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June, 2013

Ms-93 : Management Of New And Small Enterprises

SECTION-A

1. Briefly explain the meaning of Entrepreneurial competencies.Discuss the stages in which it is developed?

2. What are the factors which influence the decision for selection of site for a Small Scale Enterprizes (SSE). State the locational problems confronted in the selection of plant site with respect to single as well as multi-facility location.

3. Discuss the common errors committed in the formulation of a Business plan.

4. What are the functions carried out in work services and how are these managed ? Illustrate.

5. Write short notes on any four of the following:

(a) Total Performance Index.

(b) Inventory control

(c) Firm Flexibility

(d) Professionalisation in family Business.

(e) Market Demand Analysis.

SECTION-B

6. Read carefully the case given below and answer the questions given at the end of the case :

IT'S ALL ABOUT MONEY

Nirmal Jain came from a family of commodity traders.Over the years,they had made and lost large sums of money.After completing his postgraduation from TIM Ahmedabad,he decided to start his own venture rather than take up a job in the corporate world.Starting Probity Research,an equity research firm,really paid off.The nineties was the time the Indian masses had discovered the stock exchange as an investment vehicle and they needed all the advice they could get to understand this uncertain environment.By 1999,Probity Research had a turnover of almost one crore and things were looking good,But Nirmal was not happy; he wanted to try for something much bigger. It was around that time that the Internet too was having an impact on business and society in India.Anybody who knew a little about it was getting into some business based on the Net in the fear of missing out on something big.Nirmal too was excited about this new medium of communicating and doing business.He took a big risk and put all his content online by launching Indiainfoline.com.This put an end to the way he was conducting his business and opened up entirely new possibilities.Not everyone was convinced that he was on the right track.Many members of his top management at Probity Research left him and his family was apprehensive that he had prematurely ended a good business. Initially things seem to have worked out for the better. Even though he had not started making profits, Indiainfoline was making a name for itself and was able to gain very high visibility in the right circles. He was attracting interest from banks and venture capitalist alike. Indiainfoline became the first company to offer e-broking in India and Nirmal was even contemplating starting a TV channel. With the dot-com bust, everything seemed to come apart. Good employees left the firm, financer pulled out and revenues plummeted .The stock market plummeted and that affected his basic business premise. As a reaction to the macro-economic changes, he scaled down operations, got rid of all frills and concentrated on e-broking and financial services. He persevered with his new business model through some harrowing times and finally things started looking up in 2003. Currently, Indiainfoline has revenues of over Z 300 crore and annual profit of over Z 60 crore. Nirmal Jain's stake in Indiainfoline to be worth over Z 300 crore.

Questions :

(a) Do you think Nirmal Jain took a gamble by starting Indiainfoline?

(b) What are the external factors at work which prompted Nirmal Jain to take the plunge?

7. To facilitate small scale sector government has stipulated that investors bringing FDI in single brand retailing should source 30% of there products from small scale sector. Discuss the advantages and disadvantages of this measure for Small and Medium Enterprizes (SMES).

December, 2009

Ms-92 : Management of Public Enterprises

SECTION –A

1. 'The changeover from public to private sector has taken a number of forms'. Critically comment on the statement taking into consideration the transformation of public to private sector.

2. What are the different types of audit ? Explain how public enterprises maintain a higher degree of accountability through audit process carried out by various government agencies ?

3. What do you understand by the concept of 'sickness' in case of public enterprises. What are the different causes of sickness ? Explain with suitable examples.

4. Write a note on the Public Enterprises Selection Board (P.E.S.B) , with respect to its functions, constitution and the selection procedure followed by them ? Discuss its relevance in today's context .

5. Write short notes on :

(a) Wage policy

(b) Voluntary Retirement Scheme (VRS)

SECTION – B

6. Unions, with few exceptions, have opposed privatisation of PSEs in general. Even in cases where full protection of workers interest is assured, they have been reluctant. The prevalent aversion, it appears sterns more from a conservative ideology than a rational outlook but  there is more to this aversion.

(a) List out the factors which you think are responsible for aversion to privatisation.       

(b) Explain the causes, which result in such kind of aversion.

(c) What in your opinion is the impact on the work culture of an organization which goes

for privatisation ? Explain.

June, 2010

Ms-92 : Management of Public Enterprises

SECTION –A

1. "India's approach to economic development was compromise between a centrally planned economy and a market economy". Discuss.

