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. [...]
[...] There is significant pressure for globalization for Exide at the stage it is currently. In order to reduce costs and increase profitability, Exide has moved towards a global strategy. However, there is a balance between the pressures for cost reduction that can be gained from a global strategy, and local responsiveness. The more you move towards a global strategy, you move away from local responsiveness, and vice-versa. Exide is at a position where it is on the edge of both concepts. [...]
[...] Before Lutz changed structure, Exide kept some non-profitable buildings and plants, and the focus of the previous structure encouraged the construction of manufacturing plants in each country that Exide entered. Maintaining these units continued to increase Exide's costs. The changed structure allowed Exide to decrease costs and increase profitability. Exide's European business was losing money large amounts of money through geographic divisions. One major problem identified was price wars. Exide's own subsidiaries were competing against each other for major customers. [...]
[...] Although coordinating roles and responsibility lead to greater control, this structure leads Exide to adopt a very bureaucratic approach. Different locations have different situations, and the new strategy would be rigid and inflexible, which would cause a constraint to local managers. After changed the structure, many of Exide's country managers would have to be demoted. Not only will they earn less money, many will have to move from country to country, or decide to leave the company. Family pressures and constraints will have to be considered and there will be a great degree of frustration and stress involved. [...]
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