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June, 2010

Ms-92 : Management of Public Enterprises

SECTION –A

1. "India's approach to economic development was compromise between a centrally planned economy and a market economy". Discuss.

2. How corporate Governance is relevant in today's context in public enterprises ? Explore one successful enterprise of your choice, which is society oriented.

3. "Industrial sickness is threat to developing labour surplus economy". Justify, Also discuss the main turnaround strategies followed for revival and reconstruction of sick enterprises.

4 Describe the functions of Public Enterprises  Selection Board. State the Government's policy regarding recruitment to various level posts in public enterprises.

5(a) Discuss the implications of disinvsetment on labour force. Also give suggestions to tackle such implications.

(b) Discuss the Policy of Privatisation.

SECTION –B

6. Critically evaluate the corporate Planning Process followed in SAIL.

7. Having understood the concept of marketing mix, develop marketing mix strategy for the following.

(a) Tourism Development Corporation

(b) State Financial Corporation

(c) Road Transport Corporation

June, 2011

Ms-92 : Management of Public Enterprises

SECTION – A

1.  'Economic development was sought to be achieved in different countries at different stages of development through different economic models.' Keeping this statement in mind list out the different models of economic growth. Discuss any two models.

2.  Explain the various methods of parliamentary  control and discuss their relevance in the present context.

3.  Write a brief note on the financial performance of State Level Public Enterprises (1-31,Pfs) with special reference to State Electricity Boards (SEf.3s).

4.  List out the various techniques of project  Management used in Public Enterprises. Critically evaluate PERT and Critical Path Method (CPM).

5.  Write short notes on :

Naresh Chandra Committee

Narayan Murthy Committee

SECTION-B

6.  Over the recent past  illy l rover!Iment of disinvested a part of equity of some of the Public Enterprises. What are the motivations behind such steps and how the Government plans to utilize the money ? What benefits are likely to ensure from the public point of view ? Discuss.

7.  Over the past decade Indian Railways, by and large have shown improved performance, what are the reasons behind such performance ? Would you, in this context, support privatisation of the railways ? Justify

December, 2011

Ms-92 : Management of Public Enterprises

SECTION - A

1. (a)  What are the different objectives of public enterprises ? Explain in brief.

(b) What is the impact of economic reforms on the functioning of state of Public Enterprises in India ? Explain.

2. Discuss the various dimensions of Government -  PE interface. Also discuss the ways in which the Government control is exercised over the PEs.

3. (a) Discuss the methods/techniques which can be helpful in project implementation.

(b) What methodologies can be used in project  evaluation ? Discuss with examples.

4. Discuss the relevance of marketing in public  enterprises. What marketing concepts in particular can be helpful in marketing of public enterprises ?

5. Describe the various steps in the process of  disinvestment. Comment upon the pricing of shares in the context of recent experience.

SECTION – B

6. 'In India the issues related to Corporate Governance are quite distinct - basically due to the socio-economic conditions of the country ; the major issue in India relating to corporate governance, especially in PEs is not a 'conflict between management and owners' as in the West but a 'conflict between the dominant shareholders and the minority shareholders'. Critically comment on the issues in corporate governance related to PEs. Refer to the situation given above.

7. In the view of some knowledgeable people, Public  Enterprises have become irrelevant and therefore, the structure of PEs needs to be dismantled. Critically evaluate and offer your own comments. 

December, 2012

Ms-92 : Management of Public Enterprises

SECTION-A

1.  'The patterns of ownership and management of public enterprises vary from country to country'. Discuss the ownership and management pattern of Public Enterprises in India.

2.  Briefly discuss the role of some important organs of the government machinery interacting with Public Enterprises.

3.  What is the importance of marketing concepts in  Public Enterprises ? Discuss.

4.  Briefly discuss the following : 

(a)  Voluntary Retirement Scheme (VRS).

(b)  Wage Policy followed in Public Enterprises  .

SECTION-B

6.  Taking any Public Sector Enterprise of your choice. Analytically discuss the Personnel Policy followed in that PSE.

7.  (a)  What are the different forms of disinvestment followed in PSE in  todays context ?

(b)  Critically analyse the advantages and disadvantages of each form of disinvestment.

June, 2013

Ms-92 : Management of Public

SECTION-A

1. Briefly describe the concept of socialism in context to Public Enterprises. Also discuss the emergence of Indian brand of socialism and its impact on the economic development of the nation.

2. Define 'Corporate Governance' and explain its concept. Comment on the recommendations made by Birla Committee (2001) and Naresh Chandra Committee (2002) on corporate governance.

3. How has public sector reforms played a role of a 'social developer' ? Discuss giving examples.

4. (a) How is a Board in the case of Public Sector Enterprises (PSEs) constituted ? Explain.

(b) What is the structure of Board of Directors of PSEs ?

5. List out various dimensions of privatization and explain any five with the help of examples.

SECTION-B

6. The public sector, with more than 130 Government of India Undertakings today, occupies a key position in the economy of the country. It has already grown into an industrial giant with more than INR. 20,000 crores of investment. About one-fourth of it is in the railways, but steel, heavy electrical and oil industries also have a sizeable portion of the total investment. The private entrepreneurs are always in search of profit and this motive urges them to move in fields where the returns are high and certain. In a developing country or in an under-developed country, this tendency has many drawbacks.

List out the challenges a Public Enterprise faces in comparison to its private competitors. Support your answer with the help of examples.

