Mission And Vision O Grow En Clean example essay topic

This case analyses situation described in the HBR article about En Clean. 1. Major issues facing En Clean. A. Stock price is down more than 85% from its high of $22. Company has been losing money since the first quarter of 1992. Financial fundamentals are sagging: . Gross margin is dropping; .

SG&A are too high; . debt is huge; As a result, investors have lost confidence in the company. B. Managerial incompetence. COO has lost control over several major company's SBUs. Since 1989 En Clean has been failing the task of properly integrating acquired companies. Business units such as CMC, Alpha Chem, and Sizemore have resisted change and have never accepted the vision, the mission, and the common strategy of En Clean. C. Demoralized personnel.

Because of the following problems En Clean is losing highly valuable sales and technical associates: . absence of clear goals; . lack of training; . confusing deliverable's; . faulty employee recognition system; . blame culture, finger pointing; . conflict between corporate and divisional interests; D. Uncertain / declining economic conditions... Economy has been in recession for several years; . Environmental cause has received a hard blow in 1992 when president Bush Sr. postponed or cancelled many environmental laws. As a result, companies began to postpone environment-related jobs. E. Facing heavier competition... Environmental side of the En Clean's business faces increased competition due to the business erosion.

Competition lowers prices to secure the reduced amount of work... Industrial side of the En Clean's business faces equal competition. For instance, 1992 saw the emergence of two potent competitors: WM Technologies and Rust International. F. Losing the focus on quality. Since 1988 En Clean had been basing its strategy on providing high quality service (as opposed to low-cost). Quality improvement and control processes had been developed and successfully maintained. However, by 1992, as a result of rapid expansion, many divisions were executing quality procedures as a formality, just to satisfy the corporate group.

Thus, En Clean is undermining its core competency - high quality service. 2. What should have been done differently? A. While we were growing over the years, we should have kept in check our financial fundamentals. Our desire to grow through acquisitions was so great that we would often undermine our ability to sustain that growth.

Our cash flow was always a problem, and our debt-to-equity ratio ranges between the appalling 1,563% (!) in 1986 to still huge 208% in 1992. B. We should have limited our acquisitions to the companies within our core competency and to those compatible with our strategies. In our early years, for example, when we bought Main tech International, we negotiated hard to buy their industrial services, but not their specialty chemical operations. But later on, we went against these principles. For instance, we acquired Alpha Tech that was primarily a products distribution company, and therefore, outside of our competency. Another acquisition, Sizemore, did not have expertise in small pond de watering; therefore we could not leverage its resources for our existing customers. C. We should have paid a great deal more attention to leveraging economies of scale, corporate values, and core competencies throughout all acquired companies. In our early years, when we acquired Parker, we made sure the management transition was smooth, customer base was combined, and we leveraged by cross selling and reduced operational expenses.

However, subsequently, the transition processes got out of control; quality became a formality; we don't leverage (e.g. we have five accounting systems). There are no programs in place to develop leaders, no management evaluation procedures. 3. Recommended actions. Immediate Action Items. Create three task forces to address the following issues company-wide and produce recommendations in 60 days: o Organization simplification.

Judy Shields will head this task force. Judy previously worked as VP of Mergers and Acquisitions. Currently, she is the controller of En Clean. Recently, she proved invaluable in systemizing information from various divisions. She also was able to get a handle on equipment utilization throughout the company. o Operating mechanisms.

Mike Bone will head this task force. Mike recently was able to analyze and to turn around operations at Sizemore. We are confident that he will be able to repeat this success throughout the company. o 1993 profitability. D.A. Johnson will head this task force. Formerly from GE, D.A. will coordinate the efforts to turn En Clean around and ensure profitability by the end of the year.

Near Term Action Itemso Five accounting systems must be compacted into one common system. o Develop informational capabilities to fully utilize company's locations, resources, and customer base. o Introduce real-life total quality procedures within the operating mechanisms. Use benchmarking to measure marketing, operations planning, and execution successes and share best practices throughout the company. o Create a learning network to share company's best practices throughout the organization. o Start building a management development facility to teach and preach company values to managers of various divisions. o Identify and start to fold down businesses that are outside of the company's core competency. Long Term Action Itemso Free up capital by divesting from the business units that are unprofitable or are outside of the company's core competency. o Use that capital to improve financial fundamentals, especially debt-to-equity ratio. o Put all company's managers through the leadership development program. o Put in place semi-annual management evaluation survey. All managers must be regularly evaluated on their effectiveness, creativeness, and, most important, whether they are compatible with company's values, mission, and vision. o Grow En Clean into the strongly centralized company, where planning, even if done on an individual division basis, is then linked back to the overall strategy of the company.