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Top Careers & You


Sears is a fast-moving consumer goods (FMCG) MNC, which had recently entered the Passenger Car
segment, which has big- names like GM, Ford, Toyota etc. as market leaders, in what is probably world's most
'competitive industry. The trend in this Industry has been to cut costs through achieving the economies-ofscale, and therefore Mergers and Acquisitions are taking place all over the world. Two years back. Scars Inc.
had identified a closed Passenger Car Manufacturing facility in an East- European nation to buy, and use it as
a base to test-launch its product in Europe. The costs i.e. Wages/ salaries, federal Taxes were lower in this
former East-Block nation, now, a newly inducted member of the NATO Alliance. This nation's govt. had
promised strike- free and less regulated business environment and had allotted additional land free of cost
besides provisioning for free or concessional electricity for the next 15 years provided that 60% of the jobs
were given to the local populace, which had earlier been hit hard due to closure. After doing the initial cost &
benefit analysis, Sears pumped $ 3 Billions into this venture. It decided to enter the car market knowing fully
well that the world's Petro-fuels are expected to last only up to 2050, & that many of the Light/Heavy
Commercial Vehicle (LCV/HCV) entities were in the red & planning to convert their Assembly Lines to
manufacture cars.

But two years down the line the venture has just broken even and it could be losses in the times to
come. Costing Chief. B. Oppenhammer says to the Owner- Chairman Mr. P. Reneberg that even the
concessional energy costs are more than what a captive power plant (self-generation) would involve. The
local population given jobs has some solidarity going, led by a former Solidarity leader, who rose to high
positions, politically in the aftermath of the fall of communism. The productivity and innovative energies might
have been hampered by this employee solidarity. The top executives are from Stays' other subsidiaries.
Overall, the car named Radica has been out competed in terms of price by the Japanese carmakers in
Europe & elsewhere.

Product development & technology supreme Mr. C. Summery has been pleading for a full additional
infusion of the funds to the tune of $ 2 billions over the next year and a half, to design & produce a world-class

The options before the young CEO Reneberg are few. Either he has to pump in fresh finance or close
down and look for a buyer. But matters are not helped by the fact that other subsidiaries of Sears are not
running well. So, closing down at this stage could send a wrong signal and deplete the stocks of Sears further.
No wonder, the Vice-president (Finance) Mr. George Brown looks a worried man. He reckons that Sears' car
unit needs more powers from the East European govt. to replace some of the employees with the best of
minds from rival car companies. Mr. Reneberg is toying with the idea of seeking a one-to-one meeting with the
top leader of this nation, but he knows that after he got what he wanted from the govt. two years back, pullingout now will not be easy.
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Top Careers & You

Discuss the situation and suggest ways as to what Sears can and should do, through a group-discussion. You
have only 8-10 mins. to read the case .You can make very few notes if you want. The time for the GD will be
15 minutes.

GTC Industry is the second major cigarette manufacturer in the country after the market leader ITC
(which has 70% of the market-share). The company GTC has not been doing all that well. The sales are down
or stagnant; the Return-on-investment is a poor 5% and the organization morale is low. The response from
the distributors of GTC is far from encouraging.

The Chairman of The GTC, Mr. Tobaccowalla, a Parsi old man, is worried since he has no
diversification in business. He had channelised investments worth Rs.150 Cr from the financial institutions,
banks & other promoters, besides pumping in his own Rs.45 Cr in this venture. The F.L.s are increasingly
restive. The share of GTC is not doing well despite the fact that stock markets are buoyant. The reserves
have all but been eaten up to finance the losses in three of the last six fiscals. Tobaccowalla has to take a
major decision very soon regarding the GTC.

There area a few options for him. He can replace his Chief Executive Mr. A. Khan, and infact, is already
talking to a senior executive from the ITC, who he intends to bring at a huge salary (& share in profits). Then,
either he can go for a foreign tie-up or he can sell-out his stake to a leading international brand which is
looking for a foray in the Indian market and has sounded out Mr. Tobaccowalla. He also is set to undertake a
tour (with his top professional aides) of North America, where, at least two new medium-size cigarette
companies (successful), with a worldwide brand-equity, are looking for a venture capitalist or other take-over
tycoon. These new American companies are reported to possess (as per preliminary reports) a good process
& method, particularly in the short filter segment, that can compete with the quality of GTCs rivals, the ITC.
But the most serious option for Tobaccowalla is a move to overhaul the Marketing and Sales Promotion
functions (a key result area in cigarette business) through engaging a consultant M/S PatKinsay and Brothers.

What should Mr. Tobaccowalla do? Discuss the given options before him (& suggest Yours) in the form
of a GD among your friends. You have full ten minutes to read the next (case)

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