7. The Public Sector has played a very important role in the national economic development in India. The main objectives of the public sector enterprises are : to build a strong and sound base for heavy industries and to create infrastructural facilities for self-reliance and self-sufficiency in modern technological development, to prevent the concentration of wealth and economic power in a few hands, through public ownership of means of production and development, greater welfare of the common man and a rise in standard of living. In pursuance of the Industrial Policy Resolutions of 1948 and 1956, the Government of India made an entry into industrial and commercial activities in a big way. Massive investments have been made in a wide spectrum of activities, which fall under the categories of basic and strategic industries, such as steel, mining, metallurgy, coal, petroleum and chemicals, ship-building, shipping and heavy machine building, etc. There is, however, another side of the picture. Most of these public sector industries have shown profits in recent years, but they suffer from many shortcomings. List the shortcomings of the public sector enterprises, which are hindering their growth in the competitive environment. 

June, 2010

Ms-91 : Advanced Strategic Management

SECTION – A

1(a) Discuss the nature and scope of Corporate Management. Is corporate management the same as corporate planning ?

(b) "Corporate strategy may exist at three levels." Explain. What are the distinctive characteristics of the three levels of strategy on the standpoint of various dimensions ?

Illustrate it with the help of a chart.

2(a) Why is the need for Corporate Governance felt ? Give a brief historical account of corporate governance in India. What measures, you think, need to be taken further to strengthen corporate governance in India in the light of recent experience ?

(b) l5iscuss the functions and role of CEO in a company. What characteristics the Board of Directors of a company should possess in order to be really effective ?

3(a) What kind of strategic thrusts/actions are required during the different phases of Product Life Cycle ? Explain with the help of a chart.

(b) What basic approaches are available to a company to enter and complete in global markets ? Explain.

4(a) How can R and D be helpful in creating competitive advantage for a firm ? What are the pre-requisites for developing an effective R and D strategy ? Explain.

(b) Examine the relationship between innovation and strategic management. What characteristics the innovative organisations usually exhibit ? Discuss briefly.

5. (a) How are Business Ethics important for a firm ?Examine the relationship of business ethics with Corporate Social Responsibility (CSR).  What consequences a firm may have to face in the short and long terms if it ignores business ethics ?

(b) Discuss the relevance of strategic philanthropy for business organizations. Illustrate your answer with examples from India.

SECTION – B

6. Select (and name) any one industry of your choice and then define/analyse its environment in terms of SWOT analysis, taking into accounts the major factors and influences currently operating in that industry.

7. After reading and analysing the following Case carefully, answer the questions given at the end.

Graniterock's "Short Pay" Policy: An Innovate Way to Promote Strategy Execution

In 1987, the owners of Graniterock, a 100-plus-year-old supplier of crushed gravel, sand, concrete, and asphalt in Watsonville, California, set two big, hairy, audacious goals (BHAGs) for the company: total customer satisfaction and a reputation for service that met or exceeded that of Nordstrom, the upscale department store famous for pleasing its customers. To drive the internal efforts to achieve these two objectives, top management instituted "short pay," a policy designed to signal both employees and customers that Graniterock was deadly serious about its two strategic commitments. At the bottom of every Graniterock invoice was the following statement :  If you are not satisfied for any reason, don't pay us for it. Simply scratch out the line item, write a brief note about the problem, and return a copy of this invoice along with your check for the balance. Customers did not have to call and complain and were not expected to return the product. They were given complete discretionary power to decide whether and how much to pay based on their satisfaction level. The policy has worked exceptionally well, providing unmistakable feedback and spurring company managers to correct any problems quickly in order to avoid repeated short payments. Graniterock has enjoyed market share  increases, while charging a 6 percent price premium for its commodity products in competition against larger rivals. Its profit margins and overall financial performance have improved. Graniterock won the prestigious Malcolm Baldrige National Quality Award in 1992, about five years after instituting the policy.  Fortune rated Graniterock as one of the 100 best companies to work for in America in  2001 (ranked 17 th ) and 2002 (ranked 16 th ). Company employees receive an average of 43 hours of training annually. Entry-level employees called job owners, start at  $16 an hour and progress to such positions as "accomplished job owner" and "improvement champion" (base pay of  $26 an hour). The company has no-layoff policy, provides employees with  12 massages year, and sends positive customer comments about employees home for families to read.

Question

(a) What are the goals of an Innovative Organisation ? How these goals are accomplished by such Innovative

(b) Organisations like Graniterock. How Goals are turned into results by.such Innovative Organisations ?

June, 2011

Ms-91 : Advanced Strategic Management

SECTION – A

1.  (a) What could be the different approaches to corporate management ? Critically analyze them by pointing out their merits and demerits.

(b) Discuss the components of corporate strategy. How could a company obtain the advantages of synergy ?

2.  In relation to the role of Board of Directors in a company, there are two sets of expectations : Law-related expectations and Managerially-derived expectations. Discuss these two sets of expectations by citing examples.

3.  What effects different phases of the Product Life Cycle have on the various dimensions relating to the product, viz., nature of the product itself, buyer behaviour, marketing, competition, margins and profits, etc ? Explain and offer your comments. In what ways do industry environments vary in their basic strategic implications ?

4.  (a)   Discuss the use of IT in strategy implementation, particularly in relation to competitive strategy, value chain and value system.

(b) Discuss the knowledge management frame work as applicable to an organisation.

5.  Briefly explain the following :

(a)  Developing an effective R & D strategy

(b)  Business importance of CSR

SECTION – B

6.  Read and analyze the case study hereinafter carefully and answer the questions given

below :

Questions

(a)  Describe ITC's e-Choupal initiative to engage the farmers to the next level. Flow is version 3.0 is different from the earlier two versions ?

