Term-V: Course: Business Policy and Strategic Management

Workload for Sections A and B students

Section-B:

25/11/2010: 1.15 – 4 PM (Thursday)

Balance two groups, (Groups 8 and 9) will complete their previous workload assignment as per my e-mail
dated 12.10.2010, i.e.

Group-8:

Relevance of Structure : ITC Case study. (Which form have they taken? Why? Give your logic)

Group-9

Relevance of Structure : A.D.S.case. (Same as above: What will you recommend? Why?)

Later, Section-B’s workload is as per my e-mail dated 13/11/2010

Group-1:

Concentration Strategy and Crafting Strategy

Use relevant models
- Define
- Apply to given cases/caselet

Group-2

Integration:
Use relevant models
- Define
- Apply

Group-3

Diversification
Igor Ansoff / any other model
- Define
- Apply

Group-4

Expansion Strategy (Cooperation – Internalisation – Digitalisation)

Use relevant models
- Define
- Apply
Group-5

Cooperation: Joint Ventures: Entry Strategy

Use relevant models
- Define
- Apply

Group-6

Licensing, Franchising, Joint Ventures

Use relevant models
- Define
- Apply

Group-7

Strategic Alliance, Mergers and Acquisitions/Entry Strategy

Use relevant models
- Define
- Apply

Group-8

Restructuring/Re-Engineering/Exit
Use relevant models
- Define
- Apply

Group-9

Leveraged buy-outs / Divestment/Closure or Insolvency/Sell-out

Use relevant models
- Define
- Apply

[Can use slides 4A, 4B or 4C or all]

Term-V: Course: Business Policy and Strategic Management

Section-A
2/12/2010: 1.15 PM – 4 PM

Two groups (Groups 1 and 2) are already over as on 16.11.2010

Balance seven groups’ workload are as follows:

Group-3
Diversification
Igor Ansoff / any other model
- Define
- Apply

Group-4

Expansion Strategy (Cooperation – Internalisation – Digitalisation)

Use relevant models
- Define
- Apply

Group-5

Cooperation: Joint Ventures: Entry Strategy

Use relevant models
- Define
- Apply

Group-6

Licensing, Franchising, Joint Ventures

Use relevant models
- Define
- Apply

Group-7

Strategic Alliance, Mergers and Acquisitions/Entry Strategy

Use relevant models
- Define
- Apply

Group-8

Restructuring/Re-Engineering/Exit
Use relevant models
- Define
- Apply
Group-9

Leveraged buy-outs / Divestment/Closure or Insolvency/Sell-out

Use relevant models
- Define
- Apply

[You may use case or slide 4A, 4B or 4C]

Scenario Building Case-1
INTEGRATED CASE STUDY
ON NCCL: CRITICALITY OF LINKAGE:
BUSINESS POLITY – STRATEGIC MANAGEMENT-
FUNCTIONAL LEVEL IMPLEMENTATION

PREFACE:

This case study has been designed based on this author’s personal three year long involvement as a part time
management consultant to M/s. Nicco Cable Corporation Ltd. (NCCL). This firm is a very well known organisation
in the cable industry and it operates on an all India basis. It had three operating plants in the State of West Bengal.

All data, which have been presented in this case, are hypothetical in nature. However, this unique case study
demonstrates:

- Over a three year long period (2000-2003), integrated business development has been
presented for a Rs. 40 crore plus project, which involved local manufacturing and
marketing of a unique type of Electron Beam Irradiated Cable (EB-IRC)
- Starting with a conceptual, qualitative marketing research, this case has demonstrated the
critical need for a techno-commercial feasibility study, which alone could have
pinpointed the financial viability of this capital-intensive new project concept
- Another marketing research had been attempted with a few prospective business
organisations, which were pre-selected by the client’s management. Purpose was to
quantify, to the extent possible, future potential of IRC for few specific end-usage
applications
- Finally, in the third phase, the Management Consultants (M/s. CG) were given the part
responsibility of initiating first-level business negotiations with the concerned
managements of interested prospective business organisations.

What was missing? An integrated plan for Business Policy, Strategic Management and functional plan for
implementation.

Relevance of quite a few well-known management concepts and theories have been highlighted in this case study.
Also, all students and practitioners, who are interested in the field of integrated business development for
sophisticated industrial products and services, will realise the critical need for internal “Smooth coordination”
(Process), which is needed to ensure professional and commercial-level business launching – especially for an
unknown product concept.

At the end of the case study, project assignments have been suggested for readers.

Background

A large cable manufacturing company in the Private Sector (With Head Office at Kolkata and three separate
factories in different districts of West Bengal), with several other divisions (Projects, telecom, finance and cable etc)
operated all over India with an impressive business turnover exceeding Rs 600 crores per year (Period: 2000-2003).
Profitability, however, was quite low.

This case will deal only with the Cable Division (CD), whose divisional annual turnover was nearly Rs 280 crores.
Several competitors existed – all over India – but not for IRC, yet.

Present organizational (Division-level) structure is presented in Table-1.

 Table 1: Divisional structure in 2000 A.D.: Cable division

Reported to Deputy Managing Director

SB (’66 batch Mechanical Engineer)

Director

Sumit Basu (’70 batch Chemical Engineer)

President

Staff level Other Other

functional common
AB(Middle aged personnel departments
Electrical Engineer) *1 (Two important (Finance,
General manager, business development) officials) Personnel,
HRD
etc.)
Dr P Dr K
Sandip A personal (Sr GM, Sr VP
(Asst.: An Electrical secretary Production (R&D)
Engineer with 10 located at ↓
years of relevant Shyam- Based at
experience in -nagar Kolkata
a competitive firm) plant) office

*1 Coordinated with external agencies like Core Group (CG), Consultants.

Key: IRC: Irradiated Cable

Note: All data presented in this case are completely hypothetical. Purpose is to highlight the process of
integrated business development – for any new project on IRC (Customised special cables).
[Also, highlight: What all were missing conceptually, at the Top Management level].
Besides, for their standard cable division, there was a full fledged marketing unit, where a Senior Vice President,
Marketing headed the all India team, besides a General Manager, Marketing and a retired Consultant on “Publicity
and Promotion”, all based at their own Kolkata based head office building.

No clear cut plans existed, however, as how to organise and who will look after new business development via :-
- New product development
- New market development
- Ensure :
 Capacity optimisation
 Human resource optimisation
- If called for, look into :-
 Concentric diversification
 Or even non concentric diversification
(Like ITC’s :-Edible Oil and other projects)

 Hotel project
 Edible oils
 Financial services etc.)
[Please see Annexure 1 : Igor Ansoff’s Product market mix].

All in all, although their Chairman was reported to be a very well connected person and quite enlightened. The
Managing Director was a highly respected Management luminary. Very strangely, tradition and lot of bureaucracy
still existed in this firm – especially while evaluating totally new project concepts like the one on Irradiated Cable
(IRC), which was conceptualised in 1999-2000.
M/s CG, Management Consultants, were given the preliminary task of organising an exploratory market evaluation
in two probable end usage areas of White Goods and Automobile sectors to generate sufficient data for decision
making.

Based on these rather sketchy data (First level subjective opinions), generated on the basis of an exploratory
research, firm’s Management had internally organised a detailed techno commercial feasibility study, as follows:

- Initial data base (Only in these two end usage sectors) which have to be :-
 Reliable
 Valid
 Consistent
 Substantial.

Few notable findings have been presented in Annexure 2.

In addition, simultaneous with this externally organised market survey, client’s Management had started separate
dialogues with railways, defence authorities and other large, prospective end user firms like TISCO, Jamshedpur.
Around first quarter of 2002, after production had started for this project, Indian Railways alone were on the verge
of awarding a contract worth nearly Rs 25 million ! Similar large value orders were expected from other large
Public Sector Undertakings and private organizations, as well as from very large “Harness manufacturers”.

