Assignment 1 (EOM)

Case Study 1
Mr. Raju Raman had a family consisting of his wife and two children. He was a carpenter who
used to work on daily wages. In the spare time, he used to make wooden tables and sell it to
his neighbours and in the local area. After 10 years of hard work as a daily wage labourer who
worked for others, he thought he will stop doing it and make and sell wooden tables on a full-
time basis. He hired a small room for Rs. 3000 a month, bought some electric saws and other
tools with the saving he had made, asked his wife and son to help him. He then went around
various furniture shops and told them that he makes wooden tables to order and gave them
his mobile number. Soon orders started to flow and Raju decided to call his carpenter friends,
Shyam and Sanju, to come and work for him on a daily basis but offered them Rs. 350 per day
instead of the market rate of Rs. 400. They were happy as they had work daily and could do
it in an organized manner under one person. As the work grew, he told them that he will pay
them a daily wage of Rs. 350 and an additional of Rs. 50 per table they made. They worked
hard and often late into the evening and on an average made Rs. 500 a day as it was easy
making a table to clear specifications and using the electric tools rather than sweat it out in
the backyard of someone as a casual labourer sawing away with their handsaws. Despite their
long hours, they could not complete the order. Hence, Raju hired 4 more carpenters and made
his friend Shyam to take charge of making tables with two newly hired carpenters and Sanju
to take charge of making wooden chairs with the other two newly hired carpenters. In
addition, he hired Pankaj to buy wood and other fitments, take the finished tables and chairs
to various stores, collect the money, and pay electricity bills, and other odd jobs outside the
shop. The cost of wood suddenly rose, and his traditional timber mill owner explained to him
the how the increase in cost of diesel has resulted in increased cost of transportation. He
could understand that since the tempo owner who takes his finished products to various
stores too had hiked the cost of trips. Fortunately, one engineering college was coming up
near his shop and their demand for tables and chairs seemed to be ever increasing. Raju
pitched in showing how he made the very same furniture for big furniture shops in the city
and how he could provide them these at a lower cost if they gave him bulk orders. As he saw
growth, he put together a team to make new products for the colleges so that they can be
modular, strong to withstand the rough use by students, low cost, and with good aesthetics
and called this team ‘creative team’. Of course, the members of the creative team were select
carpenters and his favourite Pankaj who by now had three assistants and had mastered the
business of marketing and pricing of the products and book keeping to an extent.
Questions to be answered:
1. Develop a mission and vision statement for the business explained in the above
paragraphs.
2. Explain how this case study provides an idea to you regarding transforming a
family organization in to a formal one by adhering to Fayol’s principles of
management.
3. What business strategies did Raju use in becoming successful?
Case Study 2
Starbucks Corporation is an American coffee company and coffeehouse chain. Top level
management of Starbucks has conducted Situation Analysis. It analysed the (I) internal factors
such as management, culture, mission, resources, system process and structure (II) external
factors such as customers, competitors, supplies, labour force, shareholders, society,
technology, the economy and governments. The following 17 points listed in Table 1 are the
outcomes of Situation Analysis.
Questions to be answered:
Categorize the 17 points given in Table 1 and re-write them under the following headings:
Strengths, Weaknesses, Opportunities and Threats. Also, develop suitable strategies using
TOWS analysis.
Table 1

1. Strong brand-name recognition 2. Political conditions abroad may limit expansion

3. Dependence on single source of business/income 4. Expansion into untapped U.S.
markets 5. Quality product 6. Strong dependence on suppliers 7. Economic
conditions may make consumers unwilling to pay high prices 8. Expansion into
overseas markets 9. Expansion of brand name into new products or business lines
10. Large retail distribution system 11. May be reaching saturation point in some
U.S. markets 12. Good supplier relationships 13. Prices high relative to competition
14. Extensive product list 15. Merchandise sales in stores 16. Strong financial history
17. Strong human resources
Case Study 3
The Snoozy Inn is a 40-unit, no-frills operation in the less scenic part of a major Queensland
resort town. The owner, Mr. Smith, firmly believes that there is a need for his style of low-
cost family accommodation amid the luxury and beauty of the area. His rooms are large,
family-style rooms (there is no television, for example). Although there is plenty of room for
future expansion, the grounds are fairly bear with a bit of landscaping, but mostly grass.

