A PROJECT ON Strategic Management

Turnaround Management Richardson and cruddas (1870).

MASTERS OF COMMERCE BANKING AND INSURANCE

SEMESTER I 2012-2013

Submitted by SIMRANJEET KAUR SACHDEV

Roll No- 47

Under the guidance of T.Ramraj

GURU NANAK COLLEGE OF ARTS , SCIENCE COMMERCE MUMBAI, MAHARASHTRA 400037 A PROJECT ON Strategic Management

Turnaround Management Richardson and cruddas (1870).

MASTERS OF COMMERCE SEMESTER I 2012-2013

Submitted In partial fulfillment of the requirements for the THE AWARD of the Degree of Masters of commerce

SIMRANJEET KAUR SACHDEV

Roll No- 47

Under the guidance of T.Ramraj

GURU NANAK COLLEGE OF ARTS , SCIENCE COMMERCE MUMBAI, MAHARASHTRA 400037

CERTIFICATE

I Professor . T,Ramraj hereby certify that MISS. SIMRANJEET KAUR SACHDEV studying M.COM ( ACCOUNTANCY ) IN GURU NANAK COLLEGE OF ARTS , SCIENCE COMMERCE project on Richardson and cruddas (1870). under my guidance I further certify that information presented in this Project is true & original to the best of my knowledge

Course coordinator _ Principal Project guide /internal examiner _ External examiner _

DECLARATION

I SIMRANJEET KAUR SACHDEV studying in third year of

M.COM (ACCOUNTANCY ) course at

GURU NANAK COLLEGE OF ARTS , SCIENCE &COMMERCE ,

I have completed a project on Richardson and cruddas (1870).

For academic year 2012-2013 in fulfillment of the course completion

requirement at the University Of Mumbai.

I further declare that information presented in this project is true

and original to the best of my knowledge

Simranjeet Kaur Sachdev Roll No- 47

ACKNOWLEDGEMENT The joy of ingenuity!!! This is doubtlessly what this project is about. Before getting to brass tacks of things. I would like to add a heartfelt word for the people who have helped me in bringing out the creativeness of this project.

To commence with things I would like to take this opportunity to gratefully and humbly thank to Mr. T.Ramraj , Project guide, for being appreciative enough by giving me an opportunity to undertake this project in Richardson and cruddas (1870).

Respected guide Mr. T Ramraj , Faculty, Guru Nanak College for his undeterred guidance for the completion of the report. My parents need special mentions here for their constant support and love in my life. I also thank my friends and well wishers, who have provided their whole hearted support to me in this exercise. I believe that this Endeavor has prepared me for taking up new challenging opportunities in future.

CONTENTS

LIMITS OF STUDY

Executive Summary

Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. This definition captures two main elements that go to the heart of the field of strategic management. Turnarounds & Workouts Newsletter (t&w) analyses the industry and provides annually of the outstanding firms for various constituencies working in the bankruptcy, corporate renewal, investment, turnaround, and restructuring industry. Several firms have demonstrated their leadership positions in the industry and made the list multiple times. Here is a list of the turnaround management firms that have made the list, from the many hundreds of firms considered each year. This is considered by some to be the t&w Hall of Fame of Outstanding Turnaround Firms. Strategic Management Partners,.

Noble Carr Richardson came to Mumbai in 1852, with fiery ambition. In 1858 his ambition found expression in the form of a small foundry. The foundry was set up in the compound of his bungalow in Byculla, then a fashionable locality of Mumbai. Through the years, the foundry flourished, and in 1870, Richardson & Company came into existence, it was a partnership venture - with the two sons Noble and William Richardson joining hands with their father.

In 1880 Richardson & Company absorbed the business interest of Nicol & Company of Parel Road, Mumbai. With the merger, John Cruddas, the Manager of Nicol & Company became a partner and thus began a new thriving partnership - Richardson & Cruddas - later to become the largest structural and mechanical engineering company in Western India. Richardson & Cruddas as a partnership venture, continue to prosper both in Western and Southern India. However, with India's Independence the British partners sold the company to Haridas Mundhra who became it's sole proprietor. In 1949 the firm was turned into a Private Limited Company with 100% Indian Capital. In 1972 the business of the old Company Richardson & Cruddas Ltd. was acquired by the Government under an Act of the Parliament and a new company called Richardson & Cruddas (1972) Ltd., was formed on 15th March, 1973 as a wholly owned, "Government of India Undertaking" . The company has become subsidiary of M/s Bharat Yantra Nigam Litd., (BYNL) Allahabad from 01.04.1987 a company set up by Govt. of India. Later in 200. BYNL was wound up by DHI Ministry and since then the company is operating independently. At present Richardson & Cruddas has four large workshops with approximately 135 employees at Byculla-Mumbai, Mulund-Mumbai, Ambattur-Chennai and M. I. D. C. Industrial Estate, Nagpur. All the four units has necessary infrastructure pertaining to the products of their unit. R&C has built a name in the fabrication industry, projects services, environment engineering/testing field catering to various sectors.

