STRATEGIC MANAGEMENT
CASE STUDY : 1
The Ahmedabad based Astral Poly Technik Ltd. is manufacturing and provider of chlorinated poly vinyal
chloride (CPVC) piping and plumbing systems. Mr Sandeep Engineer, its managing director reported a
strategic decision of manufacturing and marketing the ‘Blaze master’ fire sprinkler system under an
agreement with the $ 4 billion global speciality chemical company, Lubrizol, whose wholly-owned
subsididary Noveon Inc makes ‘Blazemaster’ for this purpose, Astral signed a licence agreement with
Noveon to manufacturing and market its fire sprinkler system under the brand name of ‘Blazemaster’ which
is a trade mark of Noveon. The company, in order to strengthen its business plans, had taken a strategic
decision to enter into a techno-financial joint venture with speciality process LLC of USA, which provided if
the required technical expertise for manufacturing CPVC pipes and fitting for home and industrial
applications. Astral was also going for an initial public offering to further its growth plans.
Q1) Explain the term strategic decision making?
Q2) Explain the process of decision making?
Q3) What is the basic thrust of strategic decision making?
Q4) Explain in detail the issues in strategic decision making?
CASE STUDY : 2
The essence of vision is a forward-looking view of what an organization wishes to become, mission is what
an organization is and why it exists.
Several years ago, Peter F Drucker raised important philosophical questions related to business what is our
business? What will it be? What it should be? These three questions though simply worded are in reality,
the most fundamental questions that any organization can put it itself. The answers are based on an analysis
of the underlying need of the society that any organization strives to fulfill. The satisfaction of that need is
them, the business of the organization.
Q1) Define vision? And explain the benefits of a vision?
Q2) What do you mean by mission?
Q3) How are Mission statements formulated and communicated?
Q4) Explain in detail the characteristics of a Mission statement?
CASE STUDY : 3
The major market players in Indian Food processing industry include local companies such as Agro Tech
Foods, Dabur, Gits, Parle and Foreign companies such as Nestle, Cadbury and Unilever.
The business environment in which the food processing industry exists could be explained in terms of
opportunities and threats.
Opportunities just like High demand potential, low output from organized sector. Exports of agricultural and
processed food have been rising, low cost Indian labour, younger population, changing lifestyle, nuclear
families, increasing personal income, number of working women, etc.
Threats just like conservative Government policies, inadequate infrastructure for distribution and
preservation, limited assess to appropriate technology for processing and packaging, high taxation on
packaged items etc.
Just observed how the food processing industry in India is affected by different levels of the environment at
the global and national level.
Q1) Explain the concept of Environment?
Q2) Explain in detail the characteristics of Environment?
Q3) Explain Internal Environment?
Q4) Explain External Environment?
CASE STUDY : 4
According to a doctoral study on the corporate takeovers in India the major reason for increased Mergers &
Acquisitions (M & A) activity were, legal reforms, economic reforms, economic slowdown, and depressed
stock markets, etc.
Statistics related to M & A in India are quite impressive. The market research firm found that Indian
companies spent over US $ 23 billion in 2006, a jump of over 400 percent over that in 2005, in acquiring
foreign companies, more than half of which were in Europe Inbound (Foreign companies talking over Indian
companies) and Outbound (Indian companies talking over Foreign companies) mergers and acquisitions
have increased dramatically.
Q1) Explain the term mergers and acquisitions?
Q2) What are the types of mergers and acquisitions?
Q3) Explain in detail the reasons for mergers and acquisitions?
QUANTITATIVE METHODS
CASE STUDY: 1
The bulbs manufactured by a company gave a mean life of 3000 hours with standard
deviation of 400 hours. If a bulb is selected at random, what is the probability it will
have a mean life less than 2000 hours?
Question:
1) Calculate the probability.
2) In what situation does one need probability theory?
3) Define the concept of sample space, sample points and events in context of
probability theory.
4) What is the difference between objective and subjective probability?
CASE STUDY : 2
The price P per unit at which a company can sell all that it produces is given by the
function P(x) = 300 — 4x. The cost function is c(x) = 500 + 28x where x is the number
of units produced. Find x so that the profit is maximum.
Question:
1) Find the value of x.
2) In using regression analysis for making predictions what are the assumptions
involved.
3) What is a simple linear regression model?
4) What is a scatter diagram method?
CASE STUDY : 3
Mr Sehwag invests Rs 2000 every year with a company, which pays interest at 10% p.a.
He allows his deposit to accumulate at C.I. Find the amount to the credit of the person
at the end of 5th year.
Question :
1) What is the Time Value of Money concept.
2) What do you mean by present value of money?
3) What is the Future Value of money.
4) What the amount to be credited at the end of 5th year.
CASE STUDY : 4
The cost of fuel in running of an engine is proportional to the square of the speed and is
Rs 48 per hour for speed of 16 kilometers per hour. Other expenses amount to Rs 300
per hour. What is the most economical speed?
Question:
1) What is most economical speed?
2) What is a chi-square test?
3) What is sampling and what are its uses.
PRINCIPLE & PRACTICE OF MANAGEMENT
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CASE STUDY : 1
International Case : Carrefour — Which Way to Go?
Wal-Mart's biggest global competitor is the big French retailer Carretour, a firm that has hypermarkets, big
stores offering a variety of goods. It has made large investments around the globe in Latin America and China.
But not all is well as competitors taking market share its home market, for instance. There has been even
speculation of a takeover by Wal-Mart or Tesco, an English chain. Mr. Barnard has been ousted after heading
the company for 12 years; he was replaced by Jose Luis Durant who is of German-Spanish descent. Although
the global expansion is cited by some as success, it may be even a big mistake. It withdrew from Japan and
sold 29 hypermarkets in Mexico. Carrefour also had problems competing with Tesco in Slovakia and the
Czech Republic. In Germany, the company faced tough competition from Aldi and Lidle, two successful
discounters. On the other hand, it bought stores in Poland, Italy, Turkey, and opened new stores in China,
South Korea, and Columbia. Carrefour has become more careful in selecting markets. But. the company is
eager to enter the Indian market, but found out in late 2006 that Wal-Mart will do so as well.
In France, where Carrefour is well established, the company made the big mistake in its pricing policy. It
probably started with the 1999 merger with Promodes, the French discount chain. Carrefour confused the
French clientele by losing its low-cost image; whether the image can be changed remains to be seen. Mr.
Durant, the new CEO since 2005, embarked on the new strategy by offering 15 percent new products in its
hypermarkets and 10 percent in its supermarkets. Moreover, he wants to employ more staff, extend the
operating hours in certain hypermarkets, cutting prices, trying small stores, and pushing down decision
making. Mr. Durant aims to stay only in countries where Carrefour is among the top retailers.
Questions:
1. How should Mr. Durant assess the opportunities in various countries around the world?
2. Should Carrefour adopt Wal-Mart's strategy of "low prices everyday"? What would be the advantage or
disadvantage of such a strategy?
3. How could Carrefour differentiate itself from Wal-Mart?
4. Identify cultures in selected countries that need to be considered in order to be successful?
CASE STUDY : 2
International Case : Reengineering the Business Process at Procter & Gamble
Procter & Gamble (P&G), a multinational corporation known for products such as diapers, shampoo, soap, and
toothpaste, was committed to improving value to the customer. Its products were sold through various
channels, such as grocery retailers, wholesalers, mass merchandisers, and club stores. The flow of goods in the
retail grocery channel was from the factory's warehouse to the distributors' warehouses before going to the
grocery stores where customers selected the merchandise from the shelves.
The improvement-driven company was not satisfied with its performance and developed a variety of programs
to improve its service and the efficiency of its operation. One such program was electronic data interchange,
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which provided daily information from the retail stores to P&G. The installation of the system resulted in
better service, reduced inventory levels, and labor-cost savings. Another approach, the continuous
replenishment program, provided additional benefits for P&G as well as for its retailer customers. Eventually,
the entire ordering system was redesigned, with the result of dramatic performance improvements. The
reengineering efforts also required restructuring of the organization. P&G had been known for its brand
management for more than 50 years. But in the late 1980s and early 1990s, the brand management approach
pioneered by the company in the 1930s required rethinking and restructuring. In a drive to improve efficiency
and coordination, several brands were combined with authority and responsibility given to category managers.
Such a manager would determine overall pricing and product policies. Moreover, the category managers had
the authority to withdraw weak brands, thus avoiding conflict between similar brands. They were also held
responsible for the profit of the product category they were managing. The switch to category management
required not only new skills but also a new attitude.
Questions:
1) The reengineering efforts of P&G focused on the business process system. Do you think other processes,
such as the human system, or other managerial policies need to be considered in a process redesign?
2) What do you think was the reaction of the brand managers, who may have worked under the old system for
many years, when the category management structure was installed?
3) As a consultant, would you have recommended a top-down or a bottom-up approach, or both, to process
redesign and organizational change?
4) What are the advantages and disadvantages of each approach.
CASE STUDY : 3
International Case : The Restructuring of Daimler-Benz
In a 1996 address to stockholders and friends of Daimler-Benz, CEO Jurgen Schrempp reviewed the position
of the diversified company. He started by saying "1995 was a dramatic year in the history of Daimler-Benz." It
was also a year that the board of management made a major break with the past.
Daimler-Benz, with more than 300,000 employees worldwide, consisted of four major groups: The first, by far
the biggest and most successful group, was Mercedes-Benz with about 200,000 employees. It is best known
for its passenger cars and commercial vehicles. The second was the AEG Daimler-Benz industries in the
business of rail systems, microelectronics, heavy diesel engines, energy systems technology, and automation.
