UNIVERSITY

OF

CENTRE

PETROLEUM & ENERGY STUDIES

FOR

CONTINUING EDUCATION
MBA
(AVM)
SEMESTER I

YEAR: 2014

SESSION: JULY

ASSIGNMENT 2
FOR
Organization Behavior
(MBCH 731D)
(TO BE FILLED BY THE STUDENT)

NAME:

AVINASH MOGANTI

SAP NO/REGN NO:

Section A (20 Marks)

500035378

Write short notes on any four of the following:

1. Trait Theory
Ans: The trait theory is based on the great man theory, but it is more systematic in its
analysis of leaders. Like the great man theory, this theory assumes that the leader's
personal traits are the key to leadership success. However, unlike the Great man theory,
trait theorists do not necessarily assume that leaders are born. Leaders, as per trait
theorists, differ from their followers with respect to a small number of key traits and these
traits remain unchanged across time.
2. Participative or Democratic Leadership
Ans: A democratic leader is one who consults and invites his subordinates to participate
in the decision making process. He gives orders only after consulting the group, sees to it
that policies are worked out in group decisions and with the acceptance of group. The
manager largely avoids the use of power to get a job done. He behaves that a desired
organizational behaviour can be obtained if employees' needs and wants are satisfied.
Therefore, he not only issues orders but interprets them and sees to it that the employees
have the necessary skills and tools to carry out their assignments.
3. Charismatic Power
Ans: Charisma refers to a leader's ability to influence others through his personal
magnetism, enthusiasm and strongly held convictions. Often, leaders are able to
communicate these convictions and their vision for the future through a dramatic
persuasive manner of speaking. Dr Martin Luther King's famous "I have a Dream" speech
galvanized a generation to support the civil rights movement in the United States.
President J. F. Kennedy possessed referent power to a remarkable degree. His
admonition, "Ask not what your country can do for you but what you can do for your
country" resulted in thousands of volunteers for the Peace Corps.
4. Perceptual Influences
Ans: Perception is influenced by a number of internal factors. Certainly people with inner
conflicts sufficient to cause stress are more likely than self-confident people to perceive
environmental conditions as threatening. Because the environment is presumed to be full
of danger, evidences of danger are perceived everywhere. They are selectively perceived
in exaggerated form.
5. Delegation

Section B (30 marks)

(Attempt any three)

1. Critically examine the different approaches to the study of leadership behavior. Is there
one best style of leadership?
Ans:
2. 'Organization is a political battle field'. Discuss.
3. Explain briefly the various sources of organizational conflict.
Ans: 1. Line and Staff Competition: The growth of highly specialized, creative, welleducated staff poses unique problems for line managers. Faced with a growing
dependence on staff, line managers must adjust to a reduction in organizational power
and prestige. 2. Organisation-Individual Disagreements: From one perspective, the
conflict between the organisation and the individual centres around the individuals
failure to fulfill the organisations expectations regarding productivity or compliance with
rules. 3. Overlapping Responsibilities: Organizations constantly change in response to
personnel turnover, expansion or contraction, the adoption of new policies, changes in
external environment, and so forth. As a result, it is impossible to establish job
responsibilities once and for all. 4. Functional Interdependence: Conflicts between an
organisations functional units, such as sales, accounting and manufacturing are
commonplace. The sales department is at odds with manufacturing because quality is too
low or prices are too high to meet the competition. 5. Personality Clashes: Individual
differences in such personal qualities as values, attitudes, abilities and personality traits
are often the cause of conflict. 6. Disagreement over goals: Conflict among managers is
often caused by the fact that there is poor agreement over goals. Perhaps an even more
common source of conflict is the clash of the personal goals of managers and employees
with the goals of the organisation. 7. Bottlenecks in the Flow of Work: Line supervisors
in manufacturing must meet production deadlines, but they are dependent upon
production schedules, warehousing shipping, and others for effective performance.
4. What is resistance to change? Explain briefly the sources of resistance to change.
Ans: As the manager contemplates and initiates change in the organisation, one
phenomenon that is quite likely to emerge anytime in the change process is the resistance
to change. People often resist change in a rational response based on self-interest.
Resistance to change doesnt necessarily surface in standardized ways. Sources of
Resistance to change can be categorized into two sources:
1. Individual Resistance: One aspect of mankind that has remained more or less constant
is his innate resistance to change. Individuals resist change because they attach great
preference to maintaining the status quo.
(a) Economic Reasons: The economic reasons to fear change usually focus on one or
more of the following: (i) Fear of technological unemployment. (ii) Fear of reduced work
hours and consequently less pay. (iii) Fear of demotion and thus reduced wages. (b) Fear
of the unknown: Change often bring with it substantial uncertainty. Employees facing a
technological change. (c) Fear of Loss: When a change is impending, some employees
may fear losing their jobs, particularly when an advanced technology is introduced. (d)
Security: People with a high need for security are likely to resist change because it

