KAZIAN GLOBAL SCHOOL OF BUSINESS MANAGEMENT

SUBJECT: General Management

Note:- 1) Kindly write case study number question number properly2) Attached question papers with answer sheets____________________________________________________________________________________Case -1 SPIRITUALITY IN THE WORKPLACE Marks-16

Traditionally, the workplace and spirituality did not mix in America. But things are changing. AndreDelbecq, a professor at Santa Clara University, a Jesuit institution, said: “There were two things I thoughtI’d never see in my life, the fall of the Russian empire and God being spoken about in a business school.’’Now management books and conferences (including the annual meeting of the Academy of Management)deal with the various aspects of how God can be brought into the organizational environment. To be surepeople who want to integrate spiritual dimensions into the workplace are still considered rebels. Butservice Master, a Fortune 500 company with some 75,000 employees, created a spiritual organizationculture many years ago. Indeed, peter Drucker, one of the most prolific writers on management, had highregards for the company that is known for its products such as Terminix (pest control), TruGreen, MerryMaids, and others.When people in the US were asked if they believe in God, some 95 per cent said yes, it is in aspiritual context that business people under the daily pressure can discuss their inner feelings. As the babyboomers, now in their 50s, are reaching the top in their organizational life, they begin to wonder what life isall about. They lived through the youth culture of the1960s and the 1980s that was dominated by greed.They are now questioning the real meaning of life and the ethical dimension of work. Jose Zeilstra, anexecutive at price WaterhouseCoopers worked around the world, practicing her Christian principles indifferent cultures. During her assignment in China, she strongly argued against the practice of giving “veryexpensive gifts.” As a result the business transaction did not work out. Yet, in the long run, while integratingher personal beliefs with her work, resulted in a very successful career. Academic institutions such as theUniversity of St.Thomas, the University of Denver. And the Harvard Divinity School are Following andstudying the movement of spirituality. Other schools such as Antioch University in Los Angeles, theUniversity of New Haven in Connecticut, the University of Scranton in Pennsylvania, Santa Clara Universityin California as well as institution abroad such as the University of Bath in England and the Indian centre forEncouraging Excellence in Bombay, India, are conducting research, conferences, or lecture on spirituality..The cover story of Business Week (November 1, 1999) discussed how company outlets such as TacoBell, Pizza Hut, and McDonald’s as well as the Xerox Corporation pay attention to the spiritual needs of theiremployees. Some companies claim an increase in productivity, decrease in turnover, and a reducation infear. A research study by the consulting firm McKinsey & co. in Australia showed that firms with spiritualprogrammes showed reduced turnover and improved productivity. Professor Ian I Mitroff at the University ofSouthern California even stated, “Spirituality could be the ultimate competitive advantage.” But there is alsothe concern that cult members and groups with a radical perspective could use the workplace for their ownaims. Still, employees in companies that integrate spirituality in their workplace count on the potentialbenefits of greater respect for individuals, a more humane treatment of their fellow workers, and anenvironment that permeates their organization with greater trust.Questions:-

1. What is spirituality?

Ans:

The essence of spirituality is the search to know our real self, to discover the true nature of consciousness.

Throughout the history, it has been said that the self we know -- the separate individual self -- is a limited form of what we truly are. Unaware of our true self, we identify with our thoughts and feelings, our memories and our personality.

Such experiences are always changing, but the self that knows them remains the same. We may be very diffferent people than we were twenty years ago, but the "I" that is aware of the difference is the same "I" as twenty years ago. It is omnipresent and eternal. It is the "I" that knows that it knows. The very essence of being aware. It is always present, whatever we may be experiencing, sacred or profane.

This ever-present sense of being is so obvious it is easily overlooked. We fall into believing that we are the individual senses of self that appears in our mind. Like a character in a novel, this separate self engrosses us with its hopes and fears, plans and deliberations. It believes that fulfillment comes from what we have or do in the world, from our roles and possessions, from our personality and how others see us. It promises us happiness, but any happiness it does bring is usually short-lived, and we soon find ourselves chasing some new promise.

Identifying ourselves with the vulnerable, ever-changing character of our personal story, the "I" misses its true nature. Our thinking and behavior become "self-centered", leading far too often to suffering in ourselves and others.

When we awaken to the true nature of self, we are freed from many of the fears that plague us so unnecessarily. We discover an inner peace that does not depend upon events or circumstances in the world around, a quiet but profound inner fulfillment. We become less self-centered, less needy of others' approval or recognition, less focused on collecting possessions and social status. We become happier, healthier and more loving people, less likely to cause suffering to ourselves or others.