2. How corporate Governance is relevant in today's context in public enterprises ? Explore one successful enterprise of your choice, which is society oriented.

3. "Industrial sickness is threat to developing labour surplus economy". Justify, Also discuss the main turnaround strategies followed for revival and reconstruction of sick enterprises.

4 Describe the functions of Public Enterprises  Selection Board. State the Government's policy regarding recruitment to various level posts in public enterprises.

5(a) Discuss the implications of disinvsetment on labour force. Also give suggestions to tackle such implications.

(b) Discuss the Policy of Privatisation.

SECTION –B

6. Critically evaluate the corporate Planning Process followed in SAIL.

7. Having understood the concept of marketing mix, develop marketing mix strategy for the following.

(a) Tourism Development Corporation

(b) State Financial Corporation

(c) Road Transport Corporation

June, 2011

Ms-92 : Management of Public Enterprises

SECTION – A

1.  'Economic development was sought to be achieved in different countries at different stages of development through different economic models.' Keeping this statement in mind list out the different models of economic growth. Discuss any two models.

2.  Explain the various methods of parliamentary  control and discuss their relevance in the present context.

3.  Write a brief note on the financial performance of State Level Public Enterprises (1-31,Pfs) with special reference to State Electricity Boards (SEf.3s).

4.  List out the various techniques of project  Management used in Public Enterprises. Critically evaluate PERT and Critical Path Method (CPM).

5.  Write short notes on :

Naresh Chandra Committee

Narayan Murthy Committee

SECTION-B

6.  Over the recent past  illy l rover!Iment of disinvested a part of equity of some of the Public Enterprises. What are the motivations behind such steps and how the Government plans to utilize the money ? What benefits are likely to ensure from the public point of view ? Discuss.

7.  Over the past decade Indian Railways, by and large have shown improved performance, what are the reasons behind such performance ? Would you, in this context, support privatisation of the railways ? Justify

December, 2011

Ms-92 : Management of Public Enterprises

SECTION - A

1. (a)  What are the different objectives of public enterprises ? Explain in brief.

(b) What is the impact of economic reforms on the functioning of state of Public Enterprises in India ? Explain.

2. Discuss the various dimensions of Government -  PE interface. Also discuss the ways in which the Government control is exercised over the PEs.

3. (a) Discuss the methods/techniques which can be helpful in project implementation.

(b) What methodologies can be used in project  evaluation ? Discuss with examples.

4. Discuss the relevance of marketing in public  enterprises. What marketing concepts in particular can be helpful in marketing of public enterprises ?

5. Describe the various steps in the process of  disinvestment. Comment upon the pricing of shares in the context of recent experience.

SECTION – B

6. 'In India the issues related to Corporate Governance are quite distinct - basically due to the socio-economic conditions of the country ; the major issue in India relating to corporate governance, especially in PEs is not a 'conflict between management and owners' as in the West but a 'conflict between the dominant shareholders and the minority shareholders'. Critically comment on the issues in corporate governance related to PEs. Refer to the situation given above.

7. In the view of some knowledgeable people, Public  Enterprises have become irrelevant and therefore, the structure of PEs needs to be dismantled. Critically evaluate and offer your own comments. 

December, 2012

Ms-92 : Management of Public Enterprises

SECTION-A

1.  'The patterns of ownership and management of public enterprises vary from country to country'. Discuss the ownership and management pattern of Public Enterprises in India.

2.  Briefly discuss the role of some important organs of the government machinery interacting with Public Enterprises.

3.  What is the importance of marketing concepts in  Public Enterprises ? Discuss.

4.  Briefly discuss the following : 

(a)  Voluntary Retirement Scheme (VRS).

(b)  Wage Policy followed in Public Enterprises  .

SECTION-B

6.  Taking any Public Sector Enterprise of your choice. Analytically discuss the Personnel Policy followed in that PSE.

7.  (a)  What are the different forms of disinvestment followed in PSE in  todays context ?

(b)  Critically analyse the advantages and disadvantages of each form of disinvestment.

June, 2013

Ms-92 : Management of Public

SECTION-A

1. Briefly describe the concept of socialism in context to Public Enterprises. Also discuss the emergence of Indian brand of socialism and its impact on the economic development of the nation.

2. Define 'Corporate Governance' and explain its concept. Comment on the recommendations made by Birla Committee (2001) and Naresh Chandra Committee (2002) on corporate governance.

