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Friday 30 September 2016

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                                                                          OM08

                                                            Quality Management

(For CNM Cases)
                                                                     Assignment - I
  Assignment Code: 2016OM08A1                                                     Last Date of Submission: 30th April 2016
                                                                                                       Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
                                                                          Section-A
1          Explain the various steps of Benchmarking
2          Using a schematic diagram, explain the five phases of Strategic Quality Management (SQM)
3          How does the conceptual approach to ISO 14001 differ from ISO 9001?  Which of the elements in ISO    9001 are similar to ISO 14001?
4          Select one chronic quality-related problem in your organization.  In respect to that:
            (a)          Write a brief problem statement.
            (b)          Write a mission statement for a quality improvement team.
            (c)           What data could be collected to show proof of the need to address the problem?
            (d)          What departments should be represented on the team?
            (e)          State one or more symptoms of the problem.
Section-B
Case Study

Hank Kolb was whistling as he walked towards his office, still feeling a bit like a stranger since he had been hired four weeks before as director of quality assurance. All that week he had been away from the plant at a seminar given for quality managers of manufacturing plants by the corporate training department. He was now looking forward to digging into the quality problems at this industrial products plant employing 1200 people.

Kolb poked his head into Mark Hamler’s office, his immediate subordinate as the quality control manager and asked him how things had gone during the past week. Hamler’s muted smile and an “Oh, fine” stopped Kolb in his tracks. H didn’t know Hamler very well and was unsure about pursuing this reply any further. Kolb was still uncertain of how to start building a relationship with him  since Hamler has been passed over for the promotion to Kolb’s job. Hamler’s evaluation form had stated “superb technical knowledge; managerial skills lacking.” Kolb decided to inquire a little further and asked Hamler what had happened; he replied, ‘Oh just another quality snafu. We had a little problem on the Greasex line last week ( a specialized degreasing solvent packed in a spray can for high-technology sector) . A little high pressure was found in some cans on the second shift, but a supervisor vented them so that we could ship them out. We met our delivery schedule!”  Because Kolb was still relatively unfamiliar with the plant and its products, he asked Hamler to elaborate; painfully Hamler continuted.

We’ve been having some trouble with the new filling equipment and some of the cans were pressurized beyond the upper specification limit.

The production rate is still 50% of standard, about 14 cases per shift, and we caught it halfway into the shift. Mac Evans ( the inspector for that line) picked it up, tagged the cases “hold” , and went on about his duties. When he returned at the end of the shift to write up the rejects, Wayne Simmons, first –line supervisor, was by a pallet of finished goods finishing sealing up a carton of the rejected Greasex; the reject “hold” tags had been removed. He told Mac that he had heard about the high pressure from another inspector at coffee break, had come back, taken off the tags, individually turned the cans upside down and vented every one of them in the eight rejected cartons. He told Mac that production planning was really pushing for the stuff and they couldn’t delay by having it sent through the rework area. He told Mac that he would get on the operator to run the equipment right next time. Mac didn’t write it up but came in about three days ago to tell me about it. Oh, it happens every once in a while and I told him to make sure to check with maintenance to make sure the filling machine was adjusted; and I saw Wayne in the hall and told him that he ought to send the stuff through rework next time.

Kolb was a bit dumbfounded at this and didn’t say much – he didn’t know if this was a big deal or not. When he got to his office he though again what Morganthal, general manager, had said when he hired him. He warned Kolb about the ‘lack of quality attitude’ in the plant and said that Kolb ‘ should try and do something about this’. Monganthal further emphasized the quality problems in the plant: “We have to improve out quality; it’s costing us a lot of money. I’m sure of it, but I can’t prove it!. Hank, you have my full support in this matter; you’re in charge of these quality problems. This downward quality-productivity-turnover spiral has to end!”

The incident had happened a week before; the goods were probably out in the customer’s hands by now, and everyone had forgotten about it (or wanted to) . There seemed to be more pressing problems than this for Kolb to spend his time on, but this continued to nag him. He felt that the quality department was being treated as a joke, and he also felt that this was a personal slap from manufacturing. He didn’t want to start a war with the production people, but what could he do?, Kolb was troubled enough to cancel his appointments and spend the morning talking to a few people. After a long and very tactful morning he learned the following information.

1.       From Personnel.  The operator for the filling equipment had just been transferred from shipping two weeks ago. He had no formal training in this job but was being treated by Wayne, on the job, to run the equipment. When Mac had tested the high-pressure cans, the operator was nowhere to be found and had only learned of the rejected material from Wayne after the shift was over.

2.       From plant maintenance:  This particular piece of automated filling equipment had been purchased two years ago for use on another product. It had been switched to the Greasex line six months ago and maintenance completed 12 work orders during the last month for repairs or adjustments on it. The equipment had been adapted by plant maintenance for handling the lower viscosity of Greasex, which it had not originally been designed for. This included designing a special filling head. There was no scheduled preventive maintenance for this equipment, and the parts for the sensitive filling head, replaced three times in the last six months, had to be made at a  nearby machine shop. Non standard downtime was 15 % of actual running time.

3.       From Purchasing:  The plastic nozzle heads for the Greasex can, designed by a vendor for this new product on a rush order, were often found to have slight burrs on the inside rim, and this caused some trouble in fitting the top to the can. An increase in application pressure at the filling head by maintenance adjustment had solved the burr application problem or had at least forced the nozzle head on despite burrs. Purchasing agents said that they were going to talk to the sales representative of the nozzle head supplier about this the next time he came in.

4.       From product design and packaging. The can, designed especially Greasex, had been contoured to allow better gripping by the user. This change, instigated by marketing research, set Greasex apart from the appearance of this competitors and was seen as significant by the designers. There had been no test of the effects of the contoured can on filling speed or filling hydrodynamics from a high pressured filling head. Kolb had a hunch that the new design was acting as a venture ( carrier creating suction) when being filled, but the packaging designer thought that was unlikely.

5.       From the manufacturing manager.  He had heard about the problem; in fact Simmons had made a joke about it, bragging about how he beat his production quota to the other foreman and shift supervisors. The manufacturing manager thought Simmons was one of the ‘best foreman we have…..  he always got his production out”. His promotion papers were actually on the manufacturing manager’s desk when Kolb dropped by. Simmons was being strongly considered for promotion to shift supervisor. The manufacturing manager, under pressure from Morganthal for cost improvements and reduced delivery times, sympathetized with Kolb but said that the rework area would have vented with their pressure gauges what Wayne had done by hand. “But I’ll speak with Wayne about the incident,”. he said.

6      From Marketing.  The introduction of Greasex had been rushed to market to beat competitors, and a   major promotional advertising campaign was under way to increase consumer awareness. A deluge of      orders was swamping the order-taking department and putting Greasex high on the back-order list.      Production had to turn the stuff out; even being a little off spec was tolerable because ‘it would be       better to have it on the shelf than not there at all. Who cares if the label is a little crooked or the stuff      comes out with a little too much pressure.? We need market share now I that high-tech segment.

What bothered Kolb most was the safety issue of the high pressure cans. He had no way of knowing how much of a hazard the high pressure was of if Simmons had vented them enough to effectively reduce the hazard. The data from the can manufacturer, which Hamler had showed him, indicated that the high pressure found by the inspector was not in the danger area. But, again, the inspector had used only a sample testing procedure to reject the eight cases. Even if he could morally accept that there was no product safety hazard, could Kolb make sure that this would never happen again?

Case Questions:

1.            What are the causes of the quality problems on the Greasex line? Use a fish bone diagram to display the                 causes.


2.            What general steps should Hank follow in setting up a continuous improvement program? What              problems will he have to overcome to make it work? 

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CASE-I: MAKING MAGIC THE MULTIPLEX WAY

The middle class of India, a virtual nonexistent entity on Independence, has gradually become more sensible, educated and demanding. The overall growth of the economy has given a tremendous thrust to the middle class, expected to grow by 5 to 10 percent annually. It has grown over 57 million by 2001-02 and is expected to cross 153 million by 2009-10.

