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Note: Solve any 4 Case Study’s

CASE: I    Enterprise Builds On People

When most people think of car-rental firms, the names of Hertz and Avis usually come to mind. But in the last few years, Enterprise Rent-A-Car has overtaken both of these industry giants, and today it stands as both the largest and the most profitable business in the car-rental industry. In 2001, for instance, the firm had sales in excess of $6.3 billion and employed over 50,000 people.
Jack Taylor started Enterprise in St. Louis in 1957. Taylor had a unique strategy in mind for Enterprise, and that strategy played a key role in the firm’s initial success. Most car-rental firms like Hertz and Avis base most of their locations in or near airports, train stations, and other transportation hubs. These firms see their customers as business travellers and people who fly for vacation and then need transportation at the end of their flight. But Enterprise went after a different customer. It sought to rent cars to individuals whose own cars are being repaired or who are taking a driving vacation.
The firm got its start by working with insurance companies. A standard feature in many automobile insurance policies is the provision of a rental car when one’s personal car has been in an accident or has been stolen. Firms like Hertz and Avis charge relatively high daily rates because their customers need the convenience of being near an airport and/or they are having their expenses paid by their employer. These rates are often higher than insurance companies are willing to pay, so customers who these firms end up paying part of the rental bills themselves. In addition, their locations are also often inconvenient for people seeking a replacement car while theirs is in the shop.
But Enterprise located stores in downtown and suburban areas, where local residents actually live. The firm also provides local pickup and delivery service in most areas. It also negotiates exclusive contract arrangements with local insurance agents. They get the agent’s referral business while guaranteeing lower rates that are more in line with what insurance covers.
In recent years, Enterprise has started to expand its market base by pursuing a two-pronged growth strategy. First, the firm has started opening  airport locations to compete with Hertz and Avis more directly. But their target is still the occasional renter than the frequent business traveller. Second, the firm also began to expand into international markets and today has rental offices in the United Kingdom, Ireland and Germany.
Another key to Enterprise’s success has been its human resource strategy. The firm targets a certain kind of individual to hire; its preferred new employee is a college graduate from bottom half of graduating class, and preferably one who was an athlete or who was otherwise actively involved in campus social activities. The rationale for this unusual academic standard is actually quite simple. Enterprise managers do not believe that especially high levels of achievements are necessary to perform well in the car-rental industry, but having a college degree nevertheless demonstrates intelligence and motivation. In addition, since interpersonal relations are important to its business, Enterprise wants people who were social directors or high-ranking officers of social organisations such as fraternities or sororities. Athletes are also desirable because of their competitiveness.
Once hired, new employees at Enterprise are often shocked at the performance expectations placed on them by the firm. They generally work long, grueling hours for relatively low pay. And all Enterprise managers are expected to jump in and help wash or vacuum cars when a rental agency gets backed up. All Enterprise managers must wear coordinated dress shirts and ties and can have facial hair only when “medically necessary”. And women must wear skirts no shorter than two inches above their knees or creased pants.
 So what are the incentives for working at Enterprise? For one thing, it’s an unfortunate fact of life that college graduates with low grades often struggle to find work. Thus, a job at Enterprise is still better than no job at all. The firm does not hire outsiders—every position is filled by promoting someone already inside the company. Thus, Enterprise employees know that if they work hard and do their best, they may very well succeed in moving higher up the…..corporate ladder at a growing and successful firm.


Question:

1.    Would Enterprise’s approach human resource management work in other industries?

2.    Does Enterprise face any risks from its human resource strategy?

3.    Would you want to work for Enterprise? Why or why not?


































CASE: II    Doing The Dirty Work

Business magazines and newspapers regularly publish articles about the changing nature of work in the United States and about how many jobs are being changed. Indeed, because so much has been made of the shift toward service-sector and professional jobs, many people assumed that the number of unpleasant an undesirable jobs has declined.
In fact, nothing could be further from the truth. Millions of Americans work in gleaming air-conditioned facilities, but many others work in dirty, grimy, and unsafe settings. For example, many jobs in the recycling industry require workers to sort through moving conveyors of trash, pulling out those items that can be recycled. Other ……
chicken feathers, faeces, and blood also contribute to the hazardous and unpleasant work environment.

Question:
1.    How relevant are the concepts of competencies to the jobs in a chicken-processing plant?
2.    How might you try to improve the jobs in a chicken-processing plant?
3.    Are dirty, dangerous, and unpleasant jobs an inevitable part of any economy?
CASE: III    On Pegging Pay to Performance

“As you are aware, the Government of India has removed the capping on salaries of directors and has left the matter of their compensation to be decided by shareholders. This is indeed a welcome step,” said Samuel Menezes, president Abhayankar, Ltd., opening the meeting of the managing committee convened to discuss the elements of the company’s new plan for middle managers.
Abhayankar was am engineering firm with a turnover of Rs 600 crore last year and an employee strength of 18,00. Two years ago, as a sequel to liberalisation at the macroeconomic level, the company had restructured its operations from functional teams to product teams. The change had helped speed up transactional times and …….
trendsetters in executive compensation in Indian industry. We have been paying the best. Will your plan ensure that it remains that way?”
As he took the floor again, the dominant thought in Narayanan’s mind was that if his plan were to be put into place, Abhayankar would set another new trend in executive compensation.

Question:

But how should he see it through?




























CASE: IV    Crisis Blown Over

November 30, 1997 goes down in the history of a Bangalore-based electric company as the day nobody wanting it to recur but everyone recollecting it with sense of pride.
It was a festive day for all the 700-plus employees. Festoons were strung all over, banners were put up; banana trunks and leaves adorned the factory gate, instead of the usual red flags; and loud speakers were blaring Kannada songs. It was day the employees chose to celebrate Kannada Rajyothsava, annual feature of all Karnataka-based organisations. The function was to start at 4 p.m. and everybody was eagerly waiting for the big event to take place.
But the event, budgeted at Rs 1,00,000 did not take place. …..
s were cut for the days not worked.
Murthy’s death witnessed an unusual behavior on the part of the workers and their leaders, and magnanimous gesture from the management. It is a pride moment in the life of the factory.

Question:

1.    Do you think that the Bangalore-based company had practised participative management?
2.    If your answer is yes, with what method of participation (you have read in this chapter) do you relate the above case?
3.    If you were the union leader, would your behaviour have been different? If yes, what would it be?


CASE: V    A Case of Burnout

When Mahesh joined XYZ Bank (private sector) in 1985, he had one clear goal—to prove his mettle. He did prove himself and has been promoted five times since his entry into the bank. Compared to others, his progress has been fastest. Currently, his job demands that Mahesh should work 10 hours a day with practically no holidays. At least two day in a week, Mahesh is required to travel.
Peers and subordinates at the bank have ….
flashed in his mind and suddenly he instructed his secretary to set up a meeting with the doctor and some key staff members, at the earliest.

Question:
1.    If the news is broken to Mahesh, how would he react?
2.    If you were giving advice to the Chairman on this matter, what would you recommend?















CASE: VI    “Whose Side are you on, Anyway?”
It was past 4 pm and Purushottam Mahesh was still at his shopfloor office. The small but elegant office was a perk he was entitled to after he had been nominated to the board of Horizon Industries (P) Ltd., as workman-director six months ago. His shift generally ended at 3 pm and he would be home by late evening. But that day, he still had long hours ahead of him.
Kshirsagar had been with Horizon for over twenty years. Starting off as a substitute mill-hand in the paint shop at one of the company’s manufacturing facilities, he had been made permanent on the job five years later. He had no formal education. He felt this was a handicap, but he made up for it with a willingness to learn and a certain enthusiasm on the job. He was soon marked by the works manager as someone to watch out for. Simultaneously, Kshirsagar also ….
able to understand whose side he was on. Perhaps the best course would be to resign from the board. Perhaps he should resign both from the board and the union. Or may be resign from Horizon itself and seek a job elsewhere. But, he felt, sitting in his office a little later, “none of it could solve the problem.”
Question:
1.    What should he do?

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CASE I

EMPLOYEE MOTIVATION IN A GOVERNMENT ORGANIZATION"

Bhumika Services Ltd., one of the largest public sector companies of India, was serving more than 31 million customers. Along with its vast customer base, BSNL's financial and asset bases too were vast and strong. Changing regulations, converging markets, competition and ever demanding customers had generated challenges for BSNL. The Indore division of BSNL was the first in the country, which faced competition in basic telecom services from 1998. In spite of being a government department, Indore telephones had to face the competition, and relentless efforts were put in to improve the services and provide world¬class telecom services to its customers. Among the various services offered by Indore Telecom, 197 and 183 were two special services. 197 provided non-metered enquiry services to obtain telephone numbers by simply giving the name of person/name of organization/ name and designation of person, or by giving address. 183 on the other hand, was a non¬metered enquiry service that provided similar services for distant stations. ……
He wondered whether this change was a permanent phenomenon or he would have to strategize further.

QUESTIONS

1.    Discuss the long-term relevance of motivational techniques used by Baheti in the light of prevailing environment in the organization.
2.    Had you been Baheti, what other techniques you would have used to improve the special services provided by the organization?


CASE II

EMPLOYEE RELATIONS AUDIT

Triveni Foods Pvt. Ltd., a multinational confectionary company, having its branches in more than 50 countries and marketing its products in about 135 countries, established one of its production units in 1988 at Mathura near Delhi. It had a workforce of nearly 320 employees and sales turnover was more than Rs. 150 crores. Being a confectionary unit, hygiene was given the upper most priority to the extent that no one was allowed to enter the production area without taking bath and wearing sterilized clothes provided by the company. The entire process was automatic and required only food specialists and labor. In order to match the required standards, emphasis was given on training and welfare of employees on regular basis. Facilities like transportation were also provided since delay by ten minutes could cause production losses at the time of shift changes.

…….Due to these practices, a lot of improvement was observed. Better working conditions, increased productivity, rise in employees' commitment towards their goals and better superior -subordinate relationship could be seen. In 2001, the percentage of the performance rose to seventy two. While reviewing the Employee relation audit, Alok Trivedi was quite satisfied to note the steady though slow improvement in the figures of performance.
 
