Pibrex Russia

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Victoria Management School

MMBA 558 International Business

Assignment 4: Managing Pibrex (A): New Crisis, Old Grievances

Student Name: Deane Nicholls
Student ID: 300 181 563
Course Coordinator: Val Lindsay
Due Date:Monday 11th April

Executive Summary:

Pibrex is one of the world’s largest developers of petrochemical polymers for the plastics market. The company has purchased a plant in Russia and after three years of serious operating losses it has appointed a new general manager of the plant. Then plant lacks a strong organisational culture; communications within and between departments are poor; there is inequity between in wages, working conditions and training and problems with motivation and employees is prevalent. Pibrex International is losing interest in the Russian operation and two sub-cultures exist within the Pibrex Russian organisation. The new General Manager, Elena Michasilova must develop an action plan that can turn the operations around to breakeven point by the year 2000 at minimal cost to the company.

This report outlines to Elena Michailova considers both the external environmental (Political, economicsocial and organisation factors affecting Pibrex Russia and analyses why the plants are underperforming in a difficult economic environment and outlines four different unique strategies retrenchment, price leadership, quality leadership and export orientation) makes recommendations that Elena Michailova can implement to overcome the numerous organizational and financial challenges that the company faces. It establishes a viable export orientate strategy and industry leading restructuring programme, called Challenge 2000 that Elena can quickly implement to overcome these challenges she faces managing Pibrex Russia at minimal cost to the company. Implementation of both will lead Pibrex back to profitability by the year 2000

This report illustrates what the management team has done to begin a turnaround of the firm and the problems that remain. In particular, the company must reassess its management strategies and take steps to masintain its competitive position

Introduction:

This report considers both the external environmental and organisation factors affecting Pibrex Russia and analyses why the plants are underperforming in a difficult economic environment and makes recommendations that Elena Michailova can implement to overcome the numerous organizational and financial challenges that the company faces. It establishes a viable strategy and industry leading restructuring programme, called Challenge 2000 that Elena can quickly implement to overcome these challenges at minimal cost to the company.

Background.

Pibrex is one of the world’s largest producers of petrochemical based polymers for the plastics market. The company has purchased a plant in Russia and after three years of serious operating losses and has appointed a new general manager of the plant. The plant lacks a strong organisational culture; communications within and between departments are poor; inequity in wages, working conditions, and training exist but motivation and retention problems are prevalent. Pibrex headquarters is losing interest in the Russian operation and two sub-cultures exist with Pibrex Russian organisation.

Two subcultures exist within the company because there is two separate manufacturing plants. The first plant is Pibrex KAZ, which is one the site of the original plant in Kalingrad. The other plant is the recently purchased (1993) Pibrex KZ plant which is just outside Moscow. In addition Pibrex opened a sales and marketing office in St Petersburg (called Pibrex AO) and a head office in the capital city of Moscow (called Pibrex Russia). In contrast to the two manufacturing facilities Pibrex AO and Pibrex Russia were staffed with people from Pibrex’s other overseas operations and enthusiastic young graduates such as Elena. In 1994 Pibrex KAZ, Pibrex...
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