The purpose of this study is to understand and explore the management strategies used by senior managers of Bayer’s North American division to avoid closure by the parent company. Study will take a closer look at the corporate management structures and how it was aligned to manage the overall company which included 140 offshore subsidies. The Study will give special attention to North American operation to understand how it was saved from the brink of closure by the management by changing and aligning the corporate structure to reduce the cost and maximizing the revenue.

1. A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s NA 1
A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s North
American Division
Charm Rammandala
California Intercontinental University

2. A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s NA 2
Abstract
The purpose of this study is to understand and explore the management strategies used by senior
managers of Bayer’s North American division to avoid closure by the parent company. Study
will take a closer look at the corporate management structures and how it was aligned to manage
the overall company which included 140 offshore subsidies. The Study will give special attention
to North American operation to understand how it was saved from the brink of closure by the
management by changing and aligning the corporate structure to reduce the cost and maximizing
the revenue.

3. A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s NA 3
A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s North
American Division
Bayer AG is a multinational Pharmaceutical and chemical enterprise with German origin.
Its world heard quarters is based in Leverkusen, North Rhine-Westphalia, Germany. It has over
120,000 employees spread around 140 subsidiaries in the world which generates 46 billion euros
per annum. Major product areas include, human and veterinary pharmaceuticals,
biotechnological products, consumer healthcare, agricultural chemicals and high value polymers
(Mann 2009)
As a multinational company with a large number of product divisions and presence in
multiple geographical locations, company was using the matrix structure to manage the
organization. This model of management structure is best suited for large corporations with
multiple subsidiaries as management could arrange reporting structure to get employees to focus
on products as well as respective geographic location requirements (Johnson 2012)
Bayer North America was a high performing entity contributing 25% of company revenue
until 2007 when the corporate decision came in to close it. This prompted the top management of
North American unit to re-evaluate its structure, business practices and overall business strategy
to avoid the closure and increase the revenue (Peng 2013)
Advantages and disadvantages of geographical area structure
Organizational structure is the formal layout of firm’s key personal and divisions. It helps to
identify the key posts and reporting structure which helps to keep the seamless communication
and identify the scoop of the company and its subsidiaries (Johnson 2012)

4. A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s NA 4
Geographical area organizational structure is a tool used by multinational corporations to
manage subsidiaries and other facilities effectively. Geographical structure can be divided in
several different ways depending on the extend of the company which includes, regional,
national or international. Bayer is one of the larger multinational firm with 140 subsidiaries
across the world. They have divided the world in to several regions to make it easier to focus and
manage. To cater for North American region which include, Canada, USA and Mexico, Bayer
had a regional office in Pittsburg, USA (Mann 2009)
Some of the notable advantage of having a geographical structure is that it gives the
opportunity for the regional office or the country office to really focus on the local needs.
Identify the market gaps and areas need to be improved. It is well known that demands and
requirements in each country and region is different. By establishing a dedicated office looking
in to local situation and having an expert knowledge would help to better communicate &
collaborate with corporate office and other divisions to customize the approach to each region
(Jonson 2012)
Local managers could form strong business relationships with customers and suppliers to
ensure company has a better understanding about the each market needs. Another major
advantage of having a geographical corporate structure is that it gives the company a strategical
advantage by enabling the company to track the performance of individual markets and its
managers. This will help to determine future investment opportunities or cost reduction measures
(Bazerman 2012)
There are notable disadvantages comes with the geographical structure. One of the main
disadvantage is that local unit could function as on its own and disconnect with corporate goals
and business strategies. While they may bring in expected revenue as in Bayer’s case, disconnect

5. A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s NA 5
could impact the company’s overall strategy and disrupt the cultures. Further, there could be
communication gaps and difference of opinions among the regional offices and key departments
such as financial & R&D about new promotional activities or customizing products to appeal to
each market. These disconnects could lead to under performance and employee dissatisfaction in
the regional locations (Baker 2012)
The advantages & disadvantages of matrix structure
The matrix organizational structure is a commonly used management tool to layout the
company structure by majority of multinational companies. These companies have a large
product portfolio divided in to different divisions based on product categories or business units.
Same time they have multiple subsidiaries and business units across states or countries looking in
to local markets. In general, main functions such as R&D, Finance and HR are centralized with
small operations handled by the regional office (Johnson 2012)
In the matrix structure combinations divisional structure with the geographical structure.
When there are no geographical locations, it can focus by the customer segments or product
categories. In the Bayer’s example matrix structure is between the main divisions of the
company and geographical locations. Some of the advantages of matrix structure includes,
efficient communication through real time information exchange. Each category manager’s in
the product divisions objective is to maximize the sales. Similarly, managers in regional office is
also pursuing a strategy to increase the sales in order to achieve its revenue targets. This common
objective motivate both divisional team as well as regional team to work closely and efficiently
(Baker 2012)

