Industrial Relations & Labor Laws (EDL 309) -Semester III

Industrial Relations & Labor Laws (EDL 309) -Semester III

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Module I : Industrial Relations

Case study

A union or a similar collective group of employees is usually seen by its members as a way for employees to negotiate and communicate with their employers or management on a more level playing field than if each employee were to approach management individually. In line with this goal, the term “collective bargaining” refers to the actual process in which workers gather, and together bargain or make a deal with management on the key terms and conditions of employment.

Collective bargaining generally is aimed at making a deal or bargain with management that addresses a wide range of concerns in a particular workplace. This type of deal is a labor contract and is often referred to as a “collective bargaining agreement” or CBA.

Examples of some of the many topics covered in CBAs between management and employees include employee wages, hours, benefits, time off, raises, promotions, and disciplinary issues. However, CBAs also cover a number of additional topics ranging from worker safety to insurance, and can vary depending on the industry or workplace.

CBAs and the Law

Many of the legal issues involving unions are covered by the federal law known as the National Labor Relations Act (NLRA). The National Labor Relations Board (NLRB) is the federal agency charged with dealing with labor disputes when they become legal battles, and is also charged with taking enforcement action when violations occur.

In general, under the NLRA, employees have the right to join unions and collectively bargain. Notably, however, there are some types of employers and industries that are not covered by the Act. Some examples of these excluded industries include government workers, agricultural laborers, and independent contractors. For those employers and industries to which it applies, however, the NLRA prohibits employers from interfering with or preventing employees from organizing or engaging in activities that relate to organizing or forming a union.

In reality, the language of the law protects a wide range of employee activities and efforts to get together to improve their working conditions or their terms of employment. In other words, the protections afforded by the law are not limited to situations involving unions or face-to-face bargaining.

The “Good Faith” Collective Bargaining Requirement

Both sides of the employment relationship are required to undertake what is known as “good faith” bargaining. This term by its nature is pretty unclear, as evidenced by the large number of cases and disputes that end up with the NLRB involving whether one side or the other bargained in good faith. However, some common threads and generalities can be made about what are definitely not examples of good faith bargaining:

• Refusing to meet and bargain with the other party;

• Changing the terms of a bargain (or existing working conditions) unilaterally;

• Engaging in “sham” negotiations with the other side.

These are just some examples of conduct that would indicate a lack of good faith by one of the parties.

Unions’ Duty of Fair Representation

Employees should also be aware that their union has the responsibility to represent its members in a fair and equal manner. This doesn’t mean that the union has to do everything that individual members desire, nor act on their every wish. What it does mean, however, is that each member must be treated equally and in a fair manner.

If you feel your rights as a member have not been upheld equally or fairly by the union, there are typically grievance procedures that should be the first avenue to seek relief. If those procedures do not exist or have been exhausted, it may be time to consult with a local attorney specializing in employment law who will be able to advise on the matter, and if necessary, assist with bringing an action with the NLRB or the appropriate court.

No Deal! When Collective Bargaining Falls Short

As noted above, it is not uncommon for disputes to arise before, during, and after the negotiation process. When this occurs the dispute typically ends up in the hands of the NLRB which handles many labors disputes each year. The NLRB investigates claims and makes a determination as to whether further proceedings are warranted.

Need Legal Help with a Labor Issue? Find an Attorney Near You

Labor relations are complicated and there are often disputes between employers and their workers that require legal action. Unions typically offer legal representation to their members, but there may be instances where you’ll need to go it alone. Check out FindLaw’s directory of labor law attorneys to find one near you.

Article 43A of the Constitution of India deals with ‘Participation of workers in management of industries’ and falls under Part IV – Directive Principles of State Policy.

The State shall take steps, by suitable legislation or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organisations engaged in any industry.

This article was inserted by the Constitution (Forty-second Amendment) Act, 1976, s. 9 (w.e.f. 3-1-1977).

The High-powered Expert Committee on Companies and MRTP Acts headed by Justice Rajinder Sachar of the Delhi High Court has also made certain recommendations about provisions to be made for workers’ participation in management of companies. (Vide paragraphs 18.127 to 18.143 of the Report). Parliament may take early steps to implement some of the recommendations made by the said Committee. It is significant that there is no recommendation made even in this Report about the right of trade unions to contest winding-up petitions. If the workers are issued shares then they would no doubt be entitled to participate in the winding-up proceedings as contributories. This may be one way of solving the problem by legislative means.

A process by which subordinate employees, either individually or collectively, become involved in one or more aspects of organizational decision making within the enterprises in which they work.

Workers’ participation in management is an essential ingredient of Industrial democracy. The concept of workers’ participation in management is based on Human Relations approach to Management which brought about a new set of values to labour and management. Traditionally the concept of Workers’ Participation in Management (WPM) refers to participation of non-managerial employees in the decision-making process of the organization. Workers’ participation is also known as ‘labour participation’ or ‘employee participation’ in management. In Germany it is known as co-determination while in Yugoslavia it is known as self-management. The International Labour Organization has been encouraging member nations to promote the scheme of Workers’ Participation in Management.

Workers’ participation in management implies mental and emotional involvement of workers in the management of Enterprise. It is considered as a mechanism where workers have a say in the decision-

The philosophy underlying workers’ participation stresses:

1. democratic participation in decision-making;

2. maximum employer-employee collaboration;

3. minimum state intervention;

4. realisation of a greater measure of social justice;

5. greater industrial efficiency; and

6. higher level of organisational health and effectiveness.

It has been varyingly understood and practised as a system of joint consultation in industry; as a form of labour management cooperation; as a recognition of the principle of co-partnership, and as an instrument of industrial democracy. Consequently, participation has assumed different forms, varying from mere voluntary sharing of information by management with the workers to formal participation by the latter in actual decision-making process of management.

The concept of WPM is a broad and complex one. Depending on the socio-political environment and cultural conditions, the scope and contents of participation change.

International Institute of Labour Studies:

WPM is the participation resulting from the practices which increase the scope for employees’ share of influence in decision-making at different tiers of organizational hierarchy with concomitant (related) assumption of responsibility.

ILO:

Workers’ participation, may broadly be taken to cover all terms of association of workers and their representatives with the decision-making process, ranging from exchange of information, consultations, decisions and negotiations, to more institutionalized forms such as the presence of workers’ member on management or supervisory boards or even management by workers themselves (as practiced in Yugoslavia).

The main implications of workers’ participation in management as summarized by ILO:

• Workers have ideas which can be useful;

• Workers may work more intelligently if they are informed about the reasons for and then intention of decisions that are taken in a participative atmosphere

• According to Keith Davis, Participation refers to the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share the responsibility of achievement.

• According to Walpole, Participation in Management gives the worker a sense of importance, pride and accomplishment; it gives him the freedom of opportunity for self-expression; a feeling of belongingness with the place of work and a sense of workmanship and creativity.

• Clegg says, “It implies a situation where workers representatives are, to some extent, involved in the process of management decision making, but where the ultimate power is in the hands of the management”.

• According to Dr. Davis, “it is a mental and emotional involvement of a person in a group situation which encourages him to contribute to goals and share responsibilities in them”.

Objectives of Workers Participation in Management

The objectives of workers’ participation in management are as follows:

• To raise level of motivation of workers by closer involvement.

• To provide opportunity for expression and to provide a sense of importance to workers.

• To develop ties of understanding leading to better effort and harmony.

• To act on a device to counter-balance powers of managers.

• To act on a panacea for solving industrial relation problems.

Gujarat High Court

Gujarat Kamdar Sahakari Mandal … vs Ramkrishna Mills Ltd. on 7 April, 1994

The provisions of article 43A intended to herald industrial democracy and in the words of Krishna Iyer J., it marks the “end of industrial bonded labour”. The Constitutional mandate is, therefore, clear that, the management of the enterprises should not be left entirely in the hands of suppliers of capital, but the workers should also be entitled to participate in it because in a socialist pattern of society the enterprise, which is the centre of economic area, should be controlled not only by suppliers of capital but also by labour, The workers, therefore, have a special place in a socialist pattern of society. They are not mere vendors of toil. They are not a marketable commodity to be purchased by the owners of capital. They are producers of wealth as much as capital. They supply labour without which the capital would be impeded and they are at the least equal partners with capital in the enterprise. It is in the light of the aforesaid Constitutional philosophy, that the scheme which is put forward by the society of workers is required to be approached.

Specific of Purpose of Workers’ Participation

1. It helps in managing resistance to change which is inevitable. For the growth and development of industry, changes have to be welcomed, otherwise the organization will stagnate and be left behind. If the need for change is jointly felt by all partners of production its acceptance can be high. Workers’ participation in change strategy can facilitate acceptable solutions with a view to secure effective and smooth implementations of decisions.

2. Workers’ participation can encourage communication at all levels. Since both partners of production are involved in the decision-making there will be fewer changes of distortion and/ or failure in communicating the decision.

3. Joint decision- making ensures the there will be minimum industrial conflict an economic growth can be free form distracting strife.

4. Workers’ participation at the plant level can be seen as the first step to establishing democratic values in society at large.

Elements of Participation

The term “participation” has different meanings for different purposes in different situations. McGregor is of the view that participation is one of the most misunderstood idea that has emerged from the field of human relations. Keith Davis has defined the term “participation” as the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share responsibilities in them. This definition envisages three important elements in participation. Firstly, it means mental and emotional involvement rather than mere physical activity; secondly, participation must motivate a person to contribute to a specific situation to invest his own resources, such as initiative, knowledge, creativity and ingenuity in the objectives of the organisation; and thirdly, it encourages people to share responsibility for a decision or activity. Sharing of responsibility commits people to ensure the success of the decision or activity.

Forms of Participation

Different forms of participation are discussed below:

Collective Bargaining: Collective bargaining results in collective agreements which lay down certain rules and conditions of service in an establishment. Such agreements are normally binding on the parties. Theoretically, collective bargaining is based on the principle of balance of power, but, in actual practice, each party tries to outbid the other and get maximum advantage by using, if necessary, threats and counterthreats like; strikes, lockouts and other direct actions. Joint consultation, on the other hand, is a particular technique which is intended to achieve a greater degree of harmony and cooperation by emphasising matters of common interest. Workers prefer to use the instrument of collective bargaining rather than ask for a share in management. Workers’ participation in the U.S.A has been ensured almost exclusively by means of collective agreements and their application and interpretation rather than by way of labour representation in management.

Works Councils: These are exclusive bodies of employees, assigned with different functions in the management of an enterprise. In West Germany, the works councils have various decision-making functions. In some countries, their role is limited only to receiving information about the enterprise. In Yugoslavia, these councils have wider decision-making powers in an enterprise like; appointment, promotion, salary fixation and also major investment decisions.

Joint Management Councils and Committees: Mainly these bodies are consultative and advisory, with decision-making being left to the top management. This system of participation is prevalent in many countries, including Britain and India. As they are consultative and advisory, neither the managements nor the workers take them seriously.

Board Representation: The role of a worker representative in the board of directors is essentially one of negotiating the worker’s interest with the other members of the board. At times, this may result in tension and friction inside the board room. The effectiveness of workers’ representative at the board depend upon his ability to participate in decision-making, his knowledge of the company affairs, his educational background, his level of understanding and also on the number of worker representatives in the Board.

Workers Ownership of Enterprise: Social self-management in Yugoslavia is an example of complete control of management by workers through an elected board and workers council. Even in such a system, there exist two distinct managerial and operative functions with different sets of persons to perform them. Though workers have the option to influence all the decisions taken at the top level, in actual practice, the board and the top management team assume a fairly independent role in taking major policy decisions for the enterprises, especially in economic matters.

Levels of Participation

Workers’ participation is possible at all levels of management; the only difference is that of degree and nature of application. For instance, it may be vigorous at lower level and faint at top level. Broadly speaking there is following five levels of participation:

1. Information participation: It ensures that employees are able to receive information and express their views pertaining to the matters of general economic importance.

2. Consultative participation: Here works are consulted on the matters of employee welfare such as work, safety and health. However, final decision always rests at the option of management and employees’ views are only of advisory nature.

3. Associative participation: It is extension of consultative participation as management here is under moral obligation to accept and implement the unanimous decisions of employees.

4. Administrative participation: It ensure greater share of works in discharge of managerial functions. Here, decision already taken by the management come to employees, preferably with alternatives for administration and employees have to select the best from those for implementation.

5. Decisive participation: Highest level of participation where decisions are jointly taken on the matters relation to production, welfare etc. is called decisive participation.

Pre-requisites for Effetive Participation

The pre-requisites for the success of any scheme of participative management are the following:

1. Firstly, there should be a strong, democratic and representative unionism for the success of participative management.

2. Secondly, there should be mutually-agreed and clearly-formulated objectives for participation to succeed.

3. Thirdly, there should be a feeling of participation at all levels.

4. Fourthly, there should be effective consultation of the workers by the management.

5. Fifthly, both the management and the workers must have full faith in the soundness of the philosophy underlying the concept of labour participation.

6. Sixthly, till the participative structure is fully accepted by the parties, legislative support is necessary to ensure that rights of each other are recognised and protected.

7. Seventhly, education and training make a significant contribution to the purposeful working of participative management.

8. Lastly, forums of participation, areas of participation and guidelines for implementation of decisions should be specific and there should be prompt follow-up action and feedback.

Question 1

“collective bargaining” refers to the actual process in which workers gather, and together bargain or make a deal with management on the key terms and conditions of employment.This statement is ___?

Select one:

a. True

b. Partially True

c. Wrong

d. Partially Wrong

Question 2

According to this case study , If you feel your rights as a member have not been upheld equally or fairly by the union, there are _____  that should be the first avenue to seek relief.

Select one:

a. Complaint Boxes

b. grievance procedures

c. Counsellers

d. None of the options

Question 3

As per this case study , Collective Bargaining Agreement (CBA) between management and employees include__?

Select one:

a. employee wages, hours

b. benefits, time off, raises

c. promotions, and disciplinary issues

d. All of the options

Question 4

as per this case study , the correct form of NLRB is ?

Select one:

a. National Labor Regulations Board

b. Nationalised Labor Relations Board

c. National Labor Relations Board

d. National Legal Relations Board

Question 5

As per this Case Study , which of the following can be examples of conduct that would indicate a lack of good faith by one of the parties.

Select one:

a. Refusing to meet and bargain with the other party

b. Changing the terms of a bargain (or existing working conditions) unilaterally

c. Engaging in “sham” negotiations with the other side

d. All of the options

Question 6

A union of employees is usually seen by its members as a way for employees to_____  on a more level playing field than if each employee were to approach management individually.

Select one:

a. negotiate with employers

b. communicate with their employers or management

c. Both A & B

d. None of these

Question 7

Collective bargaining is aimed at making a deal or bargain with management that addresses a wide range of concerns in a particular workplace. This type of deal is a labor contract and is often referred to as ____?

Select one:

a. “Cooperative bargaining agreement” or CBA.

b. “collective bargaining agreement” or CBA.

c. “Cumulative bargaining agreement” or CBA.

d. None of these options

Question 8

Objectives of Workers Participation in Management is/are?

Select one:

a. To provide opportunity for expression and to provide a sense of importance to workers

b. To develop ties of understanding leading to better effort and harmony.

c. To raise level of motivation of workers by closer involvement

d. All of the options

Question 9

The philosophy underlying workers’ participation stresses on which of the following ?

Select one:

a. higher level of organisational health and effectiveness

b. democratic participation in decision-making

c. maximum employer-employee collaboration

d. ALL of the options

Question 10

_________of the Constitution of India deals with ‘Participation of workers in management of industries’

Select one:

a. Article 43A

b. Article 44

c. Article 20

d. Article 26

10 on 10

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MODULE II : TRADE UNION MOVEMENT IN INDIA

Case study

The Directive Principles of State Policy contained in Part IV, Articles 36-51 of the Indian constitution constitute the most interesting and enchanting part of the constitution.

The Directive Principles may be said to contain the philosophy of the constitution. The idea of directives being included in the constitution was borrowed from the constitution of Ireland. As the very term “Directives” indicate, the Directive principles are broad directives given to the state in accordance with which the legislative and executive powers of the state are to be exercised.

As Nehru observed, the governments will ignore the directives “Only at their own peril.” As India seeks to secure an egalitarian society, the founding fathers were not satisfied with only political justice. They sought to combine political justice with economic and social justice.

The Directive Principles may be classified into 3 broad categories—

1. Socialistic

2. Gandhian and

3. Liberal-intellectual.

(1) Socialistic Directives

Principal among this category of directives are (a) securing welfare of the people (Art. 38) (b) securing proper distribution of material resources of the community as to best sub serve the common-good, equal pay for equal work, protection of childhood and youth against exploitation. etc. (Art.39), (c) curing right to work, education etc. Art. (41), (d) securing just and humane conditions of work and maternity relief (Art. 42) etc.

(2) Gandhian Directives

Such directives are spread over several Arts. Principal among such directives are (a) to organize village panchayats (Art. 40), (b) to secure living wage, decent standard of life, and to promote cottage industries (Art.43), (c) to provide free and compulsory education to all children up to 14 years of age (Art. 45), (d) to promote economic and educational interests of the weaker sections of the people, particularly, the scheduled castes and scheduled tribes, (e) to enforce prohibition of intoxicating drinks and cow-slaughter and to organize agriculture and animal husbandry on scientific lines (Arts. 46-48).

(3) Liberal intellectual directives

Principal among such directives are (a) to secure uniform civil code throughout the country (Art.44), (b) to separate the judiciary from the executive (Art.50), (c) to protect monuments of historic and national importance and (d) to promote international peace and security.

On the whole, Part IV contains a formidable list of directives given to the executive and the legislatures to follow in issuing orders or making laws. These directives make India a “plastic state.” The directives may be used by any party with any ideology. In fact, the Directive Principles are codified versions of democratic socialist order as conceived by Nehru with an admixture of Gandhian thought.

Part IV of the constitution does not form an operative part of the constitution. The directives are non-justiciable in character. The courts cannot compel the governments to enforce the directives.

But if there is no judicial sanction behind the directives, there are certainly political sanctions. Art. 37 make the directives, “fundamental in the governance of the country and in… making laws.” Hence the government cannot totally ignore them, for fear of adverse popular reaction. The opposition inevitably takes the government to task whenever the directives are blatantly ignored, thus scoring a political point.

The non-justiciability of part IV has exposed the directives to trenchant criticism. Jennings calls them “pious aspirations,” and “Fabian socialism without socialism.” Where characterizes them as “paragraphs of generalities.”

Yet many scholars appreciate the value of the directives. Sir B. N. Rau regards them as “moral precepts” with an educative value. Ambedkar considered them as powerful instruments for the transformation of India from a political democracy into an economic democracy. The directive principles according to Granville Austin, are “positive obligations”… to find a piddle way between individual liberty and Public good. “The directives constitute a sort of “instrument of instruction” to all governments in the great task of transforming a laissez-fire society into a welfare state, a socialistic pattern of society and eventually into a socialist society.

Parts III and IV, that is, chapters on Fundamental Rights and Directive Principles, together constitute the “conscience” of the Indian constitution. But, the differences between Fundamental Rights and Directive Principles of State policy are significant. The differences are discussed below :

• Firstly, the fundamental rights constitute a set of negative injunctions. The state is restrained from doing something’s. The directives on the other hand are a set of positive directions. The state is urged to do something to transform India into a social and economic democracy. As Gladhill observes, Fundamental Rights are injunctions to prohibit the government from doing certain things, the Directive principles are affirmative instructions to the government to do certain things.

• Secondly, the Directives are non-justiciable. Courts do not enforce them. A directive may be made enforceable by the courts only when there is a lam on it. Fundamental rights, on the other hand are justiciable. They impose legal obligations on the state as well as on individuals. Courts enforce them. If a law violates a fundamental right, the law in question will be declared void. But no law will be declared unconstitutional on the ground that it violates a directive principle against violation of a fundamental right, constitutional remedy under Art. 32 are available which not the case is when a directive is violated either by the state or, by individual. For this reason Prof K. T. Shah deprecates the Directive Principles as “Pious wishes” or a mere window dressing for the social revolution of the country.

Whenever conflicts arise between fundamental rights and directive principles, fundamental rights prevail over the directive principles because, in terms of Arts. 32 and 226, fundamental rights are enforceable by the courts. If a law is in conflict with a fundamental right, it is declared void by the Supreme Court. But no law can be declared void on the ground that it is violative of a directive principle. In 1951, in Champakam Dorairajan vs. the state of Madras, the Supreme Court held “The chapter on Fundamental Rights is sacrosanct and not liable to be abridged by any legislative or executive act. The Directive Principles of State Policy have to conform and are subsidiary to the chapter on Fundamental Rights.”

25th constitution amendment Act in 1971 by Article 31(c) provided that laws enacted to implement directives in Article 39 (b) and (c) shall not be declared void on ground of contravention of fundamental rights guaranteed by Articles 14 and 19. In 1976, during emergency, the 42nd amendment, sought to widen the scope of Article 31 (c), to place all laws passed for the implementation of any or all directive principles beyond judicial review. But the Supreme Court struck down this attempt at total exclusion of all laws to implement directives from judicial review on the ground that this will offend the ‘basic structure’ of the constitution. Thus Article, 31(c) is restored to pre-1976 position. The position today is that, in general, the fundamental rights enjoy priority over the directives. But the laws passed to implement Article 39 (b) and (c) cannot be declared void on ground of violation of fundamental rights guaranteed by Articles 14 and 19.

Importance of Constitutional Remedies

Mere codification of fundamental rights in the constitution is not enough unless remedies for the enforcement of those rights conferred by the constitution are also guaranteed by the constitution itself. In other words, rights to constitutional remedies are also important.

Article 32: This article provides for important remedies for enforcement of fundamental rights. This article confers the right to move either to the Supreme Court or under Article 226 to the High Court for any infringement of any of the fundamental rights.

As remedial measure the Supreme Court shall have the power under Article 32 to issue directions or Writs in the nature of Habeas Corpus, Mandamas, Prohibition, Quo-warranto and Certiorari, whichever may be appropriate, for the enforcement of any of the rights stipulated in the chapter on fundamental rights.

Supreme Court has been empowered to issue the Writ known as Habeas Corpus, demanding the presence of the imprisoned person before the court to obtain knowledge of the reason why he has been imprisoned and to set him free if there is no lawful justification for his imprisonment.

This Supreme Court and the High courts can also issue the Writ of Mandamas, giving directives to an individual, or an institution, or a subordinate court or the government requiring fulfillment of its responsibilities.

The Writ of Prohibition is issued by the Supreme Court or High Court to a subordinate court forbidding to continue proceedings in excess of its jurisdiction or to usurp a jurisdiction with which it is not legally vested with.

The object of the writ of Certiorari is also to secure that the jurisdiction of subordinate court is exercised properly and it does not usurp its jurisdiction. While Prohibition is available at an earlier stage, Certiorari is available on similar grounds at a later stage.

By the Writ of Quo-warranto the Court enquires into the legality of the claim asserted to a public office and to take action if the claim is not found justified.

Varieties of rights come up for enforcement by the issue of Writs under Article 32:

1. Fundamental rights guaranteed by the constitution;

2. Constitutional rights not having the status of fundamental rights;

3. Statutory rights;

4. Rights which flow from subordinate legislations;

5. Rights based on case law;

6. Customary rights;

7. Contractual rights.

It may be pointed out here that no redress in possible for the violation of social and economic rights contained in the directive Principles, for, those rights are non-justiciable.

Question 1 : As remedial measure the Supreme Court shall have the power under Article 32 to issue which of the following directions or Writs ?

Select one:

a. Habeas Corpus

b. Mandamas

c. Quo-warranto and Certiorari

d. All of the options

Question 2

Directive Principles of state Policy are contained in ——?

Select one:

a. Part IV, Articles 36-51 of the Indian constitution

b. Part II, Articles 6-15 of the Indian constitution

c. Part III, Articles 36-51 of the Indian constitution

d. Part V, Articles 20-40 of the Indian constitution

Question 3

Fundamental Rights & Directive Principles of State Policy are contained in which of the following Chapters of Indian Constitution?

Select one:

a. III & IV

b. IV & V

c. IV & VIII

d. X & III

Question 4

Fundamental Rights are injunctions to prohibit the government from doing certain things, the Directive principles are affirmative instructions to the government to do certain things.This Statement is ______?

Select one:

a. False

b. True

c. Partially True

d. Partially wrong

Question 5

which of the following are correct in the context of Quo-Warranto?

Select one:

a. The Court enquires into the legality of the claim asserted to a public office and to take action if the claim is not found justified.

b. To secure that the jurisdiction of subordinate court is exercised properly and it does not usurp its jurisdiction.

c. Both A & B

d. None of the options

Question 6

Which of the following are true in the context of The Writ of Prohibition ?

Select one:

a. the Court enquires into the legality of the claim asserted to a public office and to take action if the claim is not found justified.

b. Court demanding the presence of the imprisoned person before the court to obtain knowledge of the reason why he has been imprisoned and to set him free if there is no lawful justification for his imprisonment.

c. issued by the Supreme Court or High Court to a subordinate court forbidding to continue proceedings in excess of its jurisdiction or to usurp a jurisdiction with which it is not legally vested with.

d. Both A & B

Question 7

Which of the following are Varieties of rights come up for enforcement by the issue of Writs under Article 32 ?

Select one:

a. “Rights which flow from subordinate legislations “

b. Rights based on case law

c. Customary rights

d. All of the options

Question 8

Which of the following options CANNOT be categorised as Directive Principles ?

Select one:

a. Socialistic

b. Politicalistic

c. Gandhian

d. Liberal Intellectual

Question 9

Which of the following statements are true in the context of fundamental rights ?

Select one:

a. fundamental rights are Not enforceable by the courts.

b. fundamental rights are Partially enforceable by the courts.

c. fundamental rights are enforceable by the courts.

d. None of the options

Question 10

__________ in 1971 by Article 31(c) provided that laws enacted to implement directives in Article 39 (b) and (c) shall not be declared void on ground of contravention of fundamental rights guaranteed by Articles 14 and 19.

Select one:

a. 25th constitution amendment Act

b. 28th constitution amendment Act

c. 35th constitution amendment Act

d. 75th constitution amendment Act

10 on 10

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MODULE III: LABOUR MANAGEMENT CO-OPERATION

Case Study

Employers can take action, including dismissals, against employees who have been errant or recalcitrant. However, any action taken must follow the proper disciplinary procedure.

Progressive disciplinary action is a process whereby an employer takes disciplinary action against an employee in a progressive manner; that is, going from lesser to heavier intensity action.

A lesser form of disciplinary action may include counselling the employee and issuing warning letters. Heavier intensity action include the issuance of a showcause letter, suspending the employee, conducting domestic inquiry and finally dismissal.

There are various clauses in the Employment Act 1955 that pertains to taking disciplinary action in a progressive manner.

If an employer acts with due care in taking disciplinary action, the courts will not intervene. Following the process step by step will reflect fairness on the part of the employer and can minimise industrial court cases for unlawful dismissal.

From time to time, cases of misconduct and dismissal involving employees may arise, and it is crucial that employers know what steps to take under the regulation to avoid being challenged for wrongful dismissal or dismissal without just cause.

All misconducts and acts of indiscipline must be investigated to identify whether they are minor or major in nature. The handling of misconduct and some of the related clauses is regulated under Section 12, 13, 14 and 15 of the Employment Act 1955 and also in Section 20 of the Industrial Relations Act 1967.

A grievance is basically a complaint. In a workplace a grievance generally occurs as a result of treatment which is perceived to be unfair or harsh at the hands of a work colleague. Typical situations which might result in a grievance include:

• Being passed over for promotion

• Being given unpopular tasks more often than other workers (picked on)

• Sexual harassment

• Favouritism in the sharing of overtime work hours

Employers need to implement measures to allow any such problems to be resolved effectively and fairly. One such measure is to implement ‘grievance procedures’, the purpose of which is to make it easier for employees to come forward if they feel they are a victim of unfair treatment.

If employees have difficulty dealing with significant workplace issues then the likely result is a reduction in workplace morale, increased staff turnover or even the risk of the employee taking legal action.

Grievance procedures will commonly contain:

1 A recommendation that the first action the aggrieved party take is to attempt to resolve the problem by talking directly with the person causing perceived to be perpetrating unfair or harsh treatment.

2 If any such attempt to find a resolution is unsuccessful, the method by which to bring the matter to the attention of appropriate authorities.

3 The amount of time which the complainant has to commence the grievance.

4 The process by which the grievance will be investigated, including the length of time within which matter must be actioned.

5 The confidentiality that must be observed

6 Guidance on mediation strategies

7 The process for appointing persons to arbitrate on the matter

Any act of misconduct can be further defined as below:

Minor misconduct

Minor misconduct can be described as any act of indiscipline or behaviour by an employee that causes minimal harm or damage, and is less detrimental to the reputation of the personnel and assets of the employer.

Some examples of minor misconducts are occasional tardiness, absence without leave, leaving the workplace before time, careless use of company tools and equipment, not storing tools in proper order, not wearing uniform, not using basic safety equipment, using company property for personal purposes and all other similar acts.

All complaints must be put in writing on a formal complaint form provided by a supervisor or the head of department. If the complaint is found not to be an offence after investigations, the supervisor or head of department should respond to the complainant that there is no case of misconduct.

However, if an offence is found, the employee should be counseled immediately and the counseling is to be recorded.

A warning letter should be issued if the same misconduct is repeated. The letter must state the misconduct, and warn that serious disciplinary action can and may be taken against the employee in question if the misconduct is not corrected. Should the employee again commit the same misconduct, a second warning letter should be issued.

It is permissible that the first warning letter be issued by the respective head of department so that the employee is aware that the person he to whom directly reports, such as supervisor or manager, can take disciplinary action against his subordinate.

Regardless, the human resource department should issue the second warning letter and handle any other action if the situation becomes serious and needs further attention, as it would be more familiar in handling the progressive disciplinary processes. If the misconduct persists, it may be considered a major misconduct.

Major misconduct

A major misconduct is any act of indiscipline or behaviour that causes substantial harm or damage, is detrimental to or affects the reputation of the personnel and assets of the employer. Similar to minor misconduct, all major misconduct must be investigated.

Some examples of major misconducts are: insubordination, disobedience, theft, fraud, dishonesty, gambling, assault, violence, abuse, habitual absences, habitual late attendance, bribery, negligence of duties, failure to observe safety rules, chronic inefficiency in performance, drug and alcohol abuse, engaging in private work during working hour, destroying company documents and all other similar act of misconduct.

Depending on the merits of the case, several measures can be taken – including suspension with half-pay and the issuance of a show-cause letter. A final warning letter can and may be issued if the response given by the employee is not acceptable.

If the employee does not satisfy to the conditions set down, the employer may proceed to hold a domestic inquiry and to take a more serious disciplinary action against the accused employee, including dismissal.

Alternatively, depending on the weight of the misconduct, the employer can and may consider not suspending the employee, issuing instead a final warning letter.

If suspension with half-pay is required, the next immediate step is the issuance of a showcause letter. In a typical situation, the employee should be given a reasonable period of time to respond (example, five working days to reply to a showcause letter), but may be extended if the magnitude of the event warrants a longer process, such as if witness accounts need to be compiled.

A final warning letter may be issued if the reply is not acceptable. In situations where said misconduct persists, the employer may proceed with a domestic inquiry.

Domestic inquiry

In a domestic inquiry process, a panel is set up to determine whether the accused is “guilty” or “innocent” of the charge. The panel consists of a chairman and two panel members, and their role is to listen to the proceedings of the domestic inquiry and come to a decision. After that management will make a decision on punishment.

There will be one person from the office that can act as the secretary to prepare a verbatim report (word by word) during the domestic inquiry process, while another person from human resource can be the presenting officer. At this stage, the case against the employee should be supported with proof of evidence, and it should be guided by the principles of natural justice and of good conscience in its deliberations.

If the accused is found guilty, the domestic inquiry panel may recommend the punishment to management.

On the other hand, the employee can and may provide an avenue for an appeal to the management committee to reconsider for other lesser punishment, if any.

If the employee is found not guilty, the domestic inquiry panel will inform the managing director of its decision.

Then, management will inform the accused employee of the decision, which is guided by the domestic inquiry panel, and pay back any amount due to the accused employee during his period of suspension with half-pay.

Question 1: “All complaints must be put in writing on a formal complaint form provided by a supervisor or the head of department. If the complaint is found not to be an offence after investigations, the supervisor or head of department should respond to the complainant that there is no case of misconduct”. This statement is ____?

Select one:

a. True

b. False

c. Partially True

d. Partially false

Question 2

As per this case Study – “A warning letter should be issued if the same misconduct is repeated. The letter must state the misconduct, and warn that serious disciplinary action can and may be taken against the employee in question if the misconduct is not corrected. Should the employee again commit the same misconduct, a second warning letter should be issued”. This Statement is ____?

Select one:

a. False

b. True

c. Partially True

d. Partially Wrong

Question 3

Depending upon the case, which of the disciplinary actions can be taken?

Select one:

a. issuance of a show-cause letter

b. suspension with half-pay

c. Both a & B

d. None of these

Question 4

Example of major misconducts  can be?

Select one:

a. dishonesty, gambling, assault

b. violence, abuse, habitual absences

c. disobedience, theft

d. All of the options

Question 5

Examples of minor misconducts can be?

Select one:

a. absence without leave

b. careless use of company tools

c. not wearing uniform

d. All of the options

Question 6

If employees have difficulty dealing with significant workplace issues then the likely result is ?

Select one:

a. reduction in workplace morale

b. increased staff turnover

c. Risk of the employee taking legal action

d. All of the options

Question 7

Minor misconduct can be described as any act of indiscipline or behaviour by an employee that causes _______to the reputation of the personnel and assets of the employer.

Select one:

a. maximum harm or damage, and is more detrimental

b. minimal harm or damage, and is less detrimental

c. average harm or damage, and is more detrimental

d. None of these

Question 8

Progressive disciplinary action is a process whereby an employer takes disciplinary action against an employee in a progressive manner, that means __?

Select one:

a. Going from lesser to heavier intensity action.

b. Going from heavier to lesser intensity action.

c. Both a & B

d. None of these

Question 9

Situations which might result in a grievance is/are?

Select one:

a. Being passed over for promotion

b. Favouritism in the sharing of overtime work hours

c. Being given unpopular tasks more often than other workers

d. All of the options

Question 10

The handling of misconduct and some of the related clauses is regulated under Section 12, 13, 14 and 15 of ____?

Select one:

a. Factories Act 1948

b. Contract Act 1970

c. the Employment Act 1955

d. Minimum Wages Act

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MODULE IV : MANAGING EMPLOYEE DISCIPLINE

Case Study

In yet another initiative towards improving the ease of doing business in the country, Bandaru Dattatreya-led labour ministry has notified draft rule that would allow principal employer or contractor hiring contract labour to file a unified annual return under the Contract Labour (Regulation & Abolition) Act, 1970.

Under the rules, to be called as the Contract Labour (Regulation & Abolition) Central (Amendment) Rules, 2017, every contractor or principal employer shall upload a unified annual return in the Form XXIV specified in these rules on or before the February 1 following the close of the year to which it relates. The draft rules expires on April 14, 2017 after which the said rules will apply from the date of notification in the absence of any objections raised.

Besides, the employer or the principal contractor qalso have the option of filing the return manually or online. The principal employer or contractor shall also file a Unified Annual Return to the concerned authorities manually. In case, if, an employer maintains registers or records or reports in electronic form, such registers or records or reports shall also be taken into consideration,” the draft notification of the labour ministry said.

Both the government and the corporate sector employ a large number of contract workers. Contract labour accounts for 55% of public sector jobs and 45% of those in the private sector. Only about 300,000 contract labourers out of an estimated 80 million are employed in the organised sector.

The Object of the Contract Labour Regulation and Abolition) Act, 1970 is to prevent exploitation of contract labour and also to introduce better conditions of work. A workman is deemed to be employed as Contract Labour when he is hired in connection with the work of an establishment by or through a Contractor. Contract workmen are indirect employees. Contract Labour differs from Direct Labour in terms of employment relationship with the establishment and method of wage payment. Contract Labour, by and large is not borne on pay roll nor is paid directly. The Contract Workmen are hired, supervised and remunerated by the Contractor, who in turn, is remunerated by the Establishment hiring the services of the Contractor.

Registration And Licensing

The Act applies to the Principal Employer of an Establishment and the Contractor where in 20 or more workmen are employed or were employed even for one day during preceding 12 months as Contract Labour. For the purpose of calculating the number, contract labour employed for different purposes through different contractor has to be taken into consideration. This Act does not apply to the Establishments where work performed is of intermittent or seasonal nature. If a Principal Employer or the Contractor falls within the vicinity of this Act then, such Principal Employer and the Contractor have to apply for Registration of the Establishment and License respectively. The contractor The Act also provides for Temporary Registration in case the Contract Labour is hired for a period not more than 15 days. Any change occurring in the particulars specified in the Registration or Licensing Certificate needs to be informed to the concerned Registering Officer within 30 days of such change. From combined reading of Section 7 and Rules 17 & 18 of the Contract Labour (Regulation and Abolition) Central Rules, 1971, it appears that the Principal Employer has to apply for registration in respect of each establishment. Other important point to note is that a License issued for One Contract cannot be used for entirely different Contract work even though there is no change in the Establishment.

