Solution HBS Case Study Kent Chemical

Topics: Globalization, Chemical industry, Multinational corporation Pages: 16 (6196 words) Published: April 14, 2015

HBS Case Study Solution

Kent Chemical:
Organizing for International Growth

Table of Contents

1Initial Problems3
1.1Introduction & Problem Identification3
1.2Link of KCP’s Strategy to Porter’s Generic Strategies4 1.3A Suitable Vision for KCP and KCI5
1.4Kent’s Fundamental Organizational Challenge5
1.5Task Analysis and Role Assignment6
1.6Why These Problems Emerged Now and not Earlier in the 1990s6 2Unsuccessful Responses7
2.1Changes Morales Made7
2.1.1The GBD Concept7
2.1.2World Boards8
2.2General Options for Organizational Design of Kent Chemical8 2.3Could the GBD Concept Have Worked?9
3Sterling Partner’s Recommendations10
3.1New Management Challenges10
3.2What Kent got for $1.8 Million11
3.3Sterling’s Decision Matrix11
4Decision12
4.1Management of Processes within Kent Chemical12
4.2Financial Situation at Kent12
4.3Final Decision13

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...

References: Bartlett, C.A. / Winig, L. (2012).  Kent Chemical:  organizing for international growth.  Harvard Business School Brief Case, 4409 (February 23, 2012).  Boston:  Harvard Business School Publishing.
Daft, R.L. (2007). Organization theory and design. 9th ed. Masen, OH, South-Western Cengage Learning.
Gibbs, T. / Heywood, S. / Weiss, L. / Jost, G. (2012). Organizing for an emerging world. McKinsey Quarterly, (3), pp.81-91.
Porter, M.E. (1986). Changing patterns of international competition, California Management Review, Vol. 28 No. 2, pp. 9-40.
Porter, M.E. (1986). Competition in Global Industries. Boston, Massachusetts, Harvard Business School Press.
Pearce J.A. / Robinson R.B. (2009). Formulation, Implementation and Control of Competitive Strategy. 11th edition, Irwin, McGraw-Hill.
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