tybbi prelim paper 2013 turnaround mgmt with solutions - naresh sukhani
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TYBBI Prelim Paper 2013 Turnaround MGMT With Solutions - Naresh SukhaniTRANSCRIPT
TYBBI – Turnaround Management
Time: 120 min Marks: 60
1. A) Explain turnaround and what are the internal cause of sickness needing turnaround (8
Marks)
Turnaround means the action plan of turning around an enterprise from its path
of decline to the path of prosperity. It is also making a company profitable again. It is one strategy, which aims at converting a loss making company into profit making company. It is a technique of giving a positive turn after a negative one.
Internal sickness:- I. Mismanagement: - The management of the organization plays an important role in
spoiling financial structure of the company. The sickness of the company caused by ruthless deals by managers.
II. Underestimation of the cost of the project: - the cost of any project of the company has to be estimated properly. It may be cost of introducing of new product
or may be erecting of new plant. The cost has to be perfectly estimated.
III. Delay in implementation of the project: - The major project has to be implemented in time. Time is money. Any delay causes problem of lost business. It will be a reason for loss. Big project have to be done very carefully.
IV. Increase in cost due to delay in implementation of project: - when the delay
takes place in implementation of the project the cost of the product goes up. That is due to the fact that the delayed project has more interest content on the money
spent.
V. Under utilization of resources:- If some plant is erected of a specific capacity by spending some amount of money, the production and sales value have to match up
the capacity. If sales volumes are much lesser than the capacity of plant, the additional capacity goes waste. The overhead charges of the full capacity have to be
taken up by smaller production quantity.
VI. Division of funds: - the fund planned for one project should not be diverted to
other project. Specifically when the project is incomplete this should not be done. The basic project remains incomplete and the amount spend on incomplete project leaves roots for the sickness of the company.
VII. Lack of management depth: - the person at the top of the company management
must have good maturity and possibility of the business, which they are in.
VIII. Bureaucratic management: - The management of the company is really at the forefront of organization. It has to agile for any type of situation. The flexibility and
prudence take the business ahead. Bureaucratic management does well in monopolistic situation.
B) Globalization is a bane. Explain the disadvantages of globalization with references to
developing economy: (7 Marks)
Globalization means expansion of business activities to global level by crossing the
political and economic boundaries to cover the entire world.
Manufacturing is undertaken on a large and global scale to not only meet the needs of
the local, domestic markets, but also the global, export markets. Commercial activities
also span the entire world through efficient transport and communication links.
Globalization is the process of integrating a country’s economy with the global economy
with a view to capture global opportunities for long term growth and development. At
an enterprise level, globalization means planning production, marketing, finance and
other business activities for remaining in the world market for a long period. It is
planning locally and implementing globally.
Disadvantages of Globalization:
1) Free entry of foreign companies in domestic market: Foreign goods and foreign
companies will enter in the domestic markets on a large scale. They may capture
domestic markets due to their competitive capacity.
2) Expansion in the activities of MNCs: MNCs get encouragement to expand their
investment, operations and activities in developing and less developed and less
developed countries. Easy entry of MNCs in such countries may prove politically
and economically harmful.
3) Difficulties before domestic companies: Domestic companies will come in
difficulties due to globalization. They will have to face competition from the
foreign companies, which are superior with regard to quality and cost. Even small
scale and agro industries may come in danger due to liberal policies with regard
to globalization.
4) Adverse effects on national economy: Globalization will lead to privatization,
disinvestments in the case of public sector, free entry of foreign
goods/companies and limited participation of government in industry and
commerce. All such changes prove harmful to the national economy of
developing and poor countries.
5) Brain drain: It will create new demand for and migration of skilled workforce
from developing countries to developed countries e.g. Indian technical personnel
migrating to the US and Europe for better earning opportunities.
6) Liberal trade policies may be harmful to poor countries: There is pressure on
developing countries to make their trade policies liberal. Such a move will be
harmful to the developing countries as their markets will be captured by
developed countries but the markets of the developed countries will not be
available to developing countries due to high cost, inferior quality production etc
7) Extensive use of Capital Intensive technology: This might lead to the problem of
un-employment in country like India.
8) Developed countries can stifle development of undeveloped and under-developed
countries.
9) Economic depression in one country can trigger adverse reaction across the
globe. 10) It can increase spread of communicable diseases.
11) Companies face much greater competition. This can put smaller companies, at a
Disadvantage as they do not have resources to compete at global scale 12) Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labor
13) Increased likelihood of economic disruptions in one nation effecting all nations 14) Corporate influence of nation-states far exceeds that of civil society
organizations and average individuals 15) Greater chance of reactions for globalization begins violent in an attempt to preserve culture heritage.
1.
P. Define ‘Turnaround Management’. Explain the implications of successful turnaround (7
Marks)
Turnaround of a company is a restructuring process or strategy in which systematic
efforts are made to convert a loss-making company into a profitable one. It is an attempt
to remove various weaknesses and make it stable, strong and profit- making.
