MS 11 solved

ASSIGNMENT

Course Code : MS-11

Course Title : Strategic Management

Assignment No. : 11/TMA/SEM-II/2010

Coverage : All Blocks

Note: There are five questions in this assignment. Attempt all the questions and send them to the Coordinator of the Study Centre you are attached with.

1. What do you understand by ‘mission’? Explain why it is necessary at the starting point in

the process of formulating a strategy?

Solution : Mission is a purpose or reason for the organizational existence, the nature of business it

is in, and the customers it seeks to serve and satisfy. Its is the basis of awareness of a sense of

purpose. Every company spelt the mission statement which is usually reflective of the value

systems of the founder. The mission statement should lead to objectives and goals of an

organization. An organization statement of purpose and mission tells what it is, why it exists and

the unique contribution it can make. This is a mission statement which defines an organization

purpose or desire i.e. what organization wants to achieve.

Methodical control of an organization's operations through establishment of OBJECTIVES / standards and targets , and a continuous monitoring and adjustment of performance against the OBJECTIVES.

VisionMembers of the organization often have some image in their minds about how the organization should be working, how it should appear when things are going well. MissionAn organization operates according to an overall purpose, or mission. ValuesAll organizations operate according to overall values, or priorities in the nature of how they carry out their activities. These values are the personality, or culture, of the organization. Strategic GoalsOrganizational members often work to achieve several overall accomplishments, or goals, as they work toward their mission.

ORGANIZATIONAL objectives are the stated, measurable targets of how to achieve business aims. For instance, we want to achieve sales of €10 million in in 2009. A mission statement sets out the business vision and values that enables employees, managers, customers and even suppliers to understand the underlying basis for the actions of the business.Business ObjectivesObjectives give the business a clearly defined target. Plans can then be made to achieve these

targets. This can motivate the employees. It also enables the business to measure the progress towards to its stated aims.The most effective business objectives meet the following criteria:S – Specific – objectives are aimed at what the business does, e.g. a hotel might have an objective of filling 60% of its beds a night during October, an objective specific to that business.M - Measurable – the business can put a value to the objective, e.g. €10,000 in sales in the next half year of trading.A - Agreed by all those concerned in trying to achieve the objective.R - Realistic – the objective should be challenging, but it should also be able to be achieved by the resources available.T- Time specific – they have a time limit of when the objective should be achieved, e.g. by the end of the year.The main objectives that a business might have are:Survival – a short term objective, probably for small business just starting out, or when a new firm enters the market or at a time of crisis.Profit maximisation – try to make the most profit possible – most like to be the aim of the owners and shareholders.Profit satisficing – try to make enough profit to keep the owners comfortable – probably the aim of smaller businesses whose owners do not want to work longer hours.Sales growth – where the business tries to make as many sales as possible. This may be because the managers believe that the survival of the business depends on being large. Large businesses can also benefit from economies of scale.

StrategiesOrganizations usually follow several overall general approaches to reach their goals. Systems and Processes that (Hopefully) Are Aligned With Achieving the GoalsOrganizations have major subsystems, such as departments, programs, divisions, teams, etc. Each of these subsystems has a way of doing things to, along with other subsystems, achieve the overall goals of the organization. Often, these systems and processes are define by plans, policies and procedures. How you interpret each of the above major parts of an organization depends very much on your values and your nature. People can view organizations as machines, organisms, families, groups, etc. (We'll consider more about these metaphors later on in this topic in the library.)

What is a Mission Statement?You should think of a mission statement as a cross between a slogan and an executive summary. Just as slogans and executive summaries can be used in many ways so too can a mission statement. An effective mission statement should be able to tell your organization story and ideals in less than 30 seconds.

Here are some basic guidelines in writing a mission statement: 1 A mission statement should say who your organization is, what you do, what you stand for and why you do it. . 2 The best mission statements tend to be 3-4 sentences long. 3 Avoid saying how great you are, what great quality and what great service you provide.4 Make sure you actually believe in your mission statement, if you don't, it's a lie, and your customers will soon realize it. =========================================================================McDONALD MISSION STATEMENT

"McDonald's vision/ MISSION is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."

