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 NETWORK MANAGEMENT



 



Note: Answer any ten questions



Each question carries ten marks



 



1.                 
The Engineering Department to twelve persons in a small
corporation is on a regular 10 Base-T Ethernet Lan hub with 16 ports. The busy
group started complaining because of the slow network performance. The network
was operating at 50% utilization, whereas 30% utilization is acceptable. If you
are the corporation’s Information Technology Engineer and have to resolve the
problem technically,


a.  Describe four choices for resolving
the problem, maintaining the LAN as an Ethernet LAN.


b. State the advantages and disadvantages of each approach.







2.                 
 Two virtual
LANs, 145.50.50.1 belonging to NM lab, and 145.50.60.1 belonging to Networking
lab, each have three workstations. The former has workstations 145.50.50.11-13,
and the latter 145.50.60.21.-23. They are connected to a switched hub on ports
2 through 7. the NICs (network interface cards) associated with ports are made
by Cabletron and their MAC addresses start with the vendor’s global prefix 00-00-1D
(hexadecimal notation) and end with 11,12,13,21,22, and 23 (same as the fourth
decimal position of IP addresses).


a.   Create a conceptual matrix table, as
shown below, that would be  
      generated by the hub that relates
the IP address, MAC address, 
      and port number.








 
  
  
  
 
 
  
  
  
 


  

3.                 
  IP Address 

  

  

4.                 
  MAC Address

  

  

5.                 
  Port Number

  

  

6.                 
   

  

  

7.                 
   

  

  

8.                 
   

  




            



             b.   The workstation 23 is moved from networking
lab to NM lab. 



                   The
appropriate parameter changes in the hub and the workstation.






3.         Design a client/server
network with two servers operating at 100Base-T Fast Ethernet speed and the
clients operating at regular 10Base-T Ethernet speed using a 10/100 Mbps NIC.
The hub is located in a wiring closet, but the servers and clients are not.
Assume that a satisfactory performance is achieved at 30% utilization of the
LAN.



 



4.                
Customer network management is used to look at
the QoS classes associated with VCIs across an ATM link interface. What three
MIB group and objects are used to collect the information? Describe the
relationships among them.



 



5.       A new LEC is
added to an ATM LAN containing other LECs, LES, LECS, a BUS, and a ATM switch.
Starting from the initial conditions, six steps (or phases) are required to
make the new LEC part of the ELAN network: (1) LEC connection, (2)
configurations, (3) join, (4) initial registration, (5) BUS connection, and (6)
operation. Describe these steps.



 



6.       Switched virtual
circuit transmission overhead could be high for sending small amounts of
information. Calculate the minimum time required to transmit one ATM cell from
Miami to San Francisco on a basic SONET network (OC-3) for the following cases.
Assume that the distance is 4500 km and that the propagation speed is 300
meters per microsecond.



                    a.   datagram service



                    b.  
switched virtual circuit service



                    c.  
permanent virtual circuit service



 



7.       A network
manager discovers that a network component is performing poorly and issues on
order to the technician to replace it. Which MIB group contains this
information for the technician to find out the physical location of the
component?



 



8.       An IT manager
gets complaints from the users that there is excessive delay in response over
the Ethernet LAN. The manager suspects the cause of the problem is excessive
collisions on the LAN. She gathers statistics on the collisions using the
dot3Stats Table and localizes the problem to a single faulty interface card.
Explain how she localized the problem. You may use RFC 2358 to answer this
exercise.



 



9.      You have been
assigned the responsibility of adding a new vendor’s components with its own
NMS to an existing network managed by a different NMS. Identify the three sets
of functions that you need to do to fulfill your task.



 



10.     In a ballroom
dance class, the instructor asks the guests to form couples made up of a male
and a female order (order does not matter) for a dance. Write an ASN.1 module
for dance Group with data type Dance Group that is composed of data type couple;
couple is constructed using male and female.



 



11.     A high school
class consists of four boys and four girls. The names of the boys with their
heights are Adam (65”), Chang (63”), Eduardo (72”), and Gopal (62”). The names
of the girls are Beth (68”), Dipa (59”), Faye (61”), and Keisha (64”). For each
of the following cases, write an ASN.1 description for the structure and record
values by selecting appropriate data types. Start with data type Student info,
listing information on each student.   



 



12.     You are asked to
do a study of the use pattern of 24,000 workstations in an academic
institution. Make the following assumptions. You ping each station
periodically. The message size in both directions is 128 bytes long. The NMS
that you using to do the study is on a 10-Mbps LAN, which functions at 30
percent efficiency. What would be the frequency of your ping if you were not to
exceed 5 percent overhead?



 



13.     Imagine that you
are working for a company (maybe you are) that has decided to move from an
SNMP-based to a Web-based management system. You are asked to prepare an
executive summary on the two approaches, WBEM and JMX, and make a
recommendation. Present your report, which is not to exceed two pages
(executives don’t have the time or patience to read longer reports). 

INFORMATION TECHNOLOGY

Case 1

HOW GENERAL MOTORS IS COLLABORATING ONLINE

The Problem

Designing a car is a complex and lengthy task. Take, for example, General Motors (GM). Each model created needs to go through a frontal crash test. So the company builds prototypes that cost about one million dollars for each car and tests how they react to frontal crash. GM crashes these cars, makes improvements, then makes new prototypes and crashes them again. There are other tests and more crashes. Even as late as the 1990s, GM crashed as many as 70 cars for each new model.

The information regarding a new design and its various tests, collected in these crashes and other tests, has to be shared among close to 20,000 designers and engineers in hundreds of divisions and departments at 14 GM design labs, some of which are located in different countries. In addition, communication and collaboration is needed with design engineers of the more than 1,000 key suppliers. All of these necessary communications slowed the design process and increased its cost. It took over four years to get a new model to the market.

The Solution

GM, like its competitors, has been transforming itself into an e-business. This gradual transformation has been going on since the mid-1990s, when Internet band width increased sufficiently to allow Web collaboration. The first task was to examine over 7,000 existing legacy IT systems, reducing them to about 3,000, and making them Web-enabled. The EC system is centered on a computer-aided design (CAD) program from EDS (a large IT company, subsidiary of GM). This system, known as Unigraphics, allows 3-D design documents to be shared online by both the internal and external designers and engineers, all of whom are hooked up with the EDS software. In addition. Collaborative and Web-conferencing software tools, including Microsoft’s NetMeeting and EDS’s eVis, were added to enhance teamwork. These tools have radically changed the vehicle-review process. 

To see how GM now collaborates with a supplier, take as an example a needed cost reduction of a new seat frame made by Johnson Control GM electronically sends its specifications for the seat to the vendor’s product data system. Johnson Control’s collaboration systems (eMatrix) is integrated with EDS’s In graphics. This integration allows joint searching, designing. Tooling, and testing of the seat frame in real time, expediting the process and cutting costs by more than 10 percent.

Another area of collaboration is that of crashing cars. Here designers need close collaboration with the test engineers. Using simulation, mathematical modeling, and a Web-based review process. GM is able now to electronically “Crash” cars rather than to do it physically.

The Results

Now it takes less than 18 months to bring a new car to market, compared to 4 or more years before, and at a much lower design cost. For example, 60 cars are now “Crashed” electronically, and only 10 are crashed physically. The shorter cycle time enables more new car models, providing GM with a competitive edge. All this has translated into profit. Despite the economic show down. GM’s revenues increased more than 6 percent in 2002. while its earnings in the second quarter of 2002 doubled that of 2001.

Questions:

1. Why did it take GM over four years to design a new car?

2. Who collaborated with whom to reduce the time-to-market?

3. How has IT helped to cut the time-to-market?  

Case 2

Intranets: Invest First, Analyze Later?

The traditional approach to information systems projects is to analyze potential costs and benefits before deciding whether to develop the system. However for moderate investments in promising new technologies that could offer major benefits. Organizations may decide to do the financial analyses after the project is over. A number of companies took this latter approach in regard to intranet projects initiated prior to 1997.

Judd’s

Located in Strasburg. Virginia, Judd’s is a conservative, family-owned printing company that prints Time magazine, among other publications. Richard Warren. VP for IS. Pointed out that Judd’s “usually waits for technology to prove itself…. But with the Internet the benefits seemed so great that our decision proved to be a no-brainer.” Judd’s first implemented internet technology for communications to meet needs expressed by customers. After this it started building intranet of the significance of these applications to the company is the bandwidth that supports them. Judd’s increased the bandwidth by a magnitude of about 900 percent in the 1990s without cost-benefit analysis.

Eli Lilly & Company

A very large pharmaceutical company with headquarters in Indianapolis, Eli Lilly has a proactive attitude toward new technologies. It began exploring the potential of the Internet in 1993. Managers soon realized that, by using intranets, they could reduce many of the problems associated with developing applications on a wide variety of hardware platforms and networking configurations. Because the benefits were so obvious, the regular financial justification process was waived for intranet application development projects. The IS group that helps user departments develop and maintain intranet applications increased its staff from three to ten employees in 15 months.

Needham Interactive

Needham, a Dallas advertising agency, has offices in various parts of the country. Needham discovered that, in developing presentations for bids on new accounts, employees found it helpful to use materials from other employees’ presentations on similar projects. Unfortunately, it was very difficult to locate and then transfer relevant ,materials in different locations and different formats. After doing research on alternatives, the company identified intranet technology as the best potential solution. Needham hired EDS to help develop the system. It started with one office in 1996 as a pilot site. Now part of DDB Needham, the company has a sophisticated corporate wide intranet and extranet in place. Although the investment was “substantial”, Needham did not do a detailed financial analysis before starting the project. David King, a managing partner explained. “the system will start paying for itself  the first time an employee wins a new account because he had easy access to a co-worker’s information.” 

Cadence Design Systems

Cadence is a consulting firm located in San Jose, California. It wanted to increase the productivity of its sales personnel by improving internal communications and sales training. It considered Lotus Notes but decided against it because of the costs. With the help of a consultant, it developed an internet system. Because the company reengineered its sales training process to work with the new system, the project took somewhat longer than usual.

International Data Corp., an IT research firm, helped cadence do an after-the-fact financial analysis. Initially the analysis calculated benefits based on employees meeting their full sales quotas. However, IDC later found that a more appropriate indicator was having new scales representatives meet half their quota. Startup costs were $280,000, average annual expenses were estimated at less than $400,000, and annual savings were projected at over $2.5 million. Barry Demak, director of sales, remarked, “we knew the economic justification…would be strong, but we were surprised the actual numbers were as high as they were.”

Questions:

1. Where and under what circumstances is the “invest first, analyze later” approach appropriate? where and when is it inappropriate? Give specific examples of technologies and other circumstances.

2. How long do you think the “invest first , analyze later” approach will be appropriate for intranet projects? When (and why) will the emphasis shift to traditional project justification approaches? (Or has the shift already occurred?)

3. What are the risks of going into projects that have not received a through financial analysis? How can organization reduce these risks?

4. Based on the numbers provided for Cadence Design System’s intranet project, use a spread sheet to calculate the net present value of the project. Assume a 5-year life for the system.

