PGBM 68PGBM 156 ASSIGNMENT ANSWER . UNIVERSITY OF SUNDERLAND PGBM156 Strategic Management in an International Context Individual Assignment Case Study: Managing Strategy in Covid – 19 Environment – evidence from Multinational Corporations (MNCs)

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1.0 Introduction This report aims to provide a case study of strategy adopted in Covid 19 Environment and efficiency and effectiveness of such strategy, evidenced from a chosen multinational corpora... tion (MNC): in this case Eicher Motor Limited, an Indian domiciled MNC which is the global leader in middleweight motorcycles. The next section of this report will describe various strategies adopted by the company to effectively overcome the disruptions caused due to Covid 19 outbreak, followed by a study of organisational leadership perspective and organisational dynamics perspective, and lastly the paradox of profitability and corporate social responsibility. In the final part, a personal reflective learning is highlighted. 2.0 Question One: Managing Complexity in Covid-19 Environment: Complex problems are typically defined as those that include the ability to approach them from multiple, sometimes competing, perspectives and which may have multiple possible solutions. (Rittel & Webber 1973) whereas simple business problems are very much fundamental where one can find a solution by following traditional means like cash flow problems, competition etc., In the context of Corona virus outbreak business are challenged with much complex business problems affecting almost all areas of the business starting from supply chain issues, human resource safety, impact on the liquidity etc., Eicher motor Ltd’s is the listed parent of Royal Enfield motorcycles which the oldest motorcycle brand to be in continuous production since 1901. In addition to the Motor cycle business, the company also has a commercial vehicles unit, in the form of joint venture with Sweden’s AB Volvo, VE Commercial Vehicles Ltd., The company’s performance in 2019-2020 and in first 3 quarters of 2020-2021 are analysed as the company has not yet released its annual report for the year 2020-21 Firstly, regarding the impact of the lockdown in India and the effect of outbreak of Covid 19, 1. The company’s operations were seriously affected as it has suspended the operations from March 23, 2020 to May 6,2020 due to nationwide lockdown. The Summary of Results is detailed in the below tables: (in crores) 1 Particulars 1st quarter % of 2nd quarter % of 3rd quarter % of 19-20 20-21 inc/ (dec) 19-20 20-21 inc/ (dec) 19-20 20-21 (dec) inc/ Revenue from operations 2,361 809 (66) 2,192 2,112 (4) 2,505 2,953 18 PAT (55) 452 (919) 601 459 (24) 498 533 7 1. The company during the year 2019-20 was already going through a tough phase as there India was experiencing general economic slowdown and as there were new entrants into the segment like Particulars 2018-19 2019-20 % of change inc/(dec) Royal Enfied Units Sold 823,828 698,216 (15) Revenue from Operations 9,797 9,077 (7) EBITDA 2,944 2,204 (25) PAT 2,054 1,903 (7) VCEV Units Sold 143,448 95,260 (34) Revenue from Operations 11,600 8,524 (27) EBITDA 988 415 (58) PAT 475 58 (88)Jawa and Honda. As the company was recovering and started showing growth in the start of 2020 lockdown was imposed and they had to shut down the factory. 2. In response to the Covid 19 outbreak, the company stuck to its ethics, it followed all the rules and regulations that the local and the union government and the governments of different countries put forth promptly. It gave necessary aids to its employees and engineers. Since the company’s fundamentals were strong it was brave enough to take the hit in sales and profits for the lockdown period and even after the lifting of lockdown the company made sure the safety of its stakeholders by introducing new schemes for purchasing the vehicles like Contactless purchase, and Contactless service. Their values in giving first preference to customer’s safety have helped them now to create a new opportunity for the business. By March 2021, their digital inquiries accounts nearly to 50% of the inquires. Before Covid 19 outbreak it was only 10% to 15%. Moreover they have managed to double the conversion from the digital inquiries which helped in increasing the sales units. By 3rd quarter the company has attained more sales than pre covid period. 3. Covid 19 Outbreak seriously affected the company’s supply chain. Once the restrictions were eased the automakers were able to source the inventory. 4. The company did not compromise on Advertising Expenditure. The advertising which is majorly done through digital is carried on as usual. 