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SUB: INTERNATIONAL BUSINESS
N. B.: 1) Attempt any four cases 2) All
cases carries equal marks.
No: 1
BPO
– BANE OR BOON ?
Several MNCs are increasingly unbundling or vertical
disintegrating their activities. Put in
simple language, they have begun outsourcing (also called business process
outsourcing) activities formerly performed in-house and concentrating their
energies on a few functions. Outsourcing
involves withdrawing from certain stages/activities and relaying on outside
vendors to supply the needed products, support services, or functional
activities.
Take Infosys, its 250 engineers develop IT applications
for BO/FA (Bank of America Novato , California Massachusetts
General Hospital
2500 college educated men and women are buzzing at midnight at Wipro Spectramind at Delhi US
insurance company and providing help-desk support for a big US Internet service
provider-all at a cost upto 60 percent lower than in the US
Another activist in BOP is Evalueserve, headquarterd in
Bermuda and having main operations near Delhi
Evaluserve provides services like patent writing,
evaluation and assessment of their commercialization potential for law firms
and entrepreneurs. Its market research
services are aimed at top-rung financial service firms, to which it provides
analysis of investment opportunities and business plans. Another major offering is multilingual
services. Evalueserve trains and
qualifies employees to communicate in Chinese, Spanish, German, Japanese and
Italian, among other languages. That
skill set has opened market opportunities in Europe
and elsewhere, especially with global corporations.
ICICI infotech Services in Edison ,
New Jersey , is another BOP services provider
that is offering marketing software products and diversifying into markets
outside the US
In its first year after setting up shop in March 1999,
ICICI infotech spent $33 million acquiring two information technology services
firms in New Jersy-Object Experts and ivory Consulting – and command Systems in
Connecticut US US market offensive, which would go towards R
& D and back-end infrastructure support, and creating new versions of its
products to comply with US Berlin , Germany with the Fraunhofer Institute for
Software and Systems Engineering, which is based in Berlin
and Dortmund , Germany
A relatively late entrant to the US
ICICI Infotech’s expansion into new overseas markets has
paid off. Its $50 million revenue for
its latest financial year ending March 2003 has the US
operations generating some $15 million, while the Middle East and Far East markets brought in another $9 million. It new boasts
more than 700 customers in 30 countries, including Dow Jones, Glazo-Smithkline,
Panasonic and American Insurance Group.
The outsourcing industry is indeed growing form
strength. Though technical support and
financial services have dominated India
Outsourcing of human resource services or HR BPO is
emerging as big opportunity for Indian BPOs with global market in this segment
estimated at $40-60 billion per annum.
HR BPO comes to about 33 percent of the outsourcing revenue and India
has immense potential as more than 80 percent of Fortune 1000 companies discuss
offshore BOP as a way to cut costs and increase productivity.
Another potential area is ITES/BOP industry. According to A NASSCOM survey, the global
ITES/BOP industry was valued at around $773 billion during 2002 and it is
expected to grow at a compounded annual growth rate of nine percent during the
period 2002 – 06, NASSCOM lists the major indicators of the high growth
potential of ITES/BOP industry in India
During 2003 – 04, The ITES/BPO segment is estimated to
have achieved a 54 percent growth in revenues as compared to the previous
year. ITES exports accounted for $3.6
billion in revenues, up form $2.5 billion in
2002 – 03. The ITES-BPO segment
also proved to be a major opportunity for job seekers, creating employment for
around 74,400 additional personnel in India
Legal outsourcing sector is another area India India India
Research firms such as Forrester Research, predict that
by 2015 , more than 489,000 US
Many more new avenues are opening up for BOP services
providers. Patent writing and evaluation
services are markets set to boom. Some
200.000 patent applications are written in the western world annually, making
for a market size of between $5 billion and $7 billion. Outsourcing patent writing service could
significantly lower the cost of each patent application, now anywhere between
$12,000 and $15,000 apiece-which would help expand the market.
