American Cyanamid - Case Study Example

1. Executive Summary Dynamism has always been the trademark of any sustainable business. The moment any industry, organization or for that matter even individual associated with business or commerce, stops responding to the ambience or keeps vegetating, it is the onset of decline. The same line of thinking has been expressed by the given case study on “American Cyanamid”. This assignment endeavours to evaluate the overall performance of the organization. It will also evaluate and rank the performance of the three divisions of the company. It will take a closer look on the chemical division and it will reflect on the challenges and opportunities facing this division in particular. At the end it will propose a strategic initiative for this division. 2. American Cyanamid: An Evaluation American Cyanamid is a US based company and is a globally renowned name engaged in development and manufacturing of pharmaceutical and agricultural products. It started its operation in 1907. As evident from the given case study it has three divisions namely, agriculture, medical and chemical. 2.1. Organisational Structure Inferring from the facts presented in the case, the company is very bureaucratic in structure and operations. The company is very fat with multiple layers of hierarchy. Thus is obvious that the communication channel across the organization is very complex and inefficient. This proposition is supported by the performance of the company as such. It is given in the case that the company does not lack talent. Rather it lacks the skill to exploit that talent for achieving its business objectives. 2.2. Employee Mentality One more prominent point to be considered here is regarding the mentality of the employee. The company has a very objective policy of supporting its employees and taking care of their career development. This policy has been misused by the employees. Employees do not seem to take any accountability for their performances. The reason behind this is a clear cut lack of and objective performance management system in the company. Thus it is not possible to encourage the employees to perform better. 2.3. Prioritization It is also evident from the case that company is lacking a priority based strategy for itself. There seems no distinction from the strategic point of view as far as their financial performance is concerned. The company has no priority depending on its core and distinctive competencies. Moreover it also does not seem to incorporate market factors into its strategic planning. 2.4. Coordination and control The company follows centralized model of coordination and control. The logic of adopting this model in this case seems to be flawed. The nature of business is such that there are tremendous local influencing factors. Thus there is a need of autonomy to take care of these issues. Even forecasting is centralized for all its divisions. It seems that company is adamant in dissemination or decentralization of power which is the need of the business it is into. 2.5. Unionization The facts given in the case also point towards union problems faced by the company. This is because of lack of employee involvement. There are various issues regarding union which are pending. There has been no timely resolution of such issues. Moreover it seems that the management doesn’t involve unions while framing its strategy. 2.6. Teeth to Tail Ratio It is given in the case that there is more functional staff than line staff in the company. The number of employees in marketing and in other customer touch points is very less. Rather functional staff like that in finance is more than required. It has been stated in the case that 70 % of the staff is redundant. 2.7. Management and Leadership It can be inferred from the given case that the lackluster performance of the company is because of the absence of any visionary leadership. The heads of the divisions and the members of the top management seem incapable of motivating the workers and employees to an all out growth. 3. Divisions: A Comparative Evaluation The parameter of growth and market share for the three divisions has been represented through BCG matrix. From the financial perspective the medical division is the cash cow for the company as it is the highest revenue generator. The agricultural division with lot of potential is a star and it needs strategic investment to further prove as another cash cow for the company. The chemical unit is the dog because of its performance. Figure 1: Representation of divisions of American Cyanamid through BCG Matrix. 3.1. Medical The prospect for medical division is also bright as it has strong market demand. The flat performance of few of the products is just because of ongoing market recession and will improve as the situation will improve. Moreover the ongoing recession is confined to North America only. Globally this division is not threatened. The company must maintain its effort in the field of R & D. 3.2. Agriculture The Agricultural division by virtue of its vast scope has tremendous potential to become a market leader. There are various products in the pipeline which may fetch fortunes for the company. The R & D need to be given more effort. If needed some of the revenue sourced from medical division need to be channeled into this division. 3.3. Chemical The poor financial performance is not the only reason on the basis of which the chemical division ahs been labeled Dog in BCG matrix. The division in its current form has no future potential at all. The product lines are very mediocre. There is severe completion in the market it operates. The organizational setup of the division is not pro-development. The SWOT analysis given below for the chemical division will analyze the internal strengths and weaknesses of it along with the external opportunities and prevailing threats. 3.3.1. Strengths Existing brand name of the company works for this division. This division is strategically important for the company as it is a diversified chemical company. It has good reputation among the customers. Efficient marketing and technical support staff. 3.3.2. Weaknesses Inefficient image of the division. Pool of non performing employees. Division is into array of largely unrelated and barely profitable businesses. Lot of contingency liabilities. 3.3.3. Opportunities Market for chemical product is growing. This division has lot of export opportunities outside North America too. The developments in field of chemical can be incorporated into field of agriculture and medical too. 3.3.4. Threats Severe completion with performing players. High contingency liabilities are hurdle in the way of it strategic disinvestment. Many of the products in the pipeline lack clout in the market. On the basis of the SWOT analysis, there are some strategic recommendations for chemical division in particular. 3.3.5. Recommendations a) The company should hive off the chemical division from the umbrella of American Cyanamid as an independent strategic unit. b) There should be a performance based incentive plan in the division. This holds true even for the whole company. c) The company in general and chemical division in particular should try to become lean by getting rid of redundant staff through special employees voluntary schemes. d) The R & D departments of all the divisions should work in tandem so that they can exploit their strengths and share the weaknesses. e) Training and development should take the front seat to make the employees more skilled. Moreover multi skill talent should be given consideration. f) The division should get a turnaround expert as a visionary leader. Read More