Case 3

Putting IT to Work at Home Depot              

Home Depot is the world’s largest home-improvement retailer, a global company that is expanding rapidly (about 200 new stories every year). With over 1500 stories (mostly in the United States and Canada, and now expanding to other countries) and about 50,000 kinds of products in each store, the company is heavily dependent on It, Especially since it started to sell online.

To align its business and IT operations, Home Depot created a business and information service model, known as the Special Projects Support Team (SPST). This team collaborates both with the ISD and business colleagues on new projects, addressing a wide range of strategic occur at the intersection of business process. The team is composed of highly skilled employees. Actually, there are several teams, each with a director and mix of employees, depending on the project. For example, system developers, system administrators, security experts, and project managers can be on a team. The teams exist until the completion of a project; then they are dissolved and the members are assigned to new teams. All teams report to the SPST director, who reports to a VP of technology.

To ensure collaboration among end users, the ISD and the SPST created structured (formal) relationships. The basic idea is to combine organizational structure and process flow, which is designed to do the following:

•           Achieve consensus across departmental boundaries with regard to strategic initiatives.

•           Prioritize strategic initiatives.

•           Bridge the gap between business concept an detailed specifications.

•           Result in the lowest possible operational costs.

•           Achieve consistently high acceptance levels by the end-user community.

•           Comply with evolving legal guidelines.

•           Define key financial elements (cost-benefit analysis, ROI, etc.).

•           Identify and render key feedback points for project metrics.

•           Support very high rates of change.

•           Support the creation of multiple, simultaneous threads of work across disparate time     lines.

•                       Promote known, predictable, and manageable work flow events, event sequences, and change management processes.

•           Accommodate the highest possible levels of operational stability.

•           Leverage the extensive code base, and leverage function and component reuse.

•           Leverage Home Depot’s extensive infrastructure and IS resource base.

Online File W 15.11 shows how this kind of organization works for home depot’s e-commerce activites. There is a special EC steering committee which is connected to the CIO (who is a senior VP), to the Vp for marketing and advertising, and to the VP for merchandising (merchandising deals with procurement). The SPST is closely tied to the ISD, to marketing, and to merchandising. The data centre is shared with non-EC activities.

The SPST migrated to an e-commerce team in Aughust 2000 in order to construct a Website supporting a national catalog of products, which was completed in April 2001. (This catalog contains over 400,000 products from 11,000 vendors.) This project requires the collaboration of virtually every department in Home depot (e.g., in the figure). Also contracted services were involved. (the figure in online file W15.11 shows the work flow process.)

Since 2001, SPST has been continuously busy with Ec Intivatives, including improving the growing Home Depot online store. The cross departmental nature of the SPSt explains why it is an ideal structure to support the dyanamic, ever-changing work of the EC-related projects. The structure also consider the skills, strengtyhs, and the weeknesses of the It employees. The company offer both the online and offline training aimed at improving those skills. Home Depot is consistently ranked among the best places to work for IT employees.

Questions:

1. Explain why the team based structure at Home Depot is so successful.

2. The structure means that the SPST reports to both marketing and technology. This is known as a matrix structure. What are the potential advantages and problems?

3. How is collaboration facilitated by IT in this case?

4. Why is the process flow important in this case?

Case 4

Dartmouth College Goes Wireless

Dartmouth College, one of the oldest in United States (founded in 1769), was one of the first to embrace the wireless revolution. Operating and maintain a campuswide information system with wires is very difficult. Since there are 161 buildings with more than 1,000 rooms on campus. In 2000, the college introduced a campuswide wireless network that includes more than 500 Wi-Fi (wireless fidelity: see chapter 6) systems. By the end of 2002, the entire campus became a fully wireless, always connected community – a microcosm that provides a peek at what neighborhood and organizational life may look like for the general population in just a few years.

To transform a wired campus to a wireless one requires lots of money. A computer science professor who initiated the idea at Dartmouth in 1999 decided to solicit the help of alumni working at cisco systems. These alumni arranged for a donation of the initial system, and cisco then provided more equipment at a discount. (Cisco and other companies now make similar donations to many collages and universities, writing off the difference between the retail and the discount prices for an income tax benefit.)

As a pioneer in campuswide wireless, Dartmouth has made many innovative usuages of the system, some of which are the following:

•           Students are developing new applications for the Wi-Fi. For eample, one student has applied for a patent on a personal-security device that pinpoints the location of the campus emergency services to one’s mobile device.

•           Students no longer have to remember campus phone numbers, as their mobile devices have all the numbers and can be accessed any where on campus.

•           Students primarily use laptop computers on the network. However, an increasing number of Internet-enabled PDAs and cell phones are used as well. The use of regular cell phones is on the decline on campus.

•           An extensive messaging system is used by the students, who send SMSs (Short Message Services) to each other. Messages reach the recipients in a split second, any time, anywhere, as long as they are sent and received within the network’s coverage area.

•           Usage of the Wi-Fi system is not confined just to messages, students can submit their class work by using the network, as well as watch streaming video and listen to Internet radio.

•           An analysis of wireless traffic on campus showed how the new network is changing and shaping campus behavior patterns. For example, students log on in short bursts, about 16 minutes at a time, probably checking their messages. They tend to plan themselves in a few favourite spots (dorms, TV room, student centre, and on a shaded bench on the green) where they use their computers, and they rarely connect beyond those places.

•           The student invented special complex wireless games that they play online.

•           One student has written some code that calculates how far away a networked PDA user is from his or her next appointment, and then automatically adjusts the PDA’s reminder alarm schedule accordingly.

•           Professors are using wireless-based teaching methods. For example, students armed with Handspring visor PDA’s equipped with Internet access cards, can evaluate material presented in class and can vote on a multiple-choice questionnaire relating to the presented material. Tabulated results are shown in seconds, promoting discussions. According to faculty, the system “makes students want to give answers,” thus significantly increasing participation.

•           Faculty and students developed a special voice-over-IP application for PDAs and iPAQs that uses live two-way voice-over-IP chat.

Questions:

1.            In what ways is the Wi-Fi technology changing the Dartmouth students?

2.                           Some says that the wireless system will become part of the background of everybody’s life – that the mobile devices are just an afterthought. Explain.

3.                           Is the system contributing to improved learning, or just adding entertainment that may reduce the time available for studying? Debate your point of view with students who hold a different opinion.

4.                           What are the major benefits of the wireless system over the previous wire line one? Do you think wire line systems will disappear from campus one day? (Do some research on the topic.)

