Corporate Level Strategy - Disputes between Four Water Corporations in Tasmania - Case Study Example

Corporate level strategy case study Student name Instructor name Course Institutional Affiliation Date of Submission Executive summary The case study is mainly focused in the address of corporate strategic management issues. The company and /or corporation is Taswater formation as a result of merger of four initial water corporations. The decision to merge the four corporations emanates from discontent among the owners and the boards of directors of the four companies. The disgruntled members feel the current structures are not efficient in the provision of the services in the efficient and prudent manner. According (West &jones 1997), the management roles include directing, controlling, supervision and recruitment of new workers to the corporation. There is a feeling that the owners are not directly involved in the appointment of members to the board. This is disrespect on their part. Policy issues and pricing strategies are done without the input of the owners. The case study clearly identifies the problems facing the owners and then the problems and or issue being raised by the boards of the four corporations. Sound discussions, practical solutions and applicable recommendations are captured in the case study. The solution to the disagreements and disconnection between the owners and the board is as a result of lack of communication and formal engagements between the two sides. Findings The case study focuses on the wrangles among four Water Corporation in Tasmania. The four water corporations are Southern Water, Cradle Mountain water, Ben Lomond Water, and On stream water corporations. The Taswater Corporation is expected to commence its operations as from 1st July, 2013. Due to competition and inefficiency in the provision of the water as a social facility, the decision has been amicably been reached to merge the four water corporation into one corporation (Sherman &Hart 2006). Merging of corporations is a good idea so as to benefit from the economies of scale and of scope. The merging will bring about linking of expertises from the four corporations to achieve great results for the Taswater Corporations (Kurtz& Boone 2011).success in most corporations is as a result of wide consultation amongst the corporations’ experts and technocrats. This will lead to efficient and informed decision making in the corporation. Access to water is a fundamental right and not a privilege to the citizens of a country. Water is crucial to the running of industries. To briefly say, water is life to both the human beings and industries. Without water, human beings will not survive. The same case applies to the industries. The state authorizes the corporations with the mandate to provide the scarce resource efficiently. Water is a public utility and ineffieint provision of the public utility will lead to widespread condemnation. The decision to merge the four water corporations is a product of the imminent need to optimally utilize the available facilities to provide efficient services. Utility in the access of public utility emanates from the efficiency and reliability in the access and safety of the public utility. Most governments do not leave the provision of the basic essential commodities to the large public. This is due to the fear of inefficiency and eventual collapse of the separate corporations (Pride, Hughes, Kapoor 2012). The fear to loose the identity of the individual corporations ought not to override the benefits of centralized and efficient provision of water as a result of merging the four corporations. There is no real danger of loosing the technical experts from the four corporations. The organization structure of the four corporations will be restructured to suit into the Taswater large corporation. The senior managers and the employees of the four corporations need to be confident of not loosing their jobs. The problems emanating from the owners and senior management are different and require a well taught approach to solve them. The owners do not feel seriously engaged and with sufficient authority to make decisions directly related to management of the organization. The current model of sole corporations does not consult sufficiently which the owners in the process of making decisions which affect the corporation. The ordinary share holders are the owners of the corporation. Failure to directly involve them in the direct control of the government activities such as appointing members to the national water board will led to disgruntled owners. Decisions to appoint members to the senior water boards determine the level of respect in the corporation. Whenever such decisions are made without consultations is a show of disregard for the owners. Control in the corporation involves also design of the corporate plan and the eventual approval of the plan for use in the corporation. According to (Hodson, & Sullivan, 2012) corporate plan constitutes aspects such as policy matters and pricing strategy. There is need to seek for input from the owners in terms of the pricing strategy. Policy decisions and pricing strategy is made with no regard to the owners has they have minimal control over the corporation. Some of the owners believe that the state government has more input to the corporation than the input the owners bring to the corporations. The government has control over the corporations in terms of registration and determination of the scope of operations of the corporations. This is the cause of perceived superior considerations