CASE 1
COMPANY BACKGROUND
The Bronson Insurance Group was originally founded in 1900 in Auxvasse, Missouri, by James Bronson. The Bronson Group owns a variety of companies that underwrite personal and commercial insurance policies. Annual sales of the Bronson Group are $100 million. In recent years, the company has suffered operating losses. In 1990, the company was heavily invested in computer hardware and software. One of the problems the Bronson Group faced (as well as many insurance companies) was a conflict …
would require underwriters to go to a single keyboard to request paper copies of files. The cost of a microfilm system was $5 million.
1. What do you recommend? Should the company implement one of the new technologies? Why or why not?
2. An operations analyst suggested that company employees shared a “dump on the clerks”
mentality. Explain.
CASE 2
Harrison T. Wenk III is 43, married, and has two children, ages 10 and 14. He has a master’s degree in education and teachers junior high school music in a small town in Ohio. Harrison’s father passed away two months ago, leaving his only child an …interested in finding out as much as possible about operations. Harrison believes he owes it to his wife and children to fairly evaluate this opportunity.
1. Prepare a worksheet of operations activities that Harrison should inquire about this summer.
2. If you were Harrison, what would you do? Why?
CASE 3
Trust them with knee-jerk reactions," said Vikram Koshy, CEO, Delta Software India, as he looked at the quarterly report of Top Line Securities, a well-known equity research firm. The firm had announced a downgrade of Delta, a company listed both on Indian bourses and the NASDAQ. The reason? "One out of every six development …
nd the US and strike alliances with firms in Europe- and also Japan-as part of developing new products for global markets."
1. Should benching be a matter of concern at Delta?
2. What are the risks involved in moving from a project-centric mode to a mix of projects and products?
CASE 4
The war on drugs is an expensive battle, as a great deal of resources go into catching those who buy or sell illegal drugs on the black market, prosecuting them in court, and housing them in jail. These costs seem particularly exorbitant when dealing with the drug marijuana, as it is widely used, and is likely no more harmful than currently legal drugs such as tobacco and alcohol. There's another cost to the war on drugs, however, which is the revenue lost by governments who cannot collect taxes on illegal drugs. In a recent study for the Fraser Institute, Canada, Economist Stephen T. Easton attempted to calculate how much tax revenue the government of the country could gain by …care and education expect to see the idea raised in Parliament sooner rather than later.
1. Plot the demand schedule and draw the demand curve for the data given for Marijuana in the case above.
2. On the basis of the analysis of the case above, what is your opinion about legalizing marijuana in
CASE 5
Companies that attend to productivity and growth simultaneously manage cost reductions very differently
from companies that focus on cost cutting alone and they drive …
to Rs 170 at the
end of 1994. Unfortunately, Arvind's deteriorating financial returns over the last few years is also typical
of the Indian textile industry. The top three Indian companies actually showed a decline in their return
ratios in contrast to the international majors. Nike, VF Corp and Coats Viyella showed a growth in their
returns on capital employed of 6.2 per cent, while the ROCE of Grasim and Coats Viyella (India) fell by
almost 2 per cent per annum. Even in absolute returns on assets or on capital employed, Indian companies
fare a lot worse. While Indian textile companies just about cover their WACC, their international rivals
earn about 8 per cent in excess of their cost of capital.
1. Is Indian companies running a risk by not giving attention to cost cutting?
2. Discuss whether Indian Consumer goods industry is growing at the cost of future profitability.
3. Discuss capital and labour productivity in engineering context and pharmaceutical industries in India.
4. Is textile industry in India performing better than its global competitors?
CASE 6
Mr. and Mrs. Sharma went to Woodlands Apparel to buy a shirt. Mr. Sharma did not read the price tag on the piece selected by him. At the counter, while making the payment he asked for the price. Rs. 950 was the answer. Meanwhile, Mrs. Sharma, who was still shopping came back and joined her husband. She was glad that he had selected a nice black shirt for himself. She pointed out that there was a 25% discount on that item. The counter person nodded in agreement. Mr. Sharma was thrilled to hear that “It means the price of this shirt is just Rs. 712. That’s fantastic”, said Mr. Sharma. He decided to buy one more shirt in blue color. In no time, he returned with the second shirt and asked them to be packed. When he received the cash memo for payment, he was astonished to find that he had to pay Rs. 1,900 and Rs. 1,424. Mr. Sharma could hardly reconcile himself to the fact that the counter person had quoted the discounted price which was Rs. 950. The original price printed on the price tag was Rs. 1,266.