QUESTIONS

1. Had you been in place of Alok Trivedi, what additional measures would you have taken?
2. Critically analyze the Employee Relations Audit in the light of its contribution to self motivation of employees.


CA S E III

EMPLOYEE TURNOVER AT XYZ MOON LIFE INSURANCE

In 1950, with the enactment of the Insurance Act, Government of India decided to bring all the insurance companies under one umbrella of the Life Insurance Corporation of India (LIC). Despite the monopoly of LIC, the insurance sector was not doing well. Till 1995, only 12% of the country's people had insurance cover. The need for exploring the insurance market was felt and consequently the Government of India set up the Malhotra Committee. On the basis of their recommendations, Insurance Development and Regulatory Authority (IRDA) Act was passed in parliament in 2000. This move allowed the private insurers in the market with the stop foreign players with 74:26% stake. XYZ- Moon life was one of the first three private players getting the license to operate in India in the year 2000.

XYZ Moon Life Insurance was a joint venture between the XYZ Group and Moon Inc. of US. XYZ starred off its operations in 1965, providing finance for industrial development and since then it had diversified into housing finance, consumer finance, mutual funds and now its latest venture was Life Insurance. Its foreign partner Moon Inc. was established in 1858 and had grown to be the largest life insurance and mutual fund company in the U.S. Moon Inc. had its presence in Asia since the past 75 years catering to over 1 million customers across 11 Asian countries.

….He wanted to increase the commitment level and integrity of his young dynamic team by facilitating proper civilization of their energy. He believed that proper training could give his team a proper understanding of the business and the dynamics of insurance industry.


QUESTIONS:

1.    If you were Malik, what strategies would you adopt to solve the problem?
2.    With high employee turnover in insurance industry, how can the company retain a person like Malik?

 
CASE IV

FRAGRANCE COMPANY LIMITED

Petals Company Limited (PCL) was initiated in the year 1919. Since then, it had produced a number of brands which enjoyed customer loyalty. It had adapted well with the changing environment and had entered into a strategic alliance with the S & G Limited, the producer of personal care products. The new company Fragrance Company Limited Was formed as a result in 1993 with equity participation from S& G and Petals Company Limited. This company marketed the products manufactured by the PCL. This alliance had given PCL access to the latest international technology in soaps and detergents. Thus, Fragrance Company Limited was now ideally placed to offer high value, international quality products at competitive prices. It was already an exporter of toilet soaps, detergents and cosmetics. It was a private organisation headed by Dharamchand, with its company's headquarters at Mumbai and seven units all over the country with one of the units at Faridabad. The turnover of the company was Rs 900 crores. The company marketed the products using the latest international technology in soaps and detergents.

….After one year, Gyanchand was highly perplexed to see only a negligible improvement in the report of the survey conducted by the personnel administration department. The rate of absenteeism had dropped by only 3%, i.e. from. 20% to 17% in spite of introducing the aforesaid schemes.

QUESTIONS:

1.    What role do the non-financial incentives play in motivating the workers and minimizing the rate of absenteeism?
2.    What innovative solutions would you suggest to minimize the rate of absenteeism?




C A S E V

Vetements Ltee


Vetements Ltee is a chain of men’s retail clothing stores located throughout the province of Quebec, Canada. Two years ago, the company introduced new incentive systems for both store managers and sales employees. Store managers receive a salary with annual merit increasing based on sales above targeted goals, store appearance, store inventory management, customer complaints, and several other performance measures. Some of this information (e.g., store appearance) is gathered during visits by senior management, while other information is based on company records (e.g., sales volume).

          Sales employees are paid a fixed salary plus a commission based on the percentage of sales credited to that employee over the pay period. The commission represents about 30 per cent of a typical paycheck and is intended to encourage employees to actively serve customers and to increase sales volume. Because returned merchandise is discounted from commission, sales staff are discouraged from selling products that customers do not really want.


…Some staff openly complained of lower paychecks because they were assigned to a slow area of the store or were given more than their share of inventory duties.



Question

1.    What symptom(s) exist in this case to suggest that something has gone wrong?

2.    What are the root causes that have led to these symptoms?


3.    What actions should the organization take to correct these problems?

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              N. B.:     1)    Attempt all Cases.
                2)    All Cases carry equal marks.

Case 1:

PROMOTING THE PROTÉGÉ

The die was cast.  Prem Nath Divan, executive chairman of Vertigo, the country’s largest engineering project organization, decided to switch tracks for a career in academics.  Divan was still six years short of the company’s retirement age of 65.  His premature exit was bound to create a flutter at the Vertigo board.  Having joined Vertigo as a management trainee soon after college, he had gradually risen through the hierarchy to take a board position as the marketing director of the firm at 32.  He had become …
of it all had missed me completely.  There is no way I can allow a split at the top just before I quit.  I must leave on a high note in my own interest.  I must find a way out of he imminent mess.”

Question:
1.     What should Divan do?
   














Case 2:

PREJUDICES IN WORKPLACES : REAL OR PERCEIVED ?

Manjula Srivastav had been head of marketing for the last four years at Blue Chips, a computer products firm.  The company’s turnover had increased by two – and a half times during the period and its market share in a number of precuts had also moved up marginally.  What was creditable was that all this had happened in an environment in which computer prices had been crashing.
    Although she had a talent for striking an instant report with people – particularly with the company’s dealers – Srivastav often found herself battling …
    “I need to think about this.  I will let you know tomorrow,” said Srivastav and left the office.
    What should she do?











Case 3:

MECHANIST’S INDISCIPLINED BEHAVIOUR
    Dinesh, a machine operator, worked as a mechanist for Ganesh, the supervisor.  Ganesh told Dinesh to pick up some trash that had fallen from Dinesh’s work area, and Dinesh replied, “I won’t do the janitor’s work.”
    Ganesh replied, “When you drop it, you pick it up”.  Dinesh became angry and abusive, calling Ganesh a number of names in a loud voice and refusing to pick up the trash.  All employees in the department heard Dinesh’s comments.
    Ganesh had been trying for two weeks to get his employees to pick up trash in order to have cleaner workplace and prevent accidents.  He talked to all employees in a weekly departmental meeting and to each employee ..
Questions:
1.    How would you rate Dinesh’s behaviour?  What method of     appraisal     would you use?
2.    Do you assess any training needs of employees?  If yes, what     inputs should be embodied in the training programme?



Case 4:

 RISE AND FALL
    Jagannath (Jaggu to his friends) is an over ambitious young man.  For him ends justify means. 
    With a diploma in engineering.  Jaggu joined, in 1977, a Bangalore-based company as a Technical Assistant.  He got himself enrolled as a student in an evening college and obtained his degree in engineering in 1982.  Recognizing as Engineer-Sales in 1984.
    Jaggu excelled himself in the new role and became the blue-eyed boy of the management.  Promotions came to him in quick succession.  He was made ..
Questions:
1.    Bring out the principles of promotion that were employed in     promoting     Jaggu.
2.    What would you do if you were (i) Suresh, (ii) Prahalad or (iii)     Ravi?
3.    Bring out the ethical issues involved in Jaggu’s behaviour.

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CASE 1

COMPANY BACKGROUND
The Bronson Insurance Group was originally founded in 1900 in Auxvasse, Missouri, by James Bronson. The Bronson Group owns a variety of companies that underwrite personal and commercial insurance policies. Annual sales of the Bronson Group are $100 million. In recent years, the company has suffered operating losses. In 1990, the company was heavily invested in computer hardware and software. One of the problems the Bronson Group faced (as well as many insurance companies) was a conflict …
would require underwriters to go to a single keyboard to request paper copies of files. The cost of a microfilm system was $5 million.

1. What do you recommend? Should the company implement one of the new technologies? Why or why not?

2. An operations analyst suggested that company employees shared a “dump on the clerks”
mentality. Explain.

CASE 2
Harrison T. Wenk III is 43, married, and has two children, ages 10 and 14. He has a master’s degree in education and teachers junior high school music in a small town in Ohio. Harrison’s father passed away two months ago, leaving his only child an …interested in finding out as much as possible about operations. Harrison believes he owes it to his wife and children to fairly evaluate this opportunity.

1. Prepare a worksheet of operations activities that Harrison should inquire about this summer.

2. If you were Harrison, what would you do? Why?

CASE 3
Trust them with knee-jerk reactions," said Vikram Koshy, CEO, Delta Software India, as he looked at the quarterly report of Top Line Securities, a well-known equity research firm. The firm had announced a downgrade of Delta, a company listed both on Indian bourses and the NASDAQ. The reason? "One out of every six development …
nd the US and strike alliances with firms in Europe- and also Japan-as part of developing new products for global markets."

1. Should benching be a matter of concern at Delta?

2. What are the risks involved in moving from a project-centric mode to a mix of projects and products?

CASE 4
The war on drugs is an expensive battle, as a great deal of resources go into catching those who buy or sell illegal drugs on the black market, prosecuting them in court, and housing them in jail. These costs seem particularly exorbitant when dealing with the drug marijuana, as it is widely used, and is likely no more harmful than currently legal drugs such as tobacco and alcohol. There's another cost to the war on drugs, however, which is the revenue lost by governments who cannot collect taxes on illegal drugs. In a recent study for the Fraser Institute, Canada, Economist Stephen T. Easton attempted to calculate how much tax revenue the government of the country could gain by …care and education expect to see the idea raised in Parliament sooner rather than later.

1. Plot the demand schedule and draw the demand curve for the data given for Marijuana in the case above.

2. On the basis of the analysis of the case above, what is your opinion about legalizing marijuana in

CASE 5

Companies that attend to productivity and growth simultaneously manage cost reductions very differently
from companies that focus on cost cutting alone and they drive …
to Rs 170 at the
end of 1994. Unfortunately, Arvind's deteriorating financial returns over the last few years is also typical
of the Indian textile industry. The top three Indian companies actually showed a decline in their return
ratios in contrast to the international majors. Nike, VF Corp and Coats Viyella showed a growth in their
returns on capital employed of 6.2 per cent, while the ROCE of Grasim and Coats Viyella (India) fell by
almost 2 per cent per annum. Even in absolute returns on assets or on capital employed, Indian companies
fare a lot worse. While Indian textile companies just about cover their WACC, their international rivals
earn about 8 per cent in excess of their cost of capital.



