Kent Chemical: Organizing for International Growth

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

20406080

100120140160180

Net Income ($mil-lions)

2004 2005 2006 20070

200400600800

10001200140016001800

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


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


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?ItemNumber=11779

Kent Chemical: Organizing for International Growth

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