Q6

1. There was a company with fair market share

2. new government
3. import high quality low price product
4. Company failed to take improve the quality (Old Machine)
5. Strategy : Reduce the cost by increasing the production (there should be the
market demand)
6. De motivated machine operators
7. Disciplinary action being taken against the workers
8. most of the workers are with “Trade Union” (Not in favour of the existing
government.)
9. Because of trade union actions the market share got down more
10. company was trying to reduce the labour force and reduce the cost (dismiss
workers on alleged ground of misconduct, without success)
11. H R manager became unpopular
12. picketing
13. damage to the HR managers vehicle
14. Collective agreement (between union and the management) with readjusted target
15. workers explanation is machines were too old and frequent break down
16. again government change and most of the workers left their union and joined
another union
17. when workers are asked about targets, they say “no more members of the union
that signed the Agreement
18. Meanwhile the Environmental Authority compelled the company to adopt
alternative system of diffusion of waster
19. company can’t bear the cost for that
20. Company is going to move the factory 10 miles away from Colombo
21. Accordingly they applied to the commissioner of Labour, he gave following
resons for the closure

-Liberation of imports by the Government

-Inability to complete with the high quality imported products
-Unbearable high cost of the waste water system suggested by the Environmental
Authority
-Depleted demand for the products of the company
-Act of sabotage by the workers
-Failure by the workers to give an adequate production flow

Question
 They have not paid their attention to what is happening in the Organization’s
Business Environment as they did not monitor the changes that have taken place in
the Technological environment and the Political environment of the country. The
Business Environment refers to the actors and factors that have an impact on the
organization. This could be broadly classified as The Specific and the General
Environment. If they have done an environmental analysis they would have been
proactive by making their machines upgraded and preparing for the competition posed
by the competitor firm.
 They can do some market research to evaluate whether mass production would be a
solution to reduce costs. Then if it will work out the company can enjoy economies of
scale. But if there is no market this will just be wastage of resources and if they want
to go for that approach still they need to capture the local or the export market.
 The best thing is to keep the momentum of the employees going as if the internal
customers of the organization get disappointed the company will fail. As such they
have to be teamed up and motivated through intrinsic rewards such as recognition,
appreciation and encouragement which would not cost a cent to the firm. Further we
can also introduce a performance based rewards scheme to improve employee
performance and boost the morale.
 At this situation faced by the company the management should predict that there is a
possibility that labour issues may arise as this is a highly unionized organization. So
they should have taken precautionary measures for that. But now as it is too late what
they can do now is to adopt a participative management approach. This where the
management will get the participation of TU leaders also in serious discussions of the
company so that they will understand the situation faced by the firm and will not
create any issues that make things bad to worse. At the same time the management
can obtain their ideas and views as well as they who are ground level employees will
have better ideas that would be practically workable.
 This approach will avoid the disciplinary issues that are taking place and the chance
for employees to participate itself will act as an intrinsic motivator as mentioned in
the Fredrick Herzberg’s Two Factor Theory of Motivation and they will still be happy
even if they are not financially motivated.
 According to what it appears the trade union is taking action not only to show their
aggression to the management but also as an action of sabotage against the
government. This indicates that the TU is politicalized. This politicalization of TUs is
very harmful and it is the duty either of the HR Manager or the IR Manager to educate
the employees that if they continue to act according to the political motives of the
political parties that are backing them it is them who are who going to suffer if the
management decide to close down the operation declaring bankruptcy as they will
lose their jobs.
 The staff reduction option is a good solution at this stage but it has to be done in a
methodical and tactful manner. The management has to inculcate the feeling that if
they do not reduce staff the whole staff has to suffer if they close the company and
then the TUs will agree to lay off some percentage of employees. The layoff also has
to be done successfully where they introduce an attractive VRS scheme. But we need
to be careful not to send out the skilled high performers but it should able the
company to get rid of problem workers. All these terminations should be according to
the Termination of Employment of Workmen Act.
http://horizon.unc.edu/courses/papers/enviroscan/