Semester 1 Business Management
IIBM Institute of Business Management
IIBM Institute of Business Management
Semester-1 Examination Paper MM.100
Organizational Behaviour
Section A: Objective Type (30 marks)
This section consists of Multiple Choice questions & Short Notes.
Answer all the questions.
Part One question carries 1 mark each & Part two carry 4 marks each.
Part one:
Multiple choices:
1) Friendship groups are
a) Party Groups
b) Formal Group
c) Evolved informally
d) Social Groups
2) Effective communication is the foundation
a) Of modern organization
b) Of formal organization
c) Of Foreign relations
d) Of informal organization
3) Perception is used in
a) Selection of candidate for employment
b) Compensation and reward
c) Enrichment and motivation
d) None of the above.
4) Attitude do not influence by
a) Family
b) Educational background
c) Policies of organization
d) Religion
5) Job enlargement means
a) Adding other task to the job.
b) Removing job responsibilities.
c) Job Testing
d) Job formal examination
Semester 1 Business Management
IIBM Institute of Business Management
6) Conflict is a
a) Immoral activity
b) Rational Behaviouer
c) None of the above
d) Natural disagreement
7) Fatigue can be defined as the ________ of the body as a result of continuous physical activity
a) Tiredness
b) Activeness
c) Possessiveness
d) Color
8) Written communication is a
a) Non-Direct Communication
b) Direct Communication
c) Waste of papers
d) Waste of time
9) Direct Communication________ are the rules of pattern and behaviour that are expected from all team
members.
a) Norms
b) Regulations
c) Guidelines
d) Format
10) The pension plans, gratuity contribution and mandatory provident fund rules are framed basically to
take care of ________ needs.
a) Security
b) Sensitive
c) Scrutiny
d) Saving
Part Two:
1. Explain ‘Y’ theory of Mc Gegor.
2. Explain Chris Argyris’s immaturity – maturity theory.
3. Explain ‘Halo effect’.
4. Write a note on ‘Reinforcement theory’.
5. Explain the terms “attitudes and values.
END OF SECTION A
Semester 1 Business Management
IIBM Institute of Business Management
Section B: Caselets (40 marks)
This section consists of Caselets.
Answer all the questions.
Each caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
Caselet 1
Kanchan and company limited was one of the leading manufacturers of pumps for the domestic,
agriculture, and industrial use. It had its corporate office at Delhi. One of its plants was located at
Faridabad, the industrial town of Haryana which is only 30 km away from Delhi. The plant at
Faridabad manufactured nearly 200 different types of pumps categories as, the mini domestic pump,
jet pump, four inch submersible pump, single phase monoblock pump, three phase monoblock
pump, end suction pump and pumps for special use. Target customers for these products were
household units, farmers, urbans (municipal corporation, civil contractors etc.), industrial houses
etc.Unit 1995, the company was one of the major players in all the market segments without having
any threat from its counterpart competitors. With the process of liberalization and globalization, a
number of competing companies entered in the business of manufacturing pumps. Some of the major
competitors were Taximo in the agricultural segment, KSB and Kalama in the submersible segment,
Sharp in the domestic segment and Crompton in almost all the segments. Because of the stiff
competition, the company had lost its market share in al the market segments. Also the financial
performance of the company had deteriorated as indicated by EBIT and PBT as shown in Annexure-
I. To counter the competition and to get international acceptance for its products, the company
pursued to get ISO 9000 and obtained the ISO 9001 certification in the year 1994. For its social
acceptability, the company obtained ISO 14001 in the year 1997, and to retain this certification, the
company started incorporating continuous improvements in all the areas of its operations.
