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ODC ASSIGNMENT

SAIL: LOGISTICS FOR BETTER CUSTOMER SERVICE


Submitted To: Prof. Neeraj kumar Submitted By: Divye Gupta 211123 FMG 21-C

Answer 1: Analysis of the specific environment for SAIL


India, along with China is one of the highest steel consuming economies in the world. So, there is a lot of scope for SAIL to expand and modernize to keep up with the growing competition. With inputs (limestone, dolomite, core etc.) available in abundance to SAIL, it clearly enjoys an edge over its competitors. Despite all this, SAIL has not been able to maintain a high market share due to an intricate environment within which it operates. A companys specific environment consists of forces/stakeholders that have a direct impact on its ability to achieve its goals. A company directly interacts with its specific environment. For example: customers, suppliers, competitors, government, distributors. Talking about SAILs specific environment, it is facing some concerns owing to high crude oil and soft steel prices, increasing competition, major technological shifts, stringent government regulations and changing customer preferences. But SAIL has been able to mitigate the impact of some of these issues with a strong task culture, structured plans and decision making and institutionalized role orientation.

Answer 2: Type of structure at Corporate level and Business level


STRUCTURE OF SAIL a) Corporate level: At this level, SAILs structure can be thought to be of related diversification since it has tried to gain something out of its core competence (i.e. steel) in most of the domains it has thought of entering. All these domains are related to steel in one way or the other. It is thinking of developing a portfolio that enhances its position in its core domain along with offering slightly different products to expand its customer base. With this structure, discipline becomes an imperative which can be maintained via centralized decision making adopted by SAIL. b) Business Level: SAIL has adopted a mechanistic structure at this level which is clearly evident from centralized decision making and little or no integration between different plants. Differentiation is also low which is quite evident from its portfolio. Only two product lines are there which makes this structure extremely simple. All units are working in isolation from one another on standardized products. But it offers them some advantages as the locations are chosen strategically to be close to the domestic sources of raw materials which makes it quite easy to coordinate.

Answer 3: Design issues


The major design challenge for SAIL is of high centralization which prevents lower level managers and employees to take quick on site decisions. Rather, they have to wait to get for

an approval from the top management before proceeding further. This causes everything to come to halt for some time resulting in huge delays that may eventually result in schedule overrun of the project. Also, with different units working in isolation from one another, there was a high probability of people developing a subunit orientation and start working at cross purposes instead of collaborating and integrating to work together to accomplish the goals of the organization as a whole. Furthermore, with a centralized marketing approach, different marketing strategies required for different products could not be implemented. Also, owing to high standardization, centralized decision making and little or no communication between divisions, SAIL was facing problems in development of new products. They had no flexibility in operations and people had to follow standardized processes. This acted as a major hurdle in SAILs expansion and emergence of more and more competition.

Answer 4: McKinsey's suggestion


McKinsey recommended SAIL to restructure itself into two SBUs on the basis of its general category of products (flat and long) since they were very different from each other. This suggestion was made for greater degree of specialization, easier division of labour and materials, greater product focus thus saving time and money. But this structure could not be implemented as it had some serious drawbacks. First of all, the possibility of different divisions developing a subunit orientation was extremely high that would hamper the organization as a whole. Also, with different products (long and flat) requiring the same raw materials, such a division would increase transportation costs as the same materials will now have to be supplied to different locations. To add to it, employees who received extensive training to play different roles in the organization would now be restricted to their areas of specialization. With different units concentrating on their own work without much communication, they wouldnt be able to help each other out in case such a need arises.

Answer 5: Rationale behind 'Centralized' Marketing organization


The rationale behind a centralized marketing organization could be as follows: a) To promote its diversified product range with a standard image of quality as no matter what the product is, quality is always a mark of superiority. b) Different channels of distribution could be used in a more effective manner. c) To maintain discipline by gaining greater control over its wide network of 34 branches and 54 stockyards. d) To standardize processes so as to bring everything in congruence with SAILs strong task culture and institutionalized role orientation.

Answer 6: 'Core technology' at SAIL


SAIL, being a steel manufacturing company, heavily relies on its core technology for conversion of raw materials (coal, dolomite, limestone etc.) into steel. In this process, raw materials are first converted into molten steel vial heating in a blast furnace. This molten steel is further processed to obtain the final product. For this, SAIL has 5 integrated and 3 special steel plants. An appropriate structure considering the technology imperative could be: a) As per Joan Woodward: Owing to an extremely high technical complexity with little or no variation in output, there is a need for continuous production since production rarely stops. b) As per Charles Perrow: Owing to high variety and high analysability, there is a need for engineering production. c) As per James Thompson: A pooled structure accompanied by mediating technology would be appropriate because of high centralization, high standardization, low communication between units (divisional structure) and low priority for locating units close together.

Answer 7: Effectiveness of SAIL as an organization


Effectiveness of SAIL can be evaluated using the following approaches: a) The Systems Approach: It looks at how effectively an organization is able to convert input into output. Both the goals and the means of achieving those goals are looked at. Using this approach, we can say that SAIL is effective but can become even more effective by controlling delays (due to centralized decision making) and inflexible operations. This can be overcome by letting the lower lever mangers to make on-site day to day decisions so that high level managers can focus on long term strategy planning. Also, high communication between units needs to be promoted for flexible planning. b) The External-Internal-Technical Approach: It consists of the following measures: i. External Resource Approach (Control): It evaluates how effectively an organization manages and controls its external environment (accessing raw materials, training employees etc.). ii. Internal System Approach (Innovation): It evaluates how effectively an organization functions and operates. It looks at the organizations ability to innovate and function quickly and responsively (cut decision making time, reduce conflict, speedy time to market etc.). iii. Technical Approach (Efficiency): It evaluates how efficiently an organization converts a fixed amount of skills and resources into finished goods and services (increase quality, reduce costs etc.).

The company has been able to manage the external environment since liberalization. It has also been able to work well on its technological aspect through modern, state of the art technology. But as far as its internal approach is concerned, there have been huge delays in its functions and operations owing to high centralization. So, we can say that SAIL is quite effective under this approach, but there is still some room for improvement (especially in its functions and operations).