DoCoMo - The Japanese Wireless Telecom

Leader: The Tsunami in Trouble
In May 2002, NTT DoCoMo (DoCoMo) Inc., Japan's largest mobile phone company, announced a net loss of ¥ 116.19 billion1 and a goodwill write-off of ¥ 624.6 billion for the fiscal ending March 2002. Though the company registered an increase in operating revenues from ¥ 4,669.37 billion in 2000-01 to ¥ 5167.14 billion, the revenue growth was stated to be well below its company expectations. Company sources attributed this to the general decline in Average Revenue Per User (ARPU) for voice services and slower growth in new cellular subscribers across the country (Refer Exhibit I for DoCoMo's financials and ARPU data). DoCoMo's announcement did not come as a major surprise to industry observers, as media reports had been forecasting losses for the company since early 2002 itself. What was noteworthy about this development, however, was the fact that the company was largely believed to be performing exceptionally well in the recent past. The fact that DoCoMo had roped in as many subscribers as the leading US-based media company AOL, but much faster, was often cited as a proof of Japan finally waking up to the challenges of the 'new' economy. Analysts claimed that DoCoMo was paying the price for its aggressive overseas expansion drive during 1999-2002, in the form of these losses. DoCoMo had to take a huge write-off in its books on account of a decline in the value of its foreign investments and the slump in the global telecommunications market in 2001. While some analysts felt that DoCoMo should revamp its global strategy, a few others said that the company should take measures to increase ARPU. In the words of Hironobu Sawake, an analyst at J P Morgan (leading global financial services firm), "The question is whether we can see a rise in profitability." DoCoMo announced that its commitment towards globalization was intact. The company also brushed off analysts' view that the focus should be on increasing the ARPU. Instead, it announced that it would focus more on 3G (Refer Exhibit II for a note on 3G) initiatives (developing and launching more innovative and new 3G technology products). While DoCoMo was still lauded for its well designed and executed strategic and marketing game plan that had helped it build a huge subscriber base over the years, these developments had raised many doubts about its future prospects and its ability to turn itself around.

Trendy. Tiffany and Cartiers into the Indian market. Domino's Pizza India Ltd. at a board meeting. Exporters in export processing zones were allowed to sell 10 percent of their produce in the domestic market. overseas banks and bullion suppliers were also allowed to import gold into India. in March 2001. Gold Jewellery Market in India Before the liberalization of the Indian economy in 1991. and some of them even launched their in-house brands. allowed large export houses to import gold freely.' The board felt that Pavan Bhatia had . Consequently. In 1997. the share of branded jewellery in the total jewellery market was still small (about Rs.1 (Domino's) stepped down from his post. Instead of being regarded as only an investment option. the number of gold retailers in the country increased sharply. CEO. Oyzterbay. The abolition of the Gold Control Act in 1992. The branded jewellery segment occupied only a small share of the total jewellery market because of the mindset of the average Indian buyer who still regarded jewellery as an investment. Traditional jewellers also began to bring out lightweight jewellery.Branded Gold Jewellery Market in India: The Gold Rush In the late 1990s. These measures led to the entry of foreign players like DeBeers. Gili and Carbon opened outlets in various parts of the country. Pavan Bhatia. though growing at a pace of 20 to 30 percent annually. Branded players such as Tanishq. Branded jewellery also gained acceptance forcing traditional jewellers to go in for branding. the Indian jewellery market witnessed a shift in consumer perceptions of jewellery. Domino's top management concluded that 'Pavan Bhatia's performance during his 18-month tenure was not up to the mark. only the Minerals and Metals Trading Corporation of India (MMTC) and the State Bank of India (SBI) were allowed to import gold. gold and diamond mining were opened up for private investors and foreign investors were allowed to own half the equity in mining ventures. Earlier. 400 billion per annum jewellery market in 2002). jewellery was being prized for its aesthetic appeal. 10 billion of the Rs. Given the opportunities the branded jewellery market offered. consumers trusted only their family jewellers when buying jewellery. affordable and lightweight jewellery soon gained familiarity. the branded jewellery players tried to change the mindset of the people and woo customers with attractive designs at affordable prices. the focus seemed to have shifted from content to design. In other words. In 1993. However. Moreover. Rethinking Domino's Expansion Plan In May 2001.

