Page 12 - Ice Breaker Article

12

PARAGRAPH 1

The Business Communications Group (BCG) had, in its fifteen years of existence, established for
itself a dominant position in a number of global markets. The credit for its success lay at the feet of
one man, its founder; Chairman; and Chief Executive, Richard Sweet. Sweet had developed the
company on the basis of planned introduction of new products supported by imaginative marketing,
and good customer service the BCG achieved an annual turnover in excess of £2 billion. With its high
profit margins, and continually rising share prices, it had rapidly become one of the favourites of
investors. However, it had recently become apparent to the chief executive that the organization
structure, no longer fitted the company's strategy.

Normally the class will readily generate the strengths of BCG: new products, imaginative
marketing and customer service which in combination make it a market leader (Board 2). In
addition it will normally be picked up that there is a weakness, a problem with the company
structure.
However, it is at this point that a more visual and visceral analysis of the information may be
made by using the chalk board to spell out the linkages and causal factors that might be at play in
the paragraph as shown in Boards 2, 3, 4 and 5.

Board 3 shows the relationship of high profit margins, rising stock prices and sales.
Examination of the product life cycles, as plotted to show the profit momentum line, allows a clearer
interpretation of the core competences of BCG to emerge. Essentially, BCG has created both a
potential technological gap and barrier to entry. From these it may be drawn out that BCG is
perceived as a good investment and that management is also perceived as good.
Board 3 also shows the profit momentum line that may be implied from the statement ‘planned
introduction of new products’. As product ‘A’ reaches maturity a new product ‘B’ is introduced to
take-up the profit short-fall and so on thereby maintaining the up-ward trend in sales and profit
growth. It might also be argued that the same logic could be applied to geographic introduction of
the product line (market extension 1, 2, 3) where new markets (Europe, China etc.) allow product
extension driving the profit momentum line up (profit momentum b) – Board 4.

Board 4 gives a visual interpretation of management’s contribution to financial performance of
BCG. Moreover, it may be drawn out that the market value of its shares is built upon a combination
of the intrinsic value of its assets etc. and the performance of its management. However, a further
question on the implications of the chairman and chief executive being one in the same person
may be also be asked and measured against the normal roles of each – chairman runs the board
and the CEO develops the strategy - a strength or a potential weakness?

Asking the class what the company is selling (Board 5), whether a product or a package, helps to
consolidate the inter-relatedness of the elements embedded in the paragraph as well as the linkages
that underpin them.

PARAGRAPH 2

For years the company had been organized along functional lines, with directors in charge of
finance, marketing, production, personnel, purchasing, engineering, and research and development.
In its growth, the company had expanded its product lines beyond its original product of Network
Systems, Satellite Communications Systems, Network applications. However, concern had arisen
that its organization structure did not provide for profit responsibility below the office of the CEO, did
not appear to fit the product or geographic dispersion of its businesses, and seemed rather to
accentuate the "walls" impeding effective communication and coordination between the functional
departments of marketing, finance, production, personnel and Research & Development; there seems
to be too many decisions that could not be made at any level lower than the CEO.