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BUSINESS PROCESS MANAGEMENT FRAMEWORK: HOW TO TRANSFER KNOWLEDGE AND INTELECTUAL CAPITAL OF

ACQUISITIONS INTO BEST PRACTICES AND SUSTAINABLE BUSINESS VALUE. A SUCCESSFUL CASE STUDY.

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XII Congreso Internacional de la Academia de Ciencias Administrativas A.C. (ACACIA).



Administración del Conocimiento

Martha Corrales, Ph. D EGADE Campus Monterrey Tecnológico de Monterrey

Av. Fundadores y Rufino Tamayo Colonia Valle Oriente

San Pedro Garza García, N.L., Z.C. 66269 México

Tel. +52 81 8625 6152 Fax. +52 81 8625 6098

Email. [email protected]

Tijuana, BC., 13-16 Mayo, 2008

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BUSINESS PROCESS MANAGEMENT FRAMEWORK:

HOW TO TRANSFER KNOWLEDGE AND INTELECTUAL CAPITAL OF ACQUISITIONS INTO BEST PRACTICES AND SUSTAINABLE BUSINESS VALUE.

A SUCCESS CASE STUDY

Abstract: The phenomenon of mergers and acquisitions has been sweeping both the academic

and the practitioners’ agenda. However, there are still many questions to address with

regards to the overall understanding of the merger success. Harrison, O’Neill and

Hoskisson (1999), propose that case research might lead to a grounded theory of

merger success. Bettis (1991), in an editorial essay, encourages more comparative

studies, multicultural studies. This paper focuses on CEMEX, a Mexican cement

manufacturing company that standardized its business processes into a scalable model

that allowed the company to grow without complexity. Its knowledge-intensive model has

been improved in every acquisition for the last decade. How transferable could be this

case study to propose a generic framework to map KM and assess intellectual capital, to

transfer best practices, applying experience during DD and PMI to close the gap

analysis with the right fit regarding organizational technology, customer relationships

and professional competences to get a competitive edge in the market?

Key words: Knowledge Management, Enterprise Integration, Intellectual Capital, and

Business Process Management.





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1. Introduction and KM related concepts

The value of knowledge and intellectual capital in international firms can be particularly

high because foreign markets often provide access to new ideas and stimuli than can be

subsequently applied in other countries (Solvell and Zander, 1995). Knowledge

Management (KM) has moved to CEOs’ agendas, where it is viewed as a strategic tool

in support of enterprise transformation for the new economy (Bresman et al., 1999). In

the United States, more than 90 percent of large private sector and 40 percent of federal

public sector enterprises have at least one KM initiative. Until recently, very few KM

programs outside of professional service firms were approached on an enterprise-scale

from the outset (Garner, 2005).

Knowledge (K) is defined as a justified belief that increases an entity's capacity for

effective action (Huber 1991; Nonaka 1994).

K is personalized information, the state of knowing and understanding, an object to be

stored and manipulated, the process of applying expertise, a condition of access to

information, and the potential to influence action.

KM focuses on exposing individuals to potentially useful information and facilitating

assimilation of information. KM involves enhancing individual's learning and

understanding through provision of information. KM focus is on K flows and the process

of creation, sharing, and distributing K. KM is organized access to and retrieval of

content. KM is about building core competencies and understanding strategic know-how.

KMS is an IT-based system built to support and leverage the creation, storage, retrieval,

transfer, and application of knowledge within the organization (Alavi and Leidner, 2001).

Three common applications were found: the coding and sharing of best practices; the

creation of corporate knowledge directories; and the creation of knowledge networks.



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The role of IT is (1) to provide access to source of K rather than knowledge itself, (2)

gathering, storing, and transferring K, (3) to provide link among sources of K to create

wider breadth and depth of K flows, (4) to provide effective search and retrieval

mechanisms for locating relevant information, and (5) to enhance intellectual capital by

supporting development of individual and organizational competencies.

In Table1 organizational knowledge is seen as an intangible asset, residing not only in

the minds of the employees, but as the core of the business processes, procedures,

systems, and organizational culture, shaping the way tangible assets are used to create

value (Lev and Zambon, 2003).

