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Transcript of Anand Automotive

457794 1..16

Anand Automotive Limited:leadership development process for creating strategic impact

Sumi Jha and Som Sekhar Bhattacharyya


DOI 10.1108/EEMCS-02-2013-0013VOL. 3 NO. 3 2013, pp. 1-16, Q Emerald Group Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1

Sumi Jha andSom Sekhar Bhattacharyya are both based at the National Institute of Industrial Engineering, Mumbai, India.

Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessfulmanagerial decision making. The author/s may havedisguised names; financial and other recognizable informationto protect confidentiality.

Mr Kawaljeet Singh Bhullar, the Group Head of Human Resources (HR) of Anand Automotive Limited (AAL) was sitting in the lounge of Mumbai airport. He was waiting to board his flight back to New Delhi (the corporate office), after a visit to the Pune plant. He felt that the difference in March temperature between Mumbai and Delhi was pretty perceptible. He was thinking that it was similar to the feelings on HRM practices he generally had, after visiting any of the 49 AAL manufacturing facilities and while heading back to the corporate office (AAL, 2012c).

Mr Bhullar was wondering what more possible efforts and direction were needed to diffuse an HR centric perspective, which touched the corporate office and all the manufacturing facilities alike. He thought, as he was taking the aerobridge to board the aircraft, that AAL had gone a long way to bring in a robust leadership development programme and activated an organization wide leadership development pipeline. In the last ten years, novel HR practices had been continuously designed and implemented to make AAL the revered employee brand that it had now become. He felt that the aerobridge for AAL had been built. Mr Bhullar was thinking what were the structural and leadership decisions he could initiate to pave the future path for a strong and sustainable AAL which could fly high in the open sky of the global market place. He believed strongly that the strength and essence of AAL resided in its HR capabilities. He contemplated that HR practices for leadership development at AAL should be able to identify the best talent, reward and retain them, and continuously groom them for higher leadership positions.

AAL, based in an emerging economy (India) and a part of a growing sector (automotive ancillaries), had to develop (by necessity not by choice) to maintain its leadership position, which it had gained since its inception. Mr Bhullar felt that the Anand leadership programme was a robust system. Though, he felt that the talent feed getting into it had to be of the desired quality and of sufficient quantity. He was contemplating increasing the spread and distribution of transformational leadership. Being an export-oriented firm catering to the needs of the worlds automobile manufacturers, he felt that the top management of AAL should have a requisite techno-managerial knowledge base, the ability to adapt to varying circumstances, be able to assimilate and tolerate different cultures and have a grand vision to hold leadership positions in the global market. The question was how to synchronize the corporate leadership development to create strategic impact at AAL. Mr Bhullar believed that then AAL would surely fly.

1. Anand Automotive Limited

AAL made its footprint in Indian business on 24 February 1961, when Gabriel India Limited started its operations for manufacturing shock absorbers in Mumbai, located in Western India (AAL, 2012c). Over the years, AAL had become one of Indias largest premier automotive systems. AAL had been a component provider catering to almost every vehicle

and engine manufacturer in India. AAL had reached a sales turnover of USD1.2 billion in2012 and had a target of achieving sales of USD2 billion by 2015 (Internal Documents of AAL, n.d.). As of January 2013, AAL had 19 companies spread across 49 plants in 11 locations in nine states of India (Exhibit 1) (AAL, 2012c). For business level details of AAL refer to Exhibit 2 (AAL, 2012b). Exhibit 2 lists the company names, its products, joint venture and technical licenses. AAL had also established successful partnerships with global firms (AAL, 2012b). Over the years these international firms were leaders in the auto ancillary sectors. AAL had established six technical licenses, 15 joint ventures and 21 global partnerships (AAL, 2012b). The top management of AAL was proud of these partnerships as it held testimony to Anands well-recognized spirit of partnership. Since inception, the company had been a market leader for auto ancillary products, a position unchallenged even in the new millennium. AAL objectives and vision are:

1. AAL organizational objectives:

B to be a world class manufacturing organization;

B to have people orientation;

B to grow ahead of the market;

B to maintain desired return on investment; and

B to have continuous improvement orientation.

