GM11

MANAGEMENT FUNCTIONS AND ORGAINASTIONAL BEHAVIOUR

Assignment – I

Assignment Code: 2014GM11A1    Last Date of Submission: 15th April 2014

                                                                                                Maximum Marks: 100

Attempt all the questions. All the questions are compulsory and carry equal marks.

Section‐A

1.    Do you think that when managers make decisions they follow the decision‐making steps as has been conceptualized in the rational decision making model? Which steps are likely to be overlooked or given inadequate attention? What can be the possible consequences of overlooking any of these steps?

2.    What is the difference between strategic and operational plans? How can you distinguish between different levels of strategy?

3.    Discuss the environmental factors that influenced the development of the four prominent schools of management thought.

4.    Management process involves four main activities? Explain the consequences of by‐ passing any one of these activities.

Section‐B

Case Study: Restructuring the Organizational Restructure at Kimberly‐Clark

In 2003, Kimberly‐Clark, the maker of paper products including Kleenex, Huggies, and Depends, announced it was creating a radical new structure to shore up underperforming parts of its business by restructuring its products into three categories. The categories were “grow,” “sustain,” and “fix” – somewhat unconventional categories. They weren’t devised based on product type, customers, or geographic locations in which they sold, but instead on the perceived strength of the product themselves.

Background

Kimberly, Clark and Company was established in 1872 by four young businessmen, John A.Kimberly, Havilah Babcock, Charles B.Clark, and Frank C.Shattuck. Based in Neenah, Wisconsin, the company initially manufactured paper, but over the years it began to branch out, broadening into the personal hygiene consumer products area to compete with companies like Procter & Gamble.

In 1978, Kimberly‐Clark introduced what would become its top seller: Huggies disposable diapers. Huggies were an instant hit and soon became the nation’s number‐one brand. In the next two decades, Kimberly‐Clark introduced Depends for adults, training pants for toddlers, and merged with

Scott Paper, a leading maker of toilet paper and paper towels. Today, the merged company sells its products in over 150 countries around the world. In about 80 of those countries, it holds the number‐ one or number‐two spot in the marketplace.

Restructuring Problems

Like many corporate mergers, the merger between Kimberly‐Clark and Scott Paper in 1995 didn’t roll out smoothly. Most of Scott’s senior management team left after the merger, and Kimberly‐Clark fell behind integrating the two companies. The following year, operating income and sales dropped.

Although senior management finally worked through the integration challenges of the merged companies by the late 1990’s, the dawn of the twenty‐first century brought new challenges. Chief among these was the lack of growth in developed countries for Kimberly‐Clark due to product saturation.    If the company were to continue to grow, it had to look to new markets.    This was complicated by the fact that it was losing market share to its fiercest rival. P&G introduced a high‐end line of Pampers in 2002 that was grabbing market share from Huggies. Given the tough competition in disposable diapers, Kimberly‐Clark tried to diversify by going into the related product category of disposable baby‐wipes used when changing diapers. These growth plans were upset when Johnson & Johnson, the prominent maker of baby shampoo, launched its own line of baby‐wipes.

It was in the context of these competitive dynamics that senior management announced the radical reorganization plan in 2003. In the “grow” category (brands and sectors growing the fastest) would be products like training pants, household towels and wipes, and Kleenex. In the “sustain” category (brands generating solid returns) would be U.S. infant care products and other facial tissues lines. In the “fix” category would be products related to European personal care as well as the U.S. professional washroom business. The sales of these products were relatively flat and although they accounted for about 20 percent of sales, they brought in just 10 percent of profits.

Senior managers argued that this reorganization would help increase the company’s speed to market, streamline its decision making when it came to allocating capital, and deliver cost reduction on a sustainable basis.     However, while making the reorganization announcement, Kimberly‐Clark also announced it would revise its sales forecasts downward from 6 to 8 percent annually to 3 to 5 percent. Predictably, shareholders did not like this, and Kimberly‐Clark’s stock price closed down for the day.

When Kimberly‐Clark rolled out its finalized organizational structure plans in early 2004, the reorganization had been reorganized.    Rather than organize products by the “grow, sustain, fix” categories, management announced that it would organize around personal care, washroom products, and emerging markets. Specifically, management planned to combine the company’s North American and European personal care groups under one organizational unit.    The same would happen for products related to the washroom business. In addition, management would create an “emerging markets” business unit to maximize growth of all its products in Asia, Latin America, and Eastern Europe.

5.    Case Questions:

a.    Why do you think Kimerbly‐Clark considered restructuring its corporation based on “grow, sustain, and fix” categories?    (6)

b.    How well do you think such a structure might work? What according to you would be its advantages and disadvantages?    (7)

c.    Why do you think Kimberly‐Clark reorganized its business structure in 2004 when it finalized its restructuring plans?    (7)