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Crises at Marcopolo Tyres

Marcopolo Tyres is a tyre manufacturing firm based in Madhya Pradesh. The company has four
plants in different locations with its head office in Bhopal. For the last three years, the company has
been running losses. Under the influence of two vary strong worker unions in the state, the factory
workers have made it difficult for the firm to carry on with business. There were seventy three
strikes in the last three years, almost two strikes per month. This was at a time when the economic
status or environment of the country was not very good, and the country was going through a period
of high inflation. Politically too, the country was not very stable.
Managing director, Mr. Swaminathan was very worried and called a meeting of the firm's board of
directors. In the board meeting, Swaminathan shared his concern and asked the members for their
options. Half the members were of the opinion that business at the firm should close down and the
other half was of opinion that such a step should not be undertaken without giving the firm one
more chance to succeed. After a couple of hours of discussion, the hoard finally decided to give the
firm one last chance. Accordingly, Sundram Iyer, a recently retired IAS officer, was offered the job
of CEO at Marcopolo. Sundram Iyer very gladly accepted the offer and joined with a lot of
enthusiasm and ideas to bring about change in the organization.
Sundram hailed from Tamilnadu and his unbringing had been in a feudal family, where autocracy
was the norm. At the age of 10, Sundram went to a boarding school Doon School where he
acquired knowledge in the areas of science and humanities. During his years in school, he
developed an interest in understanding the relationship between science and technology. This
understanding brought about a change in his mindset being open to reason rather than be guided
by traditions. After completing his graduation from the Delhi University, he wrote the civil service
examination, and was selected from the Bihar cadre. During his twenty year tenure as an IAS
officer, Sundram had handled many assignments in different parts of Bihar. The exposure helped
him understand the complexities involved in interpersonal relationships, since he had to interact
with people from diverse backgrounds and with varied experiences.
On joining Marcopolo, Sundram, to his dismay, saw the company's balance sheet, low motivation of
employees, and the unrest among workers. Indiscipline and casual culture prevailed in the
organization. Of the employee, 70 per cent were in their late forties and had been with the
organization for 25-30 years, the other 30 per cent were in their late twenties or early thirties, hired
from top management institutes. The Machinery in use at the firm was very old, production was
very low in relation to the manpower, and the few people who were close to the directors were
dominating most matters. The rumour was that they were informers of the management. Sundram
has his task cut out for him with all these problems.
As a bureaucrat, Sundram's first move was to discipline the workforce. Norms were prescribed for
completing work in time. Disciplinary action was taken on non-compliance. He set targets for
managers and closely monitored their progress. He threw out the chairs kept in the CEO's room
meant for workers and officers who came to negotiate with him, and refused to see anyone without
an appointment.
He also decided to cut down costs and made a list of employees who had no performed well in the
last one year, and also calculated the money the company spent on them. He formulated new leave
policies and also developed the criteria on which employee performance would be judged. He took
all these decisions without consulting anybody, and implemented new policies and insisted on
compliance of decisions. He also discovered through reliable sources that GM Production, Mr.
Sharma, was not performed well and that he was prone to attending personal meetings and taking
personal calls during work hours. He called Mr. Sharma and asked him to resign from his post since

he was found not conforming to the norms set in place, despite several reminders.
Sundram's decisions disturbed both older and younger employees equally. The older employees
resisted compliance with the new demands of the CEO and argued that they has more experience in
the manufacturing of tyres and the workings of the organization than him. They younger employees
had a problem with his leadership style and felt ignored as he did not consult them even though they
where part of the management. The older employees were also very disturbed by his decision
regarding Mr. Sharma, but the younger employees were happy, as they saw a ray of hope, but they
did harbour a grudge against the CEO for not involving them while taking that decision. The two
unions that had so influenced the factor yworkers came with new demands for more wages and
insisted that Sundram revert his decisions.
Sundram felt that if he was accessible to the people, he could deliver better results in less time. He
installed a direct phone line using which anybody from any department could contact him. This
telephone number was displayed at various locations throughout the organization to make
employees aware that the CEO was accessible to them. He got many phone calls from the
employees and workers. This gave him an overview of the organization right from his office.
One day, one such phone call brought to his notice a delay in the release of payment to a raw
material supplier. As a policy, payment to the suppliers had to be released within seven working
days. Ten months had elapsed since then, and the money had not been released. Sundram enquired
into the matter and came to know that the LDC or lower-division clerk had already passed the file
on time but it had been retained by the accountant. He also learnt that the accountant took bribes to
release payments on time. Sundram had the accountant suspended with immediate effect. On
hearing how Mr. Sharma and the accountant fared, the older managers got scared and started
complying with the norms that were laid out, making sure that they met deadlines and started taking
their responsibility seriously.
Sundram's next move was to deal with the young managers. He studied their background and needs.
He found that they were intelligent people, but were dissatisfied with the environment in the
organization, and many of them were contemplating th idea of leaving Marcopolo and joining some
other organization. He called a meeting of the young managers and discussed his plans with them.
He was pleasantly surprised when some very good ideas were brought to the table by the
youngsters. He drew a plant to implement the new ideas. At this time, he felt the need to include
some of the older experienced supervisors and managers as part of their plan and use them as
ambassadors to prepare the people of the organization for the change that were about to take place.
He visited the factory colony and found that the houses in the colony were in a bad condition; the
colony had broken street lights, no good education facility was available to the employees' children,
there was no creche facility for working mothers either. Sundram met the older supervisors and
managers and offered to make their living conditions better, and promised that all other necessary
facilities would be provided within one year, if they supported him in increasing the production.
Initially, the older employees were skeptical and suspected this as another trick by the management
to exploit them. To show them how serious he was, Sundram did something he had not done so far
in his tenure; he shared with them some confidential information including the balance sheet. He
also declared that every month, together they would review the balance sheet and whatever surplus
was left after meeting production costs, salaries, and other expenses. 50 per cent would be spent on
workers' welfare. He appointed one of the senior managers as in-charge of the workers' welfare
account. He also offered to give them company shares at the end of the year.

Sundram shared his plans with the board of directors and asked permission to invest in new
technology. The board was horrified and reluctant to spend any money, since the company was
already into deep losses. He put his best efforts to convince them and even told them that he would
resign exactly a year later if his plans did not take fruit. Mr. Swaminathan, the Managing Director,
decided to give him permission on the condition that he signed a bond of Rs.50 lakh, which he
would have to pay the company if he failed. Sundram signed the bond and started on his mission.
On learning about the bond, the employees regarded Sundram with great respect. So great was the
acceptance he gained that a militant union leader who tried to call for a strike three time failed, as
workers willingly put their best efforts to increase productivity by 50 per cent in a single year.
During this period, Sundram sent high-performing managers for training, and formed teams to make
and execute plans and everyone in the organization worked hard to achieve their targets. Sundram
had achieved high productivity. The company was able to go beyond the estimated productivity
level.
Exactly after one year, a beaming Sundram presented his balance sheet to the board of directors,
along with his teams.
Questions:
Q1. Analyse the case and highlight the key issues involved.
Q2. Outline Sundram's leadership traits and his personality in view of his professional
background.
Q3. Disucss the changes in Marcopolo Tyres's culture after the new team initiatives were taken.
Q4. Analyse the personality aspects in older and young members of Marcopolo Tyres, especially
after the changes Sundram brought in.
Q5. Discuss what other alternative decisions could have generated positive changes of
Marcopolo.
Q6. Identify the various factors that would have been responsible for employee behaviour at
Marcopolo.