IOI’s Global Challenge: Moving Up The Palm Oil Value Chain
(7 pages of text)
Malaysian palm oil company IOI Corporation Berhad (IOI) developed from a plantation company in Malaysia to become a vertically integrated manufacturing company with a range of higher value manufacturing businesses across Asia, Europe, and the United States. The rapid expansion into what the chief executive officer (CEO) called a “mini-multinational” placed greater demands on IOI and its leadership. The CEO had struggled to simultaneously achieve growth, innovation, control, and coordination, and the company had experienced a sustainability crisis in 2016. In early 2017, the CEO needed to decide whether to approve an ambitious growth strategy—proposed by IOI’s specialty oils and fats team, which led most overseas operations and handled IOI’s most innovative products—to be achieved by 2025. While he was eager to expand IOI and strengthen its position as a widely admired Asian family multinational, he also needed to weigh the constraints. He could not risk growing the company faster than the leadership’s ability to control it.
This case is best suited for MBA or undergraduate students in courses on strategy, international business, and family businesses. It explores two related concepts in these fields: creating and growing ambidextrous organizations and the ability–willingness paradox in family business innovation. Students will explore growth, governance, and innovation in family firms. After working through the case and assignment questions, students will be able to do the following:
- Compare the primary strategy and focus of a company based on exploiting existing business models with those of a company based on exploring new products and markets.
- Describe the different cultures, structures, and leadership styles required for exploitation and exploration, and explain how a large organization can balance these different strategies by developing ambidexterity.
- Describe the ability–willingness paradox, and outline the characteristics of family firms that contribute to their strengths and weaknesses with regard to innovation.
- Recommend methods for family firms to make use of their strengths while building their abilities to innovate.
Malaysia, Large, 2017
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