Business Management

04 Jul

CASE – 1  

Harish Bhatt, a very bright and ambitious young executive, was born and raised in Jaipur. He graduated from a local college and married a girl who was his class-mate. Harish then went to Mumbai where he received an M.B.A. He was now in the seventh year with Birla Steel Ltd, which is located in Jaipur.

As part of an extension programme, the Board of Directors of Birla Steel decided to build a new branch plant. Bhatt was selected to be the manager at the new plant. He was also informed that if the new plant is a success he would be promoted to a higher post. The location of the new plant was to be decided by an ad hoc committee of which Bhatt was made the chairman. In the committee’s first meeting Bhatt explained to the members the ideal requirements for the new plant and gave them one month to come up with three choice locations.

When after a month the committee re-met, it recommended the following cities of preference: Gurgaon, Chennai, and Indore. Bhatt thanked the committee members for their fine job and told them he would to study the report in more depth before he made his final decision.

That evening he asked his lovely wife. “Honey, how would you like to move to Gurgaon?” Her answer was quick and sharp. “Heavens no!” she said. “I have lived in Rajasthan all my life and am not at all inclined to move out to Gurgaon—extension to Delhi. That kind of life is not for me.” Bhatt weakly protested by saying that the committee had ranked Gurgaon as the best location for the new plant. The second was Chennai and the third was Indore. His wife thought a moment, then replied, “Well I would consider moving to Indore, but if you insist on Gurgaon, you will have to go by yourself.”

The next day, Bhatt called his committee together and said, “Gentlemen, you should all be commended for doing an excellent job on this report. However, after detailed study, I am convinced that Indore will meet the needs of our new plant better than Gurgaon or Chennai. Therefore, the decision will be to locate the new plant in Indore. Thank you all again for a job well done”


a) Did Bhatt make a personally rational decision?

b) Did he make an organisationally rational decision?


CASE – 2

Sigma Appliances Limited was in the business of trading of various home appliances. For this purpose, the company entered into agency agreement with different leading manufacturers. The agency business was doing well. About ten years back, it was diversified into manufacturing some of the appliances like electric iron press, electric oven, electric heater and other electrical gadgets. For this purpose, the company hired a team of technical personnel led by Khempal who was a diploma holder in Electrical Engineering but had considerable experience in the relevant field. The marketing was looked after by personnel of agency division with the addition of some more hands.

With increased business activities, the company was facing the problem of integrated information system, as this could not be built up since the company graduated from a small-scale level. Whatever information system was developed, it was based on the needs felt rather than based on planning. In order to develop its management information system based on computerised processing, the company decided to recruit an MIS manager and advertisement was put in leading newspaper inviting the applications for the post. After receiving the applications, the company appointed a selection committee consisting of three members—managing director of the company, manager of agency division, and an outside consultant. The committee interviewed applicants and selected Narayanan with three years’ experience in MIS in a large company. Narayanan was very happy on this appointment as he was offered very profitable emoluments.

On one day, Khempal had an informal chat with the Agency Manager (Rajnish), which proceeded this way:

Khempal: I have heard that you have appointed a new manager who will provide us information about how we should do.

Rajnish: I have not appointed him but the management has done this. I was just a spectator in the selection committee meeting. Further, Narayanan will not provide us information about how we should work. Rather he will collect information from us regarding how we are working.

Khempal: I do not see any need for that. We are working alright and management has wasted money in appointing Narayanan. With this money, I could have three more engineers who could have done something meaningful. Well, it is their money. If they want to waste in this manner, what we can do.

The chitchat ended as both departed. After joining the company, Narayanan decided to meet the senior personnel to understand their information need and the information that could be generated from different parts of the organisation. In this process, he met Khempal in his factory office, which was adjacent to the administrative block and the conversation took place as follows:

Narayanan: Good morning sir.

Khempal: Good morning. How do you do?

Narayanan: I am fine sir. Sir, I want to know what information your department needs.

Khempal: If you want to enjoy a cup of tea with me, you are welcome. But if you want to ask such a silly question, I am sorry.

At this Narayanan looked visibly upset and left the factory office saying, “Sir I will meet you later.”


(a) Discuss the nature of problems involved in this case.

(b) What kind of perception was formed by Khempal about the role of MIS manager? What could have been the probable reasons for this?

(c) Advise Narayanan about how he should proceed.

(d) What methods should the chief executive adopt to overcome the problem?


CASE – 3

Ramoji Rao is incharge of a bindery in Vijaywada, which employs fifteen people, five of whom work in the factory. Three of these employees run machines, one supervises and the fifth moves the blank paper and finished print by handcar. This fifth position, which demands on skill other than driving a handcar, needs to be filled, and three applicants have responded.

