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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...
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…
Rank customers by several weighted variables: yearly volume, amount of resources required, product definition (Standard vs. Custom), service demands, and time allocation. Redistribute internal resources accordingly, emphasizing volume; may require cutting back on some customers or helping them retool their own paradigm in order to realize savings.
REFERENCE
Kaplan, R.S. (1989). Kanthal. Harvard Business School Case Study. #9-190-002.
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