GM02
Economic and Social Environment of Business
Assignment No.I
Assignment Code: 2013GM02A1 Last Date of Submission: 15th April 2013
Maximum Marks:100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
Ques. 1 Explain the privatization move of public sector enterprises in recent years. Also explain
the measures to be followed for survival of public sector enterprises in India.
Ques. 2 Compare and explain how competition bill replaced MRTP Act.
Ques. 3 a). Write short note on environmental Scanning
b). Discuss the significant elements comprising the external environment of business
Ques.4 Describe the contribution of small scale industry in Indian Economy. Discuss the various
problems faced by SSI
Section-B
Procter and Gamble (P & G), a global consumer products giant, “stormed the Japanese market with American products, American managers, American sales methods and strategies. The result was disastrous until the company learnt how to adapt products and marketing style to Japanese culture. P&G which entered the Japanese market in 1973 lost money until 1987, but by 1991 it became its second largest foreign market.
P & G, acclaimed as “the world’s most admired marketing machine”, entered India, which has been considered as one of the largest emerging markets, in 1985. It entered the Indian detergent marketing the early nineties with the Ariel brand through P & G India (in which it had a 51 per cent holding which was raised 65 per cent in January 1993, the remaining 35 per cent being hold by the public). P & G established P&G Home products, a 100 per cent subsidiary later (1993) and the Ariel was transferred to it. Besides soaps and detergents, P & G had or introduced later product portfolios like shampoos (Pantene) medical products (Vicks range, Clearasil and Mediker) and personal products (Whisper feminine hygiene products, pampers diapers and old spice range of men’s toiletries).
The Indian detergents and personal care products market was dominated by Hindustan Lever Ltd. (HLL). In some segments of the personal care products market the multinational Johnson & Johnson has had a strong presence. Tata group’s Tomco, which had been in the red for some time, was sold to Hindustan Lever Ltd. (HLL). HLL, a subsidiary of P&G’s global competitor, has been in India for about a century. The take over of Tomco by HLL further increased its market dominance. In the low priced detergents segment Nirma has established a very strong presence.
Over a period of about one and a half decades since its entry in India, P&G invested several thousand crores. However, dissatisfied with its performance in India, it decided to restructure its operations, which in several respects meant a shrinking of activities – the manpower was drastically cut, and thousands of stockiest were terminated. P&G, however holds that, it will continue to invest in India. According to Gary Cofer, the country manager, “it takes time to build a business category or brand in India. It is possibly an even more demanding geography than others.”
China, on the other hand, with business worth several times than in India in less than 12 years, has emerged as a highly promising market for P&G. When the Chinese market was opened up, P&G was one of the fist MNCs to enter. Prior to the liberalization, Chinese consumers had to content with shoddy products manufactured by government companies. Per capita income of China is substantially higher than India’s and the Chinese economy was growing faster than the Indian. Further, the success of the single child concept in China means higher disposable income.
Further it is also pointed out that for a global company like P&G, understanding Chinese culture was far easier since the expat Chinese in the US was not very different from those back home where as most Indian expats tended to adapt far more to the cultural nuances of the immigrant country.
One of P&G’s big bets in India was the compact technology premium detergent brand Ariel. After an initial show, Ariel, however, failed to generate enough sales – consumers seem to have gone by the per kilo cost than the cost per wash propagated by the promotion. To start with, P&G had to import the expensive state-of-the-art ingredients, which attracted heavy customs duties. The company estimated that it would cost Rs.60 per kilo for Ariel compared to Rs.27 for Surf and Rs.8 for Nirma. Because of the Rupee devaluation of the early 1990s, the test market price of Rs.35 for 500 gms was soon Rs.41 by the time the product was launched. HLL fought Ariel back with premium variants of Surf like Surf Excel.