3. How has public sector reforms played a role of a 'social developer' ? Discuss giving examples.

4. (a) How is a Board in the case of Public Sector Enterprises (PSEs) constituted ? Explain.

(b) What is the structure of Board of Directors of PSEs ?

5. List out various dimensions of privatization and explain any five with the help of examples.

SECTION-B

6. The public sector, with more than 130 Government of India Undertakings today, occupies a key position in the economy of the country. It has already grown into an industrial giant with more than INR. 20,000 crores of investment. About one-fourth of it is in the railways, but steel, heavy electrical and oil industries also have a sizeable portion of the total investment. The private entrepreneurs are always in search of profit and this motive urges them to move in fields where the returns are high and certain. In a developing country or in an under-developed country, this tendency has many drawbacks.

List out the challenges a Public Enterprise faces in comparison to its private competitors. Support your answer with the help of examples.

7. The Public Sector has played a very important role in the national economic development in India. The main objectives of the public sector enterprises are : to build a strong and sound base for heavy industries and to create infrastructural facilities for self-reliance and self-sufficiency in modern technological development, to prevent the concentration of wealth and economic power in a few hands, through public ownership of means of production and development, greater welfare of the common man and a rise in standard of living. In pursuance of the Industrial Policy Resolutions of 1948 and 1956, the Government of India made an entry into industrial and commercial activities in a big way. Massive investments have been made in a wide spectrum of activities, which fall under the categories of basic and strategic industries, such as steel, mining, metallurgy, coal, petroleum and chemicals, ship-building, shipping and heavy machine building, etc. There is, however, another side of the picture. Most of these public sector industries have shown profits in recent years, but they suffer from many shortcomings. List the shortcomings of the public sector enterprises, which are hindering their growth in the competitive environment. 

June, 2010

Ms-91 : Advanced Strategic Management

SECTION – A

1(a) Discuss the nature and scope of Corporate Management. Is corporate management the same as corporate planning ?

(b) "Corporate strategy may exist at three levels." Explain. What are the distinctive characteristics of the three levels of strategy on the standpoint of various dimensions ?

Illustrate it with the help of a chart.

2(a) Why is the need for Corporate Governance felt ? Give a brief historical account of corporate governance in India. What measures, you think, need to be taken further to strengthen corporate governance in India in the light of recent experience ?

(b) l5iscuss the functions and role of CEO in a company. What characteristics the Board of Directors of a company should possess in order to be really effective ?

3(a) What kind of strategic thrusts/actions are required during the different phases of Product Life Cycle ? Explain with the help of a chart.

(b) What basic approaches are available to a company to enter and complete in global markets ? Explain.

4(a) How can R and D be helpful in creating competitive advantage for a firm ? What are the pre-requisites for developing an effective R and D strategy ? Explain.

(b) Examine the relationship between innovation and strategic management. What characteristics the innovative organisations usually exhibit ? Discuss briefly.

5. (a) How are Business Ethics important for a firm ?Examine the relationship of business ethics with Corporate Social Responsibility (CSR).  What consequences a firm may have to face in the short and long terms if it ignores business ethics ?

(b) Discuss the relevance of strategic philanthropy for business organizations. Illustrate your answer with examples from India.

SECTION – B

6. Select (and name) any one industry of your choice and then define/analyse its environment in terms of SWOT analysis, taking into accounts the major factors and influences currently operating in that industry.

7. After reading and analysing the following Case carefully, answer the questions given at the end.

Graniterock's "Short Pay" Policy: An Innovate Way to Promote Strategy Execution

In 1987, the owners of Graniterock, a 100-plus-year-old supplier of crushed gravel, sand, concrete, and asphalt in Watsonville, California, set two big, hairy, audacious goals (BHAGs) for the company: total customer satisfaction and a reputation for service that met or exceeded that of Nordstrom, the upscale department store famous for pleasing its customers. To drive the internal efforts to achieve these two objectives, top management instituted "short pay," a policy designed to signal both employees and customers that Graniterock was deadly serious about its two strategic commitments. At the bottom of every Graniterock invoice was the following statement :  If you are not satisfied for any reason, don't pay us for it. Simply scratch out the line item, write a brief note about the problem, and return a copy of this invoice along with your check for the balance. Customers did not have to call and complain and were not expected to return the product. They were given complete discretionary power to decide whether and how much to pay based on their satisfaction level. The policy has worked exceptionally well, providing unmistakable feedback and spurring company managers to correct any problems quickly in order to avoid repeated short payments. Graniterock has enjoyed market share  increases, while charging a 6 percent price premium for its commodity products in competition against larger rivals. Its profit margins and overall financial performance have improved. Graniterock won the prestigious Malcolm Baldrige National Quality Award in 1992, about five years after instituting the policy.  Fortune rated Graniterock as one of the 100 best companies to work for in America in  2001 (ranked 17 th ) and 2002 (ranked 16 th ). Company employees receive an average of 43 hours of training annually. Entry-level employees called job owners, start at  $16 an hour and progress to such positions as "accomplished job owner" and "improvement champion" (base pay of  $26 an hour). The company has no-layoff policy, provides employees with  12 massages year, and sends positive customer comments about employees home for families to read.

