Page 19 - Cost

Case Study

Cost of Inefciency and Revamping of Modern

India Limited

By Prof (Dr.) D. Mukhopadhyay

Dean - Faculty of Management, Shri Mata Vaishno Devi University
Katra, Jammu & Kashmir

Backdrop of the Case: the concerned directorates. Te company
works on the strong guiding principles of focus,
Modern India Limited (MIL), a multinational cost leadership and product diferentiation.
frm engaged in manufacturing of alternator Te frm has a full -fedged Total Quality
parts(P1, P2, P3 and P4) of generator for last Management(TQM) cell and the total
ffy years. Te product of the company has quality management cell of the company was
international market and it leads in term of very active and efcient at the initial years
cost efciency and quality management. Te of operations and it did never make any
company has manufacturing units in UK, compromise in quality control and quality
USA, Japan, South Africa and Australia besides management of the product keeping in view
India. Te company’s fnancial performance the international standards and parameters.
during last fve years is sluggish and depressive. Tis was the inherent strength of the company.
All the manufacturing Units across the Te company was always watchful on
globe are functioning as individual Strategic market standing, productivity, management
Business Units(SBUs) and they compete with of fnancial resources, performance of the
one another. However, they work on the managers, attitude of the staf, professionalism,
principles of goal congruence. Each SBU is surplus creation and honouring corporate
headed by a General Manager (Operations) social responsibilities. Tese are the preambles
and the organization structure of the company of the company on which it is founded. But
is of pyramidal and traditional headed by the company is not in a position to make its
CEO Cum Managing Director. Tere is intra- way in the roads of globalization. Te case of
SBU competition and one SBU can exercise the company’s performance in totality can be
option to buy input from another SBU or open understood from the foregoing account as is
market. Transfer Pricing Mechanism is in made hereunder.
place. Te company has four directorates and
they are Marketing, Operations, Finance and Marketing Functions Perspectives:
Human Resource and all the board members
and their immediate subordinates sit in the Te Marketing Directorate is headed by
Headquarters of the company. Te leaders of Director (Marketing) assisted by GM
the SBUs function as an individual decision (Marketing) at the corporate level. Te
making entity and report to the CEO thorough company is having a downward trend in sales

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