Case Analysis – Kimberly Clark
Kimberly Clark considered restructuring is corporation based on perceived strengths of the products because it would more easily allow them to better focus on brands that were in the “fix” category, while cutting back on the products in the “sustain” category. They were trying to switch their business from conventional structures to a product structure, grouping together products based on how well they performed in the market. They feel focusing on the not selling products will improve the profits for them, while the other sectors will just continue to provide similar profits.
This structure has great possibilities of working, but in the long term it may not be so good. This type of structure like I stated above is good because it allows the company to better focus on the products that need sales improvement over other products that are guaranteed sellers. This structure can improve products at the expense of hurting sales in an alternate category. The main reason for this would be that more money and resources would be diverted way from bettering products in the sustain category, so the products in this division would not be to ready for changes in the market. There are several advantages and disadvantages using such a structure. A couple of disadvantages are that since this structure would require different types of products to be managed by someone who may only have experience with dealing with only one the products. Another disadvantage with using this type of structure would be duplication. We would have to duplicate different departments, the biggest of them being production. The company would have to double up on capital expenditures. For example, training pants and diapers used to be made in the same division (i.e. using same equipment to create both items), but now you’re going to move one product to the grow division and the other to the sustain division. So now both divisions are each going to need a diaper maker since they are no longer together. There are also advantages, one of which is the performance of the product is easier to evaluate, meaning that since we group the products together by sales performance, we can easily see in we are seeing growth or not.
Kimberly Clark had to change its original reorganization plan in order to survive in the market. Just the additional costs of making products they were already good in would have been tremendous. The new way they organized it : personal care, washroom products and emerging markets, works out a lot better because for one thing the personal care division did not need much work, whereas the washroom products did. In both plans the washroom products are in there own division because it was originally the product that needed a “fix”. But not separating the personal care saves in not wasting money on repetitive equipment and man power. The addition of the emerging markets will allow the company to sell products made in the other two divisions to countries in order to maximize growth.