Hari Bhartia3 planned to shut down Domino's outlets not only in some small cities4 but also a delivery outlet in the wealthy Gujranwala Town in North Delhi. in 1999-2000 Doordarshan (DD)1 had a revenue growth at 50%. and manage the construction. Pavan Bhatia opened Domino's outlets in small towns and cities.99 mn in 1998-99. Pavan Bhatia went about opening Domino's outlets across the country. not hunting for real estate. Pavan Bhatia took over as the CEO of Domino's." Pavan Bhatia realized that fast track growth could be achieved only by focussing on the core business of selling pizza.' However. In 1999-2000. (Refer Exhibit I for post Pavan Bhatia strategy of Domino's) Sky is the Limit In November 1999. One of the two outlets in Ludihiana was also planned to be shut down.initiated an expansion strategy that was 'reckless and not properly thought out.1mn compared to Rs 3. Star. The number of outlets multiplied four fold to 100 between March 2000 and January 2001. In 2000-01. He seemed to be very ambitious and wanted to make Domino's the largest fast-food chain in India. Pavan Bhatia said. The cost per meal was too high. so we decided to hand over the entire real estate operations to estate consultants CB Richard Ellis. Sony had projected 40-50% revenue growth2. Doordarshan's Problems: Is DD Dead? After years of falling revenues. DD earned revenues of Rs 6. conduct feasibility studies. Analyst's felt that DD's sagging revenues were only tip of the iceberg. due to low footfalls2and lower volumes. Domino's expanded to more than 100 outlets in 10 months across 30 cities. They felt that the board was not considering the possible long-term benefits of Pavan Bhatia's strategy. many analysts did not agree with the board's conclusion. "We are in the business of selling pizzas. However by the end of 2000-01. And one of the biggest impediments in retailing is real estate. Analysts felt that even those willing to opt for the product found the price unacceptable. In September 2001. . DD showed signs of revival with the launch of DD World (a channel for NRIs) and had relative success with some of its regional channels (Refer Table I for different DD channels). DD's honeymoon with success seemed to be over. Domino's entered into an agreement with a real estate consultant CB Richard Ellis to help with locations. It was the fastest growth Domino's had in any of the 63 countries it operated in. During March 2000-January 2001. DD's revenues were projected to grow at 6-15% while private channels such as Zee TV. Pizza consumption in these places was very low. From an average of four stores every year in its first four years of operation.

Only FMCG companies stuck to DD because of its terrestrial network to reach the rural and semi-urban audience4. aimed at increasing the popularity of the channel and its cartoon characters. they had to delay the match till 4.m. children and their parents went wild with excitement and broke the barricades to meet their favorite cartoon characters. and Johnny Bravo.DD was plagued by multiple problems. which found their roots in the mismanagement of affairs. but the 35.30p. famous cricket players were to play against famous cartoon characters such as Scooby Doo. When pleadings and requests failed to control the crowd. In 1992.000 employees5.m. DD faced the heat of competition from private satellite channels. Jerry. Fred Flintstone. India. In the tournament. Tom. In spite of having over 21. with children and their parents. the stadium was overflowing and many were waiting outside trying to enter the stadium.000 plus capacity stadium was almost full by 1. Analysts questioned the capacity of the Government to own DD and many felt that privatization would be the only solution. When the organizers announced the start of the match. The depleting Television Viewer Ratings (TVRs)6 of the DD programmes was also a cause of concern as advertisers deserted due to its low viewer ratings. . the organizers had to threaten the children with the cancellation of the match to send them back to their seats.00 p. leading to a stampede. In the Cable & Satellite (C&S) homes it was found that there were hardly any viewers for the DD programmes.30 p. Not even one car company advertised on DD and even two-wheeler manufacturers kept a low profile3.m. DD outsourced 50% of its programmes from the private producers.30 p. As the organizers kept trying to manage the crowds.' in Mumbai. leading satellite television (TV) channel. The tournament was a promotional exercise. By the late 1990's the private producers. Under utilized infrastructure.m. improper investments and poor financial management plagued the performance of DD. advertisers and audience had deserted DD. By 2. Dee Dee. Cartoon Network. Cartoon Network . when the Government opened airwaves to private players.The Indian Experience: Cartoon Crazy Kids (and Parents) In March 2001. The match was scheduled to begin at 2. Analysts felt that DD would need a budgetary support of Rs 5 bn during the fiscal 2000-01 to sustain itself as its revenues would not be enough to meet its expenditure. Ads of Pepsi and Coca-Cola were found only during sports telecasts. held a cricket tournament titled 'Toon Cricket 2001. In late 1990's DD faced number of allegations of large-scale scams and irregularities.

