Case Analysis: VICTORIA HEAVY EQUIPMENT

Section C, Group 1 Abhishek Jobanputra (U111121) Anju P (U111126) Christopher Jegam (U111132) Dibyaroop Padhi (U111135) Manas Padhi (U111144)

CASE ANALYSIS The Case Question The case ends with Brian Walters comments on the then latest situation of VHEL, and his views about the companys future; for instance, he expects VHEL to have a 25% share of the world market by 2012, and reach sales of $375 million by 2021. Based on [1] a rigorous examination of VHELs evolving strategic framework and the logic of its organisation design how would you [2] assess the companys performance in the recent years? What would you [3] conjecture about its likely future? Do [4] any significant suggestion(s) follow from your analysis? Organisational reforms and performance Decentralisation process started in 2004 by reorganising the firm into operating companies and staff group. The result of this was dissatisfaction among the staff groups. Disputes started occurring and line managers were disappointed with the intervention of staff VPs of ER, manufacturing and marketing. As result marketing and manufacturing functions were dissolved in 2007 and Executive committee was formed. There were different views on the decentralisation. One sect believed that semi autonomous operating company structure gave each person an opportunity to grow and develop. It gave authority to modify existing practices. It also helped in identifying the performing sections of the company. The other sect believed that the independence of operating companies and lack of Active leader has resulted in poor coordination of problem solving and responsibility allocation. They believed that VHE was too small to be centralised. In 2008 during the tough economic situation, the sales and production went down. Employee strength was downsized, no bonus was paid. This led to reduction of employee morale as certain groups were meeting their budget. But bonus was based on overall profits. As workgroup was reduced, additions were happening to central and divisional staff groups. The company was able to manage not because of the organisational strategies but because of the marketplace. They competed in customised cranes segment. In 2007-08, lack of central control over spending resulted in over expenditures by profit and cost centres. In order to solve the problems of management information system and definition of staff/line responsibilities management had to hire consultants. Future ahead and recommendations Walters target for 2012 looks unattainable with current organisation structure because of the following: Absence of active leadership Lack of coordination among the divisions Accountability and responsibility was missing Competition from other firms all of whom were much larger and diversified Competition from new entrants like Sato and Toshio, who has started aggressively pursuing sales

Recommendations 1. The organisational structure should be revisited so as to remove the duplication that is occurring among various divisions. It will help to same time as well as cost. 2. Periodically the progress of the divisions should be verified so as to control any problems before it expands beyond control. 3. There should inter divisional communications so as to avoid conflicts as well to improve efficiency. 4. There should a strong top management team that integrates and controls the various divisions. 5. Replacement of old equipments with the latest ones will help to make the cost reduction measures effective.