CASE 1
XYZ
Company is an existing profit making FMCG Company. The company has 600
personnel and has branches all other the country. It has a separate training
department with a Training Manager, Mr. A.P. Mohan as its head who is supported
by two qualified training officers. Mr. Mohan has been in the company for the
last 8 years and is very efficient.
Brief
Description of the Problem:
Mr.
Mohan wants to leave the organization. He is fed up with organizational
politics. He is dissatisfied and infact frustrated. There are several reasons
attached to it. First and foremost is that he is not paid adequately despite
the fact that he has brought 12% growth in revenue to the company. Second
reason is that he is not consulted and constantly neglected while making
decisions on training aspects. Lastly, he considers himself to be a victim of
politics played in the organization. Production Manager is constantly hurting
him and interferes with the work. Dr. Ashok Sarao, boss of Mr. A.P. Mohan does
not want him to leave the organization, as he knows that the efficiency will
come down if he leaves. Dr. Ashok tries to convince Mohan that he should adjust
himself with the environment and also talk of how Mohan is constantly
neglected. He talks of how politics is played in the organization and strengths
and weaknesses of Mohan but does nothing to convince Mohan. Rather he says that
they have to adjust, as they are part of family run business. In this setting,
personal equation rather than merit works. Mohan is not convinced, and says he
is leaving.
Questions:
1.
Why a high performer like Mr. Mohan decided to leave the organization he has
been long part of?
2. Do you think Mr. A.P. Mohan took the
right decision to leave the organization? What would you have done if you were
in his shoes?
CASE 2
MAJESTIC PLASTICS COMPANY
Reps Selling Too Many Low-Profit
Products
Over the past several days the top
executives in the Majestic Plastic Company had been conducting
their annual performance review of the company’s operations. The company
president, Boyd Russell, sat in on most of these sessions and periodically
became quite involved in some of the departmental reviews. The sales
department was the one currently under discussion, and Clyde Brion, the general
sales manager, was the focus of attention. Overall, the sales and profit
results were satisfactory, but the executives noted what they thought was
a problem in two Louise Shannon was the rep, and the other was in Chicago,
which was Henry Sadowski’s territory.
In each of these territories, the
sales reps total sales volume was satisfactory. The problem was that the
bulk of their sales volume was in
low profit products- that is, products whose gross margin was well
below the company’s desired average.
Then the chief financial officer, Oliver Twombly, recalled that this
same situation had been brought up
at last year’s performance review. Clyde Brion realized he was on the
spot with his fellow executives,
including the president.
Top management really did not want
to change the basic compensation plan because, ore the company as
a whole, it apparently had been
working okay. And Brion concurred in this decision. He pointed out that
Shannon ad Sadowski consistently met
their total sales quotas and that each had won a sales contest
designed to stimulate total sales.
But their performance was not balanced. They went way over quota on
low-margin goods. They were not
selling a desirable mix of products, nor were they generating their share
of new accounts. Basically they were
getting large repeat orders from a few established accounts. And
Shannon and Sadowski generally were
neglecting the newer products that were the foundation of the
company’s future growth.
Brion had been aware of this
situation for some time, but he had never given it the attention it deserved,
partly because the two reps total
sales volume was satisfactory and partly because he had other brushfires
to put out. Now he was convinced
that he had better do something-and do it quickly.
Question:
1. What should Clyde Brion do to
remedy the imbalanced sales performance of Louise Shannon and
Henry Sadowski?
CASE 3
CLEANERS
To Train or Not to Train
Sunrise Cleaner Company’s sales have
been expanding rapidly in the past several years and are expected to
continue increasing throughout the next decade. In order to meet this demand,
Mickie Parsons, Sunrise’s sales manager, has hired a number of sales
representatives and expects to hire 6 to 10 salespeople in the coming year
and more the following year. In the past, Sunrise hired only
experienced reps, but lately the company has been hiring recent marketing
graduates. While the new grades don’t have experience, they often are a
high level of motivation and a good understanding of overall
marketing planning. However, the less experience reps need more
training-both on company policies and sales procedures-before they are
effective in making sales calls. Parson is trying to design a training
program that will provide the necessary training at the lowest possible
cost.
Currently, Sunrise does not have a
training program. Te new hires just spend a week in a territory with
an experienced rep, and ten they are given their own territory. While this
system was satisfactory with experienced people, it is not adequate for
the inexperienced people the company is now hiring.
Mickie Parsons has suggested the
president of Sunrise, Keat Markley, that the company institute a
one-or two-week training program at company headquarters. Parsons has
suggested two options. The first option is to hire a staff recruiter/
trainer who would spend half of his or her time on recruiting and the other
half on training. The new staff specialist would be paid a salary of about
$60,000 a year- so the added cost with respect to the training
responsibilities would be $30,000 a year. The second option is to contract with an
outside company that specializes les force training. That company would provide
a specialist to set up and conduct a training program at a cost of
approximately $20, 0000 per week.
Parsons was just concluding her
presentation to Keat Markley. “I feel that a training program
would increase the average annual sales per rep a minimum of 5 percent- to
$1,050, 000 per rep.” Markley replied, “I am not convinced that the
training would improve performance enough to justify the costs. You know it
isn’t just the cost of the trainer. We would also have to bring these reps into
headquarters and pay their expenses
while they are here. There would be some equipment and
materials involved…. All for a 5 percent increase in sales! I want to be
sure that the 5 percent would more than cover these costs. What about
using computer training software to train the new reps? Eng I read says
that all of the top companies are using online programs to do a lot of
their training and that they are saving bundles in the process.”