as they did not want to physically force the children off the field. the Ministry of Small Scale Industries. the mass production of fine cloth led to the availability of cloth at lower prices. there were problems. By 5 p. there were a few problems.m. which symbolized self reliance and emancipation during the freedom struggle in India2 has lost its sheen over the years. Red tapism and bureaucracy prevalent in the Indian system. announced a special package of . where cartoon crazy children and their parents had gone so 'completely berserk. In 1957. KVIC was formed as a nodal agency to promote Khadi all over India through its exclusive outlets known as Khadi Bhandars3. With many Indian industrialists setting up huge textile mills. fabric colours in khadi were also limited. There were many bogus Khadi units operating in the country. when the match began. surrounding the pitch. The Government of India (GoI) has ever since continued its support to Khadi. "We can't see anything. especially middleman. Inspite of having a wide distribution network. Post 1947. India opted for state led large scale industrialization. This overwhelming response to the tournament was beyond even Cartoon Network's expectations. a ring of people stayed on the field. "I've never seen so many kids!" Though it was not the first time Cartoon Network had organized such a promotional event. The organizers and the security people were helpless. In January 1953. Reviving Khadi in India: Khadi Loses its Sheen Khadi1.' Even the organizers were amazed at the popularity of Cartoon Network's characters. People began to buy machine made textiles and thus Khadi began losing out to the mill fabric. The cartoon characters entertained and delighted the crowds with their antics.Even then. According to designers. A stunned looking Cartoon Network official said. obstructing the view of the people who returned to the stands. the production of Khadi was inconsistent and the cloth was prone to shrinkage and fabric stretch. the stadium was still probably full. many disappointed people left the stadium saying. However. they had never seen a response like this. further hampered the growth of the Khadi sector. what's the point?" Observers remarked that judging by the number of people who were there in the first place. KVIC received huge financial assistance from the GoI in the form of subsidies and rebates. Corruption was rampant. the All India Khadi and Village Industries Board was set up to provide employment to thousands of spinners all over India. even when half the crowd had left. And there are several reasons for the same. Besides. the Khadi and Village Industries Commission (KVIC) was established to take over the work of the board. The crowd eventually settled down and the second half of the match went well. In May 2000. which made it extremely difficult to claim rebates from the Government of India (GoI).

Pass Pass was a Rs 350 million brand. KVIC launched two separate brands. In order to face the challenges of globalization and strengthen its position in the market. Sarvodaya comprised consumer goods like incense sticks. DS Group's Entry Into Food and Beverages Sector: Introduction In 1998. DS Foods also planned to enter other 'untapped' markets like Club soda. While some analysts felt that DS Foods might not be able to leverage the brand equity of Catch in the new categories. In 1935. it diversified into flavored chewing tobacco.16 billion to the industry. flavored water. the DS Group launched Tulsi Zafrani Zarda (tobacco powder) and Rajnigandha gutka (tobacco powder mixed with beetle-nut powder). and Saath Saath4 soon appeared in the market. By the mid. This was the first branded 'Indian' mouth freshener. DS Foods launched bottled natural spring water under the 'Catch' brand. Sarvodaya and Khadi in August 2001. By mid 2001.Rs. and iced tea. the DS Group became a leader in tobaccobased products with brands like Baba. In October 1999. as a manufacturer of fragrances. Dharampalji's sons had introduced many varieties of chewing tobacco. they launched the first branded chewing tobacco in India. In 1965. honey. By 1950. Background Dharampalji Sugandhi (Dharampalji) set up the Dharmapal Satyapal Group (DS Group) in 1929. The group announced that it would invest Rs 1 billion3 in the next three years.12. This was the first saffron flavored chewing tobacco in the world. Tulsi and Rajnigandha. in its foods venture. DS Foods launched the Pass Pass (Closeness) mouth freshener. and pickles. DS Foods thought otherwise. spices. In 1979. DS Foods. Pass Pass aimed at becoming a Rs 500 million brand by the end of 2001. the DS Group1 set up a subsidiary. In 1999. Similar products like Aas Paas. to enter the food and beverages market and transferred its flagship brand 'Catch'2 (See Exhibit I on DS Foods product list) to DS Foods. .

