CASE STUDY -- RASHMI GARMENTS

Mrs. Rashmi Aggarwal, who is a post graduate in Economics, has established Rashmi
Garments, in May, 1987, by installing two machines – one her own and the other
purchased from a local dealer, with a total investment of Rs. 20, 000/=. The idea of
starting her own business came in 1984, when she saw an advertisement in the newspaper
for a one month Entrepreneurship Development Programme (EDP) being conducted by
the Small Industry Service (SISI), Okhla, New Delhi. She learnt how to start her own
venture.

Feeling encouraged, she decided to start a garment unit as she had learnt something about
garments during her school days. In order to add to her technical know-how, in 1985, she
enrolled herself for a two-year part time course in Fashion Designing with the Young
Women’s Christian Association (YWCA), New Delhi and completed the course in 1987.
In the meantime, on the advice of her husband, she applied for a shed to the Director of
Industries (DI) Delhi. The shed was allotted to her in Oct, 1986 at the Flatted Factory
Complex (FFC), Jhandewalan, New Delhi. Due to lack of sufficient space, Mrs. Rashmi
Aggarwal, who had been earlier living in a joint family, had shifted to her newly
constructed house at Vikaspuri 25 km away from her unit.

Mrs. Rashmi Aggarwal, has two school going children – a girl and a boy aged seven and
four years respectively, and they were admitted to a school in Karol Bagh near her unit, so
that she can take care of them after they returned from the school to her unit. Mr. A.K.
Aggarwal is a Post graduate in M.Sc (Chemistry) and working as a Circle Officer with the
Delhi Administration. He had witnessed an event in his neighborhood, where a young
widow had been ill-treated by her in laws. This had left a great impact on him and his
interest to see his wife Mrs. Rashmi Aggarwal, do something outside home turned into his
determination to make her economically independent. During the initial stages, since
Mrs. Aggarwal’s unit was not in full production, workers were unwilling to join as they
were unsure about the units’ survival. After a great deal of effort she was able to get
through the local machine dealer, one worker at Rs. 1,000/= per month.

Mrs. Aggarwal’s initial strategy was to approach the customers in the local market with
sample pieces of her items. The response was not encouraging, despite her offering 10%
less than the market rate, the dealers and shopkeepers were unwilling to purchase her
items. Mrs. Aggarwal, then decided to supply the items at cost price. This proved
successful to get an entry into the market. In the next month, she was approached by
three dealers who placed orders with her. Thereafter, she was approached by three more
dealers. Taking this an opportunity, Mrs. Aggarwal had decided to sell her items at 10%
-15% profit. This was acceptable to her old as well as new customers. She then employed
three more workers and added two more machines to her unit for meeting the demand of
her customers. In the initial couple of months it was difficult for her to cope with the
customer’s requirements regarding the type, size and the quantity of the items.

In the month of April 1988, she was approached by two customers from Jammu &
Kashmir land Allahabad (U.P.) with orders. When the items were supplied through a bank,
the customers refused to accept then. Then, her husband had to go to get the items back.

Mrs. Rashmi has reinvested more than 70% of the profit into her venture. Gradually, her
total investment rose from Rs.20,000/- to Rs. 40,000/- and the turnover also increased
from Rs. 5,000/- to Rs. 60,000/- PM during the same period. She now had eight workers
including one cutting and designing master and eight machines in her unit and there were
more than ten customers in the local market. She always took care of her workers and was
ready to help them any time, however, she did not get their help at the time of her need.
The workers would always turn up late for work even when the customer’s demand was
high. This created tension in her mind. Her workers said that she was always ready to help
them at the hour of their need and that was why they used to work till late in the evening
and some times even on weekly holidays, however, at the same time, they also had their
personal problems and limitations.

Mrs. Rashmi thinks that her total involvement with the unit had left little time for her to
look after her children properly. Mrs. Aggarwal used to participate with her husband in the
discussions with the customers. This increased her confidence in the marketing activities.
In the absence of her husband, she had begun to take the decisions. Thought the market
demand for Rashmi Garments, is increasing, yet Mrs. Rashmi Aggarwal is finding it
difficult to cope, due to lack of space and manpower. She thinks of expanding her business
and at the same time she would like to spend more time at home with her growing
children. She is to decide which way to go first?????

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QUESTIONS:

Q1. Critically evaluate Mrs. Rashmi Aggarwal as an entrepreneur, on the basis of the
information given in the case.

Q2. What were the key factors responsible for the initial growth of Rashmi Garments?

Q3. At the position where the case ends, what are the challenges facing the organization?
What growth strategies would you suggest to Rashmi Aggarwal and why?

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 Case Study: Argot International

Argot International is a medium sized company in Peoria, Illinois,

with about 2,000 employees. The company manufactures special
machines for farms and food-processing plants, buying materials
and components from 150 vendors in six different countries. It also
buys special machines and tools from Japan. Products are either
sold to wholesalers (about 70) or directly to clients (from a mailing
list of about 2000). The business is very competitive.

The company has the following information systems in place:

Financial/Accounting, Marketing (primarily information about
sales), engineering, research and development, and inventory
management. These systems are independent of each other although
they are all connected to the corporate intranet.

