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Victor was feeling relieved after sending his resignations from the FMCG MNC he was working with for the last eight years. He didn't have any job in hand. He was not sure what should be his next move. He was wondering should he approach some head hunters in search of a new job or should he start something of his own, which he always thought of doing

About Victor Jacob

Victor Jacob hailed from a small-time entrepreneurial family from a small town Trissur in Kerala. His father was a distributor of medical products under a C&FA (Clearing & Forwarding Agent) at Trissur of Lupin Laboratories Ltd. His father was a man of strong ethical values. Victor during his college days whenever had free time used to help his father in distributing products to various medical stores driving himself one of the specially designed vehicles out of three such vehicles they had for distribution of medical products. He several times suggested his father to expand the business by taking distributorship of other companies but his father always replied that it would involve additional funds which he could not afford and he was strongly averse to taking Bank loan. His father was always wanted to remain a self-sufficient person without having any financial liabilities to anyone. He often used to advise Victor that he should after his graduation settle with a decent job instead of getting into business, which he felt risky due to financial uncertainty and vulnerable to slip out from the ethical values.

Victor was a brilliant student since his school days. After doing his B Tech. in Chemical Engineering from IIT Madras he pursued a post-graduation course in Management from a premier B- school in India. Completing his graduation course in Management in 1995 Victor wanted to join his father's business to expand it aggressively or to start-up his own business. However, on his father's insistence, he joined a USA-based fortune 500 FMCG companies to pursue his career in the corporate world. He started as a management trainee at the company’s India Head Quarter at Mumbai. He grew very fast in the company and within a short stint of seven years, he raised to the position of Plant Head of Bhandup unit, Mumbai plant of the company.

On 21st June 2004, Victor quit the job following a heated argument with his boss Samul Jacob, the Business Head – West, who was in charge of the Western India Business of the company. It was apparently a trifling issue. Samuel asked Victor Samuel to send the owner one of the contractors, K S Joshi, to the local Inspector of the Prevention Food Adulteration Act, 1954 (PFA Act), who carried out an inspection of Bhandup Plant in the previous day. The inspector knew Samuel during his earlier visits to the plant when Samuel was the Head of that plant. On the next day of the plant inspection, that is 20th June 2008, the inspector called Samuel over the phone and informed that he had spotted some very serious unhygienic conditions inside the plant and further, tacitly threatened that he would be sending his report to the plant manager within next 48 hours with a copy to the State Commissioner of PFA Act and unless the company gives him a satisfactory answer by next seven days of receipt of the report, he may be constrained to prosecute the company. As soon as the conversation ended with the inspector Samuel called Victor to his office. As victor reached his Samual’s office, Samuel informed Victor about his conversations with the PFA inspector. Samuel advised sending Joshi, the owner of one of the contractors to the PFA inspector to settle the issue. Victor was perturbed. Following conversation took place thereafter

Conversation A

Victor to Samuel "I'm very shocked and surprised, the inspector didn't tell me about any of his unusual observation and how come he told you. I was with him during the entire period of his inspection, he never complained or pointed out any unhygienic condition anywhere. I bet if anyone can figure out any condition that violates any provision of the PFA Act in my plant. I take pride in my team of maintaining high standard manufacturing practices in the plant as a benchmark of the industry."

Samuel to Victor "Don't get angry Victor. Most of the inspectors are like this. You send Joshi, the owner of loading and uncoiling contractor, Joshi & Brothers, to him. Joshi is a seasoned guy. He will settle it with the Inspector."

Victor to Samuel " How Joshi will settle the issue while we even don't know what we did wrong?"

Samuel to Victor "Don't argue Victor. Follow what I'm telling you. I don't unnecessarily get into legal issues. Prosecution under the Prevention of Food Adulteration Act is a damn serious issue. Our plant operations could even be suspended before we prove that there was nothing wrong with our production system. The inspector has the power to do so."

Conversation B

Samuel continued "I was in your position a few years before as the plant head, you know that. I also experienced similar incidents. I was also initially as troubled as you are. My the then boss Sapurkar, who left the company last year, asked me to talk to Joshi. Joshi assured me that he knew how to settle with such inspectors. The only thing I had to do is to ensure that the renewal of Joshi's contract continues."

Victor to Samuel "Oh my God! There seems to be a well-planned racket of corruption"

Samuel to Victor "How do you say so? We are not involved at all in any such deals. Neither we have paid money to anyone nor any of us have taken any undue favour from anyone. Moreover, such practice is well prevalent in the Industry everywhere."

