Essentials Of Management 3rd Assignment

Case Study 1
Hitachi, headquartered in Japan, is one of the world’s largest technology corporations. Hitachi
products are used throughout the world in telecommunications, in energy and chemical industries,
in plant engineering, and in consumer electronics. For Hitachi, manufacturing “high-tech” means
being a responsible corporate citizen by developing environmentally sound solutions to customers’
problems.
Since its founding in 1910, Hitachi has acted from a corporate philosophy of contributing to
society through technology. Recognizing that survival in the 21st century demands responding to
global change, Hitachi has adopted the phrase “Inspire the Next” as a declaration of its corporate
vow that the Hitachi brand will meet the expectation of its customers and society in the 21st century
and beyond.
Hitachi considers its employees its most valuable assets. Their talent, know-how, and expertise
make it possible for Hitachi to manufacture high-quality products that meet certified international
standards. To create and keep up with whatever comes next, Hitachi uses a team approach with
self-managing work teams. Team members share the management functions. Everyone on a team
works together to continually improve products and processes.
The company remains a corporate vertical umbrella encompassing more than 40 subsidiaries or
business units, which operate horizontally—or independently of each other. However, by the early
2000s, some of these units were not performing well. To continue to expand, Hitachi began making
some organizational changes by selling some lines of business and acquiring others. From 2000 to
2010, Hitachi made 140 divestures, compared with 21 from 1990-1999. It also made 125
acquisitions, compared with just 14 in the previous decade. When Hitachi takes over another
corporation, its management is usually more formal than that of the existing company. In the
Japanese tradition, Hitachi’s structure is formal and its organization charts show the lines of
authority for each business unit of the corporate body.
Hitachi also began changing its go-it-alone strategy and creating joint ventures. One example
was the 2003 establishment of Renesas Technology Corporation, a semiconductor joint venture
with Mitsubishi Electric Corporation. In 2004, Hitachi and Omron Corporation agreed to jointly
establish a company to combine their ATM and other information equipment businesses. In 2006,
Hitachi began conducting joint work with Hewlett-Packard on key security and privacy issues. One
year later, GE and Hitachi completed the first half of their agreement to form a global alliance of
their nuclear businesses, creating one of the world’s most comprehensive nuclear power plant and
services operations that will complete for new reactor projects around the world. In 2009, Hitachi
announced a three-way merger with NEC and Casio Computer with hopes to boost competitiveness
in the mobile phone market. In 2010, Hitachi established a joint venture with BGR Energy Systems
to design, manufacture, sell, and service steam turbines/generators and boilers. With the emphasis
on collaborations with partners and group companies, Hitachi is using diverse partnerships to
strengthen collaborative innovation business undertakings in various areas of operations. This will
not only improve business efficiencies but also allow the companies to share in research and
development endeavors.
Questions to be answered:
1. Hitachi appears to follow the unity of command principle of organization.
(a. true b. false)
2. Case indicates that the organizational changes at Hitachi affected its chain of command and
finally resulted in a ------- type of structure. (flat/tall)

Three more questions in the next page

 3. Hitachi’s organizational structure reflects----authority.
(a. centralized b. decentralized)
4. Selling and acquiring lines of business and creating joint ventures best reflect Hitachi’s
(a. Unity of command b. division of labour c. delegation d. setting priorities)
5. Draw the Hitachi’s overall organizational structure showing maximum details.
Case Study 2
Wipro, India’s third largest software company, after the departure of its former CEO Vivek Paul,
was directly controlled by Azim Premji, Chairman and owner (by virtue of owning a more than 80
percent stake in the company), who also had to act as CEO. The roles of chairman and CEO were
difficult to manage simultaneously, but Premji demonstrated efficiency in handling all matters
including operations. In fact, during Premji’s tenure, Wipro grew almost three times in revenue
(from USD 1.35 billion in 2005 to USD 4 billion in 2008). In the CEO’s role, Premji had to look
after day-to-day functioning, which, however, became counterproductive at times. Premji himself
realized the conflict brought about by his involvement in the day-to-day functional nitty-gritty since
the chairman’s role was more strategic, and in a turbulent global market, it was more important for
the chairman to reinforce the strategies of the company to sustain itself and grow amidst
competition.
In mid-April 2008, Premji appointed two CEOs, perhaps not a very common step in the
corporate world. Girish Paranjpe and Suresh Vaswani, two veterans of Wipro, were appointed as
CEOs of the company. Wipro’s IT business is also divided into two organizations, namely Wipro
Infotech and Wipro Technologies. Wipro Infotech’s business domains cover India, Asia Pacific,
and West Asia, while Wipro Technologies provides business, technology, and process solutions to
business in various countries. Operationally, Wipro as a corporate entity follows a matrix structure
encompassing three verticals and two horizontals. The verticals are technology, enterprise, and
financial services. Technology verticals look after product engineering and telecom services.
Enterprise verticals cover the business of manufacturing, healthcare, and retail. Financial services
verticals focus on the banking and financial services industry (BFSI). The horizontals are global
business practices specializing in testing, packaging, and technology infrastructure services and
business process outsourcing (BPO) operations. Each vertical and horizontal was headed by
executives who reported to two CEOs. Premji believes that since both the CEOs had been groomed
in-house and had worked together for years, they worked as a team. The ‘two-man army’ model
was also considered by the CEOs as the better option to take the company on the growth path.
Usually, the instance of joint CEOs is seen in cases of mergers, and is mainly meant to dispel
any apprehension on the part of minority stakeholders. However, globally, the performance of joint
CEOs has a poor track record. An example of an unpleasant experience with two chairmen can be
traced to the global fast-moving consumer goods (FMCG) major Uniliver. The company functioned
with two chairmen for almost 75 years. Ultimately, the joint leadership structure could not be
sustained by the company and from 2005 onwards, it had to switch over to the single-leadership
model. In contrast, for Wipro, the joint leadership worked well. With increased business volumes
and revenue earnings, Wipro perhaps is an example to emulate and proof that joint leadership can
also work well.
Questions to be answered:
1. Draw an organizational structure with two CEOs, fitting them in a matrix structure. Develop
your structure using Wipro as a model.
2. On what basis various departments/divisions have been created in the above description?
Draw sketches.
Case Study 3
The XYZ Pen Company was organized about ten years ago by Govardhan Lal, an engineer who
simultaneously became its CEO. Initially, the company had about a dozen employees engaged in
the manufacturing and assembling of high-quality ballpoint pens designed by Govardhan Lal. As
the business expanded, Govardhan Lal added additional plant facilities and employees.
In 2008, Govardhan Lal sold XYZ Co. to ABC industries which is also a pen manufacturing
company. After the merger ABC industries appointed Govardhan Lal as the CEO. At that time, the
board of directors of ABC industries also recommended that Govardhan should develop a new
organizational structure. However, Govarddhan Lal felt that restructuring was not necessary, as he
was accustomed to managing his business on an informal basis. Nevertheless, he grudgingly set up
the following organization chart without consulting the ABC Co. Board of Directors.

