0. Overview 1 The aim of this case study is to show the

The aim of this case study is to show the Quality of the Management
of the Cooking Business Unit: one of the Business Units of the
industrial co-operative Fagor Electrodomésticos S.Coop., which in
turn belongs to the MCC business corporation.
DIVISIONS
MCC
Machine Tools
Automotive
IEngineering
Background
Financial
On14 April 1956, Father José María Arizmendiarrieta blessed the first
stone of Talleres ULGOR (today Fagor Electrodomésticos S. Coop.).
The company took its name from the initials of its founders, (Luis
Usatorre, Jesús Larrañaga, Alfonso Gorroñogoitia, José María
Ormaetxea and Javier Ortubai), students at the Professional College
set up by Father José María Arizmendiarrieta in 1943.
Components
Distribution
Group
Group
Household
Industrial
Group
B. UNITS
Comfort
Dishwashers
Cooking
Fagor
Electrodomésticos
SUBGROUP
Fagor
Industrial
Mueble
Small D. Appliances
K. Units
W. Machines
Refr.
Figure 0.2 MCC Structure
Today, MCC is the leading business group in the Basque Country and
the sixth in Spain, with sales totalling more than 8,000 million euros
(Industrial and Distribution) and more than 53,000 workers.
The special interrelationship between Fagor Electrodomésticos and
MCC as far as Policy and Strategy are concerned should be stressed.
Evidence of this can be seen in the latest changes made to the
management of both organisations:
-
Jesús Catania, the previous President of MCC’s Household
Division and MCC Vice-president has been the President of
MCC since 1 January 2002.
-
In 1964 the co-operatives initiated a movement for mutual support, in
which some of the future structures of the experience timidly began to
take shape. This was the embryo of what is today Mondragón
Corporación Cooperativa (MCC).
He was replaced by Fernando Gómez-Acedo, who moved from
the post of CEO of Fagor Electrodomésticos to that of Vicepresident of MCC.
-
Pablo Mongelos, the current CEO of Fagor Electrodomésticos,
was previously the Managing Director of the Cooking Business
Unit.
Ularco (later the Fagor Group) was the pioneer group and brought
together the co-operatives operating in the Leniz Valley (Ulgor,
Arrasate and Copreci).
Fagor Electrodomésticos (FED)
Figure 0.1
In 1989 Ulgor S.Coop. became Fagor Electrodomésticos S. Coop.
The same year Fabrelec S.A., today Edesa S.Coop., was integrated
into Fagor Electrodomésticos, to reinforce its production and sales
potential.
In 1995 Fagor Electrodomésticos, as part of its Internationalisation
strategy, inaugurated its first plant abroad: the refrigerator plant in
Mohammedia in Morocco. This was followed in 1996 by the joint takeover with MCC of the Argentinian domestic appliance manufacturer
Mc Lean, which markets the Patrick and Saccol brands, and in 1999
also with MCC the Polish company Wrozamet which markets the
MasterCook brand.
Fagor Electrodomésticos S.Coop. is an industrial co-operative
engaged in the manufacture and sale of White Goods Domestic
Appliances, Small Domestic Appliances and Kitchen Units. With a
work force of more than 4,600 people and factories on three
continents: Europe, America and Africa, it has 12 subsidiaries all over
the world and a sales network that operates in more than 80 countries
on the 5 continents.
With sales of 762 million euros in 2002, and a market share of 23%
we are leaders of the Spanish White Goods market.
% Spanish Market Share (2002)
The third co-operative congress took place in 1991. This congress
approved the MCC organisational project and the basic rules on pay
policy. MCC was set up after it had been established that the previous
model joining together the co-operatives in local or regional groups
could not meet the challenges of globalisation.
FAGOR
Comp. 1
Comp. 2
The new organisational model was based on a move from
independent units to a functional concentration, structured into
Divisions and Subgroups, on the basis of the convergence between
products and markets. Fagor Electrodomésticos S.Coop. became part
of the Household Division (figure 0.2.).
Comp. 3
Comp. 4
Others
Figure 0.3
0. Overview
1
Three of the Fagor Electrodomésticos’ brands (Fagor, Edesa and
Aspes) are among the top 5 in the market share ranking in Spain. The
"Comp. 1" brand, belonging to the Comp.1 Group, which occupies
second place, is the one we have used as a reference in the external
comparisons of the results criteria.
Market Share 2002 (Spanish Market)
%
CEO
Refrigeration
M. Director
Washing
M. Director
Financial
Director
H.R.
Manager
Man. Systems
Director
Strategic
Marketing
Dishwasher
M. Director
Cooking
M. Director
Small D. A.
M. Director
Comfort
M. Director
K. Units
M. Director
Figure 0.6
Cooking Business Unit
In 1997 the Cooking Business Unit changed from being just a
manufacturing management unit to being an autonomous unit that
manages its own human and production resources, investments,
sales force, purchasing (raw materials, components and finished
products), user and distributor services, and establishes and launches
its own range.
Comp. 4
Comp. 3
ASPES
Comp. 2
EDESA
Comp. 1
FAGOR
Figure 0.4
Fagor Electrodomésticos is divided into 7 Business Units:
-
Cooking.
Refrigeration.
Washing.
Dishwashers.
-
Setting up of the organisation based on Business Units in Fagor
Electrodomésticos
The strategic plan for the period 1997–2000 drawn up in 1996
observed that there were different situations at the heart of Fagor
Electrodomésticos. The different sales channels required specific
services and products, based on the different needs of their users.
Faced with the difficulty of the overall management of all the products,
channels, production factories, etc., Fagor Electrodomésticos decided
to organise itself into Business Units, in order to respond better and
quicker to a constantly changing market and increasingly more
demanding users. The company changed from the organisational
structure shown in figure 0.5 to that shown in figure 0.6.