2. Is this topic appropriate for businesses?

Ans:

No. This topic is not appropriate for businesses

3. What are the arguments for and against its inclusion in business?

Ans:

When people in the US were asked if they believe in God, some 95 per cent said yes. It is in a spiritual

context that business people under the daily pressure can discuss their inner feelings. As the baby boomers,

now in their 50s, are reaching the top in the organizational life, they begin to wonder what life is all about.

They lived through the youth culture of the 1960s and the 1980s that was dominated by greed. They are now

questioning the real meaning of life and the ethical dimension of work. Jose Zeilstra, an executive at Price

WaterhouseCoopers worked around the world, practicing her Christian principles in different cultures.

During her assignment in China, she strongly argued against the practice of giving “very expensive gifts.”

As a result the business transaction did not work out. Yet, in the long run, while integrating her personal

beliefs with her work, resulted in a very successful career. Academic institutions such a the University of St.

Thomas, the University of Denver, and the Harvard Divinity School are following and studying the

movement of spirituality. Other schools such as Antioch University in Los Angeles, the University of New

Haven in Connecticut, the University of Scranton in Pennsylvania, Santa Clara University in California as

well as institutions abroad such as the University of Bath in England and the Indian Centre for Encouraging

Excellence in Bombay, India, are conducting research, conferences, or lecture on spirituality.

Case-2 CARLOS GHOSN- NISSAN’S TURNAROUND ARTIST? Marks-16

Carlos Ghosn, the Brazilian-born CEO of Nissan (and letter CEO of Nissan and Renault) is the son ofLebanese parents. He, as a non-Japanese, was able to turn around the Japanese car maker that was indeep trouble. Indeed, some observers in 1999 questioned whether Nissan could survive while losingmarket share in Japan and the US.His managerial career began at Michelin and Renault, the French car company. After Renault acquiredNissan, Ghosn’s responsibility was to develop the revival plan for Nissan. After arriving at Nissan, hecarefully studied the situation and noted that the company was floundering with no vision. Cost-cuttingwas one of the first tasks requiring closing of plants, laying off workers, dismantling “keiretsu”(horizontally and vertically linked industrial structure common in Japan), revamping long establishedsupplier networks, and selling non-performing assets. Many of these actions were not typical in Japan, acountry in which long-time employment was the norm for big companies. But cost-cutting was only onestep. He updated the car model line giving emphasis to quality improvement.In an interview with Business Week, Ghosn was asked about his managerial style. In his view, thebasic objective is to create value; this requires motivation and hard work by allinvolved.9 While it isdifficult to adjust to new cultures and situation, he did it well. Bing born in Brazil, living in Lebanon, andstudying and working in France, he developed the cultural flexibility that helped him adjust to theJapanese environment, its culture and its managerial practices. Still, his approach to management wasdistinctly different from Japanese companies violating many traditional taboos. How did it do it? Hecarefully listened to the employees and their comments impacted him more than the management book.The worker force in Japan may be the country’s greatest asset, he contents. Japanese workers andmanager just like those in other countries have the same need of knowing what is expected of them. Theywant to be recognized for result and performance rather than by the degree from their university. Thus,great emphasis is placed on ambition goals, empowerment, accountability, measurement, all keycharacteristics in management by objectives. For example, Ghosn set a goal to produce 1 million vehiclesbefore September 2005 – a very ambition goal indeed .Although stating goals publicly is risky, people aremotivated by ambitious goals. But goals need to be clear and need to be communicated affectively. Thiswas done by “Nissan’s 1, 8, 0 plant” which meant to produce1 million cars by 2005 with an operatingprofit of 8 per cent, and zero debt. This is a clear and demanding goal, to sell 3.6 million cars by the endof September 2005.In Japanese companies, women are extremely underrepresented in management position and Ghosnthinks that this is not only unfair, but also underutilizes a very important human resource. He predictedthat in ten years, the work force will include many more women in managerial positions, Ghosn brokemany Japanese traditions such as laying off people in a land that is known for is lifelong employment.While some predicted rebellion by the Japanese, yet Nissan’s famous turnaround made him a modelmanager and he came to be known as “ le cost killer,” trouble shooter; the ambassador for change, a “7-11 manager” known for his long working hours, and a superstar. He entered Nissan as an outsider in aculture where people were promoted from within, and people were rewarded according to their age,gender, or their university degrees; but fairness requires that rewards to be based on performance andresults-a traditional MBO concept.Ghosn’s managerial style has been admired in articles and magazines and he even cooperated in acomic book series about him. He thinks that it is important to give the reasons why a change is necessaryand how it will be done. Japan’s greatest asset, Ghosn think, is its people and they begun to respond andappreciate Ghosn’s managerial philosophy and style. He views management not as a science, but a craft,doing extraordinary things with ordinary people.Will Ghosn’s success in Japan be repeated at France where he will take the CEO position in May2006? In Japan, he drastically reduced the cost by closing five factories and reducing 21,000 jobs (partlyachieved by attrition and voluntary retirement), in France, a strong union will oppose that. Yet, getting ridof an inefficient work force seems essential. Certainly labour will oppose him if he tries to close factories.

