Management PortfolioOf

Asian Paints

Submitted by

Bhavani Kanth Chekuru(11111)

V.C.Reddy(11116)

Divyavani(11133)

N.Srikanth(11162)

Anuradha(11105)

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Table of Contents

Management……………………………………………………………………04

The External and Internal Environments…........................................................07

Globalization and the Manager………………………………………………...10

Stakeholders, Ethics, and Corporate social Responsibility…………………….13

Planning and Decision Making………………………………………………...16

Strategy…………………………………………………………………………18

Organizing………………………………………………………………………21

Control Systems………………………………………………………………...25

Effective Leadership……………………………………………………………27

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Chapter 1

Management

1) Describe the firm. How old is it? What industry (or industries) is the firm active in? What products or services does it sell? Who are its principal Competitors? Is it active internationally? How many employees does it have? What are its sales and profits?

A) Asian Paints is India’s largest paint company and Asia’s third largest paint

company, with a turnover of Rs 77.06 billion. The group has an enviable

reputation in the corporate world for professionalism, fast track growth, and

building shareholder equity. Forbes Global magazine USA ranked Asian Paints

among the 200 Best Small Companies in the World for 2002 and 2003 and

presented the 'Best under a Billion' award, to the company. Asian Paints is the

only paint company in the world to receive this recognition. Forbes has also

ranked Asian Paints among the Best under a Billion companies in Asia In 2005,

06 and 07.

B) Asian paints has been set up in 1942 by Chiman lal chowksi ,Champak lal

chowksi, Suryakant dani,Arvind vakil .It has been market leader consistently

since 1968.

C) Asian paints belongs to paint industry.

D) Products

Automotive

Ancillaries

Decorative

Industrial

Paint selector

E) Competitors: Kansai nerolac, Berger paints, Nippon, Dulux, ICI.

F) International presence:  Asian Paints operates in 17 countries and has 23 paint

manufacturing facilities in the world servicing consumers in over 65 countries.

Besides Asian Paints, the group operates around the world through its

subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and

Taubmans.

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G) Number of employees: 4382(according to 2009-2010).

H) Sales and Profits: Asian Paints is the market leader in India in paints sector. It

recorded a profit of 171.4 crores (total sales of 1607.4 crores) in Q4-FY2011

and a total Profit of 772.5 crores (total sales of 6322.2 crores) in FY-2011. Its

sales are increasing consistently year by year.

2) How well has the firm performed recently compared to rivals? Has it out performed rivals or underperformed them?

Asian paints is the market leader in paints industry in India and has a market

share more than 50% in organized sector of paints. Even though the sector is

fragmented, Asian paints has established it self very firmly. It has

outperformed its rivals with a huge margin. Its share value in stock market is

300% more than its second rival in the industry.

3) Who is the CEO? How long has she or he been in this position? What is the career track of the CEO?

PM. Murty is a B.Sc. (Hons.) Maths from Calcutta University and a Post

Graduate in Management from IIM, Calcutta of 1971 batch. In a career

spanning 37 years, PM. Murty worked in various capacities in the Sales,

Materials, Manufacturing Plants and Human Resources of the Company before

being elevated to the position of General Manager – Marketing in the mid-90s.  

He was then assigned the job of forming a new Joint Venture Company with

PPG Industries for Automotive Paints and was designated as Chief Executive. 

In the year 1998, when the Company restructured its business, PM. Murty was

called to head the Decorative Business, the largest business unit of the  

Company, as the President.  

4) Can you find the examples how the CEO has performed the basic tasks of management- Strategizing, Planning, Organizing, Leading, Controlling, Developing and leading his or her organization?

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CEO PM Murthy of Asian paints has very profound knowledge of Paints industry and also on the internal functions of Asian paints, as he has been in this industry and organization from past three decades. Even after being the market leader he prefers to have a low profile to the organization. He justifies it by his planning. Keeping in mind the increasing market demand he planned capacity expansion plans. In April 2010, they commissioned the first phase of sixth decorative paint manufacturing facility at Rohtak, Haryana, with an initial installed capacity of 1,50,000 KL per annum (pa). The plant's capacity will be further expanded in four stages to 4,00,000 KLPA.

He developed different plans to make the company run in a good condition even though there are uncertainties in the environment. To control the increasing costs of the raw materials they started backward integration. He controlled the cost by this methodology.