IF YOU ANALYZE THE MISSION STATEMENT

and THE SIGNIFICANT WORDS IN IT.

*BEST QUICK SERVICE.

*OUTSTANDING QUALITY

*OUTSTANDING SERVICE

*CLEANINESS

*VALUE

*MAKE THE CUSTOMER SMILE.

McDONALD has taken these elements to everycorner of the world.

-usa, canada,mexico-brazil, argentina-uk, west europe-russia, east europe-china-west asia-africa continent-india,south east asia-australia / new zealand

THEY HAVE APPLIED THE COMPANY MISSIONEVERYWHERE UNIFORMLY.

AT THE SAME TIME, THEY HAVE ADOPTEDTHE TASTE /CUSTOMS OF THE LOCAL REGION.

THAT IS THE REASON THEY ARE SUCHA WONDERFUL/ SUCCESSFUL COMPANY.

THEIR MISSION DRIVES THE BUSINESS.==============================================================

2. Using the published information about Dell Computers, write a brief case study showing

the strategic development and its current strategic position.

Solution:

DELL'S SALES REVENUE

1984----------START UP

1992----------$2 BILL US

1996----------$16 BILL US

2004----------$41 BILL US

2008----------$61 BILL US

2009----------$61 BILL US

==========================

DELL'S STRATEGY IS AN UNCONVENTIONAL APPROACH.

• 1984 The company becomes the first in the industry to sell custom-built computers directly to

end-users, bypassing the dominant system of using computer resellers to sell mass-produced

computers.

• 1986 Dell unveils the industry's fastest-performing computer, pioneers the industry's first

thirty-day money back guarantee, and offers the industry's first onsite service program.

• 1996 The company's quiet bid to sell custom-built computers over the Internet quickly

becomes a public revolution when the company announces that sales over www.dell.com have

exceeded $1 million per day. Dell introduces also its first custom custom-made web links for

customers. Called "Premier Pages", the links allow customers to tap directly into the company's

own service and support databases.

1998 Dell establishes web-based connections with its suppliers to speed the flow of inventory and

quality information

================================

THE THREE GOLDEN DELL RULES

Disdain inventory

Always listen to the customer

Never sell indirect

=====================================

DELL COMPETITIVE STRATEGIES

• Speed to market

• Superior customer service

• A fierce commitment to producing consistently high quality, custom-made computer systems

that provide the highest performance and the latest relevant technology to the customers

An early exploitation of the INTERNET.

==========================================

DEVELOPING THE FAST PACED FLEXIBLE CULTURE

Set a Common Goal.

- Mobilize your people around a common goal.

-Help them feel a part of something genuine, special, and important,

and you'll inspire real passion and loyalty.

====================================

DELL'S TIGHTLY ALIGNED BUSINESS STRATEGY.

THIS STRATEGY HAS SEVERAL KEY ELEMENTS

Dell's transformation

Profitability management, coordinating a company's day-to-day activities through careful

forethought and great management, was at the core of Dell's transformation in this critical period.

Dell created a tightly aligned business model that enabled it to manage away the need for its

component inventories. Not only was capital not needed, but the change generated enormous

amounts of cash that Dell used to fuel its growth. How did Dell do it?

At the heart of Dell's profitability management was a seemingly impossible dilemma: the

company had adopted a build-to-order system, yet it had to commit to purchase key components

sixty days in advance. How did Dell manage this?

1.Account selection. Dell purposely selected customers with relatively predictable purchasing

patterns and low service costs. The company developed a core competence in targeting

customers, and kept a massive database for this purpose. A large portion of Dell's business

stemmed from long-term corporate relationship accounts—customers having predictable needs

closely tied to their budget cycles. For these, Dell developed powerful customer-specific intranet

Web sites with predetermined custom specifications and budgets. The remainder of Dell's

business involved individual consumers. To obtain stable demand in this segment, Dell used

higher price-points and the latest technology products to target second-time buyers who had

regular upgrade purchase patterns, required little technical support, and paid by credit card.

2.Demand management. "Sell what you have" was the phrase that Dell developed for the crucial

function of matching incoming demand to predetermined supply. This occurred at several levels.