Question

(a) What are the goals of an Innovative Organisation ? How these goals are accomplished by such Innovative

(b) Organisations like Graniterock. How Goals are turned into results by.such Innovative Organisations ?

June, 2011

Ms-91 : Advanced Strategic Management

SECTION – A

1.  (a) What could be the different approaches to corporate management ? Critically analyze them by pointing out their merits and demerits.

(b) Discuss the components of corporate strategy. How could a company obtain the advantages of synergy ?

2.  In relation to the role of Board of Directors in a company, there are two sets of expectations : Law-related expectations and Managerially-derived expectations. Discuss these two sets of expectations by citing examples.

3.  What effects different phases of the Product Life Cycle have on the various dimensions relating to the product, viz., nature of the product itself, buyer behaviour, marketing, competition, margins and profits, etc ? Explain and offer your comments. In what ways do industry environments vary in their basic strategic implications ?

4.  (a)   Discuss the use of IT in strategy implementation, particularly in relation to competitive strategy, value chain and value system.

(b) Discuss the knowledge management frame work as applicable to an organisation.

5.  Briefly explain the following :

(a)  Developing an effective R & D strategy

(b)  Business importance of CSR

SECTION – B

6.  Read and analyze the case study hereinafter carefully and answer the questions given

below :

Questions

(a)  Describe ITC's e-Choupal initiative to engage the farmers to the next level. Flow is version 3.0 is different from the earlier two versions ?

(b)  Analyze the proposed responses of the company to its competitors and offer your comments. What stages of evolution e-Choupal experiment has gone through ? What do think is the main strength of the programme and what could be the benefits to the innumerable farmers ?

(d) I-low can mass technology (e.g., mobile telephony) play a part in supporting the envisaged transformation of rural areas ?

ITC's e-Choupal

When you run Corporate India's largest, most ambitious and most celebrated rural initiative, you better know the following :

•  That adversities could crop up unexpectedly.

•  That some adversities can be turned into opportunities.

•  And that every little opportunity has to be made most of.

It was so with ITC, the company behind the e-Choupal initiative that had reached four million farmers in six states in six Years till 2006. At one point, the company was opening 5-6 e-Choupals a day and had a target of reaching 100 million farmers. That hit a roadblock of sorts in 2006-07. The very basis of the e-Choupal's core business—commodity sourcing from farmers directly — was endangered with the government clamping down on companies trading with farmers directly. The trigger for the government reaction was the spike in wholesale price inflation, which rose close to double-digit figures in case of some commodities in 2006-07. Though the impact varied from state to state, the larger foreboding was loud and clear : The acts of government taken in the national interest could hobble e-Choupal's anchor business, even if temporarily. What does the company do then ? Roll out plans for Version 3 of e-Choupal that will add atleast two more anchor businesses to start with and deepen the engagement with individual farmers way beyond what was being done in Version 1 and 2. "The idea is to discover new anchor businesses and try and insulate the e-Choupal model from the risks of reversal in government's agri reforms," says S. Sivakumar, Chief Executive, Agri-Business, ITC, and the man who scripted the e-Choupal model of business. Many other Indian companies that had once entered rural markets, and had subsequently quit, are re-entering. Tata Chemicals, Mahindra & Mahindra are two such examples. Flow does ITC plan to respond to this competition ? By making better use of its unique social capital—the Sanchalak and the Samyojak framework. In the Sanchalak, ITC has its own man in the 40,000 villages it operates in. These men can steer e-Choupal into areas and activities the competitors cannot. For instance, the Sanchalaks will be the key men in organising Choupal Haats. Opportunity : Mandis have improved since e-Choupal initiative started Response : Leverage the unique direct relationship with the farmers When the e-Choupal initiative was started, the operations at mandis were non-transparent. From weighing of farmers' produce to its gradation—that impacted it pricing —most operations were arbitrary and based on archaic methods. Over the past couple of years, the mandis have modernised and become more transparent. Where does this leave e-Choupal, which reached out to the farmers on the plank of transparency and fair valuations for their crops ? A unique advantage 11- C still has over mandis is its direct and continual relationship with the farmers in its network. With rising awareness and concerns about food safety, this direct relationship is extremely valuable for partners who either source products directly from the e-Choupals or use ITC's farm products generat :d