The third was the Aerospace Group in the business of aircraft (the company has a more than one-third interest
in the Airbus consortium), space systems, defense and civil systems, and propulsion systems. Finally, there
was the Inter Services Group consisting of systemshaus, financial services, insurance brokerage, trading,
marketing services, mobile communications services, and real
estate management.
Daimler-Benz went through various development phases. From 1985 to 1990, it diversified into aerospace and
electrical engineering. The aim was to become an integrated high-tech group. This diversification was further
consolidated in the next phase that extended from 1990 to 1995. Under the leadership of Schrempp, the core
business was redefined and the strategy refocused.
A 1995-96 portfolio review showed the need for refocusing on what the company could do best. Top
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management reevaluated its strategies and its core businesses based on economic criteria and the strategic fit
of the various activities. It became clear that the company's strengths were in car manufacturing, the truck
business, and the railroad sector. Mercedes Benz, for example, had a strong competitive position with its cars
and trucks in Europe, North America, and Latin America. Vans were also relatively strong in Europe, and
buses had a good competitive position in Latin America. Based on this analysis, the strategies for potential
growth were through globalization and the development of new product segments.
In 1996, top management reassessed the company's position and its 1995 unsatisfactory results from its
operations. It was discovered that the company was exposed to currency fluctuations that affected profitability.
The company's image was also blurred because of the ventures into many different kinds of industries. The
management board decided to cut its losses and chart a new direction for the company, with greater emphasis
on profitability. The organization structure was tightened and certain businesses were divested. In fact, policy
decision from an earlier period were reversed. The unprofitable AEG Group and the Dutch aircraft
manufacturer Fokker did not receive financial support. Since both the Dutch government and Daimler-Benz
withdrew support, Fokker filed for bankruptcy. Although these and other drastic decisions helped reduce the
1995 financial losses, the company's goal was not to emphasize maximizing short-term profitability but to
work toward medium- and long-term profitability.
A number of other managerial decisions were made to achieve the ambitious goals of reducing costs and
improving profitability. Employees close to the operations were empowered to make decisions necessary to
carry out their tasks. The organization structure was simplified and decentralized so that organizational units
could respond faster to environmental changes. Moreover, the new organization structure was designed to
promote an entrepreneurial spirit. Control was exercised through a goal-driven, performance-based reward
system. At the same time, the new structure was designed to promote cooperation. In 1997, the board of
management restructured and integrated the Mercedes-Benz Group into Daimler-Benz. Consequently,
Mercedes-Benz's chief, Helmut Werner, who had been given credit for a successful model policy, resigned
from the company.
Questions:
1) What is your assessment of Daimler-Benz's operations in many different fields?
2) Should the various groups operate autonomously? What kinds of activities should be centralized?
3) Daimler-Benz is best known for its Mercedes-Benz cars. Why do you think Daimler bought AEG in the first
place and why did it venture into the Aerospace and Inter Services businesses?
4) Given the apparent mistakes in acquiring non-automotive businesses, what should Jurgen Schrempp do
now?
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CASE STUDY : 4
International Case : Global Car Industry
How the Lexus Was Born-and Continued Its Success in the United States, but will Lexus Succeed in Japan?
One of the best examples of global competition is in the car industry. As the Japanese gained market share in
America, U.S. car makers required the Japanese to self-impose quotas on cars exported to the United States.
This encouraged Japanese firms not only to establish their plants in the United States but also to build bigger
and more luxurious cars to compete against the higher-priced U.S. cars- and the expensive European cars such
as the Mercedes and the BMW.
One such Japanese car is the Lexus, by Toyota. This car is aimed at customers who would like to buy a
Mercedes or BMW but cannot afford either. With a sticker price of $35,000, the Lexus is substantially less
expensive than comparable European imports. In 1983, Toyota set out to develop the best car in the worldmeasured
against the Mercedes and the BMW. The aim was to produce a quiet, comfortable, and safe car that
could travel at 150 miles per hour and still avoid the gas guzzler tax imposed on cars getting less than 22.5
miles per gallon. This seemed to be an idea of conflicting goals: cars being fast seemed irreconcilable with
cars being at the same time fuel-efficient. To meet these conflicting goals, each subsystem of the car had to be
carefully scrutinized, improved whenever possible, and integrated with the total design. The first version of the
32-valve V-8 engine did not meet the fuel economy requirement. The engineers applied a problem-solving
technique called "thoroughgoing countermeasures at the source." This means an attempt to improve every
component until the design objectives are achieved. Not only the engine but also the transmission and other
parts underwent close scrutiny to make the car meet U.S. fuel requirements.
Toyota's approach to achieving quality is different from that of German car manufacturers. The latter use
relatively labor-intensive production processes. In contrast, Toyota's advanced manufacturing technology aims
at high quality through automation requiring only a fraction of the work force used by German car makers.
Indeed, this strategy, if successful, may be the secret weapon to gain market share in the luxury car market.
Questions:
1) Prepare a profile of the potential buyer of the Lexus.
2) What should Mercedes and BMW do to counteract the Japanese threat in the United States and Europe?
3) Why has the Lexus model been very successful in the U.S. but has not been marketed in Japan?
(Suggestion: Review the frequency of repair records of luxury cars. Also talk to Lexus dealers or Lexus
owners).
4) Do you think Lexus will succeed in Japan? Why or why not?
PERSONNAL MANAGEMENT
Page 1 Out of 1
Total Marks : 80
Instructions: Candidates should read carefully the instructions printed on the question paper and on
the cover of the answer book, which is provided for their use.
NB: Answer to each question must be started on a fresh page.
1. Psychological test as selection criteria can at best be a support to the interview process. Please
evaluate. (15 Marks)
2. Retention of employees in the organization starts with a structured and effective induction
program.Please comment. (15 Marks)
3. If you have to hire an HR Manager for your firm,what competencies would you look for?
Please answer in terms of your understanding of the HR function. (15 Marks)
4. Designing an attractive motivational strategy is the key to making of a high performance driven
organization. (15 Marks)
5. Briefly explain (Any two):
a) Different type of employee appraisals and rating
b) Validity / reliability
c) Job analysis
OPERATIONS MANAGEMENT
COURSE : Total Marks : 80
NB.1) All questions carry equal marks.
2) All questions are compulsory.
3} read questions carefully.
4} Figures to the right indicate full marks.
Q1) Explain the concept Six Sigma. Bring out the significance of Six Sigma in Quality
Management? (10 Marks)
Q2) Define Project Management and explain its nature and features? (10 Marks)
Q3) What is Process Analysis? Explain the steps in Manufacturing Process Selection
and Design? (10Marks)
Q4) Enumerate and explain the Theory of Constraints? (10 Marks)
Q5) Write short notes (any two) (10 Marks)
a) Inventory Control
b) Operations Scheduling
c) Aggregate Sales and Operations Planning
Q6) Explain the following concept (any two) (10 Marks)
1) Product Design
2) Strategic Capacity Management
3) Lean Productions
Q7) Define Material Requirements Planning. Discuss its various components? (10 Marks)
Q8) What is Supply Chain Strategy? Discuss its characteristics? (10 Marks)
AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL
Network Management
MARKS: 80
Section A
1. (i) List the five key differences between TCP reference model and OSI reference model. (2)
(ii) Write the similarities and differences between packet and cell switching. (2)
(iii) Why is the data link layer in a LAN subdivided into Logical Link Control (LLC) and Medium Access
Control (MAC) sub-layers ? (2)
(iv) List the characteristics of broadband coaxial cable. (2)
(v) Differentiate between virtual circuit and datagram’s. (2)
(vi) The maximum payload of TCP segment is 62 1/2,2 1/212 1/2 bytes. Why ? (3)
(vii) What are sliding window protocols ? Explain one-bit sliding window protocol with an appropriate
diagram. (2)
2. (i) Name all the basic network topologies and describe advantages of each. Draw proper diagram tor each
topology. (2)
(ii) Explain the following terms : (2)
(a) Bandwidth
(b) Channel capacity
(c) Multiplexing
(d) Quality of Service (QoS)
(e) Full-Duplex Transmission
(iii) What is the basic purpose of MAC layer protocol ? Explain the function of following MAC layer
protocols :
(a) Ethernet
(b) Token bus (2)
3. (i) Describe the characteristics and application or the following network devices : (6)
(a) Routers
AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL
(b) Bridges
(c) Switches
(iii) Answer the following : (4)
(a) Explain ISDN BRI Services.
(b) Differentiate between broadband and baseboard services.
(c) Describe the following three fields of TCP header :
(d) Sequence number
4. (i) What is congestion control ? How does it occur ? (2)
(ii) How does TCP handle connection establishment and crash recovery ? (2)
(iii) List and explain any five ISDN applications. (2)
5. (i) Describe and compare the following routing algorithms : (4)
(a) Shortest path routing
(b) Flooding
(ii) How does ATM differ from frame relay ? List and briefly define the ATM service classes. (6)
Section B
1. (a) Write any two differences between OSI and TCP/IP protocol suit. Also give reasons why OSI is not
popular. (3)
(b) Why is layering of the protocols done in TCP/IP stack ? (3)
(c) Explain any two functions of each layer of TCP/IP protocol stack. (2)
(d) How many address bits does the latest version of IP (IPv6) have ? What is the maximum number of IP
addresses possible with IPv6 ? (3)
(e) Identify the header of each flag and explain its meaning : (4)
(i) URG
(ii) ACK
(iii) FIN
(iv) RST
(f) How is flow control managed by Sliding Window protocol ? (3)
2. (a) What is Ethernet ? How does it work ? Also explain the fields of Ethernet Frame Format. (4)
(b) What is First-Octet Rule ? Give an example to explain it. (3)
3. (a) What is the significance of hierarchical naming scheme ? Differentiate among following addresses and
their meaning with reference of DNS : (5)
(i) www.isbm.edu
(ii) www.isbm.ac.in
(iii) www.Isbm.rnet.in
(iv) www.isbm.nic.in
NETWORK MANAGEMENT
Marks : 80
CASE STUDY : 1
The Engineering Department of 12 persons in a small corporation in on a regular 10 Base T Ethernet
Lan Hub with 16 ports. The busy group started complaining because of the slow network
performance. The network was operating at 50% utilization, whereas 30% utilization is acceptable. If
you are the Information Technology Engineer of the corporation and have to resolve the problem
technically.
