger role in fashion.
Conversion ratios in fashion retail.
Platform for your e-store – why Magento?: Shopify, SquareSpace, Tictail, Magento; Bonobos, Nike, Christian Louboutin, MyTheresa.
Magento Enterprise Customer Success Story GANT: High performance and visual inspiration, Full screen experience, Custom campaign modules, Look book, Customized checkout, Flexible landing and content pages, Integration with multiple warehouse and ERP systems, Access rights management across multiple sites/stores, Localized payment and shipping methods;
290% increase in conversion rate, 13% increase in traffic, 35% reduction in page load time, 50% decrease in hosting costs.
Why choose Responsive Web Design?: U.S. Mobile Commerce Activities
Divante for fashion: SOLAR Company Case Study: http://divanteltd.com/blog/complex-e-commerce-implementation-fashion-brand/ .
See the Roland Berger Strategy Consultants (http://www.rolandberger.us/) 2014 study on The Next Challenge Of The US Auto Industry.
http://tinyurl.com/NPAutomotive
http://www.linkedin.com/in/TonyLy
https://www.facebook.com/MechanicalMarketer
Market Intelligence Report: Online Personal Injury 2013 John McCambley
Stickyeyes' market report reveals that the abolition of referral fees is dramatically reshaping the search marketing landscape within the online personal injury sector.
Omnichannel Commerce & The Customer Experience - Featuring Don PeppersMargot Heiligman
In this presentation content, Don is taking the topic of omnichannel commerce and customer experience right to the core of their essence. What should businesses and management pay attention to in order to successfully transform their business digitally? And what is a good customer experience really about? Access the content now.
Visit "The Future of Customer Engagement and Commerce" by SAP Hybris to get more valuable content around commerce, marketing, and customer engagement here: http://www.the-future-of-commerce.com/
More than 100 Ecommerce managers from leading brands in the UK took part in the Bearing Partnership Digital Industry Confidence Report 2009 online survey during the spring of 2009. Between them, respondents manage £7.3 billion of Ecommerce revenue, more than 10 per cent of all UK ecommerce sales in 2008. This report looks at how the Head of Ecommerce felt they performed in 2008 as well as their predictions for 2009 with regards to remuneration, performance, and their confidence levels moving forward.
How Automotive Brand Affects Used Vehicles Prices.
Brand perception plays an important role in used
vehicle demand as well. Used vehicles from brands
with an established history of successfully meeting
buyers’ most critical needs usually sell for more
than the competition. This consistent ability to
satisfy core purchase drivers gives stronger brands
an innate advantage in cost-of-ownership and
residual value. To better explain this cause and
effect, this report explores the brand characteristics
that drive auto purchase behavior, and their impact
on used vehicle prices.
AT&T’s Announcement: "We've begun a formal advertising media and creative agency review that will cover all traditional and digital services in the U.S. for our Entertainment Group, Business Solutions and Corporate Brand work." (Adweek)
AT&T is looking to adopt "a single integrated media and creative operating model made up of affiliated agencies. Doing so will improve efficiencies, quality and consistency across our portfolio."
Current & Previous Agencies: The primary media incumbent is WPP’s MEC, which won a consolidation review back in 2007, when the client was spending an estimated $2.3 billion annually. Prior to that review, five shops handled the business including MEC, Digitas, GSD&M Idea City, Initiative and OMD.
In today’s connected world consumer experience IS your brand. Your brand is defined, not by a marketing team or agency, but by how people experience it. Our study shows unequivocally what we think the industry has known instinctively for some time; women are disenfranchised by the automotive industry.
In this ground-breaking research project, we surveyed over 48,000 women to establish the "state of the nation" of the female experience of automotive.
E-commerce in fashion industry
Apparel & accessories sales in US: Apparel has become an online success - Jeffrey Grau, eMarketer.
Fashion emerges as best-performing segment of ecommerce in UK - IMRG Capgemini e-Retail Sales Index.
Southeast Asia startup investments 2013: It’s all about e-commerce, fashion and women: Mobile commerce, online retail, payments, C2C marketplaces, flash sales.
eCommerce Benchmark for the Fashion Industry:
Where does the traffic come from in fashion? - Direct, Paid, Organic, CPS, CPC, Viral/Social, E-mail newsletter; social and viral media play a much bigger role in fashion.
Conversion ratios in fashion retail.
Platform for your e-store – why Magento?: Shopify, SquareSpace, Tictail, Magento; Bonobos, Nike, Christian Louboutin, MyTheresa.
Magento Enterprise Customer Success Story GANT: High performance and visual inspiration, Full screen experience, Custom campaign modules, Look book, Customized checkout, Flexible landing and content pages, Integration with multiple warehouse and ERP systems, Access rights management across multiple sites/stores, Localized payment and shipping methods;
290% increase in conversion rate, 13% increase in traffic, 35% reduction in page load time, 50% decrease in hosting costs.
Why choose Responsive Web Design?: U.S. Mobile Commerce Activities
Divante for fashion: SOLAR Company Case Study: http://divanteltd.com/blog/complex-e-commerce-implementation-fashion-brand/ .
Presentation given by KPMG at the United Nations on the Internet of Things and the potential for sustainable development, with a focus on transportation. September 2016.
The COVID-19 pandemic significantly altered how medical practitioners provide care to patients. Medical centers are responding to the pandemic through a rapid adoption of digital tools and technologies such as telemedicine and virtual care.
The smac-code-embracing-new-technologies-for-future-business (1)Sumit Roy
Social mobile Analytics and Cloud: How SMAC model is changing and disrupting business across industry. SMAC is not only changing the way markets function , but it also is a pointer that technology today is the biggest tool for innovation,however this is a double edged sword as SMAC is a great enabler. Small companies and the giants both have a level playing field
31 липня у "Часописі" відбулася зустріч із Олександром Романко, старшим науковим співробітником канадського представництва IBM, професором Університету Торонто.
Digital disruption and the future of the automotive industryPeter Tutty
Digital services centered on increasingly empowered consumers will bring disruption to the automotive industry.
Economic value within this industry and across adjacent markets will be forever altered. In a world where the future is far from certain, automotive companies will need to develop new core capabilities to survive.
What is going to happen next and how to respond? Download the report or explore the infographic, below.
Digital disruption and the future of the automotive industryPeter Tutty
Digital services centered on increasingly empowered consumers will bring disruption to the automotive industry.
Economic value within this industry and across adjacent markets will be forever altered. In a world where the future is far from certain, automotive companies will need to develop new core capabilities to survive.
What is going to happen next and how to respond? Download the report or explore the infographic, below.
SMACology i.e. SMAC Technology is the new buzzword reforming the IT industries as well as the skills of technical aspirants. Learn how.
PDF courtesy: KPMG
Digital asset management Market PPT 2021: Size, Growth, Demand and Forecast ...IMARC Group
According to the latest report by IMARC Group,the global digital asset management market size reached around US$ 3.88 Billion in 2020.
Digital assets refer to documents, audio, animation, pictures, and other media content that requires proper rights to use them.
Finance Cloud Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...IMARC Group
The global finance cloud market reached a value of US$ 27.13 Billion in 2021. Looking forward, IMARC Group expects the market to reach a value of US$ 91.67 Billion by 2027 exhibiting a growth rate (CAGR) of 21.70% during 2022-2027.
More Info:- https://www.imarcgroup.com/finance-cloud-market
Sheet1Task Name Responsible Start Date End Date Duration Status Sp.docxmaoanderton
Sheet1Task Name Responsible Start Date End Date Duration Status Sprint 1Jacob 3-Sep13-Sep10Complete Feature 1Kennedy 3-Sep7-Sep4CompleteFeature 2Alex 7-Sep12-Sep5CompleteFeature 3Shari 9-Sep13-Sep4Overdue Sprint 2Shari 16-Sep24-Sep8In progress Feature 4Frank16-Sep17-Sep1In progress Feature 5Alex 17-Sep21-Sep4Not started Feature 6Jacob 22-Sep24-Sep2Not started Sprint 3Jacob 25-Sep5-Oct10Not started Feature 7Jacob 25-Sep29-Sep4Not started Feature 8Frank24-Sep2-Oct8Not started Feature 9 Alex 2-Oct5-Oct3Not started
Sheet2
Sheet3
General Motors
Table of Contents
1.0:Abstract 3
2.0:Introduction 4
3.0: Internal Strategic Analysis 5
4.0Internal Strengths 7
5.0Internal Weaknesses 9
6.0: Leadership 10
7.0:Customer and Market Focus 11
8.0:Human Resource 13
9.0:Quality Management System 16
10.0:Process Management (HR) 17
11.0: Conclusion18
12.0:References20
Abstract
General Motor (GM) is a multinational automobile manufacturer. The company was founded in 1908 in Flint, Michigan by William Durant and Charles Mott. At present, GM is the second largest automaker after Toyota as measured according to the global industry sales. A key competitive edge that GM has compared with its competitors is its innovative designs and products. The purpose of this paper is to study the company based on the Malcolm Baldrige National Quality Award criteria. GM’s key strategic objectives are place the company to be competitive, satisfy customers, remain solid growth in global vehicle sales, and continually invest to dedicate to improving cultural, economic, educational, environmental, and social aspects of the communities. The paper will look into; internal analysis of GM strategic plan, leadership, customer analysis, human resource analysis, and business process management within the organization.
A key to GM’s success is its management. Without efficient management GM would not have been able to sell and finance its vehicles globally. Success does not mean that the company is not facing any impending threats. Threats for the company do exist in the industry, especially in terms of high cost and brand dilution. In order to avoid them, GM needs to reduce the cost of its vehicles and to add GM letters in all of its brands to increase the awareness among its .
Digital Transformation: Driving CX Excellence keynote slides from the following conferences - #DigiExConf #CRMEvolution #SpeechTEK #SMARTCS
Presented April 2019
Big Data, customer analytics and loyalty marketingKevin May
Want to improve the customer experience while optimizing customer service, marketing spend and wallet share?
In this FREE webinar from Tnooz and IBM, attendees learn the benefits of big data analytics including:
Developing persona-level customer segmentation.
Improving products/services launches.
Optimizing return on marketing spend.
Utilizing social media analytics.
Webinar presenters are:
Kurt Wedgwood – information agenda consultant for travel and transportation, IBM
Tzaras Christon – executive vice president for growth, Aginity
Kevin May - editor and moderator, Tnooz
Gene Quinn - CEO and producer, Tnooz
Being Digital, Fast-forward to the Right Digital Strategy Fabio Mittelstaedt
Do my Company have the right Digital Strategy? Is it compelling enough to beat my competitors? Or to conquer the new digital customers from millenniums to baby boomers? Competing in a world shaped by digital technologies requires a fundamentally different approach to how strategies are developed and executed. 55% of business leaders admit that they do not yet have an enterprise-level digital strategy to support their corporate strategy. But there is a difference between developing some digital capabilities or being a digital lead in your industry. Digital disrupts business strategy. Business leaders must consider a new strategic approach.
To survive and thrive in the age of the customer,
businesses must become digital. While many
firms believe they have a digital strategy, few
are thinking about truly digitizing their business
strategy. Yet the pioneers of the digital revolution,
be they B2B or B2C firms, are driving increased
revenues through a superior digital customer
experience and are increasing efficiency and agility
through digital operational excellence. This report
outlines the driving forces behind digital business.
This is an update of a previously published report;
Forrester reviews and updates it periodically for
continued relevance and accuracy. We revised
this edition to factor in new ideas and data.