1. What should Mr. Sharma have done to avoid the misunderstanding?
2. Discuss the main features involved in this case.
CASE 7
The Benson Hotel, a mid-sized independent property required new leadership. Mike Schwartz,
Vice-president of operations, pondered his next move as he reviewed last month’s financial
statements. The Benson was an eighty-five-room three-star property with a full-service
restaurant, lounge, banquet and health club facilities. The rapidly changing marketplace and
new competition from well-established franchises had made Mike’s job and the Benson’s
position more tenuous. Mike decided to commission a consultant’s report on the property. He
called up his longtime friend Jim Burke, who had worked for major chains across the country
and was now a hospitality consultant.
“Jim, how are you old buddy?” Mike asked.
“I am doing very well Mike. This consulting work has run me off my feet. What can I do for you?”
Jim Asked.
“Well Jim, I need an independent review of the Benson. We’re holding our own but these
franchise guys with their management contracts are really getting aggressive,” Mike said.
“Yes, I know what you mean Mike. I ….
the
actions of a general manager with this type of comportment and still maintain a workable
relationship with its employees. My opinion at this point is that something has to change.”
1. Do you feel it was necessary for Mike to commission a consultant’s report on the Benson? Why
or why not? How would you have approached the situation?
2. Identify and propose solutions for the supervisory challenges in the kitchen and dining areas of Benson Hotel.
CASE 8
The Rainbow Golf resort had something to celebrate. The 120- unit golf resort consisting of villas and
condominiums had recently been “re-branded” from a franchise to an independent property. The new
owner, Ken Okura, was reviewing the present organizational structure of the Rainbow along with the
files of key personnel presently running the operation. During the transition period Ken had recruited his
own team including a Vice-President of operations, Director of sales and ….
• It is difficult to know who to go if someone has a problem with his or her manager. There should
be someone designated as the resort manager so that employees have someone to
communicate with should the need to do so arise.
Ken assembled his new team to map out strategies to address the operational challenges and employee
concerns.
1. Identify and describe four short-term operational strategies Ken should implement immediately
at the Rainbow Golf Resort?
2. Which form of top-down communication would be most suitable for the Rainbow Golf Resort to
achieve its objectives?
CASE 9
The Pierre has been able to maximize profitability through a sales program that realigned its sales mix.
The Pierre, a luxury hotel in New York City, experienced high demand and periods of limited availability.
An analysis of the business indicated that gross operating profit was not as much as it could be because
groups were occupying rooms at discounted rates during peak periods of the year. As a result, new track
rate business (nondiscounted) was often turned away.
It was calculated that The Pierre sells out for at least 100 days a year. During these dates the hotel could
command rack rate. Group business was then targeted for the shoulder and softer time periods. Based
on historic patterns of business, a limitation was placed on the …
nd in the city as well as for the
past five years of hotel occupancy, and keeping tight tabs on room sales, yield, and revenue per
available room (REVPAR).
1. Would this kind of plan work for any sort of hotel chain?
2. Does this type of strategy helps in increasing the revenues of the hotel.
CASE 10
The climate dimensions described relates to a specific management strategy.
Clarity:
?? Dana Corporation has a corporate policy that, in part, says “The people who know best how the
job should be done are the ones doing it.”
Commitment:
• Boston’s New England Securities Corporation issues T-shirts to its employees with the slogan
“See it, Do it, Own it.”
• To develop a shared vision, United Technologies Corporation says:
?? Talk honestly and directly to employees about their performance;
?? Give people the information they need to do the job;
?? Let employees influence their own performance objectives;
?? Walk around-be visible;
?? Listen to others before evaluating their ideas;
?? Demonstrate high performance standards in your own behavior;
?? Let people know your long-term direction.
Standards:
• The quality of written reports increased after the CEO of Winter Gardens Salad Company stamps
“Read by Harry” on the report before sending it back to employees.
• Supervisors at the Mirage Treasure Island …
and free
dinner coupons to the spouses or significant others of the employees.
