Human Resource Management

Case Study on

 Big Limited

Submitted To:

Mr. Mohammad Mosharraf Hossain

Lecturer

Department of B.B.A

Dhaka City College

Submitted By:

Chandra Chakma

ID No: 06  Section: A

B.B.A 10th Batch

Submission Date:

22nd December, 2011

Case on Big Ltd.

The Managing Director of Big Ltd. called an internal meeting of senior managers to discuss issues involved in acquiring Small Ltd. for about TK. 350 crores. He started the meeting with following observations:

‘After acquiring small, we will become the second largest consumer goods company in Bangladesh with sales of over TK. 4500 crores. We will have more money for marketing initiatives, product launches and aggressive price-cuts. The key reason behind buying Small is to create shareholder value over and above that of the sum of the two companies. The merged company hopes to gain a greater market share and achieve greater efficiency.’

Different issues were discussed between the managers. Pertinent points that were raised were s follows:

Head Production. ‘Although, I am involved little, till now, in the discussion regarding the acquisition, I have closely studied various production facilities available to both the companies. I feel production facilities of both the companies need to be synergized. There is also need to close down production facilities of two locations out of seven locations of Small. The costs of production of these locations are very high and also they are located in center of Bangladesh, whereas our major sales are in south and west.

Head Marketing. We need to analyze it further. The market of the products is in mature phase with low growth rate. Small Ltd. has little presence in some regions and is not a major competitor for us. Further, there is marginal gap between our existing third position and second position. We can easily achieve second position if we are able to fully utilize our capacities.

Question a) In a low growth product what are the different options available to a company.

Answer: In case of a low growth product there are some options available to a company. These are as follows:

A FRAMEWORK TO ASSESS ALTERNATIVE LOW GROWTH OPTIONS OF MATURITY PRODUCT

The framework assesses alternative low growth options in maturity level as follows:

The rate of sales growth will slow, and the product will enter a stage of relative maturity. This stage normally lasts longer than the previous stages, and poses formidable challenges to marketing management.

The maturity stage divides into 3 phrases: growth, stable, and decaying maturity. In the first phase, the sales growth rate starts to decline. There are no new distribution channels to fill. In the second phase, sales flatten on a per capita basis because of market saturation. Most potential consumers have tried the product, and future sales are governed by population growth and replacement demand. In the third phase, decaying maturity, the absolute level of sales starts to decline, and customers begin switching to other products.

• Market Modification:

The company might try to expand the market for its mature brand by working with the two factors that make up sales volume:

Volume= Number of Brand Users* Usage Rate per User

It can try to expand the number of brand users by

1. Converting nonusers
2. Entering new market segments
3. Winning competitors’ customers

          Volume can also be increased by convincing current users to increase their brand usage.

1. Use the product on more occasions
2. Use more of the product
3. Use the product in new ways

• Product Modification: Managers also try to stimulate sales by modifying the product’s characteristics through quality improvement, feature improvement, or style improvement.

1. Quality improvement aims at increasing the product’s functional performance
2. Feature improvement aims at adding new features that expand the product’s versatility, safety, or convenience
3. Style improvement

• Marketing-Mix Modification: Product managers might also try to stimulate sales by modifying other marketing-mix elements. They should ask the following questions:

1. Prices: Would a price cut attract new buyers? If so, should the list price be lowered or should prices be lowered through price specials, volume or early- purchase discounts, freight cost absorption or easier credit terms? Or would it be better to raise the price to signal higher quality?
2. Distribution: Can the company obtain more product support and display in existing outlets? Can more outlets be penetrated? Can the company introduce the product into new distribution channels?
3. Advertising: Should advertising expenditures be increased? Should the message or copy be changed? Should the media mix be changed? Should the timing, frequency, or size of ads be changed?
4. Sales promotion: Should the company step up sales promotion- trade deals, cents-off coupons, rebates, warranties, gifts, and contests?
5. Personnel selling: Should the number or quality of salespeople be increased? Should the basis for sales force specialization be changed? Should sales territories be revised? Should sales force incentives be revised? Can sales-call planning be improved?
6. Services: Can the company speed up delivery? Can it extend more technical assistance to customers? Can it extend more credit?

Question b) If you are appointed as a consulted, advise the Big Ltd. how to proceed before arriving at decision to acquire any company.

Answer: If I am appointed as a consultant then I would be advised the Big Ltd. how to proceed before arriving at decision to acquire any company. The decision would be take place on the basis of following conditions: