Silica Glass Incorporated is a very renowned company. It is U.S. Company and widereaching leader in the production of glass fiber.

Silica fiber is an artificial fiber of

patented glass composition. This synthetic fiber is used in much dissimilar industrial
work. Mike Harrelson is president of Silica Glass Inc.
For a number of years, Silicas yields had grown progressively for the reason of its high
superiority and express sales. This company fetched changes in a number of noteworthy
possession and strategy. Silicas major product ranks had been developed in the initial
1980s. In 1984 the firm was taken over by a professional. He did some deviations but
reinvesting little. Two years later Silica had new tactics. It sold its maneuver to
Primavera, a southeastern farm.

Primaveras stratagem was to upsurge trades and obtain additional operations. So it

would increase the firms growth that means it would surge the overall worth of the
total Silica setup. Primavera saw Silicas long-term potential progression for the
series of products manufactured. Silicas product lines were very constricted and
market extension imperfect but its dissections showed healthy lucrativeness. Silicas
sales were mainly in native market. The objective for its rapid growth is unification
and procurement in its place of uninterrupted sales progression.

In 1989 in dedicated glass-fiber yields Silica transactions was nearly $25 million and
its roughly market share internationally is 25 percent .Silicas sales was newly
dwindled in both intra-divisional sales and peripheral sales. Intra-divisional sales
were shrank 50 percent and external sales diminished 50 percent. External sales were
in turn divided between the United States (75%), Western Europe (20%), and the
Pacific Rim (5%).

Silicas problem was in intra firm sales. On the other hand for the next five years its
freestanding sales breed nearly 30 percent. In the same retro its internal sales to other
commercial divisions were declined by the year 25 percent. The internal sales decline
was fairly definite to Mike so he gives significance on squeeze. New non-glass
synthetics were coming on to the market which would make the products of several other
corporate divisions retrospective. Mikes aim is to new sales outside the firm. So Mike
was clear to emphasis on external sales progression through increased market share.

Silicas competition was between United States and worldwide. Glass Pro, a major
mid-western U.S. corporation. This firm is substantially larger size and product
scope, but currently had only one glass-fiber production facility, located in Ohio.
To do the sluggish sales it is experienced in short periods. It is not expanding into
European production in future.

A Sonnenberg Glassworks GmbH, third but relatively minor competitor was

located in Sonnenberg, East Germany. Although Sonnenberg produced glass fiber,
sales were limited to the Eastern Bloc prior to German unification. With
unification, however, Sonnenberg could constitute new competition for both U.S.
firms throughout Western Europe.

Mike Harrelson saw that manufacture upsurge in both the United States and Europe.
So there is argent industrialized expansion needed in both countries. Between them
Europe was a strong possibility for the glass market. So in Europe it locates new
production. The reason behind this is:
First, the recent growth in the European market embodied new opportunities which
would be better served by producing within the region.
Second, the possibility of a single-Europe, the 1992 program, also created increasing
debate over a possible Fortress Europe. Although the protectionism debate was not
considered significant in many industries, Silica had reason to believe it was real.

With the help of Primavera Corporation Silica explore its business in European in
the spring of 1990.But Mike fear how he in Europe market.

First, Mike thought about Green field investment, He started the exploration by
searching first in the United Kingdom, France, western Germany, and then
Luxembourg. But the problem they got from this thought is it is so costly and not
encouraging.
The second approach was for the acquiring an existing firm and which are running still
in glass manufacturing industry- one with a glass furnace in place which might allow a
cheaper production start-up.

Putting effort Mike had finally found a reasonable place to begin with after a long
time. Sonnenberg Glaswerks got the spot light. It is in the Thringen region of former
East Germany. A lot of work was needed if Sonnenberg was to come alive again. But it
was known to have had some of the most advanced technology in the world in glass
manufacturing for over four centuries.
The fame and product development had stopped with the inception of the Communist
government in East Germany in 1945. There had been no new capital investment. The
facilities at Sonnenberg were a mix of the technology of different eras. The two 15-ton
furnaces in place were of a technology over 50 years out of date.
In 1990 Sonnenberg mediocre glass fiber and was badly in need of new capital,
technology, and marketing skills if it was to survive the transition to a capitalist market
economy.

Opening of Eastern Europe produced massive drives for industrialization and

privatization for some countries namely Poland, Czechoslovakia, Hungary, Bulgaria,
etc. it was different for the former west and East Germanys. Because western Germany
was already one of the worlds true industrial giants, its economy could provide a
jump-start to the revitalization of the east.

The eastern part of Germany could be absorbed into the whole rather than be
independently industrialized like other Eastern European economies.
Western Germany approach increased with triage analysis, quietly separating the
previous East German enterprises into the following three sectors:
1) Those which would not be competitive;
2) Those which were well-positioned and prepared for competing with western
businesses;
3) Those which might survive if provided with infusions of capital, technology, and
expertise.
The major problem and motivation for selection and action was maintenance of
employment. Eastern Germany was falling into a depression and fast.

To organize the privatization process in Treuhandanstalt government-constructed

holding company was set up. The Treuhandanstalt was charged with winding up over
8,000 firms. The process had some requirements. It required formation of western-style
balance sheets and operating statements for every firm. It was also necessary to quickly
assess which firms required immediate cash injections in order to stay afloat until they
could be sold or closed.
As a result of this process Sonnenberg Glaswerk GmbH was held by a regional holding
company. This regional holding company was known as Glasring Thringen AG.
Glasring Thringen AG held many companies. Sonnenberg was one of seventeen
different enterprises for which Glasring Thringen was responsible. This was done for
a special purpose

In 1990 after initial exploratory meetings Silica proposed the acquisition of

Sonnenberg Glaswerks that

75% ownership by Silica

The remaining 25% remaining with Sonnenberg

The 75% which Silica had proposed was only because of the fact that 75% ownership
level was necessary in order to obtain tax benefits under European Community law.
Glasring Thringen AG would hold the 25% minority ownership under the proposal.

Silica would be assured first negation on the sale of this 25% share though Silica
had wanted 100% ownership, but this was insupportable to Glasring Thringen.
Since Mike suspected that its 25% ownership would be given to the present
management of Sonnenberg. Management of Sonnenberg saw itself as owners
although they had no equity investment or legal standing. In fact, in the preliminary
discussions with management, the chief operating officer of Sonnenberg had
wished to discuss a joint venture with Silica in which he would be the other equity
holder, albeit with no capital investment.
First of all it wanted to invest approximately DM 1,500,000 which was in terns worth
dollar 1,000,000 at the present exchange rate of DM 1.5000 per dollar. They wanted to
invest this money in new capital and technology. They wanted to provide all marketing
and sales expertise also as needed. The new capital Silica wanted to invest a fourth of
this capital would be required for new plant and equipment. Along with an additional
thirty percent financial support package provided by the German government for
specific health like

safety,
environmental, and

Machinery needs.

Mike returned United States to a positive mentality about the feasibility of the
project. October to December Mike wait for financial information of the project.

At last in the mid-December Mike returned to Sonnenberg to investigate the problem.

Amidst an increasing unemployment rate the problems of the Treuhandanstalt and
Glasring Thringen continued to intensify.

