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CASE 1:    Spirituality in the workplace

Traditionally, the workplace and spirituality did not mix in America. But things are changing. Andre Delbecq, a Professor in Santa Clara University, a Jesuit institution, said: “There were two things I thought I’d never see in my life, the fall of the Russian empire and God being spoken about in a business school.” Now management books and conferences (including the annual meeting of the Academy of Management) deal with the various aspects of how God can be brought into the organizational environment. To be sure, people who want to integrate spiritual dimensions into the workplace are still considered rebels. But ServiceMaster, a Fortune 500 company with some 75,000 employees, created a spiritual organization culture many years ago. Indeed, Peter Drucker, one of the most prolific writers on management, had high regards for the company that is known for its products such as Terminix (pest control), TruGreen, Merry Maids, and others.
    When people in the US were asked if they believe in God, some 95 per cent said yes. It is in a spiritual context that business people under the daily pressure can discuss their inner feelings. As the baby boomers, now in their 50s, are reaching the top in the organizational life, they begin to wonder what life is all about. They lived through the youth culture of the 1960s and the 1980s that was dominated by greed. They are now questioning the real meaning of life and the ethical dimension of work. Jose Zeilstra, an executive at Price WaterhouseCoopers worked around the world, practicing her Christian principles in different cultures. During her assignment in China, she strongly argued against the practice of giving “very expensive gifts.” As a result the business transaction did not work out. Yet, in the long run, while integrating her personal beliefs with her work, resulted in a very successful career. Academic institutions such a the University of St. Thomas, the University of Denver, and the Harvard Divinity School are following and studying the movement of spirituality. Other schools such as Antioch University in Los Angeles, the University of New Haven in Connecticut, the University of Scranton in Pennsylvania, Santa Clara University in California as well as institutions abroad such as the University of Bath in England and the Indian Centre for Encouraging Excellence in Bombay, India, are conducting research, conferences, or lecture on spirituality.
    The cover story of Business week (November 1, 1999) discussed how company outlets such as Taco Bell, Pizza Hut, and McDonald’s as well as the Xerox Corporation pay attention to spiritual needs of their employees. Some companies claim an increase in productivity, decrease in turnover, and a reduction in fear. A research study by the consulting firm McKinsey & Co. in Australia showed that firms with spiritual programmes showed reduced turnover and improved productivity. Professor Ian I Mitroff at the University of Southern California even stated, “Spirituality could be the ultimate competitive advantage.” But there is also the concern that cult members and groups with a radical perspective could use the workplace for their own aims. Still, employees in companies that integrate spirituality in their work place count on the potential benefits of greater respect for individuals, a more humane treatment of their fellow workers, and an environment that permeates their organization with greater trust.

Question:
1.    What is spirituality?
2.    Is this topic appropriate for businesses?
3.    What are the arguments for and against its inclusion in business?































CASE  2:  Coke’s European Scare

What seemed like an isolated incident of a few bad cans of Coca-Cola at a school in Belgium turned into near disaster for the soft drink giant’s European operations. In June 1999, Coke experienced its worst nightmare—a contamination scare resulting in the recall of 14 million cases of Coke products in five European countries and a huge blow to consumer confidence in the quality and safety of the world’s most recognizable brand.
    After the initial scare in Bornem, Belgium, Coke and Coca-Cola Enterprises (CCE), a bottler 40 per cent owned by Coca-Cola, thought they isolated the problem. Scientists at the CCE bottling plant in Antwerp found that lapses in quality control had led to contaminated carbon dioxide that were used in the bottling of a recent batch of Coke. Company officials saw the contamination as minor problem and they issued an apology to the school.
    At the same time that the problems were being dealt with an Antwerp, things were breaking down at Coke’s Dunkirk, France, bottling plant. In Belsele, 10 miles from Bornem, children and teachers were complaining of illnesses related to drinking Coke products. The vending machines at the school were stocked with Coke from the company’s Dunkirk plant and were thought to be safe. Now a second bottling plant’s practices were being questioned. What initially seemed like an isolated incident was now a crisis.
    Immediately following the second scare, Belgium’s health minister banned the sale of all products produced in the Antwerp and Dunkirk plants. Things got worse when Coke gave an incomplete set of recall codes to a school in Lochristi, Belgium, resulting in 38 children being rushed to the hospital. Immediately following this incident, French officials banned the sale of soft drinks produced in the Dunkirk plant. It was believed that fungicide on wooden shipping pallets were the cause of the illnesses at the Dunkirk plant.
    On June 15, 1999, 11 days after the initial scare in Bornem, Coke finally issued an explanation to the public. Most Europeans were not satisfied. Coca-Cola officials used vague language and often contradicted one another when making statements. France’s health minister, Bernard Kouchner, stated, “That a company so very expert in advertising and marketing should be so poor in communicating on this matter is astonishing”
    After three weeks of testing by both Coke officials and French government scientists, it was concluded that the plants were safe and that there was no immediate threat to the health of consumers. Coke has destroyed all of the pallets in Dunkirk and tightened quality control on co2.
    How could this happen to the company that is revered worldwide for its quality control and the superiority of its products? Coke has spent decades building its reputation overseas and the European market now represent 73 per cent of total profits. While the scare has had some effect on Coke’s profits in Europe, the company is more concerned with damages to its reputation and consumer confidence in its products.
    Many critics say that Coke’s slow response time, insisting that no real problem existed and belated apology have severely damaged the company’s reputation in Europe. Some would disagree and feel that Coke handled the situation as best it could. “I think that Coke acted in a responsible, diligent way,” says John Sitcher, editor of Beverage Digest. “Their first responsibility was to ascertain the facts in a clear and unequivocal way. And as soon as Coke knew what the facts were, they put out a statement to the Belgium people.”
    The character and quality of a company can often be measured by how it responds to adversity. Coca-Cola believes that this crisis has forced the company to re-examine both its marketing and management strategies in Europe. Coke executives in Brussels are predicting that the company will double its European sales in the next decade and that this setback will only make the company stronger. Wall Street analysts seem to agree. Only time will tell.


