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GENTRAN MACHINERY

INDEX
1. EXECUTIVE SUMMARY

2. SITUATIONAL ANALYSIS

2.1 REASONS BEHIND JV


3. PROBLEMS IDENTIFIED

1
2

3.1 STARTEGY ISSUES

3.2 STRUCTURAL

3.3 SYSTEMIC & HR

3.4 CULTURAL

4. CRITICAL SUCCESS FACTORS

5. DECISION CRITERIA

6. RECOMMENDATIONS

7. EVALUATION OF RECOMMENDATIONS

8. ACTION PLAN

8.1 SHORT TERM

8.2 LONG TERM

9. CONTINGENCY PLAN

1. EXECUTIVE SUMMARY
The case study analysis explains at length about the challenges faced by Gentran Machinerys
JV in Hangzhou, China. Mr. James Thompson, President of GM Pacific wanted a review of
the problems and recommendations from an on-site visit and had allocated the responsibility
to Bill Stevenson.
Mr Stevensons report has identified cultural barriers and associated issues as the major
hindrance to the performance of the JV. Theres apparent lack of cooperation between two
sets of managers and it is compounded because of mutual distrust. He also identified the
legacy of Hangzhou Construction Factory, autocratic style of management & the traditional
Chinese system of always going to the superior for decisions.
We have developed strategy map and underlying issues were identified on the basis of
reasonable inferences drawn from the interviews findings. Finally, recommendations have
been evaluated and long-term and short-terms solutions to above issues have been listed.

2. SITUATIONAL ANALYSIS
Gentran machinery is a global heavy machinery manufacturer for manufacturing, mining and
construction operations. The company works in an increasingly competitive environment
with competitors coming in mainly from Japan and South Korea.
Despite this, Gentran has managed to perform well, clocking in an average annual growth of
~12% and increase in profitability parameters over the last 20 years.
Gentran has several overseas operations, most of which are wholly owned subsidiaries, to
emphasize the greater control that Gentran needs to exercise for its operations. The only
exceptions are a JV in Brazil which has been quite successful and one in China which has
been facing issues.
As Gentran tries to build competitor advantage by expanding into new markets, forming a JV
in a location with lower transportation costs, using it as an entry vehicle into a new market
and to tap into the Chinese technical know-how, it is increasingly facing problems.
The new JV is behind schedule and is underperforming both in terms of costs and sales,
threating the companys profitability.
2.1 REASONS FOR JV

3. PROBLEMS IDENTIFIED
3.1 STRATEGIC ISSUES

Difference in objective of Chinese and American management. Americans saw JV as


an entry vehicle into low cost and highly efficient Chinese market whereas Chinese
wanted to learn the Western technology and management techniques.
Lack of change management by the Chinese due to ill-defined roles, accountability
and responsibilities
Lack of motivation for innovation or progressive direction in Chinese management.
Lack of proper business plan
Lack of strategy for responsibility management and appropriate reward systems
leading to inability to link inducements and contributions.
3.2 STRUCTURAL ISSUES

Weak and ineffective top American management, indecisive on key issues and
execution of tasks
Lack of top down management approach leading to ineffective decision making and
friction among various levels
Weak Chinese middle management leading to delineation of tasks
Chinese management directly approaching the higher levels superseding the American
management showing lack of authority in American management
No American management in middle levels

3.3 SYSTEMIC ISSUES

Mediocre performers working in the old Hangzhou factory


Lack of effective communication of directives, concepts resulting in lack of trust
Unhealthy work-life balance for American managers who had been living on the site
for more than a year.
Lack of proper translators

3.4 CULTURAL ISSUES


Chinese system of GuanXi which mandated an autocratic style of leadership, giving
more importance to interpersonal relationships and favours.
Perception of American managers that Chinese are resistant to changes and hence fail
to follow any directives
Lack of trust and cultural insensitivity

4. CRITICAL SUCCESS FACTORS OF THE COMPANY

Critical Success Factors


Productivity

Cultural Fit
Effective Communication
Employee Skill Level
Development of Local Mangers
Proximity to Market

Key Performance Indicators


Overall Equipment Effectiveness(OEE),
Total Equipment Effectiveness Performance
(TEEP),Utilization, Rejection Rate
Interview, Feedback
Language Proficiency Tests, Surveys
Number of KT sessions attended, number of
training sessions attended, objective tests
Quality of projects handled
Number of transactions

5. DECISION CRITERIA
Based on the CSFs mentioned, the decision criteria that can help determine the effectiveness
of the recommendations being offered for the issues plaguing Gentran Machinery include:

Whether the recommendation offered by the HR personnel is decided objectively


Whether the change is required in particular area or it is too early to change status-quo
What is the degree of rules and regulations to be followed in the implementation
Ease of implementation
Effectiveness of the recommendation: long term vis-e-vis short term

6. RECOMMENDATIONS
6.1 STRATEGY
In the area of strategy formation and implementation there should be a well-defined business
plan. Every role in the organization should be defined properly in terms of accountabilities,
decision making authority and KRAs. The KRAs should be aligned with the Critical Success
Factors of the organization.
6.2 SYSTEMIC & HR

Job analysis should be carried out to write specific Job Description outlining the key
responsibilities, technical and communication skills required
American employees working in China should be provided periodic leaves to visit
their families and other provisions to remove the alienation like providing facility to
bring families to china should be implemented. Also cultural exchange have to be
promoted
Ineffective employees should be replaced. Performance evaluation should be carried
out on relative to the parameters specified in Job Description and only those
employees who satisfy these should be retained e.g. non-effective translators should
be replaced

6.3 STRUCTURAL

Since the major problems are likely the result of lack of trust and communication so we do not advise
to re-structure the organizational design at this stage. However a centralized structure with clearly
defined job roles and responsibilities and with adequate decision making authority at the middle
management level will align the organization more towards the business plan.

6.4 CULTURE
To do away with the cultural differences between the Chinese and American managers
initiatives for cultural exchange should be facilitated. It is important to have an organizational
culture focussed on the business goals and Chinese manager must be the champion of these
changes. A proper communication about the advantages of the western management system
and its benefits to employees might help reduce ambiguity.

7. EVALUATION OF RECOMMENDATIONS

8. ACTION PLAN

There are certain steps which need to be taken immediately in the short term and some steps
which need to be taken in the long term. These are:
8.1 SHORT TERM:

Provide basic English training to workers


Organise visits to other JVs and manufacturing facilities in China
Clearly define business plan and break the business plan into discrete activities to
ensure clarity of goals
Communicate clearly the benefits of switching to a Western style of management to
the employees
Bridge the cultural and language barrier by means of cross cultural exchanges and
group activities of both set of managers
Lay down strict guidelines for the General Manager Jack Bartlett to be more
authoritative and decisive in his actions to bring about change and evaluate his
performance on them
Replace the 2 translators who are not capable
Reward systems need to be monetized based on KPIs

8.2 LONG TERM

Clearly define the mission and vision along with the goals and objectives
Perform a job analysis to define the roles, responsibilities and the skill set required for
the job
Perform evaluation and performance appraisal for the workers and remove
incompetent workers.
Build upon the current centralized structure and assign responsibilities to ensure less
ambiguity
Allow expats to bring their families or make a provision for a vacation
Continue to bridge the cultural difference between the Americans and the Chinese by
Formal and informal methods
Making a formal Cultural Integration Document

9. CONTINGENCY PLAN

If issues are still not resolved, then the evaluation can again be done from operational
perspective as this review was more people inclined.