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Clear Picture TV Co.: Decision Making... A Chain Reaction!

CASELET, STATISTICS FOR MANAGEMENT
ET Cases, 5 Pages
AUTHOR(S) : R Krishnan, Faculty Member, IBS Mumbai

Case Preview

Clear Picture TV Co.: Decision Making... A Chain Reaction!

 

It was the third Saturday of July 2015. As per schedule, the Quarterly Review meeting was in progress and all members of the senior management were in attendance. The meeting was chaired by the CEO, Raj Singh; other senior members in attendance were Rajesh Subramaniam (CFO); Piyush Sharma (Marketing and Sales Head) and Suresh Mhatre (Operations head). Piyush, the Sales and Marketing Head was making his presentation; sales for the April- June 2015 quarter were down by 30% compared to the same period last year. He insisted that something had to be done and done real fast, if Clear Picture TV Co. was to survive in the market.........

Clear Picture TV Co.

Clear Picture TV Co. was established in the year 1979 to manufacture black and white colour televisions. The company manufactured and marketed two models – 14 inch and 21 inch televisions. Growth was robust in the initial years; by the year 1985, the company had a 30% share of the black and white television market in India. Colour transmission was introduced in India in 1982 to coincide with the Asian Games in New Delhi..........

Industry Overview

Since the early 2000s the Indian TV industry witnessed drastic changes in terms of intensity of competition, and technology up gradation by the key players. Aggressive marketing, product quality and price sensitivity were the key factors to controlling the market. LG, ONIDA, Samsung, Videocon, Panasonic and Sony were the key players in this intensely competitive market place..................

Declining Sales

Everyone was listening with rapt attention as Piyush tried to explain the reasons and his suggested plan of action to revive the dropping sales. Piyush explained that competition in the sector had increased sharply over the previous year, as the other major players including new entrants offered 5 years warranty on their picture tubes. Clear Picture TV Co. offered a 3 year warranty..............

Dilemma

When the meeting re convened, Suresh took centre stage. After reviewing the QC data on the life of the picture tubes (Exhibit I), he said that an additional proportion of TV tubes would have to be replaced if they would go for a 5 year warranty. Piyush had projected a sale of 100,000 units for next year............

Assignment Questions

1. What is the additional percentage of tubes which will have to be replaced if the warranty is increased from 3 to 5 years? What is the total cost implication?
2. .............

Exhibit

Exhibit I: Testing of Colour Picture Tubes

Annexure

Annexure I: Manufacture of Colour Picture Tubes

Teaching Note Preview

Clear Picture TV Co.: Decision Making... A Chain Reaction!

 

Synopsis

Clear Picture TV Co. manufactures and markets colour televisions in the Indian market. The company caters to the semi urban and rural customer, where cost and product quality and reliability are the key factors in the purchase decision. The entry of the Korean and Japanese multinationals has dramatically altered market dynamics; and the company’s leadership in its traditional segment is under serious threat. Raj Singh, the CEO needs to take immediate steps to push up flagging sales.

Learning Objectives

This is a simulated case. Students will have the opportunity to

• Understand that decisions in an organisation are not isolated in functional areas; a marketing decision has implications in Operations, Finance and other areas too.
• Appreciate the role of data and quantitative techniques in decision making

Case Positioning and Setting

This case demonstrates the concept of ‘the inter disciplinary nature of organisational decision making’ and the use of quantitative techniques in decision making. This case fits well in the first semester of a typical MBA curriculum. This case should ideally be covered towards the latter half of the first semester.

Pre-Requisite Conceptual Understanding

i) Quantitative techniques in management: concepts of central tendency (mean) and standard deviation; estimation of population parameters from sample statistics; Normal distribution
ii) Costing and cost structures: fixed and variable costs, contribution and profit
iii) Concepts of Accounting policy with respect to amortization of expenses

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Abstract

Clear Picture TV Co., one of the prominent colour televisions manufacturers and marketers in India, catered to the semi urban and rural customer, where cost and product quality and reliability were the key factors in the purchase decision. The entry of the Korean and Japanese multinationals dramatically altered market dynamics; and the company’s market position was under serious threat. Raj Singh, the CEO had to take immediate steps to push up flagging sales.

The case demonstrates the inter disciplinary nature of decision making in organizations. The immediate problem of dropping sales, can be addressed by offering increased guarantee on the product, but this may lead to increase in costs, and reduction in profit. If the CEO desires to retain the profit at the original level, then this necessitates increasing sales. Hence, decision making is really a ‘chain reaction’!


Pedagogical Objectives

This is a simulated case. Students will have the opportunity to

  • Understand that decisions in an organisation are not isolated in functional areas; a marketing decision has implications in Operations, Finance and other areas too
  • Appreciate the role and use of data and quantitative techniques in decision making

Case Positioning and Setting

This case demonstrates the concept of ‘the inter disciplinary nature of organisational decision making’ and the use of quantitative techniques in decision making. This case fits well in the first semester of a typical MBA curriculum. This case should ideally be covered towards the latter half of the first semester.



This Case Pack Includes:
- Abstract
- Caselet
- Teaching Note (**ONLY for Academicians)
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