1. How does the organizational climate in a hotel translate into total satisfaction of guests?
2. What can managers do to ensure that such a climate is being created in his or her operations?
CASE 11
THE EU’S LAGGING COMPETITIVENESS
In a report produced for the European Commission, published in November 1998, it was argued that
the EU lags behind the USA and Japan on most measures of international competitiveness. Gross
domestic product per capita, sometimes used as an indicator of international competitiveness at the
country level, was 33 per cent lower in the EU as a whole than in the USA and 13 per cent lower
than in Japan. The EU’s poor record in creating employment was singled out for particular criticism.
As this appeared to apply across the board in most industrial sectors, it suggested that the EU’s poor
performance related to the business environment in general and, in particular, to the inflexibility of
Europe’s labour markets for goods and services. A shortage of risk …
1. Is gross domestic product per capita a useful indicator of International competitiveness in the EU?
2. Is it fair to point the blame for the EU’s poor international competitiveness at inflexible labour
markets, regulated goods and services markets, and a general lack of competition? What
alternative explanations might be suggested?
CASE 12
PERU
Peru is located on the west coast of South America. It is the third largest nation of the continent (after
Brazil and Argentina), and covers almost 500,000 square miles (about 14 per cent of the size of the
United States). The land has enormous contrasts, with a desert (drier than the Sahara), the towering
snow-capped Andes mountains, sparkling grass-covered plateaus, and thick rain forests. Peru has
approximately 27 million people, of which about 20 per cent live in Lima, the capital. More Indians
(one half of the population) live in Peru than in any other country in the western hemisphere. The
ancestors of Peru’s Indians were the famous Incas, who built a great empire. The rest of the
population is mixed and a small percentage is white. The economy depends heavily on agriculture,
fishing, mining, and services. GDP is approximately $115 billion and per capita income in recent
years has been around $4,300. In recent years the economy has gained some relative strength and
multinationals are now beginning to consider investing in the country. One of these potential
investors is a large New York based that is considering a $25 million loan to the owner of a Peruvian
fishing fleet. The owner wants to refurbish the fleet and add one more ship. During the 1970s, the
Peruvian government nationalised a number of industries and factories and began running them for
the profit of the state. In most cases, these state-run ventures became disasters. In the late 1970s, the
fishing fleet owner was given back his ships and are getting old and he needs an influx of capital to
make repairs and add new technology. As he explained it to the NEW YORK banker: “fishing is no
longer just un art. There is a great deal of technology involved. And to keep costs low and be
competitive on the world market , you have to have the latest equipment for both locating as well
as catching and then loading and unloading the fish.”Having reviewed the fleet owner’ operation, the
large multinational bank believes that the loan is justified. The financial institution is concerned ,
however , that the Peruvian government might step in during the next couple of years and again
take over the business . If this were to happen, it might take an additional decade, for the loan to be
repaid. If the government were to allow the fleet owner to operate the fleet the way he has over the
last decade, the loan could be rapid within seven years. Right now, the bank is deciding on the
specific terms of the agreement. Once these have been worked out , either a loan officer will fly
down to lima and close the deal or the owner will be asked to come to NEW YORK for the signing.
Whichever approach is used, the bank realize that final adjustments in the agreement will have
to be made on the spot. Therefore, if the bank sends a representative to Lima, the individual will have
to the authority to commit the bank to specific terms. These final matters should be worked out within
the next ten days.
1. What are some current issues Facing Peru? What is the climate for doing business in Peru today?
2. Would the bank be better off negotiating the loan in New York or in Lima? Why?
CASE 13
Which Company Is Transnational?
Four senior executives of companies operating in many countries speaks:
COMPANY A
We are transnational company. We sell our products in over 80 countries, and we manufacturer in 14
countries. Our overseas subsidiaries manage our business in their respective countries. They have
complete responsibility for their country operations including strategy formulation. Most of the key
executives in our subsidiaries are host-country nationals, although we still rely on home-country
persons for the CEO and often the CFO (chief financial officer) slots. Recently, we have divided the
world regions and the United States. Each of the world regions reports to our world trade
organization, which is responsible for all of our business ….
low
income to lower middle, or from lower middle to upper middle, or from upper middle to high income
we commit our best effort to expand our positions, or, if we don’t have a positions, to establish a
position. Since our objective is to achieve an undisputed leadership position in our industry, we
simply cannot afford not to be in every growing market in the world.