6. A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s NA 6
There are few noticeable disadvantages having a matrix structure. Matrix structure has a
dual reporting requirement for employees. They need to exchange details about market needs and
expectations with product limitations and other related details such as inventory levels, quality
issues and so on. One of the disadvantage is, employees often gets confused about who should
know what. Managers could have different expectations and employees based in regional office
might be accustom to regional managers expectations and this could create a strain with the
divisional managers. As a result internal complexities and internal conflicts could surface
hindering the performance of the company.
How to recognize regional managers’ efforts are for self-interest or the for the betterment
of company?
Often it is a dilemma for multinational companies to determine is the real motivation of its
managers. This is true for divisional as well as functional managers. However, this is even harder
with the managers based away from the headquarters and operating mini units in different
regions and countries (Alfred 2012)
On the case of Bayer’s and its North American unit, it was a US$70 million gamble
managers bet based on the strong proposal presented by Babe who was the regional manager.
Bayer’s were concerned about the size and the operating strategy of the subsidiary and
motivation for closure was strategic decision rather than a financial decision as it was financially
performing well and could not dismiss the Babe’s management skills on performance (Peng
2013)
Babe was primarily motivated to keep the regional office running as it would safe guard the
employment of majority of the work force. He understood the market conditions, customer

7. A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s NA 7
requirements and more importantly expectations of the corporate office. This vast knowledge
convinced him to draw a strategy which answered grievances of all parties and implement certain
strategies which were not might approved before. One of the example is outsourcing
transportation. This would help to drive the cost down and also to improve the customer
satisfaction by reducing the lead time (Bazerman 2012)
While It’s clear that primary objective Babe to stop the closure of North American unit was to
secure the employment, it was also to get the due attention by the senior team to try out his
vision for the company. As a company Bayer’s could have a closely monitored Key Performance
Indicators to see what is going on in its regional offices to see any deviation from the corporate
objectives and also to monitor the ratio of revenue to the cost. This will help to intervene before
it is too late (Alfred 2012)
Summery
Bayer’s is one of the giant in the field of pharmaceutical and chemical field. As a true
multinational it has strategical located its subsidiaries to penetrate local markets and to achieve
competitor advantage. After seeing the growth of its North American unit management was
contemplating the option of closing the unit and integrating it to the corporate office. However,
as a result of the management team led by Babe from the North American unit, Bayar’s agreed to
keep the unit running.
This case highlights several success stories and short comings from both corporate as well as
NA unit. Corporate teams lack of monitoring and understanding of the regional office and its
activities led to the sudden realization that NA regional office getting too big in terms of cost and
the size. Effective monitoring system couple with KPI’s would have saved the disruptions in the

8. A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s NA 8
operations. Similarly, lack of motivation and poor communication by the NA team led the unit to
brink of closure. If the management communicated their findings such as outsourcing
transportation reduce one of the grievances of customers which is excessive lead time in
transportation, amount of monitory savings by reducing number of employees, would have
helped to highlight the initiatives by the team and not risks the closure.

9. A Case Study to Discuss the Management Strategy used to avoid closure of Bayer’s NA 9
Reference
Alfred, M (2012). Critical essays on Management culture. New York, Pearson
Baker, K. (2012). Organizational Structure, Strategy & Process. NY, Pearson
Bazerman, H (2012). Judgement in managerial decision making. New York, Pearson
Chapman, C (2015). R for marketing research and analytics, Pearson, NY
Johnson, R. (2012). Organizational Structures. New York, McMillan
Mann, C (2009) Aspirin Wars: Money, Medicine and rampant competition. Irwin, McGraw-Hill
Malhotra, N. (2010). Marketing Research: An applied orientation. San Francisco, Pearson
Peng, M. (2012). Global Strategy. New York, South-Western