The average household income in urban India has grown at a CAGR of 5 per cent over the last decade, not only is this, but the age profile of the INDIAN spenders is also undergoing a sea of changes. NCAER has identified five categories of household on basis of income which is summarised in Table 1 below:

Table 1 Classification of Indian Households on the Basis of Income

                                                Number Of Households [in millions]
                                  1994-95          1999-2000       2006-07
    Very rich                              1                      3                     6
    Consuming                            29                   55                    91
    Climbers                                48                   66                   74            
    Aspirants                                48                  32                    15      
    Destitute                                 35                  24                    13

Table1 reveals the paradigm shift in Indian households over the last decade. The number of effective consumers is expected to exceed 600 millions by 2010.This big bang in consumers in Indian is being seen as the driving force in emergence of various new business, which aim at high consumer tide. Availability of easy financing schemes is another aspect of the story: owinga house, or buying a car or going abroad on a pleasure trip is no more a distant dream to the average Indian consumer. With the consumers’ gradually get …………………….

Posers
1. What lessons can you draw from the above case regarding consumer behavior?

2. Do you think change in consumer perception in middle class has been instrumental in emergence of multiplexes? What can be other reasons?

3. Observe Table 1. Which of the groups, according to you, would have demand for multiplexes?

4. Would law of diminishing marginal utility apply to movie watching? Will this affect the growth rate of multiplexes? Or can it be seen a cause for establishment of multiplexes? Give  argument in support for your contention.

5. Can multiplexes use the concept of consumer surplus for attracting more consumers? How?


CASE II: SUNDER SINGH

Sunder Singh had studied only up to high school. He was 32-years of age, lived alone in a rented room, and worked eight-hour shift at one petrol pump, then went to the other one for another eight-hour shift. He had a girl friend and was planning to marry.

One day when he returned from work, he got a note from his girl friend that she was getting married to someone else and he need not bother her. This was a terrible shock to Sunder Singh and he fell apart. ………………….

QUESTIONS:

1. What does the purchase of a product like Nike mean to Sunder Singh?

2. What does the story say about our society and the impact of marketing on consumer behavior?



CASE-III:  TOYOTA

Of all the slogans kicked around Toyota, the key one is kaizen, which means “continuous improvement” in Japanese. While many other companies strive for dramatic breakthrough, Toyota overtook Ford Motor Company to become the second largest automaker in the world. Ford had been the second largest since 1931.

Toyota simply is tops in quality, production, and efficiency. From its factories pour a wide range of cars, built with unequaled  precision. Toyota turns out luxury sedans with Mercedes-Benz-like quality using one-sixth the labor Mercedes does. The company originated just-in-time production and remains its leading practitioner. ……………….

Questions:

1. In what ways is Toyota’s new-product development system designed to serve customers?

2. In what ways is Toyota’s manufacturing system designed to serve customers?

3. How does Toyota personalize its cars and trucks to meet individual consumer needs?



CASE-IV:  EXPOSURE, ATTENTION, AND COMPREHENSION ON THE INTERNET
The Internet universe literally grows more cluttered by the minute. According to Network Solutions, Inc., which registers the vast majority of Web addresses around the world, about 10,000 new addresses are registered each day. That means by the time you finish reading this case, about 60 new domain names will have been gobbled up. With all the clutter on the Web, how have some firms been able to stand out and attract millions of customers?

First, there are some basics to which online firms must attend. These cost little more than some time and a little  creativity. The first is creating a good site name. The name should be memorable (yahoo.com), easy to spell (ebay.com), and/or descriptive (wine.com—a wine retailer). And, yes, ideally it will have a .com extension. This is the most popular extension for e-commerce, and browsers, as a default, will automatically add a .com onto any address that is typed without extension.

The second priority is to make sure the site comes up near the top of the list on any Web searches. If you use Lycos.com to perform a search for “used books,” you get a list of more than 2.6 million websites. Studies have shown that most people will look only at the top 30 sites on the list, at most. If you are a used-book retailer and you show up as website #1,865,404 on the search list, there is a very good chance you will not attract a lot of business. A 1999 Jupiter Research study reveals that “searching on the Internet” is the most important activity, and Internet users find the information they are looking for by using search engines and Web directories. A good Web designer can write code that matches up well with search engine algorithms and results in a site that ranks high on search lists.

……………………………………………..
Question:
1. Consider the e-mail campaigns discussed in the case. Why do you think these campaigns were successful? Discuss the attention processes that were at work. Do you see any potential drawbacks to this type of marketing?
2. During the 2000 Super Bowl, ABC invited viewers to visit its Enhanced TV website. Fans could play trivia, see replays, participate in polls and chat rooms, and view player statistics. The site received an estimated 1 million hits. Why? Frame your answer in terms of exposure, attention, and comprehension.
3. Think about your own Web surfing patterns. Write down the reasons you visit sites. Which of the marketing strategies discussed in the case do you find most (and least) influential?

CASE: V  PEAPOD ONLINE GROCERY—2003

The online grocery turned out to be a lot tougher than analysts thought a few years ago. Many of the early online grocers, including Webvan, ShopLink, StreamLine, Kosmom, Homeruns, and PDQuick, went bankrupt and out of business. At one time, Webvan had 46 percent of the online grocery business, but it still wasn’t profitable enough to survive. The new business model for online grocers is to be part of an existing brick-and-mortar chain. Large grocery chains, like Safeway and Albertson’s, are experiencing sales growth in their online business but have yet to turn a profit. Jupiter Research estimates that online grocery sales will be over $5 billion by 2007, about 1 percent of all grocery sales, while it expects more than 5 percent of all retail sales to be online by then. A few years ago, optimistic analysts estimated online grocery sales would be 10 to 20 times that by 2005, but it didn’t work out that way.

…………………………………….
Question:
1. What behaviors are involved in online grocery shopping? How does online shopping compare with traditional shopping in terms of behavioral effort?

2. What types of consumers are likely to value online grocery shopping from Peapod?

3. Overall, what do you think about the idea of online grocery shopping? How does it compare with simply eating in restaurants and avoiding grocery shopping and cooking altogether?


CASE: VI   SONY

In just over half-century, Sony Corporation has from a 10-person engineering research group operating out of a bombed-out department store to one of the largest, most complex, and best-known companies in the world. Sony co-founders Masaru Ibuka and Akio Morita met while serving on Japan’s Wartime Research Committee during World War II. After the war, in 1946, the pair got back together and formed Tokyo Telecommunications Engineering Corporation to repair radios and build shortwave radio adapters. The first breakthrough product came in 1950, when the company produced Japan’s first tape recorder, which proved very popular in music schools and in courtrooms as a replacement for stenographers.

…………………………………………..
Question:
1. Identify and discuss some of the cultural meanings for Sony possessed by consumers in your country. Discuss how these cultural meaning were developed and how they influence consumers’ behaviors (and affect and cognition). What is the role of marketing strategies in creating and maintaining (or modifying) these cultural meanings?

2. It is often stated that the world is becoming smaller because today people communicate relatively easily across time and distance. Discuss whether that has been beneficial for Sony. What are some marketing challenges it presents?


3. What do you think about Sony’s tradition of region-specific or nation-specific marketing? Would Sony be better served by working to create a more uniform global image?

Thursday 29 September 2016

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OM03

Project Management

(For CNM Cases)
                                                                     Assignment - I
  Assignment Code: 2016OM03A1                                                      Last Date of Submission: 30th April 2016
                                                                                                       Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
                                                                          Section-A
1          Discuss the uncertainties in demand forecasting. How can one cope with these uncertainties?
2          Describe briefly the aspects of a business environment that need to be monitored as well as the              dimensions along which a firm may appraise its strengths and weaknesses for identifying     investment opportunities.
3          What do you believe is more important for successfully completing a project – the formal project                 management structure or the culture of the parent organization?  Explain.
4          (i)            Explain the role projects play in the strategic management process.
            (ii)           How are projects linked to the strategic plan?
                                                                          Section-B


You work as an analyst in the marketing department for Springfield International (SI).  SI uses a weak matrix to develop new services.  Management has created an extremely competitive organizational culture that places an emphasis upon achieving results above everything else.  One of the project managers that you have been assigned to help has been pressuring you to make his project your number one priority.  He also wants you to expand the scope of your work on his project beyond what your marketing manager believes is necessary or appropriate.  The project manager is widely perceived as a rising star within SI.  Up to now you have been resisting the project manager’s pressure and complying with your marketing manager’s directives.  However, your most recent interchange with the project manager ended by his saying, “I’m not happy with the level of help I am getting from you and I will remember this when I become VP of Marketing.”  How would you respond and why?

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CASE – 1   Your Job and Your Passion—You Can Pursue Both!