“I’ve have checked into that
option,” Parsons said, “but I don’t think that a basic off-the –shelf
program would be very effective for training inexperienced graduates and
the initial cost of developing a customized program would be excessive- a
minimum of $3,00,000 with each additional week module costing $50,000.
Besides, I think an online program works best for refresher training or for
introducing new product information, not for teaching basic selling
skills- that should be face-to-face training.” “OK,” said Markley, “you
put together an analysis that considers all the costs of these training
options, and ten make a recommendation to me. Be sure that you look at the
increase in sales that will be necessary to cover these additional
costs.” Parsons left the meeting already calculating the costs in her
head. She knew that bringing a rep into headquarters would cost $250 per
rep for travel and $750 per rep per week for lodging and meals.Materials for
any of the programs would likely add an extra $100 per rep and the audiovisual
equipment for the face-to-face training would be headed for her office,
where she could put all of these costs together
in order to make a reasoned
recommendation to Markley as soon as possible.
Question:
1. What type of training program
should Mickie Parsons recommend to Keat Markley? What’s your
reasoning for your recommendation?
CASE 4
Snow White Paper Company is located
in an agricultural belt about 300 kilometers from a metro city.
The company is into writing and
printing papers. Its primary raw material is wheat straw. Last year,
the company had a turnover of Rs.
134 crore on a volume of 45,000 tons of paper. While preparing
the business plan for the current
year, the top management was concerned with the following
distribution issue that they want
you to help resolve:
PROBLEM: FINISHED GOODS DISTRIBUTION
The paper industry is dominated by
selling agents who bring the manufacturer like Snow White and
the buyer like printing/publishing
companies, and note book makers, together. They make a
commission of about 2 percent on all
transactions. Some other points:
Snow White depends on about 110
agents to canvass business for it from the users.
· The Company sells about 23 percent
of its paper directly to some government organizations.
· The agent arranges for the buyer
to pay the company for its produce by a advance demand
draft. It is expected that the agent
provides the credit support to the buyer.
· Agents are not exclusive for Snow
White and work for other paper mills also and normally
play the mills against each other.
They have a grip on the business and are reluctant to put the
mill directly in touch with the
buyers.
· There is always an uncertainty on
the orders and the price, which would be obtained on the
orders- the company cannot plan its
profits properly nor offer the best service to end users so
that they always ask for Snow white.
Question:
1. How can you help Snow White
become less dependent on the selling agents and plan its sales and
profitability better? How can they
plan their customer service efforts?
CASE 5
Introduction to the organization:
XYZ Company was established 20 years
ago, to manufacture gearbox components for diesel engines. It employs
around 250 people, having a head office, which employs a wide range
of personnel who are generally well educated and enthusiastic about their
work, and a factory, which employs semi-skilled local people who are
generally disinterested in the products of the company
and who have an instrumental
attitude to work, seeing salary as the only reward.
Brief Description of the Problem:
The performance of the Company has
not been good and the records revealed the following facts:
· Wastage within the factory was
costing the Company approximately Rs. 100,000 a month.
· There was wide spread differences
in individual work standards
· Processes were non-standardized
resulting in repeated problems
· Management made all decisions and
cascaded the result down to employees
· The top management became
concerned about the performance of the factory and they hired Mr.
Tanmoy Deb, an OD consultant to
study the problem and suggest specific changes to
relationships and tasks with the
following objectives:
· To review and improve
communication systems.
· To restructure the organization
and to review teamwork and quality practices.
· To review leadership issues across
all levels.
Mr. Tanmoy Deb carried out
discussions, interviews and surveys and made the following
observations:
· There’ and ‘us’ attitude was
widely prevalent between head office and factory personnel
· Production personnel lacked
technical skills
· Factory employees felt alienated
from sharing the Company’s success
· Production systems were adhoc and
defective because of frequent variations in standards set
· Many times raw material was found
to be of inferior quality
· Rigidly defined job descriptions
Questions:
1. What in your view are the central
human resources issues involved in this case?
2. What strategy should Mr. Tanmoy
Deb develop and implement for improving the present
system?
CASE 6
Data Warehouse is a massive
independent business database system that is populated with data that has
been extracted from a range of sources. The data is held separately from its
origin and is used to help to improve the decision-making process.
Many traditional Databases are
involved in recording day to day operational activities of the business,
called Online Transaction Processing (OLTP), COMMONLY IMPLEMENTED
IN Airline Bookings and Banking Systems, for faster’s response and better
control over data. After establishment of OLTP Systems, reports and
summaries can be drawn for giving inputs to
decision-making process and this
process is called Online Analytical Processing (OLAP). For better customer
relationships management strategy, the call centre’s and data Warehouse
works as a strategic tool for decision-support which requires lot of time
for establishment, and needs to be updated with operational information on
daily weekly or monthly basis. Data Warehouse is used for proactive
strategies formulation strategies formulation in critical and complex
situations. A number of CRM vendors are advocating for single integrated
customer database which includes call centre, web sites, branches and
direct mail, but it lacks in analytical
functioning of data warehouse. This
Database can’t be expanded also, and carry decision support operations on
call centre Database becomes slow & the query processing and inquiries
handling operations also become slow & inefficient for agents dealing
with customers. Data Warehouse is must for identifying most profitable
& loyal customers and those customers can
be offered better customized
services which increase the chances of additional profits. Although call
centre system & data warehouse are altogether different systems yet
dependent on each other to fully exploit their potential respectively.