The implications of a successful turnaround are being identified are as follows:
1. Relevant to the enterprise
turnaround strategy prepared should be directly related to the problems faced by the
enterprise. A good strategy should be able to deal with the problems effectively.
The reasons responsible for the sickness of the enterprise should be studied in depth so
as to find out suitable remedial measures.
2. Change of management structure
in a good turnaround strategy, change of management structure should be incorporated.
Generally, it is seen that the existing chief executive and his managers do not have
mental courage to introduce the turnaround package. A good turnaround strategy may
not give good results, if the persons responsible for the execution are not capable. This
suggests that a good turnaround strategy should contain provision for change of
management structure.
3. Provision of creative leadership
the chief executive or turnaround man should provide creative leadership to the whole
organisation during the execution of turnaround strategy. He needs willing co-operation
from employees. He should motivate, raise morale and develop team spirit of the
employees. Success of turnaround mainly depends on the creative leadership. It is one
essential requirement of successful turnaround strategy.
4. Proper planning and execution
a good turnaround strategy should contain proper plan or package and arrangements for
its execution. The strategy prepared should have solutions to the basic problems and
difficulties before the enterprise. In addition, necessary funds, powers, etc. should be
given to those concerned with the execution of the strategy. This facilitates execution of
the strategy within a time frame.
5. Adequate cash flow
Inadequate flow of cash leads to problems and difficulties in the execution of the
strategy. This point should be taken into account while drafting the strategy. A strategy
will give good results, when its execution is orderly and smooth, which again depends on
timely cash supply. A good turnaround strategy should have in-built arrangement for
adequate cash flow.
6. Wide coverage
a good turnaround should have wide coverage. It should cover all aspects of the business
as they directly or indirectly contribute for improvement in the situation. The strategy
should be related to production, sales, finance, personnel and so on. This will make the
process of recovery quick and comprehensive.
7. Viability of business
the nature of business needs careful consideration before the introduction of turnaround
strategy. The viability of business activity is an essential requirement of a good
turnaround strategy. Some of the problems faced are-
-survival
-changed business environment
-government restrictions
-declining market demand, etc.
Q. Define ‘Globalization’. Discuss the negative effect of ‘Globalization’ on Indian economy? (8
Marks)
Globalization is the process of international integration arising from the interchange
of world views, products, ideas, and other aspects of culture. Put in simple terms,
globalization refers to processes that promote world-wide exchanges of national and
cultural resources. Advances in transportation and telecommunications infrastructure,
including the rise of the Internet, are major factors in globalization, generating
further interdependence of economic and cultural activities. Globalisation also refers to
expansion of business activities to cover the entire world. World is moving fast towards
global economy.
It leads to economies of different countries in a new global economic order. In this order,
large scale manufacturing activities will be undertaken for meeting the needs of local
people and also for promoting exports. Similarly commercial activities will cover the
entire world due to efficient transport and communication facilities. Globalisation is the
process of widening the area of business activities to global level by crossing
the political and economic boundaries.
Globalisation is a process of integrating country’s economy with global economy with a
view to capture global opportunities for long-term growth and development. At an
enterprise level, globalisation means planning production, marketing, finance and
other business activities for remaining in the world market for a long period. It
is planning locally and implementing globally.
No country, big or small, developed on developing, rich or poor can afford to live in
complete economic isolation. Many countries made rapid progress by adopting liberal
economic policies. In order to avoid the repetition of past mistakes, India has to make
efforts to integrate our economy with the rest of the world.
NEGATIVE EFFECTS OF GLOBALISATION ON BUSINESS:
i. Free entry of foreign companies in domestic markets: Foreign goods and
foreign companies will enter in the domestic markets on a large scale. They may
capture domestic markets due to their competitive capacity.
ii. Expansion in activities of MNC’s: MNC’s get encouragement to expand their
investment, operations and activities in developing and less developed countries.
Easy entry of MNC’s in such countries may prove politically and economically
harmful.
iii. Difficulties before domestic companies: Domestic companies will come in
difficulties due to globalisation. They will have to face competition from the foreign
companies, which are superior with regard to quality and cost. Even small scale
and agro industries may come in danger due to liberal policies with regard to
globalisation.
iv. Adverse effects on national economy: Globalisation will lead to privatization,
disinvestment in case of public sector, free entry of foreign goods/companies and
limited participation of government in industry and commerce. All such changes
may prove harmful to the national economy of developing and poor countries.
v. Brain Drain: It will create new demand for skilled workforce from developing
countries to developed countries (e.g. Indian software engineers/technically
qualified persons are in demand in the USA and the European countries.
vi. Liberal trade policies may be harmful to poor countries: There is a pressure
on developing countries to make their trade policies liberal. Such move will be
harmful to the developing countries as their markets will be captured by developed
countries but the markets of the developed countries will not be available to
developing countries due to high cost, inferior quality production etc.
vii. Extensive use of capital-intensive technology: This will lead to the problem of
employment in country like India.
