Case Study Of A Public Sector Management Commerce Essay

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Bharatiya Rail (BR) is the largest railway network in Asia and the second largest in the world after USSR, but it is the largest one under a single management system. BR is well known as "The lifeline of the nation" because; the BR serves millions of people every day to reach them to their destination throughout the country. BR is also employed the large number of direct employee, which is around 1.6 million and it refer the BR as the worlds' largest employer. Except of the direct employee the BR also gives employment to about seven millions people indirectly. In the early -2000s a survey shown that in every ten Indians, one is dependent on BR directly or indirectly for his living. The Indian Railway carries about 13 million people every day across the country.

BR operates as a ministry department under the central Government of India, headed by a cabinet rank minister. The BR has a great importance in the Indian economy; the BR is the only department that presents budget to the Parliament separate from the annual general budget. (Icmrindia, 2005)

Some facts about The Bharatiya Rail - Here are some facts about the BR which will help to know the organization properly:

The Bharatiya Rail are more than 150 years older railway network.

The approximate length of the total route of the IR is 63,000 kilometers.

The total number of railway station is more than 7000 in India.

The IR's daily operation approximately is 7,525 trains which covers 7,031 railway stations.

Bharatiya Rail has a special fund to give financial assistance to the victims of several railway accidents, which was set up in the year 1974.

The BR employed approximately 1.6 million employees.

The Bharatiya Rail owned 7,817 engines, 2,28,170 wagons for goods transport and 46,119 coaches for public transport.

Bharatiya Rail runs underground Rail since 1984 in Kolkata, recently another underground rail route has opened in Delhi. (Docstoc, 2007)

Background of the Bharatiya Rail - The first train ran in British India (undivided) on 16th April, 1953 from Bombay (Now Mumbai) to Thane, a distance of 21 miles. The principle purpose of establish the railway network was to make an easier control over the large country. Initially the Indian people were afraid of traveling by rail, but as the days passed the people get used to on it and the rail became a important part of them. The British Parliament then announced an extended plan to expand the rail network throughout the country. Now, rail is a most important means of journey in India. (Center for Management Research India, 2004).

Organization & Management Structure:

Bharatiya Rail is the worlds' largest transport company with direct employees' strength of approximately 1.6 million. The BR is controlled by the ministry of railway, under the Central Government, and headed by the Union Minister of Railways who is supported by the two Minister of state and the Railway board. The management structure and its activity are bureaucratic in nature like all other government department. Bellow organizational structure of the Bharatiya Rail are drawn which will help us to understand the actual hierarchy of the Bharatiya Rail .

BHARATIYA RAIL: ORGANIZATION & MANAGEMENT STRUCTURE

MINISTER OF STATE FOR RAILWAYS - MSR (B)

MINISTER OF STATE FOR RAILWAYS-MSR (A)

MINISTER OF RAILWAYS

ZONAL RAILWAYS

GENERAL MANAGERS

CR

ER

NR

NER

NFR

WR

SER

SCR

SR

NEW ZONAL RAILWAYS

OSD**

ECentralR

ECoastR

NCR

NWR

SECR

SWR

WCR

MEMBER TRAFFIC

MEMBER MECHANICAL

FINANCIAL COMMISSIONER

MEMBER STAFF

MEMBER ELECTRICAL

MEMBER ENGINEERING

CHAIRMAN RAILWAY BOARD

RAILWAY BOARD

DIRECTOR-GENERAL RPF

DIRECTOR GENERAL RLY. HEALTH SERVICE

SECRETARY.

ADMIN MATTERS.

ESTT.

MATTERS

PRODUCTION UNITS

GENERAL MANAGERS

CLW Chittaranjan

DLW Varanasi

RCF Kapurthala

ICF Villivakkam

WAP Yelahanka

CAO(R)*

DCW Patiala

OTHER UNITS

GENERAL MANAGERS

NF Railway (Construction)

Metro Railway Kolkata

Central Organization for Railway Electrification Allahabad

DIRECTORS-GENERAL

RDSO Lucknow

Railway Staff College Vadodra

CAO(R)*

Central Organization For Modernization Of Workshops

PSUs

IRCON

RITES

CRIS

CONCOR

IRFC

KRC

IRCTC

RCIL

MRVC

** OFFICER ON SPECIAL DUTY

*CHIEF ADMINISTRATIVE OFFICER (RAILWAYS)

(Source: P V S Praveen Kumar, October 2002)

Business Strategy:

As the BR is a organization completely owned by the Government of India, therefore the every strategy of the BR is related to the public and employee friendly, the principle strategy is the support people after that making profit. We the business strategy of the Bharatiya Rail divided into some parts, which are discussed follows. (Slideshare, 2010).

