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Designing Organizations for Performance Excellence

RITES Ltd.

Submitted to Prof. Subir Verma

Submitted by: Anshul Sehgal (10P010) Ingit Tibrewal (10P019) Kayarat Ajit Krishnan (10P023)

Contents
Company Information ................................................................................................................ 3 Sectors of Operation .................................................................................................................. 4 Organization structure ............................................................................................................... 6 Internal Environment Analysis ................................................................................................... 7 External environment analysis................................................................................................... 9 Organizational Design and Culture .......................................................................................... 11 Analysis of Survey .................................................................................................................... 12 Descriptive analysis .................................................................................................................. 13 ANOVA Analysis ....................................................................................................................... 15 Correlation and Regression Analysis........................................................................................ 19 References ............................................................................................................................... 20

Company Information
RITES Ltd. (Rail India Technical and Economic Services), a Government of India Enterprise was established in 1974, under the aegis of Indian Railways. RITES is incorporated in India as a Public Limited Company under the Companies Act, 1956. RITES Ltd., an ISO 9001-2000 company, is a multi-disciplinary consultancy organization in the fields of transport, infrastructure and related technologies. In overseas projects, RITES actively pursues and develops cooperative links with local consultants / firms, as means of maximum utilization of local resources and as an effective instrument of sharing its expertise. Since its inception in 1974, the company has made steady progress and diversified into new areas of business such as, export/leasing, maintenance and rehabilitation of railway rolling stock, operation and maintenance of railway systems under concession agreements and BOT (Build-Operate-Transfer), BOOT (Build-Own-OperateTransfer) and PPP (Public Private Partnership) projects. RITES is internationally recognized as a leading consultant with operational experience of 62 countries in Africa, South East Asia, Middle East and Latin America. Most of RITES foreign assignments are for National Governments and other apex organizations. RITES employs over 2000 staff including over 1200 specialists in the fields of engineering, management and planning. The Company also has two Subsidiary Companies namely RITES (AFRIKA) (Proprietary) Limited in Botswana, a wholly owned company and Tanzania Railways Limited in Tanzania with 51% equity stake and 49% equity stake is with Government of Tanzania Company has limited experience in managing mega projects for rendering of consultancy in overseas and has remained restricted in railway and highway sectors only. In the overseas business, the major areas of operations have been in Africa where the economy is highly volatile and open to political and financial risks.

Sectors of Operation
The company operates mainly in the following sectors Railways o RITES undertakes investigations and feasibility studies, integrated design services, institutional management and technical support for new railway projects and rehabilitation and modernization of existing railways systems Railway equipment export o RITES provides export services consisting of integrated export packages for rolling stock and technical support for operation and maintenance of a wide variety of rolling stock of different gauges for various railway systems in Asia, and Africa Highways o RITES provides comprehensive road transport consultancy services covering all aspects of conceptual and detailed design, construction, supervision, operation and maintenance of highways, expressways etc. Urban Transport o RITES provides comprehensive consultancy services in all aspects of urban transport: planning of integrated multi-mode public transit network; design, engineering and project management of infrastructure; O&M management of Public Transit Systems Airports o RITES offers specialized consultancy services in the area of design, planning and construction management of airports. Urban Planning o RITES offers consultancy services in the field of urban planning and subdisciplines. This includes preparation of Master Plans for cities, special urban area plans, development of satellite towns, industrial parks, educational and commercial centres, port towns, beach resorts, tourist and pilgrimage centres Ports and waterways o RITES provides total consultancy services from concept to commissioning for Ports, Water Resources and Inland Waterway Terminals, including planning, design and logistics, surveys, field investigations, project reports, detailed engineering and project management

Ropeways o RITES offers multi-disciplinary expertise in the field of Ropeways for selection of appropriate designs and systems of ropeways suited for various terrains, traffic levels, etc.

