Entrepreneurial Motivation

1. 0 Introduction The study of the successful entrepreneurship is important for several reasons: • Schumpeter, 1934, described entrepreneurship as the engine that drives innovation and change, and subsequently economic growth • Austrian economist Kirzner believes entrepreneurship is the mode through which equilibrium of supply and demand is reached • According to Shane and Venkataraman entrepreneurship converts knowledge into marketable products and services: thus a means of encouraging human creativity, and Zahra and Dess, 2001, see entrepreneurship as a vocation itself that has a large role in modern day capitalism All of the above takes on entrepreneurship can be justified only if the ventures undertaken are successful in the long term, as the success of entrepreneurs can only be gauged by its contribution to the economic engine, be it local or global. And like all feasts of human achievement the desire to succeed needs to back by tenacity and hard work, both of which are derivatives of motivation.

Thus the objective of this paper is to review the relationship between motivation and entrepreneurial success. 2. 0 Understanding entrepreneurship Most of the entrepreneurial theories emphasise the entrepreneur as a innovator or a creative force (Kirzner, Schumpeter) but it is important to note the term entrepreneur should be not be associated with innovators. It should instead be given to individuals who recognise a gaping hole in a market or recognise the commercial potential of a product/ service and take the necessary action to actually create demand.

However, in most circumstances innovators actually see the commercial opportunity themselves. 3. 0 Role of motivation in entrepreneurship 3. 1 How motivation applies when exploiting an idea Bill Gates saw an opportunity in selling standalone operating software whereas IBM at the time did not. The commercial value that Bill Gates attached to this concept was much higher than IBM even envisaged. This possible value attached to this concept gave Bill Gates and Paul Allen the motivation to set up a company and cash in on the opportunity.

To understand the role of motivation in entrepreneurship it is important to understand the relationship between opportunity and the level of motivation. For, creating a particular product or service may be done by anyone with similar levels of technical competence and necessary financial and operational resources. But the motivation to actually convert that opportunity into a commercially viable venture will depend on the perception of opportunity presented. Opportunities are aspects of the environment that represent potentialities for profit making.

But there are various definitions of entrepreneurial opportunities. Shane and Venkataraman (2000) defined entrepreneurial opportunities as ‘‘situations in which new goods, services, raw materials, and organizing methods can be introduced and sold at greater than the cost of their production. ’’ Entrepreneurs can pursue opportunities in any industry at any time. For example, some entrepreneurs build successful new companies by creating new industries, like Rober Swanson with bio-technology. On the other hand entrepreneurs build new companies in old and mature industries, like Sam Walton in retailing.

This illustrates the level of motivation is not attached to a particular product or innovation alone, but also on the entrepreneurs perception of the future of an existing industry. The value of opportunities, for entrepreneur motivation, also varies within industries. Because the opportunities that entrepreneurs identify and pursue have different economic value, the opportunities themselves influence entrepreneurial behaviour. For example, in the early 1970s, Butler Lampson and Chuck Thacker, researchers at Xerox Parc, invented the Alto—the first personal computer (PC) at a cost of US$10000.

In contrast, Steve Jobs and Steve Wozniak started promoting the first Apple computer at a cost less than US$3000. The basis for the apple computer sales was based on the founder’s credo that offering the product at a lower cost will encourage more people to purchase the computer. Thus it motivated them to work extra hard on getting a high volume of customers than Xerox. . 3. 2 Entrepreneur motivation theories and their usefulness 3. 2. 1 Need for achievement McClelland (1961) introduced the concept of “Need for Achievement” (nAch) in analysing entrepreneur motivation.

The premise of the this theory is that those individuals who are high in the nAch index are more likely to find the motivation to engage in activities that have a high degree of individual responsibility for outcomes, require skill and effort and have a moderate degree of risk with clear feedback on performance. These characteristics fit the basic persona of an entrepreneur. This theory was substantiated by Johnson (1990) via a traditional review of 23 studies that concluded there is a strong relationship between entrepreneurs and aAchs. 3. 2. 2 Risk taking

Risk-taking propensity is another motivation of interest, which emerged from McClelland’s (1961) original research on entrepreneurs. McClelland claimed that individuals with high achievement needs would have moderate propensities to take risk. Atkinson (1957) built upon McClelland’s argument, stating that individuals who have higher achievement motivation will prefer activities of intermediate risk because these types of activities will provide a challenge, yet appear to be attainable. However, risk taking need not be classified as low risk, intermediate risk or high risk to establish whether it is a motivational factor.

It is irrational to believe that an individual will undertake an entrepreneurial activity just to enjoy the risk especially when most start ups are funded by private funding or through heavy borrowing. It is more logically to view the entrepreneurs accepting the level of risk rather than being motivated by it. 3. 3. 3 Tolerance for ambiguity Schere (1982) argued that tolerance for ambiguity is an important trait for entrepreneurs because the challenges and potential for success associated with business start-ups are by nature unpredictable.

Budner (1982) defined tolerance for ambiguity as the propensity to view situations without clear outcomes as attractive rather than threatening. However tolerance for ambiguity is not a direct motivator but a result of motivation. Because entrepreneurs continually face more uncertainty in their everyday environment than do managers of established organizations, entrepreneurs who remain in their jobs are likely to score high on tests for this trait than would managers. There is mixed support for this prediction.

Begley and Boyd (1987) found that firm founders scored significantly higher in tolerance for ambiguity than did managers, defined as nonfounders working in business. In smaller sample studies, both Schere (1982) and Miller and Drodge (1986) found that firm founders were significantly higher in tolerance form ambiguity than were managers. 3. 3. 4 Locus of control Another motivational trait that has received attention is locus of control—the belief in the extent to which individuals believe that their actions or personal characteristics affect outcomes.

As McClelland (1961) discussed earlier, individuals who are high in nAch prefer situations in which they feel that they have direct control over outcomes or in which they feel that they can directly see how their effort affects outcomes of a given event. This point was extended by Rotter (1966) who argued that individuals with an internal locus of control would be likely to seek entrepreneurial roles because they desire positions in which their actions have a direct impact on results. This is based on the self driven nature of the entrepreneur and his innate desire to do something important.

The research on locus of control suggests that firm founders differ from the general population in terms of locus of control. Shapero (1977) found that firm founders from Texas and Italy were more ‘‘internal’’ than other groups of professions reported by Rotter (1966). This same pattern holds with female firm founders versus the general female population (Bowen & Hisrich, 1986) and with Black firm founders versus the general Black population (Durand, 1975). 4. 0 Entrepreneurial success, what is? Success can be vaguely defined as achieving a set objective.

But in the world of the entrepreneur definition of success is not only about generating sufficient cash flow to sustain a certain standard of living, but it is also about satisfying the needs of others who have an interest in the business. Wickham, 2001, identified the components of entrepreneurial success: • Performance of the venture • Meeting the expectations of those having a vested in the venture, and However, it is important to note that success is a relative term and also depends on the competition. Therefore an entrepreneur’s measurement of success in one year may be very different to his success in the subsequent years.

For example: achieving the same absolute profit in consecutive years may affect the cash flow of the business but it will be a sign of failure if the entrepreneur expected to achieve a 5% rise in profits. The motivational factors as identified above (nAch, locus of control, desire for independence, passion, and drive) influence the transition of individuals from one stage of the entrepreneurial process to another. In some cases, all of the motivations might matter. In other cases, only some of the motivations might matter.

The relative magnitudes of how much each motivation matters will likely vary, depending on the part of the process under investigation. In fact, it is quite plausible that motivations that influence one part of the process have all of their effects at that stage in the process and have no effects on later stages in the process. Entrepreneurial success is mainly dependent on the character traits of the entrepreneur. To analyse these character traits reference to existing leadership models are used as the traits of a successful leader and a successful entrepreneur seem the very similar.

They are both leadership roles and the entrepreneurial trait of locus of control (identified above) gives further credence to the necessity for entrepreneurs to study leadership success. Trait Theory The trait theory was mainly used for selection of leaders for foreign missions in the military. It was developed on the premise that by studying and isolating the qualities of historically great leaders, it was possible to form a benchmark for selecting individuals for key areas of leadership. Philosophically put, the promoters of this theory believed that leaders were born and not made.

The key traits of a successful entrepreneur can be identified as: • Ability to see and capitalise on opportunities • Able to analyse situations and adapt accordingly to meet goals • Ability to articulate thoughts and objectives in a way that can energise people • Ability to make tough decisions • Energy and enthusiasm The Situation – Situational Theory There is no such thing as a born leader but there are a whole variety of characteristics that might make a person a good leader, which people have a mixture of.

In any situation the person best suited to that situation will emerge as the leader. This theory says that leaders rise to power. There are 3 sources of power that a leader can build on: position; personality and expertise. The entrepreneur can build on the same three sources of power. With respect to entrepreneurial success, situational theory can be used for entrepreneurial success by applying the following. • Continuous professional development (both technical and personal) • Identify and improve on weak areas Encourage openness to ideas and willingness to adapt • Build rapport with senior management to enable open and challenging discussions for improvement • Proactive thinking to anticipate problems and opportunities and subsequent contingency planning Leading businessmen like Bill Gates, Warren Buffet and even the President of the United States are great believers in isolating the admirable qualities of great men and transferring those principals to business or politics. All of these leaders are renown for their study of leadership traits.

They internalized those same traits and then used their own expertise, ability to adapt and proactive thinking to crystallize their own visions, some of which are revolutionary. The Group – Functional Theory The Functional Theory of leadership introduced by John Adair says that any group has a number of functions it needs to perform – basically, three needs that need to be fulfilled can also be applied an entrepreneur in business. Here the leader is the one that can satisfy all these needs: team, task and individual.

Here the ability of the leader is based on his or her ability to integrate the team, task and individual with the right balance. Simply put it can be sequenced as follows: 1) Set vision and goals 2) Identify the various functions required to achieve the vision 3) Give responsibility of those functions to the right people (sub-leaders) 4) Ensure that the functional leaders work as a team 5) Evaluate performance and compare performance against targets 6) And finally, make changes where necessary

To achieve the above it is essential that the leader exhibits or has the potential to develop the leadership traits identified under the Leadership Traits Theory. And in developing leadership programs it is essential that the features of leadership identified in these theories are addressed In conclusion it should be notes that all the leadership theories place emphasis on personal integrity, strong will and building expertise in the relevant fields or industries. This is especially important since in the world of business building brand image is essential.

It needs to start with the leader of the business. 5. 0 Understanding the relationship between entrepreneurial motivation and entrepreneurial success The analysis of the relationship will be based on the following studies: • Collins et al. (2000), using the “Need for Achievement” concept of McClelland (1961) , concluded that those motivated by nAch were more likely to experience entrepreneurial success than those without the nAch factor. Thus, nAch could play a very useful role in explaining entrepreneurial success. • Successful entrepreneurs take calculated risks.

But their level of risk tolerance is higher than other with lower need for achievement: this increased capacity of risk is based on their motivation to succeed (Sarasvathy, Simon, and Lave (1998) Factors other than motivation that contribute to entrepreneurial success Motivations are not the only things that influence these transitions. Cognitive factors, including knowledge, skills, and abilities (KSAs), certainly matter in entrepreneurial success. All action is the result of the combination or integration of motivation and cognition (Locke, 2000).

First, the entrepreneurs need to have some knowledge, especially of the industry and of any relevant technology that is critical to success. They can hire people with certain specialized skills that they lack, but they must possess enough expertise to know that they are doing the right thing. Second, the entrepreneur must have skills. The necessary skills will depend on the circumstances, but they may include such factors as selling and bargaining, leadership, planning, decision making, problem solving, team building, communication, and conflict management.

Third, the entrepreneur needs to have the requisite abilities, including intelligence. Possessing the necessary KSAs enables the entrepreneurs to develop a viable vision, including a strategy for the organization and to carry it out successfully. Motivation helps the entrepreneur to acquire such KSAs in the first place and provide the impetus and energy to implement the needed actions to succeed. The human capital literature in entrepreneurship (e. g. Bates, 1990; Schoonhoven, Eisenhardt, & Lyman, 1990) has begun to show the effect of certain types of knowledge and skills on the start-up and resource assembly parts of this process.

The opportunities themselves certainly matter in entrepreneurial success. Prior research has shown that such things as the possession of a patented technology make individuals more likely to engage in the entrepreneurial process (Shane, 2001). One would expect that identification of a large market or a high margin product would do the same. Furthermore, environmental conditions matter. First, opportunities may interact in interesting ways with the attributes of people. Second, as much f the macro level research has shown, the willingness to engage in entrepreneurial activities depends on such things as the legal system of the country in which the entrepreneur operates, the age of the industry, the availability of capital in the economy (and to the industry in particular), the condition of capital markets, and the state of the overall economy. These factors are important, but that it might also be interesting to know whether motivations of particular people lead to different types of entrepreneurial action under different environmental conditions.

Motivations might be more or less stronger than these other factors in the degree that they influence particular transition points. In addition, there might be important and interesting interaction effects between motivations and opportunities, KSAs, and environmental factors. Empirical example illustrating the relationship between entrepreneurial motivation and entrepreneurial success Google A little background research into the meteoric rise of this company indicates that the founders, Sergis Brin and Larry Page, identified a previously unexploited market, used their superior technical knowledge to develop a technology for this market.

The success of this venture was based on their motivation to exploit a new idea to its full potential which they believed appealed to a broader market. But it should be noted that the main reason they succeeded was because they offered a new product that was commercially viable – highlighting the fact that motivation needs to materialise into an end product or service with a differentiating factor. It also highlights the fact that the degree of success depends on scope of the offering.

For example, a Stanford University graduate with the same motivation as Sergie Brin and Larry Page but with a lower level of technical competence may not be able to develop something of Google’s marketability. Thus, even if this student sets up a successful business, it might not be the success story that is Google. Conclusion All successful entrepreneurs are highly motivated and highly energised. They picture their goals and take whatever actions necessary to achieve those goals. However motivation alone is not sufficient to become successful.