Until 1995-96, the focus was on maximum capacity utilisation of man and machine and the
bargain parts were manufactured continuously without analyzing their actual requirements resulting
in the high inventory level of some parts and stock out in others. This resulted in the higher cost of
manufacturing in two ways i.e., production stoppages because of the unavailability of parts and higher
inventory cost of parts which were not required. To have maximum utilization of machines, and to
meet the market demand, the unit was working in three shifts. Since machines were used 24 hours a
day, the organization needed hitech machines with low maintenance requirements resulting in short
life span of the machines. The organization was able to meet seventy percent of the market demand in
all categories of the product. With the increasing competition, the company had to face declining
market share in some product categories. The company formed inhouse team to identify the areas in
which the unit was facing problems. The team identified that the high inventory in all the areas, high
rejection rate of the parts manufactured inhouse , low worker morale, high absenteeism, high cost
of manufacturing, high level of wastages and scrap, lower customer satisfaction and unsatisfied
demand in some product categories were some of the major reasons contributing to the poor
performance of the unit. The problems were discussed by the management and the consultancy
services of Tata Institute of Social Sciences were hired to look into problems in the area of human
resources. The other areas were investigated by inhouse teams. On the basis of the suggestions
Semester 1 Business Management
IIBM Institute of Business Management
received from the consulting team from TISS and the inhouse teams, following changes were
introduced.
Overall manufacturing system was reoriented from the push system to the pull system, i.e., the
different products were manufactured according to the market demand. Machining centre of the
manufacturing facility and part of the foundary section was converted to a synchronous
manufacturing system.
The plant layout was changed from the process based layout to group technology (Cellular
Layout) resulting in a muti-skilled workers requirement instead of a single skilled worker
requirement. The organization provided training to the existing workers to acquire the skills in the
additional areas. This also resulted in the team approach towards the same objective.
A system of the Joint Development Council (JDC) consisting of three tier organization, viz.
functional council, cross functional council and the apex council, having equal representatives
from the management and the union was evolved. There were three functional councils for the
three functional areas, the foundary department, the service department and manufacturing
department. The functional councils were responsible and accountable for absorbing the latest
organizational methods and processes for the day to day operations to achieve the company goals
of growth and profitability. The cross-functional council was responsible and accountable for
making recommendations for the development/improvement, which would help to achieve the
annual operating plans through the quarterly/monthly plans. This council was also responsible for
resolving issues pertaining to the operations and maintenance of the manufacturing standards,
quality standards, capacity utilization and resources mobilisation. It also helped the apex council
in taking final decisions in these matters. The apex council was responsible and accountable for
resolving the issues that would arise in the operationalisation of the various
development/improvement schemes and also looked after the overall well being of the workmen
besides addressing itself to achieving the company goals. Meetings of all the three councils of the
joint development council system were conducted every fortnight, every month and on each
quarter.
The company introduced various programs for the development of its workforce like,
a) A cadre system by which the company offered grades to the employees purely on the basis of
their merit and work experience. In order to assess the knowledge, skills and behaviour inventory
of the workers, the system of conducting theory and practical examination followed by an
interview was evolved. In earlier system, the workers carried out simple functions based on the
skills and the scales were also fixed based on the type of work carried by the workers, resulting in
the disparity in the scales of workers on the same product and having similar experience.
b) Continous Performance Improvement Scheme (CPIS) : this scheme was developed to focus on
ensuring the meeting of customer needs, zeroed rejections at the various operations, zeroed
breakdown of the machines, maximize the capacity utilization and developing the workers’
pride in the ownership. For these objects, the selected parameters of the CPIS were, the quality of
operations, up keeping of the machines etc., availability of workmen and the capacity utilization.
And therefore, the daily earning of the direct workmen under and CPIS were computed based on
reducing the internal and the external rejections, increasing the availability of manpower and
machines and improving the capacity utilization. In order to calculate the daily earnings of the
direct workers under CPIS, following formula was developed.
ED = { ( EQ1 + EQ2 + EA1 + EA2 + EC) * N/n} * {Aa/An}
Efforts for system Improvement
Broad production norms were developed.
Cell owners oncept was introduced.
Semester 1 Business Management
IIBM Institute of Business Management
Integrated quality control system was introduced.