The first is Mr Matti Anjaiah who is thirty-five, unmarried, and a Navy veteran. Anjaiah has poor work record. During his five years in Vijaywada he has worked only as a seasonal labourer on occasional odd jobs. He drove a forklift in the Navy, while working at Vishakapatanam. He has a strong build, which could help, although the work is generally light.

Mr Nehal Singh, age twenty-two, came to Vijaywada two years back from Punjab. He has done farm labour for many years and assembly-line work for one year. His command of English is poor (but can speak regional language, Telugu, fluently). He resides with his mother and seems certain to remain in the area for some time. After having run farm equipment he should have no trouble steering a handcar.

Mr Vandaveeti Raja is a local boy who finished high school two years ago. Subsequently he got a diploma from a local institute and is currently employed as an assistant in Savani Transport Company, Vijaywada. His character references are excellent. Mr Raja is small, but he seems quick and was track star in high school.


(a) How much consideration should be given to Mr Anjaiah’s poor work record? Should Mr Ramoji Rao check to verify it?

(b) How important is a command of English to the job? How quickly could Mr Nehal Singh learn enough English to be effective?

(c) Should Mr Nehal Singh be passed over because of his status as a recent migrant?

(d) Should Mr Raja get he job? Should his excellent character references be given more weight than his inexperience?

(e) Who should be hired? Why?


CASE – 4

As part of the company management development programme, a group of managers from various functional areas has devoted several class sessions to a study of motivation theory and the relevance of such knowledge to the manager’s responsibility for directing and controlling the operations of the organisation. One of the participants in the programme is Ashok Jain who has been a supervisor in the production department for about a year. During the discussion session, Jain made the observation. “Motivation theory makes sense in general, but there is really no opportunity for me to apply these concepts in my job situation. After all, our shop employees are unionised and have job security and wage scales that are negotiated and are not under my control. The study of motivation concepts has given me some ideas about how to get my children to do their chores and their home work, but it has not given me anything I can use on the job. Furthermore, in a working situation we are all dealing with adults, and it seems to me this reward and punishment thing smacks of personal manipulation that just won’t go over with people.”


1. In what respect is Jain correct in his comment about not having opportunity to apply motivational concept in his job situation?

2. What types of motivators for effective performance may Jain be overlooking?

3. What do you think about his concern that the application of motivational concepts leads to the manipulation of people?


CASE – 5 

For several months, the supervisors of a large corporation have been very dissatisfied with the new division head. Before the arrival of the new division head, the department had functioned as cohesive, effective unit, combining hard work with equal amount of leisure. The new division head has very strong ideas about the type of environment his employees should have. As one supervisor puts it, it resembles a full scale military operation. No longer are employees allowed to place personal belongings on the walls of their offices or have occasional informal gatherings during office hours. The bottom line has become productivity first, with the employees’ feelings being considered as an afterthought. Grass-root employees as well as supervisory personnel are very upset about the changes in structure, and their dissatisfaction is beginning to show up in their performances. Because of the decrease productivity levels, the supervisors have been informed that if they don’t shape up their subordinates, “the axe will fall on several heads”. The frustration and anger in now beginning to come to a full boil and the supervisors have decided to meet to discuss the situation.


1. Identify the leadership style of the division head from the angle of Managerial Grid.

2. From the viewpoint of Theory X and Y, what assumptions did the new head make about the way in which people work most effectively?

Business Management

04 Jul

1. Discuss the various provisions WTO has made for the developing countries? Critically evaluate the impact of WTO on the India.

2. Discuss the present status of technology in India and Indian business organization. Discuss the role of technology in the development of India.

3. Briefly describe the process of formation of company according to the company law? Describe the various modes of winding up of companies.

4. Describe the various approaches to international business. Discuss the reasons why organizations cross borders. Discuss the impact of MNCs on the host country.

5. Explore and explain the cross-culture dimension of international personnel management.

6. Compile stock market data for a few specific countries. Attempt a comparative trend analysis to throw light on nation-specific investment climate.

7. Would you accept the view that economic and non-economic variables interact each other on the domain of business environment? Explain.

8. In what sense, is ‘India going global’? Develop some counter argument to conclude that it is a long way for India to go really global.

Business Management

04 Jul

CASE – 1: Where Do We Go from Here?

As one of the many seminars held to discuss the corporate response of family-owned business to liberalisation and globalisation, the keynote Mr Gurcharan Das concluded his speech by saying, “In the end, I would say that the success of Indian economy would depend on how the Indian industry and business respond to the reform process.”

As the proceedings of the seminar progressed it became clear that there was a difference of opinion in the perception of participants. Those who were supporting the case for letting the family-owned businesses face competition opined that such businesses in India have exhibited financial acumen; its members have generally adopted an austere life style; they have demonstrated an ability to take calculated risks, and an ability to accumulate and manage capital. They have devised unique managerial style and led the creation of the equity cult among Indians. Several of them are low-cost producers.