Some are even concerned that his ego may get him into trouble. But he has promised to keep a lowprofile at Renault. Beside cost-cutting, he will need to develop hot new model for Renault’s product linewhich includes developing a luxury car which Renault does not have. Being a CEO of two companies,Renault and Nissan, is certainly unusual. Commuting between the headquarters in Paris and Tokyo(almost 10,000 miles apart) will be a challenge.Questions:-

1. Why was Ghosn successful at Nissan in Japan?

Ans:In particular, it has expanded into emerging economies like Russia, China and India. Expanding into these markets widens Nissan's customer base. The number of people who are able to buy vehicles is increasing as the population of the world increases and as the price of vehicles decreases. Two billion vehicles will be on the world’s roads in 10 years, and Ghosn recognized that he needed to get ahead in selling his cars to these new customers in order to stay competitive in the future.

The first step in staying competitive long-term is to survive the current global recession. Ghosn recognizes that not everyone will survive these difficult economic times, but those who will are going to have to be creative. To stay ahead of the curve, Nissan has been an innovator in all-electric vehicle technology. Though electric vehicles are far from being the most sought-after vehicles on the road, Ghosn has seen that the future of automobile technology is there because eventually that oil will run out, and we will need an alternative ready. He also recognizes that urban centers are becoming more and more crowded, so there is going to be a greater need for smaller, more efficient, cleaner cars.

Nissan has already introduced the only zero-emissions, no-gasoline vehicle: the Leaf. At $25,000, it is much cheaper than the Chevrolet Volt and any other electric vehicle on the market. As more competitors make cars like the Leaf, prices will go down, and people will be looking for the next exciting product. For this reason, Nissan is trying to stay ahead of the competition in all its research and development. Creating futuristic vehicles not only keeps Nissan ahead of the curve, but it also sends all other competitors a message that Nissan is a force to be reckoned with.

2. How non-Japanese were his managerial action?

Ans:

The culture of Japanese management that is often portrayed in Western media is generally limited to Japan's large corporations. These flagships of the Japanese economy provide their workers with excellent salaries, secure employment, and working conditions These companies and their employees are the business elite of Japan. Though not as much for the new generation still a career with such a company is the dream of many young people in Japan, but only a select few attain these jobs. Qualification for employment is limited to the few men and women who graduate from the top thirty colleges and universities in Japan.

3. What MBO concept did Ghosn apply?

Ans:

Ghosn had adopted five step MBO process. As the principle behind MBO concept is to create empowered employees, who have the clarity of the roles and responsibilties expected from them, understand their objectives to be achieved and thus help in the achievement of organization as well as personal goals. Clarity of goals with MBO concept of smart goals were:

Specific

Measurable

Achievable

Realistic and

Time Bound

To create the sense of urgency necessary to initiate change, Ghosn announced to his employees the 'Nissan

Revival Plan'. The plan consisted of three quantifiable goals:Return to profitability for the fiscal year 2000.Achieve a consolidated operating profit of 4.5 per cent of sales by the fiscal year 2002.Reduce net debt from ¥1.4 trillion to less than ¥700 billion by the fiscal year 2002.To underline his commitment, Ghosn publicly announced that if any one of these three goals was not achieved, he and the whole top management would resign. This statement put not only himself but also the whole top management team under pressure to achieve the goals. Besides this symbolic statement, Ghosn also demanded accountability on a day-to-day basis from all managers, based on the practice of management by objectives.

4. Can Ghosn success at Nissan be repeated at Renault? Why or why not?

Ans:

