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