2. A) Explain various I.T capabilities in BPR implementation (8 Marks)
Although, BPR has its roots in IT management, it is primarily a Business Initiative that
has broad consequences in terms of satisfying the needs of customers and the firm’s
other constituents. IT group may need to play a behind the scenes advocacy roles,
convincing senior management of the power offered by IT and process redesign.
Traditionally, the capabilities of IT to facilitate the execution of a process are examined
after it is reengineered. Out of the box thinking is a must for proper utilization of IT in
BPR. The product development teams can exchange computer –aided designs (CAD) over
large distances and this might affect the structure of a product development process, and
so the role of IT in a process should be considered in the early stages of its redesign.
Use of IT –CAPABILITIES:
1. Transactional: IT can transform unstructured processes into routine transactions. They
are properly tracked by software.
2. Geographical: IT can transfer information with rapidity and ease across large
distances, making processes independent on geography.
3. Speed: Due to its speed and ability of dealing with wide variety of complex activities,
IT is now an inseparable part of BPR.
4. Automatic: IT can replace or reduce human labour .The IT works and the persons
working on the project reduce due to the combining number of operations of complex
nature.
5. Analytical: It can analyze the data and provide it in form of information to each person
in the organization as per the need and on required time.
6. Accuracy: The data from the IT sources is very accurate. The banking systems are
working on large scales due to the accuracy of IT system.
7. Handling large data: The system of IT can handle large amount of data. It is
unthinkable by manual system. The logistic systems are working on only the basis of IT
capabilities.
8. Informational: It can bring large amount of detailed information in the total process.
Any complex natured calculations are done easily as per the program. Many operations
can be related with each other as per the requirement.
9. Sequential: It can enable changes in the sequence of tasks in the process .This allows
multiple tasks to be worked on simultaneously.
10. Knowledge management: IT can capture and disseminate knowledge and expertise
.This can help to improve the process in the organization.
11. Tracking: It helps to track the events of task in detail. Input and output are
coordinated to make the function in the company smooth.
12. Bridge between two parties: The IT can be used to connect two parties in the
process, which can generate meaningful result in the interest of organization.
B) Explain the 3Cs used by the 21st Century Organizations: (7 Marks)
3C’s are the new matters, which drive the organization. These are the Customer,
Competition and Change. The organizations keeping these on their cards are going to
decide the future.
Customer
Before the period from 1960 to 1970, the manufacturers were in a position to sell
anything, which they produced. After 1980 in all the fields the picture changed. The
customer, consumer or the industries decide the demand.
“Customer is always right”
What they want? When they want? At what place they want the delivery? And also when
he will pay? He has become wiser and decides the configuration of the matter that he will
purchase. Organizations are responding to the needs of the customers. If an organization
loses a customer for any reason, they have to get loose yet another/ the customers have
their choice. They do not behave alike. Customers, consumers. Companies demand
products and services designed for their unique and particular needs.
Competition
The second “C” stands for competition. In the seller’s market before 1980 it was easy for
a manufacturer to get an order on his table and provide the product at his will and wish.
Now, he scene has changed few buyers gave many suppliers of good quality products.
The competitive base has no only reduced the prices of the product but improved the
quality and services levels. Only the best will survive with the highest quality, lowest
price and the best service.
Change
We have seen that customers and competition have changed. The change has both
persuasive and persistent in the business environment. Only constant is change. The
pace of change has accelerated with the globalization of economy. The rapidity of
technological changes promotes innovation. Products have got now the short life. Today
companies must move fast, or they will not be moving at all.
These 3c’s have created a new world for business and it is coming increasingly clear that
organizations designed to operate in the environment cannot be fixed to work well in
another.
OR
2.
P. Write Short Note on Business Process Reengineering. Need for BPR? (8 Marks)
Business Process Reengineering (BPR) is defined as the critical analysis and
radical redesign of existing business processes to achieve breakthrough improvements in
performance measures such as cost, quality, service and speed. BPR has often been
confused with the Quality movement. Quality specialists lend to focus on incremental
change and gradual improvement of processes, while proponents of reengineering seek
radical redesign and drastic improvement of processes.
The rewards of reengineering are many including:
1) Empowering employees;
2) Eliminating waste, unnecessary management overhead, and obsolete or
inefficient processes;
3) Producing often significant reductions in cost and cycle times;
4) Enabling revolutionary improvements in many business processes as
measured by quality and customer service; and
5) Helping top organizations stay on top and low-achievers to become effective
competitors.
Example of BPR:
Need for BPR:
The need for redesign of business processes is felt more than ever before.
The companies today have vertical structure designed in 19th century for creating
value to customer in 21st century. It worked well in past but is fast losing its relevance
and utility with several barriers being abolished.
