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ASSESSMENT CENTRE EXERCISE

BUSINESS SIMULATION
'MCCD: Managerial Competencies & Career Development'
(Term V, HRM 2016-18)

Submitted to - Submitted by
Prof. R. K. Premarajan Anagh Agarwal-H16065

Ankur Desai-H16067

Megha Asawa-H16092

Pranav Pal singh-H16093


Rajesh Ranjan Mahapatra-H16096

Shivank Vishnoi-H16105
Modifications in Business Simulation

Round 1 Relationship Building


1. Changes made in the description of the theme of business simulation(highlighted)
2. Changes made in the description of the link across all modules, since we have made strategic thinking as a
group activity (highlighted)
3. Second round of relationship building exercise has been removed due to paucity of time
4. Solution added for the relationship building case along with the ranking of the solutions possible
(highlighted)

Round 2 Analytical Thinking


5. Time limit reduced from 50 minutes to 30 minutes.
6. Quarters reduced from 4 to 2 as per the time limit
7. Based on trials, difficulty was required to be reduced.
8. Price Levels were reduced from 11 to 5
9. Advertisement levels were reduced from 4 to 2
10. Limits on Cash were removed and hence the marking evaluation is only based on cumulative profit earned
and not final cash in hand. (The decision taking did not undergo any change)
11. Wage cost is supplied directly on per unit basis and doesnt require conversion as was required before.
12. Marking Guide range was earlier created on the basis of the few answers which could have been given by
the assessees. But on trial it was found that all options have a probability of being used and not just few
options, hence a new range of lowest scoring and highest scoring answers was used and it was divided in
various parts for marking Analytical Thinking

Round 3 Strategic Thinking and Relationship Building


1. Made the strategic thinking exercise a group task where instead of individual task where group will be asked
one question at a time and they have to discuss solution along with the rationale behind their choice
2. Increased the complexity of the questions on the basis of recommendations given in trial
3. Made the exercise to test both strategic thinking and relationship building competencies
BUSINESS SIMULATION EXERCISE
COMPANY NAME: INDYSNACKS
Round 1: The participants have 10 minutes to read the material and 15 minutes to discuss.

IndySnacks is one of the well-recognized Namkeen (Traditional Indian Crisps) brands in India. Its flagship Namkeen
packet is sold in all metros and major cities of India. It was founded in 1964 by a small business man in his 15X15
shop, but in the last 50 years it has become a success story for home grown companies. Started as a family business
it has now transformed itself into sophisticated company to optimize in functioning. With over 1000 employees and
a turnover over 100 crores IndySnack is at the door step of new challenges in the market.

IndySnackss Wasseypur plant based in Eastern India is currently suffering huge losses for the past couple of years
and has the highest per unit manufacturing costs among all IndySnack plants due to excess manpower at the plant.
The company also has 2 other plants operating in the state which cater to different customer segments. The closure
of the Wasseypur plant or selling it off to prospective buyers has always been a sensitive issue, and due to pressure
from the trade unions and local government authorities, a swift decision couldnt be taken in the past. Accordingly,
the management believes that at current production costs, the plant would exhaust its cash reserves in the next 4
quarters and hence believe that closure of the factory is the best option in companys long-term interests.

Currently the plant has 120 employees, and the manpower strength required to run the plant is 75. The trade union
of this plant, IMU (IndySnacks Mazdoor Union) is highly influential as it is affiliated to NTUS (National Trade Union
Sangh), which is the trade union wing of LSP i.e. the Lok Seva Party (the political party running the State
government). Further the trade union leader is the Regional Vice President of LSP, and is highly connected with the
top political brass of the state. The NTUS plays a key role in the local assembly elections held in the state as apart
from the IMU there are other trade unions affiliated to it across the state, and closure of a factory under its watch
would lead to a loss of face of the Sangh and might jeopardise the ruling partys prospects in the upcoming state
elections. Thus, the state government is inclined to provide any type of support necessary to prevent the plants
closure as they are not willing to be blamed for the loss of jobs of so many workers under the governments watch.

The Factory head and the management staff of IndySnacks Wasseypur plant are also contemplating to put forward a
revival plan to the management as they believe that closing of the plant would be against the organizational values
of the company. Further they believe that the media hype which would be created due to the closure would be
detrimental to the companys reputation and image and will also have an impact on the consumer sentiment. They
are proposing that the direct manpower costs per unit of production be controlled though the reduction of the
manpower through the implementation of a VRS scheme and through retrenchment of non-performing workers and
those who are chronic absentees.