The participants critical of the role of family business had this is to say: “There has been a tendency to mix up family’s intent with that of businesses managed by them. There is a lack of focus and business strategy. Family businesses have generally adopted a short-term approach to business causing less purposeful investments in specially critical areas such as employee development and product development. Customers and development of marketing skills have been neglected.”

The valedictory session of the Seminar attempted to bring out the issues clearly. It culminated in an agenda for reform by the family businesses. The points highlighted in the agenda are:

1. Indian family-owned business organisations need to professionalise management,

2. They need to curtail the diversified of their business groups and impart a sharper focus to their business activities, and

3. They need to pay greater attention to the development of human capital.


Suppose you were an observer at the seminar. During tea and lunch breaks you had an occasion to meet several people who were skeptical and felt that the reform process was having only a superficial impact on the corporates. Express your opinion that you form about the issues at the seminar.


CASE – 2   A Healthy Dose of Success

Muhammad Majeed represents a typical Indian who has created success out of sheer hard work and commitment through his education and expertise. At the age of 23 years, Majeed, after graduating in pharmacy from Kerala University, went to pursue higher studies in the US. He completed his masters and PhD in industrial chemistry. Armed with high qualifications, he became a research pharmacist and eventually, as most expatriate Indians do, set up his own company, Sabinsa Corporation. Experiencing difficulties with the long-drawn drug approval process of the US Food and Drug Administration and his own dwindling savings, Majeed focussed on ayurvedic products based on natural extracts. He returned to India in 1991 (incidentally, the year when liberalisation started in India) and set up Sami Chemicals and Extracts Ltd, late renamed as Sami Labs Ltd (SLL), Bangalore.

SLL has over three dozen products, and seven US patents. There are 25 European and other country patents pending approval. SLL has four manufacturing units all based in Karnataka. The sales is Rs 44.5 crore and the profit-after-tax is Rs 5.89 crore. It has pioneered specialised products based on Indian herbal extracts relying on the principles of ayurveda. The major thrust is on remedies for cholesterol control, fat reduction, and weight management. As against several Indian companies exporting raw herbs, SLL specialises in value-addition through extractions. The result is encouraging: SLL’s products typically fetch an export price that is more than double the price of raw herbs.

SLL thinks of its business as “manufacturing and selling traditional standardized extracts and nutritional and pharmaceutical fine chemicals”. Sabinsa, its US-based company, secures contracts from the US companies to manufacture certain chemicals in India. Its business plans are quite ambitious. Setting up a product management team, assisting farmers in cultivation of pharmaceutically useful herbs, and international collaborations for developing research-based intellectual property and its commercialisation are some of the strategic actions on the anvil.

SLL looks forward to being a Rs 500-crore company by 2005 when the World Trade Organisation’s patenting regimes comes into force.


How will you define the business of SLL? Comment on the business of SLL and your opinion on the likelihood of its success.


CASE – 3     No Chain, No Gain  

Textile industry is one of the oldest industries in India. Several business houses have their origin in this industry. In the mid-1980s, the powerloom sector in the unorganised sector started hurting badly the interests of the composite textile mills of the sector. Their cost structure, with lower overheads and no duties, was less than half of that of mills for equivalent production. While the powerlooms sold cloth as a commodity, the mills tried to establish their products as brands. The post-liberalisation period has seen a large number of foreign brands enter India. It is in this scenario that the Mayur brand of Rajasthan Spinning and Weaving Mills (RSWM) had to carve out a place for itself.

RSWM is the flagship company of the LNJ Bhilwara group. It has been the largest producer and trader of yarn in the country and caters to the large demands for blended yarns and grey cloth fabric used for children’s school uniform. In 1994, the yarn business faced a severe crunch owing to overcapacity. From 1995 onward, RSWM became a late follower of the industry trend as other competitors already moved up the value chain.

Textile manufacturing is basically constituted of the processes of spinning, weaving, processing, and marketing. More than 50 per cent of the value is concentrated in weaving and processing. Moving up the value chain from spinning involves large investments in machinery and labour. Graduating to marketing requires getting closer to the customers. This is the challenge that a traditional spinning mill like RSWM had to face if it was to sustain itself in a highly competitive market.

At another level, for RSWM, it was a matter of cultural transformation of the organisation long used to a conservative, trader mentality. Imagine a company whose main driving force, Shekhar Agarwal, Vice-Chairman and Managing Director having little interest in watching Hindi movies signing up Sharukh Khan at a considerable price for celebrity advertising. From the market side, it has long been troubled with its commitment to the loyal middle-class customers as it had to simultaneously pay attention to the upwardly mobile upper middle class customers. Then there was the dilemma of being too many things to a wide range of audience. RSWM wanted to have a stake in the export markets as well as keep its share in the rural markets. It perceived itself as an efficient producer and wished to become a flamboyant retailer. It excelled in basic textile processing yet dreamt of attaining sophistication in in-house production of readymade garments. And all this while it has been a late mover, losing out to early movers such as Raymonds. No wonder it virtually landed up on the fringes of the industry, far behind formidable competitors like Reliance, Grasim, and S. Kumar.