Significant judgments of the Supreme Court in the matter are:

Steel Authority of India Ltd. vs. National Union of Waterfront Workers & Ors. The Sail judgment stated that the contract workers would have no right to automatic absorption upon abolition. They would only have a right to a preference in employment if permanent workers were to be employed to fill in the vacancies created by the removal of the contract workers

upon abolition. The Bench further added that on issuance of notification by the appropriate Government under S 1 0(1) prohibiting employment of contract labour in a given establishment, it is for the contractor to provide work to his labour in other establishments, where the contract labour system is not prohibited. This decision reversed the Supreme Courts decision in Air Indias Case (contract labour of the erstwhile contractor stand absorbed on the rolls of the Principal employer on abolition of contract labour system by appropriate Government under section 10 of the Act).

2. Maharashtra General Kamgar Union vs. Cipla Ltd. Gist of this judgment is that, if contract workers filed a complaint of

any unfair labour practices against any principal employer alleging that he was, in fact, their employer and that the contractor was a mere name-lender interposed in the relationship merely to shield the principal employer, this complaint would become non-maintainable.

Question 1 : A workman is deemed to be employed as Contract Labour when____?

Select one:

a. he is hired in connection with the work of an establishment by or through a Contractor.

b. he is hired in connection with the work of an establishment as a regular employee

c. Both a & b

d. None of the options

Question 2

Any change occurring in the particulars specified in the Registration or Licensing Certificate needs to be informed to the concerned Registering Officer within_______?

Select one:

a. 45 days of such change.

b. 60 days of such change.

c. 7 days of such change.

d. 30 days of such change.

Question 3

As per Contract Labour (Regulation & Abolition) Central (Amendment) Rules, 2017, every contractor or principal employer shall upload a unified annual return in the  specified in these rules on or before the February 1 following the close of the year to which it relates.

Select one:

a. Form XXIV

b. Form XXV

c. Form XX

d. Form XXII

Question 4

As per this case study , “Contract labour accounts for 55% of public sector jobs and 45% of those in the private sector. Only about 300,000 contract labourers out of an estimated 80 million are employed in the organised sector” . This starement is ___?

Select one:

a. FALSE

b. TRUE

c. Partially Wrong

d. None of the options

Question 5

As Per this Case study , The Contract Workmen are hired, supervised and remunerated by the Contractor, who in turn, is remunerated by

Select one:

a. The Government agencies Only

b. By Himself

c. The Establishment hiring the services of the Contractor.

d. Both A & B

Question 6

as per this case study , The Judgement of supreme Court – “if contract workers filed a complaint of

any unfair labour practices against any principal employer alleging that he was, in fact, their employer and that the contractor was a mere name-lender interposed in the relationship merely to shield the principal employer, this complaint would become non-maintainable”. This refers to which of the following ?

Select one:

a. Maharashtra General Kamgar Union vs. Pfizer Ltd

b. Steel Authority of India Ltd. vs. National Union of Waterfront Workers & Ors

c. Maharashtra General Kamgar Union vs. Cipla Ltd

d. Steel Authority of India Ltd. vs. Maharashtra General Kamgar Union

Question 7

Contract Labour Act  applies to the Principal Employer of an Establishment and the Contractor where in ______are employed or were employed even for one day during preceding 12 months as Contract Labour.

Select one:

a. 10 or more workmen

b. 12 or more workmen

c. 20 or more workmen

d. 20 or Less workmen

Question 8

Contract workmen are ___?

Select one:

a. Direct employees

b. Indirect employees

c. Partially Permanent Employees

d. Either a or B

Question 9

The Object of the Contract Labour Regulation and Abolition) Act, 1970 is to

Select one:

a. prevent exploitation of contract labour

b. to introduce better conditions of work

c. Both a & B

d. None of the options

Question 10

Which of the following options is/are reasons that a Contract Labour is different from Direct Labour ?                    (A) Different  in terms of employment relationship with the establishment . (B) Different in terms of method of wage payment. ( C ) Contract Labour is not on the payroll of the company. (D) Contract Labour is a Direct Employee

Select one:

a. Only A & B

b. Only A & C

c. Only B

d. Only A, B & C

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Module V : Labour Laws

Case Study

The city is an old industrial centre in North Central India which flourished in cotton textiles, leather and leather products, woollen textiles, engineering products, etc. In the recent times though, the city has been in the news only for its rapid industrial decline, fast deteriorating socio-economic order and very high unemployment and crime rate. It had a militant working class movement, but as the capital has moved out of the city and the mills have closed down, the trade unions are in shambles and the working class movement has virtually collapsed.

The present case is situated in a premiere technological institute of the country: the Institute was set up in one of the most important industrial centres of the country in the late 1950s with US collaboration as part of the Nehruvian post-colonial nation building project. The Institute functions on the principles of parliamentary democracy and accords fair amount of autonomy to the faculty. In the early years, probably because of being part of the first generation in the phase of post-colonial nation building, some of the members of the faculty brought in notions of social concerns to this fully residential campus (mainly for teaching staff and students and partly for non-teaching staff as well). Some of them were able to find academic as well as practical expressions for their social concerns within the campus, given the liberal environment and a degree of academic freedom. The liberal culture of the campus was further enhanced by a vibrant employees’ union which came up in the early 1970s.

Employees at the lower levels were mostly from nearby places, while faculty and students had fair representation from different parts of the country. Efforts at unionisation of the temporary workforce in the Institute began in the late 1960s with participation of the academic community. The general socio-political environment of the region, country, and probably the whole world in the 1960s and 1970s, affected and furthered the movement in the Institute too. This resulted in a strong trade union, and eventually, a permanent work force within a few years. But by the 1990s, with the onset of the economic reforms, the industrial relations in the Institute too, as across the whole country, entered a new phase. In the last decade and a half many of the labour and union rights have receded, as permanent work and workers are being rapidly replaced by contingent workforce.

In the past decade, sub-contracting of work by the Institute has multiplied manifold, and therefore, the contingent workforce has also commensurately increased. Many kinds of jobs have been completely taken over by the contingent workers – construction and civil maintenance, security, sanitation, horticulture, and even research assistance and office help; though the last category is not dealt with in the present work. There has also been a phenomenal rise in the infrastructural facilities within the Institute, primarily because of monetary contributions from the alumni (mostly from those who have been ‘successful’ abroad) which have been pouring in, in the wake of liberalisation. Though we do not have the formal figures, yet by an informed estimate, at present the strength of the permanent work force is probably matched by the contract and temporary workers and would be around a couple of thousand each. The discussion here is limited to the so-called ‘unskilled’/ ‘semi-skilled’ manual work, where minimum wage is an issue.

Demand for Minimum Wages (MWs)

The MWs emerged as an issue in the campus in the early 1990s. An informal group called the Vivekanand Samiti (VS) began a literacy drive amongst the migrant Chattisgarhi workers employed on some of the construction sites in the campus. Initially the effort concentrated in getting the children of the workers to attend a temporary school . Through interactions with these children the volunteers of VS gradually came to know about the miserable wages being paid to the workers in the campus (which was even less than half of the stipulated minimum wages). They decided to take up the issue with the Institute authorities. Legally the primary responsibility for ensuring the payment of minimum wages lies with the ‘principal employer’, the Institute in this case. In actual practice the contract workers have little job security and no employment rights. No formal rolls are maintained by the contractors, and since these workers have no organisation to mediate with the employers, they literally work at the mercy of the employers’ will and live with the constant fear of losing their employment. Hence all these organising efforts by the VS had to be done surreptitiously. Though, in the process a few workers did loose their jobs and were blacklisted by the whole set of contractors working for the Institute. Some of these workers formed the core of the later efforts at organising, which led to the formation of a workers’ cooperative in the campus.

The simplicity of the issue, the absolutely unambiguous position of the law of the land on the minimum wages, and the overall irony of the context of an elite institution with no apparent dearth of funds and resources not paying the MWs to the lowest rung of workers, caught the imagination of many amongst the academic community, at least for a while in the beginning. Several faculty members and students supported the cause and the Institute found itself in an indefensible position as to the reasons for non-payment of minimum wages, but for some practical difficulties in implementing the same given the market forces, etc. Though the administration could not wish away the issue of MWs it could not implement it either as the body of contractors unitedly opposed it by adopting several deterring tactics like firing the protesting workers, threatening to stop work, etc. Under these circumstances the Institute formed a committee of a few concerned faculty members to deal with the issue. But given the political economy of MWs, the committee could not make much headway and failed to ensure the payment of minimum wages as a norm within the campus .

The core group of agitating workers and the initiated middle class supporters came up with an ingenuous solution to the problem. They decided to form a workers’ cooperative that would bid on behalf of the workers and take up contracts so that the workers would have the freedom to pay themselves the MWs without the interference of the contractors. Thus a workers cooperative, Samiti, was formed in 1992, though in its early phase it faced significant resistance from the administration. The Institute administration even refused to give tender forms to Samiti, and when the fledgeling cooperative did manage to bid, they would reject it on some ground or another. But Samiti survived and over the years, has grown to a size of around 200 members at present, and is widely acknowledged as the only contracting organisation on the campus which pays the MWs. Samiti, including its members and sympathisers, have been taking up several cases of gross violation of MWs and bringing them to the attention of the larger community and the authorities. But for all practical purposes except for Samiti market forces largely decided the norm . for the wages in the campus, irrespective of the stipulated MWs. But this is not the place to relate Samiti’s tale. We have attempted to capture some of the organisational features of Samiti in another work (Varman & Chakrabarti, 2004). We will touch upon Samiti in the final section to make certain observations regarding the labour markets.

As has been mentioned earlier, besides the global phenomena of recession of worker rights the situation in the campus was aggravated over the 1990s, probably because of a spurt in construction activity aided by huge sums of alumni money, where large numbers of workers (many of them migrants from distant places) were employed at wages which were only 50-60% of the statutory minimum wages. Concerned members of the Institute community have been regularly voicing their concerns at several formal and informal forums on the issue; some of the instances are as follows.

§ At least two reports on non-payment of minimum wages in the campus were prepared by students as part of their course work – one comparing the state of construction workers vis-à-vis the Minimum Wages Act, which made a grim reading on the conditions of the workers in the campus. The second report compared the state of other contract workers on cleaning work with those of Samiti and brought out how the latter was an exception in paying MWs. The faculty forum convener forwarded both the reports along with a letter signed by a set of faculty members expressing their concern ‘about the blatant flouting of minimum wage laws for contract jobs’, to the higher authorities seeking their response.

§ Several individual workers risked their jobs to register grievances about non-payment of minimum-wages. Many of these grievances were channelled either through the concerned members of the academic community, Samiti or Valmiki Samaj, a local chapter of an all India organisation of the Valmiki caste, who are involved in most of the cleaning work in the campus.

Probably because of all these sustained efforts, in November 2000 the administration decided to constitute another committee for monitoring minimum wages in the campus – Monitoring Committee – Wages (MCW). The appointment letter of the Committee was all of one line which indicated that probably no serious thought had been given to the functioning and role of the committee and it could at best be considered an official acknowledgement of all the criticism levelled on the issue of MWs. All that the office-order said was:

The committee shall oversee the disbursement of wages to Daily Wage Workers engaged in various units of the Institute and deal with the related disputes.

The following is the account of the journey of MCW from its inception in December 2000 to December 2005. An important aspect of the Committee and its functioning which should be mentioned at the outset, has been the sustained support it received from a large informal group consisting of members of the faculty, students, staff and other members/ residents of the campus community. The MCW had to tread uncertain and often extremely contestable territories, with almost no previous experience or precedence to go by. Under these circumstances the informal group acted as a sounding board both for new ideas as well as for delicate decisions. On situations of impasse with the authorities as well as with the contractors and the administration, the informal group has also formally supported the MCW, including by being part of official delegation on behalf of the Committee. Though it is difficult to adequately capture the significance of this informal group within the scope of the present note, one can only assert that such a group has been continually an integral part of the Committee’s efforts in various ways. In the following section we will attempt to capture various phases of the Committee and volunteers’ work in brief.

Question 1 : As Per this Case Study , a workers cooperative, Samiti, was formed in _____?

Select one:

a. 1950

b. 1992

c. 1890

d. 1990

Question 2

As per this case study ,An informal group called _____ began a literacy drive amongst the migrant Chattisgarhi workers employed on some of the construction sites in the campus.

Select one:

a. ALL India Trade union Congress (AITUC)

b. The Vivekanand Samiti (VS)

c. Bhartiya Mazdoor Sangh (BMS)Bhartiya Mazdoor Sangh (BMS)

d. Both a & C

Question 3

As per this case study -” In actual practice the contract workers have little job security and no employment rights. No formal rolls are maintained by the contractors, and since these workers have no organisation to mediate with the employers, they literally work at the mercy of the employers’ will and live with the constant fear of losing their employment”.  This statement is ___?

Select one:

a. True

b. False

c. Partially True

d. Partially wrong

Question 4

Efforts at unionisation of the temporary workforce in the Institute began in the______ with participation of the academic community.

Select one:

a. late 1960s

b. 1950’s

c. 1920’s

d. 1900

Question 5

In the past decade, sub-contracting of work by the Institute has multiplied manifold, and therefore, the contingent workforce has also commensurately increased. Many kinds of jobs have been completely taken over by the contingent workers – what are these jobs ?

Select one:

a. construction and civil maintenance

b. security, sanitation, horticulture

c. research assistance and office help

d. All of the options

Question 6

Legally the primary responsibility for ensuring the payment of minimum wages lies with __ ?

Select one:

a. the ‘principal employer’

b. the contractor Only

c. the Government

d. Both B & C

Question 7

Probably because of all the sustained efforts, in November 2000 the administration decided to constitute another committee for monitoring minimum wages in the campus  known as ?

Select one:

a. Mentoring Community of- Wages (MCW).

b. Marketing Committee – Wages (MCW).

c. Mentoring Committee – Wages (MCW).

d. Monitoring Committee – Wages (MCW).

Question 8

Reports on non-payment of minimum wages in the campus were prepared by students. (A)Ccomparing the state of construction workers vis-à-vis the Minimum Wages Act. ( B) Comparing the state of other contract workers on cleaning work with those of Samiti and brought out how the latter was an exception in paying Minimum wages.

Select one:

a. Only A

b. Only B

c. None of these options

d. Both a & B

Question 9

The city is an old industrial centre in North Central India which flourished in cotton textiles, leather and leather products, woollen textiles, engineering products, etc. In the recent times though, the city has been in the news only for

Select one:

a. its rapid industrial decline

b. fast deteriorating socio-economic order

c. very high unemployment and crime rate.

d. All of the options

Question 10

Through interactions with these children the volunteers of VS gradually came to know about the____ ?

Select one:

a. miserable wages being paid to the workers in the campus

b. Wages were even less than half of the stipulated minimum wages

c. Both a& b

d. None of these

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ASSIGNMENT 2

Case Study

For right or wrong reasons, Bata India Limited (Bata) always made the headlines in the financial dailies and business magazines during the late 1990s. The company was headed by the 60 year old managing director William Keith Weston (Weston). He was popularly known as a “turnaround specialist” and had successfully turned around many sick companies within the Bata Shoe Organization (BSO) group.

By the end of financial year 1999, Bata managed to report rising profits for four consecutive years after incurring its first ever loss of Rs. 420 mn in 1995. However, by the third quarter ended September 30, 2000, Weston was a worried man. Bata was once again on the downward path. The company’s nine months net profits of Rs 105.5 mn in 2000 was substantially lower than the Rs. 209.8 mn recorded in 1999. Its staff costs of Rs. 1.29 bn (23% of net sales) was also higher as compared to Rs. 1.18 bn incurred in the previous year. In September 2000, Bata was heading towards a major labour dispute as Bata Mazdoor Union (BMU) had requested West Bengal government to intervene in what it considered to be a major downsizing exercise.

With net revenues of Rs. 7.26 bn and net profit of Rs. 300.46 mn for the financial year ending December 31, 1999, Bata was India’s largest manufacturer and marketer of footwear products. As on February 08, 2001, the company had a market valuation of Rs. 3.69 bn. For years, Bata’s reasonably priced, sturdy footwear had made it one of India’s best known brands. Bata sold over 60 million pairs per annum in India and also exported its products in overseas markets including the US, the UK, Europe and Middle East countries. The company was an important operation for its Toronto, Canada based parent, the BSO group run by Thomas Bata, which owned 51% equity stake.

The company provided employment to over 15,000 people in its manufacturing and sales operations throughout India. Headquartered in Calcutta, the company manufactured over 33 million pairs per year in its five plants located in Batanagar (West Bengal), Faridabad (Haryana), Bangalore (Karnataka), Patna (Bihar) and Hosur (Tamil Nadu). The company had a distribution network of over 1,500 retail stores and 27 wholesale depots. It outsourced over 23 million pairs of footwear per year from various small-scale manufacturers.

Throughout its history, Bata was plagued by labor problems with frequent strikes and lockouts at its manufacturing facilities. The company incurred huge employee expenses (22% of net sales in 1999). Competitors like Liberty Shoes were far more cost-effective with salaries of its 5,000 strong workforce comprising just 5% of its turnover.

When the company was in the red in 1995 for the first time, BSO restructured the entire board and sent in a team headed by Weston. Soon after he stepped in several changes were made in the management. Indians, who held key positions in top management, were replaced with expatriate Weston taking over as managing director. Mike Middleton was appointed as deputy managing director and R. Senonner headed the marketing division. They made several key changes, including a complete overhaul of the company’s operations and key departments. Within two months of Weston taking over, Bata decided to sell its headquarter building in Calcutta for Rs. 19.5 crores, in a bid to stem losses. The company shifted wholesale, planning & distribution, and the commercial department to Batanagar, despite opposition from the trade unions. Robin Majumdar, president, co-ordination committee, Bata Trade Union, criticised the move, saying: “Profits may return, but honor is difficult to regain.” The management team implemented a massive revamping exercise in which more than 250 managers and their juniors were asked to quit. Bata decided to stop further recruitment.

The management team implemented a massive revamping exercise in which more than 250 managers and their juniors were asked to quit. Bata decided to stop further recruitment. The management offered its staff performance based salary. In 1996, for the first time in Bata’s 62-year-old history, the company signed a long-term bipartite agreement. This agreement was signed without any disruption of work. Recalls Majumdar: “We showed the management that we could be as productive as any other union in the country.” In the six-year period 1993-99, Bata had considerably brought down the staff strength of its Batanagar factory and Calcutta offices to 6,700.

In fiscal 1996, Bata was back in the black with the company reporting net profits of Rs. 41.5 mn on revenues of Rs. 5.90 bn (Rs. 5.32 bn in 1995). In fiscal 1997, Bata further consolidated the gains with the company reporting net profits of Rs 166.9 mn on revenues of Rs. 6.70 bn. A senior HR manager at the company admitted that with an upswing in Bata’s fortunes, even its traditionally intransigent workers were motivated to do better. In 1997, Bata workers achieved 93% of their production targets. The management rewarded the workers with a 17% bonus, up from the 15% given in 1996.

By the end of 1997, Bata still faced problems of a high-cost structure and surplus labour. Infact, the turnaround had made the unions more aggressive and demanding. Weston had failed to strike a deal with the All India Bata Shop Managers Union (AIBSMU) since the third quarter of 1997. The shop managers were insisting that Bata honor the 1990 agreement, which stipulated that the management would fill up 248 vacancies in its retail outlets. It also opposed the move to sack all the cashiers in outlets with annual sales of less than Rs 5 mn, which meant elimination of 690 jobs.

In 1999, the Bata management in a bid to further cut costs announced the phasing out of several welfare measures at its Batanagar Unit. Among the proposals were near total withdrawal of management subsidies, canteen facilities, township maintenance, electricity and health care schemes for the employees’ families. Other measures were aimed at increasing productivity, reorganizing some departments and extending working days for some essential services. On January 14, 1999, the BMU submitted their charter of demands to the management. The demands mainly revolved around economic issues. In the list of non-economic issues was the demand for reinstatement of the four dismissed employees.1 The Union had also demanded the introduction of a scheme for workers participation in management. On the economic front, the Union had demanded a wage hike of around Rs. 90 per week, additional allowances as provident fund over the statutory limit by the management, increase in ‘plan bonus’ and introduction of attendance bonus for migrant workers.

In July 1999, BMU was finally able to strike a deal. It signed a three-year wage agreement that included a lumpsum payment of arrears of Rs. 4,000 per employee. The management agreed to include 10% of the 400 contract laborers at Batanagar in its staff.

Other gains included an average increase of Rs. 45.50 in the weekly pay of the 5,600 employees in Batanagar, an improved rate of DA and increase in tiffin allowance. However, canteen rates had been doubled from Rs. 0.75 for a meal to Rs. 1.50. For the 500 families staying at Batanagar, the electricity rates had been doubled to Rs. 0.48 per unit. BMU was successful in preventing the management from dismantling the public health unit in which 80 people were employed. In September 1999, the West Bengal State labour tribunal in an order justified and upheld Bata’s action of suspending and subsequent dismissing of three executive members of the BMU. The tribunal had provided no relief to the dismissed members who had been found guilty of assaulting the chief welfare officer at the Batanagar unit on November 26, 1996.

More than half of Bata’s production came from the Batanagar factory in West Bengal, a state notorious for its militant trade unions, who derived their strength from the dominant political parties, especially the left parties.

Notwithstanding the company’s grip on the shoe market in India, Bata’s equally large reputation for corruption within, created the perception that Weston would have a difficult time. When the new management team weeded out irregularities and turned the company around within a couple of years, tackling the politicized trade unions proved to be the hardest of all tasks

On July 21, 1998, Weston was severely assaulted by four workers at the company’s factory at Batanagar, while he was attending a business meeting. The incident occurred after a member of BMU, Arup Dutta, met Weston to discuss the issue of the suspended employees. Dutta reportedly got into a verbal duel with Weston, upon which the other workers began to shout slogans. When Weston tried to leave the room the workers turned violent and assaulted him. This was the second attack on an officer after Weston took charge of the company, the first one being the assault on the chief welfare officer in 1996. Soon after the incident, the management dismissed the three employees who were involved in the violence. The employees involved accepted their dismissal letters but subsequently provoked other workers to go in for a strike to protest the management’s move. Workers at Batanagar went on a strike for two days following the incident. Commenting on the strike, Majumdar said: “The issue at Bata was much wider than that of the dismissal of three employees on grounds of indiscipline. Stoppage of recruitment and continuous farming out of jobs had been causing widespread resentment among employees for a long time.”

Following the incident, BSO decided to reconsider its investment plans at Batanagar. Senior vice-president and member of the executive committee, MJZ Mowla, said2: “We had chalked out a significant investment programme at Batanagar this year which was more than what was invested last year. However, that will all be postponed.”

The incident had opened a can of worms, said the company insiders. The three men who were charge-sheeted, were members of the 41-member committee of BMU, which had strong political connections with the ruling Communist Party of India (Marxist). The trio it was alleged, had in the past a good rapport with the senior managers, who were no longer with the organization. These managers had reportedly farmed out a large chunk of the contract operations to this trio.

Company insiders said the recent violence was more a political issue rather than an industrial relations problem, since the workers had very little to do with it. Seeing the seriousness of the issue and the party’s involvement, the state government tried to solve the problem by setting up a tripartite meeting among company officials, the labor directorate and the union representatives. The workers feared a closedown as the inquiry proceeded.

For Bata, labor had always posed major problems. Strikes seemed to be a perennial problem. Much before the assault case, Bata’s chronically restive factory at Batanagar had always been plagued by labor strife. In 1992, the factory was closed for four and a half months. In 1995, Bata entered into a 3-year bipartite agreement with the workers, represented by the then 10,000 strong BMU, which also had the West Bengal government as a signatory. It was in 1998, that the company for the first time signed another long-term bipartite agreement with the unions without any disruption of work. Apprehensive about labor problems spilling over to other units, the company entered into similar long-term agreements with the unions at its manufacturing units at Bangalore and Faridabad.

In February 1999, a lockout was declared in Bata’s Faridabad Unit. Middleton commented that the closure of the unit would not have much impact on the company’s revenues as it was catering to lower-end products such as canvas and Hawaii chappals. The lock out lasted for eight months. In October 1999, the unit resumed production when Bata signed a three-year wage agreement

On March 8, 2000, a lockout was declared at Bata’s Peenya factory in Bangalore, following a strike by its employee union. The new leadership of the union had refused to abide by the wage agreement, which was to expire in August 2001. Following the failure of its negotiations with the union, the management decided to go for a lock out. Bata management was of the view that though it would have to bear the cost of maintaining an idle plant (Rs. 3 million), the effect of the closures on sales and production would be minimal as the footwear manufactured in the factory could be shifted to the company’s other factories and associate manufacturers. The factory had 300 workers on its rolls and manufactured canvas and PVC footwear.

In July 2000, Bata lifted the lockout at the Peenya factory. However, some of the workers opposed the company’s move to get an undertaking from the factory employees to resume work. The employees demanded revocation of suspension against 20 of their fellow employees. They also demanded that conditions such as maintaining normal production schedule, conforming to standing orders and the settlement in force should not be insisted upon.

In September 2000, Bata was again headed for a labour dispute when the BMU asked the West Bengal government to intervene in what it perceived to be a downsizing exercise being undertaken by the management. BMU justified this move by alleging that the management has increased outsourcing of products and also due to perceived declining importance of the Batanagar unit. The union said that Bata has started outsourcing the Power range of fully manufactured shoes from China, compared to the earlier outsourcing of only assembly and sewing line job. The company’s production of Hawai chappals at the Batanagar unit too had come down by 58% from the weekly capacity of 0.144 million pairs. These steps had resulted in lower income for the workers forcing them to approach the government for saving their interests.

Question 1 : according to this case study ,throughout its history, Bata was plagued by labor problems . What were these? (A) frequent strikes (B) lockouts at manufacturing facilities.

Select one:

a. Only A not B

b. Only B not A

c. Both A & B

d. None of these

Question 2

AIBSMU stands for _____ in this case study.

Select one:

a. All India Bata Shop Managers Union

b. All india Bata specialist Managers Union

c. All India Bata Shop Managerial Union Committee

d. All India Bata Shop Managers Trade Union

Question 3

As per this case study , managing director William Keith Weston (Weston), he was popularly known as ___?

Select one:

a. Turnaround expert

b. Turnaround specialist

c. Either a or b

d. None of these

Question 4

As per this case study ,Who among the following was deputed as as deputy managing director of Bata ?

Select one:

a. William Keith Weston

b. R. Senonner

c. Mike Middleton

d. None of these

Question 5

As per this case Study – ” the three men who were charge-sheeted, were members of the 41-member committee of BMU, which had strong political connections with the ruling Communist Party of India (Marxist)”. This Statement is ___?

Select one:

a. True

b. Partially true

c. False

d. Partially Wrong

Question 6

Bata had a major labour dispute with BMU related to which of the follwing issues ?

Select one:

a. Low wages

b. non payment of wages

c. major downsizing exercise

d. All of the options

Question 7

In 1992, the factory was closed for four and a half months. In 1995, Bata entered into a______, represented by the then 10,000 strong BMU, which also had the West Bengal government as a signatory.

Select one:

a. 5-year bipartite agreement with the workers

b. 3-year bipartite agreement with the workers

c. 3-year bipartite agreement with the management

d. 5-year bipartite agreement with the management

Question 8

In July 1999, BMU was finally able to strike a deal. It signed a three-year wage agreement that included___?

Select one:

a. Total Payments to all workers

b. a lumpsum payment of arrears of Rs. 4,000 per employee

c. a lumpsum payment of arrears of Rs. 1,000 per employee

d. All Pending payment of arrears + Rs. 10,000 per employee

Question 9

In September 2000, Bata had  a major labour dispute with ?

Select one:

a. Bata Mazdoor Union (BMU)

b. Bharatiya Mazdoor Sangh (BMS)

c. All india Trade union Congress (AITUC)

d. None of these

Question 10

Which of the following was/were the demands of the union in Bata ?

Select one:

a. a scheme for workers participation in management

b. wage hike of around Rs. 90 per week

c. attendance bonus for migrant workers

d. All of the options

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Organizational Change & Development -Semester III

Organizational Change & Development -Semester III

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Module I : Organizational Development: An Introduction

Case study

British Gas is a British-owned energy supplier. British Gas is the UK s leading provider of energy and has over 16 million customer accounts. It employs over 20,000 people and was voted one of the 25 Best Big Companies to Work For by The Sunday Times in the UK in 2011. All organisations have employees working at different levels of responsibility. At the bottom, a business depends on its operatives to produce the products or services. Team leaders perform the day-to-day management role, with operational and senior managers setting direction and strategy for the business as a whole.

Theorist Henri Fayol identified the key areas of manager’s work. He proposed that the five key functions of management are:

Planning

• Organising

• Commanding

• Coordinating

• Controlling

Within British Gas, each individual operates as a member of a team, which is led by a team manager who has a range of supervisory duties. These include monitoring the performance of their team members. At British Gas the team managers are referred to as service managers. Service managers of electrical and technical service engineers need to organise routines in order to meet the needs of customers. They must also positively promote British Gas and its products. Their expert knowledge helps them to provide customers with sound advice that opens up opportunities to create new business. Occasionally, they have to deal with customer complaints. This is why customer service and good communication skills are of great importance to this role. As leaders of a team, all service managers within British Gas set personal and group targets for employees within their span of control. They also communicate their ideas and thoughts to members of the team, to other service managers and to operational managers. At all times they need to maintain good working relationships with team members. Being able to communicate effectively and keep focused on strong customer relations helps them to manage their workload effectively. Some of the benefits of being a service manager include a competitive salary, performance related bonuses and good pension provision.

In many cases an individual who started at British Gas as an apprentice, trainee or qualified engineer or electrician can advance to become a service manager. Career progression may eventually enable them to become an operational manager. The operational managers are responsible for making strategic decisions. To make such decisions operational managers require a range of key skills. These include skills and knowledge of customer service, teamwork, communication, IT and finance. As individuals progress from a service manager to operational managers within British Gas they need to up-skill. This helps them to adapt and develop as they undertake further senior responsibilities within the organisation. For example, they now have to take responsibility for customer satisfaction for a large part of the business. They do this by monitoring that work has been completed to the satisfaction of customers. Operational managers also have to monitor standards and set targets for improvements. They are responsible for managing budgets and have to ensure that their part of the business meet its budget objectives. At all times they must try to improve best practice. By doing this they can identify areas where costs can be reduced to improve profitability and efficiency. It is the vision of the operational managers that keeps the business moving forward, vital in such a highly competitive market.

Question 1 : According to theorist Henri Fayol, what are the key areas of manager’s work?

Select one:

a. Planning

b. Commanding

c. Controlling

d. All of the above

Question 2

How does a service manager take the responsibility to progress as an operational manager?

Select one:

a. The service managers have to take responsibility for customer satisfaction and for the progress they do it by monitoring that work has been completed to the satisfaction of customers

b. Performing the given task diligently

c. Encouraging the team to take extra responsibility

d. All of the above

Question 3

How is the hierarchical system within British Gas?

Select one:

a. Each individual operates as a member of a team, which is led by a team manager who has a range of supervisory duties

b. Each individual operates as a member of a team

c. All departments are led by the same team manager who has a range of supervisory duties

d. None of the above

Question 4

What are the benefits of a service manager at British Gas?

Select one:

a. Competitive salary

b. Performance related bonuses

c. Good pension provision

d. All of the above

Question 5

What are the responsibilities of an operations manager?

Select one:

a. Monitor standards and set targets for improvements

b. Managing budgets to ensure that their part of the business meet its budget objectives

c. Improve best practice

d. All of the above

Question 6

What are the skills that an operational manager should possess?

Select one:

a. Skills and knowledge of customer service

b. Communication Skills

c. Performance related bonuses

d. Both a and b

Question 7

What are the team managers referred as at British Gas?

Select one:

a. Line managers

b. Supervisors

c. Service managers

d. Team managers

Question 8

What is the role of operational manager?

Select one:

a. Making strategic decision

b. Monitoring the performance of their team members.

c. Deal with customer complaints

d. Provide customers with sound advice

Question 9

Which of the following are supervisory duties of team managers at British Gas?

Select one:

a. Managing the work of the team

b. Monitoring the performance of their team members.

c. Organising the work for each team member

d. All of the above

Question 10

Which of the following are the responsibilities of the service managers of electrical and technical department?

Select one:

a. Promote British Gas and its products

b. Provide customers with sound advice

c. Deal with customer complaints

d. All of the above

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Module II : Typology of Organizational Development Interventions

Case study

“A pharmaceutical machines manufacturing company got in touch with us when they were clogged by lot of internal challenges. They were unable to harness the market opportunities, or manage the work efficiently. They wanted to get into a Joint venture with a Multinational company in Germany, for which they had to set their company, ready in order to go through the audit and evaluation successfully.

After a detailed 360 degree diagnosis, we identified the gaps and stagnant areas. We drew an organizational developmental intervention and implemented it. This intervention ran over 12 months.

At the end of phase 1, the company saw the following improvements:

• Clear vision and mission for the management

• Long standing pending decisions on obsolete process and way of working made space for improved business processes.

• Inefficiencies were recorded objectively and handled through process refinement and employee training.

• Employee satisfaction was improved, through setting up and communicating the HR policies, defining Job roles and introducing performance management system.

• The overall top line of the company grew by more than 40% that year

• The company started attracting professional talent into the organization

Before Scenario the Challenges faced:

• Unable to harness growth/market opportunities. Stagnancy in Top Line

• To transform the organization from a conservative family owned business to a profession outfit.

• Production challenges

• Absence of HR setup or processes or policies

• Lack of clearly set processes made the working very person driven and time consuming.

• Resistance to Change at the staff level, Department Head level

• No Productivity Measures and the work at all departments was person driven rather than performance or process driven

An Organization Development Plan was drawn for first 12 months which is the First Phase, after a detailed diagnosis of the company.

• Priority Areas were identified and a Plan of Action was drawn.

• As a top –down approach we facilitated in recreating the Vision, Mission & values and set direction to where the organization wants to be in future.

• Organization restructuring for efficient manpower utilization

• Business Process Re-engineering to streamline the work flow

• Introducing best practices from other Industries, HR Strategy, HR Operational policies, Job descriptions, Manpower Planning, Recruitments

• Training and development, counseling and audit given to employees

In the second Phase, they introduced Performance Management System

• Departmental KPI’s were fine-tuned

• Job roles were revisited

• Performance Management Trainings were given to Managers and staff

• Supported to complete the implementation of the performance Management process

After the Interventions the company became a self-propelled organization. The organization finally became a system driven, target oriented. They were able to create the growth plan for the next 5 Years in place and plan for strategic joint ventures with world no 1 in respective fields in place.

Question 1 : By how % the overall top line of the company grew?

Select one:

a. 20%

b. 40%

c. 30%

d. 10%

Question 2

How long was the organizational developmental intervention carried on in the organisation?

Select one:

a. 5 Months

b. 3 Months

c. 2 Months

d. 12 Months

Question 3

How were the gaps and stagnant areas identified?

Select one:

a. Management discussion

b. Managerial role change

c. Detailed 360 degree diagnosis

d. None of the above

Question 4

In the first phase of intervention, which of the following improvements were seen within the organisation?

Select one:

a. Employee satisfaction was improved, through setting up and communicating

b. The overall top line of the company grew by more than 40% that year

c. Clear vision and mission for the management

d. All of the above

Question 5

What was introduced in the second phase of intervention?

Select one:

a. Performance Management

b. Introducing best practices from other Industries

c. Training and development

d. Business Process Re-engineering

Question 6

What was the challenge faced by the pharmaceutical company?

Select one:

a. Unable to harness the market opportunities

b. Manage the work efficiently

c. Internal challenges

d. All of the above

Question 7

What was the new strategy they looked forward for?

Select one:

a. Drop their line of business

b. Joint venture with a Multinational company in Germany

c. Re-engineering of the organisation

d. None of the above

Question 8

What were the objectives of the organisational plan in the first phase?

Select one:

a. Organization restructuring for efficient manpower utilization

b. Business Process Re-engineering to streamline the work flow

c. Departmental KPI’s were fine-tuned

d. Both a and b

Question 9

Which among the following challenges were faced by the organisation before the interventions?

Select one:

a. Stagnancy in Top Line

b. Production challenges

c. Absence of HR setup or processes or policies

d. All of the above

Question 10

Why was the company looking forward for interventions?

Select one:

a. They were clogged by lot of internal challenges

b. They were not able to manage their employees

c. Wanted to increase their expertise

d. None of the above

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Module III: Action Research & Organizational Design

Case Study

“Matt owns 10 mobile phone shops located across Northern Ireland. Although each outlet trades under the same name, Chatz, they are all very different. This is because Matt has always allowed the manager within each shop to have complete control over their respective outlet. Therefore, each of the stores has its own unique character in terms of store layout, presentation and location. They stock different brands of mobile phone and accessories and buy from different suppliers. Each of the stores is promoted locally.

Whilst this approach has served the business well in the past, Matt is planning to appoint a Purchasing Manager to take responsibility for stock purchases for all outlets.

Increasing levels of competition from national supermarkets and changes in consumer tastes have convinced Matt to centralise the decision-making process within Chatz. It is anticipated that many of the current responsibilities undertaken by store managers will be transferred to Head Office within the next 3 months. In considering the appointment of a Purchasing Manager, Matt is conscious of the need to widen the ‘span of control’ that this individual would have, to include supervisory duties related to successful management of stocks and the warehouse operations.”

Question 1 : How are the stores promoted?

Select one:

a. Regionally

b. Locally

c. Centrally

d. All of the above

Question 2

How has Matt planned to make the organisation a centralised organisation?

Select one:

a. By transferring the current responsibilities undertaken by store managers to the Head Office

b. By changing the role of store manager to purchase manager

c. By recruiting a supervisor for each store

d. All of the above

Question 3

The runing plan of Chartz has served __________ in the past.

