Mahut Group: A Failed Case of Organizational Restructuring

Ashok Som

Mahut Group (name disguised) was a family-owned business group that operate two cement companies, Heera and  Moti (name disguised), in Gujarat, the Western part of India. Heera Cement has been making substantial losses since its inception and was currently under the consideration of Board of Industrial & Financial Reconstruction (BIFR). Moti Cement was also a loss-making company but the losses were not substantial as that of Heera. Each of the cement companies, Heera and Moti, had a production capacity of 1.2 million tons of cement per annum.  The Mahut Cement Group had about 1000 employees, out of which about 30 personnel were in the top management. As of 1999, both the cement companies competed with each other in addition to competing with other cement players operating in Gujarat. The cement industry was deregulated in India in the late 1980's which resulted in fierce competition and price wars among the cement firms. In the face of this fierce competition, the Group decided on a restructuring process, and hired an American consulting firm, in 1998, to find a “synergy” between the two companies, Heera and Moti, and help the two companies to turnaround. This case discusses the issues of the restructuring process and the various interventions undertaken by the top management of Mahut Group. The case discusses the recommendations of the consultant and the role of human resource management during the restructuring process.

Turbulent Times at MoneyInc: Effects of Change in the New Zealand Public Sector

Douglas Ashwell

The late 1980’s saw the New Zealand Government implement a number of radical economic reforms. As part of these reforms, a number of formerly public organisations were transformed into profit-making enterprises. These reforms resulted in large scale redundancies in a number of industries. During this time Rob joined MoneyInc a former publicly owned and operated financial institution, undergoing restructuring to become a State Owned Enterprise. The branch where Rob was employed was suffering from a number of redundancies and staff changes. Although a newcomer to the organisation and its culture, Rob quickly indicated his aspirations to be involved in the sales area of MoneyInc and was offered the job of Sales Officer by the branch management. At the time, this job was held by Mary a well respected and long-time employee of the branch. The manner in which this staff change was made led to a serious interpersonal conflict between Mary and Rob which affected the whole branch. This case can be used to examine issues related to staff job changes, such as trust, organisational culture and conflict management.

SingTel: Venturing into the Region

Loizos Heracleous & Kulwant Singh

In mid-2003, SingTel was at a key point in its history. The last decade had seen dramatic changes, as SingTel transformed itself from a Singapore-based government-owned telecommunications firm with no foreign operations and no domestic competition, to a credible regional competitor. By 2003, SingTel had invested more than $20 billion in substantial international operations in East and South Asia, Australia and Europe, and had survived perhaps the biggest collapse the telecommunications industry had ever suffered.  SingTel was confident enough for its CEO, Lee Hsien Yang, to claim that the firm was “the leading communications company in Asia”.  Yet there were many doubts about its performance. SingTel was accused of lacking a clear strategy in its overseas ventures, of having overpaid for several of its overseas acquisitions, and most significantly, of having destroyed shareholder wealth. This case presents a brief outline of the main trends in the global and Singapore telecommunications industry and discusses SingTel’s efforts to regionalize, with a focus on the Optus acquisition. The case ends with a call to evaluate the success of SingTel’s regionalization efforts, in particular the Optus acquisition, and to discuss what SingTel’s strategy should be for the future. 

Performance Challenges at Masood Textile Mills

Zafar Iqbal Qureshi

Shahid Nazir, Chief Executive Officer of Masood Textile Mills in Faisalabad, Pakistan wanted to turn his company into one of the leading apparel companies in the world. To achieve this vision, Nazir wanted to transform his employees into what he called ‘corporate athletes’ through his vision and a more credible Performance Appraisal System. However, the results of an employee survey earlier in the year indicated that the company’s performance appraisal was perceived by the employees to be subjective, inadequate and lacked credibility.  This was of serious concern to Nazir. He therefore developed a new Performance Appraisal and Reward System. Implementation of the new system, however, was delayed temporarily due to the events of 9/11 and Nazir now aimed at its enforcement by mid 2002. He was of the opinion that the implementation of the new system would help in improving the motivation of his employees which, in turn, would lead to sustained high performance so essential to realize his vision. This case is useful in examining the design and implementation of an employee performance appraisal and reward system.

L&T: Restructuring the Cement Business

Ashok Banerjee and Neeraj Dwivedi

The case describes one of the most hyped and controversial acquisition and de-merger episodes in Indian corporate history. The case involved two Indian diversified corporations: Grasim Industries Limited (Grasim) which belonged to the Aditya Birla group and a professionally managed Larsen and Toubro Limited (L&T). With an eye on exploiting possible synergies in the cement business, Grasim acquired a big chunk of shares of L&T and then went on to make an open offer for more shares. The case describes the situation and events unfolding after these developments with a view to highlight the intricacies involved in corporate restructuring through the process of demerger, such as, valuation, synergies, takeover defense and negotiations among various stakeholders.

Corporate Governance and the Challenges of Economic Transition: The Case of Shanghai Petrochemical Company

Damian Tobin

A case study of Shanghai Petrochemical Company (SPC) is used to analyse how economic reforms in China have impacted on corporate governance and enterprise performance. Reforms have increased the level of competition and altered the corporate structure of large state enterprises such as SPC. The case examines how SPC has responded to the opportunities and challenges created by the reform process. The case study indicates the despite changes in corporate structure, property rights remain unclear, resulting in a weakened corporate governance structure. Enterprise management had responded in an innovative way to the challenges of more competitive product markets. Improvements in areas such as efficiency, sales and management profile were largely a result of market-oriented reforms. However, weak property rights and a failure to integrate ownership and market reforms more effectively, had lessened the ability of SPC's management to fully exploit new business opportunities. Improvements in efficiency and sales had yet to be reflected in financial returns. The research case therefore indicates that a more integrated approach to enterprise reform is necessary for enterprises to benefit fully from economic liberalisation. 

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