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CASE :CONTRIVED CRISES
Internal memo – 1
From: Minoo Batliwala, Chairman
To: Rakesh Mohan, Managing Director,
Date: May 7
Dear Rakesh,
I've just received a copy of Shrinagar Auto's preliminary audited results for 1994-95, which will he reviewed by the board on May, 25. I think this is an opportune moment to share with you some of my concerns about out future before were drowned in eth celebrations of a successful year.
I must admit that the numbers look great. Few of us expected profits to jump by 110 percent to Rs.3 10 crore considering that turnover rose by 36 percent to Rs.2,290 crore. We continue to maintain our leadership position on the home front with a 52 percent market share in the two-wheeler market : 72 percent in scooters and 31 percent in motorcycles. Our margins are higher than those of any of our domestic rivals. And the stock price of Rs.700 proves that investors are happy. Most people think we're doing everything right.
To be honest, I do not. I don't believe that our figures are telling us the truth. Which is that Shrinagar may not continue to perform as well. Last fortnight, a consultant suggested as much to me privately. And the signs that he pointed to are real, very real. Let's face it, a 72 percent share of the scooters market today means that we've dropped four percentage points in two yeas. In motorcycles too, we've dropped four percentage points. Which means that our competitors are growing faster than we are. Now more competitors are coming in – including foreign companies.
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Answer the following questions :
1. How should the top management of Shrinagar motivate its successful workforce ? Should it proclaim doomsday ? Or should it set its sights on the future through inspiring targets ?
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2. Is a crisis the only way to galvanise a company ?
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3. What must Shrinagar do to maintain its market leadership ?
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