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Management Case Study

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CASE STUDY ON MANAGEMENT
MC DONALDS CASE STUDY
McDonald’s a leading fast food joint ,has enjoyed over 40 years of exceptional performance. In 2010, for example, the company had registered 10 years of 20 per cent per annum growth.
EDITOR’S CHOICE

The challenge: That year, Jack Greenberg became the company’s fourth chief executive. His main concern was how to lead the business in less favourable market conditions. McDonald’s was facing concerns about fatty foods and about beef; competition was squeezing margins; and growth from international markets was slowing.

The strategy:
Mr Greenberg did what the textbooks suggest. First, he focused on improving the core business, announcing it as his top priority. Then, he also set a second priority: to find a new platform for growth. With this audacious goal in mind, he supported five acquisitions of related restaurant businesses – including Chipotle, a Mexican food restaurant, and 50 per cent of Pret A Manger, the UK sandwich chain – and he set up the Partner Brands Division, to be responsible for these new businesses. Mr Greenberg also opened the door to a number of other, more organic initiatives led by his head of strategy, Mats Lederhausen.

What happened: Mr Greenberg found it difficult to dedicate enough attention to both priorities. The core business continued to deteriorate and in 2001 McDonald’s announced its first quarterly loss and the resignation of Mr Greenberg.
Jim Cantalupo, a retired McDonald’s executive, was asked to return as CEO. His first announcement was that McDonald’s had been trying to do too many things. He shut down many of the organic initiatives and housed all the new businesses into a structure called McDonald’s Ventures.
Mr Cantalupo instructed Mr Lederhausen to identify those businesses that could become significant for McDonald’s without distracting management from its core business and to sell or close the rest. The result was that over the course of the next few years, almost all of them were either sold or closed.

The lessons:
First, this story is common. A company forecasts reduced growth in its core business, looks for new sources of revenue, launches initiatives, and makes acquisitions – only to find a few years later, that it is back where it started, having sold or closed its new ventures.
Second, the textbook advice – set a growth ambition, try a portfolio of related ventures and invest heavily in the few successes at the same time as attending to the core – does not always work, in spite of its continuing popularity.
So, what is the alternative? When the core business starts to mature, leaders should be patient rather than energetic. The main risk is that attention is distracted from the core. Therefore, avoid launching a portfolio of initiatives; don’t set targets for growth outside the core; and don’t set up a new business division or venturing unit.
Do scan opportunities, but with a tough screening process and the expectation that none will be suitable. Expect to use spare cash to buy back shares, until a really good opportunity comes along.
Above all, look for people rather than projects – successful new growth outside the core nearly always comes from individuals or teams who happen to have a rare combination of both grassroots knowledge of a particular area and an understanding of how your company’s strengths can be used to succeed. What happened next: The company’s leaders have stuck to and revived the core. In fact, as is often the case with a strong core, the hamburger business is growing again, partly because of the fast growth of emerging markets such as China.
DELHI METRO PROJECT MANAGEMENT
The Delhi Metro project gave Delhi a world-class mass rapid transit system. More importantly, it stood out from most other public sector projects in India in that it was completed on schedule and within the budgeted cost.

The case describes the organization and planning of the project and highlights the steps taken by the DMRC to ensure the successful completion of the project. It also explains how the DMRC managed the various stakeholders like the central and state governments, the contractors, and the citizens of Delhi, to ensure that the project was implemented smoothly. The case ends with a brief discussion on the future plans of the DMRC.
Issues:
» Understand the preliminary activities to be taken up before a large infrastructure project can be started

» Appreciate the significance of the role of a project manager in project execution

» Understand the importance of the right work culture in successful project management

» Recognize the importance of managing the various stakeholders in a project

» Appreciate the difficulties involved in the execution of large infrastructure projects in developing countries, and how these can be overcome.