Question:
1.    What are the management issues in this case?
2.    What did Coke do and what could have been done differently?
What are the key factors that were or should have been considered by management?













CASE  3  Trials and Challenges For Barrett at Intel
Intel Corporation is best known for its processors. The sign “Intel Inside” is familiar to most people using a computer. There is, for example, the Pentium 3 and 4 and the new generation Itanium. For servers and workstations, Intel produces Xeon. The colorful CEO Andy Grove led the company for many years. By 2001,  however, the Chief Executive Officer Craig R. Barrett faces many challenges, including criticism.
    The new strategy of moving into new markets such as information appliances, communications, and Internet services was costly and so far less than successful. In fact, the move beyond its core businesses may have detracted from its core business of computer chips. These new directions resulted in frequent reorganizations resulting in organizational uncertainties for the managers. While some think that the frequent changes were necessary to adapt to new situations and to keep the organization agile, others disagree.
    Barrett’s leadership and his moves into various directions is quite different from Grove’s carefully crafted strategy that focused on chips. Barrett’s personal strengths lie in manufacturing. He invested heavily in research and development. But new products such as the Itanium require several years before they show results, and Barrett has only a few more years before his retirement. Investing in new manufacturing technologies with the aim of achieving virtually automated plants results in the reduction of manufacturing costs of chips. But the PC market is stagnated in the early 21st century and wireless communication and cell phones are becoming important in the market. In the cell phone market, for example, Motorola and Texas Instruments are developing new digital signal processors and Intel would have to work hard to catch up. A key to success of Intel may be whether the company can become an important player in the wireless market. Barrett made a number of costly acquisitions, including Level One Communications. But the question remains if the heavy investments in new technologies will result in profitable businesses. This may determine the legacy of Craig Barrett.
Question:
1.    What is your assessment of Barrett’s performance and his vision for Intel? Is he the right person for the job at Intel?
2.    What are some problems associated with frequent reorganization?
3.    What are the pros and cons for focusing on the distant futures and the heavy investments in new technologies?


