How to improve performance of a
region/business unit?
-A Case Study
    SYZ is a multi national software development company catering to global customers. The senior management has been concerned with the
    performance of their Strategic business unit based in Chennai India. Though it is powered by a promising workforce and managers, it has not
    achieved its targeted sales figure in the past 5 years. Further, in the last 2 years it has been incurring losses.

    There has been a suggestion from within the organization to close down the unit and absorb select managers into other streams. However, the
    chairman wants to understand the real causes, to record it as a lesson learnt, before taking any action. Therefore, they sought the expert opinion
    of Lekrish to unearth the real causes contributing to the failure and recommend the future course of action.

    A thorough management audit entailing the inter relationships amongst various functions, people, business policies, pricing and costing
    methodologies and risk assessment  techniques followed within the unit revealed the following weak links within the processes:
Sr. No
Weakness
Consequence
1
 The quality of identifying and qualifying prospects needed
improvements
 Excessive time, effort and money was being spent without any concrete
results
2
 The service offerings were not clearly communicated to the
target customers
 Ambiguity with respect to the cost and benefits of the services offered
3
 The business unit was overstaffed
 Increased overheads
4
 Cost control was not being implemented in a focused manner
 Concentration on less material items leading to overall frustration and
dissatisfaction
5
 Cash flows were not being effectively managed
 Liquidity crisis on a regular basis
6
 Timely MIS was not presented to the management
 No exception reports for the management to act on
7
 Poor debt collection system
 Liquidity crisis, increased cost of capital employed, cost of dispute
management
8
 Poor project management in some critical projects
 Slippages in deadlines, credibility loss, increased cost of implementation
9
 Pricing was heavily buffered
 Shows poor costing methodologies, becoming uncompetitive
  • The conclusion presented to the Chairman was that the unit cannot be deemed as sick or non-performing. However, it would
    definitely come within the purview of underperforming unit.
  • Therefore, Lekrish proposed a revised set of procedures, business policies, control points, clear definition of roles and
    responsibilities and performance monitoring tools. The chairman accepted the valuable recommendations to revamp the
    underperforming unit and implemented them with immediate effect. The third quarter of management audit showed significant
    improvements and buoyancy and within 5 quarters the unit started showing signs of profitability.