1. Name of Candidate : 2. Batch 3. SMS ID 4. Name of Topic 5.

Name of Faculty : : : :

Vivek.Dantkale@gmail.com PGCBM-20 2407476 Globalisation of Bharat Forge Limited Prof Manoj Thomas Bansal Plaza, Ranchi

6. Name of Study Centre: Table of Contents 1 2 3 4 5 6 7 8 9 10 13 14

Contents Title, Table of Contents, Abstract, Locations of Bharat Forge Limited Locations, Board of Directors Bharat Forge Limited An Introduction, Objectives / Reasons to Globalize Analysis of Global Environ Comparative assessment of Locations under consideration Assessment of advantages as per the objective for globalization Assessment of Risks, Political Risks, Economic Risks, Financial Risks Internal Analysis : Analysis: Core Competencies of BFL; & Current Business Model Modes of Entry into New Country For Marketing & Production : Costs of Different legal systems; Cultural Differences; Aligning activities in new location Implications of Globalization for BFL : Structure; Change; Control Summary

Pages 1 2 3 4 4 5 6-8 9-10 11 11-13 14-15 15

Abstract Bharat Forge Limited is a newer genre Co compared to the well-established global Cos. It faced stiff global challenge post liberalisation stance of Govt of India starting 1991. After few setbacks Mr. B.N. Kalyani, CM & MD of the Co asked his Strategists to chalk-out a strategy to go global since liberalisation also hurled global opportunities. India had a great advantage even in 1991 in terms of exceptionally low cost of HR, huge home market, innovative mindset termed Jugad and a burning desire to learn from great technologists from Germany, US & lately China. As part of International Management (Global Strategy) We are going to study the remarkable journey & transformation of BFL into a Global Giant in the real sense. Locations1 Headquarters Pune Mundhwa INDIA EU ; PUNE 411 India Cantonment 036

Plant at Ennepetal CDP Bharat Forge GmbH; Mittelstr. 64 D-58256 Ennepetal Forge Kilsta AB Plant at Daun 428, SE-69127 Karskoga, CDP Bharat Forge GmbH; Julius Saxler Str.4 ;D-54550 Daun / Vulkaneifel

Bharat P.O. Box Sweden

Bharat Forge Scottish Stampings Limited Plant at Brand Erbisdorf Neptune Works, East Park Road, Bharat Forge Aluminiumtechnik GmbH & Ayr Scotland KA8 9HR Co. KG ; Berthelsdorfer Str. 8 09618 Brand-Erbisdorf (Germany)

Locations1 N. America Bharat Forge Asian Country America FAW Bharat Forge (Changchun) Co Ltd

2807 South Martin Luther King Jr. Blvd 118-1 Dong Feng Da Jie; Changchun Lansing, MI 48910 India (South-West & South) Mumbai 400 Municipality ; Jilin Province; PRC India (North & East) 021 New Delhi

Bharat Forge Limited; Mittal Towers,

Bharat Forge Limited; Antriksh Bhavan,

B Wing; 15th Floor, Opp. New Council Hall 14th Floor ;22 Kasturba Gandhi Marg Nariman Point, Chennai New Delhi-110 001 (Madras) Jamshedpur Bharat Salai 61-A , Forge Rajendra Limited Nagar

Bharat Forge Limited; Fagun Mansion; 3rd Floor; 26, Ethiraj

Chennai- 600 105 Bangalore560084 Bharat 23/2, Forge 2nd

Sakchi; Jamshedpur - 831 001 Kolkata Limited Bharat Floor 20 Netaji Forge Subash (Calcutta) Limited Road

Kammanahalli Main Road Board of Directors1 Name the Director 1 B.N. Kalyani, CM MD 2 S.M. Thakore 3 S.D. Kulkarni 4 P.G. Pawar 5 Dr. Uwe Loos 6 P.C. Bhalerao 7 Lalita D. Gupte 8 P.H. Ravikumar 9 Alan Spencer 10 Naresh Narad 11 Dr. T. Mukherjee 12 G.K. Agarwal Dy MD 13 Amit Kalyani 14 B.P. Kalyani 15 S.E. Tandale 16 Sunil Kr Chaturvedi 1- Source BFL website Category

