Kent Chemical: Organizing for International Growth

Kent Chemical: Organizing for International Growth

Kent Chemical: Organizing for International Growth 1 TEAM 1 LDR 660 WI-II 2013 B E T H A N Y H A L L , C A S S I E B E Z E A U, VICKIE DELANEY Delaney Company Overview 2 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 1953 Locations: 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 Company Overview 3 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, etc Customers: Construction, electronics, medical, and consumer industries Bezeau, Delaney & Hall Kent Chemical Organizational Chart

2006 Additionally- World Boards function to help plan, review and communicate but not to manage. Delaney 4 Financial Snapshot 5 Net Income ($millions) 180 1800 160 1600 140 1400 120 1200

100 1000 80 800 60 600 40 400 20 200 0 2004 2005 2006 2007 Bezeau 0 Costs

($ millions) Cost of Sales SG&A R&D 2004 2005 2006 2007 What are the issues/ problems? 6 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 Bezeau, Delaney & Hall Previous Solutions Attempted 7

2 attempts at reorganizations 2006 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 Bezeau Strengths Internal and External 8 Internal External

Strong R&D Have made valuable patented products Fast growing Global presence Implemented expansion over time international operations Large growth from 11% to 27% of revenue Strong leaders: Morales and Perri Morales- created communication that worked until growth Bezeau, Delaney & Hall Weaknesses Internal and External 9

Internal External Entrepreneurial Weak economy- Independence: Subsidiaries compete with one another, they export into each others markets instead of working together to compete No trust between countriesquestion 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 Bezeau, Delaney & Hall globally and expected to shift downward Not adapting to changing pressures and demands Opportunities Internal and External 10 Internal External Empower employees Change culture to give employees more input(Schein, 2010) Include employees in meetings and decisions(Dubrin, 2010) Reduction in production Grow client base Look for new

opportunities Growth in medical industry-currently accounts for 35% of global revenue costs Cut un-necessary practices Duplication of processesconsolidate Bezeau, Delaney & Hall Threats Internal and External 11 Internal External Breakdown in Intense price competition Fire protection products Need to decrease production costs

Global recession predicted overall corporate strategy Lack of strong leadership Lack of direction Lack of communication Lack of current mission, vision, values Bezeau, Delaney & Hall 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 Final plan and why we picked it 12 Org chart-(see next slide) Simplify leadership Define Leadership roles Eliminate GBDs Put leaders in non-US locations Concentrate 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 on better communication 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 Bezeau.

13 Dunning, J. & Hedlund,G. (1993) How it will be implemented 14 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 Bezeau, Delaney & Hall How can the company evaluate the

strategy? 15 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 Bezeau, Delaney & Hall References 16 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+c ompany&ots=FnDg91meCr&sig=i9llNFHrw5Bgx9E9v4Rw2DqX9 D0#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 p. 12. Boston, MA: Harvard Business School Press. Bezeau, Delaney & Hall Your Business, References 17 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 to the art of strategy. Harvard Business http://sienaonline.org/re Review. September). Bringing science Retrieved from:

Massood, N. & Benson, H. (2005). Organizational change management and global sourcing- a winning combination. Retrieved from: http://www.infosys.com/global-sourcing/whitepapers/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: 79 http://www.asaecenter.org/Resources/EUArticle.cfm?ItemNumber=117 Bezeau, Delaney & Hall

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