through the e-Choupals. For instance, an importer of processed foods in Europe can trace ITC food products all the way to the farm it came from to satisfy itself of the food safety standards. By making these and a few other mid-course corrections. ITC is hoping to morph e-Choupal into an all-weather venture—relatively de-risked from regulatory flip-flops and even market swings. But the success of this restructuring will critically depend on how much further it can deepen its existing relationship with four million farmers so that it can extract more value out of this network than it has been able to do till now—value for itself, for the farmer and all the current and future network partners. Sivakumar has interesting calculations to share. By personalising its relationship under e-Choupal's Version 3, ITC can increase its reach from the existing 4 million farmers to 16 million— without even adding any village to its network. How ? Once personalised, each farmer's family (assuming a wife and two kids) will come into the e-Choupal network as either a consumer or a contributor of some sort. That will give an additional reach of 12 million ! Of course, all these will not happen in one go and overnight. Some of the modifications mentioned—like setting up of rural employment exchanges —have already been implemented. Some are going to be added soon. The first Choupal Haat will be organised in November. The two-way mobile application and its full operationalisation will take some more time. But given the blueprint and flexibility demonstrated so far, ITC should be able to achieve much of what it plans to. And in doing so, the company will continue to be a leading and unique example of Corporate India's engagement with rural India.

>>VERSION 1.0

The Start

IDEA : To give power of scale to small farmers by aggregating them as sellers (of produce) and as buyers (of farm inputs)

FARMERS' GAIN : They get bargain and choice - the two key virtues of competition ITC'S GAIN : Access to inputs for its agri business; offer the use of network to other companies

>>VERSION 2.0

The Scale - Up

REACH : By 2006, 40,000 villages covering 4 million farmers

OFFERING : Network now offered five services :

• Information: Weather, price, etc.
• Knowledge : Farming methods, soil testing, etc.
• Purchase : Seed, fertiliser... to insurance
• Sales : Farmers sell crops to ITC centres
• Other : Cattle care, water harvesting, women employment etc

>>VERSION 3.0

The Deepening

NEW BUSINESSES : Add two new anchor businesses :

(1)  Rural jobs and employability and

(2)  Personalised agri services. Plus strengthen existing commodity sourcing

MORE INTERACTION : Through Choupal Saagars and Haats and via mobile phones

NEW TECHNOLOGY : Use of especially enabled mobile phones, in addition to PCs, for two - way interaction with farmers; use of analytics; new partners Technologically, it would mean adding mobile phones to the existing channels of Net-based computers and Choupal Saagars, the one-stop shops catering to all the needs of the rural community. As the company scoped around for new opportunities, it found many — some emerging from the adversities that have got it rethinking. These opportunities not only make transition to Version 3 possible, but also help modify the existing strengths of Version 1 and 2 (sec box above).  It's spotting of these opportunities and turning them into current and future businesses that has become a case study in persevering with rural India.

Opportunity : Farmers willing to invest more

Response : Offer them services they really need, and are willing to pay for Though the average farm productivity is still low in India, the last 10 years have seen an unprecedented rise in farmers' income. This has been driven by a record increase in the price of agricultural produce (government's minimum support prices for food grains alone have risen by 30-90 per cent in two years) and a good run with monsoons—this year's  deficiency not withstanding. Higher income means farmers are ready and willing to invest more—and one of their critical investment needs is in getting agriculture services. So far, agri services like helping farmers improve crop techniques and advice on ways to improve farm productivity have mostly been provided by the government and for free. But the quality of service has been poor, rendering them useless. In e-Choupal's Version 2, services like weather, agri inputs and pricing were provided through Sanchalaks (e-Choupal coordinators) through multimedia presentations made on village computers, but these services were customised only for crops and regions. Besides, no money was charged for these services. Under Version 3, the plan is to deliver personalised agri services to individual farmers via mobile phones. ITC has recently signed a memorandum with Nokia for this. The company already powers some of Nokia's "Life "Fools" meant for farmers. Right now the information dissemination is limited and one-way-from company to the farmer. ITC plans to make the information flow two-way. A farmer will be able to provide information on, say, the type of soil, the date of sowing and the kind of crop to the company. The company can then process these inputs and give him very specific advice. Imagine getting such inputs from millions of farmers across the country. Apart from creating economic value by offering personalised services to farmers, the data