Question :
1) Describe four choices for resolving the problem maintaining the lan as Ethernet Lan.
2) State the advantages of each approach.
3) State the disadvantages of each approach.
4) Give reasoning about the choice you would prefer.
AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL
CASE STUDY : 2
Assume these are two management stations – one SNMP based and the other Corba based. The SNMP
based manager does poll based fault management of a device by sending SNMP requests every 2
minutes. The Corba based NMS fault management is fully push based and the NMS receives a
notification when there is a fault. The size of the SNMP request and response PDUS is 150 bytes and
the size of a CORBA notification is about 400 bytes. During 1 hour these are 20 alarms.
Question:
1) Calculate the bandwidth used in both cases.
2) How do you differentiate between both the cases?
CASE STUDY : 3
WLAN is created as an air interface 802.11 from 802.3 Ethernet interface. BSS comprises a set of
wireless stations controlled by a wireless termination point (WTP) you have set up your home network
using a wireless access point (WAP), which is connected to the Ethernet output of ADSL coming into
your house.
Question:
1) What are the two modes of MAC types that the WTP could be configured in?
2) Assume that you have a WIFI AP, how is it configured?
3) Write the SNMP query to use to validate your answer in (2)
4) What is your general understanding about the above.
CASE STUDY : 4
As a network engineer in a Network Operations Center, you are following up on two trouble tickets.
You do not have a network management system and you have to use the basic network tools to validate
the problem before you can resolve them (i) Please explain what tools you would use in each case and
how it would validate the consumer complaint?
Question:
1) Trouble Ticket 100: Customer says that when he receives messages, the message is periodically
missing some characters.
2) Trouble Ticket 101: Customer in Atlanta complaints that when she tried to lag into the system
server, headquarters.com in New York, she gets disconnected with a time out. However, her colleague
in her New York office reports that he is able to access the system.
MARKETING MANAGEMENT
Case-1 : The use of the marketing mix in product launch
Introduction
NIVEA® is an established name in high quality skin and beauty care products. It is part of a range of
brands produced and sold by Beiersdorf. Beiersdorf, founded in 1882, has grown to be a global company
specialising in skin and beauty care.
In the UK, Beiersdorf’s continuing goal is to have its products as close as possible to its consumers,
regardless of where they live. Its aims are to understand its consumers in its many different markets and
delight them with innovative products for their skin and beauty care needs. This strengthens the trust and
appeal of Beiersdorf brands. The business prides itself on being consumer-led and this focus has helped
it to grow NIVEA into one of the largest skin care brands in the world.
Beiersdorf’s continuing programme of market research showed a gap in the market. This led to the
launch of NIVEA VISAGE® Young in 2005 as part of the NIVEA VISAGE range offering a
comprehensive selection of products aimed at young women. It carries the strength of the NIVEA brand
image to the target market of girls aged 13-19. NIVEA VISAGE Young helps girls to develop a proper
skin care routine to help keep their skin looking healthy and beautiful.
The market can be developed by creating a good product/range and introducing it to the market
(product-orientated approach) or by finding a gap in the market and developing a product to fill it
(market-orientated approach). Having identified a gap in the market, Beiersdorf launched NIVEA
VISAGE Young using an effective balance of the right product, price, promotion and place. This is
known as the marketing mix or ‘four Ps’. It is vital that a company gets the balance of these four
elements correct so that a product will achieve its critical success factors. Beiersdorf needed to develop
a mix that suited the product and the target market as well as meeting its own business objectives.
The company re-launched the NIVEA VISAGE Young range in June 2007 further optimising its
position in the market. Optimised means the product had a new formula, new design, new packaging and
a new name. This case study shows how a carefully balanced marketing mix provides the platform for
launching and re-launching a brand onto the market.
Product :
The first stage in building an effective mix is to understand the market. NIVEA uses market research to
target key market segments which identifies groups of people with the same characteristics such as
age/gender/attitude/lifestyle. The knowledge and understanding from the research helps in the
development of new products. NIVEA carries out its market research with consumers in a number of
different ways. These include:
• using focus groups to listen to consumers directly
• gathering data from consumers through a variety of different research techniques
• product testing with consumers in different markets.
Beiersdorf’s market research identified that younger consumers wanted more specialised face care
aimed at their own age group that offered a ‘beautifying’ benefit, rather than a solution to skin problems.
NIVEA VISAGE Young is a skin care range targeted at girls who do not want medicated products but
want a regime for their normal skin.
Competitor products tend to be problem focussed and offer medicated solutions. This gives NIVEA
competitive advantage. NIVEA VISAGE Young provides a unique bridge between the teenage market
and the adult market.
The company improved the product to make it more effective and more consumer-friendly. Beiersdorf
tested the improved products on a sample group from its target audience before finalising the range for
re-launch. This testing resulted in a number of changes to existing products. Improvements included:
• Changing the formula of some products. For example, it removed alcohol from one product and used
natural sea salts and minerals in others.
• Introducing two completely new products.
• A new modern pack design with a flower pattern and softer colours to appeal to younger women.
• Changing product descriptions and introducing larger pack sizes.
Each of these changes helped to strengthen the product range, to better meet the needs of the market.
Some of these changes reflect NIVEA’s commitment to the environment. Its corporate responsibility
approach aims to:
• reduce packaging and waste - by using larger pack sizes
• use more natural products – by including minerals and sea salts in the formula
• increase opportunities for recycling - by using recyclable plastic in its containers.
Price :
Lots of factors affect the end price of a product, for example, the costs of production or the business
need to maximise profits or sales. A product’s price also needs to provide value for money in the market
and attract consumers to buy.
There are several pricing strategies that a business can use:
• Cost based pricing – this can either simply cover costs or include an element of profit. It focuses on the
product and does not take account of consumers.
• Penetration price – an initial low price to ensure that there is a high volume of purchases and market
share is quickly won. This strategy encourages consumers to develop a habit of buying.
• Price skimming – an initial high price for a unique product encouraging those who want to be ‘first to
buy’ to pay a premium price. This strategy helps a business to gain maximum revenue before a
competitor’s product reaches the market.
On re-launch the price for NIVEA VISAGE Young was slightly higher than previously. This reflected
its new formulations, packaging and extended product range. However, the company also had to take
into account that the target market was both teenage girls and mums buying the product for their
daughters. This meant that the price had to offer value for money or it would be out of reach of its target
market.
As NIVEA VISAGE Young is one of the leading skin care ranges meeting the beautifying needs of this
market segment, it is effectively the price leader. This means that it sets the price level that
competitors will follow or undercut. NIVEA needs to regularly review prices should a competitor enter
the market at the ‘market growth’ point of the product life cycle to ensure that its pricing remains
competitive.
The pricing strategy for NIVEA is not the same as that of the retailers. It sells products to retailers at one
price. However, retailers have the freedom to use other strategies for sales promotion. These take
account of the competitive nature of the high street. They may use:
• loss leader: the retailer sells for less than it cost to attract large volume of sales, for example by
supermarkets
• discounting – alongside other special offers, such as ‘Buy one, get one free’ (BOGOF) or ‘two for
one’.
NIVEA VISAGE Young’s pricing strategy now generates around 7% of NIVEA VISAGE sales.
Place
Place refers to:
• How the product arrives at the point of sale. This means a business must think about what distribution
strategies it will use.
• Where a product is sold. This includes retail outlets like supermarkets or high street shops. It also
includes other ways in which businesses make products directly available to their target market, for
example, through direct mail or the Internet.
NIVEA VISAGE Young aims to use as many relevant distribution channels as possible to ensure the
widest reach of its products to its target market. The main channels for the product are retail outlets
where consumers expect to find skin care ranges. Around 65% of NIVEA VISAGE.
Young sales are through large high street shops such as Boots and Superdrug. Superdrug is particularly
important for the ‘young-end’ market. The other 35% of sales mainly comes from large grocery chains
that stock beauty products, such as ASDA, Tesco and Sainsbury’s. Market research shows that around
20% of this younger target market buys products for themselves in the high street stores when shopping
with friends. Research also shows that the majority of purchasers are actually made by mums, buying for
teenagers. Mums are more likely to buy the product from supermarkets whilst doing their grocery
shopping.
NIVEA distributes through a range of outlets that are cost effective but that also reach the highest
number of consumers. Its distribution strategies also consider the environmental impact of transport. It
uses a central distribution point in the UK. Products arrive from European production plants using
contract vehicles for efficiency for onward delivery to retail stores. Beiersdorf does not sell direct to
smaller retailers as the volume of products sold would not be cost effective to deliver but it uses
wholesalers for these smaller accounts. It does not sell directly through its website as the costs of
producing small orders would be too high. However, the retailers, like Tesco, feature and sell the
NIVEA products in their online stores.