It is pointed out that, “in hindsight, even P&G managers privately admit that bringing in the latest compact technology was a big blunder. In the eighties, P&G had taken a huge beating in one of its most profitable markets, Japan, at the hands of local company Kao. Knowing the Japanese consumer’s fondness for small things, Kao weaved magic with its new-found compact technology. For a company that prided itself on technology, the drubbing in Japan was particularly painful. It was, therefore, decided that compacts would now be the lead brand for the entire Asia-Pacific region. When P&G launched Ariel in India, it hoped that the Indian consumer would devise the appropriate benchmarks to evaluate Ariel. As compacts promised economy of use, P&G hoped that consumers would buy into the low-cost-per-wash story. But selling that story through advertising was particularly difficult, especially since Indian consumers believed that the washing wasn’t over unless the bar had been used for scrubbing. Even though Ariel was targeted at consumers with high disposable income, who represented half the urban population, consumers simply baulked at the outlay.
Thereafter, one thing led to another. Ariel’s strategy of introducing variants was a smart move to flank Lever at every price point by cleverly using the brand’s halo effect. And by supporting the brand in mass media and retaining the share of voice. By 1996, it had become clear that Ariel’s equity as a high-performance detergent had begun to take a beating. Its equity as a top-of-the-line detergent was getting eroded…Nowhere in P&G’s history had a concept like Super Soaker been used to gain volumes…It was decided that Super Soaker would no longer be supported, nor would Ariel bar be supported in media.
Case Questions:
5 Where did P&G go wrong (if it did) in the evaluation of the Indian market
and its strategy? (10)
6. Discuss the reasons for the differences in the performance of P&G in India and China. (10)
GM02
Economic and Social Environment of Business
Assignment No.II
Assignment Code: 2013GM02A2 Last Date of Submission: 15th May 2013
Maximum Marks:100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
Ques. 1 Write short notes on Industrial sickness in India
Ques. 2 Bring out the challenges of globalization.
Ques. 3 What was the rationale behind setting up development financial institutions? Do you
think these institutions have lost their relevance in the current economic scenario?
Ques.4 Discuss with reference to monetary and fiscal policy, how RBI regulates supply of money in the country.
Section-B
Case Study
Indian SMEs need to be more IT Savvy
Small and medium businesses (SMBs) contribute more than 60 per cent of India’s GDP, while their spending on IT is only 30 percent of India’s total IT spending according to a recent study by Zinnov Management Consulting Pvt. Ltd. Titled IT Opportunity in Indian SMB Sector. Zinnov estimates that SMB’s total revenue contribution to Indian GDP, which today is more than $600 billion, has been growing at a CAGR of 12 percent over the last seven years. There is therefore huge potential for the SMB sectors IT spend to increase, the study concludes.
IT spend by SMBs was $6.5 billion in 2007-08, which is around 30 percent of the total IT spend in India. This consisted of $4.2 billion of hardware, $1 billion on software, and $1.3 billion on services, coming to a total of $6.5 billion, compared to an IT spend of $15.1 by large organizations, according to the study.
The study says three key factors inhibit the adoption of technology in SMBs. The first is a lack of IT awareness, with many SMB owners in the tier II and tier III cities or rural areas unaware of existing IT solutions that may solve their problems. The study suggests that to tackle this, the focus of most IT vendors should not be restricted in increasing their penetration across the country – they also need to educate SMB owners about using technology to solve their business problems.
The second inhibiting factor is a lack of vertical-specific solutions, with most IT solutions not being customized to vertical- or cluster-specific problems of SMBs. The textile industry, for example, has a four-stage value chain- spinning, weaving, processing and stitching – but currently there aren’t many specific customized solutions catering to each process of the value chain.
The third inhibiting factor is under return on investments. SMB owners need to be convinced of returns before making any capital investments in IT. In most cases, they expect quantified benefits such as growth in revenues or profit margins or significant cost savings. The study notes that though a complex `return on investment’ mathematical calculation might not be the best solution, IT vendors would have to build a case for IT solutions and highlight benefits that can solve SMBs’ key problems.