(b)  Analyze the proposed responses of the company to its competitors and offer your comments. What stages of evolution e-Choupal experiment has gone through ? What do think is the main strength of the programme and what could be the benefits to the innumerable farmers ?

(d) I-low can mass technology (e.g., mobile telephony) play a part in supporting the envisaged transformation of rural areas ?

ITC's e-Choupal

When you run Corporate India's largest, most ambitious and most celebrated rural initiative, you better know the following :

•  That adversities could crop up unexpectedly.

•  That some adversities can be turned into opportunities.

•  And that every little opportunity has to be made most of.

It was so with ITC, the company behind the e-Choupal initiative that had reached four million farmers in six states in six Years till 2006. At one point, the company was opening 5-6 e-Choupals a day and had a target of reaching 100 million farmers. That hit a roadblock of sorts in 2006-07. The very basis of the e-Choupal's core business—commodity sourcing from farmers directly — was endangered with the government clamping down on companies trading with farmers directly. The trigger for the government reaction was the spike in wholesale price inflation, which rose close to double-digit figures in case of some commodities in 2006-07. Though the impact varied from state to state, the larger foreboding was loud and clear : The acts of government taken in the national interest could hobble e-Choupal's anchor business, even if temporarily. What does the company do then ? Roll out plans for Version 3 of e-Choupal that will add atleast two more anchor businesses to start with and deepen the engagement with individual farmers way beyond what was being done in Version 1 and 2. "The idea is to discover new anchor businesses and try and insulate the e-Choupal model from the risks of reversal in government's agri reforms," says S. Sivakumar, Chief Executive, Agri-Business, ITC, and the man who scripted the e-Choupal model of business. Many other Indian companies that had once entered rural markets, and had subsequently quit, are re-entering. Tata Chemicals, Mahindra & Mahindra are two such examples. Flow does ITC plan to respond to this competition ? By making better use of its unique social capital—the Sanchalak and the Samyojak framework. In the Sanchalak, ITC has its own man in the 40,000 villages it operates in. These men can steer e-Choupal into areas and activities the competitors cannot. For instance, the Sanchalaks will be the key men in organising Choupal Haats. Opportunity : Mandis have improved since e-Choupal initiative started Response : Leverage the unique direct relationship with the farmers When the e-Choupal initiative was started, the operations at mandis were non-transparent. From weighing of farmers' produce to its gradation—that impacted it pricing —most operations were arbitrary and based on archaic methods. Over the past couple of years, the mandis have modernised and become more transparent. Where does this leave e-Choupal, which reached out to the farmers on the plank of transparency and fair valuations for their crops ? A unique advantage 11- C still has over mandis is its direct and continual relationship with the farmers in its network. With rising awareness and concerns about food safety, this direct relationship is extremely valuable for partners who either source products directly from the e-Choupals or use ITC's farm products generat :d

through the e-Choupals. For instance, an importer of processed foods in Europe can trace ITC food products all the way to the farm it came from to satisfy itself of the food safety standards. By making these and a few other mid-course corrections. ITC is hoping to morph e-Choupal into an all-weather venture—relatively de-risked from regulatory flip-flops and even market swings. But the success of this restructuring will critically depend on how much further it can deepen its existing relationship with four million farmers so that it can extract more value out of this network than it has been able to do till now—value for itself, for the farmer and all the current and future network partners. Sivakumar has interesting calculations to share. By personalising its relationship under e-Choupal's Version 3, ITC can increase its reach from the existing 4 million farmers to 16 million— without even adding any village to its network. How ? Once personalised, each farmer's family (assuming a wife and two kids) will come into the e-Choupal network as either a consumer or a contributor of some sort. That will give an additional reach of 12 million ! Of course, all these will not happen in one go and overnight. Some of the modifications mentioned—like setting up of rural employment exchanges —have already been implemented. Some are going to be added soon. The first Choupal Haat will be organised in November. The two-way mobile application and its full operationalisation will take some more time. But given the blueprint and flexibility demonstrated so far, ITC should be able to achieve much of what it plans to. And in doing so, the company will continue to be a leading and unique example of Corporate India's engagement with rural India.

>>VERSION 1.0

The Start

IDEA : To give power of scale to small farmers by aggregating them as sellers (of produce) and as buyers (of farm inputs)

FARMERS' GAIN : They get bargain and choice - the two key virtues of competition ITC'S GAIN : Access to inputs for its agri business; offer the use of network to other companies

>>VERSION 2.0

The Scale - Up

REACH : By 2006, 40,000 villages covering 4 million farmers

OFFERING : Network now offered five services :

• Information: Weather, price, etc.
• Knowledge : Farming methods, soil testing, etc.
• Purchase : Seed, fertiliser... to insurance
• Sales : Farmers sell crops to ITC centres
• Other : Cattle care, water harvesting, women employment etc

>>VERSION 3.0

The Deepening

NEW BUSINESSES : Add two new anchor businesses :

(1)  Rural jobs and employability and

(2)  Personalised agri services. Plus strengthen existing commodity sourcing

MORE INTERACTION : Through Choupal Saagars and Haats and via mobile phones

NEW TECHNOLOGY : Use of especially enabled mobile phones, in addition to PCs, for two - way interaction with farmers; use of analytics; new partners Technologically, it would mean adding mobile phones to the existing channels of Net-based computers and Choupal Saagars, the one-stop shops catering to all the needs of the rural community. As the company scoped around for new opportunities, it found many — some emerging from the adversities that have got it rethinking. These opportunities not only make transition to Version 3 possible, but also help modify the existing strengths of Version 1 and 2 (sec box above).  It's spotting of these opportunities and turning them into current and future businesses that has become a case study in persevering with rural India.