IRC project:
- NCCL worked on an investment base, which was computed to be Rs 40 crores for this highly
sophisticated (first time in India) cable, which technically was superior to chemically cross linked
additive (CV method). Another competitor was contemplating entry, as on May, 2002.

Few relevant and indicative technical aspects have been enclosed in Annexure 3, on following broad issues:

Electron beam Irradiated Cross Linked Cable project:

 1. Technical particulars of cables for working voltage upto and including 4 KV range
(Temperature range : 40 degree centigrade to 120 degree centigrade)

2. Electron beam Irradiation Cross Linked Cables versus usual CV method.

3. Comparative report on EB versus Chemical cross linked products for customers
4. EB cross linking properties (All features built in one).

Above were used to prepare the foundation for considering the market potential based new project evaluation versus
costs involved for machinery importation, erection, installation, commissioning and start up in one of their plants in
West Bengal.

Financial viability study was also organised internally by the cable division.

The latter two phases had been internally worked out by firm’s other divisional counterparts, all headed by firm’s
Managing Director Dr AS, a highly renowned Management expert with specialisation in Financial Management
aspects.

Reportedly, this brand new project will be financially viable only if following are organised :-

i) At least Rs 18 crores yearly turnover (Production, under Dr Panda, had started in the fourth quarter of
2001 AD) is achieved. It meant a major effort in new business development on a regular basis to :-

 Convert large prospects to customers

[This will need a total organisational effort]

- Select those end usage areas, where IRC will make an impact, as compared to existing, available
substitutes. This will be a strategic decision, based on :-

Segmentation

Targetting

Positioning
(The STP concept)

ii) Approx 46 percent (Average) was the planned gross margin (Revenue – direct variable costs), which
obviously will vary, depending on :-
 End usage applications and degree of needed technological component versus those provided by
presently available substitutes.
 Costs versus benefits to actual users, who need to be fully convinced about IRC’s special features.
 Also, specific enquiries have to be generated.

In other words, approximate yearly gross margin needed to be Rs 8.280 crores (= Rs 18 crores × 0.46). At this
theoretical rate, at least five years will be the needed as pay back period to recover the capital employed.

Dr Shyam, Partner of M/s CG, leading marketing research firm in Kolkata, thought that several other financial
parameters, like the following, should also have been considered :-

- Return On Investment (ROI)

- Internal Rate of Return (IRR)
- Discounted Cash Flow (DCF)
- Cash Flow Statement etc.
However, Dr Shyam realised that for any highly capital intensive project, knowledge of market’s demand, potential,
relevant potential is always an important factor, as also the concerned DMU’s (Decision Making Unit members)
willing acceptance, over a period of time, to use a new product, which was all along imported as on 2000 AD by a
few large firms like :-

- BPL Appliances
- Electronic Research Ltd. etc.
(Please see Annexure II).

Dr Shyam also was well informed that even with often hastily drawn up market studies, many new product concepts
failed commercially*2

For this, Dr Shyam repeatedly informed the concerned TOP Management personnel of M/s. NCCL that the
following managerial steps should be taken with Dr. Shyam functioning as a neutral Facilitator;

At the Top Management level, preferably with concerned Board of Directors and top level functionaries, an internal
SWOT analysis should be organized to clearly highlight the following conceptual aspects, ie.

- Needs & wants to be satisfied

- SWOT exercise(Internal)
Using the concept of Business Policy and Strategic Management, which is critical for any Top Management to
clearly highlight both policy guidelines and strategic route(s) to be chosen.

To start with, this internal brainstorming session MUST assess clearly:

- Who are the Stakeholders? What are their expectations at the international level (Corporate), if
relevant, national (Business level) and, finally, at the departmental/functional level?
- At the national level, as a follow up measure, this internal exercise has also to qualify as well as
quantify the present needs and future requirements, if any, of the ultimate buyers and users of this type
of new Irradiated cable. The prospective buyers and users can be both within and outside India. This
needs to be explored in-depth, if necessary, through collaborative efforts, which may even involve
Expansion Strategy at the global level.
[Define: Expansion Strategy].

To sum up:

SWOT is an internal exercise, which has to consider both relevant environmental factors, within and outside India
(Concept: PESTLE), as well as presently available Core Competency (Strengths and weaknesses),. Then only, using
cost-benefit analytical technique (CBA), Strategic Management decisions
should be taken. [Study enclosed annexure-4: Integration – Business Policy – Strategy – Structure].

He suggested that, after completing the above mentioned exercise at the Top Management level, local as well as
with international buyers-users, if any should be identified. Then, using specialized Marketing Research technique,
their “Needs and Wants” should be explored in-depth, alongwith presently available competitive substitutes. This
study will help in clearly identifying relevant segments, from which target segments, both within and outside India,
need to be focussed. At a later stage, necessary Positioning exercise can be designed and implemented. [Concept: S-
T-P].

*2: In 1958, a market study in North America came out with a research finding:
“58% of new commercial (Product) launches failed, even after research studies”!!

At the functional level:

First level qualitative conceptual market study (Often without samples) needs to be organized to have a first-hand
“Feel” of the new product and its possible old and/or new buyers-users.

This should be followed by development of new prototype, as a part of the second level of sampling exercise.
Purpose is to find out from the prospective buyers-users, within and outside India, their acceptability from the
technical and commercial points of views. Simultaneously, needed service level inputs, to ensure customer
satisfaction, have to be assessed by the specialized research team.

The next step of operation, after satisfactory sampling exercise, should be to quantify, to the extent possible, the
present and/or future requirements of IRC, possible buyer segment wise – once again within and outside India..

Business strategy formulation (Leading onto marketing strategy)

Corporate level business plan, starting with the global level, needs to be thought through first.

Linkage has then to be established at the:

- National level (India)

- And then to departmental level (Cable division).

Basic overriding concept:

Formulation and implementation of ‘Super Ordinate Goal” concept, which sets a set of common Goals (Business
Policy level framework) to be achieved amongst corporate (Global), national (Here India) and, finally, inter-link
with the cable department (Shyamnager Factory) in West Bengal. All the internal “Players” will be held
responsible, as well as accountable; to reach the common set of Goals and specific Objectives arrived at before the
very expensive new project launch.

What was actually done as per advice of NCCL’s Top Management?

Like in any Engineering or even Medical assignments, step wise market assessment has been conceptually suggested
to minimise failure probability. Unfortunately, as in numerous Indian new product/concept launch cases, a
conceptual exercise alone was carried out (As in this case) by M/s CG, under instructions from the client firm’s
General Manager, Business Development.

In other words, systematic marketing researches were not organized and often these are substituted by “Know all
Managers’ gut feeling”, hunch and sixth sense !!

How then should one go about ?

It is well appreciated that marketing researches do cost considerable time, money and often outsiders’ involvement
and expertise, latter being not too popular in many large and medium sized firms, whose Senior Managers
“Intuitively” knew anything worth knowing about market and its needs – a real “Id-
-centric” attitude.

For example, in a typical interaction, Dr Shyam’s mild corrective reminder to the President of a large company
about Dr Peter Drucker’s oft related statement (Please see below) did not go too well, since the President verbalised
about the same marketing definition from another Marketing Professor, who happened to be Dr Drucker’s student!

--- “Marketing and any business operation is all about :-

- Identifying a customer
- Maintaining a customer”---.
[1955 statement of Dr Peter Drucker]

Id and ego often played “Hell with logic and common sense”, which is usually so uncommon.

In addition, Product Life Cycle (PLC) concept must be clearly understood (Please study Annexure-4.1), before
going in for any new project’s total financial evaluation. It must be clearly understood that any new project/concept
will :-

- Need time, energy, patience and perseverance, prior to ensuring its professional success.
- This needs a fully thought out organisational structure to ensure the concept’s acceptance. The old
structure* may not be sufficient, since other existing product lines too needed to be looked after.
[Organisation Structure: Study project assignments].

After all, types of marketing personality needed for existing product lines and new concepts (Being tested) may be
quite different, a simple thought process hardly realised by many experienced professionals – either due to
ignorance, cost considerations or both.

