A Brief Introduction

We discussed an interesting case just yesterday on Tetra Pak CT written by Prof. Lars Lindkvist, Linkoping University. The case did appear to be a bit difficult. But the group presenting their analysis did a brilliant analysis. Their analysis led to some key issues which I have summarized after the succeeding paragraphs .

Group presentation

Tetra Pak (CT) was a R&D unit within Tetra Pak, a leading company worldwide in developing and producing process, packaging and distribution system for liquid food. CT was established in 1989 but by the beginning of the 90s demand for its services diminished.

At that time, CT had a traditional line-of-command structure organized along functional units, which were subdivided into smaller, technical specialist departments. Line managers tended to focus more on their line duties than on project goals. This led to a reinforcement of their technical character while downplaying customer focus. As a result, project leaders were accountable, but had little authority, and individual project members felt torn between the demands of the line organization and the project they were engaged in.

The new MD and a team of top managers decided to conduct a SWOT analysis. The SWOT lead to a major decision – restructuring. The former matrix organization dominated by the functional units was abolished, and instead a purely project-based organization was introduced. The revolutionary change efforts were successful. As a result the organization was no longer on the edge of survival and demand for its services increased manifold. Between 1994 and 1999 demand doubled several times over. So also the number of patents increased.

Character of the new CT structure promoted the picture of a very flat decentralized system. It was loosely coupled, dispersed yet integrated enough to produce valuable services. CT carried out its operations in projects that were largely self-organized within goals set for quality, cost and time.

In the break Arihant thoughtfully distributed chocolates to the class. Arihant thanks and a Happy Birthday.

What were the main reasons for success in the reorganization initiative?

Some of the key issues are given below:

(a) The challenge was to develop CT as customer focused and move out of their inward focus. For this a project-based organization was considered necessary. This will enable a team-based structure with minimal hierarchy levels.

(b) A functional organizational structure has the advantage of increasing specialization and expertise. It also creates accountability and pride in ones function. On the other hand it suffers from lesser inter-functional coordination due to ‘silo’ mentality. Here Jack Welch’s teaching on creating ‘boundarylessness’ helps in introducing structural mechanisms that improve cross-functional relationships greatly. The overall organizational effectiveness improves.

(c) A change in focus inwards towards the customer will need a change in the mindset of the people. Structure alone is a blunt weapon it cannot create such a change by itself. A lot will depend upon the depth and vision of the change initiative. Communication the message of change with awareness is important.

(d) Self-motivation can emerge only if a spirit of entrepreneurship is made to prevail. Insecurity must be allayed specially in the people who may not be in a position to rely on authority of position and technical expertise.

(e) A question that may arise is that why can a similar change be achieved in their earlier functional organization? Yes it can for a manufacturing organization but for a purely researched-based organization a project form is most suitable.

(f) CT needs to emphasize a global vision that is sensitive to cultural diversity. This will enable alignment to customer preferences in packaging needs. The challenge is to move from an ethnocentric approach to one that is geocentric.

(g) CT in its vision could give importance for research to develop biodegradable material as a replacement to plastic. The recycling support presently being given in some cities is appreciated by the customers.

Note: As suggested by Raju in his comment below I am inserting a link for the case abstract by the author of the case study. The full text is not available on-line.

http://alturl.com/vuwz

Thank you!

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About dilipnaidu

An open mind! Love to share my thoughts and a keenness to learn. An engineer and a MBA I had a wonderful innings in the Army and later moved to consultancy and teaching. My current interests are reading, music, growing culinary herbs, playing golf and yoga. I am serious on "Living life less seriously". A warm welcome to you be well and be cheerful always.

17 responses »

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  2. anwar says:

    how to get on to the presentation .

    Like

  3. Vanessa says:

    Guys
    I am doing this case as part of an advanced strategy exam this Friday and would be interetsed in your views as to the strategies deployed
    Thanks

    Like

    • Dilip says:

      Hi,

      The case findings are mentioned comprehensively in (a) to (g). The main strategy can be identified to be a ‘turnaround strategy’ of the R&D unit Tetra Pak CT. This turnaround was successful by restructuring Tetra Pak CT into a ‘Project-based’ organization structure. This enabled them become more customer focused and flexible.