Glasring Thringen now proposed an alternative arrangement: Silica would not only
acquire Sonnenberg Glaswerks GmbH, but also acquire a second facility. This was 50
kilometers away, Shl Glaswerke GmbH. The two were to be sold together, and not
separately. This was different.
Then Silica decided to do the production facility in two ways that is direct and indirect
operation cost. Mike explored the possibility of consolidating the two operations at one
facility, Shl, but Glasring Thringens interests were firmly in the maintenance of
regional employment without worker dislocation. And finally Glasring Thringen
came to the same opinion to the purchase price.

Silica was facing a decrease in its interior sales, because of new opposition with nonsynthetic fiber. Product outlines were narrow tracked by restricted market extension.
Accordingly Silica decided to upsurge peripheral sales by obtaining Sonnenberg, a
glass industrialized company in East Germany. But the single-Europe, the 1992
program, detained back foreign firms spreading to Europe and ruin Silicas plans for
evolution. At the same time East Germany was in deep downturn and Silicas
suggestion was given a counterproposal of buying two companies at the cost of one
which meant the attainment will result in increased operation cost for the company.
Procurement seemed to be even more thought-provoking for Silica than it may have
been as the government in East Germany gave circumstances buying both the
conveniences. Silica was also restricted from closing down or inclusion the two
companies as the rules purpose were to preclude employee interruption.

How will Silica Glass, Inc. extend their narrow product line and exchange with the
German government and the holding company for acquisition of Sonnenberg Glaswerk
GbmH to secure sales expansion in the European market?

Inferior production cost leads to higher profit margin. Silica is expanding its business
in the European industry of glass fiber with an unusual strength i.e. cheaper production
cost. European market is a huge market.
A low production cost is really valuable. Mike Harrelson of Silica Glass Inc. explored
different regions of the Europe to find the best expansion option for the company.
Subsequent to thorough analysis, he found the Sonnenberg Glaswerks GmbH as the
appropriate option for acquisition because it will give the company more flexibility in
the production area.
Sonnenberg is mainly a German company which has been producing glass fibre for the
German market. It has two furnaces which has given Silica an opportunity of cheaper
production start-up.

In todays business atmosphere spirited benefit is the eventual weapon to survive in a

market where the competition is increasing day by day. The glass fiber manufacturing
market around the world is becoming more and more soaked.
Silica Glass Inc. has the spirited benefit over its major competitors in producing
technically complex fiber. This kind of fiber is very sophisticated and has a very high
demand around the world. There is no other company that can produce this type of
complex glass fiber.
Due to this competitive advantage the company is having very high sales in the
domestic market. With this technologically complex fibre they are moving to the
European market.

Primavera Corporation as long as a lot of strength to Silica as it is given that a lot of

advantages to the company. Since, Silica is expanding its business in the European
market. Primavera has been providing Silica with options that it can use to move on
with the expansion plan.
They are mainly using the Primavera as the regional headquarter. Without this
corporation it would be unfeasible for Silica to move for an attainment in Germany.
Due the presence of Primavera, Silica is thinking about expanding into the East
German region, because by establishing another facility in the eastern part of Germany
Silica can easily monitor the management activities and the production process. If they
did not have Primavera as a supporting company, it would be impossible to effectively
manage the production activity in the eastern region of Germany having to cope with
the unknown market with only Sonnenberg on its side. Moreover, with the help of
Primavera, Silica will be able to expand its business in the other parts of Europe as
well.
So, there is no doubt that Primavera Corporation is a great strength of Silica in the
European region providing the company with the expansion options.

Sonnenberg is mainly an East German company. After the unification of Germany,

some glass producing company as well as Sonnenberg has been subjected to
privatization. As an opportunity to expand the market in the European region Silica is
trying for the acquisition of Sonnenberg. There exists a mixed technology.
Because of this mix, Silica will be able to cut the production cost and will be able to
produce efficiently. Sonnenberg has some very advanced technology for producing
glass fibre.
This is strength because it will give Silica more flexibility of producing superior
quality glass products. It will definitely give a cost benefit in the production process.
With this technological advantage Silica will be able to gain control over the European
market.

Silica Glass Inc. is one of the worlds dominant glass producing companies. It not only
fulfil countries own demand but as well as it also drive foreign market in the world.
Though it has many competitors it has managed to place itself amongst the leaders in
the industry all over the world. Its products are renown through out the world.

By producing superior quality glass products it has earned good reputation in different
parts of the world. Since, it owns a large chunk of share of the international glass
market; it has managed to gain an edge over its competitors.
It is one of the largest manufacturers of glass compared to its competitors. Its products
are largely demanded in the US market as well as other parts of such as Europe and
Germany Silica has to produce in huge quantity to maintain a stable sales growth in
these markets. This has led to the company getting a new image and reputation in the
industry as the world leader.

By looking at the rate of growth of its sales, Silica has a very steady growth in sales.
By providing unique quality maintain Silica has driven the competitors out of business
that the others could not provide. Through heavy growth in sales, the company is
expanding worldwide.
It is almost impossible for any company to survive and control the market without
steady growth in sales and quality. Silica is aiming towards controlling the
international market by focusing its operations on the international market to gain
control in the future with the steady growth. This steady growing market share is
strength for Silica Glass Inc as every year.

This high rate of sales is adding more value to the company and increasing its
profitability. This is also helping Silica in securing the investors and its stockholders
money. Even though other companies may have the resource to compete with Silica
but they do not have the sales growth and the profitability that Silica has. For this
reason it is becoming mind-boggling for other companies to compete with Silica.

Sales information is significant as they point toward the abundance of a company.

Companies always attempt to amplify their sales this is because rising sales will lead to
increase in the profits. One of the main potency of Silica Inc. is their healthy and stable
growth in external sales. The total sale of Silica is mainly divided into two categories
one is intra-firms sales and other is external sales.
The external sale is the strength of Silica. The company heavily relies on internal sales.
Almost 75% of the companies sales are based within the country. In the European
market, the sales figure is little bit low compared to the domestic one due to the low
control over the market there. The sale in Europe is around 20% of the total sales
Silica had grossed nearly $25 million in sales in 1989; its targeting to increase the
sales in the upcoming years. The external market is expected to grow by 10-15%
annually. With this weighty growth rate of the market, it is hard for any company to
remain in the leading position. Due to heavy growth in external sales Silica is still the
market leader and expecting to be at that position in forthcoming years.

Silica Glass inc. is a global glass manufacturing brand. It has ended its presence felt in
numerous parts of the world marketplace. Silica has numerous manufacture units in
service known as divisions within the company. Of these divisions of Silica Inc. many
have very high profitability that is why the company has crossed a long distance in
terms of achievement. Revenue acts as a main motivator for all the companies it acts
like the blood that is smooth through all livelihood animals.

Adequate level of profit is important for a company to maintain its attention in the
market and to keep it in service without any troubles. Silica is mainly a U.S. based
company and has most of its operations running out of USA. The high profitability
from these sectors ensures the smooth running of Silica. Through the profits earned
from these businesses the company has financed its expansion in the foreign markets.