Suggest how should RSWM manage its value chain effectively. Should it try to imitate the market leaders? If yes, why? If no, why not? What alternatives routes to success do you propose?


CASE – 4         A Very Intriguing Package

It is not quite often that a positive product feature becomes an albatross around the neck of a company. VIP Industries had held sway for over two decades in the organised Indian luggage market on the basis of the durability of its moulded suitcases. Obviously, the customer perceives value-for-money in the long-lasting, reasonably-priced Alfa brand of VIP suitcases which sells 1.5 lakh pieces a month. But this means that having bought one suitcase the customer can do with it for several years. Market research by the company shows that an average Indian family pulls out the suitcase merely for outstation travel a few times a year. Hence, there is no pressing need for continual replacement of the old luggage.

The VIP products are made of virgin polymer as compared to the recycled grade I and II polymers used by the unorganised sector. They are subjected to stringent stress tests for quality control.

VIP has a presence in a wide range of the market segments within a price spectrum of Rs 295 to Rs 6,000 apiece. It is her that the competition from the unorganised sector hurts the company most. VIP’s economically-priced brand, Alfa is widely imitated and sold at much lower prices. This enables the unorganised sector to typically sell 20 times more than VIP can. The lower price threshold seems to be Rs 225 which in nearly impossible for VIP to achieve given its cost structure. In the Rs 1500 plus premium range, VIP has to contend with Samsonite which is a formidable competitor.

The obvious tactic for VIP has been to cut costs. Distribution and logistics is one area where valiant efforts have been made at cost reduction. VIP has four factories located in heart of India. The average distribution costs come to Rs 7 to Rs 8 apiece. Reduction in cost has been attempted through distributed manufacturing by having vendors making the product at different locations, thereby, avoiding transportation of high-volume suitcases across long distances and reducing inventory build-up in the channel.

Severe pressure on sales has resulted in VIP Industries offering discounts and unwittingly entering into a disastrous price war. Promotion of a high visibility product suffered and advertising expenditure has been ruthlessly curtailed from the earlier Rs 11 crore to Rs 2 crore now. Its lead advertising agency is HTA. Action on the promotion front has seen reorganisation of the brand portfolio. Incidentally, earlier its successful and popular Kal bhi aaj bhi campaign served to reinforce its durability theme.

There are several roadblocks that the company has to negotiate. Increase in population, rising propensity of Indian to travel, and the insatiable thirst of customers for state-of-the-art technological products with newer designs and innovation, all at an affordable price are the opportunities and challenges before the company. Introduction of new brands, Mantra and Skybags, product range of diversification to include children’s bags and ladies’ bags, strategic alliance with Europe’s leading luggage-maker—Delsey—are some of the steps taken by the company.

Yet, caught in its self spun web of past successes, VIP is today faced with an uncertain future.


How should the VIP Industries get out of the bind that it finds itself in? Outline the contours of the marketing plans and policies that VIP needs to formulate and implement?


CASE – 5     Let There be Light

Traditionally, power plants, being capital-intensive, have been set up by the public sector and state electricity boards (SEBs) in India. Everyone agrees today that the energy sector is the major infrastructure bottleneck holding up economic development. A critical aspect of economic reforms thus is the reform of the energy sector.

The Madhya Pradesh State Electricity Board (MPSEB) is not much different from its counterparts in other states. It faces similar problems and is opting for identical solutions. The common elements in the power sector reforms are: corporatisation by breaking the SEB into generation, transmission, and distribution; financial restructuring including debt and interest payment rescheduling; reduction of manpower; and improvements in operational efficiency.

Public utilities, like SEBS, have to be commercially viable in order to survive. Yet historically, this aspect of SEB as an organisation has been sacrificed at the altar of political expediency. The ruling party, irrespective of whether it is the Congress at present or the Bharatiya Janata Party earlier, have made pre-election promises of supplying free or heavily-subsidised power. Digvijay Singh, the present chief minister of Madhya Pradesh, a populist politician earlier, on longer sees electoral benefit in providing free electricity. “It pays to pay” is his refrain today, whether it is healthcare or electricity.

Bold steps—bold, as they still carry the risk of a political fallout with fiery BJP leader Uma Bharti breathing down Digvijay’s neck or the silent schemers of his own party working overtime behind the scenes—have been initiated to reform the energy sector in Madhya Pradesh. MPSEB is to be divided into generation, transmission, and distribution (T&D), and supply companies. Financial management and cash flow management is to be improved. The retirement age of MPSEB employees has been reduced from 60 to 58 years. Effective operational control is sought to be exercised by metering power supply at division / district level to fix responsibility for T & D losses and power thefts. A sustained drive is on to identify non-paying consumers, install meters, and make them pay their bills regularly.

