Small Business Cases 6

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SMALL CASE STUDIES ON ENTREPRENEURSHIP

B O O K N O. 6

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Small Business Cases TABLE OF CONTENTS

(REA D AS PER P GP S E PRO GRAMME SYLLABUS) 1. retailing – the endless battle game 2. acquiring and retaining talent 3. Importance of Cartoons

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RETAIL ING – THE ENDLESS BATTLE GAME

India has the largest number of shops in the world. It has over 12 million shops, most of which are very small kirana stores. 95 percent of retailing in India is through small kirana stores. People go to their nearby store and buy the goods. Most of the retailers don’t even issue cash memo. Organized retailing is yet to spread in India. However, this is one sector about which everyone is excited. Reliance group is investing over 550 million dollars in this sector. There are many other groups which are planning to invest huge money in this sector. Take Birla group for example, - they are setting up More – a retail chain. Organized retailing is experiencing fast growth in India. On year to year basis, we are able to witness a growth of 20% per annum in retailing sector, which can be considered a very healthy growth (with reference to organized sector only). However, in total the growth is about 7%. RPG group and Pantaloon are big players in retailing sector. RPG has had a history of takeovers and alliances. The promoters of RPG group had migrated from Rajasthan to Kolkata to start a small business enterprise. From a small beginning, the group diversified into many sectors like power, tyres, retailing etc. RPG continued its growth forays through takeovers and alliances. RPG group has now in its wallets companies like Ceat tyres, CESC, Chi Investments etc. Thus RPG is a big name to talk about. RPG group had taken over Spencer’s retail outlets. Here it is important to talk about Spencer’s group. Spencer’s were originally started in Chennai to supply British goods to Britishers through organized retail format. This was started more than 100 years ago. At that time the target of spencers was to supply goods to the army personnel who were working for the then British Government in India. Spencers had opened its offices in some other cities also. Its Chennai store was the largest store in India Spencer’s once reached strength of 40 stores. It was commanding premium prices and its collections were mostly good made in other countries. However, its market share started shrinking and sales started declining. Its stores were closed down one after another. Finally when only 9 stores were left out, RPG took it over. Then RPG made a foray into retailing sector. RPG tied up with DFI to start food world. DFI was a leading company in dairy products segment and was growing through alliances. Social networking theory tells that companies can grow faster by establishing networks and alliances. Alliances work faster, and give companies an edge over others. But there must be close coordination and mutual dependence. Both the companies should benefit out of the alliances. Companies would be able to grow only if they are able to establish very close network and exchange vital information and take participative decisions. RPG and DFI continued their joint ventures in India for some time and start a few more stores. They started Health and Glow chain also. However, their partnership was not long

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lasting. Both the companies had higher expectations from each other. They didn’t have much coordination. They didn’t also have any mutual supporting relations. RPG group continued to support its companies like Spencer’s etc. RPG meanwhile started another chain – GIANT. This created a big tussle. RPG got involved into many legal battles when it launched Giant. The two companies were now against each other openly. Finally the marriage ended and the two companies divided their stores. Food world remained with RPG group, but Health and Glow remained with DFI. Pantaloon had made its entry in most of the retailing formats. Pantaloon was having big presence in lifestyle format through Central and Pantaloon. It was also in value sector through Big Bazaar and All. Pantaloon was considered the leader in most of the segments in which it was operating. It was able to make a solid presence in all the retail formats. Many companies tried to make an entry into food sector. RPG was partially successful with food world. Subhikha, Nilgiri, Reliance Fresh, and many other companies entered into food retailing including vegetable selling. Reliance retail had the concept of connecting the farm houses to the customers through faster logistics and better storage. Subhikhsa tried to sell through low cost and wider distribution. RPG group tried to spread its wings and tried to keep every type of products in its spencers. When it renovated its Bangalore Spencer, its sales jumped very much, but it took it as a clue to expand and mercilessly expanded and introduced every product that it could. As per guidance from its consultant, RPG introduced one after another product. The result was shocking. RPG found most of its store in difficulty. Most of its stores were in losses. Earlier Spencer was known for high quality, premium goods, but now it lost it that image also. Ultimately, RPG had to close down its units one after another. Retailing sector in India is now experiencing meltdown. Except Reliance Fresh, all other groups are now retrenching in spite of healthy growth of 20% in organized sector. The reason is simple – unrealistic expectations. You can’t expect the market to give you unreasonable growth in a very short period of time. Question: ‘ Critically evaluate the strategies of different companies and try to predict the future of retailing in India – do you think that the organized retailing will be as successful in India as it is there in other countries?