The study also notes that three key factors are limiting the growth technology adoption among SMBs. The first in high investments made in legacy systems- most SMBs invest in technology solutions on a long-term basis, and do not welcome frequent technological developments, which force them to migrate to newer technology and dump legacy systems. IT vendors and their channel partners must address this situation by guiding SMB owners, designing their IT investments and becoming their trusted partners, the study suggests.
The second factor limiting the growth of technology adoption is the need for integration. Most SMBs invest in IT in a phased manner due to constraints in IT budgets and lack of a clear roadmap of IT implementation. Hence, it becomes a big challenge for SMBs to integrate various technologies on different platforms. But the very need for seamless integration between various technologies translates into a big opportunity for IT vendors, the study notes.
The third factor limiting the growth of technology adoption among SMBs is the high cost of technical support. SMBs that have invested in IT need continuous technical support due to their limited knowledge of technology, but most SMBs don’t invest much on internal IT staff. SMB owners often have to choose between regular support at high cost and limited support at an economical price. However, neither of the two options solves the need for technical support, the study notes.
However, the study also stresses that there are a mix of macro and micro factors that will drive technology adoption by SMBs between now and 2015. the first is an improvement in the country’s IT infrastructure, due to growth in broadband and mobile penetration in tier II and III cities and rural areas, and the availability of affordable customized hardware and software for SMBs.
The second factor is government initiatives-the government is encouraging SMBs to adopt technologies to make their processes more efficient, and enable them to better face global competition.
The third factor is the pressures of globalization felt by SMBs themselves- those of them venturing into global markets or partnering with MNCs require IT to successfully conduct business at the global level; on the other hand, the influx of global players is increasing the pressure of competition within the Indian market, and SMBs get to experience the superior efficiency that comes with the adoption of IT.
The fourth and final factor is the SMB-focused IT initiatives of IT majors. India has seen an increase in interest among large IT majors in catering to the specific needs of the SMB segment.
Case Questions:
1. What are the key factors limiting the growth of technology adoption among SMBs
2. “There are a mix of macro and micro factors that will drive technology adoption by SMBs between now and 2015.” Explain the factors in the light of above statement.
Economic and Social Environment of Business
Assignment No.I
Assignment Code: 2013GM02A1 Last Date of Submission: 15th April 2013
Maximum Marks:100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
Ques. 1 Explain the privatization move of public sector enterprises in recent years. Also explain
the measures to be followed for survival of public sector enterprises in India.
Ques. 2 Compare and explain how competition bill replaced MRTP Act.
Ques. 3 a). Write short note on environmental Scanning
b). Discuss the significant elements comprising the external environment of business
Ques.4 Describe the contribution of small scale industry in Indian Economy. Discuss the various
problems faced by SSI
Section-B
Procter and Gamble (P & G), a global consumer products giant, “stormed the Japanese market with American products, American managers, American sales methods and strategies. The result was disastrous until the company learnt how to adapt products and marketing style to Japanese culture. P&G which entered the Japanese market in 1973 lost money until 1987, but by 1991 it became its second largest foreign market.
P & G, acclaimed as “the world’s most admired marketing machine”, entered India, which has been considered as one of the largest emerging markets, in 1985. It entered the Indian detergent marketing the early nineties with the Ariel brand through P & G India (in which it had a 51 per cent holding which was raised 65 per cent in January 1993, the remaining 35 per cent being hold by the public). P & G established P&G Home products, a 100 per cent subsidiary later (1993) and the Ariel was transferred to it. Besides soaps and detergents, P & G had or introduced later product portfolios like shampoos (Pantene) medical products (Vicks range, Clearasil and Mediker) and personal products (Whisper feminine hygiene products, pampers diapers and old spice range of men’s toiletries).
The Indian detergents and personal care products market was dominated by Hindustan Lever Ltd. (HLL). In some segments of the personal care products market the multinational Johnson & Johnson has had a strong presence. Tata group’s Tomco, which had been in the red for some time, was sold to Hindustan Lever Ltd. (HLL). HLL, a subsidiary of P&G’s global competitor, has been in India for about a century. The take over of Tomco by HLL further increased its market dominance. In the low priced detergents segment Nirma has established a very strong presence.