The 21st century offers many challenges to every one of us. As more firms go global, as more economies interconnect, and as the Web blasts away boundaries to communication, we become more informed citizens. This interconnectedness means that the organizations you work for will require you to develop both general and specialized knowledge—such as speaking multiple languages, using various software applications, or understanding details of financial transactions. You will have to develop general management skills to foster your ability to be self-reliant and thrive in a changing market-place. And here’s the exciting part: As you build both types of knowledge, you may be able to integrate your growing expertise with the causes or activities you care most ….
dislike, what you know and what you want to learn, what you fear and what you dream. Then try the following exercise.

Questions

1. Create a three-column chart in which the first column lists nonmanagement skills you have. Are you good at travel? Do you know how to build furniture? Are you a whiz at sports statistics? Are you an innovative cook? Do you play video games for hours? In the second column, list the causes or activities about which you are passionate. These may dovetail with the first list, but they might not.

2. Once you have you two columns complete, draw lines between entries that seem compatible. If you are good at building furniture, you might have also listed a concern about families who are homeless. Remember that not all entries will find a match—the idea is to begin finding some connections.

3. In the third column, generate a list of firms or organizations you know about that reflect your interests. If you are good at building furniture, you might be interested working for the Habitat for Humanity organization, or you might find yourself gravitating towards a furniture retailer like Ikea or Ethan Allen. You can do further research on organizations via Internet or business publications.
CASE – 2   Biyani – Pioneering a Retailing Revolution in India

“I use people as hands and legs. I prefer to do thinking around here.”

- Kishore Biyani, CEO & MD, Pantaloon Retail (India) Ltd.

Kishore Biyani (Biyani), CEO& MD of Pantaloon Retail (India) Ltd., planned to have 30 Food Bazaar outlets, 22 outlets in Big Bazaar, 21 Pantaloons outlets, and four seamless malls under the Central logo, by the end of 2005. He also planned to launch at least three businesses every year and had already selected music, footwear and car accessories as his next areas of investments. He was already the top retailer in India followed by Raghu Pillai of RPG. As of 2004, Biyani headed a company that had a turnover of Rs 6,500 million and operated 13 Pantaloon apparel stores, 9 Big Bazaars, 13 Food Bazaars, and 3 seamless malls (Central), one each located in Bangalore, Hyderabad, and Pune.
Biyani’s journey from a person who looked after his family business to India’s top retailer in 1987, when he launched Manz Wear Pvt. Ltd. The company launched one of the first readymade trousers brands – ‘Pantaloon’ – in the country. The company also launched its first jeans brand called ‘Bare’ in 1989. On September 20, 1991, Manz Wear Pvt. Ltd. went public and on September 25, 1992, it changed its name to Pantaloon Fashions (India) Limited (PFIL). ‘John Miller’ was the first formal shirt brand from PFIL.
The company opened its first apparel stores, called ‘Pantaloons’ at Kolkata in August 1997. The stores generated Rs 70 million. Biyani then realized the potential of the Indian market and started to aggressively tap it. Accordingly, Biyani decided to expand into other segments of retailing besides apparel. To reflect this change in focus, the company changed its name to Pantaloon Retail (India) Limited (PRIL) in July 1999 and set itself a target of achieving Rs 10 billion in sales by June 2005. In course of time he launched three other retail formats -- Big Bazaar, Food Bazaar, and Central.
Biyani didn’t believe in copying ideas from western retailers. He was critical of his peers who felt just copied ideas form the west without making any effort to mold them to Indian conditions. He ensured that his store formats such as Big Bazaar, Food Bazaar, and …
about the product. His decision making was quick and devoid of unnecessary delays. Biyani was also a good learner and learned quickly from his mistakes. He planned to improve inventory management through responding effectively to the demands of the customers rather than forecasting them, as he felt that forecasting would pile up the inventory in this dynamic market.

Questions

1. The tremendous success of the ‘Pantaloons’, ‘Big Bazaar’ and ‘Food Bazaar’ retailing formats, easily made PRIL the number one retailer in India by early 2004, in terms of turnover and retail area occupied by its outlets. Explain how Biyani is further planning to consolidate his businesses.

2. “Our striving toward looking at the Indian market differently and strategizing with the evolving customer helped us perform better.” What other qualities of Kishore Biyani do you think were instrumental in making him top retailer of India?






















CASE – 3   The New Frontier for Fresh Foods Supermarkets

Fresh Foods Supermarket is a grocery store chain that was established in the Southeast 20 years ago. The company is now beginning to expand to other regions of the United States. First, the firm opened new stores along the eastern seaboard, gradually working its way up through Maryland and Washington, DC, then through New York and New jersey, and on into Connecticut and Massachusetts. It has yet to reach the northern New England states, but executives have decided to turn their attention to the Southwest, particularly because of the growth of population there.
Vivian Noble, the manager of one of the chain’s most successful stores in the Atlanta area, has been asked to relocate to Phoenix, Arizona, to open and run a new Fresh Foods Supermarket. She has decided to accept the job, but she knows it will be a challenge. As an African American woman, she has faced some prejudice during her career, but she refuses to be stopped by a glass ceiling or any other barrier. She understands that she will be living and working …………………………………………………………………………………………………………
and otherwise assist customers who speak little or no English. Noble believes that she is a pioneer of sorts, guiding Fresh Foods Supermarkets into a new frontier. “The sky is almost blue here,” she says of her new home state. “And there’s no glass ceiling between me and the sky.”



Questions

1. What steps can Vivian Noble take to recruit and develop her new workforce?

2. What other ways can Noble help her company reach out to the community?

3. How will Fresh Foods Supermarkets as whole benefit from successfully moving into this new region of the country?










CASE – 4   The Law Offices of Jeter, Jackson, Guidry, and Boyer

THE EVOLUTION OF THE FIRM

David Jeter and Nate Jackson started a small general law practice in 1992 near Sacramento, California. Prior to that, the two had spent five years in the district attorney’s office after completing their formal schooling. What began as a small partnership—just the two attorneys and a paralegal/assistant—had now grown into a practice that employed more than 27 people in three separated towns. The current staff included 18 attorneys (three of whom have become partners), three paralegals, and six secretaries.
For the first time in the firm’s existence, the partners felt that they were losing control of their overall operation. The firm’s current caseload, number of employees, number of clients, travel requirements, and facilities management needs had grown far beyond anything that the original partners had ever imagined.
Attorney Jeter called a meeting of the partners to discuss the matter. Before the meeting, opinions about the pressing problems of the day and proposed solutions were sought from the entire staff. The meeting resulted in a formal decision to create a new position, general manager of operations. The partners proceeded to compose a job description and job announcement for recruiting purposes.
Highlights and responsibilities of the job description include:
Supervising day-to-day office personnel and operations (phones, meetings, word processing, mail, billings, payroll, general overhead, and maintenance).
Improving customer relations (more expeditious processing of cases and clients).
Expanding the customer base.
Enhancing relations with the local communities.
Managing the annual budget and related incentive programs.
Maintaining annual growth in sales of 10 percent while maintaining or exceeding the current profit margin.

The general manager will provide an annual executive summary to the partners, along with specific action plans for improvement and change. A search …
run the firm would achieve all of its goals. Howser pointed out that people in general are resistant to change. The partners met for drinks later that day and looked at each other with a great sense of uncertainty. Should they ride out the storm as Howser suggested? Had they done the right thing in creating the position and hiring Howser? What had started as a seemingly, wise, logical, and smooth sequence of events had now become a crisis.

Questions

1. Do you agree with Howser’s suggestion to “sit tight and ride out the storm,” or should the partners take some action immediately? If so, what actions specifically?

2. Assume that the creation of the GM—Operation position was a good decision. What leadership style and type of individual would you try to place in this position?

3. Consider your own leadership style. What types of positions and situations should you seek? What types of positions and situation should you seek to avoid? Why?

























CASE – 5   The Grizzly Bear Lodge

Diane and Rudy Conrad own a small lodge outside Yellowstone National Park. Their lodge has 15 rooms that can accommodate up to 40 guests, with some rooms set up for families. Diane and Rudy serve a continental breakfast on weekdays and a full breakfast on weekends, included in the room they charge. Their busy season runs from May through September, but they remain open until Thanksgiving and reopen in April for a short spring season. They currently …
the expansion process. “This is our dream business,” says Rudy. “We’re only at the beginning.”



Questions

1. Discuss how Rudy and Diane can use feedforward, concurrent, and feedback controls both now and in future at the Grizzly Bear Lodge to ensure their guests’ satisfaction.

