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Ferox Manufactured Products Case Study Change Management

3263 words - 13 pages

ObjectiveThis paper aims to analyze the current situation of Ferox and make recommendations regarding the strategy and the action plan to be followed in order to cope with change.OverviewIn October 1991, a public announcement was made, regarding the privatization plan of Ferox, a Czechoslovak gas and chemical company located in a northeastern industrial city near the German border.The privatization proposed project was stipulating the following:- 3 % of shares - set aside as a reserve fund for restitution to the original owners;- 3 % of shares - for employees purchase;- 52 % of shares - for purchase by the international gas products corporation, Air Products and Chemicals Inc. (APCI), headquartered in US;- 42 % of shares - for purchase by Czech citizens, through the government voucher program.Ferox has 1,350 employees organized into six functional departments: production services, production, commercial, economics, personnel, engineering.APCI recognized that even if in this country the industry is old, there is a lot of production capacity. Therefore, APCI decided to purchase Ferox, and was planning to transform it in its biggest manufacturing facility.APCI will have a major role in Ferox privatization, due to the fact that it will bring important contributions like: specific know-how about the gas business, management skills; financial and accounting skills; technological skills and marketing skills.Business ContextThe period immediately after the velvet revolution in 1989 meant difficulties for the majority of companies in Czechoslovakia, including Ferox: an instable political situation, the tendency of replacing people rather than changing their behaviour, a new management that does not know how to run their company, the belief that old contacts are not useful anymore.A critical factor that influences the change both at the national and corporate level is the lack of managerial skills. It is obvious that the move forward, the change, cannot be efficiently made without a new management approach.Ferox management team believes in the capability of their company to survive:Improvisation - "every day brings new information";Privatisation - need for investment money to modernize technology, need for know-how;Long-term strategy - "to become one of the most prosperous companies in the country by European standards".In January 1991 Ferox began selling gas, line assumed by its joint venture with APCI. According to joint-venture agreement APCI owned 51% and Ferox 49% and this agreement covered the distribution and sales of cryogenic equipment and liquefied gases in Central and Eastern Europe, over which joint-venture had exclusive dealership.Issue IdentificationOne important issue is that Ferox is still a state-owned company and it cannot undertake drastic changes in order to become a successful company at European standards - this being their major goal.One major obstacle in achieving the company's goal is the fact that the values of the company did not...

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