Victor to Samuel "Why are you then continuing the renewal of Joshi's contact? If not directly, but indirectly you indulged in corrupt practices. Why can't we objectively do the contractor selection by proper bidding, which I planned to do this year?"

Conversation C

Samuel to Victor "Victor, you are exceeding your limit. You even don't know how to talk to your superior. Are you blaming me for indulging in unethical practice?"

Victor to Samuel angrily replied "You did. If not directly but tacitly. Indulging in unethical practice indirectly as is bad as doing directly. If you did what you said it's definitely and knowingly indulging in the unholy practice of corruption. It's damn unethical."

Samuel shouted at Victor "Don't teach me ethics! You are more kiddish than I thought. Management did the mistake of entrusting such an important role in such an immature kid like you! How do you dare to tell me, I'm unethical?"

Victor argued further raising his voice "You are. Of course, you are!"

 

Samuel to Victor, "Please behave properly. If you can't, I will talk to Joshi. I can't put the company in trouble just because of your misplaced ideas of ethics!"

 

The meeting ended with heated arguments between them. As soon as Victor found Samuel stated calling Joshi over his mobile phone, he left the room abruptly.

 

Immediately after returning to his office, Victor sent a mail to the Head HR of the company marking a copy to the Managing Director informing his decision of resigning from the company with immediate effect. In that mail, he also narrated, in brief, the background of his resignation

Questions:

1. According to Shalom Schwartz's model of the structure of Values, what was the type of Value of the father of Victor had, and? Justify your answer (Marks 2+ 2=4)

2. Do you agree with Samuel that Victor had misplaced ideas of ethics? If yes, Why? If not, Why not? Justify your answer linking it relevant theories and concepts (Marks 6)

3. What was the kind of ethical sensitivity Victor and Samuel had? Justify your answer.  (Marks 2 + 2= 4)

4. According to concepts explained in the article "Note on Human Behavior: Situation Versus Ethics",

a. What kind of traits or behavior will you assign to Samuel, as a leader, in settling the issue with the inspector by sending a contractor to him in the situation in the case? (Marks 5)

b. What kind of traits or behavior will you assign to Victor in refusing to follow the advice of Samuel?    (Marks 5)

5. What is the ego state of each of the conversations between Samuel and Victor in conversation set (A), (B), and (C)?  (Marks 3 X 2 = 6)

6. From the OB perspective of the Rational Choice Decision-Making process, what made Victor to decide to resign from the services of the company? Justify your answer (Marks 5)

Case 2

Victor Jacob and Sabarmati Snacks & Confectioneries Ltd.

Victor was immersed in deep thoughts. After having a reasonably successful journey so far, he was extremely frustrated with the slow progress of implementing the new business strategy. He had nurtured the growth of Sabarmati Snacks & Confectioneries Ltd with the utmost care and within a short period of 15 years he built a company of Rs. 1500 crores annual revenue, employing over direct 1200 employees starting as a small-time distributor. There were several thoughts passing through his mind; was the company struck with its old culture? or was it the misbalance of power dynamics within the company? or it was a complex combination of them? He was trying searching for an answer to where from should he start? Which one he would address first? Should he seek help from an external consultant?

About Victor Jacob and Sabarmati Snacks & Confectioneries Ltd (SSCL)

SSCL was founded by Victor Jacob in 2008. The origin of the company can be traced in an apparent trifle incident of a heated exchange of argument of Victor with his Boss over the issue that Victor felt unethical and that led Victor to resign from the company he was working with. Two days after his submitting the resignation, Victor was called at the Head Quarter on 23rd June 2004 by the company's country HR Head Sangitha Vaswani. He was advised to withdraw his resignation and offered to take another senior role if he was not comfortable working in the Western Region. Sangitha also informed him that the company would be initiating a proper investigation on the issue that he narrated in the mail because the company firmly committed to a high standard of ethical values. Victor politely denied to withdraw his resignation and expressed his intention to start his start-up venture. After a couple of days, Sangitha phoned him that "if you want to start a venture with your own, the company can help you". Victor got excited. Sangitha asked him to meet the Marketing Head, Praveen Bhatia who could possibly help him in his startup venture.

Victor’s meeting with Praveen was a turning point in his next career journey. Praveen offered him a distributorship at Ahmedabad and also helped him with a Bank loan to start his business. Though Victor's father strongly opposed his decision to venture out for a business and that too with a Bank loan, Victor went ahead with his decision. He made his father meet Praveen, who could convince him. Praveen assured his father that Victor being recognized as a highly talented professional with good business acumen, the company would provide all support to make Victor successful, however, if anything would go wrong the company would be too happy to have Victor joining back the company.