Table 1: Organizational knowledge takes many forms (Corrales and Garcia, 2005)

Internally, Knowledge of: Externally, Knowledge of:

• culture, history • strategic direction • organizations, partnerships, and other

formal relationships • communities of practice, communities

of interest, networks, and other informal relationships

• individual people • processes • products, services • systems, tools • patents, technologies • written and unwritten rules • where knowledge is located and how

to find or access knowledge? • how to use or apply KM? -- how to get

things done ? • how to succeed around here? • who knows what and how to access

him/her?

• customers, markets, and their needs, and activities in the marketplace: existing and potential

• competitors and our position relative to them: short term and strategically, overall and in specific markets and situations

• laws and regulations impacting the enterprise now or in the future

• emerging technologies and other trends of possible significance to the enterprise

• suppliers, partners: existing and potential

• investment market, sources of capital • other parts of the extended enterprise

-- owner, sister business units or companies in a larger corporation or holding company, subsidiaries

• global: countries, cultures, climates - political and geographical, economics, global locations of the enterprise operations and markets

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The enterprise integration is a platform to communicate and coordinate information

across global locations, and it is the ultimate desire of the corporate leader who seeks to

continue to grow globally, while at the same time maintaining access to and control over

day-to-day operations through effective communication and flow of information.

Continued expansion and wise decisions can only serve to guarantee that the industry

leader maintains its posture in the future. Enterprise integration is based on information,

functionality and integration, consolidation, adaptability and currency.

A business process is a set of logically related tasks performed to achieve a defined

business outcome (Davenport and Short, 1990). The business processes describe how

work is done by being recurrent (people carry this out often and in large numbers),

replicable (the process can be transferred to multiple contexts and is not unique to a

single company), consequential (has impacts on some aspect of company

performance), leverageable (base for further improvements in company performance)

and coordinated (coordination of tasks, people, information, and procedures)

(Davenport, 1993; Keen, 2004).

Business process management BPM is a broad term for (1) designing and sourcing

business process capabilities and (2) exploiting the opportunities of information

technology to leverage processes whose efficiency and effectiveness significantly

impact competitive, economic and organizational positioning (Keen, 2004).

Reduction of budgets and a stronger trend for governance to conform to common global

IT platforms are also important factors that will trigger cross-functional synergies. This

would be the next stage of evolution for KM in a manufacturing company.

In the current climate, the challenge in the paper is to make an effective case study for

a CEMEX, a Mexican cement manufacturing company, making explicit how effective the

company has been in its KM initiatives to manage, measure, report and leverage its



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intellectual capital (IC), mapping its business processes and speeding up the enterprise

integration after its acquisitions.

Globalization of markets and production have been a trigger for the Mexican

companyCEMEX to grow thru M&A and to get a better position in its markets to

overcome economic and politic instability with risk diversification in different geographies

with attractive and growing markets to optimize productive capacity, secure profitable

investments, predictable cash flows, competing in price and customer response for a

long term leading position in consolidated and mature markets.

As the consolidation of the manufacturing cement industry became a constant, the

integration of new subsidiaries in different locations worldwide, the service being offered

to thousands of customers around the globe, and the continuous operation of the

Mexican company to support business processes were major triggers for an innovative

business initiative that assured that each region in America, Europe, Africa and Asia was

taking control of the business operations to serve its customers as the day went by

standardizing processes, transferring knowledge, and creating intellectual assets as a

differential competitive advantage.

As competition in these industry intensified and the pace for technological change

accelerated, some Mexican firms like the one under studyCEMEX built cooperative

ventures in order to evolve and enhance its competitiveness, investing in research and

development projects for cost-effective product innovation, energy savings,

environmental efficiency programs, and forging synergies with external contributors for

access to knowledge and capabilities.

Culture is a system of knowledge and insights serving as basis for interpreting

experiences and generating actions. In Mergers and Acquisitions (M&A), knowledge

bases were combined with the expectation that the joint capabilities would derive



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benefits. Nevertheless, the knowledge transfer needed to be managed carefully to

maintain the intended synergies.