Opportunity : Farmers willing to invest more

Response : Offer them services they really need, and are willing to pay for Though the average farm productivity is still low in India, the last 10 years have seen an unprecedented rise in farmers' income. This has been driven by a record increase in the price of agricultural produce (government's minimum support prices for food grains alone have risen by 30-90 per cent in two years) and a good run with monsoons—this year's  deficiency not withstanding. Higher income means farmers are ready and willing to invest more—and one of their critical investment needs is in getting agriculture services. So far, agri services like helping farmers improve crop techniques and advice on ways to improve farm productivity have mostly been provided by the government and for free. But the quality of service has been poor, rendering them useless. In e-Choupal's Version 2, services like weather, agri inputs and pricing were provided through Sanchalaks (e-Choupal coordinators) through multimedia presentations made on village computers, but these services were customised only for crops and regions. Besides, no money was charged for these services. Under Version 3, the plan is to deliver personalised agri services to individual farmers via mobile phones. ITC has recently signed a memorandum with Nokia for this. The company already powers some of Nokia's "Life "Fools" meant for farmers. Right now the information dissemination is limited and one-way-from company to the farmer. ITC plans to make the information flow two-way. A farmer will be able to provide information on, say, the type of soil, the date of sowing and the kind of crop to the company. The company can then process these inputs and give him very specific advice. Imagine getting such inputs from millions of farmers across the country. Apart from creating economic value by offering personalised services to farmers, the data

thus generated could be of immense value to companies selling farm inputs (e.g. seeds, fertilisers, pesticides), financial firms and government planners. In sum , personalised agri services will add a second anchor business to e-Choupal —keeping its core philosophy of complementing the farmer's good with the company's good intact. Opportunity : Villages closer to towns moving away from agriculture Response : Provide job information and skill development services in villages With rural youth, especially in villages closer to towns, shunning agriculture and farm labour, ITC sees vast opportunities in using e-Choupals as centres for information on job vacancies and —eventually—providing skills that help increase the employability of rural youth. So, e-Choupals are also being geared as rural employment exchanges, which will connect the rural youth with jobs. This will be a new anchor business with a clear revenue model. Already, on August 11, 2009, e-Choupal in alliance with Monster India, the leading online career and recruitment resource, has launched Rozgarduniya.com, a website to enable job seekers in rural India to access and apply for jobs through e-Choupals. In less than a month of the service, over 1,200 job openings from 52 companies were made available through this channel. ITC is also working on the skills training business, which will be rolled out over the next few months. "Rural India has a huge untapped talent pool and Rozgarduniva.com  will provide a platform to bridge the demand and supply gap. Job

opportunities available to the rural population through this initiative will help improve employment in addition to facilitating corporate expansion plans in the rural market, " says Sanjay Modi, Managing Director, Monster.com  (India, Middle Fast and Southeast Asia). Opportunity : Faster diversification by farmers into horticulture Response : Increased push to retail of fruits and vegetables Sourcing farm produce is e-Choupal's key and original anchor business. But instead of purely trading in commodities, the sourced produce was used as inputs for ITC's food business. So, for instance, wheat procured through farmers finds its way into Aashirwad atta. With farmers around e-Choupals diversifying their produce, ITC got the opportunity to plan forward integration in more ways than one. "We moved into Choupal Fresh through forward integration with the horticulture farmers," says Sivakumar. Choupal Fresh (it is still in a pilot phase with six outlets in Hyderabad) is more "fresh" than other chains since vegetables and fruits make up 80 per cent of products sold through its outlets, compared to 20 per cent in most other "fresh" chains. The forward integration is also evident in the export of processed foods and fruits (mango and other fruit pulps). "Many of our products and businesses have backward integration with the e-Choupals. Bingo, for instance, is made from potato sourced entirely through the e-Choupals. Similarly, the export of processed foods and fruits is dependent on the e-Choupals now," says Sivakumar. Also, starting mid-2008 ITC has entered personal care products in a big way. The e-Choupal network is a platform to take these products to consumers in the countryside. These branded products will also be introduced at the Choupal Haats (these are temporary rural gatherings meant for interaction and product and service experience as against a Choupal Saagar, which is a permanent and multiple rural services facility that includes an agri produce warehouse, retail hypermarket and a fuel station), which are going to be launched over the next couple of months. Among the things planned to be introduced through the Haats are branded personal care products like shampoos.

Opportunity : Improved rural roads, courtesy Bharat Nirman project

Response : Increase the coverage area of each e-Choupal

The e-Choupals, right from Version 1, worked in a hub and spoke model. Each e-Choupal and its Sanchalak catered to several villages nearby. The average number of villages catered by an e-Choupal so far were six. With massive government investments in rural roads, connectivity between villages has improved. This allows ITC to potentially add more spokes to each of its hubs. Network reach can be easily expanded without making much fresh investments into it. 

December, 2011

Ms-91 Advanced Strategic Management

SECTION – A

1. (a) Discuss the various kinds of corporate strategy and under which conditionsieach strategy would be followed ?

(b) Explain the process of policy formulation. Is policy formulation different from strategy formulation ? Discuss.

2. Why is the need for corporate governance felt ? Discuss the subject in the context of Indian situation. What needs to be done further ?

3. Discuss the various approaches/modes of entering into foreign markets and point out their relative advantages and disadvantages. Under what conditions/situations each approach would be considered suitable ?

4. (a) How could R and D create competitive advantage for a firm ? What a firm could do to achieve competitive advantage in implementing its competitive strategy ?

(b) Briefly discuss the characteristics of innovative organizations.

