Kent Chemical: Organizing for International Growth

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Kent Chemical: Organizing for International Growth


Kent Chemical was established in the year 1917 in the United States of America as a corporation that was involved in the production of rubber. The Fisher family was one of the largest shareholders and owned the firm’s 10 percent of the total stock. There were two major divisions in the company namely Kent Chemical International known as KCI and Kent Chemical Products known as KCP (Geiger &Pécoud, 2013).

The other three business core lines identified for Kent Chemicals were the products for consumers, products for fire protection, and medical plastic products in the domestic and global markets (Bartlett &Ghoshal, 2014). Gradual growth was found in Kent Chemicals where it started to enjoy the sales of the product excellently in various regions other than the United States of America. Therefore, the president understood that restructuring of the organization was required for controlling the regions from the headquarters located in America.

For most of the years, the overseas operations of Kent had been regarded as the source for the increase in sales with the help of exports, majority joint ventures, and licensing agreements. This view changed in the year 1988 when the new CEO Ben Fisher was appointed for KCP. A more strategic approach was announced by him for its expansion on a global scale as his premium priority (Becker & El-Said, 2013). According to the review of Harvard Business (2012), the CEO of KCP Ben Fisher stated that their goal was to reshape Kent’s firm since the US company was operating in the international market for developing, manufacturing, and selling globally.

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Problems by Luis Morales

In the beginning, Kent Chemicals was highly successful, but later it started to encounter some challenges because of the fast growth of the business in various regions other than headquarters that is in the United States of America (Bothello & Jelic, 2015).

The main problems that appeared in front of the president of KCI, Luis Morales as he began implementing Ben Fisher’s international expansion strategy were as follows:

  • Since the global functioning of Kent’s international business was increasing at a large scale, Luis Morales the president of the company became concerned about the company’s adaptability feature. Since there was an increase in international pressure and the demands in the global market were ever-changing, he believed the firm was not able to adjust to changing work patterns. Many changes in work like the introduction of a corporate reporting system had strained the business process. The capital allocation process had also become a complicated process for the firm. (Dunning &Kundu, 2013).
  • The second issue that bothered Luis Morales was regarding Kent’s subsidiaries’ operations at a global level. The company’s managers at the overseas platform focused on their self-interest since they had a history of operating independently without having to experience a centralized working environment. When the firm tried to integrate the different strategies relating to overseas operations, conflicts arose at that level. (Geiger &Pécoud, 2013).
  • The third issue that Luis Morales thought was impacting the performance of Kent was that within his global division, the regional organizations were struggling to coordinate different issues that had global implications on the firm’s operations. This kind of obstacle of Kent showed that no one in the undertaking was responsible for decisions about the coordination of prices, products, or sourcing.

The main problems of Kent Chemical International better known as KCI have been analyzed by the consultants of Sterling Partners who were a reputed international management consulting firm. After a thorough evaluation and understanding of the various challenges and issues of Kent firm, the appointed consultants concluded that several elements played a crucial role in the problems and issues faced by Kent Company (Afshan, Chakrabarti & Balaji, 2014).

The prevailing issues were due to the organizational structure and the strategy adopted by the company. For strategizing the appointed consultants had given three advice after assessing the whole business scenario of Kent.

  1. The firm Kent Chemical International needed to adopt a different strategy for its consumer product line. The report by the consultants suggested that the company must manage and administer its business locally and regionally.
  2. For the medical plastic segment of Kent’s business, the consultants believed that the key success factor for this line of product was central research and development input which would enable the firm to develop and design new products and technologies. Since the primary customers of the medical plastic business were multinational companies which were scattered at a global level, this section of Kent business needed global control for better growth and performance.
  3. The products of fire control had to be regionally managed because the regulations of different nations would be different. It was recommended by them that the decision matrix should be introduced which could be used for outlining the process of decision-making and to address the different issues of ownership precisely.

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Evaluation of the organizational changes

Since different countries had different factors that played a crucial role in impacting the performance of the concern, there was a need for Kent to adapt to the changing external environment and modify its operational strategies (Arslan, Leposky & Kontkanen, 2016). Kent’s international operations and profitability were no joke since its income from exports, license agreements, and minority joint ventures helped the firm earn revenue.