1.  Is Indian companies running a risk by not giving attention to cost cutting?
2.  Discuss whether Indian Consumer goods industry is growing at the cost of future profitability.
3.  Discuss capital and labour productivity in engineering context and pharmaceutical industries in India.
4.  Is textile industry in India performing better than its global competitors?


CASE 6
Mr. and Mrs. Sharma went to Woodlands Apparel to buy a shirt. Mr. Sharma did not read the price tag on the piece selected by him. At the counter, while making the payment he asked for the price. Rs. 950 was the answer. Meanwhile, Mrs. Sharma, who was still shopping came back and joined her husband. She was glad that he had selected a nice black shirt for himself. She pointed out that there was a 25% discount on that item. The counter person nodded in agreement. Mr. Sharma was thrilled to hear that “It means the price of this shirt is just Rs. 712. That’s fantastic”, said Mr. Sharma. He decided to buy one more shirt in blue color. In no time, he returned with the second shirt and asked them to be packed. When he received the cash memo for payment, he was astonished to find that he had to pay Rs. 1,900 and Rs. 1,424. Mr. Sharma could hardly reconcile himself to the fact that the counter person had quoted the discounted price which was Rs. 950. The original price printed on the price tag was Rs. 1,266.


1. What should Mr. Sharma have done to avoid the misunderstanding?
2. Discuss the main features involved in this case.


CASE 7
The Benson Hotel, a mid‐sized independent property required new leadership. Mike Schwartz,
Vice‐president of operations, pondered his next move as he reviewed last month’s financial
statements. The Benson was an eighty‐five‐room three‐star property with a full‐service
restaurant, lounge, banquet and health club facilities. The rapidly changing marketplace and
new competition from well‐established franchises had made Mike’s job and the Benson’s
position more tenuous. Mike decided to commission a consultant’s report on the property. He
called up his longtime friend Jim Burke, who had worked for major chains across the country
and was now a hospitality consultant.
“Jim, how are you old buddy?” Mike asked.
“I am doing very well Mike. This consulting work has run me off my feet. What can I do for you?”
Jim Asked.
“Well Jim, I need an independent review of the Benson. We’re holding our own but these
franchise guys with their management contracts are really getting aggressive,” Mike said.
“Yes, I know what you mean Mike. I ….
the
actions of a general manager with this type of comportment and still maintain a workable
relationship with its employees. My opinion at this point is that something has to change.”

1. Do you feel it was necessary for Mike to commission a consultant’s report on the Benson? Why
or why not? How would you have approached the situation?
2. Identify and propose solutions for the supervisory challenges in the kitchen and dining areas of Benson Hotel.
CASE 8
The Rainbow Golf resort had something to celebrate. The 120‐ unit golf resort consisting of villas and
condominiums had recently been “re‐branded” from a franchise to an independent property. The new
owner, Ken Okura, was reviewing the present organizational structure of the Rainbow along with the
files of key personnel presently running the operation. During the transition period Ken had recruited his
own team including a Vice‐President of operations, Director of sales and ….
• It is difficult to know who to go if someone has a problem with his or her manager. There should
be someone designated as the resort manager so that employees have someone to
communicate with should the need to do so arise.
Ken assembled his new team to map out strategies to address the operational challenges and employee
concerns.

1. Identify and describe four short‐term operational strategies Ken should implement immediately
at the Rainbow Golf Resort?
2. Which form of top‐down communication would be most suitable for the Rainbow Golf Resort to
achieve its objectives?


CASE 9
The Pierre has been able to maximize profitability through a sales program that realigned its sales mix.
The Pierre, a luxury hotel in New York City, experienced high demand and periods of limited availability.
An analysis of the business indicated that gross operating profit was not as much as it could be because
groups were occupying rooms at discounted rates during peak periods of the year. As a result, new track
rate business (nondiscounted) was often turned away.
It was calculated that The Pierre sells out for at least 100 days a year. During these dates the hotel could
command rack rate. Group business was then targeted for the shoulder and softer time periods. Based
on historic patterns of business, a limitation was placed on the …
nd in the city as well as for the
past five years of hotel occupancy, and keeping tight tabs on room sales, yield, and revenue per
available room (REVPAR).


1. Would this kind of plan work for any sort of hotel chain?
2. Does this type of strategy helps in increasing the revenues of the hotel.
CASE 10
The climate dimensions described relates to a specific management strategy.
Clarity:
􀂃 Dana Corporation has a corporate policy that, in part, says “The people who know best how the
job should be done are the ones doing it.”
Commitment:
• Boston’s New England Securities Corporation issues T‐shirts to its employees with the slogan
“See it, Do it, Own it.”
• To develop a shared vision, United Technologies Corporation says:

􀂃 Talk honestly and directly to employees about their performance;
􀂃 Give people the information they need to do the job;
􀂃 Let employees influence their own performance objectives;
􀂃 Walk around‐be visible;
􀂃 Listen to others before evaluating their ideas;
􀂃 Demonstrate high performance standards in your own behavior;
􀂃 Let people know your long‐term direction.
Standards:
• The quality of written reports increased after the CEO of Winter Gardens Salad Company stamps
“Read by Harry” on the report before sending it back to employees.
• Supervisors at the Mirage Treasure Island …
and free
dinner coupons to the spouses or significant others of the employees.

1. How does the organizational climate in a hotel translate into total satisfaction of guests?
2. What can managers do to ensure that such a climate is being created in his or her operations?

CASE 11
THE EU’S LAGGING COMPETITIVENESS
In a report produced for the European Commission, published in November 1998, it was argued that
the EU lags behind the USA and Japan on most measures of international competitiveness. Gross
domestic product per capita, sometimes used as an indicator of international competitiveness at the
country level, was 33 per cent lower in the EU as a whole than in the USA and 13 per cent lower
than in Japan. The EU’s poor record in creating employment was singled out for particular criticism.
As this appeared to apply across the board in most industrial sectors, it suggested that the EU’s poor
performance related to the business environment in general and, in particular, to the inflexibility of
Europe’s labour markets for goods and services. A shortage of risk …


1. Is gross domestic product per capita a useful indicator of International competitiveness in the EU?
2. Is it fair to point the blame for the EU’s poor international competitiveness at inflexible labour
markets, regulated goods and services markets, and a general lack of competition? What
alternative explanations might be suggested?


CASE 12
PERU
Peru is located on the west coast of South America. It is the third largest nation of the continent (after
Brazil and Argentina), and covers almost 500,000 square miles (about 14 per cent of the size of the
United States). The land has enormous contrasts, with a desert (drier than the Sahara), the towering
snow-capped Andes mountains, sparkling grass-covered plateaus, and thick rain forests. Peru has
approximately 27 million people, of which about 20 per cent live in Lima, the capital. More Indians
(one half of the population) live in Peru than in any other country in the western hemisphere. The
ancestors of Peru’s Indians were the famous Incas, who built a great empire. The rest of the
population is mixed and a small percentage is white. The economy depends heavily on agriculture,
fishing, mining, and services. GDP is approximately $115 billion and per capita income in recent
years has been around $4,300. In recent years the economy has gained some relative strength and
multinationals are now beginning to consider investing in the country. One of these potential
investors is a large New York based that is considering a $25 million loan to the owner of a Peruvian
fishing fleet. The owner wants to refurbish the fleet and add one more ship. During the 1970s, the
Peruvian government nationalised a number of industries and factories and began running them for
the profit of the state. In most cases, these state-run ventures became disasters. In the late 1970s, the
fishing fleet owner was given back his ships and are getting old and he needs an influx of capital to
make repairs and add new technology. As he explained it to the NEW YORK banker: “fishing is no
longer just un art. There is a great deal of technology involved. And to keep costs low and be
competitive on the world market , you have to have the latest equipment for both locating as well
as catching and then loading and unloading the fish.”Having reviewed the fleet owner’ operation, the
large multinational bank believes that the loan is justified. The financial institution is concerned ,
however , that the Peruvian government might step in during the next couple of years and again
take over the business . If this were to happen, it might take an additional decade, for the loan to be
repaid. If the government were to allow the fleet owner to operate the fleet the way he has over the
last decade, the loan could be rapid within seven years. Right now, the bank is deciding on the
specific terms of the agreement. Once these have been worked out , either a loan officer will fly
down to lima and close the deal or the owner will be asked to come to NEW YORK for the signing.
Whichever approach is used, the bank realize that final adjustments in the agreement will have
to be made on the spot. Therefore, if the bank sends a representative to Lima, the individual will have
to the authority to commit the bank to specific terms. These final matters should be worked out within
the next ten days.

1. What are some current issues Facing Peru? What is the climate for doing business in Peru today?
2. Would the bank be better off negotiating the loan in New York or in Lima? Why?
CASE 13
Which Company Is Transnational?
Four senior executives of companies operating in many countries speaks:
COMPANY A
We are transnational company. We sell our products in over 80 countries, and we manufacturer in 14
countries. Our overseas subsidiaries manage our business in their respective countries. They have
complete responsibility for their country operations including strategy formulation. Most of the key
executives in our subsidiaries are host-country nationals, although we still rely on home-country
persons for the CEO and often the CFO (chief financial officer) slots. Recently, we have divided the
world regions and the United States. Each of the world regions reports to our world trade
organization, which is responsible for all of our business ….
low
income to lower middle, or from lower middle to upper middle, or from upper middle to high income
we commit our best effort to expand our positions, or, if we don’t have a positions, to establish a
position. Since our objective is to achieve an undisputed leadership position in our industry, we
simply cannot afford not to be in every growing market in the world.
We have always had a European CEO, and this will probably not change. The executives in this
company from Europe tend to serve all over the world, whereas the executives from the United States
and Japan serve only in their home countries. They are very able and valuable executives, but they
lack the necessary perspective of the world required for the top jobs here at headquarters.

