Cooper Industries Case

Managerial Policy c completely Industries Case By Aena Rizvi, Anum Rinch & Rafia Farooqui Introduction In 1833, an iron foundry was founded by Charles and Elias barrel maker in mature Vernon, Ohio. Overtime, cooper became the market leader in pipeline compression equipment. make Industries was almost 150 eld old and was mostly involved in the manufacturing of engines and compressors to facilitate the flow of natural accelerator through pipelines. They began expanding it around 1960s and for that, more(prenominal) than 60 manufacturing companies were acquired in the following 30 course of instructions.This came to be known as the performance of barrel makerization and some re-known companies became a part of the Cooper banner to form a highly successful and moneymaking business. Timeline of Important events for Cooper Year Event 1833 Charles and Elias Cooper founded an iron foundry in Mount Vernon, Ohio 1900 transposition to the productionion of natural gas compressors 1920 Cooper became the leader in pipeline compression equipment 1957 Gene milling machine was elected as the president 958 Cooper suffered a cyclical downturn and a corporate freebooter acquired enough shares to elect two board members 1961 Miller recruited Robert Cizik as chief assistant for corporate knowledge from Standard Oil 1965 The social club formally adopted the name Cooper Industries 1967 Headquarters were moved to Houston diversification began and Cooper acquired Lufkin Rule Company Bill Rector was appointed as Corporate Vice ch personal credit linewoman and given capital to develop the likewisel Group 1968 Cooper acquired Crescent Niagara 969 Cizik became Chief Operating ships officer 1970 Cooper acquired Weller Manufacturing Corporation Tool Group set up its headquarters in Apex, North Carolina C. bread maker Cunningham joined the corporate planning department at Cooper Cooper bargain ford Dallas Air Motive 1970-1988 Cooper Divested 33 businesses 1971 Cunni ngham joined the Tool Group as director finance and introduced a new computer system to manage inventories, sales, shipping and billing for all tool products 1972 Cooper acquired Nicholson Company 974 Coopers scholarships had relocated their manufacturing trading operations to new plants mostly in the South 1975 Robert Cizik became CEO and formed Corporate level Manufacturing work 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 exchange off its Airmotive Division Compression, Drilling and Energy Equipment generated 50% revenues and 60% direct profits 1984 Purchasing council was naturalized 1985 Cooper acquired McGraw Edison 987 Cooper expanded its industrial compressor business by purchasing Joys air and turbo compressor business for $140 million 1988 Cooper was a broadly diversify manufacturer of electrical and command industrial produc ts, and energy-related machinery and equipment Electrical and Electronic (E&E) became Coopers largest segment, generated 50% corporate sales and 57% operating profits Acquisitions in the Tool Group were unite 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 lied in making high calibre products that become important input for early(a) products much(prenominal) as turbine compressors. They wanted to be a company with a steady stream of income which is wherefore they ever so went after ventures that were profitable. They made sure they had no cash flow of liquidity issues just to see to it this. Moreover, they were more interested in being an owning company 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 all organization on a whole is consistent in policy making. They even made sure that they were deeply involved in all the acquisitions they made so that they do not end up making mistakes by acquiring a wrong company. Coopers President, Gene Millers ideology was to not restrict operations to the production of engines unaccompanied. This was reflected in the business decisions when Cooper began to diversify and widen its product ranges.Coopers acquisition strategies were surface planned and they were not left 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 culture and customs of the areas in which Cooper operated and diversification solo took place when the prospects looked profitable. There was a limit to diversification and special attention was remunerative to the timing of acquisitions. Most of the companies that Cooper aimed at acquiring were market leaders who maintained records of high caliber manufacturing.Coopers journey was not about acquisitions and additions only. After a business had served its recyclable purpose, it was divested because clinging to the past would only reduce chances of future success. Between 1970 and 1988, Cooper divested 33 businesses. Cooper also ventured into the aircraft service business by purchasing Dallas Airmotive which was mainly involved in the repair and lease of jet engines as well as the distribution of aircraft parts and supplies. After this, Cooper turned to its Energy Division and concentrated all its efforts there.Energy Divisions revolt profits made up for the falling sales of hand tools. Coopers biggest merger was the purchase of Gardner-Denver, which was equal in size to Cooper and manufactured machinery for petroleum exploration, mining and general construction. One wages of this merger was that Coopers needs of exploration production, transmission, distribution and storage for oil and natural gas were met . 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 management vogue at Gardner-Denver was too centralized. Cooper had to change all these things subsequently in order to align Gardner-Denver with the determine and business practices of Cooper industries. By late 1970s Cooper came up with the acquisition by destiny idea when it was acquiring Colorado Fuel & Iron (CF&I) which mainly took place because CF&I has halt producing 1095 Steel and it was really expensive for Cooper to buy it from an separate 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 vulnerability to the booming oil and gas manufacture. Cooper built a reputation in the electrical assiduity 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 based on impulse and such opportunities are normally short-lived. Had Cooper not taken returns of such opportunities then some other company would have. Cooper had a very flexible management 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 Management 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 necessary skills. Coope r followed 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 character if its performance suffered or when the division violated the boundaries set by the strategic planning process.Cooper believed that cash-flow is king because a strong cash flow position enables Cooper to pursue acquisitions. SWOT Analysis Strengths Weaknesses * Highly diversified hence lower risk * Acquisition of market leaders was done based on enquiry 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 * Focus on profitability led to the success of the firm * Due to numerous acquisitions, $1. 8 billion of Coopers $1. 77 billion stockholders equity was goodwill * pers ist and mean cost structure due to which many RTE senior managers left within a year after acquisition * Cooper exercised centralized control over corporate policy * Cooper hold too much control with itself which is evident 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 Development and Planning, Cooper has a very rich organisational 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 recreate to cost cutting and layoffs rigidly. * After 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 h as always focused 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.