Source: RITES Annual Report

Organization structure

The companys organizational structure resembles a functional structure. This structure groups people who perform similar functions or work processes. We can clearly see from the above diagram that the company has separate departments for Exports, Finance, HR, Rail Infra etc. Functional Divisions have its own strengths and weaknesses which are: Strengths Allows Economies of scale within functional departments Enable in-depth knowledge and skill development Enables organization to accomplish functional goals Weaknesses Slow response time to environmental change May cause decisions to pile on top

Poor horizontal coordination

Results in less Innovation

Internal Environment Analysis Strengths


* Large pool of experienced professionals and technical experts * Sound financial health * Awarded the Mini-Ratna status awarded by the Government of India * Considerable international experience and presence * Operates across a diverse range of fields and sectors

Weaknesses
* Lack of experience in mega-projects hurts consultancy prospects internationally * Being a State-run organization, it is subject to considerable bureaucracy and red-tape * A major portion of international revenues come from Africa, where the economy is volatile and there are higher political and financial risks.

Opportunities
* The Indian Government is aggressively pushing for infrastructure projects in the country (RITES area of expertise), despite the global meltdown * The recent emphasis on the Public-Private-Partnership (PPP) model to achieve greater efficiencies * Modernization and upgradation of the Indian Railways network * International demand for exporting rolling stock, spare parts etc * The growth of Infrastructure Consultancy services in the country and beyond

Threats
* Stiff competition in consultancy and Build-Operate-Transfer (BOT) businesses from private and multinational companies * Slowdown in investments or the economy in general * Opening up of the Indian railways sector to foreign multinationals

External environment analysis


RITES has business operations in four distinct fields namely: i) ii) iii) iv) consultancy in transportation infrastructure sector, construction activities, export and leasing of railway equipment and running railway systems on concession.

The consultancy business of RITES is mainly in transportation infrastructure sector viz. railways, highways, airports, ports, ropeways, urban transport, inland waterways etc. Business opportunities through joint venture/SPV have increased particularly after emergence of importance of PPP (Public Private Partnership) model. Due to G-20 summit held in London, to uplift the world economy by strengthening demands, investments in infrastructure are getting priority and this having an immediate ripple effect on growth of other core industries. There are new emerging areas such as special economic zones, industrial parks, inland container depots, air cargo complex etc. from infrastructure development perspective which provide ample scope of business opportunities for the company in domestic sector. Asia & Africa continued to remain the preferred regions in the international market for investments and these regions happen to be the key market for RITES since inception.

Source: RITES Annual Report

Risks and Concerns


Risk of geography Many of the projects undertaken by RITES are in risky geographical areas, where employees are exposed to risk and threats on their life, liberty and property. Currency Risk A significant portion of Company's revenues are in US dollar which is amenable to foreign exchange fluctuation risk. Political Risk Export of railway goods largely depends upon the financial aids by multilateral institutes or line of credit facilities extended to the concerned Governments and any change in the policy of giving such aids/facilities may result in fall in export business. Concern over quality of employees In the highly technical and demanding field that RITES is in, acquiring and retaining quality personnel is always a matter of concern. Major contributing factors to this concern are equally lucrative jobs in the private sector and lower corresponding pay in the public sector

Organizational Design and Culture


According to Daft, the organisational design, on the other hand, depends on the environmental complexity and stability.

Stable

Low Uncertainty
Environmental Change

Low-Moderate Uncertainty

High-Moderate Uncertainty

High Uncertainty

Unstable Simple Environmental Complexity Complex

Analysis of Survey
Through this survey we have tried to measure the following attributes about the company Nature of the strategic domain that is favourable to innovation This is a function of Extent of Turbulence in product and input market Extent of Complexity due to changing customer preferences, government regulations Extent of Richness