threatens their feeling of safety. (e) Status quo: Perhaps the biggest and most sound
reason for the resistance to change is the status quo. As human beings, we are creatures of
habit. (f) Peer Pressure: Individual employees may be prepared to accept change but
refuse to accept it for the sake of the group. (g) Disruption of Interpersonal Relationships:
Employees may resist change that threatens to limit meaningful interpersonal
relationships on the job. (h) Social Displacement: Introduction of change often results in
disturbance of the existing social relationships.
2. Organizational Resistance: Organizations, by their very nature are conservative. They
actively resist change. Some of the organizational resistances are explained below:
(a) Resource Constraints: Resources are major constraints for many organisations. The
necessary financial, material and human resources may not be available to the
organisation to make the needed changes. (b) Structural Inertia: Some organizational
structures have in-built mechanism for resistance to change. (c) Sunk Costs: Some
organisations invest a huge amount of capital in fixed assets. (d) Politics: Organizational
change may also shift the existing balance of power in an organisation. Individuals or
groups who hold power under the current arrangement may be threatened with losing
these political advantages in the advent of change. (e) Threat to established power
relationships: Any redistribution of decision-making authority can threaten long
established power relationships within the organisation. (f) Threat to expertise: Change in
organizational pattern may threaten the expertise of specialized groups. Therefore,
specialists usually resist change. (g) Group Inertia: Even if individuals want to change
their behaviour, group norms may act as a constraint.
Section C (50 marks)
(Attempt all questions. Every question carries 10 marks)
Read the case Breathtaking Revolution and answer the following questions.
Case Study: Breathtaking Revolution
Ludhiana-based Hero Cycles Ltd. (1994-95 turnover: ` 433 crore) saw it coming. Fitness fever
was catching on among up-market consumers. It was evident in the spread of health devoted
cooking oils, the mushrooming of gyms and in the new body-care columns that magazines were
introducing. Work hours were getting more and more sedentary, and thoughts of outdoor exercise
(such as jogging) were being squashed by worsening urban surroundings.
Health equipment held enough promise, felt Hero, to launch another product in the category to
add to Fitkit, its 1981-launched exerbike a stationary work-out machine which simulates
cycling.
In August 1990, the company launched Allegro, an exerbike developed by in-house R&D and
manufactured by Majestic Auto Ltd., another Hero group company. Its USP? It offered the option
of simulated rowing action to strengthen arms, shoulders and abdomen muscles (apart from
cycling, which tones the lower half of the body). Allegro was priced at ` 1,775 and offered

standard features such as an adjustable handle bar and seat, a speedometer (to tell the notional
distance covered), a speedometer and a timer. It came with a manual, which, apart from
explaining product features, recommended weekly exercise schedules (to be followed in
consultation with a doctor).
Rival brands offered only the routine cycling bikes. Some prominent players: Atlas Exercycle,
Chandigarh-based Rama Health Care Ltds Sharp 101 and Avon healthmaster, were all priced in
the ` 1,100-1,400 bracket. The lower end, however, was dominated by local contraptions made
by unorganized sector players and retailed at roughly half the average brands price.
In 1990, Hero estimated the market for exerbikes at 20,000 units. It was still in its infancy, with
most of the sales coming from the metros and other big cities. Most companies considered
exerbikes too tiny a niche to expand much marketing energy on. They were kept stacked up in
cramped comers of regular cycle shops. Marketers did not bother reaching out to the consumer.
Shouldering the Onus
Hero decided to storm the market. It already enjoyed high brand equity in the consumers mind.
The job now was to employ the same to sell Allegro. The company went in for a big, fourmonthlong drive to create awareness of the product and change attitudes towards exercising. Ads
were placed in local print media (1990 ad budget: ` 17 lakh), leaflets were widely distributed and
the product was exhibited at strategic selling points (about 20 cycle dealers sprinkled across the
country). Rather than talk solely of its rowing USP (which swings the consumers brand decision
in its favour only after the decision to buy an exerbike has been made) and watch its market share
rise, Allegro decided to expand the market beyond fitness freaks by selling the very idea of
fitness to others. This, Hero claims, was a long-term endeavour to appropriate the fitness plank
and start relationships with customers.
The agency on the account, HTA, decided to steer clear of the clichd before-and-after route
which most fitness products and services took. Even the nameAllegro, which refers to the
introductory movement in western classical music was atypical.
By a fortunate coincidence, the name struck a chord with dealers, who thought it was a brilliant
self-explanatory combination of the wordsleg and row.
The fighting fit launch campaign, which used only print in its media plan (as it allows for
detailed copy), showed a fashionable young couple astride a pair of Allegros to emphasize that
exerbikes werent meant only for womena commonly held misconception.

