HBS Case Study Solution
Organizing for International Growth
Table of Contents
Introduction & Problem Identification
Link of KCP’s Strategy to Porter’s Generic Strategies
A Suitable Vision for KCP and KCI
Kent’s Fundamental Organizational Challenge
Task Analysis and Role Assignment
Why These Problems Emerged Now and not Earlier in the 1990s
Changes Morales Made
The GBD Concept
General Options for Organizational Design of Kent Chemical
Could the GBD Concept Have Worked?
Sterling Partner’s Recommendations
New Management Challenges
What Kent got for $1.8 Million
Sterling’s Decision Matrix
Management of Processes within Kent Chemical
Financial Situation at Kent
1 Initial Problems
1.1 Introduction & Problem Identification
This paper provides a sample analysis and solution to the fictive Harvard Business School case study on Kent Chemical Products (KCP), an 1917 founded Ohio-based global leading chemical company. KCP produces plastic additives and further specialty chemicals and atis America’s largest supplier in this sector with revenues of $2.2 billion in the year 2007 (Bartlett & Wining, 2012, p.1). The case is set in July 2008, about the time when the recent global recession had been looming. The company’s situation is considered from the perspective of Kent Chemical International’s (KCI, a KCP subsidiary comprising the international divisions) President Luis Morales, who is the major decision maker in the case. Other key decision makers are Kent Chemical Products CEO and Chairman Ben Fisher, his son and Vice Chairman Peter Fisher and the President of Kent Chemical U.S. Angela Perri. Throughout great parts of the 20th century, KCP’s operations and sales remained mainly focused on the United States. By the end of the century, in the year 1999, only 11% of KCP’s total revenues came through exports from outside the U.S., licensing agreements and minority Joint Ventures (JVs). From the year 1998, initiated by its newly appointed CEO Ben Fisher, the company began to pursue a more global strategy to stimulate further growth and thus wanted to become a company “[…] that develops, manufactures, and sells worldwide” (Bartlett & Winig, 2012, p. 3) by increasing its international alignment and global expansion ambitions. As a result of KCP’s new strategy, reinforced by the overall globalization tendency of the world economy, the company’s international sales as a proportion of total sales had climbed to 25% in 2007, where most progress in expanding international sales had been made until the year 2004. After Morales began implementing the global integration strategy by taking majority interests in KCP’s offshore JVs, acquiring further foreign companies and generally intensifying international manufacturing and sales, he was facing various problems. His most obvious problem was that KCP’s international sales and income and thus overall firm growth have plateaued, since KCP’s international business has been the main driver for its overall firm growth. However, since 2004 only little progress has been made in expanding international sales. The company has only grown moderately at a much lower rate in the recent years after 2004, profit margins have declined and KCP has even shrunken in terms of sales volume after 2006. The reason for the decline in Kent’s profitability in the recent years, especially between the years 2006 and 2007, is the sharp increase in manufacturing costs, while sales volume has increased only moderately. This is probably a first impact of the impending global recession that is an additional external problem Morales and his company are facing and that piles the pressure on him to find a fast and sustainable organizational solution to...
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