This grand variable has been named SDFI_PN in the excel sheet for the present situation and SDFI_PT for the past environment. Strategic Management and Positioning favourable to innovation This is a function of Organizational objective to be unique and to grow through pioneering of customized, highly differentiated, high quality and technologically superior new products Management of risk by controlling the environment through forward and backward integration, lobbying and strategic alliances

This Grand variable is named SMFI_PN & SMFI_PT. Management Styles Through this we are trying to see whether the management style is Conservative .Entrepreneurial IntuitiveProfessional BureaucraticOrganic Self Altruistic Authoritarian Participative This will overall yield the management styles favourable to innovation as an aggregate variable based upon the average of the ratings on the above management styles. This for the present data has been referred as the MSFI_PN & and for the past data as MSFI_PT

Management of innovation This is referred as an aggregate variable for the present data as MOI_PN and for the past data as MOI_PT. It is arrived at by averaging the scores of 16 questions on innovation. Managerial Empowerment Practices: This is referred as an aggregate variable for the present data as MOE_PN and for the past data as MOE_PT. It is arrived at by averaging the scores of 34 questions on empowerment. Dimensions of Corporate Performance These are as per the dimensions mentioned. The aggregate variable is CE_PN and CE_PT.

Descriptive analysis
Standard Deviation 0.067419986 0.146059349 0.212702173 0.182574186 0.256173769 0.360362472 0.267862963

Variable CE_PN HR_PN MOE_PN SDFI_PN SMFI_PN MOI_PN MSFI_PN

Mean 4.672727 3.306667 3.011765 3.133333 5.308333 3.35 3.163333

Strategic Domain favorable to innovation SDFI The mean of 3.13 for this variable clearly shows that the product and input environment is fairly stable and there is little change in government regulations and customer preferences. Strategic management favorable to innovation SMFI The mean of 5.30 shows that the objective of organization is to provide high quality and technologically superior products and services and it manages risk by controlling the environment through forward and backward integration, lobbying and strategic alliances Management Style Favorable to innovation MSFI The mean of 3.16 shows that the management style of the organization is conservative, bureaucratic and authoritarian.

Management of innovation MOI The mean of 3.35 shows that the there is less focus on innovation and R&D Managerial Empowerment Practices MOE The mean of 3.011 shows that the management is not very participative and there is not a free flow of information HR Practice HR The mean of 3.30 shows that the HR practices (for recruitment, training, promotions etc. ) followed by the company are not satisfactory. Corporate Performance - CE The mean of 4.67 shows that the organization has been quite successful in meeting customer requirements and competing with other firms in the industry.

ANOVA Analysis
For ANOVA analysis we take the null hypothesis that the Means of populations 3 years before and of today are the same. In other words we can say that there is no change in the organization with respect to that particular variable

SDFI

As p- value is greater than 0.05, we cannot reject the null hypothesis with 95% confidence. So we cannot say that RITES domain has changed in the past 3 years

SMFI

As p- value is greater than 0.05, we cannot reject the null hypothesis with 95% confidence. So we cannot say that RITES Strategic Management has changed in the past 3 years MSFI

As p- value is greater than 0.05, we cannot reject the null hypothesis with 95% confidence. So we cannot say that RITES Management Style has changed in the past 3 years

MOI

MOE

HR

CE

As p- value is less than 0.05, we can reject the null hypothesis with 95% confidence. So we can say that RITES Corporate performance has changed in the past 3 years

Correlation and Regression Analysis

From the above table we can clearly see that there is a strong correlation of Corporate Performance with HR Practices Managerial Empowerment Practices Strategic Domain favorable for Innovation Following is the regression analysis taking CE_PN as the dependent variable and MOE_PN, HR_PN and SDFI_PN as the independent variables

CE_PN = 3.71 0.04*HR_PN + 0.32*MOE_PN + 0.036*SDFI_PN The Respondents perceive that corporate performance is inversely related to HR Practices and is directly related to Empowerment Practices and Nature of the strategic domain.

References
http://www.rites.com RITES Annual Reports