The original French title of the book is “Citoyen du monde” (citizen of the world). It is a title that properly frames the private and mostly the professional life of Carlos Ghosn today CEO of NISSAN and CEO of RENAULT (the French car company that developed a very successful strategic and operational Alliance with Nissan in 1999; the Alliance has been lead by Ghosn himself). Born in Brasil from Lebanese parents, raised in France, Degree in Engineering, fast and results oriented career as manager of companies and plants in need of a fast turnaround (first while working for Michelin than for Renault) in countries such as France, Brasil, the USA and Japan. What strikes most about Ghosn’s successful managerial style is that it has demonstrated to be effective among very different companies, different countries and different socio-cultural perspectives and work practices.Through his career, Ghosn has always been able to keep a global perspective while totally focusing on the unique local characteristics he has to work with. The book is enjoyable also because it shows that Ghosn’s management style has developed step-by-step guided by experience, by wins and failures and, most of all, guided by the perspective that you never, ever stop learning from everybody: the worker in the shop floor as well as the top rated engineer. Ghosn shows that the key secret to effectively produce results is to be able to develop a vision (and make sure that people understand it and act upon it with you) while keeping your feet on the ground on the actual problems and opportunities you find yourself facing along your path.There are some “rules of thumb” that facilitate this process across cultures and global market trends. Ghosn while writing about his professional experiences, and mostly about the remarkable turnaround at Nissan that he has lead, articulates them in his narrative and I am going to summarize them briefly.The “rules of thumb” of modern multicultural and multinational effective management• Effective management always starts from practice then it evolves benefiting from theory and reflection; never the other way around.• Effective management is based upon the ability to listen, to understand and empathize with the people that actually do the front line work: local workers, sales people, customer service representatives; they are the ones that have the knowledge at the basis of effective decisions and choices.• Effective management is based upon mutual respect among people on a personal and professional level; when mutual respect is not present among people cooperating on a project the venture is bound either to fail or to slow its progress.• Effective management ensures to “open doors” and removes barriers between departments: the success of an organization depends upon the actual integration of all of its parts; this is the only way to make all of the organizational knowledge flow and focus on the needs and wants of clients and markets.• Effective management is based upon the affirmation that there are no taboos relevant to the dogmas of tradition: tradition is useful and its roots are insightful, at the same time it can never get in the way of real progress.• Effective management is based upon being concrete in words and acts and ensure that a concrete and practical mindset spreads within the organization: you cannot go far if you cannot count on your commitments and the commitments of your colleagues.• Effective management is based upon defining and effectively communicating quantifiable objectives that can be clearly understood at all levels of the organization.• Effective management is based upon the affirmation that there is difference between determination and inflexibility: you can be determined on your objectives but you can be flexible in the way you reach them (Ghosn points out several times within the narrative that you cannot force people to change; change is a process that it has to come natural and flow once new objectives and goals are clearly defined and shared).• Effective management learns to understand and appreciate the value added created by a multicultural organization practicing respect for different perspectives and views while focusing on the target markets

needs: Nissan design has improved thanks to the active cooperation with French professionals at Renault; while Renault quality and engineering has improved thanks to the rigorous focus of Japanese engineers.• Effective management ensures that all of the previous factors integrate and become results oriented  by outlining and shaping an inspiring yet reachable vision of the future.

CASE 3 : COKE’S EUROPEAN SCARE Marks-16

What seemed like an isolated incident of a few bad cans of Coca-cola at a school in Belgium turnedinto near disaster for the soft drink giant’s European operations. In June 1999, Coke experienced its worstnightmare- a contamination scare resulting in the recall of 14 million cases of Coke products in fiveEuropean countries and a huge blow to consumer confidence in the quality and safety of the world’s mostrecognizable brand.After the initial scare in Bornem, Belgium, Coke and Coca-Cola Enterprises (CCE), a bottler 40 percent owned by Coca-Cola, thought they had isolated the problem. Scientists at the CCE bottling plant inAntwerp found that lapses in quality control had led to contaminated carbon dioxide that were used in thebottling of a recent batch of Coke. Company officials saw the contamination as minor problem and theyissued an apology to the school.At the same time that the problems were being dealt with in Antwerp, things were breaking down atCoke’s Dunkirk, France, bottling plant. In Belsele,10 miles from Bornem. Children and teachers werecomplaining of illnesses related to drinking Coke products. The vending machines at the school werestocked with Coke from the company’s Dunkirk plant and were thought to be safe. Now a second bottlingplant’s practices were being questioned. What initially seemed like an isolated incident was now a crisis.On June, 15,1999. 11 days after the initial scare in Bornem, Coke finally issued an explanation to thepublic. Most Europeans were not satisfied, Coca-cola officials used vague language and often contradictedone another when making statements. France’s health minister, Bernard Kouchner, stated “That acompany so very expert in advertising and marketing should be so poor in communicating on this matteris astonishing”.After three weeks of testing by both Coke officials and French government scientists, it was concludedthat the plants were safe and that their was no immediate threat to the health of concluded that theplants were safe and that there was no immediate threat to the health of consumers. Coke has destroyedall of the pallets in Dunkirk and tightened quality control on CO2.How could this happen to the company that is revered worldwide for its quality control and theEuropean market now represents 73 per cent of total profits.14 While the scare has had some effect onCoke’s profits in Europe, the company is more concerned with damages to its reputation and consumerconfidence in its products.Many critics say that Coke’s slow response time, insisting that no real problem existed and belatedapology have severely damaged the company’s reputation in Europe. Some would disagree and feel thatCoke handled the situation as best it could. “I think that Coke acted in a responsible, diligent way,” saysJohn Sitcher, editor of Beverage Digest. “Their first responsibility was to ascertain the facts in a clear andunequivocal way. And as soon as Coke knew what the facts were, they put out a statement to the Belgiumpeople.”The character and quality of a company can often be measured by how it responds to adversity. Coca-Cola believes that this crisis has forced the company to re-examine both its marketing and managementstrategies in Europe. Coke executives in Brussels are predicting that the company will double its Europeansales in the next decade and that this setback will only make the company stronger. Wall Street analystsseem to agree. Only time will tell.

