Internation business case:Decorative Tiles Ltd
...niform. Once again in the export scenario, a sub-standard quality product does not qualify for exports. Worse, in this case, the tiles were broken, incompletely glazed, or brittle. All these factors worked against his export orders. Problem 2: Communication with employees became highly complicated. Causes: In the initial phase, the number of employees was less and so the need for a proper organizational structure was not needed. But now, with an increase in orders the number of employees has boomed. This has necessitated division of labor, and departmentalization. Since Mr. Tabir was completely absorbed with increasing his export business, he failed to give adequate attention to the structure planning and as a consequence lost the direct (1-to-1) contact with his employees. The unity of command being broken and also due to the absence of delegation of powers to subordinates, there was no one who could be approached during times of crisis and problems. Problem 3: He had to take a loan at the local bank. Causes: Due to the rapid expansion of the company he could not meet the financial expenses associated with growth. An increase in employees from 17 to 51 and the addition of middle management personnel led to an increase in wages. Added to this, the increased expenditure on raw materials to meet the higher demand; all led to a financial problem leading him to take a loan. Problem 4: Shutdown of the company with decrease in production. Causes: Due to mismanagement and miscommunication between the raw materials and production departments they ran out of critical raw material, thus causing the company to shut down for a couple of days. Also, this miscommunication increased the manufacturing lead time. Due to improper planning the production capacity started declining while the ratio for domestic to foreign market dropped to 1:4 from 4:1. Problem 5: Loss of local customers. Causes: Since Mr. Tabir did not delegate responsibilities adequately to his subordinates and instead maintained the responsibility for Finance, Personnel and marketing individually, he failed to devote enough attention to each of these departments. As a result, domestic competitors got the required lead, while Mr. Tabir failed to make a mark even in the export market. 2. Are these problems typical of an entrepreneur? Yes. The general problem associated with the entrepreneur is that as the business starts flourishing and expanding they fail to delegate responsibilities. Even in instances when authority is delegated the power is not given to the concerned person to execute his authority. Instead of concentrating on consolidating the business, they give over-emphasis on growth. The same problem has occurred here. There is a lack in unity in command. In the very first instance, when the export order was rejected due to quality issues, Mr. Tabir interfered in the purchase manager’s department, thus indirectly hinting at loss in faith. This can lead to de-motivation for the middle management employees. This is a typical problem faced by many entrepreneurs. Once a company gets too big, an ideal scenario would be one wherein the entrepreneur appoints a manager to look after the company and then move on to different aspects of expansion of the unit. But then entrepreneurs often gets stuck in the normal rut of handling day-to-day working of the organization as a result the more important issues of decision making get ignored in the bargain. 3. Does international business aggravate organizational problems of this kind? Yes. When an entrepreneur looks at business from an international point of view and goes in for exports several factors come into the picture: a. Division of Labor: As a business expands it becomes highly inefficient to run it as a single unit. Departmentalization and subsequent division of labor become the need of the hour. Proper coordination between the different departments will help in reducing the increased lead time problem and will ensure smooth functioning. Once again competition in the home market and international market will be well taken care off, since there is a responsible person looking into the matter. b. Increased work force: An increase in the labor normally calls for an introduction of middle level managers who handle different departments. Also in this case unity of command when introduced reduces confusions and allows for faster and more efficient work processes. This will also help to clear the bottle neck in communication. As of now since there is no other person to handle some of Mr. Tabir’s responsibilities, his employees are as of now queuing up outside his office to get even their minor problems solved. By delegating authority to middle level management this bottleneck is cleared. c. Quality manager: In this case the deployment of a quality manager becomes extremely crucial. In the export market uniformity in quality is of prime importance with even a small variation in quality leading to a rejection of the entire order. Mr. Tabir has lost his export orders due to this variation in quality. He can avoid such an opportunity loss in the future by appointing a quality manager who will check into the quality of the products and ensure uniformity and high standards. d. Changing the organizational culture: By entering in the global arena, Decorative Tiles Ltd will go through a major organizational change. And as we know, change is one thing that all the employees or others resist strongly to. In this regard, Mr. Tabir should act like a “Change Handler” and convey to his employees that by entering into the global arena they would be making lots of profits, make them feel secure that by the company venturing into global arena, their job security wouldn’t be at stake. By taking all your employees confidence, re-organization is going to be comparatively easier and in this way, Mr. Tabir will be in the better position to manage the firm. e. Sufficient capital: When a company goes international or starts catering to the foreign market the capital requirements increase in the same proportion. There fore a company when expanding should first try to consolidate its position and then look at growth. Growing at the expense of a fiscal deficit could spell doom for the company. 4. Would you describe Mr. Tabir as an entrepreneur, a manager, a leader, or a combination of these? The most important characteristic that differentiates small business management and that of large enterprises is the close link of the entrepreneur-manager and the business. Entrepreneurship is the quality, which enables people to start a new business or vigorously and innovatively expand an existing one. Entrepreneurs are known to exhibit self-confidence; strong will power, Task/result oriented, Risk-taker, Leadership, Originality, and Future-oriented. These qualities enable them to seek-out business opportunities, conceptualize and initiate business projects, gather the physical, financial, and human resources needed to start the business, set goals for themselves and their enterprises and guide the enterprise and its people to accomplish the goals. Entrepreneurs, being persons having internal locus of control, provide the driving force behind the small businesses based on their belief that their behaviour and action, rather than outside factors beyond their control, determine the outcome of any endeavor. They provide the insight and the vision, being perceptually alert and having high ability to see opportunities and threats in the environment. In this sense, Mr. Tabir is an entrepreneur as the company was one of the few ones who started manufacturing ceramic tiles, which were rather uncommon in the market then. The traditional functions of managers are planning, organizing, leading and controlling. § Planning - analysis of the business environment, appraisal of the performance of the business, defining the goals and objectives of the business, deciding on the best route and ways of achieving them, allocating and budgeting the resources required in the performance of the work and tasks involved, and preparing contingency plans for various possibilities. § Organizing - structuring how and where the various functions, work and tasks are to be done and how they will interact and relate with each other, coordinating the activities of the various units of the organization, and assigning responsibilities and authorities to people and groups for carrying out specific duties and tasks. § Leading - motivating, enabling and drawing-out the talent of the people to achieve the goals of the small enterprise through good communication, building of trust and confidence, creation of the organizational climate for good performance and development of their capabilities, skills and competencies. § Controlling - making sure that the performance is according to plans and expectations through establishment of standards of organizational and individual performance in key result areas, monitoring and measurement of actual performance and results, comparing actual performance versus expectations and taking corrective actions whether to adjust performance level or modify standards where necessary. In this regard, Mr. Tabir has not been successful as neither he would manage the company well nor was a very good leader. The leadership style he adopted in the initial stages of his business was that of a “Directive Leader”, but soon when he ventured into the international arena and he felt the need to delegate responsibilities to others, he would not do the same in an effective manner. He recruited the purchasing manager on the basis of his trust and let his employees take minor decisions, which he was taking all this while. And then suddenly due to the loss incurred, he adopted a very “Coercive Leadership”, interfering in the jobs done by the rest; in a way, not giving them the chance to have responsibility in spite of delegating the authority. As a result of which the productivity fell down and employees started queuing up in front of his door. Unity of command was thus broken, as none of the employees knew whom to report to. Thus, we feel that Mr. Tabir was an excellent entrepreneur but failed as an manager or a leader. 5. Which of these roles is most responsive to training? Managers are most responsive to training. But entrepreneurs-managers of a small enterpr...