Promotion
Promotion is how the business tells customers that products are available and persuades them to buy.
Promotion is either above-the-line or below-the-line. Above-the-line promotion is directly paid for, for
example TV or newspaper advertising.
Below-the-line is where the business uses other promotional methods to get the product message across:
• Events or trade fairs help to launch a product to a wide audience. Events may be business to consumer
(B2C) whereas trade fairs are business to business (B2B).
• Direct mail can reach a large number of people but is not easy to target specific consumers costeffectively.
• Public relations (PR) includes the different ways a business can communicate with its stakeholders,
through, for example, newspaper press releases. Other PR activities include sponsorship of high profile
events like Formula 1 or the World Cup, as well as donations to or participation in charity events.
Branding – a strong and consistent brand identity differentiates the product and helps consumers to
understand and trust the product. This aims to keep consumers buying the product long-term.
• Sales promotions, for example competitions or sampling, encourage consumers to buy products in the
short-term.
NIVEA chooses promotional strategies that reflect the lifestyle of its audience and the range of media
available. It realises that a ‘one way’ message, using TV or the press, is not as effective as talking
directly to its target group of consumers. Therefore NIVEA does not plan to use any above-the-line
promotion for NIVEA VISAGE Young.
The promotion of NIVEA VISAGE Young is consumer-led. Using various below-the-line routes,
NIVEA identifies ways of talking to teenagers (and their mums) directly.
• A key part of the strategy is the use of product samples. These allow customers to touch, feel, smell
and try the products. Over a million samples of NIVEA VISAGE Young products will be given away
during 2008. These samples will be available through the website, samples in stores or in ‘goody bags’
given out at VISAGE roadshows up and down the country.
• NIVEA VISAGE Young launched an interactive online magazine called FYI (Fun, Young &
Independent) to raise awareness of the brand. The concept behind the magazine is to give teenage girls
the confidence to become young women and to enjoy their new-found independence. Communication
channels are original and engaging to enable teenagers to identify with NIVEA VISAGE Young. The
magazine focuses on ‘first time’ experiences relating to NIVEA VISAGE Young being their first
skincare routine. It is promoted using the Hit40UK chart show and the TMF digital TV channel.
• In connection with FYI, NIVEA VISAGE Young has recognised the power of social network sites for
this young audience and also has pages on MySpace, Facebook and Bebo. The company is using the
power of new media as part of the mix to grow awareness amongst the target audience.
Conclusion
NIVEA VISAGE Young is a skincare range in the UK market designed to enhance the skin and beauty
of the teenage consumer rather than being medicated to treat skin problems. As such, it has created a
clear position in the market. This shows that NIVEA understands its consumers and has produced this
differentiated product range in order to meet their needs.
To bring the range to market, the business has put together a marketing mix. This mix balances the four
elements of product, price, place and promotion. The mix uses traditional methods of place, such as
distribution through the high street, alongside more modern methods of promotion, such as through
social networking sites. It makes sure that the message of NIVEA VISAGE Young reaches the right
people in the right way.
Answer the following questions:
1. Describe what is meant by a business being ‘consumer led’.
2. What are the key parts of the marketing mix? Explain how each works with the others.
3. Explain why the balance of the marketing mix is as important as any single element.
4. Analyse the marketing mix for NIVEA VISAGE Young. What are its strongest points? Explain why
you think this is so.
Case-2 : SWOT analysis in action at Škoda
Introduction
In 1895 in Czechoslovakia, two keen cyclists, Vaclav Laurin and Vaclav Klement, designed and
produced their own bicycle. Their business became Škoda in 1925. Škoda went on to manufacture
cycles, cars, farm ploughs and airplanes in Eastern Europe. Škoda overcame hard times over the next 65
years. These included war, economic depression and political change. By 1990 the Czech management
of Škoda was looking for a strong foreign partner. Volkswagen AG (VAG) was chosen because of its
reputation for strength, quality and reliability. It is the largest car manufacturer in Europe providing an
average of more than 5 million cars a year – giving it a 12% share of the world car market. Volkswagen
AG comprises the Volkswagen, Audi, Škoda, SEAT, Volkswagen Commercial Vehicles, Lamborghini,
Bentley and Bugatti brands. Each brand has its own specific character and is independent in the market.
Škoda UK sells Škoda cars through its network of independent franchised dealers.
To improve its performance in the competitive car market, Škoda UK’s management needed to assess its
brand positioning. Brand positioning means establishing a distinctive image for the brand compared to
competing brands. Only then could it grow from being a small player. To aid its decision-making, Škoda
UK obtained market research data from internal and external strategic audits. This enabled it to take
advantage of new opportunities and respond to threats.
The audit provided a summary of the business’s overall strategic position by using a SWOT analysis.
SWOT is an acronym which stands for:
• Strengths – the internal elements of the business that contribute to improvement and growth
• Weaknesses – the attributes that will hinder a business or make it vulnerable to failure
• Opportunities – the external conditions that could enable future growth
• Threats – the external factors which could negatively affect the business.
This case study focuses on how Škoda UK’s management built on all the areas of the strategic audit.
The outcome of the SWOT analysis was a strategy for effective competition in the car industry.
Strengths
To identify its strengths, Škoda UK carried out research. It asked customers directly for their opinions
about its cars. It also used reliable independent surveys that tested customers’ feelings. For example, the
annual JD Power customer satisfaction survey asks owners what they feel about cars they have owned
for at least six months. JD Power surveys almost 20,000 car owners using detailed questionnaires. Škoda
has been in the top five manufacturers in this survey for the past 13 years. In Top Gear’s 2007 customer
satisfaction survey, 56,000 viewers gave their opinions on 152 models and voted Škoda the ‘number 1
car maker’. Škoda’s Octavia model has also won the 2008 Auto Express Driver Power ‘Best Car’.
Škoda attributes these results to the business concentrating on owner experience rather than on sales. It
has considered ‘the human touch’ from design through to sale. Škoda knows that 98% of its drivers
would recommend Škoda to a friend. This is a clearly identifiable and quantifiable strength. Škoda uses
this to guide its future strategic development and marketing of its brand image.
Strategic management guides a business so that it can compete and grow in its market. Škoda adopted a
strategy focused on building cars that their owners would enjoy. This is different from simply
maximising sales of a product. As a result, Škoda’s biggest strength was the satisfaction of its
customers. This means the brand is associated with a quality product and happy customers.
Weaknesses
A SWOT analysis identifies areas of weakness inside the business. Škoda UK’s analysis showed that in
order to grow it needed to address key questions about the brand position. Škoda has only 1.7% market
share. This made it a very small player in the market for cars. The main issue it needed to address was:
how did Škoda fit into this highly competitive, fragmented market?
This weakness was partly due to out-dated perceptions of the brand. These related to Škoda’s eastern
European origins. In the past the cars had an image of poor vehicle quality, design, assembly, and
materials. Crucially, this poor perception also affected Škoda owners. For many people, car ownership is
all about image. If you are a Škoda driver, what do other people think?
From 1999 onwards, under Volkswagen AG ownership, Škoda changed this negative image. Škoda cars
were no longer seen as low-budget or low quality. However, a brand ‘health check’ in 2006 showed that
Škoda still had a weak and neutral image in the mid-market range it occupies, compared to other players
in this area, for example, Ford, Peugeot and Renault. This meant that whilst the brand no longer had a
poor image, it did not have a strong appeal either. This understanding showed Škoda in which direction
it needed to go. It needed to stop being defensive in promotional campaigns. The company had sought to
correct old perceptions and demonstrate what Škoda cars were not. It realised it was now time to say
what the brand does stand for. The marketing message for the change was simple. Škoda owners were
known to be happy and contented with their cars. The car-buying public and the car industry as a whole
needed convincing that Škoda cars were great to own and drive.
Opportunities and Threats
Opportunities
Opportunities occur in the external environment of a business. These include for example, gaps in the
market for new products or services. In analysing the external market, Škoda noted that its competitors’
marketing approaches focused on the product itself.
Audi emphasises the technology through its strapline, ‘Vorsprung Durch Technik’ (‘advantage through
technology’). BMW promotes ‘the ultimate driving machine’. Many brands place emphasis on the
machine and the driving experience. Škoda UK discovered that its customers loved their cars more than
owners of competitor brands, such as Renault or Ford.
Information from the SWOT analysis helped Škoda to differentiate its product range. Having a
complete understanding of the brand’s weaknesses allowed it to develop a strategy to strengthen the
brand and take advantage of the opportunities in the market. It focused on its existing strengths and
provided cars focused on the customer experience. The focus on ‘happy Škoda customers’ is an
opportunity. It enables Škoda to differentiate the Škoda brand to make it stand out from the competition.
This is Škoda’s unique selling proposition (USP) in the motor industry.
Threats
Threats come from outside of a business. These involve, for example, a competitor launching cheaper
products. A careful analysis of the nature, source and likelihood of these threats is a key part of the
SWOT process.
The UK car market includes 50 different car makers selling 200 models. Within these there are over
2,000 model derivatives. Škoda UK needed to ensure that its messages were powerful enough for
customers to hear within such a crowded and competitive environment. If not, potential buyers would
overlook Škoda. This posed the threat of a further loss of market share.
Škoda needed a strong product range to compete in the UK and globally. In the UK the Škoda brand is
represented by seven different cars. Each one is designed to appeal to different market segments. For
example:
• The Škoda Fabia is sold as a basic but quality ‘city car’
• The Škoda Superb offers a more luxurious, ‘up-market’ appeal
• The Škoda Octavia Estate provides a family with a fun drive but also a great big boot.
