Ican 2021 Corporate Strategic Management And Ethics Question 1

Davidson Ltd is an automobile company based in Aba, Nigeria. It has been in existence for nearly eighty years. The company originally began by supplying components for small vehicles and was producing equipment during the Second World War. However, in the nineties, it underwent rapid transformation under the founder's son, Tony. Tony has diversified the company into supplying tricycle components and spare parts to the Nigerian market. The company now employs some 500 staff around the country and is well known for the quality of its workmanship. The company operates under three divisions. One division is concerned with the manufacture of tricycle components, a second division with spare parts and the third division undertakes specific one–off work in automobile and automobile design. The tricycle component division is by far the biggest and accounts for seventy per cent of the total turnover. The smaller specialist automobile design division is by far the most profitable in terms of return on capital employed and it relies a great deal on a senior engineer, Emmanuel, who has been with the company for more than twenty years. Recently, the company was invited to send sample components to a Japanese car manufacturer who is keen to commence operations in Nigeria. These components are needed within eight months. However, Mr. Tony is concerned that his company may not be able to meet the strict standard imposed by the Japanese manufacturer. The deal, if it is sealed, would establish Davidson Ltd as an important auto component supplier in South East Asia, thus, opening up the potential for exports. Tony realises that the export potential is great and that any initiative towards exports would get full backing from the government. While, this is happening, the spare parts division is also showing signs of growth. Recent reforms in part of North Africa has made companies in that region to be very keen to modernise and innovate their old manufacturing processes and Davidson had received business enquiries from the region. Tony faces a dilemma. He knows that the opportunities that have presented themselves would give the company a global presence. At the same time, he knows that the company is solely under his management as chief executive. Tony holds eighty percent of the shares. The other two directors hold ten percent each. Although the other divisions have managing directors, they rely on him for decision making. The current managing directors are family members. One is a brother in-law and the other a cousin. Their knowledge of the industry and its workings is generally poor. He made these appointments to please his father so that he could be left to run the company as he deems fit. Tony knows that to satisfy the Japanese auto manufacturer, he needs to reorganise the automobile design division and consider issues of Total Quality Management (TQM). This will take time and requires that he delegates responsibilities to other divisions. However, he feels uncomfortable doing this. The company is at crossroads. The three divisions are doing well, but could do even better, if their old, bureaucratic and hierarchical systems are reviewed. Indeed, some of the younger managers and engineers would prefer a more open, flexible management structure. Some of them have studied both engineering and management in Holland and the United States, and are keen to see key innovations in place. While Tony knows that these opportunities highlighted above should not be missed, he has to ensure that they are handled successfully so that the future is secured for Davidson Ltd. This requires that he takes some tough decisions in restructuring the company within a few months.