In addition to the adequate resources the successful entrepreneur need to be self driven, articulate, able to make tough decisions, thick skinned, able to create and maintain brand image, and most important have a great product or service to represent. References Aldrich, H. , & Zimmer, C. (1986). Entrepreneurship through social networks. In D. Sexton, & R. Smilor (Eds. ), Atkinson, J. W. (1957). Motives in fantasy, action, and society. Princeton, NJ: Van Nostrand. Bandura, A. (1997). Self-efficacy: the exercise of self control. New York: Freeman. Bates, T. (1990). Entrepreneur human capital inputs and small business longevity.

Review of Economics and Baumol, W. (1968). Entrepreneurship in economic theory. American Economic Review Papers and Proceedings, 64–71. Locke, E. A. (2000). Motivation, cognition and action: an analysis of studies of task goals and knowledge. Drucker, P (1981), Management, Pan Business Management Welch, J (2001), Jack: Straight from the Gut, Headline Book Publishing Schroeder, A (2008), The Snowball: Warren Buffett and the Business of Life, Bloomsbury Publishing Alderfer, C. P. (1969). A new theory of human needs. Organizational Behavior and Human Performance, 4, 142-175. Bass, B. M. (1981).

Stogdill’s handbook of leadership. New York: Free Press. Hogan, R. , Curphy, G. J. , and Hogan, J. (1994). What we know about leadership. American Psychologist, 49, 493-504. House, R. J. , and Mitchell, R. R. (1974, Fall). Path-goal theory of leadership. Journal of Contemporary Business, 3(4), pp. 81-98. House, R. J. , Spangler, W. D. , and Woycke, J. (1991). Personality and charisma in the U. S. presidency: A psychological theory of leadership effectiveness. Administrative Science Quarterly, 36, 364-396. Kozlowski, S. W. J. , Gully, S. M. , Salas, E. , and Cannon-Bowers, J. A. (1995, September). Team

Leadership and development: Theory, principles, and guidelines for training leaders and teams. Manz, C. C. , and Sims, H. P. , Jr. (1989). SuperLeadership. NY: Prentice Hall Press. Manz, C. C. , and Sims, H. P. , Jr. (1991). SuperLeadership: Beyond the myth of heroic leadership. Vroom, V. H. (1964). Work and motivation. New York: Wiley. Vroom, V. H. , and Yetton, P. W. (1973). Leadership and decision-making. Pittsburgh, PA: University of Pittsburgh Press. Wilson, J. M. , George, J. , and Wellins, R. S. (1994). Leadership trapeze: Strategies for leadership in team-based organizations. San Francisco, CA: Jossey-Bass, Inc.

Nissan S Supply Chain

[pic] FACULTY OF ENGINEERING AND COMPUTING Module Assignment SUPPLY CHAIN MANAGEMENT M25EKM By Rama Venkata Naveen Reddy Karri STUDENT ID: 2891540 MODULE LEADER: Mr. Phil Southey YEAR 2009-2010 INDEX PAGES 1) Introduction 3 2)Nissan European Technology Center 3 3)How information is shared 3 ) NX96 4 5) How is supply chain performance measured 4 6) kanban 4 7) NEXT21 5 8) Cogent 6 9) Lean management 6 0) Just in time 6 11) Fast track cogent 7 12) Kaizen 7 13) Results 7 14) key learning points 7 15)Recent trends 7 6)Conclusion 7 17)References 8 18) Bibliography 9 Introduction:- Nissan Motor Manufacturing (UK) Limited, a Japanese transplant in sunderland uk was started in 1986. Japanese Manufacturers are known for their quality, this is main reason the first three companies in perception of quality are Toyota, Honda and Nissan.

One of the main reason behind this is Japanese suppliers. Below is comparison table of Japanese ventures work when compared to US plants and European plants. Table 1. 1 Comparative Table of Japanese plants with US an Europe plants. |Comparative Japanese and American |Transplants in |U. S. Plants |European Plants | |Plant Performance in North America |North America |in America |in Europe | |Productivity |21. 2 |25. 1 |36. | |Quality |65 |82. 3 |97 | |Inventories |1. 6 |2. 9 |2 | |Size of repair area |4. 9 |12. 9 |14. 4 | |Absenteeism |4. 8 |11. 7 |12. 1 | |Training of new production |370 |46. |173. 3 | |Percentage of work force in teams |71. 3 |17. 3 |0. 6 | |Number of job classifications |8. 7 |67. 1 |14. 8 | (Robert R. Heder, Judith Kenner Thompson) Japanese Manufacturers are known for their quality, this is main reason the first three companies in perception of quality are Toyota, Honda and Nissan. One of the main reason behind this Japanese suppliers. Taking this into consideration SDT(Supplier Development teams) were developed .

At first Nissan selected two engineers to undergo training activities in Japan. Based on this training, they have developed a 10 day improvement activity which started improving the suppliers by a major extent. They carry out evaluation of supplier activities at the supplier place and discuss necessary improvements and disclose the necessary action plan with senior management and take approval from them and carry on with improvement activity. Nissan European Technology Centre (NETC) :- NETC, started in 1988 has centres at Cranfeild, Sunderland, Barcelona, Brussels and Munich.

NETC plays a key role in design and developing the vehicles manufactured and marketed in Europe. Its other activities include market research, research on styling, Testing of vehicles according to the emission standards. NETC Europe is reputed for improving the identity of the brand and enhancing the quality. The Design Engineers in Europe, NETC USA and NETC Tokyo are connected through satellite for uninterrupted sharing of information. How is the information shared:-Communication of information between suppliers and Customer is very important for developing an efficient supply chain.

Proper usage of Technology like OSI(Open Systems Interconnection), EDI(Electronic Data Interchange), EPOS(Electronic Point of Sale) can improve the supply chain performance to a greater extent. NX-96:-It is an initiative by Nissan to evaluate and improve its Supplier base. It started in early 1990 and the approach was to set targets for Quality, Cost, Delivery, Development and Management. And encourage the suppliers to reach them. How is Supply Chain Performance Measured:-Supply Chain in most cases is measured by inventory tied up with the company as it adds up to the cost to he company. There are two ways to measure supply chain efficiency mathematically 1) Inventory Turnover Method :- [pic] 2) Weeks of Supply Method;- This method is mainly used, where there is more distribution inventory involved [pic] Cost of goods sold :- also known as ‘cost of revenue’ is annual cost incurred by the company in production of goods and services to the end user. Average Aggregate Inventory value :- It is the total value of the inventory held by the company So there is a need for efficient way of maintaining inventory which lead to introduction of kanban.

Kanban means ‘card you can see’ can be defined as ‘Pull’ system of maintaining inventory. It starts from the customers order and follows production line to the customer. According to kanban, every part should have a card and it has an inventory number attached to it, which should be removed before it is installed and sent to the purchase department as a request for another part. So a part is manufactured only if there is a kanban card attached to it. Quality:- The Key corporate principle of Quality for Nissan UK is “Building Profitability the highest quality car sold in Europe” (Robert R.

Heder, Judith Kenner Thompson) Nissan tries to think from customers perspective, and there will be no customer who will be ready to accept defective parts. So it is important from Nissans perspective, that all its products reach the quality standards. So it expects its suppliers to have high quality standards. Cost:- Suppliers are expected to have good cost control measures suitable targets were set to them and many of them were achieved. Delivery:- Nissan looks for right quantity to be delivered at right time and in right condition. And this particular area is easy to measure.

Development:-Development activity is very difficult to be measured due to wide variety of supplier base, products and technologies. Which resulted in poor results Management:- Nissan expects its suppliers to have a open approach, suppliers should be willing to share development plans it is only when true co development takes place. They found that there was a problem regarding measuring development. As they have wide variety of supply base. It is difficult to assess to what extent, that particular supplier has developed leading to poor results and suppliers were also dubious about future results.

These conditions resulted in a new programme ’Next 21’. Nissan Euro Excellence Towards 21st Century(Next 21) :- This particular programme set ongoing improvement targets for the next millennium. It was observed that Nissan is still ranked below when compared to its competitors like Toyota and Honda. Though its actual quality is far better. So Nissan has shifted its attention for building more stylish designs which would appear to the customer and incorporating durability and reliability in their total quality experience.

Cogent(Drive forward Together) :- Cogent is an innovative program started by Cranfeild university, NETC and Suppliers. It was funded by Innovative Manufacturing Initiative(IMI), supported by DTI. They were 88 suppliers who participated in this initiative. It is introduced to integrate design and development activities of both Nissan and Suppliers at the development stage. As they found that if 80% of cost, Quality and performance are determined at product development phase, the business profit that is achieved is relatively higher.

According to Andy Palmer NETC, general manager for vehicle design though product development accounted for only 5% of total vehicle budget ,it dictated 70-80% of total production life costs. Objectives :- 1) To Develop the supplier continuously towards world class standards, introducing concept of design and development at initial stages. 2) To have a clear understanding of factors which are responsible of co development. Cogent Results Development of an environment involving which involves both customer and suppliers by eliminating waste at every stage using Lean management techniques.

Maximise resources at intial stage which results less use of resources like trial parts at the end Teams Involved :- 1)Nissan European Technology Center 2) Cranfeild University 3) 88 Nissan Suppliers Cogent’s main aim is to improve communication between supplier and customer at early stages of development. It tries to follow lean management principles by eliminating waste at every stage of product development. Lean Management:-Lean management aims at eliminating waste in all the activities involved in producing the final product. The ultimate aim to ccelerate the time that is involved in making the final product. It actually starts with identifying unproductive resources, excess inventories, time lags in production, delivery problems, use of unreasonable floor space . The management takes immediate measures to correct these issues and tries to improve lead times, costs involved in production and a good product quality. Suppliers can improve their performance by following JIT Methods Just in time (JIT) was invented by Toyota Motor Company . According to which, the customer tells the supplier to produce correct quantity at the correct time.

Which means the supplier have to keep his inventory levels of raw materials, components and finished goods as low as possible. So the supplier have to plan his production schedule very carefully so that their customers production does not get hindered. It started with calling managing directors of its suppliers and organising a workshop with them regarding development activities and improving relationship with the supplier It actually aims to use maximum amount of resources at the initial stage so that resources used are less in the later stage.

The emphasis is on having the right first time design. By following such a process there will be reduction of lead times and true co development. In cogent they found that they need more efficient way to communicate, which paved way for Fast Track Cogent. Fast Track Cogent:- Fast track cogent is a programme in which 40 suppliers were divided into three groups and three specific workshops were conducted . They were asked to discuss core messages of cogent. They were asked what they would need to deliver world class performance. and they were asked to discussed the action plan to get there.

They were actually aligning there perceptions, processes and targets. They finalised on a target for each supplier, So the supplier is clear on the targets he has to achieve and Nissan would monitor these improvements. Kaizen: Derived from a japanese word ‘Kai’ means continuous and ‘zen ’ means improvement. It means that it is continuous and never ending improvement. It is slow, incremental and constant. The way this process is done is pretty simple. The organisation forms team which are responsible analyze problems on our day to day activities and generate solutions.

And these teams will have take the approval from the senior management before implementing these solutions. Results:- Launch of NX-96 resulted in good results. If the same is continued uptill 1998 they would have improved by one percent. With the introduction of Cogent, They have increased by 11 %. As the number of suppliers introduced to cogent increases the improvement also increases significantly. Results clearly shows that there is significant development in the suppliers activity. The codevelopment capability increased by more than 10%.

Companies performance increased by 0. 6 % per annum. Cost Reduction for about 30%. Development cost was reduced by 40%. Manufacturing costs reduced by 30%. Key learning points:- 1) Increase in business profits through alignment of design and development activities. 2) Good Return on Capital Employed(ROCE). 3) Strong agreement between supplier and customer is necessary for development of such a programme. 4) Collaboration with cranfeild university helped to get good results. 5) Reducing waste during the process increases the performance of the product. ) Development of an efficient system to measure development. 7) Development of good supplier evaluation and development system. Recent Trends :- Nissan has come up with a new supplier development program called ANPQP(Alliance New Product Quality Procedure). ANPQP sets internal standards for the suppliers for delivery of high quality components. Conclusion :-With development of programmes like cogent,Nissan can improve supplier relationships to a greater extent. And in Industry like automobiles where there is fierce competition, It is very important for Nissan to have strong supplier base.

It had already started reaping benefits of cogent best example for it is production of its new electric car ‘leaf’. The research on this electric car started in 1992. And now it is far ahead when compared to its competitors like GM, Honda on its electric car specifications. References:- 1) Anon. [online]. Available from http://www. supplychainstandard. com/liChannelID/15/Articles/465/Shaping+the+future+of+the+automotive+supply+chain. html 2) Anon. [online]. Available from http://www. foresightvehicle. org. uk/dispproj1. asp? wg_id=1050 3) Anon. [online] available from http://www. just-auto. com/article. spx? id=86119 4) Anon. [online]. Available from http://www. nissan-global. com/EN/QUALITY/GLOBAL_SP/GUARANTEE/ 5) Anon. [online]. Available from http://www. cardata. com/electric_cars. htm 6) Becker, S. F. U. ‘Supplier Integration—Controlling of Co-Development Processes. ‘ [online]. Available from http://www. sciencedirect. com/science? _ob=ArticleURL&_udi=B6V69-4H57JVT-2&_user=10&_coverDate=01%2F31%2F2006&_alid=1123485106&_rdoc=24&_fmt=high&_orig=search&_cdi=5809&_sort=r&_docanchor=&view=c&_ct=11097&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=367e67989ac4be5c49be09f037bbe7ba ) Thompson, R. R. R. J. K. ‘ Nissan U. K. : The Japanese Transplant Beachhead in Europe. ‘ [online]. Available from 9) Wickens, P. The Road to Nissan 10) Agarwal, R. B. C. F. R. J. N. J. A. N. K. Operations Management for Competitive Advantage. 11) M. Srinivasan, M. ‘Streamlined:14 Principles for Building and Managing the Lean Supply Chain. ‘ 12) Southey, P. (2009) ‘Supply Chain Management – Module Notes. Bibilography :- 1) Bhaskar, K. The Future of the World Motor Industry.

