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Case Study: AusCo Plumbing Supplies Pty Ltd.
Peter Flood, CEO of AusCo Plumbing Supplies Pty Ltd, found himself thinking about the changes the company had experienced over the past 3 years since his appointment. The company had originally started as a small family business owned by Phil Walters father. Along with his friend Steve Masters, the pair had started to grow the business in the early 1960s with borrowed money and a ******** on both their homes. And what an expansion it had been! Steve and Phil had been entrepreneurial and expanded the company to have manufacturing sites and retail outlets in three Australian states, with the largest manufacturing site employing 90 workers based in Perth. Despite having a well-known quality brand, they were facing increasing competition from cheaper imports, especially for Tap and Plumbing Fittings. Labour costs were a big factor in manufacturing and overseas competitors labor costs were often well under those that the Australians had to pay. To counter this AusCo had recently entered into negotiations to set up an offshore manufacturing plant in Malaysia and was considering buying an existing chain of plumbing suppliers.
Walters and Masters knew they needed to respond to changing international circumstances with their business strategy choices, and they also wanted to extend the product range. Both had always been entrepreneurial and were keen to position the company to be more competitive in the mass-produced market, while at the same time retaining their position as suppliers of high-quality and expensive bathroom and kitchen wares. The Research and Development department, a highly committed, hand-picked group, was the company's 'growth engine' and in many respects drove the company’s success. Although other areas of the company are important, it is the innovations and adaptations of existing ideas and concepts that have made AusCo a market leader, and the management team are committed to making sure it stays that way.
The company's growth was fairly steady in the early years; however the past five years have seen a period of rapid expansion. Good economic growth in Australia, particularly in Western Australia, where growth has been fueled by a resources [mining] boom has seen a rapid increase in house prices and home developments with buyers looking for affordability, functionality, style and quality. AusCo has been able to capitalize on concerns about the environment with low water usage as a unique feature in their taps, showers and other fittings. Peter knew that understanding the market and being responsive to changing trends was critical, but he also knew that much remained to be done. AusCo still had many characteristics of a small family business. Along with the Perth plant, the company employed 400 people and had an annual turnover exceeding $100 million. This growth had mostly happened in the last six years, mainly through acquisition of competitors in each of the other states. The two founders were getting older and wanting to consider retirement and had already set up a board of directors and employed Peter to continue the company’s expansion.
However the problem facing Peter at the moment is how to merge so many organisational cultures. The process of combining smaller businesses and their ways of doing things into the larger business has been repeated, but with varying levels of success. There is still quite a bit of duplication. Along with the culture, the processes and different systems, such as accounting, information technology, industrial relations, occupational health and safety have had to be merged. In several cases this has extended to include suppliers. Although some progress had been made there is still more to be done. “On a forever basis, it would seem” thought Peter. The people part of the business was the hardest. The R&D department was crucial to the company's level of innovation. "We need to maintain our innovation" Peter thought. "Not just for products and service provision, but for organisational structures and processes as well”. Also, with the expansion into Malaysia he wanted to ensure that employees there embraced the same values as those in Perth. The pace of change just seemed to speed up! There was still so much to be done!
Peter has recently become aware of some problems within the existing plants. Departmental heads are overworked and along with line managers, still hire their own staff. Maybe we need a centralized Human Resources Department. “Maybe there are other functions that could also be centralized, given the increases in staff numbers and product ranges and we also need to set up some type of performance management system”, he mused. If the company lost capability because of its inability to manage its internal workings, ultimately business viability would be impacted. Not a happy prospect. There is also the move to Malaysia to consider, as this is a higher risk than earlier initiatives. Government regulations, the distance, the language, the inevitable cultural collision - how to manage these?
Guys/Gals, what are your analysis of this case if you don't mind sharing with me.
Peter Flood, CEO of AusCo Plumbing Supplies Pty Ltd, found himself thinking about the changes the company had experienced over the past 3 years since his appointment. The company had originally started as a small family business owned by Phil Walters father. Along with his friend Steve Masters, the pair had started to grow the business in the early 1960s with borrowed money and a ******** on both their homes. And what an expansion it had been! Steve and Phil had been entrepreneurial and expanded the company to have manufacturing sites and retail outlets in three Australian states, with the largest manufacturing site employing 90 workers based in Perth. Despite having a well-known quality brand, they were facing increasing competition from cheaper imports, especially for Tap and Plumbing Fittings. Labour costs were a big factor in manufacturing and overseas competitors labor costs were often well under those that the Australians had to pay. To counter this AusCo had recently entered into negotiations to set up an offshore manufacturing plant in Malaysia and was considering buying an existing chain of plumbing suppliers.
Walters and Masters knew they needed to respond to changing international circumstances with their business strategy choices, and they also wanted to extend the product range. Both had always been entrepreneurial and were keen to position the company to be more competitive in the mass-produced market, while at the same time retaining their position as suppliers of high-quality and expensive bathroom and kitchen wares. The Research and Development department, a highly committed, hand-picked group, was the company's 'growth engine' and in many respects drove the company’s success. Although other areas of the company are important, it is the innovations and adaptations of existing ideas and concepts that have made AusCo a market leader, and the management team are committed to making sure it stays that way.
The company's growth was fairly steady in the early years; however the past five years have seen a period of rapid expansion. Good economic growth in Australia, particularly in Western Australia, where growth has been fueled by a resources [mining] boom has seen a rapid increase in house prices and home developments with buyers looking for affordability, functionality, style and quality. AusCo has been able to capitalize on concerns about the environment with low water usage as a unique feature in their taps, showers and other fittings. Peter knew that understanding the market and being responsive to changing trends was critical, but he also knew that much remained to be done. AusCo still had many characteristics of a small family business. Along with the Perth plant, the company employed 400 people and had an annual turnover exceeding $100 million. This growth had mostly happened in the last six years, mainly through acquisition of competitors in each of the other states. The two founders were getting older and wanting to consider retirement and had already set up a board of directors and employed Peter to continue the company’s expansion.
However the problem facing Peter at the moment is how to merge so many organisational cultures. The process of combining smaller businesses and their ways of doing things into the larger business has been repeated, but with varying levels of success. There is still quite a bit of duplication. Along with the culture, the processes and different systems, such as accounting, information technology, industrial relations, occupational health and safety have had to be merged. In several cases this has extended to include suppliers. Although some progress had been made there is still more to be done. “On a forever basis, it would seem” thought Peter. The people part of the business was the hardest. The R&D department was crucial to the company's level of innovation. "We need to maintain our innovation" Peter thought. "Not just for products and service provision, but for organisational structures and processes as well”. Also, with the expansion into Malaysia he wanted to ensure that employees there embraced the same values as those in Perth. The pace of change just seemed to speed up! There was still so much to be done!
Peter has recently become aware of some problems within the existing plants. Departmental heads are overworked and along with line managers, still hire their own staff. Maybe we need a centralized Human Resources Department. “Maybe there are other functions that could also be centralized, given the increases in staff numbers and product ranges and we also need to set up some type of performance management system”, he mused. If the company lost capability because of its inability to manage its internal workings, ultimately business viability would be impacted. Not a happy prospect. There is also the move to Malaysia to consider, as this is a higher risk than earlier initiatives. Government regulations, the distance, the language, the inevitable cultural collision - how to manage these?
Guys/Gals, what are your analysis of this case if you don't mind sharing with me.
would you please shorten it out?
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