Select one:

a. Inconveniently

b. Successfully

c. Incorrectly

d. All of the above

Question 4

What are the two ways Matt designed the organisation structure of Chatz?

Select one:

a. Each of the stores has its own unique character in terms of store layout, presentation and location

b. The stocks are of different brands of mobile phone and accessories and buy from different suppliers

c. The creation or change of an organization’s structure

d. Both a and b

Question 5

What is ‘span of control’?

Select one:

a. Individual will have to include supervisory duties related to successful management of stocks and the warehouse operations

b. Individual will have manage stocks and the warehouse operations

c. Individual will arrange stocks in the warehouses

d. None of the above

Question 6

What is meant by Organisational Design?

Select one:

a. Creation of roles & processes

b. The creation or change of an organization’s structure

c. Recruitment of new employees

d. Both a and b

Question 7

What is the new strategy planned by Matt for Chatz?

Select one:

a. Appointment of a purchasing manager

b. Change the promotional strategy

c. Change the names of the trade outlets

d. None of the above

Question 8

What is thought to be the responsibility of the purchasing manager?

Select one:

a. Managing the warehouse

b. Managing the stocks

c. Stock purchases for all outlets

d. All of the above

Question 9

What strategy has Matt thought of applying in the decision making process of Chatz?

Select one:

a. Centralised decision making

b. Decentralised decision making

c. Formal decision making

d. None of the above

Question 10

What will Matt have to do with the appointment of purchasing manager?

Select one:

a. Reduce the store managers

b. Widen the ‘span of control’

c. Manage the stocks in the warehouse through proper inventory system

d. None of the above

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MODULE IV : ORGANIZATIONAL DEVELOPMENT INTERVENTIONS

Case study

“The problem:

Linda, the CEO of a global software development company, knew she needed to have a tough conversation with her senior management team about how they were working together – or, more precisely, how they were not working together. Communication on the team had broken down because different team members had varying perspectives on important issues, and were not finding productive ways to address them. Some were angry but silent, while others were fighting openly – and loudly. The team knew they needed to discuss how to communicate across departments, how to make decisions together as a team, and how to manage the hand-off from the Sales department to Engagement Management once a new client had been signed on, a process that had been historically unclear and was getting more and more fraught with confusion over time.

The underlying problem:

We conducted our initial round of diagnostic interviews with each member of the 6-person senior management team. We discovered that there was a long-running history of miscommunications and turnover on the leadership team that contributed to the current difficult team dynamics. In particular, two members of the team represented opposite views from one another on a series of topics facing the team. These two team members, the Chief Marketing Officer and the Chief Technology Officer, had very different perspectives on how certain decisions had come to be made, and how those should now change. Linda, the CEO, was unsure how to manage the quickly deteriorating relationship between the CMO and CTO, but she knew something needed to be done.

The solution:

After the initial interviews, we helped the CMO and the CTO explore the nature of their relationship, their different roles in the company, as well as their different management styles and personalities. We enabled them to listen to one another, and to share their own perspectives, reasoning and interests. While they still disagreed on some topics, they discovered that some of their initial disagreements had been the result of misinterpretations and stylistic communication differences. This helped them give one another the benefit of the doubt more readily than before, and to agree on two major decisions that had previously been deadlocked and were holding up the team. They recommended those decisions to the CEO.

As the relationship between the CMO and CTO improved, we facilitated a series of team-wide meetings. We put the thorny issues facing the team on the table for discussion, one by one. The team discussed its communication and decision-making processes and the hand-off from Sales to Engagement Management: how did these happen at the company today? What worked, and what didn’t? How did this team want these to work going forward?

Results:

Through the team-wide meetings, each of the officers made a series of commitments for actions to take in the next 3 quarters to follow up on the solutions the team had generated. The CEO committed to being more proactive when disagreements on the team arose, and to tracking everyone’s commitments over time.

Over the next few months, the senior management team identified how best to make decisions going forward, how to communicate in good times as well as under stress, and they resolved the Sales/Engagement Management hand-off. As a result, the company’s overall bottom line improved by 25% and the working relationships and satisfaction of the senior management team members increased significantly.

Process results:

Through this experience, each of the team members also learned how to more authentically listen to other people’s viewpoints and how to calmly and more effectively express their own. They learned that sometimes what drives other people’s behavior is not what it seems on the surface. The CMO and CTO in particular learned that people’s viewpoints are impacted as much by the role they play in the organization as by their personality. They used this knowledge to minimize jumping to conclusions before trying to understand the other person’s motivations and perspective.”

Question 1 : How did the senior management team intervention helped the organisation ?

Select one:

a. The management could identify the best way to make decisions going forward

b. The management knew how to communicate in good times as well as under stress

c. The management could resolve the Sales/Engagement Management hand-off

d. All of the above

Question 2

How did this strategy of team intervention help the organisation?

Select one:

a. The working relationships and satisfaction of the senior management team members increased significantly

b. The company’s overall bottom line improved by 25%

c. The company managed to change the roles in the management level

d. Both a and b

Question 3

What is the % of overall improvement?

Select one:

a. 50%

b. 25%

c. 30%

d. 45%

Question 4

What was the cause discovered for disagreement in their discussion on reasoning and perspective sharing?

Select one:

a. Misinterpretations and stylistic communication differences

b. Miscommunication

c. Misinterpretation

d. None of the above

Question 5

What was the first step taken to resolve the misunderstanding between the CMO and CTO?

Select one:

a. Explore the nature of their relationship

b. Different roles in the company

c. Different management styles and personalities

d. All of the above

Question 6

What was the issue found after the diagnostics interview?

Select one:

a. Miscommunications and turnover on the leadership team

b. Team dynamics

c. Team management

d. None of the above

Question 7

What was the next step taken after sorting the relationship between CMO and CTO

Select one:

a. Team meeting with the CEO

b. Team-wide meetings for discussion on thorny issues

c. Change of roles within the team

d. All of the above

Question 8

What was the result of team-wide meeting?

Select one:

a. They were able to make team goals

b. They could decide the targets for the year

c. Each of the officers made a series of commitments for actions to take in the next 3 quarters

d. None of the above

Question 9

What were the leanings for the senior management team from the intervention?

Select one:

a. How to manage team meetings

b. How to more authentically listen to other people’s viewpoints

c. How to calmly and more effectively express their own views

d. Both b and c

Question 10

Who were the team members that represented opposite views from one another on a series of topics facing the team?

Select one:

a. Chief Marketing Officer

b. Chief Technology Officer

c. Chief Finance officer

d. Both a and b

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Module V : Change Management

Case Study

When Asa Griggs Candler founded The Coca-Cola Company in the late 1800s, there was no way he knew his company would one day be valued at upwards of $180 billion. That’s a lot of money for a business that sells soft drinks.

But Coca-Cola didn’t become the powerful force it is today by sheer chance.

An illustration: In the 1980s, Coke’s biggest rival, Pepsi, was aggressively targeting it. This caused Coca-Cola to reevaluate its offerings. Eventually, the company decided to concoct a new, sweeter soda. They called it simply New Coke.

Unfortunately, the public didn’t take too kindly to the new beverage. But Coke’s executives didn’t let the mishap derail their success.

Quickly, management decided to pull New Coke and replace it with the older, established formula. Lo and behold, Coca-Cola Classic was born, and Coke maintained its market dominance.

Question 1 : During which period was Pepsi introduced as a rival to Coke?

Select one:

a. 1880s

b. 1980s

c. 1970s

d. None of the above

Question 2

How did Coca-Cola expand its market?

Select one:

a. By introducing simply New Coke

b. By introducing diversified products

c. By establishing the formula of Lo and behold

d. None of the above

Question 3

Introduction of which product shook the market for Coke?

Select one:

a. Mirinda

b. Limca

c. Pepsi

d. None of the above

Question 4

What change strategy did Coca-Coal adapt to compete with its rival Pepsi?

Select one:

a. Coca-Cola decided to concoct a new sweeter soda called simply New Coke

b. Coca-Cola introduced a substitute similar to Pepsi

c. Coca-Cola started advertising more

d. None of the above

Question 5

What does Coca-Cola primarily sell?

Select one:

a. Sweetened carbonated beverages

b. 500 brands to customers in over 200 countries

c. Sugary Drinks

d. All of the above

Question 6

What was the value of the company in 2016?

Select one:

a. $180 billion

b. $120 billion

c. $ 150 billion

d. $ 130 billion

Question 7

When does Coca-Cola enact on their change strategy?

Select one:

a. If there is a customer demand

b. If there is a drop in sales

c. If there is a drop in sales

d. If there is and market positioning change

Question 8

When the simply New Coke strategy did not work, what was the new change management step taken by the management?

Select one:

a. Pulled the New Coke and replace it with the older

b. Named the older coca-cola as Coca-Cola Classic

c. Established a formula Lo and behold

d. All of the above

Question 9

Which among the following are other products of Coca-Cola?

Select one:

a. DASANI

b. Vitamin water

c. Evian

d. All of the above

Question 10

Who is the founder of Coca-Cola?

Select one:

a. Asa Griggs Candler

b. Caleb Bradham

c. John Pemberton

d. None of the above

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Assignment 2

Case Study

“In the years since it was founded in 1973, the Sacramento Natural Foods Co-op has blossomed into a $15 million business. With 7,000 members/owners, it is the second largest single-store grocery cooperative in the nation in terms of sales and volume. However, when a vocal minority of its democratic membership quashed plans to expand to a second store, the business was at a crossroads. With tensions running high, Cultrera interviewed Eric Douglas of Leading Resources Inc. (LRI). Cultrera was impressed by Douglas’ track record for managing change and gaining consensus within large organizations. “I was looking for someone with really good communication skills,”Cultrera said.

D2K: Establishing Trust as a Foundation for Long-term Growth

Together Douglas and Cultrera mapped out a five-stage process they called “Directions 2000” or “D2K.” The process was carefully crafted to engage as many member-owners as possible in a productive dialogue with management and each other. At each stage of the process, Douglas guided the participants toward an understanding of the complex business issues under consideration while improving their communication and problem-solving skills. Because the issues were complex, and emotions were running high around the issue of expansion, flexibility had to be at the heart of the process itself.

They got into the process themselves and realized that changes needed to be made and the proceeded following the steps below:

Stage 1: Identifying Basic Values

The guiding force behind any effective strategic plan is a clearly articulated set of values and a strong vision. But with member-owners representing a broad demographic spectrum, getting their agreement on a common vision was extremely challenging. Douglas and LRI consultants addressed the challenge by organizing 13 focus groups – 200 people representing specific constituencies such as top shoppers, most active owners and staff – to brainstorm about values and vision.

Stage 2: Casting a Wider Net

Using input from the focus groups, LRI drafted a survey with 50 questions about values and visions and distributed it to all 7,000 Co-op member-owners. LRI’s analysis of the 1,645 returned surveys confirmed that pricing was most important to members. Member-owners were evenly divided on the question of whether to expand to additional locations. A third issue that came into focus from the survey was the 5% member-owner discount: Owners did not want to give it up, even if it meant they paid higher prices in the store.

Stage 3: Moving Beyond Conflict to Strategy

With the survey data in hand, a group of 25 people – comprised of 15 member-owners, seven members of the Board of Directors and three members of management – began working together as the D2K Planning Team under the guidance of LRI consultants.

Within a few weeks, the team had defined the purpose and values – what Douglas calls the “strategic foundation.” The team then faced the question of vision – and the deep conflict over whether or not the Co-op should expand to a second store.

As a first step, Douglas broke the drafting committee into two teams to generate deeper discussion. The resulting dialogue between the teams ultimately led to a draft vision that called for the Co-op to extend its services “to as many people as possible in the communities we serve.”

“This vision was based on a philosophy of inclusion,” said Keat who was a Planning Team member. “The Co-op offers something very special in the quality of its products, its support for local farmers, and its reliance on cooperative economic principles. Our vision was to share that.”

“We tested this vision again and again within the Planning Team,” Douglas said. As they grew more comfortable, team members used a combination of brainstorming exercises, management input and survey feedback to develop seven key goals to achieve the vision. LRI consultants carefully translated their decisions into a draft strategic plan.

Stage 4: Honoring the Process through Feedback

The next step was presenting the draft plan to member-owners. Rather than ask for “thumbs up or thumbs down,” LRI created a survey asking member-owners to rate each component of the plan, as well as the process itself. Member-owners were also invited to attend “town hall” forums to discuss the draft and provide feedback.

The resulting feedback was overwhelmingly positive. More than 95% of those responding said they supported the process. More than 90% said they supported the vision. Even more surprising was that, “Many of the member-owners who approved the plan had only been touched tangentially by the process – through taking the survey or reading about it in the Co-op’s newsletter,” Douglas said. “But because they had been touched, they supported the change.”

Stage 5: From Approval to Action

After unanimously voting to approve the plan, the Board handed it over to management to implement. “It makes my job as general manager a whole lot easier,” Cultrera said. “Now, when we run into pockets of controversy or resistance, it’s very easy to say, ‘Well, thank you. I really appreciate your input. But we heard from a lot of people who said this is what they want us to do.’ I feel like when there are other issues we need to face on a nitty-gritty level, we can call that process up again.”

Roadmap to the Future: From Plan to Action

That opportunity was right around the corner. Fresh from the D2K victory, the Co-op again hired LRI to implement one of the plan’s key initiatives. This was the hot button issue of deciding whether to keep or modify the 5% member-owner discount.

True to the D2K process model, Douglas and Cultrera ensured a high level of member-owner involvement at every stage. They convened a half-dozen “focus groups” to educate member-owners about the impacts of the discount. As with D2K, a Planning Team representing a broad spectrum of viewpoints was selected by LRI to explore alternatives and make a recommendation to the Board.

“At that point, we ran up against the fact that grocery store finance is not easy,” said Douglas. “Yet the team had to learn it in order to make a cogent decision.”

As team members became convinced of the wisdom of changing to the discount structure, some wanted to survey member-owners about the alternatives they were considering. “But a new survey would only confirm what the earlier survey told us,” Douglas said. “Without going through the education process, people would resist giving up the discount.” The team finally agreed to stage a series of forums that would bring member-owners from the Planning Team face to face with fellow member-owners still skeptical about making a change.

It was a critical part of the process that Mendenhall calls “transformative.” “One planning team member really turned the group around just on the force of her own presentation,” Mendenhall said. “As she talked about what she and the group had gone through, you’d start to see heads nod. You could see she felt it from the heart.”

With positive feedback from member-owners, the Board approved changing to an end-of-the-year patronage refund that has worked well at a number of co-ops throughout the country, combined with special pricing programs such as monthly category specials. Some of the original benefits – such as a 10% discount on Owner Appreciation Days – remained in force.

“We’ve learned that there are a variety of ways to involve members in decision-making, besides just sending everything out for a member vote,” said Mendenhall. “Communication and cooperative education is very important.”

Cultrera agrees. “Because we kept the lines of communication open with the ownership throughout this long process, we heard from people we had never heard from before. By the end of it, member-owners clearly honored the process, so they trusted the plan. It’s given the organization a tremendous amount of strength and ability to keep moving forward.”

The Co-op’s annual sales increased to $17 million. Its employees had received an across-the-board pay increase reflecting the plan’s commitment to a quality workplace. Meanwhile, the Co-op had begun looking at new locations for a second store, this time with the clear support of its owners.

Question 1 : According to Menden hall, what is important in decision-making?

Select one:

a. Communication

b. Cooperative Education

c. Talking to the team

d. Both a and b

Question 2

After the planing stage, what is the next step of presenting the draft plan called?

Select one:

a. Honoring the process through feedback

b. Moving beyond conflict to strategy

c. Casting a wider net

d. None of the above

Question 3

What is the new process introduced by Douglas and Cultrera?

Select one:

a. D2K

b. Directions 2000

c. D3K

d. Both a and b

Question 4

What was the step taken to approve the plan?

Select one:

a. Unanimously voting

b. Implementing the plan

c. Prepared the employee for new projects

d. None of the above

Question 5

Which among the following was the first step taken while incorporating the new process?

Select one:

a. Casting a Wider Net

b. Identifying Basic Values

c. Moving Beyond Conflict to Strategy

d. None of the above

Question 6

While identifying basic values how did Douglas and LRI address the challenges?

Select one:

a. By guiding the employees at every step

b. By organizing 13 focus groups – 200 people representing specific constituencies

c. By managing the employees

d. All of the above

Question 7

Who worked towards the planning of D2K after the survey?

Select one:

a. 15 members owners

b. 7 members of the Board of Directors

c. 3 members of management

d. All of the above

Question 8

Why did Douglas break the drafting committee into two teams?

Select one:

a. To generate deeper discussion

b. To reduce people in one forum

c. To manage employee problems

d. None of the above

Question 9

Why did Douglas guide the participants at every stage?

Select one:

a. Because the issues were complex

b. Because emotions were running high around the issue of expansion

c. Because flexibility had to be at the heart of the process itself

d. All of the above

Question 10

Why was the new process crafted?

Select one:

a. To engage as many member-owners as possible in a productive dialogue with management and each other

b. To improve employees communication skills

c. To manage employee problems

d. None of the above

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International trade Procedures & Documentation (EDL 313)-Semester III

International trade Procedures & Documentation (EDL 313)-Semester III

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1st Module Assessment

Case Study

Philippines: Adopting the Transaction Basis for Customs Valuation

This study describes the challenges faced by customs officials in the Philippines when they adopted transaction valuation to facilitate imports, and the way in which they overcame these challenges. The Philippines government needed to adopt its international treaty obligations into domestic law, and it did that with two laws. It enacted Republic Act (RA) 8181 in 1997, which enabled transaction valuation reform. However, various obstacles hindered the implementation of this law, and so in 2001 the government adopted RA 9135 to fix the problem in RA 8181 so as to authorize post-entry audit systems.

There had been two major concerns in the Philippines regarding the country’s obligations to shift its customs values from notional published values to transaction values. On the part of the customs authorities, they expected customs collection to go down as importers took advantage of their legal rights, undervalued their imports with fake invoices knowing that customs authorities would never know on time that they did so and so paid lower duties and taxes than they ought to. On their part, domestic producers were fearful that implementation of this obligation would erode their trade protection. The Philippines has nevertheless implemented its obligation and has used transaction values in customs assessments since 2000.

Three and a half year later, the then Customs Commissioner, Antonio M. Bernardo, has been pleased to see that customs collections have been going up. However, domestic producers are still concerned and keep adjusting to these changes. This study documents the policy reform process, assesses the impact of the reform and highlights the tasks yet to be done to implement transaction valuation reform effectively and properly.

I. Why reform customs valuation?

In 1996, when the Philippines enacted RA 8181, its customs valuation procedures deserved a major overhaul, at least from the perspective of reducing corruption and facilitating trade. Its pre-reform rules virtually allowed customs authorities to exercise wide discretion and compel importers to make deals with customs authorities to secure the most privately profitable terms for their businesses, in particular because of high tariff protection. Multiple customs valuation rules had been a tradition since RA 1937 in 1958, when customs authorities could legally calculate duties and tax assessments based on wholesale prices in exporting countries, with domestic prices adjusted appropriately to make these comparable to border prices or invoice values. That was because the law failed to specify when a particular rule should be employed. Because it also prescribed high tariff protection in order to protect domestic industries, RA 1937 sowed the seeds of corruption in customs administration in the Philippines.

The reforms following RA 1937 aimed at undoing the abuses of customs officials. Since 1972 there have been efforts made to publish home consumption values, defined to be the wholesale price of the good at about the time of exportation from the principal markets of the exporting country, and to delegate to the Philippine consular office staff the task of gathering data on home consumption values (HCV) and certifying the authenticity of these values.

The next initiative came in March 1987, when through Executive Order (EO) 186, customs authorities used fair market values, which were defined as the wholesale price of the merchandise being exported to the Philippines in the principal market of the exporting country at the time of exportation or, in the absence of that information, that of a similar good being sold in the Philippines. The EO also ordered the use of the actual cost of freight and insurance instead of an across-the-board 10% surcharge to cover such costs and incorporate other expenses needed to bring the goods to the Philippines to obtain the dutiable value..

With hardly any resulting improvement, EO 186 had to be complemented by a pre-shipment inspection (PSI) requirement to authenticate the declared values of imported merchandise. In 1987 the government contracted the services of the Swiss-based Société Générale de Surveillance (SGS) to do pre-shipment inspections for imported merchandise with a value of at least US$500 coming from Japan, Hong Kong and Taiwan. Thus, in April 2000, when the Philippines had to implement RA 8181, the government decided not to renew the contract with SGS and stopped PSI altogether.

II. RA 8181: a good attempt given the constraints

When the Philippines government incorporated into domestic law its legal obligations under the WTO’s transaction valuation agreement in 1996, the political atmosphere in the country was become increasingly hostile to WTO compliance laws. To give legal weight to these obligations only served to sustain the confrontation between those against globalization and those behind the integration of the economy into the global trading system.

The action taken by the Senate was to retain the use of published values to deter undervaluation, even as transaction values were ordered to be used for customs valuation purposes starting in 2000. The use of published values per se is in compliance with the WTO’s transaction valuation rules, if the prices published are transaction values at the time the merchandise is imported. In the Philippines, however, the published values were home consumption values, not updated in line with the market,(3) neither were the data comprehensive enough to cover all possible imported merchandise

Adjusting import assessment procedures

The customs agency adjusted its import assessment system to implement RA 8181. Pre-shipment inspection had to go, customs officials having concluded that retaining the PSI for valuation purposes would only create problems; they decided not to extend their PSI contract with SGS. The Commissioner, however, extended SGS services for three months or until 31 March 2000 to give the bureau the opportunity to master the new systems and procedures under RA 8181.

The value range information system (VRIS) was introduced to deter attempts to undervalue imported merchandise. The system consists of a database giving high and low transaction values of the merchandise imported in commercial quantities to the Philippines. If the declared value of a given shipment falls outside the range, the importer would have to show the relevant documents to the Valuation and Classification Review Committee (VCRC) to support his declared value. According to Philippines customs authorities, Article 17 of the WTO Customs Valuation Agreement allows the use of the VRIS for validation purposes. If the documents presented failed to remove reasonable doubt, the importer would need to post a bond to support the conditional release of the shipment.

As SGS’s PSI contract ended in March 2001, the Super Green Lane (SGL) facility became operational. The SGL is a facility meant for regular importers, most of whom were concerned about harassment in the post-PSI import processing system. To use this facility, an importer would need to be accredited by the bureau as a low-risk importer. In theory, the SGL goods require only an hour to process, and processing simply involves the matching of payment of duties and taxes with assessment.

SGL merchandise does not go through the bureau’s selection system. Examination of goods may be conducted at random and at the premises of the importer. SGL importers are subject to post-release audit, the purpose of which is to verify whether their import activities are in accord with the bureau’s and other government agencies’ regulations and to help these importers improve compliance.

III. RA 9135: improving the law

The Philippines customs officials realized that using published values as laid down in RA 8181 would only complicate customs administration. However, they needed a proposed alternative to published values before they went back to Congress to ask for an amendment of the law. When the chairman of the Senate Ways and Means Committee asked them for an alternative to published values to assure revenues, the customs officials were not ready with a good answer. They had heard about customs audits from training programmes sponsored by the Asia Pacific Economic Co-operation council (APEC) and executed by individual governments, but did not know how the audits were carried out in the countries that used them.

The need to improve RA 8181

The prevailing message at the Senate hearing was that while RA 8181 enabled transaction valuation, it had to be improved in order to reduce discretion, make valuation more transparent and provide the customs authorities with a post-entry audit system to improve compliance and assure revenues. Rey Nicolas, a customs collector, explained that the six methods were alternate, exclusionary and hierarchical methods, and that the proposed bill in fact limited discretion by making the law more systematic and clear on when and on what to use each method. Senator Enrile, answering a representative of the PMAP, said that the Senate wanted to improve RA 8181. If declared transaction values were truthful, no problem would arise. However, if mistakes occurred, the post-entry audit process would sort these out and help importers improve their compliance in subsequent import transactions.

President Arroyo signed RA 9135 into law on 28 April 2001. Besides enabling transaction valuation in the Philippines, this Act is more transparent and more compliant with the WTO customs valuation agreement, removes unnecessary discretion and assures revenues more positively than does RA 8181.

V. Concluding remarks: lessons learned

The Philippines customs authorities and private businessmen had serious concerns about this reform. The customs agency feared that its revenue collection would be reduced, since it expected the majority of importers to take advantage of its poor capacity for enforcing compliance. Importers would undervalue their merchandise and pay lower duties and taxes. If government officials were worried that undervaluation would reduce collection, Filipino domestic producers were concerned about the erosion of trade protection. Those in the private sector who stood to benefit from the reform were in no position as yet to fathom out the positive consequences. Thus the prospects of poor collection and import competition dominated the policy discussions at the time the government was adopting this reform.

Locking the reform in

The reform does not end with a piece of legislation. There are its implementation and enforcement, which brings this study to a parting remark The risk to watch out for is that the audit group goes down the path of arbitrary selection of those to be audited and in the search for importers’ violations of the Tariff and Customs Code. The cost of failure of post-entry audits is reduced collections, the lack of or incomplete implementation of regulations, and corruption.

There are other improvements in implementation that the Commissioner may want to consider. One is to improve its product description convention so that it becomes more precise and the list is regularly adjusted in line with the market. This reduces unnecessary friction between customs authorities and importers regarding the use of the value range information system..

Question 1: An importer would need to be accredited by the bureau as a____ importer.

 a. Medium risk

 b. High-risk

 c. low-risk

 d. Both a & c

Question 2. APEC stands for ___

 a. Asia Prone Economic council

 b. Asian Pacific Economy council

 c. Asia Pacific Economic Co-operation council

 d. Asia Prone Economy count

Question 3. Philippines adopted ______ to facilitate imports

 a. transaction valuation

 b. Technology

 c. Both a & b

 d. Only a

Question 4. Philippines had to implement RA 8181, the government decided not to renew the contract with SGS and___ stopped altogether.

 a. SPI

 b. SSI

 c. PSIII

 d. PSI

Question 5. President Arroyo signed_____ into law on 28 April 2001

 a. RA 1878

 b. RA 9135

 c. RA 1897

 d. RA 9876

Question 6. Senate wanted to improve ____

 a. RA 6798

 b. RA 8181

 c. RA 8799

 d. RA 4567

Question 7. SGL importers are subject to ____ audit

 a. Post Launch

 b. Pre Launch

 c. post-release

 d. Pre-Release

Question 8. The cost of failure of post-entry audits is reduced collections and ___

 a. Payments

 b. Receipts

 c. Both a & b

 d. corruption.

Question 9. The reform does not end with a piece of ___

 a. Rules

 b. legislation

 c. Procedures

 d. Norms

Question 10. _a customs collector

 a. Rey Nicolas

 b. Jorge

 c. Maria

 d. Annna

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2nd Module Assessment

Case Study

In 2004 Mauritius, a small island state located thousands of kilometres from its major markets, was facing two major challenges: the probable erosion of preferential treatment for its main export product (sugar) and a serious disruption to its textile and apparel industry, as a result of the impending expiration of the global restraint system that encouraged producers to seek out locations that could benefit from marginal quota allocations.

Mauritius’ participation in the multilateral trading system and in various regional agreements reflects its interests as a small, export-oriented economy with advantages in a few products, sugar, textiles and clothing in particular. As part of its economic success is due to preferential market access granted by major trading partners, Mauritius is taking steps to adjust to changes in this international environment.

Notwithstanding its considerable geographic disadvantage and the shocks sustained by the traditional pillars of its economy, Mauritius is a success story. The degree of success achieved is particularly evident when this country is compared to other island states with similar resource limitations.

This case study of Mauritius, based on background research and interviews conducted in Port Louis in May 2004, attempts to examine the basis for this success and to explore the future direction of the economy.

The local and external players and their roles

Mauritius is a multi-racial environment where the official language of business, English, is mixed freely by locals with a French-based patois that most appear to use in their day-to-day dealings with friends and colleagues. The differing ethnic backgrounds of the population, which in other parts of the world so often give rise to political strife and economic discrimination, are embraced positively in Mauritius and seem to have been melded into a distinct local culture.

One cannot help but be impressed by the degree to which the business community and government in Mauritius collaborate on projects designed to improve the country’s economic and trade prospects. There is a long-standing tradition in Mauritius of addressing problems and opportunities through institutional arrangements that bring together main players from the private sector and relevant government agencies. The Chamber of Commerce was already established in the mid-nineteenth century and the Mauritius Chamber of Agriculture opened its doors in 1853.

The single most important co-ordinating body for the private sector in Mauritius is the Joint Economic Council (JEC), established in the early 1970s shortly after the country gained independence. Although dialogue between the JEC and the government was hampered initially by mutual suspicion, the body has evolved over time into an ideal forum for sharing new ideas as well as developing shared views of problems and how best to pursue the country’s economic development. According to Jean Noël Humbert, the general secretary of the Mauritius Chamber of Agriculture, it was in the JEC that discussion was first initiated on turning Port Louis into a regional seafood hub (discussed below) and where the government agreed on the need to fast-track both seafood-related investment approvals and fisheries permits in order to remove any practical difficulties to making the vision a reality.

Crisis management is another important role of the institutional structures evolved in Mauritius. The Sugar Sector Strategic Plan (2001-5) was developed and discussed through these government-industry groupings. The non-sugar strategic plan was also formulated within these structures, as have been the various initiatives to deal with necessary adjustment in the textiles and clothing sector.

Mahmood Cheeroo, the secretary general of the Mauritius Chamber of Commerce and Industry, says that the Mauritian economy has necessarily been open and export-oriented from the start. After serious difficulties in the late 1970s, when Mauritius was the first to adjust under an IMF standby agreement, a strong government with a political mandate undertook a tough restructuring campaign and, with a structured and co-operative buy-in from the business community, charted a course for strong export-led growth in the 1980s..

Challenges faced and outcomes

Mauritius is situated at a considerable distance from international markets with significant purchasing power. Transportation costs are onerous and market development can be expensive. The country has benefited importantly over the past thirty years from preferential arrangements for sugar purchases by the EC as well as from the fact that the quota restraint system for international trade in textiles and apparel helped to create a significant garment production industry on the island.

Overcoming the disadvantages of distance: the tourism sector

Supachai pinpointed a major element when he alluded to the problems faced by small developing countries thousands of kilometres away from major markets. It is obvious to anyone who has had the pleasure of visiting Mauritius that it has major potential as a tourist destination. Some considerations pertinent to this strategy are obvious. Mauritius is a relatively small island with a fragile ecology and environment, especially in areas likely to attract tourist investment. Additionally, apart from the South African market, Mauritius is a long way from sources of tourists who are likely to spend significant amounts of money on beach holidays. Yip Wang Wing explained that an analysis of this situation had led to the adoption of what seems to be a very sensible national policy in respect of tourism. The official policy calls for ‘low-impact’, ‘high-end’ tourism, meaning that the ecological/environmental impact of tourist sites will be low and the tourists visiting Mauritius are likely to spend generously while in the country.

Yip Wang Wing explained the investment strategy along the following lines.

Where the government approves a significant investment in the tourism sector, accelerated investment and amortization allowances form an important part of the package from the start. Approved investors in the sector can amortize the cost of their investment in hotel facilities over just four years and in the case of new investments, 25% of the investment is allowed as a special credit.

In addition to making certain that the right investors put the desired levels of investment into tourism in Mauritius, governmental authorities also concern themselves with the standard of service in approved high-end hotels. Measures are in place to ensure that qualified hotel schools and hotel management certification requirements are met in the sector.

These efforts appear to be paying handsome dividends. Tourism is the third-largest source of foreign exchange earnings for the country and accounts for around 8% of total employment. Mauritius’ international airport has registered a growth in passenger traffic of around 8% a year in recent years.

Dealing with distance: the transport sector

The efforts being made by Mauritius to position itself as an economic hub are complicated by serious logistics competition from Johannesburg and Durban, in South Africa. In order to keep the harbour of Port Louis in the market as an effective player, the government and private sector have worked hard to keep down costs. The Mauritius Marine Authority (MMA) has expanded and modernized the port facilities in recent years and periodically studies new ways of cutting costs. A recent study, referred to as the ‘dwell time for cargo’ study, focused on how to remove identified bottlenecks and move vessels in and out of the harbour in as short a period as possible. The MMA periodically revises port tariffs to reflect market conditions. A programme designed to increase the handling level to twenty-five ‘twenty-foot equivalent units’ (TEUs) per hour by 2005 is contributing to an improvement in labour productivity in the port.

The sugar sector: making the most of a changing environment

Historically, sugar has been very important for Mauritius, and there can be no doubt that the country could not have reached its current level of economic development were it not for the many years of preferential sales of sugar to the European Community under special arrangements. Although Mauritius has a more diversified domestic economy than many other developing countries that are also reliant on sugar exports, sugar remains especially important for Mauritius both because it is the largest single beneficiary of EC preferential purchases and because the island is ill-suited to the cultivation of alternative agricultural crops.

The interviews for this case study were conducted prior to the outcome of the recent EC sugar subsidies dispute, but those interviewed were nevertheless already expecting major change to the long-standing regime and considering how to make the best of the situation through the transition. Humbert gave an overview of how the sugar industry was adapting. The overall area of land under sugar cane cultivation was diminishing, in part motivated by a restructuring plan that would allow for more profitable land use, in some circumstances potentially contributing to the industry’s modernization and also cutting one-third of the workforce in the industry. At the same time, an important part of the strategy called for modernizing and preparing the industry for the future

Financial services

Recognizing that rising income levels and a more well-educated populace would create a demand for more employment in white-collar services industries, the government and the private sector have collaborated very effectively to create an environment in Mauritius which has allowed the financial services sector to prosper and become a major and growing part of the island’s economy. The concept and supporting legislation for offshore banking were introduced in 1991, supplemented by lower tax rates for particular types of bank. In mid-2004 there were twenty-two authorized banks operating in the country, ten under a category-1 licence and twelve under a category-2 licence.

Lessons for others

Many of those interviewed by the author commented that there is in Mauritius today a large level of tolerance prevailing among the populace, notwithstanding the many different religious and ethnic groups present on the island. The first comment from Rajpati, the executive director of the Mauritius Sugar Authority, was that in Mauritius there is a well-established and functioning collaboration between the public and private sectors and that the Mauritian people are accustomed to ‘pulling together’ for the common good.

On the international trade front that is so vital to the country’s well-being, Mauritians are well aware that they have benefited from special preferences and circumstances over the past thirty years, but they are also very conscious that the landscape is changing and that these special features of their international trade cannot be counted on for the future. Their reaction has been to preserve what they can (by, for example, acting to cut costs in sugar production while developing new niche markets for speciality sugars) and, more importantly, experiment with new ideas for the country’s future economic development.

Question 1: Mauritian people are accustomed to ___ for the common good.

 a. Fasination

 b. pulling together

 c. Both a & b

 d. None of the above

Question 2. Mauritius both because it is the ___single beneficiary of EC preferential purchases

 a. largest

 b. Smallest

 c. Medium

 d. only

Question 3. Mauritius has a __ diversified domestic economy than many other developing countries

 a. less

 b. more

 c. high

 d. new

Question 4. MMA stands for ____

 a. Merger Manipulation Agency

 b. Mauritius Marine Agency

 c. Mauritius Marine Authority

 d. none of the above

Question 5. Overall area of land under sugar cane cultivation was __

 a. Developing

 b. Progressive

 c. Both a & b

 d. diminishing

Question 6. Rising income levels and a more well-educated populace would create a demand for more employment in _____services industries

 a. Yellow collar

 b. Blue collar

 c. white-collar

 d. Brown collar

Question 7. The concept and supporting legislation for offshore banking were introduced in __

 a. 1991

 b. 1995

 c. 1989

 d. 1994

Question 8. The MMA periodically revises port ____ to reflect market conditions.

 a. Non – Tariffs

 b. Duties

 c. tariffs

 d. all of the above

Question 9. ___remains especially important for Mauritius

 a. Tea

 b. Tobacco

 c. Tuna

 d. sugar

Question 10. ____ focused on how to remove identified bottlenecks and move vessels in and out of the harbour in as short a period as possible.

 a. dwell time for cargo

 b. Technology

 c. Government

 d. Both b & c

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3rd Module Assessment

Case Study

Malawi is a land-locked country occupying the southern part of the Rift Valley in east Africa. It is bordered by Zambia to the west, Mozambique to the south and east and Tanzania to the north. In 2001, the estimated population in Malawi was 11 million (World Bank 2003). This relatively small sub-Saharan African country is one of the poorest in the world, with GDP per capita of US$163 in 2001 and over half of the poor population living in the rural area.

Malawi is an open economy, but trade openness has not fostered economic growth, as is indicated by the declining figures for economic growth (from 6% in 1990 to -1% in 2001). Merchandise trade has declined significantly over time, with exports decreasing from US$442 million in 1999 to US$310 million in 2001, and imports from US$698 million to US$550 million in the same period (World Bank 2003). Tobacco, tea, sugar and coffee account for 90% of merchandise exports, with tobacco as the main export. There have been some efforts to diversify to non-traditional products such as fruit and vegetables and spices. On the import side, the main imports are vehicles and parts, petroleum fuels, machinery, boilers and parts, electrical machinery, fertilizer, wheat flour, pharmaceuticals, iron and steel.

Agriculture contributes a little more than a third (34%) to Malawi’s GDP, while the manufacturing and service sectors account for 18% and 48% respectively (World Bank 2003). Most of the activities in the service sector are non-tradable. The importance of agriculture cannot be stressed enough: in addition to being the leading export earner, approximately half of Malawi’s citizens who are in paid employment work in the agricultural sector and 85% of the population are supported by it (SADC 2001).

