Cooper Industries Case

Managerial Policy barrel betrayr Industries Case By Aena Rizvi, Anum Rinch & Rafia Farooqui Introduction In 1833, an iron foundry was founded by Charles and Elias barrel maker in Mount Vernon, Ohio. Overtime, cooper became the market leader in agate line compression equipment. cooper Industries was round 150 yrs old and was somely complicated in the manufacturing of engines and compressors to speed the flow of natural gas through pipelines. They began expanding it around 1960s and for that, more than 60 manufacturing companies were acquired in the following 30 years.This came to be known as the process of cooperization and some re-known companies became a part of the cooper banner to bound a highly successful and dineroable calling. Timeline of Important events for make category Event 1833 Charles and Elias cooper founded an iron foundry in Mount Vernon, Ohio 1900 teddy to the proceedsion of natural gas compressors 1920 barrel maker became the leader in pipeline compression equipment 1957 Gene Miller was elected as the president 958 make suffered a cyclical downturn and a corporate raider acquired adequacy shares to elect two board members 1961 Miller recruited Robert Cizik as chief assist for corporate development from Standard Oil 1965 The confederation formally take the name barrel maker Industries 1967 Headquarters were moved to Houston Diversification began and barrel maker acquired Lufkin detect ph unityr Bill Rector was appointed as Corporate unrighteousness President and given capital to develop the whoreson conference 1968 barrel maker acquired Crescent Niagara 969 Cizik became Chief Operating Officer 1970 cooper acquired Weller Manufacturing Corporation Tool theme set up its headquarters in Apex, North Carolina C. baker Cunningham joined the corporate planning department at barrel maker Cooper purchased Dallas Air Motive 1970-1988 Cooper Divested 33 businesses 1971 Cunningham joined the Tool Group as director f inance and introduced a new computer carcass to manage inventories, sales, shipping and billing for all tool products 1972 Cooper acquired Nicholson Company 974 Coopers acquisitions had relocated their manufacturing operations to new plants mostly in the South 1975 Robert Cizik became CEO and formed Corporate Level Manufacturing Services Group 1976 Cooper purchased Superior, maker of engines and natural gas compressors 1979 Cooper purchased Gardner-Denver 1981 Crouse-Hinds was acquired Cooper acquired Kirsch Cooper sold off its Airmotive Division Compression, drilling and Energy Equipment generated 50% revenues and 60% operating earn 1984 Purchasing council was established 1985 Cooper acquired McGraw Edison 987 Cooper expand its industrial compressor business by purchasing Joys business and turbo compressor business for $140 million 1988 Cooper was a broadly modify producer of electrical and general industrial products, and energy-related machinery and equipment Elect rical and Electronic (E&E) became Coopers largest segment, generated 50% corporate sales and 57% operating profits Acquisitions in the Tool Group were consolidated and new manufacturing facilities were constructed Compression Drilling and Energy Equipment accounted for 21% sales and less than 10% of operating profitVision, Mission and Corporate Strategy Coopers success lie in making high quality products that become important infix for other products frequently(prenominal)(prenominal) as turbine compressors. They wanted to be a smart set with a steady stream of income which is why they always went after ventures that were profitable. They make sure they had no cash flow of liquidity issues barely to find this. Moreover, they were more interested in being an owning participation rather than just a holding company.To make sure of this they made their acquired companies adapt to their benefit plans etc so that the whole ecesis on a whole is self-consistent in policy making. They even made sure that they were deeply involved in all the acquisitions they made so that they do non closing curtain up making mistakes by acquiring a wrong company. Coopers President, Gene Millers ideology was to not compel operations to the production of engines only. This was reflected in the business decisions when Cooper began to diversify and discover its product ranges.Coopers acquisition strategies were well planned and they were not unexpended to the professional managers on the grounds that they could do justice to any product categories or manufacturing processes. Great importance was given on understanding the glossiness and customs of the areas in which Cooper operated and variegation only took repoint when the prospects looked profitable. at that place was a limit to diversification and special attention was paid to the time of acquisitions. Most of the companies that Cooper aimed at acquiring were market leaders who maintained records of high quality ma nufacturing.Coopers journey was not about acquisitions and additions only. afterward a business had served its useful purpose, it was divested because clinging to the past would only reduce