The decisions taken by Hanson to change the structure of the organisation and its leadership is a key stage of strategic development for the company. As was established in question 1, Hanson were beginning to not only make deals, but also make appropriate choices with a balance of profit-driven decisions against strategic choices. They were beginning to see that perhaps financial management needed to become a paramount issue for consideration, and not simply acquiring random companies in estimation of corporate growth, and also to begin promoting internal growth.
The structure began to change in 1995, when a new chairman and corporate development director were elected. The choice of successors was important because investment managers had realised that in order for the company to go forward in a different and more suitable direction, the right choices in leadership had to be made. Men with good deal-making skills such as one of the predecessors (Lord White), were elected not only because of this but because they had accountancy backgrounds and skills also.
Also, US Operations were handed over to a successor with a finance background, as he was previously the finance director. This was to help Hanson further grow internally ad channel finances in the right t direction, which was soon to be ‘demerging’. Because of the volatility of Hanson’s markets, which were arising in the 1990’s, Hanson had moved away from their previously held strategy of large acquisitions and this tied in with the choice of restructuring.
This was logical in that the leaders had to be intent on changing the Hanson strategy to compete in new business times. However, competition in the 1990’s, especially towards the end was fierce and issues of competitive advantage (see appendix a – Porter’s theory of competitive advantage) and added value were huge. Added value would be extremely hard to achieve with each area of activity loosing the strength of a corporate giant and gaining unsure independence, both in reputation and finance terms.
In financial terms, it would become far more difficult for each activity to manage itself. Costs and cost advantage would also be difficult to exploiting order to benefit each interest. It could also be said that during this era of business environmental change, the only way for an organisation of this size to compete with others for market leadership is to implement enormous and monumental change. Instead of ‘playing it safe’, it seems that the organisations that did succeed were those who weren’t afraid to implement radical and fact change through radical leaders.
The prospects for Hanson at the beginning of demerging were changed forever with the radical decisions of Lord Hanson before he retired. This could simply have been a strategy to influence new leadership. The company, it seemed had reached a barrier where it could progress no further. Perhaps Hanson wanted to set the pace for the future and prompt radical change in the only way he knew how. The prospects were now unclear, yet exciting for each of the four new businesses, each fresh and fundamentally capable of massive success.