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Principles of Management Case Study Bharat Engineering Works Ltd. Group Members Bhavesh Gohil (75) Lijo Mathen (88) Pranav Thakker (118) Bharat Engineering Works Ltd Bharat Engineering Works Limited is a major manufacturer of industrial machineries besides other engineering products. It has enjoyed considerable market preference for its machineries because of limited competition in the field. Usually there have been more orders than what the company could supply.
However, the scenario changed quickly because of the entry of two new competitors in the field with foreign technological collaboration, for the first time, the company faced problem in marketing its products with usual profit margin. Sensing into the likely problem, the Chief Executive appointed Mr. Arvind Kumar as General Manager to direct the operations of industrial machinery division. Mr. Kumar had similar assignment abroad before coming back to India. Mr.
Kumar had a discussion with the Chief Executive about the nature of the problems being faced by the company so that he could fix up his priority. The Chief Executive advised him to consult various heads of department to have first hand information. However, he emphasized that the company lacked an integrated planning system while members of the board of directors insisted on introducing this in several meetings both formally and informally. After joining as general manager, Mr. Kumar got briefings from the heads of all departments.
He asked all departmental heads to identify major problems and issues concerning them. The Marketing Manager indicated that in order to achieve higher sales, he needed more sales managers and sales professionals. His main concern was a lack of engineering support to sales and marketing efforts. The company had adequate engineers but they were spread under three separate engineering groups. Sales people had no central organization which had responsibility to provide sales support. Therefore, some jobs were being done from outside at higher costs with lower quality.
Besides, he needed a generous budget for demonstration system which could be sent on a trial basis to customers to win business. The Production Manager complained about the old machines and Equipments used in manufacturing. Therefore, cost of production was high but without corresponding quality. While competitors had better equipments and machinery, Bharat Engineering neither replaced its age-old plant nor got it reconditioned. Therefore, to reduce the cost, it was essential to automate production lines by installing new equipment.
Director of Research and Development (R&D) did not have any specific problem and, therefore, did not indicate for any change. However, a principal scientist in R&D indicated on one day that the director, R&D, though very nice in his approach, did not emphasize on short-term research projects which could easily increase production efficiency to the extent of at least 20 per cent within a very short period. Moreover, such projects did not involve any major capital outlay. Mr. Kumar got himself convinced about the management process going on in the division and the type of problems being faced.
Questions Q 1. Discuss the nature and characteristics of management process followed in the company. Q 2. What are the real problems of industrial machinery division of the company? Q 3. What steps should be taken by Mr. Kumar to overcome these problems? Analysis of the Case: • Bharat Engineering Works has been a dominating market player with ample orders for its industrial machinery and other products and has faced limited competition so far. • The entry of two competitive players with foreign collaborations quickly changes the game with Bharat Ltd. nable to sell the products with the usual profit margin. • Mr. Arvind Kumar appointed as GM to direct the operations of the machinery division, who immediately seeks to tackle the problems by meeting the heads of the department as his top priority. • The critical need for the company was the requirement for an integrated planning system which was an issue voiced by the CEO. • Mr. Kumar’s findings complement the CEO’s concern where the departmental heads directly/indirectly agree or admit that the lack of planning has severely affected their respective departments. The Sales Department’s requirement for more staff has been ignored or has gone unnoticed by the management. The sales people required support from engineering to aid in their marketing and sales efforts, however, the engineers were posted in different departments while the sales requirements were unattended. Some of the jobs required were done from a third-party which was more costly and reduced quality. The need for extra budget to enable demos was also not met. Evidently, the fact that there is no planning and a centralized support for the department has hampered the efforts made by the same.
The planning has become obsolete and the need for improvement has not been planned or discussed until the arrival of competitors. • The Production Department also suffered from obsolescence where the machinery was outdated and no changes were made to cope up with the new tech since the company was lethargic to improve due to absence of competition. This increased the production costs which hampered with the profitability margin of the products as compared to that of the competition. • The R Department suffered from lack of enthusiasm from the head of the department.
