Rhodes Industries Case Analysis

INTRODUCTION

Rhodes Industries was established by Robert Rhodes in 1950s in Southern Ontario, Canada. Davis Javier replaced Sean Rhodes as president in 2004 was reviewing Rhodes Industries proposed changes in Organizational Structure by the consulting firm. Javier had been president of RI for 18 months, and he was keenly aware of the organizational and coordination problems that needed to be corrected in order for RI to improve profits and growth in its international businesses. David Javier was in doubts whether the changes recommended by the consultants would do more harm than good for RI.

CONTEXT

Rhodes Industries was established by Robert Rhodes in 1950s in Southern Ontario, Canada. Initially, the business of Rhodes Industries was to make pipes and then glass for industrial uses. As soon as this initial business was established they quickly branched out into new areas such as sealants, coatings and cleaners, manufacturing mufflers and even parts for trucking industry. Then gradually Rhodes Industries expanded by acquiring small firms in Canada and the United States during the 1960’s and each subsidiary was a complete local business and was allowed to operate individualistically so long as it contributed profits to Rhodes Industries.

Rhodes Industries was a combination of multiple corporations engaged in different businesses that fall under one corporate group i.e. one parent company with many subsidiaries structure with subsidiaries across North America reporting directly to headquarters at Ontario, Canada. 1970s and 1980s, the president at that time, Clifford Michaels, brought a strong international focus to Rhodes Industries and adopted a strategy of acquiring small companies worldwide. Rhodes Industries ventured into new lines of business such as consumer products and electrical equipment’s, in addition to its previous line of business. This strategy was adopted with the belief of forming cohesive units that would bring Rhodes Industries synergies and profits. Most of these products had local brand name. During 1990s, Rhodes Industries changed its strategy and focused more on three lines of businesses viz. Industrial products, Consumer products, and Electronics. Sean Rhodes led the acquisition of more international business related to these three categories and divested business not related to the above three categories.

In 2004 David Javier replaced Sean Rhodes as president and at that time the structure was based on 3 major geographical areas i.e. North America, Asia and Europe. The various independent units within those regions reported to the office of the regional Vice President. Businesses were largely independent which provided flexibility and motivation for subsidiary managers.

The three central departments were:

1. Corporate Relations & Public Affairs.
2. Finance & Acquisitions.
3. Legal & Administrative.

These three departments served the Corporate Business worldwide. If a country had several units, a subsidiary president was responsible for coordinating the various businesses in that country. But most of the coordination was done through the regional vice president. Other functions such as HR management, new product development, marketing, and manufacturing existed within individual subsidiaries. However, there was little or no coordination of these functions across geographical regions as shown in the Rhodes Industries Organization Chart in the case study.

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