CASE 1 Dabur India Limited: Growing Big and Global

Questions
1. Wat is te ob!e"ti#e o$ Dabur% Is it &ro$it ma'imisation or growt ma'imisation% Dis"uss.
Answer : The objective is to significantly accelerate profitable growth by providing comfort to others. It is
growth maximization because for achieving this objective Dabur aims to:
Focus on growing core brands across categories, reaching out to new geograhies, within and outside
India, and imrove oerationa! efficiencies b" !everaging techno!og".
#e the referred coman" to meet the hea!th and ersona! grooming needs of target consumers with safe,
efficacious, natura! so!utions b" s"nthesising dee $now!edge of a"urveda and herbs with modern science.
#e a rofessiona!!" managed em!o"er of choice, attracting, deve!oing and retaining %ua!it" ersonne!.
#e resonsib!e citizens with a commitment to environmenta! rotection.
&rovide suerior returns, re!ative to our eer grou, to our shareho!ders.
(. Do )ou tin* te growt o$ Dabur $rom a small &arma") to a large multinational "om&an) is an
indi"ator o$ te ad#antages o$ !oint sto"* "om&an) against &ro&rietorsi& $orm% Elaborate.
Answer: 'hi!e oting coman" form of business, the entrereneur shou!d c!ear!" gone through the distinction
between coman" with artnershi form of business. The next ste arises a regard to wh" to go for coman"
form of business. ( The fo!!owing oints deicts the advantageous oints of this form of business. )dvantages
of *oint +toc$ ,oman": -./ 0uge resources: ) coman" can raise !arge amount of resources from the genera
ub!ic b" issuing shares. +ince, there is no maximum !imit of the number of shareho!ders ii case of ub!ic
coman", fresh shares can be issued to meet the financia! re%uirement. ,aita can a!so be obtained b" issuing
debentures and acceting ub!ic deosits. -1/ 2imited !iabi!it": The !iabi!it" of the shareho!ders is !imited to the
extent of the face va!ue of the shares he!d b" them or guarantee given b" them. The shareho!ders are not
!iab!e ersona!!" for the a"ment of debt of the coman". Thus, !imited !iabi!it" encourages the investors to ut
their mone" in the shares of the coman". -3/ Transferabi!it" of shares: The shares of the ub!ic coman" are
transferab!e without an" restriction. ) shareho!der can se!! his shares at an" time to an"bod" in the stoc$
exchange Therefore, the conservative and cautious investors are a!so attracted to invest in the shares of ub!ic
coman". This brings !i%uidit" to the investors. -4/ +tabi!it" of existence: ) joint stoc$ coman" enjo"s eretua!
succession. It continues for a !ong eriod of time because it is unaffected b" the death, inso!venc" of the
shareho!ders directors. ,hange of ownershi and management a!so does not affect the continuit" of the
business. -5/ 6fficient management: ) coman" can hire the services of rofessiona! manager for its functiona!
areas because of its financia! strength. The directors who !oo$ after the management of the coman" are
genera!!" exerienced and ersons of business acumen Therefore, the management of a coman" is sure to
be efficient. -7/ +coe for exansion: ) coman" can generate huge financia! resources b" issuing shares and
debentures to finance new rojects. ,omanies a!so transfer a ortion of their rofit to reserve which can be
uti!ised for future exansion. 8
CASE ( I+ Industr): Ce"*ered Growt
Questions
1. +r) to identi$) #arious stages o$ growt o$ I+ industr) on basis o$ in$ormation gi#en in te
"ase and &resent a s"enario $or te $uture.
Answer : The Indian IT industr" has been the great success stor" of India9s !ibera!isation. +tarting with an
exort of around :.;; mi!!ion and 5;;; em!o"ees at the beginning of the .<<;s, it has grown to exorts of
:=; bi!!ion and 1.> mi!!ion em!o"ees toda", and a g!oba!!" dominating industr" too. It has transformed India,
created ride in being Indian and given the much needed resect to our assort g!oba!!". Inc!uding
business in India, the industr" has crossed :.;; bi!!ion in revenues with over 3.5 mi!!ion em!o"ees,
amongst the to 1 industries in India toda".
