Running Head: KENT CHEMICAL
Kent Chemical: Organizing for International Growth
Gina Fiorello, John Kraft, Steve Stowe & Mandy Crabtree, Doris Davis
Siena Heights University
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Running Head: KENT CHEMICAL
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Introduction
John Kraft
Organizations may present opportunities that fail or eventually become successful in
expanding into other markets. For Kent Chemical, it has been successful stories until their
international growth starting to present challenges. After a new president in Morales was taking
over, it started to become clear that there was a need to help increase communication and
coordination of operational activities. For example, with Kent Chemical growing at a faster pace
than anticipated, Morales figured that in order for growth to continue he would have to find ways
back into the domestic core of when the business first started in creating a culture that could
better communicate and coordinate for maintaining success. Morales new it would only become
successful if it could find its way back to the original roots that first created new opportunities
and growth. After failed attempts and new strategies, the organization was not adapting well
from improper connections between links between geographic locations. Therefore, global
implications and coordinating issues needed to be addressed immediately. Overall, Kent
Chemical was in need of change and bridging the gaps with reorganizing the core business
through increasing communication, review of leadership title changes, strategy maps, and more
improved decision-making processes. With limited time to make changes for the divide that was
forming between the core business and its growth markets, Morales knew that it was time to act
fast since during the time a global recession was beginning.
Kent Chemical
What is the primary issue presented in the case?
Gina Fiorello
Running Head: KENT CHEMICAL
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Background: Kent Chemical, originally a producer of rubber products, was established
in 1917 in Kent, Ohio (Bartlett & Wining, 2012). In the 1940’s the company expanded into
plastics and quickly was seen as one of the country’s largest producers of plastic additives along
with other specialty chemicals (Bartlett & Wining, 2012). Kent Chemical Products opened a
research laboratory in 1953 to take advantage of opportunities post war. This decision allowed
KCP to focus their efforts on driving product development through technology-based research
(Ref.). Fast-forward to the 2000’s, where Kent Chemical Products reached revenues of $2.2
billion in 2007 and was identified as a leader in specialty chemical arena in both the U.S. and
globally (Bartlett & Wining, 2012). KCP had grown their business to an impressive 4,200
employees; 1,200 whom were offshore where they sold products in nearly 100 countries through
30 manufacturing plants housed in 13 different countries (Bartlett & Wining, 2012).
Kent Chemical Products had its hand in Consumer Products, Fire Protection Products,
and Medical Plastics. In the consumer product line the company’s first product “Grease-BGone” helped spur a large line of products formulated for many household cleaning applications
(Bartlett & Wining, 2012). The fire protection product line started in the 1950’s, was expanded
in the late 1060’s to include the “larger fire control market segment” (Bartlett & Wining, 2012,
p. 2). The fast pace of research in this sector of the business forced KCP to concentrate on
lowering cost of production. In the medical plastics field, Kent held position as a leading
product provider and grew the product line substantially (Bartlett & Wining, 2012). 35% of
Kent Chemical Products $625 million global revenue came from the medical plastics division
(Bartlett & Wining, 2012).
As president of Kent Chemical International, the international branch of KCP, Luis
Morales identified areas he considered concerning and in need of new strategy.
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1. Impact of new systems: Kent added corporate reporting systems to allow financial
reporting to be consolidated as they continued to acquire majority stake of more and
more businesses (Bartlett & Wining, 2012). Allocation of capital monies was more
complicated and as some U.S. staff was given access to financial documents
regarding international business, less teamwork was seen and replace by more critical
behavior (Bartlett & Wining, 2012). When this happens it becomes a concern for
many organizations because teamwork and multi-department projects can be
jeopardized currently and in future projects.
2. Conflicts between overseas subsidiaries due to integration of strategies and
operations: Changes in relationships that had once been informal changed due to the
growth of the business. This was a cause for concern because technology based
information was not being transferred between groups (Bartlett & Wining, 2012).
Another cause for concern was seen in some U.S. divisions toward geographic and
product segments (Bartlett & Wining, 2012). Failure of teamwork within a global
organization can cause rifts and dysfunctional work environments. Without
intervention in this situation, an internal global crisis may exist, which affects
business both internally and externally.
3. No coordination of price, product or sourcing decisions globally: This was concerning
for Morales because a decision to drop price on a product line in one country was felt
worldwide, highlighting the fact that there was a lack of communication. This
occurrence was worsened by the fact that the international business was run as a
regional operation rather than a product based international operation (Bartlett &
Wining, 2012). Without stricter standards and policies, set up for each country overall
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and on the local level, confusion and bad decision-making can take place because the
leaders do not understand the impact to the entire organization.
How can the organization implement and evaluate the chosen strategy?
Steve Stowe
Three top executives Peri, Fisher, and Morales from Kent Chemical realizing there was a
problem in there organization agreed they needed to come with a solution (Bartlett & Wining,
2012). The three executives sought out the help from a consulting firm Sterling Partners for fee
of $1.8 million to address the concerns. Agreeing about the consulting firm did not come without
controversy. One of the top executives Fisher was not a big fan of outside consultants or
complicated business models (Bartlett & Wining, 2012).
The consulting firm worked with four managers of Kent Chemical, collecting as much
information as they could about the organization to come with the best plan to take back to top
executives (Bartlett & Wining, 2012). The consulting firmed determined that Kent Chemical was
a diverse organization and one of the main concerns was that the organization was utilizing
uniform organizational structures (Bartlett & Wining, 2012).
The consulting firm concluded the following conclusions (Bartlett & Wining, p. 7 2012):