CASE: 4   Profiles of Two Visionaries—Bill Gates & Steve Jobs
Two men have their hearts and souls for developing their visions have driven the personal computer revolution. However, the way in which each of these men went about this quest has been different. Steve Jobs and Bill Gates have changed the way the world does business, but the story of their leadership styles is even more compelling than the success spawned Apple and Microsoft.
    Gates and Jobs: The Early Years  Bill Gates started developing his computer skills with his childhood friend Paul Allen at Lakeside School in Seattle. At the age of 14, the two had formed their first computer company. After high school, Allen and Gates left Seattle for Boston. Gates was off to Harvard and Allen began working for Honeywell. After only two years at Harvard, Gates and Allen left Boston for Albuquerque to develop a computer language for the new Altair 8080 personal computer. This computer language would become BASIC and was the foundation for Microsoft, which was created as a partnership in 1975.
    After five years in New Mexico, Microsoft relocated to Bellevue, Washington in 1980 with BASIC and two other computer languages (COBOL and FORTRAN) in its arsenal. Later that year IBM began developing its first PC and was in need of an operating system. Microsoft developed the Microsoft Disk Operating System (MS-DOS) for IBM while two other companies created competing systems. Gates’ determination and persuasion of other software firms to develop programs for MS-DOS made it the default IBM platform.
    As Microsoft became more successful, Gates realized that he needed help managing Microsoft. His enthusiasm, vision, and hard work were the driving force behind the company’s growth, but he recognized the need for professional management. Gates brought in another one of his friends from Harvard, Steve Ballmer. Ballmer had worked for Proctor & Gamble after graduating from Harvard and was pursuing his MBA at Stanford University. Gates persuaded Ballmer to leave school and join Microsoft. Over the years, Ballmer has become an indispensable asset to both Gates and Microsoft. In 1983, Gates continued to show his brilliance by hiring Jon Shirley who brought order to Microsoft and streamlined the organizational structure, while Ballmer served as an advisor and sounding board for Gates. Microsoft continued to grow and prosper in the 1990s and Gates became the richest man in the world with Microsoft dominating the operating systems market and the office suite software market with Microsoft Office.
    Gates recognized that his role was to be the visionary of the company, but that he needed professional managers to run the operations of Microsoft. He combined his unyielding determination and passion with a well-structured management team to make Microsoft the giant it is today.
    The other visionary, Steve Jobs, and his friend Steve Wosniak started Apple Computer in Job’s garage in Los Altos, California in 1976. In contrast to Bill Gates, Jobs and Wosniak were hardware experts and started with the vision for a personal computer that was affordable and easy to use. When Microsoft offered BASIC to Apple, Jobs immediately dismissed the idea on the basis that he and Wosniak could create their own version of BASIC in a weekend. This was typical Jobs: decisive and almost maniacal at times. However, Jobs eventually agreed to license Microsoft’s BASIC while pursuing his vision of developing a more usable and friendly interface for the PC.
    Jobs, seen by some as the anti-Gates, is a trailblazer and a creator as opposed to Gates who is more of a consolidator of industry standards. Jobs, whose goal was to change the world with his computers, was very demanding of his employees. Jobs was not a hard-core computer programmer, but he sold the idea of the personal computer to the public. He changed the direction of Apple by developing the Macintosh (Mac) that used a new Graphical User Interface (GUI) that introduced the world to the mouse and on-screen icons. With all this success, there was a major problem developing at Apple: Steve Jobs was overconfident and did not see Gates and Microsoft as a serious threat to Apple.
    Soon after the release of the Macintosh computer, Jobs asked Microsoft to develop software for the Mac operating system. Gates obliged and proceeded to launch a project copying and improving Apple’s user interface. The result of this venture was what became Microsoft Windows.
     Jobs’ cocky attitude and the lack of management skills contributed to Apple’s problems. He never bothered to develop budgets and neglected his relationship with his employees. Wosniak left Apple due to differences with Jobs. In 1985, John Scully, formerly CEO of PepsiCo, was hired to replace Steve Jobs as president and CEO of Apple Computers. Differences between Scully and Jobs developed which eventually resulted in the dismissal of Jobs.
Microsoft and Apple at the turn of the Century: An Industry Giant and a Revitalized Leader      With the success of Windows, the Office application suite, the Internet Explorer, Microsoft has become a household name and Bill Gates has been hailed as a business genius. The fact that Microsoft’s competitors, the press, and the US Justice Department have called Microsoft a monopoly reinforces Gates’s determination to succeed. Some people even questioned whether Microsoft can survive the Justice Department’s decision. But Bill Gates has shown that he is the master of adapting to changing market conditions and technologies.
    In the 1990s, Apple went in the opposite direction. The outdated operating system and falling market share eventually led to a decrease in software development for the Mac. Something needed to be done. In 1998 Steve Jobs returned to Apple as the “interim” CEO. His vision, once again, resulted in an innovative product: the iMac. In the 80s he created the simple-to-operate Macintosh to attract people who were using IBM PCs and their clones. Now he developed a simple, stylish, and Internet-friendly computer that added some much-needed excitement to the computer market. Jobs had also changed as a manager and a leader. He had matured and looked to his professional staff for advice and ideas. The Mac is an expression of his creativity and Apple as a whole is an expression of Steve, leading to continuing the success for Apple and a renewed battle between Gates and Jobs.
Gates and Jobs in 2006   Bill Gates, one of the richest men, has also become one of the biggest charitable givers. He and his wife Linda have donated some $31 billion to philanthropic causes. When Bill Gates read the World Development Report by the World Bank, he realized that he could improve the health of people in poor countries by supplying drugs and treatment. The Bill and Melinda Gates Foundation also provides scholarships for students with different backgrounds. While Gates is very much in philanthropy, Microsoft is preparing the new Windows Vista which helps users in enhancing their computing experience.
    Steve Jobs’ career also took some interesting turns. After he was fired by Scully (the person he hired), he started a company called NeXT and Pixar, the firm that created the first computer animated feature film. When Apple got into trouble, Jobs was rehired, doing some amazing things. When he was diagnosed with cancer—which fortunately could be successfully treated—his outlook on life changed. In the 2005 commencement address at Stanford University he said: “Because almost everything—all external expectations, all pride, all fear of embarrassment or failure—these things just fall away in the face of death, leaving only what is truly important.” In 2006, Jobs can look back with exciting new products such as computers and the best selling iPods: the Nano and the Video. Now, the pundits are wondering, what will be Steve’s next innovation?
Question:
1.    Compare and contrast the careers of Bill Gates and Steve Jobs.
2.    Compare and contrast the leadership styles and managerial practices of Gates and Jobs.
3.    What do you think about the future of Microsoft and Apple Computers?
What is the outlook on life of the two computer nerds?