Allegro was positioned as a unisex, complete work-out machine, (to exercise both the upper and
lower halves of the body) and targeted at the above - 30 consumer who, though in reasonably
good shape, was afraid of losing it. The blanket proposition: stay fit.
Within six months of launch, the company replaced Allegros spring-wound timer with an
electronic one. To keep sales moving, the product needed regular upgradation. In the eight
months from launch till the end of the financial year, the brands sales crossed the 5,000-unit
mark.
Even as competitors rushed into imitate Allegro does features, HTA refused to highlight them,
prefer to sell the category instead. Gaining consumer mindshare. Its 1991 ad campaign used
visual metaphors to taunt the target consumer in an attempt to raise his weight consciousness.
One ad showed an apple and a pear to symbolize how flab accumulates on the frames of men and
women (respectively). Unlike the launch campaign, this one had messages of direct relevance to
the target buyer, and resisted from either making fashion statements or using shapely models
(Stroking such farfetched aspirations, felt HTA, and was poor strategy).
The Synergy Problem
The company began distributing the product through its intricate cycle networkwhich gave it
instant reach. Of the 3,200 cycle shops in Heros web, 1,800 stocked Allegro. Wide though its
distribution network was, Allegro faced an obstacle in the type of shops that retailed the brand. In
general, cycles appeal to a segment of consumers who are quite different, pyscho- and
demographically, from those in Allegros audience. Not many executives, for instance, are driven
enough by the fitness bug to hunt for the product in a gloomy and dusty corner of a cycle shop,
probably located in a dingy part of town. Clearly, Allegros upmarket aura (as portrayed in the
ads) was not matched by its retail ambience. Besides, it was losing out on the added attention
from upmarket shoppers that attractive display could achieve.
In 1991, Hero started placing Allegro even in sports goods shops, where it was more likely to be
seen by its target consumer. This was done after a careful analysis of the sales potential of these
outlets. Sports shops, which faced persistent queries about such equipment, were only too glad to
stock the product. Though the majority of its off take still comes from regular cycle stores, the
expansion of the retail web helped generate additional awareness of Allegros benefits. In 199192, sales soared to about 15,150 units.
More Sweat

Meanwhile, several new exerbikes had jumped into the fray. In December 1992, Atlas Cycles Ltd
(which also commands high brand recall) launched a snazzier, premium-priced version of the
product Atlas Aerobik. Though it only simulated the cycling action, its upmarket appeal sparked
off high starting sales. Hero claims that when it saw Aerobiks sales plateau within a few months,
it was reassured of its mid market thrust. While the price-sensitive buyer went in for inexpensive
local makes, the affluent buyer preferred imported equipment. In the segment of Indian brands,
Allegro continued to lead, unchallenged.
Allegro decided to widen its target audience. It stepped up its advertisingusing metaphors
which hit the consumer still harder. In a clear move to enrol out-of-shape business executives
(for the first time), it started inserting ads in business magazines. Warns one: executives who
cant control their shape cant control much else.
Competition intensified. In 1993, Sharp launched a new model which not only offered the option
of simulated rowing, but also gave the choice of switching to an automatic mode for that action
(which demands less exertion to go back and forth- and hence is particularly useful in
physiotherapy). Despite new entrants in the market, claims Hero, Allegros sales grew
undeterred. Heros distribution advantage alone was enough to sustain its lead. In addition, there
was brand pull. The adspends in 1994-95: ` 20 lakh. This was supplemented by belowthe- line
spending on direct mail, product display and so on.
On the trade front, dealer margins which stood at an average 8 per cent in 1990, have now raised
to 15 per cent evidence of growing aggression from rivals. Despite Heros claimed control over
pricing, market sources say that dealers are often willing to drop prices to make a spot sale.
Questions:
1. Explain the main features of Allegro.
2. Discuss the brief background of Hero Cycles.
3. Explain in brief the methods of curbing competition by Hero Cycles.
4. Write in your own words the process of capturing the market and curbing competition by
a company.
5. Pen down the outcomes of the case study.

1. Explain the main features of Allegro.

Allegro, an exerbike developed by in-house R&D and manufactured by Majestic Auto

Ltd.
Allegro was priced at ` 1,775 and offered standard features such as an adjustable
handle bar and seat, a speedometer (to tell the notional distance covered), a
speedometer and a timer. It came with a manual, which, apart from explaining product

features, recommended weekly exercise schedules

It offered the option of simulated rowing action to strengthen arms, shoulders and

abdomen muscles (apart from cycling, which tones the lower half of the body.
Allegro was positioned as a unisex, complete work-out machine, (to exercise both the

upper and lower halves of the body).

