CASE ANALYSIS- KENT CHEMICALS

INTRODUCTION
Kent Chemical was founded in USA in the year 1917 as a rubber producing company. Fisher
family owned 10% of the stock and was one of the largest shareholders. The company had 2
major divisions namely Kent Chemical International (KCI) and Kent Chemical Products
(KCP) and 3 core business lines were identified for Kent Chemicals - consumer products, fire
protection products and medical plastic in domestic and global market. Kent Chemicals grew
gradually and began enjoying excellent sales of their products in regions other than USA.
Hence the president realized that the organizational re-structuring was required to control all
the regions from the US Headquarters. For many years, Kents overseas operations was
regarded as a source of incremental sales through exports, licensing agreements, and minority
joint ventures (JVs). But, this view changed in 1998, when Ben Fisher, KCPs newly
appointed CEO, announced that a more focused strategic approach to global expansion
would be his top priority: According to the Harvard Business Review (2012) Ben Fisher,
KCPs CEO had said Our goal is to remake Kent from a U.S. company dabbling in
international markets to one that develops, manufactures, and sells worldwide.
PROBLEM
Kent Chemicals was very successful in the beginning, but it was encountering some
challenges due to the speedy growth of the business in regions other than the US
headquarters.
1. As the international business grew, the company president Morales realized that his
company could not manage changing pressures and demands.
2. Secondly, Morales was worried about the "self-protection" of the overseas subsidiaries'
managers as they had a long history of independent operations and had not
experienced

centralized operations.

3. Thirdly, Morales was concerned that the regional organizations (branch locations
overseas) who could not deal with the coordinating issues of global implications.
Finally Morales, the President embarked on a Restructuring programme for Kent

Chemicals. The program basically had the following issues to tackle:1. The new system implemented by Kent Chemicals forced people to follow common
procedure in financial reports, target setting, capital allocation etc.
2. They decided to have independence of subsidiaries, so that they could manage their
business in their own style for a long period of time.
3. Coordination of local issues specific to each branch and headquarter. To Each local
wing (branch) managed their issues based on their know-how. As a result, the staff
working in the local branch was hesitant to communicate with their global office and
the inter-companies.

INITIAL SOLUTIONS two types of solutions were offered. First the Global Board
Directors (GBDs) setup in 2006 and secondly the World Board (WB) established as a
restructuring exercise in 2007.
A) Solution by GBDs and its failure:Morales, the President of Kent Chemicals, diagnosed the problem and enlightened the
GBDs which comprised of three directors who were deputed to improve communication
between the global office (headquarter in the US) and local branch offices.
Challenges and Failure of GBD - The President expected that each director from the GBDs
group would improve communication levels in three core business areas, encourage local
offices to follow global operations strategy. GBDs were authorized to manage each business
sector in their region, but due to dearth of local knowledge, they could not perform
efficiently.
The management conducted a feedback exercise whereby they asked the local staff to
opt for centralized style, but the GBDs were faltering in adopting this style.
The GBD finally failed. There were several reasons for its failure such as lack of local
knowledge, communication problems and interfering the local operations.
B) Solution by World Boards and its failure:Subsequent to the worst lessons learnt by Kent Chemicals from the GBDs flaws, they
established the World Boards to support GBDs to learn the local knowledge. The World
Board (WB) included experts from local branches. However, due to the adverse image
developed by the locals for GBDs, the local managers at Kent Chemicals were quite hesitant
to suggest ideas to the WBs.

FINAL SOLUTION - In next year of that failure, Kent Chemicals decided to employ a
consultant because it was vital to strengthen the organizational structure. Solutions given by
Sterling Partners (Kents Consultants) - As the business of Kent Chemicals had serious
management issues and was displaying low performance, their consulting firm, Sterling
Partners analyzed the scenario and launched a reorganization programme. In the programme,
a matrix organization was setup to realign communication effortlessly and efficiently, and
would blend global instructions and local requirement together. Another major change they
embarked on was the operation area of each business line would change. For instance, the
consumer products division had run their business based on customer needs; as Kent
Chemicals had to conform to fire protection laws of each country of operation, hence the fire
protection products were localized, and the lastly the medical plastic division would be
managed by merging global and local operations since their main clients were multinational
companies which were able to supply the products globally.
All these restructuring and reorganizing still could not contain the most pressing and
challenging issue faced by the company Control of the Global Headquarters on the branch
locations.
CONCLUSION
The consultants analyzed that KCI's main problem was caused by their structure and strategy
like a small company. They gave three advises to strategize:1. KCI should introduce - local and regional administration,
2. medical plastics business should be coordinated globally, and
3. fire control products should be managed regionally since the country regulations differ in
every country. They also recommended to use "decision matrix" to outline their decision
process and address their ownership issues clearly.
ANALSIS, SUGGESTED SOLUTIONS and CONCLUSION
QUESTIONS:
1. What were the international market entry approaches pursued by Kent until Fisher took
over as a CEO? Why did they pursue these options? Use the following table format to
respond to this question.
What are the pros and cons of each option (use a table format to respond)? Why did Fisher
want to make Kent a global company?
Answer 1)

Kent Business (e.g. Fire

Protections products,
Consumer products, etc.)
Consumer Products

Business pressures

Kent Approach

Demand in local markets were

very high, and company
achieved increasing sales from
the local industry

Medicals Plastic Business

Demand was good and

competition was strong
globally.
Had to be customized to
regional.