Offshoring of equity research is another major growth
area. Translation services are also
becoming a big Indian plus. India produces some 3,000 graduates in German
each year, which is more than that in Switzerland
Though going is good, the Indian BPO services providers
cannot afford to be complacent.
Phillppines, Maxico and Hungary Russia China
BOP is based on sound economic reasons. Outsourcing helps gain cost advantage. If an activity can be performed better or
more cheaply by an outside supplier, why not outsource it ? Many PC makers, for
example, have shifted from in – house assembly to utilizing contract assemblers
to make their PCs. CISCO outsources all
productions and assembly of its routers and witching equipment to contract
manufactures that operate 37 factories, all linked via the internet.
Secondly, the activity (outsourced) is not crucial to the
firm’s ability to gain sustainable competitive advantage and won’t hollow out
its core competence, capabilities, or technical know how. Outsourcing of maintenance services, date
processing, accounting, and other administrative support activities to
companies specializing in these services has become common place. Thirdly, outsourcing reduces the company’s
risk exposure to changing technology and / or changing buyer preferences.
Fourthly, BPO streamlines company operations in ways that
improve organizational flexibility, cut cycle time, speedup decision making and
reduce coordination costs. Finally,
outsourcing allows a company to concentrate on its core business and do what it
does best. Are Indian companies
listening ? If they listen, BPO is a boon to them and not a bane.
Questions:
1. Which of the theories of international trade can help Indian
services providers gain competitive edge over their competitors?
2. Pick up some Indian services providers. With the help of Michael Porter’s diamond,
analyze their strengths and weaknesses as active players in BPO.
3. Compare this case with the case given at the beginning of this
chapter. What similarities and
dissimilarities do you notice? Your analysis should be based on the theories
explained.
No: 2
One of these potential investors is a large New York
During the 1970s, the Peruvian government nationalized a
number of industries and factories and began running them for the profit of the
state in most cases, these state – run ventures became disasters. In the late
1970s the fishing fleet owner was given back his ships and allowed to operate
his business as before. Since then, he
has managed to remain profitable, but the biggest problem is that his ships are
getting old and he needs an influx of capital of make repairs and add new technology. As he explained it to the new York
Having reviewed the fleet owner’s operation, the large
multinational bank believes that the loan is justified. The financial institution is concerned,
however, that the Peruvian government might step in during the next couple of
years and again take over the business. If this were to happen, it might take
an additional decade for the loan to be repaid.
If the government were to allow the fleet owner to operate the fleet the
way he has over the last decade, the fleet the way he has over the last decade, the loan could
be repaid within seven years.
Right now, the bank is deciding on the specific terms of
the agreement. Once theses have been
worked out, either a loan officer will fly down to Lima
and close the deal or the owner will be asked to come to New York Lima
Questions:
1. What are some current issues facing Peru Peru
2. What type of political risks does this fishing company need to
evaluate? Identify and describe them.
3. What types of integrative and protective and defensive
techniques can the bank use?
4. Would the bank be better off negotiating the loan in New York or in Lima
No: 3
RED
BECOMING THICKER
The Backdrop
There seems to be no end
to the troubles of the coloured – water giant Coca Cola. The cola giant had
entered India India
The
Story
It was in the early 1990s
that India India
Jayadeva Raja, the flamboyant management expert was made
the first CEO of Coke India
Raja was replaced by the hard – nosed Richard Niholas in
1995. The first thing Nicholas did was to give an ultimatum to the bottlers to
expand their plants or sell out. Coke also demanded equity stakes in many of
the bottling plants. The bottlers had
their own difficulties as well. They
were running on low profit margins. Nor
was Coke willing to finance the bottlers on soft terms. The ultimatum backfired. Many bottlers
switched their loyalty and went to Pepsi.
Chauhan allegedly supported the bottlers, of course, from the sidelines.
Coke thought it had staged a coup over Pepsi when it
(Coke) clamed the status of official drink for the 1996 Cricket World Cup
tournament. Pepsi took on Coke mightily
with the famous jingle “Nothing official about it”. Coke could have capitalized
on the sporty image of Thums Up to counter the campaign, but instead simply
caved in.