These gainful divisions are main strength of Silica because using these divisions the
company is growing its business around the world and supplementing other divisions
which are not performing up to that level and also to maintain a solid growth of the
business.

In todays business atmosphere spirited benefit is the eventual weapon to survive in a

market where the competition is increasing day by day. The glass fibre manufacturing
market around the world is becoming more and more soaked.
Silica Glass Inc. has the spirited benefit over its major competitors in producing
technically complex fibre. This kind of fibre is very sophisticated and has a very high
demand around the world. There is no other company that can produce this type of
complex glass fibre.
Due to this competitive advantage the company is having very high sales in the domestic
market. With this technologically complex fibre they are moving to the European market.

:
Primavera Corporation as long as a lot of strength to Silica as it is given that a lot of
advantages to the company. Since, Silica is expanding its business in the European
market. Primavera has been providing Silica with options that it can use to move on with
the expansion plan. They are mainly using the Primavera as the regional headquarter.
Without this corporation it would be unfeasible for Silica to move for an attainment in
Germany.
Due the presence of Primavera, Silica is thinking about expanding into the East German
region, because by establishing another facility in the eastern part of Germany Silica can
easily monitor the management activities and the production process. If they did not have
Primavera as a supporting company, it would be impossible to effectively manage the
production activity in the eastern region of Germany having to cope with the unknown
market with only Sonnenberg on its side. Moreover, with the help of Primavera, Silica
will be able to expand its business in the other parts of Europe as well.
So, there is no doubt that Primavera Corporation is a great strength of Silica in the
European region providing the company with the expansion options.

Silica Glass Inc. a U.S. based prominent glass manufacturing company has come to the
present circumstances following long period of time by changing its tenure and
strategies from time to time. These changes have had some objectionable effect on the
company because it changed the total course of action and target of the company with
the change in ownership and approach.
The main product line of Silica had been developed under Silica Products in the near
the beginning 1980s. Afterwards the firm was taken over in 1984 by a company
particular in takeover who used it as a cash cow, that meant that the main object was to
engender profit but there was no re-investment done for the growth of the company.
Two years later, Silicas facilities were sold to Primavera, a south-western company
who used Silica in a diverse way.

Consequently, whenever a new owner was acquired, it changed the total strategy of the
company and used Silica for a different organizational purpose. These changes have
had an adverse effect or in other words have affected the companys growth because
the resources were not efficiently used.

The product lines and the expansion opportunities are very important for any company.
Silica Glass now at its expansion stage is facing problems regarding their existing
product lines and market expansion opportunity.
In the U.S. Silica has a sale of 75%. But the market is saturated as there are many
competitors. Silica is now struggling to retain its market control because it does not
have the flexibility of larger range of product lines like others. Though they are
producing superior quality goods but that is for some limited products only.

As a result, its getting hard for them to attract new pool of customers. In U.S. the
market expansion opportunity is no longer available. Because the market is saturated
and Silica has been doing their business in U.S. for quite a long time. So, there is no
opportunity left for Silica to expand business in U.S.

Silica Glass Inc. has some solemn problem in their intra-firm sales class. Their intrafirm sale is not relatively good compared to their external sales figure. As we know
Silica is a rapidly growing company. It has excellent growth in their external sales and
product quality and the growth rate of the whole company is also convincing.
But the problem is that their intra-firm sale is decreasing continuously. While external
sales are increasing at an annual rate about 30% per year and are expected to grow at
this rate for the next five years, the internal sales in most of the corporate divisions are
expected to decrease at an annual rate of nearly 25% over the same period of time.

It means Silica is continuously losing its money in intra-firm sales. This loss is
affecting the profitability of the company severely. Most of the operating divisions are
being squeezed. Silica is losing the control over the domestic market and corporate sale
is decreasing at an alarming rate. So, intra-firm sales of Silica seem like a weakness for
the company.

Aggressive benefit is the most significant issue in business. Companies can be

exclusive if they provide the market with up dated and modern products which give
them an aggressive benefit and consequently enable them to attract more customers.
But unfortunately Silica does not have an opportunity of providing unique products.
Most of their products are old and are similar to its competitors.
The U.S. market is already soaked by too many companies competing among
themselves. Those companies are introducing more new products in the market. So,
with the access of new products the existing products produced by Silica become
obsolete. It loses the ability to attract customers because everyone wants to buy the
new product. For this reason customers are touching left from Silica.
The outdated products of Silica are affecting the company in several ways first of all,
the customers are moving away, secondly, substantial decrease in profitability, thirdly,
reputation of Silica is being hampered, and finally losing control over the market.

Thats why; obsolete product lines are one of the weaknesses of Silica Glass Inc.

Another major weakness of Silica Glass Inc. is lack modernism and hi-tech execution.
Lack of modernism means there is no effort doing things in a new way. Hi-tech
implementation means no use of advance technology in the production process. Silica
is one of the leading glass manufacturing companies of the world. But they do not use
new technology to improve their production efficiency and profitability.
They are simply following their customary age old production scheme for a long time
making no change in technology. As a result they are finding it difficult to cope with
the new products and technology used by domestic competitors. Besides, there is no
effort being given by the company to bring any change in their business.
This view of the company is affecting it in a concealed way. They are losing their longterm potentiality of the company and also losing the capability of adapting to the new
technological era of production.

Due to the unification of Germany, Silica has availed the opportunity of expanding its
business in the European province. They are looking forward to the acquisition of
Sonnenberg Glaswerks facility in the Eastern Europe. For being a foreign company,
Silica has to follow the rules and regulation of the German government. The German
government is mainly concerned about the unemployment level hence; there is law
which prohibits the company from lying off their current employees.
This is a weakness of Silica because they do not have the option of lying off their
inefficient employees. They have to keep them to maintain the required employment
level. Moreover, there is no option of relocating the employees either. An employee
cannot be relocated to another operating facility.
This is a weakness of Silica because whatever happens they can not make change in
their employment status and as a result, the efficiency level of the company is being
hampered severely.

Silica Glass Inc. is currently operating in some countries of the European region. They
are looking forward to expand there business in Germany. They have been exploring
different areas of Europe to select the best option of expansion. But they found it
difficult to explore and select because there are too many countries with new business
environment and new opportunities which are unique from each other.
They mainly faced this problem because they do not have any regional headquarter of
the parent company operating in the European region. Its a major weakness. With out
a regional headquarter it is very difficult to analyse the market and also very difficult to
supervise the overall production process.

Due to this lacking they have not made significant level of sales in the European
region. Besides, without the regional headquarter they are giving rise to inefficiency in
business because for selling products they have to bring the products directly from the
U.S. which is time consuming and adding more to the cost of production. So, without a
regional headquarter Silica is losing the opportunity of making high sales and profit.
Thats why its a weakness.

People always look forward to buy new products. They usually try to avoid the old
ones though it may have superior quality. One of the major weaknesses of Silica is the
lack of new product development. They are doing their business on the basis of their
age old products. As markets are becoming too drenched, surviving without
introducing new products is very difficult.
The most alarming thing is that if the competitors introduce new products than Silica is
sure to lose customers. For this reason, Silica is having problems with their intra-firm
sales. They are losing customers every day because those customers are switching to
new products.
So, the profitability of the company is decreasing. If Silica does not start innovating
new products, it will become hard for them to remain in this business. Due to the lack
of new products they are losing to their close competitors.