1. Which company is transnational?
2. What are the attributes of a transnational company?
3. What is the difference between a domestic, international, multinational, global, and transnational
company?
4. At what stage of development are your company and your line of business today? Where should you be.

CASE 14


Parker Pen Co. (A)
INTRODUCTION
The meeting at sunny Palm Beach concluded with nary a whimper of dissent from its participants.
After years of being run as a completely decentralized company whose managers in all corners of the
world enjoyed a high degree of flexibility, Parker Pen Co., Janesville, Wisconsin, was forced to
reexamine itself. The company had enjoyed decade after decade of success until the early 1980s. By
this time, Parker faced strong competitive threats and a deteriorating internal situation. A new
management team was bought in from outside the company – an unprecedented step for what had
been until then an essentially family-run business. At the March 1984 Palm Beach meeting, this new
group of decision makers would outline a course of action that would hopefully set Parker back on a
path to success.
The men behind the new strategy were supremely confident of its chances for success – and with
good reason. Each was recognized as a highly skilled practitioner of international business and their
combined extensive experience gave them an air of invincibility. They had been recruited from larger
companies, had left high-paying, rewarding jobs, and each had come to Janesville with a grand sense
of purpose. For decades, Parker had been a dominant player in the pen industry. In the early 1980s,
hoe-ever, the company had seen its market share dwindle to a mere 6 percent and, in 1982, net
income plunged a whopping 60 percent.
To reverse this decline, Parker recruited James Peterson, an executive vice president at R.L.
Reynolds, as the new president and CEO. Peterson hired Manville Smith as president of the writing
instruments group at Parker Smith, who was born in Ecuador and had a broad international
background, came from 3M where he had been appointed division president at the tender age of 30.
Richard Swart was vice president/marketing of the writing instruments group. He spent 11 years at
the advertising agency BBDO and was an expert on marketing planning and theory. Jack Marks was
head of writing instruments advertising. Marks came to Parker from Gillette, where, among other
things, he assisted in the worldwide marketing of Paper Mate pens. Rounding out the team was Carlos
Del Nero, manager of global marketing planning, who brought with him considerable international
experience at Fisher-Price. Each of these men was convinced that Parker would right itself by
following the plan they unveiled at Palm Beach.
A BRIEF HISTORY OF PARKER PEN
The “Rolls Royce” of the Pen Industry
The Parker name has been identified with pens since 1888 when George S. Parker delighted inksplotched
pen users everywhere by introducing a leakproof fountain model called the Parker Lucky
Curve. Parker Pen would eventually blossom into America’s, if not the world’s, largest and bestknown
pen market. Parker’s products, which …
examined, not the least of which was Parker’s decentralization of global operations.


1. What would you do if you were in James Peterson’s shoes in January 1982?
2. What changes, if any, would you make in Parker’s marketing strategy?
3. Which aspects of Parker’s structure would you discard? Which would you keep?
4. Assume that you are James Peterson and you have just hired a new management team composed
of highly qualified executives from outside companies. You and your new team are convinced
that you have the solution to Parker’s problems but there are many hold overs who disagree with
you. How would you implement your plan? To what extent would you incorporate the views of
Parker management into your plan?



Detailed information should form the part of your answer (Word limit 200 to 250 words).


1. Consider the equation Y=f(A,B,C,D,E,F,G), where Y stands for consumption of soft drinks
and D is the variable for cultural elements. How would this equation help a soft-drink
marketer understand demand for soft drinks in global markets?

2. The president of XYZ Manufacturing Company of Buffalo, New York, comes to you with a
license offer from a company in Osaka. In return for sharing the company’s patents and
know-how, the Japanese company will pay a license fee of 5percent of the ex-factory price of
all products sold based on the U.S. Company’s license. The president wants your advice what
would you tell him?

3. Imagine that you are the director of a major international lending institution supported by funds
from member countries. What one area in newly industrialized and developing economics would
be your priority for receiving development aid? Do you suspect that any member country will be
politically opposed to aid in this area? Why or Why not?

4. The principle problem in analyzing different forms of export financing is the distribution of risks
between the exporter and the importer. Analyze the following export financing instruments in this
respect:
(a) Letter of Credit
(b) Cash in advance
(c) Draft
(d) Consignment
(e) Open Account

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CASE: 1       GEORGE DAVID

George David has been CEO of United Technologies Corporation (UTC) for more than a decade. During that time he has received numerous accolades and awards for his performance as a CEO. Under his leadership UTC, a $343 billion conglomerate whose operating units include manufacturers of elevators (Otis Elevator), aerospace products (including Pratt & Whitney jet engines and Sikorsky helicopters), air conditioning systems, and fire and security systems, has seen earnings grow at 10–14 percent annually—impressive numbers for any company but particularly for a manufacturing enterprise.

According to David, a key to United Technologies’ success has been sustained improvements in productivity and product quality. The story goes back to the 1980s when David was running the international operations of Otis Elevator. There he encountered a Japanese engineer, Yuzuru Ito, who had been brought in to determine why a new elevator product was performing poorly. David was impressed with Ito’s methods for identifying quality problems and improving performance. When he was promoted to CEO, David realized that he had to lower the costs and improve the quality of UTC’s products. One of the first things he did was persuade Ito to work for him at UTC. Under David, Ito developed a program for improving product quality and productivity, known as Achieving Competitive Excellence (ACE), which was subsequently rolled out across UTC. The ACE program has been one of drivers of productivity improvements at UTC ever since.
Early in his tenure as CEO, David also radically reorganized UTC. He dramatically cut the size of the head office and decentralized decision making to business divisions. He also directed his accounting staff to develop a new financial reporting system that would give him good information about how well each division was doing and make it easier to hold divisional general managers accountable for the performance of the units under them. He then gave them demanding goals for earnings and sales growth and pushed them to improve processes within their units by implementing the ACE program.
At the same time David has always stressed that management is about more than goal setting and holding people accountable. Values are also important. David has insisted that UTC employees adhere to the highest ethical standards, that the company produce that have minimal environmental impact, and that employee safety remain the top consideration in the work-place.

When asked what his greatest achievement as a manager has been, David refers to UTC’s worldwide employee scholarship program. Implemented in 1996 and considered the hall-mark of UTC’s commitment to employee development, the program pays the entire cost of an employee’s college or graduate school education, allows employees to pursue any subject at an accredited school, provides paid study time, and awards UTC stock (up to $10,000 worth in the United States) for completing degrees. Explaining the program, David states, “One of the obligations that an employer has is to give employees opportunities to better themselves. And we feel it’s also very good business for us because it generates a better workforce that stays longer.”

David states that one of his central tasks has been to build a management team that functions smoothly over the long term. “People come to rely upon each other,” he says. “You have the same trusting relationships. You know people; they know you. You can predict them; they can predict you. All of that kind of begins to work, and it accelerates over the tenure of a CEO. If you have people bouncing in and out every two to three years, that’s not good.”


According to Sandy Weill, former chairman of Citicorp and a UTC board member, David has the right mix of toughness and sensitivity. “When somebody can't do the job he’ll try to help; but if that person is not going to make it work, that person won't be on the job forever.” At the same time Weill says, “He does a lot of things that employees respect him for, I think he is a very good manager. Even though David is demanding, he can also listen—he has a receive mode as well as a send mode.”

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Case 1: Zip Zap Zoom Car Company
   
Zip Zap Zoom Company Ltd is into manufacturing cars in the small car (800 cc) segment.  It was set up 15 years back and since its establishment it has seen a phenomenal growth in both its market and profitability.  Its financial statements are shown in Exhibits 1 and 2 respectively.
   
    To maintain an annual dividend of 10 per cent, an additional Rs. 35 crore has to be kept aside.  Hence, the expected available net cash inflow is Rs. 185.27 crore (i.e. Rs. 220.27 – Rs. 35 crore)
Question:
Analyse the debt capacity of the company. 


CASE – 2   GREAVES LIMITED

Started as trading firm in 1922, Greaves Limited has diversified into manufacturing and marketing of high technology engineering products and systems. The company’s mission is “manufacture and market a wide range of high quality products, services and systems of world class technology to the total satisfaction of customers in domestic and overseas market.”
    Over the years Greaves has brought to India state of the art technologies in various engineering fields by setting up manufacturing units and subsidiary and associate companies. The sales of Greaves Limited has increased from Rs 214 crore in 1990 to Rs 801 crore in 1997. The sales of Greaves Limited has increased from Rs 214 crore in 1990 to Rs 801 crore in 1997. Profits before interest and tax (PBIT) of the company increased from Rs 15 crore to Rs 83 crore in 1997. The market price of the company’s share has shown ups and downs during 1990 to 1997.
Questions

1.    How profitable are its operations? What are the trends in it? How has growth affected the profitability of the company?
2.    What factors have contributed to the operating performance of Greaves Limited? What is the role of profitability margin, asset utilisation, and non-operating income?
3.    How has Greaves performed in terms of return on equity? What is the contribution of return on investment, the way of the business has been financed over the period?







CASE – 3   CHOOSING BETWEEN PROJECTS IN ABC COMPANY

ABC Company, has three projects to choose from. The Finance Manager, the operations manager are discussing and they are not able to come to a proper decision. Then they are meeting a consultant to get proper advice. As a consultant, what advice you will give?

The cash flows are as follows. All amounts are in lakhs of Rupees.

Project 1:
Duration 5 Years
Beginning cash outflow = Rs. 100
Cash inflows (at the end of the year)
Yr. 1 – Rs 30; Yr. 2 – Rs 30; Yr. 3 – Rs 30; Yr.4 – 10; Yr.5 – 10

Project 2:
Duration 5 Years
Beginning Cash outflow Rs. 3763
Cash inflows (at the end of the year)
Yr. 1 – 200; Yr. 2 – 600; Yr. 3 – 1000; Yr. 4 – 1000; Yr. 5 – 2000.

