Draw CRT $($current reality tree$)$ for below case ## Pharma Machines India $($PMI$)$

The company: Pharma Machines India $$ PMI was started by Anand K about $30$ years ago. He was working for a company that was importing $/$ selling and servicing Pharmaceutical machinery in India. Anand K was a commissioning and servicing engineer and quickly built a reputation as a sincere engineer who can quickly set machines right. Gradually he also learnt about the processes being followed in the pharmaceutical industry. Thus he was also able to provide advice to customers on processing and how the machines can be used well.

The Clients $/$ Customers: The customers were Indian Pharmaceutical companies who were involved in manufacture of pharmaceutical products like $$ Intravenous fluids, vaccines, injections etc. $30$ years ago, Pharma processing machinery had to be by and large imported. Such imports were handled by agents, who also provided support in installation, commissioning, spares and maintenance. But slowly Indian companies were trying to manufacture machines in India itself $$ primarily driven by India$$s shortage of foreign exchange. Further imported equipment were expensive.

The beginning: Anand K built for himself a strong reputation as a competent engineer who understood machines and also the processes followed by the Pharma Industry. Some of the customers who he served kept egging Anand K to start a company to manufacture such machines in India. They were willing to give him an advance to enable him to start. The customers understood that engineers like Anand K have the talent, but no money and that banks are not going to fund them. Companies in the pharma industry were willing to provide a substantial advance to Anand K if he was willing to make those machines in India. Slowly, the idea that such machines can be made successfully in India and sold sank into Anand K$$s mind.

He started making a few equipment $$ sterilizers, water for injection plants, autoclaves, and a few more. He flourished in this business. Several people joined him and many of them left in course of time. As his business grew he brought in a distant relative of his to handle the accounts $/$ finance side of the business. Thus Ajit became the accountant cum finance manager cum purchase manager of the company. In $1996$ Anand K$$s nephew, Mohan completed engineering and he was also roped into the company. Mohan learnt the business with great interest and grew to be the Vice president of the company.

Now: The company is a leader in the small niche area $$ Sterilization and related equipment. PMI makes and sells about $160$ machines in a year. There are two other competitors $$ one of them is significantly big and the rest are small competitors. The company is today operated by Anand K $$ Managing Director, Mohan $$ Marketing $/$ Operations VP and Ajit, head of Finance & accounts $+$ Commercial.

The Business:PMI has a built a strong reputation for supplying good machines. Well designed and properly priced. They have an enviable client list, virtually the who is who of the Indian Pharmaceutical Industry. They have also spread their wings across other continents and have a significant volume of exports $$ about $20\%$ of their output is

exported to Africa, Poland, Latin America and Middle East. They are still a small company with a turnover of about $35$ crores. But they have some serious problems. Anand K keeps saying $$when we were at $8$ crores turnover we were making more profits and I was seeing money in hand, but with $35$ crores, I do not see the same amount of profits and as far as cash is concerned, we are always hand to mouth$$

Ground Reality:

PMI has a great reputation for good machines and reasonable prices. Imported equipment of comparable capacity $($probably a bit more sophisticated$)$ costs anywhere between $150$ to $400\%$ of PMI$$s prices.

But PMI has a very poor record of $1)$ On time deliveries $2)$ delays in commissioning machines $3)$ also sending incomplete machines to customer site $$ some PLCs are missing etc.

Yet they receive a large number of enquiries and PMI sends offers to all of them. They book orders promising a delivery time of $1216$ weeks, knowing fully well that they are NOT going to fulfill the promise. They take a $25\%$ advance before they begin making the machines. When the machine is fully made, the customer visits the PMI factory to conduct a trial $($FAT $$ Factory Acceptance test$)$ after successful trials or after corrections identified during trials the machines are dispatched to the customers$$ place. When the machine arrives the customers$$ place, they are supposed to release another payment of $65\%($the last $10\%$ is paid after installation and commissioning$)..$

Since equipment are delivered late, often the $65\%$ payment gets delayed and PMI is not able to insist on payments. Also, this delay in dispatching the machine is compounded by further delays in Installation and commissioning. Here again, collecting the last $10\%$ is a very difficult job.

The Proces