30th Dec, 2015

Kent Chemicals Case Analysis

KENT CHEMICALS
CASE ANALYSIS

Submitted By:
Karteek Ponnuru
15MBABRS006
About Kent Chemicals:
Organization Theory Assessment

Karteek Ponnuru

30th Dec, 2015

Kent Chemicals Case Analysis

Karteek Ponnuru

Kent was established in 1917 as a rubber manufacturer. Kent is basically a family

run business with 10% of its total shares retaining with the family even today. Its
headquarters is in Kent, Ohio, United States of America. It was in 1940 that Kent got
into plastics, after which they have expanded rapidly by acquisitions to become one
of the countrys largest producers of plastic additives and other specialty chemicals.
With effective utilizing the then environmental conditions it expanded rapidly and
with innovation they became the top player in the chemical industry. Kent currently
employs 4200 people, with manufacturing facilities in 13 countries and also has its
presence in almost 100 countries.
Kent offers the following products:

Consumer Products which includes a product called Grease-B-Gone

Fire Protection Products
Medical Products

Q.1 Analyze the strengths, weaknesses, opportunities and threats (i.e. SWOT
analysis) of Kent Chemical.

(attributes of theExternal
(attributes
origin
of the system)Internal origin

A. SWOT Analysis for Kent Chemical s

Helpful
to achieving the objective

Harmful
to achieving the objective

Strengths

Weaknesses

Wide range of Products

Good Market Position
Good
Repo
amongst
dealers/ customers
Great R&D department
in place
Wide variety of products
Widespread market
Products
cater
to
Opportunities

The ability to innovate

Good repo in the market,
so products come with a
factor of trust
Trusted B2B partner, so
ability to expand is more
With efficient working of
the R&D more innovative
products can come out

Inability to restructure
their
organization
according to the market
needs
Lack of inter departmental
co-ordination and also coordination
between
different JVs
Inability
of
the
organization in adapting
Threats
Since, Kent has its
presence in many parts of
the world, it faces threats
from the local competitors
who are dynamic and
have presence in a
specific market unlike
Kent.
Internal conflict
Lack of trust between the
higher level authority and

Q. 2 What are the issues/problems faced by Kent Chemical? Also identify the
solutions which have been already attempted by Kent Chemical to resolve these
issues.
Organization Theory Assessment

30th Dec, 2015

Kent Chemicals Case Analysis

Karteek Ponnuru

A. Even though Kent has a wide range of products and is able to cater to the needs
of its customers both in the US and globally it has its set of problems which need to
be addressed as soon as possible. We can see that the performance of the company
is at an all-time low and its performance in the current year is also doping. The
major challenges Kent faces are:
a. For years Kents overseas operations were seen as a source of incremental sales
through exports, licensing agreements, and minority Joint Ventures (JVs) but they
took on the aspect of JVs mostly and it became the major portion of their global
operations. Lack of co-ordination between the JVs and intense fight for market
supremacy is a major problem for the company. Even though the JVs operate in
different fields most of them eye the other as a source of competition and refuse to
share information amongst themselves leading to the failure of the company
b. Capital is not being properly allocated amongst the global JVs or units of Kent. In
the case it is given that subsidiaries have to complete capital requests which were
first looked at by the regional managers, then by Morales, and also mostly by the
corporate levels in order to proceed. This is a problem of high formalization. This
lead to straining of ties between the subsidiaries and the US head office
c. Kent has given autonomy to most of its subsidiaries and this has created a
problem of inter subsidiary conflict which is affecting their own business at large as
managers now tend to protect their own self-interest. In the case there is an
example of challenge between Kents Korean subsidiary and German subsidiary. This
is a critical challenge for Kent as their company is at stake at large
d. Lack of co-ordination and linking system between various subsidiaries and the
head office is also a challenge for Kent. High complexity, formalization and less
decentralization are threatening for the organization as a whole.
e. In the case there is a clear problem of adaptability. Kent follows a regional
structure and not a product structure which hasnt changed for a long time. This is a
problem for them. Restructuring of the organization is required.
f. There is also a problem with the approach the R&D department. In the case it is
said that they respond to specific problems or identified applications and not on
offshore opportunities or needs.
Q.3 What can be other effective solutions (according to you) for above identified
issues/problems for Kent Chemical?
A. To address the first problem of lack of coordination and proper integration, a
specialized structure of hierarchy can come up in place of the existing structure. We
can see that Kent is into different product manufacture so a mix of product and
geographic structure can come up in place like a matrix structure. We can see that
there are managers in every country where Kent operates. Firstly, the existing
system should be scrapped. Every country in which Kent operates should be
autonomous and a family member of Kent can be put on the top level. He/She would
be responsible for the operations. For example let us take France, a family member
could head France and under him/her different product structures can come up. So
Organization Theory Assessment

30th Dec, 2015

Kent Chemicals Case Analysis

Karteek Ponnuru

decentralization of top level management can be done easily and the authority can
still be credible to the mission and vision of Kent.
It, should also be a mandate for every country or region to work in its own
circle. For example where a problem arose between the Korean subsidiary and the
German subsidiary in such situations Korea should be given the complete authority
to manufacture and sell in Korea or Asia while Germany can cater the needs of
Europe or Africa. So, there has to be clear boundaries for each and every subsidiary.
This can reduce the risk of inter subsidiary competition.
The problem of capital allocation can also be assed using this model
structure. Fixed allocations for every region can be done on the basis of request or
extensive use of analytics or priorities of the head and capital can be allocated
thereafter.
To curb the personal interest of the managers resulting out of long history of
independency, Kent can come up with reporting authorities for every country, which
is explained above. Since, it is still a family business the members of the family can
be the heads and would be credible for every decision and action in their respective
spheres.
When a structure of the above is made, it reduces the problems of
complexity, formalization and centralization of authority. The head would be easily
reachable even to the lower employees, making him credible for the happenings
would help in solving of the existing problems and effective working of the staff.
Kent should add the concept of change in its dictionary. We can clearly see
that the R&D is still focused on existing products and new products havent been
launched for some time now. The organizations R&D should be involved in more
research and innovation. It should remember that Kent has a worldwide presence
and also has a lot of competition. Making regional R&D centers can also help in this
case because a centralized R&D may not cater the needs of every market, a
regional R&D center can help in this aspect of need for innovation and market
needs.

Organization Theory Assessment