Project 3:
Duration 15 Years
Beginning Cash Outflow – Rs. 100
Cash Inflows (at the end of the year)
Yrs. 1 to 10 – Rs. 20 (for 10 continuous years)
Yrs. 11 to 15 – Rs. 10 (For the next 5 years)

Question:
If the cost of capital is 8%, which of the 3 projects should the ABC Company accept?

CASE – 4   STAR ENGINEERING COMPANY

Star Engineering Company (SEC) produces electrical accessories like meters, transformers, switchgears, and automobile accessories like taximeters and speedometers.
    SEC buys the electrical components, but manufactures all mechanical parts within its factory which is divided into four production departments Machining, Fabrication, Assembly, and Painting—and three service departments—Stores, Maintenance, and Works Office.
   
REQUIRED

Based on the data given in Exhibits A and B, you are required to:

1.    Complete the attached “overhead cost distribution sheet” (Exhibit C).
Note: Wherever possible, identify the overhead costs chared directly to the production and service departments. If such direct identification is not possible, distribute the costs on some “rational basis.

2.    Calculate the overhead cost (per direct labour hour) for each of the four producing departments. This should include share of the service departments’ costs.
Do you agree with:
a.   The procedure adopted by the company for the distribution of overhead costs?
b.   The choice of the base for overhead absorption, i.e. labour-hour rate?





Case 5: EASTERN MACHINES COMPANY

Raj, who was in charge production felt that there are many problems to be attended to. But Quality Control was the main problem, he thought, as he found there were more complaints and litigations as compared to last year. With the demand increasing, he does not want to take any chances.

So he went down to assembly line, but was greeted by an unfamiliar face. He introduced himself.

Raj: I am in charge of checking the components, which we use, when we assemble the machines for customers. For most of the components, suppliers are very reliable and we assume that there will not be any problem. When we generally test the end product, we don’t have failures.

Namdeo: I am Namdeo. I was in another dept. and has been transferred recently to this dept.

Raj: Recently we have been having problems, and there has been some complaint or other about the machines we have supplied. I am worried and would like to check the components used. I would like to avoid lot of expensive rework.

Namdeo: But it would be very expensive to test every one of them. It will take at least half an hour for each machine. I neither have the staff nor the time. It will be rather pointless as majority of them will pass the test.

Raj: There has been more demand than supply for these machines in last 2 years. We have been buying many components from many suppliers. We have been producing more with extra shifts. We are trying to capture the market and increase our market share.

Namdeo: We order for components from different places, and sometimes we do not have time to check all. There is a time lag between order and supply of components, and we cannot wait as production will stop. We use whatever comes soon as we want to complete our orders.

Raj: Oh! Obviously we need some kind of checking. Some sampling technique to check the quality of the components. We need to get a sample from each shipment from our component suppliers. But I do not know how many we should test.

Namdeo: We should ask somebody from our statistics dept. to attend to this problem.

As a Statistician, advice what kind of Sampling schemes can we consider, and what factors will influence choice of scheme. What are the questions we should ask Mr. Namdeo, who works in the assembly line?

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Case I

PANDIT TO AFAUZI
The case is based on an actual incident which took place in an Army unit operationally deployed in a field area just a few months before the 1971 showdown with Pakistan. The opposing forces of India and Pakistan were taking their respective positions in a pre-war scenario. The clouds of showdown were looming large over the horizons of both the countries. The rumbling of own tanks and guns, the reconnaissance, leaders of different arms and services establishing liaison with one another in the process of formulating plans for both defence and attack, digging of main and contingency positions was in progress, complete war machinery was being mobilized, camouflaged, and concealed. Ammunition and other explosives were being unloaded and dug down. Junior leaders were being briefed and rebriefed, communications were being checked, and troops were being motivated and looked after as most of them were green because of their sudden induction in the Army in post war days of 1965. Such was the scene which convinced all and sundry that war was imminent. Most of the troops looked forward to a showdown mainly because they wanted to get rid of the heavy ……
The cadre was conducted for the whole sub-unit with a view to eradicate any apprehensions from the minds of others too, in case there were any, and to educate all. The cadre proved to be a great success. It motivated the whole lot, made them more confident and ready to face the challenge bravely. This was subsequently apparent when the hostilities started.
QUESTIONS:
1.    What was the cause of fear in RBM?
2.    What were the symptoms of fear displayed by RBM?
3.    How did the RMO come to know of the war phobia of RBM?
4.    What actions should be taken to avoid building up of fear among the troops? Which of these steps were taken by the officer?






Case II

HE WHO RIDES A TIGER

In the Year of the Youth, the author took up a research project on young industrial workers. It involved comparing young and old workers. Two industries producing the same machines at similar technological level were selected. One belonged to the private sector and the other to the public sector. While the latter was started a decade later than the former, it had achieved greater expansion. Both were located in the same state.

After we obtained necessary permission to conduct our study, we reached the mofussil town where the private sector industry was located. Before we could launch our study, as a matter of principle, we wanted to meet the General Secretary of the workers' union. The Personnel Department was not willing for this. On our insistence they called the union official. We talked to him for about half an hour but Personnel Department people were all the time hovering around.

………While the older union was a prisoner of its past, the new union was free to write its own history. Workers' interests were being served perhaps by both.



QUESTIONS FOR DISCUSSION
1.    Discuss merits/demerits of the role of strike, agitation and legal approach in union¬management relations.
2.    What role does mutual trust play in building union-management relations?


CASE III

COMPETITION AHEAD: VSNL AT CROSS ROADS

The telecom sector had been functioning as a typical government department right from its inception. With the Department of Telephones (DoT) being under the exclusive control of the Ministry of Communications, Government of India (GO!), the system functioned more as a monopoly., With the advent of the LPG process (liberalization, privatization and globalization) in the early nineties, the telecom department went through a phase of modernization. A number of new and sophisticated electronic exchanges were installed which enhanced the capacity and lead to the disappearance of waiting list for telephone connections. In a landmark decision in 1995-96, the Government of ………………….
•    was outlined for launching a comprehensive promotion programme using both indoor and outdoor media ensuring a good coverage of the market.


VSNL – Tariff Structure
Scheme     Rental (Rs.)     Free Colis     Facilities
Business Plan - 500-700*     500 (Monthly)     700     Without STD
Economy Plan **     160 (Monthly)     Nil     With STD
Standard Plan*     500 (Bimonthly)     150     With STD
* 0.80 Per Call     ** Rs.1 .20 Per Call        

VTNL – Tariff Structure
Scheme     Rental (Rs.)     Free Calls
Silver 300     349 (Monthly)     300
Golden – 500     499 (Monthly)     500


Questions:

1.    What were the strengths and weaknesses of VSNL?
2.    Do you think that VSNL should have changed its thrust from basic telephony to cellular services?
3.    If you were the Deputy General Manager, what strategies would you have undertaken to deal with the competition?

Case IV
DISNEY’S DESIGN
The Walt Disney Company is heralded as the world’s largest entertainment company.  It has earned this astounding reputation through tight control over the entire operation : control over the open – ended brainstorming that takes place 24 hours a day ; control over the engineers who construct the fabulous theme – park rides; control over the animators who create and design beloved characters and adventurous scenarios ; and control over the talent that brings the many concepts and characters to life.  Although control pervades the company, it is not too strong a grip.  Employees in each department are well aware of their objectives and the parameters established to meet those objectives.  But in conjunction with the pre-determined responsibilities, managers at Disney encourage independent and innovative thinking.
    People at the company have adopted the phrase “Dream as a Team” as a reminder that whimsical thoughts, adventurous ideas, and all – out dreaming are at the core of the company philosophy.  The over all control over each department is tempered by this concept.  …….
where it comes from.”

Questions :
1.    What environmental factors influenced management style at Disney?
2.    What kind(s) of organizational structure seem to be consistent     with “Dream as a Team” ?
3.    How and where might the informal organization be a real asset at Disney ?




1.    Case V
 “THAT’S NOT MY JOB” – LEARNING DELEGATION AT CIN-MADE
When Robert Frey purchased Cin – Made in 1984, the company was near ruin.  The Cincinnati, Ohi-based manufacturer of paper packaging had not altered its product line in 20 years.  Labor costs had hit the ceiling, while profits were falling through the floor.  A solid quarter of the company’s shipments were late and absenteeism was high.  Management and workers were at each other’s throats.
    Ten years later, Cin – Made is producing a new assortment of highly differentiated composite cans, and pre-tax profits have increased more than five times.  The Cin – Made workforce is both flexible and deeply committed to the success of the company.  ……………
s workers, have a lot of opportunities,” said Williams. “If we want to take leadership, it’s offered to us.”


Questions:
1.    How were principles of delegation and decentralization incorporated into Cine – Made operations?
2.    What are the sources and uses of power at Cin – Made?
3.    What were some of the barriers to delegation and empowerment at Cin –Made?
4.    What lessons about management in a rapidly changing marketplace can be learned from the experience of Cin – Made? 

   

Case VI
HIGH-TECH ANSWERS TO DISTRIBUTION PROBLEMS AT ROLLERBLADE
When a manger finds that demand exceeds inventory, the answer lies in making more goods. When a manager finds that inventory exceeds demand, the answer lies in making fewer goods.  But what if a company management finds that they just do not know which situation applies?
    This is the situation that recently confronted management at Rollerblade, the popular skate manufacturer based in Minnetonka, …………………
eliminate order backlog.  “Now we have a different business,” says Ellis. “The new layout has taken us from being in a crunch, to being able to plan.

Questions:
1.    With retailers as their primary customers, what customer competitive imperatives could be affected by Rollerblade’s inventory problems?
2.    How appropriate might a just – in – time inventory system be for a product such as roller skates?”
3.    What opportunities are therefore Rollerblade managers to see FOR themselves as selling services, instead of simply roller skates?

