Sonoco Products Company - Essay Example

Sonoco Products Company 25th, October, Sonoco Product Company Introduction Background and Facts  The following case isan analysis of the Harvard business school-Sonoco products company (A); Building a World-Class HR Organization. The case involves an in-depth analysis of the circumstances surrounding the company and the challenges, which the company goes through as it strives to revise its corporate strategies in order to remain competitive and to continue its relative growth in the market. Sonoco Product Company is a packaging company that was established in 1899 in Hartsville, South Carolina. It was established by Major James Coker with $6,000 of opening capital, and was recognized as Southern Novelty Company until 1923. The new name of the company uses the first two letters of the original name of the company according to its mission statement of 2009. The company dealt with paper cone, which was used to hold yarns in the textile industry as its first product but later advanced to including various other products. The company engineers invented many other different processes that helped in the production of these different cones. An illustration is the automated engineering of the cones. It was this automated manufacturing that gave Sonoco a competitive advantage over its rivals in the industry thus becoming the leading manufacturer of cones in the United States ("Strategy for Growth," n.d.). The company manufactured plastic T-shirt and grocery sacks that were common in the supermarkets and other retail stores. According to International Directory of Company Histories, 1994, the company made Ultra seal, a shutting device for Crisco shortening cans that got rid of the need for a container opener. Sonoco grew up to become the leading packaging company in the world by the year 2000. Its revenues had grown to $2.6 billion brought about by the production and sale of consumer and industrial packaging. According to Thomas, Groysberg & Reavis, the companys employee base had enlarged to 17,300 employees working in 285 processes in 32 different countries. They served customers in 85 countries with an extensive collection of manufacturing and customer packaging solutions. Moreover, the company manufactured just about all of its paperboard, using just about two million tons of collected paper annually (Taylor, 2005) As time went by, the company has sustained growth with new processes from place to place, diversifying its product line. The company now deals with cardboard, aluminum cans, plastic, flexible packaging which has made it one of the most profitable company in the world. Nevertheless, as the company continued to grow, the industry too grew and so was the increased change in the industry. The company enjoyed economic growth mostly between 1990 and year 2000. After this period, the company’s position began to worsen. These changes were mostly being caused by vulnerability to changes in the world economy. This created a need for change for the company in order to meet the changing conditions. Among the changes to be implemented is the development and execution of strategies and action programs in order to meet consumer wants. These changes include the development of innovative package in packing the containers and the techniques in which they are packaged. Moreover, the company had to engage in production of diversified products as well as improve its productivity to reduce the cost of production. In addition, the company was to introduce a new and faster computer technology in order to meet quality assurance standards, and save on the cost of labor. In addition, the company was to create a website for the whole industry that would create awareness to consumers of their products and make cooperative efforts of the completely packaging industry. In order for the company to achieve these new standards, it had to reassess and reinvent itself to the new global marketplace in order to remain competitive. I have therefor used a situational analysis to review the state of Sonoco Company as well as the 7-S model to scrutinize Sonoco’s requirements for planned change, look at proposed options, and come up with a plan of action or the recommendation. Statement of Core Problem Sonoco Product Company started to pinpoint a change in its business upon nearing the new millennium. This had started bringing to an end years of continuous growth and development to the company. The price of its shares began to fall and hit an all-time low of eight years. Moreover, the company had acquired a huge debt and continued with its production in the country while many other companies were shifting to overseas nations to acquire cheap labor. The level of sales of the company to its main market, the North American market, reduced drastically. This led to an internal restructuring of the company in order to overcome the challenges. The company’s actions were regionalized to the point that it was incapable of supporting some of the far-reaching strategic initiatives of the company. Precisely, its human resources purpose was unproductive and viewed as just a managerial support function. Moreover, the company had to face the rising challenges of quickly changing technology, and variety matters. For instance, it now had to deal with flexible packing which was the new technique at this time and the increasing use of electronic business as a source of trade. Moreover, the company had to adapt to the increasing change in the demand for its product by the customers. These variables prompted the company to realize the desire for transformational change to ensure its sustainability in an