Argot is having profitability problems. Cash is in high demand and

short supply, due to strong business competition from Germany and
Japan. The company wants to investigate the possibility of using
information technology to improve the situation. However the vice
president of finance objects to the idea, claiming that most of the
tangible benefits of information technology are already being
realized.

You are hired as a consultant to the president. Respond to the

following:

1. Prepare a list of 10 potential applications of information

technologies that you think could help the company

2. From the description of the case would you recommend any

portals? Be very specific. Remember that the company is in
financial trouble.

3. How can Web services help Argot?

 Title: ARE SOME CUSTOMERS MORE EQUAL THAN OTHERS?

Jill Hoover was getting her first look at the Anaconda, the newest – and biggest –
attraction in the group of these parks her company ran nationwide. She had seen ride in
various stages of development, but the final product was truly something to behold,
especially in action.

She called out to the park manager, who was explaining the sophisticated safety features
of the roller coaster they were walking towards. Mr. Nathan Cortland, who had
accompanied with the CEO to the tour and the latter, noticed a scuffle in the long line of
people waiting to ride. A couple of tough kids – young men, had tried to jump the queue,
and other people weren’t standing for it.

Mr. Bill, who is the park manager, was already moving toward them and murmuring into
his walkie-talkie about the security to the Anaconda, code no 3. Taking this as an
opportunity to convince the CEO, Mr. Nathan had conveyed an idea to Jill, to introduce a
new scheme for its privileged customers to avoid to deal with these long queues.

Nathan had first approached the CEO with the idea of a “preferred guest card” as a way
to win more business from an increasingly moneyed – but time-pressed-group of people
that the folks in market research referred to as “mass affluents”. Mr. Nathan has learned
that the top 20% of incomes now accounted for more than 48% of total spending on
entertainment fees and admissions, and he intended to get Paradise Parks’ share of that
pie. Under his plan, visitors could pay an additional fee to get free rein of the park and the
cardholders would enter the rides through separate lines that would give them first crack,
and they would be seated immediately at any in-part restaurant.

For this part, Nathan, had done an impressive amount to work developing the idea,
commissioning surveys and focus groups, and getting finance to run the numbers on all
kinds of pricing permutations. Mr. Nathan’s tactic had been to get people arguing the
details – should the pass cost $20 more than general admission, or $30 more? – while
brushing right past the question of whether it was a good idea at all. At first, this approach
seemed to be working.

In the beginning:

The founder of Paradise Mr. Francis Fritz Hoover’s idea was to create a place where
families could come together for a day to foreget about their cares, a place where people
could enjoy their shared humanity, in an environment that highlighted the best of human
endeavors.

Paradise Park became an instant success and eventually opened five Paradise Parks, all in
secondary urban markets. When the business slowed in the 1980s, Fritz followed his
competitors’ moves into niche parks, including water parks and syndicated-cartoon theme
parks. Paradise held the advantage here because it has always served smaller locales with
an entertainment option that was considered good value.

The beginning of a boom in the 1990s helped business, and over time, Paradise was lured
into expanding its business into undeveloped neighboring land and experimenting but had
required significant investment. By the time Jill took over as CEO, Paradise owned and
operated 19 seasonal and year-round amusement parks, seven of them full-blown Paradise
Parks.
Trouble in Paradise:

But if everyone at the off-site meeting knows about the company’s roots, they were even
more acutely aware of its current situation, Nathan summarized their thoughts during his
presentation: “out history is great, but if things don’t turn around fast, we’re going to be
history.” For all the growth and excitement of the past two decades, profits had remained
slim. Labour costs had sky-rocked with the low unemployment of the late 1990s, and
insurance rate had soared after a series of industry mishaps.

And, as Nathan correctly pointed out, the company would have to make changes quickly
to avoid a cash-crunch-driven bankruptcy or a hostile takeover-both of which threatened to
ruin Fritz’s dream.

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QUESTIONS & ANSWERS:

Q1. Should Paradise offer different levels of service as proposed by Nathan? Critically
examine the various issues involved in implementing the scheme.

Q2. What information should Jill collect which would help her in taking a decision and
formulating a plan for Paradise Park that will turn its finances around? What other options
would you recommend to the company to consider to meet the current situation?
TITLE OF THE CASE STUDY: WRONG TRADE ORGANISATION

One of the banners one saw during the demonstration at Seattle proclaimed the WTO was
not the World Trade Organisation but the Wrong Trade Organisation. It was the Wrong
Trade Organisation because it involved itself with trade which (as the protestors saw it)
spoilt the environment and promoted unacceptable working conditions for labourers in the
poor countries.

In the face of it, the charge is clearly not acceptable; but then, do the demonstrations have
a point at all? In the eyes of the demonstrators, the WTO would not have been the Wrong
Trade Organisation if it could ensure that more trade did not automatically mean greater
damage to the global environment.