CH-1 INTRODUCTION Long did I cherish a desire Neither for wealth nor fame But a tiny house tucked away in a corner of the earth Where I could be with my thoughts

What is Strategic Management Defining Strategic Management Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. This definition captures two main elements that go to the heart of the field of strategic management. First, the strategic management of an organization entails three ongoing processes: analysis, decisions, and actions. That is, strategic management is concerned with the analysis of strategic goals (vision, mission, and strategic objectives) along with the analysis of the internal and external environment of the organization. Next, leaders must make strategic decisions. These decisions, broadly speaking, address two basic questions: What industries should we compete in? How should we compete in those industries? These questions also often involve an organizations domestic as well as its international operations. And last are the actions that must be taken. Decisions are of little use, of course, unless they are acted on. Firms must take the necessary actions to implement their strategies. This requires leaders to allocate the necessary resources and to design the organization to bring the intended strategies to reality. As we will see in the next section, this is an ongoing, evolving process that requires a great deal of interaction among these three processes. Second, the essence of strategic management is the study of why some firms outperform others. Thus, managers need to determine how a firm is to compete so that it can obtain advantages that are sustainable over a lengthy period of time. That means focusing on two fundamental

Overview of Sta
Strategic management is a level of managerial activity under setting goals and over Tactics. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is useful to talk about "strategic alignment" between the organization and its environment or "strategic consistency." According to Arieu (2007), "there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context." Strategic management includes not only the management team but can also include the Board of Directors and other stakeholders of the organization. It depends on the organizational structure. "Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment." ] Strategic Management can also be defined as "the identification of the purpose of the organisation and the plans and actions to achieve the purpose. It is that set of managerial decisions and actions that determine the long term performance of a business enterprise. It involves formulating and implementing strategies that will help in aligning the organisation and its environment to achieve organisational goals."

Questions: How should we compete in order to create competitive advantages in the marketplace? For example, managers need to determine if the firm should position itself as the low-cost producer, or develop products and services that are unique which will enable the firm to charge premium prices-or some combination of both. Managers must also ask how to make such advantages sustainable, instead of highly temporary, in the marketplace. That is: How can we create competitive advantages in the marketplace that are not only unique and valuable but also difficult for competitors to copy or substitute? Ideas that work are almost always copied by rivals immediately. In the 1980s, American Airlines tried to establish a competitive advantage by introducing the frequent flyer program. Within weeks, all the airlines did the same thing. Overnight, instead of competitive advantage, frequent flyer programs became a necessary tool for competitive parity, not competitive advantage. The challenge, therefore, is to create competitive advantage that is sustainable. Michael Porter argues that sustainable competitive advantage cannot be achieved through operational effectiveness alone. Most of the popular management innovations of the last two decades-total quality, just-in-time, benchmarking, business process reengineering, outsourcingall are about operational effectiveness. Operational effectiveness means performing similar activities better than rivals. Each of these is important, but none lead to sustainable competitive advantage, for the simple reason that everyone is doing them. Strategy is all about being different from everyone else. Sustainable competitive advantage is possible only through performing different activities from rivals or performing similar activities in different ways. Companies such as Wal-Mart, Southwest Airlines, and IKEA have developed unique, internally consistent, and difficult to imitate activity systems that have provided them with sustained competitive advantage. A company with a good strategy must make clear choices about what it wants to accomplish. Trying to do everything that your rivals do eventually leads to destructive price competition, not long-term advantage.

The strategic management process means defining the organizations strategy. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance. Strategic management is a continuous process that appraises the business and industries in which the organization is involved; appraises its competitors; and fixes goals to meet all the present and future competitors and then reassesses each strategy. Strategic management process has following four steps: 1. Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it. 2. Strategy Formulation- Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environment scanning, managers formulate corporate, business and functional strategies. 3. Strategy Implementation- Strategy implementation implies making the strategy work as intended or putting the organizations chosen strategy into action. Strategy implementation includes designing the organizations structure, distributing resources, developing decision making process, and managing human resources. 4. Strategy Evaluation- Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as well as its implementation meets the organizational objectives. 5. These components are steps that are carried, in chronological order, when creating a new strategic management plan. Present businesses that have already created a strategic management plan will revert to these steps as per the situations requirement, so as to make essential changes.

Components of Strategic Management Process Strategic management is an ongoing process. Therefore, it must be realized that each component interacts with the other components and that this interaction often happens in chorus.

Strategy evaluation and choice An environmental scan will highlight all pertinent aspects that affect an organization, whether external or sector/industry-based. Such an occurrence will also uncover areas to capitalise on, in addition to areas in which expansion may be unwise. These options, once identified, have to be vetted and screened by an organization. In addition to ascertaining the suitability, feasibility and acceptability of an option, the actual modes of progress have to be determined. These pertain to: The basis of competition The basis of competition is the competitive advantage used or established by the strategy. This advantage may derive from how an organization produces its products, how it acts within a market relative to its competitors, or other aspects of the business. Specific approaches may include:

Differentiation, in which a multitude of market segments are served on a mass scale. An example will include the array of products produced by Unilever, or Procter and Gamble, as both forge many of the world's noted consumer brands serving a variety of market segments. Cost-based, which often concerns economy pricing. An example would be dollar stores in the United States.