2. What might be some of the fundamental budgetary considerations the Conrads would have as they plan the expansion of their logic?

3. Describe how the Conrads could use market controls plans and implement their expansion.

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Note:

Solve ANY THREE case studies.


CASE I
A CASE OF ALPHA TELENET LIMITED

Alpha Telecom Ltd., a part of Alpha Group was established in 1976 by its visionary Chairman and Managing Director, A. S. Verma. The company started with manufacturing of Electronic Push Button Telephones (EPBT) and Cordless phones in 1985 in Allahabad. On July 7, 1995 Alpha Tele-Ventures Limited was incorporated. A mobile service called 'Web-Tel' was launched in Kochin, which eventually expanded its operations in Andhra Pradesh in 1996.

Till 1994, fixed telephone services were provided by Department of Telecommunications (DoT) which had a monopoly in this business. This was regarded as self-defeating because DoT was a regulator as well as a competitor. With increasing pressure for privatisation, the government agreed to give license to private operators. Finally in December 1996, the bill of privatisation of fixed telephone services was passed. The New Telecom Policy (NTP) with its targets for improving tele-density was an ambitious policy. The NTP planned to achieve a tele-density (number of telephones per 100 people) of 7 by the year 2005 and 15 by the year 2010, which translated into 130 mn lines. The policy also planned an investment of Rs. 4000 billion by the year 2010. The above factors combined with the fact that the domestic long distance telephony was open to private players, led to considerable demand for the company's products. But to get the tenders from Ministry of Telecommunication, Government of India, a license fee was to be paid over a period of 15 years and the viability of telecom projects was also affected by the guidelines that required private operators to earmark at least 10% of their telephone lines for villages. The operating companies did not like the idea of having to pay for the maintenance of lines that might not be used most of the times. The license fee of Maharashtra state was minimum at Rs.643 crores. Thus, Alpha Telenet, a pioneer in every field wanted to avail this opportunity and started the survey for extending the services in Pune. Their marketing survey team provided the statistics of existing customers of DoT, the waiting list of DoT, potential of users for successive years and so on.

Alpha Telenet Ltd. (ATL) decided to start their fixed line telephone operations in technical collaboration with Telecom Italia at Pune in Maharashtra. Initially, they received permission for installing their exchanges covering 0.5 km. of radius which was too small with respect to the cost involved and thus difficult to achieve lucrative returns. After struggling for a year, they finally got permission to set up exchanges covering 1 km. of radius. They set up their exchanges in potential areas in the city. Another problem was that the consumer's mindset fixated was with DoT and they were not ready to accept the services of Alpha Telenet Ltd. This was due to opposite tariff rates for household consumers. Consumers did not rely on ATL as they were private players. ATL initially had attracted the customers from the areas where the waiting line for DoT connections was high. Further, they had provided the connections with wireless CDMA receivers for only Rs. 3000 (movable within the area of 5 km radius) though its actual cost was Rs.15,000. The connection between exchanges by optical fibre ensured high quality of voice and data transmission, which was later to be shifted to the conventional copper wires for consumer connections. The company made the connection using Ring Topology stay connected even in case of line disturbances.
They also installed a Submarine Optical Fibre Cable to Singapore with an 8.4 Tbps (terabits per second) capacity providing high-class worldwide connectivity. Alpha Telenet installed the latest Digital Switches from Tiemens and other devices, which were fully compatible with the equipment of other telecom providers in India. The company installed a digital Geographical Information System (GIS) for network surveillance. A 24-hr Internal Network Management System for technical support and infrastructure maintenance were also installed with a dedicated round-the-clock toll-free call centre to ensure prompt services.
In 1997, Alpha Telenet Ltd. obtained a license for providing fixed-line services in Maharashtra state circle and formed a joint venture with Behrin Telecom, Alpha BT, for providing VSAT services. On June 4, 1998 they started the first private fixed-line services launched in Pune in the Maharashtra circle and thereby ending fixed-:-line services monopoly of DoT (now TSNL). Alpha entered into a license agreement with DoT in 2002 to provide international long distance services in India and became the first private telecommunications service provider. The company also launched fixed line services in the states of Goa, Uttar Pradesh, Gujarat and Delhi.
With the start of basic telephony services in the .state of Maharashtra, residents of the area and others felt a great sense of breaking away from the old and traditional government monopoly. The kind of ill-treatment of customers and also the red-tapism and bureaucracy which prevailed earlier, was about to end. It was observed that no private telecom company wanted to start their operations in less profitable areas like Bihar and other eastern states .
. The tariff plans of the TSNL and Alpha Telenet Ltd. were opposite to each other. TSNLS tariff structure was upwards i.e., price per unit increase with number of calls and vice versa for Alpha Telenet. This was the beginning of the entry of private players in the sector.

1 .     Give a critical analysis of the privatisation of telecom sector in India.
2.    Highlight the secrets of success of Alpha Telenet Ltd. in terms of technological advancements and service~ provided.

CASE II
GEARING• FOR GROWTH
Premier Differential Gears Pvt. Ltd. (PDGL) was formed in the year 1991 near Noida in the state of Uttar Pradesh (India). The company was established to cater to the ever¬growing needs of the differential gear market for cars, jeeps, trucks, and tractors. It was established under the aegis of the parent company called Premier Gears Pvt. Ltd. which in turn was established in the year 1962 at Noida. The parent company was engaged in the manufacturing of automobile transmission gears. With a modest start in 1961, it had never looked back and by 2006, it became the largest manufacturer of automobile transmission gears in the country. The parent company had employee strength of 2,500 trained and dedicated employees and was producing a range of over 1,000 gears. Premier Gears Pvt. Ltd. was making gears for virtually every major brand of truck, car, jeep and tractor. In 2006, the group company comprised of three firms namely, Premier Gears Pvt. Ltd. (manufacturing Transmission gears, Gearbox assemblies, Laser marking machines, and Material handling equipments), Premier Differential Gears Pvt. Ltd. (manufacturing differential gears) and Elve Corporation (a government recognized export house).
PDGL was manufacturing a wide range of Crown Wheel and Pinions, Bevel Gears, Bevel Pinions, and Spider Kit Assemblies. The installed capacity was 20,000 sets per month. PDGLs focus on quality, fast product development and customer service had enabled it to become an OEM supplier to many car and tractor companies in India, the EU, and Asia. Almost 75% of the total production was exported to a number of countries like Germany, Russia, USA, China, Japan, South Mrica, etc. The domestic OEM and replacement market accounted for the remaining 25% of the company's sales and in a short span of time, the company had become one of the major players in the Indian replacement market. The use of latest technology and comprehensive quality control systems at PDGL go a long way to ensure that customers get exactly what they want.