Malawi has removed most of its non-tariff barriers. However, a few import licences and bans for environmental, health, safety and security reasons still exist. The Ministry of Agriculture provides phytosanitary regulations, and the Ministry of Commerce and Industry issues licences for wild animals and other import licences in general. Approximately 29% of all product lines continue to face non-tariff measures (UNCTAD 2001). In the case of live fish, for example, trout face a tariff equivalent of 100%. Imports of this product line require a licence from the Ministry of Commerce and Industry. Import of live animals faces non-tariff measures of 50%. In 2001, Malawi introduced import licences on sugar and import bans on dairy produce and vegetable cooking oil. Even though sanitary and phytosanitary requirements are applied, they are not used to curtail imports. Malawi, like other developing countries, is in the process of preparing new anti-dumping measures and introducing countervailing measures (MG and IAWG 2003). Looking at exports, Malawi is a relatively open country. Since the late-1990s, all trade taxes and quotas on exports have been eliminated (WTO 2002). Export surrender remains only on tobacco, tea and sugar. Export licences are required for a few commodities such as fuel and maize for environmental protection and food security reasons. Tea and raw tobacco are also subject to export licences.

In general, Malawi faces severe trade and economic problems, including declining commodity prices, weak infrastructure, lack of technology, high cost of inputs, lack of access to financing, weak institutional and human capacity, high external debt — all of these have a major impact on trade performance.

The local and external players and their roles

Prior to 1994, Malawi was a one-party state and the government handled trade issues. In recent years, with the introduction of the multi-party system, the new governing structure has made tremendous efforts to include the private sector and non-government organizations in having a say in trade issues. Who are the main local stakeholders? The main department responsible for trade and industry policy is the Ministry of Commerce and Industry. Even though trade issues have taken centre stage in the domestic area, it is disconcerting that the Poverty Reduction Strategy (PRS) does not have a sector-specific plan for trade, meaning that when resources are allocated trade does not feature as a major priority in the development agenda. The good news is that sector-specific trade issues have been addressed in the Malawi economic growth strategy, and part of the strategy will be incorporated in the revised PRS. Other government ministries involved in trade issues include the Ministry of Agriculture, Irrigation and Food Security, which has the main task of formulating agricultural policies and the Ministry of Finance and Economic Planning, the overseer of the overall government budget as well as expenditure and revenue measures; the Malawi Revenue Authority is responsible for tax and tariff administration. The Ministry of Foreign Affairs, the Copyright Society (under the Ministry of Sports and Culture) and the Patents Office (under the Ministry of Justice) also play an important role in trade matters.

Challenges faced and the outcome

This section presents the views and challenges faced by some key stakeholders. To start with, the Ministry of Agriculture, Irrigation and Food Security, one of the key stakeholders, considering that the country is an agriculture-based economy, recognizes the importance of Malawi’s participation in the WTO. However for Malawi to benefit from the WTO process, Mr Lungu, a senior ministry official, argued that the country has to overcome some of the major domestic bottlenecks because ‘if developed countries were to grant Malawi free access to their market, supply-side constraints would hinder the country from enjoying significant gains from the full access’The challenge for Malawi, as an exporter of mainly agricultural products and venturing into exporting more processed products, is that it lacks trained manpower and equipment to address these non-tariff barriers and to comply with WTO commitments. This point was also reiterated by Dr Daudi’s son at the Malawi Bureau of Standards (MBS), the designated enquiry point for the Agreement on TBT and for food safety aspects of the SPS Measures.

Lessons for others (the players’ views)

From Malawi’s experience, lessons can be drawn on how to bring trade into development; how countries may effectively utilize technical assistance; the use of the safeguard mechanism and countervailing measures as liberalization prevails; how to address some of the constraints beyond tariffs and other border measures; and how to handle the issue of preference erosion.

Other lessons that Malawi could provide to other LDCs are to extend tariff bindings beyond agriculture to the manufacturing sector; increase programmes to enhance the participation of the private sector and other stakeholders so that supply-side constraints are addressed; and most importantly, to make sure that countries have missions at the WTO in Geneva.

Question 1: Agriculture contributes to Malawi’s GDP

 a. 34%

 b. 23%

 c. 42%

 d. 78%

Question 2. Export surrender remains only ____on tea and sugar

 a. Oil

 b. tobacco

 c. both a & b

 d. only b

Question 3. Malawi’s experience lessons can be drawn on how to bring trade into _____

 a. Cuture

 b. development

 c. country

 d. Streamline

Question 4. MBS stands for ____

 a. More Brake Somt

 b. More Bureau Standard

 c. Malawi Bureau of Standards

 d. Malawai Bench Standard

Question 5. Ministry of Finance and Economic Planning is the overseer of the overall____ budget

 a. National

 b. Public

 c. Both a & b

 d. Both a & b

Question 6. PRS stands for ____

 a. Poverty Reduction Strategy

 b. Poverty Residual Strategy

 c. Project Reduction Strategy

 d. Project Reduction standard

Question 7. The challenge for Malawi, as an exporter of mainly agricultural products and venturing into exporting ____ processed products

 a. more

 b. less

 c. both a & b

 d. Only a

Question 8. The main department responsible for trade and industry policy is the ___

 a. Ministry of Transport

 b. Ministry of Commerce

 c. Ministry of Commerce and Industry

 d. Ministry of technology

Question 9. the Ministry of Agriculture, Irrigation and ___ , one of the key stakeholders, considering that the country is an agriculture-based economy,

 a. Plantation

 b. Food Security

 c. both a & b

 d. none of the above

Question 10. The Ministry of Foreign Affairs, the Copyright Society (under the Ministry of Sports and Culture) and the Patents Office (under the Ministry of Justice) play an important role in ___.

 a. Economy

 b. Trade

 c. Business

 d. trade matters

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4th Module Assessment

Case Study

Indonesia’s Shrimp Exports: Meeting the Challenge of Quality Standards

Among Indonesia’s fishery products, shrimps contribute the largest foreign exchange earnings. The total value of shrimp exports in 2002, for example, was US$840 million, accounting for about 50% of the total value of fishery exports. However, shrimp exports have been declining during 2000-3. In 2000, Indonesia exported 144,035 tons (US$1,003 million) of shrimp, but this declined to 127, 334 tons in 2001 and 122,050 tons in 2002, or around US$940 million and US$840 million, respectively (Central Bureau of Statistics 2003). As an archipelagic country, Indonesia has 17,508 islands and 81,000 km of coastline which provide an excellent resource for brackish-water shrimp farming to support the growth of shrimp exports.

Japan is the largest export market for Indonesian shrimp, followed by the European Union (EU) and the United States. From the total export amount (122,050 tons) in 2002, 60% was shipped to Japan, 16.5% to the United States and 11.5% to the EU. Indonesia’s shrimp exports to Japan were, on average, 53,000 tons per year, or about 30% of Japan’s total shrimp imports. Meanwhile, Indonesia’s share of (frozen) shrimp exports to the United States is only 5-6%, which is much lower than that of Thailand (31%), Ecuador (20%) and Mexico (13%). Other export competing countries are Bangladesh, China, India, the Philippines, Taiwan and some Latin American countries.

The shrimp business in Indonesia is now under serious challenge, both internally and externally. Internally, the shrimp business faces many problems, especially in the production (farming) phase, such as disease infestation, shortage of shrimp fry, shrimp feed and medicine, regional planning and infrastructure, and farmer empowerment. Externally, the current flooding of relatively ‘cheap’ imported shrimp into Indonesia has had a detrimental effect on the profitability of businesses. Some of them went bankrupt and a large number have been in financial difficulties. Depressed world prices had begun in 2002, when the US government enacted an anti-dumping measure against China, Thailand, Vietnam, Brazil and Ecuador. This low price will potentially reduce incentives for doing business, reduce the quality of Indonesian shrimp and eventually reduce Indonesia’s competitiveness in the world market.

The European Union market

The September 2001 EU regulation obliging all imported shrimp to be free from chloramphenicol was discussed intensively during the second meeting of the ASEAN Fishery Federation (AFA) in Bangkok (4-6 November 2003). AFA member countries revealed their concern about the potential adverse effects of such a regulation. To mitigate the immediate adverse effects, AFA has proposed to the EU the gradual implementation of a zero chloramphenicol content over five years, namely 3 parts per billion (ppb) for the first three years, 1.5 ppb for the remaining two years and finally zero ppb. Some analysts and traders raised their objection to this regulation, pointing out that chloramphenicol is naturally produced by Streptomyces venezuela in the soil and in plankton which is eventually fed to the shrimps. A zero content of chloramphenicol in shrimp may therefore be impossible.

The US market

The US Shrimp Trade Action Committee, an ad hoc committee of the Southern Shrimps Association (SSA), sent an anti-dumping petition to the Department of Commerce and the International Trade Commission dated 31 December 2003 (Bisnis Indonesia, 2 January 2004). It sought anti-dumping action against six shrimp exporting countries, namely Brazil, China, Ecuador, India, Thailand and Vietnam, claiming that these six countries practised unfair trading which harmed the US shrimp grower. Indonesia was, fortunately, not included in this anti-dumping action.

There are two implications of the US action that need to be considered. First, although Indonesia was not included in the anti-dumping action, this measure should be considered as a sign of a future threat to the Indonesian shrimp business and exporters. The US government may decide to take action against Indonesia in future, particularly if Indonesia is found to be re-exporting imported shrimps from China, Thailand and Vietnam. There are signs that some ‘rent seeking’ traders may be undertaking ‘transshipment’ of imported shrimps from these three countries to the main export destination, including the United States. Indonesia’s shrimp imports from China, Thailand and Vietnam have been increasing recently, as a result of the US anti-dumping action against these countries (Kompas, 10 July 2004).

Second, this anti-dumping measure will obviously open a window of opportunity for Indonesia to increase its shrimp exports (and its share) to the United States. High tariffs on Chinese and Vietnamese shrimp imports will make Indonesian shrimps more competitive in the US market. The question, however, is whether Indonesia is able to take advantage of this opportunity. Since the United States imposed anti-dumping duties on Thailand, China and other main exporters, Indonesian exports of shrimp to the United States have increased significantly, from 15,253.5 tonnes in January-August 2003 to 26,679.3 tonnes in January-August 2004, or by about 75% (Putro 2004). The increase has been mainly associated with cultivated shrimps.

The players and their roles

Responses to chloramphenicol contamination

There are two choices for shrimp growers in response to the chloramphenicol problem: the first is using synthetic chloramphenicol that would increase shrimp production and result in shrimp that were ‘free’ from salmonella, but contaminated with chloramphenicol. Second, by abandoning the use of chloramphenicol, growers could produce chloramphenicol (mostly) free shrimp, but would probably reduce their shrimp production due to salmonella infestation. The second option, if chosen, would not free shrimp growers from the quality problem, as the EU also requires salmonella-free (non-contaminated) shrimps. Needless to say, shrimp growers in Indonesia are thus facing a dilemma. For developing countries such as Indonesia, producing salmonella-free as well as chloramphenicol-free shrimps appears to be a difficult, if not impossible, goal to attain at the moment. A more sensible and fairer solution would be for the EU governments to help developing country exporters to comply with such standards. Facilitation through trade, such as technical and financial assistance, can be set up bilaterally or, though WTO fora, multilaterally.

Natural chloramphenicol can easily be distinguished from its synthetic counterpart by a special instrument introduced by the EU. The question is whether this device can be cheaply accessed by typical small-scale Indonesia shrimp growers. The EU should also be willing to bear part, if not all, of the pre- and post-inspection costs regarding quality standard inspection procedures. It is a challenge not only to the Indonesian government but to all world leaders to promote freer and fairer trade in line with the Doha Agenda of the WTO.

Responses and Action to Cheap Imported Shrimp

The world market price of white shrimp is expected to drop due to a peak harvest in many shrimp-producing countries. China, for example, will likely produce more than 350,000 tons of white shrimps in 2005, while Vietnam and Thailand will each produce around 250,000 tons. If shrimp imports from these countries are not controlled, the domestic price of shrimp in Indonesia will certainly be depressed, and shrimp growers will suffer large losses.

Indonesia’s shrimp imports from China, Thailand and Vietnam increased in the period June-August 2004, as a result of the US anti-dumping policy towards these countries. The imported shrimps eventually depressed Indonesia’s domestic prices, since some of them are marketed domestically. At the same time unit production costs have been reported as increasing (to more than Rp 20,000 per kg) in line with an increase in the prices of feed and shrimp fry.

The shrimp market needs to become more diversified in terms of both product and market in order to counter cheap shrimp imports. This calls for a high level of technical assistance from both the government and international organizations (such as the FAO) in order to increase the value added of the product, such as quick-frozen, peeled, butterfly-cut shrimp, and cooked products. Industry development through technical assistance can be implemented by offering simple, low-cost technologies for value adding and by matching buyers and sellers to facilitate market diversification. Indonesia can also promote a locally specific or national quality brand (seal) the better to compete in the international market.

Lessons for others

Indonesia’s shrimp business has been facing serious constraints and challenges, only some of which have been partially tackled. The most critical challenges are related to quality standards, including freedom from antibiotic contamination, imposed by developed country importers, with which the Indonesian shrimp growers lack the capacity to comply. Other problems are the low productivity and high cost of production of domestic shrimps. This last problem creates difficulties in managing trade policy against cheap imported shrimps from major shrimp exporters such as China, Thailand and Vietnam.

The Indonesian government has recently tightened the conditions of issuance of import quality and health certificates in order to avoid the possibility of shrimp transshipment to the United States via Singapore. This initiative is a response to the increasing trend of transshipment using Indonesia’s export certificates, and has been found to be very effective in controlling transshipments and in avoiding Indonesia being involved in possible circumventions through transshipments. In addition to imposing a temporary import ban, Indonesia has also prepared an instrument for the management of the importation of shrimps. In order to stabilize domestic prices and to support domestic shrimp growers, shrimp importers are obliged to absorb domestically produced shrimps according to an import-absorption ratio. This instrument is expected to be effective in guaranteeing that farmers receive reasonable farm-gate prices for their shrimps during the peak harvest period.

Question 1. In order to stabilize domestic prices and to support domestic shrimp growers, shrimp importers are obliged to absorb domestically produced shrimps according to an _______ratio.

 a. Import-Export

 b. Export-Absorption

 c. Both a & b

 d. import-absorption

Question 2. Indonesia’s fishery products, shrimps contribute the largest___ earnings.

 a. Dinars

 b. Euros

 c. Dollars

 d. foreign exchange

Question 3. It is a challenge not only to the Indonesian government but to all world leaders to promote freer and fairer trade in line with the Doha Agenda of the ___.

 a. WTF

 b. WTO

 c. GATT

 d. ARS

Question 4. The current flooding of relatively ‘cheap’ imported shrimp into Indonesia has had a detrimental effect on the ________of businesses.

 a. Loss

 b. profitability

 c. Both a & b

 d. none of the above

Question 5. The imported shrimps eventually depressed Indonesia’s ____

 a. domestic prices

 b. National Price

 c. International Price

 d. all of the above

Question 6. The Indonesian government has recently tightened the conditions of issuance of import quality and ____in order to avoid the possibility of shrimp transshipment to the United States via Singapore.

 a. quantity

 b. health certificates

 c. Both a & b

 d. only b

Question 7. The shrimp market needs to become more diversified in terms of both product and market in order to counter cheap shrimp ___

 a. imports

 b. export

 c. Both a & b

 d. only a

Question 8. The US government may decide to take action against Indonesia in future, particularly if Indonesia is found to be re-exporting imported shrimps from China, Thailand and____ .

 a. Hongkong

 b. Japan

 c. Japan (Vietnam)

 d. Thailand

Question 9. This initiative is a response to the increasing trend of transshipment using Indonesia’s__ certificates

 a. import

 b. Foreign

 c. export

 d. Both a & c

Question 10. ___ is the largest export market for Indonesian shrimp,

 a. Japan

 b. Indonesia

 c. Vietnam

 d. Hongkong

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5th Module Assessment

Case Study

This case study of Fiji explores the way in which its government and people are preparing to deal with the expected end of preferential trading relationships, and is based largely on interviews conducted in Fiji over several days in August 2004. In March 1997 the WTO Secretariat published its report of Fiji’s first review under the Trade Policy Review Mechanism (TPRM)

Fiji’s economy depends heavily on sugar, tourism and clothing. The need to lessen the dependence on the sugar industry may become more urgent as Fiji’s preferential status in its sugar export markets is eroded in the long term. Similarly, the clothing sector, also facing an erosion of preferential access, could require efficiency gains to remain competitive. Diversification of the economy will, however, require attention to the problem of shortages of professional and technical personnel that have resulted from the high rates of emigration over the past decade.

The local and external players and their roles

Fiji’s political and economic relations with the countries affording it preferences for its exported goods — mainly Australia, New Zealand and the European Union (EU) — have long been key to the islands’ prospects for success. As a sign that Fiji’s relations with the EU are more significant than its need to participate in the WTO, Fiji maintains an embassy in Brussels that — as a part-time responsibility — looks after developments in Geneva. Decisions made in Canberra, Brussels and Wellington are critically important to policy-makers in Suva. This is a tough position to be in, and one would expect that it would encourage Fijians to co-operate with each other as a way of promoting a common cause.

The government and the state-owned sugar company have traditionally played a central role in Fiji’s economic development. The government’s Native Land Trust Board and the Fijians it represents is another central actor. Foreign investors are also important, particularly in the garment sector, where they dominate the ownership of the industry. The government and private-sector outside investors should be working together.

Challenges faced and the outcomes

Fiji’s trade and economic prospects are heavily dependent on developments in a few key economic sectors. The challenges faced in these sectors, current policies and likely prospects are explored below.

Sugar

The sugar sector of the global economy is undoubtedly one of the most distorted, given the plethora of production and export subsidies and extremely restrictive access barriers complicating sales to the world’s major sugar-consuming markets. Tragically, sugar is also a commodity that many developing countries have come to depend upon as a mainstay of their local economy and as a principal source of export earnings.

The sugar industry has benefited significantly over the years from access to the EU’s preferential trade regime for sugar. Under the arrangement, the EU pays prices substantially above world market price levels for imports of sugar from specified ACP(5) countries — up to three times the world price —with about half of the preferential import quota allocated to Mauritius and the rest divided among sixteen other ACP suppliers.

Within the EU, changes are being debated to sugar policy that, if implemented, would drastically cut the price paid for preferential sugar imports from ACP countries. The scheme, as it has existed up to now, is collapsing in part under the weight of dramatically increased imports of sugar into the EU from least developed countries under the ‘Everything But Arms’ (EBA) preference arrangement. None could have anticipated nor imagined how quickly EBA sugar suppliers could ramp up their production.

Looking at the current situation in Fiji’s sugar industry, an outside observer could be tempted to reach the conclusion that an unconscious decision has been made to abandon the industry even before the end of the EU’s preference scheme. A critical problem is that of land tenure. Some 87% of the land in Fiji is owned by ethnic Fijian extended families and managed by the Native Land Trust Board (NLTB), and most of the farmland devoted to sugar cultivation was leased, mainly to Indo-Fijians, for thirty-year periods under the provisions of the Agriculture Landlord and Tenants Act of 1976. Those leases, the bulk of which have evidently expired over the past three to four years, are not being renewed. The Indo-Fijians are leaving farms and the ethnic Fijians are evidently not taking up sugar farming in their place. Consequently, sugar production has fallen dramatically as land is taken out of production.

The garment sector

The garment-producing sector is the most important industrial sector in Fiji today and can generally trace its origins to a combination of domestic incentives, the existence of the global scheme of allocated trade for textiles and apparel under the GATT’s Multifibre Arrangement and the WTO successor arrangement, and special preferential trading arrangements put in place by Australia and New Zealand under the South Pacific Regional Trade and Economic Co-operation Agreement (SPARTECA). Most of Fiji’s garment factories are foreign-owned and many depend upon preferential access for their continued profitability. In the 1990s the production and export of garments grew rapidly, but in recent years the industry has been hit by three factors that could well threaten its long-term viability.

A first major problem concerns the impending end of quota arrangements under the WTO’s Agreement on Textiles and Clothing (ATC). Faced with the potential closure of many foreign-owned plants that were established in the country solely to take advantage of Fiji’s quota in developed country markets, the government in Suva has had to consider its position in the WTO.

Alternative opportunities for the future

Naturally enough, Fiji’s economic and trade prospects for the future are not limited to sugar and garment production; a number of other alternatives present themselves. In recent years, mining — mainly for gold — has accounted for as much as 3% of GDP, but a combination of technical difficulties in production and wide swings in the world price for gold have undermined the sector’s viability. Fiji is the location of the world’s largest mature mahogany plantation and the country is poised to benefit from the harvesting of this renewable resource. Exploitation of the mahogany plantation has reportedly been delayed by political infighting over how the revenue from the timber should be shared. The author was told by more than one interviewee that tensions over this question contributed to the impetus for the 2000 coup.

Lessons for others: Fiji’s approach to loss of preferences

Many people would argue that in the world of 2004 the sugar industry is not the industry to pursue as a means of making money. Many of them would also argue that the best course of action for a country in Fiji’s circumstances would be to get out of the industry. Such comments ignore the fact that sugar continues to be a mainstay of the Fijian economy and the country’s most important employer.

The outlook is far more optimistic for the garment sector. While it is true that both the government and industry’s first reaction to the end of preferences has been to seek a further extension of special trading arrangements (both in Australia through SPARTECA and in the WTO through association with the Istanbul Consensus group), there are nevertheless reasons to think that Mark Halabe’s vision of Fiji as a cost-competitive niche supplier of quality garments to the Australian market is a real possibility. But that industry needs to remain focused and to take advantage of the time remaining for preferential trade to undertake needed training programmes and investment in technologies contributing to efficiency gains. The Fijian government will likely need to co-operate as well. From the interviews conducted by the author, it seems that many of the garment producers now in Fiji would probably leave if the government implemented its rumoured plans to end the tax-free factory scheme.

Fiji’s failure to deal effectively with skilled labour shortages that were already apparent in 1996 when the WTO Secretariat conducted its trade policy review must be viewed as a serious concern.

Question 1: ATC stands for _____

 a. Air Traffic control

 b. All Transport Control

 c. Aeronautics Theme Count

 d. Agreement on Textiles and Clothing

Question 2. Fiji’s economy depends heavily on sugar,____ and clothing.

 a. Tea

 b. Technology

 c. Rice

 d. tourism

Question 3. Fiji’s failure to deal effectively with ___ shortages that were already apparent in 1996

 a. Unskilled labour

 b. Competetion

 c. skilled labour

 d. Both a & c

Question 4. it seems that many of the garment producers now in Fiji would probably leave if the government implemented its rumoured plans to end the ____factory scheme

 a. tax-free

 b. Tax-imposed

 c. both a & b

 d. None of the above

Question 5. mining mainly for gold has accounted for as much as__ of GDP

 a. 4.60%

 b. 2%

 c. 1%

 d. 3%

Question 6. Most of Fiji’s garment factories are___ and many depend upon preferential access for their continued profitability

 a. foreign-owned

 b. Costly

 c. Old

 d. None of the above

Question 7. SPARTECA stands for ____

 a. Ideology

 b. South Pacific Regional Trade and Economic Co-operation Agreement

 c. both a & b

 d. Only b

Question 8. TPRM stands for ____

 a. Trade Premium Review Mechanism

 b. Trunk Policy Review Method

 c. Trade Policy Review Mechanism

 d. Both a & c

Question 9. ___of the land in Fiji is owned by ethnic Fijian extended families

 a. 45%

 b. 89%

 c. 87%

 d. 98%

Question 10. ____vision of Fiji as a cost-competitive niche supplier of quality garments to the Australian market is a real possibility

 a. Mark zoon

 b. Mark Halabe’s

 c. Hemaann jihg

 d. All of the above

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Assignment 2

Case Study

Thailand: Conciliating a Dispute on Tuna Exports to the EC

Tuna is arguably one of the most well-known and abundant of fish, found in large quantities at supermarkets and convenience stores around the world. It is such a popular sight in its canned form that one may have even dissociated it from its origins as a fish, until reminded of the amusing slogan-cum-brand, ‘chicken of the sea’. As such, it is safe to say that tuna enjoys as much popularity among consumers as the humble and ubiquitous chicken.

On the production side, easy accessibility and popularity translates into big business, thriving markets and fierce competition. For producers of canned tuna, the fish is their livelihood, an important source of income and an industry of serious economic significance, contributing as it does to the national balance of payments, the employment rate and, subsequently, a productive and healthy social climate.

This case study illustrates the manner in which Thailand raised the issue and challenged the EC tariff within the framework of the Dispute Settlement Understanding (DSU) provided for in the WTO Agreement. There are three major stages to the DSU: consultation between the concerned parties, adjudication by Panels and, if necessary, the Appellate Body, and implementation of the ruling. However, it is not always necessary for every case to follow this trajectory and to be taken to Panels. In fact, the preferred path is for members to settle the dispute between themselves, through consultations.

To this end, the DSU provides good offices, conciliation and mediation which may be requested by members if consultations fail to produce an acceptable solution.

The players

The countries concerned here are Thailand and the Philippines on the one hand and the European Community on the other. The Philippines, as a fellow ASEAN and WTO member facing similar difficulties, joined with Thailand in this landmark attempt to prove that preferential tariffs had long been impairing their economic interests, and to seek appropriate redress or compensation from the EC. For the purposes of this case study, however, the focus will remain on Thailand and its actions, although the term ‘complainants’ will be used to refer collectively to Thailand and the Philippines when necessary.

Challenges and the outcome

The initial challenge faced by Thailand was, indeed, how to persuade the EC to enter into discussions on the matter. On 2 March 2000 the EC requested a waiver of its MFN obligations with regard to the ACP Agreement. In the eighteen months following the request until the adoption of this waiver, Thailand had on numerous occasions expressed its concerns relating to the implementation of the ACP Agreement and the negative effects that it would have on their canned tuna exports. They received no response.

At the Doha Ministerial Conference, however, a give-and-take situation presented itself. The EC-ACP Agreement could not be extended without the consensus of all WTO members in approving the adoption of the requested waiver. Realizing that Thailand would not concede, the EC agreed to hold consultations with Thailand and the Philippines (the complainants) to examine their differences. In the end, Thailand agreed to concede on the waiver, on condition that their case be taken up in an appropriate forum, with the aim of resolving the conflict of interest.

Lessons

This is a good example of how developing country members were able to use their WTO rights to secure more equitable treatment from a developed country trading partner. Once the positive resolution had been reached, EU Trade Commissioner Pascal Lamy travelled to Bangkok to inform Thailand’s Minister of Commerce, Adisai Bhodharamik, an indication of continued good relations between the two trading partners. Indeed, Chanintr emphasized that, although the tariff situation was of great importance to its canned tuna industry and national interests, Thailand made a conscious effort to maintain good relations with the EC throughout the proceedings.

Question 1: DSU provides good offices, conciliation and___ which may be requested by members if consultations fail to produce an acceptable solutio

 a. Support

 b. ventilation

 c. mediation

 d. none of the above

Question 2. DSU stands for ___

 a. Delhi Safety Unit

 b. Dispute Settlement Understanding

 c. Distance Safe Zone

 d. Dispute Settlement Unit

Question 3. EU Trade Commissioner ___

 a. Assrohm

 b. Kyle monn

 c. kim cheggs

 d. Pascal Lamy

Question 4. On 2 March ___ the EC requested a waiver of its MFN obligations with regard to the ACP Agreement.

 a. 2008

 b. 2000

 c. 2006

 d. 1989

Question 5. The EC-ACP Agreement could not be extended without the consensus of all ___ members

 a. WTO

 b. UNESCO

 c. Both a & b

 d. all of the above

Question 6. The ____as a fellow ASEAN and WTO member facing similar difficulties joined with Thailand

 a. Hongkong

 b. Malaysia

 c. Both a & b

 d. Philippines

Question 7. There are three major stages to the DSU: consultation between the concerned parties, ______and the Appellate Body, and implementation of the ruling

 a. Boad of conciliation

 b. Expert panel

 c. adjudication by Panels

 d. both b & c

Question 8. Tuna enjoys as much popularity among consumers as the humble and ubiquitous ____

 a. Fish

 b. chicken

 c. Both a & b

 d. all of the above

Question 9. ___is arguably one of the most well-known and abundant of fish, found in large quantities at supermarkets and convenience stores around the world

 a. Tuna

 b. Junkyard

 c. dolphin

 d. octopus

Question 10. ____agreed to concede on the waiver, on condition that their case be taken up in an appropriate forum, with the aim of resolving the conflict of interest.

 a. Europe

 b. Bangkok

c. Thailand

 d. Pataya

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International Economics & Policy (EDL 312)-Semester III

International Economics & Policy (EDL 312)-Semester III

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1st Module Assessment

After a decade since the end of civil unrest, Angola economy started an intense reconstruction process, boosted by booming economy based on oil exports and diamonds. During this on-going phase, the Angolan economy has increasingly become an important player in Southern Africa international trade, with imports as a critical part of the economy. Thus, controls on imports needed tightening to secure duties and taxes, previously lost.

The government launched a massive customs modernization program, including radical legal changes which could impose large penalties to non-compliant economic operators. Part of this challenge laid in communicating new obligations to importers with appropriate dissemination.

Since January 2002, Bureau Veritas has been contracted to conduct Pre-Shipment Inspections (PSI) for the Angolan Government. The main objective was to tighten customs controls to increase revenues from duties and taxes on goods entering Angola. Bureau Veritas implemented a dedicated structure in Angola with 60 employees in the capital Luanda and nearly 30 additional employees in 5 provinces: Cabinda and Soyo in the North, Lobito in the South, Namibe further South and Santa Clara at the border with Namibia.

Bureau Veritas built up a comprehensive database relating to import certificates issued which it, continuously shares with customs authorities as well as other offices in Angola. In parallel, Bureau Veritas became responsible for communicating to both importers and exporters all new regulations established by Angolan Authorities.

Seminars and workshops were held to raise the understanding of the new obligations, not only in Angola but also in some of its key trade partner nations: Portugal, South Africa, and Brazil. Bureau Veritas approach is to treat importers as clients, supporting their needs to understand all new regulations and increase awareness to avoid penalties and delays.

Bureau Veritas worldwide network has been greatly appreciated by the client; the network structure was adapted to suit Angola´s needs. Customs officials have received necessary training and Bureau Veritas continuously shares information to support controls.

The Angolan Customs authorities report excellent results after the implementation of their modernization program. From revenue receipts of $200 million on imports in 2002, the figure rose to $3.797 billion in 2010, a remarkable improvement of nearly 1800% in 7 years. Tighter legal, and customs controls have led to greater confidence in trading with the country. Correct revenues are being paid and it is widely recognised that they are contributing to the financial health of the nation’s economy.

The speed of processing imports also improved, dropping from an average of 40 days to 10-15 days currently. Close communication with importers and exporters reduced misinterpretation of legal obligations. Angola also benefits from detailed reporting of inspection certificates, a comprehensive and updated valuation database of imported goods, as well as online access to documents related to imports subject to PSI. Permanent communication between Customs officials and Bureau Veritas proved to be beneficial for this partnership

Question 1: Agola economy started reconstruction process boosted by booming economy based on __

 a. daimond

 b. Oil exports & diamond

 c. gold

 d. Bronze

Question 2. Bureau Veritas approach is to treat importers as clients, to understand all new regulations and increase awareness to avoid ___

 a. penalties

 b. Tax

 c. Both a & b

 d. penalties and delays

Question 3. Bureau Veritas Has been contracted to conduct__ for angloan government

 a. Pre-shipment inspections

 b. Shipment

 c. both a & b

 d. none of the above

Question 4. Bureau Veritas implemented a dedicated structure in Angola with _______employees in the capital Luanda

 a. 20

 b. 30

 c. 40

 d. 60

Question 5. Speed of import processing dropped from average 40 to ___

 a. 20-30 days

 b. 12-15 days

 c. 10-25 days

 d. 10-15 days

Question 6. The government launched massive____ which could impose penalties on non-compliant economic operators

 a. Schemes

 b. Rules

 c. Customs modernization programs

 d. Regulations

Question 7. The main objective of the government was to increase ____ from duties and taxes from goods entering angola

 a. Profit

 b. Sales

 c. Revenues

 d. none of the above

Question 8. ___ became important player in south african International trade.

 a. Australia

 b. New zealand

 c. Angolan Economy

 d. All of the above

Question 9. ____ and customs controls have led to greater confidence in trading within the country

 a. Tighter Legal

 b. legal

 c. both a & b

 d. all of the above

Question 10. ____ became responsible for communicating to both importers and exporters all new regulations established by Angolan Authorities.

 a. Norway

 b. Bureau Veritas

 c. Government

 d. none of the above

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2nd Module Assessment

After periods of civil disturbance, the Côte d’Ivoire government needed to reinforce the country’s economy. One way was to modernize customs control. The Ministry of Finance wanted to encourage international trade, while also making sure that correct import duties and taxes are paid. To achieve these goals, the government focused on the country’s sea ports, especially its main port in Abidjan. To attract trade, it was important to make the ports more efficient and secure. New customs and security systems were needed to maximize revenues and also to prevent illegal trade.

The government decided to implement a scanner for inspecting imported goods inside containers at the port of Abidjan. To install and operate the scanner, Bureau Veritas (through its subsidiary dedicated to facilitating trade, Bivac) was chosen because of its strong technical expertise. The government invested in the most modern scanner available. There are only two others like it in the world: one on the UK side of the Channel Tunnel, the other at the port of Marseille. It is bigger than other scanners, and can be used to inspect two 40-foot containers at the same time. Up to 30 containers can be checked every hour. The scanner is extremely sensitive. For example, trained staff can look at the color x-ray image and see the difference between a new and a used car tire. Another example: they can count exactly how many computers are inside a container, then compare with the number of computers declared on transport documents. If extra tax or duty needs to be paid, it can be decided almost instantly. As a result, illegal or undeclared items can be found quickly and easily. The Bureau Veritas team works closely with Customs officials. A certificate is given to each container that passes the scanning. Customs can then authorize the container. About 50 Bureau Veritas staff are based at the Port of Abidjan, with two teams of 6 people who are trained to analyze the images.

The new scanner began operating in early 2006. There are many advantages. Imported goods are now being cleared by Customs more quickly. The port of Abidjan is able to serve more customers in less time. It is building a reputation for being more modern, secure and efficient. The systems are now in place to increase revenues from import duties and taxes. Information about containers and the goods they carry is shared with Customs in a quick, efficient way. Bureau Veritas is working in close partnership with the Customs Department to provide a reliable and effective service.

Question 1. A certificate is given to each container that passes the ____

 a. Drawing

 b. Creating

 c. scanning

 d. None of the above

Question 2. After periods of civil disturbance, the government needed to reinforce the country’s ____

 a. Technology

 b. Growth

 c. economy

 d. none of the above

Question 3. It is bigger than other scanners, and can be used to inspect two _____ at the same time

 a. 50-foot containers

 b. 40-foot containers

 c. 20-foot containers

 d. 10-foot containers

Question 4. New customs and security systems were needed to maximize revenues and also to prevent ____

 a. Illegal trade

 b. Loss

 c. Dealys

 d. Both a & c

Question 5. The government decided to implement a ____ for inspecting imported goods inside container

 a. Device

 b. scanner

 c. Technique

 d. Tool

Question 6. The new scanner began operating in early ___

 a. 2008

 b. 2006

 c. 1987

 d. 2005

Question 7. The port of Abidjan is able to serve ____ customers in less time

 a. Less

 b. 28

 c. 34

 d. more

Question 8. There are only two others like (scanners)it in the world: one on the UK side of the Channel Tunnel, the other at the port of ____

 a. Germany

 b. Port Blair

 c. Both a & b

 d. Marseille

Question 9. To achieve these goals the government focused on the country’s sea ports, especially its main port in _____

 a. Australia

 b. Sweden

 c. Both a & b

 d. Abidjan

Question 10. Trained staff can look at the color ___ image and see the difference between a new and a used car tire

 a. z- ray

 b. x-ray

 c. Blurr

 d. all of the above

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3rd Module Assessment

The Central African Republic wished to implement a program to manage the sustainable harvesting of its forests and natural resources and ensure efficient and accurate collection of export duties on derived wood products. The diversity and scope of the Congo Basin’s ecosystems constitute one of the world’s premier forest resources and are subject to intense economic pressure. Since 2005, the Government has been focusing on strengthening all actions undertaken to promote wood products exports (logs and sawn timber), while enforcing clearly established rules and regulations for the industry, and has sought to bring all forest concessions under durable and responsible management (end 2011).

Bureau Veritas and its subsidiary BIVAC RCA, working closely with authorities (Ministries of Finance, Commerce, Water and Forests, Hunting and Fishing), have developed a verification program for exported forest products guaranteeing the collection of export duties.

The programme comprises:

1) Inspection, identification and tagging of all logs and sawn wood for export in compliance with international rules

2) Implementation of an accurate and reliable duties collection system for all wood product exports

3) Set-up of an audit trail, from the production location all the way to the port of shipment via the primary border crossings into Cameroon

4) Training local BIVAC RCA inspectors and agents of the administration.

By 2014, all wood from the Central African Republic slated for shipment to the EU must have a license guaranteeing the legality and traceability of exported wood products.

Since 2005 wood products for export are identified, quantified, inspected and traced from Central African Republic to the point of shipment. At the end of 2011, the state signed onto the Forest Law Enforcement Government and Trade (FLEGT) through voluntary partnership agreements with the European Union. Bureau Veritas and its subsidiary BIVAC RCA have a direct impact on the FLEGT process by: ensuring inspection and traceability of products produced through sustainable development, ensuring recognition in terms of ethics, professionalism and transparency with regard to all actors in the wood industry (public and private sector), and guaranteeing optimized duty collection.