)fter such a fantastic run the industr" is facing new cha!!enges, raising %uestions about its future. For us to
understand the current state of the industr" and its cha!!enges it is imortant to understand its various
hases of growth so far.
The industr" has gone through two distinct hases and is entering the third hase of growth. It has
succeeded in overcoming man" cha!!enges a!ong the wa" and has created five of the to .; g!oba! !eaders
in software services.
The <;s were the decade of unrecedented growth. +ending on IT in the ?+ grew from 3@ of AD& in the
ear!" .<>;s to <@ b" 1;;;, creating great va!ue and demand and an acute shortage of ta!ent. India became
the countr" of choice, ioneering the offshore de!iver" mode!, revo!utionising service de!iver". The B1C
henomenon further acce!erated growth. This was the oortunistic growth hase toed b" the Internet
boom. ,aita! oured into +i!icon Da!!e" and ana!"sts redicted the start of a new era of oint and c!ic$,
redicting the death of the bric$s and mortar business mode!. The boom ended with the Easda% co!!ase in
1;;1 but b" then Indian IT had grown in sca!e and sohistication with some great comanies. The" were
exerts in de!ivering rojects on time and within budget. The mar$et grew raid!" and Indian IT grew much
faster.
The second hase of growth started with focus on Fain +treet after the bust, tac$!ing the cha!!enges of
techno!og" com!exit". Indian IT became !eaders in %ua!it", dominating the a!ication deve!oment and
maintenance sace -)DF/. +tarting as bottom feeders, tac$!ing sma!! rojects in the ear!" .<<;s, the" now
started hand!ing rojects in the mi!!ion do!!ar range and reduced the com!exit" of software maintenance,
which existed across man" generations of techno!og", from the mainframe to distributed comuting , to the
web. The" added services !i$e testing, infrastructure management services, enterrise a!ication etc to
their services rofi!e.
#" the time the financia! crisis hit 'a!! +treet in 1;;>, the" were wor!d !eaders in these services. 0owever,
because of their domination, ricing ower a!most disaeared as most of them had the best %ua!it"
standards, great service de!iver" and ver" !ess differentiation. )mongst the to comanies, there was a s!ow
divergence of strateg", with a few focusing on the remium end of business and the greater number on the
)DF iece. Gff shoring created new engines of growth desite the overa!! mar$et growing more s!ow!", with
focus on cost saving, high %ua!it" de!iver", service exce!!ence and vendor conso!idation. Indian IT grew
raid!" and became the dominant !a"er g!oba!!", with India having the second !argest concentration of IT
ta!ent in the wor!d.
The financia! crisis !ed to a s!owdown, as the financia! services industr" was the !argest sender on IT and
the bubb!e econom" of the !ast decade had enhanced sending on IT. 'ith the financia! crisis subsiding in
the ?+, 6uroe facing the 6uro crisis and the emerging mar$ets becoming the dominant engine of economic
growth g!oba!!", the Indian IT industr" is entering the third hase of growth. This hase is going to be ainfu!
as growth wi!! on!" emerge b" getting mar$et share rather than a !arger share of a growing mar$et.
(. Stud) te table gi#en. A&&l) trend &ro!e"tion metod on te $igures and "omment on te
trend.
Answer : share of AD& of the Indian IT mar$et, #: size of the Indian IT mar$et -in Hs. crore/, ,: software
and services exorts -in Hs. crore/, D: size of software and services -in Hs. crore/, 6: size of the domestic
mar$et -in Hs. crore/ is continuous!" increasing.
,. Com&ute a , )ear mo#ing a#erage $ore"ast $or te )ears 1--./-0 troug (11,/12.
Answer :
CASE , 3utsour"ing to India: Wa) to 4ast +ra"*
Questions
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and o&&ortunit) "osts ma) sur$a"e. Wat "ould tese be%
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Answer : Gutsourcing human resources or some of its rocesses to an externa! rovider is a major
business decision as, whi!e it ma" be costJeffective, it introduces new e!ements of ris$, inc!uding:
2oss of contro!
