CASE 1 : BUSINESS - Public or Profit?

Indian big business firms, such as Reliance, TISCO, L&T, Grasim, ITC etc., are admired for their size and industrial muscle. In 1993, Reliance ranked second in the super 100 corporate bodies in India. Production of goods and services by such industrial giants has led to better jobs, which in turn have raised standard of living of the people. Not only the business has raised the incomes but also, while competing for profits, it has contributed to the development of industrial climate. Of course, the large growth of business in India has produced some undesirable side effects. For example, social costs are imposed when wastes are dumped into the air and water; or when the earth is defaced by strip mining. In addition there is a tendency for power to become over centralized in the hands of giant corporations. Because of the increasing number of mergers and takeovers in the past few years, moreover, some people fear big business power and are skeptical and distrustful of corporate India. These people feel that business is profit-mad and will stop at nothing in its pursuit of money. They feel that business is not working for the public good; instead, business seeks only to maximize profits. Is profit maximization the serious problem that some think it to, be? Is there another side of the story?According to Professor Milton Friedman, "Business has one and only one social responsibility-to make profits (so long as it stays within legal and moral rules of the Game established by society). Few trends could so thoroughly undermine the very foundations of our free society as acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible".' Why does Friedman feel that the public good is served better if a business focuses on profit maximization that if business focuses instead on social responsibility? In order to maximize profits, business must efficiently meet the consumers' demand for goods and services. In essence, it is thus the consumers, not the captains of industry who dictate the actions of business. Consumers are a signal to business to produce what society desires. In meeting this demand, profits supply the motive for business to innovate and to strive for more efficient means of production. The profit motive moves society's scarce resources to the areas of highest demand, thereby maximizing utility and benefit for all. On the other hand, if business is forced to change and pursue social responsibility instead of profit, then the consumer loses his vote on the actions of business. Should business determine, for example, whether society needs a new hydroelectric project or more funds for senior citizens' health care? There are some who say yes. On the other hand, in a democracy, isn't it the job of elected government representatives to decide what society needs ? Leaving decisions about the public good to business would surely increase the very corporate power that some people fear. Isn’t’ it better for Indian business to be controlled by market forces and to leave decisions concerning social responsibility to a more democratic process?

Questions: 1.Does business perform a public service when it attempts to maximize profits, or should its main goal instead be some form of social responsibility? 2.Friedman Stress profit maximization, "so long as it (business) stays within legal and moral rules of the game established by society", what are the rules of the game?, where do you draw the line, for example, when a business pollutes the environment while maximizing profits 3. What is the government's role in business? Could government, through the sue of tax incentives and other measures, make profit maximization and the maximization of social good one and the same?

CASE 2: Dabbawallahs of Mumbai:
A dabbawallah is a courier who picks up a lunch full of dabba from a client’s home in the morning and retrieves the empty dabba after the consumption of lunch and returns it to the client’s home in the evening. This practice of dabbawallah’s began in Mumbai in 1890. Working independently and in small groups for decades, the dabbawallah’s had united in 1954 to put together a rudimentary co-operative. This was officially registered in 1956 as Nutan Mumbai Tiffin Box Suppliers Charity Trust. This service of supply of tiffin box was necessitated by the advantages of healthy and inexpensive food. The number of dabbawallah’s and the number of customers increased from 5,142 in 1900 to 1, 75,040 in 2003. Together they deliver 1, 75,000 lunches daily by covering approximately 75 km through suburban railway network of Mumbai. This business generated about Rs.380 million per annum. Despite the sheer number of daily deliveries the failure rate reported by the media numbered on in two months, or one every 15 million deliveries. Their distribution network was characterized by ‘hub and spokes’ system. Under this, dabbas, were handed off between them at various points and sorting was done at specific railway locations for where individual spokes branched out for distribution. The success of the delivery process was due to their coding system. Five codes are painted on the top of each dabba in distinct group colors. They stand for residential location, for usage of dabbawallah’s at destination location, for dabbawallah’s at the residential and destination railway stations. Sri Ragunath adje President of Nutan Mumbai Tiffin Box Suppliers Charity Trust says ‘The dabbawallah’s is a Mumbai institution that has survived for over a century now. It will survive for the next century and beyond. We will continue to be there because no one can provide the kind of error – free – service that we provide’.

Questions: 1. According to you what was responsible for their successful service? 2. Which concepts of services marketing are relevant for this case and why? 3. Can you identify any such service in which service is delivered by common people without any background of concepts.

CASE3: Coke vs. Pepsi:
The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year (98). Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share. The creativity and effectiveness of each company's marketing strategy will ultimately determine the winner with respect to sales, profits, and customer loyalty (98). Not only are these two companies constructing new ways to sell Coke and Pepsi, but they are also thinking of ways in which to increase market share in other beverage categories. Although the goal of both companies are exactly the same, the two companies rely on somewhat different marketing strategies (98). Pepsi has always taken the lead in developing new products, but Coke soon learned their lesson and started to do the same. Coke hired marketing executives with good track records (98). Coke also implemented cross training of managers so it would be more difficult for cliques to form within the company (98). On the other hand, Pepsi has always taken more risks, acted rapidly, and was always developing new advertising ideas. Both companies have also relied on finding new markets, especially in foreign countries. In the foreign markets, Coke has been more successful than Pepsi. For example, in Eastern Europe, Pepsi has relied on a barter system that proved to fail. However, in certain countries that allow direct comparison, Pepsi has beat Coke. In foreign markets, both companies have followed the marketing concept by offering products that meet consumer needs (99) in order to gain market share. For instance, in certain countries, consumers wanted a soft drink that was low in sugar, yet did not have a diet taste or image (99). Pepsi responded by developing Pepsi Max. These companies in trying to capture market share have relied on the development of new products. In some cases the products have been successful. However, at other times the new products have failed. For Coke, changing their original formula and introducing it as “New Coke” was a major failure. The new formula hurt Coke as consumers requested Classic Cokes’ return. Pepsi has also had its share of failures. Some of their failures included: Pepsi Light, Pepsi Free, Pepsi AM, and Crystal Pepsi. One solution to increasing market share is to carefully follow consumer wants in each country. The next step is to take fast action to develop a product that meets the requirements for that particular region. Both companies cannot just sell one product; if they do they will not succeed. They have to always be creating and updating their marketing plans and products. The companies must be willing to accommodate their “target markets”. Gaining market share occurs when a company stays one-step ahead of the competition by knowing what the consumer wants.

Q: Critically evaluate the case and analyze the marketing implications.

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