Program: MBA

Pre-finals Examination - Feb 2021

Semester : III
Subject:3.1 STRATEGIC MANAGEMENT &
CORPORATE GOVERNANCE

Max Marks:70

(ii). Answer any six questions – each carries 5 marks in Section B

(iii) Case Study ( Compulsory ) in Section C

Section-B

Answer any Six questions from the following. Each carries 5 marks. 6x5=30 Marks

1. Describe 2 Combination schools of strategic thinking with examples from Corporate India.

2. Carry out the five forces analysis for the Agriculture Produce Market Committee (APMC) in India.

3. Examine the supporting factors for implementation of conglomerate diversification in a large

group with a portfolio that includes brands in India and overseas.

4. Analyse the business of Cafe Coffee Day using Porter’s VCA.

5. Use Ansoff’s matrix to analyse the strategic alternatives for AIRTEL.

6 Apply McKinsey's 7S framework for Vistara Airlines.

7 Explain how you would adopt the “Atma Nirbhar Bharat” policy of the Government in the
petroleum sector in India.

8 CSR is not an optional “Add On” to business core activities - but about the way in which businesses
are managed successfully. Discuss with an example.
 Section-C

This section is Compulsory 1x20=20 Marks

Case Study

Nozer Mobikes: To go or not to go public?  

History
The 2-Wheeler industry in India started in 1950’s with the launch of Royal Enfield from UK. This was followed
quickly by the launch of scooters Vespa & Lambreta from Italy, motorcycles like Rajdhoot based on a French
bike and Java (which became Yezdi) from Czechoslovakia. Since the 4 – Wheeler was still a luxury the 2-
Wheeler was considered to be the vehicle for the middle class many of whom at that time were employed in
Government services or the newly launched public sector. The market for motorcycles was 37% of the 2-wheeler
market which was growing slowly and was dominated by scooters and mopeds or motorized cycles.
The 2-Wheeler market got a sudden boost in the late 80’s and early 90’s with the entry of Japanese brands like
Honda and Suzuki followed by Yamaha & Kawasaki who launched 100 CC mobikes with fuel efficiency which
was promoted the principle of fill and forget. This was followed by the launch of 50 and 80 CC Scooty’s which
came with automatic transmission and started attracting women customers. The size of the market grew
phenomenally and the rate of growth of demand grew with the GDP growth of Indian economy each passing year.
The demand started growing so fast that deliveries were slated to be over 6 to 8 years and nobody was ready to
wait that long for mobikes!
It was around this time that Nozer M Yazaad, a chartered accountant who was turning 34 years at that time and
had worked as a finance manager with Enfield Ltd for 8 years decided to set up a venture to manufacture high
powered mobikes of 250 and 500 CC in collaboration with a British company. The collaborators were ready to
provide technical and R&D support for the latest and state of the art machines.
Meanwhile the collaborations of Japanese companies with Indian industrialists were allowed to terminate when
the Government liberalized and opened the economy for direct investment by the foreign player’s post 2000. The
industry grew double in size by 2004 as the foreign brands like Honda; Suzuki; Vespa; Yamaha etc. brought
investments and started setting up their own manufacturing facilities. With increase in supply and continuous
growth in demand India soon became one of the biggest markets for 2-Wheelers in the world.
 