Kolkata - 700 001

Promoter, Executive and Managing Director Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive Director Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive, Independent Executive Executive Director Executive Director Executive Director Executive Director

Bharat Forge Limited an Introduction

Bharat Forge Limited (BFL), is a metal forming Global Co with forging units spread world over. Co manufactures special parts for mining, aerospace, automobile, construction, oil and gas, power, rail & marine so on since 1961. For almost 3 decades it was well protected by the Licence Raj. But the founder of BFL who was close to Rajiv Gandhi, pre-eminently foresaw the dismantling of Licence Raj under Rajiv Gandhi. In his quest to prepare his Co, he used his political network to procure orders & started Exporting Aircraft Undercarriage components to former USSR. Russians are worlds best metallurgists. In 1989 BFL installed modern 16000 MT Press Line & in 1990, BFL got orders for crucial components of engines from Japan, US & UK in 1991. After another decade, BFL installed 2nd 16000 MT Press Line & in 2002 put Rs.100 Crore in R&D, Testing & validation & another Rs.300 crore in Hy Truck Crank Shaft Machining Facilities. BFL took full advantage & Expanded its Manufacturing Facilities in Germany, Sweden, US up to 2004 and in 2005 into China. Today globally it is 10,000 strong. It has developed a huge knowledge base in metallurgy. Has Assets Valued Rs. 2,500 Crore spread world-over. Indias Biggest manufacturer & exporter of critical & safety components. Supplies to almost all global OEM and Tier 1 supplier. Only Co to get huge orders from China. It expanded its capacity to manufacture value added & critical components used in mining, power, Oil & Gas, rail & marine, & construction. It has a great intellectual capital, motivated & skilled HR including about 1180 Engineers with experience in various aspects of forging. Pushing for Expansion using its core competency in metallurgy to make Capital Assets like automatic Lathe Machines etc. In Dec 1984 itself the Chairman & MD spelled out his vision to go global & spelled out 3 crisp objectives behind his vision. These will be discussed below.

Objectives / Reasons to Globalize

The Objectives / Reasons to go global as expounded by the CM & MD were: a) To neutralize the onslaught of technologically superior and Larger foreign forging cos by gradually globalising BFL.

b) Take advantage of Low-Cost-High-Quality orientation of BFL. Though the Low-Cost part of Strategy is fierce Under-Played to avoid Low-quality product perception.

c) Expand into the hinterland of global competitors using core-competencies & learning from them.

Analysis of Global Environ

Analysis of Global Environ was initiated under the aegis globalization consultant firm that did its job on similar lines namely:a) Comparative assessment of Locations under consideration b) Assessment of advantages as per the objective for globalization c) Assessment of risks- political, economic, financial;

Comparative assessment of Locations under consideration Following Countries were considered for Global Expansion:a) b) c) d) e) f) UK Germany France Sweden Portugal US China (was added to the List in 2004)

A detailed area study revealed the unsuitability of UK, France & Portugal due to numerous reasons hence Germany, Sweden & US were marked for the first 3 phases of expansion. China grew greatly in the last decade and seeing BFLs technological advancement achieved with minimal help from Germany, Sweden & US, China allowed BFL to set-up a plant in its comparatively backward Jilin Province. Yet this was a major image builder for BFL. UK, France & Portugal having a covert colonial & protectionists stance posed number of administrative hurdles. Likes & dislikes of the Board of Directors some of whom had learnt

German Language tilted the scale in favour of Germany. Of course Germany had a marked superiority in die making & BFL was superior in metallurgy learnt from Russian Artillery guns manufacturers & Aviation Engineers who have been historically great at metallurgy. (1 of many reasons of Germans losing WW-II). BFL had a Joint project for making crucial Aircraft Undercarrages with Russians & Mishra Dhatu Nigam a Public Sector undertaking for metallurgical R&D. The perfected German die making has been lauded by Kirloskar who collaborated with Cummins of Germany even before BFL thought of globalization. They say that a German Engine Block & Head facing are so perfectly matched that they do NOT require a gasket in between. Such popular assertions also tilted the balance.

