NATIONAL UNIVERSITY OF

MODERN LANGUAGES,
LAHORE

SESSION 2018-2022

Class : MBA-4(Morning?)

Nane : Arslan Ghias , Usama Youaaf, Shehriyar Alu

Roll No: L-21200 , L-21213, L-21226

Submitted To : Sir Ahmad Zikriya

SUBJECT : LEADERSHIP&ORGANIZATIONAL BEHABIOUR

TOPIC : Explore the reason of failure of Pakistan steels mill

Karachi. Look from the ob prospective. Why that big organization failed to
perform while having huge pool of resources. You may explore which political

behaviour or leadership issue led to the demise of this

 Introduction

Pakistan Steel Mills Corporation (Pvt.) Limited (Urdu: ‫)پاکستان سٹیل ملز‬, also

known as Pak Steels, is a producer of long rolled steel and heavy metal products
and entities in the country.[4]
Headquartered in Karachi, Sindh Province of Pakistan, the PSM is the current
largest industrial mega-corporation, having a production capacity of 1.1–5.0
million tons[5] of steel and iron foundries.[4] Built with the contributions of
the Soviet Union in the 1970s, it is the largest industrial mega-corporation
complex,[6] vastly expanded in an enormous dimensions construction inputs,
involving the use of 1.29Mn cubic meters of concrete and 5.70Mn cubic meters of
earth work, and containing ~330,000 tons of heavy machinery, steel structures and
electrical equipment.[4]
A controversial attempt was made to privatize the steel mills to global private
ownership under a counter-measure Privatization Programmed of Prime
minister Shakta Aziz.[7] All attempts were thwarted by the Supreme Court which
launched a full-fledged investigation against the attempts to privatize as private
sector and lost the control of the steel mills in a matter of weeks.[8] In spite of its
enormous size and expansion, only 18% of the capacity was in use and the steel
mills requested a bailout plan of Rs.12 billion to prevent its closure;[9] the bailout
plan was dismissed by the government.[10] Finally, the steel mills was brought back
to government-ownership management under an inverse counter-
measure Nationalization Programmed[11] of Prime Minister Yousaf Raza Gilliani.
Since then, its operational plant capacity has reached 30%—50[8]% after seeking
the government financial assistance.[11]
The Govt of Pakistan has decided to lay off 9,350 employees of Pakistan Steel
Mills.[12]
  Golden era

Pakistan Steel Mills was a profitable well-managed organization since its

establishment, although was a bit overloaded with extra political recruitment of
employees from time to time. PSM even remained a profitable unit in last Military
ruler Pervez Musharraf’s regime mainly in years 2001 to 2008.
 Reasons behind failure of Pakistan steel mills Karachi

 Collapse

Nobody could imagine that this country’s largest industrial unit will ever become
bankrupt and won’t be able to even pay even its employees’ salaries. The worst
time for PSM and its employees started after PPP (Pakistan People’s Party) came
into power in 2008. Although, Steel Mills was starting deteriorating in Musharraf’s
rule to be fair. Thus, because of overcrowding of useless employees, incompetence
of top management, week policies and a most significant reason behind PSM
collapse was a corruption of its top management and affiliated politicians and
bureaucrats in the past many years and affluently after 2008 till now.

 Privatization attempts

As from the first day of PSM establishments, many international countries

mainly big steel players of the World began dubious activities against this vital
national asset operation. Many local organizations and rich people were also found
guilty in its bankruptcy. In 2006 while Pervez Musharraf was still in command of
the country when the privatization of the Pakistan Steel Mills took place abruptly
bypassing many rules and regulations.

Saudi Arabia-based Al Tiwari Group of companies, Russian based Magnitogorsk

Iron and Steel Works and local hefty Arif Habib Securities paid a nominal amount
of Rs 21.6 billion ($362 million), or Rs 16.8 per share mutually. This deal
authorized these big firms to take control of Pakistan’s largest steel manufacturing
plant.
  Criticism on privatization and termination

The analysis and apprehensions were stated surfacing as soon as this PSM
privatization deal tool placed in 2006. Later, it was considered as one of the
biggest con and ruining of countries biggest industrial unit by experts.
Furthermore, Transparency International report, employees, print and electronic
media and even civil society also raised their voice against this fraudulent
agreement.

Consequence, of this protest against PSM privatization, was witnessed soon when
on June, 23 nine-member benches of Supreme Court Pakistan found serious
irregularities in the process and ruled this privatization decision illogical and
moved this case to Council of Common Interests. So, that’s how this privatization
deal got terminated later, in the profound interest of the country?

Bailout package
The toughest time for Govt initiated when the mentioned privatization deal
got terminated by the apex court. Last, PPP (Pakistan People’s Party) led
Govt fueled PSM with Rs 40 billion bailout package in its 5 years’ term to
keep it functioning. And now PML-N pilot federal Govt also recently
assigned 18.5 billion bailout packages for Pakistan Steel Mills for the
financial year 2014-15.