MPSEB’s annual losses are to the tune of a massive Rs 1,600 crore; total liabilities are estimated to be Rs 20,000 crore. Undeniably, are parameters indicating the rot that has corroded the system.

At one level, the reform of the energy sector is a political action but at another, and perhaps, a more fundamental level, it is a question of managing an organisation strategically through strategic actions designed to turn around a vital public utility.


Analyse the problems of the MPSEB from the strategic management perspective. Do you feel that the actions taken or being contemplated are strategic in nature? Propose what else needs to be done to make the MPSEB a viable organisation.

Business Management

02 Jul

Answer the following question.

Q1. Give main methods of classification.

Q2. What are the characteristics of a partnership firm.

Q3. Discuss legal restriction on sole trade.

Q4. What is flexibility of policies.

Q5. Discuss pricing of the product.

Q6. Compare administration versus management.

Q7. “Coordination is the orderly arrangement of group”.

Q8. Discuss Management thought.

Business Management

29 Jun

Q1) What are the four basic activities that comprise the management process? How are they related to one another?

Q2) Describe the systems perspective. Why a business organization is considered an open system.

Q3) Describe the formal and informal dimensions of social responsibility?

Q4) Describe the four basic levels of international business activity?

Q5) What are the four fundamental purposes of goals in an organization.

Q6) Explain the difference between 3 common methods of group decision making interesting groups, Delphi groups and nominal groups?

Q7) Define creativity and describe its causes?

Q8) What are the steps in the delegation process?

Business Management

27 Jun

No : 1


This is a tragic story, narrated in first person, of an entrepreneur who became bankrupt for no fault of him, without producing anything, mostly because of the irresponsible political and government environment. This case study, documented by BibekDebroy and P.D. Kaushik and published in Business Today is reproduced here with permission.

In the 1980s, I worked as a chemical analyst for a transnational in Germany, but kept thinking about shifting to India.

Opportunity knocked when I saw an advertisement by the Uttar Pradesh government inviting NRI professionals to start a chemical unit in the newly identified Basti Chemical Industrial Complex. I hail from Lucknow. Hence, this was attractive. I inquired from the Indian High Commission and was told that there is single window clearance for NRI investors. The brochure said several things about the benefits – excise and sales tax holiday for five years, uninterrupted power supply, low rate of interest on loans, and clearance of application within 30 days.

I started the application formalities for a chemical unit. Once the application was accepted, I requested for long leave from my employers. I also inquired from my relatives in Lucknow and was told that the Uttar Pradesh government’s intentions are clear, and developmental work is progressing at fast speed.

Every now and then, I received a letter from the ministry of industry in Uttar Pradesh to furnish some paper or the other, as part of procedural formalities. After three months, I received my provisional sanction letter for allotment of land, and term loan. The letter also stated that within six months, I must take possession of the land, and initiate construction. Otherwise, the deposited amount (Rs 1 lakh as part of my contribution) will be forfeited. I resigned from the company, and shifted permanently to India, since my employer turned down my request for long leave.

On reaching the complex, I was surprised to see that the Uttar Pradesh State Industrial Development Corporation (UPSIDC) had actually developed the land in terms of markers, and signboards, compared to what I had seen on my last visit.

Though roads were not fully laid, it was evident that work was in progress. I took possession of my land and started construction.

Meanwhile, I approached the UPFC for granting me the term loan for ordering the plant and machinery. The first obstacle came from the Uttar Pradesh State Electricity Board (now Uttar Pradesh Power Corporation). The electricity supply to the complex was not yet available. On inquiring, I was told that the plan had been sanctioned, but required clearance from the power ministry, before undertaking further work. The approximate time to get grid supply ranged between four and six months.

The next obstacle came from the Uttar Pradesh Financial Corporation (UPFC). It could release the first instalment after I completed construction till the plinth level. I continued work with the help of a diesel generating set. It took another month to reach the plinth level.

But before I could request UPFC to release my first instalment, I received a letter from UPFC that I had to deposit interest against the amount paid to the UPSIDC for land possession. This was a shock, because interest had to be paid even before anything was produced.

But I had no alternative, because the first insatlment was due. The UPFC promptly released the first instalment after inspecting the construction. It helped me continue construction work, and also book for plant and machinery.

Six months went by. Construction was almost complete. I had received three instalments from the Uttar Pradesh Financial Corporation (UPFC). Each time the payment of interest was due, the required sum was adjusted from the instalment released. If there was any shortfall in money required for construction, I paid from my own pocket.

