INDERX

Serial Subject case study title

no.
1. Retail management  Case Study on Garuda Transport:
 Case Study on Argos:
 Case Study on Crossroads:
 Case Study on Hidesign
 Case Study on Vimal
2 Merger & Acquisition  Idea and Vodafone Merger: A saga of
becoming India’s Largest Telecom Company.
 Sony Pictures Network India Acquired Zee
Entertainment.
 Sun Pharmaceuticals acquires Ranbaxy.
 Merger of BOB, Dena Bank and Vijaya Bank.
 Amalgamation of ING Vysya by Kotak
Mahindra Bank.
 Acquisition of Nokia’s devices business by
Microsoft corporation
3 Operation Management  Make Versus Buy Case
 Logistics Operations
4 Human Resource  Case 1
Management
 Case 2
 Case 3
 Case study of strategic human resource
management in Walmart stores
5 International Business  The Topas Ecolodge
6 Organisational behaviour  Conflict in company culture
 Cello India ltd.
 Increment biasness
7 Business environment  MMS Ltd
 Case Study of Coca Cola’s 4ps, Swot Analysis,
Micro & Macro Environment (PEST)
 Retail
Management
 1. Case Study on Garuda Transport:
Garuda Transport Limited (Garuda Transport Corporation limited) was established in year
1962 at Bangalore. Over a period they have established 14 transhipment warehouses at
different places. At present their business volume is around two lakh metric tons of dry cargo,
mostly in packed commodities.

They have established a good clientele. Out of two Lakh tons of cargo movement nearly
40,000 tons are from South to North, 25,000 tons from North to West, 60,000 tons from West
to South, 40,000 tons from West to North, 25,000 tons from North to South and hardly
10,000 tons is from North to East as well as South to East.

Most of the consignments are part loads booked by various clients. The rates quoted by them
for transportation is around Rs. 15 per ton per kilometre for part loads and Rs. 11.30 for full
loads. In addition to the above freight charges they also charge for handling and other service
charges as 20% of the invoice value as documentation charges.

However, the time period for the delivery is not guaranteed even though they informally
agree for a stipulated time period for delivery. Since, most of the consignments are booked by
the companies on consignee basis either as freight-to-pay or freight-paid, the consignee has to
collect the material from the transporter’s godown.

GTC Ltd. will try to consolidate the load for a particular destination on daily basis and if the
consignment is not of full load then they will club it with the loads for other locations in order
to get the full loads. For example, on a particular day if the consignment to Bangalore from
Delhi is not of full load then they will club the Bangalore consignment with the consignments
to Pune.

The Pune transhipment warehouse will receive goods and club it with the consignments from
Pune to Bangalore. This is mostly being done with the instructions to all the booking
warehouses that any consignment booked should be dispatched within 48 hours but the
destination to which the consignment is to be delivered is not the sole criteria.

The individual transhipment warehouse will receive the material and deliver the goods to
various delivery points located within the vicinity. In addition to that, the transhipment
warehouses at Bangalore or Chennai may send it to the delivery outlets either at Cochin or at
Coimbatore or at Trichur or any other place.

So in effect the transhipment warehouse will make a secondary freight in order to ensure the
goods are received for the delivery at designation locations. The company expects a
minimum return of 20% profit on all their bookings.

The company owns hardly 40 trucks. These 40 trucks are available in Pune, Mumbai and
Bangalore, which cater to the specified destinations like Pune-Bangalore, Pune-Mumbai,
Mumbai-Indore, Bangalore-Chennai, Bangalore- Hyderabad, etc. The rest of the
consignments booked are transported through outside transporters (through transport brokers)
who place the vehicles for transport.

Recently, a company preparing chemicals for water treatment and affiliate treatment plants
(factory location at Khopoli) requested the transporter to submit a comprehensive proposal
for transportation, warehousing and distribution to their dealers.

Presently the chemical company’s demand at various locations is as follows:

1. Southern region — 30,000 tons covering entire Tamil Nadu, Karnataka and Kerala
per annum.

2. 40,000 tons to Gujarat (Baroda, Ahmedabad, Bhuj and other locations) per annum.

3. 20,000 tons towards Gwalior (Indore and Jaipur) Delhi and Ghaziabad per annum.

4. 25,000 tons towards West Bengal, Bihar and Orissa, per annum.

These consignments are to be delivered to their dealers and the dealers will actually supply to
the industries according to their demand. The dealers will be paid six per cent as sales
commission and two per cent as warehouse charges. The warehousing charges are presently
paid since the company delivers full truck load to the dealers even though the actual
requirement is not a full load.

The chemical consignments are of 25 kg. bags or 20 kg. carbon. Presently the transportation
charges incurred by the chemical manufacturer is approximately six per cent of its invoiced
value (out of a turnover of Rs. 280 crores nearly Rs. 16.8 crores is towards transportation
charges). Further in view of higher inventory at the dealer’s warehouses, the inventory
carrying cost works out to 20%.

In other words, the company is incurring interest on the inventory (26,000 tons x Rs. 30 /Kg –
Rs. 78 crores, 20% Int. 15.6 crores). The transport charges are on the basis of full load to
each dealer. Then also the marked price of per Kg is Rs.42. The dealers can offer a
discounted price based on market demand.
 2. Case Study on Argos:
Organized retailing, though booming, is still nascent and evolving in India. Beset with
skyrocketing real estate prices and extreme shortage of skilled manpower and thin margins, it
could look at catalogue showroom retailing as a retailing format that cannot only be setup fast
at low cost but could also be quickly scaled up across the country. K Raheja Corp are the
pioneers in organized retail in India by taking a first giant step to successfully establish a
retail store know as Shopper’s Stop. In 2006, it then ventured out in a hypermarket format
with HyperCity and Argos. HyperCity Argos is the brand licensed to Gateway Multi channel
Retail India Ltd, a joint venture, following franchise agreements with HyperCity and with
Home Retail Group (India) Private Ltd, a subsidiary of Home Retail Group in the UK which
owns the Argos brand. Argos, for the first time will offer a unique multi-channel shopping
experience to consumers in Mumbai (Thane, Mulund, Airoli). This integrated multi-channel
capability encompassing stores, home shopping and the Internet will give consumers a new
and convenient way to shop. Customers can choose from over 4,000 products from the
comfort of their home either through a Hyper-City Argos catalogue or by going online at the
website. Customers have the opportunity to choose from a wide range of products, make
informed decisions through product and price comparisons and above all save time.

Argos is one of the leading players of catalogue retailing in the UK. It is a unique retailer
recognized for choice, value and convenience. It sells general merchandise and products for
the home throughout the UK and Republic of Ireland, online and over the telephone. In the
last financial year, Argos sales grew eight per cent to £4.2 billion and it employed some
34,000 people across the business.

Argos Product Mix:

The products include personal care, kitchen and laundry, furniture, sound vision and
electronics, garden DIY and leisure appliances, toys and games, jewelry watches and
accessories, etc. It is well said, that a retailer should not play his game with just one format. It
is not advisable to put all your eggs in one basket.

Kinds of Outlet:
Catalogue stores (size 5,000-10,000 sq. ft.) and call & collect stores (size 300-500 sq. ft.).
This has been created specifically for customers in India as they like to view the products
before a major purchase. The catalogue store will offer customers the facility to browse
through and view the products before they buy.
High involvement and high investment products across categories would be available on
display. The centrally located neighbourhood call & collect stores will have the option to
browse through the catalogue and buy. These stores hold limited products. Customers have
the option to either order and collect their product the next day, or have it home delivered.
Unlike a self-serve retail store, in a catalogue showroom (store) most of the items are not
displayed; customers are asked to view the products from printed or online catalogs in the
store and are asked to fill out an order blank. The order is then brought to the sales counter,
where an associate arranges to retrieve the items from the warehouse or if so desired by the
customer assures to deliver the same at call and collect center of the customer’s choice upon
receipt of payment. Thus, catalogue serves to act as an interface between the product and the
customer. Stores have an advantage of allowing the customer to get the merchandise
immediately after they pay and buy it. Paying up for a product online through a credit card
and waiting for the product for a week or so mellows down the customer satisfaction.

Indian customers are different. They want to touch, feel and smell various products like
staples, apparels etc. Otherwise customers don’t get convinced about the product quality.
Store shopping can be a stimulating experience for some people, providing a break from the
routine and enabling them to interact with people and friends around. This experience is
evidently missing in this kind of format. Argos is winding up its two year trial operations in
India that includes five stores in Mumbai and telephone and internet ordering service, which
it was offering in conjunction with Hyper City.
 3. Case Study on Crossroads:
On August 28, 1999, Mumbai witnessed the launch of a world class shopping mall and
entertainment complex that would set new standards in multipurpose high-rise shopping
complexes. The 1,50,000 sq.ft., Internationally styled Crossroads in Mumbai, in the hub of
India’s business activity, redefined shopping in India.

Sprawled across separate buildings, under Asia’s second largest roof, Crossroads had several
uncommon features like a terrace car parking with two automatic elevators for transporting
vehicles. It also had aerial bridges, or crossovers, to interlink all the facilities.

The sheer size and spread of the place presented a stupendous challenge. While one building
in Crossroads is five stories in a centrally air-conditioned shopping complex called pyramids;
the other two buildings house the public entertainment area and individual outlets where big
merchandising names have set up shops. It is further divided into five clusters for easy access
by the shoppers.

In the first week of August 2000, visitors to Crossroads, a retail mall, saw a polite notice
informing them that a mobile phone, a credit card or a club membership card would act as an
entry ticket. People without these new age accessories would have to pay Rs.60 as entry fee,
for a coupon redeemable against purchases made at any time.

Within days, the number of visitors to the mall fell by more than 70%. Many of the visitors
felt it very insulting to prove that they possessed a credit card or a mobile phone. Traffic
continued to fall even after the ban was lifted two months later. It hovered around 6,000-
8,000 a day, as against the initial walk-ins of 30,000-40,000 on weekdays and up to a lakh on
weekends.

Disappointed with the low traffic, Fountainhead, a bookstore, opted out of Crossroads.
Shyam Ahuja, famous for his carpets and dhurries, vacated two-thirds of the space. Other
unhappy tenants too started renegotiating rentals. To deal with this situation, Crossroads
initially relied on using anchor tenants like McDonald’s and Pantaloons to attract crowds.
The management reasoned that the shoppers at these outlets would then disperse to the other
outlets of the mall. But this plan did not work out as expected.
However, traffic-dependant outlets like bookshops and music stores were highly disappointed
with the new development. For instance, Fountainhead needed at least 1000 walk-ins every
day, with daily sales of about one lakh, to cover its monthly expense of Rs. 8 lakh. But, there
were days when just 100 people walked-in. Monthly sales fell to Rs. 12-15 lakh. Soon,
Fountainhead opted out of Crossroads. Many of the other tenants also started demanding
lower rentals from the prevailing Rs. 250 per sq.ft.

Falling traffic was not the only reason for Fountainhead’s opting out. There were also
problems with the mall’s layout. Books offered very little margins, unlike jewelry or
electronic goods. Also, they were mostly impulse- purchases and hence needed more traffic.
The greatest disadvantage for the store was that it was on the fourth floor.

People hardly went up to the fourth floor just to browse through. The store would have been a
little better off at the entrance or on the first floor. The only two tenants who were not
complaining were McDonald’s and Pantaloons. McDonald’s sold around 8,000 meals a day,
which made it one of the most successful outlets in Mumbai.

The success of these outlets could not be completely attributed to the mall. Originally, it was
expected that the onus for drawing traffic would lie with the mall management. But, soon
after inception, the relationship between mall management and the tenants soured. The
recreation arcade of the mall was also facing problems. In 2006, the group sold it to Future
group for over Rs. 300 crores which plans to open Central, the only seamless mall of India.
 4. Case Study on Hidesign:
Founded in 1978 as a two-person artisan workshop, Hidesign is now a global company.
Hidesign’s commitment to craftsmanship, technical innovation and rebellion against
uniformity and mass production has made it the ‘brand of choice’ for a loyal following of
customers throughout the world.

Hidesign is driven by the passion of a multi-cultural design-oriented team. It first started

selling in small alternative shops in London and San Francisco and quickly expanded into
adventurous department stores in London, California and Australia. Today, Hidesign is
available at department stores at over 50 Hidesign stores across the world.

Hidesign started as a small workshop in the late 1970s. Gradually the business expanded with
the company winning a number of export contracts. Although initially, the firm experienced
hiccups in developed markets like, the UK and the US. But its good quality, distinctive
designs, and aggressive marketing strategy helped it succeed in carving out a niche for itself.

It went in for marketing tie-ups with distributors and high-fashion retail chains. Later, it
entered into joint ventures and sold its products through franchised outlets in several overseas
markets.

In the 2000s, with business expanding, it started opening wholly-owned exclusive retail
outlets in overseas markets. In 2000, Hidesign decided to exploit the growing Indian
domestic market. It first opened wholly- owned exclusive retail outlets and then moved
towards selling its products through organized retail chains to increase the volumes.

Hidesign aimed to establish itself as a “luxury brand” across the world. The brand was
promoted worldwide in fashion magazines and trade journals. In 2006, Hidesign employed
over 2,300 people in its tannery, buckle factory, and leather goods manufacturing units.

It sold a wide range of products including briefcases, work casuals, travel bags, handbags,
computer bags, wheeled luggage, backpacks, and accessories such as belts, jackets, and
wallets, through 2,500 outlets in more than 18 countries (as of April 2006).

The name Hidesign was formed by merging the words “hide” and “design”… And true to its
name, Hidesign went on to become a premier design house for leather goods, gaining
acceptance even in the highly competitive western markets.
Hidesign products were priced high and were aimed at the mass luxury market. The target
market consisted of people aged between 20 to 50 years, belonging to high income
households, who traveled frequently, often internationally and insisted on high quality
products. Hidesign brand products used only full grain leather. The leather was tanned using
the vegetable tanning process.

Hidesign’s Distribution Network:

In its overseas markets, Hidesign graduated from a firm fulfilling export contracts to selling
through distributors and then through high-fashion retail chains like Selfridges. In later years,
it even started wholly-owned concept stores.

On the other hand, in India, Hidesign started its distribution operations by opening wholly-
owned stores (in 2000). This was followed by tie-ups with retail chains like Westside in 2003
and subsequently Shoppers Stop, Landmark, etc. In late 2005, it announced plans to open
exclusive franchised outlets.

Initially, Hidesign was an exclusively export-oriented outlet, fulfilling orders from European
and American distributors. It concentrated on taking small orders and fulfilling them to high
quality standards and delivering on time. This proved crucial in building its reputation among
high-end overseas customers and in gaining their initial goodwill.