Question 1. All wood from the Central African Republic slated for shipment to the EU must have a _____

 a. Permission

 b. license

 c. Authority

 d. None of the above

Question 2. At the end of 2011, the state signed onto the _____ through voluntary partnership agreements with the European Union

 a. Treaty

 b. Policy

 c. Forest Law Enforcement Government and Trade (FLEGT)

 d. both a & b

Question 3. Bureau Veritas and its subsidiary BIVAC RCA have a direct impact on the ______ process

 a. Economy

 b. FLEGT

 c. Growth

 d. All of the above

Question 4. Bureau Veritas focussed on ____

 a. Inspection

 b. Traceability of products produced through sustainable development

 c. Ensuring recognition in terms of ethics

 d. All of the above

Question 5. Bureau Veritas has a subsidiary named ____

 a. Angolan

 b. Ban thang

 c. BIVAC RCA

 d. Abdijain

Question 6. Government has been focusing on strengthening all actions undertaken to promote _____ exports

 a. wood products

 b. Glass

 c. Bronze

 d. Brass

Question 7. Implementation of an accurate and reliable duties collection system for all wood product exports is looked after by ___

 a. Bureau Veritas

 b. BIVAC RCA

 c. Both a & b

 d. Government

Question 8. The diversity and scope of the Congo Basin’s ecosystems constitute one of the world’s premier ____

 a. Water resources

 b. wildlife

 c. Both a & b

 d. forest resources

Question 9. verification program for exported forest products comprises – Inspection, _____of all logs and sawn wood for export in compliance with international rules

 a. Identification

 b. scrutny

 c. Tagging

 d. identification and tagging

Question 10. _____wished to implement a program to manage the sustainable harvesting of its forests

 a. U.S

 b. Central African Republic

 c. New zealand

 d. All of the above

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4th Module Assessment

The Company Infinity Air was founded in 1977 by Jimmy Wu, the child of immigrants from China. The company, a manufacturer and distributor of new and refurbished aircraft parts for the commercial aerospace industry, has sold $63 million in products and services to customers in 60 countries. The export of parts alone accounts for more than half of total worldwide sales. Five aircraft manufacturers, including Boeing, account for 80 percent of Infinity Air’s repairs and spare parts. Aircraft serviced are mainly Boeing’s 737-600-900 series, 767 twin-aisle, 747-400, and 777 aircraft. Today, the company employs 115 people and operates out of a 160,000-square-foot facility in southern California, with two additional locations in Seattle and Miami. Because the business is global, Wu has plenty of lower-cost competitors, and he can’t compete on a dollar-for-dollar basis with low-wage countries in Asia. His higher costs coupled with fluctuations in the business cycle were constant worries. Wu says that Infinity Air competes on innovation and business process. “Because of these processes,” he says, “we perform the service in less time and have a strong reputation for reliability and technical support—that’s the key to our international success.” For example, Infinity uses technology to manage customers’ procurement and repair. “We constantly try to be imaginative in everything we do—to make the best products, deliver the best service.” Wu said he also relies on free trade agreements to give him a competitive edge, though they are not a substitute for creativity and innovation. While Korea has always been a good market for Infinity Air, it’s getting even better now with the U.S.- Korea Free Trade Agreement. “It put a spring in the step of our business there. Korea is a huge market for us, and with the trade agreement in place, the market just got a whole lot bigger. We’ve already seen a spike in sales, with new orders coming from the Korean government for maintenance on regional jets, helicopters

Question 1. Company employs ______ people

 a. 123

 b. 345

 c. 567

 d. 115

Question 2. company operates out in southern California, with two additional locations in _____

 a. Seattle

 b. Miami

 c. both a & b

 d. none of the above

Question 3. Infinity Air competes on innovation and ___

 a. Creativity

 b. business process

 c. organizations

 d. all of the above

Question 4. Infinity Air do not substitute for Creativity and __

 a. technology

 b. Labor

 c. Innovation

 d. Capital

Question 5. Infinity Air has plenty of ____ competitors

 a. High cost

 b. Higher cost

 c. Medium cost

 d. Lower cost

Question 6. Infinity air is getting new orders coming from ___ for maintenance on regional jets & helicopter.

 a. US government

 b. Angolan government

 c. Korean government

 d. none of the above

Question 7. Infinity air was a manufacturer and distributor of new and refurnished ___

 a. Screws

 b. Nuts

 c. aircraft parts

 d. Both a & b

Question 8. Jimmy Wu was known as ___

 a. Innovator

 b. the child of immigrants from China

 c. technocrat

 d. none of the above

Question 9. The Company Infinity Air was founded in ____

 a. 1977

 b. 1987

 c. 2003

 d. 1978

Question 10. The export of parts of aircrafts alone accounts for ___ than half of total worldwide sales

 a. less

 b. very less

 c. both a & b

 d. more

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5th Module Assessment

Zeigler Brothers began in 1935 by selling livestock feed to farmers near Gettysburg, Pennsylvania. Brothers Ty and Leroy ran the business until Leroy’s son, Tom, took over and changed direction to focus on research and development of specialty animal foods and aquatic diets. Today, the company has two manufacturing facilities in Pennsylvania and two in Mexico, supplies 300 different products, and sells to 50 countries. Zeigler Brothers is a 2013 recipient of the President’s “E” Award for Exports. Chris Stock is the international sales manager. Most of the challenges faced by the company are in the form of helping customers deal with localized issues such as diseases that affect the fish species being farmed. Other concerns include how to find and perform due diligence of prospective customers and to make sure we understand the environmental regulations in the countries in which it does business. Zeigler had a fire about 6 years ago that devastated one of its production facilities. According to Stock, “The fire actually helped us to become more efficient, to make the most of what we have, and to modernize some things as well. We made the most out of what was a terrible situation and really didn’t skip a beat. Our customers are very loyal. And they helped see us through. And it’s amazing how far the company has come since that fire not so long ago.” Zeigler needed to grow, and to do that, it opted to expand its exports, which grew rapidly during the past 5 years and now represent a bit more than 50 percent of total sales. Zeigler now exports to 40–50 different countries every year. Zeigler focuses on markets that could be classified as having more risks than others, such as Nigeria and Ghana in West Africa, and Vietnam, the Philippines, Thailand, and Indonesia in Southeast Asia. India and China are also included. Said Stock, “Africa is on the cusp, I think. A lot of people see the opportunity, so it’s a great time to get in early, because it’s a huge emerging middle class that’s developing there with spending power. They need things more than any other part of the world. They Chris Stock with customers in Vietnam Success Story: Zeigler Brothers 43 have a lack of access to some of the higher-tech products and things that the United States can offer.” Another solution for Zeigler is the U.S. Commercial Service, which Stock calls “a reliable go-to kind of hub.” “In general, we come to them when we have export regulatory issues and we need somebody inside the government to guide us. A big thing about exporting is knowing that you don’t know it all and you’re always going to need support. The government has helped bring us into new markets. We went on a trade mission to Ghana when we were getting our Africa business warmed up and met people there that are clients now and important partners.” Stock believes the company is better as a result of its exporting efforts. “It challenges us. We are able to take opportunities and things we learn in one country and apply them elsewhere. So we’re always learning and one of the great parts about our job is we’re connecting people throughout the world and bringing ideas from one place to the other, whether or not they directly impact our product. We’re a facilitator and our customers see that. And I think it’s a very strong point when they get to know us is that we’re connected throughout the world and bringing solutions from one corner to the next.” One concrete example is making our products easier to use. Stock said: “In Southeast Asia, we were struggling with language barriers. We’ve been very ingrained in Latin America, very comfortable working with bilingual Spanish products and clients. But as we enter the Southeast Asian market we encounter the diversity of languages. Also because we’re in agriculture, one of the end-users of our products may have limited education or ability to read—so our products can be technical in nature, and how do we overcome these hurdles? And so we’ve begun developing and incorporating visual aids, videos, icons, logos, things that will help them understand how to use the product, what it’s designated for. And we’re able to take that and apply it elsewhere, because it is a universal need, but it’s being driven by a specific market area force at the moment.” Perhaps the biggest lesson is that exporting is a “no-brainer.” Stock said: “You should be exporting. If you’re not, start learning about it, talk to other exporters and just go for it. I think the key things to exporting are persistence and patience. You have to realize that when you get in this, it may not be immediate sales, it may take years, but you have to have the long-term vision. If you’re willing to go through a couple of ups and downs, it can pay off in dividends. If you don’t enter the export market, you’re limiting your sales in a big way, no doubt about it.”

Question 1. Challenges faced by the company are in the form of helping _____ with localized issues

 a. customers deal

 b. Consumers

 c. Needy

 d. None of the above

Question 2. exporting is a ___

 a. Game

 b. Gamble

 c. Experience

d. no-brainer

Question 3. Exports go through a couple of up and down but it can pay off in ___

 a. Installments

 b. some time

 c. Dividends

 d. specific time bound

Question 4. key things to exporting are ____ and patience.

 a. Capital

 b. International relations

 c. dividends

 d. persistence

Question 5. Zeigler Brothers is a 2013 recipient of the ____ for Exports

 a. Prestige award

 b. President’s “E” Award

 c. Innovator award

 d. None of the above

Question 6. Zeigler focuses on markets that could be classified as having ___ risks than others

 a. Less

 b. Medium

 c. more

 d. all of the above

Question 7. Zeigler had a fire about 6 years ago that devastated one of its ____ facilities

 a. Manufacturing

 b. production

 c. Technical

 d. Both a & b

Question 8. Zeigler is the _____

 a. Owner

 b. Competitor

 c. U.S. Commercial Service

 d. All of the above

Question 9. Zeigler needed to grow, and to do that, it opted to expand its exports, which grew rapidly now represent a bit more than _____ of total sales

 a. 40%

 b. 50%

 c. 30%

 d. 23%

Question 10. Zeigler now exports to ___ different countries every year.

 a. 40-50

 b. 23- 56

 c. 34-89

 d. 20-56

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Assignment 2

In October 2016, Shenzhen-based networking and telecommunications equipment and services company Huawei Technologies Ltd. (Huawei) unveiled its 14-port and 3-D Hexa-beam antennas to address the challenges associated with the 4.5G and 5G era at the 5th Annual Global Antenna and Active Antenna Unit Forum held in Paris. Commenting on the launch, Zhang Jiayi, president of Huawei’s antenna business unit, said, “Huawei focuses on satisfying the requirements of operators in the MBB (mobile broadband) era.”

Founded in 1987 in Shenzhen by Ren Zhengfei (Ren), a former military engineer in the People’s Liberation Army (PLA) – the unified organization of the armed forces of China, Huawei started as a sales agent for a Hong Kong-based company selling private branch exchange (PBX) switches. Soon, the company innovated and started selling its own PBX switches. Having established its domination over the Chinese telecommunications market, the company entered the global markets of Russia and Africa in 1996 and later mature markets such as the US and Europe.

The origin of Huawei Technologies Ltd. (Huawei) dated back to 1987 when Ren Zhengfei (Ren), a former military engineer in the People’s Liberation Army (PLA), founded the company in Shenzhen with the aim of making it the backbone of China’s communications industry.

The company started as a sales agent for a Hong Kong company selling private branch exchange (PBX) switches with an initial investment of US$ 3400. By 1990, it had acquired enough resources to open its first research laboratory. In the same year, i.e. 1990, the company made its own PBX and started selling the switches to hotel networks at prices lower than those of imported devices

HUAWEI’S INTERNATIONALIZATION STRATEGY

In the mid-1990s, the Chinese domestic telecommunications networking equipment market was dominated by giant international telecom equipment companies. Their dominance led to Huawei having a relatively weaker position in China. Ren believed that the Chinese telecommunications market was the largest and among the most open markets in the world attracting global telecommunication giants to the country. As a result, he felt, “The best food has all been eaten up by the global giants and what we can do is to have those leftovers.” This prompted Huawei to consider entering international markets. Commenting on its international expansion, Ren, said, “We were forced to go into the international market for our very survival.”

CHALLENGES IN THE GLOBAL TELECOM MARKETS

Though Huawei achieved huge success in several global markets, the US was a different story altogether. Despite bidding several times since the company first entered America, Huawei failed to win a single big contract from top-tier carriers such as AT&T, T-Mobile, and Verizon. The US telecom companies had had long relationships with home-grown suppliers such as Lucent, Motorola, and Cisco. Moreover, the US telecom majors felt that while the telecom equipment manufactured by Huawei was fine for emerging markets, it was not reliable or suitable for the 24/7 service required by networks in the US. Though by 2011, Huawei had developed some of the most innovative and fastest equipment in the telecom industry, it continued to face resistance in the US….

While Huawei was making several efforts to crack the global telecom markets, in July 2015, Malcolm Turnbull, Communications Minister, Australia, stated that amidst security threats, telecom companies in Australia had been barred from using equipment from Huawei and ZTE. This meant that Huawei would lose its existing business in Australia since it provided equipment for consumer devices and backend networks for Vodafone and Optus. There could also be more trouble in store for Huawei with the Pentagon and the US military announcing plans in October 2015 to ban the use of Huawei equipment.

In November 2016, when the US telecom market announced its plans to build the nation’s 5G wireless network, Huawei was also gearing up to roll out its 5G wireless network by 2020. Though Huawei had earlier stated that it had given up on the US market, Ren hinted that the company had not given up on the country permanently and that it planned to make a “glorious” return to the US. However, Huawei stated that it would not focus on the US market currently but would concentrate on other global markets. According to Ken Hu (Hu), Huawei’s CEO-in-rotation, “For our 5G strategy, we currently focus on markets like China and Japan among others. In the US right now, we’re not making significant progress and we don’t have big plans for that market.” ….

Question 1: 5th Annual Global Antenna and Active Antenna Unit Forum was held in ____.

 a. London

 b. sweden

 c. Paris

 d. Hongkong

Question 2. Chinese domestic telecommunications networking equipment market was dominated by giant ____ telecom equipment companies.

 a. National

 b. State

 c. international

 d. Regional

Question 3. Huawei started as a sales agent for a Hong Kong-based company selling ____ switches.

 a. Multiple

 b. Complex

 c. Both a & b

 d. private branch exchange (PBX)

Question 4. Huawei Technologies Ltd. (Huawei) is Shenzhen-based networking , _____and services company

 a. cable

 b. telecommunications equipment

 c. Television

 d. Internet

Question 5. Huwaei started selling the switches to ____ at prices lower than those of imported devices

 a. 5g

 b. hotel networks

 c. Cable

 d. all of the above

Question 6. Ren Zhengfei (Ren), a former military engineer in the People’s Liberation Army (PLA), founded the company in Shenzhen with the aim of making it the backbone of_______.

 a. Economy

 b. China’s communications Industry

 c. Telecom industry

 d. None of the above

Question 7. Telecom companies in Australia had been barred from using equipment from Huawei and ______

 a. Hongkong

 b. ZTE

 c. US

 d. Sweden

Question 8. US telecom majors felt that while the telecom equipment manufactured by Huawei was fine but was not suitable for the ______service required by networks in the US.

 a. Regular

 b. night

 c. both a & b

 d. 24/7

Question 9. US telecom market announced its plans to build the nation’s ___ wireless network

 a. 2G

 b. 3G

 c. 4G

 d. 5G

Question 10. ____ the president of Huawei’s antenna business unit.

 a. Zhang Jiayi

 b. Shan ghai

 c. Jimm see chnn

 d. Both b & c

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International Trade Finance (EDL 311)-Semester III

International Trade Finance (EDL 311)-Semester III

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1st Module Assessment

Wal-Mart, the largest retailer in the world, with over 7,800 stores, has been working steadily to improve sustainability. From installing green roofs to rolling out a more efficient trucking fleet, the company has moved forward internally, but now it is bringing its suppliers along.

Wal-Mart has been pushing sustainability since adopting the strategy in 2005, establishing goals of being 100% fueled by renewable energy, producing zero waste and selling products that will sustain the environment.

So how does that happen? In one famous example, the company began working with Unilever plc in 2005 to sell concentrated laundry detergent in a 32-ounce container (equivalent to 100 ounces under a previous formulation). Consumers got a more powerful detergent in a smaller package. Three years after rollout, the new container had saved 80 million pounds of plastic resin, 430 million gallons of water and 125 million pounds of cardboard, according to a company fact sheet. More importantly, it became an industry standard, prompting other packaged goods companies to switch to concentrated detergent as well.

Wal-Mart’s zero waste initiative is also moving forward. The company, which is aiming to eliminate all its landfill waste by 2025, was able to reduce waste by 57% between 2008 and 2009. It did so by improving inventory management, increasing donations and ramping up recycling (including 25 billion pounds of cardboard).

Now it is striving to push these criteria down into the supply chain on a three-stage path. First, it wants suppliers to rate their products on sustainability criteria. Second, it wants to gather data on product life cycles. Third, it is creating a sustainability index that will increase transparency for the consumer.

The first initiative, rolled out earlier this year, involves a questionnaire sent to more than 100,000 suppliers. It polls them on four categories: their energy and greenhouse gas emissions, waste and quality initiatives, “responsibly sourced” materials and ethical production.

Products are also being measured through their life cycles. Collaborating with academics, retailers, NGOs, suppliers and government in a consortium, Wal-Mart’s goal is to build a global database of product information. As environmental business consultant Joel Makower wrote on his blog, http://makower.typepad.com, “the consortium’s mandate is to focus on how to evaluate products, which Wal-Mart hopes will become the basis for standards, ratings, or other product-level evaluations that it would use in its stores.”

That data will be used to develop an index consumers can use to evaluate products, though it’s still unclear how that information will be measured and presented. Nor is there a timeline for rolling out such an index.

Impact: Wal-Mart wants its sustainability index to be open to all, becoming a standard to measure and communicate the green credentials of a product and thus becoming “a tool for sustainable consumption.” In the process, the exercise of measurement itself may reap rewards in more efficient production, less waste and lower emissions — all of which are also cost-saving measures.

Question 1. Initially walmart has collaborated with ___

 a. Kroger

 b. Unilever Plc

 c. Costco

 d. Kroc

Question 2. Sustanability index will be used by ___ to evaluate products

 a. Customers

 b. Employees

 c. consumers

 d. CEO’s

Question 3. walmart also focusses on ___measures

 a. cost saving

 b. Quality

 c. Both a & b

 d. None of the above

Question 4. Walmart has ___ stores all over the world

 a. 8200

 b. 6789

 c. 45637

 d. 7800

Question 5. Walmart is 100% fuled by ___

 a. World Bank

 b. Stakeholders

 c. Renewable energy

 d. Both a & c

Question 6. walmart is aiming to eliminate all its landfill waste by improving ___

 a. capital involvement

 b. Inventory management

 c. Techniques

 d. Labor

Question 7. walmart is working to increase its _____

 a. sales

 b. Revenue

 c. Profit

 d. sustanability index

Question 8. Walmart works for ____ initiative

 a. zero waste

 b. Green

 c. Child health

 d. Effeciency

Question 9. _ can also be used to eliminate landfill waste

 a. Recycling

 b. Resuing

 c. Both a & b

 d. All of the above

Question 10. ___ is the largest retailer in the world

 a. Kroger

 b. walmart

 c. Costco

 d. The home depot

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2nd Module Assessment

Case Study

Given its business of mining over 5 million tons of rock a day, Rio Tinto has a big footprint. The mines are expensive, take decades to fully develop and are not portable if something goes wrong. To reduce the political and economic risk and thus ensure steady returns, Rio Tinto has sought to win the backing of local communities, governments and the societies in which it operates.

About a decade ago, Rio Tinto came up with the concept of working within communities on outreach and social and economic development. At the time, the company was developing a mine in Madagascar that was a source of contention with NGOs, which were worried about threats to biodiversity and the local community. Ninety percent of the island had already been cleared by farming, grazing and charcoal production; the mine was situated in one of the island’s last pristine regions. The challenge was to create an operation “respectful to the environment, respectful of our employees, that is seen to be sustainable,” said CEO Tom Albanese.

A plan was developed to protect the environment and create economic opportunities in the communities surrounding the project, setting up standards and goals for the company to meet. These in turn aligned with broader company policies on environmental stewardship, social well-being, governance and economic prosperity.

Putting this strategy to work, Rio Tinto created a long list of measures, including:

• Policies to protect biodiversity and water quality around mine locations

• Employment for aboriginal peoples living near its mines

• Training programs to shift employees from manual labor to skilled positions

• Plans for the day when mining would be done, seeking to prevent “ghost towns”

• Goals for greenhouse gas emissions and energy use

Impact: Through these coordinated initiatives, Rio Tinto has obtained what it calls a “social license to operate.” The company felt an urgency because it recognized a global brand risk if it operated without such a license. Rio Tinto also helped form the International Council on Mining & Metals, which encourages sustainable practices across the mining sector.

Question 1. Planning was done to prevent ___

 a. Chaos

 b. Financial loss

 c. Loopholes

 d. ghost towns

Question 2. Policies were framed to check and protect ___ around mines

 a. water quality

 b. Plants

 c. Residents

 d. Space

Question 3. Rio came up with the concept of working with communities on ___

 a. Economic development

 b. socio & economic development

 c. Technological Development

 d. All of the above

Question 4. Rio tinto has a business of ____

 a. Food chains

 b. Garments

 c. Both a & b

 d. mining

Question 5. Rio tinto with his way of working achieved ____

 a. social license to operate

 b. Success

 c. Market share

 d. all of the above

Question 6. Strategy of working also included ___ for people residing near mines

 a. Protection

 b. employment

 c. Both a & b

 d. None of the above

Question 7. The company plan was based on various ___

 a. environment policies

 b. Government rules

 c. Both a & b

 d. None of the above

Question 8. Training programs were developed to shift employees from manual labor to ___

 a. Machines

 b. Technology

 c. skilled positions

 d. Both a & c

Question 9. working without license can lead to ___

 a. Spoil of image

 b. Legal actions

 c. global brand risk

 d. Financial loss

Question 10. ___ was a threat to business of minning

 a. Legal procedures

 b. Biodiversity

 c. Water quality

 d. Government land

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3rd Module Assessment

Case study

McDonald has been a well-known and valuable brand for over half a century. The company’s mission and vision is striving to be the world’s best quick service restaurant and formalizing their beliefs into “People Vision and People Promise.” “Quality, Service, Cleanliness and Value (Q.S.C. and V) also became the company’s motto. The company’s first McDonald store was built in 1940 by the original McDonald brothers, Dick and Mac. Later in 1954, Ray Kroc became the first official franchisee appointed by Dick and Mac McDonald in San Bernardino, California. Soon after, Mr. Kroc opened his first restaurant in Des Plaines, Illinois, and the McDonald’s corporation was created.

The new franchise began to grow rapidly as a result of its success. It wasn’t long before the 100th McDonald’s restaurant opened in Chicago in 1961. Less than ten years after the opening of Ray Kroc’s restaurant the company began to expand all over the United States. Ray Kroc bought all rights to the McDonald’s concept from the McDonald’s brothers for “2.7 million in 1961.”

McDonald’s continued to have enormous growth during the 1960’s. In 1963 alone, McDonald’s sold their one billionth hamburgers, opened their 500th restaurant, “Ronald McDonald” made his big debut, and McDonald’s net income exceeded $1 million. In 1966 McDonald’s was first listed on the New York Stock Exchange, and in 1967 McDonald’s went global. The company kept expanding with the introduction of the “Big Mac” and the opening of its 1,000th restaurant, which was where it all started- in Des Plaines, Illinois.

”Billions served,” indeed. McDonald’s is the world’s #1 fast-food company by sales, with more than 30,000 of its flagship restaurants serving burgers and fries in more than 100 countries” . Today, “McDonald’s operates over 31,000 restaurants worldwide, employing more than 1.5 million people.” In terms of countries, it operates in more than 119 countries on six continents. 70% of the locations are run by franchises while the corporation owns the other 30%. The Boston Market and Chipotle Mexican Grill fast-casual chains are also owned by McDonald’s.

McDonald’s is in the fast-food business, and nowadays, there is huge competition for that.

The following is a list of companies that are in the same business as McDonald’s and qualify as major competitors:

Burger King

Subway

Yum

Wendy’s

In & Out

One strategy McDonald’s focuses on is a differentiation strategy, partly combining it with the innovation strategy. By creating unique brand products, (chicken McNuggets, Big Mac, McFlurry) McDonald’s is setting self apart from its competitors. The innovation strategy is used by creating new and unique products (chicken tenders, Newman’s own salads, as well as specific products catered to specific region in the world), special celebrity endorsements (athletes, actors/actresses), partnerships/sponsorships (Music, Olympics, special movie toys), charities (Ronald McDonald House), games/promotions (monopoly game, special movie toys), which allow McDonald’s to develop their unique corporate image that sets them apart from their rivals. Another important role in staying competitive is McDonald’s online presence. The website (www.McDonald’s.com) is great opportunity to connect with the customers and stay competitive. Through the website, the company shows company facts, product information (nutrition facts), and links to the charity website, as well as games promotions (monopoly).

Through franchising, McDonald’s is able to reach nearly every corner of the globe. In addition, by using an alliance strategy, they are able to set up operations in Wal-Mart’s and sports stadiums and other firms which help support the industry.

The strategy the company is using to maintain or improve its competitive position is lowest total cost, expanded menu, having more than 30,000 stores, Hamburger University, celebrity endorsements, partnerships/sponsorships in music and Olympics, and Ronald McDonald Charity/Corporate responsibility.

The company has a record of industry leadership in community involvement, environmental protection, diversity, opportunity, and working with their suppliers to improve their practices. By having these programs the company is doing a very good job in building a relationship with the community

Question 1. First Mc donald’s store was built in ___

 a. 1956

 b. 1978

 c. 1940

 d. 1941

Question 2. Identify the major competitior’s of mc donald’s

 a. Burger king

 b. subway

 c. wendy’s

 d. All of the above

Question 3. Mc donald’s focusses on ___

 a. Diffusion Startegy

 b. differentiation strategy

 c. Both a & b

 d. None of the above

Question 4. MC donald’s motto includes___

 a. Q, S, C & V

 b. Quality

 c. Passion

 d. Employees

Question 5. Mc Donald’s went __ in 1967

 a. Local

 b. Global

 c. US

 d. Bankrupt

Question 6. Mc Donald’s work on the belief of ____

 a. People

 b. People vision and people promise

 c. Vision

 d. Mission

Question 7. ray kroc bought all the rights to Mc Donald’s concept for ____

 a. 3.4 million in 1986

 b. 5.4 billion in 1978

 c. 2.7 billion in 1961

 d. 2.6 billion in 1967

Question 8. Strategy used by company to maintain its competition involves __

 a. Lowest total cost

 b. expanded menu

 c. having more than 30,000 stores

 d. All of the above

Question 9. __ of Mc Donald’s locations are run by franchisee

 a. 78%

 b. 56%

 c. 67%

 d. 70%

Question 10. __ was the first official franchisee appointed by Mc donald’s

 a. Tom

 b. Wendy’s

 c. Subway

 d. Ray Kroc

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4th Module Assessment

Case Study

When a Dutch global coatings company decided to pursue a major U.K. competitor, the business world watched closely. The $17 billion acquisition brought together two giants in the coatings sector to create a global industry leader. The new company would comprise 72,000 employees, leading brands, innovative technologies, and complementary geographic footprints. It would dominate in 46 countries and enjoy a market presence in many others. Nevertheless there was some skepticism in the financial community about whether the merger would be successful. The management team needed to act swiftly to deliver results.

Despite their combined global presence, the two companies had limited geographic overlap outside of Europe. As a result, delivering the promised synergy targets of $390 million would be challenging, even more so given the timing of the acquisition: There were already warning signs of an impending global recession. For support in bringing about a speedy, best-in-class merger, senior executives called in A.T. Kearney.

We worked side by side with integration leaders to execute the global merger. Our work spanned the entire integration, from planning and execution to value capture and design of the leadership structure for each business unit (BU) and function. We decided to establish a light but robust integration management office (IMO) to stay small and flexible enough to coordinate our efforts quickly, while retaining the global depth to operate in all time zones.

Combining two different corporate cultures is almost always a struggle. We mapped both cultures to identify potential road blocks to the integration so that the team could address them immediately. The mapping exercise also allowed us to highlight and promote similarities between the two cultures, which was useful for building and maintaining momentum throughout the integration. Constant communication was pivotal to keeping all internal and external stakeholders informed. Therefore, even when important decisions were not ready for release, we kept communications flowing by talking about progress, people, and next steps.

Determining synergy targets can be tricky as it often requires overcoming opposition at the local level. Joint value-capture teams helped us find the balance. We also involved the CFO early in the synergy-review process to validate the numbers before the IMO leaders presented them to the market or baked them into any financial plans.

We worked with the integration team to assign all BU and functional leadership positions and their teams within 90 days following the merger, moving the best people from both organizations into key positions. The merger was an opportunity for the combined company to move beyond what either organization could achieve individually. Together with the integration team, we created an “aspirational” organizational structure and governance model that would ensure lasting advantage.

“The process was seamless,” said a company executive in describing the Day 1 integration. Project teams executed successfully and were able to deliver and track synergies according to plan. After Day 1, IMO leaders stretched select targets to deliver even more synergies, and savings ultimately surpassed the $390 million target. Perhaps most important, the integration was complete within the target 12-month period without a negative impact on revenues or customer relationship.

Question 1. Best people from both the organization were moved to __

 a. Top positions

 b. Key positions

 c. Lower level

 d. Middle level

Question 2. Both the companies despite of geographic overlap promised synergy targets of ___

 a. $34 million

 b. $390 million

 c. $236 million

 d. $21 Miliiom

Question 3. Determining sunergy targets involves ___ at local level

 a. Involvement

 b. People

 c. Both a & b

 d. overcoming opposition

Question 4. Integration of both the companies was backed up by _____

 a. CEO

 b. mapping of organizational culture

 c. Organizational Goals

 d. Employees

Question 5. Mapping the culture of both the companies helped in highlighting & promoting the ___

 a. similarities

 b. Dissimilarities

 c. Both a & b

 d. none of the above

Question 6. Risk means uncertainity concerning occurrence of __

 a. Gain

 b. Fire

 c. Loss

 d. Gamble

Question 7. With the help of integrated teams ___ organizational structure was created

 a. Flat

 b. Hierarchial

 c. Autocratic

 d. Aspirational

Question 8. __ is the opportunity for the company to move beyond what either organization could achieve individually

 a. Merger

 b. Take over

 c. Acquisition

 d. All of the above

Question 9. ___ acquisition brought together two giants in the coating sector to create a global industry leader

 a. $34 billion

 b. $67 million

 c. $17 billion

 d. $21 Million

Question 10. ___ was pivotal in keeping both internal & external stakeholders informed

 a. Coordination

 b. Planning

 c. Constant communication

 d. Directing

 

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5th Module Assessment

Case Study

In March 1999, a $ 3 billion stock deal was announced between luxury goods major Gucci N V and the Pinault-Printemps-Redoute (PPR) group of France.

The news of PPR acquiring a 40% stake in Gucci came as a surprise for Bernard Arnault (Arnault), Chairman of the Moet Hennessy Louis Vuitton (LVMH) group, who had been trying to acquire Gucci through open market stock acquisitions. Gucci announced that it would issue more shares if LVMH tried to further increase its stake in the group. Gucci President Domenico De Sole (De Sole) said that he had the support of Gucci staff, suppliers and independent shareholders to keep LVMH off the board. Earlier, Gucci had approved an employee stock option scheme (ESOP) to counter LVMH’s acquisition tactics. Not only did LVMH remain powerless in Gucci despite spending $ 1.4 billion, but its share prices also began sliding on the Paris stock market.

LVMH charged that the sole purpose of Gucci’s move was to deprive LVMH of its voting rights. The same day PPR announced its deal with Gucci, it paid $ 1 billion for Sanofi Beaute, the French owner of brands like Yves Saint Laurent cosmetics and perfumes. This was another setback for LVMH as Arnault had been trying to acquire Sanofi.

As a result of these deals, overnight the Gucci/PPR combination became a major competitor for LVMH. LVMH now made a full takeover bid for Gucci at $ 81 a share, $ 6 more than what PPR had paid. At the same time, it dragged Gucci to the court to annul the deal with PPR and replace its board with an independent overseer. The Gucci-LVMH battle took the global fashion industry by surprise. More so, because in 1994, it was Arnault himself, who had turned down an offer to buy Gucci for $ 400 million. However, in just five years the same man had spent $ 1.4 billion in building up a 34% stake in Gucci. A media report said, “How a $ 400 million reject became a highly desirable $ 8 billion company is one of the greatest comeback stories in the fashion business.”

Gucci’s history goes back to 1923, when Gucci Guccio started selling expensive leather goods in Florence, Italy. By 2001, the Gucci Group had emerged as one of the world’s leading multi-brand luxury goods companies.

The company designed, produced and distributed high-quality personal luxury goods, including ready to wear garments, handbags, luggage, small leather goods, shoes, timepieces, jewellery, ties and scarves, perfume, cosmetics and skincare products. Some of its important brands were Gucci, Yves Saint Laurent, Sergio Rossi and Boucheron The group directly operated stores in major markets throughout the world and also sold their products through franchise stores, duty-free boutiques and leading department and specialty stores. De Sole had joined Gucci in 1982 and quickly moved up the ranks, becoming the President of Gucci US. In the early 1980s, around 50% of the company’s stock was owned by an Arab company, Investcorp.

During the 1970s and 1980s, the Gucci label was seen on almost every imaginable product: scotch, leatherwear, key chains, watches, T-shirts, etc. Also, the company was spending more than $ 4 million a year to combat a flood of fake Gucci merchandise.

In 1990, Gucci hired Tom Ford (Ford), an actor-model with a degree in interior architecture and some experience in fashion design for its designing needs. By 1993, Gucci was on the verge of bankruptcy. In 1994, it was reported that the company was offered to Arnault for $ 400 million, but he backed off at the last minute. Investcorp then bought the remaining 50% stake in a desperate effort to recoup its investment. De Sole and Ford then began working towards canceling Gucci’s numerous licensing agreements and went on to build its image as a premier luxury brand. Though initially De Sole had reservations regarding Ford’s competence, over the years, Ford emerged as the single most important factor behind Gucci’s success…

LVMH had begun stalking Gucci since the beginning of January 1999 by acquiring more than 5% of its shares. By the end of January 1999, LVMH’s stake in Gucci had increased to 34%.

Question 1: Arnauld refused to buy Gucci at ____

 a. $14 billion

 b. $400 million

 c. $396 Billion

 d. $218 Million

Question 2. By 1993 Gucci was on verge of __

 a. Extension

 b. Expansion

 c. Bankruptcy

 d. Emersion

Question 3. Gucci group has emerged as world’s leading _____ goods companies

 a. Jwellery

 b. multi-brand luxury

 c. Handbags

 d. Perfumes

Question 4. Gucci had approved ____ to counter LVMH’s acquisition tactics

 a. ESOP

 b. RTYU

 c. EOOP

 d. PDSP

Question 5. Gucci was spending more than $4 million a year to combat a flood of ______

 a. New brands

 b. Change in customer preferences

 c. Change in lifestyle

 d. fake gucci merchandise

Question 6. In early 1980’s Gucci’s 50% stock was owned by Arab company___

 a. Emirates NBD

 b. Al-Rahiji

 c. Etisalat

 d. Investcorp

Question 7. In ___ Gucci Guccio started selling expensive leather goods in Italy

 a. 1976

 b. 1989

 c. 1932

 d. 1923

Question 8. Single most important factor behind Gucci’s success is___

 a. Tom Ford

 b. Tom Cruise

 c. Arnauld

 d. Emirates NBD

Question 9. ___ combination became major competitor for LVMH

 a. Gucci

 b. PPr

 c. Gucci/PPR

 d. None of the above

Question 10. ____ was trying to acquire Gucci through open stock market acquisition

 a. MVN group

 b. LVMH group

 c. QSCV group

 d. LMVH group

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Assignment 2

Case Study

The World Bank’s core mission is to reduce global poverty and encourage healthy economies. That’s why they depend on their peoples’ own ‘grass roots’ marketing to educate others about the cause.But being a global entity can present some major communication challenges. World Bank’s 15,000 employees span across 188 countries in 174 offices, organically creating language, culture and information silos in every corner of the globe. Brand assets were disorganized, and versioning requests and costs were out of control. The existing marketing asset management platform simply wasn’t sophisticated enough to keep up. They needed a multi-cultural, multi-lingual environment where all offices could access, localize and distribute the latest marketing materials using a new solution that was fast, flexible and web accessible.

Why they chose MarcomCentral

MarcomCentral centralized and automated the access, creation and delivery of World Bank’s static, personalized and variable data marketing assets, all within a cloud environment. Users can customize and order brochures, ebooks, letterhead, invitations, calendars, holiday cards and much more. For example, one of the most basic pieces – business cards – became the epitome of the system’s efficiency, saving them 25% in creative resources and justifying the investment in the system alone. Plus, the system tracks and reports metrics on client data, product orders, frequency of orders – all information the communications team uses to determine what materials are most effective for each audience. MarcomCentral also tackled the language barrier, thanks to the innovative multi-lingual functionality that came standard within the platform. Users now have free access to translation services for everything from traditional Romance languages to Unicode and double-byte fonts.

Result :

It used to take between 15-18 minutes to create a marketing asset for the shopping cart. Now it takes as little as 30 seconds using features like single sign-on and active directory integrations. Tens of thousands of assets are stored within their MarcomCentral solution, including video. Updates are seamless and behind-the-scenes. One functionality has been the biggest win for the marketing team and the field with 300 plus orders per month – the production of customizable business cards. Perhaps the biggest compliment is that the system was so incredibly easy to use that it was instantly adopted by teams across the organization.