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Chapter 2

The External and Internal Environments

1) Describe the nature of the task environment the firm is facing. What are the opportunities here, and what are the treats?

We can analyze the task environment of Asian Paints by using Porters Five Forces Model.

Threat of entry Growth rate much higher than global market, so global player may be

interested. Competitors may form Joint Ventures to capture more market share than

Asian Paints.

Bargaining Power of Buyers In the Decorative Products the market is fragmented, so the buyer has

more power. In the Industrial products market competitors are offering their products

with low cost of switching.

Bargaining Power of Suppliers Titanium dioxide (tio2) is very much needed in paints and it is imported.

Suppliers are few and this makes the supplier more commanding. Cost of raw materials is very high.

The Threat of Substitutes White Cement White Wash Brick and Stone structure Competitors introducing products in all the segments where Asian Paints

has high market share.

The Intensity of Rivalry Asian Paints has captured huge market in Decorative Paints, but Kansai

Nerolac is leading in Industrial paints. In both categories, companies in the organized sector focus on brand building. Higher prices through product differentiation are also followed as a competitive strategy.

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Opportunities To take over, merge with or form strategic alliances with other global

operators. Consumers becoming conscious in terms of Aesthetic and Lifestyle. International style of living. Boom to industrial coating.

Threats Increase in cost of Crude Petroleum which is an important raw material of

paints. Continuous Innovation by competitor. Being a Global player it is difficult to manufacture products targeting

different markets.

2) Has the task environment been influenced by trends in the general environment over the last decade? If so, what are these trends and how have they changed things?

The market size of the Indian paints sector has been pegged at Rs 210 bn in value terms having grown by 15% in FY10 and is very fragmented. The per capita consumption of paints in India stands at 0.5 kg per annum. The demand for Decorative paints is going on increasing year by year, thus continuous Innovations need to be made. Considering the Interests of consumers many changes had been made by Asian Paints. It introduced a wide variety of products to merge the gap between customer’s interests and supply. Always the customer wanted to have a decorative wall and also had a question how. So Asian Paints understood this perspective of customer and it provided many services and features to the customers. The Investment on Infrastructure development was high in the last decade, which made Asian Paints make it campaign more wider in the last decade. Brand promotion was done in intensively due to emerging competitors. This totally changed the branding and promotion of Asian Paints. Retail shops were set up through the country for designer paints.

3) What are the sources of uncertainty in the task environment confronting the firm? What strategies have managers at the firm adopted to try and cope with this uncertainty?

At the present position of paints industry there is a huge increase in cost, this is primarily due to spiraling cost of key items like titanium dioxide, monomers, crude based derivatives, etc. Competition in this sector is going

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on increasing and product mix from other fierce competitors is also an uncertainty.

So the company started backward integration, Asian Paints has established capacities to manufacture PAN and PET, two raw materials that comprise about 35% of the cost of the product. This backward integration helps reduction in the raw material cost in two ways. This immunizes Asian Paints to the fluctuation in the prices of raw materials in the external market. Also, the raw materials produced at the plants are transferred to Asian Paints at cost or a low margin over cost

4) What are the strengths of the organization? What are the weaknesses?

Strengths Brand Image of Asian Paints. Strong and Wide Distribution network. Continuous Innovation in Products. Huge Customer satisfaction.

Weaknesses Inherent weakness in products such as exterior painting. Asian Paints is the India’s largest Paint company and control of its empire,

despite its advantages, could leave it weak in some areas due to huge span of control.

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Chapter 3

Globalization and Manager

1) Outline the process of globalization has impacted your firm and might affect it in the future. What challenges is globalization creating? What opportunities are emerging as a result of globalization?

In an industry where the globalization potential looks limited at first glance, India's leading paints company, Asian Paints has shown that it is serious about international expansion. AP made its first moves towards internationalization, by setting up a manufacturing facility in Fiji in 1977. Currently, Asian Paints has a strong presence in several countries including Tonga, Solomon Islands, Vanuatu, Australia, Sri Lanka, Nepal, Oman and Mauritius. In most of these countries, Asian Paints is today the market leader. Asian Paints is also the largest exporter of paints from India, selling its products in over 26 countries. The company (Asian Paints) has thrived against foreign competitors by developing its local assets, notably an extensive distribution network.

