TEAM 1LDR 660 WI-II 2013
BETHANY HALL, CASSIE BEZEAU, VICKIE DELANEY
Delaney
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Kent Chemical: Organizing for International Growth
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Company Overview
History: Established in 1917 as a rubber producer During 1940s expanded into plastics to become one of the
largest producers and marketers of plastic additives and other specialty chemicals
Opened research lab in 1953Locations:
Holds minority & majority stakes in more than 2 dozen businesses
4200 employees (1200 offshore) 30 manufacturing facilities in 13 countries Sells products in almost 100 countries 6 business divisions (3 with significant international sales)
Bezeau, Delaney
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Company Overview
Products: Grease-B-Gone: 1966-leading de-greaser in U.S. Fire Protection Products: 1950s-fire retardants for
electronics, building, and transport industries Medical plastics:1960s-containers, IV bags, surgical
instruments, etcCustomers: Construction, electronics,
medical, and consumer industries
Bezeau, Delaney & Hall
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Additionally- World Boards function to help plan, review and communicate but not to manage.
Kent Chemical Organizational Chart 2006
Delaney
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Financial Snapshot
Bezeau
2004 2005 2006 20070
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Net Income ($mil-lions)
2004 2005 2006 20070
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Costs ($ millions)
Cost of Sales
SG&A
R&D
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What are the issues/ problems?
What do we want to do? Need to fix the strained relationships between the US and international
offices/plants. Issues between science division and international markets. Nobody is coordinating price, product, or sourcing decisions globally. No communication from the top-down, or between global locations Leadership is not asking the right people for input Domestic growth has reached a plateau so international markets need to
grow. Sales have not fallen, but net income has. Cost cutting measures?
Where do we want to go and why? Communication- needs improvement, international office need more
autonomy Need to cut costs, increase income, coordinate pricing Domestic products, growth need to be re-evaluated Do SWOT evaluation to determine what we have
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Previous Solutions Attempted
Bezeau
2 attempts at reorganizations2006 appointed Global Business Directors (GBD)
Responsible for 3 lines of business in KCI: Consumer Products Division, Fire Protection Products, Medical Plastics
Assembled staff of 3-6 product/project managers New roles were not well defined
2007 adopted World Boards Composed of domestic and international managers Included people with geographic, product, & functional
expertise Responsible for developing strategies for global business
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Internal External
Strong R&D Have made valuable
patented productsFast growing
international operations Large growth from 11% to
27% of revenueStrong leaders: Morales
and Perri Morales- created
communication that worked until growth
Global presence Implemented
expansion over time
StrengthsInternal and External
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Internal External
Entrepreneurial Independence: Subsidiaries compete with one
another, they export into each other’s markets instead of working together to compete
No trust between countries-question what each is doing
Poor communication No collaboration between
countries, or between leaders and staff
No communication about the direction the company wants to go
Weak economy- globally and expected to shift downward
Not adapting to changing pressures and demands
WeaknessesInternal and External
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Internal External
Empower employees Change culture to give
employees more input(Schein, 2010)
Include employees in meetings and decisions(Dubrin, 2010)
Reduction in production costs Cut un-necessary practices Duplication of processes-
consolidate
Grow client base Look for new
opportunities Growth in medical
industry-currently accounts for 35% of global revenue
OpportunitiesInternal and External
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Internal External
Breakdown in overall corporate strategy Lack of strong
leadership Lack of direction Lack of communication Lack of current
mission, vision, values
Intense price competition Fire protection products Need to decrease production
costsGlobal recession predicted
Already KCPs net income has seen a dramatic decrease from 2006 to 2007 and worse was projected for 2008
#3 competitor in world wide fire retardants Pressure from global and local
companies
ThreatsInternal and External
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Final plan and why we picked it
Org chart-(see next slide) Simplify leadership Define Leadership roles Eliminate GBDs Put leaders in non-US locations
Concentrate on better communication Planning session including key people from all departments and all countries to determine
important issues and solutions IT department upgrades: improve channels for improved communication, e-mail, online
meetings, Skype, etc. Monthly meetings: these meeting should include managers from all regions to keep lines of
communication open Cost reduction
Halt duplication of processes in multiple countries Semi-globalization
Decentralize functions including pricing, marketing, product aesthetics Centralize functions that can be standardized (i.e. accounting)
Growth International markets – medical plastics division
Bezeau, Delaney & Hall
13Bezeau. Dunning, J. & Hedlund,G.(1993)
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How it will be implemented
Buy-in from the employees is key to success. A planning session would solicit input from people in
different departments as well as different countries Be consistent with behaviors and messages and have open
communication (Harvard Business School, 2005)
Regional Directors are to be relocated to their respective country instead of managing from Kent, OH
Up grade IT structure Use of consultants to facilitate monthly meetings
Focus on communication Focus on international growth
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How can the company evaluate the strategy?
Constant communication among top level and middle level management to determine progress
Market response: if functions like pricing and marketing are decentralized, was there an increase in the respective markets
Costs: company should see decrease in costs due to improvements of efficiency and centralizing specific functions
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References
Dubrin, A. (2010). Leadership: research findings, practice and skills. Mason, OH: Cengage Learning.
Dunning, J. & Hedlund, G. (1993). Organization of transnational corporations. New York, NY: Routledge. Retrieved from: http://books.google.com/books?hl=en&lr=&id=hbSzv5HVYLoC&oi=fnd&pg=PA69&dq=organizational+chart+of+international+company&ots=FnDg91meCr&sig=i9llNFHrw5Bgx9E9v4Rw2DqX9D0#v=onepage&q=organizational%20chart%20of%20internatio nal%20company&f=false
Harvard Business Press. (2005). The people side of implementation. Strategy: Create and Implement the Best Strategy for Your Business, p. 12. Boston, MA: Harvard Business School Press.
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References
Bezeau, Delaney & Hall
Kuyvenhoven, R. & Buss, W. (nd). A normative view of the role of middle manaagement in the implementation of strategic change. Journal of Management and Marketing Research. Retrieved from http://www.aabri.com/manuscripts/11809.pdf
Lafley,A.G., Martin,R.L., Rivkin, J.W., & Siggelow, N.(2012 September). Bringing science to the art of strategy. Harvard Business Review. Retrieved from:
http://sienaonline.org/re
Massood, N. & Benson, H. (2005). Organizational change management and global sourcing- a winning combination. Retrieved from: http://www.infosys.com/global-sourcing/white- papers/Documents/OCM.pdf
Wheelen, T.L. & Hunger, J.D. (2009). Basic concepts of strategic management. Powerpoint. Prentice Hall, Inc. Retrieved from: http://sienaonline.org/re
Worth, Steven. (2003). International growth: A look at four options. Executive Update. Retrieved from: http://www.asaecenter.org/Resources/EUArticle.cfm?
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