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![Section describes the how they are used in this thesis. Figure shows the three level of decisions as a
pyramid shaped hierarchy. The decisions on a higher level in the pyramid will set the conditions
under which lower level decisions are made.
On the strategic level long term decisions are made. According to Ganeshan and Harrison [12], these
are related to location, production, inventory, and transportation. Location decisions are concerned
with the size, number, and geographic location of the supply chain entities, such as plants,
inventories, or distribution centers. The production decisions are meant to determine which products
to produce, where to produce them, which suppliers to use, from which plants to supply distribution
centers, and so on. Inventory decisions are concerned with the way of managing inventories
throughout the supply chain. Transport decisions are made on the modes of transport to use.
Decisions made on the strategic level are of course interrelated. For example decisions on mode of
transport are influenced by decisions on geographical placement of plants and warehouses, and
inventory policies are influenced by choice of suppliers and production locations. Modeling and
simulation is frequently used for analyzing these interrelations, and the impact of making strategic
level changes in the supply chain.
On the tactical level medium term decisions are made, such as weekly demand forecasts, distribution
and transportation planning, production planning, and materials requirement planning. The
operational level of supply chain management is concerned with the very short term decisions made
from day to day. The border between the tactical and operational levels is vague. Often no distinction
is made, as will be the case in this thesis.
Questions
Define hierarchy of decision making in supply chain management?
CASE-4 (20 Marks)
Inventory is a ``Flexibility Buffer''
A manufacturers flexibility is its ability to respond to changes in demand. Imagine a company that
can receive customer orders, order and receive components, assemble these, fill the orders, and ship
them to customers in one single day. This company would have a total flexibility. It would be able to
respond to any unforeseen events on a daily basis, and could easily attain a hundred percent customer
satisfaction without any inventory. But this is of course rarely the case. A supply chain may consist of
many levels of production, transportation, and warehousing, each level adding to the lead time. The
time from the first materials are ordered at the beginning of the supply chain till the finished products
reach the customer may be long. In the US apparel industry this time is typically 58.5 weeks ! (from
1990, Flaherty.
It is evident that customers will not wait this long from order to delivery. The manufacturer needs to
plan ahead, and therefore also to estimate future demand by making demand forecasts. If planning of
production and inventories was perfect we would be able to implement a pure Just in Time strategy,
with components arriving as they are needed, and finished goods being shipped as they leave the
assembly line. But in a supply chain there are many events that can not be foreseen and uncertainties
that need to be accounted for. These may be: late shipments from suppliers, defect incoming material,
imperfect production yield, production process breakdown, or highly uncertain product demands.
The longer the planning horizon, the less accurate the plans will be. A typical US apparel
manufacturer must see more than a year into the future ! For it to maintain a high level of customer
service, all uncertainty of the year must be accounted for (see Pitfall 5 below). The long lead times
make the manufacturer inflexible, and vulnerable to unforeseen changes and inaccurate demand
forecasts.
A manufacturer will account for the uncertainties and unforeseen events by keeping safety stocks.
The safety stocks assure the necessary flexibility, or rather they act as buffers for the lack of
flexibility in the supply chain.
As we decrease lead times in the supply chain, we decrease the planning horizon, and thereby
increase the flexibility. The need for a buffer in the form of inventory will also diminish. In other
words; higher flexibility allows less inventory to maintain the same level of customer service.
Inventory vs. Customer Service: A Trade-Off
If we assume lead times to be constant, the ability to fill orders is directly dependent on the inventory
levels in a supply chain. As long as there are products in the finished goods inventory (FGI), from
which products are taken, orders can be satisfied. Other inventories, such as raw product inventories
will have a more indirect effect on customer satisfaction. Stock-outs in any of these will obstruct
production and may eventually lead to stock-out in the FGI. For this reason, it is common in supply
chain management to keep exaggerated inventory levels. But as mentioned above inventory holding
costs are often calculated as high as 30-40% of inventory values.
While oversized inventories is a costly inventory management strategy, low fill rates are also costly.
Business may be lost through cancelled orders, and the company's reputation may be severely](https://image.slidesharecdn.com/mbaisbmcasestudyanswerssolutions3-140615072502-phpapp01/85/Mba-isbm-case-study-answers-solutions-3-38-320.jpg)
![damaged. It is therefore in a company's interest to balance inventory holding cost and the cost of
imperfect customer satisfaction. The trade-off inventory vs. customer satisfaction is one of the classic
issues of logistics and supply chain management.
Pitfalls in Inventory Management
Based on knowledge and experience from supply chain management in electronics, computer, and
automobile companies, Lee and Billington [16] identify 14 pitfalls in inventory management. Eight of
which are found relevant to this project:
Pitfall 1. No Supply Chain Metrics:
In a supply chain with multiple sites, each site will often have its fairly autonomous
management team. The objectives of the various teams may differ, and even be
conflicting. Inventory may for example be reduced at a Site A of a supply chain, and
thereby, seen from a local perspective, the performance is enhanced. But the inventory
decrease may also decrease Site A's flexibility. Because Site A now responds more slowly
to changes, Site B, which is Site A's customer will have to increase its inventory (of Site
A parts) in order to maintain its flexibility and level of customer service. The lack of
supply chain metrics has prevented managers at Site A to see that their local
improvements has not lead to improved overall performance of the supply chain. The
objective of supply chain metrics is to give the basis for evaluations of the performance of
the whole supply chain as one system.
Pitfall 2. Inadequate Definition of Customer Service:
Too few and in-concise metrics for customer service. The evaluation of performance
becomes difficult, and certain aspects of customer service may be overlooked.
Pitfall 3. Inaccurate Delivery Status Data:
Customers are not correctly informed of delivery dates of orders and of late deliveries.
Companies can often not readily retrieve the information needed to do so.
Pitfall 4. Inefficient Information Systems:
Databases at different operation sites that describe system environment, inventories,
backlog, future production plans, and so on are often not linked. Information must be
retrieved manually, and this can be a long process. Planning cycles may therefore be long,
using highly uncertain demand forecasts. The wrong products are made, and inventories
and backlogs grow.
Pitfall 5. Ignoring the Impact of Uncertainties:
Too often supply chains do not track uncertainties such as suppliers' delivery times, the
quality of incoming materials, manufacturing process time, transit times, and so on. This
leads to non-optimal stocking levels. In some cases uncertainties are properly tracked, but
there is no follow-up.
Pitfall 6. Simplistic Inventory Stocking Policies:
Stocking policies are often not linked to knowledge of the uncertainties mentioned above.
Stocking policies are often based on the quantity usage of the items stocked. This says
nothing about the uncertainty associated with the usage. Analysis show that stocking
levels could be greatly reduced by transferring stocking policies from being quantity
based to being uncertainty based.
Pitfall 7. Organizational Barriers:
Entities in a supply chain may belong to different organizations within the same company.
The organizations will independently measure the performance of the entities. While each
entity is occupied with achieving local goals (much like in pitfall 1), important synergies
may be lost.
Pitfall 8. Incomplete Supply Chain:
Supply chain managers are often focussed only on the internal supply chain. Going
beyond the internal supply chain by including external suppliers and customers often
exposes new opportunities for improving internal operations
Questions
Define Inventory is a ``Flexibility Buffer’’?
What are the various pitfalls in inventory management?
TOTAL SAFETY MANAGEMENT
1. What is HASAWA? Describe this in terms of the following:
a) Employees
b) Employers](https://image.slidesharecdn.com/mbaisbmcasestudyanswerssolutions3-140615072502-phpapp01/85/Mba-isbm-case-study-answers-solutions-3-39-320.jpg)
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Mba isbm case study answers & solutions 3
The document provides a comprehensive overview of various management case studies and examples related to different business sectors including retail, finance, and consumer behavior. It highlights the significance of case studies in educational settings, emphasizing problem-solving through research methodology, market analysis, and strategic recommendations for companies like Tanishq and Whirlpool. Additionally, it discusses industry trends in specialty retail environments, outlining challenges faced by apparel and footwear retailers amid competitive pressures and changing consumer preferences.
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Mba isbm case study answers & solutions 3
- 1. WE ARE PROVIDINGCASE 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 ACCOUNTINGMANAGEMENT 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 INTERIOR MANAGEMENT
- 3. L M N LOGISTICS LOGISTICMANAGEMENT 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 RESEARCH METHODOLOGY CASE-1 (16 Marks) A professor is interested in following whether the "good" students finish the test earlier or later than the others in the class. He observes a particular test and gets the following data given below If 'good' students are those who get 90 and above, can the professor conclude that good students finish the test randomly (use a 5% level of significance) ?Explain Order of finishing test Marks Scored
- 4. 1 - 1094 70 85 89 92 98 63 88 74 85 11 - 20 69 90 57 86 79 72 80 93 66 74 21 - 30 50 55 47 59 68 63 89 51 90 88 CASE-2 (16 Marks) The weight (gms) of 31 books picked from a consignment are as follows: 106, 107, 76, 82, 106, 107, 175, 93, 187, 95, 123, 125, 111, 92, 86, 70, 127, 68, 130, 129, 139, 119,115, 128, 100, 186, 84,99, 113, 204, 111 Test whether this sample may be treated as random? Briefly explain? Case-3 (16 Marks) A local supermarket has experienced a decline in unit sales and little change in rupee value sales. Profits have almost vanished. The chief executive in searching for ways to revitalize the operation, was advised to increase the number of hours the market is open for business. He comes to you for advice in structuring a research problem that will provide relevant information for decision making, Define the research problem taking care to: (a) state the relevant question. (b) enumerate the alternative answers. (c) clearly define the units of analysis and characteristics of interest. CASE-4 (16 Marks) According to the National Retail Federation and Center for Retailing Education at the University of Florida, the four main sources of inventory shrinkage are employee theft, shoplifting, administrative error, and vendor fraud. The estimated annual dollar amount in shrinkage ($millions) associated with each of these data sources are as follows Employee theft $ 17918.6 Shop lifting $ 15191.9 Administrative error $ 7617.6 Vendor fraud $ 2553.6 Total $43281.7 Construct a pie chart to depict these data ? CASE-5 (16 Marks) The market for jewellery in India is second only to that for foods and the trade is built around so-called family jewelers. Tanishq belongs to the House of Tata and, true to the group's policy it aims at bringing in credibility and professionalism to the jewellery industry. India's jewellery market is estimated to be worth Rs. 400 billion a year and the share of the organised sector -jewellery stores and brands managed by corporate houses - stands at about Rs. 10 billion. This small but significant niche is largely the creation of Tanishq, a path-breaking effort that has earned a well-deserved reputation for reliability and excellence, and for introducing pioneering concepts in an industry where tradition once ruled. The brand has a 40% share of the organised jewellery market and a 1% bite of the overall jewellery pie. There are more than 300,000 independent, non-branded jewellery retailers in India. Tanishq was a trailblazing endeavour to create a national retail chain that would provide consumers with jewellery of reliable worth and high design value. Its entry changed, in more ways than one, the way the Indian jewellery market operates. With 66 exclusive outlets spread across some 50 cities and a fully integrated jewellery manufacturing facility at Hosur, in Tamil Nadu, Tanishq has emerged as one of India's biggest retailers. The introduction of 'Karatmeters' - instruments that can be easily used by consumers to measure the purity of gold in a non-destructive manner - at its outlets is a key innovation that has developed tremendous equity for the brand. Another Tanishq novelty, one on which the brand's growth strategy is premised, is in the matter of differentiated designs, be they contemporary or traditional, Indian or international. Modern retail values and principles in the selling of branded jewellery in Indiaare almost completely the handiwork of Tanishq. The brand has broken fresh ground in retailing by creating exclusive outlets with hitherto unknown in-store ambience and hospitality touchstones. It has launched new collections at a quicker rate than its competitors, and conducted marketing promotions and fashion shows to
- 5. enhance the shoppingexperience of consumers. Although the purchase of branded jewellery is still a new experience for a whole lot of Indians, the Tanishq brand enjoys increasing levels of consumer loyalty. In 2002, about one million people shopped at Tanishq stores all over the country. A highlight of the brand's success is that, while the jewellery market growth has declined during the past two years, Tanishq has recorded an annual growth of approximately 40%. Besides catering to Indian consumers, Tanishq has successfully entered key export markets such as the US, the UK, theMiddle East, Singapore and Australia. This is testimony to the brand's ability to craft products that meet the requirements of varied cultures and sensibilities. The brand Tanishq, like the Tata name, has established itself as an ethical brand, earning the respect and affection of its consumers. The Tanishq portfolio comprises a wide range of jewellery, including 18-carat studded products, 22- carat plain-gold products, silverware and coins. Tanishq is the first brand in the jewellery category to introduce collections designed exclusively for the modern Indian woman, especially working women. Among the Tanishq collections that have caught the imagination of consumers are Aria and Diva. Collection G, with a selection of over 90 designs, addressed the everyday jewellery needs of working women. Positioned as ‘9-to-5 jewellery’, the collection is stylish and modern and is designed to suit all forms of attire, western and Indian, casual and formal. The introduction of lightweight gold –jewellery that looked heavy but was light in weight and on the purse –marked another milestone in Tanishq’s brand history. Tanishq’s retail boutiques are temples for the brand and are used as a platform for celebration, be it the launch of a new collection, a new marketing promotion or a festival. This gives Tanishq outlets a unique appeal and consumers an opportunity to heighten their shopping experience. One of Tanishq’s more innovative ideas is to offer special schemes during various festivals. Tanishq has also initiated a loyalty program called the Golden Harvest Savings Scheme, which offers buyers the benefit of getting more jewellery than what they have paid for. The scheme allows consumers to planfuture purchases in advance and pay for them in easy installments. In sync with the Tata brand values, Tanishq is synonymous with trust and purity in a category that is fraught with questionable practices. Being a member of the Tata family has meant that it can leverage the group’s well-earned reputation for ethics and values in a business where such attributes are critical to win the trust of consumers. Tanishq consumers can afford to take issues such as purity for granted, and they know they can depend upon the brand to deliver quality products all the time. The brand’s winning virtues in design and overall quality have shaped a class of discerning buyers who seek the best in jewellery products. Leadership and innovation are two of the other brand features that Tanishq is consistently identified with. These values have helped the brand bond with its consumers like no other Indian jewellery retailer. Tanishq has deliberately moved away from mass-media advertising and focused on store promotions to make the brand more accessible to consumers. This has been done to correct the consumer perception that the brand is highly priced and only meant for the rich and the famous. This approach has also ensured that Tanishq’s promotional approach is product-led. Read the caselet carefully and answer the following questions: 1. Discuss the various bases or criteria for segmenting consumer markets. Explain Tanishq’s segmentation and positioning strategy. 2. What are Tanishq’s key brand values or brand strengths? Explain. 3. What are the strength and weakness of Tanisq CASE-6 (16 Marks) A recent survey on washing machines conducted among housewives showed that most of them belonged to middle income households, were generally employed had growing up children and preferred a compact, easy-to-use, top-loading washing machine. They wanted a machine that gets clothes clean and comes with a trouble-free service. If you were the marketer of Whirlpool's washing machine, how will you use this information for planning your marketing strategy? CASE-7 (16 Marks) A company wishes to launch a new tooth paste which can effectively prevent cavities and tooth decay as well make teeth whiter. But the tooth paste markets is highly crowed with multiple brands. Design a questionnaire to identify product attributes important to consumers and consumer purchase behaviour. Also decide the target group on whom the questionnaire can be executed.
- 6. RETAIL MANAGEMENT Introduction Soft goodsspecialty retailers are on a quest to grow, with the high-growth ``stars’’ working to maintain momentum by rolling out successful concepts nationally while investing in new concepts that offer long-term promise. The less stellar performers are reinvigorating tired concepts and strengthening margins via better inventory and promotion management. A saturated marketplace will motivate more specialists at both ends of the spectrum to seek growth by building a portfolio of concepts focused on ever-finer customer groups. Concepts will vie for more attention by developing and applying deep customer insights to their assortment strategy, the shopping experience, and store brand building and communication. The Retail Landscape Many soft goods specialty retailers have seen recent improvements in sales and profits, but for most, the recovery is modest in nature and has done little to negate the pervasive price pressure on retail margins. The sustainability of the recovery is questionable given poor comparable stores sales performance. Modest Recovery Since bottoming out in the first part of this decade, sales have steadily improved in both the apparel and accessories specialty store and shoe specialty store channels. Yet, growth remains modest compared to the late 1990s. The long-term sales outlook for apparel and accessories specialty stores is stronger than for shoe stores. Apparel stores are forecast to grow in the 4 to 5 percent range annually through 2008, while shoe stores are forecast to grow mostly around 1 percent a year over the same time period. Much of the sale improvement has gone straight to the bottom line for apparel and accessories specialty stores. Though still well below its performance in the late 1990s, the sector has improved another important measure of profitability, return on net worth. In contrast, the very modest sales improvement among shoe specialty stores has not translated to improved financial performance, with the average net profit margin for publicly held shoe retailers declining. The financial struggles facing the shoe store channel are evident in the closing of individual stores and entire divisions by some of the channel’s leading players.
- 7. Pervasive price pressurehas contributed to the commoditization of apparel and footwear, particularly basic styles that are easily sourced and widely distributed. Commoditization has also been propelled by the growth of Wal-Mart (www.walmart.com) and Target (www.farget.com), both of which offer wide assortments of basic and fashion-focused soft goods at sharp price points that appeal to a broad swath of consumers. This has increased the pressure on many retailer margins as their increasingly undifferentiated assortment goes head to head with price-driven retailer margins as their increasingly undifferentiated assortment goes head to head with price-driven retailers off the mall. While apparel price deflation has made it challenging for soft goods specialists, many have proven worthy of the challenge. The availability of cheaper products allowed many of these specialists to improve inventory turns, resulting in a slight increase in their return on inventory ratio since 1998. This improvement reflects a focus by many apparel specialty store retailers on a combination of better markdown strategies, improved inventory management, and introduction of higher-margin fashion items. A Challenging Environment Soft goods specialty retailers face a crowded marketplace that is steadily becoming even more competitive. Most shoe specialty stores are faring far worse than the apparel specialists in the competitive wars. Off-mall retailers, including discount department stores/super centers and Kohl’s (www.kohls.com), are capturing apparel and shoe share of preference at expense of mall-based retailers, including specialty stores. Consumer preference for purchasing apparel is strongest at discount stores/super centers. The upward trend for discounters contrasts with a decline in spending preference for clothing at apparel specialty stores, value department stores, and traditional / upscale department stores in the same time period. For shoe purchasing, shoe stores are actually gaining spending preference, although the price-driven discount store/super center channel is as well. Shoe, discount, and apparel specialty stores are capturing shoe spending preference from value and traditional department stores, particularly Sears (www.sears.com) and Dillard’s (www.dillards.com), as well as Payless (www.payless.com). The upward trend for discounters contrasts with a decline in spending preference for clothing at apparel specialty stores, value department stores, and traditional / upscale department stores in the same time period. For shoe purchasing, shoe stores are actually gaining spending preference, although the price-driven discount store/super center channel is as well. Shoe, discount, and apparel specialty stores are capturing shoe spending preference from value and tradition al department stores, particularly Sears (www.sears.com) and Dillard’s (www.dillards.com), as well as Payless (www.payless.com).
