MBO review

Super Department stores’ MBO Programme

Prakash Gupta was irritated and confused, after the meeting with Dinesh Sharma. Dinesh Sharma was the regional stores Manager (in charge of stores of Noida, Faridabad and Ghaziabad), and Prakash was the chief manager of Delhi city Super Department Stores (SDS). Prakash had  received a letter from Dinesh, 3 weeks Earlier, explaning that top management  had decided on an on an MBO programme to help SDS improve its efficiency and profitability. The letter mentioned about linking stores managers’ salary hikes, promotions etc. to performance. The accompanying instructions required managers to list the objectives they objectives which were appropriate for their store and then to wait the regional manager’s review visit.

Prakash has done just what he was asked to do. In a meeting with his departmental managers, Prakash had chosen objectives that they all agreed were appropriate. All of the objectives represented performance levels that were improvements over the past year and were reasonably attainable, such as:

v Increasing sales by 10 percent.

v Reducing Inventory loss by 2 percent.

v Improving Customers services (i.e.20 percent fewer complaints made to head office).

v Reducing cash register shortages to .05 percent of sales.

Dinesh came late for the MBO review visit and stressed that there was little time. He quickly scanned the written statement of objectives which Prakash gave him, then explained that profit improvements was really what the home office was interested in. Senior management in Chennnai, running the SDS in over 18 major cities in India, decided that a 10 percent increase in profit would be a reasonable objectives for Prakash’s store. This single objectives, Dinesh explained, would facilitate the monitoring of performance by the head office and would also reduce the amount of information the store would have to submit. The visit was cut short because Dinesh had to attend a meeting on the advertising budget back at the Head office.

Span of Management

"The Power of Empowerment
Venu Srinivasan joined the TVS Group's family business in 1978, after a BE from Madras University and MS from Purdue University (where he sold Bible door-to-door in west Lafayette, Indiana).He first got involved with the moped project which was being set up by Sundaram Clayton and implemented it on his own when his father passed away in 1979. In 1984, he promoted a new joint venture company with Suzuki of Japan to manufacture 100cc motorbikes (TVS-Suzuki). Faced with a marketing network failed to meet the expectations of customers .For about seven years between 1986-1992, the company faced rough weather; the models did not sell; quality problems surfaced and there was a Lock-out at the autoplant.
Still, Srinivasan managed to get the workers to return at his terms. He has put together a superlative team of professionals to run the show. The importance of total quality management has been brought to the notice of workers through a service of workshops. He has also managed to beef up the company's design, engineering and product development skills. A workalcoholic himself, Srinivasan takes genuine interest in getting the right kind of people into the company. Even today, every hiring decision (even blue-collar jobs) has to be okayed by him.
Both workers and managers enjoy lot of freedom to do things on their own. Performance linked rewards, quality consciousness and excellent interpersonal relations with workers have yielded stunning results with the turn around of the company happening in less than two years time. When the Deming prize was awarded in 1998, Srinivasan took every care to take all key workers along with him to Japan and even refused to take award all alone. The only photograph that was taken on that occasion showed Srinivasan sharing the prize with all his team members on the dias. The excellent relations that he has built with his workers and the way he has empowered them to face challenges head-on, are widely reported now in every magazine. Naturally, even after parting company withSuzuki in October, 2001, marketers have not reacted in a harsh way. After some disastrous product portfolio and is currently doing very well especially in motor cycle (TVS Feiro, TVS Victory) and moped segments.