This chart was put into effect and seemed to work successfully for about a year due to the frantic
efforts made by Govardhan Lal. He worked twelve to fourteen hours a day, with much of the time
out in the plant supervising the production line. And when not supervising the manufacturing
process, he would move from department to department solving one problem after another.
On one such typical day, Govardhan Lal:
(a) Suggested the purchasing department to change suppliers of the basic plastic stock for pen
barrels,
(b) Hired a new accounts receivable clerk to work in the office,
(c) Reviewed and made corrections on advertising copy for a trade journal, and
(d) Expedited a shipment of pens which was pending for a long-time.

After a year of continuing with this kind of managing, Govardhan Lal realized that his structure
was not functioning properly. There were continual production breakdowns, sales were down, less
profits were off and to complicate things, his family physician cautioned him not to work so hard.
The problem, Govardhan Lal felt, was the friction between the department heads. They were just
not cooperating. Govardhan Lal felt that there was just one solution-dismiss the “trouble makers”
in charge of several departments and hire new more cooperative ones.

Questions to be answered:
1. Do you agree with Govardhan Lal’s diagnosis and solution?
2. If were the consultant of this company, what specific recommendations would you make
including bringing about change in the organizational chart? Draw the new organization
chart.
Case Study 4
Mr. Roy, the president and founder of Electric Manufacturing Corporation (EMCORP) is
wondering how he can follow the advice of his doctor, who had told him to take it after last year’s
coronary attack. EMCORP manufactures a full line of fractional horsepower electric motors sold
to both original equipment manufacturers and distributors throughout the country. At present, the
company employs approximately 1,000 people.

Roy, an engineer by profession, has maintained tight control over all major functions throughout
the years, and though each of the heads of the engineering, manufacturing, sales, finance and
personnel department has the title of vice-president, they come to Roy for approval before making
any change in procedure. Usually, each of these executives sees Roy several times a day. The
personnel director once suggested a weekly meeting, but Roy voted the idea as too time consuming.
Now, worried about his health as well as the problems of the company, Roy is beginning to feel the
need for some relief from the constant pressure.

The manufacturing department shows a picture of rising costs, consistent failure to meet
delivery schedules, and an increasing number of quality complaints. John, Vice President
Manufacturing, admits to poor performance, but says that the cost figures from accounting are pure
history and of no use since they do not reach manufacturing until the fifteenth of the month
following the month in which the work is completed. He states that his failure to meet delivery
schedules is due almost entirely to the fact that the sales department makes unrealistic promises,
and does not bother to check manufacturing schedules. John attributes most of the quality problems
to the incessant flow of engineering changes that come without warning and with no time to work
out the production problems present in all new products. Roy admits to himself that he had asked
Smyth, Vice President Engineering, to put all the approved changes into production immediately.

The vice president and general manager of sales, Ms. Rita, recognizes that she has no knowledge
of the manufacturing schedules and realizes that she, too, is being criticized by Roy for many broken
promises in regard to delivery dates. However, Rita’s complaint at the present time is the result of
having sold a large order of standard motors to a distributor having a supply of replacement parts
in stock, and then discovering that engineering had changed specifications: a change that made all
replacement parts in the field obsolete. Another irritant for Rita is the tightness of credit
requirements instituted by the finance department without prior consultation with the sales
department. Again, Roy admits to himself that it is the same engineering change which caused so
much trouble in manufacturing that is causing trouble for the sales department and making obsolete
the existing stock of replacement parts. He also realizes that at his request, due to an unusually short
cash position, the finance department tightened up on credit requirement.

Questions to be answered:
1. Draw an organization chart showing the existing positions and define the major problem of
EMCORP’s management.
2. Will the formation of a committee be of any value in this situation? If a committee is needed,
assign a title to the committee and indicate who should be members of the committee? Show
the details of committee on the main organization chart using proper conventions.