At a monthly MSP/MPP (master sales plan/master production plan) meeting led by CEO Michael

Dell, top-level managers agreed on a five-quarter rolling forecast with a strong focus on "the

current quarter plus one." In this meeting, Dell's functional department leaders balanced and

agreed on internal product strategies, competitive factors, and constraints. At the meeting, the

sales commission plan was set to equal the production plan. Through this process, Dell

synchronized the company every thirty days.

At a weekly Lead-Time Meeting, senior executives in sales, marketing, and supply chain

collectively interpreted demand trends and supply issues to determine where component overages

or underages were likely to develop. The meeting focused on a common variable: lead time for

product delivery to customer. At this meeting, the group focused on managing product lead times

to ensure that customers would not cancel sales, and that Dell would not be stuck with unsold

components.

If a product lead time was climbing, purchasing could expedite component deliveries or shift to

alternative sources of supply, or sales could try to induce customers to buy substitute products. If

component overages were accumulating, sales could provide incentives for order-takers to steer

customers toward the makeable set of products, or could bundle products with an attractive

umbrella price. The order-takers could tell from their screens which configurations were

available, and the dynamic incentives induced them to steer point-of-sale demand toward these.

Dell's pricing also reflected real-time demand management, and varied significantly from week to

week. While its competitor's prices were stable with periodic adjustments, Dell's prices varied

significantly from week to week as the company modified its prices to push products where

component inventory was building beyond prescribed levels.

The weekly Lead-Time Meetings had a very strong impact on Dell's culture. Once the sales

executives agreed on a set of products to be made, they "owned" the task of ensuring that these

products would be sold. The product lead times were posted daily for all to see, and this drove the

daily profitability management process.

Dell's core philosophy of actively managing demand in real time, or "selling what you have,"

rather than making what you want to sell, was a critical driver of Dell's successful profitability

management. Without this critical element, Dell's business model simply would not have been

effective.

3.Product lifecycle management. Because Dell's customers were largely high-end repeat buyers

who rapidly adopted new technology, Dell's marketing could focus on managing product lifecycle

transitions. The company's direct marketing provided real-time customer feedback, which led to

the rapid rounds of learning essential to product development and crisp lifecycle timing. Dell

became expert at curtailing the end-of-life tail of its six-to-nine-month product cycle.

4.Supplier management. Although Dell's manufacturing system featured a combination of build-

product-to-order and buy-component-to-plan processes, the company worked closely with its

suppliers to introduce more flexibility into its system. Dell concentrated its supplier base into 50

to 100 suppliers accounting for 80 percent of its purchases. Supplier selection was based only 30

percent on cost, with the other 70 percent on quality, service, and flexibility.

5.Forecasting. Dell's forecast accuracy was about 70 to 75 percent, due to its careful account

selection. Demand management, in turn, closed the forecast gap. When in doubt, Dell managers

over-forecast on high-end products because it was easier to sell up, and high-end products had a

longer shelf life.

6.Liquidity management. Direct sales were explicitly targeted at high-end customers who paid

with a credit card. These sales had a four-day cash conversion cycle, while Dell took forty-five

days to pay its vendors. This generated a huge amount of liquidity that helped finance Dell's rapid

growth and limited its external financing needs. This cash engine was a key underlying factor that

enabled Dell to earn such extraordinarily high returns.

Genesis of Dell's process

How did Dell create its tight profitability management process? The answer is very telling.

The seeds of Dell's success were sown in its failures of an earlier time. In 1994, Dell created two

important products that were deficient due to quality problems. Sales plummeted and Dell faced a

serious cash shortfall. At the same time, the company realized that it had to accelerate its growth

in order to move from the list of declining Tier 2 manufacturers (Commodore, Zeos, etc.) to the

group of prospering Tier 1 producers (IBM, Compaq, etc.), and this required even more cash.

The executives met to decide how to generate the funds to keep the company alive. The decision

was made to dramatically reduce inventories. The heads of manufacturing and marketing were

charged with devising a way to run the business without component inventories. At first they

resisted. Then they developed a way to meet this goal.

The new Dell business model developed over a period of time. The first set of objectives focused

on lowering inventory by 50 percent, improving lead time by 50 percent, reducing assembly costs

by 30 percent, and reducing obsolete inventory by 75 percent.