CASE 5:   INFORMATION TECHNOLOGY AT AMERICAN AIRLINES
The information system at American Airlines has become an integral part of the overall strategy to gain a competitive edge in the industry. The extensive use of computers began in the 1950s in payroll and inventory control and extended to customer service. In the early 1960s, American developed the widely known SABRE system (SABRE stands for Semi-Automated Business Research Environment). It is one of the most sophisticated passenger reservation system used by travel agents and customers.
    Shortly after implementing SABRE, American also used the system for other tasks, such as controlling freight shipments, as well as dispatching and tracking flights. When the government deregulated the airline industry in 1978, the information system became an even more important tool for competing against the low-cost airlines whose labour costs were as much as 40 to 50 per cent lower. American Airlines’ strategy was to use the information technology to compete in a variety of ways. One application was to have as many aircrafts seats as possible filled without having many passengers “bumped” through overbooking. Another application was to obtain the proper balance between discount and regular fares. It was estimated that revenues could be increased dramatically by shifting only one per cent of discount fares to the full fare—clearly a competitive advantage in a market where price change occur daily and even hourly. Still another application of the information system was to find the most efficient way to fly in order to reduce fuel cost, which is the second largest expense. Some airplanes have sensors on board to monitor essential equipment; the operational information is sent to the ground station. Maintenance can then be planned effectively and performed more efficiently when the aircraft lands. Still another application of the computer was to determine the most profitable routes. The complexity of scheduling over 13,000 pilots and flight attendants on 1300 daily flights is horrendous. The high cost of overtime can put an airline at a competitive disadvantage.
    Robert L Crandall, the former chairman and president of American Airlines, thinks that information systems are the key for success. He stated: “We have taken what was once a basic reservation system and built it into an integrated information system that drives our corporate strategy as much as it is driven by that strategy.” While American Airlines has been the industry leader in the use of information technology, competition developed. The 1992 program of the European Community (EC, now the European Union or EU) was designed to eliminate trade and many political barriers. The European airline industry also became deregulated than engaging in mergers, some airlines are now integrated into a network linking selected carriers together. An illustration of the cooperation among airlines involves the two computer reservation systems called Galileo and Amadeus. Thus, American Airlines—with a strategy of expanding in the European market, the largest market in the industrialized world—has ample competition. Recently, the five biggest US Airlines (Continental, Delta, Northeast, United Airlines, and now also American Airlines) developed a common website called Orbitz.com (www.orbitz.com), which could also affect SABRE.
    Technology that may have given once a competitive advantage to a company may, in time, become obsolete unless it adapts to new demands and develops new applications. Max Hopper, the architect of the SABRE system, suggests that old models are no longer sufficient. Those who can use the available tools and modify them will gain a competitive edge. The trend is away from stand-alone applications to platforms that facilitate new approaches to problem solving and decision making. SABRE is not only a reservation system, but also a system for inventory control, making flight plans, and scheduling flight crews. Other data-basses were added for car rentals, hotel reservations, and theatre shows. SABRE has become an electronic travel supermarket.
Questions:
1.    Discuss the evolving use of information technology at American Airlines?
2.    Should American Airlines expand its position in Europe? What are the arguments for and against this expansion?

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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.”


Questions

1.    What makes George David such a highly regarded manager?
2.    How does David get things done through people?
3.    What evidence can you see of David’s planning and strategizing, organizing, controlling, leading, and developing?
4.    Which managerial competencies does David seem to posses? Does he seem to lack any?


































CASE: 2        BOOM AND BUST IN TELECOMMUNICATIONS

In 1997 Michael O'Dell, the chief scientist at World-Com, which owned the largest network of “Internet backbone” fiber optic cable in the world, stated that data traffic over the Internet was doubling every hundred days. This implied a growth rate of over 1,000 percent a year. O'Dell went on to day that there was not enough fiber optic capacity to go around, and that “demand will far outstrip supply for the foreseeable future.”
Electrified by this potential opportunity, a number companies rushed into the business. These firms included Level 3 Communications, 360 Networks, Global Crossing, Qwest Communications, World-Com, Williams Communications Group, Genuity Inc., and XO Communications. In all cases the strategic plans were remarkably similar: Raise lots of capital, build massive fiber optic networks that straddled the nation (or even the globe), cut prices, and get ready for the rush of business. Managers at these companies believed that surging demand would soon catch up with capacity, resulting in a profit bonanza for those that had the foresight to build out their networks. It was a gold rush, and the first into the field would stake the best claims.
However, there were dissenting voices. As early as October 1998 an Internet researcher at AT&T Labs named Andrew Odlyzko published a paper that de-bunked the assumption that demand for Internet traffic was growing at 1,000 percent a year. Odlyzko’s careful analysis concluded that growth was much slower—only 100 percent a year! Although still large, that growth rate was not nearly large enough to fill the massive flood of fiber optic capacity that was entering the market. Moreover, Odlyzko noted that new technologies were increasing the amount of data that could be sent down existing fibers, reducing the need for new fiber. But with investment money flooding into the market, few paid any attention to him. WorldCom was still using the 1,000 percent figure as late as September 2000.
As it turned out, Odlyzko was right. Capacity rapidly outstripped demand, and by late 2002 less than 3 percent of the fiber that had been laid in the ground was actually being used! While prices slumped, the surge in volume that managers had bet on did not materialize. Unable to service the debt they had taken on to build out their networks, company after company tumbled into bankruptcy—including WorldCom, 360 Networks, XO Communications, Global Crossing. Level 3 and Qwest survived, but their stock price had fallen by 90 percent, and both companies were saddled with massive debts.

Questions

1.    Why did the strategic plans adopted by companies like Level 3, Global Crossing, and 360 Networks fail?
2.    The managers who ran these companies were smart, successful individuals, as were many of the investors who put money into these businesses. How could so many smart people have been so wrong?
3.    What specific decision-making biases do you think were at work in this industry during the late 1990s and early 2000s?
4.    What could the managers running these companies done differently that might have led to a different outcome?