In September 2004, a month before the start of the festival of Navaratri and Dewali, Victor started his journey as an entrepreneur and named his agency Sabarmati Distribution Enterprise. Thereafter, Victor never had to look back. As he started expanding his distributorship, his old company offered him the C&F Agency at Naroda in 2006, on the outskirt of Ahmedabad city. He registered his company as Sabarmati Snacks & Confectionery Pvt. Ltd. in 2006, the year he also got married to his classmate cum a longtime girlfriend Vaishali. Victor set up his snacks and confectionary manufacturing plant at Naroda in 2007 and started as a franchised manufacturing unit (co-packer) of his old company, the MNC FMCG. That was the beginning of his journey as an industrial entrepreneur. One after another Victor continued to set up new manufacturing units across the country as a franchised manufacturing unit (co-packer) of his old company. By 2010 he acquired 9 manufacturing units across India. (annexure 1 shows the locations of units). Further, in 2010 he also expanded the capacity and upgraded the technology of some of the manufacturing units like Mahul, Neelmangla, and Mamandur, and expanded the business as a co-packer of the products of two other companies, which were not in direct competition with his old FMCG MNC's products. In 2010 Vaishali also joined the company as one of the directors and confined herself to Banking and funding of the projects and was not involved in the day to day business operations.

As the company started growing in size and geographical spread, Victor strongly felt the need to create a strong culture across the company. Both Victor and Vaishali spent several days and hours thinking about the type of culture they need to create. While ethics remained a core value, Vaishali advised Victor that as a franchised unit or the co-packer of the mother companies, whose products they were manufacturing and supplying, the company's needed an internal environment of stability to ensure a high level of operational efficiency, however the strategic focus needed to external in build a robust culture of adapting to external changes proactively to continuously improve their manufacturing efficiency through process innovation and technological advancement. That idea of having a business strategy supporting culture gave them enough clarity. With lots of deliberations between them, they ultimately defined three core values on which they decided to build the culture of the organization, namely a) Unquestionable business ethics, b) “Operational Excellence”, c) “Honouring our Commitment to all stakeholders at any cost”. Vaishali personally took the initiative to promote the desired culture based on those core values with examples of "DOs & DON'Ts" on each of the values. She took the help of an external consultant to design several visual artifacts to promote the culture based on the company's core values and developed a multi-media supported company's core values actualization workshop module. She traveled extensively to all units to hold the value actualization workshops and further, created another module on how the employees of each unit should engage in a dialogue in practicing the company's core values in day to day work under the leadership of the local unit head and internal socialization process. Slowly, the story of Victor's leaving his first job on the ground of ethics became one of the folklore in the company. Employees at locations remained actively engaged in imbibing the organizational culture. Vaishali also put in place the orientation and socialization process of newly recruited employees at each location where the promotion of the company's culture remained a major focus. They also made sure their recruitment and selection process strongly emphasize the candidates are organization –fit in terms of values rather than just job-fit. The company also introduced reward programs for operational excellence for efficiency and quality.

In 2013 the company became a public limited company as Sabarmati Snacks and Confectionery Ltd and set up its headquarter at Bandra East in Mumbai. Since 2014 Victor started hiring highly qualified professionals to run the daily operations as well the corporate functional heads

Till 2014 each of the nine units at each location was operating as an independent business unit headed by a vice president. The vice president of each location had the full independent team of manufacturing, procurement, Logistic, quality assurance, HR & Administration, and Finance &IT and each such function headed by a functional general manager. Each business unit Vice President of different location had total responsibility for the profitability as an independent business unit. All these business unit vice presidents were reporting to Victor, the CEO & Managing Director of the Company. Vaishali, as the Finance Director, was engaged primarily in organizing funding of the new projects including acquisitions of the manufacturing plants. However, she had very limited interaction on day-to-day operations except advising Victor in developing HR policies and involved in senior-level recruitment and selection.

After becoming a public limited company in 2013, Victor and Vaishali change their business strategy to shift from being in the franchised / co-packing business to develop their own health & Nutritious products under their own brand names and go it by alone in a phased manner within the next three years. The idea of going alone by developing their own products and marketing them under own brand names came out of one of core value actualization meeting where one young executive, a food technologist, strongly objected manufacturing a few products of one of the companies they were manufacturing for, because according to him such products were not based on the scientific norms of health & nutrition, and was cause for creating obesity and thereby violating of the company's core value of "Unquestionable ethical Values".