Assessment of advantages as per the objective for globalization

To assess the relative advantages of entering into Germany first in the course of Globalisation followed by Sweden let us bring back the Objectives / Reasons expounded by the CM & MD: a) To neutralize the onslaught of technologically superior and Larger foreign forging cos by gradually globalising BFL.

b) Take advantage of Low-Cost-High-Quality orientation of BFL.

c) Expand into the hinterland of global competitors using core-competencies & learning from them.

After liberalisation the Germans & the Swedes were capitalising on the huge demand for superior components required in all especially the domain industries of automotives where BFL was playing with a quiet ease up-till 1991. But when this onslaught began BFL decided to counter-attack by entering into manufacture of those components which were the domain of these German & Swedish Companies viz.- safety components. The move was covered by the BOFORS deal hence the 1st musket makers (under King Gustavaus) did accede to the Indian Cos need to Set-up a Manufacturing & Marketing Unit in Sweden. These were bilateral give & take of Technology & markets. Pune has been the proud exporter of crucial automotive components to EU for more than a decade with BFLs Low Cost High Quality strategy. Many Auto manufacturers have their units in and around Pune taking advantage of the fact Human Resource of a particular Technology tend to Cluster: for Pune this cluster was of Automotive & engineering of components till 1999 examples are Telco, Paggio, Bajaj Auto etc.

Assessment of Risks The study group carried out thorough risk assessment in terms of political, economic and financial. Due to marked lower political, economic and financial risk involved in Germany & Sweden, it was planned to enter Germany & Sweden initially. Political Risks Mr. Rajiv Gandhi was made the Prime Minister after the assassination of Mrs. Indira Gandhi. He had tried to study in 2 British Colleges & later took-up Flying followed by politics as career. He was an independent thinker who saw the need & started dismantling the Licence Raj (take money before the business is started) seeing the wider opportunity in demanding the same when large No. of businesses made large profits before (political) taxes which are inevitable in any polity. BFL saw the competition knocking at their doorsteps in 1984 end itself when Mr. Rajiv Gandhi expressed the need to let high-quality products to come in. BFL set the ball rolling & with some political clout secured a large order to supply Aircraft Undercarriage Components. In the bargain BFL picked up lot of clues in metallurgy form the best in that field i.e. Russians. After some political-instability & assassination of Mr. Rajiv Gandhi, Indians again gave in to their sympathy & INC secured a majority & Mr. PV Narsimha Rao became Prime Minister. He silently allowed the new vision of Mr. Rajiv Gandhi of collecting Huge Political-taxes for the party(?) rather than collecting Licence Fees for the Govt & then channelizing a merge portion of these funds with great difficulty into party(?) funds. The low profile Finance Minister Manmohan Singh became the architect of Liberalisation. Consequently BFL had to go into the next phase of becoming an Exporter. When they got the Export strategy analysed, they had to indefinitely postpone establishment of manufacturing unit(s) in UK, France & Portugal due to the political stances transforming into administrative hurdles being interposed. Germany with its profound confidence in its home grown industrial superiority became the 1st choice followed by Sweden who had huge stales in Bofors Deal. US of course has been best for business for decades despite some major scandals like Nixon & Bill Clintons due to political stability. Another politically stable country in which BFL has established its manufacturing unit is Chinas Jilins Changchun District which has large population requiring employment. Changchun Marked as 1 in the map below is away from sea. This allowed further employment to surface transporters and provided vital pool of skilled labour for the industry around.

