Thursday, November 29, 2012

Which International Business Strategy is best suited for Indian Apparel company to expand business in European Union?

Strategy is the framework that managers apply to determine the competitive moves and business approaches that run the company. So  one can say that :
Strategy is managements idea on how to best

-                    Attract customers
-                    Operate efficiently
-                    Compete effectively
-                    Create value

Strategy in the global apparel industry is based on a combination of production, buying, and distribution forces. A large number of typical apparel manufacturers  are located in a low wage market. Many of them are having a small scale operation that employs a few to a few dozen workers. Apparel production is a highly labor intensive process.
The growing globalization of markets is changing the operational decisions of apparel firms.  Despite growing national concentration, retailing activities remain quite local. The top 10 retailers worldwide operated in an average of 10 countries in 2000, deriving less than 15 percent of their total sales from outside their home markets.
It means that the retailer has to have a high degree of localization. Italy will cater to rest of Europe. Customer preference for each country has  some variance. For example, the British seek out stores based on social sensitivities, Germans are price sensitive, and shoppers in the United states look for a mix of variety,, quality, and price.
When we look to strategy matrix  chart (Integration Responsiveness Grid)
Apparel fall under  the high level of local responsiveness and low to high  pressure for integration for global responsiveness.
This leads  to preliminary conclusion to have different short term and long term strategies.
Short Term StrategyExporting strategy
Long Term Strategy  :  Transnational strategy

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Wednesday, October 17, 2012

Case study: Manchester United Club

Case study on  Manchester United in the reference book CORPORATE STRATEGY  authored by Gerry Johnson (University of Strathclyde), Kevan Scholes (Sheffield Hallam University ) and Richard Whittington (Saïd Business School, University of Oxford ) is a  good example changing culture and  changing strategy with time.  Following are the suggested solutions :

Question 1   Do you feel that the various aspects of corporate governance discussed in section  4.2 are appropriate for a football club? What changes in governance would you  like to see?

Ans :  Manchester United is undeniably both big and a business driven by the expectations of the stakeholders. They both are at the extreme –
1.   Football Lovers  :  who would go frenetic  to see that their club wins  all the matches and trophies.  For that they do not mind travelling many miles to cheer up the players. 
2.   Investors  :  Their expectation is only increasing shareholder’s wealth like big  corporate. The club management’s financially driven ethos is undermining the  ‘most followed game’.

The governance of the club has to have a balance between these two extremes. In today’s context organizations are expected to be accountable and responsive, not only to those owners and managers in the governance chain but to a wider range of stake holders – including community at large.

In larger organizations like Manchester United, governance chain is complicated as there is a need to employ professional managers to run the organization without being shareholders on the board – that adds several layers in the management.

The concept of governance chain challenges the directors and the managers to be knowledgeable about  the expectations of the beneficiaries to actively work on their behalf and to keep them informed.
Martin Edwards, major share holder acted as Chief Executive till Peter Kanyon  in 2000 joined as a professional Chief Executive. Edwards was not at one with the manager Sir Alex Ferguson and was unpopular with the fans for his attempts to sell the club.

Principle- Agent model is a reminder that ‘agents’ will tend to work in their own self interest and need to be encouraged to work in the interests of the principal. In case of Manchester United to define the principal is a debatable matter. Existence of the club is due to investors, but it is the performance of the players  which builds the fan following. The popularity of club is based on the game of players like David Beckham. The club treats them as a commodity and trades in the benefit of shareholders.

The facilities in club for training and stadium all needs capital. Listing of MUFC as a Plc on the stock market get bonuses. Because training facilities are provided by the club, so they have put a limit to wages below 50% of budget  which leads to players down graded performance. All the money comes from the fans. The club does not repay back them anything except the entertainment. For sustained fan followership, the clubs  need to look at their CSR programs.