Mr. Smith can serve breakfast to the rooms and provides tea-making facilities. There are now
a lot of good restaurants and take-a ways in the area. Mr. Smith’s prices are less than half of
what similar motels charge and only a fraction of what the big five-star properties are
charging. And, really, he isn’t all that far away from the beach, shops and other attractions.

The problem is occupancy. He has some regulars who come every holiday period (and have
been doing so for the four years he has owned the property). Overall, occupancy is about
50% year round and he knows from the local tourist office that the other properties average
around 68% occupancy year round. New developments could mean trouble. This lack of
occupancy can be quite frustrating for Mr. Smith. Cars pull in, drive around the parking areas,
and then drive away.

Currently Mr. Smith does very little advertising in local district guides and the holiday papers,
mainly because he really thinks word-of-mouth is the best form of advertising. He is a
member of the local tourist committee, but too busy to go to meetings. However, he does
receive the local statistics and knows the average stay in the area is 3.8 nights, and that local
families and couples and increasingly overseas visitors are his potential customers.

He is not desperate yet, but he is getting worried and disillusioned. He thought he would be
overrun with guests, but that hasn’t happened.

Questions to be answered:
Identify and write the Strengths, Weaknesses, Opportunities and Threats in relation to the
Snoozy Inn., and develop suitable strategies using TOWS analysis.
Case Study 4
What is missing in MBO?
“Managing by objectives is nothing new here”, said commissioner Chidambaram of the
metropolis Police Department. “We have always had important objectives toward which
everyone in my department strives. Our job is to maintain law and order, firmly but fairly; to
protect human lives and property; and to be the conscience and spirit of the general welfare
of the millions of people who call our city home. Everyone in this department knows these
objectives. Every man and woman knows that he or she must work toward them and that, if
they do not, they will be replaced. I recognise that in a manufacturing concern you can
measure objectives by profits, sales costs, and product output. We can’t, of course, do that,
for we are a service operation. But this does not mean that we are not managing by objectives.
Ask anyone in my department!
Questions to be answered:
(1) Is Commissioner Chidambaram engaging in managing by objectives? What, if
anything, is missing?
(2) Develop the quantitative objectives in all the key result areas by referring to Peter F
Drucker’s philosophy on “Management By Objectives” in relation to the above case.
Case Study 5
Shri Vishvakarma (Emery Stone) is a Private Limited company. Three employees who worked
with Shri Vishvakarma (SVIPL) for 94 days conducted a SWOT analysis. They analysed the (I)
internal factors such as management, culture, mission, resources, system process and
structure (II) external factors such as customers, competitors, supplies, labour force,
shareholders, society, technology, the economy and governments. The following 19 points
listed in Table 2 is the outcome of their SWOT Analysis.
Questions to be answered: Categorize the 19 points given in Table 2 and re-write them under
the following headings: Strengths, Weaknesses, Opportunities and Threats. Also, develop
suitable strategies using TOWS analysis.
Table 2

