CASE-1 : COSTS OF DELAY
The public sector Indian Oil
Corporation (bC), the major oil refining and marketing company which was also
the canalising agency for oil imports and the only Indian company in the
Fortune 500, in terms of sales, planned to make a foray in to the foreign market
by acquiring a substantial stake in the Balal Oil field in Iran of. The Premier
Oil. The project was estimated to have recoverable oil reserves of about 11
million tones and bC was supposed to get nearly four million tones.
When IOC started talking to the
Iranian company for the acquisition in October 1998, oil prices were at rock
bottom ($ ii per barrel) and most refining companies were closing shop due to
falling margins. Indeed, a number of good oil properties in the Middle East were up for sale. Using this opportunity,
several develop The countries made a killing by acquiring oil equities abroad.’
IOC needed Government’s
permission to invest abroad. Application by Indian company for investing abroad
is to be scrutinized by a special committee represented by the Reserve Bank of
India and the finance and commerce ministries. By the time the government gave
the clearance for the acquisition in December 1999 (i.e., more than a year
after the application was made), the prices had bounced back to $24 per barrel
And the Elf of France had virtually took away the deal from under IOC’s nose by
acquiring the Premier Oil.
The RBI, which gave JOC the
approval for $1 Million investment, took more than a year for clearing the deal
because the structure for such investments were not in place, it was reported.
QUESTIONS
1. Discuss internal, domestic and
global environments of business revealed by this case.
2. Discuss whether it is the
domestic or global environment that hinders the globalization of Indian business.
3. Even if Elf had not acquired
Premier Oil, what would have been the impact of the delay in the clearance on
bC?
4. What would have been the
significance of the foreign acquisition to IOC?
5. What are the lessons of this
case?
Indian leather exports, an
important foreign exchange earner for the country has been reportedly hit hard
by the decision of some major US retail chains like Eddie Bauer, LI Bean,
Timberland and Casual Corner, and a German company Bader to boycott leather
goods from India in protest against the ill-treatment of animals here. This
move came shortly after a decision by global retail chains Gap, Marks & L.
Spencer, Liz Claiborne and J. Crew not to buy Indian leather goods. This
development has a lot to do with the lobbying by the US-based animal rights
group People for Ethical Treatment of Animals (PETA) for a ban on leather goods
from India
by documenting evidence of “cruelty to animals” killed for making leather. It
has been reported that the overseas firms have officially communicated to the
lnd outfit of PETA that they will not be sourcing leather products from India until
there is strict enforcement of animal protection laws. Following this, the
Mumbai-based Teja Industries, the official supplier of leather goods for Marks
& Spencer in India ,
started out-sourcing leather from other countries to manufacture products for
the global chain.
QUESTIONS
1. In the light of the above,
discuss the implications of social activist groups for business.
2. With reference to this case,
discuss the failure of the governments, Council for Leather Exports and the
leather industry and the lessons of this case.
3. What should the governments,
Council for Leather Exports and the leather industry do to overcome the
problem?
CASE-3 : HUMAN RIGHT PROTECTION
Reebok. The well known athletic
shoe multinational gets its product contract manufactured by independent firms
in the developing countries. The MNC
which gives importance to low cost and high quality is also concerned with
human rights protection and requires its suppliers to follow the following
human rights standards.
Nondiscrimination: Reebok will
seek business partners that do not discriminate in hiring and employment
practices on grounds of race, colour, national origin, gender, religion, or political
or other opinion.
Working hours/overtime: Reebok
will seek business partners who do not require more than 60-hour work weeks on
a regularly scheduled basis, except for appropriately compensated overtime in
compliance with local laws, and we will favor business partners who use 48-hour
work weeks as their maximum normal requirement.
Forced or compulsory labour:
Reebok will not work with business partners that use forced or other compulsory
labour, including labour that is required as a means for political coercion or
as punishment for holding or for peacefully expressing political views, in the
manufacture 61 its products. Reebok will not purchase materials that were
produced by forced prison or other compulsory labour and will terminate
business relationships with any sources found to utilize such labour.
Fair wages: Reebok will seek
business partners who share our commitment to the betterment of wage and
benefit levels that address the basic needs of workers and their families so
far as possible and appropriate in light of national practices and conditions.
Reebok will not select business partners that pay less than the minimum wage
required by local law or that pay less than prevailing [ industry practices
(whichever is higher).
