University Of Pune Question Paper
M.M.S./M.B.S. (Semester – I) Examination, 2012
102 : BUSINESS POLICY AND STRATEGIC MANAGEMENT
(2008 Pattern)
Time : 3 Hours Max. Marks : 70
Instructions : 1) Questions No. 7 is compulsory.
2) Attempt any four questions from question No. 1 to 6.
3) All questions carry equal marks.
1. What do you understand by Resource Allocation ? Explain its role in formulation
of business strategy. 14
2. What are the strategic options for firms operating in mature and declining
industries ? Discuss with the help of relevant examples. 14
3. Discuss the following in detail : 14
a) Cooperation strategies.
b) Outsourcing strategies.
4. Explain Porter’s five forces model of industry analysis of composition. 14
5. Why is strategy evaluation and control important to organizations ? Explain with
suitable examples. 14
6. Write short notes on any two : 14
a) Value chain.
b) Internet strategies for traditional business.
c) ETOP.
d) Stakeholders in business and their role in strategy formulation.
7. Case Study : 14
Note : Systematic approach, critical analysis of the case, identification of the
issues involved, solutions to problems with logical reasoning will carry
more weightage.
Indian Leather Goods Exports
Leather and leather goods are one of the largest export categories in India.
Although there has been a significant increase in the export of this product group,
India’s performance has been poor in comparison with late comers like China
and South Korea. India’s share of world exports of leather and leather goods fell
from about 9 per cent in the early 1970s to about 3 per cent in the early 1990s.
The Indian leather industry is considered as one with large export potential.
Large raw material base, processing facilities and availability of cheap and skilled
labour were India’s strengths. According to a study by the Indo-German Export
Promotion Project (IGEP) India has the basic strength of material and human
resources which it must harness to forge ahead.
The Indian leather industry which employs about 15 lakh people is dominated by
small family units many of which have been in this business for generations. The
reservation of leather manufacturing for the small scale sector and the licensing
policy discouraged the entry of large units in the industry. Leather industry
continued under licensing, untouched by the economic liberalisation of 1991.
However, of late the market witnessed the entry of big players like Liberty,
Phoenix, Lakhani and Aero. Large houses like Hindustan Lever, L&T and Tata
have also been in the leather business. Most Indian manufacturers import finished
leather from abroad to execute export orders. In fact, many of them merely
execute contracts using the buyer’s leather in the buyer’s colours as per the
buyer’s designs with the buyer’s trimmings.
An interesting development has been that a number of Indian firms who were
primarily in the export business has recently turned to the domestic market due
to various reasons. In case of Aero it was the collapse of the Soviet Union and
the resultant substantial excess capacity with its export oriented unit that provoked
it to turn to the booming domestic market and to new markets in Europe. The
development of the Indian market, as evinced by the total market expansion and
emergence of considerable demand for premium and fashionable products and
fierce competition in the international market from China, Malayasia, Thailand
and S. Korea which combined high labour productivity with low cost inputs have
promoted many firms to pay due attention to the domestic market. The list of
such firms include Liberty, Wasan Shoes, Mideast India (which markets the
Mescos brand) Hidesign, and R.Y. Gaitonde and Co.
Another interesting development is that several foreign firms have manufacturing
marketing tie-ups with Indian firms. Some Indian firms have such tie-ups with
more than one foreign firm. Phoenix which has its own brands in the market
manufactures for Reebok.
Reebok has manufacturing contracts with Lotus Bawa and Lakhani which also
manufactures shoes for Adidas which is an arch rival of Reebok.
In fact, due to high production costs in the developing countries, firms in those
countries have been moving to low cost production bases. Their earlier choices
were Korea and Taiwan. Recently they have moved to countries like Vietnam,
China and India.
One of the major hurdles in increasing India’s exports is the shortage of raw
materials. To get a 10 per cent share in the world market India will need
4.8 million sq. feet of raw leather against the availability of 3.5 million sq. feet.
One of the immediate problems to be addressed is to reduce the wastage of
hides and skin, the loss on account of which is estimated to be about
Rs. 660 crore annually.
The leather technology mission, launched in 1995, had an uphill task in this
respect. Over 1500 tanneries had to be modernised.
Government decided to establish a Leather Industry Development Fund (LIDF)
through a development fee to be raised in lieu of the export duty abolished in the
1994–1996 Union Budget.
Pollution is a serious problem of the leather industry. Use of certain chemicals/
dyes which are not acceptable in foreign markets will have to be stopped. The
LIDF should help ensure compliance with international demand for eco-label for
leather and leather products. A new trend in leather manufacture in the developed
countries is the use of computers for the simplification of existing machinery in
the leather manufacture. Already micro-electronics is being applied to certain
process of leather goods manufacture. The scale of operation and resources of
the Indian units again pose a problem in respect of such modernisations. Further,
if and when these electronic and computer controlled manchinery are introduced
in the Third World countries, the cost differential will be less because operations
will be less labour intensive.