Economic Risks

Other than Dismantling of License Raj which was protecting the Indian Industry from real competition, the ensuing FERA (now FEMA) also largely contributed to the decision to not only export & start manufacturing units in other countries, but also to diversify the production to hedge against Economic Risks. As a strong player needs fellowship of others to get the most out of its prowess, so does a newer player needs fellowship to learn new skills to survive in the field. Thats why Countries like Germany, Sweden, US & China welcomed BFL on their land. This gave a golden opportunity to learn skill heather-to developed by the counterpart. Chinas

decision to allot space in Changchun District of Jilin Province was based on the economic reality i.e. Industry in Jilin is focused on automobiles, train carriages, and iron alloy. Also for BFL the economic imperatives were far more overwhelming than the parochial approach of hiding behind protectionist Govt . It was like keeping too many eggs in the Indian economys basket having too much weight in form of almost continuously galloping Inflation. Though the RBI has played its cards well, this almost continuously galloping Inflation was indeed weighing down Industries like BFL. This is NOT the case in Germany or Sweden. US of course has been at the top especially for the English speaking Indians to start / do business for the last 5 decades due to its good economic policies! Its a separate matter that few GREEDY & MYOPIC people mis-used the freedom given to ALL & they happened to mindlessly copy / compete bringing down the economy for almost five years! China of course has proven to have LOW Economic Risks. General Interest Rates and Inflation rates were also part of Economic Risks. If availed may secure benefits or Losses to BFL. Here I could given a broad brush to Macro Economic Risks because I have to trade-off.

Micro Economic Risks BFL faced a trade-off between many things while deciding to locate & afterwards eg.A trade-off between Large pool of 70% skilled Workforce at Low cost in India vs.

Smaller pool of 90% skilled Workforce at double the cost in EU & a Medium sized pool of 80% skilled Workforce at double the cost in US. Cost of materials & Labour to build and operate forging plants varied in each host country.

Financial Risks Investments in 1 country prone to many hazards When BFL entered the Export arena to meet the orders from USSR for Aircraft Undercarriage Components, BFL frequently fell short of Press Line capacity. Many a times it had to borrow such a capacity from its arch competitors in the process some Competency always got transferred. This was like giving away own competitive edge. Hence there was an unavoidable need to invest in a large Press Line. The decision was taken to invest but the financial risk was quite high: what if reasonable numbers of orders are not received?.. what if the Labour Unions stopped co-operating? What if the Cost of Capital Falls drastically (due to ongoing liberalisation process) after BFL invests~ Resulting into dramatic fall in BFLs Share prices?.. There were lot many financial ifs & buts, yet large portion of profits made out of the Russian Contract were diverted towards installation of a huge 16000 MT Press Line. Media was Not as active in Financial field in those days & the share prices remained stable. But there existed a Financial Risk in NOT disbursing Dividends. Also this huge amount was being pegged in 1 country (India) which in itself was another form of Financial Risk. It was then decided to create such capital assets in other countries to hedge against country risk. Forex Risks After installing the huge Press Line and becoming a full-fledge Exporter of metal components, Bharat Forge Limited started another form of Financial Risk the Forex Risk due to high volatility of currencies rates of the importing countries. Here are some extracts of Volatility Estimates of chief customer bases of BFL to indicate the high degree of Forex risk involved: Table 1: Forex Volatility Estimates Sep 2000 and Sep 20033 Customer Base of BFL Australia European Union Japan Sweden UK Brazil South Africa India Currency Name involved Code Volatility (%) 9/1/2000 9.5 10.42 11.62 8.98 7.29 9.21 8.01 2.01 9/1/2003 9.67 9.03 8.82 9.15 7.97 21.45 17.83 1.5

Au Dollars AUD Euros Yen Kronor Pounds Real Rand Rupees EUR JPY SEK GBP BRL ZAR INR

3 Sourse: Justin Pettit & Igor Sokolovskys Forex Policy Revisited: Strategy & Tactics Union Bank of Switzerland (UBS) Strategic Advisory Group, Oct 2003. An indicator of speculators. http://papers.ssrn.com/sol3/paper.cfm?abstract_id=463106