One of the most vital weaknesses of Silica is that they do not have any Research and
Development center in Europe. There is no doubt that R&D is very important for any
kind of business. Because, it provides a company with new and innovative ideas and
products. It also provides ground breaking information regarding the business. Before the
acquisition proposal given to the Sonnenberg Glaswerks GmbH, lots of exploration and
analysis was made. But without a proper R&D center it would not be beneficial for
Silica.

As they do not have the R&D facility, they were not able to make the proper assessment
of the economic conditions. They could not get any idea about the business environment,
legal requirements of government and the most important of all they could not analyze
whether this acquisition will be beneficial for Silica in the future or a liability for Silica.
Without the R&D center they are not getting the proper view of the German market. They
cannot analyze which part of Europe has the highest chance of profitability. They could
not decide on whether to establish a new facility or just make an acquisition of an
existing one. So, from the above discussion its clear that lack of R&D Centre is major
weakness of Silica.

Extension in the West German region can be advantageous for Silica. Silica is trying to
acquire the Sonnenberg of eastern Germany. So, if they can launch another facility in
the West Germany, the complete German glass-fibre industry will be under their
control.
There is no one to compete and Silica will have the full control of the whole German
market, which is unquestionably a huge part of the European market. There will be no
problem to attract the customers because Silica is making managers quality products
compared to the local producers.
The productivity of the establishment will increase definite and also the commerce will
be delayed.

Silica Glass is intensifying its business in Europe to imprisonment the potentially

mammoth market. It has explored the occasions of establishing a new facility in
Europe, but that will be costly.
So they have decided on acquisition of an existing technologically advanced facility
called Sonnenberg Glasswerks GmbH. With Sonnenberg, they will get another facility
called Shl. Procurement of Sonnenberg can be advantageous for Silica as it already
has the incinerator for production.
So, in the near future its possible for expansion of Sonnenberg in other parts of
Germany which will give Silica some opportunity of gaining control over the European
market.

The market of Western Europe is almost new to Silica Glass Inc. Now they are operation
in some major parts of Europe but not in the western part. The corporation is having an
annual sale of about 25% in the European market which is relatively lower likened to the
national market of Silica. So, there is lot more to receive from the Western Europe.
If Silica accomplishes to establish one of production facility in the Western Europe it will
bring a new prospect of opportunity for Silica. Because than Silica will gain more control
over the European market gradually and their sales will increase respectively, so will the
profit. Now, from the Pacific Rim area the earning of Silica is very low. There the annual
sale is about 5% of the total sales. Its obvious that Silica has not still ventured at the
market of Pacific Rim area.

So, if the corporation enlarges its business in that region, in the near Silica will have
nothing to regret about, they will be the occasion hunter and leading glass-fibre
manufacturer of the world. The markets of Western Europe and Pacific Rim area can be
great place of chance for Silica.

Silica is a worldwide leader in the glass manufacturing industry. It is largely a U.S.

based corporation with a high growth rate in sales and quality. But presently its
business is under threat due to the contestants introducing new products in the industry.
Silica is losing some of the market because opponents are constructing some new
products which have given them the competitive advantage. With these new
competitive products the opponents are attracting more and more customers. As a
result, the profitability and market share of Silica is surely being exaggerated as well as
the intra-firm and exterior sales are decreasing.

So, new competitive products of other corporations are posing a great threat to Silica
Glass Inc. In the near future if Silica fails to compete with these competitors, it will be
losing their business in the local market and as well as in the worldwide market.

Silica has a sale of about 25% of its total sale from the European market. It has not
long-drawn-out its business in all European regions. So, there awaits a lots of
opportunity for Silica. But the protectionist point of view European government can be
a difficulty for Silica in entering the European market. But one benefit of Silica is that
the existing domestic markets are not as knowledgeable as Silica.
They are striving to control the major portion of the European market, while foreign
companies are dominating in the domestic market. Thats why the European
governments are more concerned about protecting local glass manufacturing company.
They are trying to save the domestic market from foreign raiders. So, they are coming
up with many rules and regulation to protect the local companies. As a result, its
getting harder for Silica to enter the European market.

As Silica is going for acquisition with Sonnenberg there will a chance of layoffs in
order to cut the labor cost. Since Sonnenberg is being privatized for the first time, it
will take time for the workers to get used to working under the new management.
Motivation will be hard as workers may suffer from the fear of lay off. Other incentive
packages will help the workers to work hard, shine, increase their ability, and over all
help the company to find the best and short list the existing workers to run the two
production unit without going out of budget and incurring a loss.

Glasring Thringen AG gave a counter proposal to Silica Glass, Inc. which stated that
Silica will have to acquire a second facility 50 kilometers away named Suhl Glaswerke
GmbH along with the Sonnenberg Glaswerks GmbH. For the whole acquisition
package Silica had to pay the same amount of money. However Glasring Thringen
AGs main concern was to maintain the regional employment without workers
dislocation.

Eastern Europe was facing unemployment problem due to an economic depression.

For this many firms were privatized which had a chance to survive if proper
technology, capital, and expertise were provided. Treuhandanstalt, a government
holding company was responsible for liquidating or selling off 8000 firms in which
Sonnenberg Glaswerks GmbH was one. Sonnenberg was under a regional holding
company named Glasring Thringen AG. This regional holding companys
management was directed by Treuhandanstalt. For the last four decades, Sonnenberg
was the most advanced in technology in glass manufacturing but after communist
government in East Germany took over the company its product development had
stopped.

As Silica Glass Inc. has gone through numerous ownership and strategy changes it
lacks its own corporate culture. Under different ownership, at different times they dealt
with different corporate culture. Changing of hand has been the past trend of the
company. It has no identity of its own in the department of corporate culture. This
might be one of the reasons that there is lack in involvement of the HR department.

Sonnenbergs present management thought of themselves as the owner of the

company. They even tried to start a joint venture with Silica. However chance was not
given by Silica to the present management of Sonnenberg Glaswerks. Glasring
Thringen AG would hold the 25% minority ownership under the proposal. For new
capital, technology and marketing and sales expertise Silica had to spend around DM
1,500,000. One fourth of the capital was needed for new plant and equipment along
with additional 30% subsidy package provided by the German government for specific
health, safety, environment and machinery needs. This was the minimum human
resource requirement by the government of Germany.

As Silica was planning to locate its new production in Europe, the employee
diversification will be a challenge. Since Silica is going for acquisition with
Sonnenberg which was popular for using some of the most advanced technology for
last four centuries, more advanced skilled workers are needed to do the job in the right
way and more efficiently. For this recruiting the right people for the job will be
challenge. Moreover facilities of Sonnenberg were a mixture of the machineries of
different eras, diversified employees to deal with these technologies will be needed.

A speedy downheartedness arose in the economy of the East Germany for which
redundancy rate was growing rapidly. To guarantee the employment to those unwaged
people administration started denationalizing more than 8000 corporations. This
denationalizing period fetched an outstanding chance to the Silica Glass Inc. as they
desired to obtain an East German company named Sonnenberg Glaswerks. Silica
required new know-how as well as new employees and personnel. This made it stressfree for Silica to employ new employees effortlessly without increasing the
reimbursement level and also retain remaining employees.