Question 2  Using section 4.3.1 and exhibit 4.5 undertake a stakeholder mapping exercise for any strategic development that is likely to be under consideration by the board (for example, ‘The formation of a European super league of major clubs’). How would  you use this analysis if you were: a board member wishing to support the strategy?  an opponent of the strategy?

Ans . :  Stakeholder mapping identifies stake holder expectations and power and helps in understanding political priorities. It underlines the importance of two issues :
  • How interested each stakeholder group is to impress its expectations on the organization’s purposes and choice of specific strategies.
  • Whether stakeholders have the power to do so.

For Manchester United if we drawup the stakeholder map it would be as follows :

  Stakeholder mapping identifies stake holder expectations and power and helps in understanding political priorities. It underlines the importance of two issues :
  • How interested each stakeholder group is to impress its expectations on the organization’s purposes and choice of specific strategies.
  • Whether stakeholders have the power to do so.

For Manchester United if we drawup the stakeholder map it would be as follows :

Organization might address the expectations of the stakeholders in segment B through information – for example the community groups. These stake holders can be crucially important “allies” in influencing the attitudes of more powerful stake holders : for example, through lobbying.

Stakeholder mapping might help in understanding better some of the following issues :
·         Whether the actual levels of interest and power of stakeholders properly reflect the corporate governance framework within which the organization is operating.
·         Who the key blockers and facilitators of a strategy are likely to be.
·         Whether repositioning of certain stakeholders is desirable and / or feasible.
·         Maintaining the level of interest or power of some key stakeholders may be essential. E.g. public ‘endorsement’ by powerful suppliers or customers may be critical to the success of a strategy. Equally, it may be necessary to discourage some stakeholders from repositioning themselves. This is what is meant by keep satisfied in relation to stakeholders in Segment C, and to a lesser extent to keep informed for those in segment B.

These questions raise some difficult  ethical issues for managers in deciding the role they should play in the political activity surrounding strategic change.

Most stakeholder groups consist of large numbers of individuals (such as customers or shareholders), and hence can be thought of largely independently of the expectations of individuals within that group. With some stakeholder groups this is not the case : they consist of a small number of individuals or even single individuals (e.g. the chairman of the company or the minister of a government department).

Question 3   Refer to exhibit 4.7 and decide which ethical stance you feel best describes Manchester United now and how you would wish to see the club. Justify your own  position.

Ans :  Different companies take different ethical stances.  There is likely to be a strong relationship between the ethical stance, the character of the Manchester United and how strategy is managed.  The four type of ethical stances can be :

Manchester United Directors can probably be classified under  longer-term shareholder interests category. A  sports club may also be considered with a stance of multiple stakeholder obligations  as players and channel partners do have strong stake in the affair of the club. But the strategy control in the case remains internally with the directors  and chief executive.

The second type of  ethical stance is  tempered with long term financial benefit to the share holders of well managed relationship with other stakeholders. The strategy of the club to tie up with Nike and New York Baseball club confirms this stance.  Building a stadium with a capacity of more than 65,000 seats at Old  Trafford serves the purpose of above stated objective.

The corporates make  attempt to ‘give something back’ to the society.   Manchester United  also established   a partnership to raise £ 1 mn for unicef, the united nations children fund in the year 2000. This was perceived as fitting the ethos of the Manchester united as reaching out to global children and involve visits by players and officials to some of the poorest communities in the world in Mangolia, Brazil and Uganda, united encountered some families surviving on salary less than  £200 a year.

This attempt can not be seen as a shift towards shaper of society. The club claimed that one should not underestimate the power of football influence others including governments. So the fund raising for the Unicef was a step to build loyalty of fans through brand  building.

Que. 4   Refer to section 4.5.3 and decide what you feel were the key cultural characteristics  of Manchester United in terms of values, beliefs, behaviours and taken-for-granted  assumptions: (a)pre-1990, and (b) today?  What are the implications of these  changes to current and future strategies?