- 8. Although department storeshave suffered the most at the hands of off-mall retailer growth, many are reinventing themselves. Key elements of the department store reinvention include a stronger, more exclusive, and more differentiated brand and style assortment supported by upgraded, easier-to-shop stores. Thus, department stores now contribute to more competitive intensity in the apparel and footwear playing filed, particularly for upscale customers. The profile of monthly shoppers at traditional/upscale department stores is similar to that of monthly shoppers at apparel specialty stores in terms of higher income and education levels – although apparel store customers skew younger. Competitive battles are also escalating due to the entry of a number of foreign specialty store retailers to the marketplace. Though most of the new foreign players operate only a handful of U.S. stores at this point in time, several intend to ramp up their store openings after establishing an initial base of stores. Some suppliers are also branching out to target new customers with new specialty store chains to attain growth in the face of modest prospects at department stores. Polo Ralph Lauren (www.polo.com) is launching Rugby, a new brand and chain of stores targeting college-aged consumers. Oshkosh B’Gosh (www.oshoshbgosh.com) is testing a family lifestyle store targeting men and women. A final factor contributing to heightened competitive pressure is the expansion of full-price specialty store chain s by several soft goods suppliers. A number of catalog retailers that are fairly new to retailing are also rapidly building store chains. Although the track record of most soft goods suppliers has been spotty when it comes to operating successful full-price retail stores – and several are closing unsuccessful concepts – it is clear that most of the majors view full-price retail as another avenue for growth that most be pursued as a consequence of overall retail maturity. Suppliers with the most substantial full-price store base include Jones Apparel Group (primarily shoe stores, www.jny.com), Liz Claiborne (primarily via Mexx in Europe and Canada, www.liz.com), and Polo Ralph Lauren. The two soft goods catalog retailers relatively new to full-price retailing that are most actively building their store chain are Coldwater Creek (www.cp;dwatercreek.com) and J. Jill (www.jjill.com). Growing diversity is making it more difficult for many specialists to adequately address the needs and expectations of all of their target customers – a critical requirement for success in the specialty store arena. Diversity is also propelling more retailers to tailor assortments and adjust merchandising tactics on an individual store basis. Previously, many only altered the offer to reflect regional seasonal variations and market size differences. Apparel and footwear are steadily capturing less of the consumer’s total spending, This is in part due to a shift in consumer spending priorities toward necessities (home, health, and transportation), as well as toward new everyday ``luxuries’’ such as eating out and entertainment – which including products such as
- 9. consumer electronics. sportinggoods and toys, and the cost of fees/admission to sporting events, concerts, movies, clubs, and other types of events. Consumers are increasingly willing to cross channels to shop a growing number of retailers – from mass to class – for apparel. They are more apt to trade down on staple wardrobe elements while trading up on aspirational, ego-intensive purchase and shopping experiences. Thus, value retailers play an even more important role in supplying the core of consumers wardrobes – from basics like undergarments to wardrobe fashion ``staples’’ such as causal pants, casual shirts, and everyday sweaters. Likewise, a number of soft goods specialty retailers and department stores are taking steps to tap into the shopper’s trade-up mindset by upgrading store environments, focusing on stronger aspirational store brand images, and introducing more higher-end and ``affordable luxury’’ products and labels to the assortment. Looking Forward Polarizing Playing Field Although the soft goods specialty store channels is far more fragmented than most other retail channels, it will continue to slowly consolidate as big companies grow bigger, ``adding more banners to their portfolio. However, the nature of specialty retailing will also ensure the continual entry of new, smaller, usually more flexible niche players able to exploit market gaps not being addressed by the majors. Only 37 percent to total U.S. Soft goods channel sales are by the top 15 retailers. This reflects a large number of independent retailers and the presence of smaller firms that operate on a regional of multi-regional basis. Growth at the ends of the size spectrum will cause the soft foods channel to remain polarized into the very big versus the very small retailers. Those in the middle will continue to be squeezed by the efficiencies and resources of the big retailers and by the flexibility and customer intimacy of smaller retailers and retail chains. Firms with strong sales growth tend to fall into one of three camps – hot, high-growth youth retailers like Pacific Sunwear (www.pacsun.com), Urban Outfitters (www.urbanoutfitters.com), Hot Topic (www.hottopic.com), and Aero-postale (www.aeropostale.com), mature but re-invigorated multi-brand mega- specialists like Gap Inc. (www.gapinc.com) and Limited Brands (www.limitedbrands.com); and Chico’s (www.chicos.com), which stands alone within the channel as a result of carving out a very well-defined niche targeting an underserved baby boomer woman. The strong performance of these retailers indicates that most will be in a position to further propel performance improvements via continued investments in technology and processes that enable them to reduce costs, more effectively allocate and manage inventory, and more strategically manage price and promotional
- 10. activity. These retailerswill also be better positioned than their peers to focus on increasing share of wallet among their highest-prospect customers. The soft goods specialty store channel will also continue to polarize with respect to new store-opening opportunities, with an expanding number of ``tapped-our’’ retail concepts unable to grow by opening more U.S. stores. With little international experience (or bad experiences in the past), most tapped-out retailers are unlikely to move rapidly or successfully into global apparel retailing, except for opening stores in Canada. Instead, they will focus on growing sales in current concepts by getting more share of wallet from existing customers through a combination of a more well-defined and relevant market position and extending their assortment into new products, brands, and services for the target customer. Despite overall channel maturity, there are several soft goods specialty store retailers with substantial room to grow, particularly those that have only begun rapid store expansion within recent years. Strong sales growth reflects both a rapid pace of new store openings and, for players such as Chico’s and Pacific Sunwear, equally impressive store-to-store sales growth. Some soft goods specialists that operate a large base of stores and that have struggled will continue to weed out unprofitable, low-prospect stores from their portfolio. In a few cases, retailer will divest or close entire chains to focus resources on higher-profit, higher-growth concepts. This trend has been under way for years, by firms such as Payless, Gap Inc., Limited Brands Inc., Wilsons Leather (www.wisonsleather.com), Charming Shopper (www.charmingshoppes.com), Brown Shoe (www.brownshoe.com), and Mother’s Work (www.motherswork.com). Repositioning for Relevancy The recent economic downturn has made many retailers loath to invest in major repositioning initiatives. However, as slaes gain some momentum and corporate purse strings sales gain some momentum and corporate purse strings loosen a bit, more aging soft goods specialty stores will undergo a facelift. For some, this will involve a long overdue re-assessment of the target customer. Perhaps the highest-profile repositioning has been Gap (www.gap.com), Old Navy (www.oldnavy.com), and Banana Republic (www.bananarepublic.com), and Banana Republic (www.banarepublic.com) chains. Banana Republic has added more trend-driven fashions to better distinguish it from Gap Stores. This includes a stronger emphasis on color, more feminine styles, and clothes for social occasions, as well as its standard work-appropriate assortment. Old Navy is more firmly positioned as a value-focused store for the entire family, with more emphasis on serving the needs of each member of the family. The retailer has increased assortment segmentation based on customer group. The chain also has new fixtures that increase
- 11. selling capacity. Gaphas been repositioned as the classic specialty store for a range of fashion ``basics’’ for casual occasions, supplemented by more ``occasion-oriented’’. merchandise for weekends, the workplace, and stepping out. Underperforming Gap stores have been closed, and stores have stricter inventory controls to increase productivity and reduce markdowns. Gap is reinvesting in marketing, including developing a more consistent message across all media. In line with size-related trends in the overall population, more specialty retailers will expand their standard size range to include larger sizes, as well as petite/small sizes. Some may spin special-size concepts off as their own store banners, but most will choose to simply extend the size range within the existing banners by adding new sizes or by increasing the breadth of assortment within existing special size lines. Ann Taylor (www.anntaylor.com) plans an overall focus on petites as one of its growth strategies. Plans include extending the product offering to all categories and more styles, creating a store environment that makes petites a preferred destination, and boosting marketing to generate awareness. The firm has rolled out petite adjacencies in current stores (including some with separate entrances). To capture more sales from customers already in the store, a growing number of soft goods specialty store retailers will extend their assortments to include products that provide additional style perspectives and meet the needs of additional wearing occasions. Express (www.expressfashion.com) strengthened its wear-to- work appeal with the Express Design Studio line of clothing being rolled out to all stores. The line is designed by a New York-based team and focuses on fitted pants, tailored jackets, and key pieces that ``add sexy sophistication’’ and allow the line to move from the ``work-place to the weekend.’’ The men’s line also includes suits sold as separates, dress shirts, and ties. Abercrombie & Fitch (www.abercrombie.com) is repositioning its brand to be less aggressively sexual in its marketing to customers and to include higher price points and fewer promotions. As part of this strategy, the retailer has a new higher price point collection called Ezra Fitch. The collection includes products such as $118 to $148 jeans and cashmere crew necks at $178. While the factors having the most influence on trying a new brand or store are the styling and price, followed by the influence of friends and family, monthly specialty store shoppers are far more likely than all shoppers to be influenced to try a brand or shop a store based on fashion magazines and celebrity culture. They are also far more willing than all shoppers to say that wearing designer brands has a positive impact on their self-esteem and self-confidence. As part of their approach to new customers, most specialist will choose to first move up the age spectrum with the intention of leveraging the knowledge they have about their customers as they ``outgrow’’ the existing concept and enter a new life stage. Where this opportunity has already been tapped out, they will be forced to focus on concepts targeting an entirely new style, lifestyle, or occasion of use.
- 12. Driving Growth ThroughStrategic Investments More specialty store retailers will invest in initiatives that allow them to not just attain competitive differentiation but to also drive profitable top-line growth via higher purchase conversion levels, more multiple-item transactions, and increased destination store status with targeted customers. Key areas of investment will include new technologies and high-value services, as well as alternative marketing and promotional venues. New technologies are becoming more mainstream and less cost-prohibitive, a trend that will motivate more specialty store retailers to invest in technological solutions that ensure that the right products are on the selling floor in the right quantities at the right time and price. Technology will also be used to provide more alternative shopping and purchasing options for customers (beyond just online selling). It will also be used to better track the flow of customer traffic in the store on a real-time basis in order to design stores that have higher sell-through levels and staff stores in line with customer needs. Many specialty store retailers will focus on improving their service programs and associate-customer interaction as a way to build top-of-mind status with target customers. In some cases, this will involve more personal shopping services and stronger customer ``clienteling.’’ In others, it will involve creatively responding to the service and shopping experience needs of the best customers in ways that are more meaningful to the customer. Talbots (www.talbots.com) has experimented with a variation on its popular Appointment Shopping service with a service called Wardrobe Express. The service targets busy, time-pressed customers with highly efficient shopping appointments by providing a pre-selected assortment of garments for the customer in the dressing room at the prescribed time – along with a light snack for lunchtime shoppers. During the visit, the store associate completes a ``wardrobing sheet’’ including what was tried on and possible coordinates. Using credit card information that is on file, the associate then completes the purchase after the shopper has left the store and arranges for pickup or delivery. Questions 1. What can an independent retailer learn from this case? 2. What are the positive implications of this case with respect to the use of leased departments in department stores? 3. How can a mid-priced apparel store become a destination retailer? 4. How is Gap Inc. utilizing the principles of the wheel of retailing through its Gap, Old Navy, and Banana Republic divisions?
- 13. 5. How canhigh-priced apparel specialty stores successfully compete against full-line discount stores? 6. What role should the Internet play for apparel retailers? 7. Can an apparel retailer prosper in the future if it does not engage in multi-channel retailing? Explain your answer. ‘ THE APPAREL SHOPPER’ INTRODUCTION Several general observations can be offered regarding apparel shoppers : High – income shoppers and younger shoppers underlie recent sales growth. Spending changes are more likely to be driven by needs not wants. Although important, the advent of new fashion “looks” is not the main reason shoppers increase – or decrease – their spending. Instead, changes are far more likely to be related to very practical reasons (e.g., a change in size, replacement of worn clothing, lower household incomes, more savings / debt reduction). Also important in prompting changes in clothing spending is te need to upgrade / update a work wardrobe or respond to a changed work situation. As own – market shoppers feel the need to pinch their pennies for apparel, they spend more of their budget at Wal-Mart. Among these shoppers, Wal– Mart is over whelmingly seen as offering the best clothing value, while its clothing styles are a good match for their basic style preferences.
- 14. Clothing specialtystores and traditional department stores benefit from consistent or increased spending among up – market shoppers. The brands and styles offered at these retail formats are most preferred by up – market shoppers. Much of the spending increases among younger shoppers are funneled to fashion – focused clothing specialty stores, as well as retailers offering credible fashions plus a strong price for the quality value. Department stores and clothing specialty stores are the top two choices for offering the most – wanted brands and the most – wanted styles, both overall and among key segments. The majority of Americans wear ordinary/basic styles at work and at play. However, they seem a bit more stylish on the job than off. Younger and higher-income shoppers skew toward more fashion – driven looks for both wearing occasions. Who Is driving Apparel Shopping Growth ? Apparel sales grew 6 percent form 2003 to 2004, following 1.4 percent growth the prior year. We project apparel spending to increase about 4 percent annually during the next several years. Margins, however, will be severely tested by accelerating price pressure. The 2004 sales increase can be explained by our ShopperScapeTM data, particularly when viewed through the “liens” of household income. Every month, we survey 4,000 shoppers about their recent and planned spending. We collect purchasing data for over 150 retailers and more than 100 product categories. The majority of Shopper Scape TM respondents say they spent about the same amount on clothes for themselves in 2004 compared with 2003. Twice as many reported reduced spending than reported increased spending. These proportions, however, drainatically varied by upper-versus lower income households and resulted in a net increase in overall spending. Consumers with the highest incomes were the most likely to increase their spending for themselves, while those with lower incomes were the most likely to reduce spending. According to U.S. personal consumption expenditure date, the highest- income shoppers account for one-quarter of all apparel spending, although they make up only 12 percent of all households. The lowest-income households account for over one-third of all households but only 18 percent of all apparel spending. With respect to race / ethnicity, Whites were the most likely to maintain their clothing spending for themselves, compared with African-Americans and Hispanics. Latines, more of whom reported reduced spending. Spending trends on clothing also varied notably by both gender and age. Changes in spending – both increases and reductions – were more pronounced among women and younger shoppers than among their counterparts. Men and mid – life to older shoppers were most likely to have an unchanged rate of spending on clothing for themselves. Women were more likely to have both increased or decreased spending
- 15. compared with men.Working-age shoppers (ages 18 to 54) were more likely than older shoppers to have increased their spending on clothing for themselves. What Underlies Spending Changes ? Spending Increases Spending increases were most likely to be related to very practical reasons (e.g.a change in clothing size, replacement of worn clothing). Spending decreases were most likely to reflect a shrinking wallet. Work wardcobes also were important to spending changes, whether related to updating the wardrobe or a change in work status. Among those spending more on clothing, the most commonly cited reasons were related to practical needs for new or replacement clothing rather than to having more discretionary income available to spend on clothing or having a desire for a new fashion look. The need for a new size was mentioned as the most important reason for spending more on clothing by 28 percent of respondents. The replacement of worn – our items was mentioned by 21 percent. Eighteen percent increased spending to upgrade the work wardrobe. Few shoppers (3 percent) increased spending because fashions were of greater interest than previously. A slightly larger percentage (9 percent) attributed the increase in spending to higher income. Specific reasons for increasing clothing spending were highly related to age but not as much to gender. The only significant gender differences were that women were more likely than men to increase spending on clothing due to a change in size, while men were more likely in increase spending because of the need to replace a worn or torn item. Shoppers in older age groups were more likely to spend more because they were replacing worn – out clothing. Those in their mid-life “work” years were more likely to spend more because they were updating their work wardrobe. Less debts, higher incomes, and more time to shop were more likely to be reasons cited by younger shoppers for higher spending. Reasons behind increased spending were not well explained by either income or race. The most notable differences by income were among shoppers with household incomes of $25,000 to $49,999 and $75,000 to $99,999. Both groups were more likely than others to spend more to upgrade the work wardrobe. Those with incomes from $25,000 to $49,000 also were more likely than others to spend because they had more income and more free time to shop. Spending Decreases Among respondents cutting back on their clothing spending most did so because their clothing budge shrank, either due to a decrease in income (21 percent) or in an attempt to spend less so as to save more or pay down debt (18 percent). Other frequent responses included a change in a workplace situation that resulted in a decreased need for clothing spending a spending shift away from clothing to other items, and a desire to wait
- 16. to make newpurchases until the respondent lost weight. Only 2 percent said they reduced spending because they were less interested in the latest fashions. The most frequently mentioned reasons for reduced clothing spending were closely related to age and gender. Women and shoppers younger than 55 were most likely to say a decrease in income caused them to cut back. Mid-life shoppers were more likely to decrease their budget to save money or pay down debt. Younger shoppers were more likely to reduce spending due to a shift in spending priorities away from clothing toward other types of products. Men and older shoppers were more likely to say a change in their work situation triggered reduced spending, presumably reflecting retirement among the oldest shoppers. Women were more likely to say they were holding off on new clothing purchases until they lost weight. Income is modestly indicative of the reasons why shoppers cut back on spending. However, race is not a good indicator. Lower-income households were more likely to cut back because of a decrease in income. Shoppers in the lowest income households also were the least likely to postpone new apparel purchases until they lost weight. Shoppers in the highest – income households that cut back on spending were more likely to say they did so because they had less time to shop or were shifting work wear spending toward less expensive, more casual clothing. African – American were much more apt to spend less because they shifted spending away from clothing to other nonclothing items. What Retailers Are Benefiting from Spending Growth ? Overall, Wal-Mart (w.w.w.walmart.com) was the biggest direct beneficiary of recent increased spending – although primarily from lower – income or mid – life shoppers. Higher income shoppers and those at each end of the age spectrum shifted their spending to more fashion – focused apparel retailers. Regardless of whether their budget to any particular retailer. An equal number of shoppers, however, said they were shifting more of their clothing budget to Wal – Mart. The retail recipient of shifting spending on apparel varied notably by age and gender. Wal– Mart gained more of the budget of women than of men, as well as of all but the youngest and oldest shoppers. Women were more likely than men to shift their clothing budget toward all types of specialty stores, from full – price to off-price and value – priced Old Navy (www.oldnavy.com) Men were more likely than women to shift more of their budget to Sears (www.sears.com) Eighteen to 34 years – olds formed a distinctive bloc, that was especially likely to shift their budgets to all types of specialty stores, as well as to Target (www.target.com) They were the most likely to shift their clothing budget among retailers, reflecting less – ingrained shopping patterns
- 17. and a greaterdesire to shop at retailers offering trend-right fashions, particularly at value price points. Shoppers age 45 or older were more likely to shift their budget toward traditional department stores, long the domain of the mid – life to older shoppers. Shifts in the budget to various types of retailers also are linked to income and race. Wal-Mart’s everyday low prices clearly attracted shoppers on a budget; 40 percent of consumers with incomes less than $25,000 say they spent more on clothing there. Shoppers with incomes of $25,000 or higher were more likely to shift their budget to Kohl’s (www.kohis.com) and Old Navy. The most – affluent shoppers ($100,000 and above) were more likely than others to shift their budget to traditional department stores. African – Americans were more likely than Whites or Latinos to shift their budget to Wal – Mart and clothing specialty stores. Latinos were more apt than Whites or African – Americans to shift to Target and Sears. African – Americans and Latinos were more likely than Whites were more apt than African – Americans or Latinos to shift to Kohl’s. Who Has the Right Clothing Quality for the Price ? Apparel shoppers come in all shapes, sizes, ages, incomes, and taste levels. Even though there are clear differences in retailer preferences based largely on age and income, it is safe to say that Wal-Mart is the overall clothing value leader. However, consumers have different criteria for assessing value, which is evident based on the ratings of shoppers by key demographics such as age and income. The assessment of which retailer offers the best clothing value clearly differs by age but less so by gender. Wal-Mart is seen as a good value by more men than women. Women are more likely to perceive that Target and Old Navy offer a good value, most likely because of the ``fashion right’’ orientation of these retailers, an aspect of value that women are more likely to use in their ratings. Older shoppers are notably more likely than younger shoppers to perceive that J.C. Penney (www.jcpenney.com) and Kohl’s offer a good value. Younger shoppers are more likely to perceive that Target and Old Navy offer a good value, again likely including being ``fashion right’’ as a more important component of value. Income has a direct relationship with shopper rankings of quality for the price paid. Value retailers receive higher ratings among lower-income than upper-income households. Race/ethnicity has less of a relationship to shopper perceptions, although a few differences exists. Wal-Mart’s overall top ranking for clothing value is directly linked to its high ranking among lower-income shoppers; no other retailer comes close in terms of perceived clothing value. The gap between Wal-Mart and other retailers also is large in the $25,000 to $49,999 income group but narrows among those with incomes of $50,000 to $74,999. In the highest income group ($100,000 and over), only 7 percent of shoppers feel Wal-Mart offers the best clothing value. Kohl’s is perceived by the highest percentage of shoppers in this group to offer the best
