Assignment No.

2
Submission date: Nov 20, 2010.
1) What is Hawthorne effect and why it is important to managers.
2) What do you understand by the concept of Social Responsibility of Business?
What argument could you put forward in favour of a case towards assumptions of
social responsibility of business?
3) Why decision making is important for a business enterprise? Discuss the elements
in decision making and also the effect of environment on decision making.
4) “Planning is pervasive in nature”. Explain it with suitable example.
5) What do you understand by Management by Objective (MBO). Explain its
essential elements with the help of suitable examples.
6) What is Herzberg’s two factor approach to job satisfaction and dissatisfaction?
Why has this approach been criticized?
Case Study-1
Ganesh Engineering works specializes in the installation of heating and air conditioning
equipment in a metropolitan area of about one million people. Although the company
usually installs nationally known equipment, it engages in limited manufacturing of
certain components needed for commercial installations. Since it was established some
forty years ago, the company has earned a reputation for quality work.
Shiva has been with the company as sales representative for two years. During this
period he believes that the company has missed a number of opportunities to obtain
lucrative contracts because of the conditions under which he is forced to operate.
Particularly in the case of commercial installations, he does not have the authority to
make any decision or commitments during preliminary contract negotiations. He has to
postpone discussion of price, completion time, and credit terms until after each of the
technical experts in these areas has studied the job and made formal commitments. By
this time, some competing firm already completes negotiations and gets the contract.
Shiva considers this a continuing problem, and feels hampered.
1. In what respects do you think Shiva is justified or not justified in his complaint?
2. What can be done on a company-wide basis to improve the situation?
Case Study-2
Himanshu Goyal, a very bright and ambitious young executive, was born and raised in
Jaipur. He graduated from a local college and married a girl who was his class-mate. He
then went to Mumbai where he received an M.B.A. He was now in the seventh year with
Birla Steel Ltd. which was located in Jaipur.
As part of an extension programme, the Board of Directors of Birla Steel decided to build
a new branch plant. Goyal was selected to be the manager at the new plant. He was also
informed that if the new plant is a success he would be promoted to a higher post. The
location of the new plant was to be decided by an ad hoc committee of which Goyal was
made the chairman. In the committee’s first meeting Goyal explained to the members the
ideal requirements for the new plant and gave them one month to come up with three
choice locations.
When after a month the committee re-met, it recommended the following cities in order
of preference: Gurgaon, Chennai; and Indore. Goyal thanked the committee members for
their fine job and told them he would like to study the report in more depth before he
made his final decision.
That evening he asked his wife. “Honey, how would you like to move to Gurgaon?” Her
answer was quick and sharp. “Heavens no!” she said. “I have lived in Rajasthan all my
life and I am not at all inclined to move out to Gurgaon-extension of Delhi. That kind of
life is not for me.” Goyal weakly protested by saying that the committee had ranked
Gurgaon as the best location for the new plant. The second was Chennai and the third
was Indore. His wife thought a moment, then replied, “well I would consider moving to
Indore, but if you insist on Gurgaon, you will have to go by yourself.”
The next day Goyal, called his committee together and said, “Gentlemen, you should all
be commended for doing an excellent job on this report. However, after detailed study, I
am convinced that Indore will meet the needs of our new plant better than Gurgaon or
Chennai. Therefore, the decision will be to locate the new plant in Indore, Thank you all
again for a job well done.”
1. Did Goyal make a personally rational decision?
2. Did he make an organizationally rational decision?
Case Study-3
Honda has debunked the auto industry’s claim that “nobody can make an economy car in
the United States at a profit.” Not only is Honda’s plant in Marysville, Ohio, profitable, it
is said, but its cars are as well built as those made in Japan.
Since Honda holds only a relatively small share of the Japanese car market, it needed an
outlet to grow. In the early 1970s, when gas became scarce and expensive, Honda
introduced its fuel-efficient cars in the United States. Strong demand and growing trade
friction convinced Honda that it needed to repeat the strategy that worked for its
motorcycles: build a U.S operation. The first cars rolled out in 1983—the year quotas
became effective. In 1985, Honda outsold both Nissan and Toyota and became the fourth
largest car manufacturer in the United States.
The Marysville plant is not demonstrably more automated than American factories, but it
works differently. All employees are treated as equals. Workers are chosen for their team
skills as well as their expertise. A quarter of the first employees spent up to 3 months in
Honda’s plant in Japan. When they returned, they taught their coworkers how to
assemble cars in teams.
New workers spend several weeks practicing on training cars before they are assigned to
a team. Team members trade jobs and learn as many tasks as they can. Team leaders
check the workmanship and help the team in any way they can (solving problems,
replacing an absent member, and so on).
Honda attributes its success to workers who are willing to work hard for the company.
The “equal partnership” gives employees a stake in the company. Mr. Honda believes
that all employees are equally important. Everyone, including the plant manager, wears
coveralls and shares the facilities (same lunchroom, washrooms, parking). All employees
can help make decisions. Initially, workers were surprised that their supervisors asked
them for advice.
The workers are very proud of their work. They like working at Honda, even though they
earn roughly 20 percent less than other U.S. auto workers. Honda’s labor costs are about
60 percent lower than the industry average because it has a lower overhead per workers.
Honda expects suppliers to establish the same quality standards it uses. It was willing to
help U.S. parts suppliers that did not meet them. Those who insisted that Honda could
simply return defective parts were replaced by Japanese suppliers. Some of them have
built plants near Marysville, which, in turn, has helped Honda minimize inventory.
Although most U.S. manufacturers barely break even on compacts, Honda earns a
handsome profit on each car, and it sells every car it makes. And while this is only half
the profit Honda earns on the cars it imports from Japan, it expects the difference to
narrow as the workers in the U.S. plant learn to be more efficient.
Now that the company is well established in the U.S. car market, Honda plans to double
its U.S. capacity and build luxury cars, which should be more profitable than the less
expensive cars. Honda attempts to avoid problems from its low-cost image by selling its
luxury cars under another name—Acura—through different dealerships. Far from
importing the large, old-fashioned Japanese luxury cars, Honda is developing “European
–style” models specifically for the U.S. market. European styling has two advantages: It
appeals to the growing number of young professionals, and the cars are small enough that
they can be built on Honda’s existing compact-car production lines.
1. Why did Honda build a plant in the United States (what were the objectives)?
How is the plant in the United States affecting the company in Japan? What
problems or advantages might the U.S. operation give Honda in the future?
2. Why was Honda able to build economy cars in the United States when
American car manufacturers could not? What advantages does Honda have
over the American companies?
3. How much of Honda’s success is due to its policies? How much is due to non-
managerial factors?
4. Apply the steps in planning to the case.