Strategic Management

Note:
Attempt Any Four Case Studies
Case I
THE STRATEGIC ASPIRATIONS OF THE RESERVE BANK OF INDIA
The Reserve Bank of India (RBI) is India's central bank or 'the bank of the bankers'. It was
established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.
The Central Office of the RBI, initially set up at Kolkata, is at Mumbai. The RBI is fully owned by the
Government of India.
The history of the RBI is closely aligned with the economic and financial history of India. Most
central banks around the world were established around the beginning of the twentieth century. The
Bank was established on the basis of the Hilton Young Commission. It began its operations by taking
over from the Government the functions so far being performed by the Controller of Currency and from
the Imperial Bank of India, the management of Government accounts and public debt. After independence,
RBI gradually strengthened its institution-building capabilities and evolved in terms of
functions from central banking to that of development. There have been several attempts at reorganisation,
restructuring and creation of specialised institutions to cater to emerging needs.
The Preamble of the RBI describes its basic functions like this: '...to regulate the issue of Bank
Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate
the currency and credit system of the country to its advantage.' The vision states that the RBI
'...aims to be a leading central bank with credible, transparent, proactive and contemporaneous policies
and seeks to be a catalyst for the emergence of a globally competitive financial system that helps deliver
a high quality of life to the people in the country.' The mission states that 'RBI seeks to develop a sound
and efficient financial system with monetary stability conducive to balanced and sustained growth of the
Indian economy'. The corporate values underlining the mission statement include public interest,
integrity, excellence, independence of views and responsiveness and dynamism.
The three areas in which objectives of the RBI can be stated are as below.
1. Monetary policy objectives such as containing inflation and promoting economic growth,
management of foreign exchange reserves and making currency available.
2. Objectives set for managing financial sector developments such as supervision of systems and
information access and assisting banking and financial institutions to become competitive
globally.
3. Organisational development objectives such as development of economic research facilities,
creating information system for supporting economic decision-making, financial management and
human resource management.
Strategic actions taken to realise the objectives fall under four categories:
1. The thrust area of monetary policy formulation and managing financial sector;
2. Evolving the legal framework to support the thrust area;
THE INDIAN INSTITUTE OF BUSINESS MANAGEMENT AND STUDIES
SUB: Strategic Management MAX MARKS: 100
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2. Customer services for providing support and creation of positive relationship; and
3. Organisational support such as structure, systems, human resource development and
adoption of modern technology.
The major functions performed by the RBI are:
• Acting as the monetary authority
• Acting as the regulator and supervisor of the financial system
• Discharging responsibilities as the manager of foreign exchange
• Issue currency
• Play a developmental role
• Related functions such as acting as the banker to the government and scheduled banks
The management of the RBI is the responsibility of the central board of directors headed by the governor
and consisting of deputy governors and other directors, all of whom are appointed by the government.
There are four local boards based at Chennai, Kolkata, Mumbai and New Delhi. The day-to-day
management of RBI is in the hands of the executive directors, managers at various levels and the
support staff. There are about 22000 employees at RBI, working in 25 departments and training
colleges.
The RBI identified its strengths and weaknesses as under.
• Strengths A large body of competent offers and staff; access to key data on the economy; wide
organisational network with 22 regional offices; established infrastructure; ability to attract
talent; and financial self sufficiency.
• Weaknesses Structural rigidity, lack of accountability and slow decision-making; eroded specialist
know-how; strong employee unions with rigid industrial relations stance; surplus staff; and
weak market intelligence.
Over the years, the RBI has evolved in terms of structure and functions, in response to the role as signed
to it. There have been sweeping changes in the economic, social and political environment. The RBI has
had to respond to it even in the absence of a systematic strategic plan. In 1992, the RBI, with the
assistance of a private consultancy firm, embarked on a massive strategic planning exercise. The
objective was to establish a roadmap to redefine RBI's role and to review internal organisational and
managerial efficacy, address the changing expectations from external stakeholders and reposition the
bank in the global context. The strategic planning exercise was buttressed by departmental position
papers and documents on various subjects such as technology, human resources and environmental
trends. The strategic plan of the RBI emerged with four sections dealing with the statement of mission,
objectives and policy, a review of RBI's strengths and weaknesses and strategic actions required with an
implementation plan. The strategic plan reiterates anticipation of evolving external environment in the
medium-term; revisiting strengths and weaknesses (evaluation of capabilities); and doing away with the
outdated mandates for enhancing efficiency in operations in furtherance of best public interests. The
results of these efforts are likely to manifest in attaining a visible focus, reinforced proficiency, realisation
of shared sense of purpose, optimising resource use and build-up of momentum to achieve goals.
THE INDIAN INSTITUTE OF BUSINESS MANAGEMENT AND STUDIES
SUB: Strategic Management MAX MARKS: 100
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Historically, the RBI adopted the time-tested technique of responding to external environment in
a pragmatic manner and making piecemeal changes. The dilemma in adoption of a comprehensive
strategic plan was the risk of trading off the flexibility of the pragmatic approach to creating rigidity
imposed by a set model of planning.
Questions
1. Consider the vision and mission statements of the Reserve Bank of India. Comment
on the quality of both these statements.
2. Should the RBI go for a systematic and comprehensive strategic plan in place of its
earlier pragmatic approach of responding to environmental events as and when they
occur? Why?
THE INDIAN INSTITUTE OF BUSINESS MANAGEMENT AND STUDIES
SUB: Strategic Management MAX MARKS: 100
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Case II
WHAT LIES IN STORE FOR THE RETAILING INDUSTRY IN INDIA?*
India is not known as the 'nation of shopkeepers', yet it has as many as 5 million retail outlets of
all shapes and sizes. Some other optimistic estimates "place the number at as high as 12 million.
Whatever be the number, India can claim to have the highest number of retail outlets per capita in the
world. But almost all of these are small outfits occupying an average of 500 square feet in size, managed
by family members, having negligible investment in land and assets, paying little or no tax and known as
the kirana dukaan ('mom and pop' stores in the U.S or the corner grocery stores in the U.K.). These
outlets offer mainly food items and groceries—the staple of retailing in India. Customer contact is
personal and one-on-one, often running through generations. There are a limited number of items
offered! often sold on credit—the payment to be collected at the end of the month. The quality of items
standard, with moderate pricing.
There is great hype about the growth and prospects of organised retailing industry in India. It
must be noted, however, that organised retailing constitutes barely 2 per cent of the total retailing
industry in India, the rest 98 percent being under the control of the unorganised, informal sector of'
kirana dukaans. Market research agencies and consultants come up with encouraging forecasts about
this segment of the retailing industry. For instance, AT. Kearney's Global Retail Development Index ranks
30 emerging countries on a 100- point scale. Its 2007-ranking places India at number one for the third
consecutive year, with 92 points, followed by Russia and China. The size of the organised retailing
industry is estimated at US $8 billion and projected to grow at a compound annual growth rate of 40 per
cent to US $22 billion by 2010. Overall, the Indian retailing industry is expected to grow from the current
US $350 billion to US $427 billion by 2010 and US $635 billion by 2015.
The economic environment in the post-liberalisation period after 1991, has created several
factors that have made this high growth of the organised retailing industry possible. India's impressive
economic growth rate of 9 per cent is the prime driver of increasing disposable incomes in the hands of
the consumer. The growing size of the consuming class in India, in tandem with the entry and expansion
of the organised sector players in recent years, has set the pace for corporate investment in retail
business. Practically, every major Indian business group is looking for opportunities in the growing
retailing industry. Among them are the big names in the Indian corporate sector such as the AV Birla
group, Bharti, Godrej, ITC group, Mahindras, Reliance, Tatas and the Wadia group.
The international environment presently is replete with examples of the fast-paced growth of the
retailing industry in many developing countries around the world. In the post-liberalisation period, there
is more openness and awareness of the international developments among Indians. The ease of travel
abroad and the exposure through television and Internet have increase the awareness of the urban
Indian consumer to the convenience of modern shopping. The modern retail formats thus have gained
acceptance in India. Carrefour, Tesco and Wal-Mart are the international players already operating in
India, with several others like Euroset, Supervalue and Starbucks having plans to enter soon. These
international companies bring to India the latest developments in the retailing industry and help to set up
a benchmark for the domestic player.
THE INDIAN INSTITUTE OF BUSINESS MANAGEMENT AND STUDIES
SUB: Strategic Management MAX MARKS: 100
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The market environment is one of the most significant in terms of the growth and prospects of
the retailing industry in India. In terms of geography, the reach of the organised retailing industry has
been growing. In addition to the mega-cities of Mumbai and Delhi, cities such as Bangalore, Pune,
Hyderabad, Kolkata and Chennai are also witnessing a boom in organised retail activity. Retailers are
now trying to focus on smaller cities such as Nagpur, Indore, Chandigarh, Lucknow or Cochin. There are
interesting possibilities regarding the retail formats. Traditionally, street carts, pavement shops, kirana
stores, public distribution systems, kiosks, weekly markets and such other formats unique to India, have
been in existence for a long time. At present, most organised retail formers are imitations of those used
abroad. These include hyper and supermarkets, convenience store, department stores and specialty
chains. Among these formats, a notable trend has been the development of integrated retail-cumentertainment
centres and malls as opposed to stand-alone developments. Besides these, there are
some attempts at indigenous formats aimed at the rural markets-such as those by ITC's Choupal Sagar,
DSCL's Hairyali Kisaan Bazaar and Godrej group's Godrej Aadhar. Pricing is an important issue in the
retailing industry. Generally, the bulk buying yield lower costs of procurement for the big retailers—a
part of which they pass on to the customer in the form of lower prices. In food retailing, for instance,
there is a clear trend of low prices being the determining factor in purchase decisions by the costconscious
Indian consumer. But, lower prices may not be a major issue with the higher-income groups
that may place greater emphasis on the quality of products and retail service, store ambience and
convenience of shopping. For the majority of Indian consumers however, price is likely to remain a
significantly important issue in the purchase decision. Competition has already accelerated with many
Indian business groups having entered or likely to enter this booming industry.
The political environment in India is ambiguous! in terms of its support to the organised retailing
industry. This is obvious as the unorganised sector employs nearly 8per cent of the Indian population
and is widely spread geographically. The whelming presence in terms of 98 per cent of the total retailing
industry also is a significant political issue. In a democracy, the politics of numbers makes it imperative
for the political class to adopt an ambiguous stand. In some cases, politicians have acted in favour of the
unorganised sector by disallowing the setting up of large retail some states. Overall, however, there is
ambiguity as there are several environmental trends in favor of the development of the organised
retailing industry.
In the regulatory environment, there has gradual easing of the restrictions albeit at a slow pace,
in view of the ambiguous political stance as indicated above. Interestingly, the retailing industry, is still
not recognised as an industry in India, Foreign direct investment of up to 100 per cent is not permitted
though it is possible for foreign players to enter through the routes of agreements, cash-and-carry
wholesale trading and strategic licensing agreements. Another problem area is of the real estate laws at
the level of state governments that are yet to be clear on the issue of allowing large stores.
Restructuring of the tax structure for the retailing industry is another regulatory issue requiring
governmental action. However, tariffs on imported consumer items have been gradually aligned to meet
the prescribed WTO norms and reduction of import restrictions are likely to help the growing organised
retailing industry.
The socio-cultural environment offers many interesting insights into the changing tastes and
references of the urban and semi-urban Indian consumer. There is a large rural market consisting of
nearly 720 million consumers, spread over more 600,000 villages. India's consumers are young: 70
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percent of the country's citizens are low the age of 36 and half of those are under 18 years of age. These
people have deep roots in the local culture and traditions, yet are eager to get connected with and know
the outside world. According to a DSP Merrill Lynch report, the key factor providing a thrust to the retail