- 18. clothing value. Asincome increases, traditional department stores, Old Navy, clothing specialty stores, and Target are more likely to be perceived to offer the best clothing value. With respect to race/ethnicity, Whites are more likely than African-Americans or Lations to feel that Kohl’s offers the best clothing values. Lations are more likely to feel that Target offers the best values. This surpasses the percent of Latinos who say that Wal-Mart offers the best clothing values. Latinos are more likely to feel that Target offers the best values. This surpasses the percent of Latinos who say that Wal-Mart offers the best clothing values-which is not the case with Whites or African-Americans, who give Wal-Mart the highest rating on this measure. Who Has the Right Brands and Styles? The overall ranking of retailers based on whether or not they offer more of the brands shoppers want to buy is very different from retailer rankings based on whether or not they offer the best value. Traditional department stores and clothing specialty stores (excluding Old Navy) are the most likely to offer more of the brands shoppers prefer. A smaller percentage say Wal-Mart has more of the brands they want to buy, followed by J.C. Penney and Kohl’s. Because many brands are aimed at specific age groups and sold at retailers targeting these groups, brands ratings of retailers noticeably vary by age. There are few differences based on gender. Older shoppers are the least likely to known which retailer carries the brands they prefer; they also are the most likely to say that traditional department stores carry the brands they want. J.C. Penney is rated highly on this factor by the oldest shoppers. Clothing specialty stores receive high ratings for carrying the ``right’’ brands by most shoppers, particularly younger ones. Target and Sears. At Work or Play, Basics Rule American consumers are not trendy – either at work or play. Regardless of wearing occasion, ``ordinary, very basic’’ styles were preferred by a wide margin over all other styles although more so far casual / weekend wear than for work. Second in preference for both wearing occasions were classic and traditional styles that never go out of fashion. Slightly more shoppers wear this style for work than for weekend. Less than a third of consumers said they wore ``contemporary’’ or ``trendsetting’’ fashions for work or for casual wear. The percent wearing the more fashion-focused styles for work was higher than the percent wearing these styles for the weekend. Age has a more noticeable impact than gender on the styles worn by full-time workers. Younger adults are more likely to wear work wardrobes comprised of contemporary or trendsetting styles. Roughly half of those younger than 34 are attracted to fashion forward types of work wear, compared with l4ess than a third of all workers. Older workers are more likely to stick to classics and basics for work, with 83 percent
- 19. and 88 percentof workers in the 55 – to – 64 and 65+ age groups saving they wear one of these two categories. Workers in the oldest age group are twice as likely to favor basic styles for work compared with those in the youngest. Women are more likely than men to wear trendsetting styles for work. Outside of the office, consumers are even more likely to wear basic styles. Half of all shoppers say this is their favorite style to wear on the weekend or on other casual occasions. As shoppers get older they are more likely to prefer basic casual looks. More than 60 percent of the oldest shoppers cite basic styles as preferred for weekend / casual wear. Classic/traditional styles are less preferred by younger shoppers for casual wear than for workplace attire. Contemporary looks are most preferred by younger shoppers for their casual wardrobe, with more than a third saying this is their favorite casual style. There is a direct relationship between income and style preferences for work attire, with preferences becoming less basic as incomes increase. Race / ethnicity is also related to work wardrobe preferences. Higher-income workers are most likely to prefer a classic work wardrobe. They, along with those in the middle-income range, also are more likely to favor contemporary, but not trendy, work wardrobes. The lower workers’ incomes, the more likely they are to wear basic styles to work. Basic styles also are more favored by White workers than by African-American and Latino workers. Latino workers are the trendiest race/ethnic group with respect to work clothing. Questions 1. What overall conclusions do you reach after reading this case? 2. How can apparel retailers compete with Wal-Mart? 3. Does cross-shopping affect apparel retailing? Is this good or bad? Why? 4. What are the retail implications of this statement ``American consumers are not trendy – either at work or play?’’ Do you agree with the statement? Explain your answer. 5. How could the information cited in the case be used in a retail information system? 6. Devise a questionnaire to determine what improvements the loyal customers of an apparel store chain would like to see in the chain. 7. What additional consumer-related information would you like to review about apparel shoppers besides that stated in the Case? RETAIL MANAGEMENT CASE – 1 (14 Marks) E-BAY The concept for eBay was born during a conversation between Pierre Omidyar and his wife, an avid Pez collector. (She currently has a collection of more than 400 dispenses.) She commented to Pierre how great it would be if she were able to collect Pez dispensers and interact with other collectors over the Internet. As an early Internet enthusiast, Pierre felt that many People like his wife needed a place to buy and sell unique items and meet other users with similar interests. He started eBay in 1995 to fulfill this need. Luckily for Pierre Omidyar, he was living in Silicon Valley when he got the idea for eBay. If Omidyar’s family had been living in France, his idea never would have gotten off the ground. It’s not a lack of venture capital or Internet audience in France that would have stopped him; it was the law at
- 20. that time. UnderFrench regulations, only a few certified auctioneers are allowed to operate, so eBay could not have been opened for business in its founder’s homeland back in 1995. Ten years later, eBay operated auctions in Argentina, Australia, Austria. Belgium, Brazil, Canada, China, France, Germany, Hong Kong. India, Ireland, Italy, Korea, Malaysia. Mexico, Netherlands, New Zealand, Philippines, Poland, Singapore, Spain, Sweden, Switzerland, Taiwan, and the United Kingdom. OFFERING TO CUSTOMERS Most retailers follow the business-to-consumer sales model. eBay pioneered online person-to-person trading, also own as the consumer-to-consumer sales model, by developing a Web-based community in which buyers and sellers are brought together. Initially, most of the items auctioned were collectibles such as antiques, coins, stamps, and memorabilia. Many of the sellers on EBay are small entrepreneurial Business that use the site as sales channel. By 2003, most of the merchandise available on eBay had shifted form collectibles to practical item, such AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL as power drills and computers. Now big business such as Disney and Sun Microsystems have discovered Bay. Retailers, manufacturers and liquidators are using the site to unload returned merchandise, refurbished merchandise, and used products. The eBay service permit sellers to list items for sale and enables buyers to bid on items of interest. All eBay users can arowse through listed items in a fully automated, topically arranged, intuitive, and easy-to-use online service that is available 24 hours a day, seven days a week. However, even with automated bidding features, participating in an online auction requires more effort than buying fixed price goods, and once the auction is over, most buyers have to send a check or money order and then get the merchandise up to two weeks later. Buyers have the option to purchase items in an auctionstyle format or at a fixed price through a feature called Buy It Now. More than 500 million items are listed for sale each year. From Civil War to Star War items, from Beanie Babies to fine antiques, chances are that you’ll find it among eBay’s 45,000 categories of merchandise from 254,000 online sellers. “If you can’t sell it on eBay, you might as well open up the window and throw it out in the backyard because it ain’t worth a damn,” says Bob Watts, an antique dealer in Fairfield, Virginia. The Web site has over 135 million registered users worldwide. Financial Overview for eBay Year 2004 2003 2002 2001 2000 Net revenues ($ mil) 3271 2165 1214 748 431 Net Income($ mil) 778 442 250 90 48 Employees 8100 6200 4000 2500 1927 Net profit margin 23.8% 20.4% 20.6% 12.1% 11.2% People spend more time on eBay than any other online site, making it the most popular shopping destination on the Internet, Users often refer to eBay as a community—a group of people with similar interests. For example, Dr. Michael Levitt by day is a distinguished medical researcher at the Minneapolis Veterans Medical Center, but by night, he is an eBay warrior. Levitt is a collector of antique California Perfume Company bottles. Every night he logs on to eBay to see if anything new is being offered. He has purchased hundreds of bottles through eBay simply because it’s the most convenient way to connect with sellers. The Web site requires that all new sellers have a credit card on file, insurance, authentication, and escrow accounts. Buyers and sellers can check the “reputation” of anyone using eBay. A Feedback Forum is provided, through which eBay users can leave comments about their buying and selling experiences. If you’re a bidder, you can check your seller’s Feedback Profile before you place a bid to learn about the seller’s reputation with previous buyers. If you’re a seller, you can do the same with your bidders. BUSINESS MODEL Unlike most e commerce companies, eBay has been profitable from the very beginning. Exhibit I contains net revenues, net income, employees, and net profit margin figures from 2000 to 2305. Most of the company’s revenues come from fees and commissions (between 1.25 and 5.0 percent of the sale price) associated with online and traditional offline auction services. Online revenues come from placement and success fees paid by sellers; eBay does not charge fees to buyers. Sellers pay a nominal placement fee, and by paying additional fees, they can have items featured in various ways. Sellers also pay a success fee based on the final purchase price. Online advertising on eBay has not made significant contributions to net revenues, and no significant revenue from advertising is expected in the near future. Additional revenues come from auction-related services, including bidder registration fees and appraisal and authentication. Its online business model is significantly different from electronic retailers. Because individual sellers, rather than eBay, sell the items listed, the company has no procurement, carrying, or shipping
- 21. costs and noinventory risk. The company’s expenses are just personnel, advertising and promotion, and depreciation on the site’s hardware and software. COMPETITION Due to the popularity of auctions with consumers, a number of e-businesses have entered the market. Some competing Internet auctions offering a broad range of products are Amazon.com, Yahoo!, uBid, and Overstock.com. In addition to these multicategory sites, there are vertical auction sites specializing in a single category of merchandise such as stamps or baseball cards. Perhaps the most significant competitor is Amazon.com, which launched an auction site in 1999. Amazon has a well-known and highly regarded brand name and substantial traffic on its Web site. (Amazon is the most widely known e-business, with eBay ranking third in brand awareness.) When Amazon launched its auction site, it offered some unique benefits to customers, including a nodeductible, no-haggle, no third-party money-back guarantee for purchases up to $250 and a feature called Going, Going, Gone that extends the auction for 10 minutes if a bid is made in the last 10 minutes before closing. On eBay, it is common for items to be picked off in the closing minutes by vigilant consumers who make the last bid. Amazon is known for the usability of its site. In response to Amazon’s entry, eBay took steps to make buying and selling easier. It now offers a Personal Shopper program that searches out specified products and My eBay, which gives user information about current eBay activities, including bidding, selling, account balances, favorite categories, and recent feedback. Finally, some Internet businesses have arisen that simply search and display summary information from many auction sites to enable comparison shopping. However, eBay sued one such site and has used technology to block access of another site to prevent them from gathering and displaying eBay auction data. Questions 1. What are the advantages and disadvantages from the buyer’s and seller’s perspectives of purchasing merchandise through Internet auctions like eBay? 2. Will a significant amount of retail sales be made through Internet auctions like eBay in the future? Why or why not? 3. What are eBay’s competitive advantages? Will it be able to withstand the competition from other auction sites like Yahoo! And Amazon’s auctions? CASE - 2 (6 Marks) How Much for a Good Smell? For the past two Christmas seasons, Courtney’s, an upscale gift store, has carried a sweet-smelling potpourri in a plastic bag with an attractive ribbon. Heavily scented with cloves, the mixture gives a pleasant holiday aroma to any room, including the store. Two years ago, the mixture cost $4.50 a bag. Courtney’s (the only store in town that carried it) sold 300 pieces for $9.50. Courtney’s supply ran out 10 days before Christmas, and it was too late to get any more. Last year, the manufacturer raised the price to $5.00, so Courtney’s raised its retail price to $9.95. Even though the markup was lower than the previous year, the store owner felt there was “magic” in the $10 price. As before, the store had a complete sellout, this time five days before Christmas. Sales last year were 600 units. This year, the wholesale price has gone up to $5.50, and store personnel are trying to determine the correct retail price. The owner once again wants to hold the price at $10 ($9.95), but the buyer disagrees: “It’s my job to push for the highest possible markup wherever I can. This item is a sure seller, as we’re still the only store around with it, and we had some unsatisfied demand last year. I think we should mark it $12.50, which will improve the markup to 56 percent. Staying at $10 will penalize us unnecessarily, especially considering the markup would be even lower than last year. Even if we run into price resistance, we’ll only have to sell 480 to maintain the same dollar volume.” The owner demurs, saying, “This scent is part of our store’s ambiance. It acts as a draw to get people into the store, and its pleasant smell keeps them in a free-spending state of mind. I think we should keep he price at $9.95, despite the poorer markup. And if we can sell many more at this price, we’ll realize the same dollar gross margin as last year. I think we should buy 1,000. Furthermore, if people see us raising a familiar item’s price 25 percent, they might wonder whether our other prices are fair.” QUESTIONS 1. What prices caused Courtney’s charge? 2. Which price would result in the highest profit? 3. What other factors should Courtney’s consider? 4. What price would you charge, and how many units would you order? CASE – 3 (10 Marks) Promoting a Sale A consumer electronic chain in the Washington, DC, area is planning a big sale in its suburban
- 22. Virginia warehouse overthe three-day President’s. Day weekend (Saturday through Monday). On sale will be nearly $2 million worth of consumer electronic products, 50 percent of the merchandise sold in the store. The company hopes to realize at least $900,000 in sales during the three days. In the retailer’s past experience, the first day’s sales were 50percent of the total. The second day’s were 35 percent, and the last day’s, 15 percent. One of every two customers who came made a purchase. It’s known further that large numbers of people always flock to such sales, some driving as far as 50 miles. They come from all economic levels, but all are confirmed bargain hunters. You’re the assistant to the general merchandise manager, who has asked you to plan the event’s marketing campaign. You have the following information: 1. A full-page Washington Post ad costs $10,000, a half page ad costs $6,000, and a quarter-page ad costs $3,500. To get the maximum value from a newspaper campaign, it’s company policy to always run two ads (not necessarily the same size) for such events. 2. The local northern Virginia paper is printed weekly and distributed free to some 15,000 households. It costs $700 for a full page and $400 for a half page ad. 3. To get adequate TV coverage, at least three channels must be used, with a minimum of eight 30- second spots on each at $500 per spot, spread over three or more days. Producing a TV spot costs $3,000. 4. The store has contracts with three radio stations. One appeals to a broad general audience aged 25 to 34 years. One is popular with the 18-to-25 group. A classical music station has a small but wealthy audience. Minimum costs for a saturation radio campaign, including production, on the three stations are $8,000, $5,000, and $3,000, respectively. 5. To produce and mail a full-color flyer to the store’s 80,000 charge customers costs $10,000. When the company used such a mailing piece before, about 3 percent responded. QUESTIONS: 1) Knowing that the company wants a mixed-media ad campaign to support this event, prepare an ad plan for the general merchandise manager that costs no more than $40,000? 2) Work out the daily scheduling of all advertising? 3) Work out the dollars to be devoted to each medium? 4) Justify your plan? CASE – 4 (10 MARKS) Enterprise Builds on People When most people think of car rental firms, they think of Hertz, Alamo, Budget or Avis, but Enterprise is the largest and most profitable car rental business in North America. The company operates 700,000 rental and fleet vehicles worldwide and has annual revenues of $7.4 billion. In 2005, Enterprise was listed as number 16 on the Forbes “500 Largest Private Companies in America” list. Enterprise operates in the United States, Canada, Germany, Ireland, and the United Kingdom. In 1957, Jack Taylor started Enterprise with a unique strategy. Most car rental firms targeted business and leisure travel customers who arrived at an airport and needed to rent a car for local transportation. Taylor decided to target a different segment—individuals whose own cars are being repaired, who are driving on vacation, hauling home improvement materials, providing an extra vehicle for an out-oftown guest, or, for some other reason, simply need an extra car for a few days. The traditional car rental companies have to charge relatively high daily rates because their locations in or near airports are expensive. In addition, their business customers are price insensitive because their companies pay for the rental expenses. Whereas the airport location is convenient for customers traveling by air, this location is inconvenient for people seeking a replacement car while their car is in the shop. Although Enterprise has airport locations, it also has rental offices in downtown and suburban areas, near where its target market lives and works. The firm provides local pickup and delivery service in most areas. Enterprise’s human resource strategy is a key to its success. The firm hires college graduates for its management trainee positions because it feels that a college degree demonstrates intelligence and motivation, Rather than recruiting the best students, it focuses on hiring people who were athletes or officers of social organizations, such as fraternities, sororities, and clubs, because they typically have the good interpersonal skills needed to effectively deal with Enterprise’s customers. Jack Taylor’s growth strategy was based on providing high-quality, personalized service so that customers would return to Enterprise when they needed to rent a car again. But operating managers were compensated on the basis of sales growth initially, not customer satisfaction. So service quality declined. The first step Enterprise took to improve customer service was to develop a customer satisfaction measure. The questionnaire, called the Enterprise Service Quality Index, was developed on the basis of input from the operating managers. Thus, the managers felt ownership of’ the measurement tool. As the index gained legitimacy, Enterprise made a big deal about it. It posted the scores for each location prominently in its monthly operating reports—right next to the net profit numbers that
- 23. determined managers’ pay.The operating managers were able to track how they were doing, and how all their peers were doing, because all of the locations were ranked. To increase the motivation of’ managers and improve the service at their location, Enterprise announced that managers could be promoted only if their customer satisfaction scores were above the company average. Then it demonstrated that it would abide by this policy by failing to promote some star performers who had achieved good growth and profit numbers but had below-average satisfaction scores. To provide a high level of service, new employees generally work long, grueling hours for what many see as relatively low pay. They, like all Enterprise managers, are expected to jump in and help wash or vacuum cars when the agency gets backed up. Bu all this hard work can pay off. The firm does not hire outsiders for other than entry level jobs. At Enterprise, every position is filled by promoting someone already inside the company. Thus, Enterprise employees know that if they work hard and do their best, they may very well succeed in moving up the corporate ladder and earn a significant income. QUESTIONS 1. What are the pros and cons of Enterprise’s human resource management strategy? 2. Would you want to work for Enterprise? Why or why not? 3. How does its human resource strategy complement the quality of customer service delivered by its representatives? CASE – 5 (8 Marks) Diamond in the Rough (Christmas Bonus) Ruth Diamond, president of Diamond Furrier, was concerned that sales in her store appeared to have flattened out and was considering establishing a different method of compensating her salespeople. Diamond was located in an affluent suburb of Nashville, Tennessee. Ruth’s father had founded the company 40 years earlier, and she had grown up working in the business. After his retirement in 1980, she moved the store into an upscale shopping mall not far from its previous location, and sales had boomed most immediately. Rising to just over million in five years. However, once it had reached that sales volume, it remained there for the next three years, making Ruth wonder whether her salespeople had sufficient incentive sell more aggressively. Diamond’s staff was all women, ranging from 27 to 58. There were four full-timers and four parttimers (20 hours a week), all of whom had at least three years of experience in the store. All of them paid at the same hourly rate, which was $10; there was also a liberal health benefit plan. Employee morale was excellent, and the entire stall displayed strong personal loyalty to Mrs. Diamond. The store was open 78 hours a week, which meant that there was nearly always a minimum staff of three on the floor, rising to six at peak periods. Diamond’s merchandise consisted exclusively of fur coats and jackets, ranging in price from $750 to more than $5,300. The average unit sale was about $2,000. Full-timers’ annual sales averaged about $160,000, and the part-timers’ were a little over half of that. Mrs. Diamond’s concern about sales transcended her appreciation for her people’s loyalty. She had asked them, for example, to maintain customer files and call their customers when the new styles came in. While some of them had been more diligent about this than others, none of them appeared to want to be especially aggressive about promoting sales. So she began to investigate commission systems and discussed them with some of her contacts in the trade. All suggested lowering the salespeople’s base pay and installing either a fixed or a variable commission rate system. One idea was to lower the base hourly rate from $10 to 7 and let them make up the difference through a 4 percent commission on all sales, to be paid monthly. Such an arrangement would allow them all to earn the same as they currently did. However, she realized that such a system would provide no incentive to sell the higher-priced furs, which she recognized might be a way to improve overall sales. So she considered offering to pay 3 percent on items priced below $2,000 and 5 percent on all those above. Either of these systems would require considerable extra bookkeeping. Returns would have to be deducted from commissions. And she was also concerned that disputes might arise among her people from time to time over who had actually made the sale. So she conceived of a third alternative, which was to leave the hourly rates the same but pay a flat bonus of 4 percent of all sales over $1 million, and divide it among the people on the basis of the proportion of hours each had actually worked. This “commission” would be paid annually, in the form of a Christmas bonus. QUESTIONS 1) What are the advantages and disadvantags of the various alternatives Ruth Diamond is considering? 2) Do you nave any other suggestions for improving the store’s sales?