While 7. DS Group's Entry Into Food and Beverages Sector: Introduction In 1998. In 1999. This was the first branded 'Indian' mouth freshener. to enter the food and beverages market and transferred its flagship brand 'Catch'2 (See Exhibit I on DS Foods product list) to DS Foods. the DS Group1 set up a subsidiary. In October 1999. 2000 and 2001) by J. HM managed to sell only 7. in its foods venture. Lancer was even ranked as the top vehicle in India for the three consecutive years (1999. D.621 cars were sold in 1999. makers of one of India's best known cars . The car's sales reached 2. HM's other offerings Ambassador and Contessa were also faring badly. the company's euphoria was short-lived as Lancer's sales failed to pick up as expected. DS Foods launched the Pass Pass (Closeness) mouth freshener. Lancer was positioned in the mid-size luxury car segment. This poor performance took a heavy toll on the company's bottomline and HM reported a net loss of Rs 615. By mid 2001. Pass Pass was a Rs .the Ambassador launched a new car. a new car from the HM stable after nearly two decades. Much to HM's delight. The company had reportedly accumulated losses worth Rs 1. DS Foods. largely due to its technical finesse. the Mitsubishi Lancer (Lancer).0002.8 million for the fiscal 1999-00. Hindustan Motors (HM). HM was reportedly banking heavily on the Lancer's success to fight competition from other car companies. sales of Honda City increased to 10.011 in 2001 from 9631 in 1999 (Refer Exhibit I for the sales comparison). whose market share was on the decline. Meanwhile. In 1999.1 billion during 1999-2001. The launch of Lancer. (Refer Table I). was reported to be very important for the company.374 from 18. On the other hand. However.312 in 1998 and Contessa's to 285 from 575 in 1998. which was dominated by Maruti Udyog's (MUL) Maruti Esteem and Honda's Honda City.Hindustan Motors' Struggle for Survival: Troubled Waters? In October 1998. Ambassador's sales were down to 15.635 cars in 200001 against a forecast of 8. Powers1 for the least number of defects and high customer satisfaction in a countrywide survey of car owners. Lancer was received very well by automobile experts throughout the country. The group announced that it would invest Rs 1 billion3 in the next three years.866 units by the end of the fiscal 1998-99. DS Foods launched bottled natural spring water under the 'Catch' brand.

as the company could lose its leading position in this market. they launched the first branded chewing tobacco in India. BPLFrance Telecom. Analysts also felt that Hutchison. Said a France Telecom official.350 million brand. and iced tea. Analysts felt that the Orange takeover could come as a severe blow to Hutchison in Mumbai. Hong Kong-based cellphone operator Hutchison Max Telecom. flavored water.4 France Telecom was keen on using the brand via its joint venture with BPL5 in Mumbai. In 1935. the DS Group launched Tulsi Zafrani Zarda (tobacco powder) and Rajnigandha gutka (tobacco powder mixed with beetle-nut powder). the DS Group became a leader in tobaccobased products with brands like Baba. By 1950. This was the first saffron flavored chewing tobacco in the world. A final decision is likely to be taken early next year". as a manufacturer of fragrances. DS Foods thought otherwise. Background Dharampalji Sugandhi (Dharampalji) set up the Dharmapal Satyapal Group (DS Group) in 1929. was planning to enforce its ownership of the brand in India in a bid to cash in on the popularity of the brand.2 which owned the popular Orange brand in Mumbai (India) might soon have to give it up in favor of the city's second operator. Tulsi and Rajnigandha. which acquired worldwide rights for the Orange brand in May 2000 from Vodafone3. or at least on its Orange1 brand. France Telecom. Pass Pass aimed at becoming a Rs 500 million brand by the end of 2001. The Story of the Cellular Phone Brand Orange By the end of 2000. Similar products like Aas Paas. "We are likely to retain the brand for this part of the world. In 1965. Dharampalji's sons had introduced many varieties of chewing tobacco. which had controlling stakes in cellular operators in other circles like Delhi. Calcutta and Gujarat. While some analysts felt that DS Foods might not be able to leverage the brand equity of Catch in the new categories. would have to develop a new brand for these . In 1979. and Saath Saath4 soon appeared in the market. DS Foods also planned to enter other 'untapped' markets like Club soda. it diversified into flavored chewing tobacco. the sun seemed to be setting on the Hutchison empire in India. By the mid. Hutchison would have to re-invest huge amounts in building up a new brand and giving it the same level of credibility that Orange enjoyed.