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        N.B.: 1)    Attempt any Four Questions
             2)    All questions carry equal marks.
NO. 1
COOKING LPG LTD
DETERMINATION OF WORKING CAPTIAL
Introduction
Cooking LPG Ltd, Gurgaon, is a private sector firm dealing in the bottling and supply of domestic LPG for household consumption since 1995. The firm has a network of distributors in the districts of Gurgaon and Faridabad. The bottling plant of the firm is located on National Highway – 8 (New Delhi – Jaipur), approx. 12 kms from Gurgaon.  The firm has been consistently performing we.”  and plans to expand its market to include the whole National Capital Region.
    The production process of the plant consists of receipt of the bulk LPG through tank trucks, storage in tanks, bottling operations and distribution to dealers.   During the bottling process, the cylinders are subjected to pressurized filling of LPG followed by quality control and safety checks such as weight, leakage and other defects.  The cylinders passing through this process are sealed and dispatched to dealers through trucks.  The supply and distribution section of the plant prepares the invoice which goes along with the truck to the distributor.
Statement of the Problem :
Mr. I. M. Smart, DGM(Finance) of the company, was analyzing the financial performance of the company during the current year.  The various profitability ratios and parameters of the company indicated a very satisfactory performance.  Still, Mr. Smart was not fully content-specially with the management of the working capital by the company.  He could recall that during the past year, in spite of stable demand pattern, they had to, time and again, resort to bank overdrafts due to non-availability of cash for making various payments.  He is aware that such aberrations in the finances have a cost and adversely affects the performance of the company.  However, he was unable to pinpoint the cause of the problem.
    He discussed the problem with Mr. U.R…….
•     10 per cent.  However, during other months the power consumption remains the same as the decrease owing to reduced production is offset by increased consumption on account of compressors /Acs.
•    Additional amount of Rs. 3 lakh is kept as cash balance to meet exigencies during winter.
•    No change in time schedules for any payables / receivables.
•    The storage of finished goods inventory is restricted to a maximum 5,000 cylinders due to statutory requirements. 












NO. 2
M/S HI-TECH ELECTRONICS
M/s. Hi – tech Electronics, a consumer electronics outlet, was opened two years ago in Dwarka, New Delhi. Hard work and personal attention shown by the proprietor, Mr. Sony, has brought success.  However, because of insufficient funds to finance credit sales, the outlet accepted only cash and bank credit cards.  Mr. Sony is now considering a new policy of offering installment sales on terms of 25 per cent down payment and 25 per cent per month for three months as well as continuing to accept cash and bank……
– off basis.  The proprietor feels that the new policy will lead to bad debts of 1 per cent.
(a)    As a financial consultant, advise the proprietor whether he should go for the extension of credit facilities.
(b)    Also prepare cash budget for one year of operation of the firm, ignoring interest.  The minimum desired cash balance & Rs. 30,000, which is also the amount the firm has on January 1.  Borrowings are possible which are made at the beginning of a month and repaid at the end when cash is available.




















NO.3
SMOOTHDRIVE TYRE LTD
Smoothdrive Tyre Ltd manufacturers tyres under the brand name “Super Tread’ for the domestic car market.  It is presently using 7 machines acquired 3 years ago at a cost of Rs. 15 lakh each having a useful life of 7 years, with no salvage value.
    After extensive research and development, Smoothdrive Tyre Ltd has recently developed a new tyre, the ‘Hyper Tread’ and must decide whether to make the investments necessary to produce and market the Hyper Tread.  ……
debt will be a tax-deductible expenses.
    As a finance analyst, prepare a report for submission to the CFO and the Board of Directors, explaining to them the feasibility of the new investment.
No. 4
COMPUTATION OF COST OF CAPITAL OF PALCO LTD
In October 2003, Neha Kapoor, a recent MBA graduate and newly appointed assistant to the Financial Controller of Palco Ltd, was given a list of six new investment projects proposed for the following year.  It was her job to analyse these projects and to present her findings before the Board of Directors at its annual …..
of these sources of funds to determine its cost of capital.  In discussion with the current Financial Controller, the point was raised that while this served as an appropriate calculation for external funds, it did not take into account the cost of internally generated funds.  The Financial Controller agreed that there should be some cost associated with retained earnings and need to be incorporated in the calculations but didn’t have any clue as to what should be the cost.
    Palco Ltd is subjected to the corporate tax rate of 40 per cent.
    From the facts outlined above, what report would Neha submit to the Board of Directors of palco Ltd ? 







NO. 5
ARQ LTD
ARQ Ltd is an Indian company based in Greater Noida, which manufactures packaging materials for food items.  The company maintains a present fleet of five fiat cars and two Contessa Classic cars for its chairman, general manager and five senior managers.  The book value of the seven cars is Rs. 20,00,000 and …..
the PC, mobioe phone and so on.
    The company’s effective tax rate is 40 per cent and its cost of capital is 15 per cent.
Analyse the financial viability of the two options.  Which option would you recommend ?  Why ?

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Case I
PROVIDE ADVICE TO AN ENTREPRENEUR ABOUT INTELLECTUAL PROPERTY PROTECTION

Locked doors and a security system protect your equipment, inventory and payroll. But what protects your business’s most valuable possessions? IP laws can protect your trade secrets, trademarks and product design, provided you take the proper steps. Chicago attorney Kara E.F. Cenar of Welsh and Katz, an IP firm, contends that businesses should start thinking about these issues earlier than most do. “Small businesses tend to delay securing IP protection because of the expense,” Cenar says. “They tend not to see the value of IP until a competitor infringes.” But a business that hasn’t applied for copyrights or patents and actively defended tem will likely have trouble making its case in court.

One reason many business owners don’t protect their intellectual property is that they don’t recognize the value of the intangibles they own. Cenar advises business owners to take their business plans to an experienced IP attorney and discuss how to deal with these issues. Spending money upfront for legal help can save a great deal later by giving you strong copyright or trademark rights, which can deter competitors from infringing and avoid litigation later.

Once you’ve figured out what’s worth protecting, you have to decide how to protect it. That isn’t always obvious. Traditionally, patents prohibit others from copying new devices and processes, while copyrights do the same for creative endeavors such as books, music and software. In many cases, though, the categories overlap. Likewise, trademark law now extends to such distinctive elements as a product’s color and shape. Trade dress laws concerns how the product is packaged and advertised. You might be able to choose what kind of protection to seek.
For instance, one of Welsh & Katz’s clients is Ty Inc., maker of plush toys. Before launching the Beanie Baby line, Cenar explains, the owners brought in business and marketing plans to discuss IP issues. The plan was for a limited number of toys in a variety of styles, and no advertising except word-of-mouth. Getting a patent on a plush toy might have been impossible and would have taken several years, too long for easily copied toys. Trademark and trade dress protection wouldn’t help much, because the company planned a variety of styles. But copyrights are available for sculptural art, and they’re inexpensive and easy to obtain. The company chose to register copyrights and defend them vigorously. Cenar’s firm has fended off numerous knockoffs.

That’s the next step: monitoring the market-place for knockoffs and trademark infringement, and taking increasingly firm steps to enforce your rights. Efforts typically begin with a letter of warning and could end with a court-ordered cease-and-desist order or even an award of damages. “If you don’t take the time to enforce [your trademark], it becomes a very weak mark,” Cenar says. But a strong mark deters infringement, wins lawsuits and gets people to settle early.” Sleep on your rights, and you’’’ lose them. Be proactive, and you’ll protect them – and save money in the long run.
An inventor with a newly invented technology comes to you for advice on the following matters:

Questions:

1.    In running this new venture, I need to invest al available resources in producing the products and attracting customers. How important is it for me to divert money from those efforts to protect my intellectual property?

2.    I have sufficient resources to obtain intellectual property protection, but how effective is that protection without a large stock of resources to invest in going after those that infringe on my rights? If I do not have the resources to defend a patent, is it worth obtaining one in the first place?

3.    Are there circumstances when it is better for me not to be an innovator but rather produce “knock-offs” of other innovations?

Case II

Provide advice to an entrepreneur about firing employees

Firing an employee is a messy business. Just the thought of having to recruit, train and manage a new sales soul is enough to keep some sales managers from following through with the task. But holding on to a salesperson who’s not performing or who’s disruptive to the team is guaranteed to exacerbate matters down the road. But how do you know when it’s time to say “you’ve gotta go”? It’s simple, according to Tricia Timkin: “Lack of production, lack of production, lack of production,” says the president of Padigent, a Carol Stream, Illinois, human resources consulting firm for emerging companies.

Dave Anderson, president of Dave Anderson’s Learn to Lead, concurs that performance is one criterion for firing. Anderson, whose Los Altos, California, company offers sales, management and leadership consulting, thinks reps who are “dishonest, selfish or disrespectful” should face the axe.

You may fear firing a rep will cause a morale dip in the troops. After all, someone’s buddy is getting shown the door. But making a tough choice can bolster the spirits of your sales squad. Says Tamkin: “Firing can positively affect morale [because] it sends a message that the company will take strong measures to ensure the success of the organization. Poor performers lower the morale of the team, and they continually break momentum and diminish the credibility of the sales manager.”

Before firing, however, steps must be taken to legally protect your business. It’s crucial that the employee has been warned in advance in writing. Coaching sessions with failing sales people will help protect you when it comes time to separate. Tamkin advises that documentation must be developed in advance of the firing, and that when it comes time for the employee to go, the manger should conduct an exit interview. Though firing will never be a savory part of a manager’s job description, it’s short – term pain for long – term gain. “Managers have to realize that when they keep the wrong person,” Anderson says, “there’s more damage to the company than just lack of production.”

Here are some firing guidelines from William Skip Miller’s ProActive Sales Management (AMACOM):
1.    Never in your office: if it’s your office, you can’t leave if the employee wants to stay and talk.
2.    Short and Sweet: As you walk in the door, say, “The reason I’m here is to tell this is your last day of employment with this company.” Just get it out.
3.    Never on a Friday: If fired on a Friday, the employee can’t start the process of feeling good. All he or she can do is stew about it over the weekend.
4.    Outside help: If the employee says he or she has consulted an attorney or other legal counsel, stop the conversation immediately and consult your HR department or attorney, whoever helped you draft your company policy.
5.    No hanging around: Personal effects can be retrieved, but have the person leave the building.