- 24. 3) What wouldyou recommend? Why? Case – 6 (12 Marks) Home Depot Changes Directions Founded in Atlanta, Georgia, Home Depot has grown into the world’s largest home improvement specialty retailer and the second-largest retailer in the United States. Twenty years of consistent growth is quite an achievement for any retailer; however, due to this growth, Home Depot is a much different company than it was when it was founded by Bernard Marcus and Arthur Blank in 1978. Changes in the company, put into motion by the new CEO, Bob Nardelli, shook up the way Home Depot does business. HISTORY AND CULTURE OF THE COMPANY During Home Depot’s first 20 years, Bernard Marcus was CEO. In 1997, Arthur Blank succeeded his partner’s place at the top of the company. In founding Home Depot, the partnership of Marcus and Blank revolutionized home improvement shopping by creating a different kind of store. Warehouse is a better term for the stores’ layout; each location stocks large volumes of goods that enable the company to compete by maintaining low prices. Because Home Depot’s primary customer is the individual home owner or small contractor, the stores also offèr know1edgeable customer service to assist those in need of a little direction. In fact, the company took this service further by offering how to clinics and longer four-week courses in its Home Depot University to educate customers about various home improvement projects, such as laying tile and caulking bathrooms. Thus, Home Depot effectively combined the strategies of low price and high service, not commonly seen in retailing. Home Depot’s “do-it-yourself” slogan was not just aimed at customers. This philosophy was fostered by the founders and trickled down through the entire company Home Depot grew, not as a part of complex plan, but as a result of a good business idea, good people and some experimentation with new projects such as the Expo home decorating stores. Home Depot’s corporate structure was Very decentralized: many typical corporate policies were nonexistent in the firm. Each store manager was also a do-it-yourselfer and had a significant amount of control in making decisions pertaining to such areas as merchandising, advertising, and inventory selection for a particular area. Thus, Home Depot stores tended to be less homogeneous in their merchandise offerings than many other national retail chains. But this decentralization of decision making allows managers to feel a stronger sense of ownership in a store’s business. Associates of the company demonstrate a great deal of loyalty and pride in the company. Many store associates are hired with strong background experience in home improvement and are able to pass their knowledge along to customers. By building an enthusiastic staff, Home Depot has been able to deliver its promise of exceptional customer service. FINDING A NEW LEADER In 1999, with well over 900 stores, a market share of 24 percent, and several growth initiatives, Home Depot exuded success. However, historical success and future success are different concepts. Home Depot’s board of directors was becoming increasingly unhappy. The company’s performance at the time was faltering with a sharp drop in stock price in October 2000. After disputes about strategy, stores, and people, Home Depot’s directors finally took action and so set out to find a leader capable, in their view, of continuing the firm’s growt. in sales and profits. The board found their man in Bob Nardelli. At the time, Nardelli was vying for Jack Welch’s position as CEO of GE but lost the battle to Jeff Immelt. Althogh he was passed up by GE, Bob Nardelli’s career has been impressive, to say the least. From playing football at western Illinois University to starting as a manufacturing engineer at GE, Nardelii’s attitude was one of persistence and relentless hard work, Nardelli managed to work up through GE to the position of rnanufcturing Vice President, left to join the equipment maker Case as an executive vice president, and then returned to GE to run the Canadian appliance business. He then continued to prove himself at GE as the head of GE Transportation and CEO of GE Power Systems. Throughout his career at GE, Nardelli was recognized for his ability to improve operations and execute, but unfortunately, he was not viewed as a strong strategic leader. Believing he was finally in the right position to succeed Welch, Nardelli was very disappointed at the announcement of Immelt’s appointment. Home Depot quickly snatched Nardelli up, placing him as CEO of Home Depot in December 2000. Nardelli redirected his energy into a mission to develop Home Depot. CHANGES AT HOME DEPOT Since Nardelli took the lead at Home Depot, the company has experienced significant changes. Home Depot is shifting toward a more centralized organization, one that can more efficiently handle the operations of a 1,400- store company in Canada, Mexico, and the United States. For example, buying, once handled by nine regional offices, is now located at corporate headquarters in Atlanta. The company as a whole benefits from consolidation; buyers can get larger quantities of goods at lower costs, but how does this affect the do-it-yourself store manager? Nardelli, always a relentless
- 25. workaholic, expects thosearound him to have the same attitude by holding frequent meetings and treating weekends like any other day of business. Although a “can do, will do” atmosphere is necessary to implement Nardelli’s plans, the hasty shift from laid- back to no-nonsense is creating some anxiety within the organization. In the ffrst 19 months of his office, Nardelli lost 24 of 39 senior officers and has brought in several new faces, many from outside the retail industry. One newcomcr, recruited by the new CEO, is Dennis Donovan from GE. Nardelli, believing in Donovan’s efficiency, has made him an exceptionally high-paid chief of human resources. Changes are not just affecting Home Depot’s associates. In the past, Home Depot’s customer return policy was simply to give cash back, no matter what. Although this was fantastic customer service, without receipt restrictions, abuse of the policy was out of control. Home Depot will now save close to $10 million annually with a new return policy of only store credit without a receipt. Nardelli is applying the GE mindset, one characterized by strict measurement emphasizing efficiency, to his new company. Home Depot is now using GE’s Six Sigma quality control method and quickly increasing the company’s use of the Internet. Another new focus is that on associate training and evaluation. Pre-Nardelli, Home Depot had 157 different associate appraisal forms. All 295.000 associates are now reviewed using just two different forms. These changes do not mean that the company is less interested in developing its people; in fact, Nardelli is trying to create an environment that will best highlight individual’s abilities. At Home Depot’s headquarters in Atlanta, the company is forming a leadership institute offering courses on leadership, merchandising, store planning, financial operations, and Six Sigma to executives with high potential. Nardelli wants a “coaching environment” that promotes succession planning and avoids the recent incident of having to hire a CEO from outside the company. Despite Nardelli’s efforts, the market has not been kind to Home Depot. In Nardelli’s first six months, the stock price rose from $39 to $53 but then curiously fell 10 percent after a first quarter announcement of 35 percent profits growth. Quarterly earnings continue to grow as in the past, but unfortunately, Home Depot’s stock price is not reflecting this trend. COMPETITION AND GROWTH POTENTIAL As Home Depot struggles with its own growing pains, the company must also consider the everincreasing competition from Lowe’s. By placing stores in directly competing areas and growing at a faster rate than Home Depot, Lowe’s is definitely a factor in future planning. Lowe’s best advantage is that it stores are designed with less of a “warehouse” feel, having wider aisles and better lighting. Store appearance may not be a crucial factor, but it is definitely a differentiating feature for a female shopper. And women are increasingly doing a greater percentage of home irnprovement shopping. Home Depot is trying to address this issue by cleaning up and modernizing its store look with lower shelving and different product mixes. Extending its already strong business targeted at individual customers, Home Depot is now opening several professional stores for contractors, developers, and superintendent or maintenance people. The firm is also looking to expand through purchases of European home improvement companies. QUESTIONS 1) What is the best way for the Home Depot to continue to grow? 2) Can Home Depot maintains its current market position with its new policies and increasing competition? 3) Will more efficient operations and increased centralization be effective in streamlining Home Depot’ business? 4) How might the shifts in corporate culture affect executives, management, and associates? CASE – 7 (10 Marks) Can Wal-Mart Improve Its Company Image? The company Sam Walton built has become the world’s number one retailer. The organization has grown in a variety of retail formats, including Wal-Mart Stores, Supercenters, Sam’s Clubs, Neighborhood Markets, online, and internationally. Wal-Mart operated units in the following countries as of April 2005: Country Number of Stores Country Number of Stores Argentina 11 South Korea 16 Brazil 151 Mexico 700 Canada 261 Puerto Rico 54 China 45 United Kingdom 285 Germany 89 United States 3719 As Wal-Mart has grown, it has also become a large job creator. According to the company home page, “more than 1.2 million Associates work at Wal-Mart in the U.S. The majority of Wal-Mart’s hourly store associates in the U.S work full-time. That’s well above the 20-40 percent typically found in the retail industry. We are a leading employer Hispanic Americans, with more than 139,000
- 26. Hispanic associates. Wal-Martis one of the leading employers of African Americans, with more than 208,000 African-American associates. More than 220,000 of our associates are 55 or older. We project we will create positions for more than 100,000 new jobs in 2005.” WAL-MART FACES CRITICISM Over the years, Wal-Mart has had its share of negative press about its labor and management practices. As a large company and employer, Wal-Mart has grown to expect attention and criticism. Some of the key areas of concern include discriminating against women, resisting unions, paying lower wages and offering fewer benefits, purchasing merchandise from China, employing contractors who hire illegal immigrants, and growing too rapidly. Constructive criticism has helped Wal-Mart improve its operations; however, the company takes issue when the criticism becomes an unwarranted attack that tarnishes their reputation. ADVERTISING CAMPAIGN TO IMPROVE CORPORATE IMAGE To reverse negative criticism and improve its public image, Wal-Mart launched an informative Web page, http://www.walmartfacts.com/Default.aspx; had key high- ranking executives appear for interviews on ABC, CNN, Fox, and CNBC; and took out full-page advertising in over 100 newspapers. Wal-Mart is proactively fighting back against critics and special interest groups to dispel myths about its employment and business practices. To tell the Wal-Mart story and clear up misperceptions, the Web page contains company news and press releases, illustrates community impact and involvement programs, describes employee benefits and wages, and explains the status of current lawsuits facing the organization. This non-commercial Web page also summarizes Wal-Mart’s diversity and equal employment opportunity policies, international operations, employee promotion strategies, charitable giving, and merchandise sourcing. An important objective of the Web site is to help associates, consumers, reporters, and investors learn about the company. To reach the mass media and take control of its image, Wal-Mart’s chief Executive Officer, H. Lee Scott, appeared on many networks including ABC, CNN, Fox, and CNBC for interviews. As part of this promotional campaign to show Wal-Mart in a positive light, he also granted interviews with US4Todqy and the Associated Press. Wal-Mart put a full-page ad in more that 100 newspapers including the New York Times and The Wall Street Journal on January 13, 2005. The ads contained a five-paragraph letter from CEO Scott in response to misinformation about Wal-Mart. To set the record straight, the national print ads stated that the average wage for full-time hourly workers at Wal-Mart is $9.68, which is almost twice the federal minimum wage of $5.15 per hour. QUESTIONS 1) Can this type of advertising campaign improve Wal-Mart’s image in the eyes of associates, consumers, investors, and the press? 2) What else could Wal-Mart do to improve its reputation? 3) Go to Wal-Mart Stores home page at http://www. walmartstores.com and click on College Recruiting. Explore what this page has to offer. If a Wal-Mart recruiter came to your campus, would you consider Wal-Mart as an employer? Why or why not? CASE - 8 (10 MARKS) Competitive Environment in the Teen/College Apparel Market Jennifer Shaffer, a 17-year-old living in Newton, Massachusetts, used to shop at Abercrombie & Fitch (A&F) once a month. She thought the prices were high, but the brand name and image appealed to her. She says, “It’s like I really had to have Abercrombie.’ Then an American Eagle (AE) store opened about 15 minutes from her home. Now she shops at the AE store about twice a month and rarely goes to the A&F store. “They look the same, and they’re both really cute,” she says. “But American Eagle’s prices are a little cheaper.” Both A&F and AE are still growing into their present strategy of selling casual apparel to the teen/college market. When A&F was established as an outdoor sporting goods retailer over 100 years ago, it sold the highest quality hunting, fishing, and camping goods. A&F also outfitted some of the greatest explorations in the early part of the twentieth century, including Robert Perry’s expedition to the North Pole and Theodore Roosevelt’s trips to the Amazon and Africa. Over time, its tweedy image became less attractive to consumers. The chain experienced a significant declines sales and profits, and in 1977 it was forced to declare bankruptcy. The company, initially acquired by Oshman’s Sporting Goods, did not experience a turnaround until The Limited Inc. acquired it in 1988. Initially, The Limited positioned A&F as a tailored clothing store for men. In 1995, The Limited repositioned A&F to target both males and females in the teen and college market with an emphasis on casual American style and youth. In 1999. The Limited sold A&F. which now operates as a separate company that operated 351 Abercrombie & Fitch stores, 167 abercrombie stores, 271 Hollister Co. stores, and 5 RUEHL stores at the end of May 2005. It operates e-commerce Web sites at www.abercronibie.com,
- 27. www.abercrombiekids.com, and www.hollisterco.com. AmericanEagle, though lacking the rich tradition of A&F, also was positioned as outfitter when it started in 1977. Initially offering apparel only for men, Amerian Eagle shifted its focus to teens and college students in 1995. In 2000, it acquired two Canadian specialty retail chains— Bluenotes/Thriftys and Braemar. The Braemar locations were converted to American Eagle stores, whereas the Thriftys stores are being converted into Bluenotes stores specialty stores that target a slightly younger, more urban teen demographic and that carry more denim merchandise. Today, American Eagle has 779 AE stores in 50 states, the District of Columbia, and Puerto Rico and 70 AE stores in Canada. It also operates via its Web business, www.ae.com. Even though A&F and AE have evolved from their roots, there is still an outdoor, rugged aspect in their apparel. Both retail chains carry similar assortments of polos, pants, t-shirts, jeans, and sweaters. All the apparel and accessories carry the store’s private-label brand. A lot of the merchandise is athletically inspired. The rivalry between A&F and AE is intense; A&F even filed a lawsuit in 1998 in federal court accusing AE of copying its clothing styles and catalog. The courts found that though the designs were similar, there was nothing inherently distinctive in A&F’s clothing designs that could be protected by a trademark. But the courts have ruled that Abererombie’s catalog design and image are worthy of trade dress protection. Trade dress is the overall image of a product used in its marketing or sales, composed of the nonfunctional elements of its design, packaging, or labeling (such as colors, package shape, or symbols). However, the court also felt that AE’s catalog had a different image that did not infringe upon the image of the A&F catalog. It was the catalog and home page that first drew Jennifer to an A&F store a couple of years ago. She recalls going through the catalog and browsing the Web page with some girlfriends and looking at the muscular young men featured “The guys in the magazine— that’s what made us all go,” she says. This young and sexy image is enhanced by store signage featuring scantily clad lacrosse players and young beachgoers. Abercrombie & Fitch has exploited this image by introducing a line of intimate apparel in 2001. Intimate apparel is now one of the best selling merchandise categories in the stores. To reinforce its brand image and communicate with its target audience, AE teamed up with MTV to sponsor MTV Spring Break 2005. As a major sponsor, AE was the official apparel provider for the network’s hottest annual event, broadcast from Cancun, Mexico, on March 18—20, 2005. American Eagle provided the wardrobe for the stars of Dawson’s Creek, and it also has its apparel featured in various movies. While its commercials are less suggestive than those of A&F, its “Get Together” commercials feature college- and high-school--age teens dancing and then coming together and kissing. Even though A&F devotes its advertising and marketing resources to reaching college-age consumers, many teenagers also patronize its stores. The company is concerned that the image of its stores will be negatively affected if they become a place for teenagers to hang out. The development of the Hollister chain is one of the approaches that A&F has taken to preserve the A&F image while catering to the growing teenage market. The Hollister stores are unique. Their target market consists of consumers ages 14 to 18 years. The merchandise in the stores is 20 to 30 percent less expensive than A&F’s merchandise. The styling of the merchandise is also different, with brighter colors and larger logos. However, many teenagers fail to recognize the subtle differences. They contend that it is essentially the same merchandise except at lower prices. Furthermore, Hollister stores are roughly. 2,000 square feet smaller than A&F stores, and the store design is completely distinct. While A&F stores still convey an outdoor ruggedness in their decor, Hollister stores present a California beach—inspired theme. They want their customers to feel as though they are part of a bench party. This casual atmosphere provides young consumers with an enjoyable shopping experience. The decor in the stores inspires and evokes memories of hot summer days at any time of the year. QUESTIONS 1) What, if any, are the differences in A & F’s and AE retail strategy? 2) What are the brand images of A&f and AE? What words and phrases are associated with each retailer’s brand name? 3) List other specialty apparel retailers that target the same customers as A&F and AE. How do these brands differentiate themselves in the competitive retail environment? Construct a product positioning map to illustrate. 4) Which retailer(s) has (have) the stronger competitive position? Why? Retail Management
- 28. Q.1) What isthe purpose of developing a formal retail strategy? How would a strategic plan be Used by a college book store? (10 Marks) Q.2) Do you believe that customer service in retailing is improving or declaring, if yes, why and If no why? (10 Marks) Q.3) What are the expected and augmented value chain elements for the following retailers. (15 Marks) a) Fast food restaurants b) Motel c) Local pharmacy Q.4) What do you understand by service retailing. Explain the unique aspects of service Retailing with suitable examples. (10 Marks) Q.5) Explain the wheel of retailing. Is this theory applicable in today’s context. Why or why not? (10 Marks) Q.6) Compare a single channel and a multi-channel retailing. State the advantages and Dis-advantages also. (10 Marks) Q.7) a) Explain non-store retailing with example (10 Marks) . b) Explain the 30 days rule for direct marketers. Q.8) Explain the characteristics of retail training methods? (5 Marks) RISK & SAFETY MANAGEMENT Q1) Write short notes (any two) (10 Marks) a) Investment Alternatives b) Mutual Funds as form of effective Indirect Investing c) Securities Market Is the Battlefield Q2) Explain briefly the Guidelines for Investment Decisions. (10 Marks) Q3) Define Portfolio Management Framework and explain its features (10 Marks) Q4) Explain in brief the Portfolio Theory .Discuss The Benefits of Diversification (10 Marks) Q5) Discuss the features of Industry Analysis. (10 Marks) Q6) Explain in brief Equity Valuation and its application. (10 Marks) Q7) Explain in brief Financial Statement Analysis: The Information Maze. (10 Marks) Q8) What is Company Analysis. Discuss the process of Establishing the Value Benchmark. (10 Marks) SAFETY MANAGEMENT CASE STUDY : 1 You as a Safety Manager, have just received a report that Harold Jacobs has lost the tips of two fingers in an accident on the milling machine he operates. His foreman states that it was a clear case of carelessness, that Jacobs is accident-prone anyway and that he thinks the man ought to be discharged, or at least move to another department. The records show Jacobs has been on his present job three weeks. He has been with the company and in this department for three years. Two months ago, he was out three days with a badly lacerated hand as a result of an ‘accident’ with the broach he was then operating. A year earlier he suffered a badly sprained ankle in a fall, and shortly after he was hired he suffered a minor injury on a drill press. Question : 1) Do you agree with foreman? 2) What things would you want to investigate relative to possible clauses? 3) Discuss some of the possibilities in this case? 4) Is Safety more a psychological problem or more an engineering problem, why? CASE STUDY : 2 The Lux manufacturing Company is seriously considering going into production of a new liquid glass cleaner for house, cars and table glasses. Tests have shown the liquid is particularly effective in dissolving spots of grease, albumen and other stubborn materials, as well as washing away ordinary dirt. It seems to leave glass clean and shining. The company is satisfied that it has the money, equipment, manpower, and marketing facilities to handle this additional product. Question : 1) From a Safety point of view what investigations would you wish to have made? 2) Suggest how these investigations might be handled? i.e. what people, departments or
- 29. organizations might carryout investigations of what hazards? 3) How serious are the dangers is unsuspected hazards of new products? Cite an example or two briefly? 4) Suggest steps a company may take to increase the probability that its products will not prove injurious on occasion? CASE STUDY : 3 The Bateman Corporation manufactures metal parts for farm machinery and road building equipment assembled and merchandised by other concerns. It does a good deal of cutting, pressing and welding of both steel and magnesium. Occupying a two-storey brick building containing 230,000 square feet of floor space on each floor, it employs on the average, 950 men and 1000 women. Question : 1) What are the two considerations in reducing the fire hazard? 2) What provisions should be made for rescue units? 3) Which portable fire-extinguishing equipment you would recommend? 4) Suggest a training program for fire prevention? CASE STUDY : 4 Suppose that a safety specialist in October of 1990 decides to figure out approximately how much injuries and accidents have cost the company in the preceding 12 months perhaps the top management has raised the question as to whether the company, making an all out effort to cut costs, should not curtail its safety program. The safety specialist can show that the firm’s prevention efforts over a period of time have reduced the rate of injuries by 30 percent. He or she now wants to translate that into dollars. Question : 1) Define the term Insurance cost? 2) Define the term Average Uninsured costs? 3) Why is it desirable to make some use of averages or ratios in calculating the cost to a company resulting from its work injuries? 4) What is the logical basis for including the cost of no injury accidents as well as SAP CONSULTANCY 1. What are the differences between system fresh and client fresh? 2. What is the difference Between Role and Profile? 3. What is the process of dialog program from first to last? 4. How can one use Bar codes in Sap-script? 5. Answer the following set of questions a) What is MANUE field in NAST table? b) What is its purpose? c) What for it is used in SAP Script? d) How can we use that field in our own driver program? e) Where Standard Driver programs reside? f) What is the t code & path for finding the standard driver programs? 6.What are client dependant objects in ABAP or SAP? 7.How do we debug sap script? 8.What are the diff types of dispatcher in SAP? 9. How you will send mail from one SAP system to other SAP system? 10.Is it possible to link R/3 projects to the MS Project? Explain SAP CONSULTANCY MANAGEMENT Case Study :1 Good Sports manufacturing is a firm that has four production plants good sports is engaged primarily in the manufacture of athletic wear the head quarters & administrative offices of the firm are located adjacent to one of four plants the distribution centre is a also at the same location two other plants are located in the same location two other plants are located in the same town as the headquarters while the fourth plant is located about 60 miles away two plants produce primarily shorts and warmup suits, & two produce T-Shirts.The production from all plants is sent to the firms distribution center for shipping to retailers. Q1) Explain “Retailing”? Q 2) What do you mean by franchise?