A number of proprietorship and approach variations were completed in Silica Glass,

Inc. In 1984, an annexation authority accepted Silica Glass, Inc. to practice the
business as a cash cow. That means the possessor grabbed out the currency but did not
capitalize very much on the progression of the company. As a consequence there was
no enlargement of the company during that period. This kind of behavior of owner
disheartens the staffs and personnel to upsurge the company trades and also the rate of
turn over intensifications.

Sonnenberg Glaswerks was suspected by a local holding establishment named Glasring

Thringen AG. Thringens duty was to monitor the directions of a government
assembled holding company named Treuhandanstalt. As the denationalization practice
of Sonnenberg was intended by the Treuhandanstalt, there is an extraordinary
opportunity that this company will try to influence human resource arrangements of
Sonnenberg in indulgence of administration issues typically.

Recommendation: Inelastic and well accomplished human resource management

strategies are desirable

Silica Inc. had endured an amount of substantial ownership and approach changes over
the years. First in 1984 silica was bought out by a take-over professional then in 1986,
Silica was as a final point sold to Primavera, which was a south eastern holding
company. As such, the management policies were constantly shifting as well. To solve
this problem Silica glass, Inc. desired well managed human resource management
policies. They must streamline whole organization specially the human resource
department.

Rigid management and management policies will bring out the best from the
employees of the companies and stimulate them to do good for the company. To get a
good grip on the employees and to retain a strong corporate culture, management
policies can be very effective especially in the current situation Silica is in. To handle
this continuous change in management and for maintaining a co-operative effort
towards the companys goal, a distinct manager is needed for every department who
would lead their departments towards achieving the corporate strategies.

Recommendation: The Counterproposal of Glasring Thringen AG should be

accepted.

Silica should agree to take any progression prospects that will help them magnify their
market and operation. Establishing new factory in Europe will prove to be very
expensive if Silica has to start from the scratch. So a very lucrative decision would be
to acquire an existing company in Europe.

The counter proposal of Glasring Thringen provides a condition to Silica glass Inc
which states that if Silica wants to acquire Sonnenberg, it will have to acquire another
facility. It was 50 kilometers away, Shl Glaswerke GmbH. The two were to be sold
together, and not separately. This proposal will be beneficial for both Silica Glass Inc
and East Germany.

The counter proposal of Glasring Thringen provides growth opportunities for Silica in
Europe. So if they accept the counter proposal of Glasring Thringen AGs counter
proposal they will be the owner of two facilities in Europe with the same amount of
money needed to acquire one facility. Even though this option might seem unprofitable
in the beginning because the facilities are 50 kilometers apart and Thringen wont
allow merging the two operations together, this will give them much flexibility to
capture European market rapidly. Besides they will be able to expand both their
production and their market. In the beginning some problems might arise in the form of
increased operation cost and labor cost, but with proper training facilities and
restructuring the facilities to favor this acquisition, the operating and employment cost
will eventually go down.

Recommendation: Silica could either internally or externally hire a specialized

research and development team to solve the constraint of limited product lines
which is followed by a contracted market expansion.

When Primavera bought Silica Glass, Inc then its strategy was to expand sales and
acquire additional operations in order to increase the total value of the Silica
operations. The former strategy was not possible because despite the fact that Silica
divisions showed healthy profitability but it had narrow product lines and also market
expansion was limited. Since this was the condition, rapid growth through direct sales
was not possible by Silica.

Implementing a strong and specialized team of research and development can decipher
this problem. The Research and Development team can help Silica to determine the
cause of limited product lines. There was almost no investment made in Silica to get
the modern and highly technical machines. This can be a major reason for limited
product lines as worker are working with the same old capacity trying to cope with the
new demand. The Research and Development team with some back up information
from the marketing section regarding what products have to be produced, can ease out
a new method of production and if required with new advanced technology. This
would make production more economic and also followed by this the external sales can
be easily boosted.

Recommendation: Silica should establish a regional Headquarter in Europe for

better monitoring and controlling.

Silica has been discovering different areas of Europe to select the best option of
expansion. But they found it difficult to explore and select because there are too many
countries with new business environment and new opportunities which are unique from
each other. They mainly faced this problem because they do not have any regional
headquarter of the parent company operating in the European region.

Without a regional headquarter it is very difficult to analyze the market and also very
difficult to supervise the overall production process. Due to this lacking they have not
made significant level of sales in the European region. Besides, without the regional
headquarter they are giving rise to inefficiency in business because for selling products
they have to bring the products directly from the U.S. which is time consuming and
adding more to the cost of production. So, without a regional headquarter Silica is
losing the opportunity of making high sales and profit. Thats why a regional
Headquarter is extremely important for Silica.

Recommendation: Recruitment and retention of qualified, efficient and effective

workforce is needed to deal with the competition and to thrive.

Silica faced major competition from GlassPRO both in the United States and
worldwide. Also in Europe a relatively minor competitor was Sonnenberg Glaswerks.
As such, Competition was very high in local and foreign market. More over there was
the problem of intra firm sales decline and changing management policies. In such a
scenario, the best weapon would be to have the most efficient and effective workforce.

The counter proposal by Glasring Thringen would result in direct and indirect
operating costs to increase initially. The company can only deal with this crisis
situation if only they have efficient, productive and enthusiastic employees. With
effective and efficient workforce Silica Glass, Inc. can lower the production cost. This
will increase the profitability of the company and help it survive in the long run; also,
will make it capable to deal with the pressure of completion and stand out as one of the
top companies.

Recommendation: Silica Inc. should consider and put all its efforts for expansion
through mergers and acquisition.
Silicas product lines were very narrow and market expansion was very limited for
Silica Glass, Inc. Rapid growth of the whole organization was needed especially
because direct intra-firm sales were expected to decline by 25% for the next five years.
Rapid growth was only possible by establishing new facility or through acquisition and
merger. So Silica decided to acquire new company which produces glass-fibre.

Mergers or acquisitions act as synergy for any company if the transition is well
managed. After acquisition or merger Silica has to worry little about training the
employees because the existing employees of the acquired company will be already
trained. Hiring new employees may not be needed that time. This flexibility will give
Silica the opportunity to expand and increase its sales in no time. But they must be
careful about the fact that the existing employees of the acquired company might not
like the acquisition so it might demoralise them. Also, employees of the host company
might feel insecure as downsizing is a common outcome of mergers and acquisitions.

Recommendation: Silica should sell off the glass synthetics in the external market
before it becomes absolutely obsolete and take initiatives to produce non glass
synthetics like other competitors.
Silicas glass fiber is used for many different industrial applications and also in some
of the corporate divisions of Silica itself. At present, Silicas sales are divided between
intra-divisional sales, which is 50% and external sales is also 50%. At present, Silicas
intra-firm sales are under risk due to a quite definite decline owing to the upcoming
entrance of new non-glass synthetics. Silica is almost certain that these non-glass
synthetics would make the products of its several other corporate divisions obsolete so
Silica is expecting a 25% decline in internal sales annually for the next five years.