In the early 1980s, Hidesign entered the UK through local distributors. However, initially, the
leather and luggage shops in the UK were not keen on stocking an Indian brand. Since Dilip
Kapur, founder and president of Hidesign, intended to sell high-fashion leather products, he
had to prove his credentials. But the ‘Made in India’ tag didn’t help. He says, “Yes, at first,
people stopped and thought for a while…”

Domestic Distribution:
Hidesign started its retail operations in India in 2000 when it opened its first wholly-owned
exclusive retail outlet in Bangalore. The Indian market too proved receptive to the high
quality leather goods of Hidesign and the business boomed. “Ever since we began retailing in
India, we have registered a 60% annual growth every year,” says Kapur.
Hidesign went in for a major expansion in India in 2002- 2003. The fact that the global
market for luxury goods was facing a slowdown while the Indian fashion market was buoyant
and that there were no major competitors in the same category, prompted Hidesign to exploit
the huge opportunity.

As Kapur says, “In India, we have two distinct advantages. One, our economy is still growing
at six per cent and two; there is no competition in leather at the top end of the market. So we
are filling up the vacuum”.
Promotions:
The organization planned to use the bag in its promotional campaigns. According to Kapur,
the bag would be taken on a tour across India and displayed at Hidesign retail outlets. It
would also be displayed on special occasions, like new store openings.

New Products:
Sustaining excitement is the success of a luxury product and depends as much on its
‘coolness factor’ as on an appropriate distribution network. Therefore, Hidesign put in a lot of
effort into creating new products and a buzz around the brand.

In November 2002, Hidesign launched Cathy — a range of high class trendy ladies’
handbags, as part of its city range. These were designed for daily use and were priced at Rs.
895, making them quite affordable. With a wide range of color options like black, biscuit, tan,
light blue, dark blue, red, etc. the range was targeted at young working women who might
find it interesting to match the range of bags with their wardrobe.

Challenges:
In the early 2000s, the Hidesign brand underwent an image makeover after a customer
opinion survey in 2001 revealed that while the brand was highly valued for its quality, it was
perceived as “boring” and not “cool” enough. In an attempt to change this image, Hidesign
unveiled a two-part ad campaign in 2002. The ads were designed to give the brand a trendier
image, to appeal more to the younger prospects.

In the campaign, Hidesign was promoted as a “fashion forward” brand that customers in any
part of the world could relate to. According to Kapur, the ads were designed to “go straight to
the heart and change the image that we are boring”. The ad campaign targeted the upwardly
mobile, educated, international-minded executives and focused more on women.

Outlook:
The company remained optimistic about the prospects for further growth in the domestic
market. Kapur felt Indians were as choosy about quality and style as the westerners and
didn’t shy away from buying something that appealed to them. And the sales figures seemed
to support his views.

In 2000-2001, when the firm started retailing in India, the domestic market contributed only
six per cent to its total business whereas in 2004-2005, the figure was 35%. Analysts were of
the view that the non- apparel market, comprising categories such as handbags and footwear,
was likely to log high growth rates in the near future as a result of easy purchase
opportunities and the growth of organized retailing
 5. Case Study on Vimal:

Vimal suiting is one of the brand which comes under Reliance. Vimal suiting, one of the
oldest and most respected iconic textile brand of India is languishing some-where in the attic
of the mega corporation Reliance. The brand which started off as a saree brand developed
itself into a mega textile brand for women, men and even for furniture (Vimal harmony is one
of the largest furnishing brands).

Vimal suiting was launched in 1980 after the successful Vimal range of sarees. At that point
of time, Reliance was predominantly a textile company. This brand was carefully positioned
as a premium men’s suiting brand. The brand which was handled by Mudra was promoted
heavily by Reliance. At that time the major competitors being Bombay Dyeing and
Raymond.

The Vimal Suiting Brand was Developed in Six Stages:

1980 saw the making of Vimal’s suitings brand. It was a challenge for the agency since the
consumer was already exposed to quite a few venerable and longstanding brands. Loyalties
ran high with little or no tolerance for newcomers. It was against this backdrop that Vimal
launched their suitings brand. They had one major advantage over the existing players—
product superiority. And this is exactly what the advertising cashed in on for their launch. It
was unusual for a textile brand to be sold as a consumer durable. In fact the first campaigns
of Vimal actually carried insets of the machinery! And quite naturally it drew considerable
criticism from the advertising pundits of the time. But the brand’s courage of conviction
eventually won the day. Slowly and surely the brand moved forward and upward in a series
of well-orchestrated moves.

Phase 1:
Established the superiority of Vimal suitings backed by, technology endorsements.
Phase 2:
Achievers endorsed the caliber of the brand. And yes, it was a most unusual take on the
conventional celebrity endorsement route.
Phase 3:
The brand achieved enough momentum to dictate fashion, and to be taken seriously.
Phase 4:
Saw Vimal firmly established as ‘The Style Guru’.
Phase 5:
Yet another first form textile advertising- Cricketers as celebrities.
Phase 6:
The brand continues with its passion for fashion.

The brand was targeted at the young ambitious people who are challengers to the CEOs. The
brand personality was stylish, and inspirational. Vimal was promoted using the famous
tagline “Only Vimal” created by Frank Simoes. The tagline is said to be personally approved
by Dhirubai Ambani himself. It was a premium brand and the ads were catchy. Reliance also
opened exclusive Vimal showrooms as part of brand promotion.
Later in the 1990’s, the Reliance business model changed. The company changed from
textiles to petrochemicals and Vimal was not fitting into the reliance business plans. It was
the only retail brand of Reliance (now we have RIM) and the company never focused on
Vimal. As far as a marketer is concerned, Vimal was a great brand with huge potential. Late
90’s also saw the shift in the consumer’s preference towards ready-mades. Although Reliance
had a readymade brand “Reance” it was a half-hearted move which resulted in a flop. Vimal
was known for its quality and style and people still people remember its simple baseline
“Only Vimal”. Lack of marketing support had virtually killed the brand. Vimal is now owned
by Raymond’s and Reid & Taylor.

Rebirth of Vimal:
After a decade long sleep, Vimal is making a comeback in a new avatar with a:
1. New Logo:

2. New Designing:

The Company hired a famous Italian designer Maurizio Bonas to train the Indian tailors on
the latest in global styles and to launch a special range of premium apparel called Vimal
Black.
3. New Product Offerings Along with different Pricing Strategy:

Created three sub-brands that straddle all price points:

1. Vimal Red offers basic formal wear for the popular segment (formal shirts for Rs. 699-
899).
2. Vimal White, which is trendier apparel, is the mid-price range (Rs. 799-1,099).
3. Vimal Black is the company’s premium offering (Rs. 999-1,800).

Thus, targeting new and various segments of customers with different brands, the new look
Vimal is planning to roll out 16 stores in the next financial year. However, it will take more
than a suit maker for that reason, even an Italian suit maker, to help Vimal regain its once
iconic “Only Vimal” status.
New Distribution Channel:
Ready to wear range will be sold in the company’s exclusive stores and the franchisees. It is
also counting on Reliance Retail’s own stores to help promote the men’s wear brand,
especially Vimal Red. Already, fabric sales have been initiated at Reliance Trendz and
Reliance Mart stores. Reliance’s Vimal did its homework very well in every aspect i.e.
advertising, promotion and distribution channel but don’t you think it will be very difficult
for Vimal to establish its brand as it was in the late 80s and early 90s?

New Advertising Campaign:

A 60-second commercial by Grey Worldwide shows the root values of company. The ad
shows a father readying his son to take over his business empire. He picks his own brand
Vimal, of course, and it ends with the original theme tune and tagline. It was first time at any
textile company showed its machinery etc. in ads to boast that Vimal fabrics were made in
the most modern plant in India. The company spent Rs. 40 crore on promotion through
television, radio spots and print ads, apart from extensive point-of-sale promotions for high
visibility.

Major Competitors of Vimal:

Vimal is facing good competition from established players like Park Avenue from Raymond,
Madura Garments (Louis Phillipe, Allen Solly, and Van Heusen), Arvind Brands (Arrow),
Zodiac and Reid & Taylor and premium international brands like Brioni, Alfred Dunhill and
Ermenegildo Zegna have also entered the Indian market.
Madura Garments:
Madura Garments, a division of Aditya Birla Nuvo, is India’s leading apparel and retail
company. It enjoys market leadership in the branded garments business through its power and
popular lifestyle brands — Louis Philippe, Van Heusen, Allen Solly and Peter England.

Recently, the company has entered into a distribution agreement with the international brands
like Esprit, Marks & Spencer’s Tommy Hilfiger, Polo and several other discerning
international buyers. Madura Garments products are sold through a network of more than 130
exclusive franchisees and over 2,000 premier multi-brand outlets as well as leading
departmental stores within India and overseas.

It has exclusive showroom space, which includes several large format brand outlets of world-
class standard, providing top quality retail experience to the consumers. It also has a highly
visible presence in large department and multi-brand stores. The thrust is on brand building
through development of innovative new merchandise, exciting communication campaigns
and enhancing the product portfolio.

The overall marketing strategy has been to move from a ‘Wardrobe’ brand to a ‘Lifestyle’
brand. Fashion brands have 95 showrooms which exclusively sell Louis Phillippe/Van
Heusen/Allen Solly and SF jeans. Popular brands have 160 showrooms and 600 shops-in-
shops and 800 multi-brand outlets spread across 250 towns in India.

Planet Fashion:
Madura Garments has successfully launched Planet Fashion showrooms in India and SAARC
and Middle East countries with further expansion plans. With over 3,000 square feet of space,
the planet fashion showrooms promise an ambience of sheer luxury. Today 45 Planet Fashion
Showrooms have been opened up in 20 cities nationwide. This format was designed by
renowned French architect Jan Claude Pannighetti. Plant Fashion hosts some of the best
know menswear brands like Louis Philippe, Van Heusen, Allen Solly, Peter England & SF
Jeans and also provides a wide range of fashion accessories to complete a man’s wardrobe.
Each store stocks about 6,000 garments with the store theme of world class shopping
experience delivered through 500 square feet of shopping area in each store where individual
brands are merchandised.
Trouser Town:
It is a whole new concept in retailing as it is the only store in India dedicated solely to
readymade trousers. Presently TT has nine showrooms across seven cities nationwide.

1. Louis Philippe:
Louis Philippe’s range of superbly crafted garments make an exclusive fashion statement that
is accepted as a status symbol, recognized by its distinctive icon — The Upper Crest.

2. Van Heusen:
Van Heusen has redefined corporate attire through continuous product innovation and
exclusive collections.

3. Allen Solly:
Allen Solly popularized the Friday dressing concept in India. It has won the IFA Images 2001
Best Brand Award in the readymade menswear apparel category. With the launch of its
women’s wear in December 2001, Allen Solly has made a successful foray into the growing
women’s work and casual wear market.

4. Peter England:
This mid-segment shirt brand has effectively penetrated the mini metros. It has won several
awards, including Shirt of the Year 2000 and India’s Most Admired Menswear Brands in
2001. With a turnover of Rs. 395 crore, Madura Garments is one of the leading and fastest
growing branded apparel companies in the country. The company enjoys a 30% market share
in the premium segment for all brands. The company is a preferred global supplier for
international brands such as Marks & Spencer’s, Tommy Hilfiger, Polo Ralph Lauren and
several other international buyers.

Madura Garments was expected to report revenue of a round Rs. 600-650 crore in FY’07, and
is currently a clear leader in the domestic apparel space with annualized growth of 20% in
recent years. Its total turnover is projected to touch Rs. 650 crore, in line with a planned 20%
growth for itself while the market grows at 15%.

5. Raymond’s:
The Raymond Group was incorporated in 1925 and within a span of a few years transformed
from being an Indian textile major to being a global conglomerate. Today, the Raymond
group is vertically and horizontally integrated to provide the customers total textile solutions.
Few companies across the globe have such a diverse product range of nearly 12,000 varieties
of worsted suiting to cater to customers across age groups, occasions and styles. Raymond’s
turnover is US$ 500 million and the group is today one of the largest players in fabrics,
designer wear, denim, cosmetics & toiletries, engineering files & tools, prophylactics and air
charter services in national and international markets. For over 80 years, Raymond has been
one of the world’s premier manufacturers of worsted suiting fabric in fine grade wool, in the
same league as the finest in Europe has to offer. Today, the Raymond product range includes
pure wools, blended wool with exotic fibres like camel hair, cashmere and angora and
innovative blends of wool with polyester, linen and silk offering suiting and trouser fabric for
all occasions and needs
 Merger
&
Acquisition
 Case Study 1- Idea and Vodafone Merger: A saga of becoming India’s

Largest Telecom Company

a huge and an unanticipated change that is being observed in the telecom

industry between two telecom giants, i.e. Vodafone India and Idea
Cellular. Idea cellular which is owned by Kumar Mangalam Birla have come
forward with the proposition to merge with Vodafone India. This would
result in the biggest company considering the number of subscriber base
catered by both the players.

The merger will leave Bharti Airtel off its hook from being the number one
from past 15 years. There are several aspects that are to be looked into
while developing an understanding about the features associated with
merger and the impact it would make on the consumers and the telecom
industry as a whole.

Key Highlights of Vodafone-Idea Merger

The merger will give a higher stake to the promoters of Idea as compared
to Vodafone India so that in the long run both the companies are able to
gain access to equal hold

1. The first step for AB group would be the acquisition of 4.9 percent of
shares from Vodafone. This would amount to a total of Rs. 3874 crore
wherein each share is worth Rs. 108. This would be helpful in increasing the
share holding capacity of Idea to 26 percent

2. While Vodafone holds 45.1 percent of the shares in the merger, Idea would
be allowed to buy another 9.6 percent but at a cost of Rs. 130 per share in
the period spread over next four years. However, if Idea is unable to come
up equal to the shareholding percentage of Vodafone, it can go forward
and buy the number of shares required further but at the price prevailing in
the market

3. The chairman of the new combined entity would be Kumar Mangalam Birla
while Vodafone would appoint the chief financial officer. The CEO of the new
entity would be named jointly by both the companies under a joint
agreement.

4. The merger also gives the promoters of both the entities with a right to
nominate 3 members each for the board. There would be a total of 12
members on the board of which 6 would be independent

Significance of the Merger for Consumers

The merger holds significance for the consumers also, as a rapid change
can be expected in the market organisation and the telecom industry
development.
1. The Indian telecom industry would see the domination of three telecom
giants of which Vodafone-Idea would be the largest. Additionally, Bharti
Airtel and Jio have been found as the dominating counterparts in the telecom
industry.

2. The process of branding will be individual for both the companies have
been found to have a complementary nature with respect to each other.

Impact of Merger on Telecom Industry

There are also several other implications that this merger will bring forth on
the telecom industry.