These classical business structures that specialize work and fragment
processes are self-perpetuating because they strive for innovation and creativity in
an organization. If a junior person has new idea of better way of doing a job, he has to
first sell it to seniors and win acceptance.
The existing processes have not been analyzed with regard to their
organization and contribution to the performance of the organization as a whole. More
often than not, the individual departments or sections in an organization focus on
optimizing their own performance. This results in imbalanced performance of the
departments at the cost of the performance of the organization.
The existing processes in a typical vertical organization have following
disadvantages:
They organize work as a narrowly defined individual tasks or activities.
They specify restrictive job roles based on their execution.
The segregate these roles into departments.
They devise elaborate mechanisms to monitor and control the performance of
these tasks and activities.
They provide managerial positions to administer the junior executives of narrow
job roles.
They have resulted in hierarchic layers transmitting work related information
upwards for appraisal and decision-making.
These factors have caused fragmentation of integrated work process. They have
resulted in creating a narrow vision amongst employees in the organization at the
cost of quality and improvement in performance thus creating a need for BPR.
Q. Common reasons that lead to failure of BPR (7 Marks)
Reasons for failure in BPR project:
1) Unsound Financial Conditions:-
The condition leads to lack of resources. Without the resources the project cannot
be implemented. This will definitely lead to failure. Specifically it has to be
understood clearly when the project is taken in loss making company for the
purpose of turnaround. It is difficult for loss making company to make
arrangement of funds.
2) Not providing adequate resources:-
The mistake is not providing adequate resources, e.g. - people, time and money
failing to engage all management levels in the change. Sponsors tend to
undermine efforts by not allocating resources appropriately and underestimate the
amount of sponsorship time and effort required.
3) Too Many Projects under way:-
When the team undertakes many projects on hand at a time, there is risk of going
in the problem. So it has to be kept in mind that the team hast to build on success
of projects taken one by one. The management has to decide priority to take up
projects.
4) Fear and Lack of optimism:-
The people working on the project already have apprehension about success about
the possibility of success. They work without the free, positive thoughts about
success. In such a situation the project may not succeed.
5) Overemphasis on tactical aspects and the strategic dimensions being
compromised:-
The team feels that most failures of reengineering are attributable to the
process being viewed and applied at tactical, rather than strategic levels.
6) Not focusing on business processes:-
The team has no focus on business processes and not the other problems.
Applying the principles of BPR will give the way to success. The BPR team has to
realize the importance of the business process. Working on that will give success.
7) Neglecting people's values and beliefs:-
There is need to reward behaviors that exhibits new values and behaviors. In the
BPR project the positive attitude of the employees is considered as very important
asset.
8) Ignoring everything except process redesign:-
The employee reorganization, reward systems, labor relationships, redefinition of
responsibility and authority should not be considered as unimportant. If these
matters are ignored one can consider project failure as sure.
9) Quitting too early:-
The management and the BPR team should not be desperate for quick results. The
team must devote good amount of time with dedicated consistent efforts on the
changes, which are decided. Number of times the failures are observed due to the
fact that the BPR team closes the project earlier. They feel nothing much is
happening. So they close the team and disperse.
10) Ignoring the impact of change on employees:-
Top management tends to focus on the business issues and neglect the employee
side. Employees can become fearful and confused without adequate information
and guidance.
11) Placing prior constraints on the definition of the problem and the scope for
reengineering effort: In the case of radical changes to be expected in BPR project it
should be seen that no constraint of any type should be given to team. This is true at
designing stage or in the implementation stage.
3. A) Explain the remedial measures taken by BIFR for removing industrial sickness (8 Marks)
1. The Government of India, in order to tackle the problem of industrial sickness, had
set up a Board for Industrial and Financial Reconstruction (BIFR), under the
purview of Sick Industrial Companies (Special Provisions) Act,1985 (SICA). It had
been established as a quasi-judicial body in the Department of Economic Affairs,
Ministry of Finance, for revival and rehabilitation of potentially sick undertakings
and for closure/liquidation of non-viable and sick industrial companies. The
Industrial Finance Division of the ministry dealt with the appointment of the
Chairman and the Members of BIFR and Appellate Authority for Industrial and
Financial Reconstruction (AAIFR) as well as with all the other matters relating to
industrial sickness.
2. Under SICA, it is mandatory for the Board of Directors of a sick industrial company
to make a reference and report to BIFR for formulation of revival and rehabilitation
schemes and other remedial measures to be adopted with respect to such a
company.
3. If the Board is satisfied after the completion of inquiry that the company has
become sick, the BIFR has to make an order in writing whether it is possible for the
sick industrial company to make its net worth exceed the accumulated losses within
a reasonable time.