boom in India the changing age profile of spenders. A group of seven million young Indians in their midtwenties,
learning over US$ 5000 per year, is emerging every year. This group constitutes people who
are enthusiastic spenders and like to visit the new format retail outlets for the convenience and time
saving they offer. Malls are also being perceived as just places for shopping, but for spending leisure
time and as meeting places. There has been an emergence of a combination of the retail outlet and
entertainment centres having multiplexes, with food courts and video game parlours.
But there are some pitfalls too. For instance, organised retailing in India has had to deal with the
misconception among middle-class consumers that the modern retail formats being air conditioned,
sophisticated places are bound to be more expensive.
The supplier environment probably offers the biggest constraint on the growth of the retailing
industry in India. Reaching India's consumers cost effectively is a distribution nightmare, owing to the
sheer geographical size of the country and the presence of traditional, fragmented distribution and
retailing networks and erratic logistics. For instance, the apparel segment that is one of the two top
segments, the other being food, have had to invest in back-end processes to support supply chains.
Supply chain management and merchandising practices are increasingly converging and apparel retailers
are establishing collaborations with their vendors. Another area of concern is the severe shortage of skills
in retailing. Human resource development for the retailing industry has picked up lately but may take
time to fill the gap caused due to the shortage of personnel.
The technological environment for the organised retailing industry straddles many areas such as
IT support to supply chain management, logistics, transportation and store operations. Some global
retailers have demonstrated that an innovative use of technology can provide a substantial strategic
advantage. The large number of store items, the diversity of sourcing and the gigantic effort required to
coordinate actions in a large retail context is ideal for using IT as a support function. For instance, an
innovative use of IT can help in a wide variety of functions such as quick information processing and
timely decision-making, reduction in processing costs, real-time monitoring and control of operations,
security of transactions and operations integration. The availability of supply chain management,
customer relationship management an merchandising software can help much while performing activities
such as ordering and tracking inventory items, warehousing, transportation and customer profiling.
Overall, the Indian scenario offers an interesting mix of possibilities and challenges. A successful
model of large-scale retailing appropriate for the Indian context is yet to emerge. The modern retail
formats accepted globally are in the process of implementation and their acceptability is yet to be
established.
Questions:
1. Identify the opportunities and threats that the retailing industry in India offers to local
and foreign companies.
2. Prepare an ETOP for a company interested in entering the retailing industry in India.
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Case III
HELPAGE INDIA
The developments in medical sciences—the lowering of mortality rates and the increase in life
expectancy—have ironically led to a situation where there are increasingly, a larger number of aged
people in the society. The situation in most countries of the world is that the number of ageing people is
increasing. India too, like other developing countries, experiences a rapid ageing of the population, with
estimated 80 million aged people. Almost eight out of ten of these aged people live in rural areas.
The challenges that the elderly people in society face are many. For instance, a report in the
Indian context indicates the following challenges:
90% of senior citizens receive no social security or medical care.
73% of senior citizens are illiterate and can only earn a livelihood through physical labour, which
is possible only if they are healthy in their old age.
80% of senior citizens live in rural areas with inadequate or inaccessible medical facilities; many
are unable to access the medical facilities because of reduced mobility in the old age.
55% of women over the age of 60 are widows with no means of support
The elderly people, or senior citizens, are the fastest growing segment of the Indian society. By 2025,
the population of the elderly is expected to reach 177 million.
Unlike many developed countries, India does not have an effective security net for the elderly
people. There have been sporadic attempts by governments at the central and state levels to pay old age
pensions, but like most government schemes, there is a lot of leakage of funds and inefficiency. There is
also a lack of post-retirement avenues for re-employment.
Socio-economic developments such as urbanization modernisation and globalisation have
impacted the economic structure and led to an erosion of societal values and the weakening of social
institutions such as the joint family. The changing mores of society have created a chasm between
generations. The intergenerational differences have created a situation where the younger people are
involved in education, career building and establishing themselves in life, ending up ignoring the needs of
the elderly among them. The older generation is caught between a society which cares little for them and
the absence of social security, leading them to a situation where they are left to fend for themselves. It
is in this context that institutions such as HelpAge India play a positive role in society.
HelpAge India, established in 1978, is a secular, not-for-profit, non-governmental organisation,
registered under the Societies Registration Act of 1860. Its mission is stated as 'to work for the cause
and care of the disadvantaged older persons and to improve their quality of life'. The three core values
that guide HelpAge India's work are rights, relief and resources. HelpAge India is one of the founder
members of HelpAge International, a body of 51 nations representing the cause of the elderly at the
United Nations. It is also a member of the International Federation on Ageing.
The organisation of HelpAge India consists of a head office at New Delhi, with four regional and
thirty-three area offices situated all over India. The governing body of the organisation consists of ten
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distinguished people from different walks of life. Besides the governing body, there are three
committees: the operations committee, the business development committee, and the audit committee.
The CEO, Mr Mathew Cherian oversees the planning and implementation of policies and programmes,
with the support of five electors. The regional directors are responsible for their own regions. The
program division at the head office chooses the partner agencies to provide the services to the elderly
people.
HelpAge India raises resources to perform three types of functions:
Advocacy about policies for the elderly persons with the national and local governments
Creating awareness in society about the concerns of the aged and promote better understanding
of ageing issues
Help the elderly persons become aware of their own rights so that they get their due and are
able to play an active role in society
The major programmes undertaken by HelpAge India include mobile medicare units, ophthalmic care for
performing cataract surgeries, Adopt-a-Gran, support to old-age homes, day care centres, income
generation and disaster relief.
The business model of HelpAge India is based on revenue generation through grants and
donations from international and national source. Nearly half of the donations come from international
donors. About a fifth of the donors are individuals. The sources of contributions come from fundraising
activities that include direct mail, school fundraising corporate fundraising, sale of greeting cards, acting
as corporate agent for insurance, organizing event and establishing a shop-for-a-cause that sells gift
made by disadvantaged people. A review report on the activities of HelpAge India enumerates its strong
points as below:
Wide Reach and Impact HelpAge India has been able to impact the lives of a large number of
elderly people and their families by adopting a holistic approach that provide immediate relief as
well as long-tern sustainable improvement.
Effective Partnerships in Development HelpAge India has evolved as a development support
agency through creating partner agencies, that is funded to implement the projects.
High Degree of Charitable Commitment Typically non-profit organisations spend a loft; on
overhead and administrative costs. But3 HelpAge India is able to put nearly eighty-five, per cent
of the funds towards actual project implementation.
Focus on Efficiency and Transparency The partner agencies are chosen carefully and monitored
thoroughly. This results in increased efficiency and low overheads. Project implementation
through partnerships increases efficiency and cuts down on 3overhead costs.
Quality of Management The management; quality of HelpAge India is good and there are a lot of
committed people. New employees are also trained to be sensitive to the mission of the
organisation.
With a wide spread of activities and being a non-governmental organisation having limited
funding, HelpAge India has adopted modern means of information technology and networking. Most of
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the HelpAge executives work in the field and have no direct access to the office network. They have to
use e-mail in order to maintain contact with their regional or area offices. They use cyber-cafes or
handheld devices for sending and receiving e-mails. HelpAge has installed a secure connection at an
initial cost of Rs. 4 lakh and annual upgradation cost of Rs. 75,000 to access e-mail from anywhere, with
a high level of security and protection of data and contents.
The nature of non-profit organisations demands certain requirements. Among these,
transparency of operations and funds management is a major one. There are many NGOs that are
accused or suspected of misappropriating funds for personal benefit. HelpAge India is conscious of this
fact and gives high priority to information disclosure. The audited financial statements and the annual
report are available on its website. The financial statements give a detailed account of the expenditure
on individual projects. The expenses on travel and salaries of its employees and CEO are also mentioned.
The individual donors are provided information regarding the use of the funds donated by them.
The functional approach at HelpAge India consists of developing projects based on the
assessment of the needs of its target community rather than on implementing them directly. The
implementation takes place through the partner agencies. Rather than outright grants, it supports
income generation projects for the elderly people. The success of implementation critically depends on
the identification and appointment of partner agencies. The officers of HelpAge India physically inspect
the proposed agencies and check on their management to ensure that they are not family-run set-ups
established for personal gains. HelpAge India works presently, with nearly 400 partner agencies. These
include, for instance, about 150 charitable eye hospitals that act as partner agencies for the ophthalmic
care programme.
HelpAge India with its slogan of 'fighting isolation, poverty and neglect' moves on its mission of
providing 'equal rights, dignity for elders'. It foresees its future activities in the area of rights based
advocacy for a better life for the elderly people by bringing them into the mainstream of society rather
than being marginalised to the fringes.
Questions
1. In your opinion, what is the distinctive competence of HelpAge India?
2. Prepare a strategic advantage profile for HelpAge India.
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Case IV
BHARAT HEAVY ELECTRICALS LIMITED CONCENTRATES ON THE EQUIPMENT INDUSTRY
Bharat Heavy Electricals Limited (BHEL) is India's largest engineering and manufacturing
enterprise, operating in the energy sector, employing more than 42000 people. Established in 1956, it
has established its presence in the heavy electrical equipments industry nationally as well as globally.
BHEL is one of the navaratnas (lit. nine gems) among the public sector enterprises in India. Its vision is
to be 'a world class enterprise committed to enhancing stakeholder value'. Its mission statement is: 'to
be an Indian multinational engineering enterprise providing total business solutions through quality
products, systems, and services in the fields of energy, industry, transportation, infrastructure, and other
potential areas'.
BHEL is a huge organisation, manufacturing over 180 products categorised into 30 major product
groups, catering to the core sectors of power generation and transmission, industry, transportation,
telecommunications and renewable energy. It has 14 manufacturing divisions, four power sector regional
centres, over 100 project sites, eight service centres and 18 regional offices. It acquires technology from
abroad and develops its own technology at its research and development centres. The operations of
BHEL are organised into three business sectors of power, industry and overseas business. Besides the
business sector departments, there are the corporate functional departments of engineering and R&D,
human resource development, finance and corporate planning and development.
BHEL's turnover hit an all-time high of Rs. 18,739 crore, registering a growth of 29 per cent,
while net profit increased by 44 per cent to touch Rs. 2,415 crore in 2006-07. The company has a
comfortable order book position of Rs. 55,000 crore for 2007-8 and beyond. The company booked export
orders worth Rs. 1,903 crore in 2006-07. It is looking toward to US$10 billion exports by 2012 from the
present US$ 4 billion. The capital investment plan of BHEL for the 11th National Plan period envisages an
investment of Rs 3,200 crore, mainly to enhance its manufacturing capacity from 10000 MW to 15000
MW.
BHEL has formulated a five-year strategic plan with the aim of achieving a sustainable profitable
growth, targeting at a turnover of Rs. 45,000 crore by 2012. The strategy is driven by a combination of
organic and inorganic growth. Organic growth is planned through capacity and capability enhancement,
designed to leverage the company's core are s of power, supported by the industry, transmission,
exports and spares and services businesses. For the purpose of inorganic growth, BHEL plans to pursue
mergers and acquisition and joint ventures and grow operations both in domestic and export markets.
BHEL is involved in several strategic business initiatives at present for internationalisation. These
include targeting the export markets, positioning itself as a reputed engineering, procurement and
construction (EPC) contractor globally, and looking for opportunities for overseas joint ventures.
