Principal & Practice of Management

INDIAN SCHOOL OF MANAGEMENT AND STUDIES

Sub: Principal & Practice of Management Max Marks: 100

Masters Program in Business Administration (MBA)

Note :- Solve any 4 case study

All case carries equal marks

1



CASE I

NAVEEN FISHERIES LTD.

The managing director of Naveen Fisheries Ltd. (NFL) received a message from one of

the members of the crew that their mechanized boats had sunk at sea off Paradeep Port Trust

due to unfavorable weather. The other directors of NFL ascertained the detailed information

regarding the incident. All the promoters were fresh graduates.

Naveem, Praveen, Nagain, Ravi and Chandra were the promoters of the organization

(NFL at Vishakhapattanam) with a capital contribution of Rs. 25 lakh each. Three of them had

an engineering background. The other two were commerce graduates. They had thought of

designing the vessels themselves so that the cost each mechanized boat would be reduced

from Rs. 30 lakhs (if they bought them) to Rs. 22 Lakh. They designed three boats and these

were sent out with a newly – appointed crew. Two vessels were sent to Paradeep and the third

to Kakinada. Unfortunately, the weather was unfavourable. All the vessels sank. The crew also

did not have experience. Two workers were injured and the rest arrived sagely. There was

significant damage to the vessels and the residue was considered scrap. The cost of scrap of

the vessels was nominal. As their working capital was scarce, and they were unable to invest

more capital, they were in a dilemma whether to continue the business or not.

Case I Questions:

1. What were the reasons for the sinking of the vessels?

2. How could they reorganize the businesses?

2



CASE II

MNC CORPORATION

At MNC Corporation, a foreman of inspection noticed a mistake in the assembly of transmitter

cases. The foreman, a shy man when speaking to his immediate superiors, mentioned this

matter to the senior supervisor in a weak, ineffectual manner. The senior supervisor nodded

his head and continued to work on a report that he was writing. Later, a production slowdown

occurred, and it was discovered that this flaw in the transmitter was the cause. The chief of

production engineering, upset because this error had passed inspection unnoticed, reproved

the senior supervisor in a brusque manner.

The senior supervisor called in the foreman of inspection and asked why this error had not

been brought to his attention. The foreman said, “I told you the other day they were missing

same of the punch-outs in those transmitter cases.” The senior supervisor said, “Yes, but you

did not pound the desk when you told me!”

Case II Questions:

1. Why did the communication problem arise?

2. What do you suggest to prevent the communication problem?

3



CASE III

MEHTA BANK LTD

Venkataraman was an officer in a leading nationalized bank with years of service to his

credit. During his long period of service, he worked in different capacities and sections. His

attitude and behavior made him a trusted in the organization. Having been posted in a big

branch based in a large city, he was not keen on getting further promotions.

On one occasion, when he was working as an incharge of the draft issue section, he issued

bundles of drawing books from the main stock of the security forms of the branch and kept

the same in his custody in an almirah provided to him. One fine morning, he removed

three drawing books out of the stock of books valued below Rs. 10,000 which he had in his

own custody and kept them in his house. He then started issuing drafts in various names

form his house out of the aforesaid stolen drawing books by allotting correct branch serial

numbers obtained from the branch register under his control. The drafts were deposited in

different banks/branches of the same bank in different accouns opened in the names of the

payees of the drafts. These accounts were introduced by the bank employees, and some of

them were in different representations only, like Mr. Venkataraman Aiyar, Mr

Venkataraman Iyengar, etc. The drafts thus deposited were presented in clearing and were

passed in the normal course without any doubt or suspicion. In the evening, he would visit

the concerned drawee offices and collect such paid drafts.

Having found this technique successful, he tried his hand at yet another. This time he

started issuing drafts in fictitious names or in the names of his close relatives drawn on

outstations without any vouchers or deposits. After a few days, he would cancel the same

drafts by allowing the credits to the respective accounts in his own branch by debiting the

head office accounts. He continued to do this for about three months, causing a loss of

over Rs. 700,000 to the bank.

The fraud came to light thanks to the presence of mind exercised by on e of the officers at

another local office. He found that on the previous day also, he had paid a similar draft

with the leaf number previous to the draft presented now. In his view, it was not possible

for such a big office to avoid consumption of draft leaved in this fashion. Consequently, the

matter was taken up with the issuing branch. Unfortunately for Venkataraman, someone

else was working as the incharge of the draft issue section on that day. On checking up the

records, it transpired that no such draft was issued. This led to promt investigations and

detection of the whole fraud committed by Venkataraman.

Case III Questions:

4


Sub: Principal & Practice of Management Max Marks: 1001. How do you view the present fraud case: a human failure or a system failure?

2. What are the main issues in the case, and how can our present system of

control prevent such fraud?

3. How would you manage the situation on detection?

5



CASE IV

SHAHID FABRICS

Mr. Lateef, Chairman of Shahid Fabrics, a Hyderabad-based garments and piece goods firm

which exported all its products to the USA, faced a decision in August 1985. The US

government had imposed quota restrictions which reduced the exports of his firm by 40

percent. He had to find a new market for his products.