During M&As, knowledge sharing was the initial target, knowledge generation and the

application of knowledge became more important. Managing the target company’s

system of knowledge was crucial for IT planning, especially in case of M&A where two

different cultures were combined.

1.1. Increased International Scope of Companies and the Mexican Scenario for Mergers and Acquisitions

Within the last two decades, an increased amount of attention has been devoted to

studying international industries, initially, to determine whether or not they are distinct

competitive environments. Porter (1986) classified industries at the extreme as being

either “multi-domestic” or “global”. Multi-domestic industries are characterized by

competitive forces that are constrained structurally by country. In contrast, global

industries have been characterized as “a series of linked domestic industries” where

structural forces combine to produce a single competitive arena which transcends

national competitive environments.

Bartlett and Ghoshal (1989), in a more sophisticated taxonomy, classified industry

competitors as global (producing in the same geography), multinational (a portfolio of

nationals with the skills of detecting and satisfy local needs), and international (a group

of nationals with the skills of transferring knowledge and innovation).

The manufacturing industryCEMEX used to be multi-domestic until early 80’s, when a

race of consolidation took place. The switch from multi-domestic to global in the industry

placed the company in a competitive environment where strategic actions taken in one

country affect competitive situations in other countries. Thus, one critical dimension



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delineating international global industry types is the interdependency existing across

national borders.

Market interdependencies result when a competitor that internationally integrates

operations compels other competitors to respond in kind or risk a loss of

competitiveness (Porter, 1986). In the last decades, some of the most important moves

and countermoves have been mergers and acquisitions, with the main goal of reducing

the risk of losing competitiveness and in a more general approach, to create value.

Moreover, international market and competitive interdependencies result from a

combination of tangible and intangible asset flows. Tangible asset flows, as best

represented by intra-industry trade (Porter, 1986), involve the transfer or movement of

component parts and finished goods across national borders that are facilitated by a

number of factors, including homogeneous worldwide product demand, low tariff and

non-tariff barriers to trade, and production cost differentials between countries. In

general, the factors that facilitate trade are increasing because of the aggressive

globalization of markets that we are witnessing.

An essential aspect of KM is the process of knowledge transfer between business units.

While the transfer of knowledge between departments or between sister units in the

same country is far from trivial, it is clear that the problems associated with transfer will

increase with geographical and cultural distance. The value of knowledge transfer in

multi-domestic firms, such as the Mexican companyCEMEX, can be particularly high

because foreign markets often provide access to new ideas and stimuli that can be

subsequently applied in other countries (Hedlund, 1986; Bartlett and Ghoshal, 1989;

Solvell and Zander, 1995).

Multi-domestic transfer of knowledge between units may occur in a number of different

modes. At one end, transfer can occur under a hierarchical mode of governance

between two units of the same firm, and at the other end it can occur through a pure



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market transaction between two independent firms. Knowledge transfer can also occur

in hybrid modes of governance (Borys and Jemison, 1989), such as alliances, joint

ventures and licensing arrangements (Bresman, Birkinshaw and Nobel, 1999).

In the Mexican firmCEMEX, the KM Needs Declaration was made about 4 years ago. As

a direct result, a number of initiatives were implemented. These initiatives grew to

address specific functional needs within each area. For firms similar to this Mexican

companyCEMEX, which has a major proportion of its market value based on tangible

assets and operational competencies, a ‘grass roots’ approach or KM strategy is ideal.

This individual functional approach for addressing KM needs works well up to a point;

that is, until the organizational growth, functional interdependency and complexity

reaches a level where a institutional-wide framework that requires KM disciplines and

methodology is needed to align, integrate and standardize the manner of addressing the

business drivers. There are also significant cost and implementation time savings to be

gained from an integrated institutional KM framework.