An example of a concentration strategy of BHEL in the power sector is the joint venture with
another public Enterprise, National Thermal Power Corporation, to perform EPC activities in the power
sector. It is to be noted that NTPC as a power generation utility and BHEL as an EPC contractor have
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worked together on several domestic projects earlier, but without a forma partnership. BHEL also has
join1 ventures with GE of the US and Siemens AG of Germany. Other strategic initiatives include
management contract for Bharat Pumps and Compressors Ltd. and a proposed takeover of Bharat Heavy
Plates and Vessels, both being sister publics enterprises.
Despite its impressive performance, BHEL is unable to fulfil the requirements for power
equipment in the country. The demand for power has been exceeding the growth and availability. There
are serious concerns about energy shortages owing to inadequate generation and transmission, as well
as inefficiencies in the power sector. Since this sector is a major part of the national infrastructure,
problems in the fibwer sector affect the overall economic growth the country as well as its attractiveness
as a destination for foreign investments. BHEL also faces stiff competition from international players in
the power equipment sector, mainly of Korean; and Chinese origin. There seems to be an undercurrent
of conflict between the two governmental ministries of power and heavy industries. BHEL operates
administratively under the Ministry of Heavy Industries, but supplies mainly to the power sector that is
under the Ministry of Power. There has been talk of establishing another power equipment company as a
part of the NTPC for some time, with the purpose of lessening the burden on BHEL.
Questions
1. BHEL is mainly formulating and implementing concentration strategies nationally as
well as globally, in the power equipment sector. Do you think it should broaden the
scope of its strategies to include integration or diversification? Why?
2. Suppose BHEL plans to diversify its business. What areas should it diversify into? Give
reasons to justify your choice.
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Case V
THE INTERNATIONALISATION OF KALYANI GROUP
The Kalyani Group is a large family-business group of India, employing more than 10000
employees. It has diverse businesses in engineering, steel, forgings, auto components, non-conventional
energy and specialty chemicals. The annual turnover) of the Group is over US$ 2.1 billion. The Group is
known for its impressive internationalisation achievements. It has nine manufacturing locations ad over
six countries. Over the years, it has established joint ventures with many global companies such as
ArvinMeritor, USA, Carpenter Technology Corporation, USA, Hayes Lemmerz, USA and FAW Corporation,
China.
The flagship company of the Group is Bharat Forge Limited that is claimed to be the second
largest forging company in the world and the largest nationally, with about 80 per cent share in axle and
engine components. The other major companies of the Group are Kalyani Steels, Kalyani Carpenter
Special Steels, Kalyani Lemmerz, Automotive Axles Kalyani Thermal Systems, BF Utilities, Hikal Limited,
Epicenter and Synise Technologies.
The emphasis on internationalisation is reflected in the vision statement of the Group where two
of the five points relate to the Group trying to be world-class organisation and achieving growth
aggressively by accessing global markets. The Group is led by Mr. B.N. Kalyani, who is considered to be
the major force behind the Group's aggressive internationalisation drive. Mr. Kalyani joined the Group in
1972 when it was a small-scale diesel engine component business.
The corporate strategy of the Group is a combination of concentration on its core competence in
its businesses with efforts at building, nurturing and sustaining mutually beneficial partnerships with
alliance partners and customers. The value of these partnerships essentially lies in collaborative product
development with the partners who are the original equipment manufacturers. The foreign partners are
not intended to provide expansion in capacity, but enable the Kalyani Group to extend its global
marketing reach.
In achieving its successful status, the Kalyani Group has followed the path of integration,
extending from the upstream steel making to downstream machining for auto components such as
crankshafts, front axle beams, steering knuckles, camshafts, connecting rods and rocker arms. In all
these products, the Group has tried to move up the value chain instead of providing just the raw
forgings. In the 1990s, it undertook a restructuring exercise to trim its unrelated businesses such as
television and video products and concentrate on its core business of auto components
Four factors are supposed to have influenced the growth of the Group over the years. These are
mentioned below:
• Focussing on crore businesses to maximize growth potential
• Attaining aggressive cost savings
• Expanding geographically to build global capacity and establishing leading positions
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• Achieving external growth through acquisitions
The Group companies are claimed to be positioned at either number one or two in their
respective businesses. For instance, the Group claims to be number one in forging and machined
components, axle aggregates, wheels and alloy steel. The technology used by the Group in its mainline
business of auto components and other businesses, is claimed to be state-of-the-art. The Group invests
in forging technology to enhance efficiency, production quality and design capabilities. The Group's
emphasis on technology can be gauged from the fact that in the 1990s, it took the risky decision of
investing Rs. 100 crore in the then latest forging technology, when the total Group turnover was barely
Rs. 230 crore. Information technology is applied for product development, reducing 3 production and
product development time, supply-chain management and marketing of products. The Group lays high
emphasis on research and development for providing engineering support, advanced metallurgical
analysis and latest testing equipment in tandem with its high-class manufacturing facilities.
Being a top-driven group, the pattern of strategic decision-making within seems to be
entrepreneurial. There was an attempt to formulate a five-year strategic plan in 1997, with the
participation of the company executives. But not much is mentioned in the business press about that
collaborative strategic decision-making after that.
Recent strategic moves include Kalyani Steels, a Group company, entering into a joint venture
agreement in May 2007, with Gerdau S.A. Brazil for installation of rolling mills. An attempt to move out
of the mainstream forging business was made when the Group strengthened its position in the
prospective business of wind energy through 100 percent acquisition of RSB consult GmbH (RSB) of
Germany. Prior to the acquisition, the Group was just a wind farm, operator and supplier of components.
Questions
1. What is the motive for internationalization by the Kalyani Group? Discuss.
2. Which type of international strategy is Kalyani Group adopting? Explain.
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Case VI
CORPORATE RESTRUCTURING OF THE INDIAN REAILWAYS
On 16 April 1853, a locomotive pulling 14 carriages and 400 people left what was then Bombay,
to a 21-gun salute, and shuttled to Thane, 34 km away. The journey took about 75 minutes. That was
the way Indian Railways was born. Some estimates consider the Indian Railways as the world's largest
commercial enterprise in terms of the number of employees.
Indian Railways is a departmental undertaking of the Government of India. The Central Ministry
of Railways oversees the policy making for the Indian Railways and is headed by a union minister. There
are some ministers of state holding specific responsibilities. The administration of Indian Railways is done
through the Railway Board headed by a chairman and having six members.
There are 16 railway zones, each headed by a General Manager who reports to the Railway
Board. The zones are divided into divisions under the control of divisional railway managers. There are
44 functional departments, including those of engineering, mechanical, electrical, signal and
telecommunications, accounts, personnel and operating, commercial and safety branches. At the
operational levels, there are station superintendents and station masters who control individual railway
stations. Apart from the Indian Railways, the Ministry also has a number of public sector enterprises
under its administrative control. There is an autonomous organization called the Centre for Railway
information System, dedicated to developing specialized application software for the railways.
The financial matters of the Indian Railways are dealt with through an elaborate system involving
the parliament of India down to the accounts departments at the divisional headquarters. The Railway
budget is presented every year and passed by both houses of the parliament. The budget is based on the
expected traffic and the projected tariff and capital and revenue expenditure. Dividends are paid to the
Central government on the capital invested. Indian Railways is subjected to the same audit control as
other government ministries and departments.
The Indian Railways is Asia's largest and the world's second largest rail network under a single
management. It is a multi-gauge, multi-traction system covering over 60,000 route kilometers, with 300
railways yards and 700 repair shops and covers most of the country's vast geographical spread. The
rolling stock fleet of the Indian Railways comprises 7,566 locomotives, 37,840 coaches and 222 million
freight wagons. With a workforce of around 1.4 million, it runs more than 11,000 trains daily.
The Indian Railways has evolved into a vertically integrated organization. Various units are engaged in
designing, manufacturing and maintaining the rolling stock, running institutions such as hospitals,
schools, housing estates and hotels and catering. It issues licenses to a large number of uniformed
porters and authorized hawkers. These are only some of the major activities that the Indian Railways
perform.
There are many problems facing the Indian Railways. Among these, the major ones are:
• Cross-subsidisation of passenger and freight tariff
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• High energy and fuel costs
• High accident rate
• Antiquated communication, safety and signaling equipment.
• Ageing infrastructure including rail tracks and bridges.
• High establishment and personnel costs.
• Emerging competition from low-cost airlines.
Many areas of the Indian Railways are in need of improvement. Several actions have been taken over
the years that include:
• Upgrading technology, especially the application of IT
• Improving the quality of railway services
• Production of better quality locomotives and
• Introduction of fast long-distance trains
• Addition of value-added services such as introducing banking facilities on trains.
A Status Paper on the Indian Railways was issued May 1998, followed by another in 2002. These
status papers underlined issues confronting the Indian Railways and possible options. The Status Paper-
1998, for instance, focused on the strategies related to honing the marketing capability for bulk and nonbulk
freight and passenger services, reducing operating costs, evolving a financial strategy, bringing
about cultural change and addressed issues of concern in areas such as research and development and
IT. Similarly, the status paper of 2002 presented several issues and posed several questions related to
its functioning.
A report published in 2001 by a government appointed group chaired by Rakesh Mohan, now the
deputy governor of Reserve Bank of India, called for a radical restructuring of the Indian Railways. The
main thrust of its recommendations was on shedding the non-core activities such as catering and
manufacturing not related to its main activities of passenger and freight transportation and becoming a
focussed organisation.
Freight has been the key revenue earner for Indian Railways. The target for 2007-08 is at 785
million tonnes. The market share of freight traffic had been on the decline over the last few decades,
owing to improvements in road infrastructure. To arrest this decline, it became imperative to: enhance
customer responsiveness through cargo visibility and information dissemination, reduce operating
expenses and improve asset utilisation. In order to achieve these aims, the Indian Railways installed a
computerised Freight Operations Information System, with the assistance of CMC Limited.
There is much hype around the financial turnaround of the Indian Railways. Here, the major
achievements have been in the areas of improved freight and passenger earnings, gross traffic revenue,
higher cash surplus, higher net revenue, better operating ratio and return on capital. For instance, the
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Indian Railways is proud of its achievements in terms of an above 78 per cent operating ratio and a 20
per cent return on capital in 2006- 2007.
Overall, the Indian Railways have benefited from several managerial initiatives taken over the
recent past, such as corporatisation of many of its activities and hiving off, separate companies to
perform functions performed in-house earlier. For example, the Indian Railways Catering and Tourism
Corporation took over the non-core activities of catering while Rail Tel Corporation was formed to create
the optic fibre network for communications. Another subtle manner of change seems to be the creeping
nature of privatisation of non-core services and adoption of modern business methods of marketing and
human resource management to improve operational efficiency. These seem to be working though critics
say that the increase in the general economic activity and overloading of wagons is the cause of this
improved short-term performance.
Certain inherent issues have become a part of the Indian Railways heritage. Among these are:
overdependence on freight business, much of freight business arising from a select few commodities,
passenger traffic being concentrated in low-yield suburban traffic and high density of traffic in the certain
areas coupled with under-utilised assets and facilities in others. The fundamental issues of the dilemma
whether Indian Railways is an organisation in the nature of a public utility, designed to discharge social
obligations, or is it a commercial orgarnisation for which financial performance and operational efficiency
are imperative still remain.
Questions
1. Comment on the steps taken to reduce the extent of vertical integration at the Indian
Railways. Suggest a few more measures that could be taken.
2. Discuss the measures taken for corporate restructuring of the Indian Railways, in your
opinion, are these adequate for dealing with the problems faced? Why?
3. Propose the basic elements of a corporate turnaround for the Indian Railways.