Donald Short replaced Nicholas as CEO in 1997. Armed with heavy financial powers, Short
bought out 38 bottlers for about $700 million.
This worked out to about Rs 7 per case, but the cost – effective figure
was Rs 3 per case. Short also invested heavily in manpower. By 1997, Coke’s workforce increased to
300. Three years later, the parent
company admitted that investment in India
It is not in the culture of Coke to admit failure. It has decided to fight back. Coke could not only sustain the loss, it
could even spend more money on Indian operations. It hiked the ad budget and appointed Chaitra
Leo Burnett as its ad agency. During
1998 – 99, Coke’s ad spend was almost three times that of Pepsi.
Coke is taking a look at its human resources and is
taking initiatives to re – orient the culture and inject an element of
decentralization along with empowerment.
Each bottling plant is expected to meet predetermined profit, market
share, and sales volumes. For newly
hired management trainees, a clearly defined career path has been drawn to
enable them to become profit centre heads shortly after completion of their
probation. Such a decentralized approach is something of a novelty in the Coke
culture worldwide.
But Alezander “Von Behr, who replaced Short as Chef of
Indian operations, reiterated Coke’s commitment to decentralization and local
responsiveness. Coke has divided India
Coke started cutting down its costs. Executives have been asked to shift from farm
houses to smaller houses and rentals of Gurgaon headquarters have been
renegotiated. Discount rates have been
standardized and information systems are being upgraded to enable the Indian
headquarters to access online financial status of its outposts down to the
depot level.
Coke has great hopes in Indian as the country has a huge
population and the current per capita consumption of beverages is just four
bottles a year.
Right now, the parent company (head – quartered in the US
Meddling
Board
Coke’s star- studded group of directors, many of whom
date back to the Goizueta era, has built a reputation for meddling.
Moribund
Marketing
Once world class critics say that today the soda giant
has become too conservative, with ads that don’t resonate with the teenagers
and young adults that made up its most important audience.
Lack
of Innovation
In the US
Friction
with Bottlers
Over the past decade, Coke has often made its profit at
the expenses of bottlers, pushing aggressive price hikes on the concentrate it
sells them. But key bottlers are now
fighting back with sharp increases in the price of coke at retail.
International
Worries
Coke desperately needs more international growth to
offset its flagging US
business, but while some markets like Japan
When its own house is not in order in the large country,
will the company be able to focus enough on the Indian market?
Questions:
1. Why is that Coke has not been able to make profit in its
Indian operations?
2. Do you think that Coke should continue to stay in India
3. What cultural adaptations would you suggest to the US
4. Using the Hofstede and the value orientations cultural models,
how can you explain some of the cultural differences noted in this case?
NO. 4
THE ABB PBS JOINT VENTURE
IN OPERATION
ABB Prvni Brnenska Stojirna Brno, Ltd. (ABB-PBS), Czechoslovakia April
15, 1993 .
Business for the joint venture in its first two full
years was good in most aspects. Orders
received in 1994, the first full year of the joint venture’s operation, were
higher than ever in the history of PBS.
Orders received in 1995 were 2½ times those in 1994. The company was profitable in 1995 and ahead
of 1994s results with a rate of return on assets of 2.3 per cent and a rate of
return on sales of 4.5 per cent.
The 1995 results showed substantial progress towards
meeting the joint venture’s strategic goals adopted in 1994 as part of a five
year plan. One of the goals was that
exports should account for half of the total orders by 1999. (Exports had accounted for more than a quarter
of the PBS business before 1989, but most of this business disappeared when the
Soviet Union Collapsed). In 1995 exports
increased as a share of total orders to 28 per cent, up from 16 per cent the
year before.
