Kranworth Chair Corporation produced a range of high-quality, trendy yet portable folding chairs. The company was protected by patents and had been enjoying sales growth. However, the company started experiencing changes in the environment, such as expiration of patents, having more competitors and even worldwide recession in the 2000s, resulting to a drop in profits.
Kevin Wentworth, CEO and co-founder of KCC, decided to change their strategy from increasing quantity of sales to improving quality of sales. In order to do, he wanted to develop stronger customer focus. He implemented the strategy through changing the organization structure from centralization to divisionalization. From this new structure, he expected to achieve a better understanding of customers, reduction in SKUs as well as enhanced efficiency and asset utilization. Unfortunately, KCC’s early experience with the new structure created additional problems.
Decentralizing the structure was supposed to empower division managers and allow division managers sufficient autonomy in decision-making essential to the achievement of overall goal. However, Kevin seems to disagree with most of the decisions the managers have made. For instances, Customs Division manager, Ed, wanted to reduce costs by purchasing a new machine however Kevin thought that the real issue with his division was with the turnaround time. Another example was when Retail Division manager, Joe, wanted to aggressively advertise retail however the issue lies in the product placement in retail chains. There were also problems in relationship between functional and divisional structure. Joe was complaining about the late deliveries, missed sales and product returns that he believed were caused by vendor problems under the Supply Chain and Quality. The solution to this problem is to have more communication with the employees of the company. Kevin should convey his overall goal to the company and explain the sudden shift of focus from...
Please join StudyMode to read the full document