If the decline in sales continues then the overall revenue of Silica will reduce radically.
In order to tackle this problem as early as possible and refrain itself from high revenue
losses due to reduced internal sales, Silica should consider selling majority of the glass
synthetics, which they produce, to the external market. In the mean time, Silica should
take additional initiative to produce non glass synthetics like other competitors, at
effective and economic cost. This may help to gain back the reduced sales level inside
the corporation and also reduce the cost of purchasing new non glass synthetics from
the external producers for Silicas own productions.

Recommendation: Silica must set up company policies taking into account the
Government Legislations.
German government has specific safety and health requirements for the workers in a
factory. Every company operating there has to follow those in return of the permission
of operation.

In every country government have some acts or legislations to protect the right of the
worker and employees. If any company do not follow or consider those acts and
legislation the employees or the government might sue the company. So Silica must be
aware of the fact that German government has similar kinds of laws.

For the safety and health requirement of the German government Silica has to spend
additional 30% of their capital investment in equipment and plant to ensure specific
health, safety , environment and machinery needs. So while they will be planning the
policies of the two newly acquired companies they must focus on the government
legislations and acts and must take the conditions seriously and incorporate them in
both the East German and US facilities. In this way, Silica would be able to maintain
both the government legislations and corporate social responsibility.

Recommendation: Silica must set the compensation package of both the United
States and East Germany based facilities on the basis of cost of living adjustment
(COLA)

The present factory of Silica Glass, Inc. is located in USA where the existing
employees and workers get higher compensation packages because of the competition.
But in East Germany there are economic depression and high unemployment rate so
the compensation package must vary according to the economic and market conditions.
Trying to maintain internal equity would be difficult for Silica given the current
scenario. So what is most important in such a situation is to maintain external equity
that is, set the compensation package of the employees based on what other companies
in the similar industry are paying.

In USA the competition was very high, the economic condition was stable and the cost
of living was very high. It was very tough to hire new qualified employees in USA
because of such competition. So in order to attract employees and retain them Silica
had to maintain the current market compensation practice and give higher
compensation to the employees. But in East Germany the economy was at a depression
and unemployment rate was very high. The availability of such labour force made it
easier for Silica to recruit and retain employees. The employees demand for salary was
low so the company need not pay them equivalent to the US employees. However, the
employees of East Germany on getting to know about the higher salaries of the US
employees might revolt or demand for more.

The Problem: 1
Silica has undergone changes in management from time to time which would cause
confusion and dissatisfaction among employees.

Rigid and well managed human resource management policies are needed

Silica Inc had undergone a number of significant ownership and strategy changes over
the years. First in 1984 silica was bought out by a take over specialist then in 1986,
Silica was finally sold to Primavera, which was a south eastern holding company. As
such, the management policies were continuously changing as well. To solve this
problem Silica glass, Inc. needed well managed human resource management policies.
They must restructure whole organization specially the human resource department.

Human Resource Department will measure and solve each and every human resource
problems that Silica will incur. Starting from appointing marketing and research and
development experts to solve segregated problems from analyzing acquisition
prospects, the HR Department will access in these areas. The involvement of HR
professionals will be vital in assessing the implications of people which the balance
sheets or income statements did not provide. During the acquisition process, the
identification of key human assets in Sonnenberg and effectively taking measures to
prevent turnover due to the announcement of the merger will be crucial. Before
merging with Sonnenberg Glaswerks, the HR department will need to administer the
industry, market, economy and all other research considering the business environment
related to managing the human resource of Germany.

Mike Harrelson has only considered the financial prospects while giving the
acquisition proposal to Sonnenberg Glaswerks. No plans were made on how to solve
the difficulties regarding the unemployment and liquidation. The implementation of the
HR department will be necessary to oversee the acquisition of Sonnenberg and the
changes in ownership and the organization structure of the many existing and newly
hired employees. Furthermore, the HR department has a big role to play in solving
problems regarding restoring employee morale and job security after merger takes
place.

Mike Harrelson, the President of Silica will probably make the most disastrous mistake
if he fails to establish a proper HR Department before moving into Germany. The
German government was worried about the economic recession and wanted to
privatize companies to bring in more investments from private investors and reduce job
losses. However, unemployment continued to increase. This delicate matter would
determine the optimum solution in keeping the best employees and screening out the
worst employees as Silica would make an entrance into Germany. HR department
would further have to develop new compensation packages based on the employee
motivation factors and implement those to the newly assembled workforce. Human
Resource Department will also guide Silica in changing the management of the
company.

The Problem: 2
To face competition from GlassPRO, silica has to expand its operations in new
markets. According to Thringens counter proposal silica can get two plants at the
price of one.

The Counterproposal of Glasring Thringen AG should be accepted.

Silica should accept any growth opportunities that will help them expand their market
and operation. Establishing new factory in Europe will prove to be very expensive if
Silica has to start from the scratch. So a very lucrative decision would be to acquire an
existing company in Europe.

The counter proposal of Glasring Thringen provides a condition to Silica glass Inc
which states that if Silica wants to acquire Sonnenberg, it will have to acquire another
facility. It was 50 kilometers away, Shl Glaswerke GmbH. The two were to be sold
together, and not separately. This proposal will be beneficial for both Silica Glass Inc
and East Germany.

Silica is looking to expand business and gain a larger market share. The abandoned
facility has the most high tech machineries and the company should utilize these
machineries to produce the top quality glass products in the market. With two such
facilities the company should utilize its skills in glass making and produce enough
glasses to gain as much market share as possible thus increasing its profitability,
productivity and most of all its employee morale and compensations. The employees
can also utilize this high production to enhance their individual as well as group

incentives. As the company currently has a low production line, it should purchase
the two facilities in order to double their production capacity and widen their market
reach. The profit gained from this increase in production can be used to motivate the
workforce even more by giving those incentives such as profit sharing and eventually
raising their morale to take the company to even higher heights

The company will be able to increase its production capacity and utilize it fully with
more efficient and innovative workforce. But there are known assurance on how
feasible these two facilities would be for Silica as previous financial papers are not yet
available to the owner. So, the Company should first of all ask for the previous
financial papers for both the facilities and wait until they arrive. The decision can only
be finalized after it is determined that the facilities will have a positive impact such as
more profitability and insure that the cost of production will not be higher than the
profit received for the sales of glass.

Mikes intentions are to expand the company for the betterment and should look into
all factors and information available to him to determine the extent to which this
counter proposal meets his plans, then he should come up with a final verdict and
decide to accept of not accept the counter proposal. The Silica Glass Incorporated
needs to expand into the European market and for that purpose they need to merge with
a German company called Sonnenberg Glassworks gmbhH. However due to a counter
proposal from Glasring Thringen who holds the acquisition company, Mike the owner
had to encounter some alterations in their expansion plan. According to the counter
proposal they had purchase two facilities instead of the initial purchase of one facility
but with the price of one. The cost of production and operation may be double for
Silica to incur as they now have 2 facilities to run instead of the initial plan of just ne
facility.

The Problem: 3
Silica Glass, Inc. was not able to gain direct sales growth because of restricted
product lines and limited market expansion in its divisions.