thus generated could be of immense value to companies selling farm inputs (e.g. seeds, fertilisers, pesticides), financial firms and government planners. In sum , personalised agri services will add a second anchor business to e-Choupal —keeping its core philosophy of complementing the farmer's good with the company's good intact. Opportunity : Villages closer to towns moving away from agriculture Response : Provide job information and skill development services in villages With rural youth, especially in villages closer to towns, shunning agriculture and farm labour, ITC sees vast opportunities in using e-Choupals as centres for information on job vacancies and —eventually—providing skills that help increase the employability of rural youth. So, e-Choupals are also being geared as rural employment exchanges, which will connect the rural youth with jobs. This will be a new anchor business with a clear revenue model. Already, on August 11, 2009, e-Choupal in alliance with Monster India, the leading online career and recruitment resource, has launched Rozgarduniya.com, a website to enable job seekers in rural India to access and apply for jobs through e-Choupals. In less than a month of the service, over 1,200 job openings from 52 companies were made available through this channel. ITC is also working on the skills training business, which will be rolled out over the next few months. "Rural India has a huge untapped talent pool and Rozgarduniva.com  will provide a platform to bridge the demand and supply gap. Job

opportunities available to the rural population through this initiative will help improve employment in addition to facilitating corporate expansion plans in the rural market, " says Sanjay Modi, Managing Director, Monster.com  (India, Middle Fast and Southeast Asia). Opportunity : Faster diversification by farmers into horticulture Response : Increased push to retail of fruits and vegetables Sourcing farm produce is e-Choupal's key and original anchor business. But instead of purely trading in commodities, the sourced produce was used as inputs for ITC's food business. So, for instance, wheat procured through farmers finds its way into Aashirwad atta. With farmers around e-Choupals diversifying their produce, ITC got the opportunity to plan forward integration in more ways than one. "We moved into Choupal Fresh through forward integration with the horticulture farmers," says Sivakumar. Choupal Fresh (it is still in a pilot phase with six outlets in Hyderabad) is more "fresh" than other chains since vegetables and fruits make up 80 per cent of products sold through its outlets, compared to 20 per cent in most other "fresh" chains. The forward integration is also evident in the export of processed foods and fruits (mango and other fruit pulps). "Many of our products and businesses have backward integration with the e-Choupals. Bingo, for instance, is made from potato sourced entirely through the e-Choupals. Similarly, the export of processed foods and fruits is dependent on the e-Choupals now," says Sivakumar. Also, starting mid-2008 ITC has entered personal care products in a big way. The e-Choupal network is a platform to take these products to consumers in the countryside. These branded products will also be introduced at the Choupal Haats (these are temporary rural gatherings meant for interaction and product and service experience as against a Choupal Saagar, which is a permanent and multiple rural services facility that includes an agri produce warehouse, retail hypermarket and a fuel station), which are going to be launched over the next couple of months. Among the things planned to be introduced through the Haats are branded personal care products like shampoos.

Opportunity : Improved rural roads, courtesy Bharat Nirman project

Response : Increase the coverage area of each e-Choupal

The e-Choupals, right from Version 1, worked in a hub and spoke model. Each e-Choupal and its Sanchalak catered to several villages nearby. The average number of villages catered by an e-Choupal so far were six. With massive government investments in rural roads, connectivity between villages has improved. This allows ITC to potentially add more spokes to each of its hubs. Network reach can be easily expanded without making much fresh investments into it. 

December, 2011

Ms-91 Advanced Strategic Management

SECTION – A

1. (a) Discuss the various kinds of corporate strategy and under which conditionsieach strategy would be followed ?

(b) Explain the process of policy formulation. Is policy formulation different from strategy formulation ? Discuss.

2. Why is the need for corporate governance felt ? Discuss the subject in the context of Indian situation. What needs to be done further ?