On this, one can have no quarrel with the Seattle demonstrators at all. If we look at labour,
everyone will agree with the premise that the most important objective of economic
development is to improve the living standards of the people. Since the business of a
higher trade exchange is to derive larger profits from such exchange, which can be used to
hasten economic development, it can be argued that more trade should ultimately lead to
better living standards.

This includes labour and living standards, the inference being that more trade should lead
to better living standards for labour. The Seattle demonstrators said that this is not always
the case and that in large parts of the developing world, the production of goods that
ultimately generated higher trade figures rested on unsatisfactory working conditions.

Their point was that the WTO was not doing anything to ensure that such production did
not enter the stream of globally traded items. Both the charges are valid as they are, which
means that concerted efforts will have to be made to look after the environment and labour
aspects of higher international trade. The question is whether it is the business of the WTO
to do so. If yes, then the WTO as it is now constituted is certainly the Wrong Trade
Organisation. If not, then the protesters are themselves wrong in trying to make the WTO
responsible for something, which really is not among its functions.

The question then is: Should the WTO be held responsible for the wrong done to global
living standards and the environment flowing from a larger international trade exchange,
or should these spheres to be responsibility of their organisations? Basically, the issue
revolves around the question – should the WTO be involved in any sphere of international
relations other than trade? As of now, nearly the entire developing world feels that it
should not be so involved while the quest of the developed countries is to develop such
extra-trade responsibilities for the WTO.This is not an easy question to answer because the
act of trading cannot be put into an airtight compartment in any social set-up.

On its part, India has talked about “food security”, which can easily be tied up with
“national security” (particularly in a poor country). This certainly cannot in any way be a
responsibility of the WTO.

What therefore, is amply clear is the complex nature of the issue – if it is the business of
the WTO to involve itself with the labour and environment aspects of trade. Common
sense would suggest that since the framework for international trade should be set by the
standards in force on the labour and environment fronts, these spheres should be the
responsibility of the already existing different forums. In other words, since trade (being
only one part of pure economic activity) cannot set the standards either in labour or the
environment, the WTO should not get into these spheres of activity but should restrict
itself to policing international trading activity, taking as given, the prevailing labour and
environment standards.

It can, of course, be argued that since not much effective work is being done in both the
labour and environment spheres by way of tightening up on standards by the different
international forums currently engaged in the task – the International Labour Organisation,
and so on – there is no alternative but to tighten the screw of these related aspects of trade
activity within the WTO itself. This could conceivably be the case, but if it is then why is
so much being made of, say, the US signing the Worst Forms of Child Labour
Convention, which is strictly an ILO document? In other words, if the WTO is the Wrong
Trade Organisation, then the ILO is the Irrelevant Labour Organization, the work of
which, however, has been applauded by, among others, Washington.

There are some who will argue that the entire effort to involve the WTO with the labour
and environment aspects of trade and environment aspects of trade is actually a part of the
larger effort by some developed countries to reduce the comparative advantage which poor
countries enjoy by way of lower overall production costs, which makes their products
cheaper in the world market.

If this is correct, then the point needs to be emphasized that the WTO is the right trade
organisation, which is being sought to be influenced and controlled by the wrong sort
people?

Questions:

1) What are the basic limitations of World Trade Organisation?

2) Why is the World Trade Organisation Called “Wrong Trade Organisation?”
3) How does WTO affect India, particularly in agriculture and in labour aspects?
 Title of the Case study: JAPANESE FOOD PROCESSING INDUSTRY

The efficiency of Japanese Food Processing Industry is much lower than other developed
countries e.g. it is just 32% of that of the USA. The important factors contributing to such
lower efficiency include Japanese cultural traits and government policies.

The cultural trait is that Japanese are fanatics for the freshest possible food. In Japan, a
milk container bears three dates:

 The date of manufacture,

 The date it reached the supermarket and

 The expiration date.

Milk production in Japan starts at one minute past midnight so that milk reaching the
market in the morning can be labeled as today’s milk. If the milk were bottled at 23.59
hours, no Japanese consumer would buy it as it would be yesterday’s. As a result, a milk
producer in northern Japan cannot compete in southern Japan because transportation
delays would add one day to the date on the container, a curse of death for milk sales.
These local monopolies originating in a Japanese cultural preference are reinforced by the
Japanese government, which penalizes competition from foreign producers by imposing
arbitrary food-import restrictions such as 10-day quarantine.

Imagine the apoplectic reaction of a Japanese consumer, already skittish about one day old
milk, on being offered month-old food shipped from overseas and then quarantined.
Hence, Japanese food-producing companies are not exposed to competition with each
other nor with foreign imports, do not acquire economies of scale, and do not learn
methods of international processing.

Similar organisational problems cripple the productivity of Japan’s soap and beer
industries – but not its differently organized steel, metal, car and electronic industries,
which have higher productivity than their US counterparts and inspire envy in the US.

Questions:

Q.1. Did you ever wonder why your car, scooter or TV has been made by a Japanese
company or its collaborator, but not your soap, chocolate or cold drink? Explain the
implication of trade theories for such a phenomenon.

Q.2. In view of the above, explain the steps, a company exporting mango juice from India
would be required to take, to cope with the environmental differences and modify its
marketing mix for Japan.

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