With its global operations rapidly expanding, Asian Paints is increasingly resorting to a portfolio approach. The company is now taking a serious look at the size of the paint market in each country, the size and strength of the economies, the nature of competition and the investment potential. Based on those calculations, it is dividing all its markets into three groups: Growth, Leadership and Niche. Asian Paints strategy varies from market to market. For instance, in Malaysia and Thailand, which are rapidly growing markets, the company is looking for further acquisitions to build critical mass. Size and markets share will help it command greater pricing power, which in turn will improve margins, is the rationale. Meanwhile, in Jamaica and Bahrain, where Asian Paints is a dominant player, its margins are closer to what it earns in India.

Asian Paints global expansion has been systematic and deliberate. The company has decided to focus exclusively on emerging markets in Asia and the Asia Pacific, which have large Indian communities. These markets have low per capita paint consumption, are among the fastest growing paint markets in the world and have also been traditionally ignored by multinationals.

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2) Is the firm active outside its home market? How much of its business comes from foreign sales?

Asian Paints group operates in 17 countries across the world. It has manufacturing facilities in each of these countries and is the largest paint company in eleven countries. The group operates in five regions across the world viz. South Asia, South East Asia, South Pacific, Middle East and Caribbean region through the five corporate brands viz. Asian Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans.

Total sales increased to 616.48 crores in FY 2010-11 from 476.88 crores in FY 2009-10 — a growth of 29.3%. The profit after tax rose to 33.03 crores from 28.58 crores representing a growth of 15.6%. The consolidated sales were 637.77 crores and the profit after tax was 33.62 crores in FY 2010-11.

3) What is the largest foreign marketer of your firm?

Asian Paints operates in 22 countries across the world, which accounts for 30% of its sales. It has manufacturing facilities in each of these countries and is the largest paint company in ten overseas markets. Asian Paints operates in five regions across the world viz. South Asia, Southeast Asia, South Pacific, Middle East and Caribbean region through the five corporate brands viz. Asian Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans.

The largest foreign marketer for this Fiscal Year 2010-2011 is Middle East region (Oman, Egypt, Bahrain and UAE) with 52.2% sales. The Middle East region is the largest operating region for the group outside India. The region now contributes 52% of the revenue from overseas operations.

4) How does it do business in that market (through wholly owned subsidiaries, joint ventures, exporting)?

Asian Paints controls its global market through the following subsidiaries and aquistions.

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Apco Coatings is a subsidiary of Asian Paints in the South Pacific islands. Asian Paints operates in Australia, Fiji, Tonga, Solomon Islands and Vanuatu under the brand name of Apco Coatings.

Berger international limited (BIL) established in 1760 by Lewis Berger became a part of Asian Paints group in November 2002. BIL has presence across three regions viz. Middle East, Caribbean and South East Asia. In the Caribbean region, Berger is a household name. And considering that the company celebrated 50 successful years in the region recently, this is not surprising.

Founded in 1979, SCIB Paints today is a reputed name and ranks amongst the top five paint companies in Egypt. SCIB Paints became a part of the Asian Paints group in August 2002

Asian PPG Industries Limited, a joint venture between Asian Paints (India) Limited and PPG Industries, Inc. USA with 50:50 equity sharing was established in March 1997 with the objective of providing solutions to the paint requirements of Indian Automobile manufacturers. The joint venture brought together two leading companies with strengths in technology, manufacturing and customer insight.

Taubmans Paints Fiji, the fourth largest paint company in Fiji, became a part of the Asian Paints family in September 2003. Taubmans Paints is the dominant player in the project sales segment in the country and is a leader in the neighbouring Samoa Islands. It has two manufacturing facilities, one in Suva (Fiji) and the other in Samoa.

5) In what ways has your firm benefited from being global?

Asian Paints held a global conference of its managers to facilitate exchange of ideas, find new ways to solve problems and create a feeling of belongingness. During the conference, it defined four guiding principles: responsibility, entrepreneurship, continuous improvement and trust. Developing a cadre of global managers has been on top of the agenda for the company in recent times. With its globalization and penetration in to foreign market, Asian Paints made its presence felt in the competition by establishing a huge market share in its global market.

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Chapter 4

Stakeholders, Ethics, and Corporate Social Responsibilty

1. Is it satisfying the claims of key stakeholders, including employees, customers, shareholders, and the general public? If so, how? If not, why not?

