Bharat Engineering Works : Case Study
BHARAT ENGINEERING WORKS LTD
Bharat Engineering Works Ltd. is a major manufacturer of industrial machineries besides other engineering products. It has enjoyed considerable market preference for its machines because of limited competition in the field. 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 co. faced problem in marketing its products with usual profit margin. Sensing the likely problem, the chief executive appointed Mr.
Arvind Kumar as General Manager to direct the operations of industrial machinery division. Mr. Kumar had a discussion with the Chief Executive about the nature of the problems facing the company so that he could fix up his priority. The Chief Executive advised him to consult various heads of departments to obtain 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. After joining as GM, 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 targets, he needed more sales managers and 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 3 separate engineering groups. Sales people had no central organization which had the responsibility to provide sales support. Therefore, some jobs were being done from outside at higher costs or with lower quality.
Besides, he needed a generous budget for demonstration system which could be sent on a trial basis to customer to win business. The production manager complained about the old machines and equipment used in manufacturing. Therefore, cost of production was high, without the corresponding quality while competitors had better equipments and machinery, Bharat Engineering neither replaced its age-old plant nor got it reconditioned. Therefore, to reduce cost, it was essential to automate production lines by installing new equipment. Director of Research and Development did not have any specific problem and did not indicate for any change.
However, a principal scientist in R & D indicated that the Director did not emphasize on short-term research projects which could easily increase production efficiency to the extent of atleast 20% 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.
- Discuss the nature and characteristics of management process followed in the Company.
- What are the real problems of industrial machinery division of the company?
- What steps should Mr. Kumar take to overcome the problems?
Answer 1: The nature and characteristics of the management process followed in the company can be described as follows:
As far as the planning process is concerned the company lacks an integrated planning system as a result of which it was not able to recognize the threat of potential competitors in the market well in advance and faced the problems in marketing its products at above profit margins. Also more focus was on long term plans and due to non emphasis and improper integration of long term plans with short term plans the company was facing the problem of low production efficiency.
The weak planning system at Bharat Engineering Works also could not recognize the need for replacement of its age-old plants and equipments. Regarding the organizing function of management process the company is organized on functional basis with well defined departments i. e the marketing department, production department, and research and development department. However there is lack of co-ordination between the departments as is visible by the problems the company is facing. The staffing function of the management process is weak in the company as hey could not identify or could not do the manpower planning in advance as the marketing department was facing the shortage of sales professional to meet the sales targets. The controlling mechanism is not well in place as it is the lack of the proper control that is the root cause of the problems face by the company. It is after the problem has been realized Mr. Arvind Kumar was appointed by CEO to direct the operations of industrial machinery division. Thus both the planning and controlling functions of the management are not well in place.
Answer 2: The real problems of the industrial machinery division of the company are as follows:
- 1. The company is facing the problem in marketing its products with usual profit margin.
- 2. Lack of an integrated planning system.
- 3. Lack of proper planning as the company is not able to identify the threat from the competitors in the external environment.
- 4. The marketing department of the company is facing the following problems a) Not being able to achieve higher targets because of shortage of sales professionals. b) Lack of engineering support to sales and marketing efforts. ) No central organization with the responsibility to provide sales support leading to high cost and lower quality. d) Budget needed for demonstration system to be sent to customers on trial basis to gain business.
- 5. The production department of the company is facing the problem of high production cost and poor quality products due to the lack of new and better equipments and machinery.
- 6. The Research and development department of the company was facing the problem of lack of integration of short term goals with the long term goals. The Director, research and development was not emphasizing on short term research projects which if paid attention could increase the production efficiency to 20% without any major capital outlay.
- 7. Lack of proper control and co-ordination mechanism.
Answer 3: Mr. Kumar should take following steps to overcome the above problems
- 1. He should introduce the integrated planning system as soon as possible in the company so that the company could analyze the threats and opportunities in the external environment well in advance.
- 2. As the marketing department is facing with the shortage of sales people to achieve the sales target adequate manpower and proper engineering support should be provided to them by proper coordination with the HR department. Centralized organization with the responsibility to provide the sales support should be established which will both reduce the cost and improve the quality. Adequate budget should be provided for demonstration system to be sent to the customers on trial basis to win the business.
- 3. As the production department is dealing with the problems of high production cost and low quality due to the old machines and equipments as compared to their competitors he should automate the production lines by installing new machines and equipments.
- 4. And to increase the production efficiency without huge capital outlay short term research projects should be emphasized in addition to the long term projects.
- 5. Proper co-ordination and control mechanism should be established as this is one of the main causes of the problems faced by the company.
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