Jack Welch was infact described as 'the most important and influential business leaders of the 20th Century' by some Wall Street analysts and academics alike. In 1960. It became clear that the Orange launch in Delhi had run into rough weather. GE had grown from a US$13 billion manufacturer of light bulbs and appliances in 1981. seemed to be raising objections over the use of the Orange brand name outside the Mumbai circle.500 job as he was unhappy with the company's bureaucracy. (GE)1. with his innovative. The Making of a CEO Jack Welch graduated in chemistry from the University of Massachusetts and in 1959 got a Ph. He had even accepted a job offer from International Minerals and Chemicals in Skokie. Jack Welch transformed GE into a highly productive and efficient company. an executive at GE convinced Jack Welch to stay back. But France Telecom. he made GE the most valuable company in the world." The Orange brand was also to be launched in Kolkata. John Francis Welch Jr. agreed that there was a delay in the Orange launch in the Capital. Management experts felt that Jack Welch's reputation as a leader could be attributed to four key qualities: he was an intuitive strategist. Ill. the foreign equity partner of Hutchison's Mumbai rival. During the period. Analysts felt that Jack Welch had become a 'deal-making' machine. CEO.6 The company might be hit particularly hard in Delhi. but attributed it to an expansion in its network. BPL. retired after spending 41 years with GE. The Hutchison Group had initially planned to launch the Orange brand in Delhi. He Said. However.6 billion. through its 49 per cent holding in Sterling Cellular. Reuben Gutoff promised that he would prevent him from getting entangled in GE red tape and . he was highly competitive. (Jack Welch). he was willing to change the rules if necessary. Analysts felt that. breakthrough leadership style as CEO. Jack Welch decided to quit the US$10. "We might launch Orange some time next year in Delhi. he started his career at GE as a Junior Engineer. Chairman and Chief Executive Officer of General Electric Co. the same amount given to all his colleagues.circles. This was later delayed to October 2000. He was offended that he was given a raise of only US$1000. into a US$480 billion industrial conglomerate by 2000. Reuben Gutoff. Sterling Cellular. and he was a great communicator. supervising 993 acquisitions worth US$13 billion and selling 408 businesses for a total of about US$10. During Jack Welch's two decades as CEO.D in chemical engineering from the University of Illinois. where The Hutchison Group held 49 per cent in Usha Martin. in May 2000. However. GE and Jack Welch: Introduction On September 6. in 1961. 2001. the second largest cellular market in the country. Sudarshan Banerjee.

Italy. Eldora do Sul. Malaysia. Michael. in a 1000 square foot office space. / Japan Japan Malaysia. Dell (Michael) established the company with a start-up capital of $1. Mexico. Texas. Sweden. By 1987. when Michael S. European countries had a lower PC saturation rate than the US and there were no large PC manufacturers in Europe. Chile. Dell Computer Corporation (DELL) goes back to 1984. in a small business center in North Austin. This included plastics and GE Medical Systems. and the Netherlands (Refer Table I). which grew to $ 257 million in the next four years. began his business by selling computer chips and disk drives for IBM PCs at meetings of computer users in Austin. Germany. "We need entrepreneurs who are willing to take wellconsidered business risks . DELL opened a sales subsidiary in the United Kingdom to tap the growing European market. Brazil. Brazil AAsia Pacific Singapore. Jack Welch became GE's youngest CEO ever (Refer Exhibits I & II). Reg Jones said. Jack Welch quickly rose to become the head of the plastics division in 1968. This theme of 'small-company environment' with 'big-company resources' came to dominate Jack Welch's own thinking as the leader of GE.and at the same time know how to work in harmony with a larger business entity.000. China. Texas. Colombia. In the same year. In 1981.The Man Behind DELL: Background Note Dell The story of the world's No 1 retailer of PCs over the Internet. Finland.would create a small-company environment with big-company resources for him. South Korea . New Zealand. During 1988-1991. Japan." Michael Dell . DELL went public. Argentina Australia. In its first year of operations itself. DELL achieved sales of approximately $ 6 million. then a freshman pre-medicine student at the University of Texas. His predecessor. He became a group executive for the US$1.. France. India.5 billion components and materials group in 1973. Table I Worldwide Presence of Dell MANUFACTURING CONTINENT HEADQUARTER FACILITIES Austin. Thailand. America Austin. Tennessee.The intellectual requirements are light-years beyond the requirements of less complex organizations. China OPERATING SUBSIDIES Canada. Texas Nashville.. DELL expanded its operations worldwide and set up whollyowned sales subsidiaries in Canada.

