CASE: Accounting for Authority What is RILs business strategy? 1.

To radically increase sales and profits at reasonable cost levels by: Boosting sale of scooters Increasing sale of mopeds by linking it to scooter sales

2. To ensure sale of genuine spare parts of RIL and thereby have satisfied customers.

Important Organizational shortcomings at RIL RIL did have a structure in place to implement its business strategy. Individual roles and responsibilities were not clarified

1.

Poor system to support the structure Absence of periodic review of system in place The processes in the system were neither laid down clearly nor were they were not reviewed periodically

2.

The MD Mr. Sinha believed that ends justified the means. Thus short-term gains seem to be gaining precedence over their long-term consequences to the company.

The approach has gained legitimacy since is signaled as acceptable from the top. This in turn has reinforced behaviour accordingly.

3.

Management at RIL was weak.

Only Mr. Deshmukh GM (Spares & Services) took a firm stand on the issue. The MD woke up only when the auditors interjected and he was afraid of the consequences especially from the foreign collaborators.

What needs to be done? Some action points: The MD now needs to do the following: First talk to Pandit and explain the companys business strategy and the reasons for adopting a particular approach.

Define Pandits role and the problems that have arisen out of nonconformity to systems.

 Call the marketing & service team along with the factory team, state the business goals and evolve critical parameters that are jointly accepted and introduce systems to monitor their achievement.

Define the role of marketing & the service team, sales and factory accountants in relation to the business strategy.

Work out a system of personally monitoring the above every week, till the MD is confident that the system is in place.

Call all the dealers along with the GM (M) and GM (S&S) and the branch managers and explain the new system and the need for it. The system should be improved upon interactively.

Alternatively, Mr. Pandit should be transferred to a function that has little or no interaction with sales and marketing before the system breaks down.

By doing so, the sales & distribution role should be reinstated to where it rightfully belongs - the branches.

Removal of Mr. Pandit may cause temporary upheaval. However, installing a simple document-based system pending the design &

implementation of a more comprehensive IT based solution will take care of the situation.