Concentrate on Volumes: The principle strategy of the BR is to increase the sales volume instead of increasing sales price. The BR took some steps to materialize this strategy.

The BR now giving importance to increase the volume of genuine ticket holder. In India the number of passenger without proper ticket is very high, and the BR is now concentrating on the regular checking and high amount of fine and higher punishment for the without ticket passengers. BR is now also running special checking operation to arrest the illegal passengers. In this way BR is now trying to minimize the number of illegal passenger and secure the revenue.

Another initiative of the BR is to look on the popular route and make arrangement for more passengers and for this strategy the BR introduce train with more coach, it means with the almost same cost they can carry more passengers, that will help them to get earn more revenue. After this where needed they started new trains according to the demand. (Slideshare, 2010)

Unit cost reduces: BR's strategy also includes reducing the unit cost, which means the minimization of cost of production and service. To implement this strategy the BR is using different policy. As it is a government organization and in India the government organization always has the employee beneficial policy, therefore the BR cannot think also about the pay cut of the employee to reducing the cost. (Slideshare, 2010).

As it has been discussed in the previous point that the BR now increasing the number of coaches in the train to avail maximum passengers with lower costs, for example normally BR runs a passenger train with 8 to 10 coaches but now they increase it to 12 to 14 coaches, it means if a 8 coaches train modified to 14 coaches train than that train can run with little higher costs and large amount of extra passengers. This policy is very profitable rather than run a new train. (Slideshare, 2010).

Share benefits with the customers: The Bharatiya Rail driven with a public beneficial strategy. The BR always has the strategy to serve the people at its best. The BR reduced the ticket price for consecutive three years from 2005 to 2008 as the profit of the BR increased. Other than the fare facility the BR offers different benefits to its consumers. Some of them are old age benefits, Hotels and holiday home facilities in different tourist spot, entertainment and amusement park in several cities, sports stadium and center in throughout the country etc. (Slideshare, 2010).

Strategic Issues:

Bharatiya Rail is running with a motto to serve the nation and help the people to travel throughout the nation. The BR is a most important thing in India and the whole nation depend on it for passenger travelling and goods transport, that's why it often called as 'Lifeline of the nation'. As the organization's key motto is to think about the nation before think about the profit, then its strategy also designs to serve people first. The BR incurs loss in some sector due to its service first strategy as in the time of financial crisis the cost of running the railway service went higher but the govt. did not increase the ticket price due o the public interest as in financial crisis the public also faced problem of money, even in some route the BR cutoff the ticket price to help the people. The report of the Comptroller and Auditor General of India (CAGI) shows that the Bharatiya Rail achieved only 28% of targets in last two years of 11th five years plan (2007 - 2011).

New Project: In the 11th five years plan (2007 - 2011) the BR planned to install 2000 kilometers of new lines, convert 10000 kilometers lines to broad gauge from meter and narrow gauge lines, 6000 kilometers of double track from single track and electrification of 3500 kilometers route. But if we look on the report which is published by the CAG of India on April 2010, then we can find the result which is like follows. The BR completed after two years, 513 kilometers new line installation (which is 25.65% of the projection), 2612 kilometers of gauge conversion (26.12% of the projection), 789 kilometers of double lining (13.15% of the projection) and 1299 kilometers of electrification (37.11% of the projection). (Source: Zee News, 2010).

Public Earnings: The CAG of India submitted the report in the Parliament of India, which also showed that the annual growth rate of Bharatiya Rail in passenger earnings goes down in last 12 months from 15.21% achieved in the financial year 2007 - 2008 to 10.52% in the financial year 2008 - 2009. The cause of this decline is the responsibilities to the public as the BR is a public sector and in India the motto of a public sector always is to serve the people first. During last year India got affected o global financial crisis and people had less money for their spending, in this circumstance the govt. policy was to reduce ticket price or not to hike it while the spending to run the service was getting higher. (Zee News, 2010).