Market segmentation (or niche), in which products are tailored for the unique needs of a niche market, as opposed to a mass market. An example is Aston Martin cars.

Mode of action

Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a SWOT analysis to figure out the internal strengths and weaknesses, and external opportunities and threats of the entity in business. This may require taking certain precautionary measures or even changing the entire strategy.

In corporate strategy, Johnson, Scholes and Whittington present a model in which strategic options are evaluated against three key success criteria:[3]

Suitability; would it work? Feasibility; can it be made to work? Acceptability; will they work it?

Suitability Suitability deals with the overall rationale of the strategy. The key point to consider is whether the strategy would address the key strategic issues underlined by the organisation's strategic position.

Does it make economic sense? Would the organization obtain economies of scale or economies of scope? Would it be suitable in terms of environment and capabilities?

Tools that can be used to evaluate suitability include:

Ranking strategic options

Decision trees Feasibility Feasibility is concerned with whether the resources required to implement the strategy are available, can be developed or obtained. Resources include funding, people, time, and information. or cash flow in the market Tools that can be used to evaluate feasibility include:

cash flow analysis and forecasting break-even analysis

resource deployment analysis Acceptability

Acceptability is concerned with the expectations of the identified stakeholders (mainly shareholders, employees and customers) with the expected performance outcomes, which can be return, risk and stakeholder/stakeholders reactions.

Return deals with the benefits expected by the stakeholders (financial and non-financial). For example, shareholders would expect the increase of their wealth, employees would expect improvement in their careers and customers would expect better value for money.

Risk deals with the probability and consequences of failure of a strategy (financial and non-financial). Stakeholder reactions deals with anticipating the likely reaction of stakeholders. Shareholders could oppose the issuing of new shares, employees and unions could oppose outsourcing for fear of losing their jobs, customers could have concerns over a merger with regards to quality and support.

Tools that can be used to evaluate acceptability include:

what-if analysis

stakeholder mapping The direction of action Strategic options may span a number of options, including:

Growth-based (inspired by Igor Ansoff's matrix market development, product development, market penetration, diversification) Consolidation Divestment Harvesting

The exact option depends on the given resources of the firm, in addition to the nature of products' performance in given industries. A generally well-performing organisation may seek to harvest (,i.e. let a product die a natural death in the market) a product, if via portfolio analysis it was performing poorly comparative to others in the market. Additionally, the exact means of implementing a strategy needs to be considered. These points range from:

Strategic alliances Capital Expenditures (CAPEX) Internal development (,i.e. utilising one's own strategic capability in a given course of action) M&A (Mergers and Acquisitions)

The chosen option in this context is dependent on the strategic capabilities of a firm. A company may opt for an acquisition (actually buying and absorbing a smaller firm), if it meant speedy entry into a market or lack of time in internal development. A strategic alliance (such as a network, consortium or joint venture) can leverage on mutual skills between companies. Some countries, such as India and China, specifically state that FDI in their countries should be executed via a strategic alliance arrangement.

Strategic implementation and control Once a strategy has been identified, it must then be put into practice. The implementation of strategy is of great importance. Conducting a corporate strategy is worthless as long as it is not implemented correctly by each department of the organization This may involve organising, resourcing and utilizing change management procedures: Organizing Organizing relates to how an organizational design of a company can fit or align with a chosen strategy. This concerns the nature of reporting relationships, spans of control, and any strategic business units (SBUs) that require to be formed. Typically, an SBU will be created (which often has some degree of autonomous decision-making) if it exists in a market with unique conditions, or has/requires unique strategic capabilities (,i.e. the skills needed for the running and competition of the SBU are different). Resourcing Resourcing is literally the resources required to put the strategy into practice, ranging from human resources, to capital equipment, and to ICT-based implements. Change management In the process of implementing strategic plans, an organization must be wary of forces that may legitimately seek to obstruct such changes. It is important then that effectual change management practices are instituted. These encompass:

The appointment of a change agent, as an individual who would champion the changes and seek to reassure and allay any fears arising. Ascertaining the causes of the resistance to organizational change (whether from employees, perceived loss of job security, etc.) Via change agency, slowly limiting the negative effects that a change may uncover.

Testing the Strategic Alignment of the organization The optimal performance of organizations is highly dependent on the level of Strategic Alignment. Until 2010 Change management was used to implement a strategy. In 2010 the Rotterdam School of Management together with the Economics conducted research on the measurement possibilities of Strategic Alignment. This cooperation led to the introduction of the S-ray Alignment Scan. The S-ray Alignment Scan is a visual of the Corporate Strategy measured against the level of understanding and implementation of the organizational departments. In 2011 Erasmus University of Rotterdam introduced S-ray Diagnostics, which is a spin-off of this cooperation, solely focused on measuring strategic alignment of organizations.