5. The Company’s workers were asked to work from home and all their salaries were promptly paid without any cuts. From the above points, we could observe that the company decided to take the hit in the form of lockdown. Since the company’s financials were strong the company was able to take the loss and with their new initiatives and loyal customer base they were able to recover their sales growth and managed to post a 5% increase in the units sold in 3rd Quarter of 2020-21 in comparison with same time period of previous year. 2 Demand for Localization and Demand for Globalization: According to Cambridge Dictionary localization means, “the process of organizing a business or industry so that its main activities happen in local areas rather than nationally or internationally.” In the context of marketing it means, “the process of making a product or service more suitable for a particular country, area etc.” According to Oxford dictionary globalization means, “the process by which businesses or other organizations develop international influence or start operating on international scale.”In recent times, the demand for localization, custom made products have gained more importance. Though it is not a paradigm shift, the shift in the consumers’ perception is significant. It was one of the factor that helped the Royal enfield to grow its business in India. The company from 2016 started establishing distribution centres across the world and exports to over 50 countries. The company has assembling Factory in Argentina and has a manufacturing unit in UK. The Company while catering to different countries has not changed the engine or the marketing theme of the bike. It has only changed the mandatory changes that is required due to change in climate, road conditions etc. Since the brand is actually a UK brand the company did not find it difficult to connect with their customer base in UK. Many also feel that most of the other bikes in the segment are much modernized and the bikers were not able to feel the wholesome riding experience. Thus the company is clear that it has made a global product and stuck onto the same with minor modifications. 2.0 Management Control Versus Organisational Chaos: Organisational context can be understood as the culture or ethos or environment around which an organisation is built and operated. Generally the organisational context is established through Vision, and mission statements. Organisational Development is the process to implementing practices, techniques and systems to effect an organisational change. Organisational development is deemed to be required when the entity’s business strategies do not align with the organisational culture. The organisations in order to acquire efficiency in operations must align their culture and strategies. Conflicts in the culture and strategies will create chaos and inefficiency in the operations of the organisations. Research shows that numerous change interventions fail because managers do not give sufficient attention to leadership, culture and managing change (Bennis, 2002; Boonstra & Vink, 1996; Brooks & Bate, 1994; Hamlin, 2005; Hamlin et al., 1999; Hamlin, Keep & Ash, 2001; Kotter, 1996; Ogbonna & Harris, 2002; Warrick, 1995. Changing an organisational context is complex and should be handled with utmost concern as it can seriously affect the labour performance, staff turnover, training costs, etc., Hence Organisational Development is a careful process of making necessary change in the Organizational Context for the survival of the organisation. 3 Organisational Leadership Perspective and Organisational dynamics perspective: Organisational leadership is the ability to lead the various group of employees and align the various stakeholders to achieve the common goal of the organisation. It is the responsibility of the leader to set the vision, mission and goal and construct a strategy and communicate it to all the employees and set the tone to achieve the common goal of the company. Organisational dynamics focuses on the employees of the organisation. In the case of Eicher Motors Ltd. its success can be majorly attributed to its Managing Director, Mr. Siddhartha Lal. During the year 2004, Eicher Motors Ltd. almost decided to sell off Royal Enfield division as it was not able tomake enough sales to cover its cost and was making losses continuously, it was its then COO Mr. Lal who was the reason behind the retaining the business of Royal Enfield bikes which was majorly due to his passion for the bikes. During that time, Eicher was into 15 diverse businesses right from trucks, tractors, motorcycles, garments, footwear, etc., but in none of the business it was a market leader. It was Mr. Lal who took the call of divesting in 13 businesses and to put the money in Royal Enfield business to make a turnaround. Now after a decade, the company’s has successfully achieved and maintaining as the market leader in two of its 15 businesses that it decided to retain, the commercial vehicle segment and Middle weight Motorcycle segment, with the royal enfield business bringing in 80% of the profits. [Show More]

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