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CRITICAL ANALYSIS OF MEASURES TO BE TAKEN TO BRING A STATE-OWNED ENTITY “AEML” OUT OF

CRISIS

The State owned manufacturing entity Automotive Equipment Manufacturing limited (AEML) is currently in a financial
and strategical crisis, with the diminishing support from the state government. We have made a critical analysis to
bring out the root causes of the issues and how to prioritize the measure that are required to be taken immediately.

History of case file (secondary research) :

 AEML, a 125 year old company was a market leader in manufacturing automobile equipments for many
decades since its inception.
 Post LPG (1990), they failed to notice the arrival of various technically superior MNCs which slowly
penetrated the market with advanced machineries at a better build quality and service.
 Currently AEML is in a total accumulated loss of over 1.46 million dollars and is also suffering from depleting
skilled workforce.

Primary research (immediate course of action) :

Arrange an immediate corporate meeting with the board of directors, stakeholders and employee unions, addressing
all the current issues and analyzing their root causes, summarizing them and acting as per priority.

Let’s begin with the simple but effective root causes which have been plaguing the company since the last two
decades.

Internal factors :

 Management inefficiency
 Political influence in the Trade unions
 Centralised decision making
 Excessive man power
 Poor product quality and quality check
 No dedicated teams for R&D, marketing and business development
 Communication gap between different teams and poor operations management
 Poor customer service and retention

External factors :

 Social motives of Government such as unwanted employment generation and no profit motives at all.
 Uncertainty in market and customer demand
 Intense competitions from globally renowned MNCs which provide modernized products at relatively low
prices

Strategies :

Cost cutting approach:

 Convert some debts into equity


 Restructuring of organizational space i.e combine three units in the space of one and rent the other two
 Stopping the production for line-ups which are outdated and less demanded
 Reduce the free inventory by adapting just in time(JIT) technology
 Reduce the use of electricity
 Strictly follow the SOPs for quality checks

Technology Upgradations:

 Collaboration with educational institutes by providing live projects


 Implement a simplified centralized ERP system to integrate all the departments of the organization for better
reporting and HR management.

Come with new Develop more core Improve the R&D to


upgraded/ modernised competencies understand the market
products to meet the fast Shift in company's better.Knowledge,ability
changing market place ecosystem to skilled and attitude of the top
knowledgable management needs to
individuals and be changed.
Flexibility
Speed

Continuos Self-
Renewal
management

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