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Kent Chemical: Organizing for International Growth

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on 13 December 2013

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Transcript of Kent Chemical: Organizing for International Growth

Kent Chemical: Organizing for International Growth

Company Background
Established in 1917- rubber production
Expansion into producing plastic additives, fire protection products, and medical plastics
Founding Fisher family still owned 10%of stocks
International Expansion Strategy
Problems and Issues
Evaluation of Organizational Changes
Becoming a majority shareholder
New Corporate Reporting System
Negative effect between offices
Capital Request Forms
No change in the structures of Subsidiaries, only financial consolidation
Mari-Liis Laiverik
Kyle Rydalch
BUS 455 Case Study

Products
Consumer products: Grease-B-Gone
Fire Protection Products
Medical Plastics

Exports
Licensing Agreements
Minority Joint Ventures
Kent Chemical International
Change in 1998:
"Out goal is to remake Kent from a U.S. company dabbling in international markets to one that develops, manufactures, and sells worldwide."
Global Business Directors (GBDs)
Three GBDs for the main business lines
The roles of GBDs were not well defined
Each had different understandings of their role
No enthusiasm and cooperation shown with the reorganization
“GDBs lacked the credibility and power to get things done”
Introduction of World Boards
Composed of managers from domestic and international organizations
Geographic, product, and functional expertise all represented
Responsible for developing strategies for global business
Reasons for failure:
Hesitation from managers
"Too big to succeed"
Lack of Unity
Reasons for Failure
No clear strategy
Lack of unity
Only financial consolidation
Inequality between organizations
Home-office just wanting to "control"
Sharing information, but not sharing knowledge
No identification of common areas
Recommendations
Sterling Partners
Morales
Fisher
Difficult times, both due to the economy and failed previous attempts of reorganization
Right step hiring outside consultants
Neutral party
Need to understand the core strategy of the company
Sit down with the heads of each subsidiary in order to find common ground
See their strategies and goals
Change in the corporate culture
Depending on Morales' recommendations
If plan is well-defined --> YES
Change needed as the company is not functioning under the current circumstances
New unification plan
Integration attempt: what does it achieve?
Strategic Issues: Competing subsidiaries, corporate targets out of touch, no overarching strategy
Structural Issues: Capital allocation, strenuous reporting systems, geographic/product issues (ex: UK product expansion blocked by US)
Deeper Problems
Regional management was ineffective and provided few benefits for subsidiaries
Many leaders with US-based experience only or a primary focus on the domestic branch
GBD functions ill-defined & undervalued
Conflicted management
Corporate culture seems ethnocentric
Neutral third party analysis
Correctly identified that strategies need to be adapted based on market needs
Attempted to clearly define decision-making responsibilities using a decision matrix
Decision Matrix
(+) Breaks down each party’s responsibilities and contributions to the decision making process

(-) Complexity, doesn’t explicitly highlight need for collaboration, fundamental issues remain
Full transcript