3. Discuss the various approaches/modes of entering into foreign markets and point out their relative advantages and disadvantages. Under what conditions/situations each approach would be considered suitable ?

4. (a) How could R and D create competitive advantage for a firm ? What a firm could do to achieve competitive advantage in implementing its competitive strategy ?

(b) Briefly discuss the characteristics of innovative organizations.

5. Briefly explain the following :

(a) The changing business paradigm and the ethical dilemmas

(b) Characteristics of dynamic environment.

SECTION - B

Read and analyze the case study, hereinafter carefully and answer the questions given

below :

Subhiksha Trading Services (STS) Over the last nine months, R.Subramanian has aged much beyond his 43 years. The Managing Director of Subhiksha Trading Services-which pioneered the discounted retail format in India-has been struggling to get his brainchild operational again after it collapsed in February following a cash cycle squeeze. In fact, the change in Subhiksha's fortunes has been as dramatic as its rapid rise from being just a regional player to a national one. "We were a darling company that could do no wrong till September 2008 and suddenly we were in trouble," rues a dishevelled Subramanian, as he looked back at Subhiksha's early days-clearly successful-and the recent crisis-without doubt an avoidable tragedy. It was in 1996 that the idea of Subhiksha (prosperity in Sanskrit) came to his mind. Organised retail, in India, was non-existent. Subramanian, and IIT Madras and IIM Ahmedabad alumnus, was then into the financial services business of asset securitisation. Research revealed that grocery was one of the largest categories of spending for the average customer, that they were extremely price sensitive on groceries and that discount stores were the largest growing format. But unlike in the West, people in India preferred to shop groceries close by. The model slowly fell into place-a large number of small stores with easy accessibility offering products at a discount. Some vital statistics about Subhiksha are given in Table 1.

Table-1

SUBHIKSHA

YEAR OF FOUNDING: 1997

FOUNDER:

R. Subramanian,

IIT Madras and

TIM Ahmedabad

BUSINESS:

Discounted retail

FUNDING: R. Subramanian,

ICICI Venture (equity);

Consortium of Banks (debt)

EMPLOYEES: 14,000

(by end of 2008)

REVENUE:

Rs 2,305 crore (2007-08)