Nozer Mobikes
Following the successful launch of the high powered mobikes, Nozer mobikes reached consolidated sales of 1200
bikes a year were growing at 20% per annum much higher than the rest of the market. The sales of 250 CC
mobikes had the highest share of the sales.  From a profit of Rs 2 Lakhs in the first year, the company reached Rs
3 Crores by the 3rd year. Nozer Mobikes had cornered a share of 8% of the market by this time.
Although Nozer had a personal interest in mobikes, he was professionally a chartered accountant. His love for
mobikes and the technical knowhow from the collaborators ensured that the machines produced were technically
the best. Nozer was a bit impatient and didn’t want to spend time to
understand customer’s needs. He also did not feel the need to invest heavily in advertising as the demand was
higher than supply. The company however managed to set up a chain of distributors all over the country. The
condition for selection of the distributor was technical expertise and also not selling high powered mobikes of
other brands. This was not such a problem because in 2006
The British collaborator was happy with the technical quality of the mobikes produced at Nozer Mobikes and
decided to shift its production of 500 CC mobikes from UK to India. This was a big boost to Nozer Mobikes and
exports of these mobikes in the collaborators brand started happening to UK and other countries around the world
from here. The opening of export markets was a welcome windfall for the company. Nozer decided to assign the
export marketing to a professional export house in Mumbai. The export house did a good job of increasing the
exports. They also advised Nozer to carry out a market survey to ascertain the reaction of customers to pricing.
Since the pricing in overseas markets were higher for the same mobikes with the British brand, it would be
desirable to check about it in India.
Nozer skill in finance ensured that the cost of the manufacturing all types of mobikes were regularly analyzed. He
related the market prices to the cost efficiency of the business. Material flow was rigorously controlled and
inventory was kept at bare minimum of just one week’s production. However on the maintenance of plant and
machinery, Nozer was very particular that it should not cause shut down and hence they had maintenance stocks
of 15 days. This was high but it ensured that there were just 2 stoppages of production during the entire year.
Nozer Mobikes was a cash rich company. The management prided itself in never delaying a payment and always
managed to pay on due date or latest with one day’s delay. This meant keeping reasonable cushion in the cash
flow plan. Nozer also believed in good corporate governance and gave excessive emphasis on honesty and social
commitment. This also meant that tax planning was not optimized. On the other hand Nozer was one of the best
paymasters in the industry, particularly at the worker level the wages he paid were known to be the best in the
industry.

Nozer controlled the operations so tightly that there were capacity constraints when export orders for the British
mobikes increased. Although he understood the importance of flexibility of operations he decided that it was
worth losing or delaying the deliveries for a few orders rather than manufacture under suboptimal conditions.
Technically superior quality mobikes could not be produced unless the plant and machinery was also top class.
Nozer never hesitated to make investment in updating the manufacturing facilities. High investments in product
development and R&D ensured that the product was best among the competitors.
Marketing VP MrGirish Shankaran however felt that it was more important to meet the delivery commitment
otherwise good distributors will lose interest and customers will start looking for other options. The competitors
he reported were already eyeing the high power bikes market which had started growing slightly more than the
regular 100-125CC mobikes. Since it would also mean bringing investments to import the high quality production
equipment Mr Shankar felt that the company could plan to public and bring in investment for expanding the
production capacity and making an advertising blitz to compete with brands like Honda, Bajaj, Royal Enfield and
recently launched KTM. The demand for power mobikes were also steady especially for the e YUMPY (Young
Upwardly Mobile) generation! Also the emphasis by most state governments in the country to go for modern
mass transportation systems

like Metro, Mono-rail and Point to Point services etc. were unlikely to affect demand for mobikes unlike 4-
wheelers.
Issue of going public
Nozer was in two minds! To go or not to go public? What would be the premium for the share? So far the
company had managed to show an EPS of 16%, higher than the industry average of 12% to 14%. The revenues of
the company had increased from Rs 60 Lakhs when it started to Rs 87 Crores. The net worth of the company had
grown from Rs 1 Cr to Rs 90 Cr. The assets of the company had grown 100 times from Rs 3 Cr to Rs 300 Cr.
Employee strength had increased from 350 to 1750. The growth in profits and revenue had been affected due to
order cancellations by almost 14%. The EBITDA of the company for the last financial year had been declared at
Rs 21 Cr. The company showed a debt of Rs 7 Cr in its balance sheet of which Rs 2 Cr was the term loan balance.
Nozer’s business friends advised to go public and use people’s money to expand the business. On the other hand
some others felt he was in a good position to leverage the good performance of the company and raise debt for the
expansion that was planned. According to them he should first take care of order cancellations and raise the
turnover over Rs 100 Cr before going public!

Nozer decided to engage the services of a suitable consulting agency to carry out an appraisal so that the strategy
of going public and for the coming years ahead could be formulated!

 
1. What would you advise Nozer Mobikes to do if you were the consultant?  
2. Justify the rationale behind your recommendation for the strategy with alternative choice analysis. 
3. Do you think there would be a need to change in the functioning of Mr Nozer in future? How would you
advise on business change and continuity process?