The new system was phased in, with component inventory dropping from seventy days to thirty

to forty days, then to twenty days, then to nearly zero. At the same time, the sales force was

trained to "sell what you have." As the new profitability management system emerged and proved

viable, Dell moved aggressively to refine it and to bring the other functional activities into tight

alignment.

Dell used the freed-up cash to fuel its growth, chiefly in major corporate accounts. These

accounts were originally hard for Dell to penetrate because they were generally buying from

resellers. In order to win this business from the resellers, Dell had to convince the accounts that

its products were of comparable quality, and that it could meet the necessary service and delivery

requirements.

It was widely thought that Dell's build-to-order model could not meet the delivery requirements

of major accounts. Once Dell demonstrated that it could build to specific customer orders and

meet delivery and quality requirements, growth followed. This dynamic enabled Dell to catapult

to first-tier status.

Two surprises greeted the Dell executives who were creating this new process.

First, as inventory dropped, lead-time performance improved. The reason was that Dell was not

simply carrying component inventory against forecasted sales, but rather was aligning inventory

and sales, managing profitability on a daily, weekly, and monthly basis.

Second, as inventory disappeared, the company's returns grew disproportionately. Not only did

Dell avoid carrying costs and obsolete stock, but importantly, it was saving enormous amounts of

money on purchasing components because the component prices were dropping 3 percent per

month.

Profitability, not inventory

The inventory in a channel is determined by the variance in supply and the variance in demand.

Unless these variances are reduced, channel inventory can only be moved around, not eliminated.

I think of this as the "waterbed effect." When you sit on a waterbed, it sinks in one spot and

bulges in another. The water is redistributed but the amount stays the same.

Through its use of profitability management, Dell matched supply and demand on a daily,

weekly, and monthly basis. It sharply reduced the variance, and the need for inventories simply

disappeared.

In many companies, inventory substitutes for profitability management, tying up valuable capital

and preventing the company from focusing on day-to-day business alignment. In most

companies, managers face a choice between managing inventory and managing away the need for

it.

By the way, are you managing profitability or inventory? If the answer is profitability, you can

have your cake and eat it too!

3. Identify a firm of your choice which is a single business unit. Read the published

information available on the firm identified, explain the advantages and disadvantages of

the corporate profile the company has.

Solution:

The organization, I am familiar with is a

-a large manufacturer/ marketer of safety products

-the products are used as [personal protection safety] [ industrial safety]

-the products are distributed through the distributors as well as sold directly

-the products are sold to various industries like mining/fireservices/defence/

as well as to various manufacturing companies.

-the company employs about 235 people.

-the company has the following functional departments

*marketing

*manufacturing

*sales

*finance/ administration

*human resource

*customer service

*distribution

*warehousing/ transportation

*TQM

---------------------------------------------------------------

The above company ,initially, operated as a market structures company.

As the company added more technical products, it became necessary

to re-organize the company.

-we conducted customer survey.

-we conducted an in-house operation audit.

-we conducted HR audit.

BASED ON THE FINDINGS, WE REVIEWED THE FOLLOWING

Basic Characteristics of Organizational Structure

• Division of labor: dividing up the many tasks of the organization into specialized jobs

• Hierarchy of authority: Who manages whom.

• Span of control: Who manages whom.

• Line vs staff positions

• Decentralization

Hierarchy of Authority

• Tall vs flat hierarchies

• Autonomy and control

• Communication

• Size

Span of Control

• A wide span of control: a large number of employees reporting,

• A narrow span of control: a small number employees reporting

• The appropriate span of control depends on the experience, knowledge and skills of the

employees and the nature of the task.

Line vs Staff Positions

• Line vs Staff:

• Line positions are those in which people are involved in producing the main goods or

service or make decisions relating to the production of the main business.