Information technology (IT) plays a key role in enabling the company to grow and generate profits. Asian Paints is the only company in India to have integrated Supply Chain Management (SCM) Solution from i2 Technologies, and Enterprise Resource Planning (ERP) solution from SAP. With these IT tools firmly in place and with the backing of an extensive communication platform, they are an internally enabled enterprise. The road ahead is to integrate all the stakeholders including suppliers, employees and customers and create an extended enterprise.

Asian Paints has launched a supplier portal that includes an automated digital document exchange facility that will improve the efficiency and effectiveness of interaction with suppliers. An employee portal has also been set up. Customer Relations Management (CRM ) tools are being used in Asian Paints Helpline and Home Solutions initiatives.

2. How would you characterize the ethical climate of the organization you have chosen to follow? What evidence is there to support your conclusion?

The Company has adopted a Whistle Blower Policy with an objective to provide employees and Business Associates a framework and to establish a formal mechanism or process whereby concerns can be raised in line with the Company’s commitment to highest standards of ethical, moral and legal business conduct and its commitment to open communication. In accordance with the Policy, an Ethics Committee has been constituted comprising of the Managing Director & CEO, the Compliance Officer, i.e., the Chief Financial Officer & Company Secretary and the Vice-President – Human Resources. The employees can make Protected Disclosures to the Ethics Committee regarding any malpractices or event or activity that may have occurred in the organization and which may be considered as unethical or fraudulent. The employees may, where the matters are of grave nature, make Protected Disclosures directly to the Chairperson of the Audit Committee of the Board of Directors of the Company.

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3. Find out if the organization has been the focus of any adverse ethical issues in recent years (look at historic news reports). If it has, try to determine whether this was due to the isolated actions of rouge managers or to more systemic, organization wide problems?

The company establishes itself as a company giving importance to environmental issues by saying about its ISO certification for maintaining good environment management standards and the company also says that all paints are safe and environment friendly. But in recent studies done by CSE’s pollution monitory lab it was found that element lead (pb) levels in Asian paints are more than standard level’s. Its levels are also varying from country to country .Low levels where present where supervision is there and high levels where super vision is not there, like in India it is 800 ppm, in Bangladesh it is 9000 pmm, in Nepal it is 23000 pmm. The element lead effects children growth and their behaviour. This unethical practice may not be because of one isolated action of rogue manager but its more of systemic, organisation problem as there is no commitment levels and strict orders to reduce lead (pb )levels in every country even though possible.

4. Does the organization undertake social investments that go beyond its narrow economic self-interest? If so, what kind of investments has it made? Whom do these investments benefit? Do you approve of these investments?

Asian Paints approaches the environment issue from the perspective of waste minimization and conservation of resources. There continued attempt is to reuse, recycle and eliminate waste, which results in less waste being generated.

Asian Paints has built a Total Water Management (TWM) Centre, at its Bhandup manufacturing facility, which is a first of its kind in the entire country. They provide expertise to citizens free of charge to implement Rainwater harvesting and total water management concepts.

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The company had conducted various health camps for the aged. The Mobile Medicare Units (MMUs) being operated in association with the NGO Help Age India has made it possible to reach the doorsteps of the needy senior citizens. Several blood donation camps and other healthcare camps were conducted during the year including a camp on cataract surgery with the motto of ‘helping the needy elderly citizens see colour again’.

The company has invested time and energy in providing infrastructure and health care support to primary schools.

In 2004, as a socially responsible company. A total amount of Rs. 4.7 million was generated as relief aid and handed over to the Tsunami victims.

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Chapter 5

Planning and Decision Making

1) Find out as much as you can about the mission, vision, values, and major goals of the organization?

Vision – Asian paints aims to become one of the top 5 decorative coating companies world wide by leveraging its expertise in the higher growth emerging markets .Simultaneously , the company intends to build long term value in the industrial coatings business through alliances with established global partners

Mission – to be the largest decorative paints co worldwide and to be the 5 th largest paint manufacturing company world wide

Values – the company is committed to good Corporate Governance and has high standards of professional growth, building shareholders equity with principles to fairness , ethics and corporate governance in spirit.

Goals – to accelerate its growth in non decorative coating business

Moving asian paints closer to customers

2) Evaluate the firm’s mission, vision , values , and goals. What are the positive aspect of these statements? Is there anything you would criticize?

