ECIL: a case study of environmental and organiztional response in the public sector

Abstract

A major function Of general management has been noted in the business policy literature as that of ensuring a "match" on a continuing basis between the characteristics of the organization and those of the environment. Environmental changes would therefore call for adaptive responses on the part of the organization. when these changes are major, sudden and irreversible (structural changes), strategic changes that may involve changes in the character of the organization and the assumptions held by its top management will be needed. There is some evidence that suggest, however, that in practice such an adaptive response does not always come about naturally. Yet the factors that come in the way of strategic changes have not received much attention in research. This study has attempted to understand how organizations react to structural changes in their environment. In view of the paucity of research on the subject, the study is exploratory in nature using a "clinical" approach. The study has been made with reference to a public enterprise, namely, the Electronics Corporation of India Limited (BCIL). Two kinds of environmental changes have been considered, namely, changes directly attributable to Government policies, and changes that cannot be traced directly to any agency (or are more autonomous) like changes in market preferences, technological advances etc. The differences in the responses of the organization to these two kinds of changes have been studied with respect to one product in each type of change: computers for policy induced changes and oscilloscopes for autonomous changes. Changes in the overall strategies of the Corporation have also been studied. ECIL was set up in 1966 to develop indigenous knowhow and effect import substitution in electronics. It had a Chief Executive highly committed to these objectives. In the early years, the Government gave ECIL protection from imports and competition. In 1976-7; the Government liberalized its imports policies for computers and licensed competitors to manufacture computers. ECIL‘s response was mainly to attempt to influence the policies to nullify the effect of these changes. Its ability to do so, however, turned out to be limited, because ECIL had not been able to come up with a satisfactory range of computers as expected by the Government's policy making body in electronics, the Department of Electronics (DOE). However, ECIL did not initiate any strategic changes in computers. Nor was there any significant changes in the overall strategies of the Corporation. This lack of response could be traced to the strong commitment to certain values on the part of its Chief Executive. In oscilloscopes, however, where competitors emerged not due to any changes in Government policies, ECIL's response was more adaptive and entrepreneurial. Based on our study of ECIL'S response, the following tentative hypotheses are proposed: 1. Influencing the environment itself rather than strategic adaptation seems to be the dominant mode of response in the case of public enterprises when the changes are policy induced. 2. The ability to influence the environment, however, seems to depend upon the extent to which the enterprise satisfies the expectations of its key stakeholders. 3. Autonomous environmental changes seem to be responded to by changes in the organization's strategies. 4. Public enterprises whose objectives are based on values, and whose top management is deeply committed to these values may have difficulties in appreciating the need for strategic changes if it implies changes in these values. Thus commitment to values can be a barrier to strategic changes. 5. Change in leadership can bring about a different appreciation of the environment and hence a strategic change. The implications for the top management of public enterprises are: 1. The enterprise has to identify its key stakeholders and ensure that its strategies take into account their interests. Failure to do so leads to an erosion of the ability of the enterprise to influence its environment. 2. The top management has to guard itself against its commitment to values becoming a barrier to strategic changes through devices like induction of outsiders in its Board of Directors and provoking open discussions in the organization about its existing strategy. ' 3. Executive succession can become an effective way to bring about strategic changes.