In 1998 Ben Fisher was appointed as the new Kent Chemical’s CEO, he had as his top priority the global expansion of the company, under this vision the company drove a series of restructuration of the company structure to try to accomplish this. They had two unsuccessful organizational changes and are now considering a third one to overcome the problems that aroused from the new strategy.
They have had a rapid international growth in their major products: consumer products, fire protection products and medical plastic products. Nevertheless the profitability of the firm is being threatened by the lack of integration of their local and regional human labor to collaborate amongst each other.
They have this idea that to be able to become a global business they had to have control over their international partners, and have a uniform way of making business around the world. They neglected the fact that they don’t need to own the whole supply chain to become global; they could have taken advantage of the knowledge of the local market that is imbibed in the local players.
There are three fundamentally different types of businesses: customer relationship management, product innovation and infrastructure management. These businesses are driven by different imperatives that make it harder for them to cooperate in a smooth manner. Trying to merge these three businesses in one is a managerial challenge, doing it in a company with the dimensions of Kent Chemical is not only extremely complex but also not the most efficient and profitable way to go global.
As part of this new global strategy they acquired companies in which they used to be minority investors, increasing the agency problem for the company. We can observe this problem in the competition for power between the local and the regional managers over the managerial decisions, the conflict of interests between regions, and a sense of superiority from the domestic managers upon the regional managers.