chances of next success. Between 1970 and 1988, Cooper divested 33 businesses. Cooper as well ventured into the aircraft service business by purchasing Dallas Airmotive which was mainly involved in the repair and adopt of jet engines as well as the distribution of aircraft parts and supplies. later this, Cooper turned to its Energy Division and concentrated all its efforts there.Energy Divisions come up profits made up for the falling sales of hand tools. Coopers biggest optical fusion was the purchase of Gardner-Denver, which was equal in size to Cooper and manufactured machinery for petroleum exploration, mining and general construction. One advantage of this flowr was that Coopers needs of exploration production, transmission, distribution and storage for inunct and natural gas were m et. However there were some problems with Gardner-Denver too as it was a company that lacked planning and control and its sales force was not motivated enough to steer the company in the ight direction. Unlike Cooper, the charge style at Gardner-Denver was too centralized. Cooper had to change all these things afterward in order to align Gardner-Denver with the values and business practices of Cooper industries. By late 1970s Cooper came up with the acquisition by necessity idea when it was acquiring Colorado Fuel & Iron (CF&I) which mainly took place because CF&I has stopped producing 1095 Steel and it was really expensive for Cooper to buy it from another German company.Crouse-Hinds was another crucial acquisition in the history of Cooper and in the words of Mr. Cizik, this was a true diversification as compared to that of Gardner-Denver which was more of a complimentary nature. However the Crouse-Hinds acquisition was criticized on the grounds that it reduced Coopers exposure t o the booming anoint and gas labor. Cooper built a reputation in the electrical industry such that it came under the ambit of one of the best-managed companies. Some of Coopers acquisitions looked decisive such as the purchase of Kirsch (worlds largest manufacturer of drapery hardware).But actually they were not found on impulse and such opportunities are normally short-lived. Had Cooper not taken advantage of such opportunities then some other company would have. Cooper had a actually flexible trouble style unlike other companies and it consolidated most of its acquisitions in order to maintain uniformity. Manufacturing Services Group made Cooper a quality conscious company that had state of the art watchfulness Information Systems. It used benchmarking and cross-referencing to improve the production methods.Manufacturing Services Group also initiated training of engineering school graduates and this equipped the employees at Cooper with the prerequisite skills. Cooper follo wed the Hay system for salaries and people with the same ranks throughout the organization had similar salaries. These salaries were at par with the industry average. EVPs at Cooper had a management-by-exception philosophy and they only interfered in the management of a member if its performance suffered or when the division violated the boundaries set by the strategical planning process.Cooper believed that cash-flow is king because a strong cash flow scene enables Cooper to pursue acquisitions. SWOT Analysis Strengths Weaknesses * Highly diversified t because lower risk * Acquisition of market leaders was done based on research and not on impulse. * It had a flexible management style * Understood the cultures and customs of the areas in which it operated * Divested businesses that served their useful purpose * counseling on profitability led to the success of the firm * Due to legion(predicate) acquisitions, $1. 8 billion of Coopers $1. 77 billion shareowners equity was goo dwill * Lean and mean cost social structure due to which many RTE senior managers left within a year after acquisition * Cooper exercised centralized control over corporate policy * Cooper retained too much control with itself which is manifest in its control on working capital * Too much focus on profitability Opportunities Threats * Manufacturing Services Group will make Cooper a leader in manufacturing functions. Due to Management victimisation and Planning, Cooper has a very rich organizational culture and hence more successful market leaders would be willing to merge with Cooper in the future. * Downturns in industries such as electrical industry can make Cooper resort to cost cutting and layoffs rigidly. * subsequently a merger or acquisition Cooper requires the new company to adopt its benefits package for medical insurance and pensions which leads to dissatisfaction and may make Cooper known as a conservative companyConclusion Cooper remained a market leader in pipeline compressors and engines. It has always focus on being identified as a quality company and pursued only those companies for acquisitions and mergers that were market leaders, had strong core competencies and were successful in their respective industries. It had an eye for rewarding opportunities and took full advantage of them when came across one of these.