Case study: Restructuring Exide
- Business segments
- Revenue from the industrial segment
- The competition on the global level
- Strategies to compete internationally
- Cost pressures
- The geographic division structure
- The change of structure
- The potential drawbacks
- Restructuring the firm
Exide is one of the major manufacturer in automotive segments, it faced financial crisis in the 1990’s. Exide was on the verge of losing its leading position to its competitors.
Exide was divided on the basis of distinct product line. This in effect led to demotions amongst some top managers. The industrial segment accounted for 37% of its overall revenue. The industrial section dealt with the supplying batteries for forklifts, golf carts, wheel chairs and cleaning products. Telecommunications are the largest buyers in the industrial section.
The automotive market generated the most revenue where supplies to major car manufacturers such as Ford, Toyota, Volkswagen, Volvo and BMW are involved. Business with these large multinational companies was the key to the future of Exide.
[...] Exide was involved with a new acquisition that further required structural changes. Control for the operations of the firm split further, lowering the centralized control and decision making, towards the route of a multi-domestic firm. It is claimed that the structure is now working well, with an effective balance of factors from a multi-domestic and a global strategy (see part five). Cost Pressures The way, in which Exide is currently operating, there will be a strong pressures local responsiveness. The strategy involves a range of subsidiaries in various locations that have some degree of authority as to what to provide to the local markets. [...]
[...] Cost Pressures Pressures for Local Responsiveness The question to be addressed is whether Exide follows a global or multi- domestic strategy. The suggestions are outlines below. A synthesis of strategy, structure, and control systems is provided below, that will lead us into the discussion of the strategy adopted by Exide. STRUCTURE & CONTROLS GLOBAL MULTIDOMESTIC Vertical Some centralized Decentralized differentiation Horizontal Worldwide product Worldwide area differentiation division structure Need for coordination High Low Integrating mechanisms Many None Performance ambiguity High Low Need for cultural High Low controls Local responsiveness Low High Bureaucratic control High Low This gives us some understanding about the different dynamics regarding the structural and operational differences. [...]
[...] Exide operates in the same market with its popular brands, and therefore cannot avoid competition. This reduces the efficiencies and effectiveness of organizational holistic strategies and plans. The situation brings us back to the state of Exide before it changed from an area to product divisions. There could be some potential management conflicts. The direct external conflict after restructuring again is between Bregman and Leuschner. Both had contention of running China’s Exide operations. However, the immanent problem reflects both business units try to obtain more power to outmatch each other. [...]