unceasingly evolving environment. The company therefore, developed a need to conduct a SWOT analysis so that it can evaluate and build its strengths, develop on its weaknesses, recognize the existing opportunities, and plan strategically to eradicate awaiting threats (Levitt, (n.d.). Specifically, the company’s focus was to assess external forces such as climatic changes, environmental damage, energy crisis, global market, packaging business, and demands from its customers and specifically its challengers to ensure alignment, if needed, with its business policy. Secondary Problem Alongside the diminishing growth of Sonoco Product Company, various secondary problems arose. This includes stagnating business strategies for the company. The company opted to change its business strategy in order to help management realize its objectives. This can be achieved through the introduction of new products or services, or cost control. Another hindrance was a growing packaging industry that increased the level of competition in the industry as well as increasing environmental concerns. Moreover, the expanding product lines, diverse and sophisticated consumers, challenged the company. Alternate Solutions As previously noted, there were numerous challenges such as globalization, the industry, economy, and the environment that faced Sonoco Product Company. In order to cope with these kinds of challenges, the company had to develop alternative solutions. One of the alternative solutions that the company implemented was a centralized human resource department. In this strategy, the company decided that one center of expertise would deal with most of the services, and reduced number of field staff would work for the divisions (Werner, 2006, p. 391) This would help to reduce the cost of running the company and enhance improvements in other processes. The second option open to the company was a more hybrid structure that would have direct involvement in progression planning, payments, personnel programs, staffing, and benefits. The human resources department would be responsible for planning, strategy development and its implementation. The human resource field officers would be responsible for divisional level programs and assist in continuing initiatives and consultancy services (Cummings & Worley, 2008, p. 321). Constraints and Limiting Factors Sonoco Product Company would experience constraints and limiting factors in implementing these alternatives. One of them is the high cost involved in reorganizing the company. This means that the company will compensate the employees who lose their job because of the restructuring program. In addition, there was distress over whether changes could be easily implemented throughout the company with this new structure. It may also result in duplication of funds if the allocation of responsibilities is not precisely drawn and understood. The human resource department would then have trouble in implementing the new strategies because of the logistic problems, which does not freely support the sharing of knowledge between human resource practitioners (Robbins & Judge, 2008, p. 235). The company would also have trouble in achieving its objectives with this structure as the structure provides less opportunity in aligning with the individual business needs and interests. It therefore makes the structure inflexible and makes coordination throughout the organization difficult. This method could result in customer dissatisfaction as well as employee dissatisfaction (Bohlander & Snell, 2007). Implementation and Justification of the best Solution The best solution for Sonoco Product Company was to implement a hybrid structure. This is because the organization is large and complex and previous research from other similar companies have suggested that this is the best strategy for large organizations. The company would advance in technology and dynamic environments such as competition, product change, product preference from customers, and the effect of the changing government regulations. It will also enable the company to meet the changing demands of its industry and consumers as well as allow recruitment of the right people for the right job. Having the suitable structures in place to get the right employees in place and up to standard will increase efficiency, improve employee satisfaction, decrease waste, and reduce turnover that will lead to more profits on a continuing basis. With this structure in place, more emphasis could be awarded where necessary. This scheme would place the vital human resource practice into the base of the organizations where it should work better. Eventually, these activities will lead to upgraded processes and expense reductions for Sonoco. References Bohlander, G., & Snell, S. (2007). Human Resource Management. New York: Thomson. Cummings, T. G., and Worley, C. G. (2008). Organization Development and Change (9th ed.). Mason, OH: South-Western Cengage Learning. Levitt, T. (n.d.). What Business are you in?: Classic Advice from Theodore Levitt. In Harvard Business Review.Retrieved from http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?articleID=R0610J&ml_action=get-article&print=true Mission Statement - Sonoco. (2009). Retrieved from http://www.sonoco.com/sonoco/Home/About+Us/cor_mission_statement.htm Strategy for Growth. (n.d.). In 2000 Annual Report. Retrieved February 1, 2009. Thomas, D., Groysberg, B., and Reavis, C. (n.d.). Sonoco Products Company (A): Building a World-Class HR Organization. Review of Harvard Business School. PP.1-25. Werner, J. M. (2006). Human Resource Development (4th ed.). Mason, OH: Thomson South-Western. Read More