Delayed Project & cost increasing: The report of CAG of India reflects that the current running projects of the BR are 144 and six of them are delayed from over 10 years and with this delay the cost of the projects are also increased. The excepted completion cost of these projects were Rs. 3,463.60 crores (Indian Rupees) while the present completion costs stands at Rs 2,33,289 crore (Indian Rupees).

HRM of the org:

The Human Resource Management is very important in any organization and when an organization is like Bharatiya Rail which has approximately 1.6 billion direct employee capacity then HRM plays a very big role to run this organization. The HRM in BR can be discussed in some parts like,

Recruitment: The recruitment process of the Bharatiya Rail organizes through the Bharatiya Recruitment Board (BRB). The recruitment process has some steps, first the specific zone collects data about how many staff required and in which designation they are required, then they send all details to BRB to recruit staffs for them. Every zone has BRB branch and they advertize the recruitment details in national and local news papers throughout the country to seeking employee. After closing date of application they opened application and calls all suitable candidates for written examination in a specific center. The next step is to evaluate the examination papers and calls top candidates according to their requirement for certificate verification and then offers job for the post. This process normally takes 10 months to 12 months and it is totally control by the central BRB to protect illegal activities and corruption.

Management the existing employees: The BR is a very large organization and the policy of the employee management is same in all zones. BR runs with influence of the central government of India's HR policy and it always very soft in nature and employee friendly, the model of the HRM is followed by the BR id Harvard Model. BR also allows its employees to join trade unions of their choice to represent them.

Pay structure: Pay structure of the BR is completely influenced by the Government of India. The central government has a uniform policy of pay structure to pay its entire employee. Every 10 years the government form a committee called 'Pay Commission' who analyze the current pay structure and its viability with the market and recommend the govt. to restructure the payment policy.

Other benefits: The BR also offers others benefits to its employees, like free railway travel to its employee and their family throughout the country, free medical and hospital facilities, education support to its employees' children etc.

Industry Analysis:

The Bharatiya Rail is a department of the central government and the premier transport organization in India. In the rail transport sector the BR has the monopoly and the major percentage of Indian people prefer the railway for their travel needs. Besides these positive sides the BR has some problem also and need to restructure the system. The ministry has a proposal towards the future which can be inferred as the vision or goal of the organization. Bellow the proposal has mentioned, which was announced by the ministry of railways.

Vision 2020 & Strategic move: The Railway Ministry announced a large investment of 14 lakhs Crores Indian Rupees in ten years or 1.4 lakh crores Indian Rupees on annual basis under the scheme of Vision 2020. Every time talks about the organization movement it is expected to develop the strategy, program and organizational structure to achieve the goal. Vision 2020 has introduced three important strategic apparatus or the railway growth over the next decade. First component is to separate the double line corridor for the passenger and freight transport. Second is to increase the speed of train from 130 to 160 - 200 kmph range, and the third is to introduce four high speed bullet train service with speed of 250 - 350 kmph range. (Word Press, 2009)

Organization Restructure: If the Ministry wants to implement the Vision 2020 properly then the organization would be need to change the organizational structure for effective decision making, efficiency and performance. Since independence, the BR has not introduced any noteworthy new route and just continuing to build the British legacy. Now the required things are to introduce new routes, create new infrastructure, new technologies and find out the new means and source of funding and investment for the further development. (Word Press, 2010).

Corporatization: The Railway is working is a department of the central government of India. For the development and achieve the Vision 2020 the Railway should be converted to a public sector holding company with board of director headed by the CEO or Executive Chairman. The command to the company should be for establishing and operating the railways network efficiently & effectively and make excess revenue for reinvestment in existing and new projects. The government funding through budget with operational subsidies on definite sectors and activities must be accepted for first ten years till new model stands.

Providentially for the Bharatiya Rail, it is not any problem to find markets with the continuous growing population. BR just needs to be aggressive with other alternative options of transportation through technical up gradation and passenger beneficial focus.