PDGL was using world class Gleason machines in its manufacturing programme. The raw material for manufacturing gears was in the form of forgings, which were procured from various parts of the country for manufacturing crown wheels and pinions. These forgings were subjected to turning followed by drilling. The drilled crowns and pinions were taken for tapping, which were then rimmed. After this, the teeth cutting procedure was applied which was called broaching. The broached units were then heat-treated. Heat treatment was very critical in producing gears having short tolerance levels. To meet this end, the company had two rotary furnaces and one state-of-the-art Continuous Gas Carburizing Furnace (CGCF) from Aichelin ALD of Austria to heat-treat its products. After the heat treatment, a number of intermediate processes like short blasting, phosphating, lapping were performed which resulted into the finished product, ready for putting company marks to avoid imitation/forgery. The company had developed a state-of-the-art 70-watt ND¬YAG laser-marking machine in collaboration with Quantum Laser (UK), which was used for marking on its produces. Laser marking was environment-friendly and was applied without any force or contact and thus the material was not subjected to any stress. The marked products were" manually pushed onto a conveyer for packing and dispatching. All the above have enabled the company to meet international standards and to produce world¬class gears with the highest performance standards.
The upstream portion of the supply chain at PDGL included a number of forgers located at "geographically dispersed locations in various parts of the country. These forgers were supplying the forgings to PDGL, which were then used in manufacturing the differential gears. All of the raw material was routed to the POGL works through road transport and"" due to large distances, transportation costs were a major issue in increasing the efficiency of this upstream portion of the supply chain. The forgings were supplied according to the drawings and dimensions set by design engineers at the company. The company indeed tried some local suppliers to cope up with the increasing transportation costs but the results on quality front wet satisfactory. To serve this end, the company was planning to develop some local suppliers. It had planned to provide them support in the areas of procuring good material for producing forgings, procuring good quality machines and" training their workforce in the required technical know-how. This was considered as an investment by the company to reduce its inbound transportation costs. To meet the small lot requirements of the forgings, the company was also contemplating to share the truckloads with the parent company. This was feasible because of the geographical proximity of the parent company, which was situated at a distance of less than 15 kms, the similar nature of raw material and same suppliers supplying to both the units.
The internal supply chain at PDGL comprised of various processing stations/lines" through which the forgings were transformed into finished differential gears. The movement of the work-in-progress between various stations was semi-automatic in which the workers manually placed the goods on trolleys/carts. Even the finished units were manually placed on a conveyer; which needed to be pushed to send the units to the packing section. There was a risk of units being damaged in this process. To minimize this risk, the company was planning to have automatic systems for moving the material from one place to another. It was decided to have hydraulic lifts, cranes, electronic escalators and the likes for progression of material from forging to packing. The packing material was stored on first floor as and when it arrived, with the help of casual laborers, which was inefficient and also involved a: risk of some• casualty.
The downstream portion of the supply chain at PDGL included around 10 distributors located evenly in various parts of the country. These distributors were supplying the products of PDGL to number of car, truck, jeep and tractor manufacturers. This portion of the supply chain also included a large replacement market, which accounted for almost half of the company's domestic sales. To meet its distribution needs the company had a panel of transporters, who used to distribute the finished goods. At times, the consignments scheduled for distributors were delayed because of lack of full truckload. One possible solution to this problem was sharing of truckload with the parent company. This was feasible because both the companies shared the same distribution network. The distribution of export consignments was through an intermediary who helped the company in exporting its products to the US, UK, Germany, China, Italy, Turkey, Saudi Arabia, Singapore, Malaysia, Thailand, Indonesia, and Nigeria, amongst other countries. The company's wide export range included replacement gears for internationally renowned automotive manufacturers like Mercedes¬Benz, Mitsubishi, Toyota, Nissan, Clark, Eaton, Fuller, New Process, ZP, Hino, Fuso, Tong Feng, Tata, Leyland, Massey Ferguson, Magirus - Deutz and various others.
There was a shortage of skilled employees. Therefore, the company has recently started training input for all their 400 employees. These training programmes are being conducted in the organization to enhance the skills of the employees and the duration of these programmes were 20 hours per month. On the financial front, the company is continuously moving on the growth track showing better financial results year after year. It has embarked on an ambitious plan to double its turnover by the end of this financial year and to become the world's numero-uno in the automotive gear-manufacturing segment. The current capacity utilization was at a meager 6000 sets against a total installed capacity of 20,000 sets per month.

1.       Comment on the upstream and downstream supply chain portions operating in the company.
2.    How far are the plans to improve the supply chain efficiency in the company feasible?
3.    "Internal supply chain at the company can be characterized by the lack of it". Comment.

CASE III
INTELLIGENT MOVEMENTS: ANYWHERE ANYTIME

Deepak Pai, an engineering graduate and a postgraduate in management from United States, was working in Transport Corporation of India (TCI), the market leader in conventional transportation. He established Speed Cargo as an express cargo distribution company after leaving TCI. Speed Cargo, started with its head office at Hyderabad, as a small cargo specialist in 1989, upgrading itself to desk-to-desk cargo in 1992, cargo management services in 1995 and became a public limited company when it was listed in Bombay Stock Exchange in 1999. The company was maintaining a strong customer base of prestigious companies like Acer, Cadilla, Sony, Panasonic, Titan, Dabur and Hitachi to name a few.

Speed Cargo Limited (SCL), a leader in the express cargo movement pioneered in distribution and supply chain management solutions in India. It differentiated the concept of cargo, from conventional transport industry by offering door pickup, door delivery, assured delivery date and containerized movement. It had a turnover of Rs.3600 million in 2005-06. The company had a strong team of 6400 employees with the fleet of 2000 vehicles on road and an extensive network covering 3,20,000 kilometers per day and a reach of 594 out of 602 districts in India. In addition to this, it was having a well-structured multimodal connectivity and 6lakh square feet mechanized warehousing facility. Warehousing facilities were comprised of the most modern storied system and material handling equipment offering very high level of operational efficiency. The four modes of transport - Road, Air, Sea and Rail were seamlessly integrated, enabling SCL to effortlessly reach anytime anywhere.

The international wing of SCL took care of the SAARC countries and Asia Pacific region covering 220 countries with a specialized India-centric perspective. The company had gone online by connecting 90 percent of its offices to provide web-centric solutions to its customers.

The company also offered money back guarantee to express cargo services. The services offered were customized for corporate, small and medium enterprises, cluster markets, wholesale markets and individuals. The state-of-the-art technology made things easier for the customers whose cargo could be tracked and traced in the simplest manner, because SCL had an effective tracking system. SCL believed that best of technology enabled best of service, and its outlays on providing the IT edge had always resulted in innovative services and solutions. SCL, in its day-to-day operations, used technologically advanced equipments like Fork Lifters, Hydraulic Trucks, Hand Trolly, Drum Trolly, Rubber Pads cushioning, Taper Rollers to move big crates, color codes for identification to delivery what it promised.

Between 1989, when company was born, and 1995, SCL started a unique value added service called Cash-On-Delivery for the advantage of its customers. SCL introduced Call Free Number for the first time in the logistics industry in India. To establish largest network in air and to facilitate faster delivery of shipments, SCL entered into a tie-up with Indian Airlines in 1996; The Company introduced the concept of 3rd party logistics and later started offering complete logistics and supply chain solutions in 1997. The courier service Suvidha later rechristened as Zipp was launched in 1998. The company entered into a tie¬up with Bhutan and Maldives Postal Departments to expand its operations to SAARC countries in 1999. The Speed Cargo Development Center was set up at Pune in India for training of its employees in the same year.

An exclusive cargo train in association with Indian Railways between Mumbai and Kolkata was launched in 2001. Based on a survey conducted by Frost and Sullivan, SCL was conferred the Voice of Customer Award for being the best logistics company in 2003. After simplifying the internal process for faster and better communication, and a smarter way to work, SCL set up its corporate office at Singapore in 2003 to create an international hub with an aim to reach out to the world. The company introduced a mechanized racking system in the automated warehouse at Panvel (Maharastra) in 2004.

SCL was sensitive to the avenues where it could contribute to building a better society. Displaying continuous social responsibility, SCL associated itself with several community development programs and contributed generously to many social causes. SCL was the first to build makeshift houses for 400 families who were affected during a massive earthquake in Bhuj district of Gujarat in India during January 2001. They reached the devastated village the same day to provide food, clothes, medication and water to the affected people.

In 2003, SCL accepted to develop one of the government schools located at Banjara Hills in Hyderabad, and built a building with basic facilities like classrooms, staff rooms and toilets, and provided furniture for students and staff. The housekeeping and security of the school, which was now having 1100 students, was also taken care of by the company. After Tsunami, one of the worst natural disasters that struck South East Asia in December 2004 leaving over 10 lakh people dead and over 4 million displaced, SCL was on the rescue scene as it brought in food, water, clothing, medication, a team of doctors and cooks, and provided the affected people with essential utensils. After rehabilitating the people in Nagapattnam and Cuddalore, it took up the development of a high school in Nagore where 500 students came in from the Tsunami affected families. SCL also actively participated in Kargil contributions and other rescue and rehabilitation works in India.

LOOKING AHEAD

SCL believed that in the age of convergence, it had kept pace with time with its infrastructure, people and technological capabilities for moving cargo to its destination on time, by making intelligent movements in air and sea, as well as on road and rail. The company had experience of handling wide range of materials including confidential papers related to University examination and sensitive goods like polio drops and life-saving medicines. In view of the strengths of its competitors such as DHL, Safexpress and Blue Dart, the company had enhanced services with a greater focus on cargo management and customer satisfaction with the new operations backed by better strategic planning. To achieve its aim, SCL had strategically tied-up with Jubli Commercials, an lATA accredited freight forwarder, which started its operations as Air Cargo Agent.
The company was confident that it was set to become 24 x 7 one-stop solution provider for all freight forwarding services including customs clearance for international cargo. SCL having 40 percent share in express distribution business was developing a huge centralized warehouse on 22 acres of land at Nagpur in India. The centralized warehouse, which was about to be commissioned, was designed as a major hub or express distribution center for 200 smaller hubs as its spokes catering to the needs of its customers across India. SCL believed that it is a concept, a vision and an idea ahead of its time, which looked at a global perspective and was constantly reinventing itself in delivering the future of logistics.