• Staff positions These are positions in which people make recommendations to others but

are not directly involved in the production of the good or service

Decentralization

• The extent to which decision making is concentrated in a few people or dispersed through

out the organization

• Advantage: benefits associated with greater participation and moving the decision closest

towards implementation

• Disadvantage: Lack of perspective and information, lack of consensus

Integration

• Hierarchy of authority

• Liaison roles

• Teams, committees, task forces

• Standardization & formalization

Mechanistic & Organic Designs

• Mechanistic: tallness in hierarchy, specialization, centralization in authority,

formalization. Work best under stable conditions

• Organic: flatness, generalization, decentralization flexibility Best fit dynamic conditions

and complex technology

Effectiveness Criteria

• Output approach

• Internal process approach

• Systems resource approach

• Stakeholder approach

Effectiveness & Structure

• Size and structure

• Complexity

• Differentiation


• Formalization

• Structure and satisfaction


• Span of control

Backwards & Forwards

• Summing up: we examined the characteristics of organizational structure, differentiation

and coordination. Mechanistic and organic designs were discussed and organizational

effectiveness.

==============================================================

BASED ON THE TOTAL FINDINGS, WE DECIDED ON A

-PRODUCT GROUP BASED '' MATRIX'' STRUCTURE.

Matrix structure

Different structures can be combined together. When one has two parallel

organizational structures this is called a matrix structure. The idea is to combine the

advantages of two structures, but this has the obvious disadvantage of being harder to

coordinate and introducing more potential conflict.

In the past most large companies were centralized – that is, involved structures in

which decisions were taken at the centre or upper levels of organization. Just as there

has been a move to flatter organizations, so there has been a move to decentralized

ones.

**MATRIX STRUCTURE

Reinforces & broadens technical excellence

Facilitates efficient use of resources

Balances conflicting objectives of the organization

THIS STRUCTURE

GAVE THE COMPANY

-better / effective coordination with R&D.

-better / effective cooperation with SALES TEAM.

-BETTER CUSTOMER SERVICE ON TECHNICAL PRODUCTS.

The effectiveness of the organization is reflected

in the financial statements.

-SALES

the sales shown 20% growth over 3 years.

-EXPENSES

consistently contained within the range.

-NET INCOME

increased growth over the years.

CURRENT RATIO = 1.0

QUICK RATIO = 1.0

SEE THE CHART

''gmail hemang info chart ''

4. Identify two companies which have recently merged. Try to read the published

information on the two companies. Based on your study identify the present status of the

merged company and its efforts in combining the respective organizational cultures.

What in your opinion can be other issues which might arise in future?

THE merger of Hindustan Lever Chemicals Ltd (HLCL) with Tata Chemicals Ltd (TCL)

2004

THE merger of Hindustan Lever Chemicals Ltd (HLCL) with Tata Chemicals Ltd (TCL) is

likely to take place within the next few weeks, thereby creating a more than Rs 3,000 crore

chemical and fertiliser company.

The High Court of Punjab and Haryana has approved the proposed amalgamation of HLCL

with TCL on Wednesday. The two companies will now jointly move the Registrar of

Companies for completing the formalities after which HLCL will cease to exist and the

amalgamation will come into effect retrospectively from April 2002.

The swap ratio for the merger has been fixed at 2.5:1 (2.5 shares of Tata Chemicals for every

one share of Hind Lever Chemicals).

Earlier, in January 2003, the boards of TCL and HLCL had approved the proposal to merge

the two companies. As per the proposed scheme of merger the company, subject to necessary

regulatory approvals, will issue HLCL shareholders new TCL shares in the ratio of 2.5:1.

According to company officials, the existing businesses of TCL and HLCL have natural

synergies and are complementary which will result in sustaining strong growth over the long

term.

For example in case of chemicals, TCL on its part is the largest manufacturer of soda ash,

which is a key raw material for the production of detergents. On the other hand, HLCL is

India's largest manufacturer of sodium tri-polyphosphate (STPP), used as builders in

detergents.

In case of the fertiliser business also, the two company's operations are complementary. TCL

is a leading urea manufacturer in India along with branded sales infrastructure in the form of

`Tata Kisan Kendras' and a strong presence in States such as Uttar Pradesh, Haryana, Punjab,

Uttaranchal and Bihar. HLCL, on the other hand, is a leading manufacturer of nitrogen- and

phosphorous-based fertilisers under the `Paras' brand name and enjoys substantial consumer

loyalty in Bihar and West Bengal.

Post merger, the company will be able to offer a wider range of complementary products and

support services to the current base of customers and also facilitate access to newer markets

and customers in both the chemicals and fertiliser businesses, officials said.