Internal Analysis If the intrinsic features are great, then even under adverse external conditions, the entity will do well. Thats the importance of Internal Values. Knowing this too well the Internal Analysis too was carried-out with close assistance of the globalization consultants. Analysis of the core competencies of BFL Volumes have been written on the importance of recognising and putting to use core competencies of any firm. Prominent among these authors is Dr. C.K. Prahlad. As per his metaphoric definition Core-Competencies are like the tree trunk if the roots are Organisational Value based mission & objectives and fruits are the end products. Core-Competencies are the ones that play a crucial role in translating the mission & objectives into final sellable products. Core-Competencies are the Unique Combinations of technologies & production skills that underlie multiple productivities & critically underpin the competitive advantage. Core competencies are about communication, involvement & a deep commitment to work across organizational boundaries. Indeed BFL had (/has) a unique combination of technologies in the field of forging precise metal components as per their customers needs. Here the word needs is underlined because sometimes the customer is NOT as precise or sometimes the component manufacturing costs / constraints are NOT known to the customer. This is where the technocrats of BFL played an important role in 1st understanding the customers needs thoroughly so that an exactly shaped, sized, coated / tempered component of the exact mix of alloys could be designed and replicated without any deviation. Explaining each of these aspect in the (technical/Nontechnical, Indian/Foreign) that the customer seems to understand and finally winning his confidence and the contract is an high-skill domain of BFL. Of course the real meat is in production of faultless components over and over at a reasonably high speed. BFL has impeccable reputation of producing faultless components in a given time-span. BFL management says year after year we mate customers timelines. Initially one felt that this is a default of Marathi/Bengali accent, but no they actually mean it. Every customer is invariably in a great hurry. In this hurry-bury they often forget the need of giving precise details & specifications which should include the exact shape, size, coating / tempering required, component of the exact mix of alloys. Here on this paper it sounds simple but a deviation of even a few microns can play havoc with customers assembled product and then the blame game begins causing loss of reputation that takes years to build. Even lives may be lost in the lose-all game of hurry-bury. Secondly the customer may try to bypass or minimise the iterations of trials, testing and validation of a prototype components. This is especially true in todays highly curtailed life cycle of the products starting from concept, designing, prototypes, trials/ testing & validation, redesigning etc. .. to the products being sold profits if any disbursed as dividends or reinvested to raise the share value. So on customer front as well as share-holders/ owners front there is always tremendous pressure to hurry. This applies to the share-holders of BFL too but it is the tech-mgt team who has to ensure that these iterations take-place mostly on computers and Testing & Validation machines that put the subject component in a highly accelerated life cycle.

Yet NOTHING can totally replicate actual field trials. ALL this is been done to the satisfaction of the customers hence ALL these aspects are the core-competency of BFL. And thats how one feels that the default pronunciation of meet pronounced as mate actually applies and may be included in the core-competencies of BFL literally. Having known these core-competencies we need to convert them into competitive-advantage & also leverage them. At BFL this was precisely achieved by first Exporting then establishing marketing followed by manufacturing units in other countries in order to widen the customer base and hedge various risks. Another unique capability of BFL which is purposely understated is YUKTI it is another name for innovation used specially to hold down the production cost. There are 2 reason to understate this ability 1st to avoid giving impression of Low costLow quality. 2nd to win over contracts by tendering appropriately. The tendering committee consisting of 3 research & analysis and 2 business intelligence guys who assist the director in reaching the correct tender values. Two such teams work simultaneously and independently representing two different manufacturing units but the orders may be fulfilled jointly by all or some units. This makes the Global Tendering teams virtually infallible. BFL seems to have learnt that winning contracts is crucial for sustained competitive-edge, because history of winning and successfully fulfilling the contracts on time is in fact a basic consideration for future wins. Thus BFL uses its global presence to win contracts- a great competitive-advantage.