2. Case Study Research Methodology and CEMEX, the Mexican Cement Manufacturing Company’s Roadmap: From KM to Value Creation

The phenomenon of M&A as the scenario in which a roadmap is presented to go from

core business process definition, mapping, knowledge transfer, knowledge management

and intellectual capital of acquisitions to the acquisition and profiting of knowledge and

intellectual capital (see Figure 1). Bettis (1991) encourages an in depth case study

research methodology to identify, analyze and understand particular situations. The

Case Study was based on corporate presentations as well as interviews with senior

project leaders, internal clients, and project champions. A variety of literature

perspectives have been considered to find relevant traits for the successful post-

acquisition process in the company, such as modes of acculturation, organizational

culture fit, cultural distances in nations, synergies creation, resourced-based

view/reservoirs of knowledge, memory system, competitive-positioning strategy and

international strategy.



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The Case Study addresses a long standing common concern about leveraging

manufacturing companies’ intellectual properties, structural assets and people know

how. Adding to the concern is the complexity of operating as global company with

customers, offices and operations in the world.



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Figure 1: Roadmap from Organizational Knowledge to Value Creation

Value Creation

~US$ 15MM

Organization

~US$ 45MM

Processes and practices

~US$ 100MM

Procurement Maintenance & qualityLogistics / SCM

In-house bankingReady MixCommercial

Internal control

Functions reduction- Integration

- Coordinated

Optimization of global resourcesImprovement in coordination and best practices sharing

Standard management modelCommercial systemOperations system

Optimized IT resources- Cost reduction for

maintenance, support and development

Value Creation

~US$ 15MM

Organization

~US$ 45MM

Processes and practices

~US$ 100MM

Procurement Maintenance & qualityLogistics / SCM

In-house bankingReady MixCommercial

Internal control

Functions reduction- Integration

- Coordinated

Optimization of global resourcesImprovement in coordination and best practices sharing

Standard management modelCommercial systemOperations system

Optimized IT resources- Cost reduction for

maintenance, support and development






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3. Process and Practices

The company under study, CEMEX, is inserted in a dynamic industry in complex

markets. It has launched initiatives to share its best ideas and management practices

and processes. According to the expert process group interviewed in the company,

before the standardization business process initiative, it was very seldom that successful

discoveries and practices in one part of the organization normally were transferred

easily, if at all, to other parts.

Because such standard practices had been embedded and hard to extract, contained in

practices, projects, processes, products, patents, and pieces of paper, and employees

frequently spend large amounts of time reinventing the wheel. The company loosed

productivity, generating redundant activities, processes, wastes.. Clearly, there were

enormous opportunities for improvement.

The Business Standardization Processes included: generating, organizing, developing

and distributing practices, know-how into process maps with updated content (see

Figure 2):

• Generating: identifying the desired content and getting people to contribute ideas,

either through on-line discussions or by submitting deliverables that have emerged

from other work.

• Organizing: information organized so that it can be represented and retrieved

electronically. Standardization sharing systems or tools, including standardization

bases, navigational devices, user interfaces, and taxonomies, must be designated to

facilitated this process.

• Development: the selection and refinement of material to increase its value for

users.

• Distributing: how people gain access to material, making it easy for people to find

what they are looking for, and encouraging the use and reuse of standard practices.

Both training and reward systems play important roles. Pull systems are less

desirable than targeted push systems that are sensitive to users’ interest and even



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their current work context, and proactively deliver material that would be helpful and

relevant.

Figure 2: Business Process Standardization in the Mexican CompanyCEMEX

Revise processes andpractices

Select best practices and redesign new ones if required

Map selected practices

Best practices

Increased central control

Shared services savings

Analyze implications of process changes

Map new organizationalstructure

Implement org. changes

Headcount reduction

Leaner organization

Clearer roles

Select common required systems

Adjust systems to country requirements

Implement systems

Common reports

Gives order to evolution

Visibility of operations

Dynamic Process Standardization Governance

Create Common Organization with Shared Services

Standardized IT, Process Architecture and Support







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In order to create, transfer and manage the business process knowledge, the company

identified, classify and deploy the following five KM activities:

• Creation: The activities that resulted in new knowledge.

• Capture: The activities that enabled capture and representation of tacit knowledge in

explicit form, thereby moving knowledge from the individual and making it available

across the enterprise.

• Organization of information: The activities that classify and categorize knowledge for

storage and retrieval purposes. The activities included maintenance of knowledge

data as well as the indices, maps and processes that managed it.

