CASE 1 : BUSINESS - Public or Profit?

Indian big business Iirms, such as Reliance, TISCO, L&T, Grasim, ITC etc., are admired Ior their
size and industrial muscle. In 1993, Reliance ranked second in the super 100 corporate bodies in
India. Production oI goods and services by such industrial giants has led to better jobs, which in turn
have raised standard oI living oI the people. Not only the business has raised the incomes but also,
while competing Ior proIits, it has contributed to the development oI industrial climate.
OI course, the large growth oI business in India has produced some undesirable side eIIects. For
example, social costs are imposed when wastes are dumped into the air and water; or when the earth
is deIaced by strip mining. In addition there is a tendency Ior power to become over centralized in
the hands oI giant corporations. Because oI the increasing number oI mergers and takeovers in the
past Iew years, moreover, some people Iear big business power and are skeptical and distrustIul oI
corporate India. These people Ieel that business is proIit-mad and will stop at nothing in its pursuit
oI money. They Ieel that business is not working Ior the public good; instead, business seeks only to
maximize proIits.
Is proIit maximization the serious problem that some think it to, be? Is there another side oI the
story?-
According to ProIessor Milton Friedman, "Business has one and only one social responsibility-to
make proIits (so long as it stays within legal and moral rules oI the Game established by society).
Few trends could so thoroughly undermine the very Ioundations oI our Iree society as acceptance by
corporate oIIicials oI a social responsibility other than to make as much money Ior their stockholders as
possible".'
Why does Friedman Ieel that the public good is served better iI a business Iocuses on proIit maximization
that iI business Iocuses instead on social responsibility?
In order to maximize proIits, business must eIIiciently meet the consumers' demand Ior goods and
services. In essence, it is thus the consumers, not the captains oI industry who dictate the actions oI
business. Consumers are a signal to business to produce what society desires. In meeting this demand,
proIits supply the motive Ior business to innovate and to strive Ior more eIIicient means oI production.
The proIit motive moves society's scarce resources to the areas oI highest demand, thereby maximizing
utility and beneIit Ior all.
On the other hand, iI business is Iorced to change and pursue social responsibility instead oI proIit, then
the consumer loses his vote on the actions oI business. Should business determine, Ior example, whether
society needs a new hydroelectric project or more Iunds Ior senior citizens' health care? There are some
who say yes. On the other hand, in a democracy, isn't it the job oI elected government representatives to
decide what society needs ? Leaving decisions about the public good to business would surely increase
the very corporate power that some people Iear. Isn`t` it better Ior Indian business to be controlled by
market Iorces and to leave decisions concerning social responsibility to a more democratic process?
Questions: 1.Does business perIorm a public service when it attempts to maximize proIits, or should its
main goal instead be some Iorm oI social responsibility?
2lrledman SLress proflL maxlmlzaLlon so long as lL (buslness) sLays wlLhln legal and moral rules of Lhe
game esLabllshed by socleLy whaL are Lhe rules of Lhe game? where do you draw Lhe llne for example
when a buslness polluLes Lhe envlronmenL whlle maxlmlzlng proflLs
3 WhaL ls Lhe governmenLs role ln buslness? Could governmenL Lhrough Lhe sue of Lax lncenLlves and
oLher measures make proflL maxlmlzaLlon and Lhe maxlmlzaLlon of soclal good one and Lhe same?

CASL 2 Dabbawa||ahs of Mumba|

A dabbawallah ls a courler who plcks up a lunch full of dabba from a cllenL's home ln Lhe mornlng and
reLrleves Lhe empLy dabba afLer Lhe consumpLlon of lunch and reLurns lL Lo Lhe cllenL's home ln Lhe
evenlng 1hls pracLlce of dabbawallah's began ln Mumbal ln 1890 Worklng lndependenLly and ln small
groups for decades Lhe dabbawallah's had unlLed ln 1934 Lo puL LogeLher a rudlmenLary cooperaLlve
1hls was offlclally reglsLered ln 1936 as nuLan Mumbal 1lffln 8ox Suppllers CharlLy 1rusL

1hls servlce of supply of Llffln box was necesslLaLed by Lhe advanLages of healLhy and lnexpenslve food
1he number of dabbawallah's and Lhe number of cusLomers lncreased from 3142 ln 1900 Lo 1 73040 ln
2003 1ogeLher Lhey dellver 1 73000 lunches dally by coverlng approxlmaLely 73 km Lhrough suburban
rallway neLwork of Mumbal 1hls buslness generaLed abouL 8s380 mllllon per annum uesplLe Lhe sheer
number of dally dellverles Lhe fallure raLe reporLed by Lhe medla numbered on ln Lwo monLhs or one
every 13 mllllon dellverles