Child labour: Reebok will not
work with business partners that use child labour. The term ‘child’ generally
refers to a person who is less than 14 years of age, or younger than the age
for completing compulsory education if that age is higher than 14. In countries
where the law defines ‘child” to include individuals who are older than 14,
Reebok will apply that definition.
Freedom of association: Reebok
will seek business partners that share its commitment to the right of employees
to establish and join organizations of their own choosing. Reebok will seek to
assure that no employee is penalized because of his or her non-violent exercise
of this right. Reebok recognizes and respects the right of all employees to
organize and bargain collectively.
Safe and healthy work environment:
Reebok will seek business partners that strive to assure employees a safe and
healthy workplace and that do not expose workers to hazardous conditions.
QUESTIONS
1. Discuss the human rights
protection endeavors of Reebok.
2. What are its implications for
the developing country suppliers? Will these standards pose a problem for the
suppliers? In what ways will these standards benefit the suppliers in
particular and developing country industrial sector in general?
CASE-4 : PATENTS
Basmati is aromatic rice grown in
Northern India and Pakistan.
In September1997, Rice Tec, a
small food technology company based in Texas, United
, was granted a patent by the US patent
office to call an aromatic rice variety developed USA Basmati. India
challenged the case, arguing that basmati is unique aromatic rice grown Northern India , and not a name Rice Tec could claim. In
fact only inventions can be patented. Consequently, the US patent office
accepted India’s basic position, and Rice Tec had to drop 15 the 20 claims that
it had made. Of the remaining claims, Rice Tec managed to evolve three new
varieties of rice for which it got a patent from United States Patent and
Trademarks Office (USPTO), as India had not objected to these. The ruling has
not handed over Rice Tec the basmati brand. Rather; it provides it a patent for
superior three strains’ of basmati developed by cross breeding a Pakistani
basmati with a semi-dwarf American variety.
According to the WTO Agreement,
geographical indications like basmati can be legally protected and their misuse
can be thus prevented. The unfortunate thing is that Government of India has
not taken timely steps for protecting our geographical indications and
bio-diversity. Although a Geographical Indication of Goods Bill was introduced
in Indian parliament in 1999, at the end of 2001 it had not become an Act.
QUESTIONS
1. Can any of the following, viz,
turmeric, neem and the name basmati be patented? Substantiate your answer.
2. Evaluate the role played by
Government of India in preventing the misuse of the name basmati.
CASE-3 : INDEX OF INDIAN SHARE MARKET
That the BSE
Sensex crashed by 140 points, causing a fall in the investor wealth by 25,000
crore (due to the fall in the market capitalization) the day the Economic
Survey 2000-01, which indicated the possibility of an economic slow down, was
presented in the Parliament is an indication of the importance of economic
factors to business. It is interesting to note that four days later when the
Finance Minister presented the Union Budget for 2001— 02, which was widely
regarded business friendly and which claimed to initiate the second generation
economic reforms, the sensex soared by 177 points. However, on the second day
the sensex nose-dived by 176 points reacting to the news of sustained
weaknesses in technology stocks across the globe and certain vicious rumors.
The stock
markets all over the world took a severe beating following the terrorist attack
the World Trade Centre and the consequent military actions. Although the Sensex
made some recovery for about a week around mid October 2001 largely because of
positive government measures and sustained purchases by FIIs. However, the
mounting fears triggered by the spread of the deadly anthrax disease and
concerns about bio-terrorism triggered panic selling in most European and Asian
markets, leading to chain reactions on Indian bourses. The bellwether Sensex
tumbled 62 points or 2 per cent to close below the psychologically important
3,000-mark at 2,981 on 18 October, putting an end to the seven-day 279 point
rally which had led to a 10 percent rise
of the Sensex. However, on the next day, equities staged a smart recovery, once
again lifting the Sensex above the psychological mark of 3000 to about 3017
encouraged Governments liberalization share buyback conditions.
While the
anthrax scare caused a set back to the stock market in general, shares
Pharmaceutical companies which
produce anthrax antidote ciprofloxacin like Ranbaxy, Dr. Reddy’s and Cipla
gained significantly. The rice of Bayer India scrip increased by 52 per cent in
10 days ended 1 7 October following the news that the Chennai based Indian
Syntans group was increasing its stake in Bayer through open market purchases.
QUESTIONS
1. Discuss the factors affecting
Sensex.
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