Organizational Behavior
Note: Solve any 4 Cases
CASE: I Diana’s Disappointment: The Promotion Stumbling Block
Diana Gillen had an uneasy feeling of apprehension as she arrived at the Cobb Street
Grille corporate offices. Today she was meeting with her supervisor, Julie Spencer, and
regional director, Tom Miner, to learn the outcome of her promotion interview for the
district manager position. Diana had been employed by this casual dining restaurant chain
for 12 years and had worked her way up from waitress to general manager. Based on her
track record, she was the obvious choice for the promotion; and her friends assured her
that her interview process was merely a formality. Diana was still anxious, though, and
feared that the news might not be positive. She knew she was more than qualified for the
job, but that didn’t guarantee anything these days.
Nine months ago, when Diana interviewed for the last district manager opening, she
thought her selection for the job was inevitable. She was shocked when that didn’t
happen. Diana was so upset about not getting promoted then that she initially decided not
to apply for the current opening. She eventually changed her mind—afterall, the company
had just named her “restaurant manager of the year” and trusted her with managing their
flagship location. Diana thought her chances had to be really good this time.
A multi-unit management position was desirable move up for any general manager
and was a goal to which Diana had aspired since she began working in the industry.
When she had not been promoted the last time, Julie, her supervisor, explained that her
people skills needed to improve. But Diana knew that explanation had little to do with
why she hadn’t gotten the job—the real reason was corporate politics. She heard that the
person they hired was some superstar from the outside—a district manager from another
restaurant company who supposedly had strong multi-unit management experience and a
proven track record of developing restaurant managers. Despite what she was told, she
was convinced that Tom, her regional manager, had been unduly pressured to hire this
person, who had been referred by the CEO.
The decision to hire the outsider may have impressed the CEO, but it enraged Diana.
With her successful track record as a store manager for the Cobb Street Grille, she was
much more capable, in her opinion, of overseeing multiple units than someone who was
new to the operation. Besides, district managers had always been promoted internally
from among the store managers, and she was unofficially designated as the next one to
move up to a district position. Tom had hired the outside candidate as a political
maneuver to put himself in a good light with management, even though it meant
overlooking a loyal employee lime her in the process. Diana had no patience with people
who made business decisions for the wrong reasons. She worked very hard to avoid
politics and it especially irritated her when the political actions of others negatively
impacted her.
Diana was ready to be a district manager nine months ago, and she thought she was
even more qualified today—provided the decision was based on performance. She ran a
tight ship, managing her restaurant completely by the book. She meticulously controlled
expenses. Her sales were growing, in spite of new competition in the market, and she
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received relatively few customer complaints. The only number that was a little out of line
was the higher turnover among her staff.
Diana was not too concerned about the increasing number of terminations, however;
there was a perfectly logical explanation for this. It was because she had high standards
for both herself and her employees. Any
Who delivered less than 110 percent at all times would be better off finding a job
somewhere else. Diana didn’t think she should bend the rules for anyone, for whatever
reason. A few months ago, for example, she had to fire three otherwise good employees
who decided to try a new customer service tactic-a so-called innovation they dreamed uprather
than complying with the established process. As the general manager, it was her
responsibility to make sure that the restaurant was managed strictly in accordance with
the operations manual, and she could not allow deviations. This by-the-book approach to
managing had served her well for many years. It got her promoted in the past, and she
was not about to jinx that now. Losing a few employees now and then—particularly those
who had difficulty following the rules—was simply the cost of doing business.
During a recent store visit Julie suggested that Diana might try creating a friendlier
work environment because she seemed aloof and interacted with employees somewhat
mechanically. Julie even told her that she overheard employees refer to Diana as the “ice
maiden” behind her back. Diana was surprised that Julie brought this up because her boss
rarely criticized her. They had an unspoken agreement: Because Diana was so technically
competent and always met her financial targets, Julie didn’t need to give her much input.
Diana was happy to be left alone to run her restaurant without needless advice.
At any rate, Diana rarely paid attention to what employees said about her. She wasn’t
about to let something as childish as a silly name cause her to modify a successful
management strategy. What’s more, even though she had recently lost more than the
average number of employees due to “personality differences” or “miscommunications”
over her directives, her superiors did not seem to mind when she consistently delivered
strong bottom-line results every month.
As she waited in the conference room for the others, Diana worried that she was not
going to get this promotion. Julie had sounded different in the voicemail message she left
to inform her about this meeting, but Diana couldn’t put her finger on exactly what it
was. She would be very angry if she was passed over again and wondered what excuse
they would have this time. Then her mind wandered to how her employees would
respond to her if she did not get the promotion. They all knew how much she wanted the
job, and she cringed at how embarrassed she would be if she didn’t get it. Her eyes began
to mist over at the sheer thought of having to face them if she was not promoted today.
Julie and Tom entered the room then, and the meeting started. They told Diana, as
kindly as they could, that she would not be promoted at this time; one of her colleagues
would become the new district manager. She was incredulous. The individual who got
promoted had been with the company only three years—and Diana had trained her! She
tried to comprehend how this happened, but it did not make sense. Before any further
explanation could be offered, she burst into tears and left the room. As she tried in vain to
regain her composure, Diana was overcome with crushing disappointment.
The Indian Institute of Business Management & Studies
SUBJECT: Organizational Behavior Marks: 100
Question:
1. Within the framework of the emotional intelligence domains of self-awareness, selfmanagement,
social awareness, and relationship management, discuss the various
factors that might have to led to Diana’s failure to be promoted.
2. What competencies does Diana need to develop to be promotable in the future?
What can the company do to support her developmental efforts?
The Indian Institute of Business Management & Studies
SUBJECT: Organizational Behavior Marks: 100
CASE: II Buddy’s Snack Company
Buddy’s Snack Company is a family-owned company located in the Rocky Mountains.
Buddy Forest started the business in 1951 by selling home-made potato chips out of the
back of his pickup truck. Nowadays Buddy’s in a $36 million snack food company that is
struggling to regain market lost to Frito-Lay and other fierce competitors. In the early
eighties Buddy passed the business to his son, Buddy Jr., who is currently grooming his
son, Mark, to succeed himself as head of the company.
Six months ago Mark joined Buddy’s Snacks as a salesperson, and after four months
he quickly promoted to sales manager. Mark recently graduated from a local university
with an MBA in marketing, and Buddy Jr. was hoping that Mark would be able to
implement strategies that could help turn the company around. One of Mark’s initial
strategies was to introduce a new sales performance management system. As part of this
approach, any salesperson who receives a below average performance rating would be
required to attend a mandatory coaching session with his or her supervisor. Mark Forest
is hoping that these coaching sessions will motivate employees to increase their sales.
This case describes the reaction of three salespeople who have been required to attend a
coaching session because of their low performance over the previous quarter.
Lynda Lewis
Lynda is a hard worker, who takes pride in her work ethic. She has spent a lot of time
reading the training material and learning selling techniques, viewing training videos or
her own time, and accompanying top salespeople on their calls. Lynda has no problem
asking for advice and doing whatever needs to be done to learn the business. Everyone
agrees that Lynda has a cheery attitude and is a real “team player,” giving the company
150 percent at all times. It has been a tough quarter for Lynda due to the downturn in the
economy, but she is doing her best to make quota during this past quarter is not to lack of
effort, but just bad luck in the economy. She is hopeful that things will turn around in the
next quarter.
Lynda is upset with Mark about having to attend the coaching session because this is
the first time in three years that her sales quota has not been met. Although Lynda is
willing to do whatever it takes to be successful, she is concerned that the coaching
sessions will be held on a Saturday. Doesn’t Mark realize that Lynda has to raise three
boys by herself and that weekends are an important time for her family? Because Lynda
is a dedicated employee, she will somehow manage to rearrange the family’s schedule.
Lynda is now very concerned about how her efforts are being perceived by Mark.
After all, she exceeded the sales quota for the previous quarter, yet she did not receive
thanks or congratulation for those efforts. The entire experience has left Lynda
unmotivated and questioning her future with the company.
Michael Benjamin
Michael is happy to have his job at Buddy’s Snack Company, although he really doesn’t
like sales work that much. Michael accepted this position because he felt that he wouldn’t
The Indian Institute of Business Management & Studies
SUBJECT: Organizational Behavior Marks: 100
have to work hard and would have a lot of free time during the day. Michael was sent to
coaching mainly because his customer satisfaction reports were low; in fact, they were
the lowest in the company. Michael tends to give canned presentations and does not listen
closely to the customer’s needs. Consequently, Michael makes numerous errors in new
sales orders, which delay shipments and lose business and goodwill for Buddy’s Snack
Company. Michael doesn’t really care because most of his customers do not spend much
money, and he doesn’t think it is worth his while.
There has been a recent change in the company commission structure. Instead of
selling to the warehouse stores and possibly earning a high commission, Michael is now
forced to sell to lower-volume convenience stores. In other words, he will have to sell
twice as much product to earn the same amount of money. Michael does not think this
change in commission is fair, and he feels that the coaching session will be waste of time.
He believes that the other members of the sales team are getting all the good leads, and
that is why they are so successful. Michael doesn’t socialize with others in the office and
attributes others’ success and promotions to “whom they know” in the company rather
than the fact that they are hard workers. He thinks that no matter how much effort is put
into the job, he will never be adequately rewarded.
Kyle Sherbo
For three of the last five years Kyle was the number one salesperson in the division and
had hopes of being promoted to sales manager. When Mark joined the company, Kyle
worked closely with Buddy Jr. to help Mark learn all facets of the business. Kyle thought
this close relationship with Buddy Jr. would assure his upcoming promotion to the
coveted position of sales manager, and he was devastated to learn that Mark received the
promotion that he thought was his.
During the past quarter there was a noticeable change in Kyle’s work habits. It has
become commonplace for Kyle to be late for appointments or miss them entirely, not
return phone calls, and not follow up on leads. His sales performance declined
dramatically, which resulted in a drastic loss of income. Although Kyle had been
dedicated and fiercely loyal to Buddy Jr. and the company for many years, he is now
looking for other employment. Buddy’s Snack is located in a rural community, which
leaves Kyle with limited job opportunities. He was, however, offered a position as a sales
manager with a competing company in a larger town, but Kyle’s wife refuses to leave the
area because of her strong family ties. Kyle is bitter and resentful of his current situation
and now faces a mandatory coaching session that will be conducted by Mark.
Question:
1. You have met three employees of Buddy’s Snacks. Explain how each employee’s
situation relates to equity theory.
2. Explain the motivation of these three employees in terms of the expectancy theory
of motivation.
The Indian Institute of Business Management & Studies
SUBJECT: Organizational Behavior Marks: 100
CASE: III Sabeer Bhatia: An Icon Of Creativity
Sabeer Bhatia, the co-founder of Hotmail is the recipient of the ‘TR 100” award
presented by MIT to 100 young innovators who are expected to have the greatest impact
on technology in the next few years. He has won several laurels—‘Elite 100’ list of top
trendsetters in the New Economy by Upside Magazine, ‘People to watch’ in International
Business by TIME (2002), ‘Entrepreneur of the Year’ by a venture capital firm Draper
Fisher Jurvetson (1997), and one of the ten most successful entrepreneurs by San Jose
Mercury News and POV magazine (1998).
One needs to know what has gone into making him a highly creative person. Born in
Chandigarh, India, he completed his early schooling at Bangalore, in schools with ethical
values. His parents were both professionals; father, Baldev, a senior officer in Ministry of
Defense, and mother, Daman, a senior official in the Central Bank of India, who attracted
great value to education. He has been a brilliant student who would solve problems on the
blackboard. He was a perfectionist and would feel miserable if he was unable to write
everything he knew in his answer book during an exam, due to limited time. He has also
been entrepreneurial during his school days and once opened a sandwich shop.
He joined the Birla Institute of Technology, which he left to study at California Institute
of after winning full scholarship. He completed his masters from Stanford University and
joined Apple, where he worked for nine months. He had an urge to do something unique
using the net, and he came up with javasoft—a method of using the web to create a
personal database, where people could preserve their personal things. He shared his plan
with his colleague Jack Smith, who suggested to e-mail to javasoft. Bhatia worked the
whole night to develop the business plan. The two tried various options and came up with
‘Hotmail’ as their final choice, and a brand was launched in 1995. After a year, Microsoft
approached them, and Hotmail was sold to Microsoft for $400 million. Bhatia worked
with Microsoft for a year, and has launched two more products: Arzoo and
BlogEverywhere. From the above account it is obvious that Sabeer Bhatia is brilliant,
persistent, and innovative, and has scientific and technical knowledge. His friends find
him “persistent, focused and disciplined”. To top it all, he is a perfectionist and
entrepreneurial at heart. He has an unquenching desire to create new ventures, and
bubbles with new ideas. He feels Indian IT companies can be more creative. Creativity
seems to be his motivation in life; he is still single.
Question:
1. What competencies are needed to be creative?
2. Identify methods through which creativity can be nurtured.
The Indian Institute of Business Management & Studies
SUBJECT: Organizational Behavior Marks: 100
CASE: IV Women Leaders In The Corporate World
There are not many women in the position of leadership in corporate India.
The growth of women in the corporate world has been slow, probably due to the glass
ceiling and role stereotypes. Barring a few females who have made it to the top, others
have only reached till the middle/senior level of management. Family and social support
and education level are important factors for leadership in the business world. Besides,
family has priority over career for women in India. Thus, few women cut through all the
barriers and reach the top. One such example is Naina Lal Kidwai, Chairperson and
Managing Director, The Hongkong and Shanghai Corporation’s (HSBC) investment
banking and securities business in India. According to her, in India, “There is an
extended family of mothers, sisters, and mothers-in-law ready to step in along with the
easily available domestic help. However, despite these advantages in the urban class in
India, women are only now entering the corporate world.” (Emmons, 2004)
A graduate from HBS, Naina joined ANZ Grindlays Bank in India in 1982. Having
done her stints in a variety of jobs in merchant, retail and investment banking, she moved
to Morgan and Stanley in 1994 to manage its operations in India. She has been a high
achiever throughout. Naina was ranked 3rd by Fortune Magazine in their maiden list of
the world’s top women in business in Asia (2000), and later it placed her among the top
50 Women in Business in three successive years 2001, 2002, and 2003. Time Magazine
selected her as one of 2002’s fifteen emerging ‘Global Influentials’. She is Chairperson
of various committees of Industry Associations, and is on the Governing Body of
National Council of Applied Manpower Research as a member. She is also Director,
International Board of Digital Partners Foundation, USA. Naina is not only successful in
professional life, but in her personal life too; she is married with two children.
Question:
1. What are the barriers for women to become corporate leaders?
2. What competencies are needed by women to succeed in corporate life?
The Indian Institute of Business Management & Studies
SUBJECT: Organizational Behavior Marks: 100
CASE: V The Excellent Employee
Emily, who had the reputation of being an excellent worker, was a machine operator in a
furniture manufacturing plant that had been growing at a rate of between 15 percent and
20 percent each year for the past decade. New additions were built onto the plant, new
plants opened in the region, workers hired, new product lines developed – lots of
expansion – but with no significant change in overall approaches to operations, plant
layout, ways of managing workers, or design processes. Plant operations as well as
organizational culture were rooted in traditional Western management practices and
logic, based largely on the notion of mass production and economies of scale. Over the
past four years the company had grown in number and variety of products and in market
penetration; however, profitability was flattening and showing signs of decline. As a
result, managers were beginning to focus on production operations (internal focus) rather
than mainly focusing on new market strategies, new products, and new market segments
(external focus) in developing their strategic plans. They hoped to reduce manufacturing
costs, improving consistency of quality and ability to meet delivery times better while
decreasing inventory and increasing flexibility.
One of several new programs initiated by managers in this effort to improve
flexibility and lower costs was to get workers cross-trained. However, when a
representative from Human Resources explained this program to Emily’s supervisor, Jim,
he reluctantly agreed to cross-train most of his workers, but not Emily.
Jim explained to the Human Resources person that Emily worked on a machine that
was very complex and not easy to effectively operate. She had to “babysit” it much of the
time. He had tried to train many workers on it, but Emily was the only person who could
consistently get products through the machine that were within specifications and still
meet production schedules. When anyone else tried to operate the machine, which
performed a key function in the manufacturing process, it ended up either being a big
bottleneck or producing excessive waste, which create a lot of trouble for Jim.
Jim went on to explain that Emily knew this sophisticated and complicated machine
inside and out; she had been running it for five years. She liked the challenge, and she
said it made the day go by faster, too. She was meticulous in her work-a skilled employee
who really cared about the quality of her work. Jim told the HR person that he wished all
of his workers were like Emily. In spite of difficulty of running this machine, Emily
could run it so well that product piled up at the next workstation in the production
process, which couldn’t keep up with her!
Jim was adamant about keeping Emily on this machine and not cross-training her.
The HR was frustrated. He could see Jim’s point, but he had to follow executive orders:
“Get these people cross-trained.”
Around the same time a University student was doing a field study in the section of
the plant where Emily worked, and Emily was one of the workers he interviewed. Emily
told the student that in spite of the fact that the plant had some problems with employee
morale and excessive employee turn-over, she really liked working there. She liked the
piece-rate pay system and hoped she did not have to participate in the recent “program of
the month,” which was having operators learn each other’s jobs. She told the student that
it would just create more waste if they tried to have other employees run her machine.
The Indian Institute of Business Management & Studies
SUBJECT: Organizational Behavior Marks: 100
She told him that other employees had tried to learn how to operate her machine but
couldn’t do it as well as she could.
Emily seemed to like the student and began to open up to him. She told him that her
machine really didn’t need to be so difficult and touchy to operate: With a couple of
minor design changes in the machine and better maintenance, virtually anyone could run
it. She had tried to explain this to her supervisor a couple of years ago, but he just told her
to “do her work and leave operations to the manufacturing engineers.” She also said that
if workers upstream in the process would spend a little more time and care to keep the
raw material in slightly tighter specifications, it would go through her machine much
more easily; but they were too focused on speed and making more piece-rate pay. She
expressed a lack of respect for the managers who couldn’t see this and even joked about
how “managers didn’t know anything.”
Question:
1. Identify the sources of resistance to change in this case.
2. Discuss whether this resistance is justified or could be overcome.
3. Recommend ways to minimize resistance to change in this incident or in future
incidents.