Toy World

COMM 371, Lecture 7 COMM 371, Lecture 7 Lecture 7: Financing Seasonal Needs – Toy World, Inc. • Objectives: • To understand the pattern of current assets and cash flows in a company with seasonal sales, and how these are affected by the choice of production plan • To understand the trade-off between profitability versus risk and liquidity in choosing between level and seasonal production • To practice the mechanics of basic financial analysis What is it that we are trying to help Mr. McClintock with?

Case Facts • Highly seasonal sales (80% of sales between August and November) • Current production follows sales, and thus is highly seasonal. • Question: should the company smooth production over the year? • Examine pro-forma monthly statement of cash flows for 1994, constructed with base on pro-forma tables reported by company 1 2 COMM 371, Lecture 7 COMM 371, Lecture 7 What we will do • Assess Toy World’s need for external financing under its current (seasonal) production plan. Discuss the timing, magnitude, and duration of borrowing needs, and risk. Assess Toy World’s need for external financing under the proposed level production plan • Conceptual discussion • The mechanics of preparing the pro forma income statement and balance sheet • Would a bank be likely to provide the financing necessary under the smooth production plan? • Would you recommend adoption of the level production plan? • Cost savings versus risks The Current (Seasonal) Production Plan Production is approximately equal to sales (production in response to customer orders). Cost and benefit of the seasonal production plan: • Inventory • Inventory is minimized and the funds necessary to finance inventory is minimized. Inventory risk is minimized. • Costs • Overtime premiums in high season (reduces profits) • Difficulty in scheduling production runs & shorter production runs • Fixed capital is underused part of the year and then run to capacity • Seasonal financing requirements • Primarily receivables financing during the collection lag after the months of peak sales (lag is 60 days) • The firm stays comfortably within its current credit line (it is owing $752 thousands at the end of 1993, and the bank is willing to extend a credit line of up to $2 million in 1994) • Cash balance stays at a minimum required to finance operations

See pro-forma IS and BS for seasonal production plan 3 4 COMM 371, Lecture 7 COMM 371, Lecture 7 Level Production Plan • Benefit o Eliminates overtime premiums o Other direct labor costs savings • Cost o Higher inventory and handling cost o Need to commit funds to finance inventory accumulation in the off season Analysis of pro-forma financial statements • Net income is much higher under level production ($519 vs. $351) • Level production dramatically increases financing needs • The required financing exceeds the maximum credit available ($2 million) for all months in the period June-November. Maximum financing needed in September doubles the available credit • Main issues: o What is the financing need under level production? o Is the current credit limit enough to cover this need? o Are there any risks involved in level production? • Actually, most critical month is July o Current assets are mostly inventory in July, whereas for September accounts receivable increase substantially. o The risk of not collecting is less than the risk of not selling! • Examine inventory cycle Construct MONTHLY Pro-forma Financial

Statements • So level production is more risky (can end up with unsold inventories) and requires more financing (now yet available) • Look more in detail at the advantages of level production! 5 6 COMM 371, Lecture 7 COMM 371, Lecture 7 • Cost Savings of Level Production (compare pro-forma statements level vs. seasonal production plans) Under level production: • If estimates are right, net income increases by almost 48% • Requires much more bank financing = 7000-6510 cut in • Required bank borrowing from June to November is above the $2 million limit set by the bank. So loan renegotiation is needed. Need to convince the bank that the firm can repay the loans. • Higher risk: if sales forecasts were not accurate, then the firm may end up with unsold inventory (dollar sales of particular products can vary 30-35% from year to year), while having to repay a larger loan. • From the bank’s perspective, the firm becomes riskier. • However, Toy World is approaching full capacity during seasonal production peak. The adoption of level production postpones the need for additional investment in fixed assets.

Overtime Premiums Other labor savings Net labor savings COGS Increase in interest expense Reduction in interest income Increase in storage costs Op. Exp. Combined cost Net pre-tax savings Taxes (34%) Net savings 225,000 265,000 490,000 105,000 = 200-95 17,000 = 28-11 115,000 = 2515-2400 in 237,000 253,000 86,020 166,980 7 8 COMM 371, Lecture 7 COMM 371, Lecture 7 • Are there any alternatives? • Sell receivables or offer them as collateral for a bank loan. Also tighten credit policy to customers to induce quick repayment. However, in July when financing needs are highest, accounts receivable are only $300, so not much collateral can be offered. • Tighter credit to customers can reduce sales…. • How about asking suppliers for an extension of payment time? • However, AP are $250 per month, so even if credit is extended to 90 days, this would only generate payables of $750. Would suppliers extend credit? • A production plan half way between seasonal and level production. • Should the bank extend the loan? The firm needs a credit line of up to $4 million in order to finance level production • Plus: firm financially healthy. Even if the firm absorbs inventory losses for one year, it can repay early in the next year. • Minus: substantial increase in firm risk. If sales forecast is not correct, the accumulation of inventories can wipe out the cost savings • Trade-off between profitability and liquidity o Level production increases profitability o But involves the risk of committing funds to inventory in an amount that exceeds the firm equity! 9 10

Coca-Cola India Case

Coca-Cola India On August 20, 2003 Sanjiv Gupta, President and CEO of Coca-Cola India, sat in his office contemplating the events of the last two weeks and debating his next move. Sales had dropped by 30-40%1 in only two weeks on the heels of a 75% five-year growth trajectory and 25-30%2 year-to-date growth. Many leading clubs, retailers, restaurants, and college campuses across the country had stopped selling Coca-Cola3 and only six weeks into his new role as CEO, Gupta was embroiled in a crisis that threatened the momentum gained from a highly successful two-year marketing campaign that had given Coca-Cola market leadership over Pepsi.

On August 5th, The Center for Science and Environment (CSE), an activist group in India focused on environmental sustainability issues (specifically the effects of industrialization and economic growth) issued a press release stating: “12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues” (See Exhibit 1).

According to tests conducted by the Pollution Monitoring Laboratory (PML) of the CSE from April to August, three samples of twelve PepsiCo and Coca-Cola brands from across the city were found to contain pesticide residues surpassing global standards by 30-36 times including lindane, DDT, malathion and chlorpyrifos (See Exhibit 2). These four pesticides were known to cause cancer, damage to the nervous and reproductive systems, birth defects, and severe disruption of the immune system. In reaction to this report, the Indian government banned Coke and Pepsi products in Parliament and state governments launched independent investigations, sending soft drink samples to labs for testing. The Coca-Cola Bottling Company (Coke) stock dipped by five dollars on the New York Stock Exchange from $55 to $50 in the six sessions following the August 5 disclosure, as did shares of Coca-Cola Enterprises (CCA). Pepsi and Coca-Cola called the CSE allegations “baseless” and questioned the method of testing but the CSE claimed it had followed standard procedures documented by the US Environmental Protection Agency including Gas Chromatography and Mass Spectrometry. Pepsi’s own tests conducted at an independent laboratory showed no detectable pesticides and led Pepsi to file a petition with the high court questioning the credibility of the CSE’s claims6 while Coke’s Gupta commented: “The allegation is serious and it has the potential to tarnish the image of our brands in the country.

If this continues, we will consider legal recourse. ”7 Despite Coke and Pepsi’s early responses denying the validity of the CSE’s claims and threatening legal action, a survey conducted in Delhi a few days after the CSE announcement found that a majority of consumers believed the findings were correct and agreed with parliament’s move to ban the sale of soft drinks. 8 It was clear that the $1 billion Indian soft drink market9 was at stake and Gupta had to act. Coca-Cola India no. 1-0000 History of Coke The Early Days

Coca-Cola was created in 1886 by John Pemberton, a pharmacist in Atlanta, Georgia, who sold the syrup mixed with fountain water as a potion for mental and physical disorders. The formula changed hands three more times before Asa D. Candler added carbonation and by 2003, Coca-Cola was the world’s largest manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups, with more than 400 widely recognized beverage brands in its portfolio. With the bubbles making the difference, Coca-Cola was registered as a trademark in 1887 and by 1895, was being sold in every state and territory in the United States.

In 1899, it franchised its bottling operations in the U. S. , growing quickly to reach 370 franchisees by 1910. 10 Headquartered in Atlanta with divisions and local operations in over 200 countries worldwide, Coca-Cola generated more than 70% of its income outside the United States by 2003 (See Exhibit 3). International expansion Coke’s first international bottling plants opened in 1906 in Canada, Cuba, and Panama. 11 By the end of the 1920’s Coca-Cola was bottled in twenty-seven countries throughout the world and available in fifty-one more.

In spite of this reach, volume was low, quality inconsistent, and effective advertising a challenge with language, culture, and government regulation all serving as barriers. Former CEO Robert Woodruff’s insistence that Coca-Cola wouldn’t “suffer the stigma of being an intrusive American product,” and instead would use local bottles, caps, machinery, trucks, and personnel contributed to Coke’s challenges as well with a lack of standard processes and training degrading quality. 12 Coca-Cola continued working for over 80 years on Woodruff’s goal: to make Coke available wherever and whenever consumers wanted it, “in arm’s reach of desire. 13 The Second World War proved to be the stimulus Coca-Cola needed to build effective capabilities around the world and achieve dominant global market share. Woodruff’s patriotic commitment “that every man in uniform gets a bottle of Coca-Cola for five cents, wherever he is and at whatever cost to our company”14 was more than just great public relations. As a result of Coke’s status as a military supplier, Coca-Cola was exempt from sugar rationing and also received government subsidies to build bottling plants around the world to serve WWII troops. 15 Turn of the Century Growth Imperative

The 1990’s brought a slowdown in sales growth for the Carbonated Soft Drink (CSD) industry in the United States, achieving only 0. 2% growth by 2000 (just under 10 billion cases) in contrast to the 5-7% annual growth experienced during the 1980’s. While per capita consumption throughout the world was a fraction of the United States’, major beverage companies clearly had to look elsewhere for the growth their shareholders demanded. The 2 Coca-Cola India no. 1-0000 looming opportunity for twenty-first century was in the world’s developing markets with their rapidly growing middle class populations.

The World’s Most Powerful Brand Interbrand’s Global Brand Scorecard for 2003 ranked Coca-Cola the #1 Brand in the World and estimated its brand value at $70. 45 billion (See Exhibit 4). 16 The ranking’s methodology determined a brand’s valuation on the basis of how much it was likely to earn in the future, distilling the percentage of revenues that could be credited to the brand, and assessing the brand’s strength to determine the risk of future earnings forecasts. Considerations included market leadership, stability, and global reach, incorporating its ability to cross both geographical and cultural borders. 7 From the beginning, Coke understood the importance of branding and the creation of a distinct personality. 18 Its catchy, well-liked slogans19 (“It’s the real thing” (1942, 1969), “Things go better with Coke” (1963), “Coke is it” (1982), “Can’t beat the Feeling” (1987), and a 1992 return to “Can’t beat the real thing”) 20 linked that personality to the core values of each generation and established Coke as the authentic, relevant, and trusted refreshment of choice across the decades and around the globe. Indian History

India is home to one of the most ancient cultures in the world dating back over 5000 years. At the beginning of the twenty-first century, twenty-six different languages were spoken across India, 30% of the population knew English, and greater than 40% were illiterate. At this time, the nation was in the midst of great transition and the dichotomy between the old India and the new was stark. Remnants of the caste system existed alongside the world’s top engineering schools and growing metropolises as the historically agricultural economy shifted into the services sector.

In the process, India had created the world’s largest middle class, second only to China. A British colony since 1769 when the East India Company gained control of all European trade in the nation, India gained its independence in 1947 under Mahatma Ghandi and his principles of non-violence and self-reliance. In the decades that followed, self-reliance was taken to the extreme as many Indians believed that economic independence was necessary to be truly independent. As a result, the economy was increasingly regulated and many sectors were restricted to the public sector.

This movement reached its peak in 1977 when the Janta party government came to power and Coca-Cola was thrown out of the country. In 1991, the first generation of economic reforms was introduced and liberalization began. Coke in India Coca-Cola was the leading soft drink brand in India until 1977 when it left rather than reveal its formula to the government and reduce its equity stake as required under the Foreign 3 Coca-Cola India no. 1-0000 Exchange Regulation Act (FERA) which governed the operations of foreign companies in India.

After a 16-year absence, Coca-Cola returned to India in 1993, cementing its presence with a deal that gave Coca-Cola ownership of the nation’s top soft-drink brands and bottling network. Coke’s acquisition of local popular Indian brands including Thums Up (the most trusted brand in India21), Limca, Maaza, Citra and Gold Spot provided not only physical manufacturing, bottling, and distribution assets but also strong consumer preference. This combination of local and global brands enabled Coca-Cola to exploit the benefits of global branding and global trends in tastes while also tapping into traditional domestic markets.

Leading Indian brands joined the Company’s international family of brands, including CocaCola, diet Coke, Sprite and Fanta, plus the Schweppes product range. In 2000, the company launched the Kinley water brand and in 2001, Shock energy drink and the powdered concentrate Sunfill hit the market. From 1993 to 2003, Coca-Cola invested more than US$1 billion in India, making it one of the country’s top international investors. 22 By 2003, Coca-Cola India had won the prestigious Woodruf Cup from among 22 divisions of the Company based on three broad parameters of volume, profitability, and quality.

Coca-Cola India achieved 39% volume growth in 2002 while the industry grew 23% nationally and the Company reached breakeven profitability in the region for the first time. 23 Encouraged by its 2002 performance, Coca-Cola India announced plans to double its capacity at an investment of $125 million (Rs. 750 crore) between September 2002 and March 2003. 24 Coca-Cola India produced its beverages with 7,000 local employees at its twenty-seven wholly-owned bottling operations supplemented by seventeen franchisee-owned bottling operations and a network of twenty-nine contract-packers to manufacture a range of products for the company.