Germany emerged as the biggest importer of leather goods in the EC with over
one-third of its sales of footwear being accounted for by goods of Indian origin.
Other major markets are UK, France, USA, Italy, Japan and the CIS. Demand in
Asia is growing.
-3- [4279] – 102
One of the important problems which Indian exporters encounter is the unfavourable
consumer attitude towards Indian products.
According to a former President of the Council for Leather Exports, leather goods
exports from India face a highly biased international market. At a Paris fair he
had himself exhibited goods that could not be bid for more than $ 85. But, changing
the site of exhibition to a German stall, he could market the same for $125.
Similarly, a jacket that could not be sold for 125 French Francs was accepted for
900 Francs, just because it was carrying a different brand name.
Italian goods enjoy a good reputation in the Western markets. Italian leather
goods manufacturers enjoy the benefit of easy availability at low price of the
chemicals needed for manufacture of leather goods. Compared to the situation in
Italy, though Indian labour is cheap, Indian machinery and chemicals are not up
to the mark.
An interesting fact is that, Italy, which is an important supplier of leather goods in
the Western market, is one of the most important importers of leather items from
India. Indian leather goods imported to Italy are stamped by Italian firms and
re-exported to other countries without any further finish or packing. The reexported
goods fetch a better price.
What is worse is that foreign markers buy inferior grade leather from India and
finish these for high priced items. Indian manufactures are still unable to utilise
such leather to their advantage. This is exactly the opposite in Holland or Italy
where inferior grade leather is used in a big way.
Questions :
1) Discuss the strengths and weaknesses of the Indian leather industry vis-a-vis the
international market for leather goods.
2) Discuss the role of the Government, Council for Leather Exports (CLE) and the
industry in the healthy development of the Indian leather industry.
3) Discuss the marketing, including branding, pricing, distribution and promotion,
strategies appropriate for Indian leather goods in the international market.
4) What can the OLE do to improve the image of the Indian leather goods ?
5) How will the expansion of the domestic market help the Indian leather goods
exporters ?
6) What are the possible benefits to the Indian firms from the tie-up with the foreign
firms ?
M.M.S./M.B.S. (Semester – I) Examination, 2012
102 : BUSINESS POLICY AND STRATEGIC MANAGEMENT
(2008 Pattern)
Time : 3 Hours Max. Marks : 70
Instructions : 1) Questions No. 7 is compulsory.
2) Attempt any four questions from question No. 1 to 6.
3) All questions carry equal marks.
1. What do you understand by Resource Allocation ? Explain its role in formulation
of business strategy. 14
2. What are the strategic options for firms operating in mature and declining
industries ? Discuss with the help of relevant examples. 14
3. Discuss the following in detail : 14
a) Cooperation strategies.
b) Outsourcing strategies.
4. Explain Porter’s five forces model of industry analysis of composition. 14
5. Why is strategy evaluation and control important to organizations ? Explain with
suitable examples. 14
6. Write short notes on any two : 14
a) Value chain.
b) Internet strategies for traditional business.
c) ETOP.
d) Stakeholders in business and their role in strategy formulation.
7. Case Study : 14
Note : Systematic approach, critical analysis of the case, identification of the
issues involved, solutions to problems with logical reasoning will carry
more weightage.
Indian Leather Goods Exports
Leather and leather goods are one of the largest export categories in India.
Although there has been a significant increase in the export of this product group,
India’s performance has been poor in comparison with late comers like China
and South Korea. India’s share of world exports of leather and leather goods fell
from about 9 per cent in the early 1970s to about 3 per cent in the early 1990s.
The Indian leather industry is considered as one with large export potential.
Large raw material base, processing facilities and availability of cheap and skilled
labour were India’s strengths. According to a study by the Indo-German Export
Promotion Project (IGEP) India has the basic strength of material and human
resources which it must harness to forge ahead.
The Indian leather industry which employs about 15 lakh people is dominated by
small family units many of which have been in this business for generations. The
reservation of leather manufacturing for the small scale sector and the licensing
policy discouraged the entry of large units in the industry. Leather industry
continued under licensing, untouched by the economic liberalisation of 1991.
However, of late the market witnessed the entry of big players like Liberty,
Phoenix, Lakhani and Aero. Large houses like Hindustan Lever, L&T and Tata
have also been in the leather business. Most Indian manufacturers import finished
leather from abroad to execute export orders. In fact, many of them merely
execute contracts using the buyer’s leather in the buyer’s colours as per the
buyer’s designs with the buyer’s trimmings.