Pricing reflects the competitive nature of Škoda’s market. Each model range is priced to appeal to
different groups within the mainstream car market. The combination of a clear range with competitive
pricing has overcome the threat of the crowded market.
The following example illustrates how Škoda responded to another of its threats, namely, the need to
respond to EU legal and environmental regulations. Škoda responded by designing products that are
environmentally friendly at every stage of their life cycle. This was done by for example:-
• Recycling as much as possible. Škoda parts are marked for quick and easy identification when the car
is taken apart.
• Using the latest, most environmentally-friendly manufacturing technologies and facilities available.
For instance, areas painted to protect against corrosion use lead-free, water based colours.
• Designing processes to cut fuel consumption and emissions in petrol and diesel engines. These use
lighter parts making vehicles as aerodynamic as possible to use less energy.
• Using technology to design cars with lower noise levels and improved sound quality. Outcomes and
benefits of SWOT analysis.
Škoda UK’s SWOT analysis answered some key questions. It discovered that:
• Škoda car owners were happy about owning a Škoda
• the brand was no longer seen as a poorer version of competitors’ cars.
However,
• the brand was still very much within a niche market
• a change in public perception was vital for Škoda to compete and increase its market share of the
mainstream car market.
The challenge was how to build on this and develop the brand so that it was viewed positively. It
required a whole new marketing strategy.
Škoda UK has responded with a new marketing strategy based on the confident slogan, ‘the
manufacturer of happy drivers.’ The campaign’s promotional activities support the new brand position.
The key messages for the campaign focus on the ‘happy’ customer experience and appeal at an
emotional rather than a practical level. The campaign includes:
• he ‘Fabia Cake’ TV advert. This showed that the car was ‘full of lovely stuff’ with the happy music
(‘Favourite things’) in the background.
• An improved and redesigned website which is easy and fun to use. This is to appeal to a young
audience. It embodies the message ‘experience the happiness of Škoda online’.
Customers are able to book test drives and order brochures online. The result is that potential customers
will feel a Škoda is not only a reliable and sensible car to own, it is also ‘lovely’ to own.
Analysing the external opportunities and threats allows Škoda UK to pinpoint precisely how it should
target its marketing messages. No other market player has ‘driver happiness’ as its USP. By building on
the understanding derived from the SWOT, Škoda UK has given new impetus to its campaign. At the
same time, the campaign has addressed the threat of external competition by setting Škoda apart from its
rivals.
Conclusion
Škoda is a global brand offering a range of products in a highly competitive and fragmented market. The
company must respond positively to internal and external issues to avoid losing sales and market share.
A SWOT analysis brings order and structure to otherwise random information. The SWOT model helps
managers to look internally as well as externally. The information derived from the analysis gives
direction to the strategy. It highlights the key internal weaknesses in a business, it focuses on strengths
and it alerts managers to opportunities and threats. Škoda was able to identify where it had strengths to
compete. The structured review of internal and external factors helped transform Škoda UK’s strategic
direction.
The case study shows how Škoda UK transformed its brand image in the eyes of potential customers and
build its competitive edge over rivals. By developing a marketing strategy playing on clearly identified
strengths of customer happiness, Škoda was able to overcome weaknesses. It turned its previously
defensive position of the brand to a positive customer-focused experience. The various awards Škoda
has won demonstrate how its communications are reaching customers. Improved sales show that Škoda
UK’s new strategy has delivered benefits.
Answer the
1. What was the key weakness that Škoda was able to identify?
2. What strength did Škoda use to turn its brand weakness into an opportunity?
3. How has Škoda strategically addressed external threats?
4. What in your view are the important benefits of using a SWOT analysis
Case-3 : Marketing strategy for growth
Introduction
Businesses must respond to change in order to remain competitive. Developing appropriate strategies
which allow them to move forward is essential. Wilkinson is a prime example of a business that has
responded to changing customer needs throughout its history. It is one of the UK’s long-established
retailers of a wide range of food, home, garden, office, health and beauty products.James Kemsey (JK)
Wilkinson opened his first Wilkinson Store in Charnwood Street, Leicester in 1930. After the Second
World War, the 1950s saw a rise in the use of labour-saving devices and DIY. Wilkinson responded by
making this type of product the focus of its sales. In the 1960s customers wanted more convenience
shopping. Wilkinson started selling groceries and supermarket goods and created the Wilko brand. In the
1980s Wilkinson extended its range of low-cost products to include quality clothing, toys, toiletries and
perfumes. In 1995 it opened a central distribution centre in Workshop, serving stores in the north of
England and in 2004, a new distribution centre opened in Wales. In 2005 Wilkinson launched its
Internet shopping service, offering over 800,000 product lines for sale online. Wilkinson currently has
over 300 stores, which carry an average of 25,000 product lines. 40% of these are Wilko ‘own-brand’
products. The company’s target is to see this element grow and to have over 500 stores by 2012.
Wilkinson’s growth places it in the top 30 retailers in the UK. Recently it has faced increasing
challenges from competitors, such as the supermarket sector. Wilkinson needed to combat this and
identify new areas for growth. Over two years it conducted extensive market research. This has helped it
create a marketing strategy designed to continue growing by targeting a new market segment - the
student population. This case study focuses on how Wilkinson created and implemented this strategy,
using the findings of its market research to drive the strategy forward.
Marketing strategy aims to communicate to customers the added-value of products and services. This
considers the right mix of design, function, image or service to improve customer awareness of the
business’ products and ultimately to encourage them to buy. An important tool for helping develop an
appropriate marketing strategy is Ansoff’s Matrix. This model looks at the options for developing a
marketing strategy and helps to assess the levels of risk involved with each option. Marketing strategies
may focus on the development of products or markets. Doing more of what a business already does
carries least risk; developing a completely new product for a new audience carries the highest risk both
in terms of time and costs.
Based on its research, Wilkinson committed to a market development strategy to sell its products to a
new audience of students. This is a medium risk strategy as it requires the business to find and develop
new customers. It also carries costs of the marketing campaigns to reach this new group. The main focus
of the strategy was to increase awareness of the brand among students and encourage them to shop
regularly at Wilkinson stores.
Market research
Market research is vital for collecting data on which to base the strategy. Market research takes one of
two main forms – primary research and secondary research. Primary research (also called field
research) involves collecting data first hand. This can take many forms, the main ones being interview,
questionnaires, panels and observation. Secondary research (also called desk research) involves
collecting data which already exists. This includes using information from reports, publications, Internet
research and company files.
Both methods have advantages and disadvantages. The advantages of primary research are that it is
recent, relevant and designed specifically for the company’s intended strategy. The main disadvantage is
that it is more expensive than secondary research and can be biased if not planned well. Secondary
research is relatively cheap, can be undertaken quickly and so enables decision-making sooner.
However, secondary research can go out-of-date and may not be entirely relevant to the business’ needs.
Wilkinson undertook primary market research using questionnaires from students across the UK and
secondary research using government and university admissions data. The statistics revealed that there
were three million potential student customers.
They had a combined annual spend of around £9 billion per year. This research confirmed that the
choice of focusing on the student market as a means of growth was valid. Wilkinson undertook further
research to identify how to reach students and persuade them to start shopping at Wilkinson stores. This
information was used to formulate a focus strategy. This was aimed specifically at the needs of the
student ‘market segment’.
Marketing to students
Wilkinson involved 60 universities in research, using questionnaires distributed to students initially in
Years 2 and 3 of a range of universities and then to ‘freshers’ (new students) through the University and
Colleges Admission Service. This ensured the widest range of students was included to eliminate bias. It
also gave a wide range of responses. From this initial group, students were asked a second set of
questions. Participants were rewarded with Amazon vouchers to encourage a good take-up. The research
focused on two areas:
1. student awareness of the Wilkinson brand and
2. reasons why students were currently not using the stores regularly.
The market research enabled Wilkinson to put together its marketing strategy. The aim was to ensure the
student population began shopping at Wilkinson stores early in their student experience. This would
help to maintain their customer loyalty to Wilkinson throughout their student years and also to develop
them as future customers after university. Repeat business is key to sustained growth. Wilkinson
wanted to create satisfied customers with their needs met by the Wilkinson range of products. A
marketing campaign was launched which focused on a range of promotional tactics, specifically
designed to appeal to university students:
• Wilkinson being present at freshers’ fairs – and giving free goody bags with sample
products directly to students
• direct mail flyers to homes and student halls, prior to students arriving
• advertisements with fun theme, for example, showing frying pans as tennis racquets
• web banners
• offering discounts of 15% with first purchase using the online store
• gift vouchers
• free wallplanners.
The challenge was to get students into Wilkinson stores. The opportunity was to capture a new customer
group at an early stage and provide essential items all year round. This would lead to a committed
customer group and secure repeat business.
Outcomes/evaluation
Wilkinson wanted to know what would inspire students to shop at Wilkinson more and what factors
would help to attract non-customers. The research provided significant primary information to analyse
the effects of the campaign. Wilkinson used questionnaires collected from the first year undergraduates
to gather qualitative data. In addition, Wilkinson obtained quantitative data from various other
sources, including:
• redemption rates – how many people used the discount vouchers when buying
• sales analysis – how much extra business did the stores handle
• footfall in stores analysis – how many extra people went into stores.
