General Managment

8/10/2019 General Managment

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MARKS: 80COURSE: DBMSUBJECT: General ManagementN.B: 1} Attempt all the questions2} All Questions Carries equal Marks

Case 1 (Marks 16)

'That's not my job' - Learning delegation at Cin-made

When Robert Frey purchased Cin Made in 1984, the company was near ruin. The Cincinnati,Ohi-basedmanufacturer of paper packaging had not altered its product line in 20 years. Labor costs had hittheceiling, while profits were falling through the floor. A solid quarter of the company's shipmentswere lateand absenteeism was high. Management and workers were at each other's throats.Ten years later, Cin Made is producing a new assortment of highly differentiated compositecans, and pre-tax profits have increased more than five times. The Cin Madeworkforce is both flexible and deeply committed to the success of the company. On-time deliveryofproducts has reached 98 percent, and absenteeism has virtually disappeared. There are evenplans toform two spin off companies to be owned and operated by Cin-Made employees. In fact, at theone day"Future of the American Workforce" conference held in July 1993, Cin-Made was recognized by

PresidentClinton as one of the best run companies in the United States.

How did we achieve this startling turnaround?" Mused Frey. "Employee empowerment is onepart of the answer. Profit sharing is another."In the late spring of 1986, relations between management and labor had reached rock bottom.Having recently suffered a pay cut, employees at Cin- Made came to work each day, performedthe dutiesrequired of their particular positions, and returned home-nothing more. Frey could see that hiscompanywas suffering. "To survive we needed to stop being worthy adversaries and start being worthypartners,"he realized. Toward this end, Frey decided to call a meeting with the union. He offered to restoreworker

pay to its previous level by the end of the year. On top of that, he offered something no oneexpected: a15 percent share of Cin-Made's pre-tax profits. " I do not choose to own a company that has anadversarial relationship with its employees." Frey proclaimed at the meeting. He thereforeproposed anew arrangement that would encourage a collaborative employee-management relationship

Employeeparticipation will play an essential role in management."Managers within the company were among the first people to oppose Frey's new idea ofemployee


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involvement. "My three managers felt they were paid to be worthy adversaries of the unions."Freyrecalled. It's what they'd been trained for. It's what made them good managers. Moreover, theywerenot used to participation in any form, certainly not in decision making." The workers also resistedtheidea of extending themselves beyond the written requirements of their jobs. " (Employees)wantedgenerous wages and benefits, of course, but they did not want to take responsibility for anythingmorethan doing their own jobs the way they had always done them," Frey noted. Employees werethereforeskeptical of Frey's overtures toward "employee participation." "We thought he was trying to ripus offand shaft us," explained Ocelia Williams, one of many Cin-Made employees who distrusted Frey'splans.Frey, however, did not give up, and he eventually convinced the union to agree to his terms. " Iwouldn't take no for an answer," he asserted. "Once I had made my two grand pronouncements,I wasdetermined to press ahead and make them come true." But still ahead lay the considerable

challenge ofconvincing employees to take charge :I made people meet with me, then insteadOf telling them what to do, I asked them.They resisted." How can we cut the waste on his run ?" I'd say, or "How are we going to allocate theovertime on this order ?""That's not my job," they'd say."But I need your input," I'd say. "How in theWorld can we have participative managementIf you won't participate?"I don't know," they'd say. "Because that'snot my job either. That's your job. ?"

Gradually, Frey made progress. Managers began sharing more information with employees.Frey was able slowly to expand the responsibilities workers would carry. Managers who wereunable towork with employees left, and union relations began to improve. Empowerment began tohappen. By1993, Cin Made employees were taking responsibility for numerous tasks. Williams, for example,used tooperate a tin-slitting machine on the company's factory floor. She still runs that same machine,but nowis also responsible for ordering almost $ 100,000 in supplies.Williams is just one example of how job roles and duties have been redefined throughout Cin-Made. Joyce Bell, president of the local union, still runs the punch press she always has, but nowalso

serves as Cin- Made's corporate safety director. The company's scheduling team, composed ofonemanager and five lead workers from various plant areas, is charged with setting hours,designatinglayoffs, and deciding when temporary help is needed. The hiring review team, staffed by threehourlyemployees and two managers, is responsible for interviewing applicants and deciding whom tohire. Anemployee committee performs both short and long term planning of labor, materials,equipment,


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production runs, packing, and delivery. Employees even meet daily in order to set their ownproductionschedules. "We empower employees to make decisions, not just have input," Frey remarked. "I

justcoach."Under Frey's new management regime, company secrets have virtually disappeared. All Cin-Made employees, from entry-level employees all the way to the top, take part in running thecompany. Infact, Frey has delegated so much of the company's operations to its workers that he now feelslittle in thedark. "I now know very little about what's going on, on a day-to-day basis," he confessed.At Cin-Made, empowerment and delegation are more than mere buzzwords; they are the way ofdoing business good business. "We, as workers, have a lot of opportunities," said Williams. "Ifwe wantto take leadership, it's offered to us."Question & Answers:

Q 1. How were principles of delegation and decentralization incorporated into Cine Madeoperations?Q 2. What are the sources and uses of power at Cin Made?Q 3. What were some of the barriers to delegation and empowerment at Cin Made?