Questions

1.    What made SCL a leader in the logistics industry?
2.    Discuss the strategies adopted by SCL for its survival in the competitive scenario.
3.    Comment on the contributions of SCL to society.
4.    What steps the company should take to globalize its network reach?
Discuss the strategies adopted by SCL for expansion.


CASE IV

LOGISTICS OUTSOURCING

Company Profile
Indian Steels Limited (ISL) is a Rs. 6000 crore company established in the year 1986. The company envisaged being a continuously growing top class company to deliver superior quality and cost effective products for infrastructure development. With major customers being from Public Sector Undertakings, the company has established itself well and is said to be considering its expansion plan and proposed merger with another steel making giant in the country.

In 1996, owing to the cut throat competition in the emerging dynamic global markets, ISL emphasized on both effectiveness and efficiency. The company strongly believed in focusing on its core competency (i.e. manufacturing of steel) and outsourcing the rest to its reliable partners. Outsourcing of its outbound logistics was one such move in this direction. ISL out sourced its stockyards and other warehousing services to a third party called Consignment Agent, who was selected on an annual basis through a process of competitive bidding. The CA was responsible for the entire distribution of the products within the geographical limits of the allotted market segment and was paid by the company according to the loads of transaction (measured in metric tonnes) dealt by him. The company also believed in maintaining long-term relationships with the suppliers as well as the buyers. It always prioritized the needs of its regular and important customers over others and this worked out to be a win-win strategy. The case brings out the model of outsourcing logistics the company has adapted for the enhancement of its supply chain competency and thus leveraging more on its core competency which led to increased productivity.

Indian Steels Limited (ISL) is a Rs. 6000 crore company established in the' year 1986. The company envisaged being a continuously growing top class company to deliver superior quality and cost effective products for infrastructure development. The company performed with a mission to attain 7 million ton liquid steel capacity through technological up-gradation, operational efficiency arid expansion; to produce steel with international standards of cost and quality; and to meet the aspirations of the stakeholders. The production started in the year 1988 and initially, it manufactured Angles, Pig Irons) Beams and Wire Rods that were mainly used for constructing roads) dams and bridges. These products were mainly supplied to Public Sector Undertakings such as Railways, Public Works Department (PWD) Central Public Works Department (CPWD) Rashtriya Setu Nigam Limited, Audyogik Kendra Vikas Nigam Ltd. and various foundry units. The company had its headquarters at Raipur with three stockyards (a kind of warehouse with a huge land to store the products).

The company has established itself well and is said to be considering its expansion plan and proposed merger with another steel making giant in the country. The company was awarded ISO 9001, ISO 14001 and ISO 18001 certifications. The temperature in the plant premises is reportedly about 6°C lesser than that of the township, thanks to the greenery being maintained therein.

Logistics Outsourcing

Outbound logistics which basically connects the source of supply with the sources of demand with an objective of bridging the gap between the market demand and capabilities of the supply sources was always a problem for companies operating in this industry. Consisting of components like warehousing network, transportation network) inventory control system and supporting information systems outbound logistics was always playing a key role in making the right product available at the right place, at the right time at the least possible cost. In 1996 owing to the cut throat competition in the emerging dynamic global markets, ISL emphasized on both effectiveness and efficiency. The company strongly believed in focusing on its core competency (Le. manufacturing of steel) and outsourcing the rest to its reliable partners. Outsourcing of its outbound logistics was one such move in this direction.

Recognizing the growing demand for its products from the big, diversified and geographically¬dispersed customers, the company started expanding the number of warehousing stockyards. From a humble beginning, the company today has 26 stockyards; most of them are outsourced. Each of the outsourced stockyards was managed by a third party, which the company referred to as Consignment Agent (hereafter referred to as CA) in the area. The CA was selected on an annual basis through competitive bidding process. The performance of CA was closely monitored by a company representative (full time employee of ISL working in the site of CA). The CA was responsible for the entire distribution of the products within the geographical limits of the allotted market segment and Was paid by the company according to the loads of transaction (measured in metric tonnes) dealt by him. Based on their sales turnover CAs were trifurcated into A, Band C categories. The CAs with a monthly turnover of Rs. 150-200 crore fell under A category) whereas those with Rs. 100 - 150 crore were B and less than Rs. 100 \ crore were C category.

In addition to the company representative) a team of marketing division operated in the town where, the site of CA was located. This department was responsible or estimating the future demand, translating it into orders and sending to the manufacturing plant. Material dispatch was done using either one or a combination of the two modes: Rail, Road. While using rail as the mode of transportation, the company had a choice to book a Normal Rake (a full train with about 35 wagons, each wagon with an approximate capacity of 60 tonnes) or a Jumbo Rake (a full train of about 52 wagons, each wagon with an approximate capacity of 60 tonnes). At times, the company was engaging the services of the CONCOR (Container Corporation of India) where a train of 62 to 70 wagons, each wagon with about 26 tonnes capacity was used for transportation. Instead, if the company decided to send the material by road, the company had a choice between Trailor (25-30 tonnes} and Truck (15-20 tonnes). The choice of transportation mode was based on the quantity of dispatch.
As soon as the material was dispatched from the manufacturing plant, the respective CA used to get a Stock Transfer Chalaan electronically through Virtual Private Network, which was developed by a professional software service provider. In-transit, monitoring was generally done with the help of Indian Railways, if the mode was Rail. Otherwise, truck/trailor drivers were contacted through mobile phone. Transit generally took five to six days, providing time for CA to plan for receiving materials. The CA used to utilize this time for arranging material handling devices like heavy cranes and required labour. The material thus unloaded was reaching the warehousing stockyard where CA was responsible for arranging the materials as per the warehousing norms of ISL.
The company broadly classified materials into Long Products and Rounds. Products falling into each category were further classified by their size, shape and utility and the company used a distinct colour code for this purpose. Each subcategory of material had a specific place for downloading. The company used Bin System for this purpose. While downloading the material in stockyard, the company norms insisted that CA arrange for providing Dunnagt Material. This enabled the CA to store material without 1 direct contact with the land surface and thus reduced the probability of material deterioration. Material was stored in the stockyard until an authorized representative of the customer used to come and collect it. While dispatching material to the customer, a Loading Slip was generated against the Delivery Order. The company" also believed in maintaining long-term relationships with the suppliers as well as the buyers. It always prioritized the needs of its regular and important customers over others and this worked out to be a win-win strategy.
Operational problems were majorly because of uncertainties in transportation, fluctuation in supply of electricity and the load bearing capacity of the soil in the stockyard. Some: more problems were encountered whenever there was a change in CA and these were overcome by training the employees of the new CA and keeping the old CA responsible for the: material in his stockyard for six months after the contract as well. Observations reveal that, at times there were situations wherein CAs had to do those things which they were not legally supposed to do (like subcontracting) because of the pressures mounted by political leaders with selfish interests.    
Despite these problems, this model of outsourcing logistics was working out very well for the company. The practices, which were started in the year 1996 have sustained major changes in the environment and are being practiced even in 2006. It has enhanced the supply chain competency of the company by enabling it leverage more on its core competency, which leads to increased productivity.

1.    Analyze the case in view of the logistics outsourcing practices of the ISL.
2.    Discuss the importance of logistics outsourcing with reference to supply chain management.
3.    Suggest strategies for further strengthening the supply chain of ISL.
4.    The participants/students are expected to have a clear understanding of Supply Chain and Logistics Management concepts.
5.    The issues involved in the case are Sales Forecasting, Strategic Sourcing, Selection of Warehousing Service Provider, Transportation Mode and other nuances in Logistics Management.

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Note: Both the Sections are compulsory

Section 1: Solve both the Case Studies (2 * 20 Marks)

Case 1:

Each SAP system has its own history. This history grows over years. New processes and modules get added, the system upgrades to newer releases. Employees come and go and more and more programs emerge that are no longer completely understood by the staff. Some typical problems develop:

……………………
The employees don’t take seriously the time that passes while the computer is showing the sand glass. IT specialists know however that this time, multiplied by the number of users of a system holds a considerable cost saving potential.

Questions:

1.    What is the solution for these problems?






Case 2: A Day in the Life of an SAP Manager: Providing User-Friendly Solutions          

After so many years (dozens of years should I say) in IT I am still surprised to notice how difficult are the relationships between the users and the IT departments. Whatever technology, and how “high” this “tech” is it is strange to see the same behaviors from IT people against this very-difficult-to-control population of users.