Questions:
1. Explain the role of data
warehousing in the functioning of a call centre.
2. How the response time in
performing OLAP queries can be improved?
CASE 7
Overview of our Client’s Strategy
Our client had an online store. They
were spending $15,000 each month on pay per click
advertising. This resulted in about
$225,000 per month in sales. They didn’t know which clicks
were leading to sales because they
didn’t track the clicks. There rankings in the natural listings was
minimal because they hadn’t done
keywords research on what visitors were using to try to find a
site like there’s. They weren’t able
to quantity results because their we statistics program only
showed very general traffic
information. They were also doing an irregular email newsletter even
though they had more than 32,000
e-mails in their database.
Analysis of the situation
In the natural listings we suspected
they were being penalized by the search enines for duplicate
content. The search engines frown on
this because they feel this is trying to fool them. Google will
often give a site like this
something called “Supplement Results”, which means that the search
engines know the page exists but
doesn’t have any content in their database. We also suspected
their email newsletter was being
blocked by many spam blockers because the names of the products
they sold were often on used in spam
e-mails.
Implementation of a Solution
For the pay per click advertising we
started tracking the clicks down to the individual terms and the
actual results that came from them.
We were able to delete terms that were not getting enough sales
and increase the bids on ones that
brought sales. For the natural listings we did keywords research
and focused on the main keywords on
the content for the home page and in the META tags. We
also found that visitors search on
product names rather than manufactures, so in the title tag for the
page we switched and put the product
name before the manufacturer. With the newsletter, we used
a good mix of graphics and content
to appease the spam blockers, as well as put the product names
in graphics so they wouldn’t be
blocked. In order to analyze of the site’s traffic, we implemented a
powerful web statistics program.
Results of our work
Through our tactics, our clients
were able to move up to #4 on Google for their main search term,
which got a lot of traffic. With pay
per click, they went from $.43. They decrease their budget to
$10,000 per month, yet were able to
increase their traffic by 33 percent. Through our optimization
of their pay per click, their cost
per conversion to sale decreased by at least 45 percent. The
deliverability of their newsletter
increased as well. Within a year, their sales increased to over
$600,000 per month.
Questions:
1. Discuss the client strategy for
the success of store.
2. Suppose if you are the client
maker what would you suggest for the client.
CASE 8
THE ORGANIZATION
Thomson and Richards, two
technocrats from Holland, both in the age group of late 30s came as
consultants to Calcutta with French
Company on a project assignment in 1940. They were quite
impressed with Indian culture and
decided to settle down in India. Upon completion of their project, they
started their own company under the
name Thomrich Pvt. Ltd. which manufactured agricultural
equipments. Encouraged by the
performance of the company, they ventured into the manufacturing of
fertilizer manufacturing equipments
in 1944 under the same banner. Their entrepreneurial skills and
success promoted them to diversify
their business into manufacturing of lubricants in 1951, and
subsequently to electrical gadgets
for industrial use in the year 1970. In the same year, they pioneered the
manufacturing of hovers at Chennai.
In 1992, Thomrich Pvt. Ltd. entered the tractor segment and
established its plant at Gwalior,
M.P. It entered into the tractor segment when another company KCP had
already established its reputation
as a sole reliable brand. Unaffected by the competition, they started their
brand of tractors and soon, after
three years they started manufacturing cultivators too. So far Thomrich
had a smooth sailing. With the
coming of liberalization and globalization in the 1990s, Thomrich did not
remain untouched by the surmounting
pressures of MNCs venturing into the Indian market. This made
them sell one of their profit-making
divisions, i.e., the fertilizer manufacturing to a leading Indian
business house, to concentrate on
their core competency areas. To add to the woes, the rumours of
Elegators, the world’s No. 1 tractor
manufacturer foraying into Indian market gave sleepless nights. Being
protective, the company decided to
enter in a collaborative venture with Wooge of France, the world’s
No. 2 tracror manufacturer, and
rechristened itself to Thomrich-Wooge Pvt. Ltd. In the year 2002, they
improvised the then existing model
in terms of efficiency by reducing its cycle-time, thereby becoming
No. 1 in the country. The company
considered this product as flagship product, although it had not been
takes the place of KCP Tractors,
despite improvisation in its efficiency. The company was purely
technocrat in nature with an annual
turnover of Rs. 10,000 crores. With
Thomrich-Wooge Pvt. Ltd.
contributing Rs. 125 crores to it. The Gwalior unit had a total strength of 308
employees, which included 94
executives and supervisors and the rest 214 as workmen. All the
executives were engineering
graduates with 50% of them as locals. The workmen were ITI qualified with
60% of them as Weldors, 10% as
Mechanics and 30% as Fitters. 40% of the workmen were from
Maharashtra and the rest were from
Madhya Pradesh. K. Vaswani, a 54 year old technocrat who had
succeeded Ranjan Khare when he
retired after serving this unit for 3 years, headed the Gwalior unit as
Chief Executive (C.E.). Vaswani had
been with the company from 1972 to 1993 and had left to join
Conclave Ltd, an MNC, as Chief
Executive. He rejoined Thomrich-Wooge Pvt. Ltd., in June 2004.