Since the newly appointed CEO, Ben Fisher wanted to adopt a more strategic approach to focus on the global expansion of Kent, several changes took place at the organizational level of Kent. Since Luis Morales was appointed as the head that would revitalize the international division of Kent, he made certain organizational changes in Kent with the motive to improve the operational performance of the concern. He had identified various areas of issues that would adversely affect Kent’s overseas business (Becker, 2017).

Since Luis was KCI’s principal top-level contact, he noticed that communication flow relating to support and advice functions had become slow, and ineffective.

Organisational Change

To address the various concerns that were right in front of Kent due to its vast operations. Luis decided to appoint three global business directors who were highly experienced and successful professionals. The GBDs would be mainly responsible and accountable for appointing three to six product or project managers and start with defining their roles. The GBDs held vice president-level positions and directly reported to Luis Morales. The exact roles of these newly appointed professionals were not well defined (Bosire, 2015).

Out of the three new GBDs that Luis had appointed, the first individual was a 25-year Kent veteran who was involved in KCP’s consumer products division. He wanted to inject customer-oriented thinking into Kent’s overseas subsidiaries. The second professional who had been appointed as a global business director was responsible for the manufacture and sale of the fire protection products of Kent. He had 10 years of experience in international sales and four years of experience as a manager of marketing planning in the fire protection division. He assumed that his responsibility encompassed worldwide technology control and marketing responsibility.

He believed that the regional managers must be held accountable for activities relating to production and government responsibility. The third GBD appointed by Luis was an engineer with fifteen years of experience. She was assigned to medical plastics. She believed that her contribution would be most fruitful if she helped in the integration of international and domestic segments of the operations of Kent firm (Gervais, 2015).

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Organizational Change Failure at Kent

The organizational changes introduced by Luis in response to the problems faced by Kent were ineffective since the three new global business directors (GBDs) appointed by him were struggling just after a few months of taking up their respective posts and responsibilities. The GBD who was appointed for the consumer product section was a total failure since his operation style was not welcomed by the subsidiaries and they felt that he was interfering in all local issues even though he lacked experience and understanding regarding those aspects of the business operations (Jawaid & Raza, 2015). The EMEA regional director believed that the organizational change was bad for Kent and its operations since it consumed the firm’s time and resources.

Luis Morales believed that the main reason for the inefficiency of the GBDs was their inability and lack of understanding to provide a strong link to the domestic product division and their inability to take up the role of conflict resolution body. The appointed professionals were highly experienced but they lacked credibility and power to manage things and get the things done by their subordinate officials. There was a lack of coordination and cooperation from some of the domestic managers. Some managers who were operating at the domestic level did not consider the GBDs to be vital and they wanted to take control over the fast-growing overseas business operations of Kent (Julian, et al., 2016).

Some people like the vice president of the fire protection division thought that the people appointed as the global business directors were not competent enough to be at par with the vice presidents of Kent. By mid-2007 it was clear that the organization’s change of introducing global business directors was struggling and Kent was unable to control and integrate its business operations at global and domestic levels.

The different organizational changes introduced by Luis in Kent’s operations failed and they were unsuccessful in resolving the conflicting situations that arose at the various levels of the business operations of Kent. The object of appointing the global business directors failed miserably since the appointed individuals did not have a definite role that would provide them the framework to understand the specific activities that they were responsible for. Different GBDs adopted a different strategy which hindered the work process of the subsidiary organizations of Kent (Kaynak, et al., 2016).

There was also a lack of support and cooperation from domestic managers since they felt threatened by these newly appointed global business directors. Since Kent was a huge corporation that operated on an international scale, its operations and control were not a simple task (Lázaro-Aguilera & Palomo-Zurdo, 2016). Several factors led to the failure of these global directors. It shows that for any organizational role to be effective and successful, support and coordination are needed from all aspects of the business concern otherwise it just leads to a waste of time and resources.

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Sterling Partners’ recommendations

The appointment of the global business directors by Luis was a failure in controlling and managing the business activities of Kent at a global and domestic level. These appointed directors were an integral part of the business of Kent since they acted as the link between Kent’s Unites States of America business operations and other international business operations. Since the GBDs failed to function and perform on their own, the business decided to introduce world boards which would help the business undertaking to adopt a global strategy and integrate Kent’s global and domestic operations (Ling, Mazzolini & Giridharan, 2014).