The complete manufacturing process had a documented quality control and assurance program including over 400 tests performed throughout the process (See Exhibit 5). The complexity of the consumer soft drink market demanded a distribution process to support 700,000 retail outlets serviced by a fleet that includes 10-ton trucks, open-bay three wheelers, and trademarked tricycles and pushcarts that were used to navigate the narrow alleyways of the cities. 5 In addition to its own employees, Coke indirectly created employment for another 125,000 Indians through its procurement, supply, and distribution networks. Sanjiv Gupta, President and CEO of Coca-Cola India, joined Coke in 1997 as Vice President, Marketing and was instrumental to the company’s success in developing a brand relevant to the Indian consumer and in tapping India’s vast rural market potential. Following his marketing responsibilities, Gupta served as Head of Operations for Company-owned bottling operations and then as Deputy President.

Seen as the driving force behind recent successful forays into packaged drinking water, powdered drinks, and ready-to-serve tea and coffee, Gupta and his marketing prowess were critical to the continued growth of the Company. 26 4 Coca-Cola India no. 1-0000 The Indian Beverage Market27 India’s one billion people, growing middle class, and low per capita consumption of soft drinks made it a highly contested prize in the global CSD market in the early twenty-first century.

Ten percent of the country’s population lived in urban areas or large cities and drank ten bottles of soda per year while the vast remainder lived in rural areas, villages, and small towns where annual per capita consumption was less than four bottles. Coke and Pepsi dominated the market and together had a consolidated market share above 95%. While soft drinks were once considered products only for the affluent, by 2003 91% of sales were made to the lower, middle and upper middle classes.

Soft drink sales in India grew 76% between 1998 and 2002, from 5,670 million bottles to over 10,000 million (See Exhibit 6) and were expected to grow at least 10% per year through 2012. 28 In spite of this growth, annual per capita consumption was only 6 bottles versus 17 in Pakistan, 73 in Thailand, 173 in the Philippines and 800 in the United States29. With its large population and low consumption, the rural market represented a significant opportunity for penetration and a critical battleground for market dominance.

In 2001, Coca-Cola recognized that to compete with traditional refreshments including lemon water, green coconut water, fruit juices, tea, and lassi, competitive pricing was essential. In response, Coke launched a smaller bottle priced at almost 50% of the traditional package. Marketing Cola in India The post-liberalization period in India saw the comeback of cola but Pepsi had already beaten Coca-Cola to the punch, creatively entering the market in the 1980’s in advance of liberalization by way of a joint venture.

As early as 1985, Pepsi tried to gain entry into India and finally succeeded with the Pepsi Foods Limited Project in 1988, as a JV of PepsiCo, Punjab government-owned Punjab Agro Industrial Corporation (PAIC), and Voltas India Limited. Pepsi was marketed and sold as Lehar Pepsi until 1991 when the use of foreign brands was allowed under the new economic policy and Pepsi ultimately bought out its partners, becoming a fully-owned subsidiary and ending the JV relationship in 1994. 0 While the joint venture was only marginally successful in its own right, it allowed Pepsi to gain precious early experience with the Indian market and also served as an introduction of the Pepsi brand to the Indian consumer such that it was well-poised to reap the benefits when liberalization came. Though Coke benefited from Pepsi creating demand and developing the market, Pepsi’s head-start gave Coke a disadvantage in the mind of the consumer. Pepsi’s appeal focused on youth and when Coke entered India in 1993 and approached the market selling an American way of life, it failed to resonate as expected. 1 2001 Marketing Strategy Coca-Cola CEO Douglas Daft set the direction for the next generation of success for his global brand with a “Think local, act local” mantra. Recognizing that a single global strategy 5 Coca-Cola India no. 1-0000 or single global campaign wouldn’t work, locally relevant executions became an increasingly important element of supporting Coke’s global brand strategy. In 2001, after almost a decade of lagging rival Pepsi in the region, Coke India re-examined its approach in an attempt to gain leadership in the Indian market and capitalize on significant growth potential, particularly in rural markets.

The foundation of the new strategy grounded brand positioning and marketing communications in consumer insights, acknowledging that urban versus rural India were two distinct markets on a variety of important dimensions. The soft drink category’s role in people’s lives, the degree of differentiation between consumer segments and their reasons for entering the category, and the degree to which brands in the category projected different perceptions to consumers were among the many important differences between how urban and rural consumers approached the market for refreshment. 2 In rural markets, where both the soft drink category and individual brands were undeveloped, the task was to broaden the brand positioning while in urban markets, with higher category and brand development, the task was to narrow the brand positioning, focusing on differentiation through offering unique and compelling value. This lens, informed by consumer insights, gave Coke direction on the tradeoff between focus and breadth a brand needed in a given market and made clear that to succeed in either segment, unique marketing strategies were required in urban versus rural India.

Brand Localization Strategy: The Two Indias India A: “Life ho to aisi” “India A,” the designation Coca-Cola gave to the market segment including metropolitan areas and large towns, represented 4% of the country’s population. 33 This segment sought social bonding as a need and responded to aspirational messages, celebrating the benefits of their increasing social and economic freedoms. “Life ho to aisi,” (life as it should be) was the successful and relevant tagline found in Coca-Cola’s advertising to this audience.

India B: “Thanda Matlab Coca-Cola” Coca-Cola India believed that the first brand to offer communication targeted to the smaller towns would own the rural market and went after that objective with a comprehensive strategy. “India B” included small towns and rural areas, comprising the other 96% of the nation’s population. This segment’s primary need was out-of-home thirst-quenching and the soft drink category was undifferentiated in the minds of rural consumers.

Additionally, with an average Coke costing Rs. 10 and an average day’s wages around Rs. 100, Coke was perceived as a luxury that few could afford. 34 In an effort to make the price point of Coke within reach of this high-potential market, CocaCola launched the Accessibility Campaign, introducing a new 200ml bottle, smaller than the traditional 300ml bottle found in urban markets, and concurrently cutting the price in half, to 6 Coca-Cola India no. 1-0000 Rs. 5.

This pricing strategy closed the gap between Coke and basic refreshments like lemonade and tea, making soft drinks truly accessible for the first time. At the same time, Coke invested in distribution infrastructure to effectively serve a disbursed population and doubled the number of retail outlets in rural areas from 80,000 in 2001 to 160,000 in 2003, increasing market penetration from 13 to 25%. 35 Coke’s advertising and promotion strategy pulled the marketing plan together using local language and idiomatic expressions. Thanda,” meaning cool/cold is also generic for cold beverages and gave “Thanda Matlab Coca-Cola” delicious multiple meanings. Literally translated to “Coke means refreshment,” the phrase directly addressed both the primary need of this segment for cold refreshment while at the same time positioning Coke as a “Thanda” or generic cold beverage just like tea, lassi, or lemonade. As a result of the Thanda campaign, Coca-Cola won Advertiser of the Year and Campaign of the Year in 2003 (See Exhibit 7). Rural Success

Comprising 74% of the country’s population, 41% of its middle class, and 58% of its disposable income, the rural market was an attractive target and it delivered results. Coke experienced 37% growth in 2003 in this segment versus the 24% growth seen in urban areas. Driven by the launch of the new Rs. 5 product, per capita consumption doubled between 2001-2003. This market accounted for 80% of India’s new Coke drinkers, 30% of 2002 volume, and was expected to account for 50% of the company’s sales in 2003. 36 Corporate Social Responsibility

As one of the largest and most global companies in the world, Coca-Cola took seriously its ability and responsibility to positively affect the communities in which it operated. The company’s mission statement, called the Coca-Cola Promise, stated: “The Coca-Cola Company exists to benefit and refresh everyone who is touched by our business. ” The Company has made efforts towards good citizenship in the areas of community, by improving the quality of life in the communities in which they operate, and the environment, by addressing water, climate change and waste management initiatives.

Their activities also included The Coca-Cola Africa Foundation created to combat the spread of HIV/AIDS through partnership with governments, UNAIDS, and other NGOs, and The Coca-Cola Foundation, focused on higher education as a vehicle to build strong communities and enhance individual opportunity (See Exhibit 8). 37 Coca-Cola’s footprint in India was significant as well. The Company employed 7000 citizens and believed that for every direct job, 30-40 more were created in the supply chain. 8 Like its parent, Coke India’s Corporate Social Responsibility (CSR) initiatives were both community and environment-focused. Priorities included education, where primary education projects had been set up to benefit children in slums and villages, water conservation, where the Company supported community-based rainwater harvesting projects to restore water levels and promote conservation education, and health, where Coke India 7 Coca-Cola India no. 1-0000 partnered with NGOs and governments to provide medical access to poor people through regular health camps.

In addition to outreach efforts, the company committed itself to environmental responsibility through its own business operations in India including39: • • • • • • • • Environmental due diligence before acquiring land or starting projects Environmental impact assessment before commencing operations Ground water and environmental surveys before selecting sites Compliance with all regulatory environmental requirements Ban on purchasing CFC-containing refrigeration equipment Waste water treatment facilities with trained personnel at all company-owned bottling operations Energy conservation programs 50% water savings in last seven years of operations Previous Coke Crises Despite Coke’s reputation as a socially responsible corporate citizen, the Company has faced its share of controversy worldwide surrounding both its products and its policies in the years preceding the Indian pesticide crisis. Ingram, et al. v. The Coca-Cola Company- 199940 In the spring of 1999, 4 current and former Coca-Cola employees, led by Information Analyst Linda Ingram, filed bias charges against Coca-Cola in Atlanta Federal Court.

The lawsuit charged the Company with racial discrimination and stated: “This discrimination represents a company-wide pattern and practice, rather than a series of isolated incidents. Although Coca-Cola has carefully crafted African-American consumers of its product by public announcements, strategic alliances and specific marketing strategies, it has failed to place the same importance on its African-American employees. ”41 In the decades leading up to the suit, both internal and external warnings surrounding Coke’s diversity practices were issued. In 1981, the Reverend Jesse Jackson, director of the Rainbow/ PUSH coalition instigated a boycott against Coca-Cola challenging the company to significantly improve its business relationship with the African American community. 2 The Ware report, written by Senior Vice President Carl Ware, an African-American executive at the Company, cited a lack of diversity at the decision-making level, a basic lack of workplace diversity, a “ghettoization” among blacks who worked for Cola-Cola, and an overt lack of respect for cultural differences as well as an implicit assumption that African- 8 Coca-Cola India no. 1-0000 American employees lacked the intelligence to meet the challenges of the highest executive levels. 43 Cyrus Mehri, one of the most visible and successful plaintiff advocates in the US, represented the group and was skilled at leveraging the power of the media, creating a true crisis for the Coca-Cola Company and exerting tremendous pressure for settlement. In 2000, the lawsuit was settled for $192. million after the company had sent mixed messages and damaging statements regarding the merit of the suit for over a year. Analysts identified the bias suit as a prime reason for the $100 billion decrease in Coca-Cola’s stock price between 1998-2000. 44 Belgium- 199945 On June 8, 1999, thirty-three Belgian school children became ill after drinking Coke bottled at a local facility in Antwerp. A few days later, more Belgians complained of similar symptoms after drinking cans of Coke that had been bottled at a plant in Dunkirk, France and eighty people in northern France were allegedly stricken by intestinal problems and nausea, bringing the total afflicted to over 250.

In the days following the first outbreak, seventeen million cases of Coke from five European countries were recalled and destroyed. It was the largest product recall in Coke’s history and Belgian and French authorities banned the sale of Coca-Cola products for ten days. Germany placed a temporary import ban on Coca Cola produced in Belgium and the Netherlands, and Luxembourg banned all Coca Cola products. Health ministers in Italy, Spain, and Switzerland warned people about consuming Coke products. Coca-Cola sources explained that the contamination was due to defective carbon dioxide used at the Antwerp plant and that a wood preservative used on shipping pallets had concentrated the outside of cans at the Dunkirk plant.

The European Commission, however, believed production faults and contaminated pipes were more likely to be the cause of the problem. Though CEO Ivester was in Paris when the news broke, he flew home to Atlanta and kept silent, waiting over a week to issue his first public statement on the crisis, citing that “Coke would do whatever necessary to ensure the safety of its products. ” A Netherlands-based toxicologist Coke had hired issued a report on June 29 exempting the company from blame for the CO2 impurity in Antwerp and the fungicide at Dunkirk. Though the product ban was lifted, Coke had a tremendous amount of work to do to win back consumer confidence.

An aggressive PR campaign included vouchers and coupons for free product delivered to each of Belgium’s 4. 4 million homes, sponsored dances, beach parties, and summer fairs for teenagers, and significant television advertising reinforcing “Today, more than ever, we thank you for your loyalty. ” 9 Coca-Cola India no. 1-0000 Kinley Bottled Water On February 4, 2003 the Center for Science and Environment (CSE) in India released a report based on tests conducted by the Pollution Monitoring Laboratory (PML) titled “Pure Water or Pure Peril? ” Analysis of 17 packaged drinking water brands sold across the country revealed evidence of pesticide residues including lindane, DDT, malathion, and chlorpyrifos.

The CSE used European norms for maximum permissible limits for pesticides in packaged water “because the standards set for pesticide residues by the Bureau of Indian Standards (BIS) are vague and undefined. ”46 Coca-Cola’s Kinley water brand had concentration levels 15 times higher than stipulated limits, top-seller Biserli had 79 times and Aquaplus topped the list at 109 times. 47 In the wake of this statement, Coca-Cola remained largely silent and the buzz went away. Corporate Communications at Coca-Cola Corporate Communications was a critical function at the Coca-Cola corporation given the number of constituencies both internal and external to the company. In addition, the complexity and global reach of the Company’s operations could not be centrally managed and instead demanded a matrixed team organization.

The senior communications position at the company, Senior Vice President, Worldwide Public Affairs & Communication, sat on the company’s executive committee and reported to the Chairman & CEO at the time of the crisis in India. Director-level corporate communication functions included: Media Relations, Nutrition Communications, Financial Communications, and Marketing Communications, but the geographic diversity of the company’s businesses required regionally-based communication leaders in addition to the corporate resources in place. As a result, five regional communications directors serviced North America, Latin America, Asia, Europe, and Africa with their own teams of communications professionals (See Exhibit 9). NGO Activism48

NGOs (Non-Governmental Organizations) evolved to influence governments but by the early twenty-first century many realized that targeting corporations and key corporate constituents such as investors and customers could be an even more powerful way to effect change. Along with their ability to focus, gain attention, and act quickly was the high level of credibility NGOs had cultivated with many constituencies. This credibility stemmed in part from their emotional, rather than fact-based, appeals and the impassioned nature of their arguments. The most common tactic of NGOs was to develop campaigns against business through which they garnered support from consumers and the media.