4. If the Board is not satisfied after the completion of inquiry that it is not practically
possible to make its net worth exceed the accumulated losses within a reasonable
time, may direct operating agency to prepare a scheme for such measures in
relation to such company. The operating agency than shall within a period of ninety
days from the date of such order shall prepare a scheme which may provide any
one or more of the following measures:
A. The financial reconstruction of the sick industrial company.
B. The proper management of the sick industrial company by change in or takeover of
the management of the company.
C. The amalgamation of the sick industrial company with any other company (transferee
company), or any other company with the sick industrial company (transferee
company).
D. The sale or lease of a part or whole of the sick industrial company.
E. Rationalization of managerial personnel.
F. Such other preventive, ameliorative and remedial measures as may be appropriate.
The BIFR may on such recommendation; sanction the scheme and will periodically
monitor the sanctioned scheme.
B) What is reengineering? What is the role played by the BPR members: (7 Marks)
Reengineering is the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical contemporary measures
of performance, such as cost, quality, service, speed.
The key elements are explained as followed.
a. Fundamental: Understanding the fundamental operations of business is the first
step prior to reengineering. Business people must ask the most basic questions
of their companies and how they operate: why do we do what we do? Why do
we do it the way we do?
b. Radical: Radical redesign means disregarding all existing structure and
procedures, and inventing completely new ways of accomplishing work.
Reengineering is about business reinvention, begins with no assumptions and
takes nothing for granted.
c. Dramatic: Reengineering is about making marginal improvements or
modification but about achieving dramatic improvements in performance.
d. Processes: Process is the most important structure for reengineering. In classic
business structure, organisations are divided into departments, and process is
separated into simplest tasks distributing across the departments.
Reengineering team
a. Each process owner works with a reengineering team for process
implementation. The team members represent a cross-functional group with
expertise in different parts of the process. Earlier their tasks were confined to
their respective departments with little concern for how these tasks affect the
overall end to end business processes.
b. The team members should be told that their appraisal is now based on their
performance in the reengineered processes and not on the tasks they used to
perform in their respective departments. They now work as members of the
reengineering team. It is the responsibilities of the BPR leader to reward them
suitably in recognition of their success in reengineering. The traditional task
oriented performance appraisal system is no longer applicable to them.
c. Process orientation or holistic perspective is concerned with a team member’s
ability to view his job not in isolation but as a part of the entire process. He is
now required to focus on the process as a whole, and offer ideas for improving
the way he is currently performing his job so as to improve the process
dramatically. Creatively is natural fall out of process orientation. When the
focus shifts from sub processes the horizons broadens and it offers enormous
scope for creative ideas.
Team members are:-BPR leaders, Process owners, Reengineering team, others
employees involved in.
BPR leaders
a. The BPR leader is a person who holds one of the top positions in the
organizations. The outcome of BPR experiments depend greatly on the quality
of leadership. Although ideally the chief executive officer seems to be the right
choice, he or she, in large organizations, may not be in a position to devote
enough time to a major initiative like BPR due to his or her preoccupation with
several important activities. Many of these are concerned with external people
and institutions. In a medium size or small organizations the CEO may also be
the BPR leader.
b. The leader should be prepared for handling lack of support at different levels of
hierarchy. BPR is unlikely to succeed in an organizational climate characterized
by skepticism, doubts and frustration amongst most of the employees. The
leader should make relentless efforts to convince them that old ways of doing
things are no longer valid in a changing world till BPR becomes a way of life.
Such a radical change in organizational culture is an uphill task and the leader
should be prepared to take it up with determination and fortitude. At times, he
may be required to take stern measures against those opposed to BPR.
The process owner is the person who is responsible for designing the processes
necessary to achieve the objectives of the business plans that are created by the
Business Leaders. The process owner is responsible for the creation, update and
approval of documents (procedures, work instructions/protocols) to support the
process.
The role of the process owner is as follow:
1) Plan
2) Do
3) Check
4) Act
The Process Owner is responsible for creating improvement actions that address
performance issues that are identified during their analysis of the process performance
data. Improvement actions may include the initiation of Lean projects to reduce waste
from the process or include the initiation of Six Sigma projects to reduce variation in the
process.
3.
P) Relationship between TQM and BPR. Also compare TQM and BPR? (8 Marks)
Definition:
TQM:
TQM refers to programmes and initiatives that emphasize incremental
improvement in work process and outputs over an open ended period of time.
BPR:
BPR refers to discrete initiatives that are intended to achieve radically redesigned
and improved work process in a bounded time frame.
In recent years, increased attention to business processes is largely due to the TOM
(Total Quality Movement). They conclude that TQM and BPR share a cross-functional
orientation. Davenport observed that quality specialists tend to focus on incremental
change and gradual improvement of processes, while proponents of reengineering
often seek radical redesign and drastic improvement of processes.