1. Firstly, there can be initiatives based on the renewal of price discipline for
the disruptive entry by Jio has caused some serious misbalance

2. Secondly, the poor financial health of the telecom sector can be

observed and through such mergers there will be infusion of health and life
since India is the fastest growing market in terms of the subscriber base.

3. Through the merger, Vodafone and Idea will overcome their debts and
large sum of credit will be infused in the system
4. The deal has also saved both the telecom companies from selling off their
business, as was being planned by them initially and this would directly
impact the quality of services being provided by different players in the
industry

The merger will surely boost the pace of the telecom sector. It has also
been found that the savings, synergies and also the spectrum will have
substantial impact on the escalating growth. There will be saving of over 60
percent of the operations cost and this will aid in improving the quality and
performance of the service through investments from the saved
money. Enhancement in network infrastructure will be observed while the
operational efficiencies have a chance to reach excellence. Moreover,
the revenue market share is expected to rise for all the locations and the
spectrum of the entity would exceed the initial caps.
 Cease Study 2:- Sony Pictures Network India Acquired Zee Entertainment

Deal Amount: USD 385 million

Industry: Media
When: 31 August 2016

INTRODUCTION

Copyright Law in India is governed by the Copyright Act, 1957. Section 13 of the Act
defines the scope of existence of copyright by listing those works in which copyright subsists.
Section 14 defines the meaning of copyright and describes the exclusive rights given to the
author of the work. This Article analyses Copyright Protection for Format Ideas in Reality
Television Programmes through case laws in India and other countries. Fully scripted half-
hour dramas have become increasingly costly, with diminishing TRPs. It therefore is not
surprising that the reality television genre has become so popular in recent times.

While hit shows can generate high revenues, they also are easily copied, forcing producers to
try to protect their creative investments through resort to the courts. The most significant of
these lawsuits assert intellectual property rights, concentrating on allegations of idea and
format theft.1 "Zee Entertainment Enterprises limited v. Sony Pictures Networks India
Private limited and Ors"2 also deals with a similar issue that, whether Plaintiff's popular
show "India's Best Dramebaaz", a televised talent hunt for child actors in 5-12 year age
group has been illicitly copied by Defendant, and hence, infringed Plaintiff's Copyright in its
concept note?

COURT DECISION

1) On Originality- A talent hunt requires eliminations from a larger pool and selection of a
winner from a larger crowd. There has to be some process of auditioning. It is difficult to
conceive of any talent hunt that goes about its stated business in any other fashion. There
cannot, therefore, be exclusivity in this. Fact that both shows feature children, they seek out
children with acting talent from different cities, and fact that they seek out best of these is
hardly something in which anyone can claim any Copyright.

2) Defendant programme not infringed Plaintiff programme– In this industry, it is

common to use this document called a 'concept note'. It sets out the thematic structure, unique
elements and so on. There is no doubt that copyright can vest in an original concept note as
original literary work.3 These are not just ideas. These are particularized expressions of ideas.
But this is not to suggest that every page of a concept note enjoys the same level of
protection. In a field as crowded as this there bound to be common elements and a plaintiff
claiming copyright in some aspect of a show such as this will not get copyright in those
matters that are undeniably in the public domain. It is not possible to accept that there can be
any such monopoly in the concept of a talent hunt for children.

In the present case granting copyright protection to plaintiff would mean granting protection
to an idea which is not the objective of grant of Copyright. We can understand this by
applying different doctrines to understand the judgement in this case.

IDEA- EXPRESSION DICHOTOMY

The idea-expression dichotomy was formulated to ensure that the manifestation of an idea
(i.e. an expression) is protected rather than the idea itself.4 An idea is the formulation of
thought on a particular subject whereas an expression constitutes the implementation of the
said idea.

In the present case we can say copyright does not extend to the idea and the idea is selecting
child actors through reality shows. Anyone can express this idea. There cannot be monopoly
to seek out children with acting talent, therefore the plaintiff failed in its case.

MERGER DOCTRINE

The idea and expression are intrinsically connected. The expression is no longer
copyrightable because granting copyright over the expression will effectively confer the
owner with a monopoly over the idea itself. Applying this doctrine courts have refused to
protect the expression of an idea that can be expressed only in one manner, or in a very
restricted manner.5
In the present case under discussion there is one idea that is of selecting child actors through
reality shows and the way to express this idea has very limited scope. If both shows of
plaintiff and defendant are on the same theme of seeking child actors then both shows will
contain child actors, will have judges and selection of child actors will be done from different
cities. There is no other way to do these.

SCENES A FAIRE

One may also contemplate instances where the expression of an idea cannot be made without
the use of certain elements. The Courts consider these essential elements as non-
copyrightable since protecting these will lead to the protection of the idea. Such essential
elements are referred to as Scenes A Faire. Similarly, scènes à faire, sequences of events that
necessarily result from the choice of a setting or situation, do not enjoy copyright
protection."6

In the present case as already said there are some elements which are non copyrightable as
selecting child actors and then declaring from among them a winner, these are sequences of
events that necessarily result from the setting of the reality show seeking child actors.

RECENT TRENDS

In the case "Milano v. NBC Universal, Inc." the court granted judgment in favour of
defendant. Court held the similarities were in elements that were not protectable. The
similarities between the two works were the generic idea of a weight loss show and the
Scenes A Faire (expressions that are standard or common to a particular topic) that flowed
from that idea, none of which were protectable.

In a reality format case Fox Family Properties Inc. v. CBS Inc. the court found that most of
the elements, such as camera crews following contestants, running for 13 episodes, air dates
and titles, were not entitled for protection.

INDIA

The most famous case for reality show and infringement is "Anil Gupta v. Kunal Gupta and
Ors." where the plaintiff, conceived an idea of producing a reality television show
containing the process of match making calling it "Swayamvar". It was held that defendant
could not reap the fruits of labour put in by the plaintiff. Defendant show based on concept of
spouse selection in any form as a reality TV show cannot be permitted as that has been
conceived by the plaintiff at the first instance."It was also held that the idea per se had no
copyright, but in case the same was developed into a concept fledged with adequate details,
the same could be registered under the provisions of the Copyright Act, 1957. Further in case
the confidential information was used with certain variations, the same would amount to
violation of copyright under section 51 and 55 of the Act.

To conclude, it cannot be denied that concept notes that are submitted by individuals need to
be given protection in order to encourage ordinary people to communicate their ideas and see
their fruition into TV programs. But mere generic idea which is in public domain cannot be
grant copyright protection. The difference between "Zee case" and "Anil Gupta case" is that
zee was claiming copyright over something where sufficient skill and judgment was not
applied but in the "Swayamvar" case some unique idea was conceived for the first time which
was also reduced into writing with adequate details for which sufficient labour and skill was
applied in the concept note which was not the case with Zee. It is held that if sufficient skill
and judgment applied then copyright protection is granted
 Case Study 3: Sun Pharmaceuticals acquires Ranbaxy:

The deal has been completed: The companies have got the approval of merger from
different authorities.

This is a classic example of a share swap deal. As per the deal, Ranbaxy shareholders will get
four shares of Sun Pharma for every five shares held by them, leading to 16.4% dilution in
the equity capital of Sun Pharma (total equity value is USD3.2bn and the deal size is USD4bn
(valuing Ranbaxy at 2.2 times last 12 months sales).

Reason for the acquisition: This is a good acquisition for Sun Pharma as it will help the
company to fill in its therapeutic gaps in the US, get better access to emerging markets and
also strengthen its presence in the domestic market. Sun Pharma will also become the number
one generic company in the dermatology space. (currently in the third position in US)
through this merger.

Objectives of the M&A:

• Sun Pharma enters into newer markets by filling in the gaps in the offerings of the
company, through the acquired company

• Boosting of products offering of Sun Pharma creating more visibility and market share in
the industry

• Turnaround of a distressed business from the perspective of Ranbaxy

This acquisition although will take time to consolidate, it should in due course start showing
results through overall growth depicted in Sun Pharma’s top-line and bottom-line reporting.
 Case study 4 Merger of BOB, Dena Bank and Vijaya Bank

1) Introduction
 The government recently announced the merging of Bank of Baroda, Vijaya Bank and
Dena Bank.
 Cleaning of the balance sheet and minimising NPAs is the objective of the latest
merger announced by the government.
 The strategy which the government has adopted is merging one weak bank with its
stronger counterparts.
 In this case, the weaker bank is Mumbai-based Dena Bank.
2) Significance
 For the first time, we are witnessing a merger of three PSBs which can be a
precursor to other such moves.
 The three banks involved consist of two strong and one Prompt Corrective Action
(PCA) bank (Dena Bank).
 It is seen as an attempt to revive a relatively weaker bank with two healthier ones.
 While two banks criss-cross one another in geographical space, the third becomes
strategically significant being based in the south.
 The merger comes at a time when all PSBs are walking the thin edge negative
profits.
 The success of this merger, according to analysts, is crucial for future such
attempts.
3) Positives
 Capital will be higher when merged together and will give a feeling of a stronger
bank.
 Large banks with larger lending capacity.
 It will provide efficiencies of scale and help improve the quality of corporate
governance for the banks.
 The merged entity will have a market share of about 6.8 per cent by loans,
according to data as of March 2018, making it the third largest bank in the system,
Moody’s said.
 Improvement in operational efficiency.
 Cost of funds for the merged entity is expected to come down.
  Bigger banks can attract more Current Account, Savings Account (CASA)
deposits.
 Banks will have the capacity to raise resources without depending on the State
exchequer.
 Improve the capacity of the banking system to absorb shocks that the markets
may cause to it.
4) Need for Consolidation
 PSBs are highly fragmented, especially in comparison with other key economies.
 The merger will enable the government to pay closer operational attention to the
enlarged institution, as is the case with SBI.
 To protect the financial system and depositors’ money.
 To build capacity to meet credit demand and sustain economic growth.
 The need to bridge geographical gaps.
 In 1991 Narasimham Committee suggested that India should have fewer but
stronger PSBs.
5) Concerns / Challenges
 Integration of technology platforms and cultures of these organisations.
 Aligning the distribution of professionals in the merged bank and handling of human
resources.
 As issues on seniority are structured and important in a public sector set-up, ensuring
that there is harmony would be a challenge.
 Rationalisation of physical infrastructure.
 Dena Bank came under prompt corrective action of the RBI in May 2017 in view of
high Net NPA and negative RoA (return on assets).
 Bank of Baroda is the largest among the three and will take a hit on its asset quality.
 The other challenge is customer retention which we saw in SBI’s recent merger with
its associate banks.
 For the banking system as a whole, things cannot change as the capital remains
unchanged.
 The quantum of Gross NPA (GNPA) cannot change and will still have to be
addressed.
 Mergers are not the panacea in the context of PSBs.
6) Way Forward
 Without addressing the governance issues in the banks, merging two or three
public sector banks may not change the architecture.
 Unless there is a change in the operating structures, mergers will may not deliver
the desired results in the long run.
 Giving the PSBs autonomy along with accountability.
 Merged entity will require capital support from the government; otherwise such a
merger would not improve their capitalisation profile.
 The merger will yield the desired results if these banks rationalised their branches,
looked to reduce costs and handled people issues well. RBI should continue to
give banking licences for more small finance banks as well as universal banks
along with bank mergers.
 Case study -5 Amalgamation of ING Vysya by Kotak Mahindra
Bank

INTRODUCTION

KOTAK MAHINDRA BANK

Kotak Mahindra Bank is the fourth largest Indian private sector bank by market
capitalization, headquartered in Mumbai, Maharashtra. The Bank’s registered office
(headquarter) is located at 27BKC, Bandra Kurla Complex, Bandra East, Mumbai,
Maharashtra, India. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship
company was given the license to carry on banking business by the Reserve Bank of India
(RBI). Kotak Mahindra Finance Ltd. is the first company in the Indian banking history to
convert to a bank. As on June 30, 2014, Kotak Mahindra Bank has over 600 branches and
over 1,100 ATMs spread across 354 locations in the country. Kotak Mahindra group,
established in 1985 by Uday Kotak, is one of India’s leading financial services
conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Group’s
flagship company, received a banking license from the Reserve Bank of India (RBI). With
this, KMFL became the first non-banking finance company in India to be converted into a
bank – Kotak Mahindra Bank Limited (KMBL). In a study by Brand Finance Banking 500,
published in February 2014 by the Banker magazine (from The Financial Times Stable),
KMBL was ranked 245th among the world’s top 500 banks with brand valuation of around
half a billion dollars ($481 million) and brand rating of AA+. KMBL is also ranked among
the top 5 Best Ranked Companies for Corporate Governance in IR Global Ranking.

ING VYSYA BANK

ING Vysya Bank is a privately owned Indian multinational bank based in Bangalore, with
retail, wholesale, and private banking platforms formed from the 2002 purchase of an equity
stake in Vysya Bank by the Dutch ING Group. This merger marks the first between an Indian
bank and a foreign bank. Prior to this transaction, Vysya Bank had a seven-year-old strategic
alliance with erstwhile Belgian bank Banque Bruxelles Lambert, which was also acquired by
ING Group in 1998. As of March 2013, ING Vysya is the seventh largest private sector bank
in India with assets totaling 54836 crore (US$8.9 billion) and operating a panIndia network
of over 1,000 outlets, including 527 branches, which service over two million customers.
ING Group, the highest-ranking institutional shareholder, currently holds a 44% equity stake
in ING Vysya Bank, followed by Aberdeen Asset Management, private equity firm Chrys
Capital, Morgan Stanley, and Citigroup, respectively. ING Vysya has been ranked the "Safest
Banker" by the New Indian Express and among "Top 5 Most Trusted Private Sector Banks"
by the Economic Times. In 2002, Vysya Bank's Board of Directors and the RBI approved
Vysya Bank's formal merger with the ING Group. Under Indian law, this move allowed ING
to increase its total equity holdings in Vysya Bank from 20% to 44%. Peter Alexander Smyth
and Jacques PM Kemp were appointed to the board of the newly formed ING Vysya Bank.
ING Vysya Bank then appointed Bart Hellemans as CEO and managing director (MD) and
G. Mallikarjuna Rao as chairman of the board.

