Industrial Leadership

Case Study
"Googleplex"

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CASE STUDY Googleplex

The following is the description of the fictitious company Googleplex. The case
study serves to provide information and data in order to build competencies in the
area of Industrial Leadership. The relevant information to perform your assignment
should be contained in this description. In case you are making assumptions or you
perceive that data is missing, please record your assumption and additional fictitious
data. Good luck!

1. History

Googleplex was founded in 2006 as a hundred percent-owned subsidiary of a large

multinational chemical company, located in Denmark. The prime business purpose is
the recycling of solvents. The holding company sells organic solvents to a variety of
customers across all industry segments. For safety and environmental reasons the
used solvents are collected by Googleplex and then transported to a contractor, who
is distilling the used solvent. After this distillation Googleplex collects the distillate
(clean solvent) and partly sells it back to some industry segments, which have lower
quality requirements (i.e. cleansing liquid). The rest of that distillate is going back to
the original factory (holding company) who blends it for other applications. The
reason for creating a subsidiary is the outfarming of that particular business as it is
not in line with the holdings company concept of being a large chemical producer.

2. Company & Market Development

Originally the company started with 70 employees, 50 of them being from the
previous holding company and 20 new hires. At that point in time this staffing level
was adequate, as the business was immature and relatively low in volume. Also there
was no prediction about any significant growth. However since then the market has
grown substantially because of increased pressure on the handling of solvents
(caused by environmentalist groups, societal trends and opinion leaders). This has
led to a change in legislation, which is forcing solvent producers to upgrade their
recycling capability dramatically. Consequently Googleplex has been approached by
other chemical producers whether they could handle additional business by looking
after their recycling activities. So far Googleplex has increased the volume handled
by tenfold, and still projections show further increase. The prediction calls for another
five fold volume increase by the year 2018.

3. Management

Googleplex is currently operating with 470 people, hired since 2010 (man power
development roughly: 2011 + 30, 2012 + 50, 2013 + 80, 2014 + 170, 2015 + 100,
2016 + 40 employees, 2017+20). From the original staff only 29 members are still
with the organization, amongst others the Managing Director, the HR Director and the
Department Head for planning and logistics.
The HR Director, who is handling at the same time public affairs, has recently
indicated a growing level of dissatisfaction and is most likely already looking for an
alternative job outside of Googleplex. Most of the new hires have little to non-industry
experience and are primarily hired from school directly into Googleplex. Despite the
very attractive financial compensation the turnover rate of personnel is about 12 %,
sickness rate about 5 %. The Managing Director claims a high motivational level,

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expressed in overtime rate of more than 20 %, and having a dynamic and vibrating
organization. However his HR Director has approached him with the growing
concern of young talented people leaving the organization after two or three years.
She is worried about an aggravation of the situation, as the overall economy in
Denmark is booming and thus a great competition for talent across all industry
segments is going on. This issue is bothering her even more as Googleplex has
aggressive growth plans over the next 5 years.

4. Vision

Starting originally to handle only the domestic market Googleplex is now operating all
across Scandinavia. One strategic objective calls for expanding the operations all
across Europe by the year 2019. This is supported by the fact that the harmonization
of European environmental laws calls for the same standards. In Scandinavia the
market share of Googleplex equals about 80 %. Of course the intention is to have the
same market leading position after the expansion across Europe. The next strategic
objective calls for expanding in the U.S. as well as into Asia. The strategic objective c
for Asia sets a target of getting into the Chinese market by 2021 with a market share
of 20%. The European growth is intended to come from one of the traditional
strengths of Googleplex, that is a very tight relationship with distributors and dealers.
Googleplex is proud of having established an excellent distributor and dealer
network, which is considered first class in that industry segment, to the extent that the
Managing Director has personal relationships with most of his counterparts. Once a
year Googleplex is holding an annual meeting whereby all distributors and dealers
are coming together and business issues are discussed. The growth in the United
Kingdom is intended to come via a joint venture. The future partner, a company
called Marsu, has its headquarters in London and is run with 42 employees. The
growth plan in Portugal calls for a merger with the company Pilami, operated as a
50 / 50 joint venture between the state and a private owner with 64 employees.

5. Operations

The operations of Googleplex are primarily consisting of handling a huge and

complex logistics task. While in the beginning the activities were exclusively handled
with the knowledge of the employees supported by a purchased stand alone
computer system, operations have increased significantly. As a result Googleplex
was hiring 5 additional Planners back in 2009, who had significant background in
computer programming.

These individuals have worked very hard to create a computer infrastructure, which is
supporting the fragmented work processes. In the opinion of the employees the
complexity has increased such that only with a tremendous effort a smooth operation
can be guaranteed. Some key employees are suffering from that, as they could not
take a long vacation since 15 months. Equally worrying is the increase in customer
complaints from originally 2.7 per 5000 orders back in 2007 to nowadays 23 % (year-
to- date 2017). Some customers called already and indicated they would move to an
alternative supplier if things do not improve significantly.