Integrated productive maintenance system was introduced.
Single digit minute die-exchange time was achieved in seventy percent of the cases.
Rapid exchange of tool/ dies was achieved in twenty to thirty percent of the cases.
First out time was introduced to reduce inventory at the casting and finish stores.
Focus was shifted from machines to shops.
Shift from component manufacturing to end-product manufacturing.
A number of mangers and workers were removed/withdrawn from the number of activities.
Shift from the individual incentive scheme to the group incentive scheme.
Despite al these efforts, the organization was still facing teething problems in a number of areas
1. The organization had reduced the raw material and the finished goods inventories but still it was
on the higher side.
2. Process improvements had been carried out only in parts because of high investment
requirements.
3. The workers were apprehensive and suspicious about the way the CPIS was introduced.
4. The organization had not done the cost benefit analysis of the changes they had made.
5. Tools and die replacement time had been considerably reduced but still needed improvement.
6. Synchronized manufacturing system had been introduced only in a few parts of the
manufacturing unit.
7. To cater to the changing demand, the organization had assigned higher man power than require,
leading to some idle man hours during normal demand periods.
8. Power supply constraints forced the company to use the age old method of manufacturing instead
of the technology.
9. Bilateral settlement had been signed with the recognized union however, there were more than
one union having their representation amongst the workers.
10. Rejection level of the casing had come down from 12.5% to 12.2%.
11. With the measures taken by the company, the financial position had improved as indicated by the
EBIT and the PBT
The apex body during its last meeting appointed a committee to review the progress made by the
different departments under the continuous improvement program . Ramchandran was appointed
the chairman of the committee. Ramchandran after completing his preliminary investigation,
forwarded the preliminary report to the management . The General Manager of the unit, Harish
Narayan, noted that the unit had made a lot of progress through continuous improvement program
but still the unit was not in a comfortable position in relation to its competitors. He was worried
as to what the organization should do to speed up the process of continuous improvement.
1. Did kanchan and Company Limited adopt the right strategy in improving the overall performance
of the organization?
2. Was it right to use a complex system for determining the workers incentives?
3. If you were the head of the unit, what steps would you have taken to remove the problems which
were still persisting.
4. What should the company do to maintain and improve its market position?
Semester 1 Business Management
IIBM Institute of Business Management
Caselet 2
Gagan International Limited was established in the year 1978 at Nasik. It was an international
business unit of Gagan group which had an annual turnover of Rs 5,000 crores and an employees
strength of 1,50,000. The group enjoyed a good reputation for its technology and quality. Gagan
International Limited had an annual turnover of Rs. 1500 crores and its activities ranged from trading
in the engineering and consumer products, to the manufacture of high quality finished leather,
leather bags, leather purses and wallets and leather outfits and the execution of the turnkey projects
and the project related management services overseas. The company maintained the network of
international offices located at commercial centers in the developed countries and also in several
developing countries. The company had a total strength of around 1100 employees with 51 managers,
120 officers, 175 staff and 674 workers. Most of the workers were literate and in their early 40s.
There were 18 women workers in the workforce. Workers belonged to the same community and
would absent themselves from the workplace, enmass particularly during summers which is the
season of marriages and harvesting. They were high on social orientation and did not mind being
absent from the workplace even for the marriage or may similar event of a distant relation. With the
result enmass absenteeism would hinder the production of the company. The workers would also
absent themselves on account of alcoholism, non payment of loan, and sickness in the family. As a
measure to deal with the problem, the asked the ESI doctors not to issue sickness certificates to the
workers. The company had a practice of making visits to the family of the worker and even
hospitalizes the sick child of the worker to facilitate the worker and reduce the absenteeism. In 1990,
the company introduced a special attendance bonus as an incentive to discourage absenteeism. A
worker who had the full attendance for a month would get Rs 80 in addition to one casual leave, and
if he would earn it for three months then he would get cash reward of Rs 500. This advantage was not
availed by the chronic cases. The company felt that they had a social commitment and therefore, even
recruited two social workers, Maitre Gupta and Anuradha Pandey, who would make frequent visits to
the families of the workers who frequently absented themselves from the workplace. The social
workers visited 2-3 families per day to keep the morale of the families high and to show the concerns
of the company for its workers. As it was typical of the workers community, these workers kept their
families in dark about the incentives that they would get in the organization. For generating
awareness about the company and to educate the family of the workers, the company often organized
lectures for them by the Teachers of Central Board of social welfare, a nodal center of social welfare
established by the Government of India.