CASE: 3       DOW CHEMICAL

A handful of major players, compete head-to-head around the world in the chemical industry. These companies are Dow Chemical and Du Pont of the United States, Great Britain’s ICI, and the German trio of BASF, Hoechst AG, and Bayer. The barriers to the free flow of chemical products between nations largely disappeared in the 1970s. This, along with the commodity nature of bulk chemicals and a severe recession in the early 1980s, ushered in a prolonged period of intense price competition. In such an environment, the company that wins the competitive race is the one with the lowest costs. Dow Chemical was long among the cost leaders.
For years Dow’s managers insisted that part of the credit belonged to its “matrix” organization. Dow’s organizational matrix had three interacting elements: functions (such as R&D, manufacturing, and marketing), businesses (like ethylene, plastics, and pharmaceuticals), and geography (for example, Spain, Germany, and Brazil). Managers’ job titles incorporated all three elements (plastics marketing manager for Spain), and most managers reported to at least two bosses. The plastics marketing manager in Spain might report to both the head of the worldwide plastics business and the head of the Spanish operations. The intent of the matrix was to make Dow operations responsive to both local market needs and corporate objectives. Thus the plastics business might be charged with minimizing Dow’s global plastics production costs, while the Spanish operation might determine how best to sell plastics in the Spanish market.
When Dow introduced this structure, the results were less than promising: Multiple reporting channels led to confusion and conflict. The many bosses created an unwieldy bureaucracy. The overlapping responsibilities resulted in turf battles and a lack of accountability. Area managers disagreed with managers overseeing business sectors about which plants should be built where. In short, the structure, didn’t work. Instead of abandoning the structure, however, Dow decided to see if it could made more flexible.
Dow’s decision to keep its matrix structure was prompted by its move into the pharmaceuticals business is very different from the bulk chemicals business. In bulk chemicals, the big returns come from achieving economies of scale in production. This dictates establishing large plants in key locations from which regional or global markets can be served. But in pharmaceuticals, regulatory and marketing requirements for drugs vary so much from country to country that local needs are far more important than reducing manufacturing costs through scale economies. A high degree of local responsiveness is essential. Dow realized its pharmaceutical business would never thrive if it were managed by the same priorities as its mainstream chemical operations.
Accordingly, instead of abandoning its matrix, Dow decided to make it more flexible to better accommodate the different businesses, each with its own priorities, within a single management system. A small team of senior executives at headquarters helped set the priorities for each type of business. After priorities were identified for each business sector, one of the three elements of the matrix—function, business, or geographic area—was given primary authority in decision making. Which element took the lead varied according to the type of decision and the market or location in which the company was competing. Such flexibility that all employees understand what was occurring in the rest of the matrix. Although this may seem confusing, for years Dow claimed this flexible system worked well and credited much of its success to the quality of the decisions it facilitated.
By the mid-1990s, however, Dow had refocused its business on the chemicals industry, divesting itself of its pharmaceutical activities where the company’s performance had been unsatisfactory. Reflecting the change in corporate strategy, in 1995 Dow decided to abandon its matrix structure in favor of a more streamlined structure based on global product divisions. The matrix structure was just too complex and costly to manage in the intense competitive environment of the time, particularly given the company’s renewed focus on its commodity chemicals where competitive advantage often went to the low-cost producer. As Dow’s then-CEO put it in a 1999 interview, “We were an organization that was matrixed and depended on teamwork, but there was no one in charge. When things went well, we didn’t know whom to reward; and when things went poorly, we didn’t know whom to blame. So we created a global divisional structure and cut out layers of management. There used to be eleven layers of management between me and the lowest-level employees; now there are five.


Questions
1.    Why did Dow Chemical first adopt a matrix structure? What benefits did it hope to derive from this structure?
2.    What problems emerged with this structure? How did Dow try to deal with them? In retrospect, do you think those solutions were effective?
3.    Why did Dow change its structure again in the mid-1990s? What was Dow trying to achieve this time? Do you think the current structure makes sense given the industry in which Dow operates and the strategy of the firm? Why?
