1helr dlsLrlbuLlon neLwork was characLerlzed by 'hub and spokes' sysLem under Lhls dabbas were
handed off beLween Lhem aL varlous polnLs and sorLlng was done aL speclflc rallway locaLlons for where
lndlvldual spokes branched ouL for dlsLrlbuLlon 1he success of Lhe dellvery process was due Lo Lhelr
codlng sysLem llve codes are palnLed on Lhe Lop of each dabba ln dlsLlncL group colors 1hey sLand for
resldenLlal locaLlon for usage of dabbawallah's aL desLlnaLlon locaLlon for dabbawallah's aL Lhe
resldenLlal and desLlnaLlon rallway sLaLlons

Srl 8agunaLh ad[e resldenL of nuLan Mumbal 1lffln 8ox Suppllers CharlLy 1rusL says '1he dabbawallah's
ls a Mumbal lnsLlLuLlon LhaL has survlved for over a cenLury now lL wlll survlve for Lhe nexL cenLury and
beyond We wlll conLlnue Lo be Lhere because no one can provlde Lhe klnd of error free servlce LhaL
we provlde'


CuesLlons
1 Accordlng Lo you whaL was responslble for Lhelr successful servlce?
2 Whlch concepLs of servlces markeLlng are relevanL for Lhls case and why?
3 Can you ldenLlfy any such servlce ln whlch servlce ls dellvered by common people wlLhouL any
background of concepLs




CASL3 Coke vs eps|
1he slLuaLlon ls boLh Coke and epsl are Lrylng Lo galn markeL share ln Lhls beverage markeL
whlch ls valued aL over $30 bllllon a year (98) !usL how ls Lhls done ln such a compeLlLlve
markeL ls Lhe underlylng lssue 1he facLs are LhaL each company ls comlng up wlLh new
producLs and ldeas ln order Lo lncrease Lhelr markeL share 1he creaLlvlLy and effecLlveness of
each companys markeLlng sLraLegy wlll ulLlmaLely deLermlne Lhe wlnner wlLh respecL Lo sales
proflLs and cusLomer loyalLy (98) noL only are Lhese Lwo companles consLrucLlng new ways Lo
sell Coke and epsl buL Lhey are also Lhlnklng of ways ln whlch Lo lncrease markeL share ln
oLher beverage caLegorles AlLhough Lhe goal of boLh companles are exacLly Lhe same Lhe Lwo
companles rely on somewhaL dlfferenL markeLlng sLraLegles (98) epsl has always Laken Lhe
lead ln developlng new producLs buL Coke soon learned Lhelr lesson and sLarLed Lo do Lhe
same Coke hlred markeLlng execuLlves wlLh good Lrack records (98) Coke also lmplemenLed
cross Lralnlng of managers so lL would be more dlfflculL for cllques Lo form wlLhln Lhe company
(98) Cn Lhe oLher hand epsl has always Laken more rlsks acLed rapldly and was always
developlng new adverLlslng ldeas 8oLh companles have also relled on flndlng new markeLs
especlally ln forelgn counLrles ln Lhe forelgn markeLs Coke has been more successful Lhan
epsl lor example ln LasLern Lurope epsl has relled on a barLer sysLem LhaL proved Lo fall
Powever ln cerLaln counLrles LhaL allow dlrecL comparlson epsl has beaL Coke ln forelgn
markeLs boLh companles have followed Lhe markeLlng concepL by offerlng producLs LhaL meeL
consumer needs (99) ln order Lo galn markeL share lor lnsLance ln cerLaln counLrles
consumers wanLed a sofL drlnk LhaL was low ln sugar yeL dld noL have a dleL LasLe or lmage
(99) epsl responded by developlng epsl Max 1hese companles ln Lrylng Lo capLure markeL
share have relled on Lhe developmenL of new producLs ln some cases Lhe producLs have been
successful Powever aL oLher Llmes Lhe new producLs have falled lor Coke changlng Lhelr
orlglnal formula and lnLroduclng lL as new Coke" was a ma[or fallure 1he new formula hurL
Coke as consumers requesLed Classlc Cokes' reLurn epsl has also had lLs share of fallures
Some of Lhelr fallures lncluded epsl LlghL epsl lree epsl AM and CrysLal epsl Cne
soluLlon Lo lncreaslng markeL share ls Lo carefully follow consumer wanLs ln each counLry 1he
nexL sLep ls Lo Lake fasL acLlon Lo develop a producL LhaL meeLs Lhe requlremenLs for LhaL
parLlcular reglon 8oLh companles cannoL [usL sell one producL lf Lhey do Lhey wlll noL succeed
1hey have Lo always be creaLlng and updaLlng Lhelr markeLlng plans and producLs 1he
companles musL be wllllng Lo accommodaLe Lhelr LargeL markeLs" Calnlng markeL share
occurs when a company sLays onesLep ahead of Lhe compeLlLlon by knowlng whaL Lhe
consumer wanLs

C CrlLlcally evaluaLe Lhe case and analyze Lhe markeLlng lmpllcaLlons