Question 1: First country who has received loan from World Bank is ___

 a. France

 b. United Kingdom

 c. Spain

 d. Russia

Question 2. Goals of World Bank includes

 a. Promotion of foreign investment

 b. Promotion of international trade

 c. Facilitation of investment capital

 d. All of the above

Question 3. International Financial Institution “World Bank” was founded in ___

 a. October, 1948

 b. April, 1949

 c. May, 1945

 d. July, 1944

Question 4. Marcom central was equipped with ___ functionality

 a. Multi-purpose

 b. Financing

 c. Technical

 d. muti-lingual

Question 5. World Bank depends upon their peoples own _____ to educate others about the cause

 a. Ideas

 b. Innovation

 c. grass root marketing

 d. Funds

Question 6. World Bank has made up of ___

 a. International Development Association

 b. Multilateral Investment Gurantee Agency

 c. International Finance Corporation

 d. All of the above

Question 7. World bank has ___ employees across the globe

 a. 1000

 b. 15000

 c. 289000

 d. 56349

Question 8. World Bank is a recognised member of ___

 a. United Nations Development Council

 b. United Nations Development Group

 c. United Nations security Council

 d. United Nations General assembly

Question 9. World Bank’s core mission is to reduce __

 a. Inflation

 b. Global Poverty

 c. Formal Procedures

 d. Research

Question 10. ___ helped in automating the world bank’s static environment

 a. HSBC

 b. United Nations Development Group

 c. Data management

 d. Marcom Central

10 on 10

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Product & Brand Management (EDL 322)-Semester III

Product & Brand Management (EDL 322)-Semester III

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1st Block Assessment

Case Study
The New Coke story in a nutshell- In 1985, Coca-Cola completely withdrew their flagship product from the market and replaced it with a “new” Coke in the US and some international markets. This product is often referred to as “New Coke”, but the intention of the packaging was to indicate that Coke was new. The product was developed and launched after years of R&D and taste testing and focus groups with consumers. The new flavor outperformed both traditional Coke and Pepsi in market research taste tests. Primarily due to media and consumer lobby group pressure, within 80 days Coke re- introduced “Coke Classic” and offered two Coke variations along with “new” Coke. Today they no longer offer “new” Coke in the US market. The “Traditional” Cola Marketing Environment In its early years, Pepsi positioned itself as a discounter and sold its product for half the price of Coke in a larger bottle. This positioning had some impact with budget-conscious households and helped Pepsi become the “at-home” drink, while Coke remained the social drink. To reinforce their perceived higher product quality, one of Coke’s slogans was “it’s the real thing”. However, within a few days of traditional Coke being withdrawn and replaced by “new” Coke, there was a backlash from consumers and the media and their brand image was damaged. Many consumers saw Coke as a cultural icon and were angry that it was no longer available. The Coca-Cola product was the traditional market leader in the cola category. They had achieved success through a strategy of outsourcing manufacturing and logistics to licensed bottlers, strong retailer relationships, and building a very strong brand. Because of this initial relative competitive position, Coke believed their product was superior and that they had an entitlement of being the market leader. Whereas Pepsi always saw themselves as the challenger and tended to be more aggressive in their marketing tactics as a result.
Question 1
Which aspect of product strategy for New Coke was wrong

Product Features

Product Quality

Brand Image

Packaging

Question 2
The launch of new coke in the US market is an exampe of

Line Extension

Brand Extension

Positioning strategy

None of these
Question 3
Even when in the blind test, the New coke was liked, it did not succeed due to

Wrong positioning

Brand Coke

Wrong pricing

All of these
Question 4
The various stages in Product Life Cycle are all except

Introduction

Maturity

Lateral development

Growth
Question 5
As part of new product development process, the new Coke was wrong at which stage

Testing the product

Commercialization

Business feasibility

None of these
Question 6
New Coke has been launched under which stage of the PLC

Introduction

Growth

Maturity

Decline
Question 7
The problem for new Coke also took place due to

Product related issues

Positioning issues

Pricing issues

Distribution issues
Question 8
The main difference between Coke Classic and New Coke

Taste

Positioning

Pricing

Brand Name
Question 9
The most important aspect in branding and product strategy is

Compatibility between brand and consumer mindset

New brand name and pricing

Reinventing the earlier brand

All of these
Question 10
With various brands, Coke handles competition from Pepsi through

Marketing strategy

Product Mix

Rebranding

None of these

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2nd Block Assessment
Case Study
In mid-1988, Nestle SA (Nestle), the world’s largest consumer packaged foods company based in Switzerland, acquired Rowntree Mackintosh PLC (Rowntree), in the largest ever acquisition deal of a British company during that time.Rowntree was the world’s fourth largest manufacturer of chocolates and confectionery products, with well-known brands like Kit Kat, After Eight, Smarties and Rolo.
In the end, Rowntree was acquired by Nestle for £2.5 billion, two and a half times the pre-bid price and eight times the net asset value of the company. This acquisition made Nestle the largest chocolate manufacturer in the world.
Analysts felt that Nestle had paid £2.5 billion because of Rowntree’s brands, not its past financial performance. Industry observers wondered how Nestle would manage Rowntree’s brands. In the mid-1860s, Henri Nestle (Henri), a merchant, chemist, and innovator experimented with various combinations of cow’s milk, wheat flour and sugar. The resulting product was meant to be a source of infant nutrition for mothers who were unable to breast-feed their children.
In 1867, his formula saved the life of a prematurely born infant. Later that year, production of the formula, named Farine Lactee Nestle, began in Vevey, and the Nestle Company was formed. Henri wanted to develop his own brands and decided to avoid the easier route of becoming a private label. He also wanted to make his company a global company. Within a few months of establishing his company, Henri began to sell his products in many European countries. In the initial years, Henri restructured the organization to facilitate research, improve product quality, and develop new products. In 1875, Daniel Peter, Henri’s friend and neighbor, developed milk chocolate. He soon became the world’s leading chocolate maker. Later, his company was acquired by Nestle. In 1905, Nestle merged with Anglo-Swiss Condensed Milk Company, a manufacturer of milk-based infant food.
During World War I, there was a huge demand for dairy products and Nestle capitalized on this opportunity by executing military contracts of various countries involved in the war.
In 1938, after eight years of research, Nestle discovered a soluble powder that revolutionized coffee drinking around the world. The product was launched under the brand name Nescafe and became an instant success. The end of the World War II marked the beginning of a new phase of growth for Nestle. The company added many new products. In its effort to expand its operations further, Nestle merged or acquired several companies. In 1947, Nestle expanded into culinary products by merging with Alimentana, a Swiss company that produced and sold Maggi soups, spices and other food products in many countries.
Rowntree followed a “one product, one brand” policy. The brands were simply Kit Kat, After Eight, Smarties and Rolo, Rowntree was never mentioned.
Question 1
The decision to acquire the other chocolate brands by Nestle is a

Operational decision

Strategic decision

Tactical decision

None of these
Question 2
“In Strategic brand management, the most critical step is”

Identifying the core brand promise

Knowing the competition

Developing new brand positioning

All of these
Question 3
The most important branding challenge in acquisition is

Monetary consideration

Cultural integration

Consumer Understanding

None of these
Question 4
Mapping of core brand competencies is very important in strategic brand management process because

Developing core competencies between the brand and consumer

For making the pricing decisions

For marketing and promotion

For distributing
Question 5
What is value of a brand

Brand Image

Mental evaluation by a consumer about the brand

Logo and tag line of the brand

All of these
Question 6
What would Nestle do in developing POD

Differentiate each brand

Measure the differences

Comparision with other brands on differences

All of these
Question 7
What is understood as POP in branding

Point of purchase

Plaster of Paris

POP stores

Points of parity
Question 8
The most critical challenge for modern day brand is

To create differentiation

To understand the consumer

To compete with new players

None of these
Question 9
The brand promise under strategic brand management process is

The key words the brand stand for

Its tag line

Its value for consumer

None of these
Question 10
Brand managers have to be careful in developing

Brand name

Brand logo

Brand positioning and differentiation

None of these

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3rd Block Assessment
Case Study
For the uninitiated, Superdry is a fashion label of SuperGroup plc, an international clothing company based out of Cheltenham, UK. Well, it didn’t start out that way but that’s what this case study is all about. It’s about ingenious branding that resurrected an almost non existent fashion line of outdoor wear – a transition from car boot sales to high street stores, from oblivion to ubiquity. The fact that Superdry has nothing to do with anything remotely Japanese is evident if you decipher the script. If loosely translated (there’s no literal translation from Japanese), it reads “maximum dry (do)”, which sounds absolutely nonsensical. James Holder, the brainchild of Superdry reminisces of his obsession with typography and his childhood spent reading Japanese manga comics (known for its Japanese script on the cover). Apparently, the logo was conceived at a Japanese pub by James with a play on English and Japanese typography to loosely convey the meaning of staying dry on a wet day using Superdry.
The branding genius lies in the logo seamlessly incorporating Japanese and English, and conveying something totally different to what it actually says! Some market experts believe it’s a parody on Japanese clothing brands that often use meaningless English mumbo-jumbo to appear British. Parody or not, SuperGroup ain’t complaining. The logo has elevated Superdry to the point it’s mentioned in the same breath as Uniqlo, Zara, AllSaints and Mango – labels that rub shoulders with Superdry.
SuperGroup hopes Idris’ mass appeal will help gain lost momentum both at home and the US, one of Superdry’s biggest markets. According to a report in The Guardian, Euan Sutherland, the chief executive believes “Superdry still appealed to 18-24 year old market, but many shoppers had grown up with the brand” and Elba, 42, would appeal to that older generation as well.” Further, he adds, “Idris Elba is a big man in the US and he will automatically reposition Superdry in people’s minds
It’s not the first time that Superdry is betting big on celebrity endorsement. It’s always thrived on celebrity endorsement. Now, though, SuperGroup’s taking it a notch further by launching an entire sub-brand that is Idris Elba. This strategy has worked in the past for many high street brands to plug plummeting sales. Will this work for SuperGroup? What do you think? Would love to hear your thoughts
Question 1
What are the main brand elements for a brand

Brand name

Brand Logo

URL

All of these
Question 2
What is the most important brand element for SuperDry

Brand Name

URL

Logo

None of these
Question 3
What is SuperDry brand personality

Sports brand

Fashion for men and women

An American brand

None of these
Question 4
What consists of the brand identity of the brand

It stands for American fashion

A British and Japanese fashion brand

It stands for young consumers fashion

None of these
Question 5
Brand personality consists of

Personality traits of a brand

Personification of the brand

Personal values of the brand

All of these
Question 6
Which brand identity dimension is most critical for Superdry

Elements

Brand Image

Personality

None of these
Question 7
The key brand image source for Superdry are

Brand positioning

Brand Loyalty

Brand Judgement

All of these
Question 8
Brand personality scale measures

Levels of personality

Various possibilities of personality of the brand

A scale to measure the success

None of these
Question 9
Brand image sources can be

Brand elements

Brand positioning

Brand Core Values

All of these
Question 10
Celebrity Endoresements can build a brand through

Brand loyalty

Brand visibility

Brand Image

Brand Judgement
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4th Block Assessment
Case Study
Brand Rejuvenation: With youth forming a major population of India, Dabur decided to revamp its brand identity. Dabur associated itself with Amitabh Bachchan, Vivek Oberoi, Rani Mukherjee and Virender Sehwag for endorsements. New packaging and advertising campaign saw the sales of Chyawanprash grow by 8.5 per cent in 2003-04. Brand Logo: The year 2004-05 saw a whole new brand identity of Dabur. The old Banyan tree was replaced with a new, fresh Banyan tree.The logo was changed to a tree with a younger look. The leaves suggesting growth, energy and rejuvenation, twin colours reflecting perfect combination of stability and freshness, the trunk represented three people raising their hands in joy, the broad trunk symbolized stability, multiple branches were chosen to convey growth, and warmth and energy were displayed through the soft orange colour. ‘Celebrating Life’ was chosen as a new tag that completely summarized the whole essence. Dabur Chyawanprash Rejuvenation: Dabur Chyawanprash (DCP) is a heritage brand which came into existence in the year 1949. The brand is now ruling the market with a market share of around 60 – 70 %. The total Chyawanprash market is estimated to be around Rs 300 crore (AC Nielsen Retail Audit 2006-07). Chyawanprash is popular as a kid’s health tonic. Parents used to rely on this product for their kids especially if the kids are between the ages 6-16. Because the teens are usually hyperactive and less inclined to taking foods. Hence Chyawanprash offered a solution to the worried parents. The ayurvedic tag also alleviated worries of side-effects.
Question 1
Rebuilding the Brand again with different perspective is

Brand Repositioning

Brand Revitalization

Brand revival

None of these
Question 2
What brand problem Dabur was facing

Losing the brand image

Staleness of the brand positioning

Incompatibiity with consumer’s liking

All of these
Question 3
What was the logic behind using Amitabh Bachchan as celebrity

To create brand pull

To relate to multiple segments

Develop mass visibility

None of these
Question 4
The new brand logo was used for which kind of extension

Line extension

Product extension

Brand extension

None of these
Question 5
Having multiple products at various touch points leads to development of

Lines of products

Brand Portfolio

Product meaning

All of these
Question 6
Brand heritage of the brand has been

Celebrating life

Oldest brand in the country

Having multiple standing

None of these
Question 7
Changing the logo to a new tree indicates

Growth

Freshness

Rebirth

Change to something else
Question 8
Dabur’s new brand identity indicates

Revitalization

Repositioning

Extension

Revival
Question 9
Catering to multiple consumer segments lead to

Difficult brand image

Possibility to relate to all

Multiple brand image

None of these
Question 10
Co-branding can be done only when

Two or more brands are available

Compatibility beetween the brands

High level of competition

All of these
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5th Block Assessment

Case Study
The world constantly changes and disparities, however, some top brands seem to keep their leadership position in their industry to this day. Strong brands are amazingly durable and have the ultimate ability to overcome many challenges. Either does Nike. Since its creation in 1971 in the USA, the Nike swoosh is still one of the world’s most valuable brand despite of the severe crises. Ranked at 26 on the list of Interbrand’s “Best Global Brands” in 2009 with a brand value at $13.2 billion dollars, up 4% from a value of $12.7 billion last year, Nike is the best among sports brand, left the big competitors, Adidas and Puma far behind (Interbrand report, 2009)
Having and holding customers is likely to be a competitive battle which each brand tries all efforts to win. They compete for functional attributes, distinctive services or innovative technologies (Aaker, 1991).
Since Nike was set up by someone who has “a deep passion for athletics and running”, it should come no surprise that product is important. Products that are comfortable, “authentic, functionally innovative and uniquely designed” (Nike report, 1985). The innovative technology is considered as one of the defining dimensions of Nike’s brand identity and corporate culture.
The simple driving concept has led to some impressive innovations which is considered as one of the defining dimensions of Nike’s brand identity and corporate culture. The first highlight was Air cushioning, using pressurized gas to cushion impact and new materials such as Urathane, that was used first with the Air Max running shoes (Nike report, 1987). More recently, to obtain maximum performance, Nike Sport Research laboratory has discovered the innovative technology such as Shox, which are made mostly of rubber and “spring back adding more power to a runner’s stride” and Total 90 Concept, a range of equipment to help players perform over 90 minutes of a soccer match (Keller, 2008)
Associated brand with the top athletes, Nike tells story of brands which the main themes is “sportsmanship and unrelenting effort”. These are the story of Michael Jordan who won a record 10th scoring title and was selected as one of the 50 Greatest Players (NBA history, 2010) in American’s National basketball association championship. Lance Armstrong survived and won a second straight Tour de France while Tiger Woods completed the career Grand Slam, “ensuring his place in golf history at the age where most of us are still wondering what we will do when we grow up” (Nike report, 2000). The most three prominent athletes has generated the inspiration for young and next generation of athletes. Nike has succeeded to transfer their inspirations to every single purchaser. Wearing every pair of Nike shoes is to engage a passion for excellence and encourage to “do your own thing”. “Just do it” – the tagline could sum up all the greatest values of brand which is (Superbrands case study, 2002).
Products are no longer just products, they move beyond the functional meanings. Nowadays, they are definitely social tools “serving as a means of communication between the individual and his significant references” (Grubb and Grathwohl, 1967 as cited by Banister and Hogg, 2003). Products are considered as a symbol of individuality and uniqueness, and also symbol of affiliation and social identification. It is particularly trued with the fashion brands. Fashion brands such as clothes, bags, shoes and etc satisfy opposing functions, both social identification and distinction among individuals (Banister & Hogg, 2003)
Nike must have understood the recipe well. The “Just do It” campaign in the early 1990s would be a perfect example. Losing ground to archrival Reebok which was quick initiative on designing “style”, “fashion” aerobics shoes in 1980s (Keller, 2008), Nike responded dramatically and forcefully by launching the “Just do it” campaign which was mainly focused on person wearing on products instead of product itself.
“Purchasing an athlete-endorsed product is one means of symbolically and publicly demonstrating aspirations to be a part of the group and such behaviors are directly influenced by the extent to which a fan identifies with an athlete endorser”
“Just Do It” campaign succeeded (Nike increased its share of the domestic sport shoe business after launching this campaign in America from 18 percent to 43 percent, regained the leader position) because it could fascinate customers in both separating ways. Wearing Nike as a self fulfilling image declaration – “if you are hip, you are probably wearing Nike”. But perhaps most importantly, it could create the desirable needs -“if you want to be hip, wear Nike” (CFAR, 1998).
Symbolic meanings of Nike brand are also tracked in the research on “Symbolic and functional positioning of brands” of Bhat and Reddy (1998). This study showed that Nike scored high on the prestige and personality expression scales (See Appendix). The findings of Hogg et al (1998) also support the success of attached the symbolic and emblematic meanings to sportswear brands. The youth showed facility in interpreting the symbolic meanings attached to the sports brands which were associated with the different sports stars (such as footballers, rugby players, athletes and tennis players) and with different sports (e.g. football and rugby.)
Question 1
Brand Equity is made from the most critical feature on the top which is

Brand liking

Brand perception

Brand judgement

Brand Resonance
Question 2
Nike Brand has developed very strong brand loyalty due to

Good quality

High price

Functional and Symbolic relation

None of these
Question 3
Symbolic attachment of the brand can be develoepd through

Customer affection

Customer Engagement

Customer loyalty

None of these

Question 4
“Under the CBBE model, Nike is positioned at”

Brand Resonance

Brand preference

Brand Feelings

All of these
Question 5
Brand hierarchy consists of

Layers os hierachy

The structure of brand development

Levels of brand portfolio

None of these
Question 6
Brand Awareness can be built best through

Marketing

Enhancing functionality

Developing relationship with the brand

None of these
Question 7
Brand associations can be built on two platforms

Top and middle level

Multiple levels

For multiple segments

Primary and Secondary
Question 8
Brand Equity measurement systems consist of

Brand Tracking and measuring

Segmentation

Brand levels

All of these
Question 9
The basic difference between brand recall and recognition

Identification

Understanding the brand

Adoption and loyalty

None of these
Question 10
The main components of the Aaker model

Brand Identity

Brand Image

Brand Congruence

All of these
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Full syllabus Assessment
Case Study
Siddhartha took a number of initiatives to revive the fortunes of the brand. A new light weight engine made of Aluminum was developed to replace the Royal Enfield motorcycles’ old cast iron engines. New engines had higher fuel efficiency and longer life than the older engines. Royal Enfield took the help of an Austrian design firm called AVL to design the new engines. Changes were also made to make the motorcycles look contemporary. In order to improve the quality of motorcycles, the management made the quality standards for its component suppliers stringent. A new cruiser model called Thunderbird was introduced in the year 2002 to attract new younger customers. Enhanced quality and new models improved the sales by the year 2005. Within a short period of initiating quality enhancement measures, the warranty claims went down.
Question 1
What is brand revival

Repositioning the brand

Building upon the brand again

Changing the brand value

None of these
Question 2
What is most important to develop a brand

Customer compatibility

Marketing

Brand Efforts

All of these
Question 3
The most important factors in developing strong brand is

Advertising

Product Quality and Image

Customer Service

None of these
Question 4
A better brand experience can be developed through

Customer Engagement

Building long term usage

Selling at low price

None of these
Question 5
How brand can be made into long term strategy

Making it premium

Developing its sub brand

Undertaking Strategic brand management process

All of these
Question 6
Marketing Mix for brand is very critical as

helps the consumers identify and adopt

Developing marketing program

Develop loyalty

None of these
Question 7
Brand Equity can be explained as

Ownership of the brand in the market

Equity shares of the company

Equity of the brand in the competition

None of these
Question 8
Revival of the brand can be done by

Changing the marketing mix

Celebrity endorsement

Changing the core values

All of these
Question 9
Competition can impact a brand in which manner

Improve systems

Develop Differentiation

Teach marketing lessons

None of these
Question 10
Revitalization of a brand leads to

making the brand accessible

Developing new features

Building a new brand position and mantra

All of these
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Distribution & Logistics Management (EDL 321)-Semester 3

Distribution & Logistics Management (EDL 321)-Semester 3
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1st block assessment
Case Study
A dabbawala is a person, who is part of a delivery system that collects hot food in lunch boxes from the residences of workers in the late morning, delivers the lunches to the workplace utilizing various modes of transport, predominantly bicycles and the railway trains, and returns the empty boxes to the customer’s residence that afternoon. They are also made use of by prominent meal suppliers in Mumbai where they ferry ready, cooked meals from central kitchens to the customers and back.
It all started about 125 years back when this Parasi banker wanted to have home cooked food regularly in office and gave this responsibility to the first ever Dabbawala. Other people also liked the idea and the demand for Dabba delivery soared.It was all informal and individual effort in the beginning, but visionary Mahadeo Havaji Bachche saw the opportunity and started the lunch delivery service in its present team-delivery format with 100 Dabbawalas. In 1890 Bombay, Mahadeo Bhavaji Bachche started a lunch delivery service with about a hundred men. In 1930, he informally attempted to unionize the dabbawallas. Later, a charitable trust was registered in 1956 under the name of Nutan Mumbai Tiffin Box Suppliers Trust. The commercial arm of this trust was registered in 1968 as Mumbai Tiffin Box Supplier’s Association. And as the city grew, the demand for dabba delivery grew too. The current president of the association is Raghunath Medge. In 1998, Forbes Global magazine conducted an analysis and gave them a Six Sigma rating of efficiency.
The journey of Mumbai Dabbawalas has been a fascinating one, where they have proved their mettle over and over again. Every day, battling the traffic and crowds of Mumbai city, the Dabbawalas, also known as Tiffinwallahs, unfailingly delivered thousands of dabbas to hungry people and later returned the empty dabbas to where they came from. The Dabbawalas delivered either home-cooked meals from clients’ homes or lunches ordered for a monthly fee, from women who cook at their homes according to the clients’ specifications. The Dabbawalas’ service was used by both working people and school children. In 1998, Forbes Global magazine, conducted a quality assurance study on the Dabbawalas’ operations and gave it a Six Sigma efficiency rating of 99.999999; the Dabbawalas made one error in six million transactions. That put them on the list of Six Sigma rated companies, along with multinationals like Motorola and GE. Achieving this rating and that too without the use of any technology or paperwork, and that most of them were illiterate or semiliterate is indeed has been a herculean task. Apart from Forbes, the Dabbawalas have aroused the interest of many other international organizations, media and academia. It has very well survived the threats from todays business environment but has manage to survive through and that too has done it very well.
A collecting dabbawala, usually on bicycle, collects dabbas either from a worker’s home or from the dabba makers. As many of the carriers are of limited literacy, the dabbas (boxes) have some sort of distinguishing mark on them, such as a colour or group of symbols. Lunch boxes are usually marked in several ways: (1) abbreviations for collection points, (2) colour code for starting station, (3) number for destination station and (4) markings for handling dabbawala at destination, building and floor. The dabbawala then takes them to a designated sorting place, where he and other collecting dabbawalas sort the lunch boxes into groups. The grouped boxes are put in the coaches of trains, with markings to identify the destination of the box. The markings include the railway station to unload the boxes and the destination building delivery address. At each station, boxes are handed over to a local dabbawala, who delivers them. The empty boxes are collected after lunch or the next day and sent back to the respective houses. Dabbawallas tend to belong to the Varkari sect of Maharashtra and consider Tukaram’s teachings of helping each other to be central to their efficiency and motivation. The service is almost always uninterrupted, even on the days of severe weather such as monsoons. Since 1890, when the dabbawalas formally came into existence, none of them had ever gone on strike until 2011 when the members decided to head towards Azad Maidan to support Anna Hazare in his campaign against corruption. Each dabbawala, regardless of role, is paid around 8,000 rupees per month (about US$131 in 2014). Between 175,000 and 200,000 lunch boxes are moved each day by 4,500 to 5,000 dabbawalas, all with an extremely small nominal fee and with utmost punctuality.
Question 1
Founder of Dabbawala system

Parsi Banker

Mahadu Havaji bacche

Dhondiba Medge

Marathi banker

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Question 2
Dabba system started—————years ago

120

130

135

125

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Question 3
Sis sigma perfformance is

95.99

99.99

97.99

98.99

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Question 4
Technological back of Dabawala

to some extent

nil

full backup

as and when desired

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Question 5
Food is delivered from

home to office

home to home

mess to office

home or mess to office

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Question 6
Lunch boxes are usually marked in several ways:

“only abbreviations for collection points, and colour code for starting station, ”

only number for destination station

“markings for handling dabbawala at destination, building and floor”

all are correct

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Question 7
Tukaram s teachings matra was

God is one

believe in God

helping each other

believe in humanity

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Question 8
Dabbawallas tend to belong to the ——————sect of Maharashtra

Varkari

valmiki

varkai

none of the above

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Question 9
Dabba system is highly ..

unbaised

efficient

sufficient

none of the above

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Question 10
Means of transport is mainly ..

train and bicycle

car

bus

none of the above

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2nd Block Assessment
Case Study
Distribution systems may evolve over time as a business grows and changes. Consider a small one-store family restaurant named Alice’s, with delicious, unique, homemade salad dressings (e.g., Pomegranate Vinaigrette, Rum-Raisin-Orange Ranch, Blue Cheese Catalina). Initially, the dressings were only available to customers eating at Alice’s. Then customers begin requesting bottles to buy. Initial sales and distribution of Alice’s Salad Dressings were from the restaurant to walk-in customers. The product was packaged in a 32-ounce canning jar with a handmade label.
New distribution channels cause packaging and pricing changes. Then Alice’s Dressings were sold to a local grocery store at a discounted wholesale price, 28 percent less per ounce than the retail restaurant price, packaged in a smaller, 26-ounce bottle. As local demand grew, Alice decided to have the dressings made in an independent packing facility and sold to other stores in the area, which initially raised the cost of making the dressings. Alice’s husband, brothers, and a sister-in-law divided up initial sales responsibilities to call on local and regional stores in their spare time.
The popularity of Alice’s Dressings caused Alice to consider the possibility of selling large pallet quantities to distributors in other states. The distributors needed another 25 percent discount from wholesale price, along with free shipping. Sales brokers were also recommended, at 5 percent commission on net distributor sales, since the family could no longer call on everyone. A separate company would have to be set up to market the salad dressings; an enterprise requiring full-time management
Distribution channels are key to pricing and packaging decisions. In this case, a separate business, new distribution channels and sales representation grew out of Alice’s initial one-store restaurant. Alice’s restaurant was initially able to sell the salad dressings at $5.00 per 32-ounce jar (15.6 cents per ounce) directly to customers. However, once a decision was made to sell Alice’s Dressings as a shelf-stable item in grocery stores, the bottles changed to a standard 26-ounce size to compete with other dressings sold in this size.
Alice was concerned that grocery consumers, unfamiliar with the restaurant, would not pay over $3.99 retail per 26-ounce bottle when competing brands ranged from $1.29 to $2.69 for the same 26-ounce size. Wholesale prices were 28 percent less than retail, at $2.89 per bottle. However, the cost of ingredients was substantially more than competing brands, at $1.00 per bottle, and packaging and processing costs added another $0.50 per bottle. Profits were reduced from restaurant sales per bottle, but still acceptable (i.e., from $3.50 a bottle, or 11 cents per ounce, to $1.39 per bottle, or five cents per ounce), since the total amount of sales and profits were expected to be substantially greater through grocery sales.
Further research with marketing experts in the industry and sales brokers indicated a further 40 percent reduction in delivered distributor price (including brokerage commissions and shipping costs). Alice would net $1.73 per bottle at delivered distributor price with brokerage commissions of 5 percent, leaving an unacceptable gross margin of only 23 cents per bottle (13 percent), even at the higher retail price of $3.99 per bottle.
Alice finally decided to upgrade the bottle and label to a unique, tall, triangular, Italian glass bottle and cork, with gold and black labels and recipe hang-tags by a local design studio. She sold the dressings directly to upscale specialty and grocery stores. Distributors would not be used. Specialty brokers were hired to aid in selling directly, at a 10 percent commission on net sales. The premium pricing was also retained in this non-elastic, low-price- sensitivity market segment, with the new bottles retailing at $4.99 each. Final net factory sales per bottle were $2.69 after deducting 10 percent brokerage commissions, with net factory profits of $1.10/bottle. Specialty food stores took a 40 percent gross margin, but paid for shipping.
Packaging and pricing decisions are intimately related to distribution and sales force decisions: Alice’s restaurant could have made several different distribution decisions, with different packaging and pricing results:
Sell the salad dressings only from the restaurant in 32-ounce jars with handmade black and white labels at $5.00 each. This distribution and sales decision requires the least amount of extra resources, spending, and risk. This also provides the smallest potential sales return.
Sell the dressings directly to all consumers through mail order or other marketing channels with family members handling both marketing and sales. This distribution and sales decision is a variation on selling only from the restaurant and may require additional resources to manage and grow, but it delivers better returns than selling only to local restaurant customers.
Sell through DSD (Direct Store Delivery) distributors. This distribution and sales decision requires financial resources, management time, personnel, higher margins, and spending support, but may be the fastest way to grow the business.
Hire brokers for store and/or distributor sales. This sales decision depends upon scope of operations and geographic and distribution channel expansion plans.
Combine several distribution channels simultaneously. This distribution and sales decision calls for the largest amount of resources, time and personnel, with the objective of growing the business as fast as possible.
License the formulas and restaurant name to another manufacturer and receive a 4 percent to 5 percent royalty on net sales. This distribution and sales decision is also low-risk, with low-resource requirements. The long-term potential return is much higher than selling out of a single restaurant.
Sell a different size bottle or jar directly to stores only, as Alice finally decided to do. This distribution and sales decision preserves higher gross margins and eliminates discounts to distributors and possibly sales commissions to brokers, but requires more financing, management personnel and time.
Question 1
” Pricing interacts with a supply chain in many ways. For instance, transportation rate structures are adjusted by the carrier based on:”

cost to unload

the size of the shipment

local currency rates

the logistics costs concept
Question 2
The total logistics cost factors need to be balanced against the:

supply chain managers total experience

total expected transportation needs

customer service factors

lead time expectations
Question 3
The benefits of marketing channels are__

Cost saving

Time saving

Financial support given

All of above
Question 4
“___ were hired to aid in selling directly, at a 10 percent commission on net sales by Alice”

Middle man

Specialty brokers

adviser

local boys
Question 5
what distribution approach(es) would you use if you Alice s was your company

Wholesaler

Sole selling agent

Direct marketing channel

Semi-wholesalers
Question 6
What is the full form of CIS

Channel information system

Channel induced system

Channel informal system

Channel incorporated system
Question 7
“The work of setting up objectives for selling activities, determining and scheduling the steps necessary to achieve these objectives is known as .and should be used by Alice”

Selling

Sales policy

Sales programme

Sales planning
Question 8
The difference between transactional selling and relationship selling is

“In transaction, selling buyers must pay cash relationship selling, sellers work to provide value to their customers”

“In transaction selling, sellers provide greater service ”

“In relationship selling, buyers and sellers must be related”

“In relationship selling, sellers work to provide value to their customers”
Question 9
________________ is a marketing channel that has no intermediary levels proposed by alice

direct marketing channel

indirect marketing channel

forward channel

hybrid channel
Question 10
” A distribution channel moves goods and services from producers to consumers. It overcomes the major time, place, and ______________ gaps that separate goods and services from those who would use them.”

possession

profit

image

psychological

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3rd Block assessment
Case Study
Shri Om Logistics was started by Mr Mukesh Chatwal in 1989 and has grown from a one truck operation to a 150 tractor-trailer fleet serving shippers in western zone of India. Company serves the automotive industry by providing inbound transportation to the assembly plants. It has strategic alliance relationship with three large automakers and is the exclusive trucking company for a number of auto suppliers. Mr Mukesh Chatwal is willing to adopt new equipment technology, computer systems, and management techniques. As he was about to call strategic planning meeting with his top executives, he was mulling over recent trends in the logistics field. He also knew that to retain current enviable position in market, he must continue to be innovative and provide the services customers need. During recent past three years, he has witnessed increased competition. The other logistics companies that provide rush deliveries have made significant inroads in the market where just-in-time management system mandate minimal raw material inventories, guaranteed deliveries and vendor penalties for late deliveries.
The perplexing trend to Mr Chatwal is the growing vertical integration of trucking companies into other logistics services. A number of other companies have started warehousing divisions to provide sorting, kitting( putting pieces together to make up a kit), and cross-docking (moving freight across a dock to a waiting truck). Other carriers are adding third party logistics divisions to manage a shipper/receiver’s transportation and storage activities. Finally a few trucking companies have started air carrier divisions, freight forwarding services and logistics information services. He also recognizes that this vertical integration of trucking companies is a result of customer demands. In addition, shippers are reducing number of vendors in transportation suppliers, being used and asking the few vendors to provide a wider range of products and value added services.
After considerable thought, his decides that only viable long term strategy for Shri Om Logistics is to become a full service logistics provider. If current status of company is continued , it will greatly impair the growth and profit potentials of the company. The only question remaining for Mr Chatwal is what other logistics services are appropriate for the company in long run?
Question 1
“To retain current enviable position in market, he must continue to be”

quality assurance

stratigic decision

innovative and provide the services customers need.

none of the above

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Question 2
A company’s channel decisions directly affect every ________.

marketing decision

customer’s choices

employee in the channel

competitor’s actions

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Question 3
logistics companies that provide rush deliveries have made significant inroads in the market because of

JIT

kanban

cycle time

none of the above

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Question 4
Intermediaries play an important role in matching ________.

dealer with customer

information and promotion

supply and demand

product to region

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Question 5
warehousing divisions was provide

“sorting, ”

kitting

cross-docking

all of the above

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Question 6
“A channel consisting of one or more independent producers, wholesalers or retailers that are seeking to maximize their own profits even at the expense of profits for the channel as a whole is a ________.”

administered vertical marketing system

conventional distribution channel

vertical marketing system

vertical distribution structure

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Question 7
An advantage of a channel of distribution over selling direct to consumers is that each channel member plays a ________ in the channel.

time-saving part

decisional role

disciplinary role

specialized role

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Question 8
Mr Chatwal was thnking to improve company profitability by introducing

other logistics services appropriate for the company in long run

other logistics services appropriate for the company in short rrun

inbound logictic

outbound logistic

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Question 9
“From the economic system’s point of view, the role of marketing intermediaries is to transform the assortment of products made by producers into the assortment of products wanted by ________.”

manufacturers

consumers

marketers

distributors

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Question 10
Do you agree that logical strategic thrust for Mr Chatwal is to

horizontal integrate and provide other logistics services

horizontal integrate

vertically integrate and provide other logistics services

none of the above

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4th Block Assessment
Case Study
In the store house of a steel plant, the material is received through railways and by road. There are 30,000 moving items. On an average, 20 trucks of loads are received every day in the receiving store house of the central stores department. In the central stores department, the materials are received centrally. The receiving house is divided into 6 bays named Monday, Tuesday, Wednesday, Thursday, Friday and Saturday. There are 50 stores personnel to receive the consignments and to unload them in respective bays.
After unloading the materials, a store collection report is prepared by a store man. He also records the details of the receipts, commercial invoices and related purchase orders in the ‘Day Book’. A stores receipts voucher is prepared having the details of the materials received including nomenclature/ description of the materials, catalogue number and quantity received, challan/commercial invoice number, railway receipts/consignment note number and other important information. SRV is handed over to the inspection unit for checking the quality (physical/chemical) to ensure that the material has been received as per purchase order terms. If the material is found correct, the same is handed over the respective custody storehouse meant for storing different types of material before issue. The custody storekeeper checks the material as per SRV and keeps in the marked bin.
The SRV is signed by the custody storekeeper and handed over to receiving storekeeper. There are six copies of this voucher for the following:
Purchase department
Receiving storehouse
The indentor of the material
Accounts department
The supplier
These copies are distributed to the above-mentioned. The supplier submits the bill along with the SRV to the accounts department of the company for the payment.
It is taking average 15 days to take the material into charge form the date of receipt to the material. Sometimes, the material is lying in the receiving bay but due to ignorance the indentor is making emergency purchase’. The supplier is getting his payment against the supplies in average of 30-days.
The management wants to reduce the time for taking materials into charge from 15-days to 3-days, eliminate emergency purchases’ and also reduce the payment time of the supplier to average of 3-days.
Question 1
“Store man records the details of the receipts, commercial invoices and related purchase orders in the .”

register

Day book

cash book

note book
Question 2
“A stores………………………….. is prepared having the details of the materials received including nomenclature/ description of the materials, catalogue number and quantity received, challan/commercial invoice number, railway receipts/consignment note number and other important informatio”

cash voucher

bill

receipts voucher

payment voucher
Question 3
The market logistic decision concept originated in ____________.