March 27. Africa.' Ford was accorded this honor for transforming the lives of billions of people and revolutionizing the automobile world by creating a car which was affordable to the common working middle class. Italy."5 Henry Ford . Belgium. It shall be large enough for the family. reporter. Introduction In November 1999.Europe. Spain." .)4 as the 'Businessman of the 20th Century. and winner of the 1991 Pulitzer Prize for feature writing (journalism).Peter Drucker. But it shall be so low in price that the man of moderate means may own one and enjoy with his family the blessings of happy hours spent in God's great open spaces.A Great Innovator "I will build a motor car for the multitude. Middle East & England Africa Ireland Austria."3 . It will be built of honest materials. "Henry Had the Dream. Sweden. (General Motors). England.A Great Innovator . author. Norway. Czech Republic. "Ford's action transformed American industrial society. "Ford Motor Co. Fortune magazine named Henry Ford (Ford). Detroit Free Press. and it shall be light in weight and it may be economical in maintenance.Vision of Henry Ford (1903). Denmark. .'s founder was a charismatic risk-taker who relentlessly pursued his vision. after the simplest designs that modern engineering can devise. Switzerland Henry Ford . Sheryl James (James). Thomas Watson (IBM). but small enough for the unskilled individual to operate easily and care for. economist and management guru. founder of the Ford Motor Company (Ford Co. Netherlands. said. by the best workmen that money can hire. S. "There was no way to escape the fact that Henry Ford was the great business impresario of his era ± or any era for that matter." by Sheryl James.Douglas Brinkley. Ford was chosen ahead of three other finalists ± Alfred Sloan Jr. Detroit Free Press. feature writer. and Bill Gates (Microsoft) ± as the 20th century business leader. Ireland. France. 2003.Next Page >>> 1] As quoted in the article. Wheels for the World." 2 . Germany.

"The 2000 Millennium Medal of Honor". 5] As quoted in the article. March 27." by Douglas Brinkley. In 2002. Correspondent. based in New Delhi.Janine Sharell. Detroit Free Press. etc. It employed about 4200 people in 650 salons spread across 104 countries. "Ford At 100: 5 Ideas Shaped Industrial America. 4] Ford Co. In an innovative move. breathes her business. A number of awards. 3] As quoted in the article. "One of the Leading Women Entrepreneurs of the World". is the second largest automobile company in the world and ranked fourth in 2003 Fortune 500 list with revenues of $163. I sell an entire civilization in a jar.2] As quoted in the article. She is consumed with building a successful company which she has done. was worth $100 million. both national and international have been conferred on Shahnaz Husain. Shahnaz Husain is one of India's most successful women entrepreneurs.Shahnaz Husain "She lives. (Refer Exhibit I & II) . Her company. Detroit Free Press. Some of them are "The Arch of Europe Gold Star for Quality". 2003. CNN Introduction She captured the markets around the world and now she wants to conquer space. June 12. May 29. The Group has seen a good growth rate in the 25 years that it has been in business. hoping that they will be used on space expeditions. "Henry Had the Dream. sleeps. It has approximately 13.4%. She has sent National Aeronautics and Space Administration (NASA) free samples of her moisturizers. Detroit Free Press. Shahnaz Husain .63 billion for fiscal 2003." . the Shahnaz Husain Group." . 2003. from the USA to Asia. "Rajiv Gandhi Sadbhavana Award". It formulates and markets over 400 products for various beauty and health needs and has a strong presence across the globe.A Successful Indian Woman Entrepreneur "I do not sell products. In the 1990s the average growth rate was 19. Shahnaz Husain has started work on formulations that astronauts could carry with them in their extraterrestrial sojourns to protect their skin from the ravages of space travel and slow down the ageing process. Shahnaz Husain Herbals is one of the largest manufacturers of herbal products in the world." by Sheryl James. The average growth rate in the initial years (late 1970s to the early 1980s) was 15-20%.000 dealers globally and operates in 137 countries. 2003." by Mark Phelan. "Ford at 100: A Century of Audacious Tinkering.

