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Group 9
Case Analysis Johannes Linden: Managing the Global Executive Committee (Leadership)
PGDM Ex.2013-14
Group 9: Sheshank Kumar (1303-041) Shubha Mishra (1303-042) Somyashree Khare (1303-043) Sougata Sarkar (1303-044) Sumati Arora (1303-045)
1 Institute of management technology, Ghaziabad
Group 9
EXECUTIVE SUMMARY
Fluss AG, the Swiss parent company of FWD (Fluss Washer and Dryer Division), having 51,000 employees was established in 1947. Fluss specialized in design and manufacture of large households Appliances and also expanded its business across the globe. FWD division was divided initially into three geographic regions: Asia, Europe and the America. After becoming Director of FWD in 2004, Johannes Linden restructured the geographic regions from three to six ( i.e. South America, North America, Europe & North Africa, China & South East Asia, Japan-Korea & Australia and India & Indonesia) to get all aligned with the strategic division for FWD. After implementing the new regional structure, Linden created the Global Executive Committee (GEC), which consisted of his corporate staff and six regional directors, to make strategic and major investment decisions and to provide necessary support and expertise to Regional Directors to execute divisional strategy. Outside the GEC meetings, Linden also kept close contacts with the RDs and participated actively in the discussions and developments of the annual business plans for the most country managers. Due to lower material cost in 2011, Linden faced a challenge whether or not to change targets of sales for each country to reflect new price(lowerprice) as GEC members were not very supportive with the new targets for their regions.
Group 9
It can be concluded that Linden was a good global leader and was handling GEC with consensus and confidence.
Q 2- What was Lindstrom's purpose in establishing the GEC, and to what extent has this purpose been fulfilled by the members of the GEC?
In response to changing global trends and growth of emerging economies FWD was restructured in 200 , the number of FWDs went up from 3 to 6. Johannes Linden, DirectorFWD, created GEC (Global Executive Council) with the intention of establishing a forum for making strategic and major investment decisions. The GEC consisted of Linden's corporate staff and 6 Regional Directors (RDs). Purpose in establishing GEC: Country managers were concerned with growth and targets in local/national context. The RDs were there to think on a regional level when deciding upon: developing/planning business strategies, directing resources, overseeing future contracts, co-ordinating advertising/marketing, searching efficiencies/opportunities across region, risk assessment, and monitoring distribution networks. In broader sense, the RDs existed to think from a macro aspect. The GEC was supposed to be good at 'change management'. Also, it wasn't enough to be prepared to respond to global changes but also keep an eye on local preferences. RDs were to keep a tab on revenue and market share as well. Competition was getting tougher and profit margins kept getting slimmer. In this highly competitive scenario it was of utmost importance that newer growth opportunities were spotted and worked upon promptly. RDs were needed to be a step ahead of competitors. It was expected that GEC would set an example of BPS (best practice sharing) on global level, at the same time attuned to local needs. Extent to which GEC fulfilled its purpose: Linden shares CEO's remark at one of GEC meetings that FWD has made invaluable contribution to the overall corporate performance during the worst financial crisis in generations. This says it all; it shows GEC's grit. We are shown through the case that GEC started with fumbling baby steps, but it took off quite well gradually in the able guidance of Linden. Looking at the go getter dynamic style of Linden and his high expectation of GEC we doubt the success of GEC. But, nowhere it is shown that they are inefficient. Yes, there is room for improvement. Linden expects GEC members to take initiative. He's disappointed when they don't. I think he needs to introspect on why- not one of his dynamic go getter RDs does so? Is there a problem in the system or himself or with them? The global scene was that of unprecedented flux. There were great opportunities but plentiful challenges. Linden needed an agile org led by executive with both strategic and operational expertise. GEC needs to rise to the challenge of changing times and also the expectations of Linden.
3 Institute of management technology, Ghaziabad
Group 9
To answer the question: GEC has fulfilled its purpose to a large extent but they have 'miles to go before they sleep' (changing the famous lines of Frost's poem).
Group 9
Q 4- What should Linden do about the GEC discussion of the FWDs business targets and bonuses?
Key issues before Linden to resolve in the bonus and target discussion: Key business task of keeping everyone motivated to work hard. Align executive CMO and CFO using surplus monies for investment in growing markets. Appreciate POV of all RDs E.g. - North America- slowdown in housing, Australia Climate volatility, India Indonesia- keeping investment related authority. Provide RDs greater responsibility in decision making about business and targets. Inspiring everyone to take up the difficult discussion of revisiting Bonus and targets.
Lindens proposed plan of actions to achieve the above: Linden should appreciate the differences in Geographical business and non-business external environment. He should lay down priorities for every region in line with the RDs point of views. India Indo & China SE Asia & South America are only regions demanding investment hence there revenue targets should be revised aggressively with additional inputs managed by region (as RDS want )but monitored by CMO & CFO (as Executive teams want). North America & Europe are big for business and growth opportunity is small hence they should be driven by overall profitability for the division. All the regions should get their goals aligned towards the business performance of the division. Post seeking alignment from all the RDs and Executive teams he should structure the Target and Bonus in the following manner:
The Superlative Bonus should exceed the present Bonus by a handsome 10%-15%, so that all regions are working in alignment with the Global Business goals of the division.