This information helped Wilkinson to develop its plans for future marketing campaigns. It identified
Motivation factors for the student audience which would help to encourage future purchase. Key
factors included products being cheaper than competitors and easy access to stores. 23% of students
questioned gave ‘distance from university’ as a reason for not regularly visiting the store. The layout of
the store was another major problem affecting repeat visits. These findings have been taken on board by
Wilkinson in its future planning of store locations and layouts.
Researching students’ opinions after the campaign showed that:
• Awareness of Wilkinson brand had significantly risen from 77% to 95% of those interviewed. This
brought it in line with Morrison supermarkets, a key competitor.
Conclusion
Wilkinson’s marketing strategy began with its corporate aim to grow and increase stores across the UK.
It was facing increased competition from supermarkets and needed to identify an area to focus on. To
pursue a growth strategy, Wilkinson used market research to identify new target customers. This enabled
it to prepare marketing strategies to fit the audience.
Primary and secondary research was used to find out customer views regarding its brand. Data indicated
the student market segment was a significant area to focus on to achieve market development. A
marketing campaign using data from a follow-up survey was put in place. The campaign showed
significant increase in students’ levels of awareness about Wilkinson and its products. It encouraged
them either to shop more or to try Wilkinson for the first time. The campaign helped to achieve many of
the business’ aims, creating increased brand awareness and repeat visits. It also helped to inform the
company’s future strategies for growth. Market research gathered will help to formulate future plans for
new stores. These will be in line with Wilkinson commitment to providing communities with affordable
products across the country.
Answer the following questions
1. What is the difference between primary and secondary research? Identify one example of primary and
secondary research carried out by Wilkinson.
2. Explain why Wilkinson needed a marketing strategy to help them to grow.
3. Evaluate the benefits of the marketing campaign to Wilkinson.
4. Analyse how effective the marketing campaign was in helping Wilkinson respond to competitive
pressures.
Case-4 : Extending the product life cycle
Introduction
Businesses need to set themselves clear aims and objectives if they are going to succeed. The Kellogg
Company is the world’s leading producer of breakfast cereals and convenience foods, such as cereal
bars, and aims to maintain that position. In 2006, Kellogg had total worldwide sales of almost $11
billion (£5.5 billion). In 2007, it was Britain’s biggest selling grocery brand, with sales of more than
£550 million. Product lines include ready-to-eat cereals (i.e. not hot cereals like porridge) and nutritious
snacks, such as cereal bars. Kellogg’s brands are household names around the world and include Rice
Krispies, Special K and Nutri-Grain, whilst some of its brand characters, like Snap, Crackle and Pop, are
amongst the most wellknown in the world.
Kellogg has achieved this position, not only through great brands and great brand value, but through a
strong commitment to corporate social responsibility. This means that all of Kellogg’s business aims
are set within a particular context or set of ideals. Central to this is Kellogg’s passion for the business,
the brands and the food, demonstrated through the promotion of healthy living.
The company divides its market into six key segments. Kellogg's Corn Flakes has been on breakfast
tables for over 100 years and represents the ‘Tasty Start’ cereals that people eat to start their day. Other
segments include ‘Simply Wholesome’ products that are good for you, such as Kashi Muesli, ‘Shape
Management’ products, such as Special K and ‘Inner Health’ lines, such as All-Bran. Children will be
most familiar with the ‘Kid Preferred’ brands, such as Frosties, whilst ‘Mum Approved’ brands like
Raisin Wheats are recognised by parents as being good for their children.
Each brand has to hold its own in a competitive market. Brand managers monitor the success of brands
in terms of market share, growth and performance against the competition. Key decisions have to be
made about the future of any brand that is not succeeding. This case study is about Nutri-Grain. It shows
how Kellogg recognised there was a problem with the brand and used business tools to reach a solution.
The overall aim was to re-launch the brand and return it to growth in its market.
The product life cycle
Each product has its own life cycle. It will be ‘born’, it will ‘develop’, it will ‘grow old’ and, eventually,
it will ‘die’. Some products, like Kellogg’s Corn Flakes, have retained their market position for a long
time. Others may have their success undermined by falling market share or by competitors. The product
life cycle shows how sales of a product change over time. The five typical stages of the life cycle are
shown on a graph. However, perhaps the most important stage of a product life cycle happens before
this graph starts, namely the
Research and Development (R&D) stage. Here the company designs a product to meet a need in the
market. The costs of market research - to identify a gap in the market and of product development to
ensure that the product meets the needs of that gap - are called ‘sunk’ or start-up costs. Nutri-Grain was
originally designed to meet the needs of busy people who had missed breakfast. It aimed to provide a
healthy cereal breakfast in a portable and convenient format.
1. Launch - Many products do well when they are first brought out and Nutri-Grain was no exception.
From launch (the first stage on the diagram) in 1997 it was immediately successful, gaining almost 50%
share of the growing cereal bar market in just two years.
2. Growth - Nutri-Grain’s sales steadily increased as the product was promoted and became well
known. It maintained growth in sales until 2002 through expanding the original product with new
developments of flavour and format. This is good for the business, as it does not have to spend money
on new machines or equipment for production. The market position of Nutri-Grain also subtly changed
from a ‘missed breakfast’ product to an ‘all-day’ healthy snack.
3. Maturity - Successful products attract other competitor businesses to start selling similar products.
This indicates the third stage of the life cycle - maturity. This is the time of maximum profitability, when
profits can be used to continue to build the brand. However, competitor brands from both Kellogg itself
(e.g. All Bran bars) and other manufacturers (e.g. Alpen bars) offered the same benefits and this slowed
down sales and chipped away at Nutri-Grain’s market position. Kellogg continued to support the
development of the brand but some products (such as Minis and Twists), struggled in a crowded market.
Although Elevenses continued to succeed, this was not enough to offset the overall sales decline. Not all
products follow these stages precisely and time periods for each stage will vary widely. Growth, for
example, may take place over a few months or, as in the case of Nutri-Grain, over several years.
4. Saturation - This is the fourth stage of the life cycle and the point when the market is ‘full’. Most
people have the product and there are other, better or cheaper competitor products. This is called market
saturation and is when sales start to fall. By mid-2004 Nutri-Grain found its sales declining whilst the
market continued to grow at a rate of 15%.
5. Decline - Clearly, at this point, Kellogg had to make a key business decision. Sales were falling, the
product was in decline and losing its position. Should Kellogg let the product ‘die’, i.e. withdraw it from
the market, or should it try to extend its life?
Strategic use of the product life cycle
When a company recognises that a product has gone into decline or is not performing as well as it
should, it has to decide what to do. The decision needs to be made within the context of the overall aims
of the business. Kellogg’s aims included the development of great brands, great brand value and the
promotion of healthy living. Strategically, Kellogg had a strong position in the market for both healthy
foods and convenience foods. Nutri-Grain fitted well with its main aims and objectives and therefore
was a product and a brand worth rescuing.
Kellogg decided to try to extend the life of the product rather than withdraw it from the market. This
meant developing an extension strategy for the product. Ansoff’s matrix is a tool that helps analyse
which strategy is appropriate. It shows both market-orientated and product-orientated possibilities.
Extending the Nutri-Grain cycle – identifying the problem
Kellogg had to decide whether the problem with Nutri-Grain was the market, the product or both. The
market had grown by over 15% and competitors’ market share had increased whilst Nutri-Grain sales in
2003 had declined. The market in terms of customer tastes had also changed – more people missed
breakfast and therefore there was an increased need for such a snack product.
The choice of extension strategy indicated by the matrix was either product development or
diversification. Diversification carries much higher costs and risks. Kellogg decided that it needed to
focus on changing the product to meet the changing market needs.
Research showed that there were several issues to address:
1. The brand message was not strong enough in the face of competition. Consumers were not impressed
enough by the product to choose it over competitors.
2. Some of the other Kellogg products (e.g. Minis) had taken the focus away from the core business.
3. The core products of Nutri-Grain Soft Bake and Elevenses between them represented over 80% of
sales but received a small proportion of advertising and promotion budgets.
4. Those sales that were taking place were being driven by promotional pricing (i.e discounted pricing)
rather than the underlying strength of the brand.
Implementing the extension strategy for Nutri-Grain having recognised the problems, Kellogg then
developed solutions to re-brand and re-launch the product in 2005.
1. Fundamental to the re-launch was the renewal of the brand image. Kellogg looked at the core
features that made the brand different and modelled the new brand image on these. Nutri-Grain is
unique as it is the only product of this kind that is baked. This provided two benefits:
• the healthy grains were soft rather than gritty
• the eating experience is closer to the more indulgent foods that people could be eating (cakes and
biscuits, for example). The unique selling point, hence the focus of the brand, needed to be the ‘soft
bake’.
2. Researchers also found that a key part of the market was a group termed ‘realistic snackers’. These
are people who want to snack on healthy foods, but still crave a great tasting snack. The re-launched
Nutri-Grain product needed to help this key group fulfil both of these desires.
3. Kellogg decided to re-focus investment on the core products of Soft Bake Bars and Elevenses as these
had maintained their growth (accounting for 61% of Soft Bake Bar sales). Three existing Soft Bake Bar
products were improved, three new ranges introduced and poorly performing ranges (such as Minis)
were withdrawn.
4. New packaging was introduced to unify the brand image.
5. An improved pricing structure for stores and supermarkets was developed.
Using this information, the re-launch focused on the four parts of the marketing mix:
• Product – improvements to the recipe and a wider range of flavours, repositioning the brand as
‘healthy and tasty’, not a substitute for a missed breakfast
• Promotion – a new and clearer brand image to cover all the products in the range along with
advertising and point-of-sale materials
• Place – better offers and materials to stores that sold the product
• Price – new price levels were agreed that did not rely on promotional pricing. This improved revenue
for both Kellogg and the stores.
