Background to Scenario 1

Background to Scenario 1

Five years ago, Peter Drummond was recruited from a FTSE-100 global consumer products group, where he was MD of its largest division. He was brought in to shake things up. Using top-level strategy consultants, he quickly replaced the old geographical structure with product-based divisions. This change led to a number of departures and new faces at or near the top of the group, and was presented to the shareholders as having more logic and better specialisation of skills.

His style has been to allow plenty of autonomy within the divisions: retain the corporate identities of acquisitions; keep their local management teams intact; use their own systems; retain their ways of doing things. In exchange, he has demanded strict overall financial targets. He has intervened only if these targets are missed badly. He manages by exception and has a strong belief in hiring the best people, telling them what he expects and then leaving them to get on with it. Peter tends to make his mind up about people quickly and is intolerant of those who say, “it can’t be done”. Experience has taught him that things are done differently in one country compared to another, but he leaves the locals to work out the implications. He sees his main responsibility as setting direction for the company.

Recently, the investors and the analysts have criticized AXO Group for being difficult to understand and lacking focus; the Group has also suffered several nasty financial surprises that have made the share price volatile. Drummond called in the same strategy consultants who now recommend a matrix approach, so that that each significant territory has a 'Country Manager' who is overall responsible for that geographic entity.

Peter had to work hard to convince several members of his board of this approach, including the divisional heads, but there is still significant opposition. The non-executive chairman has told him that he has precisely a year to make it work. If the annual results do not improve significantly he will not have the chairman’s confidence any more. Peter’s reaction has been to make it clear that the four divisional chief executives are fully responsible for recruiting the Country Managers and turning round the financial performance of each of their businesses.

Your Task...

Peter has identified four possible courses of action (A - D below) and he needs to decide between them. Use the scale provided to indicate how effective you think each of the options are likely to be. Should Peter:

A. Insist that the country managers should all be British, and recruited from big brand UK companies, and then spend a month inducting them in the UK so that they understand what is needed?

B. Insist that they recruit country managers directly from the countries involved, set them clear turnaround targets, and bring them to the UK for a week to induct them?

C. Task Chuck Novak with promoting good people from within the company, but send each person to run a different country to give them more international experience, and to ensure that they will question the status quo?

D. Reject the consultants’ advice altogether, and send in teams from the UK Head Office to root out the reasons for variations in financial performance?