Therefore, the Bharatiya Rail restructuring should be aimed at focus on development of infrastructure, technical development and operational efficiency. The first two aspects should be handled through Strategic Business Units, as they have strategic importance. Operational efficiency is the weakness of the Bharatiya Railways and therefore operations restructuring should aim to improve. (Word Press, 2010)

Strategic Business Units: The most noteworthy approach to run the Bharatiya Rail in future should engage in division of ownership & management of infrastructure & technology development and operations. The restructure process should be done to manage three strategic apparatus of Vision 2020 discretely with three Strategic Business Units (SBUs). This is that for setting up two SBUs to set up new and manage existing infrastructure to dedicated corridors for passengers and freight separately. The strategic vision to increase speed levels needs to be moved by the separate SBU for renovation and technological up gradation of existing infrastructure of the railway networks. Reasonably, the same SBU can set up infrastructure for high speed bullet trains. This restructuring of infrastructure & technology would give a unique strategic identity and view for accomplishment of the Vision 2020. (Word Press, 2009)

Public Private Partnership: Public Private Partnership (PPP) has been accepted by ministry of railways and railways board for a certain limited and selective aspects. To take shape an option, we have to look at road transport network which are one of the important and efficient mode of transport today. The roads and highways network infrastructure is owned and set up by the government. But the continuing stock on the roads is owned by the thousands of companies both private and public sectors and also millions of individuals. This small difference is a significant driver of efficiency & productivity. Can the government not adopt & adapt the similar model, suitable to continuing stock for Bharatiya Rail?

The scheme 'Own Your Wagon' has been in operation in a very limited manner. It would preferable that a separate subsidiary company, like "Indian Railways Rolling Stock Company" (IRRS), under the holding company, which would own the rolling stock, transport the cargo & passengers and the user of the infrastructure of the Bharatiya Rail's network. IRRS can have the 99 or more year lease for using the network with exchange of lease rentals which is to be paid to the respective SBUs for providing railway infrastructure and technology along with required maintenance services. Therefore IRRS should have focus on only operations. SBUs of infrastructure & technology would be responsible for their individual activities at their own costs, that can be recovered through rentals and annual maintenance contracts fees from IRRS.

The IRRS must be that entity for partnership of private and public sector with the Bharatiya Railways. The fund raising can be happen by selling share and long term bonds to the public, so that the rolling stock will be indirectly owned by the millions of shareholders and thousands of corporate firms. For strategic reasons IRRS will have only controlling interests through equity share from the holding company. The result of this approach would allow the political concern to give concentration on budgeting only for investments in infrastructure & technology on one hand and on the other hand operational subsidy. It has no need to say that the operation must be generating sufficient revenue to make up for the costs and make excess money. It is easily understandable that the sensitive decisions like passenger fares and freight charges must be decided in greater public interest and therefore a factor of some selective subsidy cannot be avoided. (Word Press, 2009).

SWOT Analysis:

The SWOT analysis of the Bharatiya Rail (BR) is as follows:

Strength:

In respect of the employee strength Bharatiya Rail is the world 'Biggest Organization' - The human resource strength helps the organization to start any new project without any problem of manpower. The large human resource also helps the organization to extend any part of the organization and if any recruitment problem arises then keep running operation with the help of existing employees.

Palace on wheels - This is a luxury train which offers a very luxurious journey to visit different places in India. This is a very big source of income of the Bharatiya Rail, as the major percent of the customer of Place on wheels are from outside of India then through this service the company earns a very big amount of money.

Connects different cities - The Bharatiya Rail connects different cities in the country. As the major portion of the Indian people are from middle class or lower standard financial conditions, then to visit other places rail is the only suitable means of transport which is cost effective too.

Luxurious and affordable - The Bharatiya Rail offers luxurious journey in comparatively lower price than other means of transport. The one of the luxurious train 'Rajdhani Express'has different class for different types of people and their fare structure also made consider with the common people.

Technological advancement - Throughout the entire rail track the optical fiber facility already started by the Bharatiya Rail, it means in any place one can go through rail he/she will be connected with the others through internet. People can do their work during travelling. Instead of this the phone facility also available in train service. Other than in train service, the booking of the railway ticket can be possible through internet and even through mobile text service. Therefore technological advancement bring people more closer to the Bharatiya Rail. (Slideshare, 2010).

Weakness:

Corruption - Corruption within the department is the very big weakness of the Bharatiya Rail. As all in Indian government sector corruption is the big problem, therefore the Bharatiya Rail is not any exception. To the high Political level and top level management to lower level clerk, everywhere corruption has hit and it affect the organization and its profitability badly.