This huge amount was mainly used for paying remaining salaries of PSM
employees and starting some sort of manufacturing through purchasing raw
material for PSM few operational plants. Moreover, the present is Govt also
making efforts for boosting production capacity of PSM gradually in the
coming few months by this financial aid.
  Current situation

The good news has now started going off from Pakistan Steel Mills
according to latest reports, the production capacity of PSM has touched 45 % out
of total capacity at present. This drastic improvement has been seen ever since
Govt appointed Major General (Retd) Zaheer Ahmed Khan as CEO, who is in
charge of PSM since April 7, 2014. The notable thing is that national steel mill was
working at 1.4 % of its total production capability – at the time Major Gen Zaheer
took over.

Moreover, the authorities are also claiming that this vital national asset will soon
become profitable again in April 2015 eyeing the present enhancement in its
production capacity. This proves that if right people having the will to evolve any
sector deployed on right positions, no one can stop Pakistan to progress towards its
due place on World’s map.

Ob prospective
There are some factors which become the failure of an organization and that why
organization failed to perform.

 technology

When there is a change in

technology in the organizational environment and other organizations adopt the
new technology, the organizations under focus become less cost effective and its
competitive position weakens. Therefore, it has to adopt new technology, its work
structure is affected and a new equilibrium has to be established.
  Social changes

Social changes reflect in terms

of people’s aspirations, the needs, and their ways of working. Social changes have
taken place because of the several forces like level of education, urbanization,
feeling of autonomy, and international impact due to new information sources.
These social changes affect the behavior of people in the organization. There, it is
required to make adjustment in its working so that it matches with people.

 Political and legal changes

Political and legal
factors broadly define the activities which an organization can undertake and the
methods which will be followed by it in accomplishing those activities. Any
changes in these political and legal factors may affect the organization operation.

 Internal forces

It is not only the changes in

external factors, which may necessitate organizational changes; any change in
organization’s internal factors may also necessitate changes. Such a change is
required because of two reasons: changes in managerial personnel and deficiency
in existing organizational practices.

 conflict
Conflict exists in every organization and to a
certain extent indicates a healthy exchange of ideas and creativity. However,
counter-productive conflict can result in employee dissatisfaction, reduced
productivity, poor service to clients, absenteeism and increased employee turnover,
increased work-related stress or, worse case scenario, litigation based on claims of
harassment or a hostile work environment.
  Demographic factors

The demographic factors

are socio-economic background, education, nationality, race, age, sex, etc.
Organizations prefer persons that belong to good socio-economic background, well
educated, young etc. as they are believed to be performing better than the others.
The young and dynamic professionals that have good academic background and
effective communication skills are always in great demand.

Why big organization failed to perform while having

huge pool of resources.

There are many causes which becomes the failure of organizations while
having huge resources.

 Ineffective boards

One of most obvious reasons for corporate failure is the lack of an effective
board – and there are plenty of warning signs to indicate when boards are in over
their heads. Clear skills limitations, an absence of experience in core business areas
and the inability of non-executive directors (NEDs) to hold senior executives to
account have repeatedly paved the way for collapse.

 complexity
intricate processes are certainly necessary at times – but the truth is, excessive
complexity is often a root cause of corporate failure. When flaws begin to appear
in even the most well-oiled complex system, it can be incredibly difficult to
correct, often initiating a domino effect that impacts all aspects of a project or
company.
  Risk blindness

A crucial reason boards often fail is their inability to engage with risk in the
same way they engage with opportunity and reward. According to author Margaret
Heffernan, this so-called risk blindness perpetuates a wide range of problems for
companies.
“Risk blindness means that problems are ignored – which gives them time to grow
and to fester.

 Company structure

Poor company culture is another major culprit in terms of corporate failure.

Businesses that place a hyper-intensive focus on driving profits often foster
cultures of double standards – which go on to facilitate questionable risk-taking.
The terrifying losses sustained by Society Générale in 2008 pose the ultimate
cautionary tale. When junior French trader Jerome Kevel was promoted to a spot
on Society General’s trading desk, he was disappointed to find his remit was
limited to arbitrating price differences between derivatives swaps.

 Systematic failure
Systematic failures also present a huge external barrier for corporates. After
all, when government policy is stacked against the interests of a company or
existing regulation facilitates reckless decision-making, those systematic failures
pave the way for disaster.
Which political behaviour or leadership issue led to
the demise of this organization.

Both individual and organizational behaviour led to the demise of organization.

 High self-monitor

They appear more friendly

and less anxious to observers, and are sensitive to social cues are likely to vary
their behavior from situation to situation. High self-monitors read non-verbal
behavior better, and will change their behavior to suit the situation as they perceive
it.

 High need for power

Those high in need for power enjoy running an organization, making

decisions, or being in charge of a group. They run for elected office. ... These types
of behaviors result in the high-need-for-power individual being more dominant in
the relationship.

 High expectation of success

Everyone in the
organization want to be at high level according to their education and want success
that is the reason who want more success may be caused the organization.
  High pressure for performance

Pressure affects coordination, focus and judgement, increases your heartrate,

speeds up breathing and creates unwanted tension. These factors can
negatively affect performance, causing an athlete to panic and rush.

 Politicking by top management

It is also known
as office politics and organizational politics. It is the use of power and social
networking within an organization to achieve changes that benefit
the organization or individuals within it. ... Influence by individuals may serve
personal interests without regard to their effect on the organization itself.