……………………
At the end they will have two false impressions:
•    One is that they do a good job since nobody is complaining
•    Second is that the users have no real need for some task simplifications
And the whole company loses thousands of days of productivity that could be used in more interesting tasks.

Questions:

1.    Comment on the relevance of this article in today's times. Cite an example to support your comments.

2.    Write in not more than 500 words your ability to create wealth in the community/company you work in. Wealth may not necessarily be in terms of money. It may refer to your ability to contribute to the wealth of your organization. Write in the context of above article.

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Case 1:
Scripto, Inc. (B)1

At one time, Scripto, Inc., utilized the services of Audits and Surveys, a national marketing research firm, but, owing to budgetary restraints, Scripto eliminated marketing research and channeled its financial resources in other directions. As a result, the company had little of the data it required for important marketing decisions. For example, the company experienced great difficulty in securing comparative data for sales of its products and competitive products in retails outlets.
             Determined not to let the void of data affect the 19¢er, Scripto management decided again to consider using marketing research. While management was in general agreement that marketing research was an essential ingredient in marketing orientation and sales strategy, there were two viewpoints as to the type of marketing research needed. One group believed that market studies and data were most crucial to the success of the ¢er; hence, they favored using the services of marketing-research companies, such as Audits and Surveys or A.C. Nielsen Company. Both Audits and Surveys and Nielsen prepared bimonthly reports measuring sales and movements of products through stores (the former was used by Papermate). The major differences between the two research companies were (1) cost and (2) type of retail outlet sampled. It would cost Scripto $20,000 to use Audits and Surveys and $25,000 to use Nielsen. Audits and Surveys recorded sales and products movement primarily of mass merchandisers (variety stores) and a relatively small sample of drugstores and grocery stores, while Nielsen sampled more drugstores and grocery stores than A and S but a smaller sample of variety stores.
    Another group, however, preferred a different course of action – the use of a marketing research firm that specialized in consumer buying patterns rather than market studies per se. This group contended that consumer research was more instrumental in the future of the 19¢er. Such research was typified by the data generated by the National Consumer Panel of Market Research Corporation of America.
    Decisions were required on (1) whether or not to again use marketing research; (2) if so, the type of marketing research most important for Scripto’s 19¢er, market studies and/or consumer buying patterns; and (3) the relationship between sales and marketing research. Management was especially concerned about the relationship between sales and marketing research.


Case 1 Questions:

What is your position on the three problems that had to be solved by Scripto? Defend your arguments.


Ans.
•    1. Scripto, Inc. By KSOM-10-12
•    2. Company Background• 1923 incorporated as Atlantic Manufacturing Company.• 1946 adopted the Scripto name.• 1969 acquired the Butane Match Corporation of America.• By 1964, decline in market share from 16% to 10% and dropped from second to fifth place in sales volume.• 1964 to 1966, sales again increased by 40%.
•    3. Scripto’s sales strategy• First entered market with 49 cent Graffiti pen, “me-too” product and annual advertising budget was approx. $250,000. But failed.• In 1971, it started developing a fine-line marker to equal Flair in quality and retail for 19 cents.• Scripto’s philosophy behind the pricing strategy was to sell a quality pen for considerably less than the competition.• Although the lower retail price meant less revenue per sale for the merchant and the manufacturer, the key to increasing profits was to increase sales volume.
•    4. Sales to Marketing orientation• In the past, Scripto had placed greatest emphasis on sales. Marketing plan being formed around sales plan. No marketing research and advertising program was greatly curtailed.• But Tokai Seiki management shifted from sales to marketing

•    orientation. Stronger trade support, better trained sales organization and more promotional programs
•    5. Scripto Management• Until late 1950s, Scripto was successful and profitable.• Competitors In the late 1963, Japanese entered the American writing market. And number of American soft-tip pen manufacturers increased.• After 1964, Scripto spent heavily to improve production facilities diversified its investments
•    6. • Resulted in sales increase by 40% in next two years.• In early 1972, Scripto introduced “19cer” fiber-tip pen, with the pricing strategy to sell a quality pen for considerably less than the competition.• All these show the management’s involvement in bust and boom performance of Scripto.







CASE  2:
Holden Electrical Supplies Company

Holden Electrical Supplies Company, Cincinnati, Ohio, manufactured a wide line of electrical equipment used in both home and industry. The sales force called on both electrical wholesalers and industrial buyers with the greater part of their efforts concentrated on industry buyers. The industrial products required considerable technical expertise upon the part of salespeople. Sales offices situated in twenty cities spread over the country had two hundred sales personnel operating out of them. In the past eight years sales volume increased by more than 50 percent, to a level of nearly $150,000,000. The fast rise in sales volume and the accompanying plant expansion created a problem in that more sales personnel were needed to keep up with the new accounts and to make sure the additional plant capacity was used profitably.
    In addition, Holden’s sales recruiting problem was compounded by a noticeable decline in the number of college seniors wanting a selling career. Holden recruiters had observed this at colleges and universities where they went searching for prospective salespeople. Another indication of the increased difficulty in attracting good young people into selling was aggressive recruiting by more and more companies. These factors combined to make the personnel recruiting problem serious for Holden; consequently, management ordered an evaluation of recruiting methods.
     Virtually all Holden salespeople were recruited from twenty-five engineering colleges by district sales managers. Typically, Holden recruiters screened two hundred college seniors to hire ten qualified sales engineers. It was estimated to cost Holden $600 to recruit a candidate. Management believed the college recruiting program was deficient in light of the high cost and the fact that only 5 percent of the candidates interviewed accepted employment with Holden.
    Evaluation of the college recruiting program began with the College Recruiting Division of the company asking district sales managers for their appraisals. Some district managers felt that Holden should discontinue college recruiting for various reasons, including the time required for recruiting, the intense competition, and the candidates’ lack of experience. Other district managers, however, felt the program should continue with a few modifications, such as recruiting college juniors for the summer employment more or less on a trial basis, concentrating on fewer schools, and getting on friendly terms with placement directors and professors.
    Holden’s general sales managers favored abandoning the college recruiting program and believed the company should adopt an active recruiting program utilizing other sources. He reasoned that, while engineering graduates had a fine technical background, their lack of maturity, inability to cope with business-type problems, and their lack of experience precluded an effective contribution to the Holden selling operation.
    The general sales managers felt that the two hundred sales engineers currently working for Holden were an excellent source of new recruits. They knew the requirements for selling the Holden line and were in continual contact with other salespeople. By enlisting the support of the sales force, the general manager foresaw an end to Holden’s difficulty in obtaining sales engineers.
    The president preferred internal recruiting from the nonselling divisions, such as engineering, design, and manufacturing. He claimed that their familiarity with Holden and their proven abilities were important indicators of potential success as sales engineers.
    A complete analysis of Holden’s entire personnel recruiting program was in order, and, regardless of the approach finally decided upon, it was paramount that the company have a continuous program to attract satisfactory people to the sales organization.



Case 2 Questions:

Evaluate Holden’s recruiting program, suggesting whether or not the company should have continued in college recruiting of sales engineers.