Case 2 (Marks 16)Culture Shock

Warren Oats was a highly successful executive for American Auto Suppliers, a Chicago-basedcompanythat makes original-equipment specialty parts for Ford, GM, and Chrysler. Rather than retreatbefore theonslaught of Japanese automakers, AAS decided to counterattack and use its reputation forquality anddependability to win over customers in Japan. Oats had started in the company as an engineerandworked his way up to become one of a handful of senior managers who had a shot at the nextopen vicepresidentialposition. He knew he needed to distinguish himself somehow, so when he was given a chance

to lead the AAS attack on the Japanese market, he jumped at it.Oats knew he did not have time to learn Japanese, but he had heard that many Japaneseexecutivesspeak English, and the company would hire a translator anyway. The toughest part about leavingtheUnited States was persuading his wife, Carol, to take an eighteen-month leave from her careeras anattorney with a prestigious Chicago law firm. Carol finally persuaded herself that she did notwant to missan opportunity to learn a new culture. So, armed with all the information they could gather aboutJapanfrom their local library, the Oats headed for Tokyo.Known as an energetic, aggressive salesperson back home, Warren Oats wasted little time

getting started.As soon as his office had a telephoneand well before all his files had arrived from the StatesOats madean appointment to meet with executives of one of Japans leading automakers. Oats reasoned

that if hewas going to overcome the famous Japanese resistance to foreign companies, he should getstarted assoon as possible.Oats felt very uncomfortable at that first meeting. He got the feeling that the Japaneseexecutives were


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waiting for something. It seemed that everyone but Oats was in slow motion. The Japanese didnot speakEnglish well and appeared grateful for the presence of the interpreter, but even the interpreterseemed totake her time in translating each phrase. Frustrated by this seeming lethargy and beginning todoubt themuch-touted Japanese efficiency, Oats got right to the point. He made an oral presentation of hisproposal, waiting patiently for the translation of each sentence. Then he handed the leader of theJapanese delegation a packet containing the specifics of his proposal, got up, and left. Thetranslatortrailed behind him as if wanting to drag out the process even further.By the end of their first week, both Oats and his wife were frustrated. Oatss office phone had

not rungonce, which did not make him optimistic about his meeting with another top company thefollowing week.Carol could scarcely contain her irritation with what she had perceived of the Japanese way oflife. Shehad been sure that a well-respected U.S. lawyer would have little trouble securing a job with aJapanesemultinational corporation, but the executives she had met with seemed insulted that she was

asking themfor a job. And the way they treated their secretaries! After only a week in Japan, both Carol andWarrenOats were ready to go home.A month later, their perspective had changed radically, and both looked back on those firstmeetings withembarrassment. Within that month, they had learned a lot about the Japanese sense of protocolandattitudes toward women. Warren Oats believed he was beginning to get the knack of doingbusiness withthe Japanese in their manner: establishing a relationship slowly, almost ritualistically, waitingthrough anumber of meetings before bringing up the real business at hand, and then doing so

circumspectly. It wasdifficult for Oats to slow his pace, and it made him nervous to be so indirect, but he wasbeginning to seesome value in the sometimes humbling learning process he was going through. Perhaps, hethought, heand Carol could become consultants for other executives who needed to learn the lessons he wasbeginning to understand.Case Questions1. What specific errors did Warren and Carol Oats make during their first week in Japan?2. If you were talking to a non-U.S. businessperson making a first contact with an Americancompany, what advice would you give?CASE 3 : (Marks-16)

COKES EUROPEAN SCARE

What seemed like an isolated incident of a few bad cans of Coca-cola at a school in Belgiumturned intonear disaster for the soft drink giants European operations. In June 1999, Coke experienced itsworstnightmare-acontamination scare resulting in the recall of 14 million cases of Coke products infive Europeancountries and a huge blow to consumer confidence in the quality and safety of the worlds most

recognizablebrand.