 HUMAN RESOURCES MANAGEMENT
1
CASE I
EMPLOYEE MOTIVATION IN A GOVERNMENT ORGANIZATION"
Bhumika Services Ltd., one of the largest public sector companies of India, was serving
more than 31 million customers. Along with its vast customer base, BSNL's financial and asset
bases too were vast and strong. Changing regulations, converging markets, competition and ever
demanding customers had generated challenges for BSNL. The Indore division of BSNL was the
first in the country, which faced competition in basic telecom services from 1998. In spite of being
a government department, Indore telephones had to face the competition, and relentless efforts
were put in to improve the services and provide worldclass telecom services to its customers.
Among the various services offered by Indore Telecom, 197 and 183 were two special services.
197 provided non-metered enquiry services to obtain telephone numbers by simply giving the
name of person/name of organization/ name and designation of person, or by giving address. 183
on the other hand, was a nonmetered enquiry service that provided similar services for distant
stations. There were a large number of complaints related to these services. Complaints were
either directly forwarded to the district office by customers or raised during Telephone Adalats or
pointed out by correspondents during press conferences, which were conducted quarterly.
Complaints ranged from non-response, long waiting time to rude responses.
S. Baheti took charge as Area Manager (North) on July 25, 2001 In the Indore Division.
Immediately after taking charge, he realized that special services like 197 and 183 required
urgent attention as they were directly affecting the image of the organization amongst customers.
Since most of the complaints during Telephone Adalats and press conferences were related to
these services, Baheti wanted to reach the root cause of the problem, to solve it forever. In this
process, he looked at the background of the employees involved in the special services and found
that most of the employees were office bearers of various unions that were active in the
organization. The problem was more complicated than it seemed to during interactions, the
employees indicated that they were not to be blamed for poor services since they were facing a
number of problems in providing services and senior officials were not paying enough attention to
alleviate their problems. Defective handsets, non-operating telephone lines, disturbance in lines,
jacks not making proper connections, fans and air conditioners not working properly and non
availability of typewriter/computer terminals were some of the problems brought to the notice of
Baheti by operators.
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Further investigation revealed that in addition to these technical problems, there were
some Human Resource Management problems as well, such as frequent short leave, extended
breaks, uninformed leave and indifferent attitude of employees towards customers. Baheti
identified that despite technical problems, some operators were sincere towards their viork and
tried their best to provide better services. To improve these services, Baheti decided to use
multipronged strategies. Most of the technical problems were solved immediately, other problems
that could not be solved at his level were forwarded to higher authorities and pursued rigorously.
As the technical problems were taken care of, efficiency of sincere employees went up. Moreover,
Baheti also began regular interaction with the operators, appreciating their good work, listening to
their problems and explaining them the;-i. importance of their jobs. The employees were made
aware of the facts that B5NL did not enjoy a sole monopolistic position any more and had to
compete with private players. So the laidback attitude towards customer complaints was not only
detrimental to the image of the organization, but also could lead to a reduced market share.
After gaining the confidence of operators, the next step was to motivate them. Towards
this end, Baheti started announcing the best operator of the month and recognition was given to
the operator by displaying his name on the board of honor. The criteria for award were minimum
200 calls attended per day and 20 days' attendance. In addition, based on last six months
performance, three best performers were identified. Appreciation letters from Area Manager and
General Manager were conferred upon these operators in a public function and prizes of their own
choice were given to them. These efforts had a desired result and the performance of all the
operators showed a marked improvement. The number of calls attended by some operators
increased from 200 to 700 calls per day. Further, quick and polite response had reduced customer
complaints. While reviewing the situation, Baheti was quite contended to see a remarkable
change in the behavior of operators just four months. He wondered whether this change was a
permanent phenomenon or he would have to strategize further.
QUESTIONS
1. Discuss the long-term relevance of motivational techniques used by Baheti in the
light of prevailing environment in the organization.
2. Had you been Baheti, what other techniques you would have used to improve the
special services provided by the organization?
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3
CASE II
EMPLOYEE RELATIONS AUDIT
Triveni Foods Pvt. Ltd., a multinational confectionary company, having its branches in
more than 50 countries and marketing its products in about 135 countries, established one of its
production units in 1988 at Mathura near Delhi. It had a workforce of nearly 320 employees and
sales turnover was more than Rs. 150 crores. Being a confectionary unit, hygiene was given the
upper most priority to the extent that no one was allowed to enter the production area without
taking bath and wearing sterilized clothes provided by the company. The entire process was
automatic and required only food specialists and labor. In order to match the required standards,
emphasis was given on training and welfare of employees on regular basis. Facilities like
transportation were also provided since delay by ten minutes could cause production losses at the
time of shift changes.
Over a period of time due to start and workers' redundancy, it was observed that problems
like lethargy, absenteeism, violation of work practices were increasing. Absenteeism rate went up
to 18 percent. Employees visited canteen for drinking water and started gossiping during working
hours. Buses did not arrive on time due to which production suffered. Operators came late and
left shop floor early without waiting for relievers. Employees were found hovering in
administration building without any reason. It was also found that employees were violating
personal hygiene standards. Malpractices were also reported with attendance process and
records. These activities were having a negative impact on managerial effectiveness and
performance of the unit. The management tried to take number of initiatives to overcome these
problems. However, these initiatives seemed ad hoc solutions and did not serve the purpose in
the long run.
In 1996, Alok Trivedi joined the company as Head of the Department H.R. While facing
these problems, he realized that the causes of these problems were deep rooted and required a
proactive approach. He started with an approach called Employee Relation Audit, developed by
him, where everything was to be monitored, regulated and reported on regular intervals. He
along with his team prepared an action plan (Appendix 1) and corrective measures were taken
accordingly. Facilities of drinking water were arranged at 3 to 4 places in the production area
which stopped employees from going to canteen for this purpose. Action was taken against the
late arrivals of the buses. A proper time study was done and they were given ten minutes margin
so that they could report on time. Operators were frequently questioned and stringent vigilance
was kept for amenities. Regular counseling was also arranged. A grievance register was also kept
and effective grievance redressal was undertaken. Groups were formed called 'Pragati' groups for
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solving work related problems. Employees were frequently checked for ensuring their strict
adherence to personal hygiene standards. For ensuring timely processing and printing of
attendance records, training was given to al! line officers and production of records was made
mandatory on shift basis.
It was further decided that based on this action plan an audit should be carried out at
regular periods so that actual performance could be measured. For quantification, a 5 point. scale
0- poor, 2-below average, 3-average, 4-good, 5-v.good) audit report was prepared featuring
practices, criteria for evaluation, standards, observations/comments and rating :Appendix 2). For
example, in canteen criteria for evaluation there were food quality, menu, timings and
unauthorized presence of the employees in the kitchen. The standards were strict adherence to
the rules defined. For transportation, arrival, departure and punching of cards by drivers were the
criteria for evaluation. Internal teams of auditors were asked to observe and comment against the
set standards and give the rating accordingly. Performance vas evaluated on the basis of
percentage, the highest point being 215. For example, if the total points scored on various
parameters in a audit report was one hundred and fifty five, hen percentage score would be
seventy-two (l55/215xl00 = 72 per cent). The first audit "as carried out in August 1999 and
percentage of performance was sixty two.
In the year 2000, the performance rose to sixty-five per cent. Proactive approach of
solving le problems was adopted. For example, registers were maintained at different work areas,
write down the complaints experienced by employees and action was taken by the concerned
person. A complaint of tap leaking in a bathroom was recorded in register by a workman. It was
attended by a supervisor in charge and he got it repaired immediately. At times these were
reviewed and signed by H.R. department and the higher management. Due to these practices, a
lot of improvement was observed. Better working conditions, increased productivity, rise in
employees' commitment towards their goals and better superior -subordinate relationship could
be seen. In 2001, the percentage of the performance rose to seventy two. While reviewing the
Employee relation audit, Alok Trivedi was quite satisfied to note the steady though slow
improvement in the figures of performance.
QUESTIONS:
1. Had you been in place of Alok Trivedi, what additional measures would you have
taken?
2. Critically analyze the Employee Relations Audit in the light of its contribution to
self motivation of employees.
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CA S E III
EMPLOYEE TURNOVER AT XYZ MOON LIFE INSURANCE
In 1950, with the enactment of the Insurance Act, Government of India decided to bring
all the insurance companies under one umbrella of the Life Insurance Corporation of India (LIC).
Despite the monopoly of LIC, the insurance sector was not doing well. Till 1995, only 12% of the
country's people had insurance cover. The need for exploring the insurance market was felt and
consequently the Government of India set up the Malhotra Committee. On the basis of their
recommendations, Insurance Development and Regulatory Authority (IRDA) Act was passed in
parliament in 2000. This move allowed the private insurers in the market with the stop foreign
players with 74:26% stake. XYZ- Moon life was one of the first three private players getting the
license to operate in India in the year 2000.
XYZ Moon Life Insurance was a joint venture between the XYZ Group and Moon Inc. of US.
XYZ starred off its operations in 1965, providing finance for industrial development and since then
it had diversified into housing finance, consumer finance, mutual funds and now its latest venture
was Life Insurance. Its foreign partner Moon Inc. was established in 1858 and had grown to be
the largest life insurance and mutual fund company in the U.S. Moon Inc. had its presence in Asia
since the past 75 years catering to over 1 million customers across 11 Asian countries.
Within a span of two years, twelve private players obtained the license from IRDA. IRDA