Marketing

Operations

Logistics

Production
Question 4
Market logistic decision requires following prerequisites ____________.

“Order processing, warehousing, inventory and transportation”

Flow of goods

Buying and selling

Purchasing of raw materials
Question 5
The purpose of logistic decision is ____________.

Provide customer satisfaction

Improving quality of a product

Integrating supply and demand management

Increasing production
Question 6
SVR record describes

Supply value record

Service record

transpotation record

sale voucher
Question 7
Retailing operation which is operated and owned by manufacturer and carries surplus orirregular goods is classified as ____________.

Warehouse

Factory club

Factory outlets

Wholesaler those take titles of marketing offering independentl
Question 8
The management wants to reduce the time for taking materials into charge

“from 10-days to 3-days,”

“from 11-days to 3-days,”

“from 15-days to 3-days,”

“from 9-days to 3-days,”
Question 9
The management wants to reduce the payment time of the supplier to average of

3-days.

2-days.

1-days.

5-days.

Question 10
Companies manage their supply chains through _____________.

Transportation modes

The internet

Competitors

Information

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5th Block Assessment
Case Study
Tasty – Food Products established in 1980, distributes a 100 item product line of canned vegetables, fruits, condiments and specialty items (such as pappads, fruit jams and pickles) to wholesalers in several states of South India.
Tasty – Food Products introduced a new customer-order policy to improve its service to its wholesalers and also the effectiveness of its sales representatives.
Two important features of this program are:
Sales people are free from the work of order taking, and
Orders received from wholesalers on a predetermined schedule.
The company’s sales representatives are no longer to process customer orders. Earlier practice was to accumulate wholesale orders until they had enough volume to make up a truck load and then send the orders to the head office. Under the new program, wholesalers are to e-mail their orders directly to the head office as per a fixed schedule (say once in a month or so). If the wholesalers miss their fixed date they have to wait for the next fixed date as per schedule.
These procedures are designed to increase the number of sales calls the sales people could make to their customers. The assumption is that sales people would spend more time determining the sales patterns and the effect of sales promotions if they are relieved of the task of order taking and transmitting the consolidated orders to head office. By this, each sales person could do more of a sales job rather than the order taking job.
But, unfortunately many wholesalers failed to follow a predetermined order schedule. They were not used to the system where some one would have to tell them when to order. Some wholesalers complain against fixed schedules and lack of flexibility. Others were so much dependent on sales persons to determine what their requirements are and felt that the new program meant more work for them.
If the orders do not reach the head office according to the schedule, the wholesalers has to wait for two weeks to place the next order. If a wholesaler misses a fixed scheduled date for ordering, he would run the risk of having a stock out which would cause a loss of 20-30 percent of sales of tasty-food’s product. But due to this only tasty-food products company suffered because the wholesalers and retailers carried several product lines of competitors and when Tasty-Food’s brands were out-of-stock, they sold other brands.
Tasty-Food Products has no integrated logistics department to deal with its distribution activities. In the past, three salespersons were made responsible for arranging transportation. When they accumulated orders worth rupees 3 lacks (nearly a truck load) they would send the orders to the head office of shipment. To expedite shipment for wholesalers who have urgent need, a sales person in one area would try to combine his orders with another sales person of the adjoining area to meet the requirement of a full truck load. However, in the new practice, the head office would ship according to a fixed schedule and arrange the shipment with the wholesalers even if the order totaled to less than rupees 3 lacks.
Question 1
“Tasty – Food Products established in 1980, distributes a —————-item product line ”

200

150

100

110

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Question 2
As per company new policy sales people are free from the work of

order delivery

loading

unloading

order taking

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Question 3
A ______________ is a set of interdependent organizations involved in the process of making a product or service available for use of consumption by the consumer or business user.

retailer

wholesaler

distribution channel

middleman

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Question 4
How can an organisation reduce its market uncertainty?

By offering more products and services.

By reducing the number of products and services it offers.

By broadening its view of what marketing channels can and should do for it.

By forming dyadic relationships with intermediaries.

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Question 5
____ involves the acts by which channel entities obtain products and services.

Procurement

Requisition

Solicitation

Acquisition

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Question 6
Tasty-Food Products has no ..department to deal with its distribution activities.

Fianance

operation

integrated logistics

HR

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Question 7
The new system introduce by Tastey-Food was————————-

inefficient

efficient

none

sufficient

Flag this Question
Question 8
“Through their contacts, experience, specialization, and scale of operation, ______________ usually offer the firm more than it can achieve on its own.”

manufacturers

producers

direct marketers

intermediaries

Flag this Question
Question 9
Independent firms at different channel levels integrate their programs on a contractual basisto achieve systemic economies and increased market impact are known as .

Corporate vertical marketing systems

Contractual vertical marketing systems

Administered vertical

None of the above

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Question 10
What is the full form of VMS?

Velocity moving system

Vertical marketing system

Vertical moving system

Very moveable system
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Full syllabus Assessment
Case Study
“Your Choice” Fashion Apparel company is a very successful merchandiser of contemporary fashion apparel for both men and women. The company publishes a high quality product catalog and sends it to prospective customers, who then place orders by mail or by telephone calls. The customer base consists mostly of young couples with two incomes and no children. These customers receive catalogs from competitor fashion apparel companies as well.
The catalog business a highly competitive and growing. It has become an alternative means of shopping for people who are just too busy to shop in retail stores.
The company has developed an Internet based capability, “Your choice.com” that provides full catalog and ordering services for “on line” customers. The company’s website offers a new and effective way to interact with customers.
“Your choice” Fashion Apparels is regarded as the company that offers the best product assortment, product quality and customer service. Two critical customer service elements at “Your Choice” are that (i) the company receives, packs and ships orders in a timely manner, and (ii) the product returns procedures are customer friendly. But the company’s product return practice is expensive and the top management is highly concerned about this.
“Your Choice does not produce any of the merchandise it sells. It contracts with manufacturers in India, Korea, Taiwan, China and Singapore to meet its largely seasonal product line needs. The company ships container loads of labeled and pretagged merchandise by intermodal transportation services to a centralized distribution centre in Dallas, Texas, subsequent movements to individual customers are made by UPS and Federal Express.
“Your Choice” executives consider themselves to be in “logistics business”. They consider that the company’s logistical capabilities are a key to its excellent reputation in the market place. However, managers at “Your Choice” are worried that customer tastes and company product preferences are beginning to change very quickly, sometimes in the middle of a selling season. Only a continued ability to react quickly to changing market place needs will distinguish market leaders from others.
Question 1
Transporting and storing goods is part of which of the following marketing channel functions?

negotiation

physical distribution

contact

matching
Question 2
The benefits of marketing channels are ..

Cost saving

Time saving

Financial support given

All of above
Question 3
“With respect to a channel of distribution, the number of intermediary levels within the channel indicates the ____________ of a channel.”

width

depth

length

similarity
Question 4
Your Choice does not produce any of the ——————————–it sells.

merchandise

customer

choice

ready to eat
Question 5
“””Your Choice executives consider themselves to be in ..”

real state

banking

logistics business

e-commerce
Question 6
Only a ..to changing market place needs will distinguish market leaders from others

strategy

lower price

just in time

continued ability to react quickly
Question 7
Your choice.com is a company that provides

full catalog and ordering services

delivery services

ready to make

assembelling
Question 8
Your Choice company have only ———————- customer

off line

walk in

physically present

online
Question 9
Which is not a strategic role of sales management?

Tracking

Reporting

Delivery

Optimizes distribution
Question 10
Many firms use environmental scanning to assess their external environment. Environmentalscanning should be used to

Identify future threats and opportunities

Determine personnel performance

Allocate financial resources

Assist with service delivery

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Consumer Behaviors (EDL 320)-Semester III

Consumer Behaviors (EDL 320)-Semester III
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1st Block Assessment

Case Study
Segmentation has been vital to the success of NIVEA Sun and allowed the brand portfolio to grow to over 40 products, all meeting clear consumer needs. The following factors are used to develop and define the sun care segments: Demographics – different groups of consumers behave differently (factors relate to age, gender, etc). Demographic differences relevant to NIVEA Sun include different buying behaviours between men/women and adults with children. There is a stark contrast between awareness and usage of sun care products between men (who prefer convenience) and women (who enjoy more luxurious sun care products). Similarly, adults with children are another broad segment with differing needs. Demographic segments are broad. As research shows, the level of awareness of sun care transcends income and social class. Concerned Consumers ‘a good tan is not important’. These consumers are conscious of the harmful effects of the sun and purchase sun protection products that are most likely to offer high sun protection factors Attitudinal this is the most important segmentation variable. Consumers’ attitudes towards sun care influences their purchases. NIVEA Sun conducts market research to understand user attitudes. This involves questionnaires using a nationally representative sample, and more intensive research with small groups, to discuss individual skin protection habits and preferences. This has identified 5 distinct groups for protection and after sun: 1. Sun Avoiders – avoid sunbathing and using sun protection when in the sun – it is seen as a chore. These are unlikely to purchase a sun care product. Through education, this segment may be convinced to protect using more easy-to apply products such as sprays. 2. Careless Tanners – adore the sun but don’t protect against harmful dangers. Tanning is important to this group, not protection. They don’t worry about the long-term damage to their skin and may purchase a low SPF product, if any at all. 3. Naive Beauty Conscious – like to have a good sun tan. They recognise that sun protection is important but fail to understand about Sun Protection Factors (SPFs). These consumers may still be interested in the core features of a sun protection product (e.g. SPF) and be more inclined to purchase an added-value offering such as a mousse.
Question 1. Segmentation is the process of dividing_____into various segments
Target Audience
Population
Consumers
Buyers

Question 2. Consumer behaviour for products is related to

Using of goods and services

Disposing of goods

Buying and paying for goods

All of these

Question 3. Demographic segmentation consists of the following except
Family
Income
Motivation
Marital Status

Question 4. Beauty products can be segmented best through
Demographic segmentation
geographical Segmentation
Psychological segmentation
Socio-Cultural

Question 5. Research on beauty products can be undertaken by which method in the best possible manner
Survey method
Indepth Interview
Focus Group Discussion
Observation

Question 6. What is the most critical benefit of using multi segmentation
Profits
Revenue
Large base of consumers
Better utilization of resources

Question 7. Consumer buying behaviour is impacted most by which environmental factor
Political
Socio-Cultural
Economic
None of the above

Question 8. The best theory to understand lifestyle segmentation is
VALS model
Black Box model
Howard Sheth model
All of the above

Question 9. The most widely used method of consumer profile by marketers is
Behavioural
Psychographic
Hybrid Profiling
None of the above

Question 10. The most important behavioral aspect of buying beauty products involve
Frequency
usage
uses
Quality

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2nd Block Assessment
Case Study
The latest snowstorm kept me an extra night in Toronto, but it did give me the chance to pass on this interesting case study. In his presentation at a Canadian Advertising Research forum on Wednesday morning, Dhan Kashyap, strategy director at Diageo Canada Inc., explained how a new positioning had boosted sales growth for Baileys. What was interesting to me was that the repositioning encouraged consumers to reassess what the brand stood for.
Baileys is a strong, differentiated brand in Canada that has been supported over time with effective above-the-line advertising. Positioned for years as a brand to accompany intimate moments and special occasions, Baileys has never relied on promotions or price discounting. But after two years of robust sales increases, the year 2005 brought a rapid deceleration in the brand’s sales growth.
Diageo considered various strategies for boosting the brand’s sales momentum. Increasing penetration was not really an option, since, to use Diageo’s consumer loyalty terminology, over 50 percent of target consumers were already “Adorers” or “Adopters.” It was not that people did not like the brand; they simply did not drink it very often.
The obvious strategy was to try to extend usage to more frequent occasions, but people who were conditioned to think of Baileys as an indulgence for special occasions would not feel comfortable ordering Baileys in an impersonal setting like a crowded and noisy bar. The brand was boxed in by its existing positioning. Yet repositioning the brand as one being suitable for casual social occasions would put it into direct competition with many other spirits brands.
The question became, how far could the positioning of Baileys be stretched toward more public usage occasions without undermining the strong bond it had forged with consumers through its associations with special occasions?
Whatever the brand did, consumers would need to reconsider what the brand stood for. Challenging goals were set for changing brand attitudes, including decreasing the perception that Baileys was for special occasions, and improving claimed past 4 week usage. Aggressive goals were also set for the TV advertising. The agency brief called for breakthrough copy that would achieve an Awareness Index of 9 or higher in Millward Brown’s Link pretest (well above the Canadian norm). As Dhan stated later, in order to achieve significant changes in entrenched attitudes and behavior, compelling creative is a must. You need breakthrough copy and cannot settle for something that is merely average.

Question 1. The most important aspect of comsumer perception about the brand is
Consumer Imagery
Subliminal Perception
Just Noticiable difference
None of these

Question 2. Comsumer Imagery is a combination of
Advertising and branding
Consumer’s mindset
Competitor’s marketing
All of the above

Question 3. Subliminal perception about the brand is based on
Marketing elements
Celebrity endorsements
Latent and subconcious cues
None of the above
Question 4. Repositioning of the brand impacted the perception in which direction
Positive
Negative
Neutral
None of these

Question 5. Perceptual barriers can be broken through
Advertising
Branding
Repositioning
All of these
30 out of 50
Question 6. Percption of consumer products is highly based on
Product performance
Advertising only
Word of mouth
Branding

Question 7. Perceptual blocks about an FMCG product can be based on
Service being offered
Biase and usage
Competitor’s positioning
None of these
Question 8. Perception is also a function of the following except
Earlier experience
Marketing elements
Positioning
Internal Motivation

Question 9. Perception impact attitude formation through the following
Developing judgement
Improving marketing performance
Converting into purchase
None of these

Question 10. Threshold perception is formulated for the brand through
Just Notiable Difference
Moving beyond judgement
Subconscious mindset
All of these

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3rd Block Assessment
Case Study
Like it or not, banking is moving online in a big way. But as the number of online banking customers grows, so too do the security risks, particularly for high-value commercial banking transactions which make a tempting target for cybercriminals.
HSBC, the global banking group, wants to encourage more commercial customers to use internet banking. But it has long recognised that the security measures used on its personal banking website – a combination of PIN and challenge phrase – were insufficient for business accounts.
To allay widespread fears about internet security among its personal banking customers, HSBC promises to refund the amount of any unauthorised transaction conducted online.
But for commercial customers, the value of transactions can be quite high – HSBC’s UK commercial customers have a £100,000 daily transaction limit – and the risk to the bank is consequently much greater.
To reduce the risk, HSBC recognised it needed a way to better authenticate its commercial users.
“Most banks just re-badge their personal internet banking offering for commercial customers but we recognised that businesses need greater functionality and also better security,” says Trevor Oney, Senior Manager, HSBC’s senior manager for e-commercial banking in the UK.
In 2002, HSBC began to use digital certificates to authenticate its UK commercial banking customers.
“It was spectacularly successful and the fraud levels we got using digital certificates were truly minuscule,” says Mr Oney.
Nevertheless, the use of digital certificates created support headaches for the bank. As the certificate – a small piece of software code – is installed on a specific PC, the customer must always use the same computer to access their bank account.
In addition, certificates periodically expire, obliging customers to download new ones. Sometimes, the certificate was deleted by accident – when a new operating system was installed, for example.
According to Mr Oney, these issues led HSBC to look at a less “intimidating” way to protect its commercial banking customers.
Security experts have long argued that the best way to prove that people really are who they claim to be is using “two factor” strong authentication and this is the approach HSBC chose. With two-factor authentication, the user can only access the site if they successfully pass two separate challenges: one based on something they know, such as a PIN or mother’s maiden name; and the other based on something they own.
In the case of the HSBC, the object of desire is a small electronic device called a “token” which generates a fresh password each time a button is pressed.
The tokens are supplied by Vasco, a Belgium-based company specialised in authentication technologies. Tokens have been used for security applications for some time– one common application is to authenticate remote users trying to access a corporate intranet –but most deployments to date have been limited in scale.
Nevertheless, for HSBC’s internet banking initiative, the bank ultimately wants to distribute the devices to all its commercial banking customers that have registered to use online banking. That is around 400,000 users or half the total number of business customers that HSBC has in the UK.
The high penetration rates might surprise those critics who once argued that internet banking would never be as popular as branch-based banking.
Question 1. Communication model for consumers comprise of 4 stages namely
AIDS
AIDA
AIDP
None of these
Question 2. Online Technology and Social Media communication provide all the information except
Personal Service
Real time information
Intellectual Capital
Quick response time

Question 3. The A in the communication model stands for
Attention
Awareness
Attitude
All of these
Question 4. Online communication for marketing used by HSBC will comprise under which marketing method
Sales promotion
Digital marketing
Marketing Mix
None of the above
Question 5. Internet banking and communication for HSBC impact which aspect of consumer behaviour
Information
Attitude formation
Perception
Buying
Question 6. Communication about services leads to which stage of consumer buying process
Information Search
Evaluation of Alternatives
Post Purchase evaluation
None of the above
Question 7. Online way of banking is faced with the problem of
Adoption by consumers
Communication of benefits
Developing an Attitude
All of these
Question 8. Communication leads to development of the following except
Attitude
Perception
Learning
Buying decision
Question 9. Communication barriers in consumer buying behaviour are caused due to
Culture
Language
Incongruency between communication and consumer
Mode of communication
Question 10. The message and media strategy for communication would be based on
Consumer Psychology
Orientation of the company
Mode of communication available
Goals of the company

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4th Block Assessment
Case Study
The Golden Circle theory provides evidence of how most companies communicate in an uninspiring manner. Most companies typically communicate by stating what they do, how a company is different or better, and the expectation from the company of a behavior, such as a purchase. The Golden Circle theory focuses on the following elements: Why as a central focus in the inner circle, The How is the next outer circle, The What is the outermost circle. The why is the cause, purpose, or belief of the organization, according to Sinek, very few companies know why they are in business. Sinek cites Apple’s former CEO Steve Jobs vision of design and simplicity guiding how Apple does things and what they produce. “Everything we do, we believe in challenging the status quo. We believe in thinking differently. The way we challenge the status quo is by making our products beautifully designed, simple to use and user-friendly. We just happen to make great computers. Want to buy one?”. Apple’s method of communicating provides consumers’ with trust, confidence, and a set of shared beliefs inspiring people to make a purchase from the company. The how refers to the actions a company takes to bring the beliefs into reality. The what are the resulting actions, such as the services, products, culture, marketing, and employees. As a result of its marketing communication strategies, consumers have confidence they are purchasing a quality product whether, it is a Mac, iPhone, iPad, iPod or iTunes software. The shared beliefs between Apple and consumer’s along with positive product and service experiences are critical in establishing the brand in the mind of the consumer.
Question 1. The most imprtant impact that group has on purchase

Influence decision
Developing the reference group
Impacting the choice
Motivating the person

Question 2. Reference group for Apple comprise of
Loyalists
First time Apple users
Value Seekers
None of these

Question 3. How will group impact Apple products purchase
Developing the status image
Developing the relation
Influence each purchase criteria
All of these

Question 4. The Golden Circle at Apple has helped in changing consumer behaviour
Developing the intention to buy
Attitude formation and perception
Usage rate
Brand loyalty

Question 5. Culture impact purchase of phones through
Impacting behaviour
Changing values
Impacting the judgement of the product
None of these

Question 6. Social status seeking is a function of
Group behaviour
Individual judgement formation
Developig brand loyalty
All of these

Question 7. Cross cultural consumers of Apple buy Apple products
Global consumer have common values
Differences lead to different buying motives
A global brand image
None of these

Question 8. Group Dynamics for Apple products is based on
Closeness to the brand
Social status attached to the brand
Word of mouth
New products launch

Question 9. Group influence buying of Apple products through
Developing a social status
Reference impact
Motivation given by others
All of these

Question 10. A very important aspect of culture is
Commonality
beliefs and values
Similar thinking
None of these

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5th Block Assessment
Case Study
An increased awareness of consumer behavior is essential for business and environmental reasons. The more the consumers are aware of environmental measures, less are the chances of environmental degradation. The Key issue to address consumers awareness towards “Electronic rickshaws” (E-rickshaws) as an environmental friendly drive. Again the study focuses on adoption behavior of consumer to e-rickshaws over traditional fuel driven auto-rickshaws. For this, exploratory study research design has been used through literature review and survey method is used to measure the level of awareness and adoption behavior of consumer towards e-rickshaws. The results indicate that most of the consumer are aware of environmental reasons behind the introduction of e-rickshaws and are ready to adopt in their daily means of transportation. The present study comes with certain loopholes for e-rickshaws and suggests ground for improvement. So, it will be helpful for suppliers of e-rickshaws to modify their models as per demand of consumers.
Question 1 Consumer Adoption relates to
Buying
Consideration of purchase
Disposing of products
None of these
Question 2. Innovation diffusion of E-rickshaw is mostly dependent on
Environmental factors
Marketing factors
Consumer acceptability
Efficiency of vehicles
Question 3. Introduction and Awareness about the new service should have
Innovation Quality
Uniqueness in service
Compatibility with consumer
None of these

Question 4. The stages of consumer adoption comprise of
Awareness
Trial
Desire
All of these
Question 5. Opinion leadership would influence diffusing the innovation through
Influencing the customer
Taking decision
Motivating and forming positive attitude
None of these

Question 6. The basis of innovation diffusion are
Complexity
Triability
Communicability
All of these
Question 7. E-rickshaw can develop customer loyalty through
Impacting consumer mindset
Making it affordable
Marketing it well
None of these
Question 8. E-rickshaw would be adopted quickly through
Observablility
Triability
Innovation
All of these
Question 9. How can E-rickshaw spread through opinion leadership
Developing loyalty
Innovation Diffusion
Easy Accesability
Impulse purchase
Question 10. Diffusion process can be improved for innovation through
Increasing in communicability
Improve customer satisfaction
Building awareness
None of these

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Full syllabus Assessment
Case Study
Burger King failed to attract nutrition-conscious diners through Satisfries, a lower-calorie, healthier version of its French fries, with the result that the company withdrew the product from two-thirds of its restaurants. The failure of Satisfries was a major blow to the global fast food giant which was struggling to provide better dining experiences to customers by serving healthy fast food at its restaurants. Burger King introduced the lower-calorie fries with the objective of attracting more health-conscious consumers and boosting its health-friendly image among the fast food giants in the world. But critics questioned its claim about offering fewer calories and a heathier fast food option than its rivals. The product also failed to satisfy consumers who were not clear about the advantages of Satisfries compared to the company’s regular fries. Moreover, its overpricing, weak brand positioning, bad marketing decision, wrong social media advertisements, and lack of product differentiation among others, resulted in the failure of Satisfries.

Question 1. Consumer buying behaviour is impacted by various factors
Marketig elements
Word of mouth
Group Behaviour
All of these
Question 2. Positioning in the consumer mind is based upon
Marketing methods
Image about the product
Other people’s influence
None of these
Question 3. Developing a different product and concept leads to
Innovation diffusion
Competitor’s marketing
New marketing elements
None of these
Question 4. Offering a health product by a fast food company lead to
Adoption by consumer
Confused positioning and offer
right marketing mix
All of these
Question 5. Eating and drinking choices by consumers are highly impacted by
Demographical issues
Geographical concerns
Cultural issues
None of these
Question 6. Perception can be built about a new product offering by
Marketing Mix
Positioning methods
Overall image and imagery
All of these
Question 7. The most important step in consumer decision process is
Information Search
Trial
Evaluation of Alternatives
None of these
Question 8. The new product would be accepted based on
Observability
Compatibility
Complexity
None of these
Question 9. A clear advantage of product over existing one can be developed through
Comparison
Repositioning
Unique features
Acceptance by consumers
Question 10. The failure of Satisfiers can be attributed to
Over pricing
Wrong positioning
Bad marketing
All of these

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Business Policy & Strategic Management (EDL 301)-Semester 3

Business Policy & Strategic Management (EDL 301)-Semester 3
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1st Block Assessment
CASE STUDY
In November 2017, China’s largest online travel agent (OTA), Shanghai-based Ctrip.com International Limited (Ctrip), announced the acquisition of the US-based travel recommendation service, Trip.com (Trip), for an undisclosed sum. This was the latest among several moves by Ctrip that signaled its ambitions to expand beyond Asia. Earlier in 2016, Ctrip bought Skyscanner, a Scotland-based flight Search Company, for about US$1.74 billion, making the travel industry sit up and take notice. The Trip deal was expected to help Skyscanner leverage Trip.com’s capabilities on its own platform. Travis Katz, CEO and founder of Trip, said, “The idea of this deal is for Skyscanner to marry in-destination reviews content in Trip’s arsenal to Skyscanner’s platform. The aspiration is not to only add static details, such as about the opening times of restaurants or museums, but to also enable Skyscanner users to see and eventually add social reviews within Skyscanner’s website and apps,”
Founded in June 1999 by James Liang, Neil Shen, Min Fan, and Qi Ji, Ctrip started out as a trip advisor service provider. The company aggregated information on hotels and flights and enabled customers to make informed and cost-effective hotel and flight bookings. Its inception and growth coincided with the travel boom in China and its revenues increased from Renminbi (RMB)6.9 million in 2000 to RMB105.3 million (US$12.7 million) in 2002.

Even the outbreak of the Severe Acute Respiratory Syndrome (SARS) in 2003 did not have a significant impact on Ctrip’s business. By October 2003, Ctrip had established room supply relationships with over 1,700 hotels in China and over 450 hotels internationally. It went public in December 2003, with its IPO soaring on the debut day. On Nasdaq, the shares opened at US$24.01, and at one point went up to US$37.35, thereby making Ctrip’s first IPO double its US$18 offer price on day one of trade.
COMPETING WITH TECHNOLOGY
Ctrip had constantly been acquiring new technologies to serve its customers. Artificial Intelligence, big data, and intelligent hardware employed by Ctrip were crucial in providing a superior travel experience. Jane Sun (Jane), Ctrip’s Chief Executive Officer, said, “For the user interface, we want to make sure that we know every customer who has purchased or searched on the Ctrip website. So when we list our products for them, it’s not millions of items that they have to search through — the user experience wouldn’t be maximized. Hopefully we can personalize the display. All of that is in our design. When the customer purchases with us, they (may not) know what they want, but we know what would fit them. That’s a way technology will help us” .
CTRIP’S STRATEGIC INVESTMENTS AND ACQUISITIONS
Ctrip maintained its leading position through a series of strategic investments and acquisitions. From 2013, the company began expanding aggressively expanding internationally. Feifei Xu, Director of Brand Strategy, Labbrand, said, “Their international expansion aims to offer Chinese out-bound travelers or foreign companies in China an extension of their value-chain platform of tourism. By international expansion, they are mostly targeting outbound Chinese travelers.” In 2013, Ctrip invested in travel search engine Kuxun, hotel app Economy Hotel Manager, social trip sharing platform Chanyouji, and car rental services Yongche and eHi Car Services
CHALLENGES AND OPPORTUNITIES
The acquisition of Skyscanner, while contributing substantially to Ctrip’s growth, intensified both domestic and international competition. To compete effectively with Ctrip, other OTAs in China made attempts to attract large investments. Meituan Dianping raised US$4 billion in a funding round led by Tencent Holdings . Interestingly, Priceline, which was Ctrip’s largest shareholder, also participated in the funding round. Agoda.com, owned by the Priceline Group, established a strategic partnership with Meituan Dianping. This strategy of Priceline investing in Ctrip’s domestic competition indicated that it perhaps saw Ctrip as a potential threat and thus made an investment in Meituan Dianping that could lead to hedging its bets against Ctrip. However, analysts felt that Ctrip was strong enough to take a further share of the Chinese OTA market and its long-term growth prospects in China remained strong.
Adding Skyscanner’s revenue to Ctrip’s total boosted Ctrip’s Q3 2017 transportation-ticketing revenue by 41 percent to US$515 million. Cindy Wang, Chief Financial Officer, Ctrip, said, “The total number of transactions made by direct booking increased almost three-fold since May (2017), the month we launched the engine on Skyscanner, through September.”
Question 1
For expansion of C Trip International Ltd. , what strategy was adopted ?

Acquisition of US based Trip .com

Selling of Trip .com

Becoming a Parter of Trip.com

None of the options
Question 2
To enable customers to make informed and cost-effective hotel and flight bookings , The company aggregated information on ?

On hotels and flights

on budget hotels

on international flights

both a & b
Question 3
Ctrip had continously been acquiring new _____ to serve its customers?

Customers

Technology

Offers

None of the options
Question 4
what technological tools were employed by Ctrip in providing a superior travel experience ?

Artificial Intelligence, big data, and intelligent hardware

Excellent Software

Market Research

Both B&C
Question 5
Co. adopted a strategy of using technological tools and make customer purchase easier by ?

Knowing what would fit customers , as customers (may not) know what they want

Giving promotional offers

Giving discounts, customers always know what they want

None of the options
Question 6
Ctrip maintained its leading position through ?

series of strategic investments only

a series of strategic investments and acquisitions

Focussing on Industry Competition

Focussing on Attracting maximum customers

Question 7
Investment strategy adopted by Ctrip was into field of?

Car rentals , Hotel Apps & travel search engines

Car rentals only

hotel app Economy Hotel Manager only

Both B & C
Question 8
The strategy adopted for acquisition of Skyscanner, by Ctrip helped in?

growth of international market

Growth in Foreign Lands

growth of both domestic and international markets

growth of domestic market
Question 9
Main investment strategies adopted by the Companies in this case study were related to ?

Selling of a Product Line

Competitor analysis

Scanning Environment

Acquisitions
Question 10
______ has played a major role in this case study , and for capturing a wide market share by the company ?

Technology

Competitors

International Markets

Both B& C
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2nd Block Assessment
CASE STUDY
Navroze Godrej (Navroze), the young executive director for Strategy and Innovation at Godrej and Boyce, the holding company of the India-based Godrej Group, is a fourth generation scion of the Godrej family. Keen on bringing about a major change in his company’s design thinking, he set himself the goal of changing the Godrej Group’s old-world, engineering driven mindset into a forward looking design driven mindset. He aimed to shape the Godrej Group into a company that inculcated a culture of open collaboration between different work groups and businesses. As part of his efforts to fulfill this aim, he created a suitable ambience and office infrastructure to break down the organizational hierarchies. He also started the Godrej Design Lab to encourage young designers to showcase their work. The selected designers were mentored and their designs displayed at national level exhibitions. The case discusses whether the initiatives taken by Navroze to bring about organizational transformation to make the Godrej Group design, innovation, and consumer focused can succeed. The case gives enough scope to analyze whether the influx of young talent is capable of bringing in novel ideas to shape the company’s future.
In 2005, Navroze Godrej (Navroze) was inducted as a management trainee into Godrej & Boyce (G&B), the holding company of the Godrej Group. Navroze, a fourth generation-scion of the Godrej family which owned the Godrej Group, was all of 23 years old when he joined Godrej. He was quite different from the previous generations of the family in terms of being more agile and wanting to bring in change within the company. When Navroze was in his early twenties, he met Professor Hemmant Jha, (Jha) of the Institute of Design, Chicago, US. It turned out to be a momentous meeting and was a turning point for Navroze as it kindled in him a love for design, which soon turned into a lasting passion. Navroze was so impressed after chatting with Jha that he persuaded the professor to join G&B. Analysts said this was a smart move by Navroze – one that drove G&B toward innovation. After hiring Jha, Navroze and his team at G&B brought out novel designs and innovations which were patented under Godrej.
Godrej, one of the largest Indian privately-held diversified industrial companies, was founded by Ardeshir Godrej (Ardeshir) in 1897. Ardeshir, a lawyer by profession, gave up his career in law to pursue his passion for making high quality locks and safes. The business was expanded further by Ardeshir’s youngest brother, Pirojsha Godrej (Pirojsha), who joined the company in 1906. In 1909, Godrej secured its first patent for spring-less locks which Ardeshir sold under the Anchor brand. During the 1920s, Ardeshir manufactured the first of Godrej’s sturdy steel cupboards branded as ‘Storwel,’ that became a trend in Indian homes. Ardeshir launched a washing soap as well and the world’s first vegetable oil based toilet soap. The toilet soap was considered to be the best in its time, as it revolutionized the manufacturing process. Up till then, soaps were made from animal fat. Godrej earned a name for itself with the superior quality of locks and soaps it sold. In 1952, Godrej bagged a contract to manufacture ballot boxes for India’s first general elections. Every day, 15,000 ballot boxes were made at its Vikhroli factory in Mumbai, to supply the target of 1.2 million boxes.
In 2013, after Navroze graduated with a Master’s in design, he returned to join G&B and spearheaded a pilot project on a disruptive business model. One of the things he changed was the layout of the (office) shop-floor. Unlike the previous directors who worked from their closed office space, he preferred to sit with his project teams around a big table and discuss matters with them. The new furniture layout was intended to support both individual and group work. Navroze felt traditional desk arrangements created a barrier and prevented openness and collaboration.
GODREJ INNOVATION CENTER
In 2013, Navroze took the bold move of setting up a 25,000 square foot ‘Innovation Center’ in Vikhroli, Mumbai. This was a research and development center to conduct explorative study in areas involving security, lifestyle, well-being, energy, productivity, and connectivity. The innovation center had a fixed 20-member full-time team, while at any given time there were at least a 100 other employees who belonged to other departments deputed to accomplish time-bound projects. As Navroze believed in diversity, the members in the teams came from different backgrounds such as, design, marketing, research, business, engineering, and others. The center had enough space for meetings and lectures, and the furniture was such that it could be reorganized for display of prototype product designs, a collection of material types, and for any other informal interaction as well.
SPRINT PROGRAM
Navroze led the Sprint program that caused a cultural transformation in the company. He facilitated a bottom-up approach, where he invited all the employees of Godrej to submit ideas at the innovation center. Based on their ideas, Navroze set up work groups. For the first time, people with 20 years of experience and those who had joined just six months earlier began working together. The groups came up with ideas that ranged from cooking appliances to recycling of waste, to looking at resources and services for transit population.
GODREJ DESIGNLAB
In 2013, Navroze set up the Godrej DesignLab, (GDL), which was established in collaboration with a Mumbai-based design studio, Elle Décor. GDL was a platform for designers to co-create, experiment, innovate, and challenge the boundaries of product design. GDL aimed at providing a holistic support system to designers who could give a whole new level of futuristic designs. GDL was a forum where designers could submit their work in four categories of furniture, furnishings, lighting and home décor, & accessories.
THE HUBBLE
In April 2014, Navroze spearheaded the development of a second innovation center, the Hubble. It was conceived to serve as a hub where people could interact informally to encourage the culture of creative thinking. The Hubble was built on a spacious 25,000 square foot space in the Vikhroli office itself, to function as an eat, work, and play space with a coffee-shop-kind-of-atmosphere. It encouraged both private and collaborative work among the employees.
REINFORCING THE DESIGN TRADITION
The Chief Design Officer, of GPL, Anubhav Gupta (Gupta), said that though there was no vertical on design in the Godrej group of companies, design was considered a business horizontal as it had become omnipresent in all aspects of the Godrej Group. He said innovation at GPL was not about playing it safe but it required an ability to tolerate failure before earning superlative success. Innovation, according to Gupta, was finding the best possible or the most optimal design.
Question 1
A smart strategy adopted by Navroz in the starting phase ,after getting impressed with professor Jha was ?

Strategy related to innovation

strategy related to acquisitions

Strategy related to controlling systems

strategy related to diversifications
Question 2
The first patent secured by godrej , was related to which product?

spring-less locks

Almirah’s

Safe’s

Refregirator’s
Question 3
The strategy adopted by godrej in respect of innovation , was done in respect of ?

achieving greater market share

to attract more & more customers

Both A& B

None of the options
Question 4
Godrej revolutionised the manufacturing process, and created world’s first _______?

Animal fat based toilet soap

vegetable oil based toilet soap

Herbal Soaps

All
Question 5
It was felt that old structure of traditional desk arrangements created _______?

efficient working environment

Prevented positive work culture

Barrier ,prevented openness and collaboration

All
Question 6
On what kind of activities godrej majorly focussed in the innovation centre ?

Research & Development

cost cutting strategies

strategies to attrat customers

None of the options
Question 7
Godrej earned a name for itself in the starting phase for which of the following products ?

Refrigerators

superior quality of locks and soaps

Soaps Only

Electronic Appliances
Question 8
People/ employees in Godrej were allowed to interact informally which lead to encouragement of ___?

the culture of creative thinking

collaborative work among the employees

Both A & B

None of the options

Question 9
In order to breakdown the organisational hierarchies , what basic strategy was adopted ?