These campaigns, such as Greenpeace’s attack on Shell Oil following the company’s decision to dump the Brent Spar oil rig in the ocean in the 1990s, typically focused on a single issue; targeted companies with successful and well-known brands such as McDonald’s and Nike; and were augmented by 10 Coca-Cola India no. 1-0000 market trends such as the homogenization created by chains like Wal-Mart and Starbucks. NGOs realized that anti-corporate campaigns could be far more powerful than antigovernment campaigns. Global Exchange’s attack on Nike for sweatshop labor conditions in the 1990s, for example, was one of the most highly publicized and also one of the most successful anti-business campaigns in recent years. Center for Science and Environment

The CSE, an NGO, was established in India in 1980 by a group of engineers, scientists, journalists and environmentalists to “catalyze the growth of public awareness on vital issues in science, technology, environment, and development. ”49 Led by Sumita Narain, a former schoolmate of Coke India CEO Gupta, the CSE’s efforts included communication for awareness, research and advocacy, education and training, documentation, and pollution monitoring. Spurred by the February 2003 report on bottled water and questions like “if what we found in bottled water was correct, then what about soft drinks? ” the CSE’s August 2003 report claimed that soft drinks were extremely dangerous to Indian citizens based on tests conducted at the Pollution Monitoring Laboratory (PML).

All samples contained residues of lindane, DDT, malathion, and chlorpyrifos, toxic pesticides and insecticides known to cause serious long term health issues. Total pesticides in all Coca-Cola brands averaged 0. 0150 mg/l, 30 times higher than the European Economic Commission (EEC) limit. PML also tested samples of Coke and Pepsi products sold in the United States to see if they contained pesticides and they did not. Regulations on soft drinks were weak in India, even compared to bottled water, as neither the Prevention of Food Alteration Act (PFA) nor the Fruit Products Order (FPO), aimed at regulating food standards in India, addressed pesticides in soft drinks, and there were no standards to define ‘clean’ or ‘potable’ water. The report called on the government to put in place legally nforceable water standards and chastised the multi-nationals for taking advantage of the situation at the expense of consumer health and well-being. Indian Regulatory Environment50 The main law governing food safety in India was the 1954 Prevention of Food Alteration Act (PFA) which contained a rule regulating pesticides in foods but did not include beverages. The Food Processing Order (1955) required that the main ingredient used in soft drinks be “potable water” but the Bureau of Indian Standards (BIS) had no prescribed standards for pesticides in water. One BIS directive stated that pesticides must be absent and set a limit of 0. 001 parts per million but the Health Secretary admitted, “There are lapses in PFA regarding carbonated drinks. 51 Indian law enforcement was minimal with virtually no conviction under PFA. In the absence of national standards, NGOs such as the CSE turned to the United States and the European Union for “international norms. ” The appropriateness and feasibility of these standards for 11 Coca-Cola India no. 1-0000 developing nations however, remained a question for many. Under EU food laws for example, milk, fruit, and basic staples such as rice and wheat would need to be imported into India to satisfy safety standards. The Initial Response The day after the CSE’s announcement, Coke and Pepsi came together in a rare show of solidarity at a joint press conference.

The companies attacked the credibility of the CSE and their lab results, citing regular testing at independent laboratories proving the safety of their products. They promised to provide this data to the public, threatened legal action against the CSE while seeking a gag order, and contacted the United States Embassy in India for assistance. Coca-Cola India’s CEO Sanjiv Gupta published the following statement for the Indian public:52 You may have seen recently in the media some allegations about the quality standards of our products in India. We take these allegations extremely seriously. I want to reassure you that our products in India are safe and are tested regularly to ensure that they meet the same rigorous standards we maintain across the world.

Maintaining quality standards is the most important element of our business and we cannot stand by while misleading and unaccredited data is used to discredit trusted and world-class brands. Recent allegations have caused unnecessary panic among consumers in India and, if unchecked, would impair our business in India and impact the livelihoods of our thousands of employees across the country. This site is about the truth behind the headlines. It provides some context and facts on these issues and we hope it helps you understand exactly why you can trust our beverage brands and continue to enjoy them as millions of Indians do each day. Sanjiv Gupta, Division President, Coca-Cola India

In the following days, the Delhi High Court asked the government to convene an expert committee to test and report on the safety of soft drinks within three weeks and to revise existing standards to include pesticide norms. Coca-Cola and Pepsi launched independent campaigns to reassure the public, taking out full-page newspaper advertisements and directing consumers to their corporate Web sites to review test results and safety protocol in greater detail (See Exhibits 10 and 11). In spite of these actions, the public seemed to believe the CSE’s claims and the crisis was far from over for the beverage giants. With sales continuing to experience a precipitous drop, one Delhi medical student’s sentiments appeared to be widespread: “For a person drinking at least one bottle a day, the report came as a rude shock.

I haven’t picked up a bottle today and most definitely will not consume soft drinks in the future. The reports of pesticides and other pollutants have made soft drinks a strict no-no and we will now stick to juices and plain drinking water. ”53 12 Coca-Cola India no. 1-0000 Gupta’s Dilemma As he contemplated the crisis at hand, Sanjiv Gupta questioned what action if any was necessary. Coke India was well within the country’s legal guidelines and the crisis had not been widely reported outside of India. Gupta knew that the Indian public had a short attention span and had reason to think that it wouldn’t be long before the CSE’s report faded, just as the Kinley water issue had earlier this year.

On the other hand, he wondered if the situation might offer the company an opportunity to display higher standards of social responsibility at a time when it needed to differentiate itself from the competition. Multinationals had slipped in numerous situations of late and were blamed for not adhering to the same standards in developing countries as in industrialized nations. The additive effect of this negative press meant that the potential damage to Coke’s reputation was even greater. Finally, an ineffective resolution would be a devastating blow to the momentum Coke had gained after three long years of work on the marketing front. 13 Coca-Cola India no. 1-0000 Exhibit 1: Center for Science and Environment Press Release Hard Truths About Soft Drinks

New Delhi, August 5, 2003: After bottled water, it’s aerated water that has plugged the purity test. In another expose, Down To Earth has found that 12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues. The results are based on tests conducted by the Pollution Monitoring Laboratory (PML) of the Centre for Science and Environment (CSE). In February this year, CSE had blasted the bottled water industry’s claims of being ‘pure’ when its laboratory had found pesticide residues in bottled water sold in Delhi and Mumbai. This time, it analysed the contents of 12 cold drink brands sold in and around the capital.

They were tested for organochlorine and organophosphorus pesticides and synthetic pyrethroids — all commonly used in India as insecticides. The test results were as shocking as those of bottled water. All samples contained residues of four extremely toxic pesticides and insecticides: lindane, DDT, malathion and chlorpyrifos. In all samples, levels of pesticide residues far exceeded the maximum residue limit for pesticides in water used as ‘food’, set down by the European Economic Commission (EEC). Each sample had enough poison to cause — in the long term — cancer, damage to the nervous and reproductive systems, birth defects and severe disruption of the immune system.

What we found • Market leaders Coca-Cola and Pepsi had almost similar concentrations of pesticide residues. Total pesticides in all PepsiCo brands on an average were 0. 0180 mg/l (milligramme per litre), 36 times higher than the EEC limit for total pesticides (0. 0005 mg/l). Total pesticides in all Coca-Cola brands on an average were 0. 0150 mg/l, 30 times higher than the EEC limit. While contaminants in the ‘Dil mange more’ Pepsi were 37 times higher than the EEC limit, they exceeded the norms by 45 times in the ‘Thanda matlab Coca-Cola’ product. Mirinda Lemon topped the chart among all the tested brand samples, with a total pesticide concentration of 0. 0352 mg/l. • •

The cold drinks sector in India is a much bigger money-spinner than the bottled water segment. In 2001, Indians consumed over 6,500 million bottles of cold drinks. Its growing popularity means that children and teenagers, who glug these bottles, are drinking a toxic potion. PML also tested two soft drink brands sold in the US, to see if they contained pesticides. They didn’t. 14 Coca-Cola India no. 1-0000 The question, therefore, is: how can apparently quality-conscious multinationals market products unfit for human consumption? CSE found that the regulations for the powerful and massive soft drinks industry are much weaker, indeed non-existent, as compared to those for the bottled water industry.

The norms that exist to regulate the quality of cold drinks are a maze of meaningless definitions. This “food” sector is virtually unregulated. The Prevention of Food Adulteration (PFA) Act of 1954, or the Fruit Products Order (FPO) of 1955 — both mandatory acts aimed at regulating the quality of contents in beverages such as cold drinks — do not even provide any scope for regulating pesticides in soft drinks. The FPO, under which the industry gets its licence to operate, has standards for lead and arsenic that are 50 times higher than those allowed for the bottled water industry. What’s more, the sector is also exempted from the provisions of industrial licensing under the Industries (Development and Regulation) Act, 1951.

It gets a one-time license to operate from the ministry of food processing industries; this license includes a no-objection certificate from the local government as well as the state pollution control board, and a water analysis report. There are no environmental impact assessments, or citing regulations. The industry’s use of water, therefore, is not regulated. Source: CSE Press Release, “Hard Truths about Soft Drinks,” 8/5/03. 15 Coca-Cola India no. 1-0000 Exhibit 2: Pesticide Content in Twelve Leading Soft Drink Brands Source: CSE Press Release, “Hard Truths about Soft Drinks,” 8/5/03. 16 Coca-Cola India no. 1-0000 Exhibit 3: The Coca-Cola Company Income Statement in millions $ except per share data) Net Operating Revenues Cost of Goods Sold Gross Profit Selling, general, and administrative expenses Other operating changes Operating Income Interest Income Interest Expense Equity Income (loss) Other Income (loss) –net Gains on issuances of stock by equity investee Income before income taxes and cumulative effect of accounting change Income Taxes Net Income before cumulative effect of accounting change Cumulative effect of accounting change for SFAS No. 142 net of income taxes: Company operations Equity investments Cumulative effect of accounting change for SFAS No. 133 net of income taxes: Net Income Basic Net Income per share Before accounting change Cumulative effect of accounting change 1. 60 (0. 37) 1. 3 Diluted net income per share Before accounting change Cumulative effect of accounting change 1. 60 (0. 37) 1. 23 Average shares outstanding Effect of dilutive securities Average shares outstanding assuming dilution 2478 5 2483 1. 60 0 1. 60 2487 0 2487 0. 88 0 0. 88 2477 10 2487 1. 60 0 1. 60 0. 88 0 0. 88 (367) (559) 0 3,050 0 0 (10) 3,969 0 0 0 2,177 2002 19,564 7,105 12,459 7,001 0 5,458 209 199 384 (353) 0 5,499 1,523 3,976 2001 17,545 6,044 11,501 6,149 0 5,352 325 289 152 39 91 5,670 1,691 3,979 2000 17,354 6,204 11,150 6,016 1,443 3,691 345 447 (289) 99 0 3,399 1,222 2,177 17 Coca-Cola India no. 1-0000 Exhibit 4: Interbrand’s Global Brand Scoreboard 2003 Rank Company 003 Brand Value ($Billion) 2002 Brand Value ($Billion) Percent Change Country of Ownership 1 2 3 4 5 6 7 8 9 10 Coca-Cola Microsoft IBM GE Intel Nokia Disney McDonald’s Marlboro Mercedes 70. 45 65. 17 51. 77 42. 34 31. 11 29. 44 28. 04 24. 70 22. 18 21. 37 69. 64 54. 09 51. 19 41. 31 30. 86 29. 97 29. 26 26. 38 24. 15 21. 01 +1% +2 +1 +2 +1 -2 -4 -6 -8 +2 U. S. U. S. U. S. U. S. U. S. Finland U. S. U. S. U. S. Germany Source: Interbrand’s Global Brand Scorecard, 2003. Business Week, 8/4/03. 18 Coca-Cola India no. 1-0000 Exhibit 5: Rountine tests carried out by bottling operations and external laboratories Process Parameter No. of tests 1 2 3 4 5 6 7 8 9 10

Water Water Treatment & Auxiliary Chemicals CO2 Sugar Syrup Packaging Material Container Washing Finished Product Market Samples External Lab TOTAL 71 68 50 13 17 25 17 18 15 147 441 Source: The Coca-Cola Company; http://www. myenjoyzone. com 19 Coca-Cola India no. 1-0000 Exhibit 6: Soft Drink Sales in India Fiscal Year Million Bottles Sold 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 5670 6230 6450 6600 10000 Source: “Soft drink sales up 10. 4%,” PTI, 9/29/04. 20 Coca-Cola India no. 1-0000 Exhibit 7: Thanda Matlab Coca-Cola Advertising Campaign, Print Media Source: McCann-Erickson Worldwide Web site 21 Coca-Cola India no. 1-0000 Exhibit 8: Coca-Cola Principles of Corporate Citizenship Our reputation is built on trust.

Through good citizenship we will nurture our relationships and continue to build that trust. That is the essence of our promise – The Coca-Cola Company exists to benefit and refresh everyone it touches. Wherever Coca-Cola does business, we strive to be trusted partners and good citizens. We are committed to managing our business around the world with a consistent set of values that represent the highest standards of integrity and excellence. We share these values with our bottlers, making our system stronger. These core values are essential to our long-term business success and will be reflected in all of our relationships and actions – in the marketplace, the workplace, the environment and the community.

Marketplace We will adhere to the highest ethical standards, knowing that the quality of our products, the integrity of our brands and the dedication of our people build trust and strengthen relationships. We will serve the people who enjoy our brands through innovation, superb customer service, and respect for the unique customs and cultures in the communities where we do business. Workplace We will treat each other with dignity, fairness and respect. We will foster an inclusive environment that encourages all employees to develop and perform to their fullest potential, consistent with a commitment to human rights in our workplace. The Coca-Cola workplace will be a place where everyone’s ideas and contributions are valued, and where responsibility and accountability are encouraged and rewarded.