In October 1999, it was discovered in one of the sections that a good skilled worker, Madan
Lal, aged 35, used to absent himself frequently. He used to be absent for fifteen days at a stretch
every month. On collecting the information from his family and coworkers, it was found that they he
had been taking brown sugar and his drug dependence had been the reason for his recurrent
absence. Maitre Gupta visited his family and found his wife Bhagwanti quite dejected and helpless on
account of her husband’s behavior. Madan Lal would not even spare the household utensils to get the
brown sugar if he did not have the money. Madan Lal had stupid upto eight standards and his wife
Bhagwanti was fourth standard school drop our, they had two small school going children. Madan lal
had separated from his parents though they lived nearby.
Maitre Gupta after several visits, convinced Bhagwanti and parents of Madan lal that deaddition
of Madan Lal was important and it was possible only if they extended full cooperation to her.
They were instructed not to allow Madan Lal to go out of home alone and he was to be accompanied
to the bus stop where the staff bus (a special facility extended to him) was to pick him to the factory
with Maitre Gupta accompanying him. On his way back, Maitre Gupta would be with him upto the
bus stop where his family members would be waiting to accompany him to home. This arrangement
Semester 1 Business Management
IIBM Institute of Business Management
continued for a few days and Madan Lal did not taste brown sugar inspite of his suffering on account
of withdrawal symptoms. In between Maitre Gupta discontinued accompanying him in the bus and it
was soon discovered that his drug addiction was relapsed. He would leave the served show cause
notice, but it was of no avail. Maitre Gupta felt that Madan Lal should be sent to the rehabilitation
center and was sent to the Ashirwad De-addiction and Rehabilitation center at Nasik. Here Madan
lal was treated for the de-addition and was discharged after 15 days.
After his discharged, Madan lal resumed his duty. Maitre Gupta, in consultation with
Sudhakar Bhatt (DGM, Human Resource and Industrial Ralations ), worked out a new system for
Madan Lal. His monthly salary was directly handed over to Bhagwanti. Lunch coupons were stopped
for him because he would sell them for money to buy the brown sugar. If he would absent himself
from the job, he was forced to meet Maitre Gupta and Sudhakar Bahtt who would counsel him and
ask for his confession in writing. In between, he was also charged sheeted and suspended for four
days. He was even served a show cause notice three times. The four days suspension costed him four
days salary as a punishment, his family was kept informed by Maitre Gupta all through. However, by
the end if six moths, Madan lal showed signs of complete recovery. He started coming to work
regularly with an improved performance. The organization fulfilled its social commitment by
transforming and retaining a good worker, even when he had undergone a dark period of two to three
years of drug addition.
1. The company faced the problem of mass absenteeism. Is it desirable to recruit workers from the
same community?
2. Were the efforts put by the organization worth in transforming Madan lal from a drug addict to a
performing worker? Justify your answer.
3. Was suspension of Madan lal justified? Comment.
4. Was the organization socially committed in a real sense or all the efforts were focused at profit
making?
END OF SECTION B
Section C: Applied Theory (30 marks)
This section consists of Long Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
1. A large unit manufacturing electrical goods which has been known for its liberal personnel policies
and fringe benefits is facing the problem of low productivity and high absenteeism. How should the
management improve the organizational climate?
2.Discuss the nature and significance of morale ? Describe the relationship between morale and
productivity?