- 30. Q 3) Whatare the essentials of business? Q4) What are the types of Integration & mergers? Case Study : 2 Oakley sunglasses based in foothill Ranch, California was a leader in fighting counterfeiting in 2001.Oakleys are favored by athletes & people who want to look like athletes Oakley sunglasses are made in the united states & sell for $ 60 to $ 315 counterfeit versions made in china sell for $4 to $ 20 In the united states, 304 people were arrested for selling fake Oakleys & 363,651 pairs of fake Oakleys were seized. Out side the united States, 85 people have been arrested & 261,045 pairs of fake sunglasses seized. Since the 9/11 terrorist attack on the world trade center. Customs & other officials have turned their attention away from counterfeits & toward National Security. Yet Roslyn Mazer associate deputing attorney general in the Clinton administration said that there are criminal organization including terrorist that use counterfeit goods to finance their activities. Q1) Explain counterfeiting Q2) What do you mean by Licensing Q 3) Explain protecting rights to merchandising properties? Q 4) Explain Intellectual property ? Case Study : 3 Cartwheels is an apparel manufacturer that specializes in childrens apparel at good value the firms mission is to provide serviceable childrens fashion goods at morderate price. Size ranges offered include toddlers, boys & girls Annual sales for the firm are $ 25 million The firm has QR partnerships with its major retail customers cartwheels has three major categories in its merchandise mix tops ( 60 % of sales) , bottom ( 30% of sales) & pajama (10 % of sales) Girls tops are 55% of tops sales. The economy has been flat and competition strong but because QR partenerships sales are expected to increase 10% A fashion trend away from wearing oversized tops & towards stretch fabrics has been observed. The merchandising cycle is divided in to 4 selling periods for girls tops.The selling periods are approximately equal in length about 10 weeks each in the 52 week merchandising cycle. Q1) Expalin Line Planning ? Q2) What do you mean by product development? Q3) Explain Line presentation Q4) How do you explain these concepts i) Labels ii) Hang Tags iii) Tickets iv) Pocket Flashers Case Study : 4 Ralph laurens womens is a firm that uses its collection as the fashion leadership strategy for multiple lower priced brands. R.L collection is the premiere product line and other brands are Ralph Lauren Blue Label, Ralph Lauren Black lable, pinky pony, Raph, Polo Jeans Company, Ralph lauren Gold & RLX each label represents high end merchandise, but each targets a some what different customer with different types of products & at different price points. Question. 1) What are the influences on the design process? 2) Examine pre adoption processes in relation to creative design? 3) Examine post adoption processes in relation to technical design SHIPPING MANAGEMENT Q1) Describe the Sustainable transport Mode? (Marks 3) Q2) Explain the Following? (Marks 3) a) Second line of Defance? b) Changing Technology c) Shipping Weakness and threats d) Ship disposal e) Cargoes Q3) What are shipping Strengths and opportunities? (Marks 3) Q4) Who are the actors in shipping? (Marks 3) Q5) Case – 1 (Marks 15) Today shipping has become more globalize than the air line industry perceptions have changed nations and companies are willing to use ships that fly any flag provides they offer competitive freights to move
- 31. cargo/people safely andeffectively from point A To B national strategic interest has also receded since the advent of flag of convenience ships. For ship owners and operators of flag of convenience, their interest now loess in operating efficiency and maximizing profits recent examples of this phenomenon are Falklands, Iran / Iraq wars and the invasion of kauit in all these cases the limitations of these ships under their own flag did not pose a problem. The ships available far exceeded the logistical requirement for the conflicts, and chartering their vessels was relatively easy. Questions a)What does the above scenario show? b)What does this prove? c)What does it prove to our country – INDIA Q6) Describe the strengths and weaknesses of the Indian shipping? (Marks 3) Q7) Describe the advantages and disadvantages and standards of EDI? (Marks3) Q8) Explain the cost and value service principle? (Marks 3) Q10) What is the principle of “WHAT THE TRAFFIC CAN BEAR” (Marks 3) Q9) what are quality Management Systems? (Marks 3) Q11) Explain Impact of Competition on rates? (Marks 3) Q12) Describe the complete structure of shipping Operations? (Marks 3) Q13) Explain the following in brief? (Marks 8) a) Bulk Cargo market. b) Iron Ore trade. c) Coal trade. d) Grain Trade. e) Shipping Demand Forecast. f) Operating Cost. g) Ship Market. h) Freight Market. Q14) Explain Financial Management with the help of the following points. (Marks 8) a) Debt Equity Mix and Dividend. b) Treasury Function. c) Funds from international sources. d) Trading activities. e) Shipping Business. f) Buying and selling of ships. 3 g) Foreign Exchange transactions h) Diversification. Q15) Present an organization Chart? (Marks 3) Q16) Case --------II (Marks 16) The Indian cultural belief in "Karma" if it is for the upliftment of oneself Indian society's acceptance of creation of riches by a person by his/her ownefforts.Wealth is seen as God's gift. An almost mythical belief of bringing oneself above the masses both in excellence and in wealth. The impact of this belief is so deep that we have accepted the "lotus" as our national flower which blooms even in dirty ponds without its natural beauty and fragrance being affected. A large sea coast and a large coastal population which earns its living from sea resources. A growing offshore oil industry which provides support to the shipping industry, especially in times of depression in the shipping industry. The existence of English as a widely spoken language which happens to be the lingua franca of the shipping industry. Recent growth in net worth of non-resident Indians and Indian ventures abroad who can be both investors and users of shipping services. Until now, my comments and questions have been straightforward but the problem ahead is to find the best possible solution which, if adopted or practiced, may provide a stimulus for the growth of the shipping industry. The shipping industry, in view of its globalizes operations, is so complex in nature, high on capital requirement and low on returns (IRR), especially in comparison to some other industries, such as a manufacturing, in a overpopulated country like India It will be difficult to attract existing industrialists from other sectors to the shipping industry unless
- 32. sea transportation formsa captive part of their business or the government provides sufficient subsidies and protections as incentive. Therefore, my friends, the burden for growth of Indian shipping lies on our shoulders, being the shipping managers in the forefront of the industry. Failure on our part will not be pardoned by the future generations involved in shipping. Questions:- a) Why will it not be pardoned by future generations? b) How can executives and managers of that Indian shipping industry take advantage of these opportunities? c) So now the question is: what level playing fields are relevant today? d) Issues on which a ship-owner should commit himself to the 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
- 33. SOFTWARE PROJECT MANAGEMENT 1.You have been appointed a Project manager for a major software products company. Your job is to manage the development of the next generation version of its widely used word-processing software. Because new revenue must be generated, tight deadlines have been established and announced. What team structure would you choose and why? What software process model(s) would you choose and why? 2. You have been asked to develop a small application that analyzes each course offered by a university and reports the average grade obtained in the course (for a given term). White a statement of scope that bounds this problem. 3. Use the COCOMO II Model I to estimate the effort required to build software for a simple ATM that produces 12 screens, 10 reports, and will require approximately 80 software components, Assume average complexity and average developer/environment maturity. Use the application composition model with object points. 4. Develop a spreadsheet model that implements one or two of the estimation techniques described in this chapter. Alternatively, a acquire one or more on-line models for software project estimation from web-based sources. AN ISO 9001 : 2000 CERTIFIED INTERNATIONAL B-SCHOOL 5. A system has 12 external inputs, 24 external outputs, fields 30 different external queries, manages 4 internal logical files, and interfaces with 6 different legacy systems (6 EIFs). All of these data are of average complexity, and the overall system is relatively simple. Compute FP for the system. 6. Give at least three examples in which black-box testing might give the impression that everything’s OK, while white vox tests might uncover an error. Give at least three examples in which white-box testing might give the impression that “everything’s OK,” while black-box tests might uncover an error. SOFTWARE PROJECT MANAGEMENT Case Study 1 ACE is a premier real estate consultancy involved in real estate dealings for top notch companies in the
- 34. country. As ACEis growing, the support staff at ACE offices is growing in numbers. The management at ACE realises the need for dedicated collaboration across its different offices spread across the country. The human resource department at ACE works in a distributed fashion. The Head Office of ACE has the core HR team and the regional offices have supporting HR staff along with supporting staff like site supervisors, accountants, legal executives and customer support. In all, there are 500 ACE employees spread across the country with almost 1500 telephone lines connecting them. The existing emailing system facilitates communication and collaboration partially. Keeping in consideration the case above, the management at ACE decides to get a software application developed to cater to the collaboration requirement of ACE. ACE head office has an in-house technical team who have been taking care of the IT requirements till now. This team is known as the ‘Internal System’ in ACE. Mr. Sharma, one of the Vice Presidents in Senior Management chose Ms. Mary D’Souza from the Internal System team as the project manager for this assignment. Ms. Mary needs to co-ordinate with all the regional offices in the country to develop the software. She would need inputs from all offices to decide the functionalities of this application. This application would integrate the existing email facility and ensure that there are many more features which support the collaboration needs of the organisation. Mr. Sharma briefs Ms.Mary of the above mentioned problem statement and the possible solution. Followed by this, Ms.Mary is instructed to do the needful. Based on the above case, answer the following questions: 1. Prepare a business case 2. Draft the feasibility report 3. Identify the stake holders involved in this project with their suitable role and responsibilities 4. Under what circumstances can Ms.Mary outsource this work? 5. Identify few known quality principles/policies that can be implemented while developing this project. Case Study 2 Rakesh has been just assigned as the project manager to develop accounting software for a firm based in a country which has been hostile for quite for sometime. Rakesh has been deployed in the customer’s country with an initial team consisting of three members. Rakesh meets the customer Mr.David and starts the requirement gathering process. Mr.David recommends a team of 10 people from his company to facilitate the requirements gathering process. Rakesh with his three team members conducts the requirements gathering phase and comes with a rough estimate of the development time in weeks for the five modules that have been identified. Module Name Development Time (in Person Weeks) Pessimistic Optimistic Most Likely A 7 3 4 B 4 2 3 C 8 6 7 D 15 5 13 E 20 1 16 Pretty soon Rakesh realises that he will need a bigger team to complete the project on time. Rakesh raises this human resource requirement to his head office in India. Head office suggests Rakesh that he needs to work with human resources from the local country. Head office approves him to go ahead with hiring in the local country. Based on the above data/information, do the following: 1. Calculate the weighted average development time for each module 2. Standard deviation for each module 3. Calculate the standard deviation for the complete project and the estimated time frame for completion? 4. Assuming Rakesh has to finish this project 20 weeks. What is the team strength he would need to do it? 5. What are the possible issues Rakesh may face while hiring Human Resources from the local country? Case Study 3 Stefan has been working on a computer simulation project to forecast about the cyclones and storms. This project also involves understanding the impacts of these natural calamities and predicting the estimated damage to human lives and property. This project is sponsored jointly by 10 governments across the world. Stefan is the project manager with a team of 20 people and their profiles are listed below. Designation Number of People Description Programmers 12 Programming the modules based on the designs supplied by the team leaders.
- 35. Team leaders 3 Teamleaders design the software modules and give them to the programmers for programming. Team leaders are remotely based in the geographical locations which are cyclone and storm prone. They work closely with the subject matter experts who provide the technical details about natural calamities. Team leaders travel to cyclone/storm hit areas and assist the subject matter experts. Subject Matter Experts 3 Subject Matter Experts are people with specialized knowledge and skills related to storms and cyclones. These people keep on travelling to various locations for studies and provide the development team with necessary data and details. Graphical Designers 1 These people design the Graphical User Interface for the software modules developed by the programmers. Accountant 1 Accountant keeps track of the project budgeting, costs and expenditures. While the programmers are co-located in a relatively safe environment, the team leaders and the subject matter experts travel in a hostile environment. Based on the scenario described above, perform the following: 1. Based on assumptions, identify minimum of five important risks involved in the project 2. Perform a qualitative risk analysis based on the answer for Q. 1 above 3. Perform a quantitative risk analysis based on Q.1 and Q. 2 above. Assume numerical value ranges for probability and impact (Exposure) of risks 4. Prepare a sample risk register for such a project 5. List out three positive risks in such a project Case Study 4 New Boston School is a reputed school in the city and has been in existence since last 75 years. With IT affecting all domains of life, the school has identified the need of a web based school portal to connect the school, students and parents/guardians. This will help the school maintain a transparency between its staff, students and parents. The business case has been drafted and approved. D-Smart Infotech, a local software development firm, has been awarded this project and Lillie has been identified as the project manager for this project from D-Smart Infotech. Lillie has completed the feasibility study for this project and D-Smart Infotech has decided to go ahead with the project. The project deadline is very crucial and ends after one year of awarding the project. Since D-Smart Infotech is running short of human resources, it plans to outsource this project again to a third party vendor. Since Lillie has been assigned as the project manager, she has to identify, select and negotiate a vendor for this assignment. The school has awarded this project to D-Smart Infotech on the firm condition that the project should be completed within a year. Based on the above scenario, answer the following: 1. Should a third party vendor be selected to do this software project? If yes, then what are the legal formalities D-Smart Infotech need to complete with New Boston School and the selected vendor? 2. What are the high level risks associated in such a project? STRATEGIC MANAGEMENT CASE STUDY : 1 The Ahmedabad based Astral Poly Technik Ltd. is manufacturing and provider of chlorinated poly vinyal chloride (CPVC) piping and plumbing systems. Mr Sandeep Engineer, its managing director reported a strategic decision of manufacturing and marketing the ‘Blaze master’ fire sprinkler system under an agreement with the $ 4 billion global speciality chemical company, Lubrizol, whose wholly-owned subsididary Noveon Inc makes ‘Blazemaster’ for this purpose, Astral signed a licence agreement with Noveon to manufacturing and market its fire sprinkler system under the brand name of ‘Blazemaster’ which is a trade mark of Noveon. The company, in order to strengthen its business plans, had taken a strategic decision to enter into a techno-financial joint venture with speciality process LLC of USA, which provided if the required technical expertise for manufacturing CPVC pipes and fitting for home and industrial applications. Astral was also going for an initial public offering to further its growth plans. Q1) Explain the term strategic decision making?
- 36. Q2) Explain theprocess of decision making? Q3) What is the basic thrust of strategic decision making? Q4) Explain in detail the issues in strategic decision making? CASE STUDY : 2 The essence of vision is a forward-looking view of what an organization wishes to become, mission is what an organization is and why it exists. Several years ago, Peter F Drucker raised important philosophical questions related to business what is our business? What will it be? What it should be? These three questions though simply worded are in reality, the most fundamental questions that any organization can put it itself. The answers are based on an analysis of the underlying need of the society that any organization strives to fulfill. The satisfaction of that need is them, the business of the organization. Q1) Define vision? And explain the benefits of a vision? Q2) What do you mean by mission? Q3) How are Mission statements formulated and communicated? Q4) Explain in detail the characteristics of a Mission statement? CASE STUDY : 3 The major market players in Indian Food processing industry include local companies such as Agro Tech Foods, Dabur, Gits, Parle and Foreign companies such as Nestle, Cadbury and Unilever. The business environment in which the food processing industry exists could be explained in terms of opportunities and threats. Opportunities just like High demand potential, low output from organized sector. Exports of agricultural and processed food have been rising, low cost Indian labour, younger population, changing lifestyle, nuclear families, increasing personal income, number of working women, etc. Threats just like conservative Government policies, inadequate infrastructure for distribution and preservation, limited assess to appropriate technology for processing and packaging, high taxation on packaged items etc. Just observed how the food processing industry in India is affected by different levels of the environment at the global and national level. Q1) Explain the concept of Environment? Q2) Explain in detail the characteristics of Environment? Q3) Explain Internal Environment? Q4) Explain External Environment? CASE STUDY : 4 According to a doctoral study on the corporate takeovers in India the major reason for increased Mergers & Acquisitions (M & A) activity were, legal reforms, economic reforms, economic slowdown, and depressed stock markets, etc. Statistics related to M & A in India are quite impressive. The market research firm found that Indian companies spent over US $ 23 billion in 2006, a jump of over 400 percent over that in 2005, in acquiring foreign companies, more than half of which were in Europe Inbound (Foreign companies talking over Indian companies) and Outbound (Indian companies talking over Foreign companies) mergers and acquisitions have increased dramatically. Q1) Explain the term mergers and acquisitions? Q2) What are the types of mergers and acquisitions? Q3) Explain in detail the reasons for mergers and acquisitions? Q4) What are the important issues in mergers and acquisitions? SUPPLY CHAIN MANAGEMENT Q1) Solve any four of the following a) Explain the push/pull view of supply chain. b) Explain, what is the competitive strategy of supply chain. c) Discuss the goal of Supply Chain. d) Describe the major obstacle that must be overcome to successfully manage a supply chain. Q2) a) Identify the major drivers of supply chain performance and discuss the role of each driver in creating strategic fit between the supply chain strategy and the competitive strategy. b) Evaluate the strengths and weakness of different modes of transportation Q3) Attempt any three of the following a) List the various view of supply chain and discuss one of them. b) Describe how the company achieves strategic fit between its supply chain strategy and competitive strategy.