Questions:-

1. What are the management issues in this case?

Ans:

In June 1999, Coke experienced its worst nightmare—a contamination scare resulting in the recall of 14

million cases of Coke products in five European countries and a huge blow to consumer confidence in the

quality and safety of the world’s most recognizable brand. After the initial scare in Bornem, Belgium, Coke

and Coca-Cola Enterprises (CCE), a bottler 40 per cent owned by Coca-Cola, thought they isolated the

problem. Scientists at the CCE bottling plant in Antwerp found that lapses in quality control had led to

contaminated carbon dioxide that were used in the bottling of a recent batch of Coke. Company officials

saw the contamination as minor problem and they issued an apology to the school. At the same time that the

problems were being dealt with an Antwerp, things were breaking down at Coke’s Dunkirk, France, bottling

plant. In Belsele, 10 miles from Bornem, children and teachers were complaining of illnesses related to

drinking Coke products. The vending machines at the school were stocked with Coke from the company’s

Dunkirk plant and were thought to be safe.

The character and quality of a company can often be measured by how it responds to adversity. Coca-Cola

believes that this crisis has forced the company to re-examine both its marketing and management strategies

in Europe. Coke executives in Brussels are predicting that the company will double its European sales in the

next decade and that this setback will only make the company stronger. Wall Street analysts seem to agree.

Only time will tell.

2. What did Coke do and what could have been done differently?

Ans:

What are the key factors that were or should have been considered by management?

Scientists at the CCE bottling plant in Antwerp found that lapses in quality control had led to contaminated

carbon dioxide that were used in the bottling of a recent batch of Coke. Company officials saw the

contamination as minor problem and they issued an apology to the school. Immediately following the

second scare, Belgium’s health minister banned the sale of all products produced in the Antwerp and

Dunkirk plants. Things got worse when Coke gave an incomplete set of recall codes to a school in Lochristi,

Belgium, resulting in 38 children being rushed to the hospital. Immediately following this incident, French

officials banned the sale of soft drinks produced in the Dunkirk plant.

On June 15, 1999, 11 days after the initial scare in Bornem, Coke finally issued an explanation to the public.

Most Europeans were not satisfied. Coca-Cola officials used vague language and often contradicted one

another when making statements. France’s health minister, Bernard Kouchner, stated, “That a company so

very expert in advertising and marketing should be so poor in communicating on this matter is astonishing”

After three weeks of testing by both Coke officials and French government scientists, it was concluded that

the plants were safe and that there was no immediate threat to the health of consumers. Coke has destroyed

all of the pallets in Dunkirk and tightened quality control on co2.

They key factors to be considered by the management are:- A good quality control strategy- Training of people- Proper control of production

A mechanism to prevent such issues in the future.

3. What are the key factors that were or should have been considered by management?

Ans:

As the project manager you are ultimately responsible for delivering a successful project. The buck stops with you, so it is in your interest to ensure relevant tools and techniques are deployed to make this happen. Some of the following may sound obvious but I encounter these basic mistakes month in month out with project managers scratching their heads wondering how and why it all went wrong. Business Case:Ensure that there is a strong business case, with high level support, that everyone can buy into. The business case is the justification for the project and should list the expected benefits. This is something everyone involved in the project can focus on and the reason why the project is taking place. Projects move us from one state to another by deliver a change, product or other desired outcome, with the business case explaining why. Critical Success Factors:Define with the customer the Critical Success Factors that will make the project a success. Ensure that you make them measurable e.g. a 20% reduction in the cost of raw materials by the end of the year. Use these factors at the end of the project to measure your success. This is all that counts and the must have items that the project needs to achieve. All other issues are secondary to these as the Critical Success Factors effectively form your contract with the customer. Planning:Time spent planning is time well spent. All projects must have a plan with sufficient detail so that everyone involved knows where the project is going. A good plan provides the following benefits: -

· Clearly documented project milestones and deliverables· A valid and realistic time-scale· Allows accurate cost estimates to be produced· Details resource requirements· Acts as an early warning system, providing visibility of task slippage· Keeps the project team focused and aware of project progress 

To skimp on this area is likely to lead to problems. Ensure that you build in contingency to any estimate. I recommend between 10 and 15 percent. I prefer to be a little pessimistic and deliver early rather than too optimistic and deliver late. Be careful though, add too many contingencies and you could give the impression of being inefficient. 

