MN 1020Organisational designs should be responsive                            Chandrakesan Delakshan      101412 A        ...
AcknowledgementsOur sincere gratitude goes to the following persons who have given their utmost support to makethis projec...
ContentsTable of ContentsChapter 1    Introduction …………………………………………………………………….. 4Chapter 2    History & Development ………………...
AbstractThis study is based on the structural changes took place in the organisational environment ofSouth Asia Gateway Te...
CHAPTER 1Introduction1.1 Place of studySouth Asia Gateway Terminals (here in after referred as SAGT) is the best performin...
1.4 Importance of a Flexible structureIf organizations are to successfully implement their chosen strategy, it is importan...
CHAPTER 2History and DevelopmentAs a result of a Build, Operate & Transfer (BOT) agreement, spanning 30 years with thegove...
Added 10 Rubber Tyred Gantries          Added 50 Terminal TractorsAfter the completion of these three phases present termi...
CHAPTER 3Business Expansions & DesignTime to time businesses have to expand their product capacity, product quality, etc… ...
CHAPTER 4Present Situation and its industry environmentSWOT analysis is used to define the present situation of an organiz...
STRENGTHS                                            WEAKNESSES      Quality of their services                          ...
Choice strategy to survive from the above problem       For that top level people of SAGT can use BCG Matrix model. Curren...
CHAPTER 5Present Organisational StructureAfter having above alterations to the organizational design SAGT now has a capabl...
mentioned above since the vast increase the annual TEU throughput in SAGT they now give asignificant importance to their i...
According to the study we had it is evident that organisational designs should changeaccordingly to the situation. Otherwi...
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SAGT

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SAGT

  1. 1. MN 1020Organisational designs should be responsive Chandrakesan Delakshan 101412 A Thushan Dharmawardana 101414 G Tharindu Kodikara 101419 C Gayashan weerawansha 101449 R Chandika Gishyan 101450 C Submission date: 9th November 2011
  2. 2. AcknowledgementsOur sincere gratitude goes to the following persons who have given their utmost support to makethis project report possible.Mr. Sanath Kumara Palliyaguru – Employee Relations Manager / SAGTMr. Indika Fernando – Management trainee/ SAGTMr. Niles Perera – 4th year undergraduate / Department of Transport & logistics ManagementOrganisational Management Page 1
  3. 3. ContentsTable of ContentsChapter 1 Introduction …………………………………………………………………….. 4Chapter 2 History & Development …………………………………………………………6Chapter 3 Business Expansions & Design…………………………………………………..8Chapter 4 Present Situation & Its Industry Environment ……………………………………9Chapter 5 Present Organisational Structure ………………………………………………….12Organisational Management Page 2
  4. 4. AbstractThis study is based on the structural changes took place in the organisational environment ofSouth Asia Gateway Terminals.The objective is to present our views on the statement, “Organisational designs should beresponsive “using the data and examples gathered.Organisational Management Page 3
  5. 5. CHAPTER 1Introduction1.1 Place of studySouth Asia Gateway Terminals (here in after referred as SAGT) is the best performing terminalin Sri Lanka and it is rated among the best performing container ports in the world. It is animportant milestone of Sri Lanka’s quest of becoming a maritime hub.1.2 LocationSAGT, which is located in the Colombo port, is advantageously placed on the main sea routes inthe world.1.3 Main customersSAGT serves both main line operators and feeder line operators. Their key customers are,  Maersk Line  Mediterranean Shipping Company  Orient Overseas Container Line  Nippon Yusen Kaisha LineOrganisational Management Page 4
  6. 6. 1.4 Importance of a Flexible structureIf organizations are to successfully implement their chosen strategy, it is important that theydevelop an appropriate organization structure and design. The appropriateness of anyorganization structure and design is dependent upon a number of key factors: the chosenstrategy, the nature of the external environment, and the organizational culture. Thereforeorganizational design in an organization is a key factor which determines the success andsustainability of a certain organization. These organizational designs should be flexible enoughto confront any kind of obstacles coming on their way. The obstacles vary according to thebusiness process and the scale of the organization. Therefore organizational designs should notbe rigid it must adjust according to the dynamic business environment.Organisational Management Page 5
  7. 7. CHAPTER 2History and DevelopmentAs a result of a Build, Operate & Transfer (BOT) agreement, spanning 30 years with thegovernment of Sri Lanka, SAGT was established in September 1999 as the largest foreign directinvestment at that time. In the inception the operations were done under the guidance of P&Oports the main shareholder at that time. The other shareholders were Sri Lankan Ports Authority,Peony Investment, Evergreen Maritime and John Keels Ltd. In the year 2003/04 with thebankruptcy of P&O ports the ownership of SAGT changed again. The shares of P&O ports weredistributed between John Keels and APM terminals. Withstanding to those alterations in theownership John Keels Holdings now has become the major shareholder in SAGT.In this period of time the organization underwent lots of changes. Physical infrastructure werechanged and added like reclamation, steel piling, reinforced concrete decking, new pavements,reefer stacking areas, electrical items and modern container handling systems in 2002 and 2003.The main structure of birth of QTC was changed in 3 steps.1st step completed and operated in February 2002.Changes - Berth one was developed to 340m and depth alongside 15m Added 3 Super Post Panamax cranes Added 9 Rubber Tyred Gantries (RTG)2nd step completed and operated in July 2003.Changes - Added another berth, with 310m length with depth alongside 15m Added 3 Super Post Panamax cranes Added 9 Rubber Tyred Gantries (RTG)3rd step completed and operated in Augest 2003Changes- Added 3rd berth with 290m with depth alongside 15m Added 3 Post Panamax cranesOrganisational Management Page 6
