British Commercial Investments Ltd.

An Individual Report on

British Commercial Investments (BCI) Ltd.

BA _____

General Management

Submitted to:

Submitted by:

28 March 200_

I. Case Overview

British Commercial Investments Ltd. (BCI), a diversified holding company based in London, has 16 subsidiary companies operating in various industries including production of oil drilling equipment and electrical instruments, special steel fabrication, asphalt products, and construction of agricultural buildings. Recently there is a shift in emphasis in corporate objectives and investment efforts, namely, internal expansion of the existing subsidiaries and acquisition of related companies. Another change is geared towards an increased focus on formal planning through the BCI three-year forecast which is instituted to sustain and reinforce the strength of the firm.

These recent efforts resulted in changes in the relationship of BCI with its subsidiaries. The BCI parent company offers support services to its subsidiaries by appointing director nominees, who usually take the role of chairman of the board, to the subsidiaries. The director nominees try to initiate reforms in the subsidiaries and also share their experiences and expertise. In particular, the case focuses on the ensuing relationship between BCI, through its director nominee to the subsidiary as represented here by Mr. Henry Lampton, and the top management of Harrogate Asphalt Products Company, one of the subsidiaries of BCI Ltd. Mr. Lampton wanted to initiate changes in Harrogate but he experienced difficulties due to the refusal of Paul Denham, the Harrogate Managing Director, to cooperate.

II. Assumptions

The case will be analyzed from the point of view of Mr. Henry Lampton, a BCI executive and leading contender for the position of BCI managing director which is expected to be vacated in one year when the incumbent retires and also the current director nominee of Harrogate Asphalt. The setting of the case is in the United Kingdom, where the BCI holding is London-based, with the subsidiaries located in other towns or cities. It is assumed that the case happened in the late 1960s and early 1970s as can be surmised from the weekly wage of workers as given in the case. Relevant business context during this period will be considered in the analysis.

III. Business Context

During the period in the late 1960s and early 1970s, the United Kingdom of Great Britain (U.K.) experienced a declining economy with union workers in many industries frequently staging strikes. Inflation was also rising during this period, with the Sterling Pound experiencing substantial devaluation, especially during the 1960s. Being a major player in World War II, the U.K. during this period was still trying to rebuild the damages wrought on it by the war.

In the social context, the education sector experienced a remarkable growth, with women entering universities in greater numbers and an alternative form of education, the distance learning or open university, was formally introduced. Liberal or progressive reforms were also occurring in many areas such as the repeal of the capital punishment law, divorce reforms, and enactment of the abortion law.

During the said period, the U.K. was led by Mr. Harold Wilson as the Prime Minister. The country experienced unrest from some of its commonwealth member nations, such as Rhodesia, which were trying to gain independence from the U.K. In the 1970s, the discovery of oil off the northern coast of the U.K., particularly in the North Sea area, buoyed hopes of uplifting the country’s economy.

IV. Problem Statement

Due to the recent changes that BCI wants to implement to its subsidiaries, the relationships between the parent company and its subsidiaries, particularly in this case Harrogate Asphalt, have been adversely affected. The shift in emphasis in corporate objectives plus the increased attention to formal planning had resulted in some conflicts. BCI believes that its subsidiary companies cannot attain their full potential without some assistance from the central advisory services provided by the headquarters staff. The company is convinced that the following could attest to the need felt by subsidiary managers, namely: (1) the success of the operations research group, (2) the welcome accorded to the monthly economic bulletins of BCI’s chief economist, and (3) the demand for the services of BCI’s marketing adviser.

In the past, the U.K. subsidiaries were regarded merely as diversified investments to be bought and sold and the managerial responsibilities entirely rested on the subsidiary or unit. Later on, the parent company gradually realized that it needed to take full responsibility for the units while giving them certain levels of local autonomy in conducting their individual businesses.

In the case of Harrogate, Mr. Paul Denham, the managing director, refused to listen to proposals of the board of directors, particularly Mr. Lampton. The former would brush aside suggestions for improvement during board meetings, saying the issues brought out were not board matters. Further, Mr. Denham did not want changes or meddling in the operations from corporate staff, stating that they have a system that is producing high profit. Mr. Lampton suspects that the trouble lay in the fact that Mr. Denham had been outgrown by the firm he managed, and he may be afraid that he may not be capable of dealing with new changes. Against Mr. Lampton’s objections, Mr. Denham did not hire, for instance, a highly qualified managerial accountant who could think and plan rather than simply doing clerical work. Instead he hired a local accountant that saved him substantially in wages than if he hired the managerial accountant. Mr. Lampton observed that Mr. Denham was an individual who would reject any sort of idea that he was not familiar with.

The issues in this case consist of leading positive change, motivating others, building effective teams and teamworks and crisis management. When changes are happening in organizations, it is imperative that there should be effective and appropriate ways of managing people, management of changes and culture