Texana - Background and Relevant Facts The Texana Petroleum...

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Background and Relevant Facts The Texana Petroleum Corporation has existed for decades. For most of its early years, it thrived by processing and refining crude oil, producing petroleum products, and selling such products to the southwestern United States, Central America, and South America via its retail service station outlets. The rise of competition from larger companies began to erode Texana's profits considerably starting in 1990. To meet this new challenge, Texana's leadership opted to divest the company of its retail outlets and to focus instead on the chemical and plastic products market. It had already laid the groundwork for this change in 1989 with the creation of its first chemical processing plant. As Texana pressed forward through the 1990s, its leaders continued to reshape it into its new projected image as a producer of chemical and plastic products. Through both internal development and external acquisitions, the company grew by 2000 to five profit generating divisions: 1) the Petroleum Products Division; 2) the Polymer and Chemicals Division; 3) the Molded Products Division; 4) the Packaging Products Division; and 5) the Building Product Division. To accelerate growth in this new direction, Texana leaders recruited aggressive division managers and gave them great freedom and leeway to innovate entrepreneurially. The corporation viewed each division as an entity unto itself and judged each by its return on investment (ROI). This led each division to focus on its own bottom line rather than its role in the bottom line of Texana. It also created a competitive rather than collaborative spirit in each division as it strove to "be the best" and to "beat the other divisions." By 2000, Texana leaders saw this approach as problematic as it created competition among the divisions that hindered optimal corporate profits. They sought a new paradigm to integrate Texana harmoniously.
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Problem Definition The lack of a harmoniously integrating paradigm at the Texana Petroleum Corporation has led each of its five divisions to pursue financial goals in a manner that attempts to optimize ROI for the individual division at the expense of optimizing ROI for the overall corporation. Relevant Theories and Models
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This note was uploaded on 02/25/2010 for the course MAN 5245 taught by Professor Tosi during the Fall '07 term at University of Florida.

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Texana - Background and Relevant Facts The Texana Petroleum...

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