END OF SECTION C
------------------------------------------------------------- ***------------------------------------------------------------
IIBM Institute of Business Management
IIBM Institute of Business Management
Semester-1 Examination Paper MM.100
Organizational Behaviour
Section A: Objective Type (30 marks)
This section consists of Multiple Choice questions & Short Notes.
Answer all the questions.
Part One question carries 1 mark each & Part two carry 4 marks each.
Part one:
Multiple choices:
1) Friendship groups are
a) Party Groups
b) Formal Group
c) Evolved informally
d) Social Groups
2) Effective communication is the foundation
a) Of modern organization
b) Of formal organization
c) Of Foreign relations
d) Of informal organization
3) Perception is used in
a) Selection of candidate for employment
b) Compensation and reward
c) Enrichment and motivation
d) None of the above.
4) Attitude do not influence by
a) Family
b) Educational background
c) Policies of organization
d) Religion
5) Job enlargement means
a) Adding other task to the job.
b) Removing job responsibilities.
c) Job Testing
d) Job formal examination
Semester 1 Business Management
IIBM Institute of Business Management
6) Conflict is a
a) Immoral activity
b) Rational Behaviouer
c) None of the above
d) Natural disagreement
7) Fatigue can be defined as the ________ of the body as a result of continuous physical activity
a) Tiredness
b) Activeness
c) Possessiveness
d) Color
8) Written communication is a
a) Non-Direct Communication
b) Direct Communication
c) Waste of papers
d) Waste of time
9) Direct Communication________ are the rules of pattern and behaviour that are expected from all team
members.
a) Norms
b) Regulations
c) Guidelines
d) Format
10) The pension plans, gratuity contribution and mandatory provident fund rules are framed basically to
take care of ________ needs.
a) Security
b) Sensitive
c) Scrutiny
d) Saving
Part Two:
1. Explain ‘Y’ theory of Mc Gegor.
2. Explain Chris Argyris’s immaturity – maturity theory.
3. Explain ‘Halo effect’.
4. Write a note on ‘Reinforcement theory’.
5. Explain the terms “attitudes and values.
END OF SECTION A
Semester 1 Business Management
IIBM Institute of Business Management
Section B: Caselets (40 marks)
This section consists of Caselets.
Answer all the questions.
Each caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
Caselet 1
Kanchan and company limited was one of the leading manufacturers of pumps for the domestic,
agriculture, and industrial use. It had its corporate office at Delhi. One of its plants was located at
Faridabad, the industrial town of Haryana which is only 30 km away from Delhi. The plant at
Faridabad manufactured nearly 200 different types of pumps categories as, the mini domestic pump,
jet pump, four inch submersible pump, single phase monoblock pump, three phase monoblock
pump, end suction pump and pumps for special use. Target customers for these products were
household units, farmers, urbans (municipal corporation, civil contractors etc.), industrial houses
etc.Unit 1995, the company was one of the major players in all the market segments without having
any threat from its counterpart competitors. With the process of liberalization and globalization, a
number of competing companies entered in the business of manufacturing pumps. Some of the major
competitors were Taximo in the agricultural segment, KSB and Kalama in the submersible segment,
Sharp in the domestic segment and Crompton in almost all the segments. Because of the stiff
competition, the company had lost its market share in al the market segments. Also the financial
performance of the company had deteriorated as indicated by EBIT and PBT as shown in Annexure-
I. To counter the competition and to get international acceptance for its products, the company
pursued to get ISO 9000 and obtained the ISO 9001 certification in the year 1994. For its social
acceptability, the company obtained ISO 14001 in the year 1997, and to retain this certification, the
company started incorporating continuous improvements in all the areas of its operations.
