In September 1998, the Procter & Gamble Company, Cincinnati, USA, announced a major global structural change programme, “Organisation 2005”.
In September 1998, the Procter & Gamble Company, Cincinnati, USA, announced a major global structural change programme, “Organisation 2005”.
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Business
Administration
Bharat Heavy Electricals Ltd (BHEL) is
major Indian public sector enterprise in power, engineering, and manufacturing
divisions and centres spread all over the country. It exports to more than 45
countries.
The Vision 2001 statement of BHEL is as
below.
MISSION:
To be the leading engineering enterprise providing quality products,
systems, and services in the fields of energy, transportation, industry,
infrastructure, and other potential areas.
VALUES:
─
meeting
commitments made to external and internal customers
─
foster
bearing, creativity, and speed of response
─
respect for
dignity and potential of individuals
─
loyalty and
pride in the company
─
team
playing
─
zeal to
excel
─
integration
and fairness in all matters
BUSINESS MISSION: To maintain a leading position as suppliers
of quality equipment, systems, and services in the field of conversion,
transmission, utilisation, and conservation of energy for application in the
areas of electric power, transportation, and gas exploration and industries. To
utilise company’s capabilities and resources to expand business into allied
areas and other priority sectors of the economy like defence, communication,
and electronics.
COMPANY OBJECTIVES:
Growth
To ensure a steady growth by enhancing
the competitive edge of BHEL in existing business, new areas, and international
operations.
Profitability
To provide a reasonable and adequate
return on capital employed primarily through improvement in operational
efficiency, capacity utilisation, and productivity and generate resources to
finance the company’s growth.
Customer
To build a high degree of customer
confidence by providing increased value for his money through international
standards of product quality, performance, and superior customer service
Technology
To achieve technological excellence in
operations by development of indigenous technologies and efficient absorption
and adaptation of imported technologies to suit business needs and priorities
and provide a competitive advantage to the company.
Image
To fulfill the expectation which
stakeholders like government as owner, employees, customers, and the country at
large have from BHEL.
Question:-
Analyses the vision statement of BHEL and
comment on its positive and negative features.
CASE
– 2 The Troubled Soap Opera
Doordarshan (DD) is India’s public
service broadcaster (PSB) with 1,000 transmitter covering 90 per cent of the
country’s population across an estimated 70 million homes. It has 21,000
employees managing its metro and regional channels.
Recent years have seen growing
competition from private channels, now numbering more than 60, and the cable
and satellite (C & S) operators. The C&S network reaches nearly 30
million homes and is growing fast.
DD’s business model is based on selling
half-hour slots of commercial time to the programme producers and charging them
in minimum guarantee. For instance, the present tariff (i.e., in 2001), for the
first 26 episodes of a programme, is Rs 42 lakh plus the cost of production of
the programme. In exchange, the producer gets 720 seconds of commercial time
that he can sell to advertisers and generate revenue. Break-even point for
producers, at the present rates, thus is Rs 70,000 for a 10-second spot in
order to break-even. It is at this point that advertisers face a problem: the
competitive rate for a 10-second spot is Rs 50,000. Producers are cagey about
buying commercial time on DD. As a result, DD’s projected revenue growth is
just 6 to 15 per cent as against 40 to 50 per cent for the private sector
channels. Software suppliers, advertisers, and audiences are deserting DD owing
to its unrealistic pricing structure.
Clearly, DD has three options
if it is to survive. The first is to privatise and the other is to become a
pure PBS. In between is the third option of a middle path.
The SWOT factors of DD,
analysed by Business World in its issue of March 19, 201, are as below.
|
Strengths
|
Opportunities
|
Weakness
|
Threats
|
|
§
Its
1,000 transmitters cover90 per cent of the country’s population across an
estimated 70 million homes against C & S’s tally of 30 million homes.
|
§
Cable
distribution along with MTNO and DoT
§
Leasing
infrastructure, time blocks to other broadcasters like Channel 9
§
Digital
terrestrial transmission
§
Syndicating
programming
|
§
Too
much political interference
§
Muddled
programming and commercial strategy
§
Low
credibility
§
Gross
over-staffing
§
Little
stability
|
§
Producers
and advertisers are deserting DD in droves
§
C
& s Continues to attract a larger portion of advertising, and now pay
revenues
|
Privatisation
could fetch the government a tidy sum and solve many of the managerial and
operational problems of DD. Yet, no government can be expected to let go the
reins of mass media owing to its political ramifications. If DD is to be a pure
PSB, then it needs to have just a news-focussed channel letting its metro and regional
channels become autonomous entities. The middle path would mean that DD tighten
up its management by reducing its bloated workforce, diversifying into other
media, creating marketing function, and overhauling its programming function.