Environment We will conduct our business in ways that protect and preserve the environment. We will integrate principles of environmental stewardship and sustainable development into our business decisions and processes. Community We will contribute our time, expertise and resources to help develop sustainable communities in partnership with local leaders. We will seek to improve the quality of life through locally-relevant initiatives wherever we do business. Responsible corporate citizenship is at the heart of The Coca-Cola Promise. We believe that what is best for our employees, for the community and for the environment is also best for our business. Source: Coca-Cola Company Website 22 Coca-Cola India no. 1-0000

Exhibit 9: Corporate Communications at Coca-Cola SVP WW Public Affairs & Communications Assistant VP & Director, Media Relations Director, Health & Nutrition Communications Director, Financial Communications Director, Marketing Communications Director, North America Communications Director, Asia Communications Senior Manager, Public Affairs & Comm, C-C India Source: Case writer derived from Coca-Cola Company Web site 23 Coca-Cola India no. 1-0000 Exhibit 10: Myths and Facts from Coca-Cola India Web site Since August 5, 2003 the quality and safety of Coca-Cola and PepsiCo products in India have been called into question by a local NGO, the Centre for Science and Environment (CSE).

The basis of the allegations are tests conducted on products of Coca-Cola and PepsiCo by CSE’s internal unaccredited laboratory, the Pollution Monitoring Laboratory. In India, as in the rest of the world, our plants use a multiple barrier system to remove potential contaminants and unwanted natural substances including iron, sulfur, heavy metals as well as pesticides. Our products in India are safe and are tested regularly to ensure that they meet the same rigorous standards we maintain across the world. The result of these allegations has been consumer confusion, significant impact on the sale of a safe and high-quality product, and the erosion of international investor confidence in the Indian business sector.

This situation calls for the development of national sampling and testing protocols for soft drinks, an end to sensationalizing unsubstantiated allegations, and co-operation by all parties concerned in the interests of both Indian consumers and companies with significant investments in the Indian economy. The facts versus the fiction False statements made in recent weeks have led to false perceptions by Indian consumers: Myth Fact Coca-Cola products in India contain pesticide residues that are above EU norms. Throughout all of our operations in India, stringent quality monitoring takes place covering both the source water we use as well as our finished product. We test for traces of pesticide in groundwater to the level of parts per billion. This is equivalent to one drop in a billion drops. For comparison’s sake, this would also be equivalent to measuring one second in 32 years, or less than one person in the entire population in India.

These tests require specialized equipment at accredited labs to have accurate results. Even at these stringent miniscule levels we are well within the internationally accepted safety norms. Myth Fact Coca-Cola products sold in India are “toxic” and unfit for human consumption. There is no contamination or toxicity in our beverage brands. Our high-quality beverages are – and have always been – safe and refreshing. In over 200 countries across the globe, more than a billion times every day, consumers choose our brands for refreshment because CocaCola is a symbol of quality. Coca-Cola has dual standards in the production of its products, one high standard for western countries, another for India. Myth 24

Coca-Cola India no. 1-0000 Fact The soft drinks manufactured in India conform to the same high standards of quality as in the USA and Europe. Through our globally accepted and validated manufacturing processes and Quality Management systems, we ensure that our state-of-the-art manufacturing facilities are equipped to provide the consumer the highest quality beverage each time. We stringently test our soft drinks in India at independent, accredited and world-class laboratories both locally and internationally. Myth Fact In India the soft drinks industry is virtually unregulated. There are no standards for soft drinks in the US, the EU, or India.

In India, water used for beverage manufacture must conform to drinking water standards. The water used by CocaCola conforms to both BIS and EU standards for drinking water and our production protocols ensure this through a focus on process control and testing of the water used in our manufacturing process and the final product quality. Myth Fact Coca-Cola has put out results for Kinley water only and not for their soft drinks. The results of product tests conducted by TNO Nutrition and Food Research Laboratory in the Netherlands is conclusive and is available on The Science Behind Our Quality web page. International companies like Coca-Cola are “colonizing” India. The Coca-Cola business in India is a local business.

Our beverages in India are produced locally, we employ thousands of Indian citizens, our product range and marketing reflect Indian tastes and lifestyles, and we are deeply involved in the life of the local communities in which we operate. The Coca-Cola business system directly employs approximately 10,000 local people in India. In addition, independent studies have documented that, by providing opportunities for local enterprises, the Coca-Cola business also generates a significant employment “multiplier effect. ” In India, we indirectly create employment for more than 125,000 people in related industries through our vast procurement, supply and distribution system. Farmers in India are using Coca-Cola and other soft drinks as pesticides by spraying them on their crops.

Soft drinks do not act in a similar way to pesticides when applied to the ground or crops. There is no scientific basis for this and the use of soft drinks for this purpose would be totally ineffective. In India, as in the rest of the world, our products are world class and safe and the treated water used to make our beverages there meets the highest international standards. Myth Fact Myth Fact Source: Coca-Cola Company Website 25 Coca-Cola India no. 1-0000 Bibliography Argenti, Paul A.. Collaborating with Activists: How Starbucks Works with NGOs. California Management Review, Vol. 47, No. 1, Fall 2004. Bhatia, Gauri. Multinational Corporations: Pro or Con? Outlook India, October 29, 2003.

Business Week Online, Things Aren’t Going Better with Coke, June 28, 1999 Centre for Science and Environment (CSE): Analysis of Pesticide Residues in Soft Drinks, August 5, 2003. Coca-Cola India. Marketing: Questioning Paradigms, Internal Company Presentation. Coke, Pepsi challenge India pesticide claim: http://www. ajc. com/business/content/business/coke/0803/06pesticide. html Coke, Pepsi India deny pesticides in soft drinks: http://www. forbes. com/home_europe/newswire/2003/08/05/rtr1049160. html Coca-Cola, Philips Win Marketing Awards: http://www. financialexpress. com 10/7/04 Dawar, Niraj and Nancy Dai. Cola Wars in China: The Future is Here. HBS Case, August 21, 2003. Dey, Saikat. Interview on Indian history and economic liberalization.

January 10, 2005. http://www. coca-cola. com/flashIndex1. html http://www2. coca-cola. com/presscenter/viewpoints_india_situation. html http://www. coca-colaindia. com/ http://www. indiaresource. org/ http://www. killercoke. org http://www. myenjoyzone. com/press1/truth. htm “Global Brand Scorecard 2003: Special Report. ” Interbrand, as seen in Business Week 8/04/03. Kaul, Nymph. Interview of Sanjiv Gupta, President and CEO of Coca-Cola India, June 2004. Kaul, Nymph. Rai University, multiple interviews. Kaul, Nymph. Rai University, “Coca-Cola India. ” Keller, Kevin Lane. Strategic Brand Management. Prentice Hall, 1998. 26 Coca-Cola India no. 1-0000

Kochan, Nicholas, editor. The World’s Greatest Brands: an International Review by Interbrand. New York University Press, 1997. “People’s Forum Against Coca-Cola,” Brochure. Pendergrast, Mark: For God, Country and Coca-Cola. Charles Scribners, 1993. Sanghvi, Rish. Interviews on Cola in India before liberalization and marketing/advertising of Coke and Pepsi in India, November 2004. Society for Environmental Communications: Colanisation’s Dirty Dozen: Deadly pesticides found in 12 leading brands of soft drinks, 8/15/03. “Soft drink sales up 10. 4%,” PTI, 9/29/04. Srivastava, Amit: Coke with a New Twist: Toxic Cola, India Resource Center, February 15, 2004.

The Corporate Web Site as an Image Restoration Tool: The Case of Coca-Cola Yoffie, David B. and Yusi Wang, Cola Wars Continue: Coke versus Pepsi in the TwentyFirst Century. HBS Case, January 11, 2002. Yoffie, David B. and Richard Seet, Internationalizing the Cola Wars: The Battle for China and Asian Markets. HBS Case, May 31, 1995. 27 Coca-Cola India no. 1-0000 Endnotes 1 “Toxic effect: Coke sales fall by a sharp 30-40%,” The Economic Times, 8/13/03, p 1. 2 “Controversy-ridden year for soft drinks. ” Business Line, New Delhi, 12/30/03, p 6. 3 “Toxic effect. ” 4 “Hard Truths About Soft Drinks. ” Center for Science and Environment, Press Release, 8/5/03. “No standards for world-wide pesticide residues in soft-drinks. ” Business Line, New Delhi, 10/03/03 p 9. 6 “Coke & Pepsi in India: Pesticides in Carbonated Beverages. ” http://www. vedpuriswar. org/articles/Indiancases retrieved 12/7/04 7 “Tests show pesticides in soft drinks, claims CSE,” Economic Times, 8/6/03, p 1. 8 “Coke & Pepsi in India: Pesticides in Carbonated Beverages” 9 http://www. indiastat. com 10 “Coca-Cola India. ” Nymph Kaul, 2004. and Coca-Cola Company Website: http://www2. cocacola. com/heritage/ and Pendergrast, For God, Country and Coca-Cola. Charles Scribner’s, 1993. 11 http://www2. coca-cola. com/ourcompany/aroundworld. tml 12 Pendergrast, 172. 13 Ibid 14 Ibid, 199 15 Ibid, 200-201. 16 “The Top 100 Brands: Interbrand Brand Scorecard 2003. ” Interbrand Special Report, as seen in Business Week 8/4/03. 17 Ibid 18 The World’s Greatest Brands, A Review by Interbrand. Edited by Nicholas Kochan. 19 Strategic Brand Management. Kevin Lane Keller, page 153. 20 http://www. portobello. com. au/portobello/reading/memorabilia_cocacola. htm 21 “Brands of Coca-Cola in India,” Rai University, 11/04. 22 http://www. coca-colaindia. com 23 Sanjiv Gupta Biography, Rai University. 24 “Coca-Cola India to Double Capacity,” Kolkata, 3/8/03. 25 http://www. coca-colaindia. com 26 Gupta Bio 27 http://www. ndiastat. com 28 Ibid 29 Ibid 30 “Broken commitments: The case of Pepsi in India. ” Kavaljit Singh, PIRG Update, May 1997. 31 Interview with Nymph Kaul, 9/20/04. 32 Coca-Cola India Internal Marketing Presentation 33 Ibid 28 Coca-Cola India no. 1-0000 34 Kaul 35 Kaul 36 Ibid 37 http://www. coca-colaindia. com 38 Ibid 39 Ibid 40 “The Corporate Web site as an Image Restoration Tool. ” Nicola K. Graves and Randall L. Waller, 2004. 41 “Coca-Cola accused of a ‘companywide pattern. ’” Unger, H, The Atlanta Journal-Constitution, p H1, (1999a, April 24). 42 “The real thing: Truth and power at the Coca-Cola Company. ” Hays, C. L. , New York: Random House 2004. 3 Ibid 44 “Coke crisis: Equity erodes as brand troubles mount. ” MacArthur, K. , & Linnett, R. , Advertising Age, p. 3, 4/24/00. 45 “Coke & Pepsi in India: Pesticides in Carbonated Beverages,” p. 8 46 “Pure Water or Pure Peril,” CSE press release 2/03. 47 Ibid 48 “Collaborating with Activists: How Starbucks Works with NGOs. ” Argenti, Paul A. , CMR, Fall 2004. 49 http://www. cseindia. org 50 “Coke & Pepsi in India: Pesticides in Carbonated Beverages,” p. 3. 51 “The Gulp War,” Supriya Bezbaruat and Malini Goyal, India Today, 8/25/03, pp 50-53. 52 http://www. coca-colaindia. com 53 “Shocked Dehlites Stay Away from Soft Drinks,” The Hindu, New Dehli, 8/07/03 p. 1 29

Bronfenbrenner Analysis

Urie Bronfenbrenner is most famous for his views on ecological psychology. Some argue that he is one of the most well known psychologists of his time. In his eighties when he died, he had an extremely long and productive career. Having read a lot of history on this psychologist I would have to agree that interactions with others and the environment are key to development. These theories acknowledge the interaction of biology and environment. They also emphasize the important impact that cultures can have on the development of the individual.

We all experience more than one type of environment, including §The microsystem – such as a family, classroom, etc is the immediate environment in which a person is operating. §The mesosystem – which is two microsystems interacting, such as the connection between a child’s home and school. §The exosystem – which is an environment in which an individual is not involved, which is external to his or her experience, but nonetheless affects him or her anyway. For example, if the parent has a bad day at work, or is laid off, or promoted, or has to work overtime, all of these events impact the child.

And finally, §The macrosystem – or the larger cultural context (Bronfenbrenner, U. 1979). The ecology of human development. Cambridge, MA). Throughout my life and in my home my parents, grandparents and great grandparents were all educated and there was no question whether or not education would be the next step. With this background as Bronfenbrenner says, two microsystems are interacting, such as the connection between a child’s home and school (Bronfenbrenner, U. 1979).

It was inevitable that I went to college and graduate, it was even more important to further my education as much as I saw fit. The sky is the limit and we were taught that only we as individuals could hold ourselves back. There was no pointing the blame at others and we knew that if we failed that we had to take ownership and accountability for what went wrong. Graduate school for me was a personal choice for me because I knew there were other things that I wanted to accomplish and learn. In today’s economy and with our future not as promised, I knew that education was the key to my success.

Bronfenbrenner emphasized that what was important about development was the social context that children grew up in. People in different cultures develop dramatically different outlooks on life. They learn different skills. Also, children are extremely dependent upon their parents or teachers to care for and teach them, this is very universal in my opinion. No matter where you are from all children rely on their elders to teach them and even duplicate what they see their elders doing because they have no sense as a child of right from wrong.

With that being said, a child can sense when something is wrong even if they don’t understand what’s going on, for instance, the mesosystem (Crandell, Crandell, & Vander Zanden, J. W. 2009) when a child whose parents are fighting all the time and considering divorce starts to become more withdrawn at school. Children may not understand why their parents are fighting or getting a divorce, so that can lead to them thinking they did something to cause their parents fighting and in turn blame themselves. This reflects in the child’s personality and grades.