Advice to an entrepreneur:
An entrepreneur, whose business has stopped growing, has read the above article and comes to you for advice:

1.    Gee, these managers discussed in the article are a bit rough. Even if one particular person is not producing as expected, doesn’t this person still deserve to be treated with respect?

2.    It appears that the automatic assumption is that the employee is at fault for not performing and therefore should be fired. But shouldn’t the responsibility fall on me as the manager and the system that I have introduced? Maybe the person is performing as well as the situation allows?

3.    How am I to build team spirit within my small company when I single out one person for lack of production and fire him or her?

Case III

Provide advice to an entrepreneur about small business investment companies

It started out as a straightforward consulting project for Mahendra Vora and research partner Sundar Kadaya. They were analyzing software trends and perusing market research studies to assess the size of various software markets. But after spending 40 hours looking for information that should have taken 10 minutes to access, the pair concluded that more advanced tools were needed to search the internet and databases of public information. Within months, they launched Intelliseek Inc., providing software to capture, track and analyze information for use in strategic planning, market research, product development and brand marketing. Vora, 39, was no stranger to start-ups. By the time he co-founded Intelliseek in 1997, he already had three business launches under his belt. He sold all three to Fortune 500 firms, providing capital for Intelliseek. His initial investment of a few million dollars supported operations the first couple of years and through two major product launches.

By 1999, the Cincinnati Company was laying the groundwork for its first round of venture capital.Vora had had two years to contemplate his dream investor. Foremost, size did matter: The venture capitalist should have the wherewithal for ongoing financing, but not be so large that it shunned all but elaborate business models. Finding an investor with a broad network of investing partners also was important to the $10million company. “If you become wildly successful and plan to raise $50 million someday, then [the investor] should have access to the big investors. The network is also important because it can [introduce] you to customers,” says Vora, whose clients include CBS, Ford Motor Co. and Nokia. Finally, Vora was looking for operational experience. “A lot of VCs are phenomenal in advising you about what to do, but they’ve never done it themselves,” he observes. Vora ultimately found his venture match in Cincinnati-based River Cities Capital Funds, a small business investment company. While River Cities was not large, it was well-connected and managed by industry veterans with extensive professional experience.

Starting Small
Licensed and regulated by the SBA, SBICs are generally organized and operated like any other venture capital fund. But unlike traditional funds, SBICs use their own capital and long-term loans to small companies. On the whole, SBICs tend to be more risk-tolerant than banks or traditional venture capitalists….Inteliseek’s SBIC banker removed barriers to reaching larger, mainstream investors. Led by river cities capital funds, the initial $6 million investment included capital from the venture arm of Nokia; later investors included Ford Motor Co. and General Atlantic Partners LLC. “once you get a VC like River Cities, it is much easier to get access to bigger VCs,” says Vora. “They can go to VCs and say ‘One of our companies is doing so well, we’re going to put in more money, and you guys should come in’.”
Down But Not Out
SBICs invested roughly $2.8 billion in about 2,100 companies in the 12-month period ending September 30, 2002 down from $4.6 billion invested in 2,254 companies in the same period one year earlier. Like mainstream investors, they have had to adjust to deteriorating economic conditions.  “Valuations have come down on deals, and due diligence periods have increased,” says Patrick Hamner, vice resident of Capital Southwest Corp., a Dallas-based SBIC. “People are being far more discriminating in how they invest their capital.”
“The bar has been raised even more for small businesses trying to get capital,” he continues. “As opposed to the overall venture industry, which has had a very marked decline in financing activity, SBICs are down but still active.”
Nor has quality been an overriding concern, even as SBICs engage in riskier deals than their mainstream counterparts. “Part of what has happened with the bursting of the bubble is that the ideas being proposed are based on more substantive models,” says Edwin Robinson, managing director of River Cities Capital Funds. “A lot of the excess is being wrung out the system.” While the venture shakeup has impacted conventional the way some SBICs operate. “During the bubble years, there was probably more of an inclination to overfund,” says NASBICs Mercer. “I don’t mean in  the sense that money might not be justified, but to make the unconditional investment. I suspect that what you’re seeing now is a lot more investing on a milestone basis.” For instance, a company that requires $3 million over three years is likely to receive $1 million upfront, getting the rest after meeting revenue and growth targets. Fewer venture dollars, coupled with the banking industry’s reticence to lend to small businesses, has contributed to an overall capital shortage, adds Mercer. “Banks that had been out a little bit further on the risk curve than they probably normally do,” he says. “The banks’ own proclivity and the regulators kind of forced a pullback, so there has been a tremendous pullback in bank credit availability even for small businesses that have had long time banking relationships.”

The SBIC program, meanwhile, is attracting mainstream investors having difficulty raising capital for venture-backed investments. The increased interest bodes well for the small firms that SBICs target: companies with a net worth of less than $18 million and average after-tax earning of less than $6 million for the past two years.

Advice to an entrepreneur
An entrepreneur, who is an owner manager of a small business and looking to raise $4,00,000, has read the above article and comes to you for advice:
1.    What are the advantages of going to an SBIC over and above a business angle or venture capitalist?
2.    What are the disadvantages and how can they be minimized?

Case IV

Provide advice to an entrepreneur about being more innovative

When Neil Franklin began offering round-the-clock telephone customer service in 1998, customers loved it. The offering fit the strategic direction Franklin had in mind for Dataworkforce, his Dallas-based telecommunications – engineer staffing agency, so he invested in a phone system to route after hours calls to his 10 employees’ home and mobile phones. Today, Franklin, 38, has nearly 50 employees and continues to explore ways to improve Dataworkforce’s service. Twenty-four-hour phone service has stayed, but other trials have not. One failure was developing individual Web sites for each customer. “We took it too far and spent $30,000 then abandoned it,” Franklin recalls. A try at globally extending the brand by advertising in major world cities was also dropped. “It worked pretty well,” Franklin says, “until you added up the cost.”
Franklin’s efforts are similar to an approach called “portfolios of initiatives” strategy. The idea, according to Lowell Bryan, a principal in McKinney & Co., the NYC consulting firm that developed it, is to always have a number of efforts underway to offer new products and services, attack new markets or otherwise implement strategies, and to actively manage these experiments so you don’t miss an opportunity or over commit to an unproven idea.

The portfolio of initiatives approach addresses a weakness of conventional business plans-that they make assumptions about uncertain future developments, such as market and technological trends, customer responses, sales and competitor reactions. Bryan compares the portfolio of initiatives strategy to the ship convoys used in World War II to get supplies across oceans. By assembling groups of military and transport vessels and sending them in a mutually supportive group, planners could rely on at least some reaching their destination. In the same way, entrepreneurs with a portfolio of initiatives can expect some of them to pan out.

Making a Plan
Three steps define the portfolio of initiatives approach. First, you search for initiatives in which you have or can readily acquire a familiarity advantage – meaning you know more than competitors about a business. You can gain familiarity advantage using low-cost pilot programs and experiments, or by partnering with more knowledgeable allies. Avoid business in which you can’t acquire a familiarity advantage, Bryan says.
After you identify familiarity-advantaged initiatives, began investing in them using a disciplined, dynamic management approach. Pay attention to how initiatives relate to each other. They should be diverse enough that the failure of one wont endanger the others, but should also all fit into your overall strategic direction. Investments, represented by product development efforts, pilot programs, market tests and the like, should start small and increase only as they prove themselves. Avoid over investing before initiatives have proved themselves. The third step is to pull the plug on initiatives that aren’t working out, and step up investment in others. A portfolio of initiatives will work in any size company. Franklin pursues 20 to 30 at any time, knowing 90 percent wont pan out, “The main idea is to keep those initiatives running,” he says. “If you don’t, you’re slowing down.”

Advice to an entrepreneur
An entrepreneur, who wants his firm to be more innovative, has read the above article and come to you for advice:

1.    This whole idea of experimentation seems to make sense, but all those little failures can add up, and if there enough of them, then this could lead to one big failure-the business going down the drain. How can I best get the advantages of experimentation in terms of innovation while also reduction the costs so that I don’t run the risk of losing my business?
2.    My employees, buyers, and suppliers like working for my company because we have a lot of wins. I am not sure how they will take it when our company begins to have a lot more failures (even if those failures are small)- it is a psychological thing. How can I handle this trade-off?
3.    Even if everyone else accepts it, I am not sure how I will cope. When projects fail it hits me pretty hard emotionally. Is it just that I am not cut out for this type of approach?

Case V

PROVIDE ADVICE TO AN ENTREPRENEUR ABOUT NONTRADITIONAL FINANCING

When Lissa D’Aquanni created a gourmet chocolate business in her Albany, New York, basement in 1998, she had not only a passion for candy-making, but also a knack for spurring citizen involvement. The former nonprofit executive had worked for women’s advocacy groups, most recently promoting breast cancer awareness. If there was one thing she knew, it was how to rally community support.

Her ability to leverage local resources would be invaluable as she made her business a fixture of her Albany neighborhood. And in no area were those skills as critical as in financing last year, D’Aquanni wanted to move her business, the chocolate Gecko, to an abandoned building three blocks away, she needed $25,000.” Volunteers also helped renovate the building, cutting project costs form an estimated $3,00,000.

Check out D’Aquanni’s unorthodox and creative financing plan: An economic development group, the Albany Local Development Corp., loaned her $95,000 to buy the building. D’Aquanni obtained a $1,00,000 government guaranteed loan from a local credit union to renovate the structure. Façade improvements were funded through a matching grant program to encourage commercial development in Albany. A local community development financial institution used a state program to fund energy-efficient upgrades, including new windows, light fixtures, furnaces and siding. Says D’Aquanni, “ There were lots of different pieces of the puzzle to identify and figure out how to access.”