• Access: The activities through which knowledge was disseminated to or requested

by users.

• Use: The application of knowledge to work activities, decisions and opportunities.

Use was recursive (it generated feedback influencing other activities, and this

feedback was inserted into the KM process through the other four activities).

4. Organization

The Mexican manufacturing companyCEMEX was redesigned and restructured for profit

and growth, focusing in activating knowledge sharing, collaboration and innovation,

which were activities that occurred within the human processes and social structure of

the enterprise (see Figure 3). The organizations have traditionally operated within a




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cultural framework that encourages and rewards competition and individual

achievement. Employees performed their work and advanced their careers by keeping

their knowledge to themselves (for their own benefit) rather than sharing it with others.

KM demanded a shift to a culture where collaboration, knowledge sharing and team

achievement were valued equally with competition and individual achievement.



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Figure 3: Organizational Redesign in the Mexican companyCEMEX

The Mexican organizationCEMEX used four key business process design principles

(see Figure 4):

• Facilitating implementation of core business processes and systems to share best

practices.

• Leveraging economies of scale by sharing resources.

• Standardizing organizational structures where appropriate.

• Establishing clear accountability and governance.

Systems development

Process revision & redesign

1

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Principles for organization redesign

Facilitate implementation of processes and systems

• Sharing best practices

Leveraging economies of scale

• Sharing resources

Standardize organizational structures where appropriate

Establish clear accountability and governance

Principles for organization redesign

Facilitate implementation of processes and systems


Leveraging economies of scale

• Sharing resources

Standardize organizational structures where appropriate

Establish clear accountability and governance

Required An Organization Redesign

Organization redesign










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By analyzing all of Mexican CEMEXcompany’s global operations, the design of regional

and global processes and organization followed balanced criteria between flexible and

standard:

• Integrated, global, or regional shared services functions (IT, accounting,

procurement, finance, and audit functions). Regional functional leaders are in charge

of worldwide standardization and report directly to the CIO.

• Coordinated communication functions (legal, planning, trading, technology, and

human resources) with local differentiation that require standardized business

process.

• Local business operations functions (commercial, production, operations, and

logistics).




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Figure 4: Regional and Global Organization in Mexican companyCEMEX

4.1. Information Technology Structure

The IT structure for the company under studyCEMEX provided a referent that ensured a

well balanced IT investment decision, meeting all the important knowledge workers

needs from a KM tool or application perspective.

1. Local areas (business

organization)

2. Coordinatedareas (shared

services with local

differentiation)

Profit andgrowth

Top linegrowth

LocalEffectiveness

GlobalEffectiveness

3. Integrated areas

(regional or global shared

services)

Operations

Logistics

Commercial & Marketing

Ready Mix Concrete

Planning

Information Technology

HR

C&I

Regional/global organization

Finance & Treasury

Accounting & Taxes

LegalTrading

Technical

Procurement

Audit

MexicanCompany



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• First stage was to examine the business drivers defined using the strategy

imperatives. The user needs were analyzed and mapped in terms of three process

sub processes: knowledge creation, knowledge sharing and knowledge usage. The

final need was expressed via formal functional specification documentation.

• Second stage was to review and analyze the needs’ statements mapping these into

three basic technologies:

• Knowledge access and storage.

• People finders, expertise location, and improved collaboration.

• E-Learning.

• Third stage was the selection and implementation of the chosen solution. The

Mexican company has a very mature enterprise technology selection, evaluation,

purchasing, and implementation process.

The current KM technology portfolio managed by IT planning in the firm demonstrated

value creation from IT selection process, ensuring that the IT and KM technology

architecture was aligned to company’ strategies, as well as improving the IT budget and

resource management. IT group was structured for a central role in defining, deploying

and supporting process standardization, leveraging pre-existing process design

expertise and integrating IT and process user support (Figure 5).