These appointed world boards would not replace any existing local management but they would only act as planning bodies, reviewers, and communicators who would help the business firm to operate together efficiently and share responsibilities to ensure that the firm’s business at a global platform was successful and profitable. The formation of the world board was not successful for Kent firm and its operations (Melanthiou, Pavlou & Constantinou, 2015).

The world board appointed for the fire protection division was quite successful and it got off to a strong start. It met its stated objectives. However, the other two world bodies failed since the Medical Plastic World board focused on discussion but never reached an agreement or action that was necessary. Similarly, the world board appointed for consumer products never decided on any action. It simply met twice and disbanded once the discussion was over. Since there was no initiative or support from any side, Kent’s senior executives contacted Sterling Partners which was a leading international management consulting firm to find a solution to the prevailing problem.

The consultants from Sterling Partners were appointed by Kent to sort out the issues relating to Kent’s business operations at the international and domestic levels and help in the integration of the business activities. After analyzing the business and organizational scenario of Kent, the consultants made a few recommendations regarding the changes needed by the firm to work effectively and efficiently in the business environment (Mihai-Yiannaki & Rios-Morales, 2015). A total of four Sterling Partners’ consultants worked with four managers from the Kent organization to collect relevant information relating to the industry scenario, the firm’s competitive position, and the different strategic objectives of all the global business subsidiaries of Kent.

The consultant firm charged a fee of USD 1.8 million to provide a solution to the issue existing in Kent’s business. After conducting a thorough analysis of the prevailing situation of the firm concerning the external business environment, they concluded that the major issue of Kent Company was the imposition of a single uniform organizational solution on a strategically diverse portfolio. Since Kent’s business in different nations was affected by different factors it was impossible to adopt one particular strategy for all the business scenarios (Nobre & Silva, 2014). The consultants believed that Kent must be more flexible in its operations and they suggested the firm use a tailored approach to perform its business activities.

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The various suggestions by the consultants included the firm KCI adopting a different strategy for its consumer product line. The report prepared by the consultants suggested that the company needed to manage and administer its business locally and regionally by responding to local consumer needs, understanding the distribution channel issues, competition faced by Kent in various nations, etc. For the medical plastic segment of the business undertaking, the consultants believed that the main success attribute was the central research and development strategy since it would enable the organization to design and introduce the latest offerings and technologies (Pentz, Terblanche & Boshoff, 2013). As the main purchasers of the medical plastic business were multinational corporations that had a global presence, the medical plastic business of Kent business needed to have global control for better expansion prospects.

The consultants stated that for the products of fire control, there was a necessity for regional management since the laws and regulations of different nations would vary. They suggested that a decision matrix should be introduced by Kent which could be used to provide a framework for the process of decision-making and to focus on and answer the different concerns concerning business operations at various levels (Pruthi, 2014). The decision matrix tool would help in the analysis by defining the core decisions of Kent’s business operations. These consultants had also prepared a set of sample decision matrix forms which would help the management to understand the underlying process that plays a significant role in the decision-making process of a concern.

The Kent business which was involved in business operations in the United States of America and various other parts around the globe was struggling internally since it was unable to manage and conduct its business operations which were taking place both at the domestic level and in the international platform. Since there was a lack of proper and effective coordination between the domestic managers and the global business directors the various conflicts that arose could not be addressed by the management (Raziq, et al., 2013). When Kent’s management decided to introduce world boards which could help the global business directors perform their task of linking the product division of Kent and solve the various conflicting situations that arise in the normal course of the business operations, that step was also ineffective and failed. Finally, the three senior executives thought that the issue was out of their control and they appointed the consultants from Sterling Partners and paid them a huge fee of USD 1.8 million to address the issue to integrate the business operations at both domestic and global platforms.

The huge investment made by Kent towards the consultation charge shows that the management of the firm was ineffective in introducing an organizational restructuring model which would help it to enhance its performance in the market and enable it to be established as a transnational organization. The management issue prevailing in Kent has impacted its performance in the market and its profits have been declining year after year (Raziq, et al., 2013). Luis wanted to devise a strategy that would help the organization to work efficiently and productively in the fast-changing business environment. His main object to take the help of consultants was to introduce a reorganisation in Kent Company which would help the business undertaking to harmonize its business operations in the market.

