Bharat Petroleum Corporation Ltd.

A REFLECTION ON THE CASE

A thousand things changed after the inception of Burmah Oil Refineries Ltd.in 1952 to its JV
with Shell to its nationalization and the baptism to BPCL and in the latter stages, its
disinvestment. With its refineries and diversified range of petro products that it markets, it
faces challenges on each and every aspect ever since it was conceptualized. It has witnessed
large changes post liberalization & APM regimes, which was in line with diktat of government
that all PSUs should have a business orientation irrespective of the social obligations. Thus,
started the story of massive internal changes and to begin with, Mr. U Sundararajans initiative
for restructuring the organization through the liaison of BPCL with Arthur D little. The
formation of cross functional change team for the CUSECS project led to the creation of a
shared vision, organized assessment & an appropriate change plan. The transformation from a
people centric approach to a customer centric approach shows its competitiveness with other
private players in the market. The recommendations of the expert committee to change team
to think and make decisions also implies that the employees who are involved in the business
for years can think better and give best to the organization.
Thus, brew the consensus among the change management, top management & the consultant
teams that the functional structure would not be able to sustain the initiatives taken to create
the customer centric approach and the solution was to create customer centric strategic
business units or SBUs. LPG reforms and inevitable competition threat was the prime reason
for BPCL to go for the restructuring process. Therefore, it could be said that this big change
was a result of changes in many factors prominently being a part of the international sector.
Lacunae in the older structures were identified. Every individuals role in company was
focused on multiple customer segments, resulting in lack of awareness of unique needs of
different customer segments. Even higher management involved in defining marketing
strategy had difficulty in understanding the different customer segments. Long chain of
communication lead to slow response time
The older structure had a more functional approach as the activities were grouped together as
common function from top to bottom. It had mainly four functions, refineries, marketing,
finance and personnel, each headed by an ED reporting to CMD with CMD looking after the
other support aspects like audit, vigilance, legal etc as well. The new structure through the
persistent efforts of the then CMD came out in a phased manner for ensuring effective
implementation.

The whole of India was divided into regions and divisions and each region was headed by the
regional manager, who reported to the Director marketing. The macro organization structure
which pretty much had a functional design was now inundated with a divisional structure
which brought in the decentralization of decision making, the shifting of bureaucratic power
towards the downward direction of the pyramid, the lowering of issue pumping to the CMD
and Directors and empowering the individual SBU heads. Establishing SBUs divided the
organization with individual divisions responsible for the whole business process. Each division
had all the functional departments like IT & Supply Chain, Logistics, HR, Engineering etc which
reduced unnecessary communication among different units. The structure became more of a
parallel layout than vertical. Each unit is now a separately chartered independent unit working
under the Director. This also lead to the concept of vertical specialization according to the
SBUs. Earlier, the regional sales force had the pressure of selling an appropriate product mix of
sundry varieties viz. LPG, Lubes, Industrial Petro products, Aviation fuel etc. These products
have complex variations in sales pattern and creating an appropriate mix out of these was a
highly complex and haphazard job. Now, in restructuring, each SBUs sales force had a clear
mandate of what to sell. Thus, the vertical specialization helps in creating a structured
business goal at micro level & the achievement of clear definition of product responsibilities &
contact points. Creating 66 territories made BPCL closer to its customers. This when coupled
with decentralization of power creates opportunity to create various offers at local level which
is essential to retain and thus, expand market shares.
There was a different reporting structure that was created in the above mentioned change,
with the supports functions like HR, IS & Finance being introduced at each drilled down level
(SBU, Regions etc), wherein, they reported to their respective SBU / Regional heads and the
other respective vertical heads at the subsequent higher level as well. The creation of
individual vertically specialized SBUs certainly help in improving the reporting standards and
the feedback mechanism and a seamless way of managing individual units and thus bringing in
an overall ease in the functioning. This also helped in bringing vertically specialized support
functions as well. To further increase the horizontal linkages and further streamlining of
processes, governance councils, process councils and task forces were constituted.
Communication also played a vital role in implementation of these ideas and the higher
authorities made sure that each employee should know undergoing change of vision and the
purpose the organization is following. One example of this would be: the entire change plan
was uploaded in every computer of the organization .Face to face interaction with managers
and discussion sessions would be encouraged. This would lead to free contribution of opinions
from different employees across all levels and kept everyone in the same page. Also
innovation and problem resolution increased without wasting much time on formal
communication and without them being funneled up the hierarchy.

Shared vision is necessary to motivate employees and make them proactively contribute in
restructuring process. Re-oriented goals always energize people and this when coupled with
effective leadership would drive the organization out of any kind of crisis. The broad outlines
given in visioning are very comprehensive which focusses on not only organizational
performance but also at micro level of employee productivity.
The matrix type structure of the Cross Business Councils helped introduce the corporate
centers like Strategy, Brand, HR etc across all the SBUs, which for sure, ensures better
supplement for carrying seamless and efficient business processes of each SBU and in entirety
as well.
This change thus, cemented a strong base for an Oil Marketing company like BPCL to compete
and prove its strong presence in our country and in the international arena as well, and it goes
in line with the famous Greek Philosopher, Heraclitus quote, Change is the only constant.

Compiled By : Group 1 :
Utsav Chatterjee
Avinash Kumar
Tusharika Verma
Alka Chachariya
Sravan Parmar
Manas Roy
Md. Imran