STRATAGIES
E.Sreedharan (Sreedharan) was appointed managing director (MD) of the DMRC and project manager for Phase I of the project in November 1997. Work on Line 1 of Phase I started in October 1998. DMRC formed consortiums to advise it on the project and to provide it with the latest technology. It also saw to it that the foreign companies worked with the Indian companies to ensure that the latter assimilated their expertise and technological know-how.

The DMRC faced any number of technical and systemic challenges during the construction of the metro.
However, thanks to thorough planning, an effective project design, and a 'we-mean business' culture, it was able to overcome all these hurdles. The organizational culture was based on punctuality, honesty, and a strict adherence to deadlines. The DMRC successfully managed the various stakeholders in the project like the general public, government bodies, etc., and also ensured that the project was environmentally safe.

With Phase I of the Delhi Metro project nearing completion, the GoI decided to extend the metro network and work on Phase II of the Delhi Metro project was set to commence in September 2006.
In the process of implementing the project, the DMRC had gained a lot of technological expertise, which would be used by other cities in India and abroad to build metro systems similar to the Delhi Metro.
The Delhi Metro Project
In order to implement the Delhi Metro project, the GoI and the GNCTD set up a 50:50 joint venture company called the Delhi Metro Rail Corporation Ltd. (DMRC). The company was incorporated under the Companies Act in May 1995. The DMRC was to complete Phase I of the project within 10 years, i.e., by the end of 2005.
Funding the Project Globally, most urban MRTS projects were financially unviable because the fares could not be fixed solely on a commercial basis. If the fares were fixed too high, the passenger numbers would remain low, thereby defeating the very purpose of setting up the system. Therefore, the concerned governments generally bore the capital costs of an MRTS system. In the case of the Delhi Metro project too, the GoI and the GNCTD bore the capital costs. The total cost of the first phase of the project was initially estimated at Rs. 60 billion, at April 1996 prices. Later in 2002, with the cost of the project rising by approximately 10% per year, the estimate was revised to Rs. 89.27 billion... |
The Project Team
With the funding for the project being finalized, the next step was to constitute a project team. Sreedharan was appointed as project manager and managing director of the DMRC in November 1997. A technocrat, he had had a long stint in the Indian Railways (IR) and had retired in 1990. During his service with IR, he had earned a reputation for completing major projects on time and within the budget..
In India, major infrastructure projects are often stalled because of a lack of funds, political interference, lack of professionalism and accountability, property disputes, corruption, etc. Therefore, even before the commencement of the project, the DMRC attempted to put in place effective systems to ensure the smooth progress of the project.

Funding was not an issue in the case of the Delhi Metro project because it was settled even before the project commenced.
In order to steer clear of political interference, the DMRC sought autonomy on all major matters and the GoI promised to give it this autonomy. "Financial powers were vested in the managing director. Also, the managing director was the last authority on tenders," said Anuj Dayal (Dayal), chief public relations officer, DMRC Managing the Stakeholders in the Project
Effective project management involved not only completing the project on schedule and within the budget, but also managing the project's stakeholders. The stakeholders included the governments, the contractors, the funding agencies, and the general public. Despite assurances that the DMRC would enjoy autonomy, it faced political pressure not only in its recruitment processes, promotions, and contract awarding but also in land acquisition..
Project Evaluation
The successful completion of the project effectively silenced the critics who had been skeptical about the ability of an Indian public sector organization to complete any project, let alone one as complex and costly as the Delhi Metro, on time and within the budget.
Outlook
The Delhi Metro was expected to play a major role in relieving the transport problems faced by the city's residents. Moreover, with the GoI planning extensions to the Metro, it appeared that the benefits of an efficient transport system would be enjoyed by people living in a wider geographical area than originally planned. The GoI and the GNTCD had prepared a comprehensive plan to extend the Delhi Metro to 244 km by 2021 in three subsequent phases (Refer Exhibit VI for more information about the Delhi Metro project by 2021).…...

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