THE DEAL

Kotak Bank Buys ING Vysya in Record $2.4 Billion Share Deal

Kotak Mahindra Bank has agreed to buy ING Vysya in an all-share deal valuing its smaller
rival at $2.4 billion, bulking up as analysts predict the start of long-awaited consolidation in a
crowded banking sector. Dutch lender ING Groep NV owns roughly a 43 per cent stake in
ING Vysya. It will be the second-largest shareholder in Kotak Mahindra after the deal -- the
largest in the Indian banking sector to date -- with a holding of about 7 per cent. India has 40
publicly traded banks, 24 of them majority owned by the government. The state banks
account for over 70 per cent of a total of $1 trillion advances in India, leaving dozens of small
lenders in their wake with tiny market shares. Analysts expect the sector to begin coalescing
around a few major players after the country's central bank in April granted licences to set up
two new banks. Deals, though, have been rare in a banking industry hampered by restrictive
regulation, reluctant investors and strong unions. (Also read: ING Vysya Bank Acquisition
Will be Good Fit for Kotak, Says Nomura) Thursday's deal, subject to regulatory approvals,
is the first major bank takeover since top privately held lender ICICI Bank bought Bank of
Rajasthan four years ago.

"Most private sector banks ... do not really have coverage across India and are regional
players at best," Aman Bhargava, director of financial services advisory at Grant Thornton
India LLP, said. "Consolidation, especially amongst the private sector players, is probably the
quickest and most efficient way forward to attain the size and geographical coverage to
compete for retail customers in a growing India." The combination of Kotak Mahindra and
ING Vysya will create India's fourth largest private sector bank by branch network. The share
exchange ratio indicates a price of Rs 790 rupees for each ING Vysya share based on the
average closing price of Kotak shares during the month to Wednesday, valuing the deal at
$2.4 billion, according to Reuters calculations. That compares to ING Vysya's closing price
of 816.95 rupees on Thursday. The combined banking entity will have 1,214 branches with a
widespread network across the country, the two banks said in a statement. The merged bank
will also leverage ING's network to tap international business. Kotak Mahindra's bolstered
balance sheet and expanded branch network -- assuming the deal completes -- will also put it
in a better position to tap a pickup in demand for credit from Indian corporates and
individuals in the near future, analysts said. The transaction is expected to close in the second
half of 2015, the statement said. ($1 = Rs 61.88)

SYNERGY:

Kotak Mahindra Bank's acquisition of ING Vysya Bank to beef up its network

The 55-year-old investment banker turned banker Uday Kotak has pounced at his first chance
in the highly regulated banking space to acquire Ing Vysya Bank in an all-stock deal. The last
merger the market saw was in 2010 when ICICI Bank acquired Bank of Rajasthan. In 2008,
HDFC Bank had acquired Centurion Bank of Punjab. The acquisition will straightaway give
Kotak Mahindra Bank access to ING Vysya's huge network in south India. ING has 573
branches of which 64 per cent are in south India. Kotak has 641 branches, of which 46 per
cent are in the west. The move will also help Kotak meet its target of 1,000 branches by
2016. "We are getting businesses like SMEs, MNC clients, HNIs, forex and trade advisory
where ING is very strong," said Uday Kotak, Vice Chairman and MD, Kotak Mahindra
Bank, soon after sealing the deal here today. A beaming Uday Kotak said the objective of the
merger was growth. "I firmly believe this merger will pave the way for a bigger and better
financial services player with deep Indian roots and global standards of service," he said.
Many see the acquisition as a masterstroke by Kotak who has also managed to reduce his
stake from 40 per cent to 34 per cent in all-stock deal. The RBI had asked Kotak to reduce his
stake to 30 per cent by 2016, which now appears not so difficult. The bank along with Yes
Bank had got the banking licence in 2003 and has created a much bigger balance sheet among
the mid-sized banks. Its total assets will now increase from Rs 1,34,401 crore to 1,98,983
crore, which is almost double that of its nearest rival Yes Bank. ING was a minority
stakeholder in the bank way back in 2007 and had sold its stake in 2010. However, Uday
Kotak was always in touch with the ING promoters.

Uday Kotak, whose father was a cotton trader, has been building a financial supermarket kind
of model with interests in mutual fund, insurance, private equity, commodity and so on. This
merger with an European giant will provide further strengths especially in investment
banking areas in Europe. The huge client base of ING's high net worth individuals can be
used to cross sell opportunities in insurance and mutual fund.

ING Deal Precursor to 'Acche Din': Uday Kotak

Taking a leaf out of Prime Minister Narendra Modi's poll campaign, eminent banker Uday
Kotak said that the Rs 15,000-crore merger between Kotak Mahindra Bank and ING Vysya
Bank is a precursor to 'Acche Din' and would create a world-class financial institution of size
and scale. The all-share deal, for which he expects all necessary regulatory approvals by
March 2015, would create India's fourth largest bank with a combined balance-sheet size of
over Rs 2 lakh crore and market value of over Rs 1 lakh crore. Mr Kotak, who heads the
nearly 12-year-old Kotak Mahindra Bank, also allayed concerns that the merger would result
into any job loss and said that the synergies from the transaction would instead provide new
growth opportunities for staff of the two banks and also create new jobs over a period of time.
"This is a merger for growth and a merger for 'acche din' coming. This deal is for a belief that
the future of India over the next ten years is bright and for that we need to create capacity and
build muscles." "This is the time to build financial institutions which are able to meet India's
future needs. If India is on a marathon growth track over the next ten years, we in the banking
industry have to prepare ourselves for that and this merger is a step towards that," Mr Kotak
told PTI in an interview here. He also expressed confidence that the deal would provide
significant opportunities for international cooperation, in addition to huge synergies in
domestic markets and in various product segments and on digital platform. After the merger,
Dutch financial services giant ING, currently the main promoter of the over 80-year-old ING
Vysya Bank, would become a shareholder in the merged entity and would remain invested
for minimum one year. "The main purpose of doing this is that we believe that there is a
significant compatibility between the two banks... Kotak Mahindra Bank has very significant
presence in the West and the North and our total branch network between these two regions is
80 per cent and in case of ING Vysya Bank, their network in South is 64 per cent of their
total branch network." "Therefore it is almost like a perfect fit if you look at the two
branches.

networks together. We have a total of 1,200 branches combined. Therefore, it enables us to

focus on building synergies together. We also see a very significant opportunity in products
and distribution together," he said. "For example, Kotak Mahindra Bank is a very significant
lender and the largest bank financier in the tractor finance business. ING Vysya Bank has a
very limited presence in tractor finance, but it has got a large number of branches in South
including 170 branches in erstwhile Andhra Pradesh, which is one-third of their network," Mr
Kotak added.

Kotak Mahindra Bank’s general insurance venture gets RBI nod

Private sector bank Kotak Mahindra Bank Ltd on Tuesday said it has received Reserve Bank
of India (RBI) approval to start its general insurance business through a new subsidiary. The
RBI approval follows the in-principle approval the bank has already received from the
Insurance Regulatory and Development Authority (Irda). Kotak will now apply to complete
the registration of the new company with Irda, the bank said in a press release. Mahesh
Balasubramanian, currently executive vice-president and co-head of branch banking at Kotak
Mahindra Bank, will take over as chief executive officer (CEO) of the new venture. Kotak
already has a life insurance company called Kotak Mahindra Old Mutual Life Insurance Ltd,
in association with South Africa-based Old Mutual Public Ltd Co. Last week, Kotak
Mahindra Bank announced that it will acquire ING Vysya Bank Ltd in a $2.5 billion all-share
deal, which is the largest banking acquisition and the first such deal in India in four years. In
a note earlier on Tuesday, rating agency Standard and Poor’s Ratings Services (S&P) said
Kotak’s credit profile will “improve marginally” because of the bank’s increased size and
reach after the acquisition. “The acquisition is likely to improve Kotak Mahindra Bank’s
growth potential and bring about revenue synergies and cost efficiencies. Nevertheless, we
anticipate a slight deterioration in the bank’s capitalization following the deal. We assess
Kotak Mahindra Bank’s stand-alone credit profile as ‘bbb-’,” S&P said in the note. S&P said
the merged entity faced integration issues around human resources, technology andalignment
of credit policies and processes. “Nevertheless, we believe that the Kotak Mahindra Bank
management will be able to manage the integration challenges. We expect the capitalization
of the combined entity to remain strong post the merger, despite ING Vysya’s relatively
weaker capitalization,” S&P credit analyst Amit Pandey was quoted as saying in the note.
“We expect the merged entity’s risk position to remain adequate for the next 12-24 months.
The key risks to asset quality will continue to be from Kotak Mahindra Bank’s commercial
real estate business. The stable outlook reflects our expectation that Kotak Mahindra Bank
will maintain its financial profile over the next 12-24 months, despite some deterioration in
its capitalization,” S&P said.

POST MERGER EFFECTS

Kotak Mahindra, ING Vysya Bank shares surge on merger report Kotak Mahindra Bank rises
as much as 7.6% to Rs1,160.05, while ING Vysya Bank climbs 7% to Rs812.85 Shares of
Kotak Mahindra Bank Ltd and ING Vysya Bank Ltd surged in morning trade on Thursday
after a news report said Kotak is in final stages of acquiring ING Vysysa. Kotak Mahindra
Bank rose as much as 7.6% to Rs.1,160.05, while ING Vysya Bank climbed 7% to
Rs.812.85. However, Kotak Mahindra Bank clarified in a notification to the National Stock
Exchange (NSE) on Thursday that no decision has been made by the bank in relation to any
merger or acquisition transaction. “If the bank takes a decision to undertake such a
transaction, the same being unpublished price-sensitive information, the bank shall make a
disclosure in accordance with Clause 36 of the listing agreement,” it added. Acquiring ING
Vysya Bank may strategically fill many gaps for Kotak Mahindra Bank, Reuters said quoting
Nomura report. Both banks have low geographical overlap, similar liability mix and the
merger will provide Kotak with an SME (small and medium enterprises) banking platform,
the report said. Potential acquisition will also help Kotak comply with the Reserve Bank of
India’s (RBI’s) deadline on reducing promoter stake, it added. Earlier, ET Now business
news channel reported that Kotak is close to acquiring ING Vysya bank and deal is valued at
Rs.16,500 crore.

Dutch ING Group to cut almost 2,000 jobs

Dutch banking group ING has announced it is shedding thousands of jobs to streamline its
operations and save costs. The lender said it wanted to push ahead with its digitalization
program to adapt to new realities. The Netherlands' second-largest lender, ING Group,
reported Tuesday it would have to cut 1,700 jobs over the next three years in a bid to save
costs. An additional 1,000 positions would be lost at external suppliers, the bank announced
in Amsterdam. ING explained the cuts were part of a move to expand its digital operations,
with "jobs to be lost at the headquarters of ING Retail Banking and in the back offices, call
centers and IT departments." Making the figures add up The company said it would book a
320 million-euro ($400-million) charge to cover one-off costs, adding that it expected to save
270 million euros annually from 2017.lashback: ING breakup (2009) Earlier this month, ING
paid back the remainder of a 10 billion-euro bailout it received from the state during the
global financial crisis. In return for the rescue fund, the lender had to undergo large-scale
restructuring and was forced to part with its insurance business. State-owned Dutch bank
ABN Amro had also reported on its plans to cut 1,000 jobs by 2018 as an increasing number
of customers have switched to online banking, making a lot of the lender's offices redundant.
After Kotak-ING Vysya deal, more bank takeovers on cards in India India is set for more
banking acquisitions after a record $2.4 billion takeover last week ended four years of a deals
drought, as lenders fight for market share and wider reach amid looming competition from a
new breed of players. Kotak Mahindra Bank agreed last week to buy ING Vysya in India's
biggest bank deal.

"Deals will happen in the banking sector, but relatively fewer compared to mergers in other
nonregulated sectors," said Sanjay Doshi, a partner at consultancy KPMG, referring to
segments such as industrials and consumer where there is no sector-specific regulator. Any
deals, though, will be subject to close regulatory scrutiny and may face other hurdles,
meaning they are expected at a steady clip rather than in a torrent. A banking sector
consolidation should support an expected recovery in Asia's third-largest economy through
creation of stronger lenders that will control the growth of bad loans and make credit
availability easier. The Indian banking sector is fragmented, with 46 commercial banks
jostling for business with dozens of foreign banks as well as rural and co-operative lenders.
State banks control 80 percent of the market, leaving relatively small shares for private rivals.
The state-run banks are unlikely to be part of any takeovers involving private sector rivals as
the government has not been keen to bless such transactions. But the private sector, which
accounts for nearly half the total number of commercial banks, could see deal activity. New
private players were earlier this year allowed to enter the sector for the first time in a decade,
and the central bank plans to grant more bank licences. As a result, some large conglomerates
are expected to jump in the fray. With the incumbents keen to fortify themselves against the
new competition and as the new players try to scale-up quickly, takeovers are clearly on the
cards, say financial industry executives. Among the conglomerates, the Aditya Birla group
and billionaire Anil Ambani's Reliance Capital are keen on the banking sector and will be
eyeing deals to expand quickly after they get permits, say investment bankers. The central
bank's stance on allowing conglomerates into banking is unclear. Some of the bigger private
sector players - No. 3 private sector lender Axis Bank, IndusInd Bank and Yes Bank - are
also potential acquirers, dealmakers say. Axis, IndusInd, Yes Bank, Reliance and Birla Group
did not respond to requests for comment.

HURDLES

The central bank is also facilitating the setting up of 'payments banks', which take deposits
and facilitate transactions but do not lend, and which could eat into the banks' margins. While
the economic rationale for the deals is growing, they face practical hurdles. Pricing of deals is
one such. Many founders of small banks see their licenses as prized assets for which they will
demand a high price, even though most private sector banks are already trading at significant
premiums to their book values. Bank employee unions also can pose problems, if they fear
major job losses in a takeover. "The banking sector needs consolidation, but ... consolidation
will move at a moderate pace in India in the near to medium term," said the head of M&A for
India at a large European bank in Mumbai. (Additional reporting by Suvashree Choudhury in
Mumbai and Shilpa Murthy in Bangalore) – Reuters.