5. Briefly explain the following :

(a) The changing business paradigm and the ethical dilemmas

(b) Characteristics of dynamic environment.

SECTION - B

Read and analyze the case study, hereinafter carefully and answer the questions given

below :

Subhiksha Trading Services (STS) Over the last nine months, R.Subramanian has aged much beyond his 43 years. The Managing Director of Subhiksha Trading Services-which pioneered the discounted retail format in India-has been struggling to get his brainchild operational again after it collapsed in February following a cash cycle squeeze. In fact, the change in Subhiksha's fortunes has been as dramatic as its rapid rise from being just a regional player to a national one. "We were a darling company that could do no wrong till September 2008 and suddenly we were in trouble," rues a dishevelled Subramanian, as he looked back at Subhiksha's early days-clearly successful-and the recent crisis-without doubt an avoidable tragedy. It was in 1996 that the idea of Subhiksha (prosperity in Sanskrit) came to his mind. Organised retail, in India, was non-existent. Subramanian, and IIT Madras and IIM Ahmedabad alumnus, was then into the financial services business of asset securitisation. Research revealed that grocery was one of the largest categories of spending for the average customer, that they were extremely price sensitive on groceries and that discount stores were the largest growing format. But unlike in the West, people in India preferred to shop groceries close by. The model slowly fell into place-a large number of small stores with easy accessibility offering products at a discount. Some vital statistics about Subhiksha are given in Table 1.

Table-1

SUBHIKSHA

YEAR OF FOUNDING: 1997

FOUNDER:

R. Subramanian,

IIT Madras and

TIM Ahmedabad

BUSINESS:

Discounted retail

FUNDING: R. Subramanian,

ICICI Venture (equity);

Consortium of Banks (debt)

EMPLOYEES: 14,000

(by end of 2008)

REVENUE:

Rs 2,305 crore (2007-08)

"Between 2006-07 and 2007-08 we doubled our stores, tripled our revenues and

almost quadrupled our profits - R. Subramanian "We opened our first shop in Chennai in March 1997 with funds from the financial services business, a team of passionate youngsters with little retail experience and a plan to set up a Chennai-centric retail business with low prices and high level of neighbourhood focus as the USP," recalls Subramanian. In the first year 10 stores were opened and the count rose to 19 by March 1999. By then Subhiksha was breaking even, volumes were picking up and customers were responding. Problems did arise initially though, as its unique discounting model enraged the retail trade in Chennai, which accused it of unfairly undercutting their business. By 2000 Subhiksha grew to nearly 50 shops in Chennai retailing groceries and medicines. ICICI Venture's decision then to pick up a 10 per cent stake in Subhiksha for Rs 15 crore gave the retailer enhanced credibility in the market. This money was used to expand outside Chennai, into the rest of Tamil Nadu. By 2002-03, Subhiksha had 140 stores across 30 towns in Tamil Nadu. Sales grew steadily. Cash flows were reasonable and debt, at Rs 15 crore against the net worth of Rs 23 crore, was comfortable. Expansion and Expansion : In 2004, the retail sector was seeing an enhanced level of activity. In what proved to be a watershed decision later in its brief history, Subhiksha decided to expand nationally and more so, scale up at a rapid pace. "We realised that we had done our bit in Tamil Nadu and it was time to go national. The question we faced was do we expand sequentially (one state at a time) or parallely (many states simultaneously) ? We opted for the latter," reveals Subramanian. “Between late 2004 and early 2007, Rs 160 crore worth of equity was raised. That apart, a debt of Rs 220 crore and a bridge loan of Rs 125 crore (pending raising of equity from capital markets) was arranged to fund the national rollout. On an average, 60 to 70 stores were added in a month. The pace of rollout is evident from the fact that till September 2006, Subhiksha had a store count of just 160, but by March 2007 it had shot up to 670 and by March 2008 to 1,320. By September 2008, it was 1,650-in all 1,500 stores were added ih just 24 months. "Business was growing like mad. Despite the cost pressures in 2006 after Reliance, the Birlas and others announced plans to enter retail, between 2006-07 and 2007-08 we doubled our stores (from 670 to 1,320), tripled our revenues (from Rs 833 crore to Rs. 2,305 crore) and almost quadrupled our profits (from Rs. 11 crore to Rs. 39 crore)." says Subramanian. By then Subhiksha had become the country's largest mobile phone retailer with an annual turnover of Rs 1,000 crore. Buoyed by its performance, Wipro Chairman Azim Premji, in March 2008, picked up the 10 per cent stake in Subhiksha that was offloaded by ICICI Venture for Rs 230 crore, pegging the company's valuation at Rs 2,300 crore. Expansion Funding : Debt our Equity. It was clearly the highest point in the retailer's history (and, in a way, beginning of its decline too). The company, which had been contemplating and postponing initial public offering (IPO) since 2007, failed to capitalise on Premji's investment and the goodwill it created to raise money from the market. "We kept thinking : why dilute equity for shareholders ? We wanted to keep equity low and raise more debt. This strategy will return better money for shareholders as stock market is booming. But we should have raised equity in March 2008. There was a lot of investor interest in Subhiksha. Not doing it then was a mistake." Concedes Subramanian. Subhiksha entered 2008-09 with a Rs 1,000-crore investment plan for increasing the store count to 2,200 (from 1,320 as of March 2008) and add a new line of business-consumer durables information technology (CDIT) products retailing. It was to be funded by Rs 400 crore equity and Rs 600 crore debt. In June 2008, it announced a merger plan with Blue Green Construction Ltd, a company listed on the Madras Stock Exchange, and which had done some research on the CDIT business. By then the stock markets had begun to weaken. "A weak market, we thought, would at best lower our valuation by 10 per cent or so. There was nothing to tell us that we were in for a complete collapse of the equity markets," explains Subramanian. The banks were getting worried too. The bridge loan of Rs 125 crore was coming up for repayment in September 2008 and there was no sign of equity. They were finding it difficult to lend. Working Capital for Expansion "By July 2008, we were finding it difficult to borrow. But we kept the expansion going as we were confident of raising equity. In fact, in September we had some good offers for equity but before we could grab it Lehman Brothers collapsed and the markets fell off," reveals Subramanian. In the absence of borrowings. Subhiksha made the cardinal mistake of diverting working capital to fund expansion. Consequently vendor payments were defaulted. They stopped supplies and the shelves ran empty. Salaries and other statutory dues were not paid. Security staff deserted their jobs and over 600 stores were vandalised in November-December 2008. "We desperately worked with various stakeholders to put something together to prevent a collapse. All we needed then was Rs 125 crore to be back in shape. Between September and November 2008, we had four meetings of the collective financial stakeholders. But unfortunately it was a period when liquidity was tight. Investors, too, could not do much as the markets were crazy," rues Subhiksha's founder, adding, "In a way we got into trouble at the wrong time." By end-February 2009 operations came to a standstill. Says Subramanian, "At this stage, everybody's reaction was emotional. There were people who said we should have been more careful in managing our money, which is perfectly right, and that we did not have a plan B." Independent directors quit, relations with ICICI Venture soured (it withdrew its nominees from the board and reportedly sought government investigation into the affairs of Subhiksha). Premji and ICICI Venture objected to the merger of Subhiksha with Blue Green Construction Ltd. Cash Flow Management ? Subramanian is now banking on the much-delayed Corporate Debt Restructuring (CDR) process (involving 13 banks with cumulative exposure of over Rs. 800 crore) to bring Subhiksha back to life. "I don't see ourselves getting back to 1,650 stores. We will probably restart about 1,200 stores once the CDR process is through. We should clearly be back in business in the second quarter of the current fiscal", claims Subramanian. He adds: "Regaining the credibility of vendors, lenders, investors and the employees will be the toughest challenge for us." Has the discounted retail model failed ? His response is quick: "Subhiksha's problem was cash flow mismanagement. We ran a profitable business. We were completely overconfident when it came to raising equity. If anybody wants to be a