Total team effort needed (Synergy and concerted efforts):

Customer orientation is a two letter word, hardly appreciated by many Managements and often mis-
-interpreted.

It is not marketing, which is a functional job. It is understanding and then logically implementing the “Super
ordinate goal” concept, which signifies total firm level involvement, as follows :-

- Pre specified “Goals & objectives” have been clearly defined and accepted in principle by concerned
departmental heads, say from :-
 Corporate planning (International and local)
 R&D Local +
 Materials Management Departmental
 Production
 Finance & Accounts
 Marketing / After Sales Service etc.

Even “Brain storming sessions”, (Refer: Alex Osborn, 1958) can be used to arrive at a common work agenda, after
problems have been identified and formulated [In this case, successful commercial launch of IRC]

How to reach objectives in India? [After all planning had been completed]

Rs 18 crores sales revenue needs to be generated every year with average 46 percent gross margin. The Central
Coordinator will have to sit with the Corporate Planner and Marketing to work out how much of yearly business can
be generated from :

- Existing end usages / customers

- New prospects
- Also, subjectively assess probable competitive reactions.

The “Gap” between possible market demand from above and firm’s expectations (Objectives) will be the basis for
developmental business strategy, say from a scattered White Goods sector market. 42 names had been identified as
a preliminary take off point, out of which 15 units had already been interviewed in the exploratory market survey
(Please see Annexure 5 for list of initial prospective names). This will need an in depth descriptive marketing
research by which aspects like the following have to be quantified :-

Plan for local business development

For White Goods : (Specific Information Bits : SIBs) : To generate data on:

1. Which firms will need how much of IRC and when ? Why will IRC be needed?

What specifications – for what end usage(s) ?

2. From whom and how much per year are they buying now ?

 Imported sources
 Local substitutes.

3. Prices and financial terms

4. Place : How IRC is supplied and via whom ?
5. Promotion : Basis for awareness creation via :-
 Advertising and publicity
 Sales promotion via :
 Trials and demonstrations
 Sampling
 Knowledge upgradation via seminars, conferences etc.

 Personal selling and interactions.

Most importantly, assessment of existing “Level of dissatisfaction”, if any, needs to be assessed first with presently
used cables.

In the process, the Coordinator can also work out, in consultation with his team members, how to generate new
business and from which end usages firms ?

Acceptable trial samples have to be developed in time. For example, at acceptable financial terms, internal
Coordinator has to work very closely with external buyers users (To be) and simultaneously coordinate internally
with concerned departmental officers (R & D, Production, Materials Management and the like). It is very easily said
then done – since a lot of “Id related” human factors are likely to surface !!

Man Management is essential, as also clearly defined job descriptions – right from top Management, who too have
to be involved. Usually, major emphasis is on “Today” and existing customers and presently available products,
services.

Usually, much lesser resource allocation is invested on developmental projects like IRC, whose wide-
-spread probable usage will be highly dependent on:

(i) Table-2(Enclosed):

It demonstrates, on eight separate criteria:

- What is actually being achieved in 2002?

- What may be possible during 2002-2007 ? (Prognosis)

- Objectives of the firm.

 (ii) The Strategic Route(s) will be for filling up the “Gaps” between what is possible (Prognosis) and what are
the firm’s expectations (Objectives)? This can be a combination of:

- Maintenance Management

And

- Developmental Management for IRC.

Table 2

Corporate objectives *
a five year perspective

Sr Corporate health Say in Actually Expectations

Nos “Indicators” 2002 possible
(Present status) (2002-2007) (2002-2007)
[Prognosis]

1. Sales value Rs.X1 1.5x1 2x1

Gap

(0.5x1)
2. Growth rate (%) Y1 1.2 Y1 2 Y1
0.8Y1

Gap

3. Market share (%) MS1 1.2 MS1 1.5 MS1

0.30

Gap

4. Proffit before Rs. M Rs.1.5 M Rs.2 M

tax (PBT)
0.5 M

Gap
Qualitative aspects

5. Corporate goodwill 1 CG1 1.1 CG1 1.3 CG1

(Qualitative)
0.20 CG1
Gap

6. Employee morale EM1 1.2 EM1 1.5 EM1

(Qualitative)
 0.3 EM1

Gap

7. Image o.5 I 0.6 I 0.7 I

(Qualitative) 0.10I

Gap

8. Add Customer 0.4 CS I 0.5 CS I 0.6 CS I

satisfaction index 0.10
(CSI)
Part quantification CS I : Gap

* Michigan survey Research Centre (1967) functioned as Management Consultants for 6 months with
General Electric, USA. These were the output on the first 7 Indicators.
From the above, it should be clear to any reader that :

The process should be :-

Diagnosis Analysis and where

a firm “Stands” at a
point of time vis a vis
competition in India and abroad.

Prognosis Actually possible status,

given same/similar
environmental & internal
indicators.

Objectives Where the firm

“Wants to go” ? Why?

Strategy formulation How to bridge the “Gaps”

(Please study Table 2)

Tactical aspects Decision on which

“Action plan” to follow ?
Cost benefit analysis is
the basis.

Follow up, feedback A regular

and replan cycle

Interestingly, several of the already mentioned Management concepts are known to many Executives like Mr AB of
M/s NCCL, and his senior bosses, who may want to be marketing oriented – but, in reality, considerable
“Delearning” needs to be organised, prior to fresh “Relearning” and further reinforcement – especially, for down to
earth implementation. Though not too much of resource is allocated to assess to what extent actual efforts are really
producing results, it does not need a genius to understand few basic home truths like the following :-

An alternative : [Strategy→ Structure→ Implementation]

 1. One team has to concentrate on today’s market products (Cell 1 of Igor Ansoff : Annexure 1) so as to
ensure total customer satisfaction (Via Maintenance Marketing) : Build on strength principle.
2. Same team, ideally, should not allocate time and energy for new prospects / concepts like IRC because
the personality type(s) needs to be different. Development is always time consuming and usually very
frustrating, at least initially. Hence, natural human tendency is to go in for the “Path of least
resistance” and concentrate on existing product market mix.

For this firm, where its Management has already “Sunk”* Rs 40 crores, its commercial success is of critical
importance – both to the senior management level of M/s NCCL, as also to the division’s several seniors, leading
onto survival and then growth.

*: [A basic question for Readers: Why “Sunk” the entire capital before detailed feasibility study (Project Report)
had been completed, starting with market exploration in India and abroad?]
The 2002 May fiasco [What actually happened?]

The market development plans were not in consonance with actual order status! As mentioned earlier in this case,
besides Rs 25 M probable business from the Indian Railways, few other new business prospects were being explored
with :-

- Defence authorities (Indian Navy)

- Few large “Harness manufacturers” like a well known Delhi based party with whom the full time
General Manager, Business Development of this firm was in regular, literally weekly contact.

However, considerable “Gap” existed between business objective and actuals – as on May, 2002, although orders
were trickling in from few, very selective sources.

A major observation of their General Manager, Business Development to Dr Shyam of CG was :-

“We know from your preliminary market survey that White Goods sector, which is a fragmented market, may be a
potential segment to the tune of Rs 5 crores business per year from large prospective firms like :-

- Godrej, Vikhroli,
- Electronic Research Ltd, Bangalore
- Indian Fine Blank, Goa,
- BPL Sanyo & Appliances Ltd, Bangalore

The above figure was an educated “Guesstimate”, of Mr AB. This may be considerably modified. The
$ 64 questions were :

- Phase one : Descriptive study is a must to estimate market (Present) demand and future
potential – firmwise – since “All eggs in few baskets” may be a myopic
approach of any management.

- Phase two : How can a suitable marketing organization (Structure) be designed and
implemented ? Obvious best bet will be via their own set up.

Existing organisational structure was far too occupied with existing market products/services and usual nonchalance
to totally new projects, which were usually risky propositions and may not even take off!!