The consumer product line’s strategic need was for locally adapted marketing programs
to respond to local consumer needs, distribution channel differences, and competition that
varied by country.

The consultants placed the medical plastics business at the other end of the local-global
spectrum. Here the key success factor was the central R & D input required to develop
new products and technologies. Manufacturing occurred in two specialized globally
scaled plants where quality was tightly controlled
Running Head: KENT CHEMICAL
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Fire control products fell between theses extremes. Because R & D was important for
innovation, global coordination was critical. However, fire prevention was a highly
regulated industry in which relationships with national regulatory bodies and control
agencies were critical.
The consulting firm suggested that Kent move towards a differentiated organization
(Bartlett & Wining, 2012). A “decision matrix” would guide Kent in there different areas of
business. Each business would expand on the consulting firm’s analysis by defining core
decisions business by business (Bartlett & Wining, 2012). A process would be created to analyze
the decisions discussions would be facilitated by a consultant.
This new strategy did not come without debate there was a mix of feelings by managers some
felt the process was to complex.
Strategic Planning and Implementation
Doris Davis
How should the organization respond to the issue/opportunity?
The Kent Chemical Company must resolve the differences that were extremely difficult
among the management team (the regional directors) to coordinate the activities of the company
and integrate operations for better communication and cooperation. The Kent Chemical
Company must find a resolution to bring cohesiveness among the regional directors for problems
internally and the overseas global operations.
The Kent Chemical Company must recognize the pertinent issues at hand of the lack of
knowledge and the detailed technical expertise to counter the country subsidiaries, and take the
company to the global growth that is needed to have the competitive advantage. Some of the
other issues involved, post-acquisition task of coordinating activities, integrating operations,
Running Head: KENT CHEMICAL
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financial and operating control was limited and technological support. In addition, there was
competition was between FireGard and SicherFeuer for many years. It was very clear that these
issues must be confronted and collaborative measures must be put in place for growth of the
company.
First, in order to resolve some of the issues of the within the company there must be
better communication and coordination between the management team. Morales, the
international division leader of the company would benefit from there must be an internal
evaluation of performance to create and sustain the growth in the global economy. In addition,
the division leaders must perform the Porter’s (2006) SWOT 1 analysis and SWOT II analysis to
maintain sustainable growth and progress for the company. The second issue, a better focus and
strategy should be implemented for the overseas opportunities or needs for product, price and
sourcing decisions in the global product development production. The third problem, in
promoting the new vice-presidents to their new assigned duties, there was more communication
problems within the organization that ended up with time wasted and no solutions to the issues.
The inefficiencies of the VP’s lacked the credibility to get the jobs done for the organization.
The Kent Chemical needed a computer system that could link the United States and the
International divisions together for expansion, problem solutions, brainstorm for new ideas, a
better look at the financial progress of the company, and to embrace a new strategy and
innovation for the company, and the consumer needs. Moreover, the company had many
organizational problems that needed to be addressed in the reorganization process to resolve the
issues. In addition, there were issues to integrate Kent Chemical Company (KCI) and Kent
Chemical Company (KCP) businesses globally. In addition, there were issues of open
communication, cooperation, blockage of progress within the company, and controlling interest
Running Head: KENT CHEMICAL
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and other concepts between the various members of the division managers and the world boards.
In resolving the issues of the Kent Chemical Company (KCI) and the Kent Chemical Products
(KCP) there must be opportunities in place to so that the organization can move the business
forward for internal and international success.
Therefore, one of the opportunities for the company to respond would be to utilize the Porter’s
National Diamond framework. This process involves the six components that consist of:
1. Factor conditions – this is done by explaining why various geographic areas will attract
certain industries and capital.
2. Home-country demand – this component involves the nature and size of the demand of
the products in the home country and to develop new technologies and provide opportunities to
industries on a substantial scale.
3. Related and supporting industries – this involves a cluster of suppliers and service
providers.
4. Competitiveness of the home industry - this is the competitive force for the domestic
competition and the rivalry that exists among the various companies.
5. Public policy and change – this process can nurture the global industries through
various ways of incentives, subsidies, or government policy, and the scientific breakthroughs that
may occur in a certain geographic area. Moreover, the company must respond and strategize to
resolve the issues to focus on additional opportunities of the company by doing the following:

