Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Dr.K.Prabhakar,
Velammal Engineering College
prabhakar.krishnamurthy@gmail.com
Electronic copy available at: https://ssrn.com/abstract=1791334
Abstract
Application
This case study will be suitable for students undergoing I year MBA when they are
exposed to all functional areas. Similarly, it is suitable to Human Resources
Practitioners with two to three years of experience.
Deliverables was measured against the objectives and then linked to the
values. Every person generally does a value-check, if it is not in tune with the values
of the organization, even if it is a success the process did not justify the achievement:
so people stop and rethink and examine the process. This is the thought process that
worked in the background, encapsulating all thoughts and deeds.
The information is shared and always available across all levels. The
organization has no boundaries and hierarchies. At all level there is no confidentiality
or secret. The Vice President's presentation to South Asia Head is available on the
Intranet, he asked everybody to comment and wanted his or her opinion, and he
personally signed it. At Charkraj, Sr. Manager like Raju does not know even annual
report. Raju never knew what is confidential and what is not confidential. Raju used
to get information from newspapers. When Raju was sales head of a business unit, his
What is missing in Charkraj is the attitude of sharing. At Charkraj everyone act like a
unified family, they celebrate events like Diwali, but they were not united in goals
towards organization, one. So if some employee comes up with some idea he kept it
for himself and used for his growth and development. Information was never shared
and his ideas may be passed on as his bosses' ideas and the employee is likely to loose
his position. The organization had 10 business units there are many common factors
with each of the business units. Raju never met other unit chiefs or shared any
information between each of the units. There were secrets, lobbies, groups, and
intrigues.
During training programme at Charkraj, Raju was put through six months in
costing and systems. Raju knew raw materials that go into various products, the cost
of raw material, and how to prepare cost sheets. Later, when Raju became sales head
of the same product, TOPS, the finance manager told him: "X is the cost of
manufacture, Y is the cost of sales, and we are making a 15% margin. This is the
selling price; you have to sell at this price. Raju fresh with his memories at the costing
department has challenged it. In order to compete in the market we need correct data.
Then only pricing can be done appropriately and then craft a position in the market
according to the cost economics is the argument of Raju.
Raju discovered there was a huge difference between what was listed on the
product cost sheet and what was stated on the bill of material. Raju requested the unit
accountant, informed about the total deviation, and wanted further information. The
accountant was visibly annoyed. "Why are you looking at the bill of material and who
gave you access to it and who are you to question all these?" he said. "You are a sales
person and you have no right to examine purchase orders and question them, it is the
work of an auditor." he admonished the factory manager for sharing such information
especially with sales people. The commercial head called Raju and asked about the
problem. Raju explained the need for transparency in costing and how it will help to
build brands. The commercial Head gave a patient hearing and said: "Raju, Just go
and sell... and forget all your training in the costing department. Focus your abilities
Raju realized that this practice was common in the organization. Due to this
reason despite some strong brands, Charkraj was pushed down in the marketplace by
local brands. Because it was taking the price up without proper planning of costs.
Now, if values were the drivers, information sharing and transparency are the drivers
for Charkraj then if value audit has been conducted, the organization would have built
better brands. But such needless confidentiality and smudging of figures was also
affecting the perception of the sales force, who believed that our products were not as
good as those of the competition or somebody in the Management is making money.
However in the sales meetings the chiefs push the sales force and even condemn them
for lethargy, inefficiency, and slow movement, misplaced emphasis. Bonuses and
increments of these people were reduced, as a penalty for poor performance - the
effect is poor moral, poor performance and even poor personal lives! Raju has to
accept the self appointed custodians of profitability of organization, the accountants.
At Wellbonne, anyone can just log on to the Intranet and access all data about the
products. The difference between Charkraj and Wellbonne is apparent.
At Charkraj, even commercial executives were not aware that the firm was in
the process of divesting a brand. Having seen openness, Raju was aghast. At old
method of secrecy of objectives at Charkraj, let alone organization objectives, Raju's
objectives were told to him late into the year. Raju cannot even imagine any of his
bosses discussing their goals and objectives with him! At Wellborne, the walls are
plastered with global objectives, their Indian country head's objectives, regional
head's objectives, and world chairperson's objectives. This way every one knows each
team's objectives, and in such a way, that each sees how his contribution links up to
total organization goals! People are encouraged to see what their chairman is thinking;
directionally this is what the Indian business is aiming for and we would like you to
orient your work in that direction for the year is the message Wellbonne wants to
diffuse.
In Charkraj, people endlessly debate every concept. Partly, that comes out of
the organizational philosophy that encourages everyone to question everything. The
essence of that philosophy was to encourage contributive thinking and improvisation.
But slowly it degenerated into a kind of questioning everything. It is being used as a
tool to get rid of pent-up emotions by trying to blame everything for lack of focus.
The culture is aggression. In addition, it works complementarily. For example, when
our sales director recommended a new distribution method, each of us argued,
debated and conflicted. On the other side, it came to a stage, where the sales director
gave an ultimatum do it or leaves organization. Within three weeks, the new system
was in place.
At Wellbonne, Raju was facing a completely different style. The system was
democratic. However, democracy did not lead to mindless arguments or resistance.
Neither was it autocratic in enabling change. Raju have not seen people getting
anxious or vicious; At Charkraj, it is always giving orders? Shouting and bad
language are the outcomes of discussions. Nevertheless, not in Wellbonne. Why?
Charkraj is a successful firm. Its share prices are going up and even in worst days, it
never saw any downturn. The chief is respected in various industry associations. What
makes Charkraj successful in business, even with all the ailments that are given? It
has a HR system, excellent training programmes, very good recruitment processes
and, a very low staff turnover! It is a company on the ball, energetic, performance-
driven, hard working, high on ethics and business practices (to outside world), good
managers...
Year 2002
Due to recession in Indian market and competition from Korean Majors made
Wellbonne to rethink its strategy. Its profitability started coming down. It posted loss
Questions
I) what is the central issue to be addressed in this case?
2) If you were to be Raju what decision you will take?
3) Please indicate how you will justify decision of Raju as suggested by you.
4) Do you agree with the downsizing philosophy of Wellbonne because everybody
worked according to organization directions?