Mr AB had requested from M/s CG a “Proposal” as how they may like to handle, on a five year contractual basis,
full business development during :-

- Short term (6 months – one year)

- Medium term (One year – two year)
Phase three: Long term (Beyond two years)

Dr Shyam designed and submitted a comprehensive business development proposal for the consideration of firm’s
Top Management (Please see Annexure-6).

CG’s suggested plan of action

PROBLEM SOLVING APPROACH:

Stages

1. Problem identification and formulation (Via identified symptoms)

2. Objectives : Short term, quantifiable and achievable targets.
3. Constraints : In firm
4. Feasible alternative(s) identification
5. Cost benefit approach (CBA)
6. Decision
7. Plan for implementation : How to go about ?
8. Organisation for implementation. (Structuring)
CG: Well-known Research Organisation.

Present focus :

M/s CG have suggested to the management of M/s NCCL a three-pronged business development approach, as
follows :
Stage 1 : A detailed, quantitative, descriptive research all over India to start with in the
White Goods sector for which about 42 prospective firms have already been
identified. From this study, it is expected that future relevant market potential
for IRC will be available as follows :
 Short term (6 months – one year) : few firms, which may number between 10-15*
organisations.
 Mid term (1-2 years) : Few more organisations
 Long term (Above 2 years) :For a few more organisations, which need to be specifically
identified.

During the process of this market research, CG expects to eliminate those organisations, which may not be interested
at all in any type of Irradiated Cable due to reasons, which also have to be clearly pinpointed.

Stage 2 : Based on the above inputs, CG will have to enter into a long term business
contract (At least for 5 years), by which they will be held responsible for
generating, to start with, an yearly business of Rs 5 crores. This may increase
progressively if the market needs so in future, during this 5 year long contractual
period with the Management of M/s NCCL.

Reportedly, the average gross margin (Revenue minus direct variable costs) ranges
between 40-46 percent ie approximately Rs 2 crores will be expected per year from this
sector alone, as gross margin in the first year, at present rate ofgross contribution.

Stage 3 : Actual implementation – (As per plan) and continuous, planned follow up for
business generation.

Focus: Targetted prospects have to be converted to long term customers – at

least most of the parties from the original list of prospects.
The proposed arrangement :

M/s CG & NCCL, both legally and functionally, have to coordinate intimately as a team by which prospective
parties can be converted to customers. Also, the following aspects of After Sales Service (ASS) have to be
scrupulously and jointly organised to ensure long term business continuity :
 Acceptable response rate : Before, during and after sales
 Strict adherence to needed delivery schedule.
  Timely availability of spare parts
 Ensure training of operators as a part of the total system
 Help in erection, installation, commissioning, start up
 Organise required frequency of visits by sales & service engineers
 Help in development of quality relationship between vendor’s representatives and concerned
Decision Making Unit members (DMUs) of each and every customer/prospect.
 Optimal “Marketing orientation” of the vendor’s management for all needed problem solving.

To organise the above, clear demarcation of functional, as well as managerial activities have to be worked out
officially between these two organisations so that following are organized:

* Exact number of serious, short term oriented prospects will be known after the detailed marketing research
is completed.

OTHER RELEVANT ISSUES:

 Over lapping of responsibilities is strictly avoided (Between CG and NCCL)

 Problem solving approach must be the only approach to ensure within organisational
integration ie for internal conflict resolution
 CG’s all concerned marketing personnel have to be trained fully in all needed technical
aspects of this product line. Full “Product knowledge” is very necessary.
 For commercial consideration, based on market feed back provided by CG, it is suggested that
the method of “Relative Contribution Approach” (RCA) *
is adopted to determine tailor made pricing and financial transaction mode (Customer
specific).
 One Coordinator, preferably on a full time basis, should be made available from NCCL’s
Management. Ideally, CG’s marketing professionals should be allowed to interact directly
with all concerned technical and professional personnel of M/s NCCL specially during the
stages of :

 Product development
 Trial launch
 Product modifications, as and when called for (For modified rebuy)
 Commercial launch
 Ensure regular supplies, over a period of time by organising needed :
 Marketing strategy, Marketing mix parameters, Marketing organisation specially for after
sales service by NCCL’s technical wing.

In short, only if market potential exists, to ensure first level orders and then regular continuity, regular “Client level
servicing” has to be organised over a period of time. Objective is to develop and ensure “Customer Relationship
Management” (CRM).

CG’s management also proposed a 2-day long Workshop after the marketing research findings have been made
available to NCCL’s Management. Objectives were:

 To appraise all concerned personnel of client regarding the relevant market findings.
 To suggest a Plan Of Action, which can be modified based on suggestions by NCCL’s
concerned personnel.
 To clearly work out, activity wise,
 “Who will do what, when, how, through whom and at what cost ?”
(Plan of action ie. implementation).

* For any new product development and initial trial launch, specially during the introductory phase (Refer
Product Life Cycle concept), “What the market can bear” approach should be adhered to, rather than the
usually applicable full costing base. This RCA can also be discussed in detail during the proposed two day
long Workshop, after the quantitative market research is fully completed.

Customer specific pricing mechanism has to be organised. This is a must.

How CG functioned ?[Iinteractive action plan for new business development]

The suggested steps are as follows :

I Back up structuring :

1.1 Clear demarcation of :

 Organisational allocation of authority and responsibilities

 Detailed contractual agreement between CG and NCCL for at least 5 year period specifying :

 Yearly targets for sales value and volume and expected yearly gross margin over a 5 year
period in pre defined end usage industries (Example : White Goods sector)
 CG’s expectations on a yearly basis (Spread over 5 years : 1/8/2002 – 31/7/2007)

1.2 CG’s proposed organisational structure for this project, along with financial implications. (Please
see enclosed annexure 7.1).

II Proposed functional activities :

2.1 Detailed work plan :

 Short term (6 months – 1 year)

 Mid term (1-2 years)
 Long term (Above 2 years)

2.2 A proposed activity flow and sequence for business development (Please see annexure 7.2)

III Need for integration between the principal company and CG, who will be expected to market their
products to customers and prospects in White Goods sector, to start with. Without completely clear and well
defined functional flow, internal coordination may become a major stumbling block for any business
development.
SUMMARY

“Strengths” of CG

M/s CG, a partnership firm and now under the effective leadership of Dr Shyam,
Director, Marketing Services, started their operations from Kolkata city in 1982. During
this period, they have designed and organised :

 More than one hundred, all India level marketing research assignments and a large number of regional
projects, out of which more than 70% were concerned with industrial products and services.
 17 all India level projects had been designed and organised from 1992 onwards for 6 large
organisations like :
 BOC (I) Ltd. : (9 projects : 1993-1996)
 ITC Ltd. : (2 Projects)
 Exide Industries Ltd (3 projects)
 IBP Co Ltd
 Marubeni Corporation, New Delhi
 Nalco Chemicals : (1997-1998).

All the above 17 projects were involved with :

“How to measure, quantify and then organise customer satisfaction?”
 Several techno commercial feasibility studies have also been designed and organised – out of which 2
large projects were funded by World Bank.
 Nearly one hundred, short duration in house Management level re orientation training programmes had
been designed and conducted for 40 different large and medium organisations. In addition, 17
Workshops had been organised.
 From July 1996 onwards, a separate division had been launched to identify, select and recruit, on
behalf of our several all India level clients, both managerial, as well as supervisory level personnel.

In short, CG have developed their expertise as top grade specialists in the field of Management Consultancy
(Generic) and specifically, as for this project, in the field of Industrial Buyer Behaviour.
For the project with NCCL :

Contractual arrangement, especially for identification, development and then maintenance of new prospects, dealers
etc. had been an effective management strategy in many parts of the developed world.

Based on the findings from the first level exploratory market survey organised by M/s CG in 1999-2000, the
Management of M/s NCCL had decided and then implemented a project for Irradiated Cables (IRC) at a total
investment of Rs 40 crores. As on April 2002, production had already started and business had been obtained from
the Indian Railways. Discussions were already on with other end-usage industries like automobiles for new business
development.

