Restructuring the organizational structure at Kimberly-Clark Essay

In 2003,Kimberly-Clark the maker of paper reapings including Kleenex, Haggis , and Depends, proclaimed it was creating a radical mod structure to shore up part of its headache that were performing poorly by restructuring its product into three categories .The categories were grow, sustain, and shackle-somewhat unconventional categories. They werent devised based on product type, customers, or the geographic location is which Kimberly-Clark sold goods, but instead on the perceived speciality of the products themselves.BackgroundKimberly, Clark and follow was established in 1872 by four issue businessmen, John A. Kimberly, Havilah, Babcock, Charles B. Clark, and Frank C. Shattuck. Based in Neenah, Wisconsin, The Company initially manufacture paper, but over the years it began to branch out, broadening into the personal hygienics consumer products area to compete with companies like Procter & Gamble. In 1978,Kimberly-Clark introduced what would become its top trafficker Huggie s disposable diapers. Huggies were an instant hit and soon became the nations act one diaper brand.Over the course of the next two decades,Kimberly-Clark introduced Depends for adults and training boxershorts for toddlers,and acquired its competitor Scott Paper,a leading maker of toilet paper and paper towels.Today,the incorporated company sells its products in over 150 countries around the world.In 80 of those countries,it holds the number-one or number-two spot in the marketplace.It has physical operations in 38 countries and employs more than 55.000 employees.Restructuring ProblemsLike many corporate mergers, the merger between Kimberly-Clark and Scott Paper in 1995 didnt roll out smoothly .Most of Scotts senior circumspection team left after the merger,and Kimberly-Clark experienced problems integrating the two companies.The future(a) year,operating income and sales dropped. By the late 1990s,the companys senior managers had in the end worked through the integration chall enges of the merger.But the dawn of the twenty- kickoff century brought new challenges.Chief among these was the pretermit of harvest in developed countries for Kimberly-Clark products due to market saturation. To continue to grow,the company had to look to new markets.Thecompany was also losing market section to its fiercest rival,P&G.By introducing a high-end line of pampers in 2002,P&G had been able to capture market share from Huggies. Given the tough competition in the disposable diapers industry,Kimberly-Clark tried to transition by producing a related product disposable muck up wipes.But these growth plans were upset when Johnson & Johnson,the prominent maker of baby shampoo,launched its own line of baby wipes.It was within the context of these competitive dynamics that Kimberly-Clarks senior manager de none their radical reorganization plan in 2003.The grow kinsfolk (brands and sectors growing the fastest) included products such as training pants,household towels and wipes,and Kleenex.The Sustain category(brand generating straight returns) included U.S, infant care products and other facial tissue lines. Whereas the secure category included products related to European personal care on with the U.S. Professional washroom business.Sales of these products were relatively flat.And although they accounted for about 20 percent of the firmss count sales,they contibruted only 10 percent of the profits. Kimberly-Clarks senir managers argued that reorganization would help profit the companys speed to market,streamline its decision making regarding allocating capital and flip cost decrease on a sustainable basis.However,simultaneous to the reorganization announcement,Kimberly-Clark announced it had revised its forecast for sales increase down from 6 percent to 8 percent annually to 3 percent to 5 percent.Predictably,shareholders reacted negatively,and Kimberly-Clarks stock price closed down immediately after the announcements.Thus,executives began to see the planned changes. Kimberly-Clark eventually presented a new and different organizational structure in early 2004.Rather than organize products by the grow, sustain , and fix categories, counselling announced that it would organize around by personal care, washroom products, and emerging markets.Specifically, anxiety planned to combine the companys North American and European personal care groups under one organizational unit. The same would give-up the ghost for products related to the washroom business. In addition, vigilance planned to create an emerging markets business unit to maximize the growth of all Kimberly-Clarks products in Asia, Latin America, and Eastern Europe. As an example of this growth, in 2010 the company announced its first plant in Russia to manufacture Huggies diapers. By 2010, Kimberly-Clarks changesreshaped the company into a consumer product health and hygiene firm. Analysts have reacted well to these changes. In addition, the company announc ed that its efforts to reduce cost are likely to exceed its initial estimates. The management projected that cost savings could be as high as $450 milliion by the end of 2010. And, management also announced a new plan to reduce up to $500 million more by 2013. Finally, the company is searching for good acquisitions in the health care industry.Questions..1. why would Kimberly-Clark executives restructure the company based on grown, sustain, and fix categories? What disadvantages might direct from such a structure?2. Was the organizational structure presented by Kimberly-Clark executives in 2004 better than the first structure proposed? Why or Why not?3. Are the companys changes to reshape its identity as a consumer product health care and hygiene company and its cost reduction efforts likely to improve its competitive position relative to P&G? please explain your answer.