Figure 5: IT Structure in CEMEXthe Mexican company

TECHNOLOGY

PEOPLE

PROCESS

ENTERPRISE

INFORMATION

SYSTEMS



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5. Value Creation

The institutional criteria for all IT (KM, BPM and Virtual Work Model) initiatives were

based in presenting a sound business case, showing the economic, pragmatic and

sustainable value for the process, organization and the community before getting the

final approval. in the Mexican company. CEMEX has four major elements derived in

following order:

• Common understanding and interpretation of the KM or BPM discipline and concepts

between all the actors connected with the program.

• Business value identification from IT programs. What were the current important

business drivers that KM or BPM could address? Once the critical drivers were

defined, the KM or BPM strategy were defined to best address these drivers, such as

information overload, ROI on KM, IC and competitive environment.

• Best approach or intervention solutions that will address the situation. Since market

value is largely composed of tangible assets and operational competencies. The

approach would be to have a corporate wide vision but focus initial implementation

on solutions that use IT to strengthen operational competencies or tangible asset

management.

• To measure the results of the IT initiatives. This last stage initiates the ongoing cycle

of assessing the impact of the company business drivers, adjusting the knowledge

strategy to attack the drivers, applying knowledge assets with robust applications and

measuring the value achieved.

5.1 Company Growth and Evolution

The Mexican companyCEMEX’s mission was to serve the global needs of its customers

and build value for its stakeholders by becoming the world’s most efficient and profitable

manufacturing company.


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This firm began global expansion in the 1980’s obtained operating efficiencies and

transfer of best practices program. In 2000, the Mexican companyCEMEX defined an

initiative to manage its knowledge base more efficiently, identify and disseminate best

practices, standardize business processes, implement key technologies, and foster

innovation.

Its acquisition strategy was to control the acquired organization, control the best

practices, and deploy an own management team. The strategy allowed leaders to

identify performance gaps, capture value, and implement best practices immediately

after acquisition. In contrast, the competitions’ acquisition model was to start with a

minority position and maintained it.

The Mexican companyCEMEX has been at the front of the consolidation trend. Better

cost positioning through scale and strategic benefits of a global presence drive

acquisitions. The firm launched an IT value management project to analyze the value

that IT could add to the operations organization. The organization realized that in order

to have common platforms and common systems, there is a need to have common

processes. IT did not define the processes. A solution was the creation of a new

governance model to manage business processes and business results, such as sales

and costs.

The benefits of the IT initiatives were:

• A standard blueprint for managing processes across the world in all operations,

• For use in all post merger and acquisition integrations, and

• A methodology that allows the organization to continually evolve, identify and adopt

best practices, and promote innovation.

Documentation of company’s CEMEX’s strategy was of utmost importance. Different

groups used a common template to document processes and stored them in a common

knowledge base repository. All employees used the intranet to access the knowledge

database that contained process documentation, policies, procedures, and process

maps. The Mexican company obtained three major benefits (see Figure 6):

• Resource optimization






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• Simple, efficient, and scalable processes

• Operation and IT costs reduction

– Avoid duplication of efforts by providing shareable services

• Sharing knowledge and improving control

• Improvements realized through flexible operations

• Facilitate quick adaptation of new practices and IT platforms

• New business processes governance model

– Authority to coordinate and collaborate global process innovations

– Alignment of HR, business processes, and IT functions

• Growth Facilitation

• PMI’s integrated to Company’s management model in less time and with less

effort

• Set the basis for bigger acquisitions (across countries).



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Figure 6: Value creation in Mexican company CEMEX

In summary, the Mexican firmCEMEX obtained a core set of best business practices

through KM with which company conducted its business throughout all of its locations

by:

• Standardizing key processes, practices, and operational systems,

• Redesigning the organization to support and take advantage of these new processes

and systems; and

• Creating the cultural transformation necessary to encourage speed, flexibility, and

innovation throughout company.

Its mission is to improve, streamline, and simplify company’s global operations. Three

months after implementing process improvement recommendations, the Mexican

manufacturing companyCEMEX realized improvements. Such enhancements enabled

the organization to improved customer performance, decreased operational costs,

improved the order fulfillment process, and increased ROI.