Ans. :  As  the Manchester United has  grown  there emerges a  change in ethical stance.  This has  also brought in a major  change in the loyalty towards the club.  It gets reflected from the transfer of star  player David  Beckham  to Spanish club Real Madrid  and  Chief Executive Kenyon joining   rival club  Chelesa.
The roots  of these changes are in shift of values  and beliefs.

Values – have clearly shifted towards a more commercial agenda.
Beliefs – The time honoured religious metaphor for football – or rather how it used  to be.

Actions of Beckham, Ferguson and Kenyon has a  reason of shift in cause of the game. Early in 1990 and   professional football was played for the benefit of supporters profit is only a means to an end. Today it is a big business.

A reasonable set of alternative assumptions for the early years of the new century could reasonably be postured:
Professional football is played because it is a core product  profit is essential but reinvestment in players might give longer term benefits. Television is an integral part of the game today offering sponsorship and brand recognition potential  football should be professionally managed. It does not matter who invests in the club or which players are employed by the club so long as it is successful.

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Friday, August 17, 2012

Case Study : Application of Focus Group Interviews in Marketing

Solution to case study  Based on  article in  Journal of Marketing, January 1976   written by   KEITH K. COX, JAMES B. HIGGINBOTHAM, AND JOHN BURTON

The focus group interview is an effective qualitative  technique in marketing research. Three actual marketing applications illustrate the usefulness of this approach for marketing mix problems.
Although focus group interviews have been used  by many marketing research firms since the 1950s.

Focus Group
The Focus Group Interview 

Basically, there are two types of group interview  studies. 
1.      One is nothing more than a question and answer session: the group moderator asks questions and the respondents give verbal or written answers.

2.      A second type is the focus group  interview, where a group of people (generally eight to twelve) are led through an open, in-depth discussion by a group moderator.
Such interviews   can be used to develop hypotheses in the  planning or qualitative stage of the  marketing research process.

Marketing Applications
Focus group interviews can be effective research  tools in many types of marketing decision situations. The  usefulness of the technique in three distinct decision areas is discussed in this case study:

(1)  Pricing and advertising,  (By a  Power distribution Company)
(2)  A new product    (To be launched by Car Accessory Manufacturer), and
(3) Packaging   (of a  food company).

Example 1: Alpha Power and Light   ( Pricing and advertising)
The Alpha company had requested an electricity rate increase  of 6%, in its trading area for the first time in 20 years and wanted to know

(1) customer opinions of the rate increase, and
 (2) reasons for customer resistance to the rate increase, such as general service problems.

The company used a three stage marketing research program to address this problem :

Stage 1 (Qualitative)   :   Personal Interview of Company executives and analysis of past data.
Stage 2 (Qualitative)  :  Focus group interviews (12  groups of 10 persons in each  group), each interview session videotaped.
Objectives  :
·         Evaluate consumer attitudes  toward utility companies in  this area generally.
·         Develop hypotheses on rate  and service problems of customers
Stage 3 (Quantative)   :   Telephone interview of 700  persons  from 7 districts 100 users in each.
Objectives  :
·         Evaluate Hypotheses  about consumer attitude.
·         Develop communication Ideas

The information obtained in the first stage was used in guiding the researchers in the second stage of the research, where focus group interview sessions were conducted.

The focus group interviews uncovered a "rate bargaining" phenomenon among the groups,

In general, consumers wanted assurances of available utilities and were willing to pay for these services.

Johnson Car Air Conditioning Filter  : (New Product Launch)
The Johnson company developed a new filter to be used in car air conditioning systems. 
A two-stage research process was followed.
Focus group interviews were used in stage 1

  • ·         to help develop hypotheses
  • ·         to identify potential markets,
  • ·         to determine advantages and disadvantages of the  product.

Based of the FG  it was found  that  the target customers can be :

1.    1.      Families in which one or more members had allergy or respiratory problems might be the best prospects for the new product.
2.       Persons seriously concerned about air pollution were also identified as good potential buyers.

The major disadvantages of the product were the performance capability of the filter and the cost of replacement cartridges.