The board of directors have called a meeting to evaluate the options for the plant i.e. whether to proceed with the
closure or implement a revival scheme as suggested by the factory management.

As board of directors, you must collectively decide the most feasible option for plant with the consensus of the
other members (no voting is allowed).

The following facts and perspectives are provided below to help you reach a decision:

1) Perspective of the Management The company is making losses which run into crores per quarter. This is
putting a significant impact on the companys liquidity position and is also impacting the investor sentiment
and share price of the company in the stock exchange.
2) Perspective of the local factory management By the means of VRS and retrenchment of the non-
performing workers, the factory will start generating profits after a couple of quarters. VRS is a one-time
payment, and the power to reject or accept VRS applications of the employees rests with us.
3) Perspective of the Trade Union Against the closure due to reasons detailed above, however they are in
favour of implementing the VRS scheme but against the dismissal of any worker on grounds of non-
performance. They claim that the metrics used to determine performance are not objective in nature and
that it is simply a tool designed by the management to find reasons for retrenching diligent workers to
reduce the manpower.
4) Perspective of the Government- The government has promised to provide the Wasseypur plant with tax
breaks for 3 years or till the company is profitable (whichever is earlier). Also, they are contemplating to
subsidize the energy and water costs of the plant to support the revival of the company.
5) Perspective of the Workers Working at IndySnacks is not just a job, but a part of our daily lives. There are
no available factory jobs in the adjoining areas, and hence after taking VRS we have no other place to go to
work. Some employees who had taken VRS earlier a couple of years ago are now toiling as labourers in the
farm of the local Zamindar as they exhausted their VRS compensation in nefarious activities like gambling
and drinking.

Exhibit 1:

Age of the workers

0-25 25-50 >50

Exhibit 2:

Direct Manpower Costs as a percentage of total cost


60

50

40

30

20

10

0
2009 2010 2011 2012 2013 2014 2015 2016 2017
Round 2 of Business Simulation Time 25 mins.
Calculator is required.

Case
You are a factory manager (contender) and you need to take the following 2 decisions for 2 quarters:

1. How much to price the product for the quarter? (Available Options: Rs. 10, 11, 12, 13, 14 per packet)
2. Whether to spend 3.2 crores in Advertising? Yes or No?
The goal of each contender is to ensure Maximum profit for each quarter. (Profit = Sales at the Price Selected
reduced by all costs incurred)

1. Predictions of the Quarterly Demand Function (both Quarters) applicable to the individual factory follows an inverse
relationship with Price. At Rs 10, the demand is 1 Cr packets. For each rupee increase (or decrease) in price, the
demand decreases (or increases) by 10 lakh packets for the factory. Further an advertisement expenditure of 3.2
crores will lead to an increase in demand by 60% at any price level.

The implication of selecting a price level and an advertisement level is that, the demand must be necessarily
produced by the factory because the orders are pre-booked at the price.

2. For Quarter 1, Workers are paid for packets produced at the rate of 1000 Rs per 500 packets produced.

3. For Quarter 1, Input Material Required for the productions are at the rate of 1000 Rs per 200 packets.

4. In Quarter 2, worker cost remains unchanged, while input material cost reduces by 20%

5. Production will be exactly equal to demand for that quarter, hence there is no unmet demand, nor there is any
inventory carried to the next quarter.

Answers:
Quarter 1 (Price) ..
Quarter 1 (Advertisement) Yes or No .
Quarter 2 (Price) ..
Quarter 2 (Advertisement) Yes or No .
Module III

Note: This is a group activity. 10 minutes will be given for reading the case and answering the 5 questions along with
rationale (max 20 words) in the answer sheet after that individuals will be asked to submit the sheet. Now the group
will be given 5 minutes per question to come up with a collective decision in ranking options for from best to worst.
The discussion will happen for only first 3 questions.