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June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
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Mba isbm case study answers & solutions 1
1. WE ARE PROVIDING CASE STUDY ANSWERS
ASSIGNMENT SOLUTIONS, PROJECT REPORTS
AND THESIS
ISBM / IIBMS / IIBM / ISMS / KSBM / NIPM
SMU / SYMBIOSIS / XAVIER / NIRM / PSBM
ISM / IGNOU / IICT / ISBS / LPU / ISM&RC
MBA - EMBA - BMS - GDM - MIS - MIB
DMS - DBM - PGDM - DBM - DBA
www.mbacasestudyanswers.com
www.casestudies.co.in
aravind.banakar@gmail.com
ARAVIND 09901366442 -
09902787224
2. SUBJECTS
A B C
ACCOUNTING MANAGEMENT
AUDIT MANAGEMENT
ADVERTISING
ADVERTISING MANAGEMENT
AUTOMOBILE MANAGEMENT
ASSET MANAGEMENT
AVIATION MANAGEMENT
AGRICULTURE MANAGEMENT
ARCHITECTURAL
MANAGEMENT
AIR TRANSPORT MANAGEMENT
BANKING MANAGEMENT
BPO MANAGEMENT
BANKING & FINANCIAL SERVICES
MANAGEMENT
BUSINESS MARKETING
BUSINESS ETHICS
BUSINESS COMMUNICATION
BUSINESS LOGISTICS
BIO TECHNOLOGY MANAGEMENT
BUSINESS ADMINISTRATION
BUSINESS MANAGEMENT
BUSINESS ENVIRONMENT
BUSINESS PLANNING
BUSINESS STRATEGY
BOI-TECHNOLOGY MANAGEMENT
CORPORATE LAW
CONSUMER BEHAVIOR
CORPORATE FINANCE
COST MANAGEMENT & ACCOUNTANCY
CORPORATE & FINANCE MANAGEMENT
CORPORATE GOVERANCE
COMMUNICATION MANAGEMENT
CLINICAL PHARMACOLGY
CLINICAL RESEARCH
CUSTOMER RELATIONSHIP MANAGEMENT
CONSTRUCTION MANAGEMENT
CUSTOMER CARE MANAGEMENT
CALL CENTRE MANAGEMENT
CO – OPERATIVE MANAGEMENT
CONSUMER MANAGEMENT
CORPORATE FINANCE MANAGEMENT
CHARTERED FINANCE MANAGEMENT
D E F
DAIRY MANAGEMENT
DISTRIBUTION LOGISTIC
MANAGEMENT
DATABASE MANAGEMENT
DEVELOPMENT STRATEGY
E-BUSINESS SYSTEM
E-COMMERCE
ENERGY MANAGEMENT
EQUITY RESEARCH MANAGEMENT
ENTREPRENEUR MANAGEMENT
EVENT MANAGEMENT
ENTREPRENEURSHIP MANAGEMENT
EXPORT IMPORT MANAGEMENT
EXPORT MANAGEMENT
FINANCE
FINACE MANAGEMENT
FINACIAL & COST ACCOUNTING
FINANCIAL ACCOUNTANCY
FINANCIAL INSTITUTIONS
FASHION MANAGEMENT
FOREIGN EXCHANGE MANAGEMENT
G H I
GENERAL MANAGEMENT
GLOBAL MARKETING
MANAGEMENT
H R MANAGEMENT
HUMAN RESOURCE MANAGEMENT
HOSPITAL MANAGEMENT
HEALTHCARE MANAGEMENT
HOSPITALITY MANAGEMENT
HOTEL MANAGEMENT
HOLISTIC MANAGEMENT
HOSPITAL ADMINISTRATION
HARDWARE MANAGEMENT
INTERNATIONAL FINACE
INTERNATIONAL FINACE MANAGEMENT
INTERNATIONAL HR MANAGEMENT
INTERNATIONAL BUSINESS
INFORMATION TECHNOLOGY
INDUSTRIAL MANAGEMENT
INVESTMENT MANAGEMENT
INVESTMENT ANALYSIS MANAGEMENT
INDUSTRIAL MARKETING
INDUSTRIAL RELATIONS
INFORMATION MANAGEMENT
INDUSTRIAL SAFETY MANAGEMENT
INTERNATIONAL BUSINESS MANAGEMENT
INVENTORY MANAGEMENT
INDUSTRIAL RELATION LABOUR LAW
IT FOR MANAGEMENT
INFRASTRUCTURE MANAGEMENT
INTELLECTUAL PROPERTY RIGHTS
3. INTERIOR MANAGEMENT
L M N
LOGISTICS
LOGISTIC MANAGEMENT
LOGISTIC ENGINEERING
MARKETING
MARKETING MANAGEMENT
MASS COMMUNICATION
MEDIA MANAGEMENT
MUTUAL FUND MANAGEMENT
MARKET RISK MANAGEMENT
MARKETING FINANCE MANAGEMENT
MATERIAL MANAGEMENT
MANAGEMENT INFORMATION
SYSTEM
MANAGEMENT OF SALES FORCE
MANAGERIAL ECONOMICS
MANUFACTURING PLANNING &
CONTROL
MASS COMMUNICATION
MANAGEMENT
MERGERS & ACQUISITIONS
MARKET RISK MANAGEMENT
NETWORKING
NETWORK MANAGEMENT
NETWORKING MANAGEMENT
O P Q
OPERAIONS
OPERATIONS MANAGEMENT
ORGANIZATION BEHAVIOR
OPERATING SYSTEM
OPERATION RESEARCH
PRINCIPLE & PRACTICE OF
MANAGEMENT
PERSONNEL MANAGEMENT
PROJECT MANAGEMENT
PRODUCTION & OPERTION
MANAGEMENT
PROFFESSIONAL COMMUNICATION
PURCHASING MANAGEMENT
PETROLEUM MANAGEMENT
PORTPOLIO MANAGEMENT
PHARMACOLOGY MANAGEMENT
PUBLIC RELATIONSHIP MANAGEMENT
PUBLIC ADMINISTRATION
QUANTITATIVE METODS
QUATITATIVE TECHNIQUES IN
MANAGEMENT
QUANTITATIVE MANAGEMENT
R S T
RESEARCH METHODOLOGY
RETAIL MANAGEMENT
RISK & SAFETY MANAGEMENT
RISK & INSURANCE
MANAGEMENT
RURAL MANAGEMENT
SALES & DISTRIBUTION
MANAGEMENT
SIX SIGMA MANAGEMENT
SIX SIGMA GREEN BELT
MANAGEMENT
SIX SIGMA BLACK BELT
MANAGEMENT
STATICAL QUALITY CONTROL
SUPPLY CHAIN MANAGEMENT
STORE MANAGEMENT
SOFTWARE PROJECT MANAGEMENT
SHIPPING MANAGEMENT
SOFTWARE MANAGEMENT
SAP CONSUTANCY MANAGEMENT
SALES MANAGEMENT
TELECOM MANAGEMENT
TOTAL QUALITY MANAGEMENT
TREASURY MANAGEMENT
TOTAL SUPPLY MANAGEMENT
TRAVEL & TOURISM
TRAINING & DEVELOPING
TAKE OVER AQUISATION
TAXATION MANAGEMENT
TEXTILE MANAGEMENT
4. E-BUSINESS SYSTEM
Case : 1
GM’s E-Business Strategy
INTRODUCTION
US-based General Motors (GM), the largest automobile company in the world, was in trouble in the
late 1990s. The company’s market share in the US automobile market had been steadily declining from
a high of 50% in the late 1960s to a low of 28% by 1999.Analysts pointed out that GM had been in the
grip of a vicious circle.
The company faced low demand for its automobiles as they were not developed in line with the
changing customer needs and preferences. However, GM continued producing automobiles which did
not met customer requirements, leading to excess inventories at its factories and dealers.
The building up of inventory at the dealers made the company even more desperate, and most often it
resorted to higher dealer incentives which reduced the company’s profits significantly. This again
forced GM to produce more cars to compensate for the eroded profit margins. Commenting on the
dilemma GM faced in the late 1990s, John Paul MacDuffie, Professor, Wharton Business School,
explained, “That belief in volume, and doing whatever it takes to keep volume, has driven a lot of their
decisions.
GM’s labor costs are fixed, meaning they remain the same regardless of what the volume of sales is.
GM wanted to keep factories open as much as possible. There was some value in that strategy, but I
think they overdid it.” Analysts added that the reason for the decline in GM’s US market share was
that it had failed to introduce new models that customers wanted in quick time. To address this
challenge, GM made e-business a strategic priority. It wanted to reinvent itself by embracing ebusiness
across its value chain.
In August 1999, after a year of research in collaboration with Forrester Research, GM launched a
business division called e-GM that was responsible for all of the company’s websites and its On Star
communication system. Through this initiative, the company planned to reduce costs, improve quality
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and boost demand for its products.
Ult also wanted to position itself as a provider of Internet-based information services and a major
player in the e-commerce arena. Commenting on this, Computerworld magazine quoted, “GM wants to
be more than your car company. Think in-car, real-time stock quotes, talking e-mail messages and
video games.
Think satellite-based radio services and online car financing. Think of a multibillion-dollar online
trading exchange. These are just a few of the businesses in which GM is making huge information
technology investments. “The philosophy that drove GM e-projects was the ‘launch and learn’
approach. The company launched e-business projects, did pilot tests for them and then decided whether
to abandon or continue them. However, analysts expressed doubts whether GM would be able to
successfully implement its e-business strategy, and if it did, what the significance of this strategy for
the company would be.
Commenting on this, Derek Slater, Executive Editor of CIO Magazine said, “Can e-business make a
difference for an old economy, big and slow manufacturer the way it can for nimble, informationbased
businesses?” Raising similar doubts, an Internet World magazine article queried, “Will Internet
hardware and services become GM’S best products? And this in turn raises this question: Will Internet
services become GM’s core product some day?”
NEED FOR E-BUSINESS STRATEGY
With the advent of the Internet wave in 1999, GM wanted to reposition itself strategically. It wanted to
make use of its vast customer base and huge assets to emerge as a leading player in the new economy
businesses of entertainment and e-commerce. The 1999 annual report of GM stated: “Besides mergers
and acquisitions, there is no bigger trend in business today than that towards electronic business.
Issues
1. What do you understand by the E-Business strategy implementation across an organization’s value
chain?
2. What are the rationale and benefits associated with e-commerce initiatives in an automobile
company?
3. What are the Channel conflict arising from e-business initiative?
Case : 2
Marriott’s Customer - Focused E- Business Strategy
5. DELIGHTING CUSTOMERS
Headquartered at Washington in the US, Marriott International (Marriott) is a world leader in the
hospitality industry. In year 2003, it had a network in excess of 2,600 operating units in the US and a
workforce of 145,000 employees, spread over 65 countries across the world. Marriott’s diverse
portfolio of popular hotel brands included leading brands such as Marriott, JW Marriott, Renaissance,
Ramada International, Courtyard, Residence Inn, and The Ritz-Canton, among others.
Marriott became the first hospitality company to win the CIO - 100 award from CIO magazine for four
consecutive years (2000-03). The award was based on the company’s exceptional customer service and
relationship capability. Reacting to the receipt of award in 2003, Carl Wilson, Executive Vice
President and Chief Information Officer of Marriot said, “This award is the result of a culture and
commitment among Marriott’s information technology leadership team, associates and business
partners to create great value for our company.”
Since its inception, Marriott has focused on providing excellent customer service. The company
offered personalized services to its clients, whom it referred to as its ‘guests.’
It had introduced several innovative technologies and impIemented them even before its competitors
did. For instance, in the 1980’s, the company launched Marriott Automated Reservation System for
Hotel Accommodation (MARSHA), a totally new concept of hotel reservation in the hospitality
industry at that time.
Marriott made continuous improvements in its business processes in its efforts to ‘delight’ its
customers. In 1998, the company adopted an e-business strategy to re-orient itself to serve its
customers better. The company was operationalizing a strategy to switch over from a decentralized
property-orientation to a centralized customer- orientation in its services. The company invested $70
million (mn) over a two-year period to implement a variety of IT applications in diverse functional
disciplines such as sales, accounting and personnel. A key component of Marriott’s e-business system
was its CRM applications, developed in association with the leading CRM software company - Siebel
Systems.
By installing eCRM applications, Marriott was able to offer several new services that enhanced its
hospitality services. The company’s website, www.marriott.com became one of the most frequently
visited sites in the hospitality industry, giving clients access to the services offered by the entire
Marriott chain of hotels and resorts. Il these initiatives boosted the company’s ability to serve its
clients, and also contributed to its own strong financial performance. For the financial year ending
2001-02, the company reported revenues of $84.41 billion (bn) and a net profit of $2.77 bn.