·         Some individuals feared that the filter would cause their car's air conditioning system to malfunction.

·         Non allergic consumers ex-pressed doubt about their need for the product.

·         An unexpected resistance occurred when consumers were informed that the filter would need to be changed periodically.

An analysis of 1500 respondents in five cities showed that the original marketing strategy for introducing the new product was not economically feasible. This led to the development of an alternative marketing plan.

Example 3: Harris Meat Company  (Packaging) :

In this case, the focus group interviews exposed a serious packaging problem and minor problems in shelf space allocation and competitive pricing.

Evaluation and Implications :

Focus group interviews have several advantages for marketing management.
·         First, they help generate hypotheses in the qualitative stage of research.
·         They can provide a stimulus to creative people (copy writers, creative directors, new prod-uct managers, etc.),

Focus group interviews can also give direction and guidelines for constructing questionnaires. Lists of relevant areas of interest of the target audience to be measured can be developed from the groups. With these lists, the risk of addressing the wrong problem is minimized.

Limitations in using focus group interviews.

·         First, the moderator can bias the group results if he or she does not have adequate training and experience in conducting focus group sessions.

The focus group interview is one of a number of qualitative research techniques that can be profitably employed along with quantitative techniques to help marketing managers make better decisions.


Friday, July 20, 2012

What are the goals of OD? Which problems are addressed by OD experts?

The two major goals of OD programs are

(1) To improve the functioning of individuals, teams and the total organization, and the total organization, and
Books on OD  theory
(2) To teach organizations members how to continuously improve their own functioning.

Organization development deals with the gamut of “people problems” and “work systems problems” in organizations like :

Poor Morale, Low Productivity, Poor Quality, Interpersonal Conflict, Unclear or Inappropriate Goals, Inappropriate Leadership Styles, and the like.

In short, where individuals, teams and organizations are not realizing their potential, OD can improve the situation.

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What is organizational development ?

Nine things successful people do.

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Today's dynamic work place

What is Organizational Development?

Organization development is a systematic process for applying behavioral science principles and practices in organizations to increase individual and organizational effectiveness.

·         Organization development is an organizational improvement strategy.

·         In the late 1950s and early 1960s, it emerged out of insights from group dynamics and from the theory and practice of planned change.

·         Organization development is about how people and organization function and how to get them to function better.

·         The field is based on knowledge from behavioral science disciplines such as psychology, sociology, anthropology, systems theory, organizational behavior, organization theory, and management.

·         OD practitioners are consultants trained in the theory and practice of organization development, with knowledge from the underlying behavioral sciences.

·         OD programs are long term planned, sustained efforts.

·         Such efforts begin when a leader identifier an undesirable situation and seeks to change it.

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Sunday, July 8, 2012

Role of Small scale and cottage industries in India’s industrial and economic development.

Small scale and cottage industries have an important role in India’s industrial and economic development as would be clear from the discussion below:

1. Expansion of SSI sector and its share in industrial output.
The number of units in the small scale sector was 15.91 lakh in 2002-03 and this rose to 24.68 lakh in 2007-08. As far as output of units in the SSI sector is concerned, it was Rs. 3,14,850 crore in 2002-03 and this rose to rs. 6,95,126 crore in 2007-08. The production in the SSI sector rose by 17.5 per cent in 2006-07 and by 18.8 per cent in 2007-08. The share of small scale industries in the country’s manufacturing output is around 39 per cent.

2. Employment generation. The SSI sector employed 264 lakh people in 2002-03 and this number rose to 322 lakh people in 2007-08. Within the manufacturing sector itself, small and decentralized sector contributes about four-fifths of manufacturing employment in India.
An important constituent of this sector is the manufacturing activity consisting mainly of textile based and agro based products and units producing construction materials. In the urban areas employment potential seems to be the largest in the non household, tiny sector segment of the manufacturing sector. Overall, it has been estimated that labour intensity in the micro and small enterprises sector is almost 4 times higher than the large enterprises.
3. Efficiency of small scale industries. Whether large scale industries are more efficient or small scale industries are more efficient, is a matter of debate. The problem arises because of the fact that efficiency can be defined in many different ways.
Comparison of the SSI sector with large manufacturing sector made for the year 2001-02 by the Census Report shows that the SSI sector is a better employment generating sector.