Strategic decision making processes

Will Mulcaster] argues that while much research and creative thought has been devoted to generating alternative strategies, too little work has been done on what influences the quality of strategic decision making and the effectiveness with which strategies are implemented. For instance, in retrospect it can be seen that the financial crisis of 20089 could have been avoided if the banks had paid more attention to the risks associated with their investments, but how should banks change the way they make decisions to improve the quality of their decisions in the future? Mulcaster's Managing Forces framework addresses this issue by identifying 11 forces that should be incorporated into the processes of decision making and strategic implementation. The 11 forces are: Time; Opposing forces; Politics; Perception; Holistic effects; Adding value; Incentives; Learning capabilities; Opportunity cost; Risk; Stylewhich can be remembered by using the mnemonic 'TOPPHAILORS'.

The psychology of strategic management

Several psychologists have conducted studies to determine the psychological patterns involved in strategic management. Typically senior managers have been asked how they go about making strategic decisions. A 1938 treatise by Chester Barnard, that was based on his own experience as a business executive, sees the process as informal, intuitive, non-routinized, and involving primarily oral, 2-way communications. Bernard says The process is the sensing of the organization as a whole and the total situation relevant to it. It transcends the capacity of merely intellectual methods, and the techniques of discriminating the factors of the situation. The terms pertinent to it are feeling, judgement, sense, proportion, balance, appropriateness. It is a matter of art rather than science. In 1973, Henry Mintzberg found that senior managers typically deal with unpredictable situations so they strategize in ad hoc, flexible, dynamic, and implicit ways. . He says, The job breeds adaptive information-manipulators who prefer the live concrete situation. The manager works in an environment of stimulous-response, and he develops in his work a clear preference for live action. In 1982, John Kotter studied the daily activities of 15 executives and concluded that they spent most of their time developing and working a network of relationships that provided general insights and specific details for strategic decisions. They tended to use mental road maps rather than systematic planning techniques. Daniel Isenberg's 1984 study of senior managers found that their decisions were highly intuitive. Executives often sensed what they were going to do before they could explain why.[82] He claimed in 1986 that one of the reasons for this is the complexity of strategic decisions and the resultant information uncertainty.

Shoshana Zuboff (1988) claims that information technology is widening the divide between senior managers (who typically make strategic decisions) and operational level managers (who typically make routine decisions). She claims that prior to the widespread use of computer systems, managers, even at the most senior level, engaged in both strategic decisions and routine administration, but as computers facilitated (She called it deskilled) routine processes, these activities were moved further down the hierarchy, leaving senior management free for strategic decision making. In 1997, Elliott Jacques book Requisite organization was published based on his 'Stratified Systems Theory'. From over 20 years of research Jacques concluded that the strategic leader works in an increasingly complex, ambiguous, volatile and uncertain environment. Dr Maretha Prinsloo developed the Cognitive Process Profile (CPP) psychometric from the work of Elliott Jacques. The CPP is a computer based psychometric which profiles a person's capacity for strategic thinking. It is used worldwide in selecting and developing people into strategic roles. According to Corner, Kinichi, and Keats, strategic decision making in organizations occurs at two levels: individual and aggregate. They have developed a model of parallel strategic decision making. The model identifies two parallel processes that both involve getting attention, encoding information, storage and retrieval of information, strategic choice, strategic outcome, and feedback. The individual and organizational processes are not independent however. They interact at each stage of the process. For instance, competition-oriented objectives are based on the knowledge of the financial status of competing firms, such as their market share.

Limitations of strategic management

Although a sense of direction is important, it can also stifle creativity, especially if it is rigidly enforced. In an uncertain and ambiguous world, fluidity can be more important than a finely tuned strategic compass. When a strategy becomes internalized into a corporate culture, it can lead to group think. It can also cause an organization to define itself too narrowly. An example of this is marketing myopia. Many theories of strategic management tend to undergo only brief periods of popularity. A summary of these theories thus inevitably exhibits survivorship bias (itself an area of research in strategic management). Many theories tend either to be too narrow in focus to build a complete corporate strategy on, or too general and abstract to be applicable to specific situations. Populism or faddishness can have an impact on a particular theory's life cycle and may see application in inappropriate circumstances. See business philosophies and popular management theories for a more critical view of management theories. In 2000, Gary Hamel coined the term strategic convergence to explain the limited scope of the strategies being used by rivals in greatly differing circumstances. He lamented that strategies converge more than they should, because the more successful ones are imitated by firms that do not understand that the strategic process involves designing a custom strategy for the specifics of each situation. Ram Charan, aligning with a popular marketing tagline, believes that strategic planning must not dominate action. "Just do it!" while not quite what he meant, is a phrase that nevertheless comes to mind when combatting analysis paralysis. The linearity trap It is tempting to think that the elements of strategic management (i) reaching consensus on corporate objectives; (ii) developing a plan for achieving the objectives; and (iii) marshalling and allocating the resources required to implement the plan can be approached sequentially. It would be convenient, in other words, if one could deal first with the noble question of ends, and then address the mundane question of means. But in the world where strategies must be implemented, the three elements are interdependent. Means are as likely to determine ends as ends are to determine means.[89] The objectives that an organization might wish to pursue are limited by the range of feasible approaches to implementation. (There will usually be only a small number of approaches that will not only be technically and administratively possible, but also satisfactory to the full range of organizational stakeholders.) In turn, the range of feasible implementation approaches is determined by the availability of resources. And so, although participants in a typical strategy session may be asked to do blue sky thinking where they pretend that the usual constraints resources, acceptability to