The external service business, organized and functioning
as a separate business for the first time in 1995, did not meet
expectations. It accounted for five per
cent of all orders and revenues in 1995, below the 10 per cent goal set for it. The retrofitting business, which was expected
to be a major part of the service business, was disappointing for ABB-PBS,
partly because many other small companies began to provide this service in
1994, including some started by former PBS employees who took their knowledge
of PBS-built power plants with them.
However, ABB-PBS managers hoped that as the company introduced new
technologies, these former employees would gradually lose their ability to
perform these services, and the retrofit and repair service business, would
return to ABB-PBS.
ABB-PBS dominated the Czech boiler business with 70 per
cent of the Czech market in 1995, but managers expected this share to go down
in the future as new domestic and foreign competitors emerged. Furthermore, the west European boiler market
was actually declining because environmental laws caused a surge of
retrofitting to occur in the mid -1980 s, leaving less business in the 1990
s. Accordingly ABB-PBS boiler orders
were flat in 1995.
Top managers at ABB-PBS regarded business results to date
as respectable, but they were not satisfied with the company’s
performance. Cash flow was not as good
as expected. Cost reduction had to go
further. The more we succeed, the more
we see our shortcomings” said one official.
Restructuring
The first round of restructuring was largely completed in
1995, the last year of the three-year restructuring plan. Plan logistics, information systems, and
other physical capital improvements were in place. The restricting included :
- Renovating
and reconstructing workshops and engineering facilities.
- Achieving
ISO 9001 for all four ABB-PBS divisions. (awarded in 1995)
- Transfer
of technology from ABB (this was an ongoing project)
- Intallation
of an information system.
- Management
training, especially in total quality assurance and English language.
- Implementing
a project management approach.
A notable
achievement of importance of top management in 1995 was a 50 per cent increase
in labour productivity, measured as value added per payroll crown. However, in the future ABB-PBS expected its
wage rates to go up faster than west European wage rates (Czech wages were
increasing about 15 per cent per year) so it would be difficult to maintain the
ABB-PBS unit cost advantage over west European unit cost.
The Technology Role for
ABB-PBS
The joint venture was expected from the beginning to play
an important role in technology development for part of ABB’s power generation
business worldwide. PBS a.s. had
engineering capability in coal – fired steam boilers, and that capability was
expected to be especially useful to ABB as more countries became concerned
about air quality. (When asked if PBS
really did have leading technology here, a boiler engineering manager remarked,
“Of course we do. We burn so much dirty
coal in this country; we have to have better technology”)
However, the envisioned technology leadership role for
ABB-PBS had not been realized by mid – 1996.
Richard Kuba, the ABB-PBS managing director, realized the slowness with
which the technology role was being fulfilled, and he offered his
interpretation of events.
“ABB did not promise to make the joint venture its steam
technology leader. The main point we wanted to achieve in the joint venture
agreement was for ABB-PBS to be recognized as a full-fledged company, not just
a factory. We were slowed down on our
technology plans because we had a problem keeping our good, young engineers.
The annual employee turnover rate for companies in the Czech Republic
ABB-PBS had benefited technologically from its
relationship with ABB. One example was
the development of a new steam turbine line.
This project was a cooperative effort among ABB-PBS and two other ABB
companies, one in Sweden and
one in Germany
Questions:
1. Where does the joint venture meet the
needs of both the partners? Where does
it fall short?
2. Why had ABB-PBS failed to realize its
technology leadership?
3. What lessons one can draw from this
incident for better management of technology transfers?
NO. 5.
CHINESE EVOLVING
ACCOUNTING SYSTEM
Attracted by its rapid
transformation from a socialist planned economy into a
market economy, economic
annual growth rate of around 12 per cent, and a population in excess of 1.2
billion, Western firms over the past 10 years have favored China China as an emerging economic superpower, with
an economy that will be as large as that of Japan
by 2000 and that of the US
The Chinese government sees foreign direct investment as
a primary engine of China China China China , many Western firms
find themselves struggling to comply with the complex and often obtuse nature
of China
Accounting in China
Although the system is changing rapidly, many problems
associated with the old system still remain.
