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The purpose of this paper is to illustrate how a well-performing company can turn into a loss-making company on account of adverse industry cycle and poor management of risks in the business. The importance of factors like optimal level of leveraging, the ability of the management to deal with external and internal risks, and importance of corporate governance in the process of credit appraisal is understood from this case.

The case relates to the credit appraisal by the banks of a prominent steel company in India. The company, Bhushan Steel Limited, was doing very well. The banks lent aggressively to the company, based on their credit appraisal. However, the company soon turned insolvent on account of poor assessment of risks and deteriorating external factors. While this case may be analysed and studied through the eyes of both the Management and the lenders, the focus is currently on the latter. In a real-world scenario, the challenge for the lender is to sieve through the financial as well as non-financial data and make a valid conclusion on the level of credit worthiness of the borrowing company. This includes the topics of operational efficiency and synergies, commodity price cycles, external credit ratings, operating and financial leverage, regulatory risks and corporate governance.

Post graduate business management programmes – Finance specialisation.

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CSS 1: Accounting and Finance

The case is intended to enable the student to understand: The dynamics of SME, particularly in the adhesive industry entrepreneurial dilemma faced by the owner of an SME, faced with an existential crisis; the application of analytical frameworks such as Porter’s five forces, PESTEL and SWOT in strategy formulation; importance of long-term supplier relationships and focus on quality in retaining relationship clients.

The case is set up in the context of a SME in the adhesive industry in India where the Managing Director of the company Suntej Engineering Private Ltd was engulfed with questions on the future of the firm. The firm was faced with multiple challenges mostly from the external environment. The case could help students to appreciate the process of strategic decision-making by the owner of a small firm, in response to a crisis situation, and how his vast experience and entrepreneurial mind-set helps him to tide over the crisis.

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Strategy

The case specifically discusses the role of stakeholders and non-market forces and how they can potentially influence the strategic choices of firms. Participants need to have some basic understanding of non-market forces, and stakeholder theory. The case is suitable for courses on sustainable supply chain management, closed loop supply chain management, reverse logistics, green business, environmental management, strategic management and business in emerging economies.

The target audiences for the case are bachelor and first-year MBA students and trainees who are interested in learning the relevance of non-market forces in sustainable growth of an industry and the importance of stakeholder management in the smooth conduct of business.

The case study details how the plastic industry in Kerala faces a non-market threat and how it affects the progress of the industry by using the example of Ashiyana Pipe. Though plastic is a unique material by virtue of its reusability and non-perishable characteristics, it has invited a lot of criticism, as there is a wide spread perception regarding its detrimental impact on the environment (such as choking drains, preventing the degradation of solid waste because of its impermeability, etc.). But the reason for experiencing the detrimental impact of plastic can also be attributed to the inability of the supply chain of the plastic industry to reach a closed-loop status, especially in developing countries such as India, as all categories of post-consumer plastic are not reaching recycling plants. Lack of awareness, lack of community participation in proper segregation and aggregation at the source, absence of incentive systems, weak regulations and poor monitoring are discussed as the common barriers hindering the achievement of closed loop status of plastic supply chain. Detailing the barriers, the case study explains the failure of informal and formal recycling markets in Kerala. Finally, the case study proposes a model with involvement of all the key stakeholders to reposition the hate toward plastic into love through recycling initiatives.

Expected learning outcomes of the case are listed below: illustrate the importance of stakeholder involvement in achieving a sustainable business and to stress the importance of a decentralized approach. Illustrate the relevance of non-market forces in sustainable growth of an industry that has significant impact on the surrounding environment and society. Critically analyze the existing business models (based on market mechanism) and suggest possible improvements and alternatives. Understand the challenges that will be faced while implementing an inclusive model with involvement of all stakeholders to reduce the negative impact of non-market forces.

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

CSS 11: Strategy.

The case focuses on the importance of the brand-building process, which takes place in B2B companies. Commodity companies focus a lot on the sales and distribution aspect of their marketing strategies but do not emphasize the importance of developing their brands. At the end of the discussion, the participants would be able: to examine the steps involved in conceptualizing the brand identity for an existing product in a highly competitive B2B market, as per Kapferer’s Brand Identity Matrix. To understand the steps involved in the journey of internal and external brand-building processes in B2B. To analyze the various challenges and issues faced by large organizations dealing in the metals and commodity business.

The case discusses a marketing challenge faced by Jindal Steel and Power Limited (JSPL) in launching a new brand of thermomechanical treatment (TMT) products in the market. Traditionally, the company had focused on the sales and distribution aspect of their marketing strategies but did not emphasize the importance of developing their brands. This case is based upon the challenges faced in the creation of a new brand identity for JSPL’s TMT products by the protagonist, Mr Paras Sharma (who is the brand custodian and manager in this case).

Postgraduate/Masters in Business Administration (MBA), Masters in Management Studies, Executive MBA.

Teaching Notes are available for educators only.

CSS 8: Marketing.