But after nine months, my coffers went empty. Machinery suppliers were after me, for payment. UPFC insisted on interest payments, because this was the last instalment of my term loan and interest due couldn’t be deducted from future instalments. I borrowed from family and friends and paid up. Then I received the final instalment from UPFC for plant and machinery, with another notice that the yearly instalment for the principal was due.

Within two months, machinery was commissioned at the site. But electricity was yet to reach the complex. In the previous year, I had visited the Uttar Pradesh State Electricity Board (UPSEB) office innumerable times. I also approached the industry association to assist me. But all my efforts were in vain. This did not help me, or others like me, to get the grid supply.

There were 14 other who were in the same boat. The biggest company of them all – obviously with contacts at higher levels – arranged for grid supply from the rural feeder. But that plan also did not take off, because the rural feeder supplied poor quality power for a mere six hours. A process industry requires 24 hours of uninterrupted electricity supply without load fluctuations. It is precisely because of this that all 15 of us, who were waiting for electricity, had insisted on industrial power from UPSEB.

All plans failed. Captive generation was not a viable alternative now. And we continued to wait for the grid supply. We met the former minister for industry and pleaded our case. He assured us that he would take up the case with the power ministry.

Meanwhile, I defaulted on interest payment. So did the others. The final blow came in the Assembly elections, when both the sitting : Member of Legislative Assembly, from Basti, and the state industrial minister lost their seats. Suddenly, everything – from road construction work, to the laying of sewer and phone lines – came to a standstill.

Only the police post and the UPSKB rural feeder office remained. The new incumbent in the industrial ministry hailed from Saharanpur, so the thrust of the ministry changed. Basti was not on their priority list anymore. After waiting for tow years, UPSEB was not able to connect the complex with grid supply.

In the end, UPFC initiated recovery action and sealed my unit. Besides, they claimed that I could not get NRI treatment, with preferential interest rates, because I had permanently moved to India. Thus, there were also plans to file a case against me on account of misinforming the corporation. Experts suggested I should file for insolvency if I wanted to avoid going to prison. This I did in 1994. I spent Rs. 15 lakh from my own pocket.

Now, all that remains of an entrepreneurial dream is a sealed chemical unit in Basti and a complex legal tangle.

I was better off working for the transnational in Germany. Power does not come out of the barrel of a gun. A gun’s barrel comes of power, especially when the latter does not exist.


  1. Identify and analyse the environmental factors in this case.
  2. Who were all responsible for this tragic end?
  3. It is right on the part of the government and promotional agencies to woo entrepreneurs by promising facilities and incentives which they are not sure of being able to provide?
  4. Should there be legislation to compensate entrepreneurs for the loss suffered due to the irresponsibility of public agencies? What problems are likely to be loved and created by such legislation?
  5. What are the lessons of this case for an entrepreneur and government and promotional agencies?


No : 2


The public sector Indian Oil Corporation (IOC), the major oil refining and marketing company which was also the canalizing agency for oil imports and the only Indian company I the Fortune 500, in terms of sales, planned to make a foray in to the foreign market by acquiring a substantial stake in the Balal Oil field in Iran of the Premier Oil. The project was estimated to have recoverable oil reserves of about 11 million tonnes and IOC was supposed to get nearly four million tonnes.

When IOC started talking to the Iranian company for the acquisition in October 1998, oil prices were at rock bottom ($ 11 per barrel) and most refining companies were closing shop due to falling margins. Indeed, a number of good oil properties in the Middle East were up for sale. Using this opportunity, several developing countries “made a killing by acquiring oil equities abroad.’’

IOC needed Government’s permission to invest abroad. Application by Indian company for investing abroad is to be scrutinized by a special committee represented by the Reserve Bank of India and the finance and commerce ministries. By the time the government gave the clearance for the acquisition in December 1999 (i.e., more than a year after the application was made), the prices had bounced back to $24 per barrel. And the Elf of France had virtually took away the deal from under IOC’s nose by acquiring the Premier Oil.

The RBI, which gave IOC the approval for $15 million investment, took more than a year for clearing the deal because the structure for such investments were not in place, it was reported.


  1. Discuss internal, domestic and global environments of business revealed by this case.
  2. Discuss whether it is the domestic or global environment that hinders the globalization of Indian business.
  3. Even if Elf had not acquired Premier Oil, what would have been the impact of the delay in the clearance on IOC?
  4. What would have been the significance of the foreign acquisition to IOC?
  5. What are the lessons of this case?



No : 3


Balsara Hygiene Products Ltd., which had some fairly successful household hygiene products introduced in 1978 a toothpaste, Promise, with clove oil (which has been traditionally regarded in India as an effective deterrent to tooth decay and tooth ache) as a unique selling proposition. By 1986 Promise captured a market share of 16 per cent and became the second largest selling toothpaste brand in India. There was, however, an erosion of its market share later because of the fighting back of the multinationals. Hindustan Lever’s Close-up gel appealed to the consumers, particularly to the teens and young, very well and toppled Promise form the second position.