1. Serving the industry for last 43 years 2. No proper workflow that promotes
unnecessary movement of man and material 3. Innovating new products, which will
generate demand in near future 4. Pure competition in the market 5. Facing
competition from many local manufacturers; therefore, home state (Rajasthan)
demand is very low 6. ISO 9001 Certified Company 7. Highly reliant on employees
due to which mismanagement has been seen in certain areas in the company
8. Benefits of economies of scale, due to bulk production so per unit cost is much
lesser than competitors 9. High fluctuation in the price of raw materials like iron
which disturbs the market demand 10. Excellent quality control 11. No clear duties
and responsibilities assigned to the employees thereby creating some confusions at
the time of excess work 12. Exporting high quality flour mills, increasing exports day
by day 13. Being supervised by founder R.D.Sharma and Mr. Bhairon Bux Sharma
14. Orders are not delivered on time 15. Demand of emery stone is high, but
increase in the production capacity is very expensive 16. Managed by highly
qualified directors – Shri Gopal Sharma (M.D.) and R.S.Choyal (E.D.) 17. Little
attention is being paid towards the complaints and grievances of the customers
18. Emphasis on automation of production, so high quality and low cost of
production which gives edge above the competitors 19. Always keen on innovation
of new products and design
Case Study 6
One November evening, Pepsi CEO Steve Reinemund laid out a smorgasbord of snacks for his
board of directors to munch on. This was not gentlemanly hospitality; it was pure business.
These snacks represented Pepsi’s future: a line of products aimed at cashing in on consumers’
continuing obsession with healthy food. If all goes well, the line will bring in billions for the
company. According to one board member, the treats were “delightful”. But more than just
the future of Pepsi, this spread in many ways represents everything the company has done
right for nearly a decade: finding new ways into people’s stomachs-and wallets-and pulling
off one of the great turnarounds in American business.
In December 2005, for the first time in this 108-year rivalry, Pepsi beat Coke in market
capitalization. “Pepsi’s been on fire”, notes Robert van Brugge, beverage analyst with Sanford
Bernstein. Part of Pepsi’s progress in the food and beverage business is due to the rigor and
competitiveness of CEO Reinemund. “Steve’s an ex-Marine, and everything you would
associate with that pertains”, says Ken Harris, a consultant who has worked with Reinemund
at PepsiCo.
“You’ll leave a meeting knowing exactly what is expected of you and the time frame in
which it should be done.” Reinemund has put together one of the strongest management
teams around, including president and CFO Indra Nooyi, and is a hands-on manager who’s
been known to personally make sales calls to help Pepsi win a contract. One Christmas Eve a
few years back, while on vacation with his family, he found himself at a convenience store
just as a Frito-Lay delivery arrived to replenish the shelves; he pushed aside his purchases and
helped pack chips.
Nooyi worked so closely and so well with Reinemund that she was appointed chief
executive officer in August 2006, when Reinemund decided to leave executive life and spend
more time with his family. Nooyi said she felt fortunate to become CEO at a time when
PepsiCo had such solid growth across all business units. Reinemund said, “I can’t tell you how
excited I am to pass the baton to Indira.”
Pepsi’s resurgence is not considered to be an accident. A decade ago Coke offered
investors a compelling story: a recession-resistant product inexpensive enough that
consumers would buy it in good times and bad, but valued enough that they would willingly
pay an extra nickel or so above what no-name brands charged. What Coke investors didn’t
envision was that an emerging preference for other soft beverages—water, sports drinks—
would fracture demand. By 2007, however, Coke was moving rapidly into non-carbonated
beverages, as exemplified by two key purchases: Energy Brands which produces vitamin-
enhanced water, and Fuze Beverage LLC, a producer of energy, tea, and vitamin-enhanced
drinks.
Losing the cola wars, it turns out, was the best thing that ever happened to Pepsi. It
prompted Pepsi’s leaders to look outside the confines of their battle with Coke. “They were
the first to recognize that the consumer was moving to noncarbonated products, and they
innovated aggressively,” observes Gary Hemphill of Beverage Marketing. PepsiCo embraced
bottled water and sports drinks much earlier than its rival. Pepsi’s Aquafina is the No.1 water
brand, with Coke’s Dasani trailing; in sports drinks, Pepsi’s Gatorade owns 80 percent of the
market while Coke’s Powerade has 15 percent.
Throughout the past five years the company has deftly moved with every shift in consumer
tastes. “He’s thinking about what the products should look like in the future,” says Victor
Dzau, a director of PepsiCo. For example, as COO in 2000, Reinemund had a hand in Pepsi’s
acquisition of Sobe, buying the company a critical foothold in an emerging category of New
Age drinks—the business now pulls in an estimated $200 million a year. Through its
partnership with Starbucks, PepsiCo now dominates the bottled-coffee market, with annual
sales of over $300 million of Frappuccinos.
But Pepsi’s strongest business lies outside drinks altogether. Over the past ten years, the
Frito-Lay division has become a powerhouse, controlling 60 percent of the U.S. snack food
market. So strong is Pepsi in this arena that many investors no longer judge it by how it stacks
up against Coke. “Most people think of Pepsi and Coke as fighting it out, “observes Eric
Schoenstein, an analyst at Jensen Investment Management. “But we don’t see it that way.
Pepsi isn’t really a beverage company anymore. It’s a food company that also sells beverages.”
The company now boasts 16 brands that bring in more than $1 billion each year in revenue.
Questions to be answered:
1. Why might this story about PepsiCo be considered an example of business strategy?
2. Which business strategy or strategies are illustrated in this story about PepsiCo?
Explain them briefly by citing the lines from the given case.