We have always had a European CEO, and this will probably not change. The executives in this
company from Europe tend to serve all over the world, whereas the executives from the United States
and Japan serve only in their home countries. They are very able and valuable executives, but they
lack the necessary perspective of the world required for the top jobs here at headquarters.
1. Which company is transnational?
2. What are the attributes of a transnational company?
3. What is the difference between a domestic, international, multinational, global, and transnational
company?
4. At what stage of development are your company and your line of business today? Where should you be.
CASE 14
Parker Pen Co. (A)
INTRODUCTION
The meeting at sunny Palm Beach concluded with nary a whimper of dissent from its participants.
After years of being run as a completely decentralized company whose managers in all corners of the
world enjoyed a high degree of flexibility, Parker Pen Co., Janesville, Wisconsin, was forced to
reexamine itself. The company had enjoyed decade after decade of success until the early 1980s. By
this time, Parker faced strong competitive threats and a deteriorating internal situation. A new
management team was bought in from outside the company – an unprecedented step for what had
been until then an essentially family-run business. At the March 1984 Palm Beach meeting, this new
group of decision makers would outline a course of action that would hopefully set Parker back on a
path to success.
The men behind the new strategy were supremely confident of its chances for success – and with
good reason. Each was recognized as a highly skilled practitioner of international business and their
combined extensive experience gave them an air of invincibility. They had been recruited from larger
companies, had left high-paying, rewarding jobs, and each had come to Janesville with a grand sense
of purpose. For decades, Parker had been a dominant player in the pen industry. In the early 1980s,
hoe-ever, the company had seen its market share dwindle to a mere 6 percent and, in 1982, net
income plunged a whopping 60 percent.
To reverse this decline, Parker recruited James Peterson, an executive vice president at R.L.
Reynolds, as the new president and CEO. Peterson hired Manville Smith as president of the writing
instruments group at Parker Smith, who was born in Ecuador and had a broad international
background, came from 3M where he had been appointed division president at the tender age of 30.
Richard Swart was vice president/marketing of the writing instruments group. He spent 11 years at
the advertising agency BBDO and was an expert on marketing planning and theory. Jack Marks was
head of writing instruments advertising. Marks came to Parker from Gillette, where, among other
things, he assisted in the worldwide marketing of Paper Mate pens. Rounding out the team was Carlos
Del Nero, manager of global marketing planning, who brought with him considerable international
experience at Fisher-Price. Each of these men was convinced that Parker would right itself by
following the plan they unveiled at Palm Beach.
A BRIEF HISTORY OF PARKER PEN
The “Rolls Royce” of the Pen Industry
The Parker name has been identified with pens since 1888 when George S. Parker delighted inksplotched
pen users everywhere by introducing a leakproof fountain model called the Parker Lucky
Curve. Parker Pen would eventually blossom into America’s, if not the world’s, largest and bestknown
pen market. Parker’s products, which …
examined, not the least of which was Parker’s decentralization of global operations.
1. What would you do if you were in James Peterson’s shoes in January 1982?
2. What changes, if any, would you make in Parker’s marketing strategy?
3. Which aspects of Parker’s structure would you discard? Which would you keep?
4. Assume that you are James Peterson and you have just hired a new management team composed
of highly qualified executives from outside companies. You and your new team are convinced
that you have the solution to Parker’s problems but there are many hold overs who disagree with
you. How would you implement your plan? To what extent would you incorporate the views of
Parker management into your plan?
Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Consider the equation Y=f(A,B,C,D,E,F,G), where Y stands for consumption of soft drinks
and D is the variable for cultural elements. How would this equation help a soft-drink
marketer understand demand for soft drinks in global markets?
2. The president of XYZ Manufacturing Company of Buffalo, New York, comes to you with a
license offer from a company in Osaka. In return for sharing the company’s patents and
know-how, the Japanese company will pay a license fee of 5percent of the ex-factory price of
all products sold based on the U.S. Company’s license. The president wants your advice what
would you tell him?
3. Imagine that you are the director of a major international lending institution supported by funds
from member countries. What one area in newly industrialized and developing economics would
be your priority for receiving development aid? Do you suspect that any member country will be
politically opposed to aid in this area? Why or Why not?
