1 Running head: ANALYSIS FOR KENT CHEMICAL

Case Analysis for Kent Chemical Product Sue Danke Sara Jacobs Connie Lane Siena Heights University

2 Running head: ANALYSIS FOR KENT CHEMICAL Kent Chemical Product (KCP) was established in 1917 in Kent, Ohio. One of the first products produced was rubber. As the years progressed, KCP branched into plastics and by 1940, they were the one of the countrys largest producers and marketers of plastic additives and other specialty chemicals (Bartlett and Winig, 2012, p. 1). In 1953, KCP opened a research laboratory to develop more products. By the early 2000s, the company had expanded globally and was a leader in the specialty-chemical division. In 2007, KCP held minority and majority stakes in more than two dozen businesses in the U.S. and overseasoperated 30 manufacturing facilities in 13 countries, and sold its products in almost 100 countries (Bartlett and Winig, 2012, p. 1). As the company continued to grow, the president of KCP, Luis Morales, was struggling with coordinating the international and domestic portion of the industries. Morales first issue was his company not being able to adjust to new systems, changing pressures and demands (Bartlett and Winig, 2012). The changing systems meant more people were able to see reports; the reports became transparent and were open to interpretation by different managers. Transparency as a strategic communications imperative has a huge role to play in ensuring that all stakeholders understand the impact and value of those intangibles (Binneman, 2011, p. 25). As more managers reviewed the reports, they would question the decisions of the country managers; who in the past were able to act without their actions being questioned. Country managers were being asked to work more as a team and less as independent factors, thus leading to Morales second issue. As the country managers were being asked to collaborate more as a team, they were resisting and trying to preserve the old ways by thinking, they were protecting their company. As the company grew, the more informal way of reporting gave way to technology and interacting with different people. Managers from different countries were not communicating effectively.

3 Running head: ANALYSIS FOR KENT CHEMICAL Managers were using tactics to force other companies to comply. Knowledge and skills in interacting with people of other cultures ensures a higher success rate when doing business internationally (Rai & Rai, 2009, p. 63). The third issue was the different companies were not thinking how changes made at one facility might affect facilities in other regions of the world. Lack of communication between the divisions was causing problems for the company. Information was not being shared to the correct departments, so issues were not being resolved. With the information gap threatening Kents global vision, CEO Ben Fisher embarked on a new idea for reorganization. Kent was experiencing the growth pains of a company venturing into the global market place. De Kluyver (2010) states, industries and companies tend to globalization in stages, and at each stage, there are different opportunities for, and challenges associated with, creating value (p.41). Fishers response to the companies dilemma was to unite a president for U.S. businesses and a vice chairman for the international activities (Bartlett & Winig, 2012). Luis Morales, the President of Kent Chemical, was hinging his hope that this announcement would create a better working atmosphere between the domestic and the international sectors. Morales was not able to solely participate in problem solving between both divisions because of the rapid growth. Morales argued, the regional directors should have provided the extra link with the domestic division. But they never had the status or power of product division manager, who were all KCP vice presidents (as cited in Bartlett & Winig, 2012, p. 5). Morales took action and came up with a solution. Relying on the previously stellar careers of three individuals from other companies, he created the global business directors

4 Running head: ANALYSIS FOR KENT CHEMICAL (GBD). These newly designed sectors included up to six team members to help with work. Although completely unproven, this brave group set out to carve out their responsibilities and lay tackle their main concerns (Bartlett & Winig, 2012). The first director headed up the consumer-product division. His background was that of a small-scale joint venture, but apparently did not have experience in global ventures. He saw his directive to understand why the product Grease-B-Gone had done poorly overseas and try to correct the problem (Bartlett & Winig, 2012). The next director did have experience in global commerce. He headed up the fire protection products and saw his responsibilities as nurturing the global technology and marketing. The final director managed the medical plastics division. Her concern was that the group should blend both the overseas activities and the local sales for a more cohesive result (Bartlett & Winig, 2012). Setting up the Global Business Division seemed like a logical response to a serious gap in communication. In hindsight, though, perhaps a better idea would have been to incorporate directors that were strong in global growth. Farrell cites industries and companies both tend to globalize in stages, and at each stage, there are different opportunities for and challenges associated with each (as cited in Kluyver, 2010, p.23). It seems to be that Kent Chemical followed through with stage one and two, skipped the third and fourth stages of globalization, and jumped right into stage five (DeKluyver, 2010). With each stage providing opportunity to create value, skipping a stage may indicate value loss. In stage three, KCP did not streamline production, so to positively affect each global entity. Instead, nobody was coordinating price, product, or sourcing decisions globally (Bartlett & Winig, 2012, p. 4).

