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TEXANA PETROLEUM CORPORATION
MARIA SHAMS ATIYA SALEEM ABID HUSSAIN
Texana Petroleum witnessed change in management hierarchy. The two individuals represented a new generation of top executives at Texana Petroleum Corporation. Despite the success. . Division performance was mostly rated on return on invested capital. The main corporate mechanism to control the divisions consisted of a semi-annual division review and approval of capital expenses. In early 1950s. and some managers blamed this policy for the existing competitive atmosphere and lack of collaboration. In 19 66 George Prentice was designated as executive vice president for domestic operations and responsible for improving the combined performance of the five divisions reporting to him. Packaging and Building Products organizations.TEXANA PETROLEUM CORPORATION CORPORTATE HISTORY: Texana Petroleum Corporation was major producers and marketers of petroleum products in southwest United States. The company which started operations as a refiner of crude and marketer of petroleum products was transformed into a vertically integrated producer and vendor of chemicals and plastics. Polymer and Chemicals Products. Donald Irwin took charge as CEO and William Dutton as Chairman of Board. The main business operations till early 1950 s were processing and refining crude oil and selling petroleum products through chain of company operated service stations. Under previous management the company suffered a severe downturn. but the highly competitive management team was successful in creating a more profitable business model. Molded Products. there was growing pressure on corporate management to increase cost savings through coordination. The five divisions were the Petroleum Products.
DIVISIONAL COMPOSITION OF TEXANA PETROLEUM: EVP DOMESTIC OPERATIONS PETROLEUM PRODUCTS DIVISION RAW MATERIAL SUPPLIER POLYMERS & CHEMICALS PRODUCTS DIVISION RAW MATERIAL SUPPLIER PACKAGING PRODUCTS DIVISION MOLDING PRODUCTS DIVISION BUILDING PRODUCTS DIVISION .
The division was a supplier to Molding Products division . Packaging Products Division This division had product line comprising of plastic packaging materials that includes films. The division had evolved a wide range of product line of petroleum derived Chemical and Polymer compounds and successfully managed to generate profits from large volumes external sales. bottles etc and the target market was industrial customers. 4.FUNCTIONAL BREAKUP OF TEXANA DIVISIONS 1. The Petroleum Products Division enjoys an acceptable role as a supplier to rest of the corporation and its relations with other sister divisions was also harmonious. Petroleum Products Division Petroleum Product division is the core functional division of company s original producing and refining activities. 2. This division also gets its raw material from Polymers & chemical division and works independently from other end products divisions. It supplied raw material to the Polymers & chemical division and sold refining products under long term contracts to other petroleum companies. 5. This division was developed with a vision to feed the consumer petroleum market. This division also gets its raw material from Polymers & chemical division and works independently from other end products divisions. This division gets its raw material from Polymers & chemical division and works independently from other end products divisions. larger proportion of Polymers & Chemical division capacity was required by the sister division for their efficient throughput and production balance that required Polymer & chemical division to reduce their commitment to external customers. . Building Products Division This division produced and marketed variety of insulation and roofing materials and similar products to construction and building markets. 3. cartons. Molded Products Division The division had expertise of producing molded plastic products that ranges from toys and household products to electronic and automotive parts. Packaging division and Building Products division With the growing production of sister divisions. Polymers & Chemical Division Polymers & Chemical division is a highly technical division which executes around the processes.