- The merger of Hind Lever Chemicals Ltd with Tata Chemicals Ltd came into effect on June

1. Consequent to the orders of the High Court of Judicature, Mumbai, and the High Court of

Punjab & Haryana, sanctioning the Scheme of Amalgamation of Hind Lever Chemicals with

Tata Chemicals, Hind Lever Chemicals has merged with Tata Chemicals, effective from June

1, 2004.

<\l >

TATA CHEMICAL

"Okhai" nationwide first retail outlet inaugurated in Ahmedabad ne

Tata Chemicals bags prestigious award for excellence in Industrial Relations

Tata Chemicals signs MoU with BITS, Pilani

Tata Chemicals selected for Dun & Bradstreet - American Express Corporate Awards 2007

Tata Chemicals acquires 100 per cent stake in General Chemical Industrial Products Inc,

USA

Tata Chemicals announces Q3 FY08 results

Tata Chemicals bags Nine ABCI awards

13th JRD Tata Corporate Leadership Awards - Jury to meet on 12th January 2008

Tata Chemicals, Mithapur, awarded the CII National Award for Excellence in Water

Management 2007

Tata Chemicals joins ICRISAT's sweet sorghum ethanol

consortium

Tata Chemicals, Babrala wins the FAI Award for the Best Technical Innovation

Tata Chemicals annouces H1/Q2 FY08 results

Tata Chemicals announces the launch of Tata Salt Lite

Tata Chemicals wins 'ICC Aditya Birla Award for Best Responsible Care Committed

Company and ICC Award for Social Responsibility'

Tata Salt's 'DESH KO ARPAN' programme to support Nanhi Kali project

Tata Chemicals annouces Q1 FY08 results, PAT at Rs 121 crore — up by 61 per cent over

Q1FY07

Tata Chemicals Limited is India's leading manufacturer of inorganic chemicals. It also

manufactures fertilisers and food additives. Incorporated in 1939, the company has an annual

turnover of over Rs 5,800 crore and is part of the $ 28.8 billion Tata Group, India's foremost

business conglomerate

Since its inception, Tata Chemicals has been continuously raising the bar in technological

competence and gaining recognition as a leader and innovator. The company has an enduring

commitment to protecting and enhancing the environment, serving and improving the

communities in which it functions, and adhering to the highest ethical standards of corporate

behaviour.

TCL operates the largest and most integrated inorganic chemicals complex in India, at

Mithapur in Gujarat, a state in western India. A pioneer and market leader in the branded,

iodised salt segment, the company manufactures salt that has a purity percentage of 99.8 per

cent, the highest in the country. It is also among the largest producers of synthetic soda ash in

the world.

The company's state-of-the-art fertiliser complex at Babrala in Uttar Pradesh, a state in

northern India, has a remarkable record in energy efficiency. This facility, which makes urea,

has won several awards in the fields of environmental conservation and safety.

TCL's phosphatic fertiliser complex at Haldia in West Bengal is currently the only

manufacturing unit for DAP/NPK complexes in West Bengal. The Haldia plant has

production volumes exceeding 1.2 million tonnes per annum. The fertilisers, sold under the

brand name 'Paras', lead the market in West Bengal, Bihar and Jharkhand.

The quality factor

TCL manufactures a wide range of high-quality and competitively priced products, including

soda ash, sodium bicarbonate, salt, caustic soda and urea, which deliver outstanding value to

its customers. The company's products and production processes are benchmarked with the

best of global touchstones, and meet the most rigorous international specifications.

TCL's products go into numerous end-use applications in a variety of industries: glass,

detergents, paper, textiles, agriculture, photography, pharmaceuticals, food, tanning, rayon,

pulp, paints, building and construction, and chemicals. The company exports to a variety of

world markets including South and Southeast Asia, the Middle East and Africa.

TCL is now in the process of expanding its operations globally. It is uniquely positioned to

achieve this objective — thanks to the skill and dedication of its people, the excellence of its

production facilities, and the technical and technological expertise it has nurtured.