serious grocery player in India, they have to follow our path. The model is eminently successful."

Questions:

(a) What went wrong with STS ? What do you attribute as the reasons for its collapse ? Elucidate clearly.

(b) Did STS have a clear strategy ? What should have been the focus of STS ? What cost STS its business ?

(c) Can the company be revived or does revival seem a possibility ? If yes, how, present a plan of action; if no, why (give reasons) ?

(d) Was the expansion funding route adopted by STS justified. Give reasons. 

December, 2012

Ms-91 : Advanced Strategic Management

SECTION – A

1.  Discuss in detail the nature and process of corporate planning and the importance of its implementation.

2.  Bring out the historical perspective of corporate governance and discuss why has it become necessary for business houses to adopt a good corporate Governance.

3.  Discuss the characteristics of dynamic environment and what are the strategic choices

available for a firm to compete in such an environment ? Give examples.

4.  (a)  Explain the role of information technology (IT) in strategy implementation.

(b)  "IT is being extensively used by various service organisations to improve service delivery. " In the light of this statement discuss IT in service sector.

5.  Write short notes on any four  of the following:

(a)  Importance of corporate policy.

(b)  Cadbury Committee Report on Corporate Governance.

(c)  Pricing Strategies.

(d)  Competitive advantage and R and D.

(e)  Social Audit.

SECTION-B

Analyse the case situations given below and answer the questions at the end.

6.  Retailing Success Changing tastes and preferences of customers, upward mobility, rising disposable income, availability of a variety of products and services, lifting of the quantitative restrictions on imports, and increasing exposure to international standards have led to a retail revolution in India. The Mumbai-based Akbarallys is conscious of these developments. A pioneer of the concept of shopping under one roof, Akbarally Ebrahimji set up a 300-sq ft drug store in 1897 that today has metamorphosed into a sprawling retail chain. There are five department stores at different locations in Mumbai generating sale of more than Rs 50 crore. The 32 counters stock more than 20,000 products ranging from electronic goods to garments. The strong points of the retail chain are the range of products offered and convenient locations that are overshadowed by its cramped and shoddy interiors and poor service. But recent make-over in decor and managerial actions at enhancing employee skills and merchandising offer scope for improving the profitability. Focus is on stocking products like garments that have a higher margin as compared to food and drugs that do not. Competition is imminent from local retail brands and international chains contemplating entry into India. A strategic option is to go in for franchisee arrangements in major metropolitan cities. The aim is to establish a mall as an anchor store surrounded by well-known retailers. Another project is to set up the Akbarally Institute of Retailing affiliated to the University of Bombay. The business is managed wholly by the three Khorakiwala brothers and their children. The second-generation family members are professionally trained in management. The senior positions are manned by professionals. Besides retailing, the family is also into furniture centres in Mumbai. Its other business that is better known is Wockhardt, a leading pharmaceutical company. The challenge before the family business is to keep changing itself to remain on the top.

Question

Analyse the retailing operation of Akbarallys  from  the viewpoint of strategic management. Do you feel that the organisation is geared to face new challenges? What needs to be done additionally to secure continued success ?

