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Managerial Economics – Case Studies

What is the objective of Dabber? Is it profit minimization or growth minimization? Discuss. Answer : The objective is to “significantly accelerate profitable growth by providing comfort to others”. It is growth minimization because for achieving this objective Dabber aims to: Focus on growing core brands across categories, reaching out to new geographies, within and outside India, and improve operational efficiencies by leveraging technology. Ђ Be the preferred company to meet the health and personal rooming needs of target consumers with safe, efficacious, natural solutions by synthesizing deep knowledge of arrived and herbs with modern science. Bea professionally managed employer of choice, attracting, developing and retaining quality personnel. Be responsible citizens with a commitment to environmental protection. Provide superior returns, relative to our peer group, to our shareholders. 2. Do you think the growth of Dabber from a small pharmacy to a large multinational company is an indicator of the advantages of Joint stock company against proprietorship form?

Elaborate. Answer: While opting company form of business, the entrepreneur should clearly gone through the distinction between company with partnership form of business. The next step arises a regard to why to go for company form of business. [ The following points depicts

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the advantageous points of this form of business. Advantages of Joint Stock Company: (1) Huge resources: A company can raise large amount of resources from the genera public by issuing shares. Since, there is no maximum limit of the number of shareholders ii case of public company, fresh shares can be issued to meet the financial requirement.

Capita can also be obtained by issuing debentures and accepting public deposits. (2) Limited liability: The liability of the shareholders is limited to the extent of the face value of the shares held by them or guarantee given by them. The shareholders are not liable personally for the payment of debt of the company. Thus, limited liability encourages the investors to put their money in the shares of the company. (3) Transferability of shares: The shares of the public company are transferable without any restriction.

A shareholder Managerial Economics – Case Studies By Vienna noncreative and cautious investors are also attracted to invest in the shares of public company. This brings liquidity to the investors. (4) Stability of existence: A Joint stock company enjoys perpetual succession. It continues for a long period of time because it is unaffected by the death, insolvency of the shareholders directors. Change of ownership and management also does not affect the continuity of the business. (5) Efficient management: A company can hire the services of professional manager for its functional areas because of its financial strength.

The directors who kook after the management of the company are generally experienced and persons of business acumen Therefore, the management of a company is sure to be efficient. (6) Scope for expansion: A company can generate huge financial resources by issuing shares and debentures to finance new projects. Companies also transfer a portion of their profit to reserve which can be utilized for future expansion. ] I I Questions I I Try to identify various stages of growth of IT industry on basis of information given in the case and present a scenario for the future.

I Answer : The Indian IT industry has been the great success story of Indian’s aberration. Starting with an export of around $100 million and 1 15000 employees at the beginning of the sass, it has grown to exports of $70 billion and 2. 8 million employees today, and a globally dominating I Lindquist too. It has transformed India, created pride in being Indian and given the much needed respect to our passport globally. Including I I business in India, the industry has crossed $100 billion in revenues with over 3. 5 million employees, amongst the top 2 industries in India I Today.

I After such a fantastic run the industry is facing new challenges, raising questions bout its future. For us to understand the current state’s I Lethe industry and its challenges it is important to understand its various phases of growth so far. I I The industry has gone through two distinct phases and is entering the third phase of growth. It has succeeded in overcoming many challenges along Lethe way and has created five of the top 10 global leaders in software services. I I The ass were the decade of unprecedented growth.

Spending on IT in the US grew from 3% of GAP in the early sass to 9% by 2000, creating great I Value and demand and an acute shortage of talent. India became the country of choice, pioneering the offshore delivery model, revolutionaries I Service delivery. The YAK phenomenon further accelerated growth. This was the opportunistic growth phase topped by the Internet boom. Capital I I poured into Silicon Valley and analysts predicted the start of a new era of point and click, predicting the death of the bricks and mortar I I business model.

The boom ended with the Nasdaq collapse in 2002 but by then Indian IT had grown in scale and sophistication with some great I Companies. They were experts in delivering projects on time and within budget. The market grew rapidly and Indian IT grew much faster. I I The second phase of growth started with focus on Main Street after the bust, tackling the challenges of technology complexity. Indian IT became I Leaders in quality, dominating the application development and maintenance space (ADAM).

Starting as bottom feeders, tackling small projects in I Lethe early sass, they now started handling projects in the million dollar range and reduced the complexity of software maintenance, which existed lacrosse many generations of technology, from the mainframe to distributed computing , to the web. They added services like testing, infrastructures I management services, enterprise application etc to their services profile. I I By the time the financial crisis hit Wall Street in 2008, they were world leaders in disappeared as most of them had the best quality standards, great service delivery and very less differentiation.

Amongst I Lethe top companies, there was a slow divergence of strategy, with a few focusing on the premium end of business and the greater number on the ADAM I Piece. Off shoring created new engines of growth despite the overall market growing more slowly, with focus on cost saving, high laity I I delivery, service excellence and vendor consolidation. Indian IT grew rapidly and became the dominant player globally, with India having the I Second largest concentration of IT talent in the world.

I I The financial crisis led to a slowdown, as the financial services industry was the largest spender on IT and the bubble economy of the last I Decade had enhanced spending on IT. With the financial crisis subsiding in the US, Europe facing the Euro crisis and the emerging markets I I becoming the dominant engine of economic growth globally, the Indian IT industry is entering the third phase of growth. This phase is going to bell I painful as growth will only emerge by getting market share rather than a larger share of a growing market.

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