It trained the local farmers to produce lettuces or potatoes to specifications and worked with a vendor to get the perfect cold chain in place. McDonald's success in India had been built on four pillars: limited menu. (Mumbai) and Connaught Plaza Restaurant (New Delhi). McDonald's was aware that supply chain management was undoubtedly the most important factor for running its restaurants successfully. fresh food. running right up to the farms". which extended from these outlets right up to farms all across India. From its experience in other countries (Refer Exhibit II & III). she developed a love for poetry and English Literature.encouraged the fast food giant to customize product variety without hampering the efficacy of its supply chain. Amit Jatia. when McDonald's opened its first outlet in India. they would pop out of the patty and get burnt). But did anyone ever wonder as to how this US giant managed the show so perfectly? The answer seemed to lie in a brilliantly articulated food chain. Chief Justice N. McDonald's was able to run the show seamlessly by outsourcing nine different ingredients used in making a burger from over 35 suppliers spread all over India through a massive value chain. "A McDonald's restaurant is just the window of a much larger system comprising an extensive food-chain. Intense competition and demands for a wider menu.U. Yet.The Making of an Entrepreneur Shahnaz Husain belongs to a royal Muslim family which migrated from Samarkhand to India and later held high positions in the princely kingdoms of Bhopal and Hyderabad before India's independence. Few companies appreciate the value of supply chain management and logistics as much as McDonald's does. Ltd. McDonald's worked on the supply chain management well ahead of its formal entry to India. fast service and affordable price. drivethrough and sit-down meals . No matter what one ordered . These efforts paid off in the form of joint ventures between McDonald's India (a 100% whollyowned subsidiary of McDonald's USA) and Hardcastle Restaurants Pvt. approximately 85% of McDonald's restaurants were owned and operated by independent franchisees. Beg. And explained to the suppliers precisely why only one particular size of peas was acceptable (if they were too large. Hardcastle Restaurants Private Limited said. it worked frenetically to put the perfect supply chain in place. Around the world (including India).the very best was served every time. "We spent seven years to develop the supply . Between 1992 and 1996.a hot Maharaja Mac or an apple pie . US-based fast food giant. Shahnaz received her schooling in an Irish convent and because of the influence of her father. Mc Donald s Food Chain Introduction It was early evening and one of the 25 McDonald's outlets in India was bustling with activity with hungry souls trooping in all the time. Managing Director.

However." Even as the company worked towards explaining its strategies clearly to the employees. Product Manager. In an interview to a business magazine1. from within and outside India. mainly in Asia and Europe. the top management of Titan Industries Ltd. engineering plastics. clock and jewelry manufacturer. tool steels. Moreover.The Benchmarking Story . The reason behind the unrest was the company's decision to increase the level of outsourcing in its manufacturing activities while limiting production facilities for just assembling purposes. "We will manufacture only if we can do it faster and cheaper than anyone else in the world. The company's management seemed to have realized that global sourcing of certain components made better business sense.' XEROX . the company had always been sourcing a variety of raw materials such as stainless steels. Desai had remarked. Titan's Vice-Chairman and Managing Director Xerxes Desai (Desai) quickly issued a statement stating that the above was not true. India's leading watch. Saravanan (Saravanan). this was in sharp contrast to his earlier statements in the media.chain. consumables. analysts could not help remark that Titan was already sourcing a large part of cases and movements.The Outsourcing Journey Introduction In late 1999. The first McDonald's team came to India way back in 1989. Titan . D. (Titan). The threats reportedly came after a long period of employee unrest in the organization. key watch components. was surprised when several senior executives threatened to resign. National Supply Chain." said S. tools. components and specialty movements2 for its watch manufacturing operations through vendors spread across 20 countries. McDonald's India. Media reports even quoted watch industry officials claiming that companies like Titan had 'no option but to move away from manufacturing and towards trading in the long run.

The strong demand for Xerox's products led the company from strength to strength and revenues soared from $37 million in 1960 to $268 million in 1965. In 1962. the Battelle Memorial Institute in Columbus. in 1944. Basic Systems and Ginn and Company. Haloid changed its name to Haloid Xerox Inc in 1958. Carlson struggled for over five years to sell the invention. Ohio. Xerox grew by acquiring many companies. Throughout the 1960s. Pacific Coast. including University Microfilms.Background Note The history of Xerox goes back to 1938. Buoyed by the success of Xerox copiers. Cincinnati. Micro-Systems. Fuji Xerox Co. Ltd. Daconics (which made shared logic and word processing systems using minicomputers). a patent attorney and part-time inventor. Electro-Optical Systems.' Three years later. Philadelphia. Finally. Xerox was listed on the New York Stock Exchange in 1961 and on the Chicago Stock Exchange in 1990. . made the first xerographic image in the US. and Vesetec (producers of electrostatic printers and plotters). maker of photographic paper. when Chester Carlson. Xerox diversified into the information technology business by acquiring Scientific Data Systems (makers of time-sharing and scientific computers). It is also traded on the Boston. and to The Xerox Corporation in 1961. was launched as a joint venture of Xerox and Fuji Photo Film.2%) in Rank Xerox in 1969. London and Switzerland exchanges. which Carlson called 'electrophotography. The Haloid Company. During the late 1960s and the early 1970s. Haloid later obtained all rights to Carlson's invention and registered the 'Xerox' trademark in 1948. contracted with Carlson to refine his new process. as many companies did not believe there was a market for it. Xerox acquired a majority stake (51. approached Battelle and obtained a license to develop and market a copying machine based on Carlson's technology.