  8. 8. Added 10 Rubber Tyred Gantries Added 50 Terminal TractorsAfter the completion of these three phases present terminal has an overall length of 940m and adraft of 15 metres.In the year 2003/04 Navis terminal operating system which is known to be the 1st fullyautomated container terminal in Sri Lanka was introduced in SAGT. This was a uniquemilestone in SAGT history as the organisational design and efficiency changed a lot after theintroduction of this system. Many more TEUs (Twenty-foot equivalent unit) were able to behandled using less resources such as manpower and time.They sat up IBM RS/6000 Computer system in December 2006. Other than that 2 Kalmar Emptyhandlers are also added in this period. This enhanced the productivity of the organisation.SAGT is using Oracle Finance system for their financial works. So their financial systemspeeded than before. Another key milestone in SAGT history is the establishments of Twin Liftsused in year 2009, which was the first of kind in Sri Lankan history. These innovations andupgrades in the SAGT structure made the organisational design to change accordingly.Organisational Management Page 7
  9. 9. CHAPTER 3Business Expansions & DesignTime to time businesses have to expand their product capacity, product quality, etc… to survive in themarket. In the start of the SAGT container facility capacity was about 250,000 TEU/year. But graduallySAGT increased their TEU/ year. After the ownership change mentioned above SAGT passed a keymilestone in their business procedure surpassing the designer capacity of 1.1Million TEU/year. This wasan important juncture in SAGT organizational structure. Lots of new posts and new departments wereintroduced as a result to successfully sustain this achievement in the long term.SAGT invested millions of rupees on new systems such as RDT (Radio Data Terminal), CraneManagement Systems (CMS) and most importantly deployment of WAVE’s IP-based infrastructure hasimproved operating efficiency because crane operators and truck drivers have access to voicecommunications. With these implications in technology the working environment in SAGT became muchmore organized and also it improved their safety condition and efficiency on other activities such as craneoperating by increasing communication ability.SAGT introduced significantly higher service standards to Colombo Port, which today is the benchmarkfor port operations in Sri Lanka. As a result, overall container terminal efficiency at the Port hassignificantly increased. SAGT introduced not only service standards but also a professional work ethicand corporate governance to the sector. Its human resource policies and programs are geared towardimproving worker compensation and promoting strong worker relations.References : http://www.adb.org/Documents/PCRs/SRI/31910-SRI-PCR.pdfOrganisational Management Page 8
  10. 10. CHAPTER 4Present Situation and its industry environmentSWOT analysis is used to define the present situation of an organization. It gives us an ideaabout organizations strength, weaknesses, opportunities & threats. Through these analysing datathen top management people of an organization can take responsive decisions to ensure itsmarket share and etc. Decisions are very important because decisions can make organizationalsuccess or its failures. SWOT  Organizational Strength  Common strength  Strategic imitation  Sustained competitive advantage  Organizational Weakness  Organizational Opportunity  Organizational TreatsTo make organizational design in a responsive way top level people should have a good ideaabout their strengths. Management should always try to take maximum use of their strengths &try to reduce their weaknesses by taking good decisions. Opportunities and threats are veryimportant managers should responsible to take maximum use of opportunities & reduce theirthreats through responsible decision making.The SWOT analysis for the SAGT can be done as follows with the strengths, weakness,opportunities, threats.Organisational Management Page 9
  11. 11. STRENGTHS WEAKNESSES  Quality of their services  Limited yard capacity  12 years of experience  Difficult (can’t ) handle mega vessels  Agreements with leading shipping links  Running with old equipment  Location of the Colombo port  Problems in finding employeesOPPORTUNITIES THREATS  Rapid increase in Indian exports  Lack of yard storage capacity  Increase world trade between the east &  Development of Colombo south port west  Indian port developments  Government vision of make Sri Lanka a maritime hubThis is the current situation of SAGT. We can take responsible decisions by using this analysis.As an example we can take a threat ‘‘Development of Colombo south port’’. Because of itsdevelopment SAGT is going to lose their market share by a higher proportion, after this it will bevery difficult to survive. So SAGT should try to survive by responsible decision making.SAGT has 12 years experiences & their services are in a good quality, major strength is theyhave agreements with leading shipping links. So they can try to continue their operations withthose companies because those ships have experiences already with SAGT.But because of limited capacity, difficulty of handling mega vessels & using old equipment thosecan affect to reduce their vessels when start Colombo south port. But they can improve becausealready they know what are their opportunities, weakness, strengths & treats.Organisational design should change according to the present external environment.Organisational Management Page 10
