Bradford Kendall Analysis - Case Study Example

Introduction This paper is a case study of an Australian company that has undergone a change or restructuring in the way it operates. The case study analyzes the company from a range of perspectives including the strategic imperatives, the people factor and the way in which the change management practices were followed in the company. The company chosen for this case study is Bradford Kendall or Bradken as it is popularly known. The company is into servicing the transport and logistics industries by providing them with materials and maintenance that include the rail wagons, freight cars and other assorted items. The case study concentrates on how Bradken turned the corner as far as its sagging business fortunes were concerned by undertaking a series of strategic moves that resulted in the business looking up for the company. The primary strategic change that the company underwent has to do with the company changing owners and finally reverting to the management that it was used to and injecting capital into the company for its expansion plans. The company also started acquiring related businesses and diversifying into the core competency areas for which the company was famous for. Background Information The company under review, Bradford Kendall, is an Australian company that caters to the Energy, Resource and Freight industries. Ever since its inception in 1922, the company has been leading from the front in meeting the goals of customer satisfaction and fulfilment. Bradford Kendall or Bradken as it is popularly known is a family owned business that has been servicing the customers with a focused approach and a commitment to research and development. The company was founded by two steelworkers, Leslie Bradford and James Kendall after they won $15,000 at the races and decided to start a company. From its inception till the recent organizational change (which would be discussed in the succeeding sections), the company has been at the forefront of organizational change and restructuring with emphasis on change management from the external and internal perspectives. The company is known for the way in which it puts customers first and the way in which it enables and empowers the employees to take decisions with autonomy and responsibility. The company is in the business of making products for the freight sector that includes consumable cast products, associated maintenance and refurbishment products like rail wagons and freight bodies for the transportation sector. The company’s business picked up after the organisational change happened as described in this paper. The focus of the company is on maintaining its forges and foundries that roll out the products that the company is famous for. The Organization before the Change The company was part of the Australian National Industries till 2004 when it was sold to a group consisting of the management of Bradken and other investment groups. To give a brief history of the company before the transfer of ownership, it was being held by the ANI group that was a loss making entity and this permeated the culture of Bradken as well as the company failed to meet its annual targets much like its parent organisation, ANI and hence was the target of takeovers by the Smorgon Steel group. To quote from a trade website, “In 1974, the company officially changed its name to Bradken Consolidated Limited, and in 1982 the company was purchased by Australian National Industries (ANI). In 1999, ANI was taken over by Smorgon Steel Group and in 2001, Bradken changed hands again, with the Smorgon Steel Group announcing the sale of the company to a team including Bradken Management and other investment groups” (Supply Chain Digital, 2010). This meant that the company was suffering losses while it was part of the ANI and the Smorgon groups. However, when the Smorgon group announced the sale of the company to a management team consisting of Bradken employees and other investors, the company’s fortunes started to look up and this is evident from the fact that the Bradken company was listed on the Sydney stock exchange with an annual sales of AUD $400 Million and employing a workforce of 2,000 people. This move was fortuitous for the company as it managed to recover lost ground and expanded into new businesses as well. Prior to the restructuring, the company was going through a rough patch as can be seen from the fact that it was changing hands frequently and in ways that impacted its profitability as a business unit. The restructuring also highlights the fact that the company moved from a model where it was part of a larger group to an independent entity in its own right. This necessitated a transfer of ownership to its management as well as injection of capital by investors into the company. The following quote illustrates the way in which the company changed with the transfer of ownership, “The business underwent considerable restructuring, with significant capital injection by the owners to improve the operational efficiency of the business and to become globally competitive in the major resource and rail markets. In August 2004, Bradken Limited listed on the Australian Stock Exchange and reached sales of $AU400 million and a workforce of 2,000 employees” (Supply Chain Digital, 2010). Analysis of the Management Structure The management structure of the company has changed dramatically with the restructuring and the company has reverted to the old management structure that served it well prior to its Smorgon days and the times when it was under ANI. With the management of the company stepping in and rescuing the company from near oblivion the way in which the company’s management was structured also underwent a radical transformation. At Bradken, the employees are fond of recounting the way in which the founders seeded the company in the initial days with their winnings from the races serving as seed capital. The saying that the company was founded on luck gave it a special place among the employees who regarded luck as one of the factors for its success with the other being a strong culture of innovation and performance. An analysis of the management team reveals