Reference no: EM133251212

Case #1: Tata India

Project: 2004 & 2008 Industrial Projects (steel mill, power plants, fertilizer plants)

Tata, a global conglomerate headquartered in India, is another company that has seen its fair share of stalled projects. The main reason behind this is conflict with local communities over land acquisition for Tata industrial projects.

For example, in 2004, the state government sold 3000 acres of land to Tata in Kalinga Nagar to build a 6-million-ton steel plant. But with families still living on the land, it proved difficult for Tata to proceed with the project. When the company tried to build a perimeter wall in 2006, clashes with the community members erupted, leading to 14 deaths.

This is not the only Tata project that has had to suffer. In July 2008, the group terminated four industrial projects including 2 power plants, fertilizer plant and steel plant, all of which were estimated to cost $4 billion. The reason behind these failures was that the Bangladesh government was unable to provide natural gas required to run the plants.

Case #2: Pets.com

Project: Pet supplies
Even after heavy VC investment of up to $110 million, pets.com had to eventually shut down due to over-optimism and logistical problems.

The backers of the project believed that it would be successful owing to the belief that pet owners love to spend money on their pets. But as the company soon found out, the high cost of shipping pet equipment and food which tend to be heavy, pushed up pricing. The company couldn't sell enough high-profit-margin products to keep up. Add this to the fact that the company was offering discounts, they ended up selling at below cost and within just 2 years of operations, the company eventually had to shut down in 2000.

Questions

1. What is the main issue in each of the two cases?

2. Give a recommendation for addressing each of the main issue in the 2 cases