Vaswani did not seem to be different
from the earlier CEs who had ingrained an employee-friendly
culture in the organization. He
regularly held meetings with employees irrespective of their levels and
also made frequent visits to the
shopfloor to have face-to-face interaction with the workmen.
HR PROCESSES
Thomrich-wooge had a policy of
recruitment in two phases. The corporate office at Calcutta, through
campus selection, recruited the
engineering graduates and the Certificate and Diploma holders were
recruited independently at the unit
level. The company did not encourage inter-unit transfers, although
there were a few need-based
transfers to facilitate the employees’ and company’s operations. The
company had the policy of recruiting
the graduate engineers at entry level and nurturing and grooming
them for higher positions. As a
result, only the Thomrichians occupied all the top positions in all the units
of the organization. The company had
a firm belief that the workers would always put their best efforts if
facilitated with good quality of
work life and therefore, did not have the provision of monetary incentives.
They also believed that the
incentive schemes would hamper the quality of products by compelling the
employees to pay more attention to
quality rather than quality. Lured by the incentives they will somehow
try to sell the product without due
consideration to the customer’s need. They felt that monetary
incentives can motivate an employee
to a certain extent, and beyond that level it would fail to have any
impact on his efficiency. Rather, it
would raise his expectations and unfulfilled expectations would lower
the morale of the employee.
Nonetheless, the top management acknowledges and appreciated the
performance of workers from time to
time. The company had a fixed wage / salary structure across all the
units in India. However, allowances
varied from place to place. Thomrich-wooge had a performance
appraisal system based on management
by objectives (MBO). The top management would set the goals
and communicate it to the CEs who in
turn would pass down to the HODs. They were given sufficient
time to speculate on its feasibility
and once the feasibility was decided; the goals were frozen and
communicated to the employees. At
every quarter, the superiors would discuss the performance with the
employees and pass on the ratings to
HR departments. The expert committee consisting of 4-5 members
from various functional departments
evaluated these ratings. These members knew all the employees who
were being evaluated, and then they
re-rated them to reduce the inter-rater bias. The ratings of the
committee were final and were
communicated to the respective superiors, which was then discussed with
the concerned employees. The
superiors would also counsel the subordinates in order to redress their
grievances, if any. Decisions
regarding promotions and rewards were made annually and were based on
quarterly performance appraisals.
The company had a 2-tier system of training, one at the plant level and
other at the corporate level. It had
its own Management Development Centre at Darjeeling where most of
the training programs were conducted
for managers, incorporating prayers and yoga too. The company
did not have a separate budget for
training, it was need-based. Every employee was required to undergo at
least 15 days of training every
year. Since, multiskilling was practiced within assembly lines, the
employees were exposed to both
technical as well as behavioural training. Most of the trainers engaged
by the company were outsiders. All
the training programmes were thoroughly evaluated every quarter by
talking the feedback from the
immediate superior. The company would administer psychometric
measures once in three years to
appraise the potential of employees fro various functional areas. Once the
competence and aptitude was
identified in an employee, he was groomed in that particular area by a
mentor.
The company had a recognized trade
union, which was earlier affiliated to Bhartiya Mazdoor
Sangh (B.M.S) and was now enjoying
an independent status. The union would place a charter of demands
before the management once in four
years, which was followed by harmonious negotiations between the
two. As the management involved the
workmen even in the market survey of the products, the union also
discussed the quality issues with
the management. The company’s employment policies radiated a single
principle that they believed in
people and that they were the most valuable assets for them. Employees
had the freedom to see any superior
ant time without prior appointment. The company boasted of an open
communication system, total
transparency, no-status barrier, security and sense of professional among the
employees, which was reflected in
the unit not witnessing any strike or major indiscipline since its
inception. The company had also
introduced “Prayaas”, an HR-initiative as a proactive measure to have a
competitive edge in the dynamic
scenario. Prayaas involved OD interventions like cross functional team,
large-scale integration, kaizen,
etc. All the employees in the group of 3-5 were asked to suggest changes
for the betterment of the unit.
Subsequent solutions and action plans were also invited from the employees
and the consolidated suggestions
were implemented which resulted into introduction of suggestion
schemes, wastage utilization and
recycling of packaging material. Some of the brilliant ideas of the
employees were suitably recognized
and widely circulated through in-house journals in all the units of
Thomrich.
CHALLENGES
Since 2002, the unit had seen 12% of
executive turnover, which was earlier just 3%. This drew attention
of the top management who were
confident of the high degree of employee-loyalty and believed that the
employees were emotionally attached to
the unit. At this juncture, the HR Head, S. Abraham anticipated
trouble, as he feared that the
turnover rate might increase in the wake of globalization and liberalization
with more and more MNCs offering
lucrative packages and challenging assignments to the executives.
These firms were recruiting people
at all levels, which made the employees feel that growth prospectus at
their units were rather slow.
Moreover, employees had also become more risk talking and their varied
expertise encouraged them to
experiment in new segments namely IT, Banking and BPOs. Though the
MNCs had 15-18 hours of working, but
the changing orientation of employee made them feel that they
were handsomely compensated. S.