- 37. c) Discuss theimpact of replenishment policies on supply chain on safety inventory. d) Discuss the role of distribution in the supply chain. Q4) Write the short note on any five of the following. a) Role of transportation in supply chain b) Role of sourcing in supply chain. c) Safety inventory management in Supply chain d) Coordination in supply chain. e) Role of Information technology in Supply chain. f) E-Business and supply chain management. SUPPLY CHAIN MANAGEMENT E-TENDERING IN SUPPLY CHAIN MANAGEMENT-VENDOR SELECTION The e-tendering process has meant a transformation from a traditional vendor selection process through tenders to an online process making huge advances in efficiency, transparency and Data Storage solutions and retrieval systems. Wipro Infotech Enterprise application practice through its eprocurement application development service has ensured a smooth migration for governments. The e-tendering service offering allows vendors to electronically upload and download documents, access project details as well as enabling you to maintain a track on the overall status of the tenders. The key benefits of our E-tendering service offering include: Reducing collusion among vendors and making the process fair and competitive Enabling systematic documentation of the complete tendering process and hence reducing administrative costs and minimising human error Ensuring significant reduction in processing time and tender cycle time Ensuring timely completion of tendering process thereby resulting in better utilisation of available funds from financial institutions Providing onsite service and training to ensure that government adopts the new system without any difficulties Questions How has technology helped SCM ? Is e-tendering a good process to select vendors? CASE-2 (20 Marks) Supply Chain: definition of a supply chain as a partnership of organizations sharing a common goal of delivering a set of goods or services to an end-customer. Thus, the supply chain includes not only the upstream suppliers of an item and the organizations that make the components used to create that item, but also the downstream retailers or distributors for the item. Other authors have called these value chains or webs, in an attempt to highlight the fact that supply chains don't just include suppliers but also their customers and that the relationships aren't always linear but more commonly look like a network or web. Supply Chain Collaboration: any kind of joint, coordinated effort between two parties in a supply chain to achieve a common goal. Note that these words on their own give no indication of whether the effort I am talking about is at a strategic, tactical, or operational level, what kind of business process is involved, or the degree of collaboration. These things aren't often stated explicitly enough when we talk about collaboration or the tools used to support it. Since there are numerous processes that partners can collaborate on, it is critical that we are clear about which processes are involved in the collaboration. On this site, we focus primarily on Collaborative Planning, Forecasting, and Replenishment (CPFR) activities when talking about supply chain collaboration, rather than other activities such as collaborative design or marketing. However, once organizations begin the strategic shift towards more collaborative relationships, it is much easier to experience process gains in many other areas. Questions Define supply chain and supply chain collaboration? CASE-3 (20 Marks) Decisions on Three Levels Supply chain management decisions are often said to belong to one of three levels; the strategic, the tactical, or the operational level. Since there is no well defined and unified use of these terms, this
- 38. Section describes thehow they are used in this thesis. Figure shows the three level of decisions as a pyramid shaped hierarchy. The decisions on a higher level in the pyramid will set the conditions under which lower level decisions are made. On the strategic level long term decisions are made. According to Ganeshan and Harrison [12], these are related to location, production, inventory, and transportation. Location decisions are concerned with the size, number, and geographic location of the supply chain entities, such as plants, inventories, or distribution centers. The production decisions are meant to determine which products to produce, where to produce them, which suppliers to use, from which plants to supply distribution centers, and so on. Inventory decisions are concerned with the way of managing inventories throughout the supply chain. Transport decisions are made on the modes of transport to use. Decisions made on the strategic level are of course interrelated. For example decisions on mode of transport are influenced by decisions on geographical placement of plants and warehouses, and inventory policies are influenced by choice of suppliers and production locations. Modeling and simulation is frequently used for analyzing these interrelations, and the impact of making strategic level changes in the supply chain. On the tactical level medium term decisions are made, such as weekly demand forecasts, distribution and transportation planning, production planning, and materials requirement planning. The operational level of supply chain management is concerned with the very short term decisions made from day to day. The border between the tactical and operational levels is vague. Often no distinction is made, as will be the case in this thesis. Questions Define hierarchy of decision making in supply chain management? CASE-4 (20 Marks) Inventory is a ``Flexibility Buffer'' A manufacturers flexibility is its ability to respond to changes in demand. Imagine a company that can receive customer orders, order and receive components, assemble these, fill the orders, and ship them to customers in one single day. This company would have a total flexibility. It would be able to respond to any unforeseen events on a daily basis, and could easily attain a hundred percent customer satisfaction without any inventory. But this is of course rarely the case. A supply chain may consist of many levels of production, transportation, and warehousing, each level adding to the lead time. The time from the first materials are ordered at the beginning of the supply chain till the finished products reach the customer may be long. In the US apparel industry this time is typically 58.5 weeks ! (from 1990, Flaherty. It is evident that customers will not wait this long from order to delivery. The manufacturer needs to plan ahead, and therefore also to estimate future demand by making demand forecasts. If planning of production and inventories was perfect we would be able to implement a pure Just in Time strategy, with components arriving as they are needed, and finished goods being shipped as they leave the assembly line. But in a supply chain there are many events that can not be foreseen and uncertainties that need to be accounted for. These may be: late shipments from suppliers, defect incoming material, imperfect production yield, production process breakdown, or highly uncertain product demands. The longer the planning horizon, the less accurate the plans will be. A typical US apparel manufacturer must see more than a year into the future ! For it to maintain a high level of customer service, all uncertainty of the year must be accounted for (see Pitfall 5 below). The long lead times make the manufacturer inflexible, and vulnerable to unforeseen changes and inaccurate demand forecasts. A manufacturer will account for the uncertainties and unforeseen events by keeping safety stocks. The safety stocks assure the necessary flexibility, or rather they act as buffers for the lack of flexibility in the supply chain. As we decrease lead times in the supply chain, we decrease the planning horizon, and thereby increase the flexibility. The need for a buffer in the form of inventory will also diminish. In other words; higher flexibility allows less inventory to maintain the same level of customer service. Inventory vs. Customer Service: A Trade-Off If we assume lead times to be constant, the ability to fill orders is directly dependent on the inventory levels in a supply chain. As long as there are products in the finished goods inventory (FGI), from which products are taken, orders can be satisfied. Other inventories, such as raw product inventories will have a more indirect effect on customer satisfaction. Stock-outs in any of these will obstruct production and may eventually lead to stock-out in the FGI. For this reason, it is common in supply chain management to keep exaggerated inventory levels. But as mentioned above inventory holding costs are often calculated as high as 30-40% of inventory values. While oversized inventories is a costly inventory management strategy, low fill rates are also costly. Business may be lost through cancelled orders, and the company's reputation may be severely
- 39. damaged. It istherefore in a company's interest to balance inventory holding cost and the cost of imperfect customer satisfaction. The trade-off inventory vs. customer satisfaction is one of the classic issues of logistics and supply chain management. Pitfalls in Inventory Management Based on knowledge and experience from supply chain management in electronics, computer, and automobile companies, Lee and Billington [16] identify 14 pitfalls in inventory management. Eight of which are found relevant to this project: Pitfall 1. No Supply Chain Metrics: In a supply chain with multiple sites, each site will often have its fairly autonomous management team. The objectives of the various teams may differ, and even be conflicting. Inventory may for example be reduced at a Site A of a supply chain, and thereby, seen from a local perspective, the performance is enhanced. But the inventory decrease may also decrease Site A's flexibility. Because Site A now responds more slowly to changes, Site B, which is Site A's customer will have to increase its inventory (of Site A parts) in order to maintain its flexibility and level of customer service. The lack of supply chain metrics has prevented managers at Site A to see that their local improvements has not lead to improved overall performance of the supply chain. The objective of supply chain metrics is to give the basis for evaluations of the performance of the whole supply chain as one system. Pitfall 2. Inadequate Definition of Customer Service: Too few and in-concise metrics for customer service. The evaluation of performance becomes difficult, and certain aspects of customer service may be overlooked. Pitfall 3. Inaccurate Delivery Status Data: Customers are not correctly informed of delivery dates of orders and of late deliveries. Companies can often not readily retrieve the information needed to do so. Pitfall 4. Inefficient Information Systems: Databases at different operation sites that describe system environment, inventories, backlog, future production plans, and so on are often not linked. Information must be retrieved manually, and this can be a long process. Planning cycles may therefore be long, using highly uncertain demand forecasts. The wrong products are made, and inventories and backlogs grow. Pitfall 5. Ignoring the Impact of Uncertainties: Too often supply chains do not track uncertainties such as suppliers' delivery times, the quality of incoming materials, manufacturing process time, transit times, and so on. This leads to non-optimal stocking levels. In some cases uncertainties are properly tracked, but there is no follow-up. Pitfall 6. Simplistic Inventory Stocking Policies: Stocking policies are often not linked to knowledge of the uncertainties mentioned above. Stocking policies are often based on the quantity usage of the items stocked. This says nothing about the uncertainty associated with the usage. Analysis show that stocking levels could be greatly reduced by transferring stocking policies from being quantity based to being uncertainty based. Pitfall 7. Organizational Barriers: Entities in a supply chain may belong to different organizations within the same company. The organizations will independently measure the performance of the entities. While each entity is occupied with achieving local goals (much like in pitfall 1), important synergies may be lost. Pitfall 8. Incomplete Supply Chain: Supply chain managers are often focussed only on the internal supply chain. Going beyond the internal supply chain by including external suppliers and customers often exposes new opportunities for improving internal operations Questions Define Inventory is a ``Flexibility Buffer’’? What are the various pitfalls in inventory management? TOTAL SAFETY MANAGEMENT 1. What is HASAWA? Describe this in terms of the following: a) Employees b) Employers
- 40. c) Manufacturers d) Suppliers e)Occupiers of premises; 2. How many types of Fire appliances are available? Explain them. 3. What is Stress? Classify the Stressors? What are the sources of stress among managers? 4. What is Benchmarking? Explain the process of Benchmarking in respect of Health & Safety Management. 5. What are the Ergonomics on the occupational health? 6. Explain the concepts of BS 8800? 7. What are the parameters of Safety Monitory System? Explain them. 8. Enumerate the various occupational health initiatives? 9. What is the role of communication on health & safety issues? 10. Who are a Atypical workers? Give example. 11. What is MHSWR? Differentiate between MHSWR & HASAWA in terms of employers? 12. What is Risk Management? Critically Evaluate Risk Management strategies? 13. Describe the role of the health and safety practitioner? 14. What are the different measures (rates) used in the calculation of accident and ill health? 15. Identify the different areas of influence, which affects the people at work? 16. What do you understand by ‘The Fire Triangle’ Explain this with illustration. 17. (I). Based on your perception, describe the following. a) Safety in offices b) Safety at home c) Safety at operational areas. (II). In each of the above situation (a, b, & c), establish the necessary safety norms as a part of precautionary measures. 18. Describe the basics of Electrical safety. Explain the nomenclature ‘sound working environment’. TOTAL QUALITY MANAGEMENT 1. Which of the gurus would be the father of quality control? Which had the greatest impact on management? Which is noted for robust design? 2. Write your personal philosophy or creed? 3. List and explain the six most important factors that influence consumer purchases? 4. What conditions are necessary for empowerment? 5. Describe how empowerment, work groups, and multifunctional teams would or would not affect the five types of problems? 6. Working as an individual or in a team of two or three people, develop a supplier selection plan for one of the organizations. 7. Working in a team of three or more people, what performance measures would you recommend for the following organizations? a) Large bank b) Health-care facility c) University academic department
- 41. d) University nonacademicdepartment e) Large department store f) Grade School g) Manufacturing facility h) Large grocery store 8. What is a critical success factor? How is it important in benchmarking? Travel & Tourism Management CASE STUDY - 1 A travel agency is a business that retails travel related products and services, particularly packaged tours to customers on behalf of third party travel suppliers such as airlines, hotels, tour companies and cruise liners. There are three different types of agencies-multiples, maniples and independent agencies. Multiples comprise a number of national travel agency chains often owned by an international: conglomerate. For example, Thompson Holidays a national chain is owned by TUI, the German multinational. It is quite common now for large mass-market tour companies to purchase t controlling interests in a chain of travel agents in order to control the distribution of their products. This is called vertical integration. The maniples are smaller travel agency chains that serve particular regions or districts. An Independent Agency is a single entrepreneur unit that usually caters to a special niche market or neighbourhood. Its most important role is to be the on-the-spot neighbourhood advisor on travel. As travel has become popular, we see independent travel agents in most neighbourhoods. They are recognized by the attractive posters of tourist destinations in their show windows. They sell dreams and are important partners of different agencies in any travel plan. The diagram below illustrates the number of other agencies coordinated by a travel agent to give quality services to a particular market. ROLE OF A TRAVEL AGENT The role of the travel agent is that of a retail agent that sells travel plans and services. Their main function is to act as an agent for travel related products and services on behalf of the supplier who are the principals or tour operators. They do not keep stocks on hand but requisition them from the supplier on demand by the customer. They approach travel principals to get cheap rates for the facilities they offer. Principals would be those travel partners like the airlines, surface transporters, • hotels, etc. who provide essential services. Travel agents get better rates because of the volume of the business they give to each principal. The agent's profit is the difference between the supplier's price and the price that they quote to the customer. The difference is called the commission which may vary from 10-20%. They also provide access to the principals in those regions where the principals would have to make heavy investments to get access on their own. Travel Agents therefore provide the distribution network that the principals crave for. A travel agent's typical role would be to: 9. Plan itineraries for wholesale operators in their region, including arranging hotel accommodations, surface transportation and sightseeing tours. 10.Negotiate favourable rates with surface transporters to provide coaches for airport transfers, sightseeing tours and inter-city travel. 11.Negotiate with hotels for favourable room rates and meal prices for FITS.
- 42. 4. Negotiate withart centres for cultural entertainment. 5. Negotiate fares with domestic airlines and railways for inter-city travel by the most economical route. 6. Coordinate with various tourist centres for sightseeing tours. 7. Develop comprehensive local packages for tour operators and individual travellers. 8. Provide information on national and international tours. 9. Arrange international and domestic airline, railway, bus, river boat, ocean liner tickets to the public consumer. 10. Arrange hotel accommodation. 11. Arrange city and inter-city tours. 12. Arrange surface transportation including limousines and coaches. 13. Organise local sight seeing tours. 14. Make arrangements for passports and Visas for foreign travel. Travel Agency chains may offer additional commercial services such as travel insurance, travel guides, timetables, car rental, on-site exchange bureau, etc. Travel agencies give confidence to their customers by enrolling as members of the national association (e.g. Travel Agents Association of India (TAAI) and IATA (International Air Traffic Association) who set their own standards of commercial proprietary. Travel Agency Revenue Travel agents make money through commissions from the various principals. Principals work with travel agents as partners. Such partnerships are formerly cemented in an agreement that covers the following: 1. The amount of commission. Travel agents get as much as 20% from the principals. 2. Discounted tariff that they can pass on to the traveller or keep as their profit. 3. Reservation quotas to freely confirm rooms, seats, berths etc. in hotels, airlines and boats etc. 4. Policy on cancellation of bookings with penalty clauses. 5. Advance payments from travellers for services expected. TOUR OPERATORS Tour operators create package tours or package holidays. It consists of transport and accommodation advertised and sold together by a tour operator to the vendor. Package holidays are organised by the tour operator while it is sold by the travel agency. Vladimir Raitz, the co-founder of the Horizon Holiday Group, pioneered the first mass package
- 43. holidays abroad withcharter flights between Gatwick airport and Corsica in 1950. By the 1950s and 1960s, these package holidays, which combined chartered flights and accommodation, provided the first chance to the middle cl3SS in the UK to have affordable travel abroad. The package tour market is now in the hands of few large tour operators such as Thompson Holidays, Thomas Cook AG, My Travel and First Choice. Under these umbrella brands, there exists a whole range of different holiday operators catering to different markets such as Club 18-30 or Simply Travel. The changing profile of customers has led to another concept called Dynamic Packages. This involves booking procedures that enable customers to build their own package of flights, accommodation and car rental instead of pre-defined packages. The advent of budget airlines, budget car-rental and economy hotels have given the opportunity to all with a modicum of disposable income, to travel creating mass travel as never before. This type of customer is called the Free Individual Traveller (FIT). INFLUENCE OF E-TRADE With the advent of the internet, the public has access to travel information directly. With airlines and hotels linked to global distribution systems or with proactive websites, travellers do not need travel agents Principals too are dealing directly with travellers and saving on the commissions paid to the travel agents. Many pass on the benefit of discounted fares to customers which would have otherwise gone to the travel agent. Travel agents have responded by developing internet presence on the web with their own websites. Such sites are complex and require the assistance of outside travel technology solutions such as Travelocity, Patheo and Open Fares promoted by Global Distribution Systems like Sabre Holdings, Amadeus and Worldspan to provide up to the minute detailed data on tens of thousands of flights, hotel rooms and car rental availability. Some travel sites allow travellers to compare hotel and flight rates with multiple companies for free. They may also allow travellers to sort the travel packages by amenities, price and proximity to a city or landmark. Travel agents have used dynamic packaging tools to provide fully bonded (full financial protection) travel at prices equal to or lower than a member of the public who can book online. Travel agents in busy districts also negotiate quotas of airline seats and hotel rooms in order to give instant confirmations to customers who visit their sites. Earlier, customers had to wait for the confirmation till the travel agent had secured the seat or hotel booking from the principal. Question : 1) Explain the role of travel agent. 2) Explain the concept of E-trade. 3) List the types of agency. 4) What is WIT and why it is called?
- 44. CASE STUDY -2 CUSTOMER SERVICE BEFORE, DURING AND AFTER A SALE Before a Sale The first point of contact for most customers is over the phone. A reservationist of a hotel is the first point of contact for a hotel. 92% people feel their call experience will shape the image of the company over the phone. In a Mobius Management Systems Survey, the following were the results after the first call: • 60% cancelled accounts with banks • 36% changed insurance providers • 40% changed telephone companies • 35% changed credit card providers • 37% changed internet service providers The question an organisation must ask is, "Am I one of those statistics?" A study done by Purdue University and BenchmarkPortal.com showed that younger people are more intolerant and likely to change their business to elsewhere. They need a 'Wow' experience to maintain their loyalty. People over 65 years were more demanding than middle-agers. Middle-aged people seem to have a better emotional account and are more likely to forgive. How can one know the age of customers over the phone? It is not possible. Therefore, the best way to ensure good customer service is to have a uniform customer-centric approach to every interaction. Telephone Manners The telephone we see is the preferred instrument of contact. It becomes J powerful marketing tool and therefore, needs some skills to be used effectively as a medium of providing good customer service. Here are some tips when answering telephone calls: • Answer the telephone within three rings. A customer is impatient with a telephone that keeps on ringing. It suggests" that the organisation is unprofessional and laidback. • Identify the organisation by saying: "Good morning, Hotel XYZ, how may I help you?" Should an extension route through a telephone operator say, "Good morning, Reservation Department, how may I help you?" The Americans made such greetings more informal by saying, "Hi, Betty speaking, how may I help you?" The way one answers must be in keeping with local practices and sensitivities. The phrase "How may I help you?" shows care. The first interaction is like a handshake when two people physically meet. The cordiality shown at a meeting is the same that must be shown on the phone. • Listen carefully to what the guest says. She hates having to repeat a request or instruction. Repeat the "statement to get it right. At this stage, it is preferred to get the name of the guest to personalise the subsequent conversation. • The tone of one's voice is crucial here as the customer cannot see the server. It cannot be
- 45. excitable nor dulland boring. The server should try to conjure up an image of professionalism and friendship. The best way to get the right tone is to smile while talking. The tone automatically shows warmth. • A customer does not like someone very chatty. The customer prefers to do the talking and the server to do the listening. When responding to a customer's query, it is best to be short and to the point. Long statements can only confuse the customer. Often customers are too chatty themselves and speak about everything else but what they want. It is best, in such circumstances, to take control of the conversation by asking questions using the Ws and H - What, Why, Who, Where, Which and How. Such questions immediately force the chatty customer to answer the question and get to the point. • Do not rush the customer to disconnect. It gives the impression that the customer is a nuisance. It is prudent to be patient and a courtesy to let the guest disconnect first. • Before disconnecting, thank the guest for calling and give any dates if required to call back. • Remember to callback. With the advent of cyberspace, most organisations have their own websites which give complete information and contact for future transactions. The websites must be attractive and motivational for a customer to pursue the transaction. Home delivery is a potent way to 'lock-in' the customer. Airlines deliver air tickets home. Passengers can download their tickets. Hotels have the same feature with room confirmations. Customers can download their confirmations from the web. Restaurateurs have capitalized on this concept by delivering meals home thereby greatly enhancing their reach to a faceless customer. An important step before making any sales is acquiring product knowledge. A salesperson must be fully aware of every aspect of product and service features. A customer loses interest if the salesperson is unable to supply accurate information. Misleading a guest is also wrong. Sales persons must constantly update themselves on product and service information to be more effective. A hotel reservationist, for example, must know the features of all types of rooms, hotel facilities, rates of products and services, options, etc. Guests expect the person in the front to be knowledgeable and will not tolerate any ignorance. Should a situation arise that a server is unable to answer a specific question, she -should be honest but promise to call back with the required information. She must call back thereafter. During a sale The above translates itself into behaviour that promotes the best customer service. Such behaviour is as follows: First Impressions: We have heard that "First impressions leave lasting impressions". The first impression sets the standard for future experiences. If the first impression is good, then it takes ages for it to be changed to a bad one. If the first impression is a bad one, then it takes a lot of effort to convert it into a good one. So the first impressions must be right to leave a good impression. In the hotel industry, owners build excellent edifices with striking landscapes and lobbies to create the first impressions. That is the physical dimension.