Conventional financing wasn’t an option. “I was looking at a business that did about $44,000 in sales doing a $260,000 project, and the traditional funders were apprehensive,” explains D’Aquanni, 37. They urged her to rent a storefront rather than buy the rundown building. Undeterred, D’Aquanni met with a neighborhood group to develop her expansion plan. It wasn’t the first time the community had helped out. In 1999, the cashstrapped chocolatier needed molds and a temperer for the Christmas rush. Recalling a strategy she had seen in a magazine, she sold discounted gift certificates to raise capital. D’Aquanni offered customers $25 in free chocolates for every $100 in gift certificates purchase. “A lot of folks mailed them as gifts to friends, family and co-workers,” D’Aquanni says. “ And most of those people ordered chocolates. My customer base expanded.”

Indeed, many entrepreneurs successfully launch a business only to encounter funding hardships as they attempt to grow. The ability to think outside the box, experts say, is critical for firms short on funding. “There are pockets of money out there, whether it be municipalities, counties, chambers of commerce,” says Bill Brigham, Director of the Small Business Development Center in Albany. “Those are the loan programs that no one seems to have information about. A lot of these programs will not require the collateral and cash that is typical of traditional [loans]. They may be a little more lenient as far as credit history goes. That’s one of the key roles we can play-what entrepreneur is going to think [he or she] can qualify for HUD money?

Advice to an entrepreneur

An entrepreneur, who is looking to expand but has limited access to traditional financing, has read the above article and comes to you for advice:

1.    I want to find a little pot of gold like Lissa D’Aquanni. Where should I look?
2.    I like the gift certificate idea to raise money and build my business. What other types of products do you think that approach will work for?
3.    Over the years I have paid a lot of taxes. Should I feel guilty for accessing government – subsidized monies to build my business, or should I feel justified?

IIBM Exam papers/Case studies: Contact us for answers at assignmentssolution@gmail.com

Attempt All the case

Case - 1

GlaxoSmitbKine, Bristol – Myers Squibb, and AIDS in Africa ¹

In 2004, the United Nations estimated that the previous year 5 million more people around the world had contracted the AIDS virus, 3 million had died, and a total of 40 million people were living with the infection. Seventy percent, or about 28 million of these, lived in sub – Saharan Africa, where the epidemic was at its worst. Sub – Saharan Africa consists of the 48 countries and 643 million people who reside south of the Saharan desert. In 16 of these countries, 10 percent are infected with the virus, in 6 other nation, 20 percent are infected. The UN predicted that in these 6 nations two – thirds of all 15 – year olds would eventually die of AIDS and in those where 10 percent were infected, half of all 15 – year – olds would die of AIDS.

        For the entire sub –Saharan region, the average level of infection among adults was 8.8 percent of Botswana’s population was infected, 34 percent of  Zimbabwe’s, 31 percent of Lesotho’s, and 33 percent of Swaziland’s. Family life had been destroyed by the deaths of hundreds of thousands of married couples, who left more than 11 million orphans to fend for themselves. Gangs and rebel armies forced thousands of orphans to join them. While crime and violence were rising, agriculture was in decline as orphaned farm children tried desperately to remember had to manage on their own. Labor productivity had been cut by 50 percent in the hardest – hit nations, school and hospital systems were decimated, and entire national economies were on the verge of collapse.

         With its huge burden of AIDS illnesses, African nation desperately needed medicines, both antibiotics to treat the many opportunistic diseases that strike …….

nounced in 2003 that it would try to collect from governments the funds needed to bring antiretrovirals to at least 3 million people by the end of 2005.

Questions

1. Explain, in light of their theories, what Locke, Smith, Ricardo, and Marx would probably say about the events in this case.
2. Explain which view of property-Locke’s or Marx’s- lies behind the positions of the drug companies GlaxoSmithKline and Bristol-Myers Squibb and of the Indian companies such as Cipla. Which of the two group-GlaxoSmithKline and Bristol-Myers Squibb on the one hand, and the Indian companies on the other –do you think holds the correct view of property in this case? Explain your answer.
3. Evaluate the position of Cipla and of GlaxoSmithKline in terms of utilitarianism, right, justice, and caring. Which of these two positions do you think is correct from an ethical point of view?

Case - 2

Playing Monopoly: Microsoft

On November 5, 1999, then the richest man in the world, learned that a federal judge, Thomas Jackson, had just issued “findings of fact” declaring that his company, Microsoft, “enjoys monopoly power” and that it had used its monopoly power to “harm consumers” and crush competitors to maintain its Windows monopoly and to establish a new monopoly in Web browsers by bundling its Internet Explorer with Windows. On the day the judgment was issued, Microsoft stock began its decline. The decline was hastened by an announcement in February  2000 that the European Commission, which enforces European Union lows on competition and monopolization, had been investigating Microsoft’ …….

          Meanwhile, some government had stopped purchasing Windows and had instead adopted Linux, a free “open source” operating system. Among these were Italy, Germany, Great Britain, France, India, South Korea, China, Brazil and South Africa. Several Companies, including Amazon.com, FedEx, and Google, had moved to Linux. A study by Forrester Research found that 72 percent of companies it surveyed were increasing their use of Linux, and over half of them were planning to replace Windows with Linux.

  

Questions                                            

1.      Identify the behaviors that you think are ethically questionable in the history of Microsoft. Evaluate the ethics of these behaviors.

2.      What characteristics of the market for operating systems do you think created the monopoly market that Microsoft’s operating system enjoyed? Evaluate this market in terms of utilitarianism, rights, and justice (your analysis should make use of the textbook’s discussion of the effects of monopoly markets on the utility of participants in the market, on the moral rights of participants in the market, and on the distribution of benefits and burdens among participants in the market), giving explicit examples from the operating systems industry to illustrate your points.                                                

3.      In your view, should the government have sued Microsoft for violation of the antitrust laws? In your view, was Judge Jackson’s order that Microsoft be broken into two companies fair to Microsoft? Was Judge Kollar-Kotelly’s November 1, 2004 decision fair? Was the April 2004 decision of the European Commission fair to Microsoft? Explain your answers.

4.        Who, if anyone, is harmed by the kind of market that Microsoft’s operating system has enjoyed? Explain your answer. What kind of public policies, if any, should we have to deal with industries like the operating system industry?

Case - 3

Gas or Grouse?

The Pinedale Mesa (sometime called the Pinedale Anticline) is a 40-mile-long mesa extending north and south along the eastern side of Wyoming’s Green River Basin, an area that is famous as the gateway to the hunting, fishing, and hiking treasures of the Bridger-Teton wilderness. The city of Pinedale sits below the mesa, a short distance from its northern end, surrounded by hundreds of recently drilled wells ceaselessly pumping natural gas from the vast pockets that are buried underneath the long mesa. Questar Corporation, an energy company with assets valued at about $4 billion, is the main developer of the gas wells around the city and up on the mesa overlooking the city. Occasionally elk, mule deer, pronghorn antelope, and other wildlife, including the imperiled greater sage grouse, descend from their habitats atop the mesa and gingerly make their way around and between the Questar wells around Pinedale. Not surprisingly, environmentalists are at war with …..

In a preliminary report on the study, the Bureau of Land Management said there was “no conclusive data to indicate quantifiable, adverse effects to deer” from the drilling. The Upper Green River Vslley Coslition, however, sued the bureau for failing to adhere to its own rules when it allowed Questar and other companies to drill on mule deer range on the mesa during winter and for failing to conduct an analysis of the potential impact before granting the permits, as required by the National Environmental Policy Act. As of this writing, the suit has not been resolved.

   Question

1. What are the systemic, corporate, and individual issues raised in this case?

2. How should wildlife species like grouse or deer be valued, and how should that value be balanced against                           

    the economic interests of the of company like Questar?

3. In light of the U.S. economy’s dependence on oil, and in light of the environmental impact of Questar                    drilling operation, is Questar morally obligated to cease its drilling operation on the Pinedale Mesa? Explain

4. What, if anything, should Questar be doing differently?

5. In your view, have the environmental interest groups identified in the case behaved ethically?   `                                      

Case - 4

Becton Dickinson and Needle Sticks

During the 1990s, the AIDS epidemic posed peculiarly acute dilemmas for health workers. After routinely removing an intravenous system, drawing blood, or delivering an injection to an AIDS patient, nurses could easily stick themselves with the needle they were using. “Rarely a day goes by in any large hospital where a needle stick incident is not reported. “ In fact, needlestick injuries accounted for about 80 percent of reported occupational exposure to the AIDS virus among health care workers.² It was conservatively estimated in 1991 that about 64 health care workers were infected with the AIDS virus each year as a result of needlestick injuries.³

AIDS was not the only risk posed by needlestick injuries. ……

         Continuing to find itself locked out of the market by Becton Dickinson’s contracts with Premier and Novation, Retractable sued Premier, Novation and Becton Dickinson in federal court alleging that they violated antitrust laws and harmed consumers and numerous health care workers by using the GPO system to monopolize the safety needle market.¹⁹ In 2003, Premier and Novation settled with Retractable out of court, agreeing to henceforth allow its member hospitals to purchase Retractable’s safety syringes when they wanted. In 2004, Becton Dickinson also settled out of court, agreeing to pay Retractable $ 100 million in compensation for the damage Becton Dickinson inflicted on Retractable. During the 6 years that Becton Dickinson’s contracts prevented Retractable and other manufacturers from selling their safety needles to hospitals and clinics, thousands of health workers continued to be infected by needlesticks each year.

            

     Questions    

1.      In your judgment, did Becton Dickinson have an obligation to provide the safety syringe in all its sizes in 1991? Explain your position, using the materials from this chapter and the principles of utilitarianism, rights, justice, and caring.

2.      Should manufacturers be held liable for failing to market all the products for which they hold exclusive patents when someone’s injury would have been avoided if they had marketed those products? Explain your answer. 

3.      In your judgment, who was morally responsible for Maryann Rockwood’s accidental needlestick: Maryann Rockwood? The clinic that employed her? The government agencies that merely issued guidelines? Becton Dickinson?

4.      Evaluate the ethics of Becton Dickinson’s use of the GPO system in the late 1990s. Are the GPO’s monopolies? Are they ethical? Explain.