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MGT610 Assignment No 01 Solution & Discussion Due Date:24-01-2018

Case:
Raheel & Co. was the only manufacturer of shuttle box for power loom in Pakistan and has monopoly for
the last 60 years. The company was founded in 1958, and established the market of manual loom
shuttle boxes. With the passage of time, they started to make electronic and later smart shuttle boxes
which were controlled by computer. These shuttle boxes are very complicated their technology is
inimitable.
Back in 1998, Mr. Raheel Ashraf died with cancer and the company owned by his two sons, Mr. Aqib and
Mr. Suhail. Bother brothers had decided to take their legal shares and make two more companies, with
their own names. As the business was owned by their family for many years, they had an advantage to
have trust in the market and the emerging business of power loom was at the boost at that time. These
two factors supported them and they made two manufacturing units; one in Karachi and second in
Faisalabad to support the local demand of power loom.
By 2013, government had imposed Value addition tax on textile sector and many people suffered. These
two brothers, who were actually doing separate business but in different geographical location faced
setbacks and reduction in demand. Along with other textile stake holder, they had gone into dialogue
with government officials and with the ministry to trade and development Pakistan. Response was not
good, they had been threatened by government that if they did not reduce the price, government will
subsidized import of shuttle box from China, which resultantly put positive impact on the price of
production. But the idea totally malicious and projected bad impact was disastrous.
Both brothers took decision to visit China and signed agreement with almost all big suppliers of shuttle
box. After that they came back and made a cartel to save their businesses. They had continued their
“soft” monopoly in the market as import from European countries was far much expensive for the
owners of power loom factories. Government tried so much to break that cartel, but remain unable to
do till now. Ministry had also decreased duties for the import of all parts used in power looms, but it did
not put a single dent in the business of two brothers.
Question:
In your opinion, is decision taken by brother ethical as they create monopoly against government?
Support your choice while giving 2 supportive arguments.
Special Note: You are also required to consider the fact that both are sole supplier of Shuttle box and
getting maximum profit over decades.

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