Total time: 25 Minutes (10 + 5*3)

Challenges to the CEO

Market Scenario: Branded Crisps market is one of the fastest growing market in India. A nation which was long obsessed
with foreign packaged brands like Lehar, Uncle Chips from global giants like Pepsi and Coca Cola has recently developed
its interest in branded traditional snacks, thanks to the marketing strategies of home grown and family owned brands
like Haldiram, IndySnack etc. There are many organized and unorganized players in the market, and in the organized
sector IndySnack stands at 3rd position with 15 percent share in the category, followed by Lehar (25 percent share) and
Haldiram (30 percent share).

Lehar is backed by global beverage giant Pepsi and spends a huge amount in marketing and sales efforts. The corporate
backing behind these brands is huge and they can spend any amount in branding to protect their market share and
expand. Haldiram on the other hand is a pioneer in Indian traditional crisps market and due to innovative products and
brand image enjoys a special image among customers. IndySnack albeit of having a humble financial backing, has a loyal
segment of customers and is especially popular among urban customers, thus ranks first in this segment. More than 75
percent of the overall market is still covered by unorganized sector who do not have approval from any agency for
quality and hygiene, but with the growing standards of living and increasing hygiene awareness organized sector is
growing far more rapidly. The advantages that unorganized sector has is their reach to the customers as they are present
in almost every street in our country and sell their product at a relatively cheaper price.

Challenges: Recent ban on Maggi-a popular brand due to some issues in the ingredients has shaken the whole organized
foods market. It has also increased the expectation from the customer regarding the quality of food they eat. As
IndySnack sources raw material from various vendors so it has become a challenge to keep the quality standards
checked at all steps rightly from procuring to manufacturing and storage. Due to stringent standards of FSSAI on
companys product there has been a supply side issue and it has become hard for the company to achieve its
manufacturing targets.

Moreover, there has been a fluctuation in the prices of raw material like edible oil, spices and flour which has also posed
a challenge as there is already a price war in the industry. Due to low marketing expenditure IndySnack has not been
able to attract young buyers (Children and teenagers) which make the biggest segment of market. Recently there has
developed a trend of online selling of food items and traditional crisps market is not immune to this.

Strategy: Mr. Gyanprakash Lahoti a third generation member of the founding family along with other board members
has set an optimistic target to become market leader in the next five years. Mr. Javed Ateeb, the new CEO and MD of
the company is well aware of the impending challenges to the growth of the company. He has to come up with a plan
to achieve the target set by the board and win their confidence.

Please select the best option for the following questions and write the answer in the answer sheet along with rationale
(maximum 20 words):

1. What according to you is the biggest weakness of the company?


a. Indysnacks is not diversifying in the popular non-traditional popular snack segment which has big customer
base
b. Indysnacks has a humble financial base in comparison to the big players in the market who have huge
financial backing and marketing expenditure
c. Extremely stringent regulations put by the government on food quality and standards
d. Unreliable supply of raw material impacting the production capacity of the company and its ability to expand

2. What according to you is the biggest strength of the company?


a. Already an established and recognized brand in traditional snacks segment
b. A consistent track record of excellent quality standards of the products of the company
c. Increasing awareness among the customers about the quality and hygiene of branded food in comparison to
unbranded food
d. Large size and market share of the company which can help it to expand to untapped markets

3. What according to you will be future course of action for the CEO?
a. Expanding its product portfolio by introducing new traditional products
b. Opening company-owned retail stores to sell quality products near customer doorstep for easy accessibility
c. Development of branding and marketing strategy to tackle the untapped segment of the market and compete
with the competitors
d. Opening franchise based stores by setting up contract with local entrepreneurs

4. What according to you will be challenges for the company in upcoming 5-10 years?
a. To develop a branding and sales strategy in order to penetrate into the unoccupied market and increase the
overall market share
b. To expand into the untapped market by implementing new distribution, sales and marketing strategy
c. To ensure un-interrupted supply of raw material to meet production level targets so that the company can
expand in near future
d. To increase production capacity in order to capture more market share

5. Suppose due a food poisoning incident, Govt. has imposed strict regulations on food quality and standards, and is
taking actions against many sellers, what according to you would be the best course for the company?
a. Capturing market share by opening company owned stores at places where company has negligible presence
b. To device an awareness program in order to sensitize public about the ill-effects of low quality food on health
and at the same time highlight the quality of IndySnack
c. A complete reassessment of the production process of the company to look into food quality issues, if any
d. Setting up franchise based stores in areas where unorganized shops are present