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Morales recommendation

The Kent Chemical International undertaking was a successful business undertaking that had a national and international presence. But lately, the top management team of Kent were worried due to the lack of proper coordination and integration of Kent’s fast-growing international business operations with its domestic core. Since the firm, its operations, and overall productivity had been adversely affected due to the organizational changes, several remedial steps were taken by Kent’s president Luis Morales (Sedzro, et al., 2014).

The top management finally decided to take the help of external consultants to find a solution to their business problem which had been existing for a long time. The external consultants analyzed the entire business situation with the industry context before making any recommendations (Shiel, 2013). The four consultants of Sterling Partners before making the suggestions but for Luis to consider any recommendation it is important to thoroughly analyze the various aspects of Kent company about its external environment. Morales and the management of Kent need to conduct a thorough analysis of Kent’s firm’s strengths, weaknesses, opportunities, and threats.

They need to assess these elements and consider the external environment that influences the operations and productivity of Kent and accordingly recommend the necessary steps that can be implemented by the concern to integrate its international business operations with its domestic activities.

Luis Morales needs to conduct a SWOT analysis of Kent’s concern and its various operations before making any recommendations to the management team of the firm. The in-depth analysis of Kent Chemical International (KCI) and Kent Chemical Products (KCP) is crucial to understanding the various internal strengths and weaknesses of the concern as well as recognizing the various external opportunities, scope, and threats that come across their path in the global business scenario (Shiel, 2013).

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Strength– Once the firm gets an insight into the markets and factors that drive it, in various nations, it can recognize its strengths and how they can be used as a competitive tool. There is a need for a thorough restructuring of the organization depending on the below factors: Strength – The Kent firm needs to understand the market scenario to understand the various positives that it has so that it can use them to enhance its business performance and productivity in the global and domestic market. Kent should focus on establishing a communication network so that all the domestic and global participants operate on a single platform and there will be no scope for any party to think of self-interest in the business firm. Since the firm has always relied on its technology-based research to develop new products, it needs to increase investment in its technological research so that it can introduce its process and enhance the products which will enhance its global performance (Titi, 2013).

Weakness – Since Kent lacked proper coordination among the subsidiary business organizations, whenever the firm plans to make any organizational change in the business undertaking it needs to keep all the segments of the business in the loop so that they don’t feel left out and they also develop a team spirit while working for Kent organization. In the current scenario, the global business directors were struggling because there was no coordination with the domestic managers.

Thus Morales and the management need to improve the coordination function of Kent to improve its communication channel and enhance the overall productivity of the business at the local as well as international levels.

Opportunity – Kent needs to analyze the market conditions of all the markets where it has a presence so that it can understand the different opportunities that exist in the prevailing market. This strategy by the firm will help it to adopt relevant strategies in different market scenarios which help it to get fruitful results in the market (Vicien-Milburn, García-Márquez & Papaefstratiou, 2013).

Threat – Since Kent operates in various markets, it faces competition in both the local market and the international market. It needs to focus on competitive advantage, i.e. it can differentiate its offerings either by adopting a product differentiation model or a cost differentiation model. This strategy in the market will help it to have a competitive advantage in the market against its rivals and competitors.

Thus Luis Morales must consider all the aspects and recommend the management which will help it to adopt a flexible business model so that it can adopt different business strategies depending on the market environments and the factors that operate in the particular market environment.

The Chairman Ben Fisher must also focus on a model which will be adaptable to the changing business scenario. Since the needs and demands of consumers are ever-changing the chairman must introduce a model which will be able to adapt to changing conditions. The top officials of Kent Company need to work together to bring about changes in the organizational restructuring of Kent while considering all the players whether big or small who play a role in its operations (Wise, 2013).

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Kent Company has a lot of opportunities and scope to increase its performance and productivity in the market and be a market leader. However, due to the organizational restructuring issues and lack of proper integration of its international operations with domestic operations, it is unable to use the positive factors prevailing in the global market environment to its advantage. The firm needs to adopt customized strategies depending on the market type and demand pattern of the particular set of consumers.

For the products that perform well on a global market, the firm needs to establish better management and control at a global level. All these steps are crucial for the business operations of Kent so that it can further expand in the global market and acquire more customers. Since Kent operates in various product categories it has greater scope than its competitors since it can focus on a different segment and increase the profitability of the business concern.

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