Case Study1:CrossRock

Until2007,CrossRockwasseenbyinsiders,customersandmanyinthewiderfinancialcommunity as a successful financial services company offering mortgage products tothe United Kingdom market and providing a portfolio of savings products. Initially, likeother traditional building societies, CrossRock relied on its saving products to fundmuch of its lending but over time, it started to source more and more of its fundingthrough wholesale borrowing on capital markets, bonds and securitized loans. Thesenew sources of funding provided a platform for expansion and the development of anew profitable business model that involved lending higher risk mortgages product(loans of more than 100% of the property value) and making these loans available toa wider customer base, including some customers who, by industry standards, wouldnothave beenjudgedas abletoafford therepayments.

While property value continued to increase, this business model was very successfulandCrossRockcontinuetoexpand.Customerswereattractedbythemorethan100%mortgages because they provided surplus funds they could use to furnish their newproperties of for some other purpose, such as the purchase of a new car. Those inCrossRock who are responsible for managing the agenda for change appeared tofocus their attention on opportunities for generating profit and failed to pay muchattentiontopotentialthreats.Thereareanumberofclientsthatwereunhappywiththequalityof servicesprovidedbyCrossRock.Someof theproblemseemsbecauseof:

1. The shortage of staff: There has been a high increase in demand for loans andtheneedforfindingthenewportfoliosof deposits.
2. Thestyleofthemanagement:Thecompanystylewastopdowncommandandcontrol. This was effective on the past but less effective now. The top down approachhasanegativeimpactonmotivation,performanceofemployees.
3. Thestructureofthemanagement:Thenumberofexecutiveshasnotincreasedinline with thebusiness.
4. Theineffectivemanagementinformationsystem:Theinformationsystemisnotonlineandnot up todate.

Adopting SWOT approach might have provided a diagnostic framework that wouldhave helped those caught up in the runaway success of the business be alert topotential threats alongside the opportunities that appeared to dominate their thinking.Some sign of the potential threats were there but they appeared to have little impactonthethinkingofthoseleadingthebusiness.TheseincludedanincreaseinconsumerdebtandthepossibilitythatthiswasaffectingtheCrossRockcustomerdemographic

morethanthatofmostotherhighstreetlenders,associatedconcernsaboutaffordability,andconcernsaboutthefuturegrowthofpropertyvalues.

Questions.

1. ExplainthestepsindiagnosingCrossRockproblems.
2. InassessingCrossRock,whichmodelshouldbechooseeitherHolisticModelor ComponentModel andgive the reasons.
3. WhatapproachescanbeusedintheinformationgatheringtechniqueinCrossRock?
4. AssessCrossRock case byusingSWOTanalysis.
5. Explaintheinterventionstrategythatcanbeusedtoimprovetheplanchangeof CrossRockcompany.

(50 marks)

SECTIONB

CaseStudy2:WildwoodManufacturingCompany

WildwoodManufacturingCompanyisinruralVirginiainvolveindistributionofwoodforfurniture products. After a 50 years period of stable progress, Wood involve in theacquisition of other businesses which is the wood chemical industry. Later WildwoodwastransformedtoadistributorofawiderangeofawoodfurnitureproductsandwoodchemicalsindustryoperatingacrossUnited States.

Later,afterspending5yearsincorporatingpastacquisitions,decreasingexpendituresandgrowingmargins,theboardofdirectorsofWildwoodrecognizedthatthecompanywas ready to get on a new phase of progress and to continue the company formertacticof acquiringexistingbusinesses whichis relatedtotheircoreof businesses.

Subsequently, after reviewing the company strength, weaknesses, opportunities andthreat, and the opportunity of generating more profit and more shareholder value, theboard has decided to search for the new acquisition target that would increase thevalueandprofitbyprovidingaccess tothe newentrymarket.

The company recruited a merchant banker to assist them finding the new acquisitiontarget which can be quickly executed. Within 2 months, they select Douglas Refinery,a company that dominated the wood treatment chemicals market in Germany. Thecompany was very attractive because an analysis indicated the only way for a newcompetitor to break into the market of European Union would be to acquire DouglasRefinery.

The merchant banker approached the property owner of Douglas Refinery and thereareindicationofwillingnesstoconsiderthesellingofthecompany.Wildwoodembarked on a more detailed examination of Douglas Refinery to determine whetherthe acquisition will add value and profit, and also determine on how much they shouldpaytoobtainthebusiness.

Question.

1. Whatarethemain objectivesofWildwood inacquiringDouglasRefinery?

1. Explainwhybusinesscompaniesmakeadecisiontoacquireanotherbusinesses?

1. In your opinion, what are the concerns that need to be addressed by WildwoodinacquiringtheDouglas Refinery?

1. Demonstratethestagesofachievingstrategicobjectivesandformulatingdetailed plan towards integrationstrategy between Wildwood and DouglasRefinery.

1. Recommend the strategy of communication that could be used in handlingemployeesissuethataffectedbychangeprocessespeciallyinDouglasRefinery.

(50marks)