that most of the members of the senior management are old hands who have been with the company for decades. However, the interesting aspect is that most of them have been elevated into the senior management slots after the restructuring that saw a change in the senior management team and which ensured that the management of Bradken was back in the hands of the employees who have been with the company for a long time. The point here is that like many family owned businesses, Bradken embarked on a restructuring exercise that witnesses the company reverting to its earlier model of management and with capital injection, the expansion plans of the company took off in a major way. Relationship between Motivation and Performance People are the key to Bradken’s success and this is evident from the way in which the restructuring of the company has been done according to the people management processes that include bringing in the management to the centre stage again and ensuring that the company’s focus is reoriented to the way in which it was working earlier. The company has inculcated a culture of risk taking and high performance that emphasises the work ethic of the company and the efforts of the management to put in place a strong reward system based on performance. The management strongly believes that the company’s focus must be on sustaining the performance levels that the company was known for and which floundered a bit during the years in which the company lacked direction and focus. The following quote illustrates the way in which the company restructured itself with respect to creating a strong people oriented culture that rewarded performance and motivated the people to work harder, ““The business model for Bradken is the creation of differentiated consumable products and the sale of their value to our customers,” says Allen. “To roll out that model it’s really important for us that we have a strong culture in the business. We invest a lot of resources and time to develop young people in the business. For example, I currently have six scholarship engineering students in my office alone. We also have a number of young engineers employed in our Chinese operations. We’re working hard to develop the culture in the younger staff so they are in a position to take the company forward for a long time.” (Supply Chain Digital, 2010) Change Management Strategies The change management strategies that the company adopted are to do with restructuring the company by allowing the original management to take over and thereby facilitating a back to the roots approach along with fresh ideas from the newer members of the management team in taking the company forward. The combination of old world leadership along with an ability to stay ahead of the curve when it concerned the modern day business practices ensured that the company broke new ground and established itself as a strong contender in the market for transportation materials and logistics. The change management strategies that were used also included acquisitions and a strong focus on making the company globally competitive by bringing in industry wide best practices that were the norm for global companies operating in the servicing of transport and logistics companies. For instance, after the change, Bradken concentrated on building its core competencies of making rail wagons and freight cars instead of diversifying into other non-core activities which would have meant a shift in focus away from the traditional business. The important aspect of this change is that Bradken reinvented itself but did not lose focus of its strategic priorities and traditional business strengths. The way in which the change happened can be attributed to the fact that Bradken managed to inject capital into its businesses without having to change focus on its traditional strengths. The change management strategy followed a two pronged approach of fresh capital injection as well as reverting to the earlier management of the company. These steps ensured that the company was reinvigorated because of the capital injection and re-established itself with the old management. This clearly indicates that the company was suffering from a lack of focus prior to the restructuring and was floundering for focus. Conclusion We can apply the theory of core competency and synergies achieved as a result of related diversification to Bradken’s case. The company focussed on its core competency of making products for the rail and other transport companies and diversified into related areas that witnessed the company achieving synergies as a result of the combined efforts. Further, the restructuring of the company was more in the way of capital infusion to fund the expansion plans and reverting the company back to the management that it had prior to when it was under the ANI and Smorgon groups. Hence, it is clear that the company underwent a transformation in so far as reclaiming the business model that it was famous for. The company is now doing well globally and with the management team being experienced in the way in which the company needs to be run, it is clear that the founders’ vision of a company that operates globally but thinks locally has been fulfilled to a large extent. The company is betting big on expanding overseas and the strategy is to leverage the capital that the company has to fund its overseas endeavours. Hence, it is hoped that the company would go from strength to strength with the current management team in place. In conclusion, the restructuring at Bradken is unique in the way in which the company reverted to its old management and shook off the shackles imposed by the parent group companies when it was under their control. It can be said that the company benefited from the way the restructuring was done which helped it regain its competitive position among its rivals. This is the case that proves that family owned businesses can compete even in these days of modern management practices that emphasise public holdings. References Barker, Penelope. Rolling Forward . Company Report. Sydney: Supply Chain Digital, 2010. Management Team. 02 Aug 2010. 21 Aug 2010 . Company Information from www.bradken.com.au Read More