The vision , mission , values , goals statements are well defined . the vision statement is measurable as they want to become the top 5 th in decorative paint companies. The mission statement is challenging as it needs many resources , perfect planning but realistic as it had potential to reach it. Those values followed by asian paints from first are one of the reasons for its success. Positives of there statements are they showed path to the company where it had to focus , what kind of market for growth. Using alliances where they cannot penetrate is a good sign as it benefits both companies and resulting in the growth of industry. negatives there is no time frame for their statements.

3) Do you think the firm is living up to its mission, vision, values, goals ?what evidence do you have to support your conclusion?

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Yes , the firm is living upto its mission, vision, values and goals.we can say this from its planning and organising of things. To achieve its vision the firms is making alliances and acquisition where necessary for its growth. It acquired apco in south pacific islands and scib paints in Egypt . it had alliances with berger paints in 35 countries. To achieve its mission it is establishing plants in rohkat Haryana , done an agreement with maharastra govt to establish paint and intermediates plant in surdi to become 5th lagest paint maker. To maintain its values it is taking measures like appointing independent auditors, directors to have high transparency and high disclosure levels. It is also conducting annual general meetings and board of directors meeting at regular intervals of time for having good corporate governance. To achieve its goals it is using IT services to reach people , set up toll free no and designing its website to offer good customer service.it is also offering expert help for customers in choosing the best paint and design for their liking.

4) Can you find any evidence that managers at the organization might have made any significant strategic errors over the last decade? If they have , what role did poor planning , a lack of planning, or decision making traps play in these errors?

To achieve its vision and mission the firm wants to expand its operations internationally. But managers failed in formulating strategic plans in some issues which lead to closing of plants in china, thailand and selling of its stakes in malayasia which are important markets. There is a lack of good decision making in choosing product portfolio according to the desires of customers in those countries . planning fail in working capital management , supply chain , plant efficiency, inventory costs which resulted in failing in maintaining cost of products less compared to its competitors which lead to failure of company.

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Chapter 6

Strategy

1) What is the corporate-level strategy of the firm? In your opinion, does this strategy create additional value, boosting the profitability of the enterprise, or is it destroying value and lowering profitability? How did you reach your conclusion?

Asian Paints Overall Corporate strategy:

DEFEND: Consists of rural and the urban market in which AP is playing.They are a target to many global companies, which are playing in Indian market via Indian arm of their operations like ICI has Berger, Kansai has JN

DEEPEN:Industrial segment of Indian paint industry where AP has a weak presence.

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DISCOVERExploit new markets by

creating products/services by leveraging existing

competencies differentlt

DEVELOP Build new competency

to create the Future

DEFENDDefend exsisting market by strengthing existing

competencies

DEEPENBuild complimentary/new

competency to fortify position in Exsisting

market

It has a presence in automotive segment but ranks a poor second. It needs to form alliances with foreign players to enter into this segment. It can also look for tie-ups with the company, which have tie-ups with those companies whose daughter arm is operating in India, to lock the account.Its move of taking over Haucoplast is one step in this direction. Their tie-up with PPG has given them a good presence in automotive segment, capturing clients like Santro, GM, Ford etc.

DISCOVER: This forms the basis of fast growth. AP has identified opportunities abroad in developing countries similar to India. To enter into these countries they adopted the process of acquisition.

DEVELOP:Paint industry is primarily a product-oriented industry up till now. Huge potential exists in the service side also. Introduction of color-world, providing service in painting and interior decoration etc are steps taken to acquire the whole chain and becoming full service provider.Need to Ensure value-adding services are possible. These can be integrated to provide an umbrella service. Constant reminders to the customers to repaint, or upgrade.

Forward integration:

The major players are considering providing services also, instead of just selling products. They are thinking of taking care of their customers’ needs right from the selection of the paint to the completion of painting their house. This will be discussed in detail in subsequent chapters.

