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CASE STUDY

INDO-CZECH PRECISION INSTRUMENTS

A sales-orientation approach

A Company was formed at Coimbatore in 1955 with Czechoslovakian collaboration to

manufacture mechanical calculators. For years to come, they enjoyed a reputation as the only

calculator manufacturer in India. Their calculator was a well-known name in all business

organizations. Especially, their accounting staff found it of immense use.

The management placed its major emphasis on maintaining a superior product and

merchandising it through a large network of retail outlets dealing in office machinery,

stationery etc. The company also had regional offices at Bombay, Calcutta, New Delhi and

Madras to look after the sales of different zones in the country. By 1967, they had a sales forceof over hundred persons of the retailers were given one months training at their works to offer

regular service to their large number of clients in each town.

In the year 1966, the company introduced an electric calculator. This was basically the

same design as mechanical one except that it used electric power instead of manual operation

and thereby not only saved the efforts on the part of the operator but also increased the speed

of calculations at least five times. This model also was well received in the market.

The company had reached a yearly turnover of Rs. 60 million by 1966 when the

collaboration for mechanical calculators expired. The company till then had accumulated

reserves of little over Rs. 1 crores. The management felt that the time was ripe to diversify inother lines. The collaborators for mechanical calculators offered the technical know-how for

typewriters. The association of eleven years was extremely beneficial to both the parties and

the management of the Indian company quite willingly decided to accept this offer. It was felt

that the company already had the sales force; distribution structure etc. and the introduction of

the new product would be smooth.

The Government clearance to this new project was obtained in January 1967 and plans

were started to set up production facilities for 20,000 typewriters per annum. The plant was

commissioned with much fan-fare in December 1968.

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The company introduced its typewriter as an office model with normal length carriage

fitted with attractive type-set in Roman script. It was, however, soon noticed in the market

that, as against a waiting period of one year that was normally prevailing for mechanical

calculators, the buyers were reluctant to go in for the companys typewriters with the same

enthusiasm. After six months of selling, complaints were received about certain defects. The

company discontinued the production for six months. All the faults were rectified and with avigorous advertising campaign, the typewriters were reintroduced. By that time, the company

was spending approximately 3% of its sales turnover on advertising. In spite of the best efforts,

the typewriter was a poor third behind Remington and Godrej.

The company turnover however was increasing over the years but the growth rate had

comparatively slowed down.

In the year 1970, the company reached its peak of Rs. 90 million. After that, it started

sliding down. The management felt that it was due to overall recession that was affecting all

industries during that time. The slide, however, continued.

In October 1976, the management requested the Government to grant the permission

to close down the operations. This was resisted angrily by a labor-force, which was already

depleted from 2000 in the year 1969 to just 1000 presently.

Questions:

1. What happened to challenge this firms dominant position in the calculatorsmarket?

2. What remedial measures would you suggest to bring the company out of the red?