stakeholders, administrative feasibility have been lifted, the fact is that it rarely makes sense to divorce oneself from the environment in which a strategy will have to be implemented. Its probably impossible to think in any meaningful way about strategy in an unconstrained environment. Our brains cant process boundless possibilities, and the very idea of strategy only has meaning in the context of challenges or obstacles to be overcome. Its at least as plausible to argue that acute awareness of constraints is the very thing that stimulates creativity by forcing us to constantly reassess both means and ends in light of circumstances. The key question, then, is, "How can individuals, organizations and societies cope as well as possible with ... issues too complex to be fully understood, given the fact that actions initiated on the basis of inadequate understanding may lead to significant regret?"[90] The answer is that the process of developing organizational strategy must be iterative. Such an approach has been called the Strategic Incrementalisation Perspective.[91] It involves toggling back and forth between questions about objectives, implementation planning and resources. An initial idea about corporate objectives may have to be altered if there is no feasible implementation plan that will meet with a sufficient level of acceptance among the full range of stakeholders, or because the necessary resources are not available, or both. Even the most talented manager would no doubt agree that "comprehensive analysis is impossible" for complex problems.[92]Formulation and implementation of strategy must thus occur side-by-side rather than sequentially, because strategies are built on assumptions that, in the absence of perfect knowledge, are never perfectly correct. Strategic management is necessarily a "...repetitive learning cycle [rather than] a linear progression towards a clearly defined final destination."[93] While assumptions can and should be tested in advance, the ultimate test is implementation. You will inevitably need to adjust corporate objectives and/or your approach to pursuing outcomes and/or assumptions about required resources. Thus a strategy will get remade during implementation because "humans rarely can proceed satisfactorily except by learning from experience; and modest probes, serially modified on the basis of feedback, usually are the best method for such learning."[94] It serves little purpose (other than to provide a false aura of certainty sometimes demanded by corporate strategists and planners) to pretend to anticipate every possible consequence of a corporate decision, every possible constraining or enabling factor, and every possible point of view. At the end of the day, what matters for the purposes of strategic management is having a clear view based on the best available evidence and on defensible assumptions of what it seems possible to accomplish within the constraints of a given set of circumstances.[citation needed] As the situation changes, some opportunities for pursuing objectives will disappear and others arise. Some implementation approaches will become impossible, while others, previously impossible or unimagined, will become viable.[citation needed] The essence of being strategic thus lies in a capacity for "intelligent trial-and error"[95] rather than linear adherence to finally honed and detailed strategic plans. Strategic management will

add little valueindeed, it may well do harmif organizational strategies are designed to be used as a detailed blueprints for managers. Strategy should be seen, rather, as laying out the general pathbut not the precise stepsan organization will follow to create value.[96] Strategic management is a question of interpreting, and continuously reinterpreting, the possibilities presented by shifting circumstances for advancing an organization's objectives. Doing so requires strategists to think simultaneously about desired objectives, the best approach for achieving them, and the resources implied by the chosen approach. It requires a frame of mind that admits of no boundary between means and ends. It may not be so limiting as suggested in "The linearity trap" above. Strategic thinking/ identification takes place within the gambit of organizational capacity and Industry dynamics. The two common approaches to strategic analysis are value analysis and SWOT analysis. Yes Strategic analysis takes place within the constraints of existing/potential organizational resources but its would not be appropriate to call it a trap. For e.g., SWOT tool involves analysis of the organization's internal environment (Strengths & weaknesses) and its external environment (opportunities & threats). The organization's strategy is built using its strengths to exploit opportunities, while managing the risks arising from internal weakness and external threats. It further involves contrasting its strengths & weaknesses to determine if the organization has enough strengths to offset its weaknesses. Applying the same logic, at the external level, contrast is made between the externally existing opportunities and threats to determine if the organization is capitalizing enough on opportunities to offset emerging threats.[citation needed]