Introduce local and regional

management (administration).
But, the company will use
"decision matrix" to outline
their decision process and
address their ownership issues
clearly.
To be coordinated and
controlled globally

Fire Protection Products

fire control products should be

managed regionally since the
country regulation differs in
every country.

2. What were the problems facing Luis Morales as he began implementing Ben Fishers
international expansion strategy? Categorize these problems in the following table and briefly
discuss at least 3 problems
Answer 2) Kent Chemicals CEO -Fishers global expansion vision proved difficult. The
International Division President Luis Morales had to face the following problems in laying
out Fishers international expansion strategy:Strategic
1. Threats of new
entrants

2.
3.

4.

Bargaining power
over customers
Products
Unsuccessful in many
countries -Threats of
Substitute products &
services
Supply Chain
-Bargaining power of
supplies

Structural/systems
Needed the final reorganization to
resolve the global economic threats that
Kent was facing.
Consulting Sterling Partners called to
help.
Handing customers international needed
a strong customer management skills
Kent sold products in 100 countries

Interpersonal
Coordinate a good team
of professionals

Kent operated 30 manufacturing

facilities in 13 countries and supplies in
each country had to be handled well

Strong networked
system and strong
control over suppliers

Implement CRM
policies
Needed good control
and coordination.

5.

Growth and Demand

-Industry position
amongst current
competition

6.

Lack of
Communication in all
Kent Divisions Set
up new system

regionally and globally

Kents international side did not align
with the domestic side.

Kents managers were not updated and

lacked knowledge in their area of
operations and financial status of the
company

was required.
Had to create a bridging
system for domestic
and international side to
link with each other
strongly
Kent should set up a
new communication
system.

Morales Strategic Approach:- The 3 main issues :1. Growth and the Demands in Kent Chemicals a) Increased their global market impact by acquiring foreign companies.
b) Managers of Kent Chemical Products used the independence of overseas
subsidiaries for their vested interests
c) Regional organization having difficulties dealing with issues within global markets
with Kent Chemical International.
d) Country managers were asked to work for the benefit of both organization and not
one specific organization
2. Products unsuccessful in some countries
a) The fire protection products did well in one country and did not do well in other
countries.
b) Hence this product had to comply with each countries specific regulations and
should be handled very carefully.
3. Lack of Communication between Kent International and other Kent Chemical
Divisions.
a) Management of subsidiary companies were allowed to continue to operate in their
own old habits and operating procedures. This posed a lot of issues in smooth
operations of Kent globally.
b) Kent Chemical Products Management were not involved in decisions being made
by the international subsidiaries, and remained in dark. Their control on subsidiary
companies was very poor.

c) Many changes were made at the subsidiary facilities without much regard on how it
will affect the company globally.

3. How would you evaluate the organizational changes he made in response to those
problems> Why were they unsuccessful?
Ans 4) Kent Chemicals needed to implement the following changes in response to the above
given problems, but were unsuccessful:- President Murales led the re-organizations strategy that did not align the international
side and the domestic side of operations.
- It had difficulty implementing re-organization in its 30 manufacturing facilties in 13
countries as country knowledge and different rules and regulations were difficult to
manage by Kent Chemicals.
- Kent used to sell its consumer products in more than 100 countries, and this was a vast
area to hanldle without an organized system.
- It needed the final re-organization strategy to resolve the global economic threats that it
faced. It should continue the services of an outside consulting form - like Sterling
Partners who could craft a matrix for Kent Chemicals to follow both International and
US operations.
- A strong, focused strategic approach was required to become global and withstand the
issues as a team.
4. What do you think of the Sterling Partners recommendations? What did Kent get for the
$1.8
million fee? What should Morales recommend? What should Chairman Ben Fisher decide?
Ans 4) Sterling Partners recommendations would be beneficial to Kent Chemicals as they
brought it team effort and cohesiveness in the company.
Sterling had recommended the following, and Kent got useful benefits on paying the fee for
worth $18 million, as the implementations of the following strategies would definitely be
useful in achieving international growth and remove all barriers cited earlier in conducting
smooth operations.:1.
2.
3.
4.
5.
6.

Kent should adopt a Decision Matrix model

Internet linked communications
Accountability
Decentralization with knowledge of ownership.
Shared vision and planning efforts by the headquarter and subsidiary groups.
Company should apply the Porters Five Forces Model.

7. Porters National Diamond Clustering Theory was to be adopted to get maximum

mileage on addressing supply-chain issues and demand for their products in various
market.
8. SWOT Analysis should be done. Internal and external.
9. De Kluyers Five stages of Globalization.
10. Value Creation and Corporate Global Success.
References
Barlett C.A. & Wing. L. (2012), Kent Chemical: Organizing for International Growth.
Retrieved from Harvard Business School Brief Cases. Retrieved from
http:\\hbr.org/product/kent-chemical-organizing-for.../an/4409-PDF-ENG.
Cusac, J. Estes. M, & Khan, R (2013), Kent Chemical. Siena Heights University. Retrieved
from http:// www.sienaheights.edu/.
Porter , M.I. (2008). The Five Competitive Forces that Shapes Strategy. The Harvard
Business Review. Retrieved from http://hbr.org/2008/01/the-five-competitive-forcesthat-shape-strategy/.

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