The Crompton Greaves' Operations Overhaul
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Case Details:
Case Code : OPER003
Case Length : 05 Pages
Period : 1990-2000
Organization : Crompton Greaves
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Electrical Equipment
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"When I became CEO of Crompton Greaves in 1985, the
company was in bad trim. The wind had abruptly changed direction, catching the
management unawares. It was my job primarily to set the sails right again and
correct the course."
- Kewal K. Nohria, CEO, Crompton Greaves in 1998.
The Bluechip's Downfall
Crompton Greaves Ltd. (CGL), the flagship company of the L.
M. Thapar group was one of India's leading private sector electrical engineering
companies. CGL manufactured a wide range of transformers, switchgears, control
equipment, motors and related products and railway signaling equipment besides
consumer products.
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CGL was incorporated in 1937 as a 100% subsidiary of the UK based Crompton
Parkinson Ltd., (CPL), under the name of Parkinson Works Ltd. (PWL). In 1948,
the L. M. Thapar group company, Greaves Cotton & Co Ltd. (GCCL), acquired a 26%
stake, which was later increased to 50% in 1956. In 1966, a joint venture
company (between GCCL & CPL), Greaves Cotton & Crompton Parkinson Ltd. was
amalgamated with PWL. The company was renamed as Crompton Greaves Ltd.
Over the years, CGL evolved from being a single location company manufacturing
ceiling fans and AC industrial motors, into a multi location, multi product
company.
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In the late 1970s, CGL entered into various technical collaboration agreements
with renowned companies from USA, UK, Europe and Japan. These activities
(many undertaken as joint ventures), were in related products, supplementing
the company's main business. While many of these companies were amalgamated
with CGL, some of them were divested as well during the following years.
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In 1987,
CGL began its diversification moves and entered the telecommunications
and industrial electronics arena. The company also undertook turnkey
engineering projects and began providing information technology
services.
During the 1980s, CGL was in dire straits with profitability at all time
lows. Nohria said, "In 1982 and 1983, industry in general and the
electrical industry in particular was gripped by recession, and the
scenario changed from a seller's market to a buyer's market. Falling
demand combined with higher production capacity and employment levels
resulted in declining productivity during 1982-84 at Crompton
Greaves."... |
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