The
challenge seems to be to leverage DD’s immense potential and emerge as a
formidable player in the mass media in India.
Question:
Analyse the SWOT factors
and the options before DD. What, in your opinion, is the best strategic
alternative before DD? Why do you think the proposed alternative to be the
best?
CASE
– 3 Managing Cultural Changes at
Procter & Gamble
In September 1998, the Procter &
Gamble Company, Cincinnati, USA, announced a major global structural change
programme, “Organisation 2005”. The mission of the programme was to take P
& G’s global turnover from $ 38 billion to $ 70 billion by 2005. The
objective was to raise profitability by changing the work culture at P & G.
The change drivers identified were the attributes of Stretch, Innovation, and
Speed (SIS). The structural changes to be initiated included setting up of four
global business units based on product lines, eight market development
organisations based on regions, and one global business service centre. A
14-member cross-functional team named as the Culture Team was set up to oversee
the management of change.
The
achievements of the Organisation 2005 programme were to be seen in terms of:
- changing
P & G from being a misaligned organisation to one aligned on common
goals, with trust as the foundation
- evolve
from an intense inspection-led organisation where everything is kept under
control to one that is a team-collaborating unit
- shift
from a risk-avoiding culture to a stretch-taking one
- move from
running down on complexities to taking on challenges
- heave
from a slow-moving organisation to one which hurtles through stretch,
innovation and speed to breakthrough goals
As the news of Organisation
2005 programme reached the P & G Hygiene and Health Care headquarter at
Mumbai, India, there was a lot of apprehension among the employees. Uncertainty
and suspicion arose with regard to their own future and related to the continued
existence of the business division they worked in. It took about a year for the
apprehensions to fade away and be replaced by clarity and confidence.
P & G, India adopted the
global motto of SIS of its parent. A cultural team was set up to communicate
the goals of SIS to the employees and to seek their involvement in creating a
new P & G. The team set out to identify projects to help achieve the goal
of SIS and to get employee feedback periodically. Outdoor meetings of all P
& G India employees were conducted to drive home the SIS message. Weekly
indoor meetings were held both department-wise and across hierarchies and
categories. Team members were made responsible for communicating formal and
informal feedback to and from their department. Monthly updates and
communication through newsletters were extensively used. Reassurance of
employees thus became an on-going continual process.
Says a P & G employee:
“Initially, when the global changes were announced, we were a little skeptical
as to what will be its impact on the Indian operations. Now after so much
communication and interaction at all levels, we are confident and look forward
to this change.”
 |
| In September 1998, the Procter & Gamble Company, Cincinnati, USA, announced a major global structural change programme, “Organisation 2005”. |
Question:
- Comment on whether the cultural
changes at P & G are supportive of the strategy being implemented.
- What, in your opinion, are the chances of the cultural change being successful? What needs to be done additionally to ensure success?
CASE
– 4 What do You Know about Knowledge
Management
Shailesh Gupta was quite impressed on
meeting T Rajashekhar who was a knowledge management consultant. The chance
meeting took place after the annual Laghu Udyog Sangh (Small-industries
association) function, which Shailesh was attending. Shailesh requested
Rajashekhar to find time to visit his factory to which the latter readily
agreed.
Shailesh belonged to an old
and established business family of Mahanagar where his grandfather had set up a
cooking oil business. The business grew and prospered well. Shailesh’s father
was prudent enough to provide him with good education. After graduating in
commerce, Shailesh was sponsored by the family business to do a year’s
management education programme at Manila. On his return, Shailesh was eager to
implement new ideas to his family business and to the real estate and construction
business that his father had started.
When Rajashekhar arrived at
the appointed time, the first question that Shailesh asked him was about his
specialization—knowledge management (or KM, as Rajashekhar referred to it).
“KM”, said Rajashekhar, “is a fairly new concept in large corporations that are
looking to maximise returns by turning all the data available internally into
useful and productive information, which can help predict market trends and
competitor moves.” Shailesh immediately related this to his own problem of
managing the real estate business that was facing intense competition from
newer companies that had come up in the last few years. He was eager to know
how KM was implemented.
Rajashekhar cautioned by
saying “A formal KM system requires a lot of planning and a sound framework in
order to be successful. The process involves planning and gathering of data to
an organisation available in any form such as text, graphics as well as
audio-visual. Once this has been done, the next step is to collate the data in
a format that can be catalogued, indexed, filtered, or linked in a manner that
makes sense. Then the information has to be refined and projected in a manner
that can be easily disseminated throughout the organisation. The purpose is to help
managers take better decisions on the basis of the information provided.”
At this point, Shailesh was
excited enough to ask why should decision-makers apply KM within their
companies. What Rajashekhar told created some apprehension in Shailesh’s mind.