Kotak - ING bank deal would not shake the dominance of Big Three

Kotak Mahindra Bank Ltd’s $2.5 billion (around Rs.15,475 crore) all-stock deal to acquire
ING Vysya Bank Ltd has rekindled possibilities of mergers and acquisitions in the banking
sector and catapulted the Mumbai-based lender to a clear number four among private sector
banks in India. The deal, however, will do nothing to shake the dominance of the top three
private sector banks—ICICI Bank Ltd, HDFC Bank Ltd and Axis Bank Ltd in the
foreseeable future, analysts said. More importantly, the new entity, though bigger and hence
more competitive, is unlikely to expand aggressively or eat into the business of its bigger
rivals. Kotak Mahindra, with total assets of Rs.95,430 crore on a stand-alone basis, was
behind Yes Bank Ltd’s Rs.1.16 trillion of assets at the end of September. The acquisition of
ING Vysya Bank will take Kotak Mahindra Bank’s assets to Rs.1.6 trillion, giving it a
sizeable lead over Yes Bank. The deal has “no material implications” on the banking sector
or competition among private banks, said Vaibhav Agrawal, vice-president (research) at
Angel Broking Pvt. Ltd. “Both Kotak as well as ING Vysya are conservative banks. They are
risk-averse with a clear focus on the bottom line. In fact, both have been losing market share
in the last few years. Yes, this deal gives Kotak branches, more deposits and also some
businesses like SME (small and medium enterprises), but it does nothing disruptive to change
the top three hierarchy,” he said. Even with the added numbers, the new Kotak Mahindra
Bank is half the size of Axis Bank which, with Rs.3.94 trillion in assets and 2,505 branches,
is way ahead. Kotak Mahindra Bank will have around 1,200 branches after the purchase of
ING Vysya. The combined entity will not pose serious competition to its bigger rivals and
will have little impact on their business strategies, said Rajiv Mehta, an analyst at IIFL
Holdings Ltd. “Banks like ICICI Bank, HDFC Bank or even Axis are all pan-India franchises
and still growing. The only thing that will change is these larger banks would now have to
compete with Kotak in smaller towns or other cities just like they were in Mumbai or Delhi,
so in that sense they will face tougher competition, but the big guys are used to it by now,” he
said. The deal allows Kotak to achieve its 1,000 branch target for 2016 two years ahead of
schedule. It gives the bank a wider reach, particularly in southern India. Mehta pointed out
that the last few years of rapid growth of new-generation banks like Yes Bank and IndusInd
Bank Ltd has done nothing to temper the growth of larger peers. “In a sense any change
because of competition has been difficult to show on the ground in the Indian banking sector.
One reason for that is because this is a huge market which is underpenetrated, leaving enough
space for everyone to grow,” he said. Perhaps any change in the overall banking sector will
be by way of sentiment. The deal could push other banks to consider acquisition
opportunities within the smaller private sector bank space, said S. Ranganathan, head of
research at broking firm LKP Securities Ltd. “At two times the book value, this is a fair deal
and to think that the bank acquired was a well-run one means that this can be done with other
banks as well which are not doing that badly. This opens new doors to companies wanting to
set up banks or even banks like Axis, which may be ready for acquisitions,” he added. To be
sure, while there is no indication of further consolidation within the sector, shares of smaller
banks thought to be potential acquisition candidates surged on Friday. Among the gainers
was South Indian Bank Ltd, which ended 5.48% higher to close at Rs.27.90, after being up
7.75% at one stage. Dhanlaxmi Bank Ltd gained 2.31% to Rs.44.20 after rising as much as
7.18% and Karnataka Bank Ltd advanced 5.07% to Rs.143.05 after being up 7.01% at one
stage in intra-day trading. ING Vysya Bank gained 0.32% to Rs.816.80 after rising 4.27% in
intra-day trading, while Kotak Mahindra increased 3.68% to Rs.1,199.65 after rising 8.98%
earlier. The broader BSE Bankex gained 2.37% to close at 20,683.54 points. BSE’s
benchmark Sensex rose 0.95% to close at 28,334.63 points. Mehta of IIFL said the deal
signifies that this probably is the “right time to get aggressive”. “ING Vysya was a good
bank, but don’t forget that this deal happened at a time when there has been a trough in the
credit cycle. This could spur smaller private sector bank promoters to consider mergers,” he
added. Credit growth, currently at 11.2%, is at a five-year low as corporate demand for loans
has slackened. The banking sector is also weighed down by non-performing assets (NPAs)
after two years of sub5% economic growth. Ranganathan of LKP Securities said this could be
the change in sentiment the sector needed. “Everyone was fed up with the low credit growth
and high NPAs. This deal could change that,” he added.

Kotak Mahindra faces job surety demand from ING Vysya workers

The All India ING Vysya Bank Employees Union will approach the nation’s central bank and
the finance ministry to ensure jobs aren’t cut. Workers at ING Vysya Bank Ltd, which is
being purchased by Kotak Mahindra Bank Ltd, have sought job and wage guarantees from
the billionaire founder of the acquirer. The All India ING Vysya Bank Employees Union will
approach the nation’s central bank and the finance ministry to ensure jobs aren’t cut, said K.J.
Ramakrishna Reddy, head of the Bengaluru-based union, which represents 25% of ING
Vysya’s employees. Billionaire Uday Kotak’s bank on 20 November agreed to acquire ING
Vysya for $2.4 billion and in a statement on Friday said it will welcome all employees from
ING Vysya. There is “no clarity regarding our employment and service conditions,” Reddy,
said in a phone interview yesterday. The leaders of the union will meet on 7 and 8 December
to decide on “further course of actions,” he said. The acquisition, which will help Kotak
become the fourthlargest bank outside state control, may get bogged down by the unions,
Morgan Stanley said in a note on 20 November. About 35% of ING Vysya’s 10,591
employees are affiliated to one of the two unions, according to the report by the New York-
based owner of the world’s largest brokerage. “It is urged that employees of ING Vysya
Bank, at all levels, should have no concerns on their career and future as employees of both
banks,” Kotak Mahindra’s spokesman Rohit Rao said in an e-mailed response. “The
combined entity will generate ample career opportunities for staff as well as a wider array of
products to serve their customers.” Kotak Mahindra rose 1.7% to Rs.1,245 at 2:04 p.m. in
Mumbai, while ING Vysya gained 0.8% to Rs.863.70. Salaries and employment of ING
Vysya employees are governed by the so-called awards and bipartite settlements unlike at
Kotak Mahindra, the union said. Under the bipartite settlements, the unionized bank
employees negotiate with the association of bank managements to decide on salary raises.
Kotak, 55, founded the Kotak Mahindra Group in 1985 as a financial-services company. It
received a banking license in 2003, making it the first non-bank finance company in the
nation to become a bank. ING Vysya was started about 80 years ago and has about 2 million
customers. ING Vysya is controlled by Amsterdam-based ING Groep NV. ING expects the
transaction to result in a $188 million gain upon closing, based on Vysya’s book value at the
end of September, it said in November. ING will have a stake of about 7% in the merged
company, it said.
 CASE STUDY 6: ACQUISITION OF NOKIA’S DEVICES BUSINESS BY
MICROSOFT CORPORATION

INTRODUCTION Amalgamation in simple sense is the blending of multiple entities into one
single entity. A bundle of legal provisions are followed that differs from country to country to
form a new amalgamated or merged company. Amalgamation and merger both conveys
almost same meaning with a difference that in a merger one or more entities (not all of them)
lost their identity and get themselves absorbed in a single entity while in amalgamation all
entities lost their identity and form a new entity. Concept of merger and amalgamation has
been using from mid nineties as a tool of growth, opportunity exploitation, expansion,
restructuring and for overcoming out of financial crisis in case of sick companies. Top 10
worldwide mergers & amalgamation deals from 1985 to January 2012 are as follows in below
chart 1:-

Chart 1:- Top 10 Mergers and Amalgamations deals worldwide

Year Acquirer Target Transaction Value

USD EUR
1999 Vodafone Air Touch Mannesmann AG 202.8 204.8
PLC
2000 America Online Inc Time Warner 164.7 160.7
2007 Shareholders Philip Morris Intl Inc 107.6 68.1
2007 RFS Holdings BV ABN-AMRO 98.2 71.3
Holding NV
1999 Pfizer Inc Warner-Lambert Co 89.2 84.9
2000 Glaxo Wellcome SmithKline Beecham 76.0 74.9
PLC PLC
1998 Exxon Corp Mobil Corp 78.9 68.4
2004 Royal Dutch Shell Transport & 74.6 58.5
Petroleum Co Trading Co
2006 AT&T Inc BellSouth Corp 72.7 60.2
1998 Travelers Group Inc Citicorp 72.6 67.2
In recent past 2013 major M&A deals were Microsoft Corporation purchased Nokia Handset
& Services Business for an amount of 7,200,000,000 USD Dollars, Softbank purchased
Sprint Corporation for 21,600,000,000 USD Dollars and Berkshire Hathaway purchased
H.J.Heinz Company for 28,000,000,000 USD Dollars. Numerous factors are there which
propel entities to go for M&A and reap the benefits of (not an exclusive list of M&A
benefits):-

 Cost reductions, thereby profits increases of combined (merged/amalgamated) entity.

 Increased market share and global clientele in cross border mergers.
 Reduction of tax liability if Profit making entity acquires Loss making entity,
whereby both the parties get benefitted.
 Strategic advantages if an entity acquires its competing entity.
 Synergy of combined managerial, human resources, financial, marketing and
production economies and diversification of risk.

This is not an easy task to blend multiple entities into a single entity and if blended then after
the combination lots of cultural and working factors create obstacles to the success path of
merged entity and number of obstructions increases more in case of conglomerate mergers
wherein entities belongs to different industries merge together. We will limit our study in this
paper upto the merger of Nokia and Microsoft entities.

FUNDAMENTAL REASONS BEHIND NOKIA-MICROSOFT MERGER

Rationale behind this deal can be discussed from two angles, first is from Microsoft point of
view and second from the side of Nokia. Microsoft came forward for this deal to strengthen
its position in fields of mobile markets; windows phone launched by Nokia is current
example of joint efforts of Nokia and Microsoft in this arena. Another reason could be to
expand its presence in emerging markets. Nokia was not able to retain its present market
share and on the other side it was not innovative as alike other Smartphone companies.
Strategy behind Nokia-Microsoft deal was to follow 'high volume - low price' principle to
grow and sustain. It does have a chance to get close to its 15% market share target of an
anticipated 1.7 billion smartphone market in 2018.

CONCLUSION

In this analysis, we look at the strategic rationale for the acquisition, focusing on the next
wave of mobile growth driven by demand for data services in fast-growing markets, and
assess how well Microsoft-Nokia is positioned to benefit from it. Risk is infinite because
Microsoft is going to enter in entirely new market of Mobile phones and this risk could be
mitigate by

 Pre integration planning

 Due diligence and compliances
 Solutions to overcome out of cultural barriers
 Retention
 Operation
Management
 SAMPLE CASE STUDIES – OPERATIONS
Case Study 1

Make Versus Buy Case

ABC Ltd. is a manufacturing company engaged in the manufacturing of valves. They have
been in the business for last 3 years and have been manufacturing only one type of valves.
They started their business initially with sales of 10,000 valves per month and now they have
grown the volume to about 50,000 valves per month. They have been buying all the raw
material for the valve and were doing all the manufacturing in house.

Now they have established themselves in the market and are planning to expand and produce
different varieties of valves. They have their plant in the main city and the total area of the
plant is 50,000 sq. ft. Now if they want to expand and continue doing all the activities of
manufacturing of all the varieties in house, they would need another 50,000 sq.ft. of the area.
In the recent times, the land prices in the area have more than doubled in the last 3 years and
still land is available with great difficulty. Mr. Mohan is the production head of ABC Ltd.
and has been successful with the production and the level is continuously increasing. But in
recent times, he is facing the problem of quality complaints which have gone up from average
0.2 % in previous 2 years to 0.5 % this year. Also, he is finding that there is a high level of
dissatisfaction among the workers regarding workload as well as salary levels. The workers
are regularly complaining about the over work.

Although, Mr. Mohan has found that the workers have been spending lot of time on tea
breaks, lunch breaks and even in between the production spending lot of time talking to each
other. But, due to insufficient workers and staff, he is unable to take strict action and the
workers are taking advantage of this situation. For completing the work and delivering the
products timely, he has to employ workers on overtime and his overtime cost has also
increased 3 times. Mr. Mohan is worried about the new expansion plan of the management
and is worried where the new workers would come from as he is already finding shortage of
workers for the existing job. He has requested the management not to go for expansion
immediately and look at improving and consolidating the existing set up. He has sent his
request to Mr. S. Kumar Director – Operations.
Mr. Kumar has gone through the request of Mr. Mohan and called a meeting of all the
department heads and explained the situation to all concerned. The marketing manager has
expressed very bullish prospect about the company’s growth and said that the company
should take advantage of growing economy and established brand image of the company and
definitely go for expansion. The finance manger also expressed that this will result in
economy of scale for the products and will further increase the profitability of the products.
Mr. Mohan again expressed his problems regarding availability of manpower as well as
production control and effect on quality and productivity. The Marketing manager asked the
Production manager about the option of outsourcing. Mr. Mohan is skeptical about the
outsourcing option as he felt that the outside agency will always charge more as he will try to
make his profit as well and also is worried about the possible problems of deliveries. Mr.
Kumar asked the Mr. Naresh who is the Purchase manager about his views. He said that since
the suppliers would also be interested in doing the business, they would not like to delay as
with delay they also incur loss. The Finance manager said that we can look at cost
comparison for buying against in house manufacturing.

After listening to all the views, Mr. Kumar told Mr. Mohan to work out the cost of production
for future sales as per the forecast given by the Marketing department. He also told Mr.
Naresh to collect the details of the future requirements to get the purchase cost details for few
components of the valve.

Mr. Mohan and Mr. Naresh have collected their data and they have presented the data in the
meeting called by Mr. Kumar to review the plan. First the marketing head Mr. Suresh
presented his market forecast and then Mr. Mohan presented his report and explained the
details as follows.

One supervisor with monthly salary of Rs. 5000 with expected increase of 10 % per year.
Direct wages of worker as Rs. 4 per unit. With 10 % reduction in second year, no change in
3rd year and increase of 10 % every subsequent year. Material cost of Rs. 14 per unit with an
increase of 10 % every year. Power and fuel cost of Rs. 2 per unit with increase of 10 %
every year. Indirect labor as 50 % of direct labor. They will have to buy a new machine with
a cost of Rs. 50 lac. With usable life of 5 years Mr. Naresh explained his details as follows:
Component price from supplier at Rs. 20 for the first 2 years with an increase of 10 % every
subsequent year.
Transportation cost of Rs. 2 per unit for the first year with increase of Rs. 0.20 every
subsequent year. Inventory cost ( storage cost ) as 5 % per year of the basic material cost.

The Marketing manager has given the sales forecast for next 5 years as follows:

Questions
1. Based on this data, is it economical for ABC Ltd.to go for buying the product from market
or manufacturing in house.
2. What other factors should ABC Ltd. look at for making this decision?
 Case Study 2
Logistics Operations
ABC Ltd. is the country’s largest manufacturer of spun yarn with well-established market.
ABC Ltd. has good reputation for quality and service. Their marketing department identified
that the potential for global market is expanding rapidly and hence the company undertook
exercise for expansion of the capacity for export market. The company formed team of
Marketing and Materials department to study the global logistics possibilities. After extensive
study, the team came up with a report on global logistics and submitted that global logistics is
essentially same as domestic due to following similarities:

• The conceptual logistics framework of linking supply sources, plants, warehouses and
customers is the same.

• Both systems involve managing the movement and storage of products.

• Information is critical to effective provision of customer service, management of inventory,

vendor product and cost control.