Purpose of this detailed proposal was to convey to the management of M/s NCCL an overall modus operandi to:

 Identify new business prospects, dealers etc to start with in the White Goods sector in India.
 After a proposed detailed descriptive research had been organised with 40-42 organisations only in this
segment, joint decisions needed to be taken for systematic and scientific business development as
follows :

- Short term (6 months – one year) : 10-15 relevant parties, so that, to start with during 2002-2003 itself,
an yearly business of Rs 5 crores (With average 40 percent gross margin) is generated by M/s CG via
needed techno commercial consultation with concerned personnel of M/s NCCL
- Mid term (1-2 years) : Stabilisation of business with already established customers, dealers, via
maintenance marketing should be the prime focus during this period. In addition, a few more
organisations needed to be identified for additional business development so as to widen the customer
base and increase the sales revenue as well as the profitability.
- Long term (Beyond 2 years) : The same above mentioned principle needed to be implemented. If
called for, and as per advice of the management of M/s NCCL ie in direct consultation with each other,
the much needed “Super ordinate goal concept” needed to be professionally and effectively
implemented to ensure that this high capital intensive project, which was already implemented, starts
producing specific results in terms of “Effective 8 Managerial Indicators” (Please refer to the
observations by Michigan Survey Research Centre).
In conclusion, therefore, this proposed contractual arrangement, at least for 5 years, needed to take off from August
2002 onwards AFTER a scientifically designed descriptive research had been satisfactorily concluded during May-
July 2002.

Decision from the Management of M/s NCCL was awaited.

LIST OF ANNEXURES

1: Igor Ansoff’s Product Market mix

2: Few notable findings from CG’s Exploratory Marketing Research (1999-2000 May) in :

- Automobile Sector

And

- White Goods sector

3: Few relevant and indicative technical aspects on EB Irradiated Cross Linked Cable
4.1 : Product Life Cycle concept

4.2 Integration concept: Business Policy → Strategy→ Structure.

5: List of 42 prospective firms in White Goods sector (Relevant Universe)

6. Outsourcing

CG’s total business development proposal for IRC project.

7. 7.1 CG’s proposed organisational structure

7.2 Proposed activity flow and sequence for business development

ANNEXURE-I

PRODUCT MARKET GROWTH MATRIX /

BUSINESS DEVELOPMENT MODEL
[ADAPTED FROM IGOR ANSOFF]

Short term Medium term

I - Sales optimization II - New product development

- Increased sales,
- Rate of usage,
- New outlets/usage, Emphasis on existing (Technical)
- Elimination of non profitable product Capacities and strengths
lines,
- Relevant product lines

(Width, depth, consistency) (Capacity optimisation)

III - Long term IV - Very long term

Market development Diversification

(primarily available internal human
resource optimisation)
Concentric Non concentric

- SWOT analysis,
 - Idea Generation Technique

Four sub segments :-

I : Present markets – present products,

II : Present markets – new products,

III : New markets – present products,

IV : New markets – new products.

Or
A combination of the above.

IRC project
ANNEXURE 2
WHITE GOODS SECTOR:A probable application area in India.*
Sr. Names, Names, Level of Present Present level of If IRC is How IRC Major Other
No address designations awarene requirement satisfaction with imported, can be criteria aspect
s. es and of respondents ss about s – m/km present suppliers available introduce for s (If
Tel IRC per year & relevant d in this purchase any)
Nos [Qualitat - Typewise Supp- Satis- details company?
ive] (Specificati -liers -fac-
ons) (Pre- -tion
- Prices -sent) level
(Where
available)
1. Electro P I Thomas
nic Dy General
Resear Manager
ch Ltd., (Manufacture) - 40 KV Electro Satis- Import Provide 1. Suppl
(Harne 20 KV Conso -fied Tarrif samples to Quality ying
ss 75 rtium 3.5% Mr to
Manufa KM/month Pvt. Preman 2. Price Video
cturer) Ltd., con,
35-36, (Delhi) Philip
Bandap s,
ur BPL,
Village Onida
Old &
Madras others
Road, .
Virgo
Nagar
Post,
Bangal
ore-49.
Tel.
847227
5/304/3
10/632
Mobile
:
 98450-
30948
Fax:
91080
847224
4
2. BPL K - 22 AWG Not Satis- Import Provide 1) Price Cable
Sanyo Parameswaran dis- -fied tariff 35% samples & Harne
Utilitie Assistant Blue – -closed quotation 2) ss for
s& General 20000 Directly to BPL Quality Micro
Applia Manager, metres/year importing wave
nces R&D from Oven
Ltd, Brown – SMO (Cord
1B, 20000 Corporati s and
Sadara metres/year on Ltd. Audio
mangal spare)
a 18 AWG
Industri Other
al White – cables
Area, 20000 used –
White metres/year Roun
field, d
Bangal Black – Cable.
ore-66. 20000
metres/year
Tel.:
845257
0/2186
3. IFB Mr V S They are 4150 Suppli- Satis- N.A. Send 1) Price Will
Industri Kamath, aware km/annum -ers -fac- details 2) consid
es Ltd., (Manager, about (Pre- -tion about Quality er
L-1, Vendor IRC Rs.1.80- -sent) level product after
Verna Development) 3.00/metre alongwith seeing
Electro depending quotation /testin
nic upon cross and g
Society sections samples quotat
, ion
Verna, and
Salcete sampl
r, Goa- es.
403722

Tel.:
91-
834-
783303
/04/07

Fax :
91-
834-
783306
4. Godrej Rohit S Bhatia No 2.5meters / (Name NA Sent 1) Woul
GE Sr Manager awarene year not details Nearby d like
Applia (Purchase) ss (Harness) disclo- about Located to
nces -sed) price, 2) consid
Ltd., Ext. 6405 Refrigerato quality Quality er
Plant- r 8000 Flat and sent 3) Price locall
03, Mr.Rajeev C PCS/annum Cables samples y
Pirojsh Joshi Supplier manuf
anagar, (Dy General Washing acture
Vikhrol Manager, Machine Tarapur d IR
i(W) PMQ) 10000 Cables Cable
Mumba PCS/Annu (Mum- s.
i-79. Ext. 6761 m -bai)
Name
Tel. s of
517313 Harne
1/41 ss
manuf
 Fax: acture
91-22- rs not
517223 disclo
4 sed.
5. Samsu Kamal Aware Mains Cord 2-3 Satis- N.A. Send 1) After
ng Bhargava with vendors -fied Quality comp
India Dy General connector (Would 1) 2) Price aring
Electro Manager, 1.25 not Company 3) C.D’s
nics Materials lacs./year. dis- details Timely price
Ltd, -close 2) Turn- delivery. with
B-1, 24 strand . names) over their
Sector- 15 dia 3) Factory presen
81, metre 4) Wire t
Phase- 3000-4000 House purch
II, metres/year 5) asing
Noida- Sample, price
201305 6) Rate. will
they
Tel. think
456825 about
1-55 purch
Ext. ase.
2302,
Fax:
456825
0-57
Key: % Percentage

