Kent Chemical: Organizing for International Growth

1. Kent Chemical: Organizing for International Growth Team 1 LDR 660 WI-II 2013 Bethany Hall, Cassie Bezeau, Vickie Delaney Delaney

2. 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 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

3. 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, etc • Customers: Construction, electronics, medical, and consumer industries Bezeau, Delaney & Hall

4. Kent Chemical Organizational Chart 2006 Additionally- World Boards function to help plan, review and communicate but not to manage. Delaney

5. Financial Snapshot Bezeau

6. 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 Bezeau, Delaney & Hall

7. Previous Solutions Attempted • 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

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

9. WeaknessesInternal and External 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 Bezeau, Delaney & Hall

10. OpportunitiesInternal and External 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 Bezeau, Delaney & Hall

11. ThreatsInternal and External 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 costs • Global 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 Bezeau, Delaney & Hall

12. 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

13. Dunning, J. & Hedlund,G.(1993) Bezeau.

14. 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 Bezeau, Delaney & Hall

15. 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 Bezeau, Delaney & Hall

16. 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=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 Your Business, p. 12. Boston, MA: Harvard Business School Press. Bezeau, Delaney & Hall

17. 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=117 79 Bezeau, Delaney & Hall