- 46. Employees give thenon-physical dimension. People who provide service should be immaculately dressed. The service industry stresses on grooming and hygiene. They control this aspect by providing uniforms. People serving must be dressed with well-pressed clothes that are clean. Then are the next steps of first and continued impression. Prompt acknowledgement: As soon as the guest approaches a person for service, she would like to be given attention immediately. This attention can be an eye contact, in the first instance, followed with a smile. Should the server be busy, it is best to say, "I will be with you shortly". This recognition and attention, as simple as it seems, gives the guest self- esteem and the emotional security that he is being attended to. A guest simply hates being ignored. If a guest is ignored then he or she will make a gesture to attract attention - sometimes unpleasant. A smile cannot be underestimated_ A smile shows friendliness and puts the guest at ease. Friendly greeting: The server attends to the guest with a smile, saying. "Good day, welcome to (name of company), how may I help you?" Here, the guest has shown courtesy by wishing him or her the time of the day. The server is also helpful by offering help. In a global world there is another problem- languages differ. An English greeting may be alien to Japanese. However, the smile and gesture shows the greeting. It is more emotive than the words. A non-English speaking guest may reply in his or her own language. It is the cue for the receptionist to find someone on her team who speaks the language. Progressive organizations maintain a multi-lingual team in customer-end jobs based on the expected profile of guests. If the language-specific person is not in the team, then the future transactions would have to display warm emotion and helping gestures. Giving importance: Nothing is more important and precious to a guest than his or her name. It is important for the server to get the name of the guest immediately by simply asking, "May I have your name please?" Thereafter, it is vital for the server to address the guest by the name. It breaks down communication barriers and makes future transactions more personal. It also enhances the customer's self-esteem. Another way to give importance is to give full attention to the customer during that transaction. Listen patiently: This is a quality that needs to be developed in order to give good customer service. Listening is different to hearing. We hear a Lot of things at the same time including the hum of the air-conditioner, chatter of conversation, slam of a door, etc. Listening, on the other hand, is deliberately giving attention to one. Therefore, Listening to a customer is a deliberate action giving the customer importance. Speak clearly: In a global environment, vocabulary becomes critical. Many hotels hire multilingual staff to bridge the barriers of Language. English is a universal language but regional centres may be handicapped with Language. It is important, therefore, to speak slowly so make sure that the guest understands. Communication is hampered by the use of jargon or official terminology. This must be avoided. A sentence Like, "I am giving you a twin room on MAP". This is not acceptable. It should be replaced with, "I am giving you a room with two single beds. Your room rate will include a breakfast and dinner, each day". The idea is to simplify the Language so that there are no errors in comprehension. Keeping Promises: In a server-customer relationship, some products and services often may not be immediately available. The server promises to satisfy the need at some future
- 47. time. Good customerservice means keeping the customer informed about the progress of that need and must fulfil it as soon as it is available. Take for instance, a receptionist who may not have a room readily available for a guest who has a confirmed' reservation. The server may expect a twenty minute delay for the next free room to be available. The receptionist should be honest about the status of the room and tell the guest to wait in the lobby. She should keep the guest appraised about the progress and allot the room as soon as the room is available. The guest should not be put in a position to follow-up with the receptionist. If a meal is promised in twenty minutes by the order-taker of room service then the meal" must be delivered to that guest room within the promised time. Guests dislike promises not kept. After a Sale A customer experience does not end with a sale. The after sale service is equally important that seals the loyalty to a product or service. Organisations that sell physical products like televisions, cars, mobiles, etc have After Sales Service Centres. The service centres provide support for faulty products. The way they respond to service requests make the final difference between a good organisation and a bad one. As the name suggests, the service centre provides service and must embrace all the qualities of customer service. Service after sales is the opportunity to rectify any bad feelings that a customer may have towards a product. How does the after sales concept apply to the service industry? A hairdresser may call his client to find out if she was satisfied with her hair style after she visited his salon last. He calls to find out if she needs any further modifications. A computer engineer may call the customer after a few days to find out if the computer was working to his satisfaction. The Guest Relations Executive may call a guest after he has checked out to find out if he had any suggestions to improve his stay. All these examples shows care even after a service has been provided. A customer would prefer to patronize those who care after a sale. CUSTOMER SERVICE AND TECHNOLOGY Organisations are increasingly using technology to serve their customers better. They call the total process as Customer Relations Management (CRM). There are three aspects of CRM each of which can be implemented in isolation: Operational CRM Operational CRM provides support to front office business processes including sales, marketing and services. Each interaction with a customer is generally added to a customers contact history which can be retrieved from the database as necessary. Such guest histories respond to customers in a much more individual way than in a 'blanket' manner. For example, when a guest checks in a hotel at the reception, the receptionist can pull up his history card and learn about a customer's personal preferences, habits and behaviour. A receptionist can respond by saying, "Would you like your favourite blue room facing the golf course?" A room service order taker can do the same when a guest calls for a meal by saying, "Sir, will you have the pepper steak you ordered the last time?" Customers are indeed astounded with such personal detail. Collaborative CRM Collaborative CRM covers all the technology used to interact with customers like internet, phone systems, speech translation systems, interface systems with suppliers, business partners and hotel associates. The objective of collaborative CRM is to save time and cost,
- 48. and improve service.For example, a: hotel guest needing baby-sitting services would contact the housekeeping desk. The attendant is immediately hooked up to a baby care company through the net with rates, times and schedules to be able to confirm the service to the guest. Similarly, a guest requiring a bouquet makes a request to the receptionist who gets hooked to an associate florist who delivers the order. Hotels have associate hotels in the area and may need to check-in a confirmed guest into that property because of their own high occupancy. The receptionist is able to call up the room status of the associate on her computer to confirm a room there. Analytical CRM Analytical CRM analyses customer data for a variety of purposes, including: • Design and execution of marketing campaigns to target markets. • Cross-selling, acquisition, up-selling and retention campaigns. • Analysis of customer behaviour for pricing decisions, new product development, etc. • Profitability analysis of past customer sources for management decision-making. • Credit evaluation of customers • Predictive analysis of future customer behaviour. Question : 1) What are the service which are given to the customer during the sale. 2) List the various types of aspects of Customer Relation Management and explain any aspect. 3) Why it is said First impression is last impression. 4) Explain the tips while answering telephonic calls. CASE STUDY - 3 HOTELS IN MODERN TIMES The advent of the industrial revolution in England brought ideas and progress in the business of innkeeping. The development of railways and steam ships made travelling more permanent. Travel also changed from social or government travel to business travel. There was a need for quick and clean service. The lead in Hotelkeeping was taken by the emerging nations of Europe, especially Switzerland. It was in Europe that the birth of an organised hotel industry took place in the shape of chalets and small hotels, which provided a variety of services and were mainly patronized by the aristocrats' of the day. Aristocrats received their education by travelling through Europe for periods ranging from three to six months. They needed accommodation for these travels which was made possible by chalets and superior inns of the day. During this century, food drink and rest which were the combined services of inns broke into hotels, pubs and restaurants. Hotels in Europe, as we know today, began in the Napoleonic wars, providing accommodation for officers on leave. They were generally run by French refugees. Into the 19th century hotels became distinctive with ornate fronts, polished wood, brass and mirrors. A good example is the Red Lion, Ritz, Claridges and Browns in London. Rail travel in Britain produced bigger hotels like The Pancreas, Victoria, Charing Cross and the Great Eastern in England reflecting Victorian architecture.
- 49. HISTORY OF HOTELSIN AMERICA With the discovery of the new continent, inns soon proliferated into America. Samuel Cole is credited with the opening the first inn in 1634 A.D., in Boston, called Cole's Ordinary. Inns such as this provided beer and rum and plentiful cheap food. Taverns and Inns modeled themselves in the European style. While eateries were established, the hotels came much later. The real growth of the modern hotel industry took place in the USA, beginning with the opening of City Hotel in New York in 1794 A.D. New York then was a busy seaport with a population of 30,000 people. This was the first building especially erected for a hotel and had 73 guest rooms. This eventually led to great competition between different cities and resulted in frenzied hotel building activities. The Exchange Coffee House in Boston came first followed by the second City Hotel in Baltimore, then the Mansion House in Philadelphia and the Adelphi Hotel in New York. These soon became the centres of social activity in their respective cities. At best these were ordinary lodgings for the middle class. In 1829, The Tremont House in Boston had the distinction of being the first luxury hotel in America. It was the first to offer private rooms with locks, a wash basin, pitcher and soap. It had a French restaurant and uniformed service personnel. This signalled the development of luxury hotels in the USA during the 1800s. The Grand Pacific in Chicago, The Palmer House and Sherman House in St. Louis and the Paxton in Omaha were such luxury prerunners in luxury hotel development. In 1874, William Chapman Ralston established a super luxury property called the Palace Hotel in California during the Gold Rush. It was built on the lines of a European palace with domed glass roof, marble floors, own water supply, fire sprinkler system and airconditioning. It had 800 plush rooms spread over seven floors. In 1908, Ellsworth M. Statler saw the need for providing accommodation for a new segment - the business traveller. He created the Statler Hotel in Buffalo, New York, built specifically for the commercial sector. It involved big investments, big profits and trained professionals to manage the business. The Statler Hotel provided private baths and full-length mirrors in each room. His engineering, architecture and service ideas became the standard for future commercial hotels. The Statler went into chain operations and can be credited to be the first hotel chain. In 1927, the Stevens Hotel, a 3000 room hotel (later renamed the Conrad' Hilton) became the largest hotel in the world. The depression in 1930 had a disastrous effect on the hotel industry, 85% of the hotels. went bankrupt. It was felt that the industry would never recover. One hotelier who kept afloat: was Conrad Hilton who made the Mobley, Cisco, Texas a profitable venture. The outbreak of World War II brought a tremendous upsurge. This prosperity continued through the war years into the fifties when two new concepts emerged: a) Motels and b) International chain operations. HISTORY OF MOTELS AND ITS FEATURES The first motels called tourist cabins were established in Western United States during the early 1900, when people began to travel by automobile and could not travel the long distances between towns in one day. Automobiles by then had come a long way from the
- 50. first steam carin 1770 A.D., invented by Nicolas Joseph Cugnot of France followed by the car with the internal combustion engine by Jean Joseph Etienne Lenoir of France in 1860. These cars were the privilege of a few then. In 1885, Gottlieb Daimler and Karl Benz of Germany developed the petrol engine the forerunner of what we have today. The technology was brought to the US in 1890 by Charles and Frank Duryea. It was only Henry Ford and Eli Olds who created the concept of mass production of cars in 1908 that made automobiles a household possession. People were now mobile for long distances because of the car. Initially Motor Inns served fishermen, hunters besides vacationers in remote areas in the early 1900s. The great increase in automobile travel in the 1940s and 1950s led to the development of motels (short form of Motor and Hotel) situated at busy interchanges and on highways. Motels are also called motor hotels, motor inns' or motor lodges. The United States alone has over 20000 motels. Motels provide free parking facilities from which the guests can reach their rooms directly. Some motels have garaging facilities, restaurants and swimming pools. Over the years motels became chain operations and in 1970, we saw the budget mote with rates half that of regular motels. Budget motels have small rooms and provide fewer services. While most motels were 'mom and pop' shows with 50 to 100 rooms, a Memphis businessman Kemmons Wilson thought of standardizing motels into a chain operation. He created the first Holiday Inn on the outskirts of Memphis, Tennessee, which remains the headquarters of the Holiday Inn chain. It {had 126 rooms, swimming pool, free ice, free parking and dog kennels. It became a standard for all Holiday Inn motels. Holiday Inns today has 315,000 guest rooms and is expanding at the rate of one every two and a half days. The Holiday Inns, 1982 onwards, built Embassy Suites, Crowne Plazas and Hampton Inns which are segmented chains within a chain. The holiday Inn is now a subsidiary of a British Hotel group, the Bass Company. Another innovator was Cecil 8. Day, who in 1970, opened budget motels and saw an opportunity with the construction of Disney World and Epcot Centre in Orlando, Florida. 8y establishing a chain of motels around the modern wonder he created one of the worlds largest motel chain - the Days Inns. A modern motel will have the following standard features: Rooms: The rooms are reasonably furnished with twin beds. Quality motels may have two queen sized beds recognizing that families travel together and need more bedding space. The room will have an attached bathroom with hot and cold water. The room is centrally heated or cooled. Facilities in the room will include an electric kettle with satchels of coffee, tea, creamer and sugar. The ensemble will have cups and saucers to serve two. The room will also have a microwave. Services: A contracted housekeeping will come in the morning to clean the rooms and may not provide turndown services in the evening. The floor, pantry is equipped with an ice dispensing machine; snack dispenser of chips and candies and perhaps a shoeshine buffer machine. There are no bellhops. Guests have to carry the luggage themselves. Most travellers leave heavy luggage in the car taking only carry cases into the room. We must remember that motels are not meant for long stay but are stops on long journeys to some final destination.
- 51. Recreation and Food:Most motels are equipped with a swimming pool. A bar is an essential feature and may have an optional contracted diner on premises. This may be essential in remote locations. In locations besides a town or city, the motel may have a tie-up with local restaurants that provide a home-delivery service. The reception may keep a range of menus of local restaurants and permit food delivery to the rooms. Those with a captive food facility may have an all-purpose diner that closes by 8 p.m. Motels recognize that travellers, especially families will bring their own food which they will re-heat in the room microwave. Check-in: Most motels have independent access to the room. The guest will have to pay for the room in advance at the reception and is given an access key to the floor where the room is located, and the room. The reception normally charge room bills to the guest credit card. Very few people in North America pay by cash. The process for check-in is simple with least fuss. There are ample parking facilities most often opposite the room itself in single storied structures. Initially motels provided garaging facilities because of car breakdowns of old cars. Modern cars are more dependable. Moreover, nowadays a petrol station may be found at shorter intervals down the road. Question : 1) How was the Hotel in modern times? 2) List and explain any two features of modern Motel. CASE STUDY - 4 Future Trends in Travel INTRODUCTION Travel Technology experts has identified the following market segments that will travel the most: • Global Executives: They are elite business travellers that want a private jet-type experience, predominantly from emerging economic markets such as Brazil, Russia, India and China which will see significant growth in the next decade. • Active Elders: They will be the wealthy, healthy, older travellers, aged between 50 to 75 who will travel for cultural and leisure pursuits, driven by large disposable incomes . • Cosmopolitan Commuters who will live in one city or small town and work in a metropolis. They will use fast trains or air taxis to commute to work. • Global Clans who are people that will increasingly use air travel to visit globally dispersed extended family members that will increase due to the explosion of global migration for employment or study.
- 52. SPACE TRAVEL Billionaire entrepreneurRichard Branson's space tourism venture, Virgin Galactic and the National Aemnautic Space Administration have announced plans to activate hypersonic travel between earth-based cities. The Cosmo Plane will be a successor to the Concorde and will. make adventurous travellers to go further and faster. Hypersonic speeds are five times the speed of sound. An aircraft flying that fast could theoretically reach London from New York in less than an hour. This will need the planes to fly at extreme altitudes necessary for hypersonic travel. A "budget rocket" is being developed by PayPal, founder of the internet financial services. The 68-foot booster rocket called Falcon has already blasted off from the Kwajalein Atoll in the Marshall Islands and successfully arrived in space minutes later. This is the forerunner of a reusable launch vehicle that will take tourists into space by 2012. Constellation Services International and Space Adventures Ltd. are working to send manned spacecraft on commercial circumlunar missions by 2008. Their offer would include a week-long stay at their Space Hotel, the ISS and a trip around the moon. The initial price would be $100 million but will soon reduce as re-useable transport is developed. We have seen that space hotels are a reality in the future. They will be connected by Space bus for transporting tourists and supplies to and from space hotels. SEA TRAVEL Cruise Liners will be much in demand for the future. The romance with the sea will continue but with mega ships under construction. Four cruise liners-Carnival, Norwegian, Princess and Royal Caribbean-are expected to take cruise liners into a different dimension. The Norwegian Pearl a 93,000 ton cruise liner will have a simulated golf link and a climbing wall high above the waves for the cliff hangers! The ship will have a skating rink and a bowling alley with four full-length lanes and a sports bar with flat screen TVs, and an ultra-lounge experience. It will have ten restaurants, 14 bars and lounges and accommodation for almost 2400 passengers. The ship will sail the Caribbean islands and between Seattle and Skagway, Alaska. The Carnival Freedom will have 13 decks, 1160 foot long and 110,000 tons displacement will carry 3000 passengers. It will have exotic decor. Each public area will evoke a different era. London circa 1880 in the Victorian Show Lounge; 17th century France and the court of Louis XIV in the Sun King Supper Club; a casino recalling ancient Babylon with the hanging gardens and the Ishtar Gate; and a Las Vegas styled strip. The liner will cruise the Mediterranean Sea. The Emerald Princess will also offer a 12-day itinerary in the Greek islands and the Western Mediterranean. The 113,000 ton vessel will feature amenities from a piazza-style atrium to a night club of 15 decks above the waves. Her 3100 passengers will have access to 11 restaurants, at least as many bars, and dozens of other public spaces. Other amenities will
- 53. include an Asian-stylespa, Gatsby-themes casino and Movies under the Stars on a 300 square foot outdoor screen above the pool. It will also have a fitness centre, jogging track and five-swimming pools. Liberty of the Seas, a 160,000-ton ship with accommodation for 3643 passengers will be the largest cruise ship in the world. It is longer than the height of the Chrysler Building, wider than the White House and heavier than 32,000 adult elephants. It will offer a seven-day Caribbean Cruise. The ship will have a five-story theatre, two storey discotheque, and 20 restaurants. It will also have a climbing wall, boxing rink, indoor skating rink, and a Flowrider surf park which uses a high-powered stream of water to create a continuous wave for ten surfers. While the above have been introduced in 2006, Royal Caribbean, a gargantuan 220,000 tons for 5400 passengers, is being planned for a launch in 2009. The cruise liners will only get bigger and more exotic holiday havens in the future. AIR TRAVEL The air travel industry is on the verge of a new era. Rising fuel costs, shrinking services, and a severely stressed air traffic system have called for a new solution. It comes in the form of Airbus 380 and Boeing 787 and microjets. The Airbus 380 is 80-feet high, 240-feet long and 260-feet wide from wing-tip to wing-tip. Like an airborne double- decker bus, the super jumbo jet will offer 50% more floor space than the largest plane today. It will carry 550-850 passengers (based on the model) making it the biggest passenger plane ever built. It will fly at 650 mph and can cover a distance of the range of 8000 miles. The plane will have a cocktail lounge, fitness centre, fully-stocked duty-free shop. Some flights will also have an onboard casino. In addition, there are lobby-like lounges with sofas and big screen TVs, conference rooms with AV equipment and high speed internet. Private suites have a living room, separate bedroom and shower equipped bath. On the flip side are the microjets that will act as air taxis. Hopping a microjet will be as easy someday as hailing a taxi. Air taxis already exist using turbo-prop planes and smaller airports to provide on-demand service for regional travel. The future will have "very light jets" (VLJs). Outfitted with four to eight seats, these jets are designed to provide direct, on-demand service to destinations up to 1300 miles away. However, most trips are expected to be 500 miles or less. VLJs will opt to go to local and regional airports instead of competing with major air hubs. Often close to both home and destination, they are the kind of airports where parking is free, security easy and rental cars next door. Suddenly, resorts and distant weddings will be saved of cumbersome surface transportation to get there. They will be used by upcountry business travellers and vacationers. Requiring a national blue skies policy, it will be an ideal vocation for individual entrepreneurs as microjets require only one pilot. The airline industry is already pursuing flying-cars and airplane-helicopter hybrids. Question : 1) Compare Sea Travel with Air Travel. 2) Explain the advantages of Space Travel. TREASURY MANAGEMENT Q1) Explain six components of interest rate risk? Q2) What is Earnings at Risk (EAR) ? Q3) Explain the important wings of organizational structure for management of market risk? Q4) Define currency risk and explain how a domestic organization is concerned with currency risk? Q5) Define equity risk and state the various forms of equity risk? Q6) What is OTC Market? Q7) What is commodity currency. Explain in brief. Q8) State the various categories of investment? How can a bank undertake security shifting? Q9) What are the obligations of Mutual Funds to the unit holders? Q10) Discuss Zero Based Budgeting in detail?
- 54. TREASURY MANAGEMENT CASE STUDY: 1 For the purpose of cash management as a treasury function would mean money in form of authorized currency notes (including coins) and bank balances (including undrawn loan or overdraft). Systematic and professional management of cash inflows and outflows is the bedrock of sound treasury management, and in the process, mitigates the risk of financial imbalance and chaos in the operation of an organization at any point of time. Cash is the real “driver” of activities in any society business organizations in particular – because its absence / shortfall surplus can severely impact the well being at times. This leads us to need of maintaining a cash flow cycle in the most effective manner. Q1) Which are the uncomfortable situation arises because of ineffective Cash Management? Q2) Explain the objectives of Cash Management? Q3) What are the main features of Cash flow cycle? Q4) Explain the implications of the Cash flow cycle? CASE STUDY : 2 Internal Audit is an independent control channel within an organization. Covering the entire gamut of its operation. In the areas of treasury / market risk management, the role of the internal audit is more pronounced since the impact of such risks of ten turns out to be very severe as volatilities across markets are unpredictable. Hence, the internal audit mechanism operates as a “Safety Value”. Q1) Define the term Internal Audit in brief. AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL Q2) Define Internal Check. Q3) State the distinction between Internal Audit and Internal Check. Q4) Discuss the objectives of Internal Audit for treasury / Market Risk Management. CASE STUDY : 3 In the entire field of market risk, options and futures play a significant role. Every stakeholder in business and commerce is exposed to the different types of risk. One important risk that the stakeholders are exposed to the risk of fluctuation in the prices of assets that they either own or assets they need to settle deferred liabilities. As a hedging process, they facilitate transfer of risks in market dynamics, i.e. interest rate risk, liquidity risk, currency risk etc. As has been aptly said however, ‘A perfect hedge is available only in a Japanese garden”. Q1) Define the hedging in detail. Q2) Distinguish between hedging and insurance. Q3) How is hedging is different from speculation? Q4) Explain the types of hedging? CASE STUDY : 4 Assets and liabilities are the only two constituents of the balance sheet of an organization which are influenced by the volume, extent and magnitude of contingent assets and contingent liabilities. From the perspective of market risk management, Asset Liability Management (ALM) is the core instrument of control, since both liabilities and assets in their liquidity and interest elements are market-driven. An effective co-ordination and control of liabilities (mainly external sources of funds in the business as distinct from owner’s equity) and assets (other than fixed assets) is required on an ongoing basis – sometimes on a daily basis, in order to protect an organization from pronounced market risks. Q1) Define ALM (Asset Liability Management). Q2) Explain the objectives of ALM. Q3) Explain pre-requisites for operation of an effective ALM system? Q4) Which types of risks ALM process has to take case, explain in brief ENTREPRENEURSHIP MANAGEMENT Q1) Who is an Entrepreneur? What is the influence of environment on growth of entrepreneurship? Q2) Discuss the role, functions and objectives of State Financial Corporation in promoting SSI Units? Q3) What factors present in our society could account for the differences between male and female entrepreneurs today? How do you think men and women entrepreneurs will differ in next ten days? Q4) How do you scout for new ideas? How do you shortlist the most promising ones? Discuss? Q5) What is the importance of determining financial viability of a project? Q6) What are the steps in identifying the critical path in a Network ?