One problem for investors is a severe shortage of
accountants, financial managers, and auditors in China China
A further problem concerns the somewhat halting evolution
of China China China
In the meantime, current Chinese accounting principles
present difficult problems for Western firms.
For example, the former Chinese accounting system didn’t need to accrue
unrealized losses. In an economy where
shortages were the norm, if a state-owned company didn’t sell its inventory
right away, it could store it and use it for some other purpose later. Similarly, accounting principles assumed the
state always paid its debts – eventually.
Thus, Chinese enterprises don’t generally provide for lower-of-cost or
market inventory adjustments or the creation of allowance for bad debts, both
of which are standard practices in the West.
Questions:
1. What factors have shaped the accounting
system currently in use in China
2. What problem does the accounting system,
currently in sue in China, present to foreign investors in joint ventures with
Chinese companies?
3. If the evolving Chinese system does not
adhere to IASC standards, but instead to standards that the Chinese governments
deem appropriate to China’s “Special situation”, how might this affect foreign
firms with operations in China ?
NO.
6
UNFAIR
PROTECTION OR VALID DEFENSE ?
“Mexico
International trade theories argue that nations should
open their doors to trade. Conventional
free trade wisdom says that by trading with others, a country can offer its
citizens a greater volume and selection of goods at cheaper prices than it
could in the absence of it.
Nevertheless, truly free trade still does not exist because national
governments intervene. Despite the
efforts of the World Trade Organization (WTO) and smaller groups of nations,
governments seem to be crying foul in the trade game now more than ever before.
We see efforts at protectionism in the rising trend in
governments charging foreign producers for “dumping” their goods on world
markets. Worldwide, the number of
antidumping cases that were initiated stood at about 150 in 1995, 225 in 1996,
230 in 1997 , and 300 in 1998.
There is no shortage of similar examples. The Untied States charges Brazil , Japan ,
and Russia with dumping
their products in the US United States United
States
Emerging markets, too, are jumping into the fray. Mexico Mexico India Argentina , China ,
Indonesia , South Africa , South
Korea , and Thailand
Why is dumping on the rise in the first place? The WTO
has made major inroads on the use of tariffs, slashing tem across almost every
product category in recent years. But the WTO does not have the authority to
punish companies, but only governments.
Thus, the WTO cannot pass judgments against individual companies that
are dumping products in other markets.
It can only pass rulings against the government of the country that
imposes an antidumping duty. But the WTO
allows countries to retaliate against nations whose producers are suspected
of dumping when it can be shown that :
(1) the alleged offenders are significantly hurting domestic producers, and (2)
the export price is lower than the cost of production or lower than the home –
market price.
Supporters of antidumping tariffs claim that they prevent
dumpers from undercutting the prices charged by producers in a target market
and driving them out of business.
Another claim in support of antidumping is that it is an excellent way
of retaining some protection against potential dangers of totally free
trade. Detractors of antidumping tariffs
charge that once such tariffs are imposed they are rarely removed. They also claim that it costs companies and
governments a great deal of time and money to file and argue their cases. It is also argued that the fear of being
charged with dumping causes international competitors to keep their prices
higher in a target market than would other wise be the case. This would allow domestic companies to charge
higher prices and not lose market share – forcing consumers to pay more for
their goods.
Questions
1. “You can’t tell consumers that the low price they are paying
for a particular fax machine or automobile is somehow unfair. They’re not concerned with the profits of
companies. To them, it’s just a great bargain and they want it to continue.” Do
you agree with this statement? Do you think that people from different cultures
would respond differently to this statement? Explain your answers.
2. As we’ve seen, the WTO cannot currently get involved in
punishing individual companies for dumping – its actions can only be directed
toward governments of countries. Do you
think this is a wise policy ? Why or why not? Why do you think the WTO was not
given the authority to charge individual companies with dumping? Explain.