Focus on the international/domestic relationships for possible solutions.

Strategize and implementation of plans for more cohesiveness in the management teams.

Utilize the SWOT 1 & SWOT 11 analysis for growth within the company locally and
internationally.
Running Head: KENT CHEMICAL
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Foster better communication within the company and overseas for innovation.

Gain the competitive advantage in the global markets through the company’s expertise
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for the development of products and services.

Accountability of the leadership through a new computer system for better cohesion and
integration of KCI and the KCP for a new vision of the company to accomplish the same
goals for global growth.

Accept the consultant’s advice (Sterling Partners) to sort through the issues and
implement the recommendations of the firm to find organizational solutions in their
diverse portfolio.

Stress the importance of the Research and Development for innovation, product
development and global coordination as critical.

Utilization of the tool of “decision matrix” to expand their analysis by defining core
decision business.

Clarification to everyone in the organization on final decisions (strategy development)
among the management teams internal and internationally to prevent threats from the
global economic markets.
In addition, the Kent Chemical must realize that the “international competition has become
one of the most important issues facing firms and governments today (Porter, 1986).” Morales,
the division leader must give each leader and the employees the innovation challenge, for
presenting new strategies, to think outside the box, and to communicate effectively to one
another to increase profits for the Kent Chemical International company and the Kent Chemical
Products. In addition, by gaining the competitive advantage the company can stop the entries of
other companies from entering the international markets and not take some of the profit sales.
Running Head: KENT CHEMICAL
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Overall, when everyone can to work cohesively together for the mission statement and vision of
the organization this will optimize growth, and success for the worldwide operation.
Debriefing Session- Mandy Crabtree
Key areas that presented issues for Kent Chemical involved conflicts arising between
overseas subsidiaries, impact of new systems, and difficulty coordinating issues with global
implications. Due to poor communication lacking needs and priorities, research and development
teams were unable to properly focus on international needs (Bartlett & Wining, 2012). The
failure in communication caused confusion and incorrect structuring. Morales mentions the
international division was running on a regional structure rather than a product-based structure
(Bartlett & Wining, 2012, p. 4). Another issue surrounding the communication breakdown was
the lack of coordinating price, product or sourcing decisions globally (Bartlett & Wining, 2012).
Kent relocated staff in an attempt to establish control. It became apparent that their staff was
lacking knowledge compared to the expertise of country subsidiaries (Bartlett & Wining, 2012).
With growth came uncertainty and concern.
Kent, while still able to find overall success, had a system that was not working well and
had many obvious weaknesses that needed improvement. A focus on strengthening and fixing
issues was necessary for growth and success to continue. For a company to be ready for change
they must be prepared to get rid of what is not working to be able to move on (Strategy, 2006).
The gradual process that is involved with going global can hide key changes that globalization
requires (De Kluyver, 2010). Although, Kent was already an international company, structuring
and processes were not focused on as they should have been. De Kluyver (2010) states,
“managers can underestimate the differences in managing international operations, a
multinational enterprise, and managing a global corporation” (p. 23).
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As seen in our readings this week, author Zook & Allen, list five forces defined as
contributors to industry turbulence and they are:
1. Significant change in regulation
2. Disruptive technology
3. Institution of a new-world business model
4. Extreme change in consumer behavior models which may be caused by technology
5. Newly developing countries causing a negative impact on manufacturing cost structures
of existing businesses (Zook & Allen, 2010).