BACKGROUND NOTE
In 1927, J. William Marriott (William) set-up a nine-seat root beer shop in Washington. After some
time, William started serving hot food along with root beer and named the shop as The Hot Shoppe’ In
1929, Hot Shoppe was officially incorporated as Hot Shoppes, Inc. In 1937, Hot Shoppe ventured into
airline catering at Washington airport, serving the Eastern, American and Capital airlines. Over the
next three decades, Hot Shoppes diversified into other businesses including food services management
by starting a cafeteria at the US Treasury Building and Highway division. e-business strategy and the
time involved for implementation.
To execute e-business strategy successfully, organizations also require the best network and systems
management tools available. It is also important to develop a framework for organizational alignment
and decision-making and a more complex IT management and governance structure. A clear
framework that establishes who can make which decisions, and where and how the e-business project
will be managed is required.
Issues
1. Bring out the facts of the case.
2. Identify the various E-business initiatives.
3. What are the strategies an organization to focus in order to excel in the E-business.
4. Apart from the facts provided in the case, what other initiatives you can project keeping in mind the
success of an organization towards E-business.
In 1966, the company ventured overseas, acquiring an airline catering kitchen in Caracas, Venezuela.
In November 1967, its name was changed to Marriott Corporation (Marriott).
In 1982, Marriott acquired Host -International, a leading hospitality services provider in the US,
becoming the largest operator of airport terminal food, beverage and merchandise facilities in the US.
In the 1980s, Marriott acquired several companies including American Resorts Corp. (vacation
business, 1984), Gladieux Corporation (food service company, 1985), Service Systems (contact food
service company, 1985), Howard Johnson Company (hotels & inns, 1985) and Residency Inn
Company (1987). With the acquisition of Saga Corporation, a diversified food service management
company in 1986, Marriott became the largest food service management company in the US.
Issues
6. 1. Taking out the facts of the case , Bring out the importance of a customer-focused e-business strategy
in the hospitality industry.
2. Establish the role of IT in integrating different business processes to make them more customeroriented
based on your understanding of the case.
Case : 3
E-Strategies - Case Studies
In the e-business environment, organizations must focus on their core competencies and should rely on
external partners for all their non-core activities. The Internet enables a significant reduction in the cost
of inter-organizational coordination and transactions, which fundamentally changes the nature of
business relationships and encourages greater use of business partners over internal departments.
Business managers have more choice to outsource business processes they require.
E-business strategies can significantly improve various organizational functions including supply chain
management (SCM), product development, marketing, HR and so on. It will also enhance the benefits
for organizations adopting e-business including shortening of new product development cycle time,
providing better information to suppliers and vendors, reducing data integrity issues, significantly
enhancing customer experience and more. The e-SCM initiatives typically start with e-procurement
with answering questions such as whether there is a need for e-market places for procurement and how
to transform SCM from the organization driven inventory building to customer driven order approach.
Another e-SCM initiative, e-sourcing is a cross-functional and cross-enterprise process that aims at
optimizing supply chain lifecycle performance through the Internet.
Organizations have to develop new partnerships, create new e-intermediaries (e-supply network) and
develop appropriate standards for data exchange and inter-organization related processes. They also
have to decide on what services they will source via the-Internet and have to develop robust KM
systems to improve internal efficiency, enable faster decision-making and facilitate information and
knowledge sharing.
E-Strategies have to be developed for the sell side of an organization solving distribution related issues
such as shall the organization serve directly to its customers and how will the organization’s existing
channels react if it uses the web as a new channel. Other sell side issues include how to manage
customer relationships online and online marketing and how to use online channels like B2B emarketplaces,
online retailers and virtual distributors. One of the major hurdles to overcome includes
solving conflicts between old and new channel successfully.
Getting prices right on the web is one of the critical success factors for establishing an e-business.
However, few companies have been able to develop a right online pricing strategy. Organizations must
ensure that their e-pricing strategy should not conflict with their core business principles and strategic
objectives. They should employ the right software tools and related skills to enhance their online
pricing performance. Moreover, the tools for optimizing e-pricing, for example, software for
monitoring competitors’ prices do not require much investment.
Organizations not only have to redefine their core business processes but non-core processes such as
human resources as well to derive the full potential of the Internet. By developing effective Internetbased
business-to-employee (B2E) systems, organizations can persuade their employees to embrace
change. The benefits of these systems include reduced interaction costs, allowing employee selfservice
and mass customization.
Online brand management is another issue that must be tackled by organizations. In their rush to
establish a presence on the Internet, most organizations have failed to build strong, distinctive online
brands. Questions such as if one branch of an organization develops a website, will it not confuse
customers of other branches of the company and how to differentiate local and global brands on the
Internet has to answered.
After addressing all issues related to electronically enabling the functional areas mentioned above, an
organization is ready to manage the execution of its overall e-business strategy.
Issues
1. Bring out the facts of the case.
2. Identify the various E-business initiatives.
3. What are the strategies an organization to focus in order to excel in the E-business.
4. Apart from the facts provided in the case, what other initiatives you can project keeping in mind the
success of an organization towards E-business.
Case : 4
A PROACTIVE APPROACH TO ENVIRONMENTAL
RESPONSIBILITY
INTRODUCTION
Dell is a premier provider of computer systems world-wide. Through its direct usiness model, Dell
designs, manufactures and customises products and services to customer requirements.
7. DELL IRELAND
Dell’s European manufacturing operation is located in Limerick with a European Business Centre
located at Cherrywood in Dublin. The company has been in Operation in Ireland since 1990, and
employs around 4,500 people. Dell is Ireland’s largest exporter, largest technology company and
second largest company overall.
Dell’s manufacturing facility operates a Just-in-Time manufacturing strategy. Dell’s suppliers deliver
the required materials at regular intervals during the day and load them onto the manufacturing line.
The final product is boxed and loaded directly onto transport trucks and shipped to supplier-owned
merge centres. There, the monitor and other requested peripherals are added before final shipment to
the customer.
SOCIAL RESPONSIBILITY TO STAKEHOLDERS
The need for a business to be responsible for its actions is widely accepted. Businesses do not exist in
isolation; they provide goods and services to people and make use of’ materials and labour supplied by
people. Businesses have responsibilities to stakeholders to ensure their actions do not cause harm.
CHARACTERISTICS OF AN ENVIRONMENTALLY RESPONSIBLE COMPANY
Dell is committed to a culture of environmental sustainability and responsibility. It continually reduces
its impact on the environment through product design, manufacturing, product ownership experience
and product end-of-life solutions.
The characteristics of an environmentally responsible company include:
• Awareness — of how the company’s policies can impact on stakeholders
• Sensitivity — to the requirements of local community and environment
• Honesty — about the actions of the company
• Consultation — with stakeholders prior to developing new policies or products
• Openness — transparency with stakeholders about company practices
Dell has developed a Code of Conduct, which correlates closely to the above characteristics. It allows
stakeholders to understand that they can believe what Dell says and trust what it does.
ENVIRONMENTAL AUDIT
Socially responsible companies conduct environmental audits to assess the impact of their businesses
on the environment. Dell complies with all the environmental laws and regulations, including ISO
14001 and OHSAS 18001, and manages its facilities with the environment in mind. Dell designs
products with up-to-date recyclable materials, using the Reduce, Reuse, Recycle initiative at ts
manufacturing site. It commits to taking back old computer parts for recycling.
Dell continually explores all kinds of recycling options to rind the stateof-the-art best practices for
recycling of its old IT equipment.
CORPORATE ENVIRONMENTAL GOALS
Dell has identified corporate environmental goals to work towards in the future. This environmental
policy provides a framework designed to ensure sustainable practices throughout the entire product
life cycle.
Dell’s vision is to create a company culture where environmental excellence is second nature. The
following environmental policy objectives have been established to achieve its mission.
PRODUCT CONCEPT & DESIGN
Dell designs products with a focus on:
• Safe operation
• Extending product life span
• Reducing energy consumption
• Avoiding environmentally sensitive materials
• Promoting dematerialisation
• Using parts that can be recycled
In 2000, Dell began a programme called ‘Design for the Environment’, which evaluates the
environmental performance of a product and the impact of its packaging, energy and materials.
Many Dell systems (and virtually all Dell monitors) comply with the U.S. Environmental Protection
Agency (EPA) Energy Star programme for energy efficient computers, which reduces air pollution.
The EPA estimates that offices can save 5O% of equipment electricity costs by taking advantage of
power management, where inactive computers go into “sleep mode”. This decrease in electricity usage
can reduce emissions of carbon dioxide, which causes the greenhouse effect, and sulphur dioxide and
nitrogen dioxide —, two primary causes of acid rain.
PREVENT WASTE & POLLUTION
Dell operates its facilities in a way that minimises harmful impacts on the environment. It also places a
high priority on reducing waste, recycling and reuse programmes and pollution prevention.
100% of all boxing material, cardboard boxes and protective foam are recycled or recovered through
Dell’s local recycling facilities.
8. In 2005, Dell developed a Forest Products Stewardship Model that established three main goals with
respect to paper products: protecting endangered forests, improving forest practices and reducing
demand on forests.
CONTINUALLY IMPROVE PERFORMANCE
Dell uses an Environmental Management System (EMS) to establish goals, implement programmes,
monitor technology and environmental management practices, evaluate progress, and continually
improve environmental performance. Dell also encourages a culture of environmental responsibility
among employees and management.
Dell-owned buildings are monitored and controlled by an automated building management system,
which monitors energy usage and controls temperature. By monitoring building occupancy, energy
consumption and cost per unit are reduced.
DEMONSTRATE RESPONSIBILITY TO STAKEHOLDERS
Dell acts in an environmentally responsible manner to ensure the health and safety of its employees,
neighbours and the environment.
COMPLIANCE WITH THE LAW
Dell conducts business with integrity and complies with environmental laws and regulations.
RECYCLING AND DONATING
As computers become more common in homes and businesses, there is a growing concern about the
environmental impact of old computers.
CONSUMER EQUIPMENT END-OF-LIFE STRATEGIES
As part of Dell’s policy that ‘No Computer Should Go to Waste’, Irish consumers can recycle used
computer systems, monitors or printers through the Dell website at no cost with a new purchase.
BUSINESS EQUIPMENT END-OF-LIFE STRATEGIES
In November 2004, Dell Ireland launched recycling services for business and consumer customers.
The new service is part of Dell’s global effort to increase product recovery by 50% in 2005.
Dell offers business customers Dell Asset Recovery Services (ARS), which allows customers to
recycle or re-sell used computer equipment of any brand.
Reuse is also a critical element of the product life cycle and Dell also supports donation as a
responsible means of disposing of computers.
RECYCLE
In November 2004, Dell hosted a free recycling event in Limerick to raise awareness among
consumers and small businesses of the importance of electronics recycling. More than 540 cars
dropped off 19.1 tonnes of old computer equipment for recycling. 630 computers, 825 monitors, 330
printers and other peripherals filled three 40-foot freight trucks.
At the event, Nicky Harterv, Vice President of Dell’s Manufacturing and Business Operations
commented “As an environmentally responsible company, offering a whole range of recycling services
to both the consumer and business customer, it is important that we help raise the awareness of the
importance of recycling to the environment and of the options available.”
DONATE
In January 2004, Dell was a partner in the Reuse Technology (RT) Centre, a scheme that facilitates the
reuse of computers by community and non-profit groups. Dell customers are encouraged through
Dell’s website to donate used systems to the RT Centre, who refurbish them, reload software and give
them to suitable non-profit organisations. This makes hundreds of used computers available to
communities that would not otherwise be able to afford them. Dell also contributes a percentage of its
own used computers to the RT Centre.
COMMUNICATING THE MESSAGE
In March 2005, Dell called on all Irish consumers to “Go Green” for St. Patrick’s Day, following
research which highlighted a lack of awareness among consumers of the computer recycle and reuse
options. The study found while 85% of the public recycle household waste at least once a month, only
9% plan to recycle their home computer.
Dell announced in June 2005 that Irish consumers are leading the way in the use of its computer
recycling services in the Europe, Middle East and Africa (EMEA) region. Irish online recycling and
computer donations accounted for over a quarter of Dell’s total EMEA numbers in the first quarter of
2005.
“Last year alone, Irish customers recycled over 22 tonnes of computer equipment through Dell. These
figures emphasise the importance of having these services available,” said Jean Cox-Kearns, Dell’s
Senior Manager for Asset Recovery Services.
