1.

Case Overview:
Rhodes Industries (RI): Established by Robert Rhodes in 1950s in Southern
Ontario, Canada
The business of RI:
developed pipes and glasses for industrial uses
gradually branched out into new areas such as Sealants, coatings and
cleaners and parts for trucking industry
expanded by acquiring small firms in Canada and the United States
during the 1960s was a conglomerate structure with subsidiaries across
North America reporting directly to headquarters at Ontario, Canada
consisted of independent local business units.
1970s and 1980s, the president at that time, Clifford Michaels, brought a
strong international focus to RI and adopted a strategy of acquiring small
companies worldwide. RI ventured into new lines of business such as
consumer products and electrical equipments, in addition to its previous
line of business. This strategy was adopted with the belief of forming
cohesive units that would bring RI synergies and profits. Most of these
products had local brand name.
During 1990s, RI changed its strategy and focused more on three lines of
businesses viz. Industrial products, Consumer products, and Electronics.
Sean Rhodes (a new president of RI) led the
acquisition of more
international business related to these three categories and divested
business not related to the above three categories.
Current organization structure
2004: The current structure is based on 3 major geographical areas viz.
North America, Asia and Europe. The various autonomous units within
those regions report to the office of the regional Vice President.
Businesses are largely independent which provides flexibility and
motivation for subsidiary managers.
3 central departments: Corporate Relations and Public Affairs, Finance and
Acquisitions and Legal & Administrative serve the Corporate Business
worldwide.
If a country had several units, a subsidiary president was responsible for
coordinating the various businesses in that country. But most of the
coordination was done through the regional vice president.
Other functions such as HR management, new product development,
marketing, and manufacturing existed within individual subsidiaries.
However, there was little or no coordination of these functions across
geographical regions
Current Scenario:
RI changed its strategy and focused more on three lines of businesses viz.
Industrial products, Consumer products, and Electronics.

Most of the products in various product lines do not need localised

customisation and technology used for the manufacturing process is very
mature. In terms of environmental uncertainty, we can infer that they
operate in a complex but stable environment. With regard to the stage of
international evolution, it fits into the Multinational bill since it is
operating in various countries. The current structure is a Global
geographic structure, which encourages product design, assembly, and
marketing strategies that are specific to the needs of each country.
2. Problem Identification:
Organizational problems:
First
Each subsidiary acts as an independent business using its own reporting
systems and tries to maximise its own profits. Autonomy makes it difficult
to consolidate financial reports worldwide and gain efficiencies of uniform
information and reporting systems.
Second
Major strategic decisions were made to benefit individual businesses or for
a countrys or regions local interests. Local projects and profits received
more time and resources than did projects that benefitted RI worldwide.
Third
There is no transfer of technology, new product ideas or other innovations
within RI. As a result, RI is getting deprived to important information that
it could leverage for its overall growth.
For eg., an Electronics manufacturer in Singapore refused to increase
production of chips and capacitors for sale in the UK because it would hurt
bottom line of the Singapore operations.
However, economies of scale in Singapore would more than offset
shipping costs to the UK and would enable RI to close expensive
manufacturing facilities in Europe, thereby increasing RI's efficiency
and profits.
Again, a cost saving technology for manufacturing Light bulbs in Canada,
had been ignored in Asia and Europe. A technical innovation that
provided home owners with cell phone access to home security systems
developed in Europe has been ignored in NA.
3. Applying Theories of Organizational Behavior and recommending
alternatives:
Model to fit Org. Structure to International Advantages
When organizations venture into international domain, a coherent global
strategy should be formulated that provides synergy among worldwide
operations. The main problem managers face here is to choose between
emphasizing on global standardization or national responsiveness.
Managers must decide whether each global affiliate should act

autonomously or whether activity should be standardized across

countries. Thus arises the decision to make a choice between globalization
and a multi domestic strategy.
a. Globalization strategy: It means that product design, manufacturing
and marketing strategy are standardized throughout the world.
Example : Coca Cola. But recently companies have begun shifting away
from strict globalization strategy due to economic and social changes.
b. Multi-domestic strategy: It means that the competition in each country
is handled independently of competition in other countries, thus
encouraging product design, assembly and marketing tailored to the
specific needs of the country
First Recommended Structure:
Create a new international department at Headquarters