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After the initial scare in Bornem, Belgium, Coke and Coca-Cola Enterprises (CCE), a bottler 40percent owned by Coca-Cola, thought they had isolated the problem. Scientists at the CCE bottlingplant inAntwerp found that lapses in quality control had led to contaminated carbon dioxide that wereused in thebottling of a recent batch of Coke. Company officials saw the contamination as minor problemand theyissued an apology to the school.At the same time that the problems were being dealt with in Antwerp, things were breakingdown atCokes Dunkirk, France, bottling plant. In Belsele,10 miles from Bornem. Children and teacherswerecomplaining of illnesses related to drinking Coke products. The vending machines at the schoolwerestocked with Coke from the companys Dunkirk plant and were thought to be safe. No w a secondbottling

plants practices were being questioned. What initially seemed like an isolated incident was nowa 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 oftencontradictedone another when making statements. Frances health minister, Bernard Kouchner, stated Thatacompany so very expert in advertising and marketing should be so poor in communicating onthis matteris astonishing.After three weeks of testing by both Coke officials and French government scientists, it wasconcludedthat the plants were safe and that their was no immediate threat to the health of concluded thattheplants 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 someeffect onCokes profits in Europe, the company is more concerned with damages to its reputation and

consumerconfidence in its products.Many critics say that Cokes slow response time, insisting that no real problem existed andbelatedapology have severely damaged the companys 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 tothe 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 andmanagement


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strategies in Europe. Coke executives in Brussels are predicting that the company will double itsEuropeansales in the next decade and that this setback will only make the company stronger. Wall Streetanalystsseem to agree. Only time will tell.Questions:-

1. What are the management issues in this case2. What did Coke do and what could have been done differently?3. What are the key factors that were or should have been considered by management?CASE 4 : (Marks-16)

FORDS EUROPEAN ORGANIZATION CHANGES STRATEGY

Ford Motor Company has a long history of operating in Europe. Starting with exports to theUnitedKingdom in 1903, the company established sales branches in France and England in 1908 and1909. Laterassembly plants ware set up in those countries. In Germany, Ford established a plant inGermany in 1926.For several decades, the European operations were separate subsidiaries, each beingaccountable to theheadquarters in the United States with little coordination among them. The rational for the

organizationstructure was that each countrys customers have different needs, testes, and preferences. Inaddition,each country had its own tariff regulations.As the European countries grew closer together, Ford viewed its European operation as acommonmarket with a regional organization named Ford Europe with two big manufacturing facilities inGermanyand England. But now, the companies in the European countries were not anymore consideredseparateand independent, but operated with a coordinated strategy. The aim was to achieve economiesof 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 neworganizationstructure. According to the new strategy, products were largely designed in the UK and Germanyandmanufactured in those countries as well as in Belgium and Spain.In1994, a new strategy emerged that was named Ford 2000. in 1995, Ford merged itsAutomotiveOperating in North America with that of Europe. Again, an important reason was to be morecompetitiveand 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 AutomotiveOperationconsisted of five vehicle centers with worldwide development for car and trucks. While four ofthosecenters were in North America, the European centre was responsible for developing small andmidsizeautomobiles Moreover, the North American center worked together with the Europeans todevelop Mondeo


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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 1998performanceespecially in Europe where Ford was loosing market share to competitors such as General MotorsandVolkswagen. Consequently, the newly elected Jacques Nasser reviewed the centralized Ford 2000strategyand reintroduced the market focus that gives more autonomy to the regions especially in Europewheremany of its competitors introduced brands that addressed the needs of its customer. Nasser alsocreatedthe Premier Auto Group for luxury cars that were more profitable than the low- and mid-pricedcars. 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 protectedbyquotas on Japanese cars. But these restrictions are going to be reduced or eliminated in the newcentury.

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 thatmay 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?2. What was the rationale for the Ford 2000 program?3. Why did Ford change from decentralization to centralization to recentralization?4. Why did Ford establish a luxury car division?5. Do you think Ford will be in the competitive global market? Why or why not?CASE 5 : (Marks-16)

TRIALS AND CHALLENGES FOR BARRETT AT INTEL

Intel 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 thecompany formany years. By 2001, however, the chief Executive Officer Craig R. Barrett face manychallenges,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 corebusinessesmay 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 thatthefrequent changes were necessary to adapt to new situations and to keep the organization agile,othersdisagree.Barretts leadership and his moves into various directions is quite different from Groves carefully crafted strategy that focused on chips. Barretts personal strengths lie in manufacturing. He

invested


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heavily in research and development. But new products such as the Itanium require severalyears 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 thereduction ofmanufacturing costs of chips. But the PC market is stagnated in the early 21st century andwirelesscommunication 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 Intelwouldhave to work hard to catch up. A key to success of Intel may be whether the company canbecome animportant player in the wireless market. Barrett made a number of costly acquisitions, includingLevel OneCommunication. But the question if the heavy investment in new technologies will result inprofitablebusinesses.This may determine the legacy of Craig Barrett.Questions: -

1) What is your assessment of Barretts performance and his vision for Intel? Is he the right

person for thejob 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 investment innewtechnologies?

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