COST-BENEFIT ANALYSIS
The costs to Dell of meeting its ethical and environmental responsibilities include:
• Resources for a take-back and recycling organisation.
• Promoting recycling and its benefits can incur costs (advertising, transportation, sorting etc.).
9. The benefits include:
• A well managed company that understands its impact on the communities in which it operates.
• Improved working conditions and higher motivation amongst employees.
• Meeting expectations of “green” customers.
• Positive publicity for the corporation.
In December 2004, Business Ethics magazine presented Dell with its Environmental Progress Award
for the company’s commitment to the environment and industry-leading computer recycling initiatives.
CONCLUSION
Dell’s success is based on its ability to meet and exceed the requirements of customers. The same
focus on business efficiencies and customer satisfaction helps Dell’s environmental programme to
conserve product energy consumption, reduce or eliminate materials for disposal, prolong product life
span and provide effective and convenient equipment recovery solutions. Dell’s philosophy is that “No
computer should go to waste” and key to meeting that goal is making customers aware that it provides
recycling services that are easy-to- use, safe and affordable.
ISSUES
(1) Why does Dell treat its stakeholders in a socially and ethically responsible manner?
(2) In your opinion, which of Dell’s strategies makes the most impact on the environment? Explain
your answer.
(3) Explain the importance of the “Energy Star” programme for consumers and businesses
E-COMMERCE MANAGEMENT
E-Commerce
Strategy, Technologies and Applications
CASE STUDY : 1
Mrs Geeta Kapoor is a middle aged lady, who is very fond of shopping. Uptill now she
always used the traditional methods of shopping. But one day her shopping activity can
stuck up due to unprecedented rains, that is when her neice brought up the idea of
internet shopping. Mrs Kapoor felt that while internet e-commerce might be a very
attractive facility to many customers, it does not solve all shopping problems for her.
Question :
1) What do you feel are the reasons for Mrs Kapoor above statement?
2) Explain the advantages and disadvantages of ordering the products online.
3) Use the Web site Evaluation Model and evaluate a couple of Web sites. Compare
the results of the two evaluations.
4) Compute an overall score to each of the sites along with reasons.
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CASE STUDY : 2
Mr Laxman Shastri is a master in the commerce field and over the period he has
acquired a lot of computer literacy as he feels that the definition of E-Commerce put
forward as “Electronic Commerce is commerce enabled by internet era technologies” is
very true.
But still a number or lot of concepts have to be understood along with the nature of the
internet.
Question :
1) Explain packet switching
2) How does packet switching differ from a switched network.
3) Draw a simple diagram of hardware, network and software facilities utilized when an
e-shop is accessed from a home PC.
4) List the facilities available on the web.
CASE STUDY : 3
The recent introduction of EDI into Leroy Merlin, one of the larger DIY retailers in the
French market. The French DIY sector is fragmented with a few medium size chains
and many independent operators. This contrast with the UK DIY sector which is
dominated by a few large operators all of which have operational EDI Systems. The use
of EDI by Leroy Merlin will no doubt be emulated by the other players of comparable
size but it seems likely to contribute to continue the rationalization that is taking place in
this sector in France.
Question :
1) For each stage of the business trade cycle, list the stage specific advantages and
10. disadvantages of using EDI.
2) What problems might be encountered in the above case with the implementation of
EDI?
3) EDI is typically applied to trade exchanges, orders, invoices etc but it can also be
used for non-trade purposes. Suggest how EDI might be used in this case?
4) Suggest any instances where a mature EDI supply chain can facilitate a change in the
nature of the product of service.
CASE STUDY : 4
Mr. Apte is retired manager from a multinational company. He worked in the Audit
department of the company. He has all his life done a great hard work. After the
system in the company became computerized he adapted himself to the computerized
environment. But still he does not feel comfortable with e-banking services and always
feels that the old system was only better.
Question :
1) Explain the reasons for Mr Apte holding the above views.
2) Explain what you mean by Internet banking?
3) What do you feel are the advantages and disadvantages of E-Banking?
4) How can the problems in Internet banking be resolved?
BUSINESS ENVIRONMENTAL
1. Discuss how the environment acts does as a stimulant to business. Analyse why business often does little for the
preservation of physical environment despite the fact that it is significant for business activity.
2. Explain the relevance of ecological issues to business environment
3. What do you understand by Business Social Responsibility ( B S R ). How this can be used to improve the Business
Environment.
4. Explain how the business in an organization can be regulated with regard to the Organization’s Basic Objectives.
5. Describe in detail the different role played by the Government towards enriching the business Environment.
6. In the Business Environment context, explain how the Political and legal Environment of business plays a vital role.
Justify by bringing in suitable examples.
7. Evaluate the advantages and disadvantages of FDI. What is your opinion on the role of FDI in the Retail Sector?
Justify your views with India's experience in this sector.
EVENT MANAGEMENT
EVENT MANAGEMENT (1st Set)
CASE STUDY : 1
A group of university students decided to hold a rock concert in the mountains in June
and advertised the concert on the Internet. Three bands attended the three-day concert,
and there was twenty-four hour music. One young girl described the entire situation as
living hell, although why she stayed is unfathomable. “The dance area was in a valley
and to get a drink of water you had to climb a sheep hill. Even then, the water was dirty
and brown. The restrooms were so far away that nobody bothered to use them. The
music pounded all night and the floor in the cabin we were in vibrated so you could not
sleep. My friend got sick and there was no medical help. The organizers did not have a
clue. They just wanted to make a fast buck.
Question :
1) What are some of the things that could go wrong, or have wrong at similar events?
2) List three ways in which the organizers were negligent?
3) List three ways in which the event could have been improved?
4) This event was described to the authorities as a cultural festival. Do you think it
belongs in that category?
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CASE STUDY : 2
You are going to rent a venue for a fashion show. The venue you have in mind is an old
theater that lends itself well to the event, with excellent sight lines for the audience.
However, the décor and lighting planned by your artistic director for your fashion
parade may compromise safety. Drapes over the ceiling area will obscure the normal
lighting and will prevent the fire sensors and sprinklers from working correctly. Also,
there are a number of props that may hinder access into and out of the venue. On the
other hand, the audience expected is quite small.
Question :
11. 1) What are the some of the Safety risk associated with this event?
2) Who is responsible for the safety of the venue and the audience?
3) With whom should you discuss the risks associated with your event concept?
4) How could the risks be reduced?
CASE STUDY : 3
Sponsorship is one of the most common funding sources for staging an event. In some
cases, the sponsor is happy to provide cash to support the event in exchange for
increased profile and sales of the sponsor’s products. In other cases sponsor provides
‘Value in kind’ that is the sponsor will provide free goods and services, again with the
expectation that this arrangement will have a bottom-line benefit. For example, a
newspaper sponsor may provide free advertising space. Some sponsors use an event to
promote a new product, and in this case, the whole event is aimed at developing
customer awareness and loyalty.
Question :
1) Can the sponsor’s involvement lead to some benefit for the organization in terms of
increased profile or increased sales?
2) What other benefits are there?
3) Will it be time-consuming for their staff?
4) Define the term sponsorship in brief.
CASE STUDY : 4
The 2008 exhibition of Designer Jewellery Artists of the South Pacific is being held in
the foyer of a large Honolulu, Hawaii hotel. The governer will open the exhibition, and
a number of dignitaries from Tahiti, Guam, Tonga, and Samoa will be in attendance.
These will be some security risks associated with the visiting guests, as well as with the
items on display. Threats and Protests could also disrupt the opening.
Question :
1) Who will be responsible for security (probably more than one body)?
2) What are some of the potential security problems?
3) What are the occupational health and safety issue?
4) What steps can be taken to prevent a security incident?
5) What plans should be in place should an incident occur?
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Financial Management
Q-1) What are the techniques of Capital Budgeting? Explain in brief.
Q-2) What are the approaches (models) of Dividend Policy.
Q-3) Write a note on Stock Markets in India.
Q-4) Explain Inventory Management, which is a part of Working Capital Management.
Q-5) What are the techniques of analyzing financial statements.
Q-6) Explain the concept of budget. Describe any 5 types of budgets.
Q-7) What do you mean by leverages. Explain all three types of leverages.
Q-8) Explain the concept of break even analysis.
FINANCE MANAGEMENT
a) What is meant by financing decisions? Mention two limitations of accounting rate of return.
b) Explain Financial Risk.
c) Mention the utility of public deposits as a source of fund.
D) Explain operating Lease.
e) Discuss the relation between debt financing and financial leverage.
F) What is a letter of credit
g) Differentiate between Bonus issue and stock split.
H) Define the term 'take over.'
i) What is Capital Asset pricing model?
13. j) How cost of preference share capital is calculated?
K) What is dividend pay-out Ratio?
l) Explain the concept of Capital Rationing.
m) Mention two advantages of Lease financing.
n) Define Economic Value added in relation to shareholder's value criteria.
Financial Management
ZIP ZAP ZOOM CAR COMPANY
Zip Zap Zoom Company Ltd is into manufacturing cars in the small car (800 cc) segment. It was set
up 15 years back and since its establishment it has seen a phenomenal growth in both its market and
profitability. Its financial statements are shown in Exhibits 1 and 2 respectively.
The company enjoys the confidence of its shareholders who have been rewarded with
growing dividends year after year. Last year, the company had announced 20 per cent dividend,
which was the highest in the automobile sector. The company has never defaulted on its loan
payments and enjoys a favourable face with its lenders, which include financial institutions,
commercial banks and debenture holders.
The competition in the car industry has increased in the past few years and the company
foresees further intensification of competition with the entry of several foreign car manufactures
many of them being market leaders in their respective countries. The small car segment especially,
will witness entry of foreign majors in the near future, with latest technology being offered to the
Indian customer. The Zip Zap Zoom’s senior management realizes the need for large scale
investment in up gradation of technology and improvement of manufacturing facilities to pre-empt
competition.
Whereas on the one hand, the competition in the car industry has been intensifying, on the
other hand, there has been a slowdown in the Indian economy, which has not only reduced the
demand for cars, but has also led to adoption of price cutting strategies by various car manufactures.
The industry indicators predict that the economy is gradually slipping into recession.
Exhibit 1 Balance sheet as at March 31,200 x
(Amount in Rs. Crore)
Source of Funds
Share capital 350
Reserves and surplus 250 600
Loans :
Debentures (@ 14%) 50
Institutional borrowing (@ 10%) 100
Commercial loans (@ 12%) 250
Total debt 400
Current liabilities 200
1,200
Application of Funds
Fixed Assets
Gross block 1,000
Less : Depreciation 250
Net block 750
Capital WIP 190
Total Fixed Assets 940
Current assets :
Inventory 200
Sundry debtors 40
Cash and bank balance 10
Other current assets 10
Total current assets 260
-1200
Exhibit 2 Profit and Loss Account for the year ended March 31, 200x
(Amount in Rs. Crore)
Sales revenue (80,000 units x Rs. 2,50,000) 2,000.0
Operating expenditure :
Variable cost :
Raw material and manufacturing expenses 1,300.0
Variable overheads 100.0
14. Total 1,400.0
Fixed cost :
R & D 20.0
Marketing and advertising 25.0
Depreciation 250.0
Personnel 70.0
Total 365.0
Total operating expenditure 1,765.0
Operating profits (EBIT) 235.0
Financial expense :
Interest on debentures 7.7
Interest on institutional borrowings 11.0
Interest on commercial loan 33.0 51.7
Earnings before tax (EBT) 183.3
Tax (@ 35%) 64.2
Earnings after tax (EAT) 119.1
Dividends 70.0
Debt redemption (sinking fund obligation)** 40.0
Contribution to reserves and surplus 9.1
* Includes the cost of inventory and work in process (W.P) which is dependent on demand
(sales).
** The loans have to be retired in the next ten years and the firm redeems Rs. 40 crore every
year.
The company is faced with the problem of deciding how much to invest in up
gradation of its plans and technology. Capital investment up to a maximum of Rs. 100
crore is required. The problem areas are three-fold.