Backward integration:

Asian Paints has established capacities to manufacture PAN and PET, two raw materials that comprise about 35% of the cost of the product. This backward integration helps reduction in the raw material cost in two ways. This immunizes Asian Paints to the fluctuation in the prices of raw materials in the external market. Also, the raw materials

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produced at the plants are transferred to Asian Paints at cost or a low margin over cost; therefore the cost of raw materials is much lower for Asian Paints than the costs for the other players. The prices of the raw materials depend upon the prices of petrochemicals in the international market. The intermediate raw material companies help insulate Asian Paints from major price rises and pass on the price drops. The process of backward integration also equips the company with the ability to meet sudden surges in demand that could be created if the industry dynamics undergo a drastic change. AP is one of the few companies to have been involved in Backward Integration. This is fundamentally because of the need for having high capacity utilization in the captive manufacturing plants. Even Asian Paints, for its size of operations, is able to consume only two-thirds of its captive production. The rest 1/3rd it sold to other manufacturers of paints. This might prove to be strategically important to AP if the demand surges.

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Chapter 8

Organizing

1) Describe the basic organization structure of the enterprise.

Asian Paints CEO

VP,Finance & VP,HR VP,Sales & VP,Corp VP,SCM VP,Systems Control Marketing Strategy General Sales General Marketing Manager Manager Regional Group Brand Manager Managers Area Sales Brand Manager Manager

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Sales Management Supervisor Trainee

T.S.I

The structure of the Asian Paints is designed in such a way that there is aCEO at top where he looks after the major decision making and to design the culture of the organization. There are vice presidents at different functions like Marketing and HR they look after the middle level management. The middle level management starts with the general managers with Regional and brand managers under them. Regional and Brand managers control supervisors and trainees respectively. Lastly TSI’s are under supervisors. This is in short about different departments present in the organization structure of Asian Paints.

2) Does the structure match the strategy of the enterprise? If it does, explainhow. If it does not, explain why not, and outline what should be changed to bringstrategy and structure into alignment?

Asian Paints developed different Business Strategies for different markets. AP divided the market into three sections i.e. Urban market, Rural market and International market. As industry is characterized by intermediaries they have more influence in the purchase decisions of consumers especially for urban areas, it uses urban intermediaries like painters, contractors, designers, decorators for initiating demand and Service based strategy was followed by them in urban market. It also tried to reduce the power of intermediaries by increasing the brand name of the product and achieve it. Rural segment is not mature to appreciate the service offered and thus followed the product related strategy and customer up gradation strategy. Asian paints used the process of market growth and maturity in International markets by influencing on its experience and launching newer products at a faster rate.

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The organization structure matches the strategy of the enterprise because there are separate Leads for each department. The global management is the major issue in any organization. In addition brand value also accounts for any organization. Asian Paints company is growing into a brand appreciated by its customers because it is continuously striving to achieve single goal of making good quality products with an emphasis on the customer first principle across all management levels, including production, sales and service. Moreover, asian paints will continue building its brand image as a top global Paint Company by handling every task with transparency and fairness from the perspective of business ethics. Marching into the future through the move forward and growth. It is a global company gaining a competitive edge in the global market.

3) Does the organization have a tall or flat management hierarchy? Is thenumber of levels in the hierarchy appropriate? The organization structure of Asian Paints shows that it is a tall hierarchy. This is because there are more layers of management. The employee at lower level can’t directly report to vice president or CEO. They should either report to executive officer or Factory manager. So a tall hierarchy normally has many layers and narrow span of control. As number of levels increase cost also increases, employees may feel they don’t have security of job. So in this case numbers of levels are not appropriate.

4) What is the span of control of CEO? Is your judgment in this span too narrow, too wide, or just right?

The CEO of Asian paints is P.M Murthy. The number of people reporting to CEO is just right because the Managers, Directors reporting to CEO is thirteen. The number of levels is thirteen. The span control is high.

Ina Dani Non-Executive Director

S Sivaram Director

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Tarjani Vakil Director

R A Shah Director

Amar Vakil Director

Deepak Satwalekar Director

Dipankar Basu Director

S Ramadorai Director

Abhay Vakil Director

Mahendra Choksi Director

Mahendra Shah Director

Jayesh Merchant Company Secretary

5) What decisions within this organization are centralized at the head office? What decisions are decentralized to subunits? Does the approach toward centralization and decentralization make sense?

The effectiveness of the decision-making of the Board is buttressed by its structure and procedures. The Board of the Company meets at regular intervals, with sufficient notice of the issues and the Agenda to be discussed and backed by necessary information and material to enable to the Directors to discharge their faithful responsibilities in an efficient manner. All the deliberations and the decisions occurring at every meeting of the Board of Directors are appropriately recorded and minuted. The draft minutes of each meeting is circulated to the members of the Board for their approval and then finalized.