This would be clear from the fact that employment generated by the SSI sector per Rs. One lakh investment was 1.39, as against only 0.20 in respect of the large manufacturing sector. This means that the organized sector requires an investment of Rs. 5 lakh to generate employment for one person whereas the SSI sector generates employment for 7 persons with the same investment.
With regard to investment output ratio also, the SSI sector fared almost on par with the organized sector an investment of about Rs. 43,000 was required in the organized sector to generate an output worth Rs. One lakh whereas in the SSI sector, a marginally higher investment of Rs. 48,000 was required to generate the same amount of output.
4. Equitable distribution of national income. One of the main arguments put forward in support of the small scale and cottage industries is that they ensure a more equitable distribution of national income and wealth. This is accomplished because of the following two considerations:
(i) The ownership of small scale industries is more widespread than the ownership of large scale industries, and
(ii) They possess a much larger employment potential as compared to the large industries.

Which Small Scale Industries need Registration ?

Registration in the SSI sector is voluntary. The registration is done with the District Industries Centres (DICs), firstly on a temporary basis and subsequently, on the request of the concerned entrepreneurs, on a permanent basis.

However, as far as manufacturing units are concerned, their registration is mandatory under Sections 2m(i), and 2m (ii) of the Factories Act.

Section 2m (i) refers to units engaging 10 or more workers and using power whereas Section 2m (ii) refers to units engaging 20 or more workers and not using power.

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Which categories of Industries are covered under SSI?

The small scale industrial (SSI) sector is a vital constituent of India’s industrial sector. It contributes significantly to India’s Gross Domestic Product and export earnings besides meeting the social objectives including that of providing employment opportunities to millions of people across the country.

The SSI sector covers a wide spectrum of industries categorized under
Books on SSI Information

a) Small scale industrial undertakings,

b) Ancillary industrial undertakings (ANC),

c) Export Oriented Units (EOUs),

d) Tiny Enterprise (TINY),

e) Small-scale Service Enterprises (SSSEs),

f) Small-scale Service Business (Industry Related) Enterprises (SSBEs),

g) Artisans, Village and Cottage Industries, and

h) Women Entrepreneurs’ Enterprises, i.e., a small-scale unit where one or more women entrepreneurs have not less than 51 per cent financial holding.

Other Posts :
Explain meaning of Globalization and List its Characterstics
Macro Environment of Business.

Which Small Scale Industries need Registration?

Role of Small scale and cottage industries in India’s industrial and economic development.

Friday, July 6, 2012


Management control of a project is different from an ongoing operation due to one or more of the following reasons:

1. Objectives: A project has a single objective, while operations have multiple objectives. Project manager has a fixed target that is the end of the project. His/her performance will be judged by the result of the end product. But manager for regular operation has to maintain his performance throughout the year.

2. Effect on organization:    

3. Emphasis of control : Control is emphasized on the project, so that the same can be satisfactorily completed within the projected time limit and at an optimum cost, preferably without cost overrun. Control in ongoing organization focuses on the activities for a specified time period on all the work done during that time period, keeping cost control, quality and delivery schedule in mind.

4. Interchangeability : Projects usually involve trade off among scope, schedule and cost. Cost can be reduced or increased by curtailing or increasing the scope of the project. Delivery schedule can be advanced by incurring extra cost by way of paying overtime, travel expenses, etc. Such practices are regulated in ongoing organization.

5. Cost standards : Cost estimates of a project are prepared by collecting data, which may be accurate or are unfamiliar at the time of making estimates. Hence, a contingency provision is created for adjustments. This is not accepted while computing standard cost of a product. Moreover, project plan may be changed frequently due to environment condition or unexpected situations which cause change in the cost estimates.