Another of Bronfenbrenner environmental systems is exosystem (Crandell, Crandell, & Vander Zanden, J. W. 2009); an example of an exosystem is the child’s parent’s workplace. Although a child may never have any role in the parent’s workplace, or, in fact, never even go there, the events which occur at the child’s parent’s place of employment do affect the child. A child’s father having problems at work is more irritable with family members. The last system is the macrosystem which refers to the values, laws, and customs of a particular culture.

This too has influenced my decision to go to graduate school because I had a sense of not wanting to be “left behind” in the world. Although I certainly don’t have any idea of how other peoples parents raise them in other parts of the world, I think our common goals are somewhat going in the same direction such as wanting to better ourselves. We have to stay ahead of the trend and some of us have the desire to set the newest trends. We would like for that trend to make a difference in the lives of everyone in the world.

No matter where you are from, the culture and historical influences that people grow up in change who they are as individuals. These theories acknowledge the interaction of biology and environment. They also emphasize the important impact that cultures can have on the development of the individual. Bronfenbrenner (1979) emphasizes that change at the level of the macrosystem is particularly important. Because it affects all other environmental levels, revising established values and programs in ways more favorable to candidate development has the most far-reaching impact on candidates’ well being.

This is the most interesting theories in psychology for me and one that includes a large percentage of truly important concepts such as the relationship with your parents, teachers, cultural expectations for different societies, the national economy, your socioeconomic status and much more. Bronfenbrenner theories have effected my educational decisions more than I could have imagined. References: Crandell, Crandell, & Vander Zanden, J. W. (2009) Human Development (9th ed. ) Boston: McGraw-Hill Higher Education Bronfenbrenner, U. (1979). The ecology of human development. Cambridge, MA: Harvard University Press

Differences Between Animal and Plant Cells

Robert Sullivan Period 3, Biology 11/18/2007 Plant Cell Paper Plant Cell The plant cell is seemingly less complicated then the animal cells. Having the necessary nucleus which holds the cells DNA and produces ribosomes that help in the synthesis of proteins. Surrounding the nucleus is the rough and smooth endoplasmic reticulum. The two help break down and store materials. Rough stores and transports synthesized proteins, while smooth stores and transports synthesized lipid, steroid hormones, and other materials.

Small, but useful organelles within the cell are the mitochondrion, the secretory vesicles, the lysosome. Centrosome, and the peroxisomes. Mitochondrion is about the size of bacteria, but is the power center of a cell. Secretory Vesicles (hormones, neurotransmitters) are packaged in the Golgi and are transported to the surface to release their chemicals. Lysosome are rarely found in the plant cells, but are necessary for intracellular digestion. Centrosome are an area where microtubule are produced for cell division.

Peroxisomes are membrane-bound packets of oxidative enzymes that help convert fatty acids to sugar and assist chloroplasts in photorespiration. Four big parts within the cell are the vacuole, the chloroplast, and the cytosol, and the cell wall. The vacuole is a membrane sac that works the intracellular digestion and release of cellular waste products. Vacuoles are fairly large in plant cells. Playing several roles; storing nutrients and waste products , helping increase cell size during growth, and acting much like lysosomes in animal cells.

They regulate the pressure in the cell and collect water to keep the plant from wilting. Chloroplasts are specialized organelles fond in all higher plan cells. Those organelles contain the plants chlorophyll which is responsible for the plant green color. The cytosol is the soup like liquid that all other organelles reside in and where most of the cellular metabolism occurs. Lastly the cell wall which animal cells do not have. It is a rigid protective wall made up of polysaccharides. Polysaccharides are replaced in higher plants with cellulose.

Lamp at Noon Essay

Formal Critique of The Lamp at Noon “The Lamp at Noon” is a very educational story. It shows how hard times can result with negitive consequences, and it can drive a regular human being into insanity. Isolation from the real world and other people can drive a person wild. After being alone in a house with nobody to talk with, Ellen feels a sense of abandonment. She starts to lose her mind after being ignored by her husband, Paul, and eventually does what she thinks is best for her and their baby. Paul is blinded by the arguement, and forgets the actually risk that he is putting his wife and baby through. The Lamp at Noon” effectively projects many themes; it is a tragic, yet interesting story that could be easily understood. The shifting third person point of view is suprisingly easy to follow throughout the story. It focuses on Ellens thoughts, and then onto Pauls as Ellen slowly gravitates toward senility. Ellen had realized that Paul was not listening to her, and he only focused on the arguement instead of the actual conflict. Ellen is then forced to insanity as she endures the fierce dust storms clouding overtop of their rickity old home. Once as she listened this first wind sprang inside the room, distraught like a bird that has felt the graze of talons on its wing; while furious the other wind shook the walls, and thudded tumbleweeds against window until its quarry glanced away again in fright” page 423 Paul escapes to the barn, where he can think without the pressure of his wife. Little does paul know, Ellen is planning an escape from the unbareable living conditions. They are both hungry and tired which elevates the tension between Paul and Ellen. Paul is set on living on his own; providing for his family by himself.

When Ellen proposes that they work for her father, he denies the proposition immediately. Pauls ego is getting in the way of seeing what is really happening to his family. The dirty and hostile land is obviously not an atmosphere to raise a child, but Paul can only visualize being miserable working for Ellens father. ” ‘Go where? ‘ His voice as he answered was still remote and even, inflexibly in unison with the narrowed eyes and the great hunch of muscle-knotted shoulder. ‘Even as a desert it’s better than sweeping out your father’s store and running his errands.

That’s all I’ve got ahead of me if I do what you want. ‘ ” page 424 The house is dark because the sun is hidden behind a cloud of sandy dirt, and the couple are feeling the pressure. A lantern is lighting up a small portion of the home, which makes Ellen feel even more confined. Ellen is feeling scared and alone, while Paul is reflecting on how she feels. When Ellen made a desperate flee of the home, Paul had realized what he had put her through. Because of Pauls ignorence, Ellen had nowhere to turn so she escaped the horrific conditions with the baby.

Ellen can not handle the taunting winds, the dirty home, or the lack of resources. All of this builds up and Ellen finally breaks free. Paul does not feel Ellen’s pain throughout the story; he only see’s her being difficult and argumentitive. In reality, Ellen is losing her mind because of Paul’s absence during the hard times in the house. Paul is always coming and going from the house to the barn, but Ellen is always stationary. She has nothing to do and is getting annoyed with the baby crying. Ellen is having a nervous breakdown, but Paul is oblivious to the occurance.

Because Ellen is always in the house, she is severly bored and has a very high level of stress. Her accumilation of stress and anger explode, and she run’s away with the baby. When Paul finally realizes that Ellen is in desperate need of a companion, he is disturbed to see an empty crib, and no sign of Ellen. He realizes he has made a mistake by seeing the horses and cows becoming skin and bones from malnutrition. Paul eventually comes across Ellen holding a lifeless baby in her arms after searching the land. After having a sudden realization of his mistake, Paul tends to Ellen.

She is still in a state of shock because the baby is dead, but she is treating it like the opposite is true. “The child was quite cold. It had been her arms, perhaps, too frantic to protect him, or the smother of dust upon his throat and lungs. ” page 430 Paul knew he should have been more empathetic and comforting toward Ellen. She was very scared, and thought that there were no other way. If Paul had been with her in the house, she would not have felt so isolated, and would have been able to talk to Paul about her problems.

Sinclair Ross was able to show how some people can be caught up in an arguement and forget the important things. Paul was so involved with the disagreement that he forgot what it was about, which effected Ellen a great deal. If Paul was not set on being right, Ellen could have explained herself and convinced Paul to do the right thing. Ross also thoroughly explains that isolation and rough circumstances can be very stressful and could eventually lead to a drastic decision. Ellen had been held in a prison like environment, and did not respond well to the isolation and disparity.

Iago the Ultimate Villain

William Shakespeare, the creator of the classic novel Othello, has portrayed the very popular character Iago in such a way that allows readers of all levels to get a fairly common analysis. The conventional interpretation of Shakespeare’s Othello consists of the understanding that Othello’s naivety was ultimately the cause of Shakespeare’s signature tragic ending. However, Iago clearly had the most injurious impact on Othello’s transition from being a strong independent man of high credentials and highly respected virtue, to a feeble man of little confidence and susceptible to being scammed or hoodwinked by the other characters in the story.

The most universal interpretation of Iago’s character is that he Iago is a mischievous individual. Iago is indeed the ultimate villain. Villains often oppose expressing their true emotions to the people in the environment surroundingthem because they interpret it as a sign of weakness. Iago has shown that he is indeed the ultimate villain because he combined his knowledge of a human’s emotional reactions to certain situations, with his villainous nature to create a society in which he basically controlled the other characters’ actions.

Within Iago’s soliloquy, he reveals his nefarious intentions to Roderigo (Shakespeare 57-65). Iago admits that he follows Othello not to envy him as a person nor to fulfill a specific obligation, but to exploit Othello’s many timidities and to “serve his turn upon him” (Shakespeare 9). Iago’s quote foreshadows an attempt to commit an act of revenge upon Othello, the man Iago suspects of having an affair with his wife, Emilia. Due to Iago’s fear of becoming vulnerable, Iago is more comfortable with keeping his emotions bottled up until they are converted into an obsession with revenge. I will wear my heart upon my sleeve / For daws to peck at…” (Shakespeare 69). Iago understands that Othello’s insecurities can drive him to lose control of his emotions and might cause him to do irrational things. Iago pits Othello against Desdemona by planting seeds of doubt in Othello’s mind that Desdemona was having an affair with Cassio (Shakespeare 117). Iago then sets up a situation where Desdemona will provide Cassio with Othello’s handkerchief, which makes Desdemona and Cassio’s relationship appear to be more suspicious than it is in actuality (Shakespeare 145-148).

Iago indirectly validated his claim of an affair between Desdemona and Cassio, from Othello’s point of view by providing false but ocular proof that Desdemona and Cassio’s relationship consisted of something more than he was aware of. Iago, the ultimate villain, sealed Desdemona’s fate with this incident and at the same time he tarnished the reputations of two people Othello trusted most. Iago single-handedly caused a transformation of Othello’s character by pitting the people he trusted most against each other but most importantly they were deemed untrustworthy in Othello’s eyes. Iago is indeed the ultimate villain in Shakespeare’sOthello.

As the story continues, it becomes further comprehensible that Iago’s motives are based upon his greed and jealousy towards Othello and his material possessions as well as his reputation. Throughout the play Iago manipulates Othello into thinking that Desdemona, who is his wife, is having an affair with lieutenant Cassio. Iago’s resentment of Cassio serves as Iago’s motivation to commit these acts of treason against Cassio because Othello appointed Cassio as his lieutenant. In Act III: Scene III, Othello and Iago says “hah? I like not that” Iago says “seeing you coming” this makes Othello suspicious of Desdemona and Cassio (Shakespeare 76).

Iago is often displayed as a man of great wit, because he uses irony to plant the seeds of mischief in Othello’s mind, but at the same time he is increasing his credibility from Othello’s perspective. Iago says to Othello “she did deceive her father…” (Shakespeare 76). In this quote, Iago is saying she could deceive anyone else, and this includes Othello. Iago causes Othello to question Desdemona’s trustworthiness. In Othello’s next quote you see evidence of Iago’s manipulative tactics beginning to take effect on Othello. Othello says “O a, bound to thee forever… ” (Shakespeare 78).

Iago says “I see y’are moved” (Shakespeare 78) Iago is asking Othello if he trusts his word to be true, and wants him to say that he does believe his word is credible. Othello calls Iago “this honest creature,” (Shakespeare 80) this reveals some of the unrevealed irony within the play. This quote also reveals that Othello is being honest, because he sincerely believes Iago has no intentions of causing him any harm. Whereas Iago’s primary focus is to cause Othello harm. Author Jay Handelman of the Sarasota Herald-Tribune asserts the idea that Iago is indeed the ultimate villain, published “A matter of trust … nd revenge,” an article in compliance with Iago’s role as the ultimate villain. Handelman states “Iago is a relentless and witty villain…” Iago ultimately causes the deaths of Othello, Desdemona, and himself. Killing Othello and Desdemona alone, would not have quenched his thirst for evil, he had to destroy the lives of his victims before he killed them (Handelman 1). In agreement with the idea of Iago being the ultimate villain, Samantha Markham of Suite101. com Inc. , wrote the article “The Brilliant Villain of Othello,” which states that Iago’s talent for manipulating people makes him a villain.

Iago has this exceptional talent for analyzing a character and maximizing their negligible insecurities, while using them to tarnish their reputations and inevitably break down their character. “He has to be the most articulate, because it is his power of persuasion that allows Othello to be taken in by his lies and manipulation…” (Markham 1). With this statement from Markham’s second article analyzing Iago, “The Moor of Venice,” Markham clearly reiterates the fact that Iago’s ability to manipulate people is injurious to the lifespan of the additional characters.

She praises Iago’s erudite skills for deception and his ability to flawlessly maintain the trust of the characters he is manipulates (Markham 1). As supported by critical analyses from S. Markham of Suite101 Inc. , R. Moore of Enotes. com Inc. , J. Handelman of The Saratoga Herald-Tribune, and Shakespeare’s original novel,Othello, Iago is the ultimate villain. Throughout the novel, Iago manipulates all of the supportive characters and in due course causes them to eradicate one another.

Handelman and Markham’s articles prove that Iago’s villainous behavior has an injurious affect on the existence of the eminent characters in the story. Moore’s analysis focused more on the diversity of methods Iago used to manipulate the other characters. Moore showed that Iago is a character of high intelligence because he preys on Othello’s insecurities, and poisons the image of an innocent and loyal Desdemona in the eyes of her husband Othello. In support of my thesis, critical analysts of Iago’s character verify that, Iago is indeed the ultimate villain.