Growth with responsibility

As TCL grows and touches new horizons, it continues to be guided by principles of good

corporate governance while pushing the profitability envelope. The company is unswerving

in its belief in ethical and fair business practices, and focused on providing value to all its

stakeholders: customers, suppliers, shareholders and employees.

TCL is committed to bettering its already-impressive quality norms and systems. It has been

awarded the ISO-9001 registration, a quality standard adopted by over 90 countries

worldwide. The company has also embraced the Tata Business Excellence Model in its quest

to become more performance-oriented and customer-centric. Based on the Malcolm Baldrige

National Quality Award, this model takes a holistic and comprehensive approach to

improving business processes and strategic decision-making.

Driving the company's push towards excellence and customer delight is a workforce of close

to 3,500 employees. TCL's employees are the key to its growth and success. The company

invests in them by providing opportunities for job enrichment, concentrated competency

development, sharing of best practices, and more.

Beyond business

TCL takes the greatest possible care to ensure the safety, health and welfare of its staff and

the communities living around its facilities. Protecting the environment is a crucial

component of this equation. The company is a signatory to Responsible Care, a voluntary

global initiative of the chemical industry which calls on enterprises to demonstrate their

allegiance to safety, health and environmental issues.

An example of TCL's philosophy of 'avoid, reduce and recycle' is its cement plant at

Mithapur, which was set up solely to consume the solid waste generated during the

manufacture of soda ash. The company has also developed the Mithapur salt works as a

natural habitat for thousands of migratory birds. Its fertiliser unit at Babrala is the most

energy-efficient plant in the Indian fertiliser industry.

Safety is given paramount importance across the organisation. Stringent safety and

occupational health programmes are in place to ensure the wellbeing of employees and

facilities at all locations. Both plants are ISO-14001 and OHSAS-18001 certified. The

Japanese 5-S and 'total productive maintenance' concepts have been implemented to ensure

the maintenance of quality standards and safety management norms. The safety management

system is in line with guidelines set by the British Safety Council.

The underlying philosophy at TCL is that ownership of safety lies beyond a company

department or an outside authority; safety is the duty of every employee and every

stakeholder.

Enriching life

"What comes from the people must go back to the people many times over" — this principle

is an inheritance from the founding fathers of the Tata Group. TCL honours its legacy

through the Tata Chemicals Society for Rural Development (TCSRD), established in 1979 for

the benefit of the rural population in and around the company's plants and townships.

TCSRD's fundamental purpose is to foster development that is sustainable and integrated. Be

it helping with natural resource management, livelihood support, or the building of health or

education infrastructure, TCSRD's aim is to improve the lives of the rural communities of

Okhamandal and Babrala. The participation of the beneficiaries is vital to the success of the

programmes it undertakes, and forms the basis of all project designs.

With a distinguished past and a flourishing present to power it forward, Tata Chemicals is

poised to build on its achievements in the years ahead

Summarised Profit and Loss Account

2006-07

Rs. in crores Rs. in crores

1. Income

Sales and operating Income (net) ....................................................................................

3,990.99

Other Income ............................................................................................................................

97.75

Total .............................................................................................................................................

4,088.74

2. Expenditure

Raw materials, stores, wages and other expenses .................................................... 3,300.39

Employee separation compensation amortised ........................................................ 3.89

Depreciation ..............................................................................................................................

150.35

Borrowing costs (net) .............................................................................................................

0.27

Total .............................................................................................................................................

3,454.90

3. Profit before tax .....................................................................................................................

633.84

4.

Taxes ...........................................................................................................................................

. 189.63

5. Profit after tax .........................................................................................................................

444.21

6. Balance brought forward ..................................................................................................

769.19

7. Amount available for Appropriations ........................................................................

1,213.40

8. Appropriations

(a) Proposed Dividend ........................................................................................................

172.08

(b) Tax on Dividends ............................................................................................................

29.25

(c) General Reserve ..............................................................................................................

45.00 3

(d) Balance carried to Balance Sheet ........................................................................... 967.07

Total .............................................................................................................................................

1,213.40

==============================================================

HINDUSTAN LEVER CHEMICAL LTD

-is an independent co. but part of the HINDUSTAN LEVER GROUP.

-IS THE SMALLER OF THE TWO MERGING COS.

-HLCL sold most of its products to the sister cos. in the LEVER GROUP.