7. Let There be Light

Traditionally, power plants, being capital-intensive, have been set up by the public sector and state electricity boards (SEBs) in India. Everyone agrees today that the energy sector is the major infrastructure bottleneck holding up economic development. A critical aspect of economic reforms thus is the reform of the energy sector. The Madhya Pradesh State Electricity Board (MPSEB) is not much different from its counterparts in other states. It faces similar problems and is opting for identical solutions. The common elements in the power sector reforms are: corporatisation by breaking the SEB into generation, transmission and distribution; financial restructuring including debt and interest payment rescheduling; reduction of manpower; and improvements in operational efficiency. Public utilities, like SEBs, have to be commercially viable in order to survive. Yet, historically, this aspect of SEB as an organisation has been sacrificed at the altar of political expediency. The ruling party, irrespective of whether it is the Congress at present or the Bharatiya Janata Party earlier, have made pre-election promises of supplying free or heavily-subsidised power. Digvijay Singh, the present chief minister of Madhya Pradesh, a populist politician earlier, no longer sees electoral benefit in providing free electricity. "It pays to pay" is his refrain today, whether it is healthcare or electricity. Bold steps-bold, as they still carry the risk of a political fallout with fiery BJP leader Uma Bharti breathing down Digvijay's neck or the silent schemers of his own party working overtime behind the scenes - have been initiated to reform the energy sector in Madhya Pradesh. MPSEB is to be divided into generation, transmission and distribution (T&D), and supply companies. Financial management and cash flow management is to be improved. The retirement age of MPSEB employees has been reduced from 60 to 58 years. Effective operational control is sought to be exercised by metering power supply at division/district level to fix responsibility for T&D losses and power thefts. A sustained drive is on to identify non-paying consumers, install meters, and make them pay their bills regularly. MPSEB's annual losses are to the tune of a massive Rs. 1,600 crore; total liabilities are estimated to be Rs. 20,000 crore. Undeniably, these are parameters indicating the rot that has corroded the system. At one level, the reform of the energy sector is a political action but at another, and perhaps a more fundamental level, it is a question of managing an organisation strategically through strategic actions designed to turn around a vital public utility.

Question

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

June, 2013

Ms-91 : Advanced Strategic Management

SECTION - A

1. (a) Briefly discuss the approaches to corporate management. Which one, you think, can be regarded as more appropriate to Indian environment and why ?

(b) what is corporate policy and what is its significance" ? How could management formulate effective corporate policy ?

2. (a) "Effective corporate governance is the new mantra of corporate management today." Why is it necessary for corporate business to have good governance ? Discuss.

(b) Several companies have the position of Chairman of the Board of Directors and the CEO merged into one. Discuss the merits and demerits of this kind of arrangement.

3. (a) What could be the various modes of entry into global markets ? Discuss their merits and demerits.

(b) What are the various pricing strategies available to a firm ? Discuss each one of them with reference to different market structures.

4. (a) "R&D strategy can enhance the competitiveness of a firm." Explain , how ?

(b) Discuss some of the problems or challenges in the effective implementation of a knowledge management system.

5. (a) Why is it important for corporate business to conduct itself in a socially responsible manner ? Explain with examples.

(b) Differentiate between Partial Social Audit and Comprehensive Audit.

SECTION-B

6. Read and analyse the case and answer the questions given at the end.

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From: Minoo Batliwala, chairman

To: Rakcsii Mohan, managing ilirector

Date: May 7

Dear Rakesh,

I've just received a copy of Shringar Auto's preliminary audited results for 1994-95, which will be reviewed by the board on May 25. I think this is an opportune moment to share with you some of my concerns about our future before we're drowned in the celebrations of a successful year. I must admit that the numbers look great. Few of us expected profits to jump by 110 per cent to Rs 310 crore considering that turnover rose by 36 per cent to Rs 2,290 crore. We continue to maintain our leadership position on the homefront with a 52 per cent marketshare in the two-wheeler market: 72 per cent in scooters and 31 per cent in motor-cycles. Our margins are higher than those of any of our domestic rivals. And the stock price of Rs 700 proves that investors are happy. Most people think we're doing everything right. To be honest, I do not. I don't believe that our figures are telling us the truth. Which is that Shringar may not continue to perform as well. Last fortnight, a consultant suggested as much to me privately. And the signs that he pointed to are real, very real. Let 's face it, a 72 per cent share of the scooters market today means that we've dropped four percentage points in two years. In motorcycles too, we've dropped four percentage points. Which means that our competitors are growing faster than we are. Now more competitors are coming in-including foreign companies.

When I look around me, I see not just a successful recovery from a recession, but also overconfidence and complacency. Don't misunderstand me. In the three decades since I started Shringo-r, there are many people who have stood by the company through good and had times. But they're all convinced that the way we've been doing business all these years has proved so efficient that there's no need to change it. How can I tell such self-assured and confident people that we're headed down a one-way street unless we're prepared to change the very basic of our success ? Do you have any answers ?

Regards.

Internal memo

From: Rakesh Mohan, managing director

To: Minoo Batliwala, chairman

c.c. : Hemanth Desai, executive director

Date: May 9

Dear Mr. Batliwala.

Thanks for your note. You have articulated a problem 1 have often faced over the years: you can't argue with success. Of course when the circumstances are abnormal, you can push through change. People rise to the occasion either because they see a challenge or because, quite simple, they are scared. I needn't remind you how we rode the automobile recession in 1990-91. Our sales had plunged by 50 per cent, production had to be slashed by 30 per cent, and profits fell by a fifth. We cut costs just by looking around. We improved quality by disbanding the quality assurance department and assigning the responsibility to the shopfloor staff. We flattened the management hierarchy from 11 layers to six. We raised R&D allocations on projects aimed at improving fuel efficiency and niche products. We did all this for two years-and we not only survived, but prospered. In 1990, a single shift used to produce 128 scooters per assembly line: today ,the same line produces 410 pershift with the same number of people. An improvement of that magnitude would not have come about if we did not have a crisis. I agree with you that we need the same sense of urgency even today. Here's my suggestion: why don't we build some crisis scenarios so that the company can react the same way as it did when the recession hit us ?