PROCESS IMPROVEMENT (TQM) V/S PROCESS INNOVATION (BPR):
S. NO. Attribute (TQM) Improvement Innovation (BPR)
1 Level of change Incremental Radical
2 Starting point Existing process Clean Slate
3 Frequency of change One-time/continuous One-time
4 Time required Short Long
5 Participation Bottom-up Top-down
6 Typical scope Narrow, within functions Broad, cross-function
7 Risk Moderate High
8 Primary enabler Statistical Control Information Technology
9 Type of change Cultural Cultural/structural
Q) Explain briefly the importance of vision as part of successful implementation of BPR (7
Marks)
A vision statement is sometimes called a picture of your company in the future but it’s so much more than that. Your vision statement is your inspiration, the
framework for all your strategic planning. 1. A vision statement may apply to an entire company or to a single division of that
company. Whether for all or part of an organization, the vision statement answers
the question, "Where do we want to go?" 2. What you are doing when creating a vision statement is articulating your dreams
and hopes for your business. It reminds you of what you are trying to build. 3. While a vision statement doesn't tell you how you're going to get there, it does set
the direction for your business planning. That's why it's important when crafting a
vision statement to let your imagination go and dare to dream – and why it’s important that a vision statement captures your passion.
4. Unlike the mission statement, a vision statement is for you and the other members of your company, not for your customers or clients.
5. When writing a vision statement, your mission statement and your core
competencies can be a valuable starting point for articulating your values. Be sure when you're creating one not to fall into the trap of only thinking ahead a year or
two. Once you have one, your vision statement will have a huge influence on decision making and the way you allocate resources.
Vision is important because:
1. An important matter to be settled by an organization is the vision statement.
The vision directs the team to achieve what is required.
2. The vision statement is a way a company management communicates a sense
of the kind of organization the company needs to become. It describes how the
company is going to operate and outlines the kind of results it must achieve. It
is both qualitative and quantitative statement, which a company can use again
and again before and during re-engineering, as a reminder of the re-
engineering teams objectives, as a yardstick to measure progress and as a prod
to keep the re-engineering action going.
3. The vision is what a company believes it wants to achieve when it is done. Well-
drawn vision will sustain a company’s resolve through at stress of the re-
engineering process.
4. The vision also provides a continuing focus. Otherwise, people easily become
distracted and diverted. In any company at any time, countless procedures and
organizational details exist that could be changed. The vision reminds the
organization which processes will actually need to be worked.
5. A powerful vision contains three elements that a product of a walk in the woods
usually lacks.
i. It focuses on operations.
ii. It includes measurable objectives and metrics
iii. It is really powerful; it changes the basis of competition in that industry.
4. Write short notes on: (Any Three)
(a) ISO
1. The acronym ISO stands for International Standards Organization. The term ISO is
used to represent the organization as well as a prefix to the numerical codes used
to designate various standards released by it.
2. ISO (International Organization for Standardization) is the world’s largest
developer of standards. The ISO, founded by the National Institute of Standards of
140 countries, has evolved thousands of elaborate technical standards for products
to facilitate international trade and instill consumer confidence in products in
matters of safety and quality
3. ISO is an international organization with participation of many countries. It
develops and promotes standard covering a very vast range of products and
services. There is no compulsion on any member countries or any individual
organization to follow standards laid down by ISO, but adherence to ISO does help
to establish quality of a product and thereby acceptance by customers.
4. To a limited extent, ISO also prescribes and certifies organizational systems and
practices. Two most popular standards of this type are:
5. ISO 9000. This standard deals with capability of organizations to design and
supply goods and services of predetermined quality as per customer requirements.
6. ISO 14000. This standard specifies the requirements to be adopted by
organizations to conserve and protect the environment.
7. Although ISO’s principal activity is the development of technical standards.
8. The International Standards, which ISO develops, are very useful. They are useful
to industrial and business organizations of all types, to governments and other
regulatory bodies, to trade officials, to suppliers and customers of products and
services in both public and private sectors and ultimately to people in general in
their roles as consumers and end users.
9. ISO standards contribute to the development, manufacturing and supply of
products and services more efficient, safer and cleaner. They make trade between
countries easier and fairer. They provide governments with a technical base for
health, safety and environmental legislation. They aid in transferring technology to
developing countries. ISO standards also serve to safeguard consumers and users
in general, of products and services-as well as to make their lives simpler
(b) MRTP
1. MRTP is also known as Monopolies and Restrictive Trade Practice
Commission. It is a National Body set up under a Special Act of Parliament to
prevent the formation of monopolies and to monitor and penalize restrictive trade
practices.
2. The Monopolies and Restrictive Trade Practices Act, 1969, aims to prevent
concentration of economic power to the common detriment, provide for control of
monopolies and probation of monopolistic restrictive and unfair trade practice and
protect consumer interest.