Creation of a suitable ambience and office infrastructure

Creation of a friendly environment

Creating a competitive Environment

Both b & C
Question 10
for India’s first general elections , what kind of contract was bagged by Godrej ?

to manufacture Lockers

to manufacture Soaps

to manufacture both ballot boxes & soaps

to manufacture ballot boxes
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3rd Block Assessment
CASE STUDY
This case discusses about the acquisition of Florida-based Elizabeth Arden Inc, (Arden), a cosmetics, skin care, and fragrance major by Revlon Inc. (Revlon) another cosmetic giant. Post-merger, Revlon reported a 21.9% increase in its net sales in 2016. The case highlights the journey of both the businesses and also the tough time they faced prior to the merger. While Revlon had been weighed down by its debt, the sales of celebrity fragrances, a key part of Arden’s portfolio, had declined. Arden’s losses and increasing debt load left the company with few options to survive as a stand-alone business. Revlon pursued the deal largely in order to achieve scale.
Revlon bought Arden in a $870 mn deal in June 2016. The merger brought together the two cosmetics majors amidst hopes that a combined distribution network and marketing strategy could broaden their appeal. The industry showed a mixed response to the union. While some experts felt the synergy was not very realistic few other opined that it would revive the fortunes of Arden.
The case also discusses Revlon’s plans of restructuring the business. It headed towards shifting to a brand-centric structure aimed at identifying investment areas quicker and reacting faster to consumer needs in the domestic and international markets.
In March 2017, New York-based cosmetics, skin care, fragrance, and personal care company Revlon Inc, (Revlon) reported its net sales rose to $2.3 billion in 2016, a 21.9 percent increase compared to 2015. Revlon witnessed growth across all segments. This growth in sales came amidst Revlon’s plans to shift to a brand-centric structure after initiating a restructuring plan in 2016. The restructuring followed Revlon’s acquisition of Elizabeth Arden Inc, (Arden), a Florida-based, cosmetics, skin care, and fragrance major, for $ 870 million. The merged company was expected to leverage the strength of its brands and adapt to the changing behaviors and preferences of consumers to serve them better. In addition to expanding categories, channels, and geographies, Revlon expected to hit $5 billion in sales in the next five years. As part of the integration, it announced the elimination of 350 positions worldwide and streamlining of certain operations. In addition, project integration-related restructuring activities were estimated to cost between $65 million and $75 million by 2020.
THE JOURNEY OF ELIZABETH ARDEN
Born as Florence Nightingale Graham (Graham) in 1878 in Ontario, (Canada), Graham was the youngest of five children in a poverty stricken family. She dropped out of school due to a lack of finances and began training as a nurse. During nursing training she met a chemist experimenting with a facial cream that could help acne sufferers. The idea fascinated her, leading to her believing that most women would give anything for beauty. Graham took up a number of odd jobs that gave her an opportunity to display her salesmanship. While working briefly as a bookkeeper for the E R Squibb Pharmaceuticals Company in 1908, she spent hours in their lab learning about skincare. This further inspired her to fashion a small lab for beauty products of her own. To pursue her dream, she quit her job at Squibb and joined as an assistant in a newly established beauty parlor. Graham later worked for beautician Eleanor Adair as a “treatment girl” and gained valuable industry experience. In 1910, Graham borrowed money from her brother William and started ‘Red Door Salon’ with a partner, Elizabeth Hubbard . The first shop was opened on Fifth Avenue. The partnership soon dissolved and Graham became the sole proprietress. She decided to name her salon ‘Elizabeth Arden’. The name was derived from her former partner’s name and from Alfred, Lord Tennyson’s poem ‘Enoch Arden’. The new name raised the prestige and glamor of not only the business but Graham as well. Thus, Graham changed her name to Elizabeth Arden (Arden) in 1915.
THE JOURNEY OF REVLON
The history of Revlon Inc, one of the world’s leading cosmetics companies based in New York, can be traced back to 1932. Two brothers, Joseph Revson and Charles Revson, conceived of the idea of creating a nail enamel using pigments instead of the normal dyes. They collaborated with a local chemist named Charles Lachman (who contributed the ‘L’ to the Revlon name), to come up with their first product. Revlon developed a variety of new shades of nail polish. Seeing the booming beauty salons and the growing popularity of manicures they targeted beauty salons as a market to sell their nail polishes.
Arden was known for its fragrances including those licensed from celebrities like Marilyn Monroe, Catherine Zeta-Jones, Britney Spears, Justin Bieber, Taylor Swift, and many more. However, in 2014, the company posted the biggest ever quarterly loss in its history, a 28 per cent drop in revenue. The company was hit hard mainly because of a fall in the sales of its celebrity perfumes. The company statement said, “While the company had expected weaker sales comparisons due to the lower level of fragrance launch activity in fiscal 2014 versus fiscal 2013, the decline in sales of celebrity fragrances, particularly the Justin Bieber and Taylor Swift fragrances.
In June 2016, mired in financial woes, Revlon decided to pick up Arden. The company agreed to buy Arden in an $870 million deal. The wager was expected to create a beauty business with annual sales of $3 billion along with creating a platform in categories like mass, prestige, professional, color cosmetics, skin care, and fragrances. In addition to greater purchasing power, the merged entity was expected to benefit from cost savings of nearly $140 million by eliminating overlaps, integrated manufacturing, and distribution networks of both companies. Garcia said, “We see great opportunities for growth where they are strong and we are not.”
Some analysts expected a negative outcome from the union. They felt that Revlon was buying a troubled competitor with an elevated debt load. Although Revlon pointed to the expected synergies, experts found this unrealistic and opined that it could possibly result in higher leverage ratios. Wendy Liebmann, CEO of WSL Strategic Retail, stated, “There’s so little other business synergy. Arden is a fragrance and skin care house. Revlon is a color cosmetics and hair-color business. Different price points and distribution.
The deal not only marked a turnabout for investors, it also put an end to speculations that Revlon would be an acquisition target – rather than a buyer. Before the acquisition was announced, Arden’s market capitalization was $280 million. Shares had fallen 40 percent off their 52-week high. But as soon as the news of the acquisition came in, Arden’s shares soared by as much as 50 per cent and closed at $14; Revlon rose about 6.6 percent to close at $33.25.
In January 2017, Revlon decided to divide and organize the business into four categories: the Revlon brand, Elizabeth Arden, fragrances and portfolio brands, (which included Almay, Mitchum, Gatineau, Sinful Colors and Pure Ice cosmetics. Each Revlon team was required to prepare a three-year growth plan and set priorities and strategies for their labels. The core corporate functions including finance, human resources, supply chain, research and development, legal, communications, and corporate social responsibility departments were to be reorganized to provide better support to the new brand-centric and regional structures.
Question 1
In this case study, What strategy was adopted by Revlon for the purpose of Growth in the Market ?

Acquisition as growth strategy

Industry Analysis as growth Strategy

Leadership strategy

Competitor analysis strategy
Question 2
This case study is about which two major companies ?

Revlon International & Mac

Maybelline & MAC

Elizabeth Arden Inc & Revlon Inc

Mayabelline & Revlon
Question 3
In order to serve the customers better ,what strategy was adopted by Revlon ?

adapt to the changing behaviors & preferences of consumers

adapt to the changing Market conditions

adapt to the changing Political environment

adapt to the latest Technology
Question 4
The case study discusses Revlon’s plans of____?

Restructuring the business

Closing the business

Both A& B

None of the options

Question 5
This case study , highlights __?

the better condition of Elizabeth Arden Inc prior its acquisition

the journey of both the businesses and also the tough time they faced prior to the merger

the downfall of Revlon Inc . before the acquisition

None of the options
Question 6
Revlon headed towards shifting to a brand-centric structure aimed at identifying investment areas quicker and reacting faster to _____?

consumer needs in the domestic and international markets

consumer needs in the domestic market only

consumer needs in the international markets

None of the options
Question 7
As per this case study , Initially Arden was known for ?

Nail enamel

Face Creams

fragrances

Both A & B
Question 8
Revlon decided to adopt restructural strategies – to divide and organize the business into categories, what were these categories ?

the Revlon brand

Elizabeth Arden brand

fragrances and portfolio brands

All of the options
Question 9
In this case study , each Revlon team was required to prepare a _____ growth plan and set priorities and strategies for their labels?

three-year

Five Year

Ten years

seven Years
Question 10
Main Motive behind the acquisition& merger strategy adopted in this case study was related to ?

Increasing the sales

attracting More & More customers

Capturing Major Market Share

All of the Options

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4th Block Assessment
CASE STUDY
When a new technology comes along that is capable of improving dramatically the products of a whole industry, every firm in that industry has vital strategic decisions to make. It must ask itself:
• How far and how quickly should we amend or abandon our present products?
• How far and how quickly should we embrace the new technology?
• Are we big enough and capable enough to accomplish all the
essential changes on our own?
• How can we come out of this time of change stronger than we went in?
Once taken, these key decisions have to be implemented.
Technological change > Strategic decisions > Strategic Implementation
All this makes for exciting times within the industry, for producers and also for consumers, who also have some adjusting to do.
Imaging is one of the world’s growth markets and new technology is making its mark; imaging has ‘gone digital’. It is not a complete transformation. Analogue imaging has not been abandoned and still has millions of satisfied consumers. However, the industry will move on. This is because the new technology:
• is genuinely innovative
• has undeniable advantages in some key aspects
• has been shown to work
• is proving reliable
• is capable of further development
• will become cheaper in the long run.
The pace of change is accelerating. Abandoning former practices and establishing new ways of working is generating not only excitement, but also stresses and tensions. The new technology requires new skills, new attitudes and new approaches from both producers and consumers.
This case study looks at how AGFA, a leading player, is taking full advantage of the digital revolution. The company is using the new technology as:
• an engine for growing its business
• a means of providing its customers with better product possibilities and with greater flexibility and choice.
Agfa
Agfa is a leading name in the imaging industry. The Agfa-Gevaert Group de-velops, produces and distributes an extensive range of analogue and digital imaging systems. Agfa has divided its operations into three segments.
Segment: Consumer imaging.
Activity/Products: Wide range of products using both digital and analogue technologies for taking, processing and manipulating photographs.
Segment: Graphic systems.
Activity/Products: A wide range of electronic and photographic systems for the graphics industry, including workflow management systems, scanners and laser image setters.
Segment: Technical imaging.
Activity/Products: Medical uses eg X-ray equipment; non-destructive fault-testing eg in aircraft and pipelines; industrial imaging for motion pictures; document management systems and micrographics.
Agfa’s operations involve a high level of innovation. The company’s willingness and ability to work at the leading edge of technology help to make it a leader in its field.

For Agfa to remain a market leader, its managers must concern themselves with the future and ask themselves:
• Where is the industry heading?
• What are our competitors likely to do next?
• Where do we go from here?
With imaging, the answers currently are:
• The industry is heading towards greater use of digital imaging.
• Our competitors will invest in research and development aimed at enhancing quality at affordable prices.
• We look to get there first, with better products to sell to customers who are prepared for using them.
This approach requires a willingness to invest heavily in new projects that maximise the benefits of new technology.
– Every proposed project undergoes investment appraisal. This procedure establishes whether a particular project is worth taking forward. Managers will ask key questions about a proposal, including:
• How expensive are the initial outlay and the final total outlay likely to be?
• For how long are we likely to be spending money without any financial return?
• How long is it likely to be before we recover, from sales, all the money we have invested?
• What return can we reasonably expect from our investment in the long term?
• How big are the risks? What events over which we have little or no control could cause this project to falter or fail? How likely are they?
Risks for the imaging industry include:
• a significant rise in the cost of borrowing to finance investment
• a downturn in business activity worldwide that persuades industrial customers to postpone their own purchase of new plant and equipment
• poorer job prospects for the general public that deter private consumers from spending on the latest products.
Agfa must consider these factors as it contemplates large scale investment in new digitally based technologies.
During 2000 Agfa invested around 224 million Euros (equivalent to 4% of its sales revenue) in research and development. Part of this involved working with external partners eg universities and leading research centres. Much of the work reflected the need to move forward in:
• developing the transition from analogue to digital solutions
• meeting a wider variety of customer needs
• helping Agfa to create new market sectors and to enter them profitably.
Digital technologies are changing the way in which people take, process and use images. New processes allow customers to work with images quickly and efficiently, without requiring extensive expertise and knowledge. Take, for example, the newspaper world. With newspapers, speed is vital and editors want the best pictures to go with the latest stories.
• Digital technology is transforming newspaper production. For example, sports photographers no longer have to dash back to the office to develop prints, wondering anxiously what they have captured. They know immediately the quality of the image they have and they can despatch it immediately too. As a result, the publisher soon has on sale a comprehensive local Saturday night ‘sports special’ carrying action photos of spectacular moments that occurred hundreds of miles away just a short time earlier.
• The new technology is also transforming photography for the general public. For example, crystal clear photos of a baby can now be available to proud, anxious grandparents thousands of miles away within a few minutes of an infant’s birth.
• Technological advance does have a downside, in that demand for new products affects sales of older ones. As a market, analogue photography has almost reached maturity. It is still
significant in size with almost 70% of the market. However, with plenty of scope for further product developments and for repeat business. The growth of digital technology has not deterred Agfa and its competitors from bringing out new, improved products for use with ‘old’ technology.
• The real difference between analogue and digital lies in how images are recorded and processed. Analogue photography uses traditional cameras to expose silver-halide film. This still remains the most widely used way to capture images. Customers are well served with a variety of excellent products, from traditional slide and print films to Advanced Photo Systems (APS) films and single-use cameras with enhanced capability.
• Compared with digital systems, recent analogue advances are ‘low tech’, but so too is their cost. Image quality is excellent, and represents optimum value. The technology can also be applied widely; even single-use cameras take good pictures. However, analogue images cannot be viewed instantly, take time to enlarge or reduce and are on prints or negatives that cannot be re-used. Negatives need optimum storage conditions to remain in good condition long term. The chemicals used in processing also raise some environmental issues. Digital technology represents a genuine advance because it removes many of these difficulties.
• Digital images
• Digital images are based upon a grid or matrix. They vary in the quality of their resolution, which is expressed in pixels or dots per inch (dpi) or millimetre. The higher the resolution, the better the picture, and the more expensive the equipment producing it.
• There is a wide range of affordable digital cameras on the market now, offering varying levels of quality, capabilities and prices. There are also thousands of commercially available CD-ROMs offering images, graphics and more, all at different quality, sophistication and price levels. Consumers can also turn to the Internet, where millions of images are available for downloading to a PC.
• Digital offers some real advantages. Images are held in a digital file and are available for use immediately. They can be transferred immediately from camera to PC, where they can be compressed, amended, altered and despatched using e-mail, fast ISDN lines and the internet. They can be downloaded and printed or transferred to CDs using recently developed copying equipment that retains image quality at a high level.
• Consumers can take CDs to an Agfa Image Center where the quality, format and resolution can be chosen. Digital images have transformed access, ease of use and transmission of images to provide a flexible series of solutions for customer needs. With instantaneous image capture, digital images require only minimal storage facilities. Images can also be manipulated and altered and only the chosen images need to be put into print format.
• However, at the present stage of development, really high quality digitally produced images do not come cheap; the equipment required is expensive. Professional users face high set-up costs, but in industries where speed, quality, and flexibility in use really matter, the price is worth paying. Imaging is an industry where copyright is jealously guarded, and ease of transfer brings with it problems of security and copyright protection. Digital files can also be lost or become corrupted, so some form of back-up is vital. Agfa is aware of these additional consumer and business needs and continues to work on ways of meeting them.
• The imaging industry now has two main product markets: analogue and digital. Each product has strengths and weaknesses, the importance of which varies according to customer needs and requirements.
• There remains a need for both analogue and digital imaging, depending upon the requirements of client groups. For example, during construction, gas and oil pipelines need their joints X-rayed with periodical follow-up checks so that cracks and defects can be detected. This is a job for tried and tested analogue systems.

On the other hand, digital technologies have helped to transform the work of hospital radiologists. For example, a software package developed by Agfa called MUSICA (Multiscale Image Contrast Amplification) enables radiologists to manipulate X-ray images in various ways. Edges can be sharpened up to reveal key details, and images can be rotated to offer alternative perspectives. Users can zoom in on details, and select and sort images in a search for recurring patterns. Images can be shared across a number of hospital workstations and can also be transmitted for immediate expert analysis elsewhere.
The best investment programmes are supported by painstaking research: market research into what consumers require and product research to establish what the new technology can and cannot do for them. Agfa is at the heart of changes in imaging brought about by new technology. It is leading. It is also listening and learning. In a highly competitive industry, Agfa’s thorough approach is enabling it to retain important competitive advantages over its closest and fiercest rivals.
Question 1
Some of the Vital strategic decisions in respect of new technology can be ?

How far and how quickly should we embrace the new technology

“Are we big enough and capable enough to accomplish all the essential changes on our own ”

How far and how quickly should we amend or abandon our present products

All
Question 2
Techonological Factors are related to which type of Environment ?

External Environment

Internal Environment

Competitive Environment

Structural environment
Question 3
The product market related to Imaging industry is/ are ?

analogue only

Analogue and digital

digital only

none of the options
Question 4
What is /are the reason/s , that the company adopts to new technology ?

Is innovative

Is reliable

good scope in long run

All
Question 5
The downside of Technological advancement can be ___?

New technology becomes immediately popular

sale of older technology is not at all affected

sale of older technology is affected

All of the above
Question 6
In the context of this case study , Adoption of New technology requires investment . is the statement true ?

Yes, Investment is required

Investment is not at all required

Both A & B

None of the options
Question 7
Market Research for the Investment Purposes in context of the consumers is related to ?

Identification of their needs or wants

identification of Competitors

Both A& B

None of the Options
Question 8
In a competitive industry , Agfa’s main approach is to gain ____________ over its competitors ?

technological Advantage

Competitive advantage

Economic Advantage

None of the Options
Question 9
Advantages of using Digital Images according to this case study are ?

available for use immediately

can be transferred immediately from camera to other devices

can be downloaded and printed or transferred to CDs

ALL
Question 10
As per this case study , the Organisational Structure Adopted by Afga is ?

Divisional Structure

Bureaurocratic structure

Line structure

Line & Staff Structure

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5th Block Assessment
CASE STUDY
This case discusses how Beijing-based multinational technology giant, Lenovo Group Limited (Lenovo), emerged as a global brand from China. After becoming a market leader in the Chinese PC market, several international acquisitions helped the company establish a presence in global markets. The company’s 2005 acquisition of the PC division of US-based multinational technology giant International Business Machine (IBM) gave the Lenovo brand global recognition. Lenovo’s 2011 acquisition of German electronics manufacturer, Medion, in 2011 and a joint PC venture with Japanese multinational technology company NEC Corporation helped the company transform from a small Chinese electronics company into the world’s largest PC maker by shipping over 53 million units in 2013.
After some initial success with its ‘Protect and Attack’ strategy, Lenovo started to face reverses. In 2017, it lost its PC crown i.e. market leadership in the global personal computers (PCs) market, to its arch rival Hewlett-Packard (HP). Lenovo also found the going tough in the smartphone business that it entered in 2010 as part of its ‘PC Plus strategy’. Lenovo’s gamble of acquiring Motorola Mobility from Google failed to pay off, according to some analysts. By the end of 2015, Lenovo’s fortunes in the mobile market had dipped dramatically. It slipped to eighth position in China’s smartphone market as new and nimbler Chinese competitors such as Huawei, Xiaomi, Oppo, and Vivo continued to grow rapidly. Critics stated that Lenovo lacked innovation at a time when its rivals were upping their game in both the PC and smartphone markets. The challenge before Yang Yuanqing (Yang), CEO of Lenovo, was how to orchestrate a turnaround in the fortunes of the company and restore it to its past glory.
In August 2017, Beijing-based multinational technology giant, Lenovo Group Limited (Lenovo), reported a quarterly loss of US$ 72 million for the quarter ended June 30, 2017. It had made a profit of US$ 173 million for the same quarter of 2016. Lenovo also lost its market leadership in the global personal computers (PCs) market to its arch rival Hewlett-Packard (HP). HP led the global PC market with a 22.8% market share for the second quarter of 2017 while Lenovo stood second with a market share of 21.6%, according to International Data Corporation (IDC). Analysts attributed Lenovo’s troubles to the maturing PC market where demand was falling with consumers shifting to smart phones and tablets for daily activities including surfing the Internet. Critics opined that Lenovo’s products, be it PCs or smart phones, lacked innovation while HP had taken over the PC crown by launching a series of cool products targeted at gamers. In the smart phone market too, analysts felt that Lenovo had failed to read the market signals, while its competitors such as Huawei Technologies Co. Ltd. (Huawei), Xiaomi Inc. (Xiaomi), Oppo Electronics Corp. (Oppo), and Vivo Electronic Corp. (Vivo) were rolling out stylish and inexpensive smart phones and gaining market share in China.
The history of Lenovo dates back to 1984 when it was started as New Technology Developer Inc., the predecessor of the Legend Group Ltd. (Legend), by Founder and Chairman, Liu Chuanzhi (Liu), along with ten colleagues at the government-owned Computing Institute of the Chinese Academy of Sciences (CAS) with US$ 25,000. The company was started with the aim of commercializing the research and development (R&D) activities conducted at CAS. In 1985, as its first business deal, the company took over the responsibility of receiving, checking, and maintaining IBM computers imported by CAS and of training CAS staff.
The company invested the profits of US$ 146,583 it had received from servicing IBM computers in the design, production, and marketing of its first product – the Chinese character card – HanCard. The Chinese character card, which translated English operating software into Chinese characteristics, was based on the original concept developed by the Institute of Computer Technology (ICT) of CAS. At that time, foreign vendors were not able to come out with such an operating system for PCs in China. The successful launch of the Chinese card boosted Lenovo’s growth in the early 1990s.
In the 1990s, Lenovo was the first company to introduce the home computer concept in China and it grew into a national company cornering a market share of 27% in the domestic market. Lenovo’s competency was its deep understanding of the domestic market and its quick response to the demands of local consumers. The success of Lenovo and other domestic computer makers in China confounded the predictions made by several market analysts. According to Business Week , “It wasn’t supposed to happen this way. A few years ago, most analysts were convinced that the global players would gobble up the Chinese market, with locals like Lenovo stuck in second tier status – at best.”
Lenovo believed that to become a global brand, it was not enough just to be identified as a global firm. Establishing a presence in more developed and highly globalized markets such as the US and Europe was essential for its overall strategy. By 2001, though Lenovo’s market share had reached 30% in China, it realized that it would not be able to grow much more given the stiff competition in the country. In addition to this, the domestic market for home PCs was shifting toward laptops rather than desktop PCs. This posed a challenge to Lenovo despite its recording profits of US$ 130 million for the FY 2002-2003, as laptops were not just costly to manufacture but also involved tough competition from rivals such as Dell and HP. In a bid to combat these challenges the company decided to step into international markets.
The global economic slowdown in mid-2008 led to Lenovo posting a loss of US$ 226 million. During this time, the company’s CEO William Amelio stepped down in favor of Yang, while Liu returned to assume the role of Chairman.
Lenovo’s Protect and Attack strategy helped the company taste success in China as well as in other global markets. For the FY ended 2013, the company also emerged as the number one PC company in global emerging markets, as well as three of the seven largest PC markets in the world – China, Japan, and Germany. For the quarter ended June 30, 2013, Lenovo’s smartphone business.
With the acquisition of Motorola, Lenovo had ambitious plans to capture a portion of the pie in the global smartphone market. However, the company’s fortunes declined when its smartphone shipments decreased by 53% in China with Lenovo maintaining a meager 3% market share for the Q4 of 2015, according to Canalys. In the global market for smartphones, the company stood at fifth position with a market share of 5.7%.
In a bid to arrest the decline in sales in its smart phone market, Lenovo planned to focus on its Moto brand. According to Yang, “Singular branding will benefit the business.” Stating that the new strategy might not bring in much success to Lenovo, Steven Tseng, an analyst at Daiwa Capital Markets, said, “Customers are also really confused by the company’s strategy.”
Despite the challenging outlook in the global smartphone market, Yang remained optimistic about turning around Lenovo’s struggling mobile business. He stated that there was a US$ 110 million sequential improvement in operational pretax income, attributable to improvements in the mobile and data center businesses in the quarter ended June 30, 2017. Yang added, “Not only did this gave me more confidence we will turn around our mobile business in the second half of FY2018, I think the entire Lenovo is entering a new phase of growth.” .
Question 1
As per this Case Study, Strategy adopted by Lenovo ,after some initial success was ?

Protect Strategy

Protect and Attack strategy

Merger Strategy

None of the Options
Question 2
According to this case Study , Lenovo lost its market Leadership in 2017, to which of its Rivals ?

Apple

Samsung

Hewlett-Packard (HP)

Sony
Question 3
Lenovo lacked ____ , when its rivals were upping their game in both the PC and smart phone markets.?

Innovation

strategic Decisions

Acquisition Strategy

Both B& C
Question 4
What strategy was adopted by Lenovo , that contributed to its success in the global PC market ?

Retrenchment Strategy

Internal Restructuring Strategy

Internationalization Strategy

Functional Level Strategy
Question 5
what strategical change/s in respect of the products, was/were adopted by the Lenonovo’s competitors to attract the customers ?

Making product more stylish

attractive pricing strategies

Both A& B

Only B
Question 6
As per this Case study, The main Objective of the company Lenovo as New Technology Developer Inc. in the start was ?

Commercialization Of Research & Development activities

To beat the competitors

Both A& B

None of the Options
Question 7
In the starting Phase of the company, What was Lenovo’s Competency ?

deep understanding of the domestic market

quick response to the demands of local consumers

Both A& B

Only B
Question 8
According to Lenovo to become a global brand – Apart from being identified as a global firm , what other strategy was also required ?

Establishing a presence in more developed and highly globalized markets

Improvement in Client servicing

adherence to International Standards

Both B& C
Question 9
What challenge Lenovo had to face , despite of its recording profits ?

Shifting of Domestic Market from Home PC’s to Laptop’s

Shifting of Domestic Market from Laptops to Home PC’s

Shifting of Market Demand to Other Electronic Items

None of the Options
Question 10
In a bid to arrest the decline in sales in its smart phone market, Lenovo planned to focus on which brand ?

Samsung Brand

VIVO Brand

Sony brand

Moto brand

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Full Syllabus Assessment
CASE STUDY
Aggregate minerals are an important resource and their use is essential to national prosperity. They are vital for building new or improved housing, hospitals, schools, factories, roads and leisure facilities. Everything from a garden path to the Channel Tunnel. The processing of aggregates also provides materials for a whole range of non-construction uses: in agriculture, water purification, medicines, paint, toiletries, paper, plastics and steel making. Mineral working can have a significant effect on the landscape and on the living conditions of the people. It is essential that the industry operates to high environmental standards and manages its operations in a manner which minimises their impact on the environment. Business managers have to take these matters seriously as public awareness and concern has significantly increased over the last decade.
Companies are judged on the achievement of their “traditional” business objectives, such as return on investment, growth, market share etc. and now on their environmental performance and this is often looked for in specific statements, objectives and strategies set by a company. It is not only environmental campaigning groups or concerned consumers who realise the importance of the environment. Research has shown that three-quarters of managers feel that more emphasis should be placed on these issues. Where does this attitude spring from? There are a number of important influences and these include UK and EU environmental legislation, public opinion, pressure groups, influence of employees’ families and friends, the company’s own sense of social responsibility and, last but not least, market pressure from customers and end-users. These pressures are expected to grow, so a well managed company should prepare itself to respond to the concerns and take appropriate action.
The RMC Group has become the world’s largest producer of ready mixed concrete, also diversifying into a number of other construction material sectors. It employs the principle of vertical integration to secure raw materials – sand, gravel and crushed rock – required to sustain the production of ready mixed concrete and other added value finished products, such as concrete blocks, paving and asphalt and macadams for road construction.
RMC operates in Europe, Israel and the United States. In recent years the reunification of Germany and the restructuring of Eastern Europe has brought about considerable expansion for the Group in the core business of concrete and aggregates and in cement, the material that when combined with aggregates forms concrete. In the UK, RMC is organised into a number of divisions, the two largest represent the core or main line business activities of aggregate extraction and processing i.e. quarrying and the production of ready mixed concrete and other, added value products.
RMC Roadstone
The Roadstone activities of the RMC Group are concerned with the production and processing of crushed rock, much of which will be used for road construction and maintenance. A significant proportion of this output will be used in the manufacture of macadams and asphalt – the materials used for the upper layers and surfacing of all types of roads and pavements.
At present, RMC operates 30 hard rock quarries and 58 bituminous coating plants. Geologically speaking, hard rock such as limestone, granite and gritstone occur to the north and west of a line running from the Wash to Dorset. All of the company’s hard rock quarrying takes place in these areas of England, Wales and Scotland. The coating plants are large mixing units where the rock or stone is combined with bitumen and other components to produce road surfacing materials. These plants are either situated on a materials source i.e. a quarry, or close to the country’s principal market areas, the major towns and cities.
In 1994 there were 1300 quarries and pits ranging from small sand pits producing a few thousand tonnes per annum to super quarries producing many millions of tonnes a year. In the same year there were 1150 ready mixed concrete plants and 350 coating plants.
In 1995, 240 million tonnes of aggregate were produced of which 149 million tonnes were crushed rock and 91 million tonnes of sand and gravel. 10% of total demand is met from recycled and secondary sources; a figure which is set to double over the next decade. (60% of all demolition materials and construction wastes are recycled). The area of land with planning permission for mineral extraction amounts to about 0.35% of the total land area of Great Britain; however, at any one time less than half of this figure would actually be worked. By way of comparison 12% of the land area is taken by urban areas.
• Review – The planning system is rooted in government policy and is controlled centrally for England and Wales by the Secretary of State for the Environment. Consequently, government policy is paramount in the making of planning decisions. The system is primarily operated and administered by local planning authorities (e.g. District and County Councils) which decide whether a proposed development, such as mineral working, may proceed. All applications for planning permission are submitted to the local planning authority.
• Business development – In order to maintain its business, the company needs to keep its “reserves” of minerals with planning permission under constant review. Allied to this, ongoing investigations are undertaken to determine areas from which additional reserves may be gained. Often, where the geological conditions permit, extensions to existing quarry operations are considered in the first instance. In other instances new “green field” sites are studied either as replacements or as a means to expand business activities.
• Environmental assessment – This is a formal technique for ensuring that the likely effects of new developments on the environment are fully understood and taken into account. It has been incorporated into the planning procedures for certain major projects in the UK to implement an EU Directive, which came into force in 1988 and was given legal effect in England and Wales through the Town and County Planning (Assessment of Environmental Effect) Regulations in 1988.Larger mineral development projects and those within environmentally sensitive areas (e.g. National Parks) are required to be the subject of environmental assessment. This approach provides a better basis for decision making. For RMC, the process serves to highlight the environmental effects of a project or, if necessary, where remedial or mitigating measures need to be adopted within the proposals for development. Where formal environmental assessment procedures are not required, environmental effects are still addressed in full since they are taken into account by the planning authority.
• Sustainability – A guiding principle of current government planning policy is to provide for development and growth to be sustainable. Quarrying operations are designed to minimise impacts on the environment while they are active and must work to a restoration objective. When quarrying ceases at a particular location, the site is landscaped and restored, then returned typically to countryside use. To understand the issues involved in quarrying, three case studies highlight specific aspects that RMC has had to consider in its applications to extract minerals.
In 1993, RMC Roadstone Ltd – Eastern sought permission to extend the existing quarry operation in a westerly direction. The quarry, which is situated in the Peak District National Park, already enjoyed an existing permission which if it were to be developed to its maximum permitted extent would yield an additional 4.5 million tonnes of limestone; this would sustain the quarry at the prevailing production level for a further 18 years. However, the company recognized that to develop the quarry within this existing permission would have significant adverse effects. The new application for the westerly extension was therefore designed to provide a similar output over the same timescale and thus sustain the quarry’s existence without the adverse effects shown below:-
• The quarrying operation would be concentrated in areas which were the subject of few planning conditions and which did not provide for meaningful landscaping or restoration.
• The quarry would become more prominent as wooded hillside slopes and an existing landscaped screen mound would have to be removed.
• Blasting would take place near to the village of Stoney Middleton.
• Increased activity at the quarry would be audible in the nearest residential area. Dust emissions would also increase.
• The removal of the existing processing plant and its replacement with a new arrangement, along with the deepening of the quarry would all add to costs of production.
In essence, the application for the westerly extension represented a straight swap i.e. the old permission (with its adverse effects) for a new permission. In addition, the scheme for the proposed extension incorporated a series of measures that would minimise the local environmental impact of the operations and would phase the development in order to effect restoration and landscaping works at the earliest opportunity. The extension would not increase the reserves and there would be no increase in the life of the quarry.
The aim, as expressed to the Planning Control Committee of the Peak Park Joint Planning Board, was to produce a restored area which complimented and mimicked the local landscape. Nearly 30,000 new trees and shrubs of 19 different species would be planted, providing an area of benefit to the local population and to create natural habitats.
The Planning Committee concluded that the environmental benefits constituted a sufficiently strong case to warrant an “exceptional case.” The removal of the possibility of working the slopes near the village and the restoration of the site provided grounds on which to allow the proposal to proceed.
To meet an established need for high quality roadstone, in 1989, the company undertook an extensive investigation of areas with suitable geology in Cumbria. The aim was to define a site with a large mineral resource which was remote from populated areas and would cause minimum disturbance to the environment. The site at Roan Edge met the criteria. The application was for the extraction of 6.9 million tonnes of Silurian Gritstone from an area of 13.4 hectares, with the total size of the site being 28.6 hectares. The period of quarrying would be 28 years.
The products from the quarry would be used to supply the demands of the road construction market, reinforced by the government White Paper on “Roads for Prosperity” of May 1989 which announced greater expenditure on roads over the next decade. The quarry itself would be well concealed within the landscape and on completion of quarrying all plant and machinery would be removed and the site restored by a combination of respreading of overburden and soils, seeding and tree planting. Permission for the development was granted in 1991, subject to the company undertaking to meet certain conditions which, amongst others, included progressive landscaping, safeguarding of water courses and drainage and control of noise, dust and blasting
Churchwood Quarry was an active limestone quarry covering an area of 37 hectares. A new processing plant was under construction and the old plant, which occupied a prominent point at the south western end of the quarry, would be removed thus releasing a worked out area suitable for landfill.
The old quarry would be progressively filled with industrial, commercial and domestic waste over a period of 20 years, at an average annual rate of input of 300,000 tonnes. Around 90-95 vehicles per day would visit the site using a new access to the north of the existing one. To maximise the potential void, a total of 1.5 million tonnes of limestone would be extracted. There was a need for such a facility in Avon to take commercial and industrial waste because, at the time of the application, there were only 8 sites available, none of which had a life of more than 2 years.
The environmental effects of the development can be reviewed as follows:
• Hydrogeology – Development of the landfill site as designed would have no adverse impact on the local hydrogeological regime. However, detailed measures to eliminate and control potential discharges from the site were recognised as being a component of the project.
• Landfill gas – Breakdown of organic matter in a landfill site produces gas. To solve this problem a gas extraction system would be installed, which, when the gas reached a certain volume, consideration would be given to using it for energy generation.
• Leachate – Degradable waste and the permeation of water through it gives rise to leachate. This would be collected, pumped out, treated and if necessary, disposed of.
• Restoration – Completion of landfill operation would enable the re-creation of the original ridge line, with the restoration of the former quarry fitting in with the surrounding contours. A network of fields separated by hedgerows would enhance the visual effect.
• Other issues, such as windblown litter, possible infestation by rats and flies, odour etc, would all be managed and dealt with in an appropriate way.
• The three case studies show how the company is engaged in quarrying within the planning framework set by government. Quarrying in all its many manifestations is a complex business and has many considerations to take into account from the visual aspects, noise, drainage and extra traffic through to the restoration of the site and the uses made of it thereafter. The response of the company to the demands of the government road building plans of the late 80s, was to identify sources of new materials within an approach that reduced the environmental impact. Calls for the more efficient use of aggregate resources, including the recycling of construction materials, together with other changes affecting the demand for aggregates, will continue to mould the development of the company’s operations.
• As indicated in the introduction, a well managed company needs to respond to increasing concerns for the environment; indeed such concerns have already influenced the reduction in the road programme. Environmental considerations naturally affect the demand for RMC’s products through their impact on the company’s principal customers – local and national government through the road building programme – and those affected by quarrying operations. Nevertheless, there will be a continuing demand by society to see improved living standards and a well maintained built environment. The supply of aggregates under these circumstances will require a properly balanced approach, taking into account all relevant factors.
• The quarrying operations, as well as dealing with the changes in demand as environmental considerations become more prominent, are key influences on RMC’s business. The ability of managers to deal with these are the guarantee of a successful business future for the company.
Question 1
As per this case study , these days emphasis is also paid on __________ and is also included in the objectives and strategies of businesses?

Environmental performance

Technical performance

Political performance

Strategic performance
Question 2
For the purpose of Business development , in this case study ,the company needs to keep its “reserves” of minerals with planning permission under___________?

Constant review

no reviews as required

the maintenance

Both B & C
Question 3
Which of the following formal technique in this case study , is used for ensuring ,that the likely effects of new developments on the environment are fully understood and taken into account?

Technological analysis

Competitor analysis

Environmental assessment

Cultural analysis
Question 4
In this case study ,Which Principle is adopted by government so as to provide for development and growth to be sustainable ?

Industrial Development

Sustainable Development

Strategical Development

Competitor Development
Question 5
Which of the following is/are adverse effects that the company recognised , to develop the quarry within this existing permission ?

Increased activity at the quarry would be audible in the nearest residential area

Dust emissions would also increase

Blasting would take place near to the village of Stoney Middleton

All of the options
Question 6
For the purpose of environmental development , what option/s was/were adopted ?

progressive landscaping

safeguarding of water courses

drainage and control of noise

All of the options
Question 7
The environmental effects of the development can be reviewed as which of the following ?

Hydrogeology

Landfill Gas

Restoration

All of the options
Question 8
With the idea of expansion strategy in Cumbria , Company’s aim was to define a site with a large mineral resource which was remote from populated areas and would cause _____ to the environment.?

minimum disturbance

maximum disturbance

medium disturbance

Both B& C
Question 9
For successful business future for the company, what factor/s are important ?

ability of managers to deal with the changes in demand

environmental considerations

Both A & B

Only A
Question 10
As per this case study, the processing of aggregates also provided materials for a whole range of non-construction uses, what were these?

Agriculture, water purification

medicines

plastics and steel making

All of the above options
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