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ACQUIRING AND RETAINING TALENT

Monika : Where is talent? It is all gone. Brain drain is the major problem. Every talented person goes out of the country. Sudha : I agree, but now Indian companies are also offering excellent packages and perks to retain talent. Indian companies are now offering so many things besides salary –for example, when you join a company, they will give you laptop, cell phone, beautiful house, membership to a club and so many other things. They are competing with each other in offering fringe benefits. Thus for acquiring best talent, companies are willing to pay the best. IT companies are racing ahead in this aspect. They try to acquire the best candidates and try to offer the most attractive packages. You can know listen about packages in the range of lacks or crores of rupees, which was unthinkable a few years back. Pankaj : Companies are able to offer packages only during boom. Now you find that most companies are reducing their packages. NRIs are returning to India. They are not able to get higher packages now. Thus India has become the ultimate destination for the talented persons. Goti : more than package, we need an effective performance management system. Employees work in a place where there is a system of rewards, which are linked to performance. If you perform, you get rewards; otherwise there are not rewards and not growth. I believe that companies are now developing their performance management system, where they monitor the performance of their employees regularly and give incentives and support to the employees so that they may experience growth. Pratibha : performance management system is critical for the growth of the organization. Those who perform should be rewarded and those who are lacking in zeal and motivation to perform should be discouraged. Thus every company should have a system to encourage performers. People will perform well, if there is a system for competition and collaboration among the employees. Passion of excellence should come before excellence. Map of the building comes before the building and outline of picture comes in the mind of the painter before the actual picture. We should be firm for performance. Talent is not something from birth. Talent is shaped by our culture, context, upbringing, and our overall socioeconomic conditions. Sudha : if a person is talented, but he doesn’t get a chance, then his performance is lost. We have to retain the combination of performance and talent. We should try to develop performance of the employees. Monika : there is a huge difference between packages in our country and in other countries. Pratibha : people don’t get opportunity as per their talent, therefore they move out of our country. Monika : social and economic environment also affect our talent.

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Sudha : lots of people, who had gone abroad, returned back to their native place due to cost cutting measures in other country. We have to retain our best persons. Nikhil: when it is boom, companies take any person – whether talented or not. A person, who is giving good performance, should be rewarded. Pratibha : companies are willing to hire people at lower rates, Swati : some people are not able to use their talent. We must support those persons, who are not able to exposé their talent. We should motivate persons to develop their talent. Monika : when economy revives, companies will need manpower, we should therefore hope for the best. If good package is offered, people will settle down if people get an opportunity to serve their homeland. Pankaj: employees should be rewarded for their performance. There should be greater transparency. Workers will not work properly, if here is no transparency. Nikhil: working environment plays an important role. Indian workers when they went to other countries, they worked very hard and got applause. Monika: we have to create good work environment. We have to create transparency, openness, and enable employees to show off their talent. Questions: What is the real issue regarding performance, talent, and how can companies acquire and retain talent?

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IMPORTANCE OF CARTOONS

Everyone must learn cartoon making. We can express our feelings through carton making. If we are dissatisfied with some person, we can make a caricature, which simply puts that person away. We can make a caricature and laugh on that person. We also need a way out to express our feelings. If people don’t share their feelings and pile up their frustration, it can be dangerous. In Japan, companies provide their employees with cloth balls, which workers can hit and get satisfied that they are able to vent out their anger. We have the habit of looking at cartoon and we try to see it doing what we wanted to do as child. It is due to this reason that Tom and Jerry has become very popular serial. We can also see the success of many companies in these ventures. Many companies have successfully used cartoons in their marketing strategies. Look at Amul’s Utterly Butterly delicious. This little cartoon has made Amul a legendary success. The cartoon has taken out a niche in the minds of every person and no competitor can throw out this cartoon from the minds of the people. Look at Disney – from a small beginning – (in 1928, it started with a Mickey Mouse), Disney has become a multi-billion dollar company. It makes everything with its cartoon symbols – be it toys, books, stationery, theme parks, TV channels etc. Disney is a symbol of success today, all due to its cartoons. Disney created many successful cartoon characters, which became very popular with children. This cartoon helped Disney in marketing every type of products. Disney today symbolizes being creative, being young and being energetic. The brand is ever-young. Its marketing success is unparallel. Cartoons have made many people legendary success. Mr. Sudhir Tailang got Padmashree for his creative cartoon making art. His cartoon tried to depict the truth, which we fail to speak out from our mouth. His cartoons forced people to think beyond the present. Corporate world is today looking at possibilities for personalizing their work place. Companies use cartoons and symbols to create their alter ego. Companies are using cartoons for bringing sense fun elements also. Look at Pidilite, this company used cartoon based advertisements for marketing Fevicol. We know about success of Fevicol. People are able to associate with cartoon characters faster than other characters. Today Doreoman, Pokemon, Tom, Jerry are more popular character among children than even political leaders or film stars. Children eagerly await for their popular cartoon heroes and try to imitate them also. Companies are also using their publicity material using these cartoon characters. If a company has to popularize its new soft drink, it asks the cartoon making company to show the cartoon characters taking that product and the product becomes very successful among children. During 80s it was difficult to convince children to take spinach. Then came Popaye. Children are changed now. They are now demanding for Spinach. One cartoon is more popular than any leader / hero / spiritual leaders.

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Rockstrong Cement has achieved very high brand recall in Rajasthan due to its creative advertisements, which highlight cartoons and caricatures on current themes. Some of its recent cartoons were: 1. (when Jaswant Singh was expelled by BJP) : Jinnah Wahan, Marna Yahan 2. (on Congress whip to Shashi Tharur to travel by economy class): Khas se aam tak Thus we can see that companies have benefited tremendously by advertising through cartoons. Questions: You are required to discuss about important social economic problems, which can be handled by cartoon characters and the social problems, which can be removed by these characters.

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