The Wizard of Oz: an Exploration of the Connections to the Populist Movement

The Wizard of Oz: An Exploration of the Connections to the Populist Movement Dorothy, as played by Judy Garland in the movie, was a young teenage girl who, when a tornado hit her house in Kansas, was magically transferred to Oz with her dog, Toto. Dorothy was seen as the Everyman who just wanted to get back to the way things used to be. She embodies what every American wants to be: loyal, strong-willed, and resourceful. Henry Littlefield identifies her, “”Dorothy is Baum’s Miss Everyman.

She is one of us, levelheaded and human, and she has a real problem. ” Hugh Rockoff of Rutgers University sees her in a similar manner, “Dorothy represents America—honest, kindhearted and plucky. ” Dorothy comes from an area where Populism was its strongest and therefore is connected to the average American citizen who wants to be able to stand up to the stronger power and fight for the greater good. Jack Weatherford sees Dorothy almost the same as Littlefield and Rockoff.

He also believes that she was based upon the Populist spokeswoman Leslie Kelsey who was later nicknamed “the Kansas Tornado. ” Even if using the spiritual journey as the meaning for The Wizard of Oz, Dorothy is seen as the seeker of enlightenment or redemption. The Scarecrow is Dorothy’s first friend in Oz. He is meant to be a symbol for the western farmer. Several opinions of Kansas’ farmers were present in the late 19th century. One was brought up in the Emporia Gazette in August of 1896 when William Allen White presented the article What’s the Matter with Kansas?

In this he brings about the question of when every other country in the United States is gaining in all ways, why it is that Kansas has gone in the opposite direction and has a deficit in everything. The Scarecrow characterizes the Kansas farmer because he doesn’t think that he is enabled with the characteristics that were in actuality his best. The Scarecrow did not think he was intelligent and when proposing an idea to the group he wasn’t wholly behind it because he didn’t have the self-assurance that he was very bright.

The Scarecrow was the most keen and ingenious of the traveling group. At the end of the Baum’s book, the Scarecrow was indeed left in charge of Oz. Sources: Dreier, Peter. “Over the Rainbow: A historical background. ” Rev. of The Wizard of Oz. Littlefield, Henry M. “The Wizard of Oz: Parable on Populism. ” American Quarterly 1964 Rev. on The Wizard of Oz. Turn Me On, Dead Man, Weblog Taylor, Quentin P. “Money and Politics in the Land of Oz. ” Rev. of The Wizard Of Oz. The Independent Review, 2005 White, William Allen. “What’s the Matter with Kansas? ” The Emporia Gazette, 1896.

Country of Origin

Introduction In the production of this report, the information is obtained from several different sources. The sources of information are collected from books, the internet, and journals databases in relation to consumer behaviour and the country of origin. The information is used to support the discussion and analysis. The report assumes the status oriented consumers as the market assumptions. The scope of the report covers the theoretical concept section in the following section. It is about the theory of country of origin and the steps in consumer decision making.

Also, there is discussion and analysis section, where the importance of COO and the steps impacted by the COO are discussed. Finally, conclusion and recommendation are presented in the last section of this report. 1. Theoretical Concept 1. Country of Origin (COO) Country of origin plays an important role in consumer decision making process. Consumers strongly associate certain items with specific countries, and products from those countries often attempt to benefit from these linkages (Solomon 2009, pp. 375). Sometimes it is being used as a determining factor for consumers when they buy a product.

Consumers buy products not only because they perform well or are produced by a well known corporation, but also based on the country of origin (Maheswaran 2006). Saeed (1994) points out that country-of-origin means the country that a manufacturer’s product or brand is associated with; traditionally this country is called the home country. The country of origin of a product, typically communicated by the phrase “made in (country),” has a considerable influence on the quality perceptions of a product (Ueltschy 1998). Swiss watches can be an example.

Federation of the Swiss Watch Industry (2009) mentioned that ‘Swiss made’ embodies a concept of quality, which includes technical quality of watches (accuracy, reliability, water-resistance, and shock-resistance) and aesthetic quality (elegance and originality of design). Consumers use the term “made in Swiss” as a way to judge the products’ quality. Consumers perceive that the watches made in Swiss have the best quality compared to the other countries. 2. Consumer Decision Making Process Consumers who want to buy a product might have a process of making the decision whether to buy or not to buy.

The process is called consumer decision making process. The process is shown in Figure 2 below: Figure 1 – The Consumer Decision Process [pic] Source: Neal et al. (2004), pp. 19 The consumer decision making process comprises 5 steps, which begin with problem recognition stage. Next, information search, evaluation and selection, store choice and purchase follow the first step. At the end of the process, the post purchase processes is occurred. The five steps are affected by situations. The process shown in figure 2, there is two types of arrow.

First, it is the dotted line. It allows the consumers to step back the process. Second, the full line which allow the consumers to jump over to the next step. 1. Problem Recognition Problem recognition is the first step in the consumer decision making process. A problem exists because there is a need. Needs are what individuals must have or wants to have (Griffin & Pustay 2005, pp. 432). The recognition of a problem is the result of discrepancy between a desired state and an actual state, which sufficient to arouse and activate the decision process (Quester et al 2007, pp. 0). 2. Information Search After the problem has been recognized, then the information needs to be collected. The searching of information involves internal and external search. The internal search is generally information stored in the memory. Meanwhile, external search can come from many sources, for instance friends, family, advertisements, and so on. 3. Evaluation and Selection Once the information has been gathered, consumers have to evaluate the information. They might have evaluative criteria before purchasing a product.

The consumer sees each product as a bundle of attributes with different levels of ability of delivering the problem solving benefits to satisfy his/her need (Matsuno 1997). When they find a product with the desired characteristics, the decision to select can be made. To decide the alternatives, consumers can think of brands that are preferred the most (evoked set). If the most preferred is not available, then they can have second choice brands used as a back up (inert set). However, when consumers can not get products from both of evoked and inert set, the inept set occurs.

It consists of brands rejected by consumers. 4. Store Choice and Purchase After the consumers already know what brands that they want, they go to the stores to purchase it. There are some forms of stores, which are virtual and physical store. Virtual stores are stores that sell products online or via the internet. On the other hands, physical store is the store that sells products through an outlet in which a consumer can typically see and feel the products. The consumers purchase the products in the chosen store. 5. Post Purchase Processes Post purchase processes is the last step in the decision making process.

In this step, consumers evaluate the product that is already bought. The evaluation can bring two results: satisfaction or dissatisfaction. If the satisfaction occurs, then consumers will likely to be loyal to the brand. However, consumers can go back to the problem recognition stage if the dissatisfaction happened. 2. Discussions and Analysis 1. The Importance of Country of Origin (COO) The country of origin is important as a source of competitive advantage. A competitive advantage exists when the firm is able to deliver benefits that exceed those of competing product (Porter n. . ). Kotler & Armstrong (2006, pp. 206) defined competitive advantage as an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices. One attribute that has the potential for conferring a competitive advantage is the product country image, which is more generally described as the country of origin effect (Baker & Ballington 2002). In handbag industries, it is important to see the product’s country image so that consumers can determine whether the handbags are good or not.

The handbags made in Italy have a competitive advantage compared to handbags made in China. The Italian handbag is made to be more prestigious, exclusive, and elite because it used good materials from Italy. In contrast, it is not seen as prestigious, exclusive, and elite as the Italian made when the handbag used materials from China. The used of production in China can not create competitive advantage for Alberto. Without the existence of competitive advantage, it can make Alberto becomes more difficult to attract consumers to buy his handbags.

The selection of country to manufacture his handbags is essential so it requires careful thinking to move the production. 2. The Impact of COO on the Decision Making Process 1. Problem Recognition In the case of status oriented consumers, the country of origin does not affect to the problem recognition stage. It is because in this problem recognition stage, the consumers just realized that they have a problem, which is they need a handbag. They only think to buy handbags to solve their problem and thus can fulfill their needs. They do not think whether the handbags are made in Italy or are made in China.

So, the country of origin does not take place. 2. Information Search After identifying the problem, consumers tend to search more information that they need to solve their problem. Consumer seeks a lot of information about the handbags. The information search process is not affected by the product’s country of origin because when searching for information, consumers do not have any limitations in determining the amount of information needed. They look for the handbags’ information without seeing the home country that makes the products. They do not search the information about the handbags that is just made from one country.

The information of the handbags is collected from many different sources. Erickson et al (1984) stated that there is no study has attempted to incorporate country of origin as a potentially important determinant of the amount of search. 3. Evaluation and Selection Consumers’ evaluation on a product can be affected by the products’ country of origin. Country of origin has an impact on product evaluation (Schaefer 1995). Consumers will look at the product country image since they are status oriented people. Country of origin is sometimes known as country image (Morish & Lee n. d. ).

Country image also has a big contribution to make to brand perceptions (Yasin et al 2007). If the country image of handbag industry is good or positive, then it will enhance consumers’ desire to buy handbag from those country. In the reverse way, consumers will not buy the handbag if the country image of the handbag industry is bad or negative. Consumers often use perceptions of a country’s image in product evaluation when they are unable to detect the true quality of a country’s product (Balestrini & Gamble 2006). They tend to rely on the country image to judge the quality of handbag.

Sohail (2005) mentioned that consumers seem to have a positive or a better perception of products from developed countries, as compared to products from developing countries. Consumers will have more positive perception to handbags made in Italy rather than the Italian handbags made in China since Italy is recognized as more developed than China particularly in the fashion business industry. As it is known by plenty of people, Italy is a country that has positive image in terms of fashion products. Therefore, the handbag made in Italy is famous in the world.

People do not have any doubt toward the handbag made in Italy because they believe in the Italian craftsmanship are able to make a high quality handbag. In contrast to Italy, the handbag made in China might have negative image for most of people. The reason is because China is not popular as a country of fashion in the world. There are a lot of people perceive that any Chinese handmade products are not reliable. Consumers believe to the price-quality relationship, which means that the more expensive the product, the better the quality that it has. The Chinese handmade is cheaper than Italian due to cheaper production and labor costs.

The cheaper price of the handbag make consumers evaluate that it does not have good quality as the Italian handbag has. Since the evaluation step is affected, the selection has also affected by the country of origin. Consumers might not select the Italian handbags made in China. According to Baker & Al-Sulaiti (1998), the quality perception of designer brands was lowered when made in Korea, China, and Costa Rica. In other words, it can be said that people perception toward products made in China is low even though the product is Italian handbags. As a result, they might not want to buy the handbags made in China.

The review made by Vittachi (2004) provides a series of survey. A survey conducted by Synovate Ltd (2004) mentioned that the majority of respondents bought European-labelled goods because they were better designed and of higher quality. It shows that the consumers have a positive image of European goods in their mind. Therefore, the handbags made in Italy will be selected over the Italian handbags made in China because of the image. Consumers with their positive attitude towards the Italian handbags will encourage themselves to buy the one made in Italy even tough the price is very expensive, but it has better design and quality.

In contrast, there is a counter viewpoint, Dongdae and Ganesh (1999) mentioned that changes in country of manufacture will not affect brand image much. The Italian handbag made in China does not bring a significant effect for consumers. Consumers are not affected by the changes of country of origin of the handbags, which is from Italy to China. So, they do not evaluate and select the handbag based on its country of origin. In summary, the country of origin gives impacts to the evaluation and selection step in the consumer decision making process.

Even though there is a contrasting view point, it can not be applied to the evaluation and selection step in this case because the market for the handbag regards status as the most important. Finally, the changes of country of origin cause consumers change their perception of the handbag. 4. Store Choice and Purchase Store choice and purchase processes are affected by products’ country of origin. After the product has been selected by the consumer, they will choose the store that sells the product with the made in label as they want.

Since the consumer thought that the handbag made in Italy is better than the handbag made in China, they will only choose the store that sells the handbag made from Italy. In other words, country of origin limits the number of outlets visited by consumers. Next, the purchase process will likely to occur when consumers have decided the store. The country of origin gives impact to the purchase step. Lin and Chen (2006) stated that the country-of-origin brand and its country image do play a very important role when a consumer makes a decision and would affect a consumer’s preference level and furthermore affect his/her purchasing intention.

Han (1991) concluded that COO had indeed affect consumer’s purchase decision. The country of origin limits the purchase options for consumers. Consumers who highly view status as important will only purchase handbags made in Italy. As a result, they will purchase the handbags made in Italy straight away. The handbag made in China is not preferred to be purchased by them because it does not have values that can increase or maintain their status. 5. Post Purchase Processes The country of origin does not give impact to the post purchase processes because consumers already know which handbag to buy.

Moreover, the country of origin of the handbag is already evaluated by consumers. As a result, it does not give any effect to the post purchase processes. 3. Conclusion In conclusion, the market assumption for the handbags industry made by Alberto is status oriented consumers. By looking at these consumers, the consumer research team can investigate the impact of country of origin on consumer decision making process. The country of origin is shown by the made in label of a country.

In addition, the country of origin is important for the handbags industry as a source of competitive advantage, in which the competitive advantage can be used to attract more consumers to buy the products. The decision making process consists of five steps, which include problem recognition, information search, evaluation and selection, store choice and purchase, and post purchase processes. The country of origin, which is often see as country image, affects two steps in decision making process in the handbag industry. The steps are evaluation and selection and store choice and purchase. 4. Recommendation

There is a recommendation from the consumer research team to Alberto. Alberto should not move his handbags production to China. The reason is the product can lose its competitive advantage. The status oriented consumers see his handbags as the one that has more value than the others. If Alberto moves the production, the consumers will not buy his handbags anymore because it can lower their status in social living. The moving production to China can harm the brand itself. It won’t sell as high as handbag made in Italy. The other reason is the status oriented consumers believe in price-quality relationship.

The expensive handbag is perceived as having a good quality. If the handbag changed to be made in China, they would not buy. Third reason is related to the two steps affected by COO. Consumers already have more positive evaluation toward handbags made in Italy than handbags made in China. Therefore, they will not select made in China. It is difficult to change people perception to the brand image that is already stuck in their mind. Also, through keeping the production in Italy make consumers easier to purchase the handbag as there is limited store that sell the product.