CASE: 4       REBRANDING MCJOBS

As with most fast-food restaurant chains, McDonald’s needs more people to fill jobs in its vast empire. Yet McDonald’s executives are finding that recruiting is a tough sell. The industry is taking a beating from an increasingly health-conscious society and the popular film Supersize Me. Equally troublesome is a further decline in the already dreary image of employment in a fast-food restaurant. It doesn’t help that McJob, a slang term closely connected to McDonald’s, was recently added to both Merriam-Webster’s Collegiate Dictionary and the Oxford English Dictionary as a legitimate concept meaning a low-paying, low-prestige, dead-end, mindless service job in which the employee’s work is highly regulated.
McDonald’s has tried to shore up its employment image in recent years by improving wages and adding some employee benefits. A few years ago it created the “I’m loving it” campaign, which took aim at a positive image of the golden arches for employees as well as customers. The campaign had some effect, but McDonald’s executives realized that a focused effort was needed to battle the McJob image.
Now McDonald's is fighting back with a “My First” campaign to show the public—and prospective job applicants—that working at McDonald's is a way to start their careers and develop valuable life skills. The campaign’s centerpiece is a television commercial showing successful people from around the world whose first job was at the fast-food restaurant. “Working at McDonald's really helped lay the foundation for my career,” says ten-time Olympic track and field medalist and former McDonald's crew member Carl Lewis, who is featured in the TV ad. “It was the place where I learned the true meaning of excelling in a fast-paced environment and what it means to operate as part of a team.”
Richard Floersch, McDonald's executive vice president of human resources, claims that the company’s top management has deep talent, but the campaign should help to retain current staff and hire new people further down to hierarchy. “It’s a very strong message about how when you start at McDonald's, the opportunities are limitless,” says Floersch. Even the McDonald's application form vividly communicates this message by showing a group of culturally diverse smiling employees and the caption “At McDonald's You Can Go Anywhere!”
McDonald's has also distributed media kits in several countries with factoids debunking the McJob myth. The American documentation points out that McDonald's CEO Jim Skinner began his career working the restaurant’s front lines, as did 40 percent of the top 50 members of the worldwide management team, 70 percent of all restaurant managers, and 40 percent of all owner/operators. “People do come in with a ‘job’ mentality, but after three months or so, they become evangelists because of the leadership and community spirit that exists in stores,” says David Fairhurst, the vice president for people at McDonald's in the United Kingdom. “For many, it’s not a job, but a career.”
McDonald's also hopes the new campaign will raise employee pride and loyalty, which would motivate the 1.6 million staff members to recruit more friends and acquaintances through word of mouth. “If each employee tells just five people something cool about working at McDonald's, the net effect is huge,” explains McDonald's global chief marketing officer. So far the campaign is having the desired effect. The company’s measure of employee pride has increased by 14 percent, loyalty scores are up by 6 percent, and 90-day employee turnover for hourly staff has dropped by 5 percent.
But McDonald's isn't betting on its new campaign to attract enough new employees. For many years it has been an innovator in recruiting retirees and people with disabilities. The most recent innovation at McDonald's UK, called the Family Contract, allows wives, husbands, grandparents, and children over the age of 16 to swap shifts without notifying management. The arrangement extends to cohabiting partners and same-sex partners. The Family Contract is potentially a recruiting tool because family members can now share the same job and take responsibility for scheduling which family member takes each shift.
Even with these campaigns and human resource changes, some senior McDonald's executives acknowledge that the entry-level positions are not a “lifestyle” job. “Most of the workers we have are students—it’s a complementary job,” says Denis Hennequin, the Paris-based executive vice president for McDonald's Europe.


Questions

1.    Discuss McDonald's current situation from a human resource planning perspective.
2.    Is McDonald's taking the best approach to improving its employer brand? Why or why not? If you were in charge of developing the McDonald's employer brand, what would you do differently?
3.    Would “guerrilla” recruiting tactics help McDonald's attract more applicants? Why or why not? If so, what tactics might be effective?

































CASE: 5       TRANSFORMING REUTERS

London-based Reuters is a venerable company. Established in 1850 and devoted to delivering information around the world by the fastest means available—which in 1850 meant a fleet of 45 carrier pigeons—by the late 1990s the company had developed into one of the largest providers of information in the world. Although Reuters is known best to the public for its independent, unbiased news reporting, 90 percent of Reuters’ revenues are generated by providing information to traders in financial markets. In the 1990s the company used a proprietary computer system and a dedicated telecommunications network to deliver real-time quotes and financial information to Reuters terminals—devices that any self-respecting financial trader could not function without. When Reuters entered the financial data business in the early 1970s, it had 2,400 employees, most of them journalists. By the late 1990s its employee base had swelled to 19,000 most of whom were on the financial and technical side. During this period of heady growth Reuters amassed some 1,000 products, often through acquisitions, such as foreign-language data services, many of which used diverse and sometimes incompatible computer delivery systems.
The late 1990s were the high point for Reuters. Two shocks to Reuters’ business put the company in a tailspin. First came the Internet, which allowed newer companies, such as Thompson Financial Services and Bloomberg, to provide real-time financial information to any computer with an Internet connection. Suddenly Reuters was losing customers to a cheaper and increasingly ubiquitous alternative. The Internet was commoditizing the asset on which Reuters had built its business: information. Then in 2001 the stock market bubble of the 1990s finally broke; thousands of people in financial services lost their jobs; and Reuters lost 18 percent of its contracts for terminals in a single year. Suddenly a company that had always been profitable was losing money.
In 2001 Reuters appointed Tom Glocer as CEO. The first nonjournalist CEO in the company’s history, Glocer, an American in a British-dominated firm, was described as “not part of the old boys’ network.” Glocer had long advocated that Reuters move to an Internet-based delivery system. In 2000 he was put in charge of rolling out such a system across Reuters but met significant resistance. The old proprietory system had worked well, and until 2001 it had been extremely profitable. Many managers were therefore reluctant to move toward a Web-based system that commoditized information and had lower profit margins. They were worried about product cannibalization. Glocer’s message was that if the company didn’t roll out a Web-based system, Reuters’ customers would defect in droves. In 2001 his prediction seemed to be coming true.
Once in charge, Glocer again pushed an Internet-based system, but he quickly recognized that Reuters’ problems ran deeper. In 2002, the company registered its first annual loss in history, £480 million, and Glocer described the business as “fighting for survival.” Realizing that dramatic action was needed, in February 2003 Glocer launched a three-year strategic and organizational transformation program called Fast Forward. It was designed to return Reuters to profitability by streamlining its product offering, prioritizing what the company focused on, and changing its culture. The first part of the program was an announcement that 3,000 employees (nearly 20 percent of the workforce) would be laid off.
To change its culture Reuters added an element to its Fast Forward program known as “Living Fast,” which defined key values such as passionate and urgent working, accountability, and commitment to customer service and team. A two-day conference of 140 managers, selected for their positions of influence and business understanding rather than their seniority, launched the program. At the end of the two days the managers collectively pledged to buy half a million shares in the company, which at the time were trading at all-time low.


