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Challenges of International harvester:

To change internal structure of harvester.
Firm cost cutting and Improving R and D.

Initially company handled well under the leader ship of Mc Cardell. Saved $ 300 million through operations, this extra cash has been invested in modernizing, R&D . He hired a consulting from and created a new negotiating team to hold on for better deals with UAW. Brought new senior people in. Tried to change many things at once and faster. Company was in old system for many decades these sudden changes made critical problems within the company, this caused strikes and losses.

Dealings with UAW:
To improve employee morals:-

IH gave out many small incentives to UAW to stop the strikes. Which gave excessive freedom and unnecessary incentives? IH completely failed to handle.
Failed to give information to the employees. Unable to control they and specially IH forgive the big loans for senior managers and CEO nearly 2 million. Employees don`t even know company is in trouble. Removed half of its employees. These actions of the company destroyed the prestige and trust of the employees.

Loosing market share.
Handling the economical recession.

Big strikes effected the production and market. Harvester main strategy in this period was to supply the market. Eventually loosed markets to competitors and posted losses continuously .losses was nearly 3 billion. Same Time Company was struck by recession. Unable to recover.

To save company from bankruptcy.

In 1982 Harvester showed 1.6 billion loss in one year .Losses, strikes and recession had wiped out nearly all of its remaining equity and used up most of its working capital. Donald Lennox took over the ceo post and James Cotting CFO of harvester that time was given the job of putting the IH financial house back. Company sold of the many operations and they had the support of more than 200 banks who refinanced the loans for 4.15 billion. Helped to save the company from bankruptcy.

To change the name.

This is one of challenge handled successfully. In the process of saving from bankruptcy IH sold its name to Tenneco. It was a big challenge for the company to choose the right name. Harvester managers, employees, retirees, declares, customers, competitors and analysts were interviewed to get the company current image. Finally five final names presented to lennox to choose and Navistar was choosen.

Challenges of Navistar:

To choose right vision and strategy
And improve employee relations.

In mid 1986 cotting took charge as a CEO of Navistar, he immediately started working on a new direction for the organization. The vision itself to improve employee relationship. He belived company success depends on the effective employee relations and satisfaction. Company changed its decision making process which was in the hand of the few people to distributed the power to local mangers. Distributed power and responsibilities to the low line managers and employees. He successfully gave new vision to Navistar.

Unfunded pension liabilities.
To achieve financial flexibility
Rapidly escalating health care costs.
At the peak in 1981, Navistar unfunded vested liabilities for its U.S hourly workers pension lians were almost 1 billion. Funding the plan became a major priority once the recapitalization was comp leaped. Payments were made to the plan each year, culminating in the financial payment of 220 million on december1, 1988, which fully funded the plans two years ahead of the previously announced schedules. Health costs at Navistar rose steadily from 129 million in 1986 to 137 million in 1987 and reached 145 million in 1998. as step addressing the problem ,in July of 1987 Navistar became self-insured, yielding the company some 26 million of cash reserve.

Restructuring the payment system
Navistar introduced a new payment system in 1986, in the new system, the 84 salary bands were eliminated and replaced with organizational levels, 12 in all. In addition the distance between salaried and management employees eliminated. The new plan was designed to motivate all employees to be committed to change, to serving customers and to create value for share owners.

3 Is change becoming easier or more difficult to handle?

Most of the times change is becoming more difficult to handle.
Company went under many global changes in a single decade. The monolithic culture of the company resisted the change, not even management are not willing to change the internal structure.
Initial changes like cost cutting and r and d under Mc Cardell were showed progress. But the same approach with UAW caused a big strike and caused millions loss. Especially the changes with the employee rules and regulations easy most difficult change to handle .harvester was never established proper relations with employees until 1982. Some changes like selling the operations to save the company, changing the name, removing McCardell, reducing the employees these changes were handled very well. Change was never easy for the company .they tried very hard to handle these changes, they achieved significant change. In the process they lost their Name and assets, laid of half of its employees, faced problems with health care costs, still struggling with health care and benefit issues.

4 how significant is health care cost issue? What position would u take?

Health care cost issue is a high priority issue because its reach the 4% of the company sales .Its a serious competitive disadvantage for the Navistar. Ratio of working and retired employee was 3.3 for 1 , resulting to loose significant amount of revenue . Health care costs are increasing rapidly.
Its also one of the main agenda for the vision. Company introduced new health care system which is trying to eliminate the poor quality from system.

This issue is a big priority and have to be solved quickly. new system is been introduced and approved by the management, the challenge is how well we make people to understand about the problems of health care costs and the quality of new program and the care we intended to take.