Meghdoot Cycles: A 42-Page Plan That Nobody Checked
Meghdoot Cycles Ltd. of Ludhiana makes 4,000 bicycles a month and has decided to enter the electric-bicycle segment. The board sanctions ₹2 crore and sets a target of 5,000 e-cycles in the first twelve months. The plan circulated to department heads runs to 42 pages: detailed budgets for frame imports, battery packs and salaries, plus a month-wise production chart. It does not mention the two import licences the company still has to obtain, says nothing about the three competitors already selling e-cycles at lower prices, and fixes no date on which anyone must check whether the plan is working. The purchase manager was never asked whether battery suppliers can deliver 450 packs a month. Seven months later only 1,150 cycles have been made, 600 finished cycles stand unsold, and a consignment of battery packs is held at customs. At the review meeting the managing director says, 'We wasted two months making this plan. Planning simply does not work in our industry.'
1. Identify and explain any two limitations of planning visible in Meghdoot's experience. Support each limitation with a specific fact from the case.
Read the worked answer
Limitation 1 - Planning may not work in a dynamic environment. The plan was built on a world that did not exist: it assumed battery packs would arrive on time and that no rival would undercut Meghdoot. In fact, three competitors were already selling cheaper and a consignment was held at customs. Because the plan contained no mechanism to absorb such changes, 600 finished cycles are now unsold. Planning cannot eliminate uncertainty; it only prepares for it, and this plan prepared for nothing.
Limitation 2 - Planning does not guarantee success. ₹2 crore of sanction and a 42-page document produced 1,150 cycles against a target of 5,000 in seven months. Money and paper spent on planning improve the odds of success; they do not purchase it.
A third limitation, planning leads to rigidity, is also present: the month-wise production chart was treated as fixed, so capacity was never re-allocated when the batteries were delayed. Note carefully that what failed here is the way planning was done, not planning itself.
2. Which step of the planning process did Meghdoot handle most poorly? Justify your answer with reference to the case, and name one other step that was also neglected.
Read the worked answer
The weakest step was developing planning premises.
Premises are the assumptions about the future - raw material availability, government policy, competitor behaviour, plant capacity - on which every later step of the plan rests. Meghdoot assumed, without verifying, that 450 battery packs a month would be available and that the two import licences would come through. The one person who could test that assumption, the purchase manager, was never asked. The plan also assumed something about competitors without ever stating it, since no competitor's price appears anywhere in the document. Because the budgets and the production chart were derived from untested premises, the entire plan stood on sand.
The working backwards is instructive: premises → alternative courses → selection → budgets. A mistake in the first link contaminates every link after it, which is exactly why 1,150 units were made and 600 could not be sold.
The second neglected step was follow-up action. No review date was fixed, so the shortfall surfaced in month seven instead of month two, when correction was still cheap.
3. The managing director wants to abandon planning altogether and 'just react faster'. Give your judgement with reasons, and state two concrete changes you would make to the planning process.
Read the worked answer
Judgement: do not abandon planning; repair it.
Planning is the primary function on which organising, staffing, directing and controlling all rest. Without a plan there is nothing to organise resources around, nothing to direct people towards, and - critically - no standard against which controlling can measure performance. 'Reacting faster' is not an alternative to planning; reacting fast without a plan is simply guessing quickly. In a dynamic environment planning matters more, not less, because the firm must anticipate licence delays and price cuts rather than discover them through unsold stock.
Change 1 - Make the premises explicit and owned. Every assumption should be written down with the name of the person who verified it: purchase head on supplier capacity, sales head on competitor price and demand, company secretary on licence timelines.
Change 2 - Build in flexibility and review points. Keep a contingency battery supplier, and fix a monthly deviation review against the 5,000-unit target with a named owner for each corrective action, so that the gap is acted on in month two rather than month seven.