Consulting Case Study - Kingsholm Polymer Systems

Table of contents

I. COMPANY INTRODUCTION

II. SITUATIONAL AUDIT
i. Internal Analysis | Micro Environmental Analysis
Financial Perspective:
Customer Perspective:
Internal Perspective:
Growth & Learning
ii. External Analysis | Macro Environmental Analysis

III. ANALYSIS OF STRATEGIC CHALLENGES
i. Internal Strategic Challenges
ii. External Strategic Challenges

IV. CHANGE MANAGEMENT

V. CRITICAL EXAMINATION

VI. SOURCES

I. Company Introduction

The following paper will concentrate on the analysis of Kingsholm Polymer Systems (KPS). KPS is a tape producing - medium - sized company which is located in the United Kingdom consisting of three different sites that are location wise separate from one another; the paper masking tape faculty, a PVC tape producing facility and a cable jointing/high performance tape site. The cable jointing site is the oldest factory and in charge of the core business. Its products are sold to a large number of United Kingdom's cable manufacturer. The PVC products are foremost purchased by electronic wholesalers and car manufacturers. The paper masking factory sells its products to car industries and do-it-yourself customers.

All three factories share a common warehouse and a common distribution system.

Each factory has its own head manager who is supervised by the Chief Executive Officer Geoff Kite. KPS is medium sized with currently 450 staff members allocated to the three factory sites. Currently KPS is facing multiple encounters foremost the declining of its operating profits and structural difficulties.

This paper will begin with a brief situation audit as a basis for the following strategic analysis and be closed by some recommendations and change management activities.

II. Situational Audit

i. Internal Analysis | Micro Environmental Analysis

In order to pursue an internal analysis for KPS the strategic map by KAPLAN & NORTON will be applied looking separately at financial, customers, internal and learning & growth perspectives. (Kaplan & Norton, Strategic Map, 1990/2000)

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Financial Perspective:

The key financial figures given in the case study are comprised of general sales, profit and costs. The first observation one will make is that the number of sales increased yearly but all the (fixed) costs went up as well. Especially the transport costs have risen by 29% over the past three years. This fact resumes the negative result of operating profits of -17% and therefore the return on sales is also critically decreasing over the three years.

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Inefficient warehouse management and economies of scale could be identified as main reason primarily for the high (transport-) costs.

Customer Perspective:

One of the main problems of KPS in terms of customer's perspective is the misinterpretation and lack of understanding of its customer's expectations. This issue probably derives from the structural problems within the company, the absence and identification of key information on customers; the products customers are interested in purchasing and its profitability. All in all KPS follows a strategy of keeping loyal long term customers happy with munificent discounts.

To put it in a nutshell the customer management is not done very professionally. Another issue is the fast moving customer lifecycle pointed out by the marketing manager. He expounds the problem of KPS products turning too fast into commodity products which is influencing the operating profit.

A final problem is the missing patent protection and underrepresented market presence which is hindering KPS of gaining lucrative long term contracts mainly from the automotive sector.

Generally the company is missing certain flexibility in product development and reaction to meet the market's expectations.

Internal Perspective:

From an internal point of view and converging in external problems; KPS is sickening on the inefficient structure of the companies and its three sub-factories.

Mainly the missing synergies and communications between the three sites are a key factor. This indicates that KPS is rather following old habits than best practice procedures.

The current situation for each factory is different and has to be looked at separately.

For example is the cable tape production site under a prize and product development pressure at the same time.

Firstly they need to prevent other cable manufacturers to enter the market but have to maintain the same speed in product development in order to stay competitive.

The standardized PVC tapes produced by the second company are mainly distributed by electrical wholesalers to a wide customer base.

The main competitor is a company with comparable format in the United Kingdom and low cost manufacturers from Eastern Europe.

The third site producing paper masking tape has its main customers in the car industry which is unfortunately slowing down and thus the demand is as well.

Moreover this site is unable to offer low prizes due to high overhead costs of the entire company.

The following overview will focus on KPS products and their flaws individually:

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Summarizing the data information it means that the cable jointing tapes are the most profitable (cash cow) contributing more that 50% of the gross profit to the operating profit in 2004.

Therefore the focus of the company should be on cable jointing tapes which also have the biggest market share.

The last point leads to the situation all factories face together. A recent investment in warehouse facilities increased the overhead costs for all sites.

But this investment also diminished space issues and enhanced services for all key clients. Moreover there is an underdeveloped innovation management or product development and the ability to turn ideas into profit.

Growth & Learning

An additional concern is the human resource development within all factories. Talent and potential is not recognized and beaten by favoritism and networking.

Employees appear to be innovative, technically skilled, and loyal but thwart by the companies slow processes and missing skill development.

A common process for supporting and promoting potential & talent is needed for the entire company. Also the appraisal scheme invented by PVC tape factory could be a tool the entire company could benefit from.

One could think that the company is not very interested in a persistent development. This also shows that KPS is a rather hierarchical and bureaucratic structured firm.

This fact also goes along with the separation of management and management styles for each company who all report to the CEO Mr Kniff.

The organization chart also shows that most staff of each factory works in operation management, which implies that no synergies or centralization was anticipated in the operation field.

Another striking fact is that the company with the least sales and gross profit - paper masking tapes - has the most staff and therefore high overhead costs.

The most pressing problem is the deficiency in patent protection, product design and the inability to stimulate the market.

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