• The functional processes of inventory management, warehousing, order processing, carrier

selection, procurement, and vendor payment are required for both.

• Economic and safety regulations exist for transportation.

The company had very economical and reliable transportation system in existence. For
exports as well they decided to evaluate capabilities of their existing transporter and entrusted
them with the job of transport till port. For customs formalities they engaged a good CHA
after proper cost evaluation and entered into contract for freight with shipping company
agent. The response for company’s export was very good and the company could get as many
as 15 customers within first two months and reached to a level of USD 250,000 per month by
the end of first half of the year. Based on this response the export volumes were expected to
grow to a level of USD 400,000 per month by the end of the year. When the review was
made at the end of the year, company found that export volumes had in fact come down to
the level of USD 120,000 which was much lower than it had reached in the first half of the
year.
The managing committee had an emergency meeting to discuss this and the export manager
was entrusted with the task of identifying the reasons for this decline. Mr. Ganesh decided to
visit the customers for getting the first hand information. When he discussed the matter with
the customers, the feedback on the quality and price were good but the customers were very
upset on the logistic services due to delayed shipments, frequent changes in shipping
schedules, improper documentation, improper identifications, package sizes, losses due to
transit damages etc. After coming back, the export manager checked the dispatch schedules
and found that production and ex-works schedules were all proper. Then he studied the
logistics systems and found that the logistics cost was very high and all the logistics people
were de motivated due to overwork and were complaining of total lack of co-ordination and
the system had become totally disorganised.

Questions

1. Explain the problems experienced by ABC Ltd. What is the main cause of these problems?

2. What logistics model should the company go for to ensure proper operations of the
company?
 CASE
STUDIES
FOR HR
 Case Study 1
Satish was a Sales Manager for Industrial Products Company in City branch. A week ago, he
was promoted and shifted to Head Office as Deputy Manager - Product Management for a
division of products which he was not very familiar with. Three days ago, the company VP -
Mr. George, convened a meeting of all Product Managers. Satish's new boss (Product
Manager Ketan) was not able to attend due to some other preoccupation. Hence, the
Marketing Director, Preet - asked Satish to attend the meeting as this would give him an
exposure into his new role. At the beginning of the meeting, Preet introduced Satish very
briefly to the VP. The meeting started with an address from the VP and soon it got into a
series of questions from him to every Product Manager. George, of course, was pretty
thorough with every single product of the company and he was known to be pushy and a
blunt veteran in the field. Most of the Product Managers were very clear of George's ways of
working and had thoroughly prepared for the meeting and were giving to the point answers.
George then started with Satish. Satish being new to the product, was quite confused and
fared miserably. Preet immediately understood that George had possibly failed to remember
that Satish was new to the job. He thought of interrupting George's questioning and giving a
discrete reminder that Satish was new. But by that time, George who was pretty upset with
the lack of preparation by Satish made a public statement "Gentlemen, you are witnessing
here an example of sloppy work and this can't be excused". Now Preet was in two minds -
should he interrupt George and tell him that Satish is new in that position OR should he wait
till the end of the meeting and tell George privately. Preet chose the second option. Satish
was visibly angry at the treatment meted out by George but he also chose to keep mum.
George quickly closed the meeting saying that he found in general, lack of planning in the
department and asked Preet to stay back in the room for further discussions. Before Preet
could give any explanation on Satish, George asked him "Tell me openly, Preet, was I too
rough with that boy?" Preet said "Yes, you were. In fact, I was about to remind you that
Satish is new to the job". George explained that the fact that Satish was new to the job didn't
quite register with him during the meeting. George admitted that he had made a mistake and
asked his secretary to get Satish report to the room immediately. A perplexed and uneasy
Satish reported to George's room after few minutes. George looking Satish straight into his
eyes said "I have done something which I should have never even thought of and I want to
apologise to you. It is my mistake that I did not recollect that you were new to the job when I
was questioning you". Satish was left speechless. George continued "I would like to state few
things clearly to you. Your job is to make sure that people like me and your bosses do not
make stupid decisions. We have good confidence in your abilities and that is why we have
brought you to the Head Office. For everybody, time is required for learning. I will expect
you to know all the nuances of your product in three months time. Until then you have my
complete confidence". George closed the conversation with a big reassuring handshake with
Satish.

Questions:

1. Was it at all necessary for George to apologise to such a junior employee like Satish?

2. If you were in Satish's place, how would you to respond to George's apology?

3. Was George correct in saying that Satish is there to correct the "stupid mistake" of his boss
and George?

4. Would you employ George in your company?

5. Did Preet make a mistake by not intervening during the meeting and correct George's
misconception about Satish?

6. As an HR man, how would you define the character of George - bullying but later
regretting? Does his attitude need to be corrected?

7. Would you be happy to have George/Preet as your boss?

 Case Study 2
Adam, fresh from school was a newly recruited HR practitioner. During his one month into
the job, he was asked to be in-charge of the orientation programme for the entire
organisation. Being new, he followed closely to the processes. Recently, Roy joined the
organisation and Adam was required to orientate him. On Roy's first day of work, Adam
brought him around the organisation for introduction to the rest of the staffs. Unfortunately,
Roy's assigned mentor was not around hence, Adam was unable to make an official
introduction for Roy to meet up with his mentor. In the afternoon, during the HR briefing,
Adam mentioned to Roy that there is a buddy system in place but it is only on an opt-in basis.
Roy requested to opt for a buddy. Adam was rather surprised by Roy's request as according to
Adam's manager-Jean, no one in the organisation has requested for a buddy. Hence, Adam
checked with Jean on the criteria in getting a buddy for Roy and according to her, Adam
found out that it needed to be someone preferably from Roy's department. Having clarified on
the criteria, Adam was supposed to get a buddy for Roy, unfortunately, this issue was clearly
forgotten by Adam due to his busy schedule as he was involved in other HR matters as well
and he did not follow up with Roy's request promptly. One week later, Adam met Roy in a
lunch gathering and Adam greeted Roy and asked him casually how is he doing and if he has
adapted well to his job. Roy, asked Adam blatantly and angrily where is his buddy that he
had requested. At that moment, Adam recalled on the existence of this request and
unwittingly told Roy that he thought Roy was joking with him on the request for a buddy as
he did not want to admit to Roy that he had clearly forgotten about the whole issue. Roy was
very angered by Adam's response and told him off that he was very serious in getting a buddy
and that its Adam's responsibility to do so. Adam, clearly embarrassed and guilty about his
mistake, apologised immediately and promised to get him a buddy. On the very day, a buddy-
Sam, was found for Roy. Roy was very unhappy with Adam and confronted Adam and his
buddy when he was able to have an official meet up session with his mentor. Adam explained
to Roy that the organisation has no current practice in place for meet up sessions to be
arranged between mentors and mentees and its a practice for mentees to take self-initiative to
do so in arranging for meetings with their mentors and also that his mentor is currently out of
town and will only be back the next day. Adam, himself being a new staff also was at that
moment in time speaking on personal experience and also based on what Jean had told him.
Sam, who was present agreed and helped to explain to Roy on the practice. Roy kept quiet
and Adam unknowingly thought that Roy has understood the organisation practice. Hence,
Adam did not continue to check with Roy on this aspect. The following day, Roy had a
feedback session with his manager and Adam was called upon to sit in as a part of the
orientation programme. Roy brought up the issue on Adam's failure to get him a buddy
promptly and that he was not introduced to his mentor at all. He complained about the poor
management of the HR mentor and buddy system and that it was not effective at all and that
he expressed that he is very unhappy with Adam as he felt that he was not doing his job at all.
Adam tried to explain to Roy and his manager about what happened and also reassured Roy
that he will take his suggestions of improving on the system and was apologetic about the
issue. He told Roy's manager that he will bring Roy to see his mentor after the session as his
mentor is back in the office after being on leave for the past week. Roy was still very
unhappy with Adam and continued telling Adam off in front of his manager.

Questions:
1. On an HR practitioner point of view, what should Adam do to resolve the issue?

2. Roy is very unhappy with Adam and holds it against him even though all has been done
and followed up. What should Adam as HR do to resolve this and should Jean, as Adam's
manager do something?

3. What role does Roy's manager play in this issue and should he be implicated?
 Case study of strategic human resource management in Walmart
stores

Introduction:

Michael E. Porter (1980) in his famous book said there are three basic competitive strategies
for a company, which are overall cost leadership; differentiation and focus strategy.
Companies use these competitive strategies to achieve competitive advantage. In this case,
Walmart Company is obviously taking the cost leadership strategy, that is to say, it aims to
become the low-cost leader in the retail industry. Walmart maintains its competitive
advantage through its satellite-based distribution system, and by keeping store location costs
to a minimum by placing stores on low-cost land outside small to medium-sized towns, no
matter in the US or in its abroad affiliations.

Part 1: the analysis of corporate strategy and HR strategy at Wal-Mart.

From this case material we could also see that Walmart purchased massive quantities of
items from its suppliers to form scale economy, and with the efficient stock control system
helping make its operating costs lower than those of its competitors. It also imported many
goods from China, “the world factory” for its low cost. So in a word the company-level
strategy of Walmart is low cost and low cost, with little differentiation strategy. Managers
engage in three levels of strategic planning (Gary Dessler, 2005): the corporate-level strategy;
the business-level strategy and the function-level strategy. The functional strategy should
serve the overall company strategy so the corporate strategy could be implemented more
effectively and efficiently. As for Walmart, its corporate-level strategy and business-level
strategy, as we analyzed above, is the low cost leadership. Then we’ll focus on its functional
strategy, especially its HR strategy. Besides the above factors, Walmart builds its low cost
leader on employment policies that help it to achieve extraordinarily low employment costs.
Through low-cost HR activities, Walmart tried to maintain its predominate competitive
advantage.

Part 2: The analysis of HR policies at Walmart and its integration with Corporate Strategy.

The basic premise that underlying SHRM is that organizations adopting a particular strategy
require HR practices that are different from those required by organizations adopting
alternative strategies (Jackson&Schuler, 1995). Generally, there are three SHRM theoretical
models in the study of this discipline: the universalistic best practices, the contingency
perspective of “best fit” and the resource-based configuration perspective. Here I would not
deliberate on all these three models to examine the HR practices at Walmart, but just choose
the contingency perspective of “best fit”. With this view, the individual HR practices will be
selected based on the contingency of the specific context of a company. Like the Walmart has
different corporate strategy with those retailers with differentiation strategy, which actually
cultivates the primary contingency factor in the SHRM literature. What’s more, we should be
reminded that the individual HR practices will interact with firm strategy to result in
organizational performance, and just for this interaction effects make the “universal best
practices” may not apply so well in a specific company. In the above part we have put great
emphasis in identifying and analyzing the primary contingency factor of Walmart’s corporate
strategy, so in the following part we’ll examine the “fitness” of HR practices in Walmart with
this theoretical model, which is obviously also the integration process of HR practices with
the contingency variables to some extent. As there are the HR policies and activities (such as
how the company recruits, selects, and trains and rewards employees) that comprise the HR
system itself, here we could illustrate the integration just by the sequence of the HR activities.
From the recruitment Walmart has tried its best to reduce the cost considering so big number
of its employees. For example, the New York Times (January 2004) reported on an internal
Walmart audit which found “extensive violations of child-labor laws and state regulations
requiring time for breaks and meals.” The cheap price of children labors and minors make it
earn more cost competitive advantage over other companies. Walmart also faced a barrage of
lawsuits alleging that the company discriminates against workers with disabilities, for the
recruitment of these guys means providing more facilities for them and the lost of efficiency
to some extent. From training perspective, Walmart refers to its employees as “associates”,
and encourages managers to think of themselves as “servant leaders”, that is, to encourage
them to serve others while staying focused on achieving results in line with the organization’s
values and integrity. An organization’s strategy necessitates behavioral requirement for
success, and the use of HR practices in the organization can reward and control employee
behavior, therefore the organization should implement HR practices that encourage the
employee behaviors that are consistent with the organization’s strategy (Delery, John E;
Doty, D Harold, 1996). Through this training and encouragement, Walmart tried to adjust th
managers must turn to wages to increase profits, and Walmart expects the labor costs to be
cut by two-tenths of a percentage point each year. So these aggressive HR polices, are just the
most “fittest”. From the employee benefit and safety perspective, Walmart’s HR policies are
also well aligned with the corporate-level strategy. At Walmart, workers eligible for benefits
such as health insurance must pay over the odds for them. In 1999, employees paid 36
percent of the costs. In 2001, the employee burden rose to 42 percent. While in the US, large-
firm employees pay on average 16 percent of the premium for health insurance. Unionized
supermarket workers typically pay nothing. Walmart was frequently accused of not providing
employees with affordable access to health care, but the top managers and HR managers
know their focus was just to try their most to implement the “low-cost” strategy. Finally,
from the labor relations perspective, Walmart couldn’t have done better to show us how the
contingency model of “best fitness” works. Sam Walton sought to bring great value through
aggressive discounting to customers, to implement its low-cost strategy. Because unionized
supermarket workers typically pay nothing, Walmart has strong anti-union policy.
Allegations of firing workers sympathetic to labor organizations have been made, all new
employees are shown a propaganda video tape which said joining a union would have bad
implication for them, and the employees should never sign a union card. In the UK it was
reported in the Guardian that Walmart is facing the prospect of a bruising legal battle with the
GMB trade union in a row over collective bargaining rights, for the union would not
accepting Walmart withdrew a 10% pay offer to more than 700 workers after they rejected a
new package of terms and conditions, which included giving up rights to collective pay
bargaining. Here there may be some doubt why Walmart has recently allowed unionization in
their stores in China, where unionization is mandatory. But actually this mandatory rule is
made a long time before Walmart walk into china, so why Walmart give up its persistence in
not having a some unions, and its former reason to China government is that it did not have
any unions in its global working. So how do we see Walmart’s compromise if that constitutes
a “compromise”? It has been argued that doing business in China is particularly difficult
because of the higher relative importance of personal relationships (guanxi), as opposed to
the specification and enforcement of contracts in the West (Davies et al, 1995). Walmart
China has tried every effort to develop good relationships with China government and other
influence groups. So Walmart made this exception of have unionizations is just in accordance
with its corporate strategy and HR strategy. If it ignores the Chinese government’s firm rule,
its cost would just outweigh what it would save by organizing no unions in its labor relations
management. And also it forgets not its basic corporate and HR strategy, for in china
Walmart provides little power for workers and the unions are controlled by the state. So from
this we could further understand how Walmart would adjust its HR policies and activities to
fit its corporate strategy contingency.
Part 3: the role of the HR manager in this company?