Abraham apprehended further deterioration due to the influence of
Dollar Packages, which was
unaffordable for Thomrich-Wooge Pvt. Ltd. The market conditions were
already tight with too many
competitors, prices being down, customers becoming more demanding and
choosy, making the inputs scarce for
the unit. Abhraham was considering the options of overcoming the
exodus of executives by increasing
the efficiency with lesser input for which the company would have to
minimize its task force. This would
tarnish its employee friendly image. The other was to increase the
profits by exploring new markets.
The Indian market by now was already flooded with many players,
leaving the international market as
the only option, which was equally a hard nut to crack. Abraham felt
trapped in a highly volatile
situation, where he fumbled for a speedy and pragmatic remedy.
Questions:
1. Was the company’s decision to
enter the tractor segment right, when KCP had already captured
the market?
2. Had you been Abraham, how would
you tackle the present situation?
CASE 9
National Competitive Advantage of
IKEA Group, a Swedish company founded in 1943 with its
headquarters in Denmark, is a
multinational operator of a chain of stores for home furnishing and
furniture. It is the world’s largest
retailer, which specializes, in stylish but inexpensive Scandinavian
designed furniture. At the end of
2005 the IKEA Group of Companies had a total of 175 stores in 31
countries. In addition there are 19
IKEA stores owned and run by franchisees, outside the IKEA store
around the world.
In Sweden, nature and a home both
play a big part in people’s life. In fact one of the best ways to describe
the Swedish home furnishing style is
to describe nature-full of light and fresh air, yet restrained and
unpretentious.
To match up the artist Carl and
Karin Larsson combined classical influences with warmer Swedish folk
styles .They created a model of Swedish
home furnishing design that today enjoys world-wide renown. In
the 1950s the styles of modernism
and functionalism developed at the same time as Sweden established a
society founded on social equality
.The IKEA product range –The IKEA product range- modern but not
trendy, functional yet attractive,
human-centered and child friendly – carries on these various Swedish
home furnishing traditions.
The IKEA Concept, like lots founder,
was born in Samaland. This is a part of Southern Sweden where the
soil is thin and poor. The people
are famous for working hard, living on small means and using their
heads to make the best possible use
of the limited resources they have. This way of doing things is at the
heart of the IKEA approach to
keeping prices low.
IKEA was founded when Sweden was
fast becoming an example of the caring society, where rich and
poor alike were well looked after.
This is also a theme that fits well with the IKEA vision. In order to give
the many people a better everyday
life, IKEA asks the customer to work as a partner. The product range is
child-friendly and covers the need
of the whole family, young and old. So together we can a better
everyday life for everyone.
In addition to working about around
1,800 different suppliers across the world, IKEA produces many of
its own products through sawmills
and factories in the IKEA industrial group, Swedwood.
Swedwood also has a duty to transfer
knowledge to other suppliers, for example by educating them in
issues such as efficiency, quality
and environmental work.
Swedwood has 35 industrial units in
11 countries.
Purchasing: IKEA has 42 Trading
Service Offices (TSO’s) in 33 countries. Proximity to their suppliers
is the key to rational, long term
cooperation. That’s why TSO co-workers visit suppliers regularly to
monitor production, test new ideas,
negotiate prices and carry out quality audits and inspection.
Distribution: The route from
supplier to customer must be as direct, cost- effective and environmentally
friendly as possible. Flat packs are
important aspects of this work: eliminating wasted space means we
can transport and store goods more
efficiently. Since efficient distribution plays a key role in the work of
creating the low price, goods
routing and logistics are a focus for constant development.
The business Idea: The IKEA business
idea is to offer a wide range of home furnishings with good design
and function at prices so low that
as many people as possible will be able to afford them. And still have
many left! The company targets the
customer who is looking for value and is willing to do a little bit of
work serving themselves,
transporting the items home and assembling the furniture for a better price.
The
typical IKEA customer is young low
to middle income family.
The Competition Advantage: The
competition advantage strategy of IKEA’s product is reflected through
IKEA’s success in the real industry.
It can be attributed to its vast experience in the retail market, product
differentiation, and cost
leadership.
IKEA Product Differentiation: A wide
product range The IKEA product range is wide and versatile in
several ways. First, it’s versatile
in function. Because IKEA think customer, shouldn’t have to run from
one small specialty shop to another
to furnish their home, IKEA gather plants, living room furnishings,
toys , frying pans, whole kitchens
i.e.; everything which in a functional way helps to build a home – in
one place , at IKEA stores.
Second, it’s wide in style. The
romantic at heart will find choices just as many as the minimalist at IKEA.
But There is only one thing IKEA
don’t have, and that is, the far- out or the over-decorated. They only
have what helps build a home that
has room for good living.
Third, by being coordinated, the
range is wide in function and style at the same time. No matter which
style you prefer, there’s an
armchair that goes with the bookcase that goes with the new extending table
that goes with the armchair. So
their range is wide in a variety of ways.
Cost Leadership: A wide range with
good form and function is only half the story. Affordability has a part
to play – the largest part. A wide
range with good form and function is only half the story. Affordability
has a part to play- the largest
part. And the joy of being able to own it without having to forsake
everything else. And the customers
help, too, by choosing the furniture, getting it at the warehouse,
transporting it home and assembling
it themselves , to keep the price low.
Questions
1. Do you think that IKEA has been
successful to utilize Porter’s Five force analysis?