After the conference the managers were fired up; but going back to their regular jobs, they found it difficult to convey that sense of urgency, confidence, and passion to their employees. This led to the development of a follow-up conference: a one-day event that included all company employees. Following a video message from Glocer and a brief summary of the goals of the program, employees spent the rest of the day in 1,300 cross-functional groups addressing challenges outlined by Glocer and proposing concrete solutions. Each group chose one of “Tom’s challenges” to address. Many employee groups came up with ideas that could be rapidly implemented—and were. More generally, the employees asked for greater clarity in product offerings, less bureaucracy, and more accountability. With this mandate managers launched a program to rationalize the product line and streamline the company’s management structure. In 2003 the company had 1,300 products. By 2005 Reuters was focusing on 50 key strategic products, all delivered over the Web. The early results of these changes were encouraging. By the end of 2004 the company recorded a £380 million profit, and the stock price had more than doubled.


Questions

1.    What technological paradigm shift did Reuters face in the 1990s? How did that paradigm shift change the competitive playing field?
2.    Why was Reuters slow to adopt Internet-based technology?
3.    Why do you think Tom Glocer was picked as CEO? What assets did he bring to the leadership job?
4.    What do you think of Glocer’s attempts to change the strategy and organizational culture at Reuters? Was he on the right track? Would you do things differently?

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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………………



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.
    …………………
    The accountant who had to visit the company’s banker, passed on the papers to you for the required analysis and cost computations.

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.

3.    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.

……………………
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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        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?

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N.B: 1} Attempt all the questions.
        2} All Questions Carries Equal Marks

1.    Explain how the Customer life time value can be calculated and the customer life cycle can be managed effectively?

2.    Explain about the performance of reporting tools and write down the advantages of the same in sales forecasting.


3.    Explain how the response management is effectively used in E-Marketing and compare the closed loop system with the traditional system.

4.    Discuss the necessity of requirement gathering phase during the implementation of CRM.


5.    What are the characteristics of BAT and how it is effectively used for personalization and retention of customers?

6.    What is customer knowledge management (CKM)?


7.    Write a note on successful CRM implementation in Indian Companies.

8.    Explain emerging impact of E-Commerce on CRM.

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Note: Solve any 4 Cases Study’s


CASE: I  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. It has close …
rivals reinvent the industry is like fiddling while Rome burns.” Competitive vitality can no longer be defined by continuous improvement alone.


Question:

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: II  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.
    Virtually all popular websites have those basics down pat. So the third step is to reach out proactively to potential customers and bring them to your site. Many companies have turned to traditional advertising to gain exposure. Television …
for generating interest in a website. The same methods that have worked for some firms have failed for others. One certainty is that as the Internet grows and more people do business online, Internet firms will have to find ever more creative ways to expose customers to their sites and keep their attention once there.









Questions:

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: III  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, …
ll ever do so. He concludes: “This is going to remain a niche offering in a few markets. It’s not going to be a national mainstream offering.” Jupiter Media Metrix analyst Ken Cassar concludes that “The moral of the story is that the ability to build a better mousetrap must be measured against consumers’ willingness to buy it.”
   
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: IV         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…
, the label “Made in Japan” connoted cheap, shoddy, imitation products. Today, for many people, that same label stands for excellence and innovation. Certainly Sony can take much of the credit that transformation. Now the question is whether Sony’s products and marketing efforts can keep pace (or set the pace) in the upcoming age of digital convergence.

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?

CASE: V   Pleasant Company

Samantha Parkington fights for women’s suffrage. Addy Walker escapes from slavery. Kirsten Larson builds a life in the frontier. Characters from feminist novel? No, these plucky heroines are part of The American Girls Collection, a line of historical dolls that are the darlings of 7- to 12 year-olds. Christmas orders piled up so fast at Pleasant Co.—the privately held doll-maker—that company vice presidents had to pack boxes in the warehouse.
    Former president, Pleasant Rowland, who began the company with royalties she received from writing primary school reading books knew her vision had to be broad. Simply launching a me-too doll would have meant failure.
    Before Rowland got her idea she went shopping for dolls for her two nieces. All she found were Barbies that wore spiked heels, drove pink Corvettes, and looked as if they belonged in strip joints. Though industry sources told her she couldn’t sell a mass market doll for over $40—some Barbies cost less than $10—Rowland gambled that boomer parents would pay more for one that was fun and educational.
    Each of Pleasant Co.’s five dolls represents an era of American history. Addy is from the Civil War, and Samantha is described as a “bright Victorian …
The stores are a little girl’s delight. Visitors can purchase dolls, books, and clothing; view a musical revue; and have tea, lunch, or dinner at the Café at American Girl Place. The Chicago store sold $35 million worth of products in 2003.

Question:

1.    Why do consumers pay $84 for a Pleasant Company doll when they can buy other dolls much more cheaply at retail stores?
2.    Considering money, time, cognitive activity, and behavioral effort costs, are Pleasant Company dolls more or less costly than dolls that can be purchased at retail stores?
3.    What recommendations do you have for Pleasant Company to increase sales and profits?