 Team Motivation:A motivated team will go that extra mile to deliver a project on time and to budget. Keep your team motivated by involving them throughout the project and by planning frequent milestones to help them feel they are making progress. Communication is key here, so let your team know when they are performing

well, not just when they are performing badly. Saying No:Believe it or not some project managers and some team members come to that, have a problem saying no. Never promise anything you know you can't deliver, you are just storing up problems for later. Stick to your guns no matter how senior or important the person is, they'll thank you for it later. If they don't perhaps you're in the wrong job. When saying no, be firm and prepared to justify the reasons behind your decision. Avoiding Scope Creep:Scope creep is one of the most common reasons projects run over budget and deliver late. Don't forget the customer will forget the extra work and effort you have put in, insisting that you have delivered what they asked for originally. Ensure that you set expectations correctly at the outset of the project and clearly define what is in and out of scope. Record it in the key project document. Don't assume the customer will read and understand this document. I recommend that you spend an hour with the customer to walk them through the project and ensure that they understand and agree the scope. Don't proceed without a firm agreement. Risk Management:Nobody likes to think about risks especially early on in a project. Avoid risk management at your peril. I recommend that you produce a risk log with an action plan to minimise each risk and then publish it to all the key stakeholders in your project. Knowing what action you will take, should the worst happen, will be a great comfort. Project Closure:Remember that projects have a finite life. A project that isn't closed will continue to consume resources. It's in the customer's interest to keep the project open so they can add new features and functionality as they think of them. At the end of a project be firm, agree with the customer that the Critical Success Factors have been met, the project delivered, tested, released and ask them to sign the project off. I like to use a Customer Acceptance Form that I lodge with the Project Office. At this point you may like to ask you customer to fill out a satisfaction survey. They may have valuable information that can help you and your team improve for future projects. Conclusions:Applying these eight simple techniques will help you avoid many common problems that befall many project managers. The key to good project management is communication with the project stakeholders. Never leave it too late to tell people what is happening, bad news only gets worse the longer you leave it.

CASE 4 : FORD’S EUROPEAN ORGANIZATION CHANGES STRATEGY Marks-16

Ford Motor Company has a long history of operating in Europe. Starting with exports to the UnitedKingdom in 1903, the company established sales branches in France and England in 1908 and 1909. Laterassembly plants ware set up in those countries. In Germany, Ford established a plant in Germany in 1926.For several decades, the European operations were separate subsidiaries, each being accountable to theheadquarters in the United States with little coordination among them. The rational for the organizationstructure was that each country’s customers have different needs, testes, and preferences. In addition,each country had its own tariff regulations.As the European countries grew closer together, Ford viewed its European operation as a commonmarket with a regional organization named Ford Europe with two big manufacturing facilities in Germanyand England. But now, the companies in the European countries were not anymore considered separateand independent, but operated with a coordinated strategy. The aim was to achieve economies of scaleand to reduce engineering costs. Ford designed similar case for Europe, instead of designing different onesfor each country. Models such as Fiesta, Capri, and Escort were the results of this new organizationstructure. According to the new strategy, products were largely designed in the UK and Germany andmanufactured in those countries as well as in Belgium and Spain.In1994, a new strategy emerged that was named Ford 2000. in 1995, Ford merged its AutomotiveOperating in North America with that of Europe. Again, an important reason was to be more competitiveand cost reduction through the elimination of unnecessary car platform and engine duplication. Thismeant fewer basic vehicle platforms as well as engines and transmissions. Moreover, the regional profitcenter concept was replaced by product line concentration. Specifically, the Ford Automotive Operationconsisted of five vehicle centers with worldwide development for car and trucks. While four of thosecenters were in North America, the European centre was responsible for developing small and midsizeautomobiles Moreover, the North American center worked together with the Europeans to develop Mondeo

which was called the Mercury Mystique and the Ford Contour, produced in the U.S. and Mexico. Thesemodels were sold in some 78 countries.But the Ford 2000 strategy and organization did not work well as shown by the 1998 performanceespecially in Europe where Ford was loosing market share to competitors such as General Motors andVolkswagen. Consequently, the newly elected Jacques Nasser reviewed the centralized Ford 2000 strategyand reintroduced the market focus that gives more autonomy to the regions especially in Europe wheremany of its competitors introduced brands that addressed the needs of its customer. Nasser also createdthe Premier Auto Group for luxury cars that were more profitable than the low- and mid-priced cars. Thisluxury car division consisted of cars such as Lincoln, Volvo, Jaguar, and Aston Martin.The 21st century brings new challenges for Ford. In the past, European carmakers were protected byquotas on Japanese cars. But these restrictions are going to be reduced or eliminated in the new century.This means that Japanese and Korean car manufacturer will market their cars in Europe. Also theintroduction of the best price. Finally, the global car industry is plagued with overcapacity that may resultin fierce competition. Ford may have to review is its current strategy.