Give reasons.
2. Where do you think can IKEA
improve?
CASE 10
For ITC Ltd., 2007-2008 continued to
be year of quiet growth. Just more launches in its relatively new
segment of non-cigarettes fast
moving consumer goods, and solid growth. As in the past few years, ITC’s
non-cigarettes businesses continued
to grow at a scorching pace, accounting for a bigger share of overall
revenues. “The non-cigarette
portfolio grew by 37.6% during 2006-2007 and accounted during that year
for 52.3% of the company’s net
turnover.” An ITC spokesman said. In fact, over the first three quarters of
2007-08, ITC’s non-cigarette FMCG
businesses have grown by 48% on the same period last year,
“Indicating that its plans for
increasing market share and standing are succeeding.”
The branded packaged foods business
continued to expand rapidly, with the focus on snacks range Bingo.
The biscuit category continued its
growth momentum with the ‘Sun feast’ range of biscuits launching
‘Coconut’ and ‘Nice’ variants and
the addition of ‘ Sunfeast BenneVita Flaxseed’ biscuits. Aashirwad atta
and kitchen ingredients retained
their top slots at the national level, with the spices category adding an
organic range. In the confectionery
category which grew by 38% in the third quarter, ITC cited AC
Nielsen data it claims market leader
status in throat lozenges. Instant mixes and pasta powdered the sales
of its ready to eat foods under the
kitchens of India and Aashirwad brands.
In Lifestyle apparel, ITC launched
Miss Players fashion wear for young women to compliment its range
for men.
Overall, the biscuit category grew
by 58% during the last quarter, ready to eat foods under the kitchens of
India and Aashirwad brands by 63%
and the lifestyle business by 26%.
For the Industry, the most
significant initiative to watch the ITC foray into premium personal care
products with its Fiama Di Wills
range of shampoos , conditioners, shower gels, and soaps. In the popular
segment, ITC has launched a range of
soaps and shampoos under the brand name Superia.
Ravi Naware, Chief executive of
ITC’s food business was quoted recently as saying that the business will
make a positive contribution to
ITC’s bottom line in the next two to three years.
In hotels, ITC’s Fortune Park brand
was making the news during the year, with a rapid rollout of first
class business hotels.
In the agri-business segment, the
e-choupal network is trying out a pilot in retailing fresh fruits and
vegetables. The e-choupals have
already specialized in feeding ITC high quality wheat and potato, among
other commodities grown by farmers
with help from e-choupal.
Questions:
Q1. Do you think the progress of ITC
Ltd. is realistic?
Q2. After analyzing the above case,
do you think every company should aim at cost leadership with high
quality product?
CASE 11
Swish flow Ltd. - Hiring Salespeople
“Why two out of five salesperson
have resigned within six months of joining the company/” asked
marketing director to the sales
manager, Sunil Kumar of Swish flow Ltd. “I think, there is
something wrong with our staffing
process, “responded Sunil Kumar, without knowing the real reasons
for the turnover of salespeople.
Swish flow Ltd started manufacturing
and marketing consumer durables like fans and water purifiers for
household consumer’s commercial
firms in 1993. The sales and marketing office was located in Mumbai,
the commercial capital of India.
Swish flow was a newly established company and for its first year of
operations, the company decided to
recruit five salesperson to cover major metros and cities of
Maharashtra. The staffing process
included the sales manager deciding the job qualifications salespersons
based on what he learnt in the MBA
programme. The administration manger was asked to place the
advertisement in the local
newspapers. The resumes of applicants were forwarded to Sunil Kumar, who
screened the same and sent interview
calls to about ten applicants. The interviews were conducted by
Sunil Kumar and the marketing
director and the selected candidates were given the appointment letters.
Some of the candidates had a problem
of finding suitable residence, but the company policy did not
provide any consideration for he3
same. Sunil Kumar conducted one-week training programme and
generally guided the new
salesperson, who reported to him directly. There was a delay in the receipt of
the fans from the factory, located
at Baroda in Gujarat. During this period of three months, Sunil Kumar
was asked to conduct market surveys
and look after advertising function of the entire group. He asked the
salespersons to collect market
information on various other products like water purifiers, power tillers,
and so on in which the group was
interested to diversify. During this period, two salespersons suddenly
stopped coming to work, after
collecting their salaries of the previous working month.
Questions:
1. What improvements do you suggest
in the staffing process followed by the company?
2. Was Sunil Kumar right in getting
market surveys done by the new salesperson?
(A)HISTORY
OF THE FIRM:
Bombay Electricals was started in 1940 by Mr. Desai, a refrigeration
engineer, as a proprietary company.In 1941 he ran short of money and approached
Mr. Khanna, Chairman of a large group of companies, for help. Mr. Khanna
decided to invest capital in the company and thereby obtained 75% control. The
company was later registered in 1945 as a Public Limited company but management
was left all this time in the hands of Mr. Desai. Until 1947 the company showed
substantial losses because Mr. Desai started a number of new product lines but
did not stick to any long enough to establish either the production or the
markets. Nor did he make any study of the existing markets or production in the
country before introducing any of the products. This was a period in which the
company launched and finally gave up a number of products all of which resulted
in severe losses. In 1947 two senior offices from the group were brought into
Bombay Electricals Company. Mr. Jain, an engineer by qualification, had served
the Group for twenty years and was appointed Works Manager. Mr. Sharma who had
also been with the Group for 18 years was made Finance and Sales Manager.