So in the above part we have assessed how various human resource practices and systems of
Walmart “fit” the organization’s competitive corporate strategy. Then what the role of HR
managers in this company, who are HR professionals with strategic and other skills required
to build a strategy-oriented HR system. As managers in one of the functional departments of
Walmart, they have tried their best to “fit” the corporate strategy to low down cost. They
made some rules and policies, for example, they implement anti-union policy in its stores to
reduce extra-costs from union workers; they help implement “lock-in” policies; they tried to
resist disability people for the efficiency loss; they discriminate women by giving them much
fewer money and opportunities to be promoted, and actually the male workers in Walmart
also got much lower salary compared with industry average level. Walmart HR managers
also tried to adjust the employee behaviors and competencies to what the company’s strategy
requires through the actions and policies of the firm’s strategy-supporting HR system, and
some of which we have listed. So in the above paragraph, we have analyzed the role of HR
mangers in Walmart using the “best fit” model, in the next we would attempt to analyze their
role from two other models. Huselid’s (1995) work reflects what has come to be known as
the “universalistic” or “best practice” approach to SHRM, which assumes that there are
certain “best” HRM practices that will contribute to increased financial performance,
regardless of the strategic goals of the firm. In this case, for example, Walmart HR managers
refers to its employees as “associates”, and encourages managers to think of themselves as
“servant leaders”, that is, to encourage them to serve others while staying focused on
achieving results in line with the organization’s values and integrity. All such kinds of HR
policies just are universal best practices adopted by HR department in all good companies.
No matter Walmart adopted low-cost strategy or differentiation strategy, these policies and
practices would bring no extra cost, but would motivate employees to contribute more to the
corporate, and even help to form even good corporate culture, to reduce much more lawsuits
and form good relationships with the community and government. And then there is also a
call for a configurational approach to SHRM, and this theoretical model argues that there are
specific “ideal types” of HRM systems that provide both horizontal and vertical fit of HRM
practices to organizational structure and strategic goals. More specifically, there are certain,
specific systems of HRM practices that result in the highest internal consistency and
complementarity (horizontal fit), as well as congruence with organizational goals (vertical
fit). In the part 2, we have seen how Walmart HR managers have coordinated a systematic
type of HRM policies to complement each other, to be congruent with organizational goals
(Gerald R.Ferris, 1999).

Part 4: some advices to improve the employment practices at Walmart.

Actually from the above analysis of the role of HR managers, we knew from different
theoretical SHRM models, there are still many things for HR managers to improve. The
resource-based view focuses on firm resources that can be sources of competitive advantage
within the industry. Three basic types of resources can provide this competitive advantage
(Barney, 1991). Human capital resources include such things as the skills, judgment, and
intelligence of the firm’s employees. So from the case material we just most information
concerning how Walmart exploited its workers by various HR policies to low down the cost
to the minimum level, which would certainly reduce the loyalty and dedication of those
human resource in the company. And besides referring to its employees as “associates”, and
encourages managers to think of themselves as “servant leaders”, there seems little training
and other activities taken to develop its valuable human resources, while human capital and
learning could be a core source of sustainable competitive advantage (Nile & Jeffrey, 2004).
As for the specific training and develop methods and forms, it would depend upon the
specific and proper time, place and the right store. But what’s worth mention is the HR
managers should pay more dynamic and long-term attention when it calculates the future
benefits of such HR practices. As for the present employment practices, even with the
“contingency model of best fit”, there may still many opportunities for improvement. It’s
really hard to be measure whether Walmart’s aggressive actions to bring cost down really get
its strategy in the long term. The workers are complaining its discrimination and low
compensation policies, and they bring many charges against Walmart in the world. The
government and other communities are just turning more and more sensitive to Walmart’s
way of aggressive acting, all these bring big damage, or even bigger cost, to Walmart’s
reputation and may very well affect its ability of long-term profitability. It imported so much
goods from China, and it even possess some sweat shops in less developed countries to
produce products with Walmart brand, which cultivate many problems such as business
ethics, followed by the opposition of its consumers, the final source of profit. So it seems
Walmart HR professional would harvest more by seeing the long-term potential cost, and
with more advanced management tools.
Conclusion:

So from all those above content we know the human resource management is of strategic
importance to Walmart, which is also the definition of SHRM. So the top managers besides
the HR executive should pay more attention to the everyday employment management, after
all, the issues that are related with employment are what they must face everyday. So they
should play more positive roles in training and using their human resources, and maybe
cultivating better organization culture, all of which may prove more cost-saving, and
correspondingly help realize Sam Walton’s simple philosophy of “bringing more value to
customers”.

Questions

Part 1: the analysis of corporate strategy and HR strategy at Wal-Mart.

Part 2: The analysis of HR policies at Walmart and its integration with Corporate Strategy.

Part 3: the role of the HR manager in this company?

Part 4: some advices to improve the employment practices at Walmart.

International
business
The Topas Ecolodge
The word “ecolodge” describes a type of accommodation that is environmentally friendly.
Ecolodges aim to minimize their negative impacts on the environment and they make this
very clear in their promotional materials. They often receive official certificates confirming
that they fulfil the criteria of sustainable development.
The Topas Ecolodge is located in the mountains of northern Vietnam. It targets three types
of visitors: wealthy tourists and jet-setters who seek an exotic, nature-based holiday
experience; young backpackers keen to see a relatively undeveloped part of Asia; and
environmental scientists working on research or conservation projects.
The mountains around the ecolodge offer opportunities for exploration and adventure.
Visitors can go mountain-biking or hiking up the many mountain trails with a local guide, or
they may prefer to visit a local market town. The abundant bio-diversity of fauna and flora
contributes to the tourist appeal of the area.

The Triple Bottom Line

Together, economic, social and ecological sustainability create “the three pillars of
sustainable development”, often referred to as the “triple bottom line”. The “triple bottom
line” stresses that business decisions should not only consider financial aspects, but also the
well-being of local communities and the natural environment. Although this is relevant for all
business functions, it is particularly relevant for operations, as manufacturing activities are
likely to have more negative impacts than marketing campaigns or financial transactions.
Often the “triple bottom line” remains an ideal rather than a reality, as economic
considerations drive most commercial organizations.

Discussion questions
Consider Topas Ecolodge – what strategies and practices can you identify for:
a) economic sustainability – how is the lodge promoting its business and encouraging
customers to spend money?
b) Social sustainability – is the business doing anything to support the local community?
c) Ecological sustainability – what is being done to minimize the negative impact on the
environment?.
Organisational
Behaviour
Case Study
 Conflict in company culture

Saroj and Parag, both young bright MBAs from a reputed Management Institute were
working as Junior Finance Executives in a huge organisation having 3,000 employees. In the
Finance Department, there were hundred employees out of which twenty were ladies. The
working hours were 10.00 a.m. to 6.00 p.m. There was an upcoming vacancy for the post of
Finance Executive and both Saroj as well as Parag were being considered for this promotion.
Both of them had an equally good record of past performance. On Thursday afternoon, Saroj
went to the records room to fetch some data. When she came back, she orally reported to the
officer that Parag molested her in the records room which was unmanned. Friday morning,
the lady activists in the organisation protested that the environment was no safer for ladies to
work and the management should take immediate action. However, the Personal Manager
had not received any written complaint and there was neither any proof nor any witness in
this particular case. Parag was denying having misbehaved in any manner with Saroj. He was
insisting that probably no male employee on duty is likely to misbehave in this fashion
especially when he is being considered for promotion. Saroj was emphasising that perhaps no
married woman like her could make such accusations and allegations unless the matter is
true. On Saturday morning, she handed over a written complaint to the Personnel Manager,
Mr. Patwardhan. During the history of past twenty years it was the first complaint of this
nature received by the Personnel Manager, and Mr. Patwardhan did not have any past record
for reference so as to determine under what circumstances and in which conditions the case
can be considered as either genuine or malicious. Mr. Patwardhan wanted to ensure that he
took the right course of action.

Questions :

1. What course of action should Mr. Patwardhan take ?

2. What measures should Mr. patwardhan take so as to avoid such problems in the future ?
 Cello India ltd.

Mr. Babar has been working in Cello (India) Ltd. as a finance manager for the last two years.
Though he had a very long and rich experience of working in finance department of the same
company and dealing with various types of financial problems faced by the company, he is
facing many new problems on this new assignment. he has a heavy work load of the
departmental activities and some time he has to stay in the office upto 10 pm. In addition to
it, he has been unable to cope with the problem which he is facing with regard to vice-
president finance, because vice president finance assumes that Mr. Babar is well versed in
finance functions and therefore new kind of job through related to finance that is evaluation
of finance and investment projects has been assigned to him. In view of this situation, Mr.
Rama Krishnan, who is chartered accountant working at the lower level of finance
department has been appointed as a staff specialist to Mr. Babar as to help, guide and advise
him on specialised matters such as project evaluation, etc. since then the efficiency level of
Mr. Babar has further come down and he is not feeling comfortable with Rama.

Questions :

1. Why is Mr. Babar not comfortable with his staff specialist Rama?

2. How can he cope with the situation of overwork load requiring variety of skill and
expertise?

3. Give your suggestions for making the situation healthy and comfortable for Mr. Babar.
 Increment biasness

A public sector consultancy organisation recruited Mr. Alok an expert in a particular field of
technical specialisation with Ph.D. and other high qualifications at a senior level, one level
below that of a director of the board. The company had a managing director and three
functional directors on its board apart from government directors. Mr. Alok at the time of
recruitment to the company was working as No.2 in a Central Government research
organisation. Since he failed to get selected to the No.1 slot in that organisation for ‘political
reasons’, according to him. He chose to join the public sector company at one grade higher
than that held by him in the government. After joining the company, Mr. Alok represented to
the Management that he should be granted at least three advance increments since in the
government research organisation where he had worked, he used to get extra honorarium to
the extent of Rs. 50,000 per anum for undertaking outside consultancy work. The
management of the company refused to grant the advance increment to him since they felt
that Mr. Alok’s request cannot be dealt with in violation and it will lead to similar requests
from other senior managers in the company. After waiting for a few months, Mr. Alok
submitted his resignation from the company. His superior, viz., the functional director
concerned (Mr. Rajeev), advised the managing director that Mr. Alok was resigning because
his request for higher salary has not been agreed to and that the matter needs review because
it would be difficult to recruit another expert of the same caliber as Mr. Alok. The Managing
Director however, accepted the resignation of Mr. Alok and ordered that the post be
advertised for fresh recruitment.

As the recruitment process was on, Mr. Alok on his own chose to withdraw his resignation
and rejoined the company apparently on a tacit undertaking given by Mr. Rajeev that his
request for higher salary would be reconsidered.

The managing director reconsidered the request and approved the grant of three advance
increments to Mr. Alok provided he would serve the company at least till the date of his
superannuating, which was two years away. The decision was communicated to Mr. Alok.

Mr. Alok once again felt insulted by being asked to agree to an unacceptable condition, viz.,
undertaking to continue in the company for two more years for the grant of additional
increments to his salary, he thought he was fully justified in his case. He did not agree to the
condition and after two months again submitted his resignation. Mr. Rajeev discussed the
matter with the managing director. The managing director stated that in return for the
additional salary being granted to Mr.

Alok which was not being given to any other senior manager of his status, he should display
some commitment, to serve the company. Without such a commitment Mr. Alok might wait
for an opportunity to look for greener pastures and leave the company after gaining a higher
salary, vis-a-vis his other senior colleagues in the organisation. The other employees would
feel that Management can be blackmailed by the so-called experts into granting more benefits
with the threat of resignation and the management would lose its credibility. The managing
director, therefore, decided to accept the resignation of Mr. Alok. But Mr. Rajeev and other
functional directors of the company were not happy with the decision as they felt that
competitors of the company would gain by Mr. Alok’s departure and, therefore, allowing Mr.
Alok to quit would jeopardize the company’s business interests.

Questions :

1. Do you agree with the Managing Director’s appraoch to the problem?

2. Do you think that Mr. Alok had reasons to be aggrieved or was he trying to exploit his
expertise?

3. What would be your solution to this case?

 Business
environment
case study
 MMS Ltd

Micro-Mechatronics Services Ltd (MMS Ltd) is a small business situated within the
congestion zone1 of a large UK city. It provides electrical, mechanical, car body diagnostics
and repair services to owners of private cars. The business started out as a sole trader in early
2008. Levi, the owner of the business, recruited his father, Joshua, in 2009 to work alongside
him. Both are Bulgarian immigrants who came to the UK in 2008 and 2009 respectively, to
seek improved work and life opportunities. In the 1990s Bulgaria, a former Soviet-style
command economy, struggled to become a market economy. Chronic unemployment,
hyperinflation and weak investment hampered Bulgaria’s productivity and growth. Most
businesses were small, employing between one and ten people. Employees worked long
hours, for minimal wages, without formal contracts of employment. This backdrop of a
stricken economy led enterprising individuals such as Levi to leave Bulgaria to seek
opportunities elsewhere in the European Union (EU). Levi entered the UK with an
'Immigration by Investment' business visa which required him to meet strict conditions and
timescales for setting up and operating a business. In addition to providing proof of sufficient
personal funds to live on until the business broke even, Levi had to produce a fully-costed
business plan. Also, to maintain this visa status, Levi had to convince the UK Home Office
that the business was making positive progress toward its profit goals. Following the fourth
year of successful operation of the business, Levi would become eligible to apply for
permanent residency in the UK. Levi found it very difficult to start a new business in a new
country. However, with determination and help from the resident Bulgarian community, Levi
was able to get the business up and running By the end of 2011, he had fully qualified as an
auto electrician. In 2012 Levi incorporated the business as a private limited company (MMS
Ltd). At that point in time its premises, situated on an industrial estate, had a floor area of 450
square metres and the business owned the following assets:

 a paint spray booth and associated safety equipment

 two vehicle ramps

 welding equipment

 compressors

 mechanical and electrical hand and power tools

 a breakdown and recovery vehicle.