4. The principle problem in analyzing different forms of export financing is the distribution of risks
between the exporter and the importer. Analyze the following export financing instruments in this
respect:
(a) Letter of Credit
(b) Cash in advance
(c) Draft
(d) Consignment
(e) Open Account
COMPANY BACKGROUND
The Bronson Insurance Group was originally founded in 1900 in Auxvasse, Missouri, by James Bronson. The Bronson Group owns a variety of companies that underwrite personal and commercial insurance policies. Annual sales of the Bronson Group are $100 million. In recent years, the company has suffered operating losses. In 1990, the company was heavily invested in computer hardware and software. One of the problems the Bronson Group faced (as well as many insurance companies) was a conflict …
would require underwriters to go to a single keyboard to request paper copies of files. The cost of a microfilm system was $5 million.
1. What do you recommend? Should the company implement one of the new technologies? Why or why not?
2. An operations analyst suggested that company employees shared a “dump on the clerks”
mentality. Explain.
CASE 2
Harrison T. Wenk III is 43, married, and has two children, ages 10 and 14. He has a master’s degree in education and teachers junior high school music in a small town in Ohio. Harrison’s father passed away two months ago, leaving his only child an …interested in finding out as much as possible about operations. Harrison believes he owes it to his wife and children to fairly evaluate this opportunity.
1. Prepare a worksheet of operations activities that Harrison should inquire about this summer.
2. If you were Harrison, what would you do? Why?
CASE 3
Trust them with knee-jerk reactions," said Vikram Koshy, CEO, Delta Software India, as he looked at the quarterly report of Top Line Securities, a well-known equity research firm. The firm had announced a downgrade of Delta, a company listed both on Indian bourses and the NASDAQ. The reason? "One out of every six development …
nd the US and strike alliances with firms in Europe- and also Japan-as part of developing new products for global markets."
1. Should benching be a matter of concern at Delta?
2. What are the risks involved in moving from a project-centric mode to a mix of projects and products?
CASE 4
The war on drugs is an expensive battle, as a great deal of resources go into catching those who buy or sell illegal drugs on the black market, prosecuting them in court, and housing them in jail. These costs seem particularly exorbitant when dealing with the drug marijuana, as it is widely used, and is likely no more harmful than currently legal drugs such as tobacco and alcohol. There's another cost to the war on drugs, however, which is the revenue lost by governments who cannot collect taxes on illegal drugs. In a recent study for the Fraser Institute, Canada, Economist Stephen T. Easton attempted to calculate how much tax revenue the government of the country could gain by …care and education expect to see the idea raised in Parliament sooner rather than later.
1. Plot the demand schedule and draw the demand curve for the data given for Marijuana in the case above.
2. On the basis of the analysis of the case above, what is your opinion about legalizing marijuana in
CASE 5
Companies that attend to productivity and growth simultaneously manage cost reductions very differently
from companies that focus on cost cutting alone and they drive …
to Rs 170 at the
end of 1994. Unfortunately, Arvind's deteriorating financial returns over the last few years is also typical
of the Indian textile industry. The top three Indian companies actually showed a decline in their return
ratios in contrast to the international majors. Nike, VF Corp and Coats Viyella showed a growth in their
returns on capital employed of 6.2 per cent, while the ROCE of Grasim and Coats Viyella (India) fell by
almost 2 per cent per annum. Even in absolute returns on assets or on capital employed, Indian companies
fare a lot worse. While Indian textile companies just about cover their WACC, their international rivals
earn about 8 per cent in excess of their cost of capital.
1. Is Indian companies running a risk by not giving attention to cost cutting?
2. Discuss whether Indian Consumer goods industry is growing at the cost of future profitability.
3. Discuss capital and labour productivity in engineering context and pharmaceutical industries in India.
4. Is textile industry in India performing better than its global competitors?
CASE 6
Mr. and Mrs. Sharma went to Woodlands Apparel to buy a shirt. Mr. Sharma did not read the price tag on the piece selected by him. At the counter, while making the payment he asked for the price. Rs. 950 was the answer. Meanwhile, Mrs. Sharma, who was still shopping came back and joined her husband. She was glad that he had selected a nice black shirt for himself. She pointed out that there was a 25% discount on that item. The counter person nodded in agreement. Mr. Sharma was thrilled to hear that “It means the price of this shirt is just Rs. 712. That’s fantastic”, said Mr. Sharma. He decided to buy one more shirt in blue color. In no time, he returned with the second shirt and asked them to be packed. When he received the cash memo for payment, he was astonished to find that he had to pay Rs. 1,900 and Rs. 1,424. Mr. Sharma could hardly reconcile himself to the fact that the counter person had quoted the discounted price which was Rs. 950. The original price printed on the price tag was Rs. 1,266.