Until 1995-96, the focus was on maximum capacity utilisation of man and machine and the
bargain parts were manufactured continuously without analyzing their actual requirements resulting
in the high inventory level of some parts and stock out in others. This resulted in the higher cost of
manufacturing in two ways i.e., production stoppages because of the unavailability of parts and higher
inventory cost of parts which were not required. To have maximum utilization of machines, and to
meet the market demand, the unit was working in three shifts. Since machines were used 24 hours a
day, the organization needed hitech machines with low maintenance requirements resulting in short
life span of the machines. The organization was able to meet seventy percent of the market demand in
all categories of the product. With the increasing competition, the company had to face declining
market share in some product categories. The company formed inhouse team to identify the areas in
which the unit was facing problems. The team identified that the high inventory in all the areas, high
rejection rate of the parts manufactured inhouse , low worker morale, high absenteeism, high cost
of manufacturing, high level of wastages and scrap, lower customer satisfaction and unsatisfied
demand in some product categories were some of the major reasons contributing to the poor
performance of the unit. The problems were discussed by the management and the consultancy
services of Tata Institute of Social Sciences were hired to look into problems in the area of human
resources. The other areas were investigated by inhouse teams. On the basis of the suggestions
Semester 1 Business Management
IIBM Institute of Business Management
received from the consulting team from TISS and the inhouse teams, following changes were
introduced.
Overall manufacturing system was reoriented from the push system to the pull system, i.e., the
different products were manufactured according to the market demand. Machining centre of the
manufacturing facility and part of the foundary section was converted to a synchronous
manufacturing system.
The plant layout was changed from the process based layout to group technology (Cellular
Layout) resulting in a muti-skilled workers requirement instead of a single skilled worker
requirement. The organization provided training to the existing workers to acquire the skills in the
additional areas. This also resulted in the team approach towards the same objective.
A system of the Joint Development Council (JDC) consisting of three tier organization, viz.
functional council, cross functional council and the apex council, having equal representatives
from the management and the union was evolved. There were three functional councils for the
three functional areas, the foundary department, the service department and manufacturing
department. The functional councils were responsible and accountable for absorbing the latest
organizational methods and processes for the day to day operations to achieve the company goals
of growth and profitability. The cross-functional council was responsible and accountable for
making recommendations for the development/improvement, which would help to achieve the
annual operating plans through the quarterly/monthly plans. This council was also responsible for
resolving issues pertaining to the operations and maintenance of the manufacturing standards,
quality standards, capacity utilization and resources mobilisation. It also helped the apex council
in taking final decisions in these matters. The apex council was responsible and accountable for
resolving the issues that would arise in the operationalisation of the various
development/improvement schemes and also looked after the overall well being of the workmen
besides addressing itself to achieving the company goals. Meetings of all the three councils of the
joint development council system were conducted every fortnight, every month and on each
quarter.
The company introduced various programs for the development of its workforce like,
a) A cadre system by which the company offered grades to the employees purely on the basis of
their merit and work experience. In order to assess the knowledge, skills and behaviour inventory
of the workers, the system of conducting theory and practical examination followed by an
interview was evolved. In earlier system, the workers carried out simple functions based on the
skills and the scales were also fixed based on the type of work carried by the workers, resulting in
the disparity in the scales of workers on the same product and having similar experience.
b) Continous Performance Improvement Scheme (CPIS) : this scheme was developed to focus on
ensuring the meeting of customer needs, zeroed rejections at the various operations, zeroed
breakdown of the machines, maximize the capacity utilization and developing the workers’
pride in the ownership. For these objects, the selected parameters of the CPIS were, the quality of
operations, up keeping of the machines etc., availability of workmen and the capacity utilization.
And therefore, the daily earning of the direct workmen under and CPIS were computed based on
reducing the internal and the external rejections, increasing the availability of manpower and
machines and improving the capacity utilization. In order to calculate the daily earnings of the
direct workers under CPIS, following formula was developed.
ED = { ( EQ1 + EQ2 + EA1 + EA2 + EC) * N/n} * {Aa/An}
Efforts for system Improvement
Broad production norms were developed.
Cell owners oncept was introduced.
Semester 1 Business Management
IIBM Institute of Business Management
Integrated quality control system was introduced.
