Introduction to Case Analysis-kent Chemicals

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MELBOURNE, Australia - July 10, 2014 - PRLog -- CASE ANALYSIS- KENT CHEMICALS

INTRODUCTION


Kent Chemical was founded in USA in the year 1917 as a rubber producing company. Fisher family owned 10% of the stock and was one of the largest shareholders. The company had 2 major divisions – namely Kent Chemical International (KCI) and Kent Chemical Products (KCP) and 3 core business lines were identified for Kent Chemicals - consumer products, fire protection products and medical plastic in domestic and global market. Kent Chemicals grew gradually and began enjoying excellent sales of their products in regions other than USA. Hence the president realized that the organizational re-structuring was required to control all the regions from the US Headquarters. For many years, Kent’s overseas operations was regarded as a source of incremental sales through exports, licensing agreements, and minority joint ventures (JVs). But, this view changed in 1998, when Ben Fisher, KCP’s newly appointed CEO, announced that a more focused strategic approach to global expansion would be his top priority: According to the Harvard Business Review (2012) Ben Fisher, KCPs CEO had said “Our goal is to remake Kent from a U.S. company dabbling in international markets to one that develops, manufactures, and sells worldwide.”

PROBLEM

Kent Chemicals was very successful in the beginning, but it was encountering some challenges due to the speedy growth of the business in regions other than the US headquarters.

1. As the international business grew, the company president Morales realized that his company could not manage changing pressures and demands.
2. Secondly, Morales was worried about the "self-protection" of the overseas subsidiaries'          managers as they had a long history of independent operations and had not experienced        centralized operations.

3.    Thirdly, Morales was concerned that the regional organizations (branch locations overseas) who could not deal with the coordinating issues of global implications.

Finally Morales, the President embarked on a “Restructuring” programme for Kent Chemicals. The program basically had the following issues to tackle:-

1.      The new system implemented by Kent Chemicals forced people to follow common          procedure in financial reports, target setting, capital allocation etc.

B) Solution by World Boards and its failure:-

Subsequent to the worst lessons learnt by Kent Chemicals from the GBD’s flaws, they established the World Boards to support GBDs to learn the local knowledge. The World Board (WB) included experts from local branches. However, due to the adverse image developed by the locals for GBDs, the local managers at Kent Chemicals were quite hesitant to suggest ideas to the WBs.


FINAL SOLUTION - In next year of that failure, Kent Chemicals decided to employ a consultant because it was vital to strengthen the organizational structure. Solutions given by Sterling Partners (Kent’s Consultants) -As the business of Kent Chemicals had serious management issues and was displaying low performance, their consulting firm, Sterling Partners analyzed the scenario and launched a reorganization programme. In the programme, a matrix organization was setup to realign communication effortlessly and efficiently, and would blend global instructions and local requirement together. Another major change they embarked on was the operation area of each business line would change. For instance, the consumer products division had run their business based on customer needs; as Kent Chemicals had to conform to fire protection laws of each country of operation, hence the fire  protection products were localized, and the lastly the medical plastic division would be managed by merging global and local operations since their main clients were multinational companies which were able to supply the products globally.

All these restructuring and reorganizing still could not contain the most pressing and challenging issue faced by the company – Control of the Global Headquarters on the branch locations.

CONCLUSION

The consultants analyzed that KCI's main problem was caused by their structure and strategy like a small company. They gave three advises to strategize:-

1. KCI should introduce - local and regional administration,

2. medical plastics business should be coordinated globally, and

ANALSIS, SUGGESTED SOLUTIONS and CONCLUSION

9.      De Kluyer’s Five stages of Globalization.

10.  Value Creation and Corporate Global Success.

References

Barlett C.A.  & Wing. L. (2012), Kent Chemical: Organizing for International Growth. Retrieved from Harvard Business School Brief Cases. Retrieved from http:\\hbr.org/product/kent-chemical-organizing-for.../an/4409-PDF-ENG.

Cusac, J. Estes. M, & Khan, R (2013), Kent Chemical. Siena Heights University. Retrieved from http://www.sienaheights.edu/‎.

Porter , M.I. (2008). The Five Competitive Forces that Shapes Strategy. The Harvard Business Review. Retrieved from http://hbr.org/2008/01/the-five-competitive-forces-that-s....

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