IRC project
AUTOMOTIVE & HARNESS SECTOR: ANOTHER PROBABLE APPLICATION AREA IN INDIA*

Sr. Names, Names, Level Present Present level of If IRC is How Major Othe
No addresse designations of requirements satisfaction with imported, IRC criteria rs
s s and of respondents awaren – m/km per present suppliers available can be for aspe
Tel.Nos. ess year & relevant introd purchase cts
about - Typewise Supp- Satis- details uced (If
IRC (Specification -liers -fac- in this any)
[Qualit s) (Pre- -tion comp
ative] - Prices -sent) level any?
(Where
available)
1. Dewoo L K Pandey Aware PVC 500 Harness: Satis- NA Send Will
Motors (Executive metres/year Delphi -fied buy
India Materials) 1. 1) Dump from
Ltd., 91456 5-10 lakhs Other Comp point in CD
On 9239)D) pcs/year Vendors: any Noida if
Noida (Harness) Not dis- detail price
Dadri Sudesh -closed s 2) is
Road, Khokar Quality same
Surajpur (Asst.Manager Mainly 2. s
-203207. , CCI Plant 3) Price what
Dist. Maintenance) data they
Gautam are
Budh A.Kaul, 3. givin
Nagar Sr.Manager Produ g
(U.P.) (Engg.Service ction now.
s)
Tel.: 91- 4.
569265 Arun K.Goyel Sampl
General e
Fax: 91 Manager
011 (Power Plant)
569234/ 91-569263
202 (D)
2. Mothers S K Arora Aware 10,000 Buys Satis- NA Send 1) They
on Sumi (Deputy as cross km/month From -fied 1) Quality give
Systems Manager, linked Comp oppo
Ltd, Materials) XLPE Imported 200 Japan any 2) Price rtuni
C-14A km/month Not detail ty to
& 14B, disclo- s 3) new
Sector-I, -sed Prompt vend
Noida- 2) delivery ors.
201301. Local Cost
Dist.:Ga supp- ISO,
utam -liers 3) QS,
Budh (2 Sampl not a
Nagar, vendors) e crite
U.P. ria
Will for
Tel. 91- not them
4551823 disclo- .
/1851/18 -sed
55 import They
process have
Fax: 91- their
1191- own
4521966 quali
ty
contr
ol.
3. Delphi Mr.Sandeep Aware Supplies to: Not Satis- Will not Send 1) Must Deci
Automot Singh Disclo- -fied disclose be IS) sion
ive Asst.Manager, General Motor -sed 1) 9000 and regar
Systems Purchase : 100% 1/2 Comp QS 9000 ding
42nd vendors any cabl
Mile (Packard Maruti: 45% profil 2) e
Stone, Electric e Gurgaon sour
Kherki Systems Mahindra : wire ce of
Daula, India) 100% 2) housing supp
Gurgaon They facility. ly
-122001 Hind Motors: will take
Haryana. 100% visit 3) n by
all Quality. them
Tel.: 91- Dewoo : comp .
124 100% any’s
371040- plant. Mig
41 Mercedez : ht be
80% 3) CD’
Fax: 91- Price s
124 15% local pros
372356/ purchase 4) pecti
196 Send ve
85% import. sampl clien
e t.

To
Singa
pore
(Test
Lab)
4. Sylea Poolo Aware 20 kms/year Tarapur Satis- 120000 Give 1) Wou
Automot Ravicino about (IRC) out of Cables -fied metres/ye detail Quality ld
ive India Irradiat 120 kms/year (Mum- ar s like
Ltd., Head ed (PVC + IR) bai) (Imported about 2) Price to
(Harness Commercial Cables. ) cons
Manufac (Fiat Group) 1) 3) ider
turer) Infras Timely local
Godrej tructu delivery ly
Soaps re man
Adminis ufact
trative ure
Building 2) IR
, Quota Cabl
Pirojsha tion esPr
Nagar, esent
Vikhroli 3) ly
(E) Sampl usin
Mumbai e g
-79. Rou
4) nd
Tel.: 91- Relev Cabl
22- ant es
5181971 docu
-74 ments
regard
Mobile: ing
98210 produ
25446 ction
of IR
Fax: Cable
9122 - s.
5175037
5. Ford V Sukumar No PVC : 1.1 kv Forma Satis- NA Send 1. Just in It’s
India Plant Engineer Aware XLPE : 11 kv Electric -fied time Harn
Ltd, ness (Che- 1. delivery ess
S P Koil 2 metres/car -nnai) Price man
Post 2. ufact
Chengal (15000 Siemens 2. Quality urer
pattu- units/year) Terms is
603204 & 3. Price Vist
Tamil = 30,000 condit eon
Nadu. metres/year ions (Che
= 30 kms/year nnai)
Tel.: 91- 3.
4114 Super Willi
54375 ior ng to
than pay
Extn.: PVC same
3379 price
as
Fax: PVC
4114- price
53855 .

Price
of
PVC
1.1
kv
Re.1
/met
re.

*: Question: How about outside India?

 ANNEXURE 3

3.1 Technical Particulars of Cables for Working Voltage upto & including 4 KV range

Temperature Range : 40 degree Centigrade to 120 degree Centigrade

Minimum Bending Radius: D<10mm = 3 x D, D>10mm = 4 x D

Sl. Nominal Wire No. x Conductor Minimum Wall Thickness Cable Dia DC Current
No. Cross Single wire dia Resistance at Rating
Section dia (max.) 20 degree (at 40 degree
Sq.mm (mm dia) Insulation Sheath Total (D) Centigrade Centigrade
mm mm mm mm mm ohm/km Ambient)
(amp)
1. 10.0 80 x 0.41 4.2 0.70 0.80 1.50 7.9 +_ 0.5 1.95 96

2. 16.0 126 x 0.41 5.5 0.85 0.95 1.30 9.8 +_ 0.5 1.24 133

3. 25.0 196 x 0.41 6.8 0.85 0.95 1.80 11.3 +_ 0.5 0.795 174

4. 70.0 348 x 0.51 11.5 1.05 1.15 2.20 17.0 +_ 0.5 0.277 348

5. 95.0 468 x 0.51 12.9 1.20 1.30 2.50 18.8 +_ 0.5 0.210 423

6. 120.0 589 x 0.51 14.8 1.30 1.40 2.70 21.1 +_ 0.5 0.162 570

7. 150.0 741 x 0.51 6.3 1.35 1.45 2.80 23.4 +_ 0.5 0.132 570

Note : Rope stranded conductor construction shall be adopted from cable sizes 10 sq mm and above.
3.2 COMPARISON OF CROSS LINKING BETWEEN
IRRADIATION AND CHEMICAL METHOD

Description Irradiation Chemical Cross-link

Method Additive
EB Method CV Method
High Energy Accelerator Heat Source (Steam,
or Radio Isotope Nitrogen or Infrared)
Application LDPE

FRLDPE(Horizontal)

FRLDPE X

HDPE X

FRHDPE(Horizontal) X

Rubber

PVC X

Fluoro-Polymer X

Extrusion Easy Difficult

Shelf life of Excellent Good
Compound
Performance High Frequency Excellent Not Suitable

Deformation Excellent Excellent

Appearance Excellent Not so good

Equipment Sophisticated & Rather simple &
needed for Relatively Expensive moderate cost
cross linking
process

3.3 Comparative Report on EB versus Chemical

Cross linked Elastomers

Tests Two Two Layers

Layers EB Chemically
Cross linked Cross-linked
Reduce size (OD) 21.9 29.3
(1x150 sq.mm)
Life of Cable (Yrs.) >35 15-18
(Arrhenious Plot)
Continuous Operating Temperature (Degree Centigrade) 125 90
Current Rating (max) (Amp) 579 378
Cold Bend at 65 Degree Centigrade Passed Failed
Ruggedness
 Dynamic Cut Through (Kg) 169 64
 Crush Resistance (Kg) 3061 1482
(Kg to cause failure)
 Scrape Abrasion (nos.) 11850 620
(No. of scrapes to failure)
Minimum Bending Radii (mm) (flexibility) 62 80
Oil Resistance (60 Degree Centigrade Diesel Oil ) (% swell) 15 20
Acid Gas Generation (ppm) <50 1000
(ppm in one mg of compound burnt)
Limiting Oxygen Index 31 26
Nuclear Radiation Resistance (Mrad) >200 100
Weight of Cable kg/km 1365 1970

EB: Electron Beam

CV: Chemical cross-linked Elastomers

(V→ Vulcanisation for outside rubber jacket)

3.4 Electron Beam (EB)

Cross Linking :

The cross linking of polymers with Electron Beam is an innovative process which improves the life of cable
significantly compared to the conventional chemically cross linked cables.