Within six months after Jain and Sharma joined the company, Mr. Desai decided
to retire. Mr. Jain was made General Manager (Works) and Mr. Sharma, General
Manager (Finance and Sales). At this stage management of the company rested
with a part-time Chairman, Mr. Khanna, who was also the Chairman of the parent
Group, and with the two General Managers. There were six superintendents for
each of the manufacturing departments plus a sales manager and an accountant.
In 1949 the company took two decisions: (1) to suspend manufacturing all
products except those which could be manufactured by mass production methods,
and (2) not to compete with the small scale or cottage industry in any of its
production lines. They agreed to concentrate only on the manufacture of
refrigerators and air conditioners. In the decade between1950-60, the company
made impressive progress and sustained a steady growth in production and in
domestic and export sales. The following figures show the employment and net
income.
|
Year
ending March
|
Employment
|
Net
income in Lakhs
|
|
1947
1950
1960
|
500
750
3500
|
150.00
250.50
925.00
|
(B)FINANCIAL
STATUS:
The company’s financial and cost position had deteriorated markedly
between1958-1960. The rate of
equity divided declared was calculated by the company as 20% in 1956,
1957 and 1958; to 0.5 lakh in
1960. In 1960 if it had not been for 10 lakhs on profit on import
entitlement and 18.50 lakhs on ‘other
income’, the balance available for equity dividends would have been a
negative figure. The short-term
financial position of the company in March 1960 was tight and it faced
a stringent cash position. The
costs on inventories too were high, imposing strain on the financial
position. The finished stock levels in March 1960 were equipment to a little
over eight weeks production; in process stocks were equivalent to about ten
weeks production; and raw materials stocks were sufficient for about 15 weeks
production. The table below gives the expenditure on labour between 1958-1960:
|
Year
ended
March
|
Salary
and
wages
per
employee
|
Profits
bonus per
employee
|
Other
expenditure
per
employee
|
Total
per
employee
|
|
1958
1959
1960
|
5344
5131
5434
|
400
346
286
|
217
317
576
|
6021
5793
6296
|
Separating
these figures for workers from clerical staff, the cost per worker was Rs.
6,000 per year. The comparable figures of earnings in other industries averaged
Rs. 1,400 in 1960. Thus workers’ earnings in Bombay Electricals were nearly
four times the industry average. Furthermore, the earnings of the employees in
the company increased at an average of 13% between 1958 and 1960.
During the
same period the figure below compares the physical output and average real
earnings
(the figure of the real earnings is reached by allowing for the shift
in consumer price index for the period).
|
Year
|
Index
of physical output per
employee
earnings
|
Index
of average real earnings
per
employee
|
|
1958
1959
1960
|
100
133
123
|
100
120
108
|
(C)
TECHNOLOGICAL STATUS:
When, in
1948, Bombay Electricals Limited decided that the company would not compete
with the small scale or cottage industry and would manufacture only those
products which could be manufactured economically by mass production
techniques, it suspended the manufacture of small tools, at that time a
profitable product. The exclusive products on which the company concentrated
were refrigerators and air conditioners. Consequent upon the technical
decisions to manufacture on mass production lines, highspeed and special
purpose machinery was gradually installed
in the plant. The decision resulted also in the setting up of an industrial
engineering (work study) department and a vast development department. The jobs
were time-studied and after negotiations with the union, standards were
established and these were used in developing a comprehensive incentive scheme.
In all cases workers achieved the targets and often exceeded them. The
technology of manufacturing refrigerators and air conditioners had remained
reasonably stable. Between1950-60 three models were introduced and each had
required a change of approximately 10-30 per cent parts. This implied that the
basic processes had remained fairly constant and the bulk of innovation had
taken place in the methods of production. It was during this period that high
speed machinery and mass producing methods and equipment replaced slower and
hand operated machinery. As a result of the technological changes the output
per employee was comparable to similar production units abroad. These
technological innovations have had direct bearing on the man-machine
relationships. Primarily these are two: one, the operator became an attendant
to the machine as against the skilled craftsman who he was before. His
activities were governed by the speed of the machine and his work was
controlled by the technology rather the skill he could have exercised to
improve the production; two, the
fictionalization of jobs on high speed, special purpose equipment used
for manufacturing process
deprived
him of his association with the totality of operations. The task became
“meaningless’ from the point of view of the operator. His concern therefore
became one of earning a high incentive rate and for job satisfaction he had to
seek involvement elsewhere. The incentive scheme covered both direct and
indirect employees. Incentive earnings were often 100-200% of the basic
earnings. The minimum take home pay packet in the company was about Rs. 250.00
per month. At the same time, as the earnings increased, the need to earn higher
incentive became less imminent. The needs shifted from the economic to the
social levels. As would be discussed later, the alternative for the
satisfaction of social needs was denied in the work situation. The problem of
social needs snowballed. As the earnings increased, the management decided to
recruit workers from middle class families in preference to the traditional
working
class population. The purpose for doing this was to obtain an educated
workforce which would
support the
company’s programme of rapid expansion and mechanization. To a large extent
this policy
was
successful in the context of increased output.