1. What should Mr. Sharma have done to avoid the misunderstanding?
2. Discuss the main features involved in this case.
CASE 7
The Benson Hotel, a mid-sized independent property required new leadership. Mike Schwartz,
Vice-president of operations, pondered his next move as he reviewed last month’s financial
statements. The Benson was an eighty-five-room three-star property with a full-service
restaurant, lounge, banquet and health club facilities. The rapidly changing marketplace and
new competition from well-established franchises had made Mike’s job and the Benson’s
position more tenuous. Mike decided to commission a consultant’s report on the property. He
called up his longtime friend Jim Burke, who had worked for major chains across the country
and was now a hospitality consultant.
“Jim, how are you old buddy?” Mike asked.
“I am doing very well Mike. This consulting work has run me off my feet. What can I do for you?”
Jim Asked.
“Well Jim, I need an independent review of the Benson. We’re holding our own but these
franchise guys with their management contracts are really getting aggressive,” Mike said.
“Yes, I know what you mean Mike. I ….
the
actions of a general manager with this type of comportment and still maintain a workable
relationship with its employees. My opinion at this point is that something has to change.”
1. Do you feel it was necessary for Mike to commission a consultant’s report on the Benson? Why
or why not? How would you have approached the situation?
2. Identify and propose solutions for the supervisory challenges in the kitchen and dining areas of Benson Hotel.
CASE 8
The Rainbow Golf resort had something to celebrate. The 120- unit golf resort consisting of villas and
condominiums had recently been “re-branded” from a franchise to an independent property. The new
owner, Ken Okura, was reviewing the present organizational structure of the Rainbow along with the
files of key personnel presently running the operation. During the transition period Ken had recruited his
own team including a Vice-President of operations, Director of sales and ….
• It is difficult to know who to go if someone has a problem with his or her manager. There should
be someone designated as the resort manager so that employees have someone to
communicate with should the need to do so arise.
Ken assembled his new team to map out strategies to address the operational challenges and employee
concerns.
1. Identify and describe four short-term operational strategies Ken should implement immediately
at the Rainbow Golf Resort?
2. Which form of top-down communication would be most suitable for the Rainbow Golf Resort to
achieve its objectives?
CASE 9
The Pierre has been able to maximize profitability through a sales program that realigned its sales mix.
The Pierre, a luxury hotel in New York City, experienced high demand and periods of limited availability.
An analysis of the business indicated that gross operating profit was not as much as it could be because
groups were occupying rooms at discounted rates during peak periods of the year. As a result, new track
rate business (nondiscounted) was often turned away.
It was calculated that The Pierre sells out for at least 100 days a year. During these dates the hotel could
command rack rate. Group business was then targeted for the shoulder and softer time periods. Based
on historic patterns of business, a limitation was placed on the …
nd in the city as well as for the
past five years of hotel occupancy, and keeping tight tabs on room sales, yield, and revenue per
available room (REVPAR).
1. Would this kind of plan work for any sort of hotel chain?
2. Does this type of strategy helps in increasing the revenues of the hotel.
CASE 10
The climate dimensions described relates to a specific management strategy.
Clarity:
?? Dana Corporation has a corporate policy that, in part, says “The people who know best how the
job should be done are the ones doing it.”
Commitment:
• Boston’s New England Securities Corporation issues T-shirts to its employees with the slogan
“See it, Do it, Own it.”
• To develop a shared vision, United Technologies Corporation says:
?? Talk honestly and directly to employees about their performance;
?? Give people the information they need to do the job;
?? Let employees influence their own performance objectives;
?? Walk around-be visible;
?? Listen to others before evaluating their ideas;
?? Demonstrate high performance standards in your own behavior;
?? Let people know your long-term direction.
Standards:
• The quality of written reports increased after the CEO of Winter Gardens Salad Company stamps
“Read by Harry” on the report before sending it back to employees.
• Supervisors at the Mirage Treasure Island …
and free
dinner coupons to the spouses or significant others of the employees.