Integrated productive maintenance system was introduced.
Single digit minute die-exchange time was achieved in seventy percent of the cases.
Rapid exchange of tool/ dies was achieved in twenty to thirty percent of the cases.
First out time was introduced to reduce inventory at the casting and finish stores.
Focus was shifted from machines to shops.
Shift from component manufacturing to end-product manufacturing.
A number of mangers and workers were removed/withdrawn from the number of activities.
Shift from the individual incentive scheme to the group incentive scheme.
Despite al these efforts, the organization was still facing teething problems in a number of areas
1. The organization had reduced the raw material and the finished goods inventories but still it was
on the higher side.
2. Process improvements had been carried out only in parts because of high investment
requirements.
3. The workers were apprehensive and suspicious about the way the CPIS was introduced.
4. The organization had not done the cost benefit analysis of the changes they had made.
5. Tools and die replacement time had been considerably reduced but still needed improvement.
6. Synchronized manufacturing system had been introduced only in a few parts of the
manufacturing unit.
7. To cater to the changing demand, the organization had assigned higher man power than require,
leading to some idle man hours during normal demand periods.
8. Power supply constraints forced the company to use the age old method of manufacturing instead
of the technology.
9. Bilateral settlement had been signed with the recognized union however, there were more than
one union having their representation amongst the workers.
10. Rejection level of the casing had come down from 12.5% to 12.2%.
11. With the measures taken by the company, the financial position had improved as indicated by the
EBIT and the PBT
The apex body during its last meeting appointed a committee to review the progress made by the
different departments under the continuous improvement program . Ramchandran was appointed
the chairman of the committee. Ramchandran after completing his preliminary investigation,
forwarded the preliminary report to the management . The General Manager of the unit, Harish
Narayan, noted that the unit had made a lot of progress through continuous improvement program
but still the unit was not in a comfortable position in relation to its competitors. He was worried
as to what the organization should do to speed up the process of continuous improvement.
1. Did kanchan and Company Limited adopt the right strategy in improving the overall performance
of the organization?
2. Was it right to use a complex system for determining the workers incentives?
3. If you were the head of the unit, what steps would you have taken to remove the problems which
were still persisting.
4. What should the company do to maintain and improve its market position?
Semester 1 Business Management
IIBM Institute of Business Management
Caselet 2
Gagan International Limited was established in the year 1978 at Nasik. It was an international
business unit of Gagan group which had an annual turnover of Rs 5,000 crores and an employees
strength of 1,50,000. The group enjoyed a good reputation for its technology and quality. Gagan
International Limited had an annual turnover of Rs. 1500 crores and its activities ranged from trading
in the engineering and consumer products, to the manufacture of high quality finished leather,
leather bags, leather purses and wallets and leather outfits and the execution of the turnkey projects
and the project related management services overseas. The company maintained the network of
international offices located at commercial centers in the developed countries and also in several
developing countries. The company had a total strength of around 1100 employees with 51 managers,
120 officers, 175 staff and 674 workers. Most of the workers were literate and in their early 40s.
There were 18 women workers in the workforce. Workers belonged to the same community and
would absent themselves from the workplace, enmass particularly during summers which is the
season of marriages and harvesting. They were high on social orientation and did not mind being
absent from the workplace even for the marriage or may similar event of a distant relation. With the
result enmass absenteeism would hinder the production of the company. The workers would also
absent themselves on account of alcoholism, non payment of loan, and sickness in the family. As a
measure to deal with the problem, the asked the ESI doctors not to issue sickness certificates to the
workers. The company had a practice of making visits to the family of the worker and even
hospitalizes the sick child of the worker to facilitate the worker and reduce the absenteeism. In 1990,
the company introduced a special attendance bonus as an incentive to discourage absenteeism. A
worker who had the full attendance for a month would get Rs 80 in addition to one casual leave, and
if he would earn it for three months then he would get cash reward of Rs 500. This advantage was not
availed by the chronic cases. The company felt that they had a social commitment and therefore, even
recruited two social workers, Maitre Gupta and Anuradha Pandey, who would make frequent visits to
the families of the workers who frequently absented themselves from the workplace. The social
workers visited 2-3 families per day to keep the morale of the families high and to show the concerns
of the company for its workers. As it was typical of the workers community, these workers kept their
families in dark about the incentives that they would get in the organization. For generating
awareness about the company and to educate the family of the workers, the company often organized
lectures for them by the Teachers of Central Board of social welfare, a nodal center of social welfare
established by the Government of India.