As a result Soft Bake Bar year-on-year sales went from a decline to substantial growth, with Elevenses
sales increasing by almost 50%. The Nutri-Grain brand achieved a retail sales growth rate of almost
three times that of the market and most importantly, growth was maintained after the initial re-launch.
Conclusion
Successful businesses use all the tools at their disposal to stay at theSuccessful businesses use all the
tools at their disposal to stay at the top of their chosen market. Kellogg was able to use a number of
business tools in order to successfully re-launch the Nutri-Grain brand. These tools included the product
life cycle, Ansoff’s matrix and the marketing mix. Such tools are useful when used properly.
Kellogg was able to see that although Nutri-Grain fitted its strategic profile – a healthy, convenient
cereal product – it was underperforming in the market. This information was used, along with the aims
and objectives of the business, to develop a strategy for continuing success. Finally, when Kellogg
checked the growth of the re-launched product against its own objectives, it had met all its aims to:
• re-position the brand through the use of the marketing mix
• return the brand to growth
• improve the frequency of purchase
• introduce new customers to the brand.
Nutri-Grain remains a growing brand and product within the Kellogg product family.
Answer the following questions:
1. Using current products familiar to you, draw and label a product life cycle diagram, showing which
stage each product is at.
2. Suggest appropriate aims and objectives for a small, medium and large business.
4. Consider the decision taken by Kellogg to opt for product development. Suggest a way in which it
could have diversified instead. Justify your answer.
MANAGEMENT CONTROL SYSTEM
CASE STUDY : 1
Traditional Forecasting
Many organizations seek to mitigate some of the traditional budgeting problems noted above by
implementing some form of forecasting. This allows managers to update budgeted numbers with actual
results for the periods that have already occurred. The forecasts are used to predict what will happen in
the future, often seeking to confirm whether predetermined annual targets will still be met.
While financial managers think of forecasting in terms of periodic forecasts, operating managers are
constantly adjusting plans, including sales estimates, which are converted to operating plans for
production and inventory control levels. Most of these planning efforts are conducted in numerous
discrete systems supporting different functional areas. A great deal of effort is required to integrate and
reconcile these different views of the future.
Financial forecasts are performed on a preset schedule, typically quarterly or monthly.
According to David Axson, author of "Best Practices in Planning and Management Reporting" 4. Axson
explains that these process cycle times are extended due to:
„h The difficulty in getting timely information;
„h The high level of details required taking significant time to forecast each item; and
„h The fact that much of this data is developed in a series of disconnected spreadsheets making
integration a time-consuming process.
Many companies use a purely financial process that is disconnected from its specific business drivers-a
mere financial accumulation of trends. These companies often determine their monthly forecasts by
subtracting the actual results to date from their annual targets and then dividing the remaining gap by the
months remaining. They then view the monthly result to see if it is even possible to attain, All their
forecasting work focuses on achieving the predefined annual targets, even if the underlying assumptions
that went into creating those targets are now Incorrect.
The level of detail used often mirrors the annual plan. Some planners forecast at the same level of detail
that is used for actual reporting, This can result in tremendous efforts in calculating variances and the
related explanation process.
These misconceptions often turn traditional forecasting into merely a different pc version of the
problems with traditional budgeting. Let's examine why.
For many organizations, forecasting is a mechanical process that adjusts future run rates upward or
downward as necessary so that the predetermined annual targets are still met.
They ignore the fact that targets were set based on various assumptions. What happens when the annual
targets are held but their underlying basis proves incorrect? The great quality guru W. Edwards Deming
noted that "if you pay people to hit targets, they often will, even if it destroys your company."
Q1) Explain the process of cycle times given by David Axson. (20 Marks)
CASE STUDY : 2
Methodology :
Jimmy Carter, who introduced ZBB for resources allocation and control in government explains, "In
ZBB, the budget is broken into units called DPs which are prepared by managers at each level. These
packages include an analysis of purpose, cost, measures of performance and benefits, alternative courses
of action and consequences of not performing the activity. Then all packages are to be ranked in order of
priority. After several discussions between department heads and the chief executive, the rankings are
finalized, and packages upto the level of affordability are approved and funded."
In more specific terms the ZBB methodology as well as the sequential stages in its introduction may be
outlined as follows:
¡E Defining the Decision Units (DUs) within the firm: A DU is a tangible activity or group of activities
for which a single manager is responsible for successful performance. The DU concept is akin to that of
the responsibility center. A traditional cost center, a group of people or even a project may be a DU.
¡E Defining objectives of each DU : In clear and specific terms and in conformity with the enterprise,
objectives and goals.
¡E Identifying activities in the form of DPs: The term D P focuses on the analysis of each activity in the
manufacturing process according to the incident of the relevant cost and the importance of that activity
in the overall cost structure of the organization. Thus, in essence DPs not only refer to the costs but also
the benefits of an activity of process.
¡E Ranking of alternative DPs in the order of decreasing benefit to the organization, using cost-benefit
analysis technique. This problem can be reduced by concentrating on marginal priority packages. This
is because ultimately all the packages presented for funding would generally fall into three categories:
(1) those with a high priority and high probability of funding; (2) those with a marginal priority and
which may be funded or not funded depending on the resources available, and (3) those with a low
priority and low probability of funding.
¡E Forwarding the ranked DPs to the next higher organizational units, for review, merger with other
comparable DPs and for re-ranking (as the DPs are consolidated and re-ranked, the perspective and
objectives are broadened). The consolidation and re-ranking should preferably be done by a committee
comprising all managers whose DPs are being considered and a chairman selected from the next higher
organizational level.
¡E Finalization of the budget proposal as well as preparation of budgets for each DU have to be finally
approved by the top management. Before according approval, the top management is guided, on the one
hand, by the principle of allocating resources to the OPs showing higher benefit to cost ratios, and the
question of affordability, on the other.
Q1) Explain the stages in specific terms of ZBB Methodology. (20 Marks)
CASE STUDY : 3
Capital Expenditures :
Another approach to deciding on capital expenditure investments is to assign a priority to each
investment proposed. We tend to limit the priority scale to values, as follows.
1. Absolute Must. Includes security, legal, regulatory, end-of-life equipment; typically externally
mandated, that is, you really have little or no choice. Simply stated, if you are under very tight
capital expenditure and/or expense budget constraints, the cutoff is drawn here.
2. Highly Desired/Business-Critical. Includes short-term "break even" (less than six months),
significant short-term "return to top or bottom line" less than months), and mega projects
already in progress.
3. Wanted. Valuable, with a longer return term (more than 12 months). Typically, these
projects get funded only if there is capital money remaining, if resources are available, and if
revenue projections are fairly secured.
4. Nice to Have. Given available bandwidth in people and money, there is a good return on
these projects, but typically the ROI has more intangibles. Unlikely to be funded in this budget
year; might go up the priority list in subsequent budget years. It is important to have some
projects in this priority, as it helps to better calibrate the higher priorities.
Expenses
The following items constitute what is most typically referred to as "the budget." The major
categories of budget expenses are:
Personnel
¡E Salaries and benefits (including hiring fees and bonuses)
¡E Training and education
¡E Travel
¡E Morale
¡E Staff-related depreciation
¡E Temporary help/consultants
¡E Miscellaneous (space, telecom, and so on)
Hardware
¡E Depreciation
¡E Maintenance
¡E Repairs
¡E Leases
Software
¡E Depreciation
¡E Maintenance
¡E Customer support
¡E Updates
¡E Repairs
¡E Leases
Services
¡E Leased lines
¡E Oursourced network services
¡E Security services
¡E Applications service providers (ASPs)
¡E Miscellaneous (transport, courier, periodicals, and so on)
Q1) Explain the needs of Capital Expenditure investment. (10 Marks).
Q2) Give any two difference between hardware and software. (10 Marks).
CASE STUDY : 4
Divorce the Forecasting Process from the Target Setting and Performance Appraisal
Forecasts must not be seen by senior managers as a tool for questioning or reassessing performance
targets. If managers see that forecasts have an impact on their reward and incentive plan, they will be
reluctant to present an unbiased picture.
Use Forecasts to Support
Leading organizations
Q1) Explain the difference between choosing the Right Forecasting on frequency and horizon.
(20 Marks)
INTERNATIONAL BUSINESS
CASE 1 (20 Marks)
Kodak started selling photographic equipment on Japan 1889 and by the 1930s it had a dominant position in
the Japanese market. But after World War II, U.S occupation forces persuaded most U.S companies including
Kodak to leave Japan to give the war torn local industry a chance to recover. Kodak was effectively priced out
of the market by tariff barriers; over the next 35 years Fuji gained 70% share of the market while Kodak saw
its share slip to miserable 5%. During this period Kodak limited much of its activities in Japan.
This situation persisted until early 1980s when Fuji launched an aggressive export drive, attacking Kodak in
the north American and European markets. Deciding that a good offence is the best defense, in 1984 and the
next six year, Kodak outspent Fuji in Japan by a ratio of more than 3 to 1. It erected mammoth $ 1 million near
signs as land marks in many of the Japan’s big cities and also sponsored Sumo wrestling, Judo, and tennis
tournaments and even the Japanese team at the 1988 Seoul Olympics. Thus Kodak has put Fuji on defensive,
forcing it to divert resources from overseas to defend itself at home. By 1990’s, some of Fuji’s best executives
had been pulled back to Tokyo.