Assessment of the current business model Presently BFL is running on a combination of International and Global Model for their business. There are certain aspects that mimic an international organisation and certain that say BFL is a Global Co. Take for eg. BFLs Communications Plan it gives a big leeway to a well meaning employee a customer or even a project writer like me to contact any level of hierarchy in any country, provided they have time for the appointment. NO issues are made on jumping the fence / guns. But Corporate ethics which are of Global nature point out the need to inform the Line managers and the concerned departments. Manufacturing as brought-out earlier is complimentary and joint efforts are made to meet timelines of the contract. Materials procurements are also flexible meaning when there is economy of scales, one unit may procure materials for others. But if the requirement of Materials is small these are procured locally. Same applies to the Computer Aided Design facilities run in a decentralised manner and with investment heavy facilities being used Globally. Testing and Validation Equipment of course is a global asset due to its high cost; yet the subsidiaries have to prove the cost effectiveness of testing prototypes locally by outsourcing. Overall it is impossible to categorise BFL as one or the other. It also has many characteristics of a Transnational Co. Whatever may be but one thing is for sure that the happy mix of BFL is yielding profits and the Co. is growing year after year. The credit goes to the entire team as much as the Board of Directors who are steering BFL so well for so long, keeping its competitive-edge intact and sharpening it regularly.

Modes of Entry into New Country For Marketing & Production

Assessment of Modes of Entry & Costs involved. a) Costs of overcoming the differences in legal systems b) Costs of overcoming differences in cultures c) Costs of aligning activities in new location with international business model BFL

Costs of overcoming the differences in legal systems Though the basics of doing business are quite similar, every country has its own set of systems developed over the ages. The principle of intellectual property rights if followed in this development of legal and administrative systems especially keeping in mind the general psychology of the people as well as the system designers. So when a firm decides to global it has to first learn about these legal and administrative systems well. Then it has to unlearn some of its own legal and administrative systems to make quick and accurate decisions. After this learning and unlearning stage is the actual stage of implementation of what the firm has learnt. All this requires lot of time and efforts for a small firm. But BFL was NOT a small firm. Even when BFL started making and exporting undercarriage components, BFL afforded Russian specialists followed by consultants and legal facilitators to quickly complete the legalities and start doing the actual business. Russians agreed to purchase components under Indian government (request pressure) by signing a memorandum of understanding including the promise to pay in Indian Rupees at pre-decided rates. Similar Tactics were used with Sweden. And Germany as well as US had simple and set systems of registration, legal fees etc. The Legal operations in the latter 2 countries were described as surgical operations as compared to compulsory and endless weekly blood donation in India. The former is much more preferable for Large Firms like BFL. A decade ago these countries required environmental impact reports which were scrutinise once thoroughly and then the registration of Land, Construction Plan and the subsidiary itself was much easier due to comparatively negligible level of corruption and highly streamlined procedures aimed at regulating rather than creating new opportunity for government/others income. China too where BFL entered in later half of 2005, had pro-entrepreneur policies and systems. In short compared to the Indian Legal and Administrative system which has to cater for every Jugad that our people design to avoid being in red, the legal and administrative systems of the countries chosen by BFL was certainly costly in the initial phase but NOT so once established and running as ALL such costs get added to miscellaneous costs.

Costs of overcoming differences in cultures Here again BFL had a smoother sail as it began with supplying undercarriage components to USSR who showed much love and affection to Raj Kapurs India. This led to overcoming of many cultural barriers between the two countries. Also Sweden who had a larger axe to grind quietly brushed aside the cultural differences. Germany who sold millions of Tractors etc had already created Max-Muller Bhavan in PUNE, incidentally BFL HQ in PUNE and this Max-Muller Bhavan of German Cultural Exchange happen to be quite close-by. PUNE has been teaching German Language in most of its schools and this Max-Muller Bhavan goes all-out in helping the students of German (Deutsch) language. Thus due to good selection of Host countries BFL had a smoother sail in becoming an Exporter~ International ~ Global Firm. BFLs Costs of aligning activities in new location with international business model BFLs Costs of aligning its business activities in the host countries and reviewing / controlling it from India had following components:a) Organisational Restructuring: The Organisational Structure that is good for the home