Regards.

Internal memo

From: Minoo Batliwala, Chairman

To: Rakesh Mohan, managing director

Date: May 15

Dear Rakesh,

I am glad you agree with me that a fat, happy, and profitable organisation like ours needs to create crisis. What worries me, though, is whether we will barter away our present-day success in the process. Reacting to a recession is one thing: you weren't doing well  anyway and neither were our competitors. So, you didn't have to worry about not letting success slip by while you fought fires. Can we cope with the confusion that unleashing a crisis will lead to ? How will our people react to this sudden spectre thrust upon them ? How will we make the crisis credible ? Please don't think I'm playing the devil's advocate: I genuinely feel that we need to light fires. But how can we convince people there's one when there's no smoke?

Regards.

Internal memo

From: Hemanth Desai, executive director

To: Mr. Rakesh Mohan, managing director

Date: May 16

Dear Mr. Mohan,

Following up on your suggestion, here are my candidates for a crises. The two-wheeler market in the country is growing at about 20 per cent per annum, and the newly-emerging replacement segment is creating its own opportunities for growth. Given the unassailable dominance of Shringar, it will be difficult to market the idea of an impending crisis unless it is linked to some straightforward and honest evidence. We can examine the crises scenario from three different perspectives:

THE INDUSTRY: Shringar has retained its rank as the world's third-largest producer in the two-wheeler league this year. Honda tops the list with 35 per cent of global production, followed by Yamaha with 22 per cent, Shringar with nine per cent, Suzuki with eight per cent, and Piaggio with six per cent. While the gap between Shringar and Yamaha is wide, both Suzuki and Piaggio are snapping at our heels. We have no choice but to surpass our production levels every year in order just to remain where we are. And even to be the second-best in the world, we must chase the numbers far more aggressively than we are doing at present. Nearer home, our marketshare will no longer be unquestionably supreme as it has been for years now. As you will recall, the report by Crosby points out how new entrants will gain at our expense. This could be crisis No.1.

THE ORGANISATION: Shringar is a 30-year-old company. Over 30 per cent of the existing workforce have been with the company since the beginning. A lot of fat has been accumulating at various levels. We have to run Shringar like a small business: fast-moving, people-driven, and innovative. The alternative is a tired, old company which will gradually lose its edge in the marketplace. This could be crises No.2.

THE MARKET: Almost from the beginning we have had no need to market our products. Jumping places on the waiting list meant having to pay a premium. But now, there's a strong undercurrent of customer dissatisfaction. I don't know how this fact can be communicated, but I am sure it will make people at Shringar feel that they have to change in order to survive in the new competitive environment. This could be crisis No.3.

Regards.

Internal memo

From: Rakesh Mohan, managing director

To: Minoo Batliwala, chairman

Date: May 17

Dear Mr Batliwala

I am enclosing a note prepared by Hementh Desai on the possible areas which could qualify for a crisis. I have convened a meeting of the management committee on May 25, before the board meets, to discuss the preliminary audit report. We could discuss the issue further at the meeting and examine ways in which plausible crises for any or all of these could be communicated to the workforce. Many of them think that our company is great the way it is and are bound to ask: why should we change ? We can later work on a formal plan of action.

Regards.

Internal memo

From: Minoo Batliwala, chairman

To: Rakesh Mohan, managing director

May 18

Dear Rakesh,

I must confess to being deeply disturbed. I have been thinking about the efficacy and dangers of creating a crisis, and I'm battered by doubts. Do we have to go on creating a crisis every time we need to change gears? How can the company live in a perpetual state of tension? Isn't there something more positive, such as vision. To set our sights on the future ? There, too, I have my doubts. A vision statement, as it is usually presented, is top-driven, unidimensional, static, and overgeneralised.

I think we need to pursue what I may call bifocal vision-something that helps people in the organisation meet today's business needs even as it prepares them for tomorrow. Bear with the jargon, please. A bifocal vision simultaneously paints a picture of the opportunities available today and the best possible tomorrow. It demands that a company improve and perfect today's products and services to please current customers while developing new products and services to delight tomorrow's customers and investors.

Granted, creating bifocal vision will not be simple. We must perpetually work towards making our current processes obsolete before our competitors do it for us. We must assume that all processes, products, and services are experimental by nature. That way, when a process is seen as an experiment, it becomes temporary and thus, amenable to change. The second thing is that every meeting, agenda, memo, report, and discussion must have this bifocal dimension. Every decision must consider the impact on both today's customers and markets and tomorrow's. when that happens, we will have people who act like owners in the interest of the company-not managers who prefer to safeguard their individual turfs. Perhaps we would not then need an artificial crisis to charge us up.

What do you think ?

Regards.

Questions :

(i) Analytically diagnose the problem the Chairman of the company is faced with. What led to his feeling of insecurity ?

(ii) Should the chairman recreate the sence of doom that led to the company's successful emergence from the recession ?

(iii) Which strategy could succeed in motivating the employees into overcoming the challenge an (artificial) crisis or a new vision for the company, including aspiring targets ? Give your response by clearly analyzing the merits and demerits of each approach.

(iv) What other steps as part of the long term strategy would you suggest for the company ? What must shringar do to maintain its market leadership ?