An interesting development has been that a number of Indian firms who were
primarily in the export business has recently turned to the domestic market due
to various reasons. In case of Aero it was the collapse of the Soviet Union and
the resultant substantial excess capacity with its export oriented unit that provoked
it to turn to the booming domestic market and to new markets in Europe. The
development of the Indian market, as evinced by the total market expansion and
emergence of considerable demand for premium and fashionable products and
fierce competition in the international market from China, Malayasia, Thailand
and S. Korea which combined high labour productivity with low cost inputs have
promoted many firms to pay due attention to the domestic market. The list of
such firms include Liberty, Wasan Shoes, Mideast India (which markets the
Mescos brand) Hidesign, and R.Y. Gaitonde and Co.
Another interesting development is that several foreign firms have manufacturing
marketing tie-ups with Indian firms. Some Indian firms have such tie-ups with
more than one foreign firm. Phoenix which has its own brands in the market
manufactures for Reebok.
Reebok has manufacturing contracts with Lotus Bawa and Lakhani which also
manufactures shoes for Adidas which is an arch rival of Reebok.
In fact, due to high production costs in the developing countries, firms in those
countries have been moving to low cost production bases. Their earlier choices
were Korea and Taiwan. Recently they have moved to countries like Vietnam,
China and India.
One of the major hurdles in increasing India’s exports is the shortage of raw
materials. To get a 10 per cent share in the world market India will need
4.8 million sq. feet of raw leather against the availability of 3.5 million sq. feet.
One of the immediate problems to be addressed is to reduce the wastage of
hides and skin, the loss on account of which is estimated to be about
Rs. 660 crore annually.
The leather technology mission, launched in 1995, had an uphill task in this
respect. Over 1500 tanneries had to be modernised.
Government decided to establish a Leather Industry Development Fund (LIDF)
through a development fee to be raised in lieu of the export duty abolished in the
1994–1996 Union Budget.
Pollution is a serious problem of the leather industry. Use of certain chemicals/
dyes which are not acceptable in foreign markets will have to be stopped. The
LIDF should help ensure compliance with international demand for eco-label for
leather and leather products. A new trend in leather manufacture in the developed
countries is the use of computers for the simplification of existing machinery in
the leather manufacture. Already micro-electronics is being applied to certain
process of leather goods manufacture. The scale of operation and resources of
the Indian units again pose a problem in respect of such modernisations. Further,
if and when these electronic and computer controlled manchinery are introduced
in the Third World countries, the cost differential will be less because operations
will be less labour intensive.
Germany emerged as the biggest importer of leather goods in the EC with over
one-third of its sales of footwear being accounted for by goods of Indian origin.
Other major markets are UK, France, USA, Italy, Japan and the CIS. Demand in
Asia is growing.
-3- [4279] – 102
One of the important problems which Indian exporters encounter is the unfavourable
consumer attitude towards Indian products.
According to a former President of the Council for Leather Exports, leather goods
exports from India face a highly biased international market. At a Paris fair he
had himself exhibited goods that could not be bid for more than $ 85. But, changing
the site of exhibition to a German stall, he could market the same for $125.
Similarly, a jacket that could not be sold for 125 French Francs was accepted for
900 Francs, just because it was carrying a different brand name.
Italian goods enjoy a good reputation in the Western markets. Italian leather
goods manufacturers enjoy the benefit of easy availability at low price of the
chemicals needed for manufacture of leather goods. Compared to the situation in
Italy, though Indian labour is cheap, Indian machinery and chemicals are not up
to the mark.
An interesting fact is that, Italy, which is an important supplier of leather goods in
the Western market, is one of the most important importers of leather items from
India. Indian leather goods imported to Italy are stamped by Italian firms and
re-exported to other countries without any further finish or packing. The reexported
goods fetch a better price.
What is worse is that foreign markers buy inferior grade leather from India and
finish these for high priced items. Indian manufactures are still unable to utilise
such leather to their advantage. This is exactly the opposite in Holland or Italy
where inferior grade leather is used in a big way.
Questions :
1) Discuss the strengths and weaknesses of the Indian leather industry vis-a-vis the
international market for leather goods.
2) Discuss the role of the Government, Council for Leather Exports (CLE) and the
industry in the healthy development of the Indian leather industry.
3) Discuss the marketing, including branding, pricing, distribution and promotion,
strategies appropriate for Indian leather goods in the international market.
4) What can the OLE do to improve the image of the Indian leather goods ?
5) How will the expansion of the domestic market help the Indian leather goods
exporters ?
6) What are the possible benefits to the Indian firms from the tie-up with the foreign
firms ?
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