Silica could either internally or externally hire a specialized research and

development team to solve the constraint of limited product lines which is
followed by a contracted market expansion.

When Primavera bought Silica Glass, Inc then its strategy was to expand sales and
acquire additional operations in order to increase the total value of the Silica
operations. The former strategy was not possible because despite the fact that Silica
divisions showed healthy profitability but it had narrow product lines and also market
expansion was limited. Since this was the condition, rapid growth through direct sales
was not possible by Silica.

Silica can hire an external research and development team to do the work for the on a
contractual basis. The R&D team will develop the latest production techniques and the
most efficient and economically viable methods possible. The new schemes will help
Silica fight against the competition in the market. Even though Silica faces few
competitors, if not none, they can take the advantage of R&D to develop a scheme to
take complete control of the glass market in Germany. Even though a substantial
amount of cost is may be incurred with the hire of a R7D team in low investment
conditions, benefits will far outweigh the drawbacks if the right personnel are
appointed. With a R7D team, Silica can plan for their future growth. Silica may set the
research and development team in the US of appoint a local R&D team from Germany
or do both in accordance to its feasibility.

Being a worldwide leader in the Glass market, Silica Glass Incorporated already
performs research and development planning. Being the leader in the industry, the
company is not able to relate itself to a benchmark and develop enhancement
strategies. It is more likely that its market followers set the company as a benchmark.
Thus, in order to enhance performance, Silica should immediately hire a Research and
Development team for the growth in the German market.

Implementation of the Research and Development team will comprise of a group of

expert technicians who will have skilled knowledge about developing new products in
the most efficient way and also using the most modern and cost effective technology. It
depends on the personnel in the decision making authority of Silica to understand its
needs and work according at their earliest convenience

The Problem: 4
Silicas operation in Europe would become extremely difficult to monitor and
standards may not be maintained because of difficulty in supervision; all these are
for the lack of a regional headquarter in Europe.

Silica should establish a regional Headquarter in Europe for better monitoring

and controlling.

Silica has been exploring different areas of Europe to select the best option of
expansion. But they found it difficult to explore and select because there are too many
countries with new business environment and new opportunities which are unique from
each other. They mainly faced this problem because they do not have any regional
headquarter of the parent company operating in the European region.

Silica may look for a free land and purchase it in order to establish this headquarter for
regional operations. However, it will be even more beneficial and less costly for the
company if they set up this controlling board at either of the two facilities available to
them. The regional headquarter will mainly function as the monitoring unit of the daily
operations like production procedures, employee performance, workforce conflicts; it
may also be used to have control of the individual HR departments of the two facilities
and control the overall operations of Silica Glass. As the company is based in USA,
this regional headquarter will help the owner, Mike to keep a close eye on the
companys performance in Germany and other part of Europe.

The timing for the implementations of this regional headquarter would coincide with
the initiation in operations with the two facilities. As soon as they begin operations, the
head quarter will begin monitoring all aspects of the facilities starting from sales
revenue, production cost, employee benefit effectiveness and also adverse conditions
such as workforce conflicts and physical damage to the facility due to both natural and
human disasters. The European regional headquarter will be evaluating the operations
in the European region and sending feedback to the parent country.

It is the job of the owner, Mike to analyze and finalize the decision making. He needs
to understand the pros and cons attached to the acquisition and take appropriate
decisions. He needs to evaluate the actual effectiveness of this regional headquarter
and its feasibility for the company. Mike can use methods such as feasibility studies
and most importantly take the help of the individual HR departments who would also
perform an evaluation on the headquarters feasibility. He can also appoint specialist
and other consultants who will collectively aid him take the correct and final decision.

The Problem: 5
For facing competition and dealing with declined sales and new management
policies, Silica needs some efficient and productive employees who would help run
the organization smoothly.

Recruitment and retention of qualified, efficient and effective workforce is needed

to deal with the competition and to thrive.

Silica faced major competition from GlassPro both in the United States and worldwide.
Also in Europe a relatively minor competitor was Sonnenberg Glaswerks. As such,
Competition was very high in local and foreign market. More over there was the
problem of intra firm sales decline and changing management policies. In such a
scenario, the best weapon would be to have the most efficient and effective workforce.

To contribute in an efficient way the management of Silica needs to innovate

themselves. The old policies have become redundant and the management needs to
analyze the current demand and trend. So Silica should implement the new theories of
management being developed to extremely effective proportions. Silica needs to
introduce more innovative managers who will bring some positive policies.
Management needs to be more flexible. With the arrival of different situation
management should be ready to answer all the possibilities. Furthermore, they should
have an effective performance appraisal procedure along with an effective grievance
policy for both existing and newly hired workforce. As the case mentions, Silica did
not provide their employees with facilities such as executive dining rooms and
restrooms and fishing lodges, so the company should provide facilities for the
employees and the executives. Furthermore, the company needs to specify the type of

workforce required. If experience is needed they should hire accordingly. Silica

should be hiring innovative and effective employees to reduce errors. The ability,
qualification and experience of the hired person should complement with the current
need of Silica. It would be necessary for the company to provide job descriptions when
recruiting processes are initiated. This will single out ineligible candidates and the right
person can be hired.

The opportunity for Silica to acquire the best workforce is right now. As there are a
huge number of unemployed individuals, there is enough to hire from. However, there
may not be enough Innovative and outstanding personnel available in the job market.
As Competition is low for Silica in this part of Europe and there are not enough jobs
available, Silica must attain the best employees before competition sneaks in and steal
these brilliant individuals from the companys grasp.

An effective HR department will bring out the best from the employees of the
companies and motivate them to do good for the company. So the HR manager must
have the ability to do al these important jobs. So the company has to hire the right
people for the right job especially in the HR department.HR department of Silica can
develop an effective compensation and executive development committee. A recruiting
and training policy, and other ways to acuire and motivate employees to being more
efficient in the workplace.

The Problem: 6
The product lines were very narrow and market expansion was very limited for Silica
Glass, Inc. Besides, the internal sales to other corporate divisions were expected to
decline nearly 25% annually over the next five years.

Silica Inc should consider and put all its efforts for expansion through mergers
and acquisition.
Silicas product lines were very narrow and market expansion was very limited for
Silica Glass, Inc. Rapid growth of the whole organization was needed especially
because direct intra-firm sales were expected to decline by 25% for the next five years.
Rapid growth was only possible by establishing new facility or through acquisition and
merger. So Silica decided to acquire new company which produces glass-fibre.

At this point in time, Silica is experiencing and potential increase in sales in both U.S
and Europe. However, it is currently facing problems of decreasing intra firm sales
with the possibility of a rise in the future. Furthermore, trade protectionism would
likely create a barrier for the company in terms of expansion. Silica should always
strive for the growth of its operation and to reach a high position in the economies of
scale, the company needs to comprehensively do research on the various possibilities.
To gain competitive advantage the management also needs to specify a particular
company for the acquisition. Furthermore, adverse situations and available resources
have to be considered before acquisition. The company has the option of expanding
operations to the UK, France and Luxembourg but the initiation cost for these places
were high. However, Silica has another option in Sonnenberg Glaswerks of Thuringen
region of East Germany to consider. As the particular company produced mediocre

glass fiber and was known to have attained some of the most advanced technology in
the world in glass manufacturing, potential seems extremely positive. Even though
growth prospects have stopped for this company after the inception of the communist
government, this is still a fair option that can be worthwhile. Silica can take advantage
in this region as companies were being privatized or liquidated. Silica can also take
advantage of low competition and low cost of employment, because of economic
recession, and might be able to enjoy the benefits of a fairly monopolistic market
initially.

