Page 187 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Unit 10: Staffing and Coordination

Strategy Notes
Wendt has established many production plants around the world, including Germany,
Belgium, US and UK. However, Wendt India is the only plant where the entire range of
Wendt’s products is manufactured. This is because Wendt India is a cost-leader for
Wendt GmbH, by virtue of the lower labour costs in India. The manufacturing plants in
other locations produce only a specific set of specialized products to serve the local markets.
Wendt follows a global strategy, with technology principally being developed in Germany,
and manufacturing principally carried out in India, the centres of lowest cost for each of
these resources.
In the Indian market, Wendt is a differentiator. This is because they manufacture highly
customised niche products. Wendt is able to command a high price, with considerable
profit margins, as competition is based on the level of precision to which the goods can be
manufactured. Margins are about 30% when PBT is considered, and 25% with PAT.
Until recently, the characteristics of Wendt India's strategy were primarily that of a
“defender”. It created a stable niche for itself in the high end abrasives and cutting
tools market by delivering uncompromising quality, excellent customer service and regular
contact with their customers for possible improvements in design. Although there was
some focus on product development, it was closely related to their existing product lines.
All this resulted in incremental growth by penetrating the market and expanding on the
peripheries.

However, this also made them vulnerable to sudden shifts in the market. For example,
from the manufacturing of grinding tools, Wendt has now shifted its focus to the
manufacture of turning tools due to recent changes in technology.

Recently, there has been a small shift in strategy towards expanding their product range to
include technology solutions. This has been coupled with some changes in organizational
structure. The introduction of the product manager has been necessitated to accommodate
a strategy of growth into new domains.
Conclusion
Organizational structure has a tremendous impact on the way an organization can achieve
its goals. By describing the various aspects of Wendt's structure, we have tried to lead the
readers towards appreciating how the different aspects of an organization can be defined
to achieve organizational objectives. The interplay between the strategy, culture and
processes as well as the structure of Wendt lends insight into the reasons for the success of
desired goals. And this success has been achieved by carefully defining the roles of
technology and people in the organization.
Question
Do you think coordination between the strategy, culture and processes holds the key to
Wendt's success?

Source: http://tejas-iimb.org/articles/07.php

10.11 Summary

Organisations and their HR departments are open systems and are affected by the
environment in which they operate.

The workforce is becoming increasingly diverse and organisations are doing their best to
address employee concerns and to maximise the benefits of different kinds of employees
with diverse educational, cultural and religious backgrounds.

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