This realization of manufacturing some of the products as a part of co-packing / franchisee business that were against the societal ethical values made Victor set up an R & D (Research & Development) center at Bangalore and hired Dr. P S Subramaniam, a highly acclaimed food technologist, as the Senior Vice President – R &D and gave him the free hand to develop his team. It was a clear mandate to the R&D team to develop products scientifically without any violation of the scientific principles and norms of "Health & Nutrition". The company strategized to launch their flour-based confectionaries like Biscuits and Cookies as well as Nutritious health drinks. They had a clear strategy to position their product in the "Health & Nutrition" segment so that they didn’t have any conflict with the core value of ethics.

Victor, established a full-fledged corporate office in  the 2nd quarter of 2014 hiring a Corporate team consisting of Monal Sardesai, fifteen years experienced HR professional as Vice President –HRM, Subir Moitra, twenty  years experienced Finance Professional as Vice President Finance, K S Badrinath, eighteen years experienced professional in engineering & technology with a strong base of production and operation as Vice President – Engineering, and Shyam Natarajan, having fouteen years of experience in Supply chain Management, working earlier with USA based Beverage firm at Settle, USA as Vice president – Supply chain. He and Vaishali followed a very stringent selection process engaging one of the best known global search firms to select each of them.

Monal Sardesai spoke to one of the talent search researchers "The only reason I chose to join in such a less known organization leaving one of top fortune100 MNCs, is the compelling vision of Victor and his commitment to ethical values. He has a great dream to provide highly nutritious food to Indian as well as global youth community who otherwise often consuming trash and junk foods. I want to be a part this novel and exciting journey"

The same was echoed by Badrinath "I think victor would be a great leader to work with. I am convinced of his vision and ethical sensitivity. Moreover, his vision of going global with high standard nutritious food products is something one would like to partner with"

The Vice Presidents at the corporate office were responsible for providing expert support to each geographic business unit and building future organizational capability as well as articulate long terms strategy for the company.  All Vice Presidents (VP) of geographically located business units across India continued to report to Victor, the CEO & Managing Director of the company. These Locational Business Unit VPs were responsible for respective business units' profitability. The functional heads of business units had a duel reporting to the respective Vice President of geographically located business units as well as a dotted line reporting to the concerned functional Vice President at the Corporate office, like all the manufacturing heads of the business while continuing to report to respective geographical vice president and also had reporting relationship with corporate vice president engineering.

Before going on their own the company had to spend several months settling amicably with the issues of de-franchising arrangement with the FNGC MNC and other companies whose products they were manufacturing. This transition from being a co-packer of other companies to its own products and brands took over two years. Victor and Vaishali along with few industry Steller leaders, who joined the board of the company carefully created a marketing team in 2014 hiring a few best talents in marketing from India and abroad. Nikhil Jain who was working as vice president marketing at Dubai with highly renowned MNC joined as Senior VP- Marketing & Sales. He and Victor worked together to build a 6-member core marketing team and a large pan India salesforce of 55 employees under Dilip Som, VP-All India Sales reporting to Nikhil.

The corporate team started working with close coordination among themselves. Victor and Vaishali were very happy finding strong bond and cohesiveness amongst the corporate leaders. The company launched its first nutritious biscuits under the brand "NutroBis" and a few verities of health drinks under the brand name "HealthStar" in February 2015 with clear positioning in the health & nutritious segment targeted to the young population. They used one of the world champion athletes as the brand ambassador and positioned the brands in the premier segment in terms of price. Despite the clear positioning of the products, the market response initially was slow because of stiff competition and congestion of several brands of confectionaries and soft drinks confusing the consumers of the segment boundaries of the products. In the 2015-16 financial year, the company made a loss. They continued to make with loss till the financial year 2017-18 when the company reverted to profit, though was a very small amount. By then, SSCL launched five more new verities of nutritious biscuits and cookies, four different varieties of diet snacks, and three distinctly different types of health drinks. Most of their brands slowly started gaining increasing market share. During this period of hard time, Victor spent his time with each corporate leader to keep the morale high and continued encouraging the R&D team for more and more product innovation. He also kept interacting with locational business unit heads but not as frequently as he was interacting with the functional heads of the corporate office. He could inspire everyone with his compelling vision of "We aim to lead a healthy world with healthy food". He used to tell everyone, "our victory is within our sight; be patient meanwhile". All the corporate functional leaders based on their past similar experiences were well versed with an initial business problem that could occur during a major shift of business strategy and product & services. They continued to meet frequently among themselves, connect with the R&D head regularly, and maintained close interactions to keep the team spirit high. They were aware of the difficult challenge ahead, but the energy and enthusiasm remained high.