High possibilities for sales growth in European markets give assurance for immediate
expansion for Silica. The German government has decided to privatize the corporations
so that more money is invested in those companies for improving conditions and Silica
should take full advantage by gaining a high market share in the region. Further delays
will only create hassles and invite other European as well as international companies to
take over the market. Silica should make liaisons with the European Commission, and
influence restrictions on other foreign companies from operating in the region.

It is the job of the owner, Mike to analyze and finalize the decision making. He needs
to understand the pros and cons attached to the acquisition and take appropriate
decisions. He can also appoint specialist like lawyers, consultants who will collectively
aid Mike to take the correct and final decision.

The Problem: 7
Internal sales to other corporate divisions are expected to reduce radically due to
new competition.

Silica should sell off the glass synthetics in the external market before it becomes
absolutely obsolete and take initiatives to produce non glass synthetics like other
competitors.
Silicas glass fibre is used for many different industrial applications and also in some
of the corporate divisions of Silica itself. At present, Silicas sales are divided between
intra-divisional sales, which is 50% and external sales is also 50%. At present, Silicas
intra-firm sales are under risk due to a quite definite decline owing to the upcoming
entrance of new non-glass synthetics. Silica is almost certain that these non-glass
synthetics would make the products of its several other corporate divisions obsolete so
Silica is expecting a 25% decline in internal sales annually for the next five years.

Silica should take decisions immediately to tackle its upcoming threat of reduction in
internal sales as 50% of its revenue is attached to internal sales The company should
also needs non glass synthetics to produce other products which were previously
being made with glass synthetics to tackle the adverse condition created due to the
reduction in demand for glass synthetics and increased competition with new non
glass synthetics. As the company faces threats for internal sales of glass synthetics, it
should concentrate on selling majority of its glass synthetics in the outside market. The
selling spree should be initiated as early as possible before the demand of non glass
in the external markets fall and make the products obsolete. Silica should also begin
producing its own non glass synthetics instead of purchasing them. Other various

methods to reduce the threats of fall in internal sales can also be used to assure higher
company profitability.

Even though the problem may occur in the future, it is best for silica to prepare for any
upcoming threats such as the reduction in demand for glass synthetics. The company
has already started experiencing the problematic situation and needs to confront the
problem immediately. The company should apply defensive measures as early as
possible to avoid adverse conditions which may not be perfected if delayed.

The company executives and board members are collectively responsible for deciding
the methods to distribute sales and meet market demand. The marketing department
should help the decision makers by investigating the market and providing feedbacks
for proper evaluation of procedures of increasing both internal and external sales for
Silica.

The Problem: 8
East Germany is stepping towards privatization and has made different new
legislations regarding companies in operation. If Silica doesnt follow the
government legislations then East Germany might not let them operate there.

Silica must set up company policies taking into account the Government
Legislations.

German government has specific safety and health requirements for the workers in a
factory. Every company operating there has to follow those in return of the permission
of operation.

In every country government have some acts or legislations to protect the right of the
worker and employees. If any company do not follow or consider those acts and
legislation the employees or the government might sue the company. So Silica must be
aware of the fact that German government has similar kinds of laws.

Silica is planning on expanding its operations to the European region and as Germany
is the most feasible place it was chosen to establish their European facilities. As the
company will enter the German economy, there are certain things they need to
implement into their business plan particularly for its operations in that country. The
German Government has its own laws and policies that must be considered before
participating in their economy as well as monitoring the effectiveness of the
implementation of those policies. Silica must include the laws and regulations of
running any type of business in Germany especially for foreign investors. The
company must first learn and then apply all the legitimate rules regarding the

commencement of foreign businesses and abide by the minimum and maximum

levels to which they can stretch these rules. The company must learn and implement
these laws strictly and make sure that these rules are maintained for the betterment of
the entire firm. The company must also abide by the laws that demand a certain
standard working conditions and facilities that the government expects a foreign firm
to practice. The labor rates, employees negotiations methods, production methods and
more importantly environmental issues should be carefully and strictly maintained in
their planning. Furthermore, the company executives might consider maintaining a
liaison with some government officials to stay on the good side of the government.

Silica needs to plan all business policies beginning with the organizational structure,
the production procedures, The employee-employer relationships, the training and
development techniques, The various pay grades and other organizational requirements
long before the operation on the facilities begin. Before making these policies, the
company needs to be sure about all laws and regulations they need to follow and for
that purpose must meet with government officials beforehand and eventually
implement all these methods to company operations.

It is the responsibility of the company officials and board members to finalize the
organization procedure planning; they are in charge of determining how the
organization will operate when the time arrives. These officials need to analyze and
meet with the government officials in Germany to discuss and learn about all laws and
regulations to be followed. It is the job of these officials to make various adjustments if
needed and then pass these procedures to the department managers at the facilities to
obtain full implementation of these methods.

The Problem: 9
The current market operation of Silica Glass Inc is in the United States and the
expansion plan is in East Germany. These two countries vary in economic
conditions and living expenses.

Silica must set the compensation package of both the United States and East
Germany based facilities on the basis of cost of living adjustment (COLA)

The present factory of Silica Glass, Inc. is located in USA where the existing
employees and workers get higher compensation packages because of the competition.
But in East Germany there are economic depression and high unemployment rate so
the compensation package must vary according to the economic and market conditions.
Trying to maintain internal equity would be difficult for Silica given the current
scenario. So what is most important in such a situation is to maintain external equity
that is, set the compensation package of the employees based on what other companies
in the similar industry are paying.

Silica can use compensation package on the basis of the Cost of Living Adjustments
(COLA).The pay and compensation should follow all the rules prevailing in the region
and country and be sufficient for the employees to make a standard living. The
government is also providing 30% subsidy package to help out as health, safety
environmental and machine need. Compensation packages may include Scanlon Plans,
gain sharing opportunities, training sessions, merit pay and other forms of incentives to
make the employees feel secured at work. The compensation must be related to the
performance of their job in this case which the quality of the glass. They have to be
given the assurance and acknowledgment for their hard work.

The whole compensation package should be implemented at the initial stages; The
Company should already start implementing compensation to the existing and
threatened employees in fear of becoming redundant. Silica has no sufficient plan for
their employees who are work in the lower level and directly related with production.
As these employees are de motivated on the prospect of losing their job, they should be
reassured about their jobs and provide employee security.

Implementation of the compensation package is the role of the HR Department. It must

provide job security to the employees working in fear of losing their job during such
massive economic depression in the region. However, HR department will need the
backing of the decision-making authorities, the owners and other departmental
managers to implement the new packages and incur costs related to it. Workers
support is also an important issue and they should support the methods used by Silica.