6. Environment: The projects which are undertaken outside the premises of the organization, suffer from numerous external problems arising out of natural calamity, political disturbance, interference by local people, etc. Ongoing organizations, generally, enjoy the protection of the factory premises.

7. Difference in rhythm : The rhythm of a project differs from that of an ongoing operation distinctly. Most of the projects start slowly, then build up momentum and take the activities to a peak, and then taper off as completion is in sight. Ongoing activities tend to operate at the same level of activity, unless there is a seasonal effect or change in activity plan.

Other Posts  :

What is capital budgeting? Name criteria to evaluate a project?

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What is a project?

Define Management Control System and explain its characteristics.

Monday, June 25, 2012

What is a Project ? Explain its starting and completion point?

A Project is a set of activities intended to accomplish a specified end result of sufficient importance to be of interest to the management. Thus, a project has limited purpose. Its object may or may not relate to the on going operations. Depending on the nature of the project, its durations may be a few weeks to a number of years.

Projects include improvement in plant, machinery, equipment and methods, substitutions of imported materials, setting up of a new factory or extension of a few bays in the existing structure, construction of building, bridge, etc.

A project starts when the management approves the project in principle, adopts it as a part of ongoing activities and allocates funds and other resources including appointing a Project Manager.

Normally, the execution of the project is done in phases unless the same is so small that it does not warrant detail planning by phases.

Thus, when a project is divided into several phases, evaluation is made at the end of each phase and necessary changes are incorporated in the next phase plan.

The project ends with either successful completion after final evaluation or cancellation at the point, when it is decided to abandon the project. Thus, a project always ends, unlike an ongoing organization where operations continue indefinitely.

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Friday, June 15, 2012

Admission in Post Graduate Diploma in Management

If you are a working executive  in or around Ahmedabad  and want to add a management qualification to your CV. There are three good colleges which you can look for :  B.K. School of Management, Som Lalit School of Management and Nirma.
Out of these three SLIMS  is most reasonable in terms of faculty and fees structure.

Wednesday, June 13, 2012

Define Financial System. Why should one study financial systems?

The word “System” is a set of inter-related components working together to achieve some purpose.

Financial System helps economic development of a country by acting as a bridge between savers and investors.

Financial system is set of inter-related institutions, instruments, and markets, that raise (saving) funds and channels them to their efficient use.

In other words, a financial system comprises individuals (savers), intermediaries (financial institutions), markets (money and capital markets), and users (borrowers of money). Hence, the financial system acts as a intermediary between the savers and users (investors).

Financial managers task is to provide sufficient funds to meet all the likely needs of a business undertaking. To provide sufficient funds, he/she needs to have a clear understanding of a financial system.   
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Friday, June 8, 2012

Explain Permanent and Temporary Working Capital

    Gerstenberg has conveniently classified the working capital into

(a) Regular or Permanent Working Capital and

(b) Temporary or Variable Working Capital.

1.   Permanent Working Capital:
It is the minimum working capital required for producing predetermined production

Permanent working is the minimum investment kept in the form of inventory of raw materials, work in process, finished goods, stores & spare, and book debts to facilitate uninterrupted operation of a firm.

Though this investment is stable in the short run, it certainly varies in the long run depending upon the expansion programmers undertaken by a firm. It may increase or decrease over a period of time.

The minimum level of current assets maintained in a firm is usually known as permanent or regular working capital.

2.   Temporary Working Capital:
It is the additional current assets required for temporary period, and it is above permanent WC

A firm is required to maintain an additional current asset temporarily over and above the permanent working capital to satisfy cyclical demands. Any additional working capital apart from permanent working capital required to support the changing production and sales activities is referred to as temporary or variable working capital.

In Other workds, an amount over and above the permanent level of working capital is temporary, fluctuating or variable working capital.

At times, additional working capital is required to meet the unforeseen events like floods, strikes, seasonal production and price hike tendencies contingencies.

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