In an interview with one of the media reporters when they reported a loss, Nikhil, the marketing responded, "We know the great challenge ahead of us and we are also excited about it. We are going to redefine the confectionary and soft drink consumer market. Don't rate us with our current financial performance. It's an inevitable part of the exciting journey armed with our game-changing strategy"

However, the discomfort of most of the business unit VPs at the locations in aligning their operational activities with the new business strategy were quite apparent. One HR executive in an informal meeting with Monal mentioned "I don't think the business unit VPs are as enthusiastic as you are at the corporate office. I heard from one of HR guys from Kolkata unit that their VP informally once mentioned that now the corporate guys only run the business and don't care for loss."

Though the company got back to the profit-making track since 2017-18 the progress was quite slow compared to planned and predicted speed by Victor and the core senior management team in the corporate office. New product launches were often delayed owing to production and supply issues. There were often mismatches of supply of product mix with planned product mix by the corporate marketing team. There were also apparent conflicts of product-wise selling priorities between the corporate team and the business units. There was also growing conflicts in other functions between corporate functional heads and functional teams under most of the business units.

Victor and Vaishali both could sense a lack of enthusiasm amongst the business unit Heads as well as Pant Heads at the locations in synchronizing their activities and actions with the corporate business strategy that involved a major shift of strategic focus from internal to external as well as highly volatile and flexible environment. So far, as a co-packer they enjoyed quite a stable environment.   A one to one discussion with the business it became quite obvious to Victor that there was a subtle but growing power conflict between the Business Unit Heads at the locations and corporate functional leaders. It further appeared to Victor that most of the business unit heads of the locations were seemed to be touch with each other and also aligning actions within themselves and most of time those were not supportive to company’s the new business strategy.  Victor became further concerned about his one style of operations and leadership when Business Unit Head of Chennai told him “Now the corporate guys are the bosses, they should be responsible for the profit too; we at the location will follow whatever they say”.

Victor felt the culture that he and Vaishali promoted with utmost care and efforts, possibly needed a be relooked and realigned. Vaishali strongly opined that the prevailing culture which supported manufacturing excellence so far now might be a hindrance to the growth since their strategy now shifted to marketing excellence with continuous innovation and creativity of products and services to strive for future growth. Vaishali also spoke to Victor to relook at their one of the core values of “Operational Excellence”. This core value seemed to her in non-congruent with the new vision and strategy which is focused on innovation and product differentiation.  Vaishali also expressed his discomfort to Victor about the underlying power dynamics between the corporate senior leaders and most of the business unit heads. Both of them were quite convinced that unless these issues are addressed urgently the realization of the company's vision will be at stake. They were wondering what to do, how to do, where to start?

Annexure 1

Company's Business Units (2000)

1.Naroda (at outskirt at Ahmedabad) at Gujarat

2 & 3. Agra and Unnao (about 64 KM from Lucknow) at Uttar Pradesh

4. Mahul (outskirt of Mumbai)

5. Aurangabad in Maharastra,

6. Sangareddy (about 64 KM from Hyderabad) in Telangana,

7. Sonapur near Kolkata in West Bengal,

8. Neelmangala (outskirt of Bangalore) in Karnataka

9. Mamandur (outskirt of Chennai) in Tamilnadu

 

Questions:

1. According to Organizational Design and Culture model, a) what type of culture the company had till the company shifted its business strategy to go alone with its own products and brand instead of being a co-packer/franchise unit of other companies in 2013? b) What factors had influenced the creation of a strong culture of the company till 20013? (Marks 5 +5= 10)

2. Victor and Vaishali were convinced of the need for a shift in the company's culture to support the changed business strategy since 2014. According to Organizational Design and Culture model, a) what type of culture, will you recommend and why? b) what actions will you recommend to them for changing the organization culture supporting the new business strategy (Marks 7+8= 15)

3. What of type organizational structure the company had till the company established its corporate office in Mumbai and what type of organization structure the company went for after setting up a corporate office manned with corporate functional senior VPs and VPs? Please justify your answer linking it to relevant theory and concepts. (Marks 5 + 5 =10)

4. Victor and Vaishali agreed that the corporate senior leaders were workings as a cohesive team. According to you, what factors influenced to build of a cohesive team of corporate senior leaders? (Marks 10)

5. Victor and Vaishali were quite convinced that unless the issues with the business unit heads about perceived power dynamics are addressed urgently the realization of the company's vision will be at stake.

a) Was there an underlying dynamic of power and politics between the team of corporate functional heads and the business heads of the locations causing slowing down of speed the process of implementation of the new business strategy? Please justify your answer linking it liking it to the relevant theories and concepts. (Marks 10)

 

b) What will you recommend to Victor and Vaishali to resolve those issues?

MBA2020 Organisation Behaviour

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