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Sabrina Meng

BA 301 - 002

Assignment #4

May 15, 2018

Owens-Illinois Plausible Solutions

O-I is among the leading glass manufacturing companies in the world, with over 78 plants in 23 countries worldwide that generate more than $7 billion annually. From my previous assignment, several problems were identified key among them being product quality problems, broken partnership deals, and failed business acquisitions. The first problem was largely witnessed between 2002 and 2003 when the company encountered a number of issues with its supply of HVR bottles to Clorox Food Company. O-I was accused of manufacturing low-quality bottles different from those that had been ordered. This caused an uproar from the food company, especially after learning that the mistake was a deliberate move by O-I to cut on costs of production. Regarding broken partnership deals, O-I recently withdrew from environment partnerships with Graham Packaging Company. This was a glass recycling partnership which was broken since O-I failed to honor financial obligations. Finally, the third problem on failed business acquisitions involved a failed move to try and acquire a German glass manufacturing company (Latino et al.). Some plausible solutions to threes problems are addressed as below;

It is important to note that organizations are obliged to ensure that the quality of their products is up to standard. While there is often an organization that is mandated to ensure this is achieved, it should not take a third person to ensure that quality is upheld. For O-I, their compromise was as a result of a move to try and cut on costs. The end result was far much worse compared to a better alternative, which would have been to produce less bottles of the same quality and explain their situation to Clorox Food Company.

Regarding the second problem, O-I needed to understand the importance of partnerships to the overall development of the organization. The partnership in question was by far the most important of them all, given that it would not only save their current problem regarding the cost of raw materials but would also help foster a good image by remaining environmentally conscious. The best solution for this organization therefore is to mend the broken relationship and come to a mutual agreement regarding the financial dispute at hand.

Finally, the importance of business acquisitions to growth is unquestionable. However, such acquisitions need to be inch-perfect if the day to day operations of the organization is not to be interfered with. Furthermore, all the necessary requirements that are needed to facilitate the shift of power need to be put in place. This was clearly not the case with O-I’s attempts to acquire the German glass manufacturing company, Indram. Getting it right would not only increase O-I’s market shares in Germany but would also improve on their revenue collection. As such, to solve this issue, they need to follow the due acquisition process, put in place better negotiation team and ensure that they have all the necessary legal tools to work out the acquisition.

Other deeper problems that had been identified include managerial inefficiency, huge company debt, and asbestos liabilities. All these can be solved by having an overhaul of the company’s structure and ensuring that the company’s financials are kept in check more often. A debt repayment plan should be put in place as soon as possible to help reduce the deficit.

Weighted-criteria decision matrix

Situation Analysis

· Improve quality product problems by maintaining quality even if it means producing less

· Mend broken relationships by resolving financial dispute

· Improve acquisition process by having in place better negotiation team and necessary legal tools

· Overhauling the managerial structure

· Having a debt repayment plan

Evaluation criteria

· Improved Quality

· Better relationships

· Managerial Efficiency

· Financial impact

Ranking Matrix	Weight	Buy		Fix
Improved Quality	0.25	1	0.25	5	1.25
Better relationships	0.25	2	0.5	6	1.5
Managerial Efficiency	0.35	5	1.75	1	0.35
Financial impact	0.15	2	0.3	2	0.3
	1.00		2.8		3.4

The decision therefore is to fix the issues.

Cost Benefit Analysis

This provides the tangible and the intangible costs and benefits associated with the chosen solution

Tangible Costs	Quantity	Intangible Costs
Financial Loss due to repayment of debt	Debt to equity ratio=68.56%	Time lost while Overhauling the managerial structure
Less bottles produced of the same quality
Asbestos Liabilities	$110 million in 2017
Tangible Benefits		Intangible Benefits
Maintained Quality		Resolved Financial Dispute
Debt payment		Better relationships
		Improved managerial positions

Works cited

Latino, Robert J., Kenneth C. Latino, and Mark A. Latino. Root cause analysis: improving performance for bottom-line results. CRC press, 2016.

Owens-illinois, Inc. (2017). Form 10-K 2017. Retrieved from Mergent Online. Web. 14 May 2018.

Owens-illinois, Inc. 2017 Annual Report, 2016. Mergent Online. Web. 14 May 2018.