Obviously. this is the least desired alternative since the company is vertically integrated. and corporate executives try to find middle ground between centralization and autonomy. could be an alternative to resolve the existing conflicts. Their excessive technical focus. this group appears to be the only one having problems integrating to the new corporate culture. corporate executives unknowingly set up the foundation for interdivisional conflicts. Indifference to participate in corporate strategies at the expense of divisional profit is high. Technical specialization seems to be another organizational factor that was causing a communications conflict. the future growth of the .PROBLEM AREAS: The core problem area was the division performance rating system that does not promote collaboration. Breaking this model would expose the corporation to the mercy of external suppliers. The corporate and molding groups were closer to marketing while the polymers group was more of a production operation. Corporate management was also uneasy about the constant flow of new project proposals coming from the Polymers division. But rather than providing more than adequate support to sister divisions. Lastly. Under the current performance rating framework. Possible solutions 1. It would also mean a lost opportunity to profit from this successful operation. not just to act as a review board or a holding company. Polymers group held a strategic position in the organization since three divisions depended on them for raw materials. despite the fact that the divisional goal was very clear. For instance. INTER DIVISIONAL COLLABORATION: In the rush to reshape the company. the method for achieving the goal was not set correctly. Some managers considered the Polymers group extremely prone to detail and technicalities but lacking business vision. the Polymers group was more concerned about capturing new business. The performance rating system together with aggressive management styles and different areas of expertise had a combined effect that maximized inter division communication deficiencies. This could provide other divisions the opportunity to use the raw materials provider they feel the most comfortable with. reluctance to participate in corporate plans and determination to maximize profit alienated them from the rest of the company. After all. the Polymers group was forced to disregarded corporate integration strategies if they came at the expense of divisional profit. as some managers speculated. POLYMER & CHEMICAL PRODUCTS DIVISION: There was particular concern about the lone rider attitude the Polymer and Chemicals division had adopted. Spinning the Polymers group as an independent entity. Most of these perceptions could be derived from the fact that the groups had different backgrounds and communication styles. Executives wanted the corporate board to generate company strategies and flow them down.
some of the individual expansion ambitions might have to be interrupted in the short term to ensure integral growth. and internal communications increased by minimizing distractions. a third party consultant could be hired to act as a mediator. or managing strategic growth. and come up with and objective set of solutions based in what is best for the company. As stated before. a corporate investment in new procedures and infrastructure could facilitate coordination. Also. a commitment from the executive team to promote a corporate identity would be required. Also.Building Products division is tied to the assurance of raw materials provided by the Polymers division. This alternative is much more attractive than the first one. But in order for any negotiation to work. 3. In order to facilitate the negotiation and options generating process. But it is obvious that a new performance rating system that promotes collaboration also needs to be implemented to harness all divisions together. . but it also has some drawbacks. as part of the negotiations. standing comities could be created to manage specific areas of interest. Ideally. At lower level of organization. This way any role ambiguities or conflicting interests would be eliminated. developing a customer centered culture. the corporation could face an exodus of frustrated ambitious general managers leaving the company. a unified product development process and shared electronic tools would increase interdivisional coordination tremendously. the best alternative would be to engage in collaborative negotiations. On the negative side. Areas of interest could include monitoring on time delivery of products. Moreover. 2. The third and best option would be to adopt a set of confrontation techniques to negotiate the best resolution for the company making sure all opinions are heard. Plan of Action The main problem appears to be the lack of an effective corporate strategy to manage growth and increase internal communications. figure out exactly what each other needs are. this option would require a high upfront cost and patience to see the results. For example. it must be bundled with improved organizational practices such as new policies and changing the rewards system. Even worse. Extraneous projects would be eliminated. an interdivisional task group could be created and chartered with looking for opportunities to maximize efficiencies. Their products market would be focused. For instance. and profits directly linked to how well they support the sister divisions. it would imply losing the revenue generated by selling products to external markets. A second alternative would be to limit the Polymers division to produce materials only for internal consumption. Also. economies of scale might be lost and the division might have to be downsized.
The successful implementation of this alternative would require a great deal of coordination. train employees and promote a corporate identity. a significant investment in financial and time resources would be required to fund task groups. deploy corporate wide processes and tools. this plan of action is the best alternative.Although. the executive team might decide to stick with the cash cow corporate strategy. In addition. . something that they are already struggling with. it might be too complicated and long term oriented for Texana Petroleum to execute. After all.
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