Profit & Loss account ------------------- in Rs. Cr. -------------------

Mar '03

12 mths

Income

Sales Turnover 983.43

Excise Duty 10.68

Net Sales 972.75

Other Income 1.84

Stock Adjustments 58.25

Total Income 1,032.84

Expenditure

Raw Materials 840.38

Power & Fuel Cost 31.91

Employee Cost 15.36

Other Manufacturing Expenses 2.03

Selling and Admin Expenses 72.50

Miscellaneous Expenses 9.61

Preoperative Exp Capitalised 0.00

Total Expenses 971.79

Mar '03

12 mths

Operating Profit 59.21

PBDIT 61.05

Interest 7.77

PBDT 53.28

Depreciation 9.72

Other Written Off 0.00

Profit Before Tax 43.56

Extra-ordinary items 0.00

PBT (Post Extra-ord Items) 43.56

Tax 13.54

Reported Net Profit 30.03

Total Value Addition 131.40

Preference Dividend 0.00

Equity Dividend 18.96

Corporate Dividend Tax 2.43

Per share data (annualised)

Shares in issue (lakhs) 137.86

Earning Per Share (Rs) 21.78

Equity Dividend (%) 137.50

Book Value (Rs) 226.63

Problems THAT AFFECTED the mergers

1) Resistance to change.

Systems strive for stability. Employees resist change because they fear negative

consequences. Change, surprise and the unknown cause fear. Expect resistance at all levels

until people determine how the merger affects them.

Resistance to change does not mean workers do not support the merger. Instead, resistance

may indicate that workers do not understand the merger and how it affects them personally.

They worry about the merger penalizing them or causing them to suffer.

2) Unclear responsibilities and roles.

Roles and responsibilities change when companies merge. It may not be clear who is in

charge, who makes decisions and what authority people have. Aggressive types seize the

opportunity and assume they are better off asking for forgiveness than for permission. Passive

types wait until someone in authority clears the confusion. Without clear roles and

responsibilities, productivity suffers as people postpone work until they know who is

supposed to do it.

3) Communication breakdowns.

Frequently, merging companies have different cultures for communicating. Rumors flow,

speculation and hearsay increases. Sometimes communication by management stops while

they try to figure out what they are doing. The merger puts middle management in the

middle. Their staffs look to them to clarify policies, procedures and responsibilities before

upper management decides those matters.

4) Divided loyalties.

Employees believe they must choose between taking care of themselves and supporting the

company. They may also have loyalties to specific people in their company. Managers try to

protect their people and their departments.

5) Job insecurity.

A merger threatens workers’ jobs. Downsizing and consolidation of workforces are normal

after mergers, as management tries to eliminate redundancy. Because the merger threatens

their careers and jobs, workers worry about their future.

It also affects their family and social lives. People often attach their identities to their jobs.

When faced with loss of employment, they may suffer identity crises. The prospect of loss of

employment, relocation, demotion and career changes puts stress on the family, and can tear

apart a weak family structure. Consequently, some workers view the merger as a catastrophic

event.

6) Increased employee turnover.

Employees bail out for many reasons. They may choose the certainty of a new job over the

uncertainty of staying with the merged organization. They may fear losing their jobs,

professional status or income. They may leave because they feel betrayed. Whatever the

reasons, expect employee turnover to rise.

The irony is that better employees are the ones that leave because they can find other jobs

easier. The deadwood often stay because they don’t have other employment options. This

increases the danger of turnover within the organization. It may represent a deterioration in

the quality of workers.

7) Conflict.

Hidden agendas, egos and personality clashes produce conflict. A merger is like a marriage

and produces similar fights over responsibilities, spending and priorities. Conflict between

merging companies can resemble parents arguing over how to raise their kids. Integrating two

organizations creates tension between the two systems and management structures. Initially,

the two systems compete for viability.

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necessary to focus attention on issues like:

• Implementation of a new shared corporate culture and management culture.

• Development of a new management structure for the new, larger organization; especially

overcoming of leadership problems in very large units.

• Harmonization of management compensation and management incentive systems.

• Overcoming of staff’s suspiciousness of the other organization (‘Us vs. Them’ syndrome)

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