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6. Leadership and Culture

The Managing Director has realized that major improvements are necessary. Already
for quite some time he has tried to initiate quality circles and project improvement
teams, unfortunately with very little success. The cause of this failure is primarily
attributed to the workload. That opinion is only partly shared by his senior staff.
Recently there were also debates about hierarchy and responsibilities. Part of the
failure of the project improvement teams was attributed to the five-layer-organization.
Also communication is a hot button in these discussions. While historically
Googleplex has managed to maintain a very bonding family spirit and associated
with that short and direct communication lines, the increasing complexity and growing
of the organization has led to some communication break-downs, resulting in major
customer complaints. Consequently the number of meetings called has been
increased yet there is an uneasy feeling in the organization that these meetings are
not really effective and helping the issues.

7. Employees Perspective and Labor Relations

The HR Director has indicated already several times to the Managing Director, that
there are growing concerns in the organization. The speed of growth and expansion
has led to an extreme high workload for all employees. Despite the fact that
Googleplex is hiring actively, the stress caused by workload has not been reduced.
Of course, the high
turnover rate of employees is aggravating the situation. Looking at the vision of
Googleplex there is no medium term solution for that concern in sight. The growing
complexity of their business has also led to complaints about the inefficiency of work
processes and information systems. Only those individuals who have been with
Googleplex for some years have the knowledge and the ability to perform multiple
roles, something that is desirable for all the employees. Despite the high workload
and concerns among the employees, there is nonetheless a high work ethics and
spirit of rolling up the sleeves and getting the work done. Additionally complaints
have been forwarded to her, that the current pay structure and promotion system is
not transparent and primarily based on subjective impressions, at least in the eyes
of the employees. The HR Director has also indicated to the Managing Director that
she needed more time to look after labor relations. Historically she has done little
activities on this subject, but with the expansion across Europe, that will take more
time from her. He has promised to come back on these issues and provide help, but
nothing has happened so far.

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8. Organization Structure

Googleplex is organized in 7 departments, each department head is supported by 2

layers of management and a number of employees as indicated in the organization
chart.

Managing
Director

Office
Professional 4

Department
Department Department
Department Technology & Department Department
Planning and Department Purchasing &
HR Information Operations & Commercial
Logistics Finance 11 Contracting
15 Systems Support 70 34
299 19
18

9. Organizational Capabilities

The HR Director is supported by 14 employees, all of them having an

administrative/HR background. The department for planning and logistics is the
biggest department, as it is the core of Googleplex. All of them have and education in
planning and logistics, five of them having an additional background in finance and
business administration. The department, handling technology and information
system has 18 employees with a subject matter expertise in information systems.
The other colleagues have either planning or business administration background but
have acquired some expertise on technology, which is primarily handling of the
soltainers. 12 of the employees in the commercial department have background in
financing and banking, the others are marketing people by education. All of them
have a masters degree. In the department of purchasing and contracting 7
employees have industry experience, as they worked for several years in a
purchasing department of another chemical company. Two employees have just
been hired in this department, having completed their apprenticeship in purchasing.
The other two employees have a background in administration, having increased
their knowledge by training on the job primarily. Except about 70 employees on the
shop floor, there is little to no industry experience. The majority of the employees are
between 25 and 38 years of age.

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10. Other important factors

Legislation:
Watching the trends in legislation closely is vital for the business survival of
Googleplex, particularly as they are now entering the whole European market. As
everywhere, complexity has increased in this area as well and nearly 30 % of the
Managing Directors time goes into maintaining contacts with governmental bodies
and related lobbying. He is considering the option of delegating this responsibility to
one of the senior staff members, on the other hand he is worried about the fact that
seniority is important in these discussions.

Technology:
Googleplex has patented their so called soltainer, a stainless steel special designed
tanktruck to handle all solvents safely and environmental friendly. The distributors
and dealers are paying a rental fee to a special company who is providing these
trucks. In return this trucking company pays a royalty to Googleplex. As this
technology is sound and state of the art, there is hardly no technological staff on
Googleplex payroll.

Profitability:
For the first two years of its operation Googleplex was just making break-even.
The third year of operation was slightly negative, but since then profits have coming
in as follows:
2010: 21 Mio. USD 2014: 95 Mio. USD
2011: 50 Mio. USD 2015: 97 Mio. USD
2012: 82 Mio. USD 2016: 101 Mio. USD
2013: 92 Mio. USD 2017:102 Mio. USD (forecast)
The Managing Director has a meeting with the Board of Directors next week in the
US based headquarter of the Holding Company in order to discuss the business
plan, particularly the necessary investments for the growth initiative.
The growth plan calls for significant expansion in China due to the growing need of
the solvent recycling in the semiconductor industry. Beijing based investors are
willing to inject the necessary capital into Googleplex, based on initial discussions.

Your Assignment

You just recently got the new job of a leadership position, reporting to the Managing
Director. The Managing Director expects you to act fast and wants you to develop a
program to improve the business performance. You have to present to the board of
directors your program for 30 minutes on the agenda of the next board meeting.
Your tasks:
1) analyze the current organization, business situation and strategy (strengths &
weaknesses of the company; opportunities and threats of the environment,
strategy and plans of the company, etc.)
2) propose a business strategy to re-shape the business to assure long-term
viability, including an organizational design, leadership principles, process re-
engineering and employee engagement
3) include a financial scenario to establish long-term profitability and secure funds for
long-term investment
4) prepare a top management presentation as well as a briefing for the shareholder
and investor community

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