3. Complaints regarding monopolistic trade practice, unfair trade practice and
restrictive trade practice, can be made to the MRTP Commission: The office of the
Director General carries out investigations on the complaint, and if found to be
genuine activity which falls under the ambit of the said Act , places Restraining
Orders on the guilty party through a temporary injection before passing a Final
Order after hearing the defense and compensating the complainant for losses as
may be determined to have been incurred
(c) Flow Chart pg 209
1. A flowchart is a schematic representation of a process. They are commonly used in
business/economic presentations to help the audience visualize the content better,
or to find flaws in the process.
2. The flowchart is one of the seven basic tools of quality control, which include the
histogram, Pareto chart, check sheet, control chart, cause-and-effect diagram, and
flowchart and scatter diagram.
3. Flowcharts can be created by hand or manually in most office software, but lately
specialized diagram drawing software has emerged that can also be used for the
purpose
4. Programs have been written to create flowcharts directly from computer program
source.
5. A flowchart is a graphical representation of a process, depicting inputs, outputs
and units of activity. It represents the entire process at a high or detailed
(depending on your use) level of observation, allowing analysis and optimization of
workflow.
6. A flowchart represents the entire process from start to finish, showing inputs,
pathways and circuits, action or decision points and ultimately, completion. It can
serve as an instruction manual or a tool for facilitating detailed analysis and
optimization of workflow.
1. START/END
2. INSTRUCTION FLOW LINE
OR
3. INPUT/OUTPUT
4. PROCESS
5. DECISION
(d) Central Thrust of BPR
BPR (Business Process Reengineering) is defined as the critical analysis and radical
redesign of existing business processes to achieve breakthrough improvements in
performance measures such as cost, quality, service and speed. BPR has often been
confused with the quality movement. Quality specialists lend to focus on incremental
change and gradual improvement of processes, while proponent of reengineering seeks
radical redesign and drastic improvement of processes.
Although BPR is multi-faceted and multi-dimensional, its central thrust is the reduction of
the total cycle time of a business process, which the time is taken for performance of the
process from beginning to the end. Expressed differently, it is the total duration from the
time a customer need is expressed to the time it is satisfied. The longer the cycle time of
a process, the more inefficient it is likely to be, and less likely to satisfy the customer in a
timely manner. Lengthy processes result in a large wastage of time and resources.
BPR seeks to reduce this cycle time of the process by:
a) eliminating redundant stages and non value adding steps, b) by drastically simplifying and rationalizing work methods and procedures, systems
and flows
c) by coordinating the entire process through a single role position and d) Reducing delays and speeding the flows of information, decision and action.
Even after the process is redesigned, BPR maintains a continuous lookout for
improvement as faster and more efficient business processes provide a firm with multiple
opportunities for trying, testing, modifying and learning, i.e. Experimentation to improve.
This enables a firm to respond to customer needs quickly, flexibly and economically,
expediting results and optimally utilizing its’ resources
(e) Outsourcing
Outsourcing is about letting the right partner take over your IT activities. With your IT
functions in good hands, you are free to focus on core business. It is built upon a
strategic partnership with a company who shoulders the responsibility and resolves any
problems.
The advantages of outsourcing are as follows:
1. Cost saving: The expenses for the staff reduce considerably. The salaries paid to
the workman are considerably lower than the salaries of the persons working in
the big companies. This is because the work is very simple and highly repetitive in
nature.
2. Leads to make organisation lean: the big companies becomes flat organisation
with reduced number of persons. The mundane jobs of regular nature are left to
the subcontractor. Number of persons employed in the main company reduces.
3. Responsibility to the outsiders: The repetitive jobs when handed over to the
outsiders, the accuracy part are expected from them. They are also given
responsibility of production output at good level of productivity. Every error is fined
to the party.
4. Better control on quality and schedules: The important matters of quality and time
targets are specifically written down in the contract deal. They are maintained well
by the suppliers.
5. Can be at several places in the country: The jobs to be sub contracted are highly
defined and are simple in nature. There can be number of contractors at many
places of convenience so several parties at the different places can be found. This
offers good flexibility.
6. Reduced liability: In the business of new world there should be minimum liability
on the company. The land place, the people, commitments, and expenses are all
liabilities. By sub contracting reduces this all liabilities.
7. Expansion can be done easily: As the company increases the business it needs to
increases the capacity. The company can increase the capacity quickly. This can be
done by increasing volume to one vendor or by increasing number of vendors.
8. Increase speed to market: The work is done at better speeds as compared with the
one, which can be expected in the big companies. The customer gets all the
services quickly.
9. Focus on the core job: When the organisation is busy with much of the regular
type of jobs the people get stuck up with much of that. Then the core activities are
often seen at sidetrack or forgotten.
10.Conserve capital: Much of the infrastructure development is not required to be
done. Such as land, buildings, machines, computers, personnel, etc are not
required. The organization can be trimmed down to highly manageable. So there is
conservation of capital.
OR
4.
