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Case Study - Competency To Measure - Managing Confrontation - SEL Limited


Managing Confrontation - SEL Limited


TIME – 90 Minutes


Instructions


  1. Read the CASE and think of the company and its work practices as if you were the SEL Management Committee

  2. As a group discuss possible decision options and then make a choice of any 1.

  3. You would need to discuss the consequences of potential actions based on choice 1

  4. Discuss how would it impact customer satisfaction amongst the possible decision options and the way it would impact the organization?

  5. Do you agree with this group decision? If yes, why and if not why? Explain what will you do now?

  6. What choices would you exercise if you in the position of the CEO?

  7. Would you like to work for somebody like this CEO? What work practices would you like implemented in your company? Would it be similar to a new CEO or would it be different? In what way would it be different? Why?

  8. Can you relate to any experience from your real life on a similar situation in regard to quality-based issue in regard to customers? What did you do at that time? Is the situation similar or different? Explain?

  9. Have you ever made promises to customers that you could not keep because of a change in circumstance or the situation? How did you handle it?

  10. What aspects of organizational culture appear to strike you?

  11. What comes first for a leader? The interest of the group, product, customer, team, culture etc.? What would be your order of preference?

  12. What is your learning from this case study? What is that you would not do based on this learning?


Activities

Step 1 – Read the Case Study and Discuss as a group – 60 Minutes

Step 2 – Reach a decision as a group

Step 3 – Write an Individual Report – 30 Minutes


You have 90 minutes to INTERPRET, DISCUSS and write an individual report.



 

SEL Saurashtra Engineering Limited Case


All day the factory of Saurashtra Engineering Ltd. (SEL) had been buzzing with rumors that the company's new line of chain saws, battery packs, drills, fits, studs had suddenly failed during the testing cycle. Then late in the afternoon, managing director Farhan Lakdawalla called his top managers – SEL Management Committee (technical, sales, distribution, production, research, quality, testing, marketing, commercial, finance, HR) together. He explained that technical director Vaibhav Desai, called for the meeting Desai to outline the situation as he saw it. An obviously tense Desai explained the situation.

I'm afraid we are going to stop production of the new chain saw model, Desai stated flatly. Far too many quality failures. There will be definite customer complaints. After market service will be seriously impacted”.


Shouts of protest immediately erupted around the table. The company had spent over a year in developing the saw for introduction late in the current year. Then suddenly the firm's leading competition splashed out with a marketing campaign for a closely similar product to be introduced in September. The move had galvanized SEL into action. Marketing executives prepared an instant advertising campaign for the new product. Manufacturing cleared floor space, put through rush order on machinery, and went on a crash hiring and training program. There was a pent-up demand for an efficient hand chain saw. It was a known that if SEL didn't get its product to the market at the same time as its competitor, it would stand to lose a large portion of the business.


As the protests died down Desai explained that, as agreed, he has authorized full production after 250 hours trouble-free testing of the prototypes off the production line. But after only another 50 hours, of the saws had suffered main bearing seizures. Desai pointed out that the firm could not risk having that happen in the hands of customers. The risks of life and safety apart from impact on the brand, company reputation, customer safety and insurance issues would be significant. The only answer was to stop production until the fault had been overcome.


Multiplicity of Challenges


Sales director Sanjay Sondhi objected: "It would be disastrous to stop production now. Competition is on an upswing with new promotions and sales discounts. If our competitors get established in the new market before us, we'll have the devil of a job to break hold."


"If you continue production now, we'll still have to pay all the extra men we’ve just hired," added works manager Umesh Bhide.


Lakdawalla brought the meeting to order. He asked each member to outline his case.


Desai spoke, by reminding his audience that the pre-production summer programs had been reduced from the normal 500 hours to 250 under pressure from the marketing department. The latest results showed that over half the saws now coming off the production line would probably since their main bearings after about 300 hours' use. Desai estimated that, using all available facilities, he needed three weeks to produce enough specially made parts to support production until a reliable standard part could be brought into service. Meanwhile, research into the cause of the failures was already under way but the results would not be known for some days.


Keep Lights On


"Why not keep production going, carry out the urgent deliveries, and then replace the faulty parts in a month, at the time of the free service?" asked Sondhi. "Less than 10% of the models in normal service will have been running for 300 hours by that time. That way, we'd have the initial sales and be able to maintain our reputation for reliability."


Bhide supported Sondhi. He wanted to keep production going at all cost, and he pointed out that the factory had no facilities to store the saws, either finished or unfinished. Further, he questioned the validity of Desai's gloomy predictions. He thought that normal on-off use would allow the bearings to cool down so they would last longer than in the development department's flat-out tests. And he suggested that the problem might lie with just one batch of poor material. He contended: "You'll probably find that the bearings don't need modifying. In the unlikely event that they do, we can do the working at the distributor's workshops. There'll be plenty of time after we have the modified parts."


Sondhi put in a few words: "At the worst, failures in service will go up by 7% for a few months. I think it is a risk worth taking."


Lakdawalla is impressed by Sondhi's plan for pressing in with shipments. A successful launch could mean the new saw would generate 20% of SEL's total sales within a year. However, if Lakdawalla waits until the fault is overcome the new product probably won't reach the market until a month after its rival. This in turn would mean a smaller than projected market share, and a longer period to offset the increasing start-up costs.


On the other hand, Lakdawalla has worked hard to build SEL's reputation for reliability. It is almost certain that the trade will eventually find out that he allowed potentially defective product to be sold. In addition, at the back of his mind, is the worry that Desai's men may not be able to produce a reliable bearing in time. Massive failures in service could permanently damage the reputation of all the company's products.

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