"Between 2006-07 and 2007-08 we doubled our stores, tripled our revenues and

almost quadrupled our profits - R. Subramanian "We opened our first shop in Chennai in March 1997 with funds from the financial services business, a team of passionate youngsters with little retail experience and a plan to set up a Chennai-centric retail business with low prices and high level of neighbourhood focus as the USP," recalls Subramanian. In the first year 10 stores were opened and the count rose to 19 by March 1999. By then Subhiksha was breaking even, volumes were picking up and customers were responding. Problems did arise initially though, as its unique discounting model enraged the retail trade in Chennai, which accused it of unfairly undercutting their business. By 2000 Subhiksha grew to nearly 50 shops in Chennai retailing groceries and medicines. ICICI Venture's decision then to pick up a 10 per cent stake in Subhiksha for Rs 15 crore gave the retailer enhanced credibility in the market. This money was used to expand outside Chennai, into the rest of Tamil Nadu. By 2002-03, Subhiksha had 140 stores across 30 towns in Tamil Nadu. Sales grew steadily. Cash flows were reasonable and debt, at Rs 15 crore against the net worth of Rs 23 crore, was comfortable. Expansion and Expansion : In 2004, the retail sector was seeing an enhanced level of activity. In what proved to be a watershed decision later in its brief history, Subhiksha decided to expand nationally and more so, scale up at a rapid pace. "We realised that we had done our bit in Tamil Nadu and it was time to go national. The question we faced was do we expand sequentially (one state at a time) or parallely (many states simultaneously) ? We opted for the latter," reveals Subramanian. “Between late 2004 and early 2007, Rs 160 crore worth of equity was raised. That apart, a debt of Rs 220 crore and a bridge loan of Rs 125 crore (pending raising of equity from capital markets) was arranged to fund the national rollout. On an average, 60 to 70 stores were added in a month. The pace of rollout is evident from the fact that till September 2006, Subhiksha had a store count of just 160, but by March 2007 it had shot up to 670 and by March 2008 to 1,320. By September 2008, it was 1,650-in all 1,500 stores were added ih just 24 months. "Business was growing like mad. Despite the cost pressures in 2006 after Reliance, the Birlas and others announced plans to enter retail, between 2006-07 and 2007-08 we doubled our stores (from 670 to 1,320), tripled our revenues (from Rs 833 crore to Rs. 2,305 crore) and almost quadrupled our profits (from Rs. 11 crore to Rs. 39 crore)." says Subramanian. By then Subhiksha had become the country's largest mobile phone retailer with an annual turnover of Rs 1,000 crore. Buoyed by its performance, Wipro Chairman Azim Premji, in March 2008, picked up the 10 per cent stake in Subhiksha that was offloaded by ICICI Venture for Rs 230 crore, pegging the company's valuation at Rs 2,300 crore. Expansion Funding : Debt our Equity. It was clearly the highest point in the retailer's history (and, in a way, beginning of its decline too). The company, which had been contemplating and postponing initial public offering (IPO) since 2007, failed to capitalise on Premji's investment and the goodwill it created to raise money from the market. "We kept thinking : why dilute equity for shareholders ? We wanted to keep equity low and raise more debt. This strategy will return better money for shareholders as stock market is booming. But we should have raised equity in March 2008. There was a lot of investor interest in Subhiksha. Not doing it then was a mistake." Concedes Subramanian. Subhiksha entered 2008-09 with a Rs 1,000-crore investment plan for increasing the store count to 2,200 (from 1,320 as of March 2008) and add a new line of business-consumer durables information technology (CDIT) products retailing. It was to be funded by Rs 400 crore equity and Rs 600 crore debt. In June 2008, it announced a merger plan with Blue Green Construction Ltd, a company listed on the Madras Stock Exchange, and which had done some research on the CDIT business. By then the stock markets had begun to weaken. "A weak market, we thought, would at best lower our valuation by 10 per cent or so. There was nothing to tell us that we were in for a complete collapse of the equity markets," explains Subramanian. The banks were getting worried too. The bridge loan of Rs 125 crore was coming up for repayment in September 2008 and there was no sign of equity. They were finding it difficult to lend. Working Capital for Expansion "By July 2008, we were finding it difficult to borrow. But we kept the expansion going as we were confident of raising equity. In fact, in September we had some good offers for equity but before we could grab it Lehman Brothers collapsed and the markets fell off," reveals Subramanian. In the absence of borrowings. Subhiksha made the cardinal mistake of diverting working capital to fund expansion. Consequently vendor payments were defaulted. They stopped supplies and the shelves ran empty. Salaries and other statutory dues were not paid. Security staff deserted their jobs and over 600 stores were vandalised in November-December 2008. "We desperately worked with various stakeholders to put something together to prevent a collapse. All we needed then was Rs 125 crore to be back in shape. Between September and November 2008, we had four meetings of the collective financial stakeholders. But unfortunately it was a period when liquidity was tight. Investors, too, could not do much as the markets were crazy," rues Subhiksha's founder, adding, "In a way we got into trouble at the wrong time." By end-February 2009 operations came to a standstill. Says Subramanian, "At this stage, everybody's reaction was emotional. There were people who said we should have been more careful in managing our money, which is perfectly right, and that we did not have a plan B." Independent directors quit, relations with ICICI Venture soured (it withdrew its nominees from the board and reportedly sought government investigation into the affairs of Subhiksha). Premji and ICICI Venture objected to the merger of Subhiksha with Blue Green Construction Ltd. Cash Flow Management ? Subramanian is now banking on the much-delayed Corporate Debt Restructuring (CDR) process (involving 13 banks with cumulative exposure of over Rs. 800 crore) to bring Subhiksha back to life. "I don't see ourselves getting back to 1,650 stores. We will probably restart about 1,200 stores once the CDR process is through. We should clearly be back in business in the second quarter of the current fiscal", claims Subramanian. He adds: "Regaining the credibility of vendors, lenders, investors and the employees will be the toughest challenge for us." Has the discounted retail model failed ? His response is quick: "Subhiksha's problem was cash flow mismanagement. We ran a profitable business. We were completely overconfident when it came to raising equity. If anybody wants to be a

serious grocery player in India, they have to follow our path. The model is eminently successful."

Questions:

(a) What went wrong with STS ? What do you attribute as the reasons for its collapse ? Elucidate clearly.

(b) Did STS have a clear strategy ? What should have been the focus of STS ? What cost STS its business ?

(c) Can the company be revived or does revival seem a possibility ? If yes, how, present a plan of action; if no, why (give reasons) ?

(d) Was the expansion funding route adopted by STS justified. Give reasons.