Properties – All features built in one :

 High Withstand Temperature (Better Temperature Properties)

 High Current Ratings – Operating Temperature upto 230 Degree Centigrade
 Special Polymers to cover Wide Temperature range from –65 Degree Centigrade to +230 Degree
Centigrade
 No Risk of Deformation above Short Circuit Temperatures
 Excellent Electrical Arc Track Resistance
 Rugged Mechanical Properties – Superior Abrasion / Scrapes & Cut thru’ Resistance
 Outstanding Fluid Resistance – Resistant to variety of Reactive Chemicals, Oils and Solvents
 Resistant to Ultra Violent (UV) Rays & Impermeable to Moisture
 High-tech Polymer – Fire Resistant, Low Smoke, Low Toxic, Zero Halogen Emission
 Compact Design

- Low Insulation / Sheath Wall Thickness

- Space Saving
- Lighter in Weight
- Flexible – Lower Bending Radii
 High Nuclear Radiation Resistant
 No Environmental Hazard
 Annexure-4.1

PRODUCT LIFE CYCLE

(PLC)

Sales Maturity
curve
Growth Decline

Introduction
O O
Negative

Profit curve

Brief back-up:

Note:

Low business value/volume (Negative profitability) during stage of introduction

Strong R&D, marketing support are needed.

Stage of growth:

Usually very sharp if product/service is acceptable to prospects, customers, dealers.

Strong production and distribution are needed to “Make money in this phase”.

Stage of maturity:

Growth rate falls off

Reasonably stable business value, volume.

Strong marketing support is needed.

Stage of decline:

Better competitive product or substitute availability.

Time for new product introduction.

Detailed explanation :

Stage 1 : Introduction :

When any new product or service is introduced in any market, initial acceptance is
usually very low – due to low level of awareness amongst targetted, prospective end
buyers-users, who are usually involved with standard substitutes, which are currently
available. Since “Resistance to change” is high amongst many technical commercial
personnel, a lot of effort, time and energy has to be invested by the marketing
organisation (In this case M/s CG), to convert the Decision Making Unit members (DMUs) of relevant
prospective firms through the stages of :

 Awareness

(Internal)
 Interest Evaluation

 Decision Trial

 Adoption (Long term)

Usually, in this stage, it has been studied (Based on several past experiences), that the profit curve is negative.
(Please see PLC curve).

Depending on the technical complexity and new technological status of Irradiated Cables, acceptance period will
vary from party to party, depending on their relative “Degree of centralisation” (DOC) of the DMUs, further sub
segmented as :
 - Highly Centralised (HC)
- Mixed Decentralised (MDC)
- Highly Decentralised (HDC)

Hence, in this stage, vendor company’s Management needs to exercise patience and perseverance.

Stage 2 : Growth :

Once new prospects, at least few of them are converted to the status of customers, rapid
growth is possible. During this phase, production and distribution should take
precedence over all other in company functional activities. This is the time to make profits.

Stage 3 : Maturity :

After a considerable period of time, which may take years if not decades, a maturity stage
is reached during which the rate of growth may be low, but sales value and volume as
well as profit before tax (PBT) have reached a certain plateau. Planned, systematic
marketing is essential to ensure and implement Maintenance Marketing in so far as the
following “Corporate health indicators” are concerned:

 Sales value,
 Sales volume,

 Market share and penetration (%)

 Profit Before Tax (PBT)
 Corporate Image and Goodwill
 Employee morale and satisfaction
 Level of rapport with the concerned political powers.

Add : * Level of customer satisfaction.

(Note : The above mentioned first seven Indicators were found out by Michigan Survey Research
Centre in 1967 when they had undertaken a detailed Consultancy assignment for General
Electric, USA. (Dr PKG added the eighth dimension, based on his Doctoral
dissertation at IIM, Ahmedabad).

Stage 4 : Decline :

Due to changing needs of customers and prospects, competitive onslaught, changes in

technical and technological complexity etc, over a period of time other, more acceptable
substitutes may be available. All vendors, therefore, need to be constantly pro active and
aggressive so that barriers to competitive entry are always ensured. This is possible by
adopting a mix of the following strategic approach:

 Maintenance Marketing with existing customers, dealers

 Developmental Marketing to identify and convert new prospects and dealers, keeping in
constant view regular competitive inroads.

To sum up :
A new product/service launch needs to be planned, organised, controlled, executed and implemented like any
military level strategic approach, which always considers the SWOT system ie :

- Strengths, as well as weaknesses of the vendor organisation.

- Opportunities in terms of relevant market demand and potential
- Threats offered by direct, as well as indirect competitors – over a period of time.

To ensure the above, a highly proactive and effective marketing organisation needs to be developed so that market’s
“Needs and wants” are identified and then translated in reality. This requires a continuous, regular, systematic and
scientific Marketing Management approach.

Annexure-4.2
Integration: Business Policy – Strategy – Structure

POLICY

Environmental Top Internal analysis

Scanning (O.T) Management

Strengths & Weaknesses

(S,W)

Political Economic Social Global Local Functional Global Local

Business business (Departmen-
-tal) (Fit)

Global Global Global

Local Local Local Local Global

Technology Environment Mission Goals Global

Other
“PESTLE” parameters Vision Objectives Local

Focus: Peter Drucker

 What business What business
am I in? do I want
to be in?
Overall Policy
guidelines

STRATEGY Top/Middle Management

Strategic options

How (Routes) to reach Goals → Objectives?

Few examples Scope - Alternatives [How to optimize?]

Fit - Buy-out/exit Joint ventures
Stretch - Mergers+ acquisitions or
Concept - Leveraging entry
- Crafting strategy strategy

STRUCTURE Middle/operational Management

Structural aspects: Global, local

→Functional optimisation

ANNEXURE 5

LIST OF THE PROSPECTIVE PARTIES

IN
WHITE GOODS SECTOR
(ALL INDIA)

Sr Nos Names of the organisations

1. BPL
2. Salora International
3. LG
4. Sony
5. Samsung
6. Whirlpool
7. Onida
8. Videocon
9. Godrej Appliances Ltd,
10. Blue Star
11. Kalyani Sharp India Ltd,
12. IFB
13. Western
14. Molex India Ltd,
15. Electronic Research Ltd,
16. Finolex Cables Ltd,
17. Kenwood
18. Maharaja
19. Kenstar
20. Hitachi
 21. Oscar
22. National Panasonic
23. Sansui
24. Thompson
25. Akai
26. Orpat
27. Wipro
28. Intel (Computer)
29. Santosh
30. Godrej
31. Kelvinator
32. Sansui
33. WEBEL Nicco
34. AIWA
35. Sonodyne
36. Philips
37. Voltas
38. Electrolux
39. Greendig
40. Usha
41. Crompton Greaves
42. Bajaj

Note: Above is a method of “Prospecting and Lead Generation”.

(How to identify probable prospective buyers and users – in India, to start with?)

ANNEXURE 6

LONG TERM BUSINESS DEVELOPMENT PROJECT

WITH M/S NCCL
AN INTEGRATED PROPOSAL

[PROJECT : IRRADIATED CABLES –

WHITE GOODS SECTOR]
Conceptual background :[Based on NCCL Management’s “Myopic” feedback]*2

A Rs 40 crores investment project has been “On” from end 2001 onwards for manufacturing various types of
Irradiated Cables (IRC), which needs to be tailor made for different end usages like :

- Indian railways
- Ships
- Indian fighter planes
- General Electrical Cables & Wires for factories/automobiles
- IRC for the White Goods sector
- etc.

End usagewise, this product needs to be tailor made and customised. Hence, this is a fabricated industrial product,
whose overall “Product Characteristics”* will be as follows :

 Unit value : Medium to high

 Purchase significance to the buyers : Medium to high
 Effort in purchasing by buyers users : Medium to high
 Technical complexity : High
 Technological component : High
 Need for service before, during and after : High (Specially at the stage of initiation)
 Frequency of purchase : Medium
 Consumption pattern = 1

Product life : Low (High product life)

  Varieties and ways in which the product gives satisfaction : Major emphasis is on technical
specifications (As also source of supply).