The company cannot forgo the capital investment as that could lead to reduction in its market
share as technological competence in this industry is a must and customers would shift to
manufactures providing latest in car technology.
The company does not want to issue new equity shares and its retained earning are not enough
for such a large investment. Thus, the only option is raising debt.
The company wants to limit its additional debt to a level that it can service without taking
undue risks. With the looming recession and uncertain market conditions, the company
perceives that additional fixed obligations could become a cause of financial distress, and
thus, wants to determine its additional debt capacity to meet the investment requirements.
Mr. Shortsighted, the company’s Finance Manager, is given the task of determining the additional
debt that the firm can raise. He thinks that the firm can raise Rs. 100 crore worth debt and service it
even in years of recession. The company can raise debt at 15 per cent from a financial institution.
While working out the debt capacity. Mr. Shortsighted takes the following assumptions for the
recession years.
a) A maximum of 10 percent reduction in sales volume will take place.
b) A maximum of 6 percent reduction in sales price of cars will take place.
Mr. Shorsighted prepares a projected income statement which is representative of the recession
years. While doing so, he determines what he thinks are the “irreducible minimum” expenditures
under recessionary conditions. For him, risk of insolvency is the main concern while designing the
capital structure. To support his view, he presents the income statement as shown in Exhibit 3.
Exhibit 3 projected Profit and Loss account
(Amount in Rs. Crore)
Sales revenue (72,000 units x Rs. 2,35,000) 1,692.0
Operating expenditure
Variable cost :
Raw material and manufacturing expenses 1,170.0
Variable overheads 90.0
Total 1,260.0
Fixed cost :
R & D ---
Marketing and advertising 15.0
Depreciation 187.5
Personnel 70.0
Total 272.5
15. Total operating expenditure 1,532.5
EBIT 159.5
Financial expenses :
Interest on existing Debentures 7.0
Interest on existing institutional borrowings 10.0
Interest on commercial loan 30.0
Interest on additional debt 15.0 62.0
EBT 97.5
Tax (@ 35%) 34.1
EAT 63.4
Dividends --
Debt redemption (sinking fund obligation) 50.0*
Contribution to reserves and surplus 13.4
* Rs. 40 crore (existing debt) + Rs. 10 crore (additional debt)
Assumptions of Mr. Shorsighted
R & D expenditure can be done away with till the economy picks up.
Marketing and advertising expenditure can be reduced by 40 per cent.
Keeping in mind the investor confidence that the company enjoys, he feels that the company
can forgo paying dividends in the recession period.
He goes with his worked out statement to the Director Finance, Mr. Arthashatra, and advocates
raising Rs. 100 crore of debt to finance the intended capital investment. Mr. Arthashatra does not
feel comfortable with the statements and calls for the company’s financial analyst, Mr. Longsighted.
Mr. Longsighted carefully analyses Mr. Shortsighted’s assumptions and points out that
insolvency should not be the sole criterion while determining the debt capacity of the firm. He points
out the following :
Apart from debt servicing, there are certain expenditures like those on R & D and marketing
that need to be continued to ensure the long-term health of the firm.
Certain management policies like those relating to dividend payout, send out important
signals to the investors. The Zip Zap Zoom’s management has been paying regular dividends
and discontinuing this practice (even though just for the recession phase) could raise serious
doubts in the investor’s mind about the health of the firm. The firm should pay at least 10 per
cent dividend in the recession years.
Mr. Shortsighted has used the accounting profits to determine the amount available each year
for servicing the debt obligations. This does not give the true picture. Net cash inflows
should be used to determine the amount available for servicing the debt.
Net Cash inflows are determined by an interplay of many variables and such a simplistic view
should not be taken while determining the cash flows in recession. It is not possible to
accurately predict the fall in any of the factors such as sales volume, sales price, marketing
expenditure and so on. Probability distribution of variation of each of the factors that affect
net cash inflow should be analyzed. From this analysis, the probability distribution of
variation in net cash inflow should be analysed (the net cash inflows follow a normal
probability distribution). This will give a true picture of how the company’s cash flows will
behave in recession conditions.
The management recognizes that the alternative suggested by Mr. Longsighted rests on data,
which are complex and require expenditure of time and effort to obtain and interpret. Considering
the importance of capital structure design, the Finance Director asks Mr. Longsighted to carry out his
analysis. Information on the behaviour of cash flows during the recession periods is taken into
account.
The methodology undertaken is as follows :
(a) Important factors that affect cash flows (especially contraction of cash flows), like sales
volume, sales price, raw materials expenditure, and so on, are identified and the analysis is
carried out in terms of cash receipts and cash expenditures.
(b) Each factor’s behaviour (variation behaviour) in adverse conditions in the past is studied and
future expectations are combined with past data, to describe limits (maximum favourable),
most probable and maximum adverse) for all the factors.
(c) Once this information is generated for all the factors affecting the cash flows, Mr.
Longsighted comes up with a range of estimates of the cash flow in future recession periods
16. based on all possible combinations of the several factors. He also estimates the probability of
occurrence of each estimate of cash flow.
Assuming a normal distribution of the expected behaviour, the mean expected
value of net cash inflow in adverse conditions came out to be Rs. 220.27 crore with standard
deviation of Rs. 110 crore.
Keeping in mind the looming recession and the uncertainty of the recession behaviour, Mr.
Arthashastra feels that the firm should factor a risk of cash inadequacy of around 5 per cent even in
the most adverse industry conditions. Thus, the firm should take up only that amount of additional
debt that it can service 95 per cent of the times, while maintaining cash adequacy.
To maintain an annual dividend of 10 per cent, an additional Rs. 35 crore has to be kept aside.
Hence, the expected available net cash inflow is Rs. 185.27 crore (i.e. Rs. 220.27 – Rs. 35 crore)
Analyse the debt capacity of the company.
NO. 2
COOKING LPG LTD
DETERMINATION OF WORKING CAPTIAL
Introduction
Cooking LPG Ltd, Gurgaon, is a private sector firm dealing in the bottling and supply of domestic
LPG for household consumption since 1995. The firm has a network of distributors in the districts of
Gurgaon and Faridabad. The bottling plant of the firm is located on National Highway – 8 (New
Delhi – Jaipur), approx. 12 kms from Gurgaon. The firm has been consistently performing we.” and
plans to expand its market to include the whole National Capital Region.
The production process of the plant consists of receipt of the bulk LPG through tank trucks,
storage in tanks, bottling operations and distribution to dealers. During the bottling process, the
cylinders are subjected to pressurized filling of LPG followed by quality control and safety checks
such as weight, leakage and other defects. The cylinders passing through this process are sealed and
dispatched to dealers through trucks. The supply and distribution section of the plant prepares the
invoice which goes along with the truck to the distributor.
Statement of the Problem :
Mr. I. M. Smart, DGM(Finance) of the company, was analyzing the financial performance of the
company during the current year. The various profitability ratios and parameters of the company
indicated a very satisfactory performance. Still, Mr. Smart was not fully content-specially with the
management of the working capital by the company. He could recall that during the past year, in
spite of stable demand pattern, they had to, time and again, resort to bank overdrafts due to nonavailability
of cash for making various payments. He is aware that such aberrations in the finances
have a cost and adversely affects the performance of the company. However, he was unable to
pinpoint the cause of the problem.
He discussed the problem with Mr. U.R. Keenkumar, the new manager (Finance). After
critically examining the details, Mr. Keenkumar realized that the working capital was hitherto
estimated only as approximation by some rule of thumb without any proper computation based on
sound financial policies and, therefore, suggested a reworking of the working capital (WC)
requirement. Mr. Smart assigned the task of determination of WC to him.
Profile of Cooking LPG Ltd.
1) Purchases : The company purchases LPG in bulk from various importers ex-Mumbai and
Kandla, @ Rs. 11,000 per MT. This is transported to its Bottling Plant at Gurgaon through 15
MT capacity tank trucks (called bullets), hired on annual contract basis. The average
transportation cost per bullet ex-either location is Rs. 30,000. Normally, 2 bullets per day are
received at the plant. The company make payments for bulk supplies once in a month,
resulting in average time-lag of 15 days.
2) Storage and Bottling : The bulk storage capacity at the plant is 150 MT (2 x 75 MT storage
tanks) and the plant is capable of filling 30 MT LPG in cylinders per day. The plant operates
for 25 days per month on an average. The desired level of inventory at various stages is as
under.
LPG in bulk (tanks and pipeline quantity in the plant) – three days average production / sales.
Filled Cylinders – 2 days average sales.
Work-in Process inventory – zero.
3) Marketing : The LPG is supplied by the company in 12 kg cylinders, invoiced @ Rs. 250 per
cylinder. The rate of applicable sales tax on the invoice is 4 per cent. A commission of Rs.
15 per cylinder is paid to the distributor on the invoice itself. The filled cylinders are
delivered on company’s expense at the distributor’s godown, in exchange of equal number of
empty cylinders. The deliveries are made in truck-loads only, the capacity of each truck being
17. 250 cylinders. The distributors are required to pay for deliveries through bank draft. On
receipt of the draft, the cylinders are normally dispatched on the same day. However, for
every truck purchased on pre-paid basis, the company extends a credit of 7 days to the
distributors on one truck-load.
4) Salaries and Wages : The following payments are made :
Direct labour – Re. 0.75 per cylinder (Bottling expenses) – paid on last day of the month.
Security agency – Rs. 30,000 per month paid on 10th of subsequent month.
Administrative staff and managers – Rs. 3.75 lakh per annum, paid on monthly basis on the
last working day.
5) Overheads :
Administrative (staff, car, communication etc) – Rs. 25,000 per month – paid on the 10th of
subsequent month.
Power (including on DG set) – Rs. 1,00,000 per month paid on the 7th Subsequent month.
Renewal of various licenses (pollution, factory, labour CCE etc.) – Rs. 15,000 per annum paid
at the beginning of the year.
Insurance – Rs. 5,00,000 per annum to be paid at the beginning of the year.
Housekeeping etc – Rs. 10,000 per month paid on the 10th of the subsequent month.
Regular maintenance of plant – Rs. 50,000 per month paid on the 10th of every month to the
vendors. This includes expenditure on account of lubricants, spares and other stores.
Regular maintenance of cylinders (statutory testing) – Rs. 5 lakh per annum – paid on
monthly basis on the 15th of the subsequent month.
All transportation charges as per contracts – paid on the 10th subsequent month.
Sales tax as per applicable rates is deposited on the 7th of the subsequent month.
6) Sales : Average sales are 2,500 cylinders per day during the year. However, during the winter
months (December to February), there is an incremental demand of 20 per cent.
7) Average Inventories : The average stocks maintained by the company as per its policy guidelines
:
Consumables (caps, ceiling material, valves etc) – Rs. 2 lakh. This amounts to 15 days
consumption.
Maintenance spares – Rs. 1 lakh
Lubricants – Rs. 20,000
Diesel (for DG sets and fire engines) – Rs. 15,000
Other stores (stationary, safety items) – Rs. 20,000
8) Minimum cash balance including bank balance required is Rs. 5 lakh.
9) Additional Information for Calculating Incremental Working Capital During Winter.
No increase in any inventories take place except in the inventory of bulk LPG, which
increases in the same proportion as the increase of the demand. The actual requirements of
LPG for additional supplies are procured under the same terms and conditions from the
suppliers.
The labour cost for additional production is paid at double the rate during wintes.
__________No changes in other administrative overheads.
The expenditure on power consumption during winter increased by 10 per cent. However,
during other months the power consumption remains the same as the decrease owing to
reduced production is offset by increased consumption on account of compressors /Acs.
Additional amount of Rs. 3 lakh is kept as cash balance to meet exigencies during winter.
No change in time schedules for any payables / receivables.
The storage of finished goods inventory is restricted to a maximum 5,000 cylinders due to
statutory requirements.
NO. 3
18. M/S HI-TECH ELECTRONICS
M/s. Hi – tech Electronics, a consumer electronics outlet, was opened two years ago in Dwarka, New
Delhi. Hard work and personal attention shown by the proprietor, Mr. Sony, has brought success.
However, because of insufficient funds to finance credit sales, the outlet accepted only cash and bank
credit cards. Mr. Sony is now considering a new policy of offering installment sales on terms of 25
per cent down payment and 25 per cent per month for three months as well as continuing to accept
cash and bank credit cards.