      Hope this helps. Best of luck.

      Like

  4. Arihant Jain says:

    well thanks a lot sir…
    it was really nice…… and i hope everyone enjoyed it!!

    Like

  5. dilipnaidu says:

    Dear Manish,

    You continue to amaze me as you always did years ago. I am glad you too share my belief in the power of vision. I just did a little Google research on Rahul Bajaj – his vision comes forth from Jamnalal Bajaj, founder (1926)founder of the group who was a close confidant and disciple of Mahatma Gandhi.

    His son, Kamalnayan Bajaj, then 27, took over the business in 1942. He too was close to Gandhiji. The present Chairman Rahul Bajaj, took charge of the business in 1965 and continued driving the vision.

    The dedication, resourcefulness and determination to succeed which are characteristic of the group today, are often traced back to its birth and roots in Gandhian philosophy of relentless devotion to a common cause.

    I am doing fine and trust are too – flying to new highs! You too keep 🙂

    Regards, Dilip

    Like

  6. Manish says:

    Hi Sir,

    It’s been a while that I’m going to appear again in the comment section. However, I’m an ardent follower of your blog (too obvious, n I needn’t be saying this.)

    I just felt like quoting our very own Mr. Rahul Bajaj (I heard him during sm program on CNBE, he anyways appears a lot on TV these days.. He has come of a age to be such a visionary!)where he has shared a lot about moving your priorities to be in business. He said, the intellect and the ability (..of key personnel; of course he was quoting from his own very life) to remain sane during testing times is what sails you thru to get into the next orbit of it all. Sounds reasonable.. ain’t it?

    How are you! My wishes for you.. to be always smiling and charming as u r!

    Regards,
    Manish

    Like

  7. Gaurav R Arora says:

    Turnaround strategy played a important role though it was just an R & D organization its vision came out well. Now as they have to change their organization structure each and every member of organization was involved.Project was for a limited time frame.
    The inital problem they faced was due to their focus more on product orientation than customer oriention and initially every decision where taken by the top management.

    Regards
    Gaurav R Arora

    Like

    • Dilip Naidu says:

      Yes Gaurav, for a turnaround strategy to be be successful the hard variables need to be integrated with the soft variables as in Seven S. The latter helps in motivating all the people in the organization.

      Thanks 🙂

      Like

  8. Rajul Joshi says:

    Indeed a very good case to teach Principles of Management, change management and strategy and structure vs system perspective. The transition to adaptive organization- project based adds to the agility in functioning and makes the organization more customer centric.
    Mr. Naidu, it will be great if u can share how the case was conducted by you and for which subject the same was conducted.
    thanks

    Rajul Joshi

    Like

    • Dilip Naidu says:

      Prof. Rajul, thank you for your comments. All the factors that you have mentioned are highly relevant. I think we could have used the McKinsey’s Seven S Model to analyze the case. The synchronization of all the factors would have made the organizational,

      We form groups in the class and each group presents the analysis of their respective cases. This forms part of our Strategic Management module.

      Please do visit again. Kind regards.

      Like

  9. Geetha says:

    “Boundarylessness” – Of course, it is a perfect fit, Sir! I do believe that we owe a lot to Mr. Jack Welch for having coined this great concept which instantly demolishes silos!

    Thanks and regards,

    Geetha

    Like

  10. Geetha says:

    A truly great case study on Change Management and Customer Relationship Management! Thank you, Sir!

    And Arihant, belated birthday greetings to you!

    Thanks and regards,

    Geetha

    Like

    • Dilip Naidu says:

      Yes Geetha to introduce a full-fledged change in focus towards the customer radical structural changes may be needed. BTW you have stressed on ‘boundarylessnes’ in earlier posts. I think it fits here too in the context of increasing synergies in a functional organization. I have added it in para (b) above.

      Thank you and regards!

      Like

  11. raju nair says:

    Hi,

    Link to the presentation would be very helpful

    Like

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