He said, “KM is important for organisations—big or small—that strive to achieve
competitive advantage. KM enables corporate and market intelligence to be used
in strategic planning.” Shailesh was quick to interject with a query about KM’s
applicability to a small business like his own. Rajashekhar agreed by saying
“KM is easier for large organisations as they already have a network that helps
them share information through e-mail, intranet, and the Web. But any committed
organisation, even if small, could apply KM if determined to do so.” He
continued, “Once a company has a KM process in place, it will be able to
empower its employees with information on various aspects of decision-making
related to the strategic as well as operational activities.”
The meeting ended but
Shailesh kept on thinking about what Rajashekhar had told him about KM. A
thought that lingered for long was whether his employees, long used to working
in the traditional environment, would readily share information that they had.
And whether they would be
willing to adapt to the sophisticated
technology involving, what Rajashekhar informed, datamining, intranet,
video-conferencing, and webcasting that the KM process was based on.
Question:
How do you respond to Shailesh’s
predicament expressed at the end of the case?
CASE
– 5 Supply Chain Management at
Hindustan Levers
The final year class of MBA students was
quite excited on hearing that the head of information systems and the infotech
manager (sales and distribution) of Hindustan Lever Limited (HLL) were coming
to address them on the application of supply chain management (SCM) at HLL.
The mini auditorium was full
when the lecture started. The first thing the managers did was to introduce the
company to the audience of students and faculty members of the business school.
They also suggested that any one could ask question during the presentation
they were going to make.
The head of information
systems started by saying “as you must be aware, HLL, subsidiary of Unilever,
is India’s largest fast-moving consumer goods (FMCG) company. We are the
leaders in home and personal care products, foods and beverages, and specialty
chemicals. Armed with a portfolio of 110 brands, HLL’s has a vision to meet
everyday needs of people everywhere by anticipating the aspirations of
customers and responding creatively and competitively with branded products and
services that raise the quality of life.” He went to relate the experience of
HLL at restructuring its businesses by informing that HLL initiated Project
Millennium focussing on the four areas of growth, knowledge, talent, and cost.
On being asked whether that was the first time that HLL was restructuring its
businesses, the head of information systems replied that business restructuring
is a continual process and HLL invested close to Rs 10 crore over a period of a
year on the process itself. The process resulted in HLL moving out of its
non-core areas, integration of existing core areas, and exploring new potential
areas.
At this point, the infotech
manager took over and explained the marketing set up of the company. He said,
“Owing to the nature of our business activities, we need to launch several new
products every year. Streamlining procurement, operations management, and
marketing are mammoth operations. It is here that an operational effectiveness
technique like SCM came to our aid. With SCM solutions, we are able to monitor
all our production lines and manage existing distribution network to make way
for new products.” On being asked to relate how HLL was using information
technology (IT), the infotech manager said, “SCM mainly relies on the use of
IT. For support, there is a satellite based communication system that offers
voice and communication facilities linking over 200 locations all over the
country. Other initiatives on the IT front have been taken to support the
streamlining of the whole process. E-commerce and B2C portal are used to reduce
the inventory levels and the working capital cycle. Continuous innovation in
process and product management are the other supporting initiatives.”
Some of the students were
interested in knowing the software used by HLL for SCM. To this, the infotech
manager said that Mfg Pro, a software similar to Enterprise Resource Planning,
was introduced in 1998. With this HLL has been able to reduce the duration of
production runs. “Constant monitoring of inventory levels and servicing demand
is done so that no bottlenecks hold up the supply lines so crucial to an FMCG
company such as ours,” he added.
The
students were quite impressed to know that the SCM system links the HLL’s
headquarter at Mumbai with its 50 factories, an equal number of depots, and 200
sites. More than 750 of the larger
stockists have also been linked through a TCS EX
software package. From the enthusiasm of the infotech manager, the audience
could surmise the continual search for a software solution to enable seamless
operations of its value chain seemed to be a fetish with HLL.
A young faculty member
interjected at this stage to ask about the difficulties faced in SCM
implementation is not always smooth. “The process involves changing established
ways of working and it could turn out to be quite painful. The success of the
SCM system depends on the quality of data provided to it. Training in
error-free data logging is essential.” The head of the information systems
added, “Then, there is a bigger challenge of decentralisation of
decision-making to the shop floor level.
The fear of making mistakes
and getting one’s inefficiencies exposed are the behavioural snags that any
company implementing SCM has to contend with.” The presentation ended with the
head of information systems encouraging the students to learn more about SCM as
it offered a viable approach to managing the value chain in an integrated way.
Question
Suppose you were a student at the
business school and a member of the audience at the presentation on SCM at HLL.
In the business policy the next day, the professor asks anyone to say how SCM
is related to business strategy. What would be your reply?
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