had provided certain base policies like, Endowment Policies, Money back Policies, Retirement
Policies, Term Policies, Whole Life Policies, and Health Policies. They were free to customize their
products by adding on the riders. In the year 2003, the company became one of the market
leaders amongst the private players. Till 2003, total market share of private insurers was about
4%, but Moon Life was performing well and had the market share of about 30% of the private
insurance business.
In June 2002, XYZ Moon Life started its operations at Nagpur with one Sales Manager (SM)
and ten Development Officers (DO). The role of a DO was to recruit the agents and sell a career
to those who have an inclination towards insurance and could work either on part time or full time
basis. They were very specific in recruiting the agents, because their contribution directly
reflected their performance. All DOs faced three challenges such as Case Rate (number of
policies), Case Size (amount of premium), and Recruitment of advisors by natural market,
personal observations, nominators, and centre of influence. Incentives offered by the company to
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development officers and agents were based on their performance, which resulted into internal
competition and finally converted into rivalry.
In August 2002, ,a Branch Manager joined along with one more Sales Manager and ten
Development Officers. Initially, the branch was performing well and was able to build their image
in the local market. As the industry was dynamic in nature, there were frequent opportunities
bubbling in the market. In order to capitalize the outside opportunities, one sales manager left
the organization in January 2003. As the sales manager was a real performer, he was able to
convince all the good performers at XYZ Moon Life Insurance to join the new company. As a result
of this, the organizational structure got disturbed and the development officers, who were earlier
reporting to the SM had started reporting directly to the branch manager. Now, nepotism crept in
and the branch manager began reallocating good agents to his favorite development officers. The
sales team of another sales manager became weak (low performer). Seeing the low performance
of the sales manager and his development officers, the company decided to terminate their
services. As the employees' turnover rate of the organization was more than the industry rate,
the company had to continuously recruit sales agents as well as development officers to sustain
itself in a highly competitive environment. The internal competition among development officers
resulted into problems like, high employee turnover and dissatisfaction. Hence the branch was not
able to perform as per the benchmarks set by the company. Its performance was not even
comparable to that of other branches of the same company.
In April 2004, the company faced a grave problem, when the Branch Manager left the
organization for greener pastures. To fill the position, in May 2004, the company appointed a new
Branch Manager, Shashank Malik, and a Sales Manager, Rohit Pandey. The Branch Manager in his
early thirties had an experience of sales and training of about 12 years and was looking after two
branches i.e., Nagpur and Nasik.
Malik was given one Assistant Manager and 25 Development Officers. Out of that, ten were
reporting to Assistant Manager and remaining fifteen were directly reporting to him. He was given
the responsibility of handling all the operations and the authority to make all the decisions, while
informing the Branch Manager. Malik opined that the insurance industry is a sunrise industry
where manpower plays an important role as the business is based on relationship. He wanted to
encourage one-to-one interaction, transparency and 4iscipline in his organization. While
managing his team, he wanted his co-workers to analyze themselves i.e., to understand their own
strengths and weaknesses. He wanted them to be result-oriented and was willing to extend his
full support. Finally, he wanted to introduce weekly analysis in his game plan along with inflow of
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new blood in his organization. Using his vast experience, he began informal interactions among
.the employees, by organizing outings and parties, to inculcate the feelings of friendliness and
belonging. He wanted to increase the commitment level and integrity of his young dynamic team
by facilitating proper civilization of their energy. He believed that proper training could give his
team a proper understanding of the business and the dynamics of insurance industry.
QUESTIONS:
1. If you were Malik, what strategies would you adopt to solve the problem?
2. With high employee turnover in insurance industry, how can the company retain a
person like Malik?
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CASE IV
FRAGRANCE COMPANY LIMITED
Petals Company Limited (PCL) was initiated in the year 1919. Since then, it had produced
a number of brands which enjoyed customer loyalty. It had adapted well with the changing
environment and had entered into a strategic alliance with the S & G Limited, the producer of
personal care products. The new company Fragrance Company Limited Was formed as a result in
1993 with equity participation from S& G and Petals Company Limited. This company marketed
the products manufactured by the PCL. This alliance had given PCL access to the latest
international technology in soaps and detergents. Thus, Fragrance Company Limited was now
ideally placed to offer high value, international quality products at competitive prices. It was
already an exporter of toilet soaps, detergents and cosmetics. It was a private organisation
headed by Dharamchand, with its company's headquarters at Mumbai and seven units all over
the country with one of the units at Faridabad. The turnover of the company was Rs 900 crores.
The company marketed the products using the latest international technology in soaps and
detergents.
The organization structure was traditionally hierarchical with the senior vice president at
the top of the management, the supervisory heads at the middle level and the workers at the
shop floor. The company had 450 permanent workers, and 150 contract workers, with an average
age of 32 years. The recruitment policy framed was to employ freshers. The various departments
in the organization were: purchase, finance, systems, engineering services, excise and dispatch,
operations and personnel department. The personnel and administration department were headed
by Gyanchand and the functions of the personnel administration department were: recruitment,
selection, training, counseling, performance appraisal, internal mobility of employees, negotiation
With workers, fixation and implementation of rules and regulations regarding wages, salary,
allowances and benefits to the workers. The philosophy of the company was based on Total
Quality Management (TQM) and Kaizen. The company was highly environment-friendly and was
oriented towards customer’s satisfaction.
Fragrance was facing an acute crisis due to high rate of absenteeism among its permanent
workers. The losses were soaring high. There was loss in production, and high expenses and
indiscipline were also observed. The personnel administration department conducted a survey in
the year 1998. They found that the rate of absenteeism was about 20% on an average. The rules
and regulations regarding leave were-12-17 days of leave with pay, 7 days casual leave with pay,
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5 day sick leave with pay, extra leave without any pay. The benefits were provided as per the
Employees State Insurance Act. The data collected revealed that 36% of the absenteeism was
due to transportation problem, 48% was because of the workers staying away from their families,
52% due to festivals, 32% due to farming, 48% on account of alcholism, 80% on account of
social occasions/marriages and 76% due to sickness of family members.
The other findings were that approximately 80% of the workers were married and they
had children to look after and hence had a greater tendency towards taking leave, 8% of workers
possessed dual jobs ,e.g., driving for others, mechanic work etc., so they felt that they could earn
more on a particular day by remaining absent; 96% of the workers did not like night shifts and
they remained absent from duty; 28% of the workers were not satisfied with the working
conditions i.e. canteen facilities, drinking water, social and cultural activities and cleanliness. In
1998, the company tried to reduce absenteeism by introducing conveyance allowance for
attendance and night shift allowance. The scheme called Inaam; was launched in which a worker
who did not avail leave in three months, received Rs 200 per month. Inhouse training was
imparted to workers In order to educate them about the consequences of absenteeism. They
were also sent for 3-6 months training to the Central Board of Workers Education on rotation.
Counseling sessions were held for the workers in order to increase their awareness. The
company also introduced the philosophy of workers participation in the management to increase
their involvement and commitment towards the work. The practice of organizing picnics, festival
celebration, informal get-togethers, and sports activities were also adopted to increase the
commitment. Regularity was made an important component of performance appraisal and
promotion. After one year, Gyanchand was highly perplexed to see only a negligible improvement
in the report of the survey conducted by the personnel administration department. The rate of
absenteeism had dropped by only 3%, i.e. from. 20% to 17% in spite of introducing the aforesaid
schemes.
QUESTIONS:
1. What role do the non-financial incentives play in motivating the workers and
minimizing the rate of absenteeism?
2. What innovative solutions would you suggest to minimize the rate of
absenteeism?
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C A S E V
HE WHO RIDES A TIGER
In the Year of the Youth, the author took up a research project on young industrial
workers. It involved comparing young and old workers. Two industries producing the same
machines at similar technological level were selected. One belonged to the private sector and the
other to the public sector. While the latter was started a decade later than the former, it had
achieved greater expansion. Both were located in the same state.
After we obtained necessary permission to conduct our study, we reached the mofussil
town where the private sector industry was located. Before we could launch our study, as a
matter of principle, we wanted to meet the General Secretary of the workers' union. The
Personnel Department was not willing for this. On our insistence they called the union official. We
talked to him for about half an hour but Personnel Department people were all the time hovering
around. So we fixed a time in the evening to meet him in the union office in the town. We visited
the union office in the evening. The union was having problem regarding wage deduction of some
workers who did not show up for overtime. The overtime notice was short and they had not
consented either, even then the management was threatening wage deduction for one week. The
union could hardly do a thing' as they in the past had burnt their hands when they had to
unilaterally call off the 106 day old strike in which even their Treasurer had committed suicide.
They were scared to the extent that they had productivity linked bonus agreement for even 12%
bonus. Moreover, a new minuscue union was recently started in the company.
We visited the new union's office next evening and held a long discussion. They asked for'
our suggestions. The union believed in legal battles more than agitations. After a visit to the
industry the author visited the state headquarters of the new union. There every office bearer
was surprisingly a lawyer. In the HQ we learnt that after we left, their union took out a procession
and held a meeting in the temple. Perhaps this was the result of our discussion. While the older
union was a prisoner of its past, the new union was free to write its own history. Workers'
interests were being served perhaps by both.
QUESTIONS:
1. Discuss merits/demerits of the role of strike, agitation and legal approach in union
management relations.
2. What role does mutual trust play in building union-management relations?