5 Running head: ANALYSIS FOR KENT CHEMICAL In the fourth stage, companies seek to further increase their cost savings by reengineering their processes to suit local market conditions (DeKluyver, 2010, p. 24). It doesn't appear that KCP set up their companies in researched regions. Nor did they coordinate efforts and have open lines of communication between subsidiaries, or place managers appropriately. It soon became clear that most of the regional staff simply lacked the market knowledge and detailed expertise to counter the countries subsidiaries' strong pushback (Bartlett & Winig, 2012, p. 3). Kent Chemical should take a step back, research, and align efforts of subsidiaries where market is best. They should put some R&D into figuring out where each product can most efficiently be manufactured to increase profits. Global subsidiaries of a business should never compete or become a barrier to profit. The restructuring was a good start within the company, as previously, Luis Moralez, was overwhelmed as the President of the International Division. However, the restructuring was not communicated properly to each division. KCP was willing to give up some control, but not enough to make each subsidiary independent. Decentralization of a business allows each branch to operate independently of each other, creating value for the overall business. Decentralizing will allow subsidiaries to align goals, taking advantage of team strategies, netting more profit than before. As stated by DeKluyver (2010), government globalization drivers effect elements of a global strategy and are important factors in the competitive environment. Leaders need to know the ins and outs of these drivers relative to their location. In the time it takes to get approval from home base, policies and regulations could change, forcing the company to lose an omportant opportunity. Subsidiaries need to have the freedom to make decisions that will add value to their business on a daily basis.

6 Running head: ANALYSIS FOR KENT CHEMICAL Decentralizing can alleviate pressure from the top down, and if done right, can create more value. In conclusion, Kent found out that to gain a more unified strategy a new approach was necessary. The success of the company really boiled down to weather or not growth in international markets would take place. Fisher stated we need an organizational solution that empowers rather than subjugates our international presence (p.7). Perri, Morales and Fisher did something that, in hindsight, probably should have been done in the first placethey hired an international consultant. Management consultants do not come cheap, but the situation was dire, and in all fairness, Kents senior managers did what they could to try and fix the problem themselves. In a sort of decision matrix (p. 8) the recommendation was to handle each division by themselves followed up by an overall discussion about the result. The plan was favorable among some of the manager, but others remained skeptical. The point is, there is always an element of risk in organizing for international growth, and sometimes it takes nerves of steel, in spite of all the research and planning that a company engages. In the end, Morales was left with the task of convincing the company to put the plan into effect for the good of the company, and creating increased value for the stakeholderhoping that his strategy was the right one.

7 Running head: ANALYSIS FOR KENT CHEMICAL References Bartlett, C.A., & Winig, L. (2012). Kent chemical: Organizing for international growth. Harvard Business Press, pp. 1-34. Binneman, D. (2011). The Transparent Organization. Internal Auditor, 68(3), 24-25. Retrieved from http://dl2af5jf3e.search.serialssolutions.com/?ctx_ver=Z39.882004&ctx_enc=info%3Aofi%2Fenc%3AUTF8&rfr_id=info:sid/summon.serialssolutions.com&rft_val_fmt=info:ofi/fmt:kev:mtx:journ al&rft.genre=article&rft.atitle=The+Transparent+Organization&rft.jtitle=The+Internal+ Auditor&rft.au=Deon+Binneman&rft.date=2011-0601&rft.pub=Institute+of+Internal+Auditors%2C+Incorporated&rft.issn=00205745&rft.volume=68&rft.issue=3&rft.spage=24&rft.externalDocID=2927240611 DeKluyer, C.A. (2010). The globalization of companies and industries. Fundamentals of global strategy: A business model approach. Business Expert Press. pp. 23-42. Rai, U., & Rai, S.M. (2009). Managerial Communication. Global Media, Mumbai, IND.