Mr. Sony feels this policy will boost sales by 50 percent. All the increases in sales will be
credit sales. But to follow through a new policy, he will need a bank loan at the rate of 12 percent.
The sales projections for this year without the new policy are given in Exhibit 1.
Exhibit 1 Sales Projections and Fixed costs
Month Projected sales without instalment
option
Projected sales with instalment
option
January Rs. 6,00,000 Rs. 9,00,000
February 4,00,000 6,00,000
March 3,00,000 4,50,000
April 2,00,000 3,00,000
May 2,00,000 3,00,000
June 1,50,000 2,25,000
July 1,50,000 2,25,000
August 2,00,000 3,00,000
September 3,00,000 4,50,000
October 5,00,000 7,50,000
November 5,00,000 15,00,000
December 8,00,000 12,00,000
Total Sales 43,00,000 72,00,000
Fixed cost 2,40,000 2,40,000
He further expects 26.67 per cent of the sales to be cash, 40 per cent bank credit card sales on which a
2 per cent fee is paid, and 33.33 per cent on installment sales. Also, for short term seasonal
requirements, the film takes loan from chit fund to which Mr. Sony subscribes @ 1.8 per cent per
month.
Their success has been due to their policy of selling at discount price. The purchase per unit
is 90 per cent of selling price. The fixed costs are Rs. 20,000 per month. The proprietor believes that
the new policy will increase miscellaneous cost by Rs. 25,000.
The business being cyclical in nature, the working capital finance is done on trade – off basis.
The proprietor feels that the new policy will lead to bad debts of 1 per cent.
(a) As a financial consultant, advise the proprietor whether he should go for the extension of
credit facilities.
(b) Also prepare cash budget for one year of operation of the firm, ignoring interest. The
minimum desired cash balance & Rs. 30,000, which is also the amount the firm, has on
January 1. Borrowings are possible which are made at the beginning of a month and repaid at
the end when cash is available.
NO.4
SMOOTHDRIVE TYRE LTD
Smoothdrive Tyre Ltd manufacturers tyres under the brand name “Super Tread’ for the domestic car
market. It is presently using 7 machines acquired 3 years ago at a cost of Rs. 15 lakh each having a
useful life of 7 years, with no salvage value.
After extensive research and development, Smoothdrive Tyre Ltd has recently developed a
new tyre, the ‘Hyper Tread’ and must decide whether to make the investments necessary to produce
and market the Hyper Tread. The Hyper Tread would be ideal for drivers doing a large amount of
wet weather and off road driving in addition to normal highway usage. The research and
development costs so far total Rs. 1,00,00,000. The Hyper Tread would be put on the market
beginning this year and Smoothdrive Tyrs expects it to stay on the market for a total of three years.
Test marketing costing Rs. 50,00,000, shows that there is significant market for a Hyper Tread type
tyre.
As a financial analyst at Smoothdrive Tyre, Mr. Mani asked by the Chief Financial Officer
(CFO), Mr. Tyrewala to evaluate the Hyper-Tread project and to provide a recommendation or
whether or not to proceed with the investment. He has been informed that all previous investments in
the Hyper Tread project are sunk costs are only future cash flows should be considered. Except for
19. the initial investments, which occur immediately, assume all cash flows occur at the year-end.
Smoothedrive Tyre must initially invest Rs. 72,00,00,000 in production equipments to make
the Hyper Tread. They would be depreciated at a rate of 25 per cent as per the written down value
(WDV) method for tax purposes. The new production equipments will allow the company to follow
flexible manufacturing technique, that is both the brands of tyres can be produced using the same
equipments. The equipments is expected to have a 7-year useful life and can be sold for Rs.
10,00,000 during the fourth year. The company does not have any other machines in the block of 25
per cent depreciation. The existing machines can be sold off at Rs. 8 lakh per machine with an
estimated removal cost of one machine for Rs. 50,000.
Operating Requirements
The operating requirements of the existing machines and the new equipment are detailed in Exhibits
11.1 and 11.2 respectively.
Exhibit 11.1 Existing Machines
Labour costs (expected to increase 10 per cent annually to account for inflation) :
(a) 20 unskilled labour @ Rs. 4,000 per month
(b) 20 skilled personnel @ Rs. 6,000 per month.
(c) 2 supervising executives @ Rs. 7,000 per month.
(d) 2 maintenance personnel @ Rs. 5,000 per month.
Maintenance cost :
Years 1-5 : Rs. 25 lakh
Years 6-7 : Rs. 65 lakh
Operating expenses : Rs. 50 lakh expected to increase at 5 per cent annually.
Insurance cost / premium :
Year 1 : 2 per cent of the original cost of machine
After year 1 : Discounted by 10 per cent.
Exhibit 11.2 New production Equipment
Savings in cost of utilities : Rs. 2.5 lakh
Maintenance costs :
Year 1 – 2 : Rs. 8 lakh
Year 3 – 4 : Rs. 30 lakh
Labour costs :
9 skilled personnel @ Rs. 7,000 per month
1 maintenance personnel @ Rs. 7,000 per month.
Cost of retrenchment of 34 personnel : (20 unskilled, 11 skilled, 2 supervisors and 1
maintenance personnel) : Rs. 9,90,000, that is equivalent to six months salary.
Insurance premium
Year 1 : 2 per cent of the purchase cost of machine
After year 1 : Discounted by 10 per cent.
The opening expenses do not change to any considerable extent for the new equipment and the
difference is negligible compared to the scale of operations.
Smoothdrive Tyre intends to sell Hyper Tread of two distinct markets :
1. The original equipment manufacturer (OEM) market : The OEM market consists primarily of
the large automobile companies who buy tyres for new cars. In the OEM market, the Hyper
Tread is expected to sell for Rs. 1,200 per tyre. The variable cost to produce each Hyper
Tread is Rs. 600.
2. The replacement market : The replacement market consists of all tyres purchased after the
automobile has left the factory. This markets allows higher margins and Smoothdrive Tyre
expects to sell the Hyper Tread for Rs. 1.500 per tyre. The variable costs are the same as in
the OEM market.
Smoothdrive Tyre expects to raise prices by 1 percent above the inflation rate.
The variable costs will also increase by 1 per cent above the inflation rate. In addition, the Hyper
Tread project will incur Rs. 2,50,000 in marketing and general administration cost in the first year
which are expected to increase at the inflation rate in subsequent years.
Smoothdrive Tyre’s corporate tax rate is 35 per cent. Annual inflation is expected to remain
constant at 3.25 per cent. Smoothdrive Tyre uses a 15 per cent discount rate to evaluate new product
decisions.
20. The Tyre Market
Automotive industry analysts expect automobile manufacturers to have a production of 4,00,000 new
cars this year and growth in production at 2.5 per year onwards. Each new car needs four new tyres
(the spare tyres are undersized and fall in a different category) Smoothdrive Tyre expects the Hyper
Tread to capture an 11 per cent share of the OEM market.
The industry analysts estimate that the replacement tyre market size will be one crore this year
and that it would grow at 2 per cent annually. Smoothdrive Tyre expects the Hyper Tread to capture
an 8 per cent market share.
You also decide to consider net working capital (NWC) requirements in this scenario. The
net working capital requirement will be 15 per cent of sales. Assume that the level of working capital
is adjusted at the beginning of the year in relation to the expected sales for the year. The working
capital is to be liquidated at par, barring an estimated loss of Rs. 1.5 crore on account of bad debt.
The bad debt will be a tax-deductible expenses.
As a finance analyst, prepare a report for submission to the CFO and the Board of Directors,
explaining to them the feasibility of the new investment.
No. 5
COMPUTATION OF COST OF CAPITAL OF PALCO LTD
In October 2003, Neha Kapoor, a recent MBA graduate and newly appointed assistant to the
Financial Controller of Palco Ltd, was given a list of six new investment projects proposed for the
following year. It was her job to analyse these projects and to present her findings before the Board
of Directors at its annual meeting to be held in 10 days. The new project would require an
investment of Rs. 2.4 crore.
Palco Ltd was founded in 1965 by Late Shri A. V. Sinha. It gained recognition as a leading
producer of high quality aluminum, with the majority of its sales being made to Japan. During the
rapid economic expansion of Japan in the 1970s, demand for aluminum boomed, and palco’s sales
grew rapidly. As a result of this rapid growth and recognition of new opportunities in the energy
market, Palco began to diversify its products line. While retaining its emphasis on aluminum
production, it expanded operations to include uranium mining and the production of electric
generators, and finally, it went into all phases of energy production. By 2003, Palco’s sales had
reached Rs. 14 crore level, with net profit after taxes attaining a record of Rs. 67 lakh.
As Palco expanded its products line in the early 1990s, it also formalized its caital budgeting
procedure. Until 1992, capital investment projects were selected primarily on the basis of the average
return on investment calculations, with individual departments submitting these calculations for
projects falling within their division. In 1996, this procedure was replaced by one using present value
as the decision making criterion. This change was made to incorporate cash flows rather than
accounting profits into the decision making analysis, in addition to adjusting these flows for the time
value of money. At the time, the cost of capital for Palco was determined to be 12 per cent, which
has been used as the discount rate for the past 5 years. This rate was determined by taking a weighted
average cost Palco had incurred in raising funds from the capital market over the previous 10 years.
It had originally been Neha’s assignment to update this rate over the most recent 10-year
period and determine the net present value of all the proposed investment opportunities using this
newly calculated figure. However, she objected to this procedure, stating that while this calculation
gave a good estimate of “the past cost” of capital, changing interest rates and stock prices made this
calculation of little value in the present. Neha suggested that current cost of raising funds in the
capital market be weighted by their percentage mark-up of the capital structure. This proposal was
received enthusiastically by the Financial Controller of the Palco, and Neha was given the assignment
of recalculating Palco’s cost of capital and providing a written report for the Board of Directors
explaining and justifying this calculation.
To determine a weighted average cost of capital for Palco, it was necessary for Neha to
examine the cost associated with each source of funding used. In the past, the largest sources of
funding had been the issuance of new equity shares and internally generated funds. Through
conversations with Financial Controller and other members of the Board of Directors, Neha learnt
that the firm, in fact, wished to maintain its current financial structure as shown in Exhibit 1.
Exhibit 1 Palco Ltd Balance Sheet for Year Ending March 31, 2003
Assets Liabilities and Equity
Cash
Accounts receivable
Inventories
Total current assets
Net fixed assets
Goodwill
21. Total assets
Rs. 90,00,000
3,10,00,000
1,20,00,000
5,20,00,000
19,30,00,000
70,00,000
25,20,00,000
Accounts payable
Short-term debt
Accrued taxes
Total current liabilities
Long-term debt
Preference shares
Retained earnings
Equity shares
Total liabilities and
equity shareholders
fund
Rs. 8,50,000
1,00,000
11,50,000
1,20,00,000
7,20,00,000
4,80,00,000
1,00,00,000
11,00,000
25,20,00,000
She further determined that the strong growth patterns that Palco had exhibited over the last ten years
were expected to continue indefinitely because of the dwindling supply of US and Japanese domestic
oil and the growing importance of other alternative energy resources. Through further investigations,
Neha learnt that Palco could issue additional equity share, which had a par value of Rs. 25 pre share
and were selling at a current market price of Rs. 45. The expected dividend for the next period would
be Rs. 4.4 per share, with expected growth at a rate of 8 percent per year for the foreseeable future.
The flotation cost is expected to be on an average Rs. 2 per share.
Preference shares at 11 per cent with 10 years maturity could also be issued with the help of
an investment banker with an investment banker with a per value of Rs. 100 per share to be redeemed
at par. This issue would involve flotation cost of 5 per cent.
Finally, Neha learnt that it would be possible for Palco to raise an additional Rs. 20 lakh
through a 7 – year loan from Punjab National Bank at 12 per cent. Any amount raised over Rs. 20
lakh would cost 14 per cent. Short-term debt has always been usesd by Palco to meet working capital
requirements and as Palco grows, it is expected to maintain its proportion in the capital structure to
support capital expansion. Also, Rs. 60 lakh could be raised through a bond issue with 10 years
maturity with a 11 percent coupon at the face value. If it becomes necessary to raise more funds via
long-term debt, Rs. 30 lakh more could be accumulated through the issuance of additional 10-year
bonds sold at the face value, with the coupon rate raised to 12 per cent, while any additional funds
raised via long-term debt would necessarily have a 10 – year maturity with a 14 per cent coupon
yield. The flotation cost of issue is expected to be 5 per cent. The issue price of bond would be Rs.