All this success, however , was apparently not enough for Kodak. In may 1995, Kodak filed a petition with the
US trade office, that accured the Japanese government and Fuji of “Unfair trading practices”. According to the
petition, the Japanese government helped to create a ‘ profile sanctuary’ for Fuji in Japan by systematically
denying Kodak access to Japanese distribution channels for consumer film and paper. Kodak claims Fuji has
effectively shut Kodak products out of four distributors that have a 70% share of the photo distribution market.
Fuji has an equity position in two of the distributors, gives large year –end relates and cash payments to all
four distributors as a reward for their loyalty to Fuji, and owns stakes in the banks that finance them. Kodak
also claims that Fuji uses similar tactics to control 430 wholesale photo furnishing labs in Japan to which it is
the exclusive supplier. Moreover Kodak’s petition claims that the Japanese government has actively
encourages these practices.
But Fuji a similar counter arguments relating to Kodak in U.S. and states bluntly that Kodak’s charges are a
clear case of the pot calling the kettle back.
(a) What was the critical catalyst that led Kodak to start taking the Japanese market seriously?
(b) From the evidence given in the case do you think Kodak’s charges of unfair trading practices against Fuji
are valid? Support your answer.
CASE 2 (20 Marks)
Two Senior executives of world’s largest firms with extensive holdings outside the home country speak.
Company A : “We are a multinational firm. We distribute our products in about 100 countries. We
manufacture in over 17 countries and do research and development in three countries. We look at all new
investment projects both domestic and overseas using exactly the same criteria”.
The execution from company A continues, “ of course the most of the key ports in our subsidiaries are held by
home country nationals. Whenever replacements for these men are sought, it is the practice, if not the policy,
to look next to you at the lead office and pick some one (usually a home country national) you know and
trust”.
Company B : “ We are multinational firm. Our product division executives have worldwide profit
responsibility. As our organisational chart shows, the united states is just one region on a par with Europe,
Latin America, Africa etc, in each division”.
The executive from Company B goes on to explain, “the worldwide Product division concept is rather difficult
to implement. The senior executives incharge of this divisions have little overseas experience. They have been
promoted from domestic ports and tend to view foreign consumers needs as really basically the same as ours.
Also, product division executives tend to focus on domestic market, because it generates more revenue than
foreign market. The rewards are for global performance, but strategy is to focus on domestic. Most of the
senior executives simply do not understand what happens overseas and really do not trust foreign executives,
even those in key portions?
Questions :
1 Which company is truly Multinational ? Why?
2 List three differences between Company , Multi National company and Trans Multi National Company ?
CASE - 3 (20 Marks)
Strategic R & D by TNCs in Developing Countries
TNCs have had long units in developing host countries for adapting products and processes to the local
conditions, and in a few cases, to products for local markets. Since the min-1980s, however, they have also
started locating strategic R & D centres in some developing countries, for developing generic technologies
and products for regional or global markets. The main incentives for this are : (a) access to highly qualified
scientists as shortages of research personnel emerge in certain fields in industrialised countries, (b) Cost
differentials in research salaries between developing and industrialised countries, and (c) rationalisation of
operations, assigning particular affiliates the responsibility for developing, manufacturing, and marketing
particular products worldwide. Th new trends are more visible in industries dealing with new technologies,
such as microelectronics, biotechnology, and new materials. In these technologies, the location of R & D can
be geographically de-linked more easily from the location of manufacturing. It is also possible to separate R &
D in core activities from that in non-core activities. Consequently, countries like India, Israel, Singapore,
Malaysia or Brazil serve TNCs as good locations for strategic R & D.
For instance, Sony Corporation of Japan has around nine R & D units in Asian developing countries. It has
three units in Singapore conducting R & D on core components such as optical data shortage devices,
integrated chip design for audio products and CD-ROM drives, and multimedia and microchip software. It has
three units in Malaysia working on video design, derivative models and circuit blocks for new TV chases,
radio cassettes, discman and hi-fi receiver designs. It has one unit in Republic of Korea focusing on the design
of compact discs, radio cassettes, tape recorders, and car stereos. It has one in Taiwan designing and
developing video tape-recorders, minidisk players, video CDs, and duplicators. Finally, it has one unit in
Indonesia focusing on the design of audio products.
Such units often work in collaboration with science and technology institutes in the host country. For instance,
Daimler Benz has established such a unit in Bangalore, India, in collaboration with the Indian Institute of
Science to work on projects related to its vehicles and avionics business. Current work includes interface
design of avionics landing systems and smart GPS sensors for use by the group’s business worldwide.
Source: World Investment Report 1999.
Questions:
(a) Explain why MNCs have located R & D centres in developing countries?
(b) Mention the areas where R & D activities can easily be decentralised.
CASE -4 (20 Marks)
VK Ltd a multi-product Company, furnishes you the following data relating to the year 2000.
First Half of the year Second Half of the year
Sales Rs. 45,000 Rs. 50,000
Total Cost Rs. 40,000 Rs. 43,000
Assuming that there is no change in prices and variable costs and that the fixed expenses are incurred equally
in the two half years periods calculate for the year 2000.
1. The Profit Volume ration
2. Fixed Expenses
3. Break-Even Sales
4. Percentage of margin of safety.
5 marks each
HUMAN RESOURCE MANAGEMENT
2 | P a g e
CASE STUDY : 1
A policy is a plan of action. It is a statement of intention committing the management to a general course of
action. When the management drafts a policy statement to cover some features of its personnel programmes,
the statement may often contain an expression of philosophy and principle as well. Although it is perfectly
legitimate for an organization to include its philosophy, principles and policy in one policy expression.
Q1) Why organizations adopt personnel policies explain the benefits?
Q2) What are the sources and content of personnel policies?
Q3) Explain few personnel policies?
Q4) Explain principles of personnel policies?
CASE STUDY : 2
Recruitment is understood as the process of searching for and obtaining applicants for jobs, from among
whom the rights people can be selected. Theoretically, recruitment process is said to end with the receipt of
applications, in practice the activity extends to the screening of applications so as to eliminate those who are
not qualified for the job.
Recruitment refers to the process of receipt of applications from job seekers. In reality, the term is used to
describe the entire process of employee hiring. These are recruitment boards for railways, banks and other
organization.
Q1) Explain in detail the general purpose of recruitment?
Q2) Explain factors governing Recruitment?
Q3) Explain the Recruitment process with diagram?
Q4) Explain Recruitment planning?
CASE STUDY : 3
Navin AGM materials, is fuming and fretting. He bumped into Kiran, GM Materials, threw the resignation
letter on his table, shouted and walked out of the room swiftly.
Navin has reason for his sudden outburst. He has been driven to the wall. Perhaps details of the story will
tell the reasons for Navin’s bile and why he put in his papers, barely four months after he took up his
assignment.
3 | P a g e
The year was 2005 when Navin quit the prestigious Sail plant at Mumbai. As a manager material Navin
enjoyed the power. He could even place an order for materials worth Rs 25 lakh. He needed nobody’s prior
approval.
Navin joined a pulp making plant located at Pune as AGM Materials. The plant is owned by a prestigious
business house in India. Obviously perks, designation and reputation of the conglomerate lured Navin away
from the public sector.
When he joined the pulp making company, little did Navin realize that he needed prior approval to place an
order for materials worth Rs 12 lakhs. He had presumed that he had the authority to place an order by
himself worth half the amount of what he used to do at the mega steel maker. He placed the order material
arrived, were recived, accepted and used up in the plant.
Trouble started when the bill for Rs 12 lakh came from vendor. The accounts department withheld payment
for the reason that the bill was not endorsed by Kiran. Kiran rused to sign the bill as his approval was not
taken by Navin before placing the order.
Navin felt fumigated and cheated. A brief encounter with Kiran only aggrarated the problem. Navin was
curtly told that he should have known company rules before venturing. Navin decided to quit the company.
Q1) Does the company have an orientation programme?
Q2) If yes how effective is it?
Q3) How is formal Orientation programme conducted?
Q4) If you were Navin what would have you done?
CASE STUDY : 4
Bitter it may taste, shrill it may sound, and sleepless nights it may cause, but it is true. In a major shake up
Airbus. The European aircraft manufacturers has thrown a big shock to its employees. Before coming to the
details of the shock, a peep into the company’s resume.
Name Airbus
Created 1970
President CEO : Vijay M.
Employees 57000
Turnover 26 Bn (Euro)
Total Aircraft sold (Feb
2007)
7187
Delivered 4598
Headquarters Paris (France)
Facilities 16
Rival Boeing
4 | P a g e
Airbus announced on February 27, 2007 that it would shed 10,000 jobs across four European contries and
sell six of its unit. N the same day the helpless workers did what was expected of them – downed tools and
staged protests. The protesting workers at Airbus’s factory at Meaulte, northern France, were seen picketing
outside the factory gate after holding up production a day earlier. To be fair to Airbus, its management
entered talks with unions before the job loss and sale was formally announced. But the talks did not mollify
the agitated workers.
Job sheating and hiring of units are a part of Power and restructuring plan unleashed by Airbus to save itself
from increasing loss of its ground to the arch rival, Boeing Co.
Airbus Power & Strategy was first mooted in October 2006 but sparkled a split between France & Germany
over the distribution of job losses and the placement of future ones. Later the two countries agreed to share
both job losses and new technology.
The power and plan, if finalized, would mean a 3 per cent reduction to Airbus’s 55000 employee strength.
Q1) Why should Power and focus on shedding jobs to save on cost?
Q2) Are there no alternative strategies?
Q3) Will the proposed shedding of jobs and scale of six units help airbus survive the intense competition
from Boeing?
Q4) Comment on the whole issue?
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