Summary

Moonlight Automobiles Ltd. is a manufacturer and marketer of two-wheelers, specifically mopeds. They
offer two models, the traditional 'Arrow' and the improved 'Double Arrow'. However, the company has been
facing challenges in the market due to the entry of fuel-efficient mopeds from competitors.

To regain market share, the company has revamped its marketing strategies and employed young sales
engineer Mr. Ramesh Tiwari to lead a strong sales drive. Mr. Tiwari's performance has been commendable,
successfully contacting prospective customers and arranging group bookings with the help of a new
financial assistance scheme.

As a reward for his good performance, Mr. Tiwari was offered a paid holiday trip to Chennai with his wife.
However, he expressed a desire to receive the equivalent amount in cash instead. The marketing manager
informed him that it might not be possible, as it was not the company's usual practice, and would need to
be confirmed with the personnel manager.

Ultimately, it was decided that a cash reward would not be possible. Mr. Tiwari reluctantly went on the trip,
but expressed dissatisfaction about having to bring his daughter along. This led some colleagues and
managers to perceive him as overly concerned with money rather than focusing on his job.

As a result, Mr. Tiwari's performance declined, indicating a lukewarm attitude towards his job and
subordinates

Immediate Problems

The first concern emerged when a new generation of fuel-efficient mopeds hit the market. This led to
Moonlight Automobiles' decline, as they began to lose market share. However, the business tried to
rehabilitate its image by manufacturing better mopeds, but it was too late because most of its competitors
were already established in the market.

The second issue concerns the incentive plan for its employee, Mr. Ramesh Tiwaru. The personnel
manager did not sympathize with Ramesh and instead inquired as to why he wanted the money rather than
the vacation. This was the ultimate chance for the personnel manager to address Ramesh's concern and
reach an agreement on how to best resolve the situation.
Root Cause

The root cause of Moonlight Automobiles Ltd. Primary's failure to adapt to market shifts lies in its lack of
proactive innovation and anticipation of market changes. The company's traditional reliance on the 'Arrow'
model left them vulnerable when competitors introduced more fuel-efficient mopeds. Despite recognizing
the need for improvement with the 'Double Arrow' model, their delayed response allowed competitors to
establish dominance in the market. This highlights a fundamental weakness in the company's innovation
processes and strategic foresight, emphasizing the necessity for a quick and proactive approach to product
development and market adaptation.

The company's fixed incentive programs contribute to problems with employee motivation and recognition,
as seen in Mr. Ramesh Tiwari's case. Despite his good performance, the company's refusal to
accommodate his preference for cash instead of a trip demonstrates inflexibility and a lack of
understanding of individual employee preferences. This could have led to decreased morale and
performance among both Mr. Tiwari and other employees.
Alternative Solutions
Issue: Market Decline due to Fuel-Efficient Mopeds
a. Diversification into electric vehicles - In order to expand their product range into electric vehicles,
Moonlight Automobiles Ltd. may choose to invest money in Research and Development (R&D).
They would be able to benefit from a developing market segment that is concerned with
sustainability and the environment by doing this.
Advantage: With rising demand for electric vehicles, joining a new market category might boost
revenue and market share.
Disadvantage: The infrastructure and R&D expenses connected with producing electric vehicles
can be substantial, and there is no guarantee that these investments will pay off immediately,
putting strain on the company’s finances.
b. Strategic Partnership with Established Brands - Moonlight Automobiles Ltd. could form
partnerships with recognized brands in the automobile industry. They may expand its consumer
base and enhance brand visibility by using these brands’ reputations and distribution networks.
Advantage: Strategic collaborations can supply Moonlight with resources, experience, and market
presence that it may not have its own, hence boosting its growth and penetration.
 Disadvantage: Establishing and sustaining partnerships can be difficult, necessitating careful
relationship management and potential conflicts of interest. Furthermore, Moonlight may have to
split revenues and decision-making authority with its partners.
c. Concentrate on Specialized Market Segments - Moonlight Automobiles Ltd. could differentiate itself
by focusing on specialized market segments that competitors do not serve. They might establish
up a distinct market position by adapting their products and marketing activities to the individual
needs of these segments
Advantage: By targeting niche areas, Moonlight can compete with less direct competition,
potentially increasing profit margins and client loyalty.
Disadvantage: Niche markets may have limited development potential, and there is a risk of over-
specialization, making Moonlight susceptible to changes in customer tastes or market dynamics.
Issue: Incentive Plan for Employees
a. Flexible Incentive Option - Moonlight Automobiles Ltd. can provide customizable reward
alternatives as an alternative to a one-size-fits-all strategy. The business might implement a
system that gives staff members the freedom to select from a variety of rewards to suit their
preferences. In lieu of paid vacation time, the corporation could offer alternative monetary
incentives or advantages like gift cards, bonuses, or cash equivalents to employees like Mr.
Ramesh Tiwari to satisfy individual preferences.

Advantages: Increased Employee Satisfaction, Enhanced Motivation and Involvement, and

Efficient Allocation of Cost
Disadvantages: Administrative Complexity, Inconsistency and Inequity, and Compliance to Legal
Regulations

b. Transparent Communication - In order to comprehend the concerns and desires of workers such
as Mr. Ramesh Tiwari regarding incentives, the personnel manager should communicate with them
in an open and transparent manner. The organization may successfully address the needs and
concerns of its employees, establishing a structured feedback system that allows staff members to
voice their preferences for incentive schemes can assist the business in better understanding and
meeting the needs of each individual.
 Advantages: Enhanced Involvement and Commitment, Continuous Improvement, and Goal
Alignment
Disadvantages: Confidentiality Concerns, Resource Constraints, and Communication Complexity

c. Personalized Recognition - Moonlight Automobiles Ltd. may want to consider non-cash methods of
expressing gratitude and acknowledgment that are customized for each employee in addition to
financial incentives. This entails giving meaningful recognition and appreciation for each
employee's contributions in a manner that suits their preferences and situation which can take the
shape of public acknowledgement, or unique prizes given out in response to your work or
contributions to the business.

Advantages: Improved Retention and Enhance Company Culture

Disadvantages: Privacy Concerns and Risk of Overlooking Employee’s Contributions