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SECTION I: Solve any 2 Case Studies:

CASE – 1   Toyota Motor Company’s Toyota Technical Training Institute in India
In August 2007, one of the world’s leading automobile manufacturers, Toyota Motor Corporation (TMC), announced that its joint venture in India, Toyota Kirloskar Motor Private Limited (TKM) had set up a technical school called Toyota Technical Training Institute (TTTI), on the outskirts of Bangalore, India. The company said………….
, ulterior motive was ensuring labor loyalty. For the past five years, Toyota India has suffered a series of strikes and a lockout, with labor unions protesting in support of better wages and against the dismissal of two of their members. Training youth in-house helps build loyalty for Toyota on the assembly line.

Questions

1.    Describe the probable reasons for the setting up of the TTTI in India. Describe the direct and indirect benefits accruing to TKM by running the TTTI. What, according to you, are the short-term and long-term benefits to the company?
2.    The TTTI trainees were not under any compulsion to join the company (TKM) once they had completed the training program. What are the possible advantage(s) and disadvantage(s) of such a policy?
3.    In your opinion, will similar training initiative be successful in the service sector? Explain in the context of a few service industries that you are familiar with.


CASE – 2   Dealer Training Programs – A New Trend

In India, the corporate training market was pegged at Rs 25 billion (by the end of 2004) and was growing at a rate of 30% annually. Though sales training was not new concept in Indian industry, the trend of extending sales training initiatives to business partners was slowly catching up. The automobile companies were among the first to implement dealership training programs. For example, when Maruti Udyog Limited (Maruti) got the highest rank in customer satisfaction in the JD Power Asia Pacific India customer satisfaction index (CSI) study in 2000, it launched ‘Project Hat Trick’ in consultation with NIS Sparta, a leading training and consulting organization. The project aimed at creating excitement among the ………..
to get a better focus of the market with a suitable sales strategy. It also helped the participants in managing markets for profits and growth.

Questions

1.    Indian companies, which used to focus mainly on sales training programs for their own sales force, are now extending these initiatives to their business partners. What are the major reasons behind the increasing prominence of such initiatives among Indian companies? Also throw light on the advantages and disadvantages of outsourcing the training activities to third parties.
2.    Behind every successful dealer is a smiling and efficient dealer salesperson. Explain the relative importance of dealers in the consumer durables industry over and above those in the FMCG industry. How have consumer durable players improved the performance of their dealers through training?


CASE – 3   Enhancing the Credibility of the Training Function: Involving Line Managers in Sales Training

“Rakesh let me make it clear to you that I can’t allocate any more money for training. I can understand why you want to conduct a training program on coaching skills for the line managers, but I can’t help you in this regard. Not for another year at the very least. In fact, I may have to curtail your training budget for next year as we are going through a lean phase,” said Sanjay Shah (Shah), the CEO of Dirc2U, a direct sales company that dealt in a range of consumer appliances. From his tone, it was clear that he would not entertain any further discussion on this topic.
Rakesh Sharma (Sharma) had been working as the training manager (TM) in Dirc2U for the past three years. During this period he had single-handedly taken care of all the training and development (T&D) activities of the company. Of late, he felt that despite a contemporary training program, the sales force was unable to internalize the training due to lack of support from the line managers in the field. Sharma, who had ample experience in sales and sales force management before getting into the training function, understood the significance of the role of line managers in reinforcing the class room training. His repeated proposals to conduct a training program on coaching for the line managers had fallen on deaf ears. But Sharma knew that he could not let the situation drift any longer. The company had failed to achieve its revenue targets in the previous year. This year too, it was struggling to reach 75 percent of the projections. Since it was difficult to measure the return on investment (ROI) of training, the training budget tended to get the chop during tough times. In such a situation, Sharma could expect some cuts in his budget for the next year. Yet he knew that in tough times there was a greater need for T&D interventions. He also knew that if things got even tougher, and the company decided to cut costs even more, the job of the TM would be one of the first to go.

Sharma was almost certain that he would convince Shah regarding the importance of this specific T&D plan for the line managers. But no amount of persuasion could budge Shah. Sharma’s hope of involving the line managers in making sales training more effective seemed unlikely, at least in the short term. Now he had to find dome other way to make the sales training more effective. He also decided to look at ways to project the importance of training to the top management.

……………Sharma believed that after another three months he would be in a position to put forward a strong case for a training program for managers in front of Shah.


Questions

1.    Discuss the importance of line managers in reinforcing initial classroom training. What are the issues and challenges faced by training managers in partnering with the line managers? How can these be overcome? In your opinion, how did Sharma succeed in forging a partnership with the line managers?

2.    Training is viewed as a cost. Although experts opine that training is needed the most when a company is going through tough times, it is in such situations that training budgets are most likely to be slashed. What are the problems in ascertaining the ROI of training? How can training link training to bottom-line results?













SECTION II: Solve any 4 questions.


1.    If you were going to use online technology to identify training needs for customer service representatives for a web-based clothing company, what steps would you take to ensure that the technology was not threatening to employees?

2.    What could be done to increase the likelihood of transfer of training if the work environment conditions are unfavorable and cannot be changed?

3.    Why would a company use a combination of face-to-face instruction and Web-based training?

4.    What does “managing diversity” mean to you? Assume you are in charge of developing a diversity training program. Who would be involved? What would you include as the content of the program?

5.    Why should companies be interested in helping employees plan their careers? What benefits can companies gain? What are the risks?

6.    Discuss how new technologies are likely to impact training in the future