Supported by the Export Import Bank of India’s Export Marketing Finance (EMF) programme and development assistance, Balsara entered the Malaysian market with Promise and another brand of tooth paste, Miswak.

The emphasis on the clove oil ingredient of the Promise evoked good response in Malaysia too. There was good response to Miswak also in the Muslim dominated Malaysia. Its promotion highlighted the fact that miswak (Latin Name :SalvadoraPersica) was a plant that had been used for centuries by as a tooth cleaning twig. It had reference in Koran. Quoting from Faizal-E-Miswak, it was pointed out that prophet Mohammed used “miswak before sleeping at night and after awakening.’’ The religious appeal in the promotion was reinforced by the findings of scientists all over the world, including Arabic ones, of the antibacterial property of clove and its ability to prevent tooth decay and gums.

Market intelligence revealed that there was a growing preference in the advanced counties for nature based products. Balsara tied up with Auromere Imports Inc. (AAII), Los Angeles. An agency established by American followers of Aurobindo, an Indian philosopher saint. Eight months of intensive R & D enabled Balsara to develop a tooth paste containing 24 herbal ingredients that would satisfy the required parameter. Auromere was voted as the No. 1 toothpaste in North Eastern USA in a US Health magazine survey in 1991.

The product line was extended by introducing several variants of Auromere. A saccharine free toothpaste was introduced. It was found that mint and menthol were taboo for users of homoeopathic medicines. So a product free of such mints was developed. Auromere Fresh Mint for the young and AuromereCina Mint containing a combination of cinnamon and peppermint were also introduced. When the company relaised that Auromere was not doing well in Germany because of the forming agent used in the product, it introduced a chemical free variant of the products.


  1. Explain the environmental factors which Balsara used to its advantage.
  2. What is the strength of AAII to market ayurvedic toothpaste in USA?


No : 4


The Economic Times, 20 October 2000, reported that Reliance Industries entered into a swap deal for the export and import of 36 cargoes of naphtha over the next six months. Accordingly, three cargoes of 50,000 tonnes each were to be exported every month from Reliance Petroleum’s Jamnagar refinery and three cargoes of the same amount were to be imported to the Reliance Industries’ Hazira facility. The deal was done through Japanese traders Mitsubishi, Marubeni, ltochu, IdCmitsu and Shell. The export was done at around Arabian Gulf prices plus $22.

Reliance, needs petrochemical grade naphtha for its Hazira facility which is not being produced at Jamnagar. Therefore, its cracker at Hazira gets petrochemical grade naphtha from the international markets in return for Reliance Petroleum selling another grade of naphtha from its Jamnagar refinery to the international oil trade.

If RIL imports naphtha for Hazira petrochemical plant, the company does not have to pay the 24 per cent sales tax, which it will have to pay on a local purchase, even if it is from Reliance Petro. Besides Reliance Petro will also get a 10 per cent duty drawback on its crude imports if it exports naphtha from the refinery at Jamnagar.

The export of naphtha with Japanese traders is being looked as a coup of Reliance as it gives the company an entry into the large Japanese market.

Indian refineries have a freight advantage over the Singapore market and can quote better prices.


  1. Examine the internal and external factors behind Reliance’s decision for the swap deal.
  2. What environmental changes could make swap deal unattractive in future?
  3. Could there be any strategic reason behind the decision to import and export naphtha?
  4. Should Reliance import and export naphtha even if it does not provide any profit advantage?


No : 5


TELCO opened bookings for different models of its proud small car Indica in late 1998. The consumer response was overwhelming. Most of the bookings were for the AC models, DLE and DLX. The DLE model accounted for more than 70 per cent of the bookings.

Telco has planned to commence delivery of the vehicles by early 1999. However, delivery schedules for the AC models were upset because of some problems on the roll out front. According to a report in The Economic Times dated 13 March 1999, Telco officials attributed the delay to non-availability of air conditioning kits.

Subros Ltd. supplies AC kits for the DLE version and Voltes is the vendor for the DLX version. Incidentally, Subros is also the AC supplier to MarutiUdyog Ltd.

Telco officials alleged that Subros was being pressured by the competitor to delay the supply of kits. “If this continues, we will be forced to ask Voltas to supply kits for the DLE version too,’’ a company official said.



  1. Why did Telco land itself in the problem (supply problem in respect of AC kits)?
  2. If the allegation about the supplier is right, discuss its implications for the supplier.
  3. Evaluate the ethical issues involved in the case. (Also consider the fact Maruti was 50 percent Government owned.)


