AEML CASE STUDY SOLUTION

ABOUT THE COMPANY

● Automotive Equipment Manufacturing Limited—a state government enterprise
in India
● Started in 1890 with a French collaboration with eastern part of India.
● Dealt with mechanical and electrical products only until 1990s. Market
Competition forced it to add third vertical- constructions.
● Offered 10 variations of railway products catering to needs of more than 25
small and medium-scale civil construction projects.
● Held more than 90% of market share prior to 1990s.
● Incurring losses since 2008 due to issues like high-cost factor, globalization,
market demands and intense competition.
● Mr. Amit Kapoor- Managing Director(AEML).
EXTERNAL CRISIS

● Growth strategies were mostly adopted to fulfil political motives such as

generating employment and entering new markets
● The changing market demand, globalization, and intense competition had an
adverse impact on the company post 1990s.
● Global giants with their low-cost products, variety of options, updated
technologies, and innovative approaches entered the market and gave tough
competition as they were superior in terms of both product quality and customer
service.
● Reluctant response of the company towards the changing business scenario.
● Their inability to understand customers’ behaviour and respond to their
demands on time made the customers dissatisfied.
● Maintenance, materials, and repairing costs added to the company’s
expenditure.
INTERNAL CRISIS

● The employees were resistant to change, showed a slow pace of learning, and had low
adaptability.
● Due to the centralized decision-making process prevalent in the organization, the process of
approvals was time-consuming.
● Lower-level employees had grievances against the top management for not sharing requisite
information at the right time.
● There were also no avenues for them to share their suggestions with the top management.
● Ineffective HR policy, favouritism, and undue political pressure fuelled unnecessary manpower
acquisition in the organization.
● The lack of manpower planning and the political motive of the government for massive
employment resulted in manpower surplus in the organization.
● The employees were also found to be highly reluctant to attend these training programmes.
● The low risk- taking culture also adversely impacted the adaptation of innovative practices.
● There was a constant conflict between the management and trade unions.
● The trade union leaders were concerned about their political agendas rather than striving for
monetary rewards, improved working conditions, and control over the work for employees.
SHORT TERM TURNAROUND BLUEPRINT
● Strong collaboration between teams.Managers and management should take care of
better coordination and communication intra team, intra department.Functional head
should take care of each and every stakeholder activity.
● Open to change.Encourage people to adhere to the changes, Redefine strategy & bring
innovative ideas.
● Focus more on employee engagement, encourage them to contribute for the
company;make them goal oriented and their objectives should be clear,increase
productivity of employees.
● Company should hire a new team of marketing, which should focus more on marketing
and promotion.Marketing team should focus to built the global image of company and
promote brand value of company.
● Traditional method of working should be replaced with creative and innovative way of
working. And they should be taught towards more contemporary management
approaches.
● Company should work more on building customer relations & avoid the product and
services which would cost ending of their business.Because poor customer service was
one of the main reason for the crisis.
LONG TERM TURNAROUND BLUEPRINT
● Management was responsible for the crisis solely.so consultants are needed to
analyse the problem and to devise solution
● Older employees can be given early retirement and non-performing employees
can be given pay cut
● The hierarchy of wages of top management need to be frozen and should focus
on devised HR policy for a transparent solution.
● Employee should be motivated for commitment and Training should be taken
seriously and performance output of employees should be made strict.
● Improving products in all verticals to be on par with global competitors
● Reduce the hierarchy needed in decision making to avoid delays
● Trade unions involvement should be reduced
● Unnecessary employees hired for political agenda without a job role should be
laid off
● Grievances of low level employees should be taken into consideration
● Customer service division should be set up do deal with repairs and complaints
● Increase employee motivation and engagement
 SOLUTION TO THE DILEMMA

While focussing on short term growth is important to receive funding without which
the organization cannot survive, emphasising on long-term growth is also important
to stand in the competitive market.

With our analysis we have reached the conclusion that the company should focus
on short-term growth and survival for the next one year. This will help them obtain
fund from the government and prevent the organization from dying.

The company should in the meantime make necessary changes in its policies and
management system in order to prepare a long term growth strategy for the
organization.

The organization needs to adapt to new technologies and implement new business
models so that it can beat its competitors. All this will demand capital and resources.
Hence, the company cannot immediately aim.to make profits. It should rather focus
on survival and sustainability.
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