CASE 3: Marquette Frozen Foods Company
The Marquette Frozen Foods Company manufactured a wide line of frozen foods sold directly to all types of food stores. The company’s 100 salespeople worked out of thirty-five district sales offices located throughout the United States. Annual sales were nearly $50 million. Although the sales picture was quite favorable, certain recent developments indicated a possible need for redesign of sales territories.
    Sales territories were established using population as the base and were composed of one or more counties, depending on each county’s population. The aim was to assign each salesperson to a territory containing about 1 percent of the country’s total population. Since the total population was approximately 205 million (exclusive of Alaska and Hawaii), an attempt was made to assign each person a territory consisting of about 2,050,000 people. Population statistics were obtained from the U.S. Bureau of the Census and were modified according to local area statistics.
    The method of territory design was illustrated by the Northeast I sales territory, including Maine, New Hampshire, and part of Massachusetts. The Northeast I territory included the following Maine counties, along with their populations;  Aroostook, 95,000; Piscataquis,  16,000;  Penobscot,  125,000;  Androscoggin,  91,000;  Cumberland,  193,000;  Franklin,  22,000;  Hancock,  35,000;  Kennebec,  95,000; Knox,  29,000;  Lincoln,  21,000;  Oxford,  43,000;  Sagadahoc,  23,000;  Somerset, 41,000; Waldo, 23,000;  Washington, 30,000; and York, 112,000. Maine population: 994,000.
    The following New Hampshire counties and their population were included:  Belknap,  32,000;  Carroll,  19,000; Cheshire,  52,000; Coos,  34,000; Grafton,  55,000;  Hillsborough,  224,000; Merrimack,  81,000;  Rockingham,  139,000; Stratford,  70,000;  and Sullivan,  31,000. New Hampshire population: 737,000.
    Finally, the following Massachusetts towns were included to increase the sales territory population to the desired figure (the first six towns listed were in Essex County, while the last two were in Middlesex County); Amesbury, 13,000;  Newburyport,  18,000;  Haverhill,  46,000;  Lawrence, 67,000;  Salem,  41,000;  Marblehead, 21,000;  Tewksbury, 23,000; and Lowell,  95,000.  Massachusetts population: 321,000. Total population in Maine, New Hampshire, and parts of Essex and Middlesex counties in Massachusetts: 2,055,000.
    Analyses of population statistics were made every three years. When warranted by population changes, sales territories were redesigned: however, most changes were minor. The company supplied each salesperson with a detailed map showing the counties in his or her territory, the cities and towns, population, and the exact territorial assignments and to ensure a salesperson’s exclusive rights to a given territory.
    The Marquette sales manager had proposed and received acceptance of this method of determining sales territories several years ago. He favored this procedure because it guaranteed equal territories and similar sales opportunities for all company sales personnel and therefore eliminated an important cause for poor morale. With total population divided evenly, it was easy to compare relative performances of the sales force. Total population divided was an accurate estimate of potential demand, according to the sales manager, because everyone was a potential customer for frozen foods. In addition, he said that the simplicity and economy of this approach made it even more desirable.
    Careful analysis of a number of call reports, however, confirmed the sales manager’s suspicions that many  salespeople were “skimming the cream” or concentrating on the larger and easier-to-sell accounts, neglecting altogether a substantial number of prospects. Consequently, he concluded that territorial coverage was unsatisfactory. He believed that this situation could be remedied by reducing the size of the territories, permitting more intensive coverage.
    The sales managers was aware that there were many reasons why reduction of the size of sales territories was difficult to implement. First, the sales personnel would feel that something was being taken away from them; in some cases they would lose accounts they had cultivated over a long period. The result was a possible morale problem. Second, high costs were involved in redesigning sales territories. Third, there would be a need to hire additional salespeople to cover the new sales territories. Fourth, someone would have to convince the sales force that the changes were in the best interests of the sales staff, the company, and the customers. It would be essential to secure the sales force’s acceptance of the new plan.
    Since substantial problems were associated with reducing the sizes of the sales territories, the Marquette sales manager was still undecided whether to redesign the present sales territories.
Case 3 Questions: Evaluate Marquette’s method of designing the sales territories – strengths and weaknesses. Should the company reduce the size of its territories?

CASE 4:
Alderson Product, Inc.

Alderson Products Inc., a $15 million company, had recently become a wholly owned subsidiary of National Beverage Corp. of Baltimore, Maryland. National had purchased 100 percent of Alderson stock. The acquisition brought with it a number of problems common to such ventures, with the most pressing problems centering around the control of the sales effort.
    Alderson Products, Inc., produced and sold packaging equipment exclusively to the soft drink industry. The company, located in Detroit, was established in 1951 by the
Alderson brothers, Jim and Frank, both of whom had worked for General Motors for several years but who wanted to be in business for themselves. After a five-year search while they were still working at GM, they decided to enter the packaging equipment industry when an opportunity came up to buy out a small bottle capping machine producer. For the first year of operation, Alderson produced only a limited line of bottle capping machinery. However, gradually at first and then more rapidly, the Alderson product line was expanded to include capping machines, decapping machines, bottle lifters, case painters, case rebanding equipment, parts, lubricants, blenders, fillers, water-coolers, carbonators, saturators, packers, decasers, washers, water treatment systems, conveyors, rinser load tables, warmers, water chillers, and refrigeration units. Most of the equipment bearing the Alderson name was manufactured by the company itself. Some equipment was purchased from other makers: the cappers and decappers came from the Zalkin Corp. (France), the bottle washers from Firton Manufacturing (Pennsylvania), rinser and warmers from Southern Tool (Louisiana), water chillers from Dunham Bush (Georgia), and the refrigeration units came from Vilter Manufacturing Company (Wisconsin).
    The products offered by Alderson came in several different sizes to match the various different applications in the soft drink industry. In addition to the new products manufactured or purchased by Alderson, the company sold used equipment and machinery. The company got into used equipment after finding that a large number of its customers were too small to afford new equipment and could not perform extensive maintenance and repairs on their present equipment.
    The market for used equipment grew to the point where it contributed 30 percent of v Alderson’s net sales. Most of the used sales were from rebuilt machinery. Alderson bought the used machinery from bottlers, brought it to Detroit, reconditioned it, and sold it. Other used machinery was sold “as is.” This was machinery that was bought in acceptable operation conditions and required minor modifications or repairs. Usually, the “as is” machinery was transported top the buyer directly from its original location.
    The “rebuilt” phase of the business called for the customer to make a 25 percent of deposit on the order before the particular unit went through the shop. Once in the shop, the equipment was dismantled to its basic components and parts were added as required. The customer ended up with a “like new” machine or piece of equipment. Savings to the customers were typically about 30 percent with a new unit. Alderson’s rebuilt equipment carried a warranty. As an additional service, Alderson tried to maintain an adequate stock of spare parts for older units, even if the original manufacturer no longer made them available. There was some concern among management as to the future of the rebuilt equipment part of the business. About two years ago, the company began experiencing difficulty in acquiring used equipment that could be rebuilt. The supply of older units was dwindling, and competition for the used equipment was forcing prices up considerably. Alderson also found that more and more bottlers were reconditioning their own units. Although it constituted a profitable segment of the overall operation, there was some thought that it might be best for Alderson to get out of the used equipment business and concentrate on its growing business for new machinery and equipment.
    Alderson served only the soft drink industry, despite the suitability of the company’s products and services for other industries, such as the beer or fruit juice producers. No attempt had been made to branch out into the other markets, largely because the Alderson brothers felt they knew the soft drink industry best. The company served primarily local and regional bottlers; however, plans were underway to increase coverage to national and, possibly, international markets. Future expansion plans did not include markets outside the soft drink industry.
    Distribution of Alderson products was through two company salespersons and six manufacturers’ representatives. Both salespersons were paid straight salaries. One salesperson spent about one-fourth of his time appraising and procuring used equipment. The other salesperson spent about one quarter of his time piloting the company airplane. The representatives received a commission for their services, according to the following schedule: 5 percent for the first $50,000, 2.5 percent for the next $50,000 (up to $100,000) and 1 percent for anything over $100,000. This was bases on individual sales. The representatives received a sales commission on any sale in their territory, regardless of whether the company (Alderson) or the representative closed the sale.
    In addition to using the personal selling, Alderson promoted its products through advertising, trade conventions, and direct mail. Alderson advertised in six trade publications, averaging one insertion every two months in each of the journals. The direct mail consisted of a newsletter, “Alderson’s News,” mailed to current and potential customers.
    With the takeover complete, National sent its auditors to Alderson Products for a routine evaluation. Among other things, it soon became apparent that Alderson had been very lax in its sales control efforts. In particular, there was no evidence that a sales budget was used and there had been no attempt at a sales analysis. The sales manager, who had been in his position for two years after four years as a salesperson with Alderson, said there had been no sales budgeting or sales analysis effort for three years prior to his becoming sales manager. He did mention that a sales budget was used for a time before that, but he was unaware of its details. When questioned by the National auditor as to why he had not instituted sales control procedures, the sales manager said he had discussed it with Frank Alderson and they came to the conclusion that the company was moving along very well and there really was no need for tight control. He was, though, on the alert that, should sales results taper off, it might be necessary to have some controls at a future date. The sales manager also pointed out that he was so busy working on a personal basis with the company sales personnel and the sales representatives that he just didn’t have the time for budgets, quotas, sales analysis and “things like that.”



Case 4 Questions:

Was there a need for sales control at Alderson Products, Inc.? Why or why not?
What would have been the components of a good sales control program for Alderson products? Be specific and give your reasons for each element of sales control.