Case Study 1 :

Problem Statement:
Arun is a successful businessman in the paper industry. During his recent visit
to his friend’s place in Mysore, he was fascinated by the exclusive variety of
incense sticks available there. His friend tells him that Mysore region in known
as a pioneer in the activity of Agarbathi manufacturing because it has a natural
reserve of forest products especially Sandalwood to provide for the base
material used in production. Moreover, the suppliers of other types of raw
material needed for production follow a liberal credit policy and the time
required to manufacture incense sticks is relatively less. Considering the
various factors, Arun decides to venture into this line of business by setting up
a manufacturing unit in Mysore. In context of the above case: • Identify of the
above case: • Identify the three factors mentioned in the paragraph which are
likely to affect the working capital requirements of his business.
Ques: 1. Identify of the above case:
2. Identify the three factors mentioned in the paragraph
which are likely to affect the working capital requirements
of his business.

Ans-1: Arun has made a choice on an investment. The goal of an investment choice
is to choose how the corporation will allocate its capital among various assets. It is
beneficial to assess new investment options and choose the best one based on the
risk and return involved. Long-term or short-term investment decisions are both
possible. A capital budgeting decision is another name for a long-term investment
choice.

The three elements listed in the paragraph that are likely to make work less efficient

His company's capital requirements are as follows:

 Raw material accessibility: Because sandalwood, the primary raw material

utilised in production, is widely accessible, his company will need less working
capital because it won't need to keep raw materials on hand.

 Production cycle: Making incense sticks requires a shorter production cycle

and less time. Thus, his company won't need much in the way of working
capital.
 Credit obtained: The company may function with a minimal amount of working
capital since the suppliers of various types of raw materials required for
manufacturing have a lenient credit policy.

Case-study-2:

DD is the India’s premier public service broadcaster with more than 1,000
transmitters covering 90% of the country’s population across an estimated 70 million
homes. It has more than 20,000 employees managing its metro and regional
channels. Recent years have seen growing competition from many private channels
numbering more than 65, and the cable and satellite operators (C & S). The C & S
network reaches nearly 30million homes and is growing at a very fast rate. DD’s
business model is based on selling half-hour slots of commercial time to the
programme producers and charging them a minimum guarantee. For instance, the
present tariff for the first 20 episodes of a programme is Rs. 30 lakhs plus the cost of
production of the programme. In exchange the producers get 780 seconds of
commercial time that he can sell to advertisers and can generate revenue. Break-
even point for producers, at the present rates, thus is Rs. 75,000 for a 10 second
advertising spot. Beyond 20 episodes, the minimum guarantee is Rs. 65 lakhs for
which the producer has to charge Rs. 1,15,000 for a 10 second spot in order to
break-even. It is at this point the advertisers face a problem– the competitive rates for
a 10 second spot is Rs. 50,000. Producers are possessive about buying commercial
time on DD. As a result, the DD’s projected growth of revenue is only 6-10%as
against 50-60% for the private sector channels. Software suppliers, advertisers and
audiences are deserting DD owing to its unrealistic pricing policy. DD has three
options before it. First, it should privatize, second, it should remain purely public
service broadcaster and third, a middle path. The challenge seems to be to exploit
DD’s immense potential and emerge as a formidable player in the mass media. •
What is the best option, in your view, for DD? • Analyse the SWOT factors the DD
has. • Why do you think that the proposed alternative is the best?

Ans: For several years Doordarshan was the only broadcaster of television
programmes in India. After the opening of the sector to the private entrepreneur
(cable and satellite channels), the market has witnessed major changes. The number
of channels has increased and also the quality of programmes, backed by
 technology, has improved. In terms of quality of programmers, opportunity to
advertise, outreach activities, the broadcasting has become a popular business.
Broadcasters too have realized the great business potential in the market. But for
this, policies need to be rationalized and be opened to the scope of innovativeness
not only in term of quality of programmes. This would not come by simply going to
more areas or by allowing bureaucratic set up to continue in the organization.
Strategically the DD needs to undergo a policy overhaul. DD, out of three options,
namely privatization, public service broadcaster or a middle path, can choose the
third one, i.e. a combination of both. The whole privatization is not possible under the
diversified political scenario. Nor it would be desirable to hand over the broadcasting
emotively in the private hand as it proves to be a great means of communication of
many socially oriented public programmers. The government could also think in term
of creating a corporation (as it did by creating Prasar Bharti) and provide reasonable
autonomy to DD. So far as its advertisement tariff is concerned that can be made
fairly competitive. However, at the same time cost of advertising is to be compared
with there each enjoyed by the doordarshan . The number of viewers may be far
more to justify higher tariffs.

(ii) The SWOT analyses involve study of strengths, weaknesses, opportunities and threats
of an organization. SWOT factors that are evidently available to the Doordarshan are as
follows: S - Strength More than 1000 transmitters. Covering 90% of population across 70
million homes against only 30 million homes by C & S More than 20,000 employees. W-
Weakness Rigid pricing strategy. Low credibility with certain sections of society, Quality of
program's is not as good as compared to C & S network O - Opportunities Infrastructure can
be leased out to cable and satellite channel. Digital terrestrial transmission, Regional
focused channels, Allotment of time, slots to other broadcasters. T-Threats Desertion of
advertisers and producers may result in loss of revenues. Due to quality of program the
reach of C & S network is continuously expanding. As the C & S network need the trained
staffs, some employees of DD may switchover and take new jobs, Best of the market-
technology is being used by the private channels
(iii) It is suggested that the DD should adopt a middle path. It should have a mix of both the
options. it should economise on its operational aspects and ensure more productivity in term
of revenue generation and optimisation of use of its infrastructure. Wherever, the capacities
are underutilised, these may be leased out to the private operations. At the same time
quality and viewership of programmes should be improved. Bureaucracy may reduce new
strategic initiatives or make the organisation less transparent. Complete privatisation can
fetch a good sum and may solve many of the managerial and operational problems.
However, complete public monopoly is not advisable because that denies the government to
fully exploit the avenue for social and public use. The government will also lose out as it will
not be able to take advantage of rising potential of the market