6. Acknowledgements

The author expresses her gratitude to the CEMEX’s executives form the manufacturing

Mexican conpnay who contributed with useful information to support her research case

study. Special thanks are offered to the personnel interviewed during a time span of 18

Past low level of standardization

Best practices not shared Mexican organization needed added flexibility to lower response time Poor benchmarking across businesses No global innovation process Duplication of processes, systems, and projects Better management of IT costs

Establishment of IC

Standard blueprint for processes across the world

• All countries to adopt it

Use for all PMIs Evolve continuously to adopt best practices and innovation

Creation of significant value for Mexican Company

From tangible results . . .• Cost reduction • More efficient

investments To more strategic benefits . . .


• Faster PMI • Flexibility

Will allow the Mexican company to grow faster while maintaining process excellence



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months. The sponsor (CEO), the owner (CIO), the leader (CKO), CFO, 12 Business

Process Directors, 8 Regional Directors, HR Manager, 12 Business Process Internal

Clients, a Project Coordinator, a Project Manager, a External Consultant,

7. Conclusions

In this particular study, a variety of literature perspectives has been considered to find

relevant traits for the successful post-acquisition process in the company under study.

The knowledge transferring activities have proved to be of great importance for the

Mexican companyCEMEX, transferring best practices, applied experience during DD

and PMI, organizational knowledge, organizational technology and professional

competencies. Being this acquisition of knowledge and intellectual capital so relevant to

the company’s acquisition process, and in general, important to lead in international

markets, it would not be very ambitious to extrapolate findings in this study to a larger

population of firms and industries that compete in a global context.

Competitive advantage is based, in part, on the competitive positioning of the business;

included, among others, low cost, service, and quality offerings. Yearly financial savings

have been classified as recurring and non-recurring (mainly qualitative benefits that are

hard to measures). Each year savings have been reported. Since the KM, BPM and IC

initiatives were implemented, the organization realized approximately $143 USD million

in savings. To continue the trend, the company will maintain its growth by acquisition

strategy.

Operational and Technical Process: Transferring of Best Practices. The operational and

technical organization consists of two groups that were responsible for sharing best

practices. The technical and engineering group were accountable for building new plants

and the operational expert group had the “know how” to operate manufacturing plants.

The operational and technical organization shared the same goal – to enable faster

integration of business processes, to improve practices, and to protect organizational

knowledge. The operational expert groups were highly specialized, global, and make

significant contributions to organizational knowledge.




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The organizational structure of the operations and technical group were very similar to

the company structure. A council was responsible for identifying and prioritizing best

practice projects. A technological disclosure team defined best practices to implement in

different domains and determine which practices were mandatory. Mandatory meant that

an e-Group had determined that a defined process will benefit the organization and had

documented the process. When a best practice was optional, that meant that a location

may not select or create an alternative plan of action. The company’s scorecard, a

tracking system, was used to track and to identify locations that have adopted standard

processes.

It was very important that all operating locations adopted best practices and used

standard processes. For example, a variation in quality implies cost for the end

customer. A slight change in a formula could equate to a disaster for customers.

Therefore, the company focused on having the same quality of product and service for

all locations and all customers. The philosophy helped its customer saved money and

avoided costly mistakes and contributed to operational efficiencies. Currently, all the

plants operate at a profitability level of at least 95 percent.

8. References

Alavi, Maryam, and Leidner, Dorothy E. (2001). “Review: Knowledge Management and

Knowledge Management Systems: Conceptual Foundations and Research Issues”.

MIS Quarterly, March, Vol. 25, No. 1, pp107-136.

Bartlett, C.A. and Ghoshal, S. (1989) Managing Across Borders: The Trasnational

Solution. Harvard Business School Press, Boston.

Bettis, Richard A. (1991) “Strategic Management and the Straightjacket: An Editorial

Essay”. Organization Science, August, Vol. 2, No.3, pp315-319.



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Bory, Bryans and Jemison, David B. (1989). “Hybrid Arrangements as Strategic

Alliances: Theoretical Issues in Organizational Combinations”. Academy of Management

Review, April, Vol. 14, No.2, pp234-249.

Bresman, Henrik; Birkinshaw, Julian; Nobel, Robert. (1999) “Knowledge Transfer in

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