3. Identify a recent antidumping case that was brought before the
WTO. Locate as many articles in the press as you can that discuss the case. Identify
the nations, products (s), and potential punitive measures involved. Supposing
you were part of the WTO’s Dispute Settlement Body, would you vote in favor of
the measures taken by the retailing nation? Why or why not?
Human Resource Management
(i) There are three Sections A
and B and C.
(ii) Attempt any three questions each from Section A and B. All questions carry 10 marks each.
(iii) Section C is compulsory for all and carries 40 marks.
(ii) Attempt any three questions each from Section A and B. All questions carry 10 marks each.
(iii) Section C is compulsory for all and carries 40 marks.
SECTION A
1.
Define and differentiate between Job Analysis, Job Description and Job
Evaluation. Select an appropriate job evaluation method and create a plan for
evaluating jobs of scientists in different grades.
2.
Discuss the role of indoctrination in organizations. How can Performance
Appraisal, and Training and Development be made an integral part of Human
Resource Planning? Discuss.
3.
Discuss the scope of Human Resource Audit. While auditing Reward systems for
employees in a manufacturing organization, which factors should be taken into
account and why? Explain with suitable examples.
4.
Define and discuss the need for Human Resource Planning in an organization.
Briefly discuss various approaches to HRP
5.
Write short notes on any three of the following:
(a) Training methods
(b) Value determinants of HRP
(c) Human Resource accounting
(d) Labour Market Behavior
(e) Promotion and Reward Policies
(a) Training methods
(b) Value determinants of HRP
(c) Human Resource accounting
(d) Labour Market Behavior
(e) Promotion and Reward Policies
SECTION B
1.
Define and discuss the objectives of Human Resource Planning at organizational
level. How does it help in determining and evaluating future organizational
capabilities, needs and anticipated problems? Explain with suitable examples.
2.
Define and describe Job Analysis. Briefly discuss several methods in which
information about a job is collected and evaluated.
3.
What is the purpose and process of recruitment function? Discuss various
methods of sourcing manpower.
4.
How is monetary value assigned to different dimensions of Human Resources
costs, investments, and worth of the employees? Briefly explain Cost and
Economic value approaches of measurement.
5.
Write short notes on any three of the following :
(a) MBO
(b) Succession Planning
(c) Competency Mapping
(d) Job Evaluation
(e) H.R. Inventory
(a) MBO
(b) Succession Planning
(c) Competency Mapping
(d) Job Evaluation
(e) H.R. Inventory
SECTION C
1. Quality control Department
Read
the case given below and answer the questions given at the end.
Mr. Kapil Kumar and Mr. Abbas
Ali were working in a scooter manufacturing public sector industry as Senior
Quality Control Engineers in 1988. One post of Deputy Chief Quality Controller
has fallen vacant due to the retirement of the incumbent and the management
decided to recruit a qualified, knowledgeable and experienced professional from
outside so that the present quality standard may be improved thus ensuring
better marketability of their scooters in the face of stiff competition. Mr.
Kapil Kumar, who was a mechanical engineer with about 15 years experience in
the Quality Control Department dealing with mopeds and scooters, could have
been promoted to fill the post on the basis of seniority. However, the
management was looking for a graduate in statistics with experience in latest
Quality Control (QC) techniques like statistical quality control, quality
assurance and other related areas rather than a mechanical or automobile
engineer with the routine experience in quality control. As such instead of
promoting Kapil Kumar, the management advertised for the post of Deputy Chief
Quality Controller - since as per company rules it was DR (Direct Recruitment)
vacancy also.
Selection of Outsider
Out
of the applications received in response to the advertisement, six candidates
were called for interview including the two internal candidates, Mr. Kapil
Kumar and Mr. Abbas Ali. The person selected was an outsider, one Mr. Ratnam,
who had over 12 years experience SQC, quality assurance etc., in the
two-wheeler private manufacturing industry. Mr. Ratnam joined within 2 months
time expecting that in his new position he would be the main controller for
quality. However, after joining the organization he came to know that he would
be the second senior most person in the hierarchy for controlling the quality
and would be reporting to one, Kirpal Sing,. The Chief for Quality Controls.