It targeted customers of age 30 and above.
2. Discuss the brief background of Hero Cycles.
The origins of Hero Group can be traced to 1956 when Hero Cycles Limited was
established by Munjal brothers: Satyanand Munjal, Brijmohan Lall Munjal and O. P.
Munjal. Before the establishment of Hero Cycles, which is the flagship company of the
Hero Group, Munjal brothers were modest manufacturers of bicycle components. Hero
Group forayed into the international market with bicycle exports from India. In 1971,
Highway Cycles was set up to meet the demands of Hero Cycles.Hero Cycles Limited
entered the Guinness Book of Records as the largest bicycle manufacturer in the World.
In August 1990, the company launched Allegro, an exerbike developed by in-house R&D
and manufactured by Majestic Auto Ltd.
3. Explain in brief the methods of curbing competition by Hero Cycles.
With best in class features under its belt Hero Allegro was able to stand out in the
competition. The company also under took marketing campaign that includes fourmonth-long drive to create awareness of the product and change attitudes towards

exercising. Ads were placed in local print media (1990 ad budget: ` 17 lakh), leaflets
were widely distributed and the product was exhibited at strategic selling points (about 20
cycle dealers sprinkled across the country). Rather than talk solely of its rowing USP
(which swings the consumers brand decision in its favor only after the decision to buy an
exerbike has been made) and watch its market share rise, Allegro decided to expand the
market beyond fitness freaks by selling the very idea of fitness to others. This, Hero
claims, was a long-term endeavor to appropriate the fitness plank and start relationships
with customers. The fighting fit launch campaign, which used only print in its media
plan (as it allows for detailed copy), showed a fashionable young couple astride a pair of
Allegros to emphasize that exerbikes werent meant only for womena commonly held
misconception. Allegro was positioned as a unisex, complete work-out machine, (to
exercise both the upper and lower halves of the body) and targeted at the above - 30
consumer who, though in reasonably good shape, was afraid of losing it. The blanket
proposition: stay fit. The company began distributing the product through its intricate
cycle networkwhich gave it instant reach. Hero started placing Allegro even in sports
goods shops, where it was more likely to be seen by its target consumer. It stepped up its
advertisingusing metaphors which hit the consumer still harder. In a clear move to
enroll out-of-shape business executives (for the first time), it started inserting ads in
business magazines. Warns one: executives who cant control their shape cant control
much else.
4. Write in your own words the process of capturing the market and curbing
competition by a company.
With best in class features under its belt Hero Allegro was able to stand out in the
competition. The company also under took a marketing campaign that included fourmonth-long drive to create awareness of the product and change attitudes towards
exercising. Ads were placed in local print media, leaflets were widely distributed and the
product was exhibited at strategic selling points. Rather than talk solely of its rowing
USP (which swings the consumers brand decision in its favor only after the decision to
buy an exerbike has been made) and watch its market share rise, Allegro decided to
expand the market beyond fitness freaks by selling the very idea of fitness to others. This,
Hero claims, was a long-term endeavor to appropriate the fitness plank and start

relationships with customers. The fighting fit launch campaign, which used only print in
its media plan showed a fashionable young couple astride a pair of Allegros to emphasize
that exerbikes werent meant only for womena commonly held misconception. Allegro
was positioned as a unisex, complete work-out machine, (to exercise both the upper and
lower halves of the body) and targeted at the above - 30 consumer who, though in
reasonably good shape, was afraid of losing it. The blanket proposition: stay fit. The
company began distributing the product through its intricate cycle networkwhich gave
it instant reach. Hero started placing Allegro even in sports goods shops, where it was
more likely to be seen by its target consumer. It stepped up its advertisingusing
metaphors which hit the consumer still harder. In a clear move to enroll out-of-shape
business executives (for the first time), it started inserting ads in business magazines.
Warns one: executives who cant control their shape cant control much else.
5. Pen down the outcomes of the case study.
Allegro was launched by Hero Cycles with much fanfare. Hero marketed the
product efficiently. Marketing at all the available touch points for customers. It was due
to this marketing campaign and the best in class design and feature that Allegro was such
a great success in the market. Allegro overcame all competition with its effective and fore
sighted marketing campaign. Competition intensified. In 1993, Sharp launched a new
model which not only offered the option of simulated rowing, but also gave the choice of
switching to an automatic mode for that action (which demands less exertion to go back
and forth- and hence is particularly useful in physiotherapy). Despite new entrants in the
market, claims Hero, Allegros sales grew undeterred. Heros distribution advantage
alone was enough to sustain its lead. In addition, there was brand pull. On the whole Hero
allegro was a successful product backed by a successful marketing campaign and a huge
brand name.