In October 1999, it was discovered in one of the sections that a good skilled worker, Madan
Lal, aged 35, used to absent himself frequently. He used to be absent for fifteen days at a stretch
every month. On collecting the information from his family and coworkers, it was found that they he
had been taking brown sugar and his drug dependence had been the reason for his recurrent
absence. Maitre Gupta visited his family and found his wife Bhagwanti quite dejected and helpless on
account of her husband’s behavior. Madan Lal would not even spare the household utensils to get the
brown sugar if he did not have the money. Madan Lal had stupid upto eight standards and his wife
Bhagwanti was fourth standard school drop our, they had two small school going children. Madan lal
had separated from his parents though they lived nearby.
Maitre Gupta after several visits, convinced Bhagwanti and parents of Madan lal that deaddition
of Madan Lal was important and it was possible only if they extended full cooperation to her.
They were instructed not to allow Madan Lal to go out of home alone and he was to be accompanied
to the bus stop where the staff bus (a special facility extended to him) was to pick him to the factory
with Maitre Gupta accompanying him. On his way back, Maitre Gupta would be with him upto the
bus stop where his family members would be waiting to accompany him to home. This arrangement
Semester 1 Business Management
IIBM Institute of Business Management
continued for a few days and Madan Lal did not taste brown sugar inspite of his suffering on account
of withdrawal symptoms. In between Maitre Gupta discontinued accompanying him in the bus and it
was soon discovered that his drug addiction was relapsed. He would leave the served show cause
notice, but it was of no avail. Maitre Gupta felt that Madan Lal should be sent to the rehabilitation
center and was sent to the Ashirwad De-addiction and Rehabilitation center at Nasik. Here Madan
lal was treated for the de-addition and was discharged after 15 days.
After his discharged, Madan lal resumed his duty. Maitre Gupta, in consultation with
Sudhakar Bhatt (DGM, Human Resource and Industrial Ralations ), worked out a new system for
Madan Lal. His monthly salary was directly handed over to Bhagwanti. Lunch coupons were stopped
for him because he would sell them for money to buy the brown sugar. If he would absent himself
from the job, he was forced to meet Maitre Gupta and Sudhakar Bahtt who would counsel him and
ask for his confession in writing. In between, he was also charged sheeted and suspended for four
days. He was even served a show cause notice three times. The four days suspension costed him four
days salary as a punishment, his family was kept informed by Maitre Gupta all through. However, by
the end if six moths, Madan lal showed signs of complete recovery. He started coming to work
regularly with an improved performance. The organization fulfilled its social commitment by
transforming and retaining a good worker, even when he had undergone a dark period of two to three
years of drug addition.
1. The company faced the problem of mass absenteeism. Is it desirable to recruit workers from the
same community?
2. Were the efforts put by the organization worth in transforming Madan lal from a drug addict to a
performing worker? Justify your answer.
3. Was suspension of Madan lal justified? Comment.
4. Was the organization socially committed in a real sense or all the efforts were focused at profit
making?
END OF SECTION B
Section C: Applied Theory (30 marks)
This section consists of Long Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
1. A large unit manufacturing electrical goods which has been known for its liberal personnel policies
and fringe benefits is facing the problem of low productivity and high absenteeism. How should the
management improve the organizational climate?
2.Discuss the nature and significance of morale ? Describe the relationship between morale and
productivity?
END OF SECTION C
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