The rent for the premises was £2000 per month, and business rates were £200 per month.
Joshua, who received his skills training in Bulgaria, was responsible for providing the
mechanical and car body repair services at MMS Ltd. Levi was responsible for the electrical
diagnostic and repair services. There was mutual respect and trust between father and son and
Joshua was happy to leave the operation and planning of the business to Levi. One issue with
business start-ups in general, and for MMS Ltd in particular, was the reluctance of banks to
provide business loans, especially when the business had little evidence of a good credit
history. Levi felt that this interrelationship between credit history and business start-up was
particularly difficult for immigrants who were new to the country and, therefore, could not
demonstrate sufficient credit history. By the end of 2012 the business had incurred total
losses of £36,000. In addition, following a visit by the Health and Safety Executive, MMS
Ltd was required to reduce the level of isocyanates2 released from its paint spray booth.
Complying with this instruction would require additional capital expenditure. Levi decided to
approach the bank in an attempt to secure a business loan. However, the bank manager
refused the loan request and suggested that Levi develop a new business plan to demonstrate
that MMS Ltd could stabilise its position and become profitable before reapplying for a loan.
For MMS Ltd’s main stakeholders, this was a very low point. Levi was disappointed at the
refusal of the bank manager to support MMS Ltd. In addition, being forced to think through a
business plan – particularly in terms of the needs of MMS Ltd's customers – led Levi to doubt
the adequacy of his business skills and leadership. In addition to losing the money he had
invested over the years, he was facing the possibility of having to lay off three of the five
employees. More worrying was that a failed business would endanger his and Joshua’s visa
status. Levi negotiated a fifty percent reduction in the floor area occupied by MMS Ltd’s
premises and, likewise, the monthly rent and rates. He also sold one of the two vehicle ramps
to accommodate the business into the smaller premises. The most difficult part of MMS Ltd's
new business plan was breaking the news of redundancies to the three employees, two of
whom were Bulgarian nationals. Although Joshua did not openly resist this decision, he
found it difficult as, of the two remaining staff (excluding himself and Levi), only one was a
Bulgarian national. Joshua was also unhappy that, with the sale of one of the vehicle ramps,
service provision in his traditional area of responsibility would be significantly reduced.
Along with these changes, Levi undertook a market survey among MMS Ltd’s existing
customers which revealed three significant facts. Firstly, he found that when MMS Ltd's
repair services were priced at £40 per hour, this attracted customers owning lower value cars,
but did not attract clients owning expensive cars. Yet, when repair services were priced at
£70 per hour, the customer base switched almost exclusively to clients owning expensive
cars. So the market for repair services seemed to operate with a strong element of ‘perceived
quality’ pricing. Secondly, he discovered that there were 12 similar repair service providers
in the locality each offering differentiated services at prices between £40 per hour and £70
per hour. Thirdly, he observed that the significant increase in the number of cars needing
computeraided engine management diagnostics presented a real opportunity for MMS Ltd, to
not only differentiate services but also to sustain a premium pricing strategy of between £70
per hour and £90 per hour. By setting the price of MMS Ltd’s repair services at £70 per hour
the volume of clients with executive cars began to increase substantially by mid 2013. Such
cars are usually of high value, with an engine capacity exceeding 2.0 litres. By the end of
2014 MMS Ltd became profitable and had a turnover of £215,000. Based on this success
Levi was able to secure a business loan, which he used to recruit three more employees and to
move MMS Ltd back into larger premises on the same industrial site. The loan also helped to
fund the purchase of a modern paint spray booth and new computeraided engine management
diagnostic equipment. Levi is confident that, in the current financial year, the business will be
even more successful than in 2014. He is hopeful that a recent tender, submitted to an NHS
trust for the repair and diagnostic servicing of its fleet of ambulances, will be successful
 CASE STUDY OF COCA COLA’S 4PS, SWOT ANALYSIS,
MICRO & MACRO ENVIRONMENT (PEST)

In the age of technology where everything is rapidly evolving, marketing goes into a more
competitive environment than ever before. The Internet, globalization and digitization
contribute to the markets. On the one hand, burst of information stems from all sides where
potential customers have limited time to investigate and consider their purchasing decisions.
On the other hand, supply of products is higher than demand, leading to oversaturated
markets. The only certainty is that a well-structured marketing plan based on a solid
marketing strategy is the foundation of a business plan, which constitutes the mean to reach
the marketing goals and achieve the objectives (Slack, 2015). Specifically, it indicates the
cornerstone for the actions that should be followed in order to display the product or service
to potential and existing customers, thus its analysis is an issue which causes a great deal of
debate. Considering the factors related to this topic, the question of what specific
consequences arise when addressing this thesis must be elaborated. This research is
particularly outstanding for the reader because it will describe the 4Ps of a well-known
company, which is Coca-Cola, not to mention it will focus on how marketing environment
factors of SWOT analysis affect its 4Ps. The aim of this specific report is to demonstrate the
significance of micro and macro environment analyses where companies could apply the
resources in the most effective way in order to further improve targeted marketing strategies
and broaden selling capabilities. Coca-Cola is the largest beverage company in the world,
providing to consumers more than 500 sparkling and nearly 3.900 beverage choices (Coca-
Cola, 2017). It must be stressed that Coca-Cola is a leading manufacturer, distributor and
marketer with a various valuable and recognizable brands on both sparkling and still
beverages. According to Forbes (2017), Coca-Cola maintained its place at the top of the food
and beverage industry, enlisted in place #86. Furthermore, based on Business Insider (2017),
of all beverages consumed every day around the world, Coca-Cola products preserve the
3.1% not to mention that the logo is recognizable by 94% of the world’s population. In my
perspective, Coca-Cola is more experiential corporation investing on human-centric system
of values. Briefly, Coca-Cola believes in a high-level mission with long-term vision
implementation focusing on customers’ needs. It is important to be told that for several years
Coca-Cola inspires consumers through the promotional phrase “Success is not a destination,
but a journey” (Coca-Cola, 2017). However, many questions arise concerning the way Coca-
Cola has reached a leading position in the market with a very good reputation as well as
brand awareness. Was the product different from others? Was the product innovative? Did
Coca-Cola consider the Strengths and Weaknesses of its products versus the competition?
Did Coca-Cola measured the opportunities and the threats? The answer to all the above
inquiries is YES! Still, how did the company accomplished to conquer the beverage industry
all these years? Initially, setting the main objective was to increase sales’ volume to the
maximum level for each physical year. Every year this objective alters based on the results of
the previous year. Specifically, market trends as well as its size and growth rate, current
market position, economic and political conditions, macro and microenvironment factors,
social values, future expectations and predictions are taken into consideration. Short
description of Coca-Cola’s 4Ps According to Business Insider (2017), Coca-Cola spends
more money on advertising than Microsoft and Apple combined in order to promote its
products as well as the brand in the market. Therefore, to have only successful promotional
campaigns, CocaCola uses a model that optimizes marketing mix components, helping the
company to determine marketing options in terms of price, product, place and promotion
meeting consumers’ demands. In other words, the given model that is called 4Ps provides the
company with the way to communicate its products to the audience, specifically, to place the
appropriate product, at the right price, in the right place at the right time.

Product

Coca-Cola maintains the widest range of soft drinks in beverage industry, which consists of
3.900 different products. It must be stressed that these soft drinks are classified on different
various categories such as diet, fruit juice, tea, energy drinks and more. Company’s products
preserve their presence in different packaging and sizing. However, Coca-Cola has unique
shape reminding always the brand. Coca-Cola is the most successful carbonated drink with
global existence and awareness and the most impressive is its adoption as the meal
complement in some cultures (Sicilia & Palazón, 2008).

Price

Price is the heart of a business because it secures its profits. Each price of Coca Cola’s
products is adjusted based on market and geographic segmentation and is standard for all
over the world. On the one hand, the company follows a pricing strategy based on its
competitors, mainly Pepsi. On the other hand, prices depend on growth rate as well as on
market opportunities. For instance, Coca-Cola offers huge discounts on bulk purchases.
Nevertheless, while the beverage industry is considered an oligopoly (few sellers and large
buyers), the dominants Coca-Cola and Pepsi have formed a cartel agreement to ensure a
pricing balance. It should be noted that the company applies a different pricing policy to each
sub-brand (Coca-Cola, 2017). Place Coca-Cola preserves an extensive distribution network
providing its products available in almost all the retails and big chain markets all over the
world. The company follows the fast-moving consumer goods (FMCG) pattern where the
distribution begins with the producer and ends with the consumer (Golder & Tellis, 1993).
The company’s distribution system is so effective that has eroded smaller production units of
similar products.

Promotion

Coca-Cola adopts various advertising and promotional strategies focusing on consumer's

demand increment. The benchmark for this aggressive marketing is the significant amount
investment on advertising campaigns such as TV, radio, print and online media, transport,
billboards etc. Moreover, Coca-Cola makes use of corporate social responsibility (CSR) in
order to acquire sentimental benefit on customers' minds, while driving alteration towards
sustainability such as social issues improvement as well as planet rescue. Despite the fact that
the company uses celebrities with the ultimate goal the consumers to integrate the products as
required in their everyday life, provides also sponsorship to huge events. The given way of
advertising is interactive as the consumer could win one of the company's products keeping
indelible in mind the brand. Finally yet important, is the fact that Coca-Cola applies push and
pull strategy by offering exceptional incentives to both distributors and retailers in order to
promote the brand. Specifically, the company allows promotional sales to retailers as well as
price discounts and allowances to distributors (Hassan, et al, 2014).

How marketing environment factors of SWOT analysis affect Coca-Cola’s 4Ps

An enterprise is like an open system that is constantly influenced by various environmental

factors in order to increase or decrease the quality of strategic decision-making. Thus, these
factors should be considered in depth for long-term brand reputation by the powerful SWOT
(Strengths, Weaknesses, Opportunities, and Threats) analysis in combination with PEST
(Political, Economic, Social and Technological).

Internal Business Analysis

Coca-Cola ensures fundamental internal features such as the efficient production process, the
appropriate organizational skills as well as the effective communication and distribution
networks, in order to achieve its mission and objective, the consumers’ satisfaction. Coca-
Cola uses the SWOT analysis technique to monitor its internal strengths and weaknesses,
which appear to be one of the most complex part of company’s culture (Appendix). However,
in order to manage its internal environment effectively, the company carries out assessments
in all sections of the consumption and production process to guarantee the proper
functionality in all aspects

External Business Analysis

The outer business environment is more powerful than the internal one. External factors,
which are divided into two types -the Micro and Macro environment-, can affect the entire
business even the economy. In particular, any alteration, especially in the macro environment,
can create threats with aspects in the entire market place. These threats might be the
instability of the economy, the environmental conditions and the demographic patterns that
immediately affect consumers’ attitude. The opportunities and threats of the SWOT analysis
are directly related to and influenced by the external environmental factors of Micro and
Marco environment.
Macro Environment

The Macro environment is translated as a range of forces, which affect not only Coca Cola’s
dynamic but also the factors within the microenvironment. Coca-Cola applies the PEST
strategic analysis tool before the SWOT analysis in order to measure and asses the market.

PEST analysis

Political forces Coca Cola is a giant in the beverage industry and its products are distributed
around the world. However, the company must follow specific rules and regulations in order
to be able to maintain the given distribution network. In particular, Coca-Cola is a product of
health interest and is constantly undergoing checks by governments and health authorities. A
huge example is its distribution in a Muslim country. If Coca-Cola does not bear the Halal
stamp on it, the products could be easily banned from all Muslim countries (Bergeaud-
blackler, 2016). It is obvious that the political and legal forces affect the place.

Economic forces

In the era of the global economic crisis and rising inflation, production costs are going up
(Cooley, Hansen, 1989). Coca-Cola has to deal with the given problem either by increasing
its prices or by maintaining them, with a less favorable profit. This creates a crucial dilemma
for the company because consumers do not meet the need for survival but the desire. For
instance, a bottle of Coca-Cola 1,5lt in 2002 was costing 0.99€ while today, after 11 years of
increased inflation, the identical bottle costs almost the double price 1.80€. It is true that
economic forces promptly affect the price.

Social forces

In my perspective, social and cultural forces are the most important because they relate to the
behavior of consumers that are differentiated between countries, cultures, religious beliefs
and the individual way of life. In particular, Coca-Cola has to ensure a level of adaptation that
is suitable for different markets and preferences in order to be able to properly portray its
products the right time and gain consumers’ interest. One example is the Muslims' fast, called
Ramadan, where for 30 days Muslims must be moderately nourished based on their religion
and consume strictly only water. Thus, the company this time of period cannot carry out any
promotional action of its products because it will seem to be against the habits of a religion
and spoil its brand. Another example is the research that Coca-Cola strengthens obesity
(Bukowiecki, et al 1983). The given view has polarized advocates of healthy lifestyle, which
destroy company’s reputation and campaigns. Thus, Coca Cola’s promotion is inseparably
linked to social and cultural forces.

Technological forces

Coca Cola looks very carefully at customers' feedback and invests in their needs for many
years, giving the company a human-centric character. With technology facilitation, Coca-
Cola creates unique collectible bottles in various shapes as well as sizes and provides them to
consumers' through digital events. At the same time, the company creates an online store
through which it sells its products at all points of the planet where the Internet can reach.
Finally yet important, Coca-Cola enters the music industry in collaboration with Spotify,
providing its customers with music on demand and the ability to connect with those who love
the same type of music around the world (Coca Cola, 2013). Consequently, each digital
consumer automatically connects CocaCola with technology and the music industry and the
product launches concerning recognition and sales. Technological developments affect the
product with regard to its form, shape and size not to mention brand awareness.

Micro environment Company

Coca-Cola is a company with rich and long history. The first drink was created in a pharmacy
and the company has now almost reached to monopolize the beverage industry. With its rich
history and strong working ethic, Coca-Cola has become one of the most beloved and
recognizable companies in the world. In this way, Coca-Cola affects the promotion.

Suppliers

It is for granted that suppliers directly affect the product in all its aspects, from the
manufacturing to the packaging. They play crucial role concerning the product because they
provide resources and raw material to the company. According to Coca-Cola (2013), a
“sound, stable and ethical supply" are vital to continued success.

Competitors

As in every industry of the economy, there is also competition in beverage. Competitors

affect several areas of the business, such as the quality, the promotion, but above all the price.
Determining the price of the product based on competition combined with its unique quality
make Coca-Cola affordable, indelible in mind, and sometimes essential for every consumer.
Customers

Coca Cola has a huge distribution network to satisfy its customers. The company, in order to
optimize its distribution network, acknowledges as targeted customers international retail
chains and restaurants. At the same time, the company provides them a training program for
more efficient and profitable entrepreneurship that is called “Customer Development and
Training”. For Coca-Cola (2013), customers affect the place of 4Ps.

Conclusion

To sum up, it would be wise for business world to consider these factors when addressing this
issue. In my opinion, the internal and external environments are extremely significant to be
measured concerning the performance of the company not to mention the efficiency. Coca-
Cola has been able to dominate the beverage industry because the company strictly applies all
the essential analyses. In my personal opinion, for any business to be successful, must be able
to gain consumers’ loyalty and defeat competitors. To achieve this, each enterprise must
follow a sequence of steps. First, the company has to calibrate the macro environment, then
the microenvironment, after the SWOT analysis as well as the 4Ps and ultimately apply
innovative and effective marketing and management strategies that will grow profit and brand
reputation. Nevertheless, the marketing strategy of enterprises will continue to be with us for
a long time because it has become an integral part of business world. I feel very strongly that
this topic will be discussed and researched further in order to help marketing plans be more
productive as well as innovative