Questions: - (Any Four)

1. What are the advantages and disadvantages of centralization and decentralization?

ANS:

Advantages and disadvantages of centralization

Advantages

1. Reduced cost—The standardised procedure and method helps in considerably reduction of office cost. Office cost is reduced as it does not emphasizes on more specialists, and more departmental machines and equipment.

2. Uniformity in action — Uniformity in action is established throughout the organisation because of central administrative control. The same executive supervises the work and same type of office equipments are used which ensure uniform performance of activities.

3. Personal leadership—Centralisation encourages and permit personal leadership. The introduction of personal leadership facilitates quick action, aggressive marketing and attainment of pin-pointed objective or purpose,

4. Flexibility — Centralisation permits flexibility and adaptability of the organisation to the changed circumstances. Occasional pressure of extra clerical work is handled with the existing staff.

5. Improved quality of work—Improved quality of work is possible because of standardised procedure, better supervision and use of improved- machinery.

6. Better co-ordination — Centrlisation facilitate better coordination among various operations. Direct control and supervision are facilitated which results in less likelihood of conflict of authority and duplication of work.

Disadvantages

Opponents attribute the following disadvantages against centralisation.

1. Delay in work—Centralisation creates loss of man-hours and delay in performance of work because of transmission of records from and to the central control room. Quick decision is not possible which also results delay in office work.

2. Remote control—Better supervision is not possible as the executives are under heavy pressure of work. Slackness in work is developed in the absence of better control and supervision.

3. No loyalty— In centralisation there is no subordinate's initiative in work because they are required to do such works which they were asked for. Workers work like machine which results in no involvement in work and absence of zeal. All these factors stand as barrier in the development of loyalty to work.

4. No Secrecy—Secrecy is not possible in centralised set up organisation because here orders and decisions flow from one place and are conveyed to all.

5. No special attention—In centralisation no special attention is given to special work as all works are done at one place.

Advantage of decentralization

The top management and promoters of the firm have distributed the decision-making authority and are therefore, left with more time to pursue the strategy for realizing the organization's long-term vision. Day-to-day problem solving is no longer the biggest concern for the higher-ups.

Operational independence makes it easier for the organization to grow overall. Activities such as franchising, diversification and hiring of employees at the departmental levels do not need constant intervention from the top management. Consequently, expansion becomes easier, raising capital and inducting additional workforce become less time-consuming. Decentralization greatly benefits huge organizations spread over several thousand employees and geographic locations.

Increased decision-making power directly translates into greater accountability. Local managers and even other employees further down the corporate ladder are motivated to take ownership of their work. Leadership qualities find expression outside the boardroom within the silos and cubicles as well. The overall atmosphere tends to boost employee morale leading to greater job satisfaction than the strict confines of a centralized setup. Grooming future leaders is also much easier in such an atmosphere.

There's no longer just one center of excellence in the organization but several pockets of excellence full of talented people spread out across the organization. Authority is delegated at the local level, which means decisions are more informed and accelerated though not always strategic.

Disadvantage of decentralization

Too much emphasis on localized way of taking decisions may end up blurring the bigger picture. As you go down the corporate ladder, employees seem to lose sight of the organizational vision.

A highly decentralized organization can be the battleground for unhealthy competition between local managers leading to lack of co-operation and coordination. As a result, interdependent functions may suffer and resolving interdepartmental conflicts is difficult when authority has been delegated. In addition, there is costly duplication of work (activities, processes and outcomes) that may impact economy of scale.

Decentralization is not always a good strategy to begin with, especially when the organization is still to find its footing in the market. Pushing decisions down the hierarchy without assessing if those levels in fact have the required skills and capabilities, is a mistake that could prove to be costly.

While decentralization promotes the spread of standards and best practices, different managers perceive them differently. Therefore, implementation of uniform organization-wide consistent policies becomes problematic. In case of emergencies that require adoption of organization-wide standards, the diffusion of authority and independent opinions and actions pose a major hindrance.