Mr. Kirpal Singh had come up to this post by seniority and was basically a
diploma holder in automobile engineering. He had to his credit about 28 years
of industrial experience, out of which 20 years were spent in Quality Control
Department of two industries. He joined the present organization in its Quality
Control Department and had 17 years experience in the organization and was due
for retirement within the next 2 or 3 years. On learning about the retirement
time of Mr. Kirpal Singh, Mt. Ratnam had the consolation that he would be able
to take up the position of 'Chief Controller of Quality' very soon.
Interference from Top
Ratnam
could not put forth many good suggestions (for quality control) because of the
interference and direct supervision of Kirpal Singh. He, however, could pick up
a good deal of knowledge about the working of the company, the nature-and
tendency of different production department heads particularly with regard to
care for quality, organization for 'QC' in the company, the various components
required for assembly of the company's two-wheeler scooter and the expected
quality standards, drawback in the present system of quality controls. etc.
Right
from the time the advertisement for the selection of Deputy Chief Quality
Controller appeared, the O.A. (Officers Association) of the organization had
been pressing the management to consider the case of Kapil Kumar for promotion
to the above post based on his seniority in the organization.
Meanwhile,
the management obtained a license in 1989 for producing Three-Wheeler Autos. As
a result of this and the pressure from O.A., Ratnam was transferred to look
after the Quality Control Department at the company's new Three-Wheeler plant,
whereas Kapil Kumar was promoted as Deputy Chief Quality Controller in the present
two-wheeler scooter plant in 1990 (after creating one additional post of Deputy
Chief Quality Controller for the new Project).
In
1991, the State Government, which controlled the company in question, changed
the Managing Director. During the regime of this new Managing Director, Kapil
Kumar was promoted as Chief (Quality Controls) next year, when Kirpal Singh
retired. This decision was based on the recommendations of Kirpal Singh and
partly attributed to pressure from O.A., for further promotion of Kapil Kumar
based on his vast experience in the Quality Control function of this industry.
Abbas Ali rose to the position held earlier by Kapil Kumar.
Allotment of Company Quarters
The
Company had its own township near the factory. Its quarter allotment scheme was
based on the length of service, i.e., date of joining. Ratnam had asked for a
suitable quarter at the time of interview and was thus allotted a tile quarter
meant for the Senior Engineer's cadre. He learnt about this, after occupying
the quarter. Ratnam asked for a change of Quarter - preferably a RCC-roof
quarter, - but his request was turned down, since he had put in only few months
of service whereas many others senior to him, on the beds of their longer
length of service in the Company (having over 10 years service), were staying
in tiled-roof quarters and were awaiting a chance for a RCC-roof quarter. Kapil
Kumar and Abbas Ali were residing in RCC-roof quarters. Soon after Kapil
Kumar's promotion to the post of Chief (Quality Controls), he was allotted a
bungalow.
The
management's decision in this case must be viewed in the context of the
downtrend in the demand for scooters and three-wheeler autos during 1993
following complaints from dealers about the deteriorating quality of components
as also their short life. Notably the complaints had risen ten-fold in that
year as compared to that in 1988.
Questions
(a)
Was the management justified in taking a decision to recruit a qualified and
experienced person from outside as Deputy Chief Quality Controller?
(b)
Was it in the interest of the organization to transfer Ratnam to the new
auto-wheeler plant and promote Kapil Kumar? What could have prompted the
management to take this decision?
(c)
How do you view the role of O.A.s in supporting only the local and internal
candidates and overlooking the interests of direct recruits even when they were
family members of the Association, particularly at a time, when the industry
needed professionally qualified persons to fill key technical posts?
(d)
How would you react to the management's scheme for quarter allotment and why?
2. Pearl Engineering
Pearl
Engineering Company was a large heavy-engineering unit. It attached great
importance to the recruitment and training of its senior supervisors. Apart
from selecting them from within the organization, the company recruited, every.