country may NOT be so good for the subsidiary. At the fledgling stages of subsidiary(s) they need much encouragement as well as much freedom to gradually learn the art of business in the new set-up at the new location having numerous differences. BFL too had to give a loose rope to the local heads to align their business. This cost them loss of control. But being GOOD businessmen the Board of Directors had seen through these problems well in advance. After affording lot of flexibility the slowly tightened the controls by Restructuring their management. This broad sequence of actions were followed in each of the subsidiary.

b) Accounting Procedures:

Till recent years each of the host country followed a

different system of accounting. Even today US has not implemented the International System of Accounting. To add to this Initially these countries had different currencies costing differently in terms of each currency. All this put together led to additional costs in first aligning the accounts of subsidiary as per the requirements of the host country and then as per the requirements of Ministry of Corporate Affairs, Government of India.

c) Training managers to succeed in the new location:

After

establishing

feasibility,

country survey for Site, Procurement of Land, Construction, registration etc., there was a need to retrain people at all levels in terms of the host countries environ and needs. Training of course costs money. BFL had to spend lot of its mullah on training for aligning its employees business as well as social activities to create a secured and profitable environment within the subsidiaries as well as caution their employees about numerous covert threats lurking around - like Right Wing Extremism, Discontent among DEMANDING local labours due to loss of few jobs to the employees of BFL,s subsidiary etc.

BFLs Costs of aligning activities in new location Contd..

d) Communication and Control:

Once the subsidiary was established, there was a need

of establishing a good (working) communication setup and to create appropriate channels of Communications and Control. This too was a large chunk of costs. Also need to expedite and yet maintain minimal necessary hierarchy for good control on the ongoing processes were 2 conflicting needs. Hence there was a psychological cost involved. BFL had to battle with these conflicting needs often leading to attrition in initial stages however with a pinch of salt present managers have come to terms with this higher degree of flexibility in communication afforded especially to the lower ranks as this has brought down the turnaround time due to right team being contacted for the job at hand are doing the job rather than the internal customer waiting for the person in his/her channel to 1st understand the Job, 2nd question the need of doing it when there are so many other important things to do, 3rd being asked to re-frame the work-order, 4th forwarding it to the right-department whose management goes from 1st through 3rd steps and then asks the right-team to do the job this is if all see the need of doing the job. Generally people dont see the long term advantage in doing such minor organisational favours. But the shorter route of communications eliminates 2 probable hindrances taking 6 times the time and may be turning-down the need itself there by suppressing the initiators moral. If this happens time and again, the people with reasonable amount of initiative are all going to go to some other organisation. All this had to be taught to the erstwhile bureaucratic management of BFL repeatedly through seminars. Yet when ever there was a setback this genre of management would attribute to the new communication regimen that afforded good amount of flexibility to the fresh cadre of management inducted in Y2K. People in BFL in those days said The Y2K bug could not harm the computer systems, so it has chosen the minds of our Sr. Managers; they dont seem understand that applying their minds to an excellent on-going job when there are immediate supervisors to do it is not only wasting their time but it is also like breathing down our necks

e) Revenue sharing between HQ and subsidiaries: After putting in lot of efforts to establish the subsidiary and running it for a while, there occurs a psychological complex among the team members of the subsidiary who necessarily work on aligning their activities to make the subsidiary a resounding success; sometimes forgetting the need to share the revenues with the parent organisation. This necessitates additional costs like regular internal global audits. Also there is a Forex cost involved in sharing the revenues between HQ and subsidiaries. These costs have always irked both the HQ as well as the subsidiaries of BFL.

Implications of Globalization for BFL

Globalization of BFL has impinged upon most of its aspects. However important among these are as follows:a) Structure b) Change and c) Control Impact of globalisation on these three aspects is explained below.