Ramachandran kept lowering the price.9 crore on sales of Rs.700 per set. there was only one response. For AL. material handling. inventory control or production. Now three of them were willing. With the manufacturing Industry reeling under recession. Corporate Communications.3 crore. AL conducted brainstorming sessions inviting ideas on cost cutting.62 per cent of its revenues in one year forcing the company to helplessly allow inventories to build up. this was one of the many ways AL was reducing materials cost. Known as reverse auction.014.the seller asked for an hour's time to confirm. AL took many initiatives ranging from tiering its vendor network to reducing the number of vendors. Ashok Leyland (AL). (Ramachandran) deputy general manager. It set up different tier-levels to improve the quality of the . At $325. 18. But this auction site was different. AL. Ramachandran was looking for suppliers of some specific tyres in the global market." AL took every employee's ideas into account and figured out a way to keep things going and reduce production without inflicting pain. Corporate Buying Cell. Abraham. the Chennai based manufacturer of medium and heavy commercial vehicles was surfing the Internet at midday in his office. goods and people across distances. moving to a just-in-time (J-I-T)4 ordering system. whose business was directly dependent on moving material. the freight generating sectors (manufacturing. 2. The results were showing on working capital. The recession saw AL waging a war on wastage and inefficiency.81% in 1997-98. He then lowered the price by $5.4 crore1 on sales of Rs.Revamping the Supply Chain: The Ashok Leyland Way: Introduction V Ramachandran. five suppliers were interested. each time by $5. be it material order. It had climbed from 33. AL's supply chain2 had gone haywire under the recession which had eaten away 17. 'Together We Can' . In 1997-98.5 crore. which accounted for nearly 70 per cent of its product cost. this had come as a severe blow. to joint-improvement programmes (JIP). At a price of $350.Beat the Recession AL did not seem to succumb to the 'uncertainty gloom' that was playing havoc to its business environment. procurement. A closer look at the screen showed that he had logged on to an auction site. Both parties then signed up by e-mail and the deal was struck at $325. which were essentially exercises in value-engineering undertaken in association with key vendors.34% of sales in 199394 to 58. Said Thomas T. "Our Quality Circle teams were very helpful at this juncture and the worker involvement made it easier to address cost cutting. deputy general manager. Quality Circle3 teams were formed for this purpose. It decided to meet the challenge by re-gearing its systems. the Czechoslovakian company confirmed it could supply the tyres. mining and quarrying) saw a steep decline resulting in a severe downturn of freight volumes. saving Ashok Leyland Rs 14. A look at the previous financial year's PAT showed that the profits for 1997-98 had gone for a severe beating. and consequently. recorded a profit-after-tax (PAT) of Rs. Within one hour. 2. 482. In 1996-97 AL had a PAT of Rs. 124.

Ashok Leyland used to source the 62 components that went into its front-end structure of its trucks and buses. . some of them were divested as well during the following years. the L. into a multi location. Greaves Cotton & Crompton Parkinson Ltd. Tiering formed the basis of the vendor-consolidation drive. Thapar group company. This saved cost and time provided the vendor network was well coordinated with AL's own manufacturing operations. acquired a 26% stake. (CGL). supplementing the company's main business. UK. Crompton Greaves' Operations Overhaul The Bluechip's Downfall Crompton Greaves Ltd. Thapar group was one of India's leading private sector electrical engineering companies. M. multi product company. the flagship company of the L. one tier-I vendor sourced the products from the other vendors and supplied the assembly to the company. were in related products. Till 1998. control equipment. Greaves Cotton & Co Ltd. The company was renamed as Crompton Greaves Ltd. Over the years. switchgears. CGL manufactured a wide range of transformers. In 2000. (GCCL). a joint venture company (between GCCL & CPL). from 16 suppliers. CGL was incorporated in 1937 as a 100% subsidiary of the UK based Crompton Parkinson Ltd. under the name of Parkinson Works Ltd.suppliers. CGL evolved from being a single location company manufacturing ceiling fans and AC industrial motors. In 1948. motors and related products and railway signaling equipment besides consumer products.. While many of these companies were amalgamated with CGL. (CPL). Europe and Japan. (PWL). CGL entered into various technical collaboration agreements with renowned companies from USA. These activities (many undertaken as joint ventures). The company also undertook turnkey engineering projects and began providing information technology services. was amalgamated with PWL. In the late 1970s. M. In 1987. CGL began its diversification moves and entered the telecommunications and industrial electronics arena. which was later increased to 50% in 1956. In 1966.

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