Alternate year, about ten young engineering graduates and offered them training
for a period of two years, before they were appointed as senior supervisors.
Such appointments were made to about 40 per cent of the vacancies of senior
supervisors that occurred in the organization. This was considered necessary by
management as a planned programme of imparting vitality to the organization.
Besides, many of the old-timers, who had risen from the ranks, did not possess
the necessary academic background with the result that they could not keep pace
with the technological changes. Management also believed that in the rapidly
changing conditions of industry, a bank of technically competent supervisors
played a pivotal role, besides serving as a pool from which to select future
departmental managers.
Engineering
Graduates were selected from amongst those who applied in response to an
all-India advertisement. For the selection of one engineer, on an average,
eight applicants were called for interview. A selection committee consisting of
the General Manager, the Production Manager, the Personnel Manager and the
Training Officer interviewed and selected the candidates. The selection
interview was preceded by a written test and only those who secured 40 per cent
marks qualified for interview.
The
engineers thus selected had to undergo a two year intensive theoretical and
practical training. A well-staffed and equipped Training Institute was directly
responsible for the training of the graduate engineers, besides training trade
apprentices and operatives required by the company. Lectures on theoretical
subjects were given at the Training Institute and practical training was
imparted in all the works departments under the guidance of qualified and
experienced instructors. A few lectures by senior officers of the company were
also arranged to acquaint them with the company policies on different matters.
During the last quarter of their two-year training programme they were deputed
to work fulltime to familiarize themselves with the conditions in departments
where they were to be absorbed eventually.
On
successful completion of training, the graduate engineers were offered
appointments, depending on their performance and aptitude as revealed during
training. On placement in the work departments, however, most of them faced
some difficulty or the other.
According
to management, some of the heads of departments, who were themselves not
qualified engineers, did not have sufficient confidence in these younger men.
They preferred the subordinates who came up from the ranks to hold positions of
responsibility. A few discredited them saying that it would take years before
these youngsters could pick up the job. Besides, some of the employees, whose
promotional opportunities were adversely affected by the placement of graduate
engineers, tried their best to run down the latter as a class, sometimes
working on the group feelings of the workers. Some of the supervisors who were
not graduate engineers also spoke derisively of them as "the blue-eyed
boys" of the organization. Management knew that many of the graduate
engineers were not utilized according to their capacity or training, nor was
any attempt made to test or develop their potentialities. They also knew that
many of the graduate engineers were, therefore, dissatisfied with their work
life. Some of them who did not get equal promotional opportunities as their
colleagues placed in other departments, were looking for better jobs elsewhere.
On
the other hand, according to management, the young graduate engineers were
themselves partly responsible for the hostile attitude of others in the
organization. Some of them failed to appreciate that a newcomer invited
hostility in the beginning and it took time before he was accepted as a member
of the work-group. They did not realize that they would be fully productive
only after gaining about five to seven years experience in the organization. A
few thought that they belonged to a superior cadre and threw their weight
around. They did not bother to understand and appreciate the problems of the
rank-and-file of employees who worked under them.
In
spite of these drawback, the General Manager of the company felt that these men
were a set of disciplined supervisors. They had a sense of pride in their
profession, and with the extensive training they had received, they would be
able to take up any responsible position in the organization in course of time.
The
General Manager could not allow the situation to continue especially when it
was a difficult and costly process to recruit and train young engineering
graduates of the requisite type and caliber. He knew that the prosperity of the
company, to a large extent, depended on these young men. In addition, a large
number of lucrative employment opportunities were available to these young
engineers elsewhere and there was a systematic raid on them, He, therefore,
called a meeting of all heads of departments to review the situation.
Questions:
(i)
Identify the issues related to manpower planning as evident in the case.
(ii)
Discuss the strategies to tackle the percentage of internal promotion at the
organizational level.
(iii)What
type of additional training programmes should be imparted for direct entrants?
(iv)
Suppose you are the head of the personnel division. What would be your
suggestions in the meeting - Which has been called by the General Manager?
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