Putting creativity and innovation into strategy Given that companies of all sizes are competing on the global stage, and the pace of change and level of complexity have skyrocketed in the last decade, creative strategy development is needed more than ever. In 2010, IBM released a study summarizing three conclusions of 1500 CEOs around the world: 1) complexity is escalating, 2) enterprises are not equipped to cope with this complexity, and 3) creativity is now the single most important leadership competency. IBM said that it is needed in all aspects of leadership, including strategic thinking and planning. James Bandrowski declared in 1990 that strategy development should no longer be just an analytical exercise, but should be highly creative with an aim to conceiving and executing an innovative strategy that creates competitive distinction and elates customers He introduced a sine wave approach that amplifies the strategic thinking of all participants in the development and execution of strategy. It can be used at the corporate level, for every function in the organization, as well as in mergers, acquisitions, divestitures, and turnarounds. He states, the bigger the amplitude (measure of the height and depth of a sine wave) of ones thinking and feeling, the greater the chance of value-added breakthrough thinking and achieving stretch goals. In 2009, he declared that a small amplitude both positively and negatively in ones thinking is the metaphorical box in thinking outside the box. Similarly, Mckeown argued that "over-reliance on any particular approach to strategy is dangerous" such that multiple methods can be used to combine the "creative human side" with the "more analytic side of strategy" in order to create strategy, or an "approach to shaping the future", that is "difficult to copy". He recommends introducing both approaches to leaders, organisations and teams and discussing how best to alter the balance in the future.

HUMBLE ORIGINS, RICH PICKINGS The Beginning: Noble Carr Richardson came to Mumbai in 1852 and, six years later, his ambition found expression in the form of a small foundry. The foundry was set up in the compound of his bungalow in Byculla, then a fashionable locality of Mumbai. Through the years, the foundry flourished, and, in 1870, Richardson & Company came into existence. It was a partnership venturewith Noble and his brother William Richardson joining hands with their father. A new partnership: In 1880, Richardson & Company absorbed the business interest of Nicol & Company of Parel Road. With the merger, John Cruddas, manager of Nicol & Co, became a partner and thus began a thriving partnershipRichardson & Cruddas later to become the largest structural & mechanical engineering firm in western India. A new era dawns : Richardson & Cruddas, as a partnership venture, continued to prosper both in western and southern India. However, with Indias Independence, the British partners sold the firm to Haridas Mundhra who became sole proprietor. In 1949, the firm was turned into a private limited company with 100% Indian capital. In 1972, the business of the old firm, Richardson & Cruddas Ltd, was acquired by the govt under an act of Parliament and a new company, Richardson & Cruddas (1972) Ltd, was formed on March 15, 1973, as a wholly-owned Indian govt undertaking. The firm is a subsidiary of Bharat Yantra Nigam Ltd, set up by the govt. (Source: Richardson & Cruddas)

DOWNFALL OF RICHARDSON & CRUDDAS (1972) LTD. Richardson & Cruddas (1972) Ltd. (R&C) was taken over from private sector in 1973. It has four units, two in Mumbai and one each in Chennai and Nagpur. The company became a subsidiary of BYNL in 1987.The company is sick and under reference to BIFR. In July, 2003, the BIFR passed the orders for winding up of R&C. The company is being reviewed in the light of Public Sector Policy under National Common Minimum Programme (NCMP). BRPSEs recommendations for restructuring of the company are under consideration of the Govt. The

company's production during the year 2006-07 is anticipated to be Rs. 49.20 crore. Review on working of RICHARDSON AND CRUDDAS : The Sub-Committee had an occasion to interact with the representatives of workers and Management of the Company at Chennai on 13th July 2000 to have first hand view of the problems being faced by the Company. Before the meeting, the Sub-Committee was shown around the Chennai unit of the Company. The following points came up at the meeting:Points raised by the Workers representatives The Workers sought financial assistance from the Government for restructuring one of its units. They also sought exemption from the earnest money deposits in Government tenders for the unit. Workers sought parity of their Dearness Allowance (DA) and long pending wage revision. Workers also pointed out that due to bad Management decision the company has incurred a loss of Rs.1.00 crore which was the result of poor market survey carried out by the Management. Workers also pointed out that inefficient and unqualified Management are manning Chennai Unit which is hampering the smooth functioning of the Company.

 The Workers representatives disclosed that the Company has lost the profits due to unviable projects by the poor Management decision. Company needs work orders on a regular basis from Central PSUs. Points raised by the Management The Management pointed out that there are no work-orders for Byculla Unit of the Company for the last one and a half years. The Management had filed a tender with Railways on 5th October, 1999. However, in spite of being the single tender, no order is forthcoming from the Ministry of Railways. They sought funds from the Government for the implementation of Voluntary Retirement Scheme (VRS) to reduce the manpower in the Company. The Management also pointed out that long pending payments from State Electricity Boards has created cash -flow problems for the Company. The Management pointed out that with regard to procurement of pumps, the different State Governments, who were major customers of the Company, have started protectionist tendencies towards units of the Company in their respective states. For example, the Tamil Nadu Government has issued an order for procurement of these projects to Tansi. The Karnataka Government has also issued similar orders. This has affected order book position of the Company and if this problem is not addressed immediately, the survival of the Company may be at stake.