Imact on the em!o"erKem!o"ee re!ationshi
2oss of f!exibi!it"
Fai!ure to de!iver cost benefits
2ega! or regu!ator" re%uirements
Industria! re!ations issues
The oeration of an" 0H outsourcing arrangement shou!d be governed b" a service !eve! agreement. This
wi!! define the re%uired standards of erformance b" both arties and an" ena!ties for nonJcom!iance. )
service !eve! agreement is a crucia! document and must be negotiated with great care to mitigate the above
ris$s.
&eo!e management !a"s a crucia! ro!e in de!ivering organisationa! erformance. In toda"9s modern,
$now!edge econom" this is more true than ever before. The decision to outsource human resources is
therefore not to be ta$en !ight!".
There are man" circumstances in which outsourcing 0H services can de!iver tangib!e benefits to the
organisation, for exam!e b" freeing 0H rofessiona!s to devote more time to a strategic ro!e suorting
organisationa! erformance.
(. Elaborate te e'ternal and internal e"onomies o$ s"ale as o""urring to Contra"t Counsel.
Answer : )!fred Farsha!! made a distinction between interna! and externa! economies of sca!e. 'hen a
coman" reduces costs and increases roduction, interna! economies of sca!e have been achieved.
6xterna! economies of sca!e occur outside of a firm, within an industr". Thus, when an industr"9s scoe of
oerations exands due to, for exam!e, the creation of a better transortation networ$, resu!ting in a
subse%uent decrease in cost for a coman" wor$ing within that industr", externa! economies of sca!e are
said to have been achieved. 'ith externa! 6+, a!! firms within the industr" wi!! benefit.
In addition to secia!ization and the division of !abor, within an" coman" there are various inuts that ma"
resu!t in the roduction of a good andKor service.
Lower input costs: 'hen a coman" bu"s inuts in bu!$ J for exam!e, otatoes used to ma$e
French fries at a fast food chain J it can ta$e advantage of vo!ume discounts. -In turn, the farmer
who so!d the otatoes cou!d a!so be achieving 6+ if the farm has !owered its average inut costs
through, for exam!e, bu"ing ferti!izer in bu!$ at a vo!ume discount./
Costly inputs: +ome inuts, such as research and deve!oment, advertising, manageria! exertise
and s$i!!ed !abor are exensive, but because of the ossibi!it" of increased efficienc" with such
inuts, the" can !ead to a decrease in the average cost of roduction and se!!ing. If a coman" is
ab!e to sread the cost of such inuts over an increase in its roduction units, 6+ can be rea!ized.
Thus, if the fast food chain chooses to send more mone" on techno!og" to eventua!!" increase
efficienc" b" !owering the average cost of hamburger assemb!", it wou!d a!so have to increase the
number of hamburgers it roduces a "ear in order to cover the increased techno!og" exenditure.
Specialized inputs: )s the sca!e of roduction of a coman" increases, a coman" can em!o" the
use of secia!ized !abor and machiner" resu!ting in greater efficienc". This is because wor$ers wou!d
be better %ua!ified for a secific job J for exam!e, someone who on!" ma$es French fries J and
wou!d no !onger be sending extra time !earning to do wor$ not within their secia!ization -ma$ing
hamburgers or ta$ing a customer9s order/. Fachiner", such as a dedicated French fr" ma$er, wou!d
a!so have a !onger !ife as it wou!d not have to be over andKor imroer!" used.
Techniques and Organizational inputs: 'ith a !arger sca!e of roduction, a coman" ma" a!so
a!" better organizationa! s$i!!s to its resources, such as a c!earJcut chain of command, whi!e
imroving its techni%ues for roduction and distribution. Thus, behind the counter em!o"ees at the
fast food chain ma" be organized according to those ta$ing inJhouse orders and those dedicated to
driveJthru customers.
Learning inputs: +imi!ar to imroved organization and techni%ue, with time, the !earning rocesses
re!ated to roduction, se!!ing and distribution can resu!t in imroved efficienc" J ractice ma$es
erfectL
,. Can )ou see some &ossibilit) o$ e"onomies o$ s"o&e $rom te in$ormation gi#en in te "ase%
Dis"uss.