1. How does the organizational climate in a hotel translate into total satisfaction of guests?
2. What can managers do to ensure that such a climate is being created in his or her operations?
CASE 11
THE EU’S LAGGING COMPETITIVENESS
In a report produced for the European Commission, published in November 1998, it was argued that
the EU lags behind the USA and Japan on most measures of international competitiveness. Gross
domestic product per capita, sometimes used as an indicator of international competitiveness at the
country level, was 33 per cent lower in the EU as a whole than in the USA and 13 per cent lower
than in Japan. The EU’s poor record in creating employment was singled out for particular criticism.
As this appeared to apply across the board in most industrial sectors, it suggested that the EU’s poor
performance related to the business environment in general and, in particular, to the inflexibility of
Europe’s labour markets for goods and services. A shortage of risk …
1. Is gross domestic product per capita a useful indicator of International competitiveness in the EU?
2. Is it fair to point the blame for the EU’s poor international competitiveness at inflexible labour
markets, regulated goods and services markets, and a general lack of competition? What
alternative explanations might be suggested?
CASE 12
PERU
Peru is located on the west coast of South America. It is the third largest nation of the continent (after
Brazil and Argentina), and covers almost 500,000 square miles (about 14 per cent of the size of the
United States). The land has enormous contrasts, with a desert (drier than the Sahara), the towering
snow-capped Andes mountains, sparkling grass-covered plateaus, and thick rain forests. Peru has
approximately 27 million people, of which about 20 per cent live in Lima, the capital. More Indians
(one half of the population) live in Peru than in any other country in the western hemisphere. The
ancestors of Peru’s Indians were the famous Incas, who built a great empire. The rest of the
population is mixed and a small percentage is white. The economy depends heavily on agriculture,
fishing, mining, and services. GDP is approximately $115 billion and per capita income in recent
years has been around $4,300. In recent years the economy has gained some relative strength and
multinationals are now beginning to consider investing in the country. One of these potential
investors is a large New York based that is considering a $25 million loan to the owner of a Peruvian
fishing fleet. The owner wants to refurbish the fleet and add one more ship. During the 1970s, the
Peruvian government nationalised a number of industries and factories and began running them for
the profit of the state. In most cases, these state-run ventures became disasters. In the late 1970s, the
fishing fleet owner was given back his ships and are getting old and he needs an influx of capital to
make repairs and add new technology. As he explained it to the NEW YORK banker: “fishing is no
longer just un art. There is a great deal of technology involved. And to keep costs low and be
competitive on the world market , you have to have the latest equipment for both locating as well
as catching and then loading and unloading the fish.”Having reviewed the fleet owner’ operation, the
large multinational bank believes that the loan is justified. The financial institution is concerned ,
however , that the Peruvian government might step in during the next couple of years and again
take over the business . If this were to happen, it might take an additional decade, for the loan to be
repaid. If the government were to allow the fleet owner to operate the fleet the way he has over the
last decade, the loan could be rapid within seven years. Right now, the bank is deciding on the
specific terms of the agreement. Once these have been worked out , either a loan officer will fly
down to lima and close the deal or the owner will be asked to come to NEW YORK for the signing.
Whichever approach is used, the bank realize that final adjustments in the agreement will have
to be made on the spot. Therefore, if the bank sends a representative to Lima, the individual will have
to the authority to commit the bank to specific terms. These final matters should be worked out within
the next ten days.
1. What are some current issues Facing Peru? What is the climate for doing business in Peru today?
2. Would the bank be better off negotiating the loan in New York or in Lima? Why?
CASE 13
Which Company Is Transnational?
Four senior executives of companies operating in many countries speaks:
COMPANY A
We are transnational company. We sell our products in over 80 countries, and we manufacturer in 14
countries. Our overseas subsidiaries manage our business in their respective countries. They have
complete responsibility for their country operations including strategy formulation. Most of the key
executives in our subsidiaries are host-country nationals, although we still rely on home-country
persons for the CEO and often the CFO (chief financial officer) slots. Recently, we have divided the
world regions and the United States. Each of the world regions reports to our world trade
organization, which is responsible for all of our business ….
low
income to lower middle, or from lower middle to upper middle, or from upper middle to high income
we commit our best effort to expand our positions, or, if we don’t have a positions, to establish a
position. Since our objective is to achieve an undisputed leadership position in our industry, we
simply cannot afford not to be in every growing market in the world.