MINISTRY STAND SOUGHT ON RICHARDSON & CRUDDAS THE Ministry of Heavy Industries and Public Enterprises (MHI) has been directed by the Board for Industrial and Financial Reconstruction (BIFR) to take a view on whether Richardson & Cruddas (1972) Ltd (RCL) was viable, and whether it was willing to extend further support to the company in the light of its present performance. Since a view on the viability of the company and its discharge from the Sick Industrial Companies (Special Provisions) Act might be taken soon, the Bench might not at this stage appoint a special director, the board said. The Bench would, however, separately nominate a person on the asset sale committee. The Bench directed MHI to sort out the matter of the demand not being raised by it asking the company to repay the loan of Rs 400 lakh. Richardson & Cruddas has been directed to submit to the Bench and the monitoring agency (MA) the audited balance sheet of March 31, 2000 and the provisional balance sheet of March 31, 2001, as also the statutory liabilities not provided for. The company has also been asked to give further details of the balance sheet indicating contingent and other liabilities and whether these were crystallized or not. The MA would verify whether the liabilities had been reflected in the balance sheet and examine whether the company's net worth had become positive in terms of the SICA, the Bench said. State Bank of India (SBI) has been directed by the board to examine and take a view on the right of recompense, and intimate the same to the company, MA and the Bench. The right of recompense to the promoter, the Central Government, would be examined by MHI as the promoters could not provide for a right of recompense under a BIFR sanctioned scheme, the Bench said. Richardson & Cruddas will crystallise the capital expenditure proposed, the amount already incurred and proposed to be incurred and the sources of funds and submit a revised and modified rehabilitation scheme based on actual working results to the MA and the Bench. The MA will examine the same and submit its comments, the Bench said. Richardson & Cruddas would approach the statutory authorities for all other reliefs and concessions, the Bench said.

MHI has been directed by the Bench to take a view on additional bonds and loans granted for further VRS amount and the interest charged on the same as also on further assistance or reliefs sought in the revised proposal.

REASONS OF FAILURE OF RICHARDSON AND CRUDDAS Mismanagement of funds The registered office of that company being at Calcutta, an application was made in December. 1957 to the Calcutta High Court by the Life Insurance Corporation of India alleging mismanagement. On that application, the Calcutta High Court appointed a Special Officer to manage the affairs of this company and lo investigate into the alleged irregularities and mismanagement. The Special Officer's enquiry revealed large scale issue of duplicate and spurious shares and other mismanagement including misappropriation of the company's funds. With the approval of the Court, the Special Officer prepared a provisional share register disallowing the claims of some shareholders. Consequently, the holders of the shares whose claims were rejected filed suits against the company for registration of their names as shareholders and. in the alternative, for damages. The matters relating to the share disputes are pending before the CuleutUi High Court. The company had suffered considerable losses due to mismanagement. For about 15 years, the company has been managed under the orders of the Court. The company has been subjected to voluminous litigation arising out of the issue of duplicate shares and claims of over Rs. 1 crore towards damages are pending. If the damages were awarded against the company, it would have no means of carrying on its business. The company has been doing valuable work for various Government Projects.

Non continuance of government support: Government have from time to time extended guarantees to the State Bank of India for extending cash credit facilities to the company amounting to R.s. 217 lakhs and have also given direct loans to it amounting to Rs. 160 lakhs for meeting its working capital and other needs. It is difficult for the Government to continue these guarantees and advances indefinitely without making arrangements for its long-term management which would ensure adequate Government control over its operations. This aspect has also been emphasized by the Public Accounts Committee from time to time. The position of a large number of shareholders who were holding genuine shares has remained uncertain for a number of years. A decision on the conflicting claims for membership through the normal processes is likely to take a long time. In the absence of a decision on these claims. It is not possible for the company to provide for its proper management by a duly constituted Board of Directors. The business of the company has been carried on with the help of Government guarantees but these cannot he continued indefinitely. It is. therefore, considered necessary to enact a special legislation to solve the legal and other special problems relating to this company.

REVIVAL STRATEGIES TAKEN: RICHARDSON & CRUDDAS TO CUT COSTS THROUGH VRS: RICHARDSON & Cruddas Ltd (R&C), a subsidiary of Bharat Yantra Nigam Ltd, has offered a voluntary retirement scheme (VRS) to its 1,000-odd workforce. The scheme is part of the cashstrapped company's revamp plans to cut costs. The VRS would offer a maximum of approximately Rs 5.5 lakh to the worker category and Rs 6.5 lakh to the officer category, according to a senior company official. ``The company cannot sustain the high labour costs it is incurring currently. Our Byculla unit, where we have 350 people working, can accommodate only about 100 workers. The scheme has been offered at our Mulund, Nagpur and Chennai units as well,'' the official said. The total expenditure expected for the restructuring exercise, including VRS, is nearly Rs 100 crore. The PSU plans to raise funds through loans from financial institutions, and internal reserves. ``We will approach the Government to act as guarantor to the borrowings,'' he said. The company is planning to modernize the machinery at all its four units. R&C also has to make provisions for payment of fees to the Centre on guarantees given on previous internal borrowings. The 142-year-old engineering firm managed to put an end to its loss-making streak, through the 1980s and early 1990s, in 1996-97 by posting a net profit of Rs 7.45 crore. ``The company has been facing intense competition from smaller units offering prices 16 per cent lower than ours. They do not have to pay the 16-per cent excise duty that we do,'' the official said. Though the company managed to come out of the BIFR's fold, to which it was referred in the early 1990s, high labour and interest costs are still eating into profit margins. ``We plan to work on EPC contracts with Bharat Heavy Electricals Ltd (BHEL) to set up effluent, water purification and sewage treatment plants,'' the official said. The company is also in talks with multinational companies for EPC contracts.