Answer : Bes, I can see ossibi!it" of economies of scoe from the information given in the case . 6conomies
of scoe are cost advantages that resu!t when firms rovide a variet" of roducts rather than secia!izing in the
roduction or de!iver" of a sing!e roduct or service. 6conomies of scoe a!so exist if a firm can roduce a
given !eve! of outut of each roduct !ine more chea!" than a combination of searate firms, each roducing a
sing!e roduct at the given outut !eve!. 6conomies of scoe can arise from the sharing or joint uti!ization of
inuts and !ead to reductions in unit costs. +coe economies are fre%uent!" documented in the business
!iterature and have been found to exist in countries, e!ectronicJbased #1# -businessJtoJbusiness/ roviders,
home hea!thcare, ban$ing, ub!ishing, distribution, and te!ecommunications.
CASE 2 Indian Sto"* 6ar*et: Does it E'&lain 7er$e"t Com&etition%
Questions
1. Is sto"* mar*et a good e'am&le o$ &er$e"t "om&etition% Dis"uss.
Answer: It is not a !eve! !a"ing fie!d. *ust a few rob!ems: &eo!e maniu!ate stoc$ rices -esecia!!" !ow
riced ones/ b" h"ing them u or artificia!!" inf!ating them whi!e the" ta$e the other side -i.e. short the stoc$/.
Insider trading. ( +ome eo!e get the scoo on a stoc$ and trade it before the genera! ub!ic gets the news.
Front trading. ) bro$er or secia!ist wi!! see a big order coming in to either bu" or se!!. The" then bu" or se!!
from their account before executing the big order thus gaining rofit that other eo!e don9t have a chance to
get.
Identi$) te "ara"teristi"s o$ &er$e"t "om&etition in te sto"* mar*et setting.
Answer : 2arge number of rationa! rofit maximizes active!" cometing with each other, tr"ing to redict future
mar$et va!ue of individua! securities comrises the main feature of an" stoc$ mar$et. Imortant current
information is a!most free!" avai!ab!e to a!! articiants. &rice of individua! securit" is determined b" mar$et
forces M ref!ects the effect of events that have a!read" occurred M are exected to occur. In the short run it is
not eas" for a mar$et !a"er to either exit or enter, one cannot exit or enter for few da"s in those stoc$s which
are under no de!iver".
(. Can )ou $ind some basi" as&e"t o$ &er$e"t "om&etition wi" is essentiall) absent in sto"*
mar*et%
Answer : Four characteristics or conditions must be resent for a erfect!" cometitive mar$et structure to
exist. First, there must be man" firms in the mar$et, none of which is !arge in terms of its sa!es. ( +econd, firms
shou!d be ab!e to enter and exit the mar$et easi!". Third, each firm in the mar$et roduces and se!!s a
nondifferentiated or homogeneous roduct. Fourth, a!! firms and consumers in the mar$et have com!ete
information about rices, roduct %ua!it", and roduction techni%ues.
CASE 8 +e Indian Audio 6ar*et
Questions
1. Wat ma!or &ri"ing strategies a#e been dis"ussed in te "ase% 9ow e$$e"ti#e tese strategies
a#e been in ensuring su""ess o$ te "om&an)%
)nswer : Fajor ricing strategies discussed in the case :
Customer/based &ri"ing
7enetration &ri"ing
&enetration ricing is the ricing techni%ue of setting a relati#el) low initial entr) &ri"e, usua!!" !ower than
the intended estab!ished rice, to attract new customers. The strateg" aims to en"ourage "ustomers to
swit" to te new &rodu"t because of the !ower rice.
7ri"e s*imming
+$imming invo!ves setting a ig &ri"e be$ore oter "om&etitors "ome into te mar*et. This is often used
for the !aunch of a new roduct which faces !itt!e or no cometition N usua!!" due to some techno!ogica!
features. +uch roducts are often bought b" :earl) ado&ters; who are reared to a" a higher rice to have
the !atest or best roduct in the mar$et.
Aood exam!es of rice s$imming inc!ude innovative e!ectronic roducts, such as the )!e i&ad and +on"
&!a"+tation 3.