Over a period of about one and a half decades since its entry in India, P&G invested several thousand crores. However, dissatisfied with its performance in India, it decided to restructure its operations, which in several respects meant a shrinking of activities – the manpower was drastically cut, and thousands of stockiest were terminated. P&G, however holds that, it will continue to invest in India. According to Gary Cofer, the country manager, “it takes time to build a business category or brand in India. It is possibly an even more demanding geography than others.”
China, on the other hand, with business worth several times than in India in less than 12 years, has emerged as a highly promising market for P&G. When the Chinese market was opened up, P&G was one of the fist MNCs to enter. Prior to the liberalization, Chinese consumers had to content with shoddy products manufactured by government companies. Per capita income of China is substantially higher than India’s and the Chinese economy was growing faster than the Indian. Further, the success of the single child concept in China means higher disposable income.
Further it is also pointed out that for a global company like P&G, understanding Chinese culture was far easier since the expat Chinese in the US was not very different from those back home where as most Indian expats tended to adapt far more to the cultural nuances of the immigrant country.
One of P&G’s big bets in India was the compact technology premium detergent brand Ariel. After an initial show, Ariel, however, failed to generate enough sales – consumers seem to have gone by the per kilo cost than the cost per wash propagated by the promotion. To start with, P&G had to import the expensive state-of-the-art ingredients, which attracted heavy customs duties. The company estimated that it would cost Rs.60 per kilo for Ariel compared to Rs.27 for Surf and Rs.8 for Nirma. Because of the Rupee devaluation of the early 1990s, the test market price of Rs.35 for 500 gms was soon Rs.41 by the time the product was launched. HLL fought Ariel back with premium variants of Surf like Surf Excel.
It is pointed out that, “in hindsight, even P&G managers privately admit that bringing in the latest compact technology was a big blunder. In the eighties, P&G had taken a huge beating in one of its most profitable markets, Japan, at the hands of local company Kao. Knowing the Japanese consumer’s fondness for small things, Kao weaved magic with its new-found compact technology. For a company that prided itself on technology, the drubbing in Japan was particularly painful. It was, therefore, decided that compacts would now be the lead brand for the entire Asia-Pacific region. When P&G launched Ariel in India, it hoped that the Indian consumer would devise the appropriate benchmarks to evaluate Ariel. As compacts promised economy of use, P&G hoped that consumers would buy into the low-cost-per-wash story. But selling that story through advertising was particularly difficult, especially since Indian consumers believed that the washing wasn’t over unless the bar had been used for scrubbing. Even though Ariel was targeted at consumers with high disposable income, who represented half the urban population, consumers simply baulked at the outlay.
Thereafter, one thing led to another. Ariel’s strategy of introducing variants was a smart move to flank Lever at every price point by cleverly using the brand’s halo effect. And by supporting the brand in mass media and retaining the share of voice. By 1996, it had become clear that Ariel’s equity as a high-performance detergent had begun to take a beating. Its equity as a top-of-the-line detergent was getting eroded…Nowhere in P&G’s history had a concept like Super Soaker been used to gain volumes…It was decided that Super Soaker would no longer be supported, nor would Ariel bar be supported in media.
Case Questions:
5 Where did P&G go wrong (if it did) in the evaluation of the Indian market
and its strategy? (10)
6. Discuss the reasons for the differences in the performance of P&G in India and China. (10)
GM02
Economic and Social Environment of Business
Assignment No.II
Assignment Code: 2013GM02A2 Last Date of Submission: 15th May 2013
Maximum Marks:100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
Ques. 1 Write short notes on Industrial sickness in India
Ques. 2 Bring out the challenges of globalization.
Ques. 3 What was the rationale behind setting up development financial institutions? Do you
think these institutions have lost their relevance in the current economic scenario?
Ques.4 Discuss with reference to monetary and fiscal policy, how RBI regulates supply of money in the country.