Shahid Fabrics was one of Pakistan’s major exporters of garments and piece goods. Its

share was 25 percent of the exports of these goods of the whole country. It was

established in 1954 as a producer of cotton cloth and later, in 1966, it extended production

to include garments and piece goods. It had eight local production units and the total

number of employees was 8,000. All its garments and piece goods were exported, and

branded according to customer specification. All the goods were exported to the USA and

the sales of the firm amounted to US$ 100 million. In 1984, the US government imposed

quota restrictions. By August 1985, Shahid Fabrics exports had been reduced by 40

percent.

Mr. Lateef believed that finding new markets was the only way to survive. The possible

alternatives according to him were the EEC countries, the USSR, the Middle Eastern Arab

countries and the other Asian countries. The EEC was a very good potential market, but

Europeans were very tough buyers. It would be necessary to segregate the EEC from other

buyers because of their existing specifications with regard to style, colour and packing.

The USSR too was a potential market as far as demand was concerned, but the country did

not have enough money in foreign exchange.

The Middle Eastern Arab countries had money, but their requirements were small due to

their smaller population. Second, these countries preferred not to buy Pakistani goods

directly from Pakistan$. They would rather like to buy the same Pakistani goods, branded

differently from other Western countries, say France.

Asia was a big market, but the Asian countries, including turkey, were Shahid Fabrics’

competition in the international market. Mr. Lateef was deeply concerned with the loss of

40 percent of his export goods. He was eager to determine which new market offered the

highest potential. He wondered what specific information he could use to help his decision.

Case IV Questions:

6


Sub: Principal & Practice of Management Max Marks: 1001. What information should Mr. Lateef develop to evaluate foreign markets?

2. Where should he look for this information?

3. Develop a framework to help Mr. Lateef identify his best potential foreign

markets.

7



CASE V

WESTWARD EXPORTS LTD.

Mr. Abdul Ahmed, Production Manger, Westward Exports Ltd, Karachi, faced a decision

in 1984. the rejection rate of their exports of readymade garments was 20 percent of total

production. He also felt that their productivity was not as high as it might have been.

Westward Exports Ltd. was a large Pakistani company exporting ladies fashion

garments made of pure cotton. Their main product items were blouses, skirts, dresses, shirts,

pants, etc. their main overseas markets were the USA, Europe and Japan, and production was

Rs. 100 million. They had about 2,000 workers engaged in production through their various

subcontractors.

Production was carried out by 138 subcontractors. They did not utilize assembly line

production: each individual worker carried out all the jobs required on each garment. The

machinery and equipment used by the machines had a low output, and were not suited to high

technology application. Mr. Abdul knew that male workers performed 60 percent of the total

production and the rest was done by females. He also knew that while male workers were

always willing to work overtime, their absentee rate was greater than that of women. Abdul

felt that productivity could be higher, and he wondered how he should approach this issue.

The company purchased raw material (grey cloth) from several sources and had it

dyed by different concerns, which sometimes caused variation in the colors. Both dyeing and

inferior stitching caused the rejection rate, to rise to 20 percent of their total production. Mr.

Abdul was worried about this high rate of rejection, and wondered what sequence of steps he

should take to help reduce this high rejection rate.

Case V Questions:

1. What alternatives are available to Mr Abdul?

2. Other than purchasing higher technology machinery, in what ways might

Mr Abdul increase the effectiveness and efficiency of the dyeing and

stitching operations?

8



CASE VI

BABA BEARINGS COMPANY

The quality circle Sigma was started in the heat treatment section of Baba Bearings Company

with seven members.

The members prepared the following list of various factors affecting the productivity of the

heat treatment section.

1. Distortion of bearing races in sealed quench furnaces.

2. Loss of productivity and energy in sealed quench furnaces.

3. Excess consumption of LPG.

4. Rejection of cages due to scaling during annealing.

5. Shrinkage in tapered roller bearing outer rings.

6. Broadly, bearing are manufactured in the following three stages: (a) Turning, (b) Heat

Treatment, and (c) Grinding.

The circle members, in their brainstorming session, gave priorities to the study aspects with

the help of Pareto analysis. Distortion of bearing races in sealed quench furnaces was a major

factor affecting the productivity. Hence, the circle decided to take this up for study. Turned

rings in the soft condition are hardened and tempered. After heat treatment, it was noted that

about 30 percent of the rings were beyond the specified limits of distortion (ovality). These

rings were subject to straining for rectification.

Straining is a laborious process involving extra manpower and time. It affected schedules and

deliveries to customers. The cause and effect diagram was employed for analysis, and the

following causes identified:

Design of heating elements

Mesh baskets distortion

The members collected data regarding the heating element. Rings are loaded into the furnace

keeping in a mesh basket in layers. The rings are heated by corrtherm heating elements; the

heat is made to circulate uniformly throughout the furnace by a circulating fan. After the

hardening process, it was observed that in general, the rings arranged at the sides of the

basket adjacent to the heating elements showed greater ovality (50 per cent) than those at

the centre (17 percent).

The members felt that rings at the sides were directly exposed to the radiant heat of the

elements, and this resulted in a temperature gradient within the cross-section of the rings,

causing more distortion. The temperature adjacent to the heating elements was higher by 26

degree Celsius than at the centre of the furnace.

9



Case VI Questions:

1. What are the measures to be taken to avoid direct effect of heat?

2. Design a quality improvement process for the bearings company.

10

Documents

Principal & Practice of Management