R&C registered a marginal profit of Rs 75 lakh for the financial year 1999-2000 (Rs 2.59 crore in 1998-99) on a turnover of Rs 60 crore (Rs 90 crore). REVIVAL OR SALE OF LAND? A revival scheme for an ailing, loss-making public sector unit looks to turn into a realty deal. Last August, bids were invited to take over and revive the sick government owned engineering company Richardson & Cruddas, which has large chunks of prime real estate in Mumbai. The offer letter stated that firms interested in reviving the over 150-yearold company should have experience in similar industry. But some of the biggest builders and construction giants are said to have submitted their offers for the companys 50 acres in Byculla and Mulund. This has sparked speculation in property circles that the revival plan is just a ploy to gift real estate worth at least Rs 2,000 crore.

REALTY GAME WORTH A GOLDMINE Is the move to revive the sick government-owned Richardson & Cruddas a faade? So far, almost a dozen offers were received from developers, but none is believed to have experience in reviving a sick engineering unit, said sources tracking the deal. The ailing company which shut operations almost a decade ago has an accumulated loss of close to Rs 400 crore and barely 100 employees. It once had around 4,000 employees who took VRS. The Byculla unit next to JJ hospital sits on a 13-acre sprawl. In Mulund, the company holds another 37 acres on LBS Road. We are only following the directives of the Board for Industrial and Financial Reconstruction (BIFR), said D J Shah, additional general manager of State Bank of India, which was appointed as operating agency by BIFR for takeover/merger/ amalgamation of the sick unit. Its a real estate game. No effort can revive this company, said a legal source, representing a developer. A loss-making company will fetch a couple of hundred crore, but its land is worth a goldmine, he added. A Richardson & Cruddas official refused to comment. It is for the government to decide, He said. One of the main considerations while evaluating the offers will be the proven financial technical and managerial capabilities of the bidder. The company has two units outside Mumbai, one each in Nagpur and Chennai. Both these units are also part of the revival package. In a related development, hotelier and developer Maredia, which owns four hotels in Mumbai, has moved the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) to seek a stay against the revival plan. The Maredias said they signed a memorandum of understanding with the companys labour unions in 2004-05 to jointly revive it. The AAIFR asked SBI to examine the scheme. The bank subsequently gave its approval. However, later many builders jumped into the fray for its land and the matter went to court, said a source, handling the Maredia case. The high court directed BIFR to reconsider the draft revival scheme in 2008. We had filed a revival scheme and offered Rs 76 crore to the government to repay the companys dues, he said.

Richardson & Cruddas revival scheme declared failed -- ICICI to advertise for change in management TAKING note of the fact that the ailing Richardson & Cruddas (1972) Ltd (RCL) and its promoter, Bharat Yantra Nigam Ltd (BYNL), have failed to revive the company under the sanctioned scheme of 1995, the Board for Industrial and Financial Reconstruction (BIFR) declared the sanctioned scheme as ``failed''. At the recent hearing, the Bench observed that the company's promoters were unable to extend any support to RCL as its own finances were not in good shape. The Board appointed ICICI as the operating agency (OA). It directed the OA to advertise for change in management, inviting offers for takeover/leasing/amalgamation/merger for rehabilitation, with or without one-time settlement (OTS) of the dues of financial institutions (FIs) and banks including measures contemplated under Sections 18(2)(i) and 18(ii) of the Sick Industrial Companies (Special Provisions) Act, giving 60 day time for submission of offers. BYNL, and the Union Government can also submit a scheme for rehabilitation of the sick company in response to the advertisement, with or without joint venture, the order said. Further, the Bench directed the OA to prepare a draft rehabilitation scheme. Such a scheme is to be prepared by the OA within a stipulated time-frame and the same could be made available to the intending bidders who would also be free to submit a revival proposal of their own in response to the advertisement. The advertisement will provide for rehabilitation of the company under various alternatives available in terms of Section 18, providing for takeover in full or in part, of the company, by way of leasing, amalgamation and/or merger, with the present company, the holding company or any other, with or without joint venture or with a co-promoter, and will ensure that the process of takeover shall not jeopardise in any manner the interest of the labour or any secured creditors. Further, the incoming promoters shall take over full liability and ensure continuity of service of the workers and all dues as per industrial laws and also meet statutory liabilities in all respects

including those of the State and the Central Governments. Such a proposal could also include one-time settlement (OTS) and VRS. The OA would also send an interim status report to the Board after March 31, 2002 indicating, inter-alia, the position of offers received in response to the advertisement, the order said. ``If no concrete rehabilitation proposal with means of finance fully tied-up is received in response to the advertisement, the Board may consider passing further appropriate orders which may include issue of a show-cause notice for winding up of the company,'' the Order said.