Kanthal Case Study as With Many Organizations,

Kanthal Case Study As with many organizations, the challenges of globalization have varying effects upon the organization's ability to remain profitable and compete in the worldwide environment. Many organizations that trace their existence back over a century find that some of the demands of globalism require a new approach to customer service, management, and even manufacturing. No longer are these organizations seeking customers at whatever cost, but find that they need to add a profitability quotient into the mix in order to survive.

One such company is Kanthal, the largest of six divisions in the Swedish-based Kanthal-Hoganas group of companies, headquartered in a small town of less than 20,000 people northwest of Stockholm. Kanthal consists of three divisions; Kanthal Heating, manufacturers of products that heat through electrical resistance; Kanthal Furnace Products, producing heating elements for larger industrial furnaces; and Kanthal Bimetals, one of the few companies in the world that is fully integrated as a manufacturer and shipper of thermo-bimetals for temperature control devices.

Kanthal Furnace Products enjoys a dominant position in large industrial corporations in the developed world, and holds a 40% market share. Kanthal Heating has a respectable 25% market share, and of course, Kanthal bimetals a virtual monopoly. All in all, quite respectable for the size of the company. By the mid-1980s, however, Kanthal had about 10,000 customers and produced 15,000 items, but was faced with flatlined sales.

Ninety-five percent of its sales were exported outside of Sweden, Carl-Erik Ridderstrale became president of Kanthal in 1985, and soon realized that despite such high levels of market share, his company's sales were flat and many of those sales relatively unprofitable. He knew the company had been quite successful historically, but was now faced with at least two critical issues: resource allocation and general product line profitability. However, prior to making any changes to the organization, Ridderstrale realized that it was the way the company measured profits that was fundamentally flawed.

In the past, Kanthal treated every customer and every order with the same delegation of resources and failed to measure profits by the job or costs incurred. Ridderstrale realized that low profit customers actually place higher demands on technical and commercial services, creating margin issues and frequent manufacture of non-standard items at inflated costs for the company. Based on these issues, we can make the following recommendations: Issue Overall Rubric Recommendations Resource Allocation Human, mechanical, marketing and sales resource allocation.

What human resource needs are being met internally, what customers are tapping expertise that may be holding back individual actualization and company strategic ROI? Look critically at allocation studies and focus human resources on high-profit items; sales on incurring the customer profile that will provide the fewest custom demands on the organization while helping Kanthal reach a more reasonable level of profitability overall.

Line Item Profitability Examine 15,000 SKUs for resource and profitability; find out which items remain fiscally stable for future markets or, by trimming some low-performing SKUs, would the organization reach more profitability? What trends can Kanthal lead in the market that might impact.