- 55. Q7) What isthe contribution by Sigmund Freud in the field of personality theory? Q8) Why do people resist change? How do you overcome it? Q9) Explain the process of framing ‘Basic Business Idea’ and how innovation will be helpful in formulating business proposals? Q10) Discuss the pros and cons of innovation? Q11) Discuss the need for entrepreneurship based education in India and suggest measures for the sustenance of entrepreneurship attitude? Q12) Describe the entrepreneurship external environment forces? Industrial Safety Management 1. Write a short note on decontamination methods. 2. Discuss about Employee/Management. 3. Write methodology of In-depth Investigation 4. Explain investigation procedures of the door safety swings 5. Why do accidents occur? 6. List out key safety measures for power tools. 7. Explain about job safety analysis. 8. Give overview of the employer’s safety programme. 9. What is assessment of the hazards 10. What is a chemical hazard International Trade 1. What is international Business? Explain nature of international business. 2. Explain theories of global trade and investments. 3. Explain political and technical environments in Europe and its effects on Global trade. 4. How does the cultural environment in a country affect on global trade? Explain with suitable example. 5. Explain the role of international strategic management. 6. Explain the significance of technology transfers in global trade. 7. Write a detailed note on international marketing. 8. Explain the role of international financial management in global trade. 9. What are the different ways of financing foreign trade? 10. What are different international strategic alliances? Explain with the help of examples. MATERIALS MANAGEMENT
- 56. 1.What do youunderstand from integrated materials management? What are the obstacles encountered to make this approach effective? 2.Name the industry and the products for which materials requirement planning technique would be suitable than economic order quantities and explain why? 3.What do you understand from Materials Requirement Planning (MRP)? What are its advantages over conventional tools of inventory planning? Which types of industries have use of this technique ? 4.Why should purchase department participate in product development ? Explain to what extent it is practiced in Indian Industry ? 5.Describe the procedure to be followed for the purchase of an item until payment of the bill. Indicate the controls involved. 6. What are blanket orders ? What are their salient features ? For what type of items is this method of buying suitable ? 7.How will you organize buying of seasonal commodities ? Explain giving examples ? 8.How does “Buying under risk” differ from “Buying under uncertainty” ? Give a comparative analysis of the two methods ? 9.What are the responsibilities of receiving stores ? What are the different types of materials received in the organization ? 10.What is pallet ? What are the different types of pallets used in the industry? Describe in brief the advantages of palletisation ? 11.Define logistics management. Explain briefly the benefits that can accrue to the organization from the successful implementation of the concept ? 12.How does an effective system of electronic data processing help in materials management ? 13.What do you understand from classification of materials ? why is it done ? In what different ways can materials be classified ? 14.What are the different methods of codification of items ? Explain them briefly ? 15.Discuss in details how standardization can assist management in any four of the following : a) Better inventory control b) Reduction in manufacturing cost. c) Quality improvement d) Minimization of obsolete and dormant stock e) Economics in purchasing f) Better stores management 16.What is meant by selective control of inventories ? What different methods are used for selective control of inventory items ? 17.“ABC analysis indicates selective control of inventories” Discuss. 18.What is the importance of EOQ in inventory control ? what are the limitations of EOQ concept ? 19.“Best buying results when annual procurement cost equals annual inventory carrying cost” Discuss ? 20.“Long term contracts with staggered deliveries are better than frequent orderings for A and B class of items.” Discuss PRINCIPLES & PRACTICE OF MANAGEMENT Q1) “Coordination is imperative for the success of any organization.” Explaining the need for coordination suggest the ways to achieve effective coordination in a decentralised private sector manufacturing organization? Q2) Describe the interpersonal needs in terms of expressed and wanted behavior. Cite suitable examples to support your views? Q3) Why do managers need to acquire different skills at various levels? What are the skills conceptualized by Katz? Explain how they are proving useful for Indian managers at different levels? Q4) Discuss various strategies used in implementing organizational change in the context of a large public sector manufacturing organization? Q5) Identify major barriers of communication and explain why do they arise. Explain ways to
- 57. overcome these barrierswith suitable examples? Q6) Write short notes on any four of the following: (5 marks each ) i) Delegation and Decentralisation ii) Line and Staff functions iii) Theory X and Y iv) Domino Effect v) Organisational culture and climate 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
- 58. CHARTERED FINANCE Air Sparesis a wholesaler that stocks engine components and test equipment for the commercial aircraft industry. A new customer has placed an order for eight high-bypass turbine engines, which increase fuel economy. The variable cost is $ 1.4 million per unit, and the credit price is $ 1.65 million each. Credit is extended for one period, and based on historical experience, payment for about 1 out of every 200 such orders is never collected. The required return is 2.5 per cent per period. Q1) Assuming that this is a one time order, should it be filled? The customer will not buy if credit is not extended? Q2) What is the break-even probability of default in port (a)? Q3) Suppose that customer’s who do not default become repeat customers and place the same order every period forever. Further assume that repeat customers never default. Should the order be filled? What is the break even probability of default? Q4) Describe in general terms why credit terms will be more liberal when repeat orders are a possibility. CASE STUDY : 2 Taper Corporation shows the following information on its 2007 income statement. Sales = Rs 1,62,000/-; Cost = Rs 93,000/-; Other Expenses = Rs 5,100/-; Depreciation Exp = Rs 8,400/-; Interest Expenses = Rs 16,500/-; Taxes = Rs 14,820/-; Dividends = Rs 9,400/-. In addition you are told that the firm issued Rs 7,350/- in new equity during 2007 and redeemed Rs 6,400/- in outstanding long term debt.
- 59. Q1) What isthe 2007 operating cash flow? Q2) What is the 2007 cash flow to creditors? Q3) What is the 2007 cash flow to stockholders Q4) If net fixed assets increased by Rs 12,000/- during the year, what was the addition to NWC? CASE STUDY : 3 Assume you are considering a new product launch. The project will cost $ 1,40,000/- have a four year life, and have no salvage value, depreciation is straight line to zero. Sales are projected at 170 units per year, price per unit will be $ 17000, Variable cost per unit will be $ 10,500 and fixed cost will be $ 3,80,000 per year. The required return on the project is 12 per cent, and the relevant tax rate is 35 per cent. Q1) Based on your experience, you think the unit sales, variable cost and fixed cost projections given here are probably accurate to within 10 per cent. What are the upper and lower bounds for these projections? Q2) What is the base case NPV? What are the best case and worst case scenarios? Q3) Evaluate the sensitivity of your base case. NPV to change its in fixed costs? Q4) What is the cash break even level of output for this project (ignoring taxes)? CASE STUDY : 4 Suppose your company needs to raise $ 20 million and you want to issue 30 year bonds for this purpose. Assume that the required return on your bond issue will be 7 per cent, and you are evaluating two issue alternatives, a 7 per cent annual coupon bond and a zero coupon bond. Your company’s tax rate is 35 per cent. Q1) How many of the coupon bonds would you need to issue to raise the $ 20 million? How many of the zeroes would you need to issue? Q2) In 30 years, what will your company’s repayment be if you issue the coupon bonds? Q3) What if the issue the zeroes? Q4) Do you have any other alternative explain in detail? CORPORATE TRAINING MANAGEMENT
- 60. CASE STUDY :1 Evaluation is the systematic collection of descriptive and judgemental information necessary to make effective training decisions related to the selection, adoption, value and modification of various training activities. The objectives of training programs reflect numerous goals ranging from trainee progress to organizational goals. From this perspective, evaluation is an information gathering technique that cannot possible result in decisions that categorize programs as good or bad. The history of evaluation of training programmes indicates that much more effort is necessary to acquire the information needed for the decision making process. Q1) Explain the barriers in the Evaluation process? Q2) What are the ways in which training Evaluation can make a contribution in process of improving training? Q3) Explain the Evaluation models? Q4) Explain the strategies of the Evaluation process? CASE STUDY : 2 Work place training is a systematic approach to learning and development to improve individual, team or organizational effectiveness. A systematic approach refers to the idea that the training is intentional. It is being conducted to meet a perceived need. Learning and development concerns the building of expertise as a function of these systematic training efforts. Learning outcomes can include changes in knowledge, skills or attitudes (KSA). One well established framework for organizing the important steps of training is the instructional design model based in the instructional technology area. Q1) Explain the term Training? Q2) Explain the term technology and instructional technology? Q3) Explain the characteristics of instructional technology? Q4) What is the importance of skill and attitude explain? CASE STUDY : 3 The learning environment refers to the dynamics of the training process with particular emphasis on those components that support learning in the training setting and then once back on the job. The basic foundation for instructional training programs is learning. Training procedures are based on the belief that it is possible to design an environment in which learning can take place. Learning is an inferred process that is not directly observable.
- 61. Learning is animportant aspect in every training. Q1) Explain the term learning? Q2) Discuss the learning outcomes in brief? Q3) Explain the stages of learning? Q4) Point out the Trainee Motivation to learn meaning and explain the term self-efficacy? CASE STUDY : 4 Training Methods have traditionally been developed as a necessary part of bringing new hires up to speed in the organization, ensuring that individuals are technically competent in their individual jobs, training and first line supervisors on how to manage and developing individuals identified as having high potential for future leadership positions in the organizations. The focus of these training efforts has been to enhance the effectiveness of individuals in particular jobs in an organization. Q1) What are three different dimensions to build employee capabilities? Q2) Explain the term Employee Orientation in brief? Q3) Explain the term OJT (On the Job Training)? Q4) Discuss the term ‘Cross Training’? CORPORATE TRAINING MANAGEMENT 12. Explain in detail “Training Design Process”. 13. If you had conduct needs assessment for a new job at a new plant, describe the method you would use. 14. What learning condition do you think is most necessary for learning to occur? Which is least critical? Why? 15. What is repurposing? How does it affect use of new technologies in training? 16. Discuss reasons why many managers are reluctant to coach their employees. 17. What are some potential legal issues that a trainer should consider before deciding to run an adventure learning program? 18. How will you define “Career”? 19. What are the three components of career motivation? What is more important? What is least important? Why?
- 62. 20. Give anexample of dual career path system and explain it? 21. What are the characteristics of an effective dual career path? ENTREPRENEURSHIP MANAGEMENT Q1) Who is an Entrepreneur? What is the influence of environment on growth of entrepreneurship? Q2) Discuss the role, functions and objectives of State Financial Corporation in promoting SSI Units? Q3) What factors present in our society could account for the differences between male and female entrepreneurs today? How do you think men and women entrepreneurs will differ in next ten days? Q4) How do you scout for new ideas? How do you shortlist the most promising ones? Discuss? Q5) What is the importance of determining financial viability of a project? Q6) What are the steps in identifying the critical path in a Network ? Q7) What is the contribution by Sigmund Freud in the field of personality theory? Q8) Why do people resist change? How do you overcome it? Q9) Explain the process of framing ‘Basic Business Idea’ and how innovation will be helpful in formulating business proposals? Q10) Discuss the pros and cons of innovation? Q11) Discuss the need for entrepreneurship based education in India and suggest measures for the sustenance of entrepreneurship attitude? Q12) Describe the entrepreneurship external environment forces? Industrial Safety Management a) Write a short note on decontamination methods. b) Discuss about Employee/Management. c) Write methodology of In-depth Investigation d) Explain investigation procedures of the door safety swings e) Why do accidents occur? f) List out key safety measures for power tools. g) Explain about job safety analysis. h) Give overview of the employer’s safety programme. i) What is assessment of the hazards 10. What is a chemical hazard
- 63. INTERNATIONAL BUSINESS 1) Whatis meant by Technology? What is its influence on business? 2) What are the functions of WTO? 3) What is international business environment? 4) How cultural factors do influences international business? 5) State the importance of business ethics. 6) What are the different dimensions of economic environment? 7) What are the steps taken by government to improve FDI? 8) What are the functions of UNO? PART B — (15marks EACH) Answer any 2 questions. 1) Foreign investment is necessary aid for developing countries like India” – Discuss. 2) Discuss in detail the environmental factors that affect a business. 3) What is privatization? What are its merits and limitations? 4) What are the role and functions of WTO in international relations? 5) ‘The changes taking place in socio-cultural environment in India is a boon for business’ – Discuss. Explain the challenges of globalization of Indian industries. INTERNATIONAL FINANCE MANAGEMENT 1) Calculate balance of Visiable Trade? 2) Calculate balance of Invisiable Trade? 3) Calculate balance of Capital Account? 4) Calculate change in Reserves? 1) Define Foreign Exchange Market? What are its characteristic features? 2) What were the provisions of LERMS? 3) What are the function of FEDAI? 4) Which is the currency used as vehicle currency in India? 5) Who are `Money Changers’?
- 64. 1) Compile thebasic balance? 2) Examine the trade balance vis-à-vis the current account balance and explain its effect on the economy? 3) Explain the behavior of the Capital Account entries and how can they affect the economy? 4) Is the increasing positive `Overall balance’ good for the economy? Why? 1) What is capital account convertibility? 2) What are the risks in capital account convertibility in India context? 3) What is the present status of capital account convertibility in India? 4) Bring out the arguments in support of convertibility? INTERNATIONAL FINANCIAL MANAGEMENT Q.1) What is exchange rate determination andforecasting? Q.2) Explain financial management in a global context. Q.3) Explain in detail: a) Accounting implications of international activities b) Tax implications of international activities Q.4) What is forwards, swaps and interest Parity? Q.5) Explain short-term financial management in a multinational corporation. Q.6) Explain long-term borrowing in the global capital markets. Q.7) What are different currency options? Q.8) Explain currency and interest rate futures. Q.9) Write a detailed note on the foreign exchange market in India Q.10) What is balance of payments? International Trade
- 65. 1. What isinternational Business? Explain nature of international business. 2. Explain theories of global trade and investments. 3. Explain political and technical environments in Europe and its effects on Global trade. 4. How does the cultural environment in a country affect on global trade? Explain with suitable example. 5. Explain the role of international strategic management. 6. Explain the significance of technology transfers in global trade. 7. Write a detailed note on international marketing. 8. Explain the role of international financial management in global trade. 9. What are the different ways of financing foreign trade? MANAGEMENT CONTROL SYSTEM 1. Describe the need for MIS in a business organization focusing on Management Control System. Also explain the important considerations in designing Management Information System (M l S) for the purpose of Management Control. (10) 2. Explain the following ( Any SIX) (30) (a) Management by Objectives (MBO) (b) Concept of Six Sigma (c) Flexible Budgeting (d) Balance Score Card (e) Elements of a Control System (f) R O I Approach (g) Performance Budgetting 3. Explain how by designing an appropriate Management Control System , the
- 66. different types ofrisks faced by the banks can be tackled. (10) 4. What are different functions involved in the control of an Organization. Explain them? (10) 5. Consider a Retail Outlet. What should be the objectives of Management Control system for the retail outlet? Examples would strengthen your views. MATERIALS MANAGEMENT 1.What do you understand from integrated materials management? What are the obstacles encountered to make this approach effective? 2.Name the industry and the products for which materials requirement planning technique would be suitable than economic order quantities and explain why? 3.What do you understand from Materials Requirement Planning (MRP)? What are its advantages over conventional tools of inventory planning? Which types of industries have use of this technique ? 4.Why should purchase department participate in product development ? Explain to what extent it is practiced in Indian Industry ? 5.Describe the procedure to be followed for the purchase of an item until payment of the bill. Indicate the controls involved. 6. What are blanket orders ? What are their salient features ? For what type of items is this method of buying suitable ? 7.How will you organize buying of seasonal commodities ? Explain giving examples ? 8.How does “Buying under risk” differ from “Buying under uncertainty” ? Give a comparative analysis of the two methods ? 9.What are the responsibilities of receiving stores ? What are the different types of materials received in the organization ? 10.What is pallet ? What are the different types of pallets used in the industry? Describe in brief the advantages of palletisation ? 11.Define logistics management. Explain briefly the benefits that can accrue to the organization from the successful implementation of the concept ? 12.How does an effective system of electronic data processing help in materials management ? 13.What do you understand from classification of materials ? why is it done ? 14.What are the different methods of codification of items ? Explain them briefly ? 15.Discuss in details how standardization can assist management in any four of the following : 4. Better inventory control 5. Reduction in manufacturing cost. 6. Quality improvement 7. Minimization of obsolete and dormant stock
- 67. 8. Economics inpurchasing 9. Better stores management 16.What is meant by selective control of inventories ? What different methods are used for selective control of inventory items ? 17.“ABC analysis indicates selective control of inventories” Discuss. 18.What is the importance of EOQ in inventory control ? what are the limitations of EOQ concept ? 19.“Best buying results when annual procurement cost equals annual inventory carrying cost” Discuss ? 20.“Long term contracts with staggered deliveries are better than frequent orderings for A and B class of items.” Discuss. Network Management 1. (i) List the five key differences between TCP reference model and OSI reference model. (2) 22.Write the similarities and differences between packet and cell switching. (2) 23. Why is the data link layer in a LAN subdivided into Logical Link Control (LLC) and Medium Access Control (MAC) sub-layers ? (2) 24. List the characteristics of broadband coaxial cable. (2) 25.Differentiate between virtual circuit and datagram’s. (2) 26. The maximum payload of TCP segment is 62 1/2,2 1/212 1/2 bytes. Why ? (3) 27. What are sliding window protocols ? Explain one-bit sliding window protocol with an appropriate diagram. (2) 2. (i) Name all the basic network topologies and describe advantages of each. Draw proper diagram tor each topology. (2) (ii) Explain the following terms : (2) 15. Bandwidth 16.Channel capacity 17. Multiplexing 18.Quality of Service (QoS) 19. Full-Duplex Transmission (iii) What is the basic purpose of MAC layer protocol ? Explain the function of following MAC layer protocols : 6. Ethernet 7. Token bus (2) 3. (i) Describe the characteristics and application or the following network devices : (6) (a) Routers
- 68. 5) Bridges 6) Switches (iii)Answer the following : (4) • Explain ISDN BRI Services. • Differentiate between broadband and baseboard services. • Describe the following three fields of TCP header : • Sequence number 4. (i) What is congestion control ? How does it occur ? (2) • How does TCP handle connection establishment and crash recovery ? (2) • List and explain any five ISDN applications. (2) 5. (i) Describe and compare the following routing algorithms : (4) • Shortest path routing • Flooding (ii) How does ATM differ from frame relay ? List and briefly define the ATM service classes. (6) Section B 1. (a) Write any two differences between OSI and TCP/IP protocol suit. Also give reasons why OSI is not popular. (3) • Why is layering of the protocols done in TCP/IP stack ? (3) • Explain any two functions of each layer of TCP/IP protocol stack. (2) How many address bits does the latest version of IP (IPv6) have ? What is the maximum number of IP addresses possible with IPv6 ? (3) (e)Identify the header of each flag and explain its meaning : (4) (i) URG (ii) ACK (iii) FIN (iv) RST (f) How is flow control managed by Sliding Window protocol ? (3) 2.(a) What is Ethernet ? How does it work ? Also explain the fields of Ethernet Frame Format. (4) (b) What is First-Octet Rule ? Give an example to explain it. (3) 3. (a) What is the significance of hierarchical naming scheme ? Differentiate among following addresses and their meaning with reference of DNS : (5) (i) www.isbm.edu (ii) www.isbm.ac.in (iii) www.Isbm.rnet.in (iv) www.isbm.nic.in PRINCIPLES & PRACTICE OF MANAGEMENT
- 69. Q1) “Coordination isimperative for the success of any organization.” Explaining the need for coordination suggest the ways to achieve effective coordination in a decentralised private sector manufacturing organization? Q2) Describe the interpersonal needs in terms of expressed and wanted behavior. Cite suitable examples to support your views? Q3) Why do managers need to acquire different skills at various levels? What are the skills conceptualized by Katz? Explain how they are proving useful for Indian managers at different levels? Q4) Discuss various strategies used in implementing organizational change in the context of a large public sector manufacturing organization? Q5) Identify major barriers of communication and explain why do they arise. Explain ways to overcome these barriers with suitable examples? Q6) Write short notes on any four of the following: (5 marks each ) 1. Delegation and Decentralisation 2. Line and Staff functions 3. Theory X and Y 4. Domino Effect 5. Organisational culture and climate SCHOOL MANAGEMENT 1) Explain the characteristics of management in terms of science? 2) Discuss the term Management as an art? 3) Discuss the term Management as profession? 4) Explain the three aspects of a process management? 1) Explain the meaning and definition of educational management? 2) Explain the needs of educational management? 3) Describe the objectives of educational management? 4) Explain the functions of educational management?
- 70. 1) Explain theterm Performance Appraisal? 2) State the objectives of Performance Appraisal? 3) Explain the need for Performance Appraisal? 4) Explain the criteria for Performance Appraisal? 1) Define the Organizational structure? 2) Explain the Organizational process? 3) Explain the managerial environment in an organization? 4) Explain the term employee skills? TAXATION Q1) Write short notes on (Any three) 28. Annual Value 29. Assessee 30. Assessment year 31. Assessment Q2) Distinguish between : 20. Resident and Non-resident 21. Ordinary Resident and non-ordinary Resident? Q3) Discuss the following exemption from Income tax? 8. Scholarship 9. Daily allowance of MP or MLA 10. Awards and Rewards. Q4) What are the different heads of income under which income is to be computed under the Income tax Act 1961? Q5) Define 7) Salary 8) Pre-quisite 9) Profits in lieu of Salary Q6) How will you determine the income from house property under the Income Tax Act 1961? Q7) What are the incomes chargeable under the head “Profits and Gains of Business or Profession? Explain. Q8) Which are the amounts chargeable under the head “Income from Capital gains”?
- 71. WE ARE PROVIDINGCASE 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