Engro Case Study

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ASIAN JOURNAL OF MANAGEMENT CASES, 7(2), 2010: 135–155 SAGE PUBLICATIONS LOS ANGELES/LONDON/NEW DELHI/SINGAPORE/WASHINGTON DC DOI: 10.1177/097282011000700204

ENGRO CHEMICAL PAKISTAN LIMITED—RESTRUCTURING THE MARKETING DIVISION Anwar Khurshid Muddassir Shafique Chaudary
This case describes the restructuring initiative undertaken to change the forty-yearold structure of the marketing division into a more flexible and rewarding set-up. Towards the beginning of 2008, Khalid Mir, General Manager, Marketing, at Engro Chemical, realized that significant changes were needed in order to address major issues the company was facing in terms of employee turnover, poor inventory control, low market development and sub-optimal merchandizing efforts in its original marketing structure. In March 2008, Engro Chemical Pakistan Limited (ECPL) undertook the restructuring of its marketing division. As Mir progressed through the planning and implementation of the new structure and related changes, he came across several challenges and issues emanating from this change effort. At the end of the case, Mir is contemplating his next steps. How successful had the restructuring effort been? Should he fine-tune the new structure or was another round of restructuring imperative? How could Engro reap maximum benefits out of this newly implemented structure? What lessons could be learnt regarding change management that might be helpful in future restructuring efforts? These questions still remained to be answered. Keywords: Change management, organizational restructuring, organizational design, Human Resource Management

This case was written by Anwar Khurshid, Professor at Lahore University of Management Sciences (LUMS), and Muddassir Shafique Chaudary to serve as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Research assistance was provided by Mehwish Ibrahim and Salman Humayoun.

ASIAN JOURNAL OF MANAGEMENT CASES, 7(2), 2010: 135–155

PREFACE
In November 2008, Khalid Mir, General Manager, Marketing, at Engro Chemical, a fertilizer company in Pakistan, was looking at the results of an internal survey to ascertain how well the newly implemented sales structure was functioning. The company had undertaken a restructuring of the marketing division to retain mid-level employees and to become more customer focused. Feedback from multiple sources about the new structure had flagged a number of issues, which included (a) the need for development of new competencies and further revision of standard operating procedures (SOP) to prepare employees to handle changes in their tasks; (b) the fear and anxiety of employees losing their authority and power; (c) the confusion resulting from new reporting relationships, especially relating to the support functions; (d) the Tier IV Syndrome, which referred to the uncertainty and dissatisfaction amongst Tier IV officers regarding their upward mobility; and (e) the lack of coordination with other divisions of the company about the restructuring of the marketing division. Now, Mir was contemplating his next steps. Should he fine-tune the new structure or was another round of restructuring imperative? What other steps were essential to realize the full potential of the marketing division?

COMPANY BACKGROUND
Engro Chemical Pakistan Limited was established in 1965 under the name Esso Chemical Pakistan Limited, which was later changed to Exxon Chemical Pakistan Limited in 1978 and eventually, Engro Chemical Pakistan Limited (ECPL) in 1991 when Exxon divested its fertilizer business worldwide (Exhibit 1 details Engro’s historic timeline).1 ECPL was a major competitor in Pakistan’s fertilizer market and the second largest producer of urea in Pakistan with a total production capacity of 975,000 tonnes per annum; approximately 19 per cent of the total domestic production capacity. It was also a market leader in blended fertilizers (nitrogen [N],...
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