Summary of the 8th Session for Section D

Summary of the 8th session for Section D

The session started with a brief recap of the previous session as to why the company’s 5 divisions were brought under the leadership of the Executive Vice President from CEO.

The fact that the 3rd End User division, i.e., Building Product Division, was acquired in the year 1963 (just 3 years prior to Irwin abdicating his responsibility of overseeing the five divisions), led to the establishment of the fact that Irwin was planning for Texana Petroleum to go for a large number of acquisitions. The pre-1966 structure and the post 1966 structure were compared to support this inference.

1955-1966: The scaffolding structure existed and it was evident that there was almost no chance that the scaffolding structure was going to be removed anytime soon, and thus the conflicts between the divisions would also remain.

Now the question was, if Texana was to retain the ICAM structure, was there any way to improve the situation?

To start with, a divisional analysis was done to see if ROI evaluation of the divisions was necessary.

The end user divisions catered to external B2B markets where the after sales issues were to be addressed as priority. From the case facts, it is also known that the end user divisions procured raw materials both from in-house (PCD) as well as external suppliers, with BPD procuring almost 80% of its raw materials from external suppliers. Whereas PCD had a huge number of external buyers as well.

PtPD on the other hand catered to both internal and external buyers, with external buyers constituting of both B2B and B2C market in the USA and Europe & Latin America respectively.

Then how did ROI evaluation affect each of these divisions?

To understand this better, each of the divisions were looked into separately.

End User Divisions (Molded Products Division, Packaging Products Division, Building Products Division)

The three end user divisions, i.e., MPD, PPD and BPD, all had different product lines of their own and also did not have any product flow relationship among themselves, hence not being Laterally Related. They were also not Vertically Related as none of their end products were used as raw materials for each other. Thus, it was safe to say that ROI evaluation was not an issue for the end user divisions.

Petroleum Product Division

Petroleum Product Division was seen to have no complaints for the neither of the other divisions, nor the headquarters. The other divisions and the headquarter too had no complaints for PtPD either.

Why was it so?

To understand this better, help of the BCG Matrix was sought after.

To understand the BCG Matrix, lets go through the following points:

• If Demand is in excess than Supply, and both the