The Board has complete and unrestricted access to any information required by them to transact business and take decisions. Also, as a good governance practice, all the information and data, relevant for the Board to understand the business of the Company in general as well as the agenda items circulated to the Board, are comprehensive in nature. The Board of Directors of the Company has constituted four committees:

Audit Committee, Remuneration Committee, Shareholders/Investors Grievance Committee and Share Transfer Committee. The roles and responsibilities

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assigned to these Committees are covered under the terms of reference approved by the Board and are subject to review by the Board from time to time.

Formal procedures for sanction, authorization and implementation of capital expenditure proposals and operating budgets of the Company are carried in centralization.

Decentralization is observed at the Functional levels where power is given to lower management where subordinates get a chance to decide and act independently which develops skills and capabilities. This way the organization is able to process reserve of talents in it.

Chapter 9

Control Systems

1) Try to discover all you can about the main methods top managers use to control the organization?

Asian paints is the best in controlling and utilizing its human resources which is one among the many reasons for the success of the company. Top managers use different tailor made control methods to suite the situation which are necessary to reach its goals, but mainly they use output control and incentives control. The goals which are measurable are given by top managers to the product category division managers. Then product category division managers segment them and pass them on to the concerned unit managers giving some autonomy. From there to unit people defining goals and steps to reach them taking views of all. Unit managers’ report to product division managers and product division managers report to top managers about the progress in work. Then they will analyse and modulate plans if necessary. Then as the goals are measurable the mangers are able to calculate who contributed how much in achieving goals and incentivise them to motivate them and others this is also one type of control called incentive control.

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2) Do these control mechanisms make sense given the structure and strategy of the enterprise? How?

As the companies structure is functional oriented so the output control and incentive control will be well suited. It helps in flow of information and doing work without confusion and distortion. It will help in clearly establish the responsibilities of each person in the organization and measure their outcome. If there is any lag the above management can take necessary steps to increase efficiency. It helps in taking decisions which are important to growth of the company by top management and companies function oriented decisions by ground managers .It balances centralization and decentralization well. It also helps in giving incentives and motivating employees because we can measure the outcome of each employee.

3) Would you suggest any change in control methods for the organization? if so, what?

Actually the control methods i.e. output and incentive controls adopted by the company are well suited in regard to the organization structure. But the control is still more of centralized but know a days we have to take quick decisions according to the ground realities like customer preferences to be competitive. So we prefer to increase decentralization control so that the low level managers and employees who will be in touch with ground happenings will be able to take quick and correct decision according to goals of the organization. Implementing cultural control and self-control to some more extent will benefit the organisation more.

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Chapter 16

Effective Leadership

1) What can you find out about the leadership style of the ceo? how would you characterize his or her leadership?

When PM Murty was made as the CEO of Asian Paints, the company was facing some problems and hence he acted as a transformational leader and now as the company is in profits he has resorted to achievement oriented leadership, the company has diversified in to more businesses. PM Murty’s style of leadership is more employees oriented. The culture of Asian Paints which was developed by PM Murty made the company sail smoothly. His leadership qualities are very unique, previously he was given the chance to lead the decorative sector and he kept Asian paints in the top position with that opportunity.

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2) Does the leadership style he or she adopted match the situation confronting the organization?

Yes the achievement oriented leadership adopted by PM Murty is suitable, in the present situation of the company as the post-tax profits are up and hence this shows that the productivity of the employees is very high and hence high goals and high expectations can be set and employees can be encouraged to take on greater responsibilities.

3) Would you characterize the CEO as an effective leader? How would you explain his or her success or lack thereof?

Yes, we would characterize PM Murty as an effective leader, as he transformed the fortunes of Asian paints by making the goals clear to the employees, he changed Asian Paints as a global player, he unleashed creativity and innovation throughout the company by empowering the employees with decision making powers and hence bringing significant cultural changes in the organization, he adopted futuristic strategies by launching new plants to meet the future demands and making the company to see higher goals year by year.

P M Murty is the Business Standard CEO of the Year for 2009-10. Murty was selected by a distinguished six-member jury led by ICICI Bank Chairman K V Kamath. The jury members felt Murty,a one-company man through his working life, had risen to the challenge of competing in an industry that was fiercely competitive, and had come through with flying colors.

 

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