Accident proof system - Though the BR is among the largest railway networks in the world but it is not among the modern railway system. Still now the accident proof magnetic wheels are not there in all trains.

Lack of Safety - The safety measures are not well followed in Bharatiya Rail. Many level crossings are un protected, the almost all local passenger trains' doors does not close when train in motion. Almost all local trains are overcrowded and caused accident.

Delayed schedule - The one of the main weakness of Bharatiya Rail is delayed trains. The local trains never runs in time, they are always late and canceled. May be it is the bad effect of monopoly but it is true that people use to wait several minutes every day as the trains are always runs delayed schedule.

Non pro-active employees - The job under government in India is permanent, and there have no pressure for work. Therefore the employees are not active to do their job properly and as a result the passengers are suffering everyday from unlearned toilet to no drinking water in station, long line in ticket counter to delayed and overcrowded train. (Slideshare, 2010).

Opportunities:

Metro Railway - In India recently two cities have metro railway or underground railway facilities, i.e. Kolkata and Delhi. The commercial city like Mumbai has no metro railway still now. The project is running and when the metro project will be finish then the Bharatiya Rail can encase the opportunity of a large crowd.

Small cities development - The Bharatiya Rail has opportunity, that it can develop the rail network across the small cities. Because the major portion of lower middle class people stays in small cities and they use to prefer train for their daily travel. Therefore the development in small cities is a greater opportunity for the Indian Railway.

Privatization - Through part privatization the rail can get the opportunities, recently the organization has started to welcome private investment in that sector like, BR already allowed McDonald's, NESCAFÉ, Wal-Mart to do their business in its premises and in catering service rail encourages small private investments to work with. The BR also now asking private investment for terminal stations modification and maintenance. Therefore through the privatization, whether may be it part or full, the BR has the opportunity to maximize its revenue. (Slideshare, 2010).

Threats:

Low cost airlines - In recent days low cost airlines are increasing in the country and the fare of those no frill airlines charges nearly about the same charges compared with first class AC rail fare. But now people start considering the low cost airlines for travel as it has a great advantage of less travel time. Therefore these low frill airlines are becoming a big threat of BR.

Improvement of Road transport: From last five years the road transport is continuously improving with the road condition and the transport facilities. The road travel is now become easier and comfortable, so people also consider this means of transport system for their journey. Road transport, both passenger and goods, is cutting market share of the BR. (Slideshare, 2010).

Conclusion:

In the case study of the Bharatiya Rail we have found different facts of that specific public sector organization. The Bharatiya Rail owned and runs by the Government of India with the service motto. The strategy of this business organization also depends on this motto. The BR has the monopoly in the specific sector in India and the approximately 1.1 billion people depends on it but still they incur loss because they cannot make large profit by hiking the fares as the 80% of the people of India are in bellow poverty level or middle class who needs cheap travel means. The BR also faced some financial problem and as a result of this their improvement project also achieved partially after two years which is only 28%. Naturally the earnings also went down. Other than these the BR has different opportunities and threats and Strength and weakness also. The Bharatiya Rail operates the entire railway networks as a single organization therefore they have a wide range of opportunities with some threats like growing no frill airlines popularity, road transport facilities improvement etc. The Govt. now taking the BR as a business institution and in some respect the decision making is process is happening through corporate style rather than political. Therefore we can conclude with that the BR is a very large organization with vast range of activities and it is running smoothly though in some area it incurs loss but the prospects of the sector is very high and now on the organization is moving that way.

Recommendation:

On the basis of the case study some of the recommendations are can be as follows:

The BR should electrify it's all networks with a great importance, because through electrification the running cost can be reduced in great extent. For example, cost of coal and diesel (these two materials are used except the electricity to run train) is higher than the electricity and it consumes more than electricity.

For cost reduction the railway can also establish power plants in different area, it will helps the railway to consume the electricity in lower costs than the purchase and the excess production can also be sold to the domestic power supply company, as India has power problem.

The BR needs to entre in-city transport facilities with great interest. The in-city transport like 'Underground rail' (in India it is knows as Metro Rail). Presently two cities Kolkata and Delhi have the underground train facilities, but they are also not extended. Underground or Metro rail can attract lots of office passengers and others to travel which will help to earn more revenue, for example the London Tube has a very large and extended area coverage and in India both Kolkata Metro and Delhi Metro are very successful run with huge passengers.

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