  12. 12. Choice strategy to survive from the above problem For that top level people of SAGT can use BCG Matrix model. Currently SAGT is at aposition called ‘‘STARS’’, because they have the biggest market share, but now with thedevelopment of Colombo south port SAGT’s relative market share is going to be reduced. Thatmeans they are going to enter to the ‘‘QUESTION MARK’’ situation, then there will be a bigproblem because running in that kind of a situation is not worth but there are some opportunitiesto grow because market is growing high.When some company is in a ‘‘QUESTION MARK’’ situation, then they have to decide whetherto strengthen them by pursuing an intensive strategy, ex – market penetration by supplying veryeffective & high quality services and go to the deep of the market, market development byimproving further services, actually its more than what they provide now, they can improve theirexisting services also to survive or recover from ‘‘QUESTION MARK’’ situation.Organisational Management Page 11
  13. 13. CHAPTER 5Present Organisational StructureAfter having above alterations to the organizational design SAGT now has a capableorganization structure consisting of 6 major departments namely engineering, finance, humanresources, informational technology & marketing and commercial and operations. Each of thesedepartments has a General Manager except in Finance department. Because of the importance offinance, Chief Finance Officer (CFO) has been included into the organizational design. Inaddition there are relatively smaller departments, in the likes of Health, Safety and Environment,Administration, Internal Audit and security. Excluding the outsourced staff SAGT now has about650 employees working.Since the business expansions SAGT had its organizational design changed accordingly such thatnew posts were introduced to the organizational structure. Posts of Berthing Manager,Performance Manager and Security Manager which were not there at inception are introducedinto the design because of their importance to the current market development. All the structureof Engineering Department has also been expanded recently as a preventive and proactivemeasure to make sure operations are carried out in all 24 hours. SAGT gives a little importanceto marketing sector as they are following a market skimming strategy because of the extensivemarket share they are having. Only two persons work in the Marketing department. AsOrganisational Management Page 12
  14. 14. mentioned above since the vast increase the annual TEU throughput in SAGT they now give asignificant importance to their inventory as they now have two inventory managers.New departments were also introduced system such as Health & Safety department which had itsinception in year 2007. As per their cost focus strategy several kinds of employees areoutsourced to reduce cost and mitigate the power of unions. Canteen, Security staff, Cleaningstaff and most importantly truck drivers are been outsourced. SAGT has been entered into alabour contract with Inter Orient Logistics Limited to supply them with adequate truck driversfor the operations.5.1 Distributing AuthorityCEO, Edward Hans with the guidance of the director board compose a target of certain TEU sper year that responsibility is collectively given to the general manager. Operational manager isresponsible for the goals set per shifts in accordance to the main target set by the CEO. Dutymanager has been granted the responsibility of completing the target by closely monitoring Crainhandling, Prime mover handling and all other operations. Duty manager’s responsibility is tocomplete the due targets with lesser discrepancies. If not he is liable to the general manager.Recently in SAGT the person who is responsible for clearing import trucks out of the port,Receiving and delivery Officer (RDO) has mistakenly issued a document for a truck that shouldnot be driven out of the port. It has cost SAGT million rupees therefore RDO, the person who iscollectively responsible for that function had to pay for the lost occurred because of him.5.2 Chain of CommandIn SAGT lower level management cant report to the higher level management directly they haveto follow the hierarchy. It is highly recommended to always follow the chain of commandfunctions according to the hierarchy. The administration is not that strict therefore smalldeviations in the chain of command are accepted. The internal auditor of SAGT is a specialperson in the design he has the authority to report directly to the director board rather than theCEO.5.3 Perspectives in Organisational designThe organisational approach is a mix of both bureaucratic and classical approaches. In somedepartments such as engineering the approach is more bureaucratic while in operationsdepartment the approach is more classical. Team working has been given a priority thatEmployees work as teams in different shifts.Organisational Management Page 13
  15. 15. According to the study we had it is evident that organisational designs should changeaccordingly to the situation. Otherwise it would not sustain in the long run. If SAGT structureand design remained the same from its inception they would not have achieved this kind ofsuccess in the market. And they would not keep the same structure sustained, even though theydon’t express they should surely have a strategy to confront the challenges coming ahead. Theywill have a change in their design according to their rivals’ behaviour. Therefore it is in evitablethat “organisational designs should be responsive “Organisational Management Page 14

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