No : 6


Product and Gamble (P & G), a global consumer products giant, “stormed the Japanese market with American products, American managers, American sales methods and strategies. The result was disastrous until the company learnt how to adapt products and marketing style to Japanese culture. P & G which entered the Japanese market in 1973 lost money until 1987, but by 1991 it became its second largest foreign market.’’

P & G acclaimed as “the world’s most admired marketing machine’’, entered India, which has been considered as one of the largest emerging markets, in 1985. It entered the Indian detergent marketing the early nineties with the Ariel brand through P & G India (in which it had a 51 percent holding which was raised 65 per cent in January 1993, the remaining 35 per cent being hold by the public). P & G established P & G Home products, a 100 per cent subsidiary later (1993) and the Ariel was transferred to it. Besides soaps and detergents, P & G had or introduced later product portfolios like shampoos (Pantene) medical products (Viks range, Clearasil and Mediker) and personal products (Whisper feminine hygiene products, pampers diapers and old spice range of men’s toiletries).

The Indian detergent and personal care products market was dominated by Hindustan Lever Ltd. (HLL). In some segments of the personal care products market the multinational Johnson & Johnson has had a strong presence. Tata group’s Tomco, which had been in the red for some time, was sold to Hindustan Lever Ltd. (HLL). HLL, a subsidiary of P & G’s global competitor, has been in India for about a century. The take over of Tomco by HLL further increased its market dominance. In the low priced detergents segment Nirma has established a very strong presence.

Over the period of about one and a half decades since its entry in India, P & G invested several thousand crores. However, dissatisfied with its performance in India, it decided to restructure its operations, which in several respects meant a shrinking of activities– the manpower was drastically cut, and thousands of stockists were terminated. P & G, however holds that, it will continue to invest in India. According to Gary Cofer, the country manager, “it takes time to build a business category or brand in India. It is possibly an even more demanding geography than others.’’

China, on the other hand, with business worth several times than in India in less than 12 years, has emerged as a highly promising market for P & G. when the Chinese market was opened up, P & G was one of the first MNCS to enter. Prior to the liberalisation, Chinese consumers had to content with shoddy products manufactured by government companies. Per capita income of China is substantially higher than India’s and the Chinese economy was growing faster than the Indian. Further, the success of the single child concept in China means higher disposable income.

Further it is also pointed out that for a global company like P & G, understanding Chinese culture was far easier since the expat Chinese in the US was not very different from those back home where as most Indian expats tended to adapt far more to the cultural nuances of the immigrant country.

One of P & G’s big in India was the compact technology premium detergent brand Ariel. After an initial show, Ariel, however, failed to generate enough sales – consumers seem to have gone by the per kilo cost than the cost per wash propagated by the promotion. To start with, P & G had to import the expensive state-of-the-art ingredients, which attracted heavy customs duties. The company estimated that it would cost Rs. 60 per kilo for Ariel compared to Rs. 27 for Surf and Rs. 8 for Nirma. Because of the Rupee devaluation of the early 1990s, the test market price of Rs. 35 for 500 gms was soon Rs. 41 by the time the product was launched. HLL fought Ariel back with premium variants of Surf like Surf Excel.

It is pointed out that, “in hindsight, even P & G managers privately admit that bringing in the latest compact technology was a big blunder. In the eighties, P & G had taken a huge beating in one of its most profitable markets, Japan, at the hands of local company Kao. Knowing the Japanese consumer’s fondness for small things, Kao weaved magic with its new-found compact technology. For a company that prided itself on technology, the drubbing in Japan was particularly painful. It was, therefore, decided that compacts would now be the lead brand for the entire Asia-Pacific region. When P & G launched Ariel in India, it hoped that the Indian consumer would devise the appropriate benchmarks to evaluate Ariel. As compacts promised economy of sue, P & G hoped that consumers would buy into the low-cost-per-wash story. But selling that story through advertising was particularly difficult, especially sine Indian consumers believed that the washing wasn’t over unless the bar had been used for scrubbing. Even though Ariel was targeted at consumer with high disposable income, who represented half the urban population, consumers simply baulked at the outlay.

Thereafter, one thing led to another. Ariel’s strategy of introducing variants was a smart move to flank Lever at every price point by cleverly using the brand’s halo effect. And by supporting the brand in mass media and retaining the share of voice. By 1996, it had become clear that Ariel’s equity as a high-performance detergent had begun to take a beating. Its equity as a top-of-the-line detergent was getting eroded….Nowhere in P & G’s history had a concept like Super Soaker been used to gain volumes…. It was decided that Super Soaker would no longer be supported, nor would Ariel bar be supported in media.


  1. Discuss the reasons for the initial failure of P & G in Japan.
  2. Where did P & G go wrong (if it did) in the evaluation of the Indian market and its strategy?
  3. Discuss the reasons for the difference in the performance of P & G in India and China.