Structure Follows Strategy at Bharat Petroleum

Abstract

This case reveals the story of organizational restructuring at Bharat Petroleum Corporation Limited (BPCL). The story begins in the 1990s when India’s petroleum industry was closed to private enterprise. BPCL’s chairman at that time (Sundararajan) anticipates that India’s government would deregulate the industry. He is concerned that without fundamental changes, BPCL might not survive private competition—and so, he initiates a transformation of the organization’s strategy and structure. The restructuring attempts to dismantle a command-and-control culture, and replace it by one of empowered teams. The change process is undertaken in the spirit of co-creation. The definition of ‘customer’ is altered, causing organizational boundaries to be redrawn. Such an exercise is extraordinary for its time.

The case then presents a picture of BPCL and its challenges in 2015. History seems to repeat itself, as market conditions are nearly identical to those that existed 17 years ago. What should the company do in 2015? This case has a three-fold purpose; viz. (i) to show how the structure of an organization can be aligned with its business strategy; (ii) to illustrate how organizations with a functional structure can reorganize to an ‘M-form’ or SBU structure; and (iii) to help readers consider the latent, long-term effects of restructuring.