100 to be redeemed at par.
In the past, Palco had calculated a weighted average of these sources of funds to determine its
cost of capital. In discussion with the current Financial Controller, the point was raised that while
this served as an appropriate calculation for external funds, it did not take into account the cost of
internally generated funds. The Financial Controller agreed that there should be some cost associated
with retained earnings and need to be incorporated in the calculations but didn’t have any clue as to
what should be the cost.
Palco Ltd is subjected to the corporate tax rate of 40 per cent.
From the facts outlined above, what report would Neha submit to the Board of Directors of
palco Ltd?
NO. 6
ARQ LTD
ARQ Ltd is an Indian company based in Greater Noida, which manufactures packaging materials for
22. food items. The company maintains a present fleet of five fiat cars and two Contessa Classic cars for
its chairman, general manager and five senior managers. The book value of the seven cars is Rs.
20,00,000 and their market value is estimated at Rs. 15,00,000. All the cars fall under the same block
of depreciation @ 25 per cent.
A German multinational company (MNC) BYR Ltd, has acquired ARQ Ltd in all cash deal.
The merged company called BYR India Ltd is proposing to expand the manufacturing capacity by
four folds and the organization structure is reorganized from top to bottom. The German MNC has
the policy of providing transport facility to all senior executives (22) of the company because the
manufacturing plant at Greater Noida was more than 10 kms outside Delhi where most of the
executives were staying.
Prices of the cars to be provided to the Executives have been as follows :
Manager (10) Santro King Rs. 3,75,000
DGM and GM (5) Honda City 6,75,000
Director (5) Toyota Corolla 9,25,000
Managing Director (1) Sonata Gold 13,50,000
Chairman (1) Mercedes benz 23,50,000
The company is evaluating two options for providing these cars to executives
Option 1 : The company will buy the cars and pay the executives fuel expenses, maintenance
expenses, driver allowance and insurance (at the year – end). In such case, the ownership of the car
will lie with the company. The details of the proposed allowances and expenditures to be paid are as
follows :
a) Fuel expense and maintenance Allowances per month
Particulars Fuel expenses Maintenance allowance
Manager
DGM and GM
Director
Managing Director
Chairman
Rs. 2,500
5,000
7,500
12,000
18,000
Rs. 1,000
1,200
1,800
3,000
4,000
b) Driver Allowance: Rs. 4,000 per month (Only Chairman, Managing Director and Directors
are eligible for driver allowance.)
c) Insurance cost: 1 per cent of the cost of the car.
The useful life for the cars is assumed to be five years after which they can be sold at 20 per
cent salvage value. All the cars fall under the same block of depreciation @ 25 per cent using written
down method of depreciation. The company will have to borrow to finance the purchase from a bank
with interest at 14 per cent repayable in five annual equal instalments payable at the end of the year.
Option 2 : ORIX, The fleet management company has offered the 22 cars of the same make at lease
for the period of five years. The monthly lease rentals for the cars are as follows (assuming that the
total of monthly lease rentals for the whole year are paid at the end of each year.
Santro Xing Rs. 9,125
Honda City 16,325
Toyota Corolla 27,175
Sonata Gold 39,250
Mercedes Benz 61,250
Under this lease agreement the leasing company, ORIX will pay for the fuel, maintenance and
driver expenses for all the cars. The lessor will claim the depreciation on the cars and the lessee will
claim the lease rentals against the taxable income. BYR India Ltd will have to hire fulltime
supervisor (at monthly salary of Rs. 15,000 per month) to manage the fleet of cars hired on lease.
The company will have to bear additional miscellaneous expense of Rs. 5,000 per month for
providing him the PC, mobioe phone and so on.
The company’s effective tax rate is 40 per cent and its cost of capital is 15 per cent.
Analyse the financial viability of the two options. Which option would you recommend? Why?
23. FINANCIAL MANAGEMENT
(A). (1).Mr. Nimish holds the following portfolio. (10 marks)
Share Beta Investment
Alpha 0.9 Rs.12, 00,000
Beta 1.5 Rs. 3, 50,000
Carrot 1.0 Rs. 1, 00,000
What is the expected rate of return on his portfolio, if the risk rate is 7 per cent and the
expected return on the market portfolio is 16 per cent?
(A). (2). A share is selling for Rs.60 on which a dividend of Rs.4 per share is expected at the end
of the year. The expected market price after dividend declaration is to be Rs.70. Compute the
following: - (10 marks)
(i) The return on investment ® in shares.
(ii) Dividend yield
(iii) Capital Gain Yield
(B) DIC Ltd. provides the following data: (20 marks)
Comparative trial balance
March 31 year 2 March 31 year 1 Increase(Decrease)
Debit Balance 20 10 10
Cash Rs.190 Rs. 90 Rs.100
Working capital (other than cash) 100 200 (100)
Investment (Long term) 500 400 100
Building and equipment 40 50 (10)
Total 850 750 100
Credit
Accumulated Depreciation 200 160 40
Bonds 150 100 50
Reserves 350 350 ---
Equity Shares 150 140 10
3
Total 850 750 100
Income Statement
For the period ending March 31, year 2
(Amount in Rs lakh)
Sales Rs.1000
Cost of Goods Sold 500
Selling Expense Rs.50
Administrative Expenses 50 100
Operating Income 400
Other charges
Gain on sale of building and equipment Rs 5
Loss on sale of investments (10)
Interest (6)
Taxes (189) (200)
Net Income after taxes 200
Notes: (a) The depreciation charged for the year was Rs.60 Lakh
(b) The Book value of the building and equipment disposed was Rs 10 Lakh
(c)
Prepare a Cash Flow Statement (Based on AS-3)
(C). (1). A. Ltd. produces a product which has a monthly demand of 4,000 units. The product
requires a component X which is purchased at Rs.20. For every finished product one unit of
component is required. The ordering cost is Rs.120 per order and the holding cost is 10 per
cent per annum. (10 marks)
You are required to calculate:
(i) Economic order quantity
(ii) If the minimum lot size to be supplied is 4, 000 units, what is the extra cost, the
company has to incur?
(iii) What is the minimum carrying cost, the company has to incur?
4
(C). (2). 4. Master Tools Ltd. Is currently operating its business at 75% level, producing 38275 units of
a tools component and proposes to increase capacity utilization in the coming year by 33 1/3 % over the
24. existing level of production. (10 marks)
The following data has been supplied:
(1)Unit cost structure of the product at current level:
Rs.
Raw Material 5
Wages 2
Overheads 3
Fixed Overhead 2
Profit 3
_____
15
(i) Raw Material will remain in stores for 1 month before issued for production. Material will
remain in process for further 1 month. Suppliers grant 4 months credit to the company.
(ii) Finished goods remain in godown for 2 months
(iii) Debtors are allowed credit for 2 months.
(iv) Lag in wages and overheads payments in 1 month, and these expenses accrue evenly
throughout the production cycle.
(v) No increase either in cost of inputs or selling price is envisaged
You are required to prepare a Projected Profitability statement and the Working Capital
Requirement at new level, assuming that a minimum cash balance of Rs.20000 has to be maintained.
(D). A stock is currently trading for Rs.29. The risk less interest is 7 % p.a continuously
compounded. Estimate the value of European call option with a strike price of Rs.30 and a time
of expiration of 4 months. The standard deviation of the stock’s annual return is 0.45. Apply BS
model. (20 marks)
5
(E). Following is the EPS record of AB Ltd over the past 10 years. (20 marks)
Year EPS Year EPS
10 Rs.30 5 Rs.16
9 20 4 15
8 19 3 14
7 18 2 18
6 17 1 (12)
(i) Determine the annual dividend paid each year in the following cases:
(a) If the firm’s dividend policy is based on a constant dividend payout ratio of 40 per cent
for all years
(b) If the firm pays at Rs 10 per share, and increases it to Rs 12 per share when earnings
exceed Rs.14 per share for the previous 2 consecutive years.
(c) If the firm pays dividend at Rs 7 per share each except when EPS exceeds Rs 14 per
share, when an extra dividend equal to 80 per centof earnings beyond Rs.14 would be
paid.
(ii) Which type of dividend policy will you recommended to the company and why?
(F). (1). A US MNC has its subsidiary in India. The subsidiary has issued 15 pr cent preference
shares of the face value of Rs.100, to be redeemed at year-end 9. Flotation costs are expected to
be 5 per cent; these costs can be amortized for tax purpose during 8 years at a uniform rate.
The corporate tax rate is 35 per cent. Determine the costs of preference shares from the
perspective of the subsidiary. (10 marks)
(F). (2) The US inflation rate is expected to be Rs.3 per cent annually and that of India is
expected to be 4.5 per cent annually. The current spot rate of US $ in India is Rs.47.4060/US $.
(10 marks)
Find the expected rate of US $ in India after one year and after 5 years from now using
purchase power theory of exchange rate
FINANCIAL & COST ACCOUNTING
Q1) ABC Ltd. Produces room coolers. The company is considering whether it should continue to
manufacture air circulating fans itself or purchase them from outside. Its annual requirement is
25000 units. An outsider vendor is prepared to supply fans for Rs 285 each. In addition, ABC Ltd
will have to incur costs of Rs 1.50 per unit for freight and Rs 10,000 per year for quality inspection,
storing etc of the product.
In the most recent year ABC Ltd. Produced 25000 fans at the following total cost :
25. Material Rs. 50,00,000
Labour Rs. 20,00,000
Supervision & other indirect labour Rs. 2,00,000
Power and Light Rs. 50,000
Depreciation Rs. 20,000
Factory Rent Rs. 5,000
Supplies Rs. 75,000
Power and light includes Rs 20,000 for general heating and lighting, which is an allocation based on
the light points. Indirect labour is attributed mainly to the manufacturing of fans. About 75% of it
can be dispensed with along with direct labour if manufacturing is discontinued. However, the
supervisor who receives annual salary of Rs 75,000 will have to be retained. The machines used for
manufacturing fans which have a book value of Rs 3,00,000 can be sold for Rs 1,25,000 and the
amount realized can be invested at 15% return. Factory rent is allocated on the basis of area, and the
company is not able to see an alternative use for the space which would be released. Should ABC
Ltd. Manufacture the fans or buy them?
AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL
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Q2) Usha Company produces three consumer products : P, Q and R. The management of the
company wants to determine the most profitable mix. The cost accountant has supplied the following
data.
Usha Company : Sales and Cost Data
Description Product Total
P Q R
Material Cost per unit
Quantity (Kg) 1.0 1.2 1.4
Rate per Kg (Rs) 50 50 50
Cost per unit (Rs) 50 60 70
Labour Cost per unit 30 90 90
Variable Overheads per unit 15 10 25
Fixed Overheads (Rs .000) 9,175
Current Sales (Units ,000) 100 50 60 210
Projected Sales (Units ,000) 109 55 125 289
Selling Price per unit (Rs) 150 200 270
Raw material used by the firm is in short supply and the firm can expect a maximum supply of 350
lakh kg for next year. Is the company’s projected sales mix most profitable or can it be changed for
the better?
Q3) DSQ Company Ltd, a diversified company, has three divisions, cement, fertilizers and
textiles. The summary of the company’s profit is given below :
(Rs/Crore)
Cement Fertilizer Textiles Total
Sales 20.0 12.0 18.0 50.0
Less : Variable Cost 8.0 9.6 5.4 23.0
Contribution 12.0 2.4 12.6 27.0
Less : Fixed Cost (allocated to
divisions in proportion to
volumes of Sales)
8.0 4.8 7.2 20.0
Profit (Loss) 4.0 (2.4) 5.4 7.0
After allocating the company’s fixed overheads to products the Fertilizers, division incurs a loss of
Rs 2.4 crore. Should the company drop this division?
