CASE – 1 BHEL’S Strategic Intent
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.
- 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.
To ensure a steady growth by enhancing the competitive edge of BHEL in existing business, new areas, and international operations.
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.
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
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.
To fulfill the expectation which stakeholders like government as owner, employees, customers, and the country at large have from BHEL.
Analyse 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.
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.
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.”
1. Comment on whether the cultural changes at P & G are supportive of the strategy being implemented.
2. 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.
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.
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?