We have always had a European CEO, and this will probably not change. The executives in this
company from Europe tend to serve all over the world, whereas the executives from the United States
and Japan serve only in their home countries. They are very able and valuable executives, but they
lack the necessary perspective of the world required for the top jobs here at headquarters.
1. Which company is transnational?
2. What are the attributes of a transnational company?
3. What is the difference between a domestic, international, multinational, global, and transnational
company?
4. At what stage of development are your company and your line of business today? Where should you be.
CASE 14
Parker Pen Co. (A)
INTRODUCTION
The meeting at sunny Palm Beach concluded with nary a whimper of dissent from its participants.
After years of being run as a completely decentralized company whose managers in all corners of the
world enjoyed a high degree of flexibility, Parker Pen Co., Janesville, Wisconsin, was forced to
reexamine itself. The company had enjoyed decade after decade of success until the early 1980s. By
this time, Parker faced strong competitive threats and a deteriorating internal situation. A new
management team was bought in from outside the company – an unprecedented step for what had
been until then an essentially family-run business. At the March 1984 Palm Beach meeting, this new
group of decision makers would outline a course of action that would hopefully set Parker back on a
path to success.
The men behind the new strategy were supremely confident of its chances for success – and with
good reason. Each was recognized as a highly skilled practitioner of international business and their
combined extensive experience gave them an air of invincibility. They had been recruited from larger
companies, had left high-paying, rewarding jobs, and each had come to Janesville with a grand sense
of purpose. For decades, Parker had been a dominant player in the pen industry. In the early 1980s,
hoe-ever, the company had seen its market share dwindle to a mere 6 percent and, in 1982, net
income plunged a whopping 60 percent.
To reverse this decline, Parker recruited James Peterson, an executive vice president at R.L.
Reynolds, as the new president and CEO. Peterson hired Manville Smith as president of the writing
instruments group at Parker Smith, who was born in Ecuador and had a broad international
background, came from 3M where he had been appointed division president at the tender age of 30.
Richard Swart was vice president/marketing of the writing instruments group. He spent 11 years at
the advertising agency BBDO and was an expert on marketing planning and theory. Jack Marks was
head of writing instruments advertising. Marks came to Parker from Gillette, where, among other
things, he assisted in the worldwide marketing of Paper Mate pens. Rounding out the team was Carlos
Del Nero, manager of global marketing planning, who brought with him considerable international
experience at Fisher-Price. Each of these men was convinced that Parker would right itself by
following the plan they unveiled at Palm Beach.
A BRIEF HISTORY OF PARKER PEN
The “Rolls Royce” of the Pen Industry
The Parker name has been identified with pens since 1888 when George S. Parker delighted inksplotched
pen users everywhere by introducing a leakproof fountain model called the Parker Lucky
Curve. Parker Pen would eventually blossom into America’s, if not the world’s, largest and bestknown
pen market. Parker’s products, which …
examined, not the least of which was Parker’s decentralization of global operations.
1. What would you do if you were in James Peterson’s shoes in January 1982?
2. What changes, if any, would you make in Parker’s marketing strategy?
3. Which aspects of Parker’s structure would you discard? Which would you keep?
4. Assume that you are James Peterson and you have just hired a new management team composed
of highly qualified executives from outside companies. You and your new team are convinced
that you have the solution to Parker’s problems but there are many hold overs who disagree with
you. How would you implement your plan? To what extent would you incorporate the views of
Parker management into your plan?
Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Consider the equation Y=f(A,B,C,D,E,F,G), where Y stands for consumption of soft drinks
and D is the variable for cultural elements. How would this equation help a soft-drink
marketer understand demand for soft drinks in global markets?
2. The president of XYZ Manufacturing Company of Buffalo, New York, comes to you with a
license offer from a company in Osaka. In return for sharing the company’s patents and
know-how, the Japanese company will pay a license fee of 5percent of the ex-factory price of
all products sold based on the U.S. Company’s license. The president wants your advice what
would you tell him?
3. Imagine that you are the director of a major international lending institution supported by funds
from member countries. What one area in newly industrialized and developing economics would
be your priority for receiving development aid? Do you suspect that any member country will be
politically opposed to aid in this area? Why or Why not?
4. The principle problem in analyzing different forms of export financing is the distribution of risks
between the exporter and the importer. Analyze the following export financing instruments in this
respect:
(a) Letter of Credit
(b) Cash in advance
(c) Draft
(d) Consignment
(e) Open Account
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