P) Write Short Notes on External Consultant in BPR ? (8 Marks)
External consultant is employed externally (either by a firm or some other agency)
whose expertise is provided on a temporary basis, usually for a fee. The roles of
external consultants are as follows:
1) Flexibility: Given the complexity of problem situations that clients have to face,
it is necessary to offer wide range of integrated services. Together with the
client, the necessary can be in order to ensure that the right services are
delivered.
2) Joint teaming: Change can be facilitated, but not delivered, by consultants.
Effective projects require joint teams & working closely with clients creates full
service partnerships & ensures long term results & client relations.
3) Work toward strategic objectives: Any improvement project must depart from
strategic objectives of the clients company. The service offering should include
all client needs from strategy formulation, change management, IT solutions &
full scale system implementation.
4) Knowledge management & transfer: knowledge must be transferred into the
client organization & must be maintained & developed. Project success is
depending from fast delivery & a knowledge leverage process.
5) Willingness to assume an implementation and/or an advisory role: Consultants
can take on multiple roles in a project, including pure advisory, but also
development & implementation of solutions. In addition, consulting also offers
outsourcing services on the IT-side.
6) Delivering value: Results of change must be linked to client’s success, defined
by measurable outcomes, such as increased profitability, shareholder value,
ROI, & cost savings.
Consultants should be chosen with care having sufficient professional background,
experience and proven track record. The external assistance depends upon the size of
your organisation and the scale of the change envisaged. The smaller the change, the
easier it may be managed in house, if you have the relevant expertise already.
Paradoxically, smaller organisations are less likely to have the in house resource and
larger organisations have the potential to benefit disproportionately from using
external change consultants.
External consultants may provide a degree of independence, especially if
controversial, or unpopular decisions will have to be made. Good consultants certainly
will.
Consultants would be a good resource only when:
1. The company has clearly defined goals and knows what they want to achieve.
2. The company knows that the change process is rapid and there is a gap in the skill
set needed for change management.
3. Time period is defined for a change. If the change process will take forever then
may be develop a team (may not be the best way to do it)
4. When the company is working under strict deadlines to get this change in process
ASAP.
Though the list is exhaustive but this will give a basic understanding when it makes
more business sense to bring in a consultant.
1. The external consultant may fulfill a wide range of roles; these may include
facilitation of workshops, discussion groups; individual coaching, mentoring or
counseling; communication, stakeholder engagement, employee or leadership
psychological or technical assessment, outplacement services; project and or
programme management, (scoping, planning, business case reviews,
implementation, post implementation/benefits realisation reviews).
2. It has to be a strong consideration, particularly when the internal capacity of
the organization is low, versus the demands being placed on them for change,
and perhaps the organization needs to move quickly.
Q) Write Short Notes on Benchmarking (7 Marks)
Benchmarking can highlight areas for improvement simply by pointing out what is
possible. When Ford found out that Mazda had only 5 people in its accounts payable
department versus 500 Ford had doing the task, it challenged the company's traditional
thinking about the process. Knowing it could do better. Ford reengineered the process
and was able to reduce its staff by 75%.
Benchmarking is not new, but like BPR it has received a lot of hype in recent years. In
the field of sport, athletes have been benchmarking themselves against their competitors
since the dawn of civilization. Today, many businesses seek knowledge and inspiration by
benchmarking themselves with others.
In benchmarking, comparison can be done between the following:-
a. Different departments within a division;
b. Different divisions within a company or organization;
c. Different organizations within the same industry;
d. Different organizations in different industries.
Benchmarking can be done on the following topics, viz:-
a. Budgetary or financial performance;
b. Customer service delivery systems and measures;
c. Use of technology;
d. Planning and project management practices;
e. Human resource management;
f. Financial control systems.
Benchmarking is particularly useful in broadening people’s perspectives. Often, however,
the results of benchmarking projects can be painful to some of the companies taking part
in the exercise. No one likes to be told how bad they are and corporate pride is every bit
as strong as that of the individual. Once the organization, and the individuals within
them, gets over this reaction the results can provide a motivating factor in initiating
much needed change. Benchmarking also helps at this stage too by providing a chance to
view what is possible, through the achievements of others, and how change may be
better managed by sharing experiences.
Setting the benchmark:-
In benchmarking, the main challenge is to set a process goal that would be
representative of the reengineering goal. After a lot of brainstorming coupled with no
subtle pressure by chief executive, the slogan 8 to 8 was born, meaning that the
organization had committed itself to a reengineering goal of 8 days, an order of
magnitude improvement of over 6 times.
When the target was set up the first challenge on hand was to convert the process slogan
8 to 8 into more easily understood objectives for the people involved in various sub
processes. The 3 major sub processes involved are:-
1) Order grabbing, which spanned all the activities up to the stage of actually receiving
the confirmed order?
2) Order execution, which started with production scheduling and continued till the full
order was dispatched from the factory.
3) Order fulfillment, which started when the order left the factory gate and ended only
with the final payment in the bank.
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