Seagram India

Y. Malini Reddy

Seagram, India’s largest multinational player in the spirits business, had been operating across the entire wine and spirits spectrum in India since 1995. It had generated consumer pull through effective advertising. With India’s entry into the World Trade Organization in 2001, the decision to open up the sector for imports and the subsequent restructuring in 2002-03 led to intensification of competition in the industry. This battle at the marketplace was further fueled by the anticipation of a steep fall in sales due to the ban on liquor advertising.

In November 2004, Seagram India was revisiting its marketing communications plans. With the aim of achieving greater market presence, it was developing its marketing communications strategy to achieve differentiation and competitive edge in the market. The company was exploring the emphasis on sales promotion rather than advertising to achieve that end.

Federal Express: Expansion Strategies for the China Market

Sherriff T K Luk & Ivy S N Chen

China’s expanding trade has fuelled the increase in demand for express services. The government was expected to open the industry fully to foreign players by end 2005.  Foreign express firms planning to enter or expand in this fast growing market would face a number of challenges – an underdeveloped and disparate transportation infrastructure, complicated and unclear customs procedures, protectionism by local government, and tight business control and bureaucracy.  Federal Express initially used a local pick-up and delivery agent to serve the China market.  Dissatisfied with its low market share after years of operating in China and convinced that the market would grow rapidly after the country’s accession to the WTO, the senior management at FedEx decided to re-examine their long-term marketing strategy in China.  The case examines the air express business in China and FedEx’s alternatives for expansion. 

Sainand Beedis

Sanal Kumar Velayudhan

Sainand beedis was a small business that produced and sold beedis, which was a leaf wrapped tobacco product used for smoking. Sainand Beedis served parts of a district in the southern state of Andhra Pradesh in India. The competition for the firm was from strong regional brands. The firm offered lower priced beedis compared to the large regional brands.  The quality of Sainand Beedis was similar to the quality of the competing regional brand. The firm provided superior service to channel members and also gave a higher trade commission. The result was a dominant position in the market it served. Its effort at geographical expansion to neighboring areas was affected by the difficulty in recruiting wholesalers.  The competitor’s distributor exerted its influence on the wholesalers in these new markets to prevent them from stocking Sainand Beedis. The inability to recruit wholesalers and the inability to service retailers directly hampered its growth plan. The large geographical spread of the semi-urban and rural markets intensified the distribution problem.. The loyalty of the small town and rural consumer to existing brands was another important issue that hindered its growth.

Timing, Trust and Transparency: Wage Restructuring at Glaxosmithkline

Nitin Pangarkar and Chung Yuen Kay

The economic ups and downs since the eruption of the Asian crisis in 1997 have prompted a wave of restructurings and job losses in Singapore and several other Asian countries. As a response, policy-makers in the Singapore government have urged companies to undertake wage reforms and to adopt more flexible wages. The wage restructuring exercise undertaken by the Singapore office of Glaxo Smithkline, one of the largest pharmaceutical companies in the world, in 2002 is studied in this case. Since the merger of Glaxo Welcome and SmithKline Beecham two years earlier, there had been consolidation with the less efficient plants in the system closing down. Although the Singapore plants were performing well, the impetus to restructure wages came primarily from a more competitive internal and external environment. Management believed that the introduction of Performance Bonus (PB) would lead to improved metrics and was essential for the company to compete in the changed environment. While the Union leadership was in broad agreement that the plant needed to remain competitive, it had some initial misgivings about the proposals put forth by management. This case charts the process of the wage restructuring exercise, illustrating some of the challenges that companies may face in implementing wage restructuring initiatives.  We also examine the impact of different factors, as well as the process of implementation, on the success of such initiatives.

Mindset Challenges at Aluminum India Limited: Privatization of a State Owned Enterprise

Anjula Gurtoo

The Central Government of India sold 49% equity and gave management control of Aluminum India Limited (AIL), an aluminum manufacturing state-owned enterprise (SOE), to the AlBright  Group in 2002, as a move to attract capital investments for AIL and make its operations financially viable. When Noorani, Chairperson of AlBright – a private company – took over AIL, she had to deal with a 30-year old manufacturing plant, an aged workforce, decreasing market share, and a 57-day employee strike against the sale of AIL shares to a private company. Together with a new management team, Noorani undertook some measures and was contemplating on others to transform AIL into a market-driven organization. She was facing high employee resistance.  At this juncture Noorani was pondering on what to do next. She was concerned about the possibility of transforming AIL and proceeding with the expansion plans on schedule.

Pepsi's 'Painful Marriage' in Sichuan

Liu Shengjun

Pepsi had been competing strongly against Coke throughout the world. In 1993, to gain an upper hand in a new market, Pepsi established a bottling plant in cooperation with the local government in Sichuan, an inland province of China. Sichuan Pepsi’s business was a big success. The troubles, however, soon started. Sichuan Pepsi refused to follow the policy of allocating separate sales areas for each bottler. It compelled Pepsi China to reduce the price of the concentrate and was eager to produce beverages with new brands to compete with Pepsi. Investigations showed that the management of Sichuan Pepsi took many actions which went against its agreement with Pepsi. The company had transformed from a state-owned enterprise to a company controlled by individuals who formed the top management of Sichuan Pepsi. Both the local government and Pepsi China had lost control of this new cooperative. This case illustrates a special kind of risk in joint ventures in transitional economies: the privatization of the local enterprise partner through some form of management buyout. This risk is further complicated by the changing relationship between the government and enterprises in China, the guanxi-dominated institutional environment and continuous economic reform characterized by 'crossing the river by feeling each stone' which refers to Deng Xiaoping's policy of moving ahead with economic reforms slowly and pragmatically. In order to succeed in such an environment, a firm must be prepared to face the 'crouching tiger, hidden dragon'.

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