case study : taking change at domtar what it takes for a turnaround - manu melwin joy
TRANSCRIPT
Case study :Taking change at Domtar; What it takes for a turnaround.
Training and Development
Prepared By
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Manu Melwin JoyAssistant Professor
Ilahia School of Management Studies
Kerala, India.Phone – 9744551114
Mail – [email protected]
Case Study : Domtar
• Third Largest Producer of uncoated free sheet paper in North America.
• In the decade prior to 1996, it had one of the worst financial records in the pulp and paper industry.
Case Study : Domtar• Bureaucratic and hierarchical
organization with no clear goals. • Half of the business in trouble
areas. • Did not have critical mass to
compete with bigger names in the industry.
• Balance sheet was in bad shape.• Did not have investment grade
status in its long term debts.
Case Study : Domtar
• In 1996, Raymond Royer
was name president and
CEO.
• He decided to focus on
two goals.
– Return on investment.
– Customer service.
Case Study : Domtar• Royer told Domtar
employees that in order to
survive, they need to
participate in the
consolidation of the industry
and increase its critical mass.
• The goal was to become the
preferred supplier.
Case Study : Domtar• He explained to the executive
team that there are three pillars to
the company.
– Customers.
– Shareholders.
– Ourselves.
• He noted that it is only “ourselves”
that are able to have any impact
on changing the company.
Case Study : Domtar• Royer implemented Kaizen in
Domtar, a process of getting
employees involved by using
their expertise in the
development of new and more
effective ways of doing things.
• He believed in tapping the
intelligence of experts, the
employees.
Case Study : Domtar• The success of any change
process requires extensive
training and therefore, training
became a key part of Royer’s
strategy for Domtar.
• He believed that it is employees
competence that make the
difference. This was later called
the “Domtar Difference”.
Case Study : Domtar• Training a Domtar went
beyond the traditional job
training necessary to do
the job effectively and
include training in
customer service and
kaizen.
Case Study : Domtar• Using the Kaizen Approach, employees
developed a new way of cutting trees
into planks.
• The result was fewer wood chips to
transport and more logs produced per
tree.
• Since 1997, it is estimated that Kaizen
has saved Domtar about $ 230 million
in production cost.
• Two of their mills are among the lowest
cost mills in North America.
Case Study : Domtar• First quarter net earnings in
1998 were $ 17 million
compared with a net loss of $
12 million for the same period
in 1997, his first year in office.
• In 2002, third quarter earning
were $ 59 million, and totaled
$ 141 million for the year.
Case Study : Domtar• Domtar became the only paper
and pulp company in north
America to be included in the
Dow Jones Sustainability list.
• In 2003, Paperloop, the pulp
and paper industry’s
international research and
information service, named
Royer Global CEO of the year.
Case Study : Domtar• The committee said that Royer
was selected for the award for
his ability to integrate
acquired businesses through a
management system that
engages employees.
• This happens only through
training.
Case Study : Domtar• It was Royer’s sound management
policies and shrewd joint ventures
and acquisitions that helped
Domtar became more competitive.
• However, joint ventures and
acquisitions bring additional
challenges of integrating the new
companies into the “Domtar way”.
• This requires training.