Section-B
Case Study
Indian SMEs need to be more IT Savvy
Small and medium businesses (SMBs) contribute more than 60 per cent of India’s GDP, while their spending on IT is only 30 percent of India’s total IT spending according to a recent study by Zinnov Management Consulting Pvt. Ltd. Titled IT Opportunity in Indian SMB Sector. Zinnov estimates that SMB’s total revenue contribution to Indian GDP, which today is more than $600 billion, has been growing at a CAGR of 12 percent over the last seven years. There is therefore huge potential for the SMB sectors IT spend to increase, the study concludes.
IT spend by SMBs was $6.5 billion in 2007-08, which is around 30 percent of the total IT spend in India. This consisted of $4.2 billion of hardware, $1 billion on software, and $1.3 billion on services, coming to a total of $6.5 billion, compared to an IT spend of $15.1 by large organizations, according to the study.
The study says three key factors inhibit the adoption of technology in SMBs. The first is a lack of IT awareness, with many SMB owners in the tier II and tier III cities or rural areas unaware of existing IT solutions that may solve their problems. The study suggests that to tackle this, the focus of most IT vendors should not be restricted in increasing their penetration across the country – they also need to educate SMB owners about using technology to solve their business problems.
The second inhibiting factor is a lack of vertical-specific solutions, with most IT solutions not being customized to vertical- or cluster-specific problems of SMBs. The textile industry, for example, has a four-stage value chain- spinning, weaving, processing and stitching – but currently there aren’t many specific customized solutions catering to each process of the value chain.
The third inhibiting factor is under return on investments. SMB owners need to be convinced of returns before making any capital investments in IT. In most cases, they expect quantified benefits such as growth in revenues or profit margins or significant cost savings. The study notes that though a complex `return on investment’ mathematical calculation might not be the best solution, IT vendors would have to build a case for IT solutions and highlight benefits that can solve SMBs’ key problems.
The study also notes that three key factors are limiting the growth technology adoption among SMBs. The first in high investments made in legacy systems- most SMBs invest in technology solutions on a long-term basis, and do not welcome frequent technological developments, which force them to migrate to newer technology and dump legacy systems. IT vendors and their channel partners must address this situation by guiding SMB owners, designing their IT investments and becoming their trusted partners, the study suggests.
The second factor limiting the growth of technology adoption is the need for integration. Most SMBs invest in IT in a phased manner due to constraints in IT budgets and lack of a clear roadmap of IT implementation. Hence, it becomes a big challenge for SMBs to integrate various technologies on different platforms. But the very need for seamless integration between various technologies translates into a big opportunity for IT vendors, the study notes.
The third factor limiting the growth of technology adoption among SMBs is the high cost of technical support. SMBs that have invested in IT need continuous technical support due to their limited knowledge of technology, but most SMBs don’t invest much on internal IT staff. SMB owners often have to choose between regular support at high cost and limited support at an economical price. However, neither of the two options solves the need for technical support, the study notes.
However, the study also stresses that there are a mix of macro and micro factors that will drive technology adoption by SMBs between now and 2015. the first is an improvement in the country’s IT infrastructure, due to growth in broadband and mobile penetration in tier II and III cities and rural areas, and the availability of affordable customized hardware and software for SMBs.
The second factor is government initiatives-the government is encouraging SMBs to adopt technologies to make their processes more efficient, and enable them to better face global competition.
The third factor is the pressures of globalization felt by SMBs themselves- those of them venturing into global markets or partnering with MNCs require IT to successfully conduct business at the global level; on the other hand, the influx of global players is increasing the pressure of competition within the Indian market, and SMBs get to experience the superior efficiency that comes with the adoption of IT.
The fourth and final factor is the SMB-focused IT initiatives of IT majors. India has seen an increase in interest among large IT majors in catering to the specific needs of the SMB segment.
Case Questions:
1. What are the key factors limiting the growth of technology adoption among SMBs
2. “There are a mix of macro and micro factors that will drive technology adoption by SMBs between now and 2015.” Explain the factors in the light of above statement.
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