in relation to the decision making in the corporations. This makes the owners feel despised in directing and controlling of the corporation. The current governments do impose corporate arrangements on the owners. The imposition of the governance arrangements will kill the core business of the corporation. There is need for engagement in order to come up with the corporate arrangement. The last major concern with owners is the lack of direct and formal communication between the board and them. Lack of formal communication is a sign of disregard on the part of the board. The battle with the problems with the current model does not end with he owners only. The problems are also with the board of directors issues in relation to the corporate governance of the corporations. The board feels the current model is inefficient, not optimal and over engineered. The model is not at best for the corporation as it is not realistic in its policies and strategies. The second problem is that the board feels the structure precludes direct and active communication with the owners of the corporation. This is source of conflict in the management of the corporation. The third issue is lack of input from the owners in basic governance matters in the current structure. The level of consultation is very minimal. The owners do not feel like owning the corporation and this prompts some of them to openly attack the corporation. The board members believe in engaging the owners in the desire to own the corporation and share decisions which relate to high impact, long term and strategic decisions which allocate limited resources in the organization. Prioritization in allocation of scarce resources requires the input of the owners so as to avoid blame game in case of any eventuality. The discontent in the current structure is likely to bring a political contest in the annual general meting. The voting trends are likely to be abused and usher in new but incompetent board members. The major problem dominant is the disconnection between the owners and the corporations’ boards. The disconnection is the source of inefficiency in the management of the corporations. The owners and the board members operate in isolation. Discussion Problems in the current structures need a wide range of the solutions to address the problems mentioned above. The four corporations can be merged into one, large state owned corporation with 49 owners. The second suggestion is to maintain status quo and do away with management. The third option is to wind up On-stream completely and incorporate its functions in the regional corporations. The forth option is to form a sole corporation to address the state functionalities. It is also possible to contract the whole industry through privatization module. Some people feel that the current licenses can be tendered to private operators and disband the four corporations. The last solution is to completely separate the boards and have three or four stand alone corporations which will not need one to coordinate its activities. Conclusion Amalgamation of the four corporations ought to be seen as the amalgamation of the ideas rather than perceived as the option to loose the identity of the initial water corporations. According to Sherman, & Hunt 2008, efficiency in the delivery of the social and essential services is the core objective of any corporations. There are economies of scope and scale associated with the amalgamation of the initial corporation into a new efficient sate corporation. State ownership of corporations will reduce conflict of interest in the water corporations. Change of guard in state corporations will usher in new ideas and efficiency instead of recycling of exhausted ideas in the management of the new water corporation. There is need for expanded participation in the management of the sate owned corporation to dismantle discontent I the perceived control of the corporation. Recommendation Amalgamation and merger of the four corporations into Taswater will solve the issues raised above. There was eventual agreement of the owners’ councils and the government to amend legislation to amalgamate the four corporations into one state owned corporation as from I July, 2013. Implementation The owners need to heavily engage with the state government agencies to develop new governance arrangements for the Taswater water corporation. With the effect of the legislation passed in November 2012, the Taswater Corporation will commence its operations as from 1st July, 2013. The four corporations need to work and agree on a new amalgamation plan to form the new corporation. Registration of the new corporation was duly done on Feb 2013 and the proposed boards of directors were appointed late February 2013. The remaining requirements for the corporation to start operations are to recruit the new CEO and apply for the operating license. References HODSON, R., & SULLIVAN, T. A. (2012). The social organization of work. Australia, Belmont, Calif, Wadsworth. KURTZ, D. L., & BOONE, L. E. (2011). Contemporary business. Hoboken, NJ, Wiley. PRIDE, W. M., HUGHES, R. J., & KAPOOR, J. R. (2012). Business. Mason, OH, South-Western Cengage Learning. SHERMAN, A. J., & HART, M. A. (2006). Mergers & acquisitions from A to Z. New York, AMACOM. http://proquest.safaribooksonline.com/9780814408803. SHERMAN, H. J., & HUNT, E. K. (2008). Economics: an introduction to traditional and progressive views. Armonk, N.Y., M.E. Sharp WEST, T. L., & JONES, J. D. (1997). Mergers and acquisitions handbook for small and midsize companies. New York, John Wiley & Sons. Read More