Structure Bharat forge Limited had a humble beginning as a foundry in Mundwa Pune. As the business grew they became dominant suppliers of automobile components to maintain the foreign Kit Autos of the 60s and 70s. Then came Maruti 800 in the 80s and started wiping off Hindustan Motors and Premier Autos Ltd initially with far superior Japanese Suzuki Engines and parts. I had the functional 1st generation M800 till 2010! It is still working for someone I sold! This onslaught of Suzuki, Honda etc seemed to push BFL out of business like a huge sumo pushingout a lean-mean machine. But BFL quickly decided to do something to stay in business. They procured the famous undercarriage contract from USSR and thus had to change their basic structure of business as national suppliers of auto parts to exporters. Once into it they found it to be a good avenue to remain in business. They started restructuring themselves into an international followed by a truly global conglomerate. All this cost huge expenditures but it not only broke even but is now a highly profitable global company.

Change Large number of changes had to be made especially to the business processes and the basic mindset of its employees. This was brought about gradually after proper establishment of the needs of BFL. Number of Consultant firms played important role in the change management of the persona of BFL. Many internal and external seminars had to be incurred. However today it is a treat to interact with the management of BFL. Some of them recommend Art of Living and Sudarshan Kria to improve quality of Management!

Control

Globalization had a telling impact on Control mechanisms of BFL. When Suzuki and Honda came into Indian markets and started pushing BFL out of the arena of auto components with their new genre of suppliers. BFL seem to have lost its internal Control mechanisms. However they could procure their 1st Export contract of supplying crucial components of undercarriage to the erstwhile USSR in 1995. Thence on they realised the usefulness of becoming global player and they started working for it. As they became export oriented the Control mechanisms had to be reset to suit the new playfields. Then they one by one established six component forging units in other countries. In the initial phase the HQ had to give lot of leeway to the management of the proposed subsidiaries. In Mid 2007 a study on Control mechanisms was carried-out with the help of external agencies which resulted in to top twenty recommendations. These were implemented in Mid 2008 onwards. Some of the aspects smoothly termed as Work Audit, QA, Global audit of accounts, Communication Plan all together give a look of a truly Transnational Incorporation to Bharat Forge Limited.

Summary Bharat Forge Limited had a humble beginning as a foundry in 1961. Upto 1995 BFL manufactures and supplied automobile components. 1984 onwards it faced toughest competition from the suppliers of Suzuki and Honda. 1985 it managed to enter into exporting Aviation components export and learnt the advantages of becoming global. Took financial risks in 1990 and Invested in 16000 MT Press Line. 1991 Liberalisation enabled winning contracts for critical supply of engine & chassis components to Japan, USA and UK. More profits permitted taking more financial risks in 2001 by Investing in another 16000 MT Press Line and by way of M&A acquired Dana and Kirkstall of Germany. In 2002 Invested $80 million in R & D, Testing & Validation and Heavy Duty Truck Crankshaft Machining facilities. Between 2003-05 BFL Established Global Manufacturing Footprint across Europe, North America & China through acquisitions / JV. In 2006 Invested $ 100 million to set-up dedicated state-of-the-art forging & machining facilities for non-auto. In 2007 Centre for Advanced Manufacturing Cfam Baramati. In 2008 in US $ 1 BILLION TARGET was achieved. BFL commissioned Indias

Largest Commercial Open Forging Press. Alstom and BFL form a JV in India to manufacture state-of-the-art super critical power plant equipment. In 2009 Heavy Duty Crankshaft Forging & Machining Facility at Baramati. Alstom BFL JV manufacturing facility at Mundra. In 2010 Inauguration of Ring Rolling facility at Baramati. BFL NTPC Energy Systems Ltd. Manufacturing facility at Solapur. Establishment of Kalyani Centre for Technology & Innovation The above growth of BFL is indeed a classic study case for Students of International management since it brings out most of the lessons taught including those on Global and Transnational Strategy Management. ~~~~~~~~