MS-92 Management of Public Enterprises Exam Paper

MBA - Master of Business Administration

Note: There are two Sections A and B.
Attempt any three questions from Section A. All questions carry 20 marks each.
Section B is compulsory for all and carries 40 marks.

1. Briefly comment on the contribution of PEs in the growth and development of Indian economy. Discuss the Mixed Economy Model followed for economic growth.

2. Discuss the issues of corporate governance in Public Enterprises.

3. Comment on the common characteristics of socially responsible firms and the importance of social responsibility in the present context.

4. Discuss the role and performance of transport sector in the present day context.

5. 'Privatisation encompasses a broad spectrum of possibilities between denationalization at one end and, market discipline at the other.’ Analyze the statement with respect to different dimensions of privatization.

SECTION - B

6. Read the following case and answer the questions that follow.

ARRIVING TO LAND ANYWHERE

As the taxi screeched to a halt, Mr. D'Souza for the umpteenth time, cursed the Monday morning traffic and his Inability to do anything about it Mr. D'Souza was the Marketing Director of Indian Aviation Company and was on his way to attend one of his several pre–lunch strategic meetings. This meeting had a special importance as it was to open the marketing plans of his company for a new helicopter the first from a private sector company in India in this category of products On consulting his watch, he reclined that he would be delayed by at least 25 minutes. Hence, he decided to use the time by reviewing the salient points of his presentation.

The Company
The Indian Aviation Company (IAC) was set up in the Export Processing Zone of one of the four metropolitan cities of India. The formation of the Company was noteworthy for the fact that it was the first in the private sector to have been given the license to manufacture helicopters so far only Hindustan Aeronautics Ltd (HAL)' a public sector company, had the license to manufacture the helicopters.
IAC was an Indo –Us Joint venture with Brantly Helicopters, USA- The joint venture was initiated by Mr. Rangnant a former technician in the Indian Air

Force who had settled in the US. The project was in response to the Indian Government’s initiative and liberalization in inviting non-resident Indians (NRIs) to bring home their expertise, and promote a new industrial culture in India. The company was set up with Rs. 1 crore as the project capital in 1986. As per the terms of joint venture, the helicopter was to be designed originally by the US partner and assembled in India under the supervision of the US experts. As per the export regulations of the Government of India, 75% of the output was to be exported out of the country while the remaining could be sold in India.

The Products
The Company decided to manufacture in the beginning two models - one with a carrying capacity of to passengers, while the other with five, including the pilot in both the cases. The machine for both models was a four stroke piston, as against turbo propelled "Chetak' of HAL, the only competitive offering in the market.
Among other vital uses and service benefits, these helicopters could land anywhere without requiring helipad. Further, the fuel efficiency and maintenance was amazingly low, working out at Rs. 1,000/- per hour of flying as against Rs. 8,000/- for the Chetak. Mr. D'Souza had thought of using these for benefits for creating distinctive competence in the market. The quality standards of the manufacturer were very high as was expected from the industry where "technical excellence was the name of the game". Besides operational quality checks, the US experts
would supervise the assembly in Indian plant and the US Federal Aviation officials would visit to certify the quality performance.
In addition to the above, the prices of the two models were considerably lower as compared to the competing offerings. While the two–seater model was priced at Rs. 10 lakhs, the five-seater model was priced at Rs. 25 lakhs a piece. The helicopter was due to come in the market in June
1988.

The Market Demand
The company had developed annual demand projection upto 1990. Based on its assessment of market needs and competitive offerings, the company had projected an annual demand of 60 machines. The plant had a production capacity of turning out 120 helicopters per annum, As the concept of using helicopters as an 'executive transport’ was still to gain momentum, Mr. D'Souza expected an upward revision in its demand projections. It being the first private sector to manufacture choppers, he did envisage the problems of market confidence and credibility. However, he thought that the alliance with a proven US manufacturer and strict quality management could mollify market resistance. In its task of achieving the export stipulation of 75%, the company had received encouraging enquiries from several international market centres. Besides the United States, where the Company had a natural entry advantage, it had been
receiving enquiries from Thailand, Japan, Singapore, Turkey, Italy, Australia and Britain about the product and delivery.

As for the Indian component of sales, Mr. D'Souza had been trying to identify probable users for both the models. Keeping in view the features, i.e. low price, low operating cost and facility to land anywhere, he thought that the two-seater helicopter would be an ideal purchase for the police in traffic control, disaster relief, hospitals and even news coverage. Already, Delhi Doordarshan and police departments of two states had evinced their interest in the product. As for the five-seater model. Mr. D'Souza pinned hopes on company executives who needed to shuttle between factories and headquarters in different places, and other business trips.

The Concerns
During the meeting, Mr. D’Souza thought of sharing his immediate marketing concerns and a long-term perspective plan. He was aware, with his background of marketing highly technical industrial products, that such products were sold on the benefits rather than product features. Also, he felt that organizational buying behaviour posed the first major barrier to be tackled. Among other immediate concerns, he included organization of competent salesforce and promotion mix, such as, publicity and word-of mouth. He needed to test the market reaction of his pricing plan as well.

Finally, he felt that the company had to tackle some strategic questions such as:
(1) How should the chopper be positioned among the existing alternatives for the product?
(2) How could the company draw the demand from competing offerings such as light aircrafts already in market? What U.S.P. should be used?
(3) How could the company prepare itself for applying for a full–fledged license to produce choppers entirely for the Indian market? What arrangements are needed for indigenization of components?
(4) How should they approach and persuade the organizational buyers?
(5) How could it create and maintain a long-term strategic advantage in the market, which was far from developed?

As Mrs. D'Souza diverted his chain of thoughts to the alternatives, the taxi suddenly came to life and resumed its crawling in the traffic.