2. What was the rationale for the Ford 2000 program?

ANS :

3. Why did Ford change from decentralization to centralization to recentralization?

ANS :

4. Why did Ford establish a luxury car division?

ANS :

In 1919, Mr Edsel Ford succeeded his father Mr Henry Ford as president of the company, although Henry still kept a hand in management. While prices were kept low through highly efficient engineering, the company used an old fashioned personalized management system, and neglected consumer demand for improved vehicles. So, while four-wheel brakes were invented by ArrolJohnson they did not appear on a Ford until 1927. Ford steadily lost market share to GM and Chrysler, as these and other domestic and

foreign competitors began offering fresher automobiles with more innovative features and luxury options. GM had a range of models from relatively cheap to luxury, tapping all price points in the spectrum, while less wealthy people purchased used Model Ts. The competitors also opened up new markets by extending credit for purchases, so consumers could buy these expensive automobiles with monthly payments. Ford initially resisted this approach, insisting such debts would ultimately hurt the consumer and the general economy. Ford eventually relented and started offering the same terms in December 1927,when Ford unveiled the redesigned Model A, and retired the Model T after producing15 million units.

During February 1922 Ford expanded its reach into the luxury auto market through its acquisition of the Lincoln Motor Company, named for Abraham Lincoln whom Henry Ford admired, but Henry M. Leland had named the company in 1917. The Mercury division was established in 1938 to serve the mid-price auto market. Ford Motor Company built the largest museum of American History in 1928, The Henry Ford.

5. Do you think Ford will be in the competitive global market? Why or why not?

Ans:

Yes Ford will be in the competitive global market why because in the 20th Century multinational

corporations (MNCs) have a choice to make: do we apply a standardised marketing strategy or a

differentiated approach to each geographic region? Ford has boldly chosen the former in their marketing

direction of the 2012 Ford Focus – their flagship car. This will mean that the one car will be sold and

promoted generically across the globe, rather than adapting the product and promotional material to suit

local tastes. It is very unusual for a global firm to come out and state they are going to take a standardised

approach. Other MNCs, such as Starbucks and McDonald’s, have been criticised for selling a generic

product across the globe; this is a highly controversial decision.

The marketing mix decision to use the same promotional material worldwide, has been made – from a

functional point of view – as highly rational. Namely, the company has adopted a global corporate strategy

named ‘One Ford’ that has been adopted to make the company more efficient and benefit from cost-

reducing economies of scale. And this is no surprise, given Ford’s last year financial results reported a $14

billion loss. The marketing department’s strategy, therefore, clearly supports the company’s wider goals.

Hence, the logic is simple enough: by producing just one standard product to satisfy all of their customers

needs – as ambitious as it sounds – there are substantial cost savings to be made. For instance, Ford

currently spends $4 billion annual on promotion.

But there are more benefits that merely saving costs. As Jim Farley, Ford’s group vice president of global

marketing, insists, there are is a degree of marketing momentum that can be generated; economies of scale

is not just about reducing operating costs. No – it is more than that. Marketing economies of scale are the

benefits of having a large, simultaneous marketing strategy across the globe. For instance, it enables a more

coherent message to be conveyed to consumers. And, in the case of the new Ford Focus, the benefit being

sold to consumers is technology.

CASE 5 : TRIALS AND CHALLENGES FOR BARRETT AT INTEL Marks-16Intel Corporation is best known for its processors. The sign “Intel Inside” is familiar to most peopleusing a computer. There is, for example, the Pentium 3 and 4 and the new generation Itanium. Forservers and workstations, Intel produces the Xeon. The colorful CEO Andy Grove led the company formany years. By 2001, however, the chief Executive Officer Craig R. Barrett face many challenges,including criticism.The new strategy of moving into new markets such as information appliances, communications, andInternet services was costly and so far less then successful. In fact, the move beyond its core businessesmay have detracted from its core business of computer chips. These new directions resulted in frequentreorganizations resulting in organizational uncertainties for the managers. While some think that thefrequent changes were necessary to adapt to new situations and to keep the organization agile, othersdisagree.Barrett’s leadership and his moves into various directions is quite different from Grove’s carefullycrafted strategy that focused on chips. Barrett’s personal strengths lie in manufacturing. He investedheavily in research and development. But new products such as the Itanium require several years beforethey show result, and Barrett has only a few more years before his retirement. Investing in newmanufacturing technologies with the aim of achieving virtually automated plants results in the reduction ofmanufacturing costs of chips. But the PC market is stagnated in the early 21st century and wirelesscommunication and cell phones are becoming important in the market. In the cell phone market, forexample, Motorola and Texas Instruments are developing new digital signal processors and Intel wouldhave to work hard to catch up. A key to success of Intel may be whether the company can become animportant player in the wireless market. Barrett made a number of costly acquisitions, including Level OneCommunication. But the question if the heavy investment in new technologies will result in profitablebusinesses.This may determine the legacy of Craig Barrett.Questions: -

1. What is your assessment of Barrett’s performance and his vision for Intel? Is he the right person for

the job at Intel?

Yes he is the right person for the job at Intel.

2. What are some problems associated with frequent reorganization?

3. What are the pros and cons for focusing on the distant futures and the heavy investments in new

technologies?