* These product characteristics are as per the qualitative module propagated by Dr Gordon E Miracle

*2 To readers:

How will you/your group organize?

- Business Policy guidelines?

↓
- Strategic Route(s)
↓
- Plan for implementation (PFI)

A total re-thinking (Scenario Building) is called for.

ANNEXURE-7

CG’S PROPOSED ORGANISATIONAL

STRUCTURE FOR THIS PROJECT

STRUCTURE

DR SHYAM, B CH E, AMICHE,FELLOW IN
MANAGEMENT (IIM, AHMEDABAD 1973-1977)

CHIEF OF PROJECTS
 ONE ASSISTANT

FUNCTIONAL BACK UP STAFF

(TWO PROFESSIONAL
BUSINESS DEVELOPERS) ONE TWO ONE
ACCOUNTANT PEONS RECEPTIONIST
(TROUBLE CUM CLERK
ELECTRICAL/ELECTRONIC SHOOTER)
ENGINEERS CUM MBA(S)

TOTAL : 8 PERSONS
AND 1 DRIVER

YEARLY FINANCIAL IMPLICATONS(OF CG FROM NCCL’S MANAGEMENT)

First year : 1.8.2002 – 31.7.2003

Sr.Nos. Cost centers Rs./year Remarks

I] Functional

Two Engineers 5 lakhs First year

(Cum MBAs) [Salary + only
incentives)

II] Back up staff

One Assistant 0.60 lakhs Note

One Accountant 0.60 lakhs
Two Peons 0.80 lakhs This estimation will
One Receptionist be governed in
cum Clerk 0.60 lakhs future by
One Driver 0.40 lakhs
- Yearly targets
Sub-total = 8.00 lakhs - Inflation & other
costs.
III] Stationery & Communication 2.50 lakhs

IV] Furnished office space

 (Rs 50/sq.ft., 500 sq.ft./month) 3.00 lakhs

V] All India train travels, Assumptions :-

boarding & lodging
(Rs 1,000/day/head) At least 10-15 all India
B/L Rs .5.4 lakhs parties – to start with
travels Rs 2.00 lakhs (12 visits/year/party)
Dr Shyam’s 120-180 visits
travels Rs 3.00 lakhs 10.40 lakhs per year for, say,
3 days each ie
Sub-total = 23.90 lakhs 360-540 mandays.

VI] Entertainment expenses 2.00 lakhs Look after new prospects.

VII] For Dr Shyam

(Overall Coordinator) 8.00 lakhs

Total = 33.90 lakhs

VIII] Contingency expenses * 3.10 lakhs To be accounted for

(Ex: In city travels) yearly.
Grand total = 37.00 lakhs

(Rupees thirty seven lakhs only)

* Two months brokerage, for example, has to be given to find a suitable and relevant office space, where
clients can be looked after on a regular basis, in a sophisticated working environment.

Payment terms : (From NCCL to CG)

By end of every month, proportionate monthly expenses have to be reimbursed.

“Some” advance (To be adjusted) will be needed initially.

Note : By 15.7.2002, marketing research is expected to be over and contractual agreement

signed and CG’s engineers have been fully trained in IRC.
COST BENEFIT ANALYSIS [FROM NCCL’S MANAGEMENT VIEWPOINT]

White Goods sector (To start with)

Expected revenue 5 crores *

(Rs /year)

Expected gross margin

(Av.: 40%) 2 crores

Expected expenses [Rs /year]

(Please see earlier)

For CG (Business Development Agency) 0.37 crores

Ratio of gross margin to Business Development

expenses (%) 18.50
 PBT for NCCL 1.63 crores

(Rs /year : 2002-2003) (81.50%)

Compare : With NCCL’s own set up, expected :-

 Market penetration
 Quality of integrated service
 Quality of customer satisfaction
 Achievement of pre decided targets for sales revenue & PBT (Profit Before Tax).

* This figure will be fully detailed (Quantified) ONLY AFTER the proposed descriptive research has been
completed and the findings have been analysed.

PROPOSED ACTIVITY FLOW AND

SEQUENCE FOR BUSINESS DEVELOPMENT

SR.NOS. CONCEPTUAL STEPS MODUS OPERANDI

i) Clear target fixation : yearly plans CG & NCCL’s Management,
Production, R&D and Finance to discuss,
as a team
ii) Start party wise market development

- Plans CG
- All internal coordination CG & NCCL, latter for all technical back
up and support, samples, literature etc.

iii) Actual market development and emphasis on As and when needed, NCCL’s technical
and commercial staff have to be
- Trial runs involved.
- Try to be sole (Proprietary)
supplier CG
- Organise regular, systematic
market feedback With
- Coordinate to ensure :-
- Handling of objections NCCL’s support
 - Sales presentations Staff
- Close sales
iv) All regular follow up, feedback and CG
replanning [Monthly feedback] [Consult NCCL, as needed].
v) Coordinate for all needed ASS - partywise CG to coordinate both with each client
and internally with NCCL’s personnel,
vi) Optimum customer satisfaction CG
(Long term Customer Relationship with
Management) NCCL

Note : 5 year period for business establishment.

Project assignments:
(Group-1)
1. What should be the Business Policy guidelines of NCCL’s Top Management, where concepts
propagated by international level scholars (Please see below) need to be considered?

- Prof.(Dr.) Peter Drucker: The Practice of Management: 1955

* What business are we in at present?
* What business should we be in?

In line with the above, Prof. C.K.Prahlad’s concept of “Core Competency” also needs to be kept inmind.

Third basic concept can be the role of: Business Scope – Business Fit – Business Stretch.

You are welcome to use any other relevant concepts like Figure-1 (Enclosed).

A hint:

Alongwith environmental scanning, as also internal assessment (SWOT), any Top Management should arrive at,
very clearly, the Goals of the organization as a whole (Mission, Vision). Then only, clearly defined Objectives
should be formulated as Basic Policy guidelines.

(Group-2)
2. Using this case study as a background, what should be the Strategic Route(s), which should have been
considered by NCCL’s Top Management? Please identify clearly the five elements that make up any
strategy, according to Hambrick and Fredrickson. Have these been considered at all? Be specific.

(i) Arenas: Where will we be active? Identify.

 (ii) Vehicles: How will we get their? For example, through acquisitions, alliances or
internal development, or any other Strategic Route? [CBA]
(iii) Differentiators: Basic question: How will we win in the marker place? Please refer to
Michael Porter’s 3 Competitive Strategies.
(iv) Staging: Basic question: What will be our speed and sequence of Moves? This
denotes plan for implementation, based on available resources as well
as limitations, if any? P.F.I.: State clearly.
(v) Economic Logic: Basic question: How will we obtain our returns?

Please determine a comprehensive strategic plan.

(Group-3)
3. Organisation Structure(s) [O.S.].

What O.S.(s) will you recommend for?

- CG
- NCCL (IRC project)

How? Why? (Detailed structuring, communication, authority-responsibility patterns, structural forms,

planning methods etc. need to be clearly highlighted)

(Group-4)
4. Any re-thinking on?

- Models to be used: Which “Concepts” should be used? Why? How?

- Process of planning and execution (Plan for implementation)

Be specific.

(Group-5)
5. Suggest specific growth strategies, alongwith logic.

(Group-6)
6. Will you like to go in for (If called for) Exit Strategies for say present (Highly competitive) cable industry
set-up of M/s. NCCL?

Why? How?

(Groups 7,8,9) Combined session

7. Scenario Building:

If you / your team had been given a totally free hand, how will you go about for this specific project,
step by step?

Start with concepts, models you will have to use and giving logic thereof.
 [Total (For point number-7) time for presentation: 60 minutes].

Specific, brevity and, to the point deliberations will be expected from all participants, who will function (As usual)
in groups. (Except for assignment-7, where groups 7,8,9 should combine their presentations.

Structuring of this analysis (No.7)

Sub-group one: Planners and later “Audit”

Sub-group two: Deliverers

Sub-group three: Plan for implementation

(20 minutes each)