2. AAL organizational vision:

B develop corporate competence to act globally;

B aspire and dare to be innovative;

B attain leadership in technology;

B achieve excellence through entrepreneurship; and

B bridge the gap between precept and practice.

India has tremendous opportunities in terms of automobiles and auto ancillaries business. Table I provides the details on growth of certain industries in the automotive sector for the year 2011-2012.

Table II shows the growth for the auto ancillary industry in the different segments.

Table I Auto industry growth rate

Industry Growth rate (%)

Two wheeler industry domestic 14.1Two wheeler industry export 35.0Commercial vehicles10-13Passenger car export 14Auto ancillaries28

Sources: Compiled from Ernst and Youngs (2012); CRISIL (2012); KPMG (2012)

Table II Auto ancillary Industry growth rate

IndustryGrowth rate (%)

Two wheeler18

Three wheeler2

Commercial vehicles21

Passenger car and utility14

Auto ancillaries53

Sources: Compiled from Ernst and Youngs (2012); CRISIL (2012); KPMG (2012)

India has also become one of the major centers for automobile manufacturing and Volkswagen, Ford, Honda, Hyundai, Skoda, BMW, etc. have manufacturing bases in India. This is in addition to indigenous Indian companies like Maruti, Tata Motors and Mahindra and Mahindra. As reflected in Table II, the growth in the automobile and auto ancillary sector in India brings many opportunities for firms like AAL. Also as reflected in Table I, the export opportunities of auto ancillary components have been rising, providing opportunities of growth for AAL. AAL from its very inception has been an exporter and a premium and reliable supplier for major Indian corporations. Table II indicates that this growth story should continue well into the second decade of the new millennium. Information provided in Tables I and II has been collected from Ernst & Youngs (2012), CRISIL (2012), KPMG (2012).

2. Leadership development at AAL

AAL, being a manufacturing firm, has been strongly dependent on the available HR for its value creation. AAL in the last five decades of its existence embarked on diversification and expansion of its business to cover a wide breadth of auto ancillary components manufacturing and their export. The technological progress and the growth of the market worldwide of the auto industry had constantly influenced AAL. As presented in Tables I and II, even in the domestic market Indian automotive industry underwent metamorphic changes and growth which also had a bearing on AAL. Generally, these changes required AAL to produce high quality, high value products. Thus, AAL as an organization had been constantly confronting changes to adapt to the changing needs of the auto industry.

AAL top management from the very beginning understood that organizations having a critical mass of employees who demonstrate leadership traits and qualities would be better able to embrace change and grow successfully (Ernst & Youngs, 2012). Leaders at AAL were expected to adapt to change comfortably and help others to be in tune with changing organizational needs. Hence, AAL was required to have an HR system which would be producing employees having leadership traits.

3. The Anand way model

Mr Bhullar, at the helm of HR affairs of AAL, with a lot of passion and energy, commented that he felt that he was as fresh as a young recruit in the organisation. Over the years, Mr Bhullar had ensured that he personally met and interacted with all the new recruits during their inductions (Internal Documents of AAL, n.d.; AAL, 2012d).

He stated that, when in the 1970s and 1980s the top management of AAL interacted with the clients of AAL in Japan or in Europe and globally in the various developed countries, they used to be both amazed and impressed by their work ethic, quality consciousness and their one firm and firm centric thinking. They had a dream of making AAL such an organization in future. Back home in India, the very senior leaders at AAL were searching for a perspective that could bind and build AAL for such a state in the future. The outcome of their considerations was the philosophy that was later christened as The Anand Way (Exhibit 3) (Internal Documents of AAL, n.d.; AAL, 2012d), the way AAL was to do its business in future.

Mr Bhullar, while addressing new recruits at a formal gathering at Parvanoo at the AnandUniversity (AU; CRISIL, 2012) (the corporate university of AAL) talked passionately aboutThe Anand Way, while