(D)
ADMINISTRATIVE POLICY AND INDUSTRIAL RELATIONS:
As mentioned earlier the active management of the company rested with
the Chairman and the two General Managers. The Chairman visited Bombay almost every
month. He believed in giving considerable freedom of action to the local
management. He saw his role as a philosopher and guide to the local management
and chose to take only broad policy decisions in matters of finance, sales,
industrial relations, employment etc. He made it known that the General
Managers must evaluate his comments in the light of the local conditions and
should not regard his remarks as mandatory. He expressed his management
philosophy as “finding the right man for the job and then leaving him free to
do it”. He advocated the same philosophy for the General Managers. The Chairman
during his visits spent a lot of time individually with both the General
Managers, but interacted more with Mr. Jain, General Manager (works). Most of
the discussions were held outside the office while they had lunch
together or went for morning walks or other simple, social occasions of this
kind. Neither believed in the formal procedure of writing down their decisions
and preparing formal minutes. Very occasionally the Chairman and both the
General Managers discussed the policy or other issues together. This was party
because the two General Managers had shown visible signs of strained work
relations between them although they were otherwise friends. Both, the Chairman
and the General Manager (works), believed in establishing personal
relationships with everyone in the company and both were highly regarded by
employees. The General Manager (works) knew at least half the workers in the
factory by their first names and often went to their houses during festivals or
whenever an occasion demanded. Most employees felt free to approach him with
their personal problems. Invariably helped them even with money, sometimes from
his own pocket. Employees knew him as a kind person who had in mind their
personal well-being as much as that of the company. He had expressed his views
by saying that Bombay Electricals should be seen as a company that belongs to
all those who contribute to its growth. He felt sure that the only problem was
to produce more and everyone would share its gains, but none should ever stop
production; whatever problems existed would be resolved by discussions among
responsible people.
(E)
INDUSTRIAL RELATIONS:
Bombay Electricals Limited Employees Trade Union was organized in 1946
by a well known trade union leader who was also a member of the AITUC executive
Committee. The union was not recognized by the management in spite of several
representations by the President. In 1951, as a protest against discharge of
four employees in the works without proper enquiry, the workers left their
departments and assembled to listen to an address by the union President. The
General Manager (works) came out of his office and also declared that he wished
to address the workers. And he did. This was the first time that the General
Manager (works) and the union president met each other. The employees went back
to work when the management agreed to hold an enquiry by a joint team of
representatives of the management and the union. Consequent upon the enquiry
two of the four employees were reinstated by the company. In the meantime the union elected another
President for their union who was also an experienced trade union leader as
well as a Member of Parliament on a communist party ticket. Although the union
was not officially recognized by the management, the two met together regularly
and in 1955 signed a comprehensive agreement for five years. This agreement
covered the following:
· Recognizing the union as the sole
bargaining agent for the employees and allowing them facilities
to collect
union dues inside the factory;
· Wage scales, dearness allowance and other benefits;
· Incentive scheme
A network
of consultative committees at departmental, works and top union management
levels; and
· Grievance procedure
Events after the agreement showed the following characteristics:
1. There were frequent meetings between the management at the
departmental and works levels but invariably the settlement took place only in
the union’s meetings with the General Manager (works).
2. Most departmental promotions and transfers involved consultations
with the union and the departmental heads seldom took a decision concerning an
employee without formally or informally consulting the union.
3. If the union disagreed with certain issues they quickly resorted to
demonstrations within the factory or stoppage of work. The Labour Welfare
Officer was manhandled outside the factory. The officer concerned left. On all
these occasions the General Manager (works) solved the dispute.
4. Inspite of a bonus formula traditionally used by the management,
the employees agitated every year when bonus was declared and they invariably
got more bonus or loans after negotiations with the General Manager (works).
5. Some representative incidents below would illustrate one aspect of
the relationship:
(a) A worker, found smoking near the paint
shop, where smoking was not allowed, complained that the officer concerned manhandled him and
issued a charge sheet even when he was not smoking. He claimed that the officer
was prejudiced and wanted him out of the department. Employees walked out of
their departments and demonstrated for withdrawal of the charge sheet. The
General Manager (works) and the union Secretary resolved this matter by
everyone going back to the departments and the company withdrawing the charge
sheet.
(b) A peon was found asleep on his job and
was charge sheeted. Repeated agitation led to withdrawal of the charge sheet
after top level discussions.
(c) At bonus time every year there were
demonstrations. Workers left their departments, surrounded the senior officers
and indulged in drum beating until a settlement was reached.
(d) At the same time the company carried out a programme of expansion
with all the attendant changes in the departments. No serious difficulty was
faced by the company in introducing technology change or in increasing
productivity per worker.
(F) THE STRIKE
In 1960 when the bonus was declared, the employees agitated in the
same as they did in previous years. The difference between the offer made to
workers and the quantum demanded by them was about Rs. 30/- (thirty) per
employee. Unlike other years, the negotiations failed and the employees gave 15
days notice to go on strike. The matter was taken up for conciliation by the
State Labour Commissioner but the dispute could not be settled. On the
appointed day, the strike began and six anxious months went by before a
settlement was reached. This case raises some highly interesting and
significant questions:
Questions:
1. Similar
problems which caused this strike in 1960 were satisfactorily resolved in the
past in Bombay Electricals. Why could not the differences be settled in 1960?
2. Inspite
of high earnings by employees, why did they choose to go on strike for a
relatively small
difference of Rs 30/- in their demand preceding the strike?
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