Vick International: Richardson-Merrell, Inc.

Vick International is one of nine operating divisions within Richardson-Merrell, Inc. Each division is given considerable independence in running their business, so long as they contribute to the company’s goals of stable growth, improving profitability, and product excellence. When Tom McGuire became the president of Vick International, Latin American/Far East (LA/FE) in 1969 and the division was having difficulty sustaining adequate growth and profitability. The division had missed its budgets by wide margins in the previous two years, and even after McGuire made changes to the budget system, and tracking and control mechanisms the division failed to meet the budgets the following two years. The current business strategy was based on running
with products already developed by other divisions within the company. During the 1960’s, Vick had set up manufacturing and distribution operations in a large number of countries, and as a result the management has emphasized on sales generation to cover the substantial overhead. McGuire’s focus is now to direct the division’s resources and energies into analyzing consumer needs, develop products to meet those needs, and improve communication with consumers about product availability and performance.
McGuire’s intentions are clearly aligned with RMI’s management philosophy of managerial independence in decision-making as he intends on delegating more responsibility for key managerial decisions to divisional managers; especially in marketing.
One of the key factors of success for Vick is the materialization of this plan within the division. McGuire’s plan and philosophy requires flexibility and thoroughness for success. Flexibility seems to be suppressed as the Managing Directors are given the power to make key managerial decisions but before many of these decisions are implemented, they must be approved by Tom McGuire and the Approver of the project. The detail continuous planning and review (CP-R) system requires forms PMG 1-8 to be completed and approved by headquarters. Thoroughness of the project is heavily monitored by headquarters of all divisions through the CP-R system. Although centered on achieving an integrated yet delegated management control system, develops into a more formal and bureaucratic system; specifically in the function of product marketing. Particularly, of the four roles in the CP-R Work-Program methodology, the Approver and Concurrer roles conflicted in their actual application. The Approver, who is of a higher level than the Prime Mover, is supposed to be equipped with final authority. However any Concurrer (the individual who supplies specialized judgment to the Prime Mover) involved in the Program is required to submit their agreement
prior to the implementation of any decision. For example, this process of obtaining authority produced significant delays in the unveiling of Product Alpha in the Mexico division.
Gurcharan Das, director of Mexico’s Nutrition Division and a Harvard Graduate with a background in successful development and introduction of products within the Indian subsidiary, had considerable difficulty with the Work-Program system.
Das felt let down by the whole system. In addition to his successful track record, he effectively completed PMG’s 3-8 (which were sent to headquarter personnel for review), obtained professional inputs from the advertising agency in Mexico, and worked extensively for a year and half on Product Alpha. Even after following many of the company’s procedures, Das still faced difficulties obtaining approval for the test-market launch of Product Alpha. If the CP-R control system is designed to delegate responsibility and key managerial decision-making authority to divisional managers, they should not be required to revert to corporate personnel for approval regarding inherent risks in running their operations and new product development. How is there independence in the system, if a qualified individual with a successful track record in product development is continuously pushed-back from proceeding with an opportunity that has been identified by an entire operating unit (Mexico division) along with it’s sub-divisions (who are ready and able to adhere to a project schedule) as one with significant potential. Does Das actually have the capability to pursue initiatives that are in his division’s best interests? Are they really equipped with the
ability to make decisions without the interference of executive management? In essence, McGuire has disagreed with Dick Olson’s criticism on the marketing campaign; Olson is the Director of Marketing for health care products. Das incorporated the comments about the advertising of Product Alpha (suggested by Olson and various other concurrers within the corporate marketing unit) into his material; however McGuire still felt there were major flaws. Is this not an issue that should be addressed between Olson and McGuire? If Olson and McGuire had consulted with one another over the material presented by Das, they may have been able to collaborate and approve the campaign more efficiently. Furthermore, Vick International LA/FE division’s interests may be better aligned with RMI’s organizational objectives if Das had been able to pursue his “development product” with executive management providing a more supportive role instead of a controlling approach. Is it really necessary to obtain comments and suggestions from executive marketing professionals within the organization and then forward these suggestions to presidential levels for final approval? The purpose of the corporate marketing unit was to manage these new product development initiatives and provide the review and approval functions. It is clear that Vick International still adheres to a very bureaucratic management system that deviates from the actual “considerable independence” philosophy of the RMI culture. Although the advent of the CP-R control system was fixed on proceeding towards this independent and non-bureaucratic management style, it is clear that executive management needs to work towards further delegation of the decision-making process in order to enable divisional managers to take risks and work independently and exclusively towards the betterment of the consolidated entity.