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.
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?
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.
1. What should Clyde Brion do to remedy the imbalanced sales performance of Louise Shannon and
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.
1. What type of training program should Mickie Parsons recommend to Keat Markley? What’s your
reasoning for your recommendation?
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.
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?
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
· 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
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
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.
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?
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.
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.
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.
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
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
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.
1. Was the company’s decision to enter the tractor segment right, when KCP had already captured
2. Had you been Abraham, how would you tackle the present situation?
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
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.
1. Do you think that IKEA has been successful to utilize Porter’s Five force analysis?
2. Where do you think can IKEA improve?
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
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.
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
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.
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
Net income in Lakhs
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:
Profits bonus per
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).
Index of physical output per
Index of average real earnings
(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:
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?