Loss leaders
The use of !oss !eaders is a method of sa!es romotion. ) !oss !eader is a roduct riced be!ow costJrice in
order to attract consumers into a sho or on!ine store. The urose of ma$ing a roduct a !oss !eader is to
encourage customers to ma$e further urchases of rofitab!e goods whi!e the" are in the sho. #ut does this
strateg" wor$O
7redator) &ri"ing <note: tis is illegal=
'ith redator" ricing, rices are de!iberate!" set ver" !ow b" a dominant cometitor in the mar$et in order to
restri"t or &re#ent "om&etition. The rice set might even be free, or !ead to !osses b" the redator.
'hatever the aroach, redator" ricing is i!!ega! under cometition !aw.
7s)"ologi"al &ri"ing
The aim of &s)"ologi"al &ri"ing is to ma$e the customer be!ieve the roduct is cheaer than it rea!!" is.
&ricing in this wa" is intended to attract customers who are !oo$ing for va!ue.
(. Is &er"ei#ed #alue &ri"ing te dominant strateg) o$ ma!or &la)ers%
Answer: >es 5 &er"ei#ed #alue &ri"ing is te dominant strateg) o$ ma!or &la)ers.
7er"ei#ed ?alue
Gne wa" to increase rices without damaging customer re!ationshis is b" adding to the erceived va!ue of
"our roduct or service. &erceived va!ue is the va!ue a customer assigns "our roduct based on what he
be!ieves he is getting out of it. This ercetion is a combination of tangib!e and intangib!e factors.
For exam!e, an executive going to the airort can choose a taxicab or a town car service. #oth wi!! get her to
the same !ace and wi!! ta$e the same amount of time, but the average airort tri fee is about :15 more for a
town car versus a taxi. &art of that is based on the higher cost of urchasing and maintaining the vehic!e, but
most of it comes from the service9s erceived va!ue.
0ere are some exam!es of how to mar$et based on erceived va!ues:
+angible Bene$its
Bou are a!wa"s on time: rovide a mone"Jbac$ guarantee if "ou are !ate.
Bou have the most comrehensive rogram: rovide a chart showing how the features of "our service
or roduct stac$ u against "our cometitors9.
Intangible Bene$its
Bou he! "our customers !oo$ good at wor$: ub!ish testimonia!s of customers sa"ing how much their
boss areciated them based on the service "ou rovided.
Bou ma$e "our customers fee! richKsuccessfu!Kbeautifu!: dis!a" images of the eo!e "our customers
want to emu!ate using "our roduct or service.
,. Wi" &rodu"ts a#e rea"ed maturit) stage in audio industr)% Do )ou tin* tat &rodu"t
bundling "an be e$$e"ti#el) used $or &romoting sale o$ tese &rodu"ts%
Answer : ,D has reached at maturit" stage. The third stage of industr" !ife c"c!e is the maturit". In the maturit"
stage, efficiencies of the dominant business mode! render these organizations a cometitive advantage over
the ver" cometition. The cometition within the industr" is growing rather aggressive because of man"
cometitors and substitute roducts in the fie!d. )!! these factors rice, cometition, and cooeration are ta$ing
on com!ex form. In fact, some comanies are shifting some of its roduction overseas to obtain cometitive
advantage.
'hen effective, a roduct bund!ing strateg" can significant!" increase rofits on individua! sa!es and over time.
&roduct bund!ing in ban$ing can increase rofits b" .5 to 3; ercent, according to consu!ting firm ,o!!abera.
+e!!ing mu!ti!e roducts or comonents in one so!ution means a greater initia! return on the costs of ac%uiring
a customer. +ome comanies use bund!ing as a wa" to ac$age !ess ou!ar roducts with hot se!!ing items,
a!though this reasoning is sometimes criticized.
,ustomers often refer to achieve a c!uster of satisfactions through one urchase. &eo!e bu" roducts to
so!ve rob!ems or address needs. If a customer has mu!ti!e needs and "our roduct bund!e addresses most
or a!! of them, this is convenient for the customer. 0e can ma$e one sto instead of mu!ti!e stos. )dditiona!!",
customers often exerience economies of sca!e when bu"ing a bund!e of roducts. If the" have a need for the
individua! comonents in the bund!e, the" t"ica!!" understand that the tota! rice is !ower when the roducts
are urchased as a bund!e.