KENT CHEMICALS CASE STUDY

INTRODUCTION

Kent Chemical Private Ltd is a large multinational company in the field of chemical
industry which was established in 1917 as rubber producer. It is headquartered at
Kent,Ohio a town which is located at the outskirts of Akron.It was founded by Fisher
Family who actually holds a 10% share in the company. They have many subsidiaries
situated at various parts of US as well as outside US.

Currently their business mainly offers a wide range of products ranging from
lubricants to polymer additives. They have also set their benchmark in the field of
construction, electronics, medicine and consumer industries. The case study mainly
discusses about the problems which had occurred when Luis Morales, the president of
Kent Chemical International (KCI) ,tried to merge the organizational charts between
Kent Chemical’s world wide and domestic operations.

QUESTIONS

1) What are the problems faced by Luis Morales as he is implementing Ben

Fishers International Expansion Strategy?

In 1998, Ben Fisher was appointed as the CEO of Kent Chemical products. He
announced that his top priority is to have a more strategic approach to global expansion:
“Our goal is to remake Kent from a U.S. Company dabbling in international markets to
one that develops, manufactures, and sells worldwide.”

In order to achieve his vision, Morales implemented the global integration strategy by
taking major interests in Kent’s 15 offshore joint ventures, acquiring other overseas
companies and expanding global presence. The international division President Morales
faced problems while implementing Ben Fisher’s International expansion strategy. The
problem which he faced was the organization was not adapting to its changing pressures
and demands and the organization was had struggle with the new operating systems. As
Kent chemicals acquired major positions, corporate reporting systems needed to allow
operations to be controlled and financial reports to be consolidated. This has caused
more strains to the organization. The other problem which Morales concerned was
about the self- interest protection of the overseas subsidiary manager’s as they had long
history of doing independent operations since they had not experienced centralized
operations. There was lack of technology transfer as organization was lacking
communication and coordination between Kent international and other divisions. Due
to this Morales was not able to know what new products were being developed and
decided to travel to Kent headquarters every 60 days to get technical help as well as to
know about the new products being developed. Also there was conflicts among
geographic and product organizations in U.S. divisions. The U.S. corporate has blocked
the new halogenated flame retardant product that was selling in U.S. From this action it
seems there is no coordination and co-operation among the company. The other problem
which Morale worried was even within his division, the regional organization had
difficulty coordinating issues with global implications. Here when the Brazilian
subsidiary reduced prizes on polycarbonates it was not communicated globally. These
were the major problems faced while implementing the expansion strategy.

2) How do you evaluate the organizational changes he made in response to the

problems? Why where those changes not successful?

The first role change was GBD (Global Business Directors), were the roles and
responsibilities were not clearly stated by Luis Morales, Because of that they
have no idea about what to do and they have assumed by their own.
The GBD have interacted with KCP executives, were KCP also not clearly know
their roles because they didn’t inform properly about the roles.

The second role change was an introduction of world Board. The board consists
of members from both the sets. They already implemented GBD were not
successful and not clearly stated. So, coming up with another changes of world
Board was not a good idea.
 3) Give an analysis of Sterling Partner’s recommendations?

Sterling partners has analysed the issues in the company and had come to a solutions
like re-organisation that could help it overcome the problems. They concluded that one
of the main problems that the company faced was that it imposed same organisational
solutions for the problems that arise from different businesses. Re-organisation of the
company would help them bind together the global and local requirements.
The three advices they gave were
1. Introduction of local and regional administration
2. Global coordination of medical plastics business
3. Fire control products must be managed regionally.
They claimed that these changes would definitely remove all barriers and would achieve
international growth.
4)What should Morales recommend? What should chairman Ben Fischer decide?

In order to overcome this problem, He could have propose for another

reorganization attempt even after two failed attempts in order for better
alignment of the business with its U.S.-based parent company. He could also
suggest that it was necessary to understand the core strategies and goals of the
business as there were a number of activities in which the company was
evolved in.
He could also suggest that it was necessary to understand the core strategies
and goals of the business as there were a number of activities in which the
company was evolved in.
And Ben should decide upon Morales recommendation and suggestions, and he
can proceed with it if the plan is well defined. He decides that the company
needs changes as it is not working under the current circumstances so it is
necessary to bring in changes to the company. He also had to decide upon a
unification plan that would unify the manufacturing and distribution functions
under one executive.