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NMIMS
Master
of Business Administration - MBA Semester 3
Organisation Theory
Q1.
Surya Enterprises is in the business of setting up Solar Power plants, which
converts energy from the sun into electricity using Solar Panels. This is a
young company that has been in existence for 4 years and has a seen rapid
growth from being a 25 people start-up to a 1000 people strong company. The
company’s founders have laid a special emphasis on sustainable and ethical
business practices, (including abiding by labour laws) and due to this, as well
as being in green energy space, the company is well regarded by everyone in the
industry. However, this sector is highly cost sensitive and the company faces
stiff competition from other local vendors who operate on lesser margins by
adopting less ethical practices. Another factor affecting margins, is that 70%
of the cost of the project is the cost of the Solar Panel itself. These panels
are imported from China and thus the profitability is closely linked to the
cost at which the panels are procured. With the Indian government coming down
heavily against dumping by Chinese companies, as well as a surge in demand for
panels in China, the cost of solar panels has increased. The government is
encouraging the spread of solar energy based plants through special schemes to
encourage the generation of clean energy. However, new plants that are coming
up, the system of allocation is through open bidding and goes to the lowest
tariff offered, and the tariff has been going down steeply. This has further
impacted the profitability of these ventures. On the positive side, technology
is changing rapidly and discovery of cheaper and better materials is making the
panels smaller and cheaper. Given the above scenario, the company is now
planning to evaluate whether the business is sustainable or not. Surya
enterprises has hired you to do an organisational analysis using the PESTLE method
Q.
Define the elements of PESTLE and using the information given in the case
above, wherever possible list out the various aspects of the PESTLE relevant to
the case.
Answer.
The environment consists of various
forces that affect the company’s ability to deliver products and services to
its customers. The environment can affect a company in many ways. A company can
have the best technologies, employees, and the best of suppliers but it can
fail miserably if any of the factors like exchange rate, policies of the host
government, changing needs of customers, etc. start to act against it. On the
other hand, a mediocre company can be spectacularly successful if the factors
in the external environment start favouring its strategies and policies. It is
imperative that companies keep a close watch on the environment factors that
may affect them, and prepare themselves adequately to face the emerging
challenges.
Environmental analysis is the
assessment of environmental factors which affect marketing activities. An
examination is made of both positive and negative affect for adjusting
marketing activities in order to survive is known as environmental analysis.
Marketing environmental analysis helps a business understand internal, micro
and macro environmental forces that can affect it. The environment, or external
forces, are often factors that a business cannot control, yet it is important
to be aware of environmental concerns when preparing a marketing plan or
introducing a new product to the market.
Q2. Pradeep Foods was started by
Pradeep Panigrahi, to provide wholesome and reasonably priced food options to
young professionals working in business parks. The primary goal of Pradeep
Foods was to deliver piping hot food, prepared with minimal quantities of oil
and spices, using only fresh seasonal produce. The company started its
operations in Mumbai and very quickly moved to all the major cities in India.
Initially, when each branch was being set up, Pradeep would stay there for 2-3
months to start the office and train the teams. He would personally supervise
the menu, and based on customer feedback tweak the menu to satisfy his
customers. The food services were well appreciated and their customer base grew
at an exponential rate. Pradeep bumped into you in a conference and shared his
concern that his organisation is becoming too big to manage. He is has heard of
a functional structure and a divisional style structure and asks you to
recommend which structure is better in his case.
Q. Detail out what a divisional
structure and functional structure are, listing out benefits and disadvantages
of each as per the case given above.
Answer. Structure of an organization defines
the levels and roles of management in a hierarchical way. One can also say that
an organizational structure spells out the way tasks, functions and
responsibilities are allocated for implementing a policy or strategy.
Organizational structure involves arrangement of activities and assignment of
personnel to these activities in order to achieve the organizational goals in
an efficient manner. It is a way by which various parts of an organization are
tied together in a coordinated manner and it illustrates the various
relationships among various levels of hierarchy within the organization as well
as horizontal relationships among various functions of the organizational
operations. A well planned organizational structure results in better
utilisation of resources. In general, “organizational structure” refers to the
way individuals and groups are arranged with respect to the tasks they perform,
and ‘organizational design’ refers to the process of coordinating these
structural elements in the most effective manner.
Q3. Kapoor & Co is a family run
business, which has been in existence for many years. The MD, Mr. Kapoor, knew
each and every employee in his company and ran the company like his extended
family. He was personally involved in every performance and increment
discussion and would take the final decision for each employee. The employees
were quite happy in this set-up. After a few decades, Mr. Kapoor decided to
retire from the company and put in place a professional management team to run
the company. The new management team has been hired from other companies and
has been given a free hand to run the company. The first step they took was to
put in place a structured performance appraisal process, to assess and evaluate
the employees. The employees became very agitated at the introduction of the
new process and the feedback reached Mr. Kapoor. You are the CEO of this
company and Mr. Kapoor wants to meet you to understand what is happening. You
see that this is a classic case of the company following Greiner’s Life Cycle
model.
a. Describe the 5 stages of Greiner’s
Life Cycle model giving the context from the case
b. Describe the need for change
management as well as the approach you intend to follow using Lewins 3 step
model
Answer.
a) An organization’s ability to adapt itself to the changes in the
environment indicates its growth. In accordance, the two significant factors
that need to be considered are capacity and capability for arranging the
necessary resources for the organization’s utilization. It is to be noted that
the capacity and capability change according to the circumstances while participating
in the process of resource mobilization to attain the goals of the
organization. According to L. Greiner, the growth of an organisation takes
place in five different phases. These phases begin with evolution and end with
revolution/crisis.
Greiner’s
life cycle model
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