An interesting point made in the article was that the need for an organization to redefine and
change its fundamental structure will become more common and increasingly critical, especially
with the increased frequency of industry turbulence, but the success rate of a company doing this
is surprisingly low (Zook & Allen, 2010). Kent Chemical has encountered practically all of
these forces and has attempted to handle each of these situations to continue to move forward
and be successful. A major concern for any organization though is the speed to which the change
or redefinition takes place. The faster a company can make necessary adjustments, the better the
result because otherwise they run the risk of competition moving in.
Although, I have not worked for a company that is international, the best example I can give
is when my company looks into expansion on more of a lower scale, such as going into a new
city or state. Since I have worked for this company, we have expanded into two new states
(Florida and Georgia) and have opened many new locations within states we have been operating
in for years. De Kluyver (2010) states there are five stages to globalizing: market entry, product
specialization, value chain disaggregation, value chain reengineering, and the creation of new
markets, however, not all industries will follow this same stage structure.
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My company first studies the market and determines if it would primarily be an area that
would make sense for the business. Since we are primarily comprised of retail banking (inside
Wal-Mart), we look at the traffic patterns and traffic counts for each Wal-Mart in that area to
determine which location would be most beneficial and provide the most opportunity. In
addition, we build in clusters, meaning we build branches that are close enough to one another
for customer convenience. Therefore, we would need to find enough high traffic Wal-Mart
locations with open leases. Of course, the expansion on a domestic level is much different from
that of international expansion.
Conclusion
John Kraft
Kent Chemical has proved to be a top competitor leading internationally as a specialty
chemical company in the past. As time passed and Kent started to face challenges internally and
externally, the new president Luis Morales needed to initiate strategies that could uplift difficult
barriers that were starting to become relevant. Therefore, the new president had no other choice
but to evaluate and understand the global pressures that could eventually lead to undesired
results. There was an impact from new systems, and other conflicts overseas from the lack of
communication and coordination. Kent Chemical believed that this resulted from rapid growth of
the industry, and soon were to find out that solutions were necessary to stay competitive. Luis
Morales being the division leader was able to identify that organizational structure and strategy
was crucial for future successes. This could only happen if communication and coordination with
adding assigned titles to personnel were utilized. Sometimes change is hard to deal with for large
firms, and that may be why the successful ones’ invest in their people to produce the desired
results of effective communication and leading. Overall, the important highlight beyond Kent
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recognizing that structural solutions and strategy was needed, they realized it was an absolute
must. That is when firms may need to find their way back to where it all started, “old roots” that
were adopted that created new growth to only create more successes in the future.
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References
Bartlett, C.A. & Winig, L. (2012). Kent Chemical: organizing for international growth.
Harvard Business Publishing. Boston, MA
De Kluyver, C.A., 2010. The fundamentals of global strategy: a business model approach.
Harvard Business Publishing.
Porter, M. E. (Ed.). (1986). Competition in global industries. Harvard Business Press.
Porter, M. E. (2011). Competitive advantage of nations: creating and sustaining superior
performance. Simon and Schuster.
Rugman, A. M., & Verbeke, A. (1993). Foreign subsidiaries and multinational strategic
management: an extension and correction of Porter's single diamond framework. MIR:
Management International Review, 71-84.
Zook, C. & Allen, J. (2010). The redefinition dilemma. Harvard Business School Publishing
2006. Looking outside for threats and opportunities. Excerpted from “Strategy: Create and
implement the best strategy for your business”. Harvard Business School Press.