General Management
1. What is Input & Output model?
2. Describe some major kinds of strategies/policies & the hierarchy of strategies?
3. What do you mean by reengineering organization & Explain key aspects?
4. What is departmentation & Types of departmentation?
5. Distinguish strength of appraisal against verifiable objectives?
6. Explain Maslow hierarchy of needs theory?
7. Define Leadership with examples?
8. Explain communication flow in the organization?
26. GENERAL MANAGEMENT
CASE-1 : ATTEMPT ANY 4 CASES, EQUAL MARKS PER CASE (20 Marks)
Case on Discomfort in a factory and Management Decision Making
Mohan remembered the call from the head office as he puts down the telephone receiver. His boss
from head office he said, "I just read your analysis and I want you to go down to our plant in Kollakal
near Mysore right away. You know we cannot afford this plant any more - the costs are just too high.
So go down there, check out what would be our operational costs would be if we move, and report
back to me in a week."
Mohan knew the challenge quite well as the branch manager of the Good will Specialty Products. His
company is into manufacturing of special apparel for injured and people with other medical conditions.
He needs to deal with high-cost labor in a remote village not so sophisticated plant, unionized
manufacturing plant. Although he had done the analysis there were 480 people who made a living at
this facility and if it is closed most of them will find it very difficult to get another job in the small
town consisting of about 10 000 people.
Instead of the Rs.20/- per hour paid to the Kollakal workers the wages paid to the migrant workers near
Aurangabad will be much cheaper Rs.7/- hour working in sub human conditions. This provides a
saving of 15 lakhs to the company for a year, which, can now be used to meet the costs for training,
transportation and other matters.
After two days of talking with Migrant workers association and representatives of other companies
using the same services in the town, Mohan had enough information to formulate alternative plan for
production and the cost figures for production and transportation. What was bothering him was only
the thought that how is going to handover the termination of service notice to the Kollakal workers.
The plant in Kollakal had been in operation since 1930s making special apparel for persons suffering
from injuries and other medical conditions. Mohan has often talked to the employees who would
recount stories of their fathers and grant fathers working in the company plant-the last of the original
manufacturing operations in the town.
AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL
But friendship aside competitors had already edged past Good will in terms of price and were
dangerously close to overtaking it in product quality. Although Mohan and his Boss had tried to
convince the union to accept the lower wages, union leaders resisted it. In fact, in one occasion when
Mohan tried to discuss a cell manufacturing approach, which would cross train employees to perform
up to three different jobs, local union leaders could barely restrain their anger. Yet probing beyond
their anger Mohan sensed their vulnerability, but could not break through.
Tomorrow he will discuss his report with the CEO. Mohan does not want to be responsible for
dismantling of the plant at Kollakal, an act, which Mohan believes is personally wrong, but he is
helpless. Mohan said to himself "The costs are too high, the union's unwilling to cooperate, and the
company needs to make a better return on its investment if it has to continue at all. It sounds right, but
it feels wrong. What should I do?
Questions :
1. Assume you want to lead the change to save the Kollkal plant. Describe how you would proceed?
2. What is the primary type of change needed - technology, product, structure or people/culture?
3. What techniques would you use to overcome union resistance and implement change?
CASE-2 (20 Marks)
A small group of managers at Falcon Computer met regularly on Wednesday mornings to develop a
statement capturing what they considered to be the 'Falcon Culture'. Their discussions were wideranging,
covering what they thought their firm's culture was, what it should be and how to create it.
They were probably influenced by other firms in their environment since they were located in the
Silicon Valley area of California. Falcon computer was a new firm, having been created just eight
months earlier. Since the corporation was still in the start- up phase managers decided it would be
timely to create and instill the type of culture they thought would be most appropriate for their
organization. After several weeks of brain storming, writing, debating, and rewriting, the management
group eventually produced a document called 'Falcon Values', which described the culture of the
company as they saw it. The organizational culture statement covered such topics, as treatment of
customers, relations among work colleagues, preferred style of social communication, the decision
making process, and the nature of working environment.
Peter Richards read over the Falcon values statement shortly after he was hired as a software trainer.
After observing managerial and employee behaviors at Falcon for a few weeks, he was struck by wide
discrepancy between the values expressed in the document and what he observed as actual practice
within the organization. For example the Falcon values document-contained statements such as this:
27. "Quality; attention to detail is our trademark; our goal s to do it right the first time. We intend to
deliver defect free products and services to customers on the date promised."
However Richards had already seen shipping reports showing that a number of defective computers
were being shipped to customers. And his personal experience supported his worst fears. When he
borrowed four brand-new Falcon computers from the shipping room for use in a training class he
found that only two of them started up correctly without additional technical work on his part.
Another example of the difference between the Falcon Values document and actual practice concerned
this statement on communication: "Managing by personal communication is part of the Falcon way.
We value and encourage open, direct, person to person communication as part of our daily routine."
Executives bragged about how they arranged their chairs in a circle to show equality and to facilitate
open communications whenever they met to discuss the Falcon values document Richards had heard
the "open communication" buzzword a lot since coming to Falcon, but he hadn't seen much evidence
of such communication. As a matter of fact all other meetings used a more traditional layout with top
executives at the front of the room. Richards believed that the real organizational culture that was
developing at Falcon was characterised by secrecy and communications that followed the formal chain
of command. Even the Falcon values document Richard was told had been created in secret.
Richards soon became disillusioned. He confided in a coworker on afternoon "the falcon values
document was so at avarice with what people saw everyday that very few of them took it seriously."
Employees quickly learned what was truly emphasized in the organization-hierarchy, secrecy, and
expediency and focused on those realities instead, ignoring many of the concepts incorporated in the
values document. Despite this frustration Richards stayed with Falcon until it filed for bankruptcy two
year later. "Next time" he thought to himself as he cleaned out his desk "ill pay more attention to what
is actually going on, and less to what top management says is true. Furthermore, I guess you just can't
create values."
Questions
1. What is more important the statement in a corporate culture document or actual managerial
behaviour?
2. Why did the Falcon executives act as they did?
3. Why didn't employees like Richards blow the whistle on Falcon, challenging the inconsistency
between values and behaviour?
4. How can executives go about changing the old values that govern an organization?
CASE-3 (20 Marks)
Study the case below.Discuss customer insight? Define CRM,role and advantages for todays
management?
Archana Tuli (Owner of a water purifier): Look at my water purifier. Last week a person came to my
house saying my service contract was up for renewal. Mind you, that was the first time in 10 months I
was seeing anyone from Purifo. I did not like his barging into my time without prior notice. But that
did not bother him. He had a list to clear, never mind if I was in the midst of cooking lunch.
I asked him about the servicing, since under the maintenance contract the company should have
serviced the unit twice that year. " You should have called the company," he said. But that was a
preventive maintenance contract and it was for the company to call and take a date.
Finally, he set about servicing the machine. I found that his handling of the machine was rather
clumsy. He dropped the casing twice and strewed the carbon all over the sink. I discovered that he was
just four months old in the Company. Before that, he used to sell plastic boxes. Is this what I get for
being your customer?
Then he said the filter candle needed to be changed which I would have to pay for. That annoyed me. I
showed him the contract, which clearly stated that the company would replace the candle once a year
at its cost. He did not know that. Would you believe that? Clearly such service contracts are simply a
means to make money. There is no attitude to servicing. He came because it was February and he had
contract renewal targets to complete. He came without calling, expecting we would drop everything
else to serve him. He had no clue as to what he had to give the customer for the contract. He messed up
my kitchen and did not even attempt to tidy it up.
The worst was that when I started the machine, the water would not flow. I was furious. Purifo sends
incompetent, inexperienced people to cut costs. I carry the responsibility of providing my family a
safe, hygienic environment at home, so I am prepared to pay for preventive maintenance. But what did
I get?
But it is a good product and I am an informed consumer who knows how to work around a
manufacturer's inefficiency. I simply gave the service contract to a private firm. I don't want to have
anything to do with Purifo.
Ritikant Sharma (Credit Card holder): Every month, I receive a credit card bill and my payment is sent
the very next day. Five months ago, the bill did not come on the 22nd evening as it normally would. I
28. received the bill 10 days later with a charge of Rs. 675/- for overdue interest. I was taken aback and
called up by the bank. But the bank manager argued that the bill had been sent earlier. It was my word
against his.
I wrote to Monet Bank, protesting against this undue charge. Eventually, after six letters from me,
including one to the managing director, the bank " waived" the interest. But I was left with a bitter taste
in my mouth. I wondered why the bank did this to me. Did I deliberately delay payment? I had this
card for three years and not once had I defaulted on payment.
I also wondered if the bank considered the cost of this argument to me. Was it worth the Rs. 675/-?
Why was the customer not right this time? And what about all those times when I paid four days
before the due date? I was amazed that the bank treated me like an errant schoolboy. Since then I have
not felt good about using the Monet credit card.
Worse, every month the bill continues to show the overdue interest and every month there is a fresh
exchange of letters on the matter. Only last week I received an invitation to become a member of
another credit card company. I am planning to surrender the Monet Card.
Divya Mathur (Owner of a washing machine): You say I am an important customer of Crysta. Great.
But for your customer service cell, I am just a number. For six months now, I have been having
problems with the washing machine. Last month, when I called the customer service cell to follow up
an old complaint about the motor, the lady who took the call asked me to repeat the details: model
number, date of purchase, and the like. When I pointed out that all these details had been given several
times before and all she needed to do was check the complaint order number, her response was
shocking. " May be, but I can't boot the system. I am only standing in for someone who has not
reported today. So, you have to give the details again." She said.
Tell me what am I getting for being your customer? Respect? Good handling? No. Now you come here
and ask me personal details like family income, number of members, husband's designation. You still
haven't told me why you need all this information. You are researching. Are you collecting this
information to help your company or me?
Then there was the problem with the V-belt. Within a day of replacing it, there were some cracking
sounds. The engineer said he would have to wait for the senior supervisor to examine it. Reason? " We
recently changed our supplier and all his pieces are turning out to be defective." I was taken aback. It
frightened me to know that there was no quality check at your end. We outsource a lot of stuff for our
garment business, but every button and needle is checked before it is used. We are not a multinational,
just an old family-managed business.
Radhika Iyer (School Teacher): That feeling for the customer is simply not there. The customer is not a
person but a collective noun. If the customer was important, wouldn't my water purifier Company tell
me when it changed the service agent? When I called the number in my contract card, I discovered that
the number now belonged to a courier company. I had to call the head office in Mumbai and get the
new service agent's number in Delhi.
Is this fair? Or does it matter? I guess the Company's attitude was: " If a customer needs service, let her
break her back and spend money to find out who the new agent is. " The only motives are profits and
sales volumes. Not customer loyalty or service. Therefore a customer is one who buys your product,
not one who has bought your product. Once you've bought the product you are a 'has been'. Why
would you want to invest energy in a set of people to whom a sale has been made? You spend energy
as long as a sale is not made. Once a sale is done, it is for the customer to invest energy in sustaining
his relationship with the manufacturer. Isn't that how it is? The manufacturer's attitude is-you need me
more than I need you, so guess who should work harder?
And everyone once in a while, there is a new face at my door asking me if I own a Zento purifier.
Dammit, don't you have a customer file? No, he says. We go from door to door. Splendid. Then what
do you do with all the data you collect? And every one of these men asks me the same questions: when
did you buy it, what is your model number, is it working properly? The worst is: " What is your
address?" I don't care what the information is being used for. But I don't want to be disturbed for
information, which you already have.
We believe that because India now manufactures Coke and Mercedes, we have progressed. But this
new market is no different from the gray market, where you can buy anything but cannot expect
service. For instance, I bought a packet of macaroni, which said I had to boil it in 250 ml of water. I
did that, but after the prescribed five minutes of boiling, there was enough water left in the pan. I then
boiled it for another three minutes, and the pasta dissolved into a unrecognizable mass.
One day, I met someone who worked for this macaroni company. I told him about my experience. He
said I should let the pan rest for five minutes after turning off the heat. The residual water would get
absorbed. That worked. Couldn't the firm have said so on the pack? Or is it cheaper to let the customer
learn? Does the Company use experienced hands-on cooks while designing these products or are they
MBAs who can't tell a stove from a cigarette lighter?