The staff complained that the manager never bothered to push the department to come up with schemes and changes in the processes which would bring down the costs. • Overall, the absence of able-competition made the company’s internal machinery departments complacent. Due to the absence of a central planning system, the company was not able to upgrade itself or be prepared for any competition which could rise against them. Therefore the company has started crumbling at the very beginning of an able-competition which rose to challenge their profitability despite a good repute and trust amongst the customers.
Questions Q. Discuss the nature and characteristics of management process followed in the company. A: The fact that initially the company was enjoying a majority in the market spread a sense of complacency. Since the inception, the company had not faced any real competition, due to which they were finding it difficult to stand up against the competition. The management had apparently not done any attempts to improve the process and were quite happy with the way things were being run. There was no centralized administration setup which could address the requirements and grievances of the various department.
A lot of problems lay unattended and no attempt to improve the process was being made in department either out of helplessness or lethargy. An integrated planning system was required which could help solve the companies dilemma. Though this was a major concern, no action was made to set it up. Q. What are the real problems of industrial machinery division of the company? A. The Marketing manager quoted the requirement for extra sales personnel. The lack of support from the engineering dept was affecting the marketing department since the sales did not get adequate support.
Also a generous budget was required which could help create a demo for the products which could enable increased number of customers. However, no systematic planning was updated to the top management and therefore the process suffered while the engineers were busy with other processes. There was an evident lack of Strategic and Operations plans and also lack of planning of budget and schedules. The Production department suffered from obsolete machines which could not match up to the requirements of speedy and bulk production.
The competitors had better and updated machinery which led them to have an increased market share while Bharat Electricals lost out on the same advantage. To reduce the cost, it was essential to automate production lines by installing new equipment. This highlights the fact that adequate long-range planning was not done. The fact that machinery gets obsolete is a concern which needs to be continually regarded. Reliance on technology is unavoidable and the only way to stay ahead in the game is to be technologically updated.
The R&D department did not lack much, but the initiative from the manager was lacking to create and improve methods or processes which could improve the company’s efficiency. This could have been done even without requirement of too much capital. However the unwillingness of the manager has been highlighted which leads to believe that proper staffing was not taken care of. This is also evident in the marketing department where the requirement of the right talent has not been met and incorrect staffing has been done regarding the engineers.
Q. What steps should be taken by Mr. Kumar to overcome these problems? A. Mr. Kumar needs to update the top management the crucial need for a planning system to be made effective immediately. The requirements and lack of resources plaguing the various departments is a testimony to the lack of planning and co-ordination in the company. The various types of planning i. e. Short range and long range plans, Strategic and operational plans, Planning of policies and procedures, Planning of budgets and project schedules need to be put into place.
The company needs to be able to better the standards of the competitor if it hopes to regain/increase its market share from the foreign competitors. This will enable the departments to update the management about their needs and concerns. The top management needs to use the various planning tools like Forecasting, Contingency planning, Scenario planning, Benchmarking, Use of staff planners, Participation and involvement in order to keep the wheels of the company turning. It is Mr. Kumar’s responsibility to make sure these problems and its real causes needs to be probed and presented to the management.
He also needs to act like a mediator between the departments and the main management since there is a chance that the departments have lost their faith in the management due to ignorance meted out to them. Mr. Kumar needs to make sure that the various departments set up small achievable goals which can be met in the near future and which will also adhere to the mission and the objectives of the organization. Regular updates need to be taken from the various departments in order to ensure smooth running of the company. The achievement of the goals will signal the success of the planning system out in use.
Planning — Planning can be defined as the process of setting objectives and determining the best alternative to achieve the desired objectives. A plan refers to the steps or the plan of action to be considered to achieve a goal. Planning involves a systematic procedure. It is first essential to determine the objectives of the firm. Once, the objectives of the firm are clear, the firm has to understand its current position. Considering the future conditions, the firm has to analyse and choose from the available alternatives to obtain the desired goals.
The plan must be implemented properly and it is essential that the firm evaluate the results. Planning improves control, coordination and time management in the activities of a firm. Types of Planning: 1. Short range and long range plans. 2. Strategic and operational plans. 3. Planning of policies and procedures. 4. Planning of budgets and project schedules. Planning Tools & Techniques: a)Forecasting b)Contingency planning c)Scenario planning d)Benchmarking e)Use of staff planners f)Participation and involvement.