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UPES Assignment 2014 Economics and Management Decisions-Ass-1-2014J
Product Name : Economics and Management Decisions-Ass-1-2014J
Product Code : AC1
Category : UPES
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Section A (20 Marks)

Write short notes on any four of the following

1.   Significance of Managerial Economics

2.   Law of Diminishing Marginal Utility

3.   Price Elasticity of Demand

4.   Opinion poll methods of demand forecasting

5.   Production Functions



Section B (30 marks)


(Attempt any three)

1.   Discuss the law of demand. Explain the exceptions to the Law of Demand.

2.   Describe the types of demand along with functions of demand.

3.   Define managerial economics. Explain the role and responsibilities of managerial economist.

4.    Explain the concept of cost. Differentiate between total cost and marginal cost.


Section C (50 marks)

(Attempt all questions. Every question carries 10 marks)


Read the case “Coke Bottles Losses in India.” and answer the following questions:


Case Study: Coke Bottles Losses in India with a $400 Million Asset


That Coke was taking a hit in India was known, but to what extent wasn't. Now it is and it's stunning. Coca-Cola Co's chief financial officer, Gary Fayard told analysts in New York on Tuesday that the company was writing off $ 400 million of its assets in India in the first quarter of 2000. In other words, virtually half the investment made by the beverages giant in India has turned to ashes.

This huge dent in its Indian assets, the company clarified, didn't in any way alter Coca-Cola's commitment to India. "We remain just as committed," said a company spokesman here, while declining to comment any further. He wouldn't be drawn into a discussion on the implications of the write off on Coke's future plans here or on whether this would lead to changes in the management structure.

The cat was out of the bag on January 26. When Coke filed its 1999 fourth quarter results with the US Securities & Exchange Commission on that day, it had admitted to a 21 per cent dent in its bottom line and a $ 45 million loss in that quarter.

It had admitted to more: "The reason for this is the company's investments in Japan and India." It had also said that it would carry out a comprehensive re-evaluation of its assets in India.

The job, therefore, was cut out for its new worldwide boss. Douglas Daft and his new Indian lieutenant Alex von Behr. And it was obvious that it wouldn't be a pleasant one. The magnitude of the writing down of its assets makes it appear that the Coke brass has chosen to make a clean breast of the Indian mess and restart it with a clean slate.

But why had the mess piled up in the first place. While Coke India itself is not communicative about it, piecing together available information makes it appear that the large losses were mainly due to three reasons - the huge expenses Coke incurred in buying out bottlers, its lavish market discounting schemes and its expensive advertising campaigns.

Coke is estimated to have paid off its bottlers about ` 1,500 crores for a smooth acquisition process, which apart from giving the company an integrating bottling network, hasn't really given commensurate returns. On top of that, there have been high discounting scheme expenses as well as the expenses to acquire key accounts (restaurants, five-star hotels, movie theatres) as well as costly ad campaigns (it's said that it has signed on current Bollywood sensation Hrithik Roshan for more than ` 5 crore).

The runaway expenses in India is said to have been worrying Atalanta for a while.

Coke's former boss, Doug Ivestor, had come to India in August 1999 to see things for himself. Prior to that, an audit team from the headquarters had visited the local HQ in Gurgaon and said to have found the expenses high indeed. Thereafter, there has been a change in local management structure and cost control measures were initiated.

Now, the impact of the write off could be two fold. One: Coca-Cola India now gets to start afresh. And two: the big brother in Atalanta is likely to keep a close eye on future expenses which might reduce the operating freedom of the local management.




1.   What factors do you think influenced the demand for the Coca-Cola? How might these factors change over time?

2.   How does strategic behavior affect market shares, profitability and prices?

3.   Analyze the case. Comment on the nature of 'economic problem' and 'choice of strategy'.

4.   Analyze the market environment of Coca-Cola in India today. Comment on the observation, "AD war is a mad war; it is just a zero-sum game at the end."

What changes and measures were initiated to manage structure and cost control.
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