Managing Director
Sales
Manager
Financial
Director
R&D
Manager
Services
Manager
HH.RR.
Manager
Factory
Managers
Economic C.
Manager
I. Aranzabal
Production
Manager
J. Galardi
Quality
Manager
M.Berasategi
R&D
Manager
Juanfe García
Purchasing
Manager
J.Beitia
Management
Innovation
Manager
A. Martiarena
Marketing
Manager
A.Terradillos
Sales
Manager
J.A.Jiménez
HH.RR.
Manager
Eli Zubiaga
Sales
Manager
J.R. L. de Munain
Services
Manager
Patxi Lopez
Figure 0.7
With the new organisation, on the one hand, we have managed to get
closer to our customers (more speed and flexibility when it comes to
satisfying their needs), and, on the other, we have got everyone
involved to identify more with the Business Unit project.
The Cooking Business Unit is located in the Garagarza
neighbourhood of Mondragon. Its facilities occupy an area of 20,000
m2 and it posted sales of 161 million euros in 2002. The current work
force totals 505 people of which 417 are members (co-owners of the
co-operative).
With its 3 brands (Fagor, Edesa and Aspes), the Cooking Business
Unit is the market leader in built-in appliances in Spain, Poland, and
the Czech Republic, with market shares in excess of 30%. (subcriterion 9.a).
In order of turnover, our range consists of the following products:
Figure 0.5
In the new organisation, there is a Managing Director for each of the 7
Business Units, and most of the functions that were centralised before
are now incorporated into the Business Units. To keep the criteria
consistent between the different Business Units, some central
departments are maintained like Financial Management, Human
Resources Management, Strategic Marketing and Audit and Systems
Certification Management, to co-ordinate the specific departments in
each Business Unit.
2
M. DIRECTOR
Belen Kortabarria
Small Domestic Appliances.
Kitchen Units.
Comfort.
The Cooking, Refrigeration, Washing and Dishwasher Business Units
produce so-called “White Goods”. Of these, the Cooking Business
Unit has the biggest market share.
Industrial
Manager
Figure 0.7 shows how the Cooking Business Unit is organised (the
resources specific to the Business Unit are in blue colour and the
resources shared with other Business Units are in green colour).
0. Overview
-
-
Hobs:
- Gas and electric.
- Glass ceramic and induction.
Ovens
Extractor hoods
Cookers.
Microwave ovens.
Sinks and Taps
Figure 0.9 shows the main milestones in the improvement of the
Business Unit’s management, which are described throughout this
case study.
We supply the following sales channels:
-
Traditional (Specialist shops).
Construction.
Kitchen unit specialists.
Sanitation (plumbers, fitters, etc.).
We export approximately 27% of our production to more than 40
countries. The main countries we export to are as follows, in order of
importance:
The management approaches adopted have led to good results in the
Business Unit. These can be seen in more details in the results
criteria. Likewise, our Business Unit was recognised in 2001 with the
“Gold Q” award given by Euskalit (the Basque foundation for the
promotion of quality). This recognition is given to those companies
that exceed 500 points in an external assessment based on the
EFQM model.
Portugal
Czech Rep.
Date
France
1993
U.K.
Quality Assurance and
Continuous Improvement policy
Start of the implementation of selfmanaged teams
Directive adopted by FED’s
Executive Committee
Hungary
1995
1st EFQM self-assessment at FED
1994 Strategic Thinking
1997
Just like the rest of the companies in the MCC corporation, the
Cooking Business Unit is organised on the basis of the co-operative
model, the basic principles of which are as follows:
•
Process redesign
1994
Figure 0.8
•
ISO 9001 certification in FED
Trigger mechanism
Morocco
Poland
•
Modification of approach
Restructuring of FED into 7 Business
Units
1st EFQM self-assessment in each
Business Unit
1998
FED Management Model
Democratic Organisation, based on the equality of the workermembers, which implies an organisation on the basis of “one
person one vote”.
1999
Business Unit Management Model
Management Participation, which implies the progressive
development of self-management with the participation of the
members in business management.
2000
Social Transformation, by means of the majority reinvestment of
the results, the creation of new co-operative jobs and support for
community development initiatives.
The Business Unit’s strategic commitment to customer satisfaction is
based on achieving people participation by means of teamwork and
management excellence. The Business Unit’s own Management
Model, has played a significant role in this regard. This model was
developed in 1999, with the direct participation of more than 20
people from the Business unit. The model establishes the Mission,
Vision, Values, Strategic Targets and Basic Strategies (sub-criterion
1.a).
Strategic Plan taking the
Business Units into account
Business Unit’s Overall Process
Business Unit’s Strategic Plan
ISO 14001 certification
WRPMS.
Application of the Management
Model in the Business Unit
Euskalit Silver Q
2001
Redefinition of the Process Map and
Management by Processes
EMAS Environmental certificate
EFQM 2000 external
assessment
Euskalit Gold Q
Management by competencies
2002
Consolidation of management by
processes
Business Unit’s Strategic Plan
Figure 0.9
Until 1999, the Cooking Business Unit shared the Management Model
and Strategies of Fagor Electrodomésticos with the rest of the
Business Units. In 1999, the Business Unit established its own
identity, although always in alignment with Fagor Electrodomésticos.
As we are a co-operative enterprise, in our Management Model we
specify our identifying features, establishing "profitability" and
"employment" as our basic targets.
Two types of strategies were developed to achieve this: the Business
strategies and the Management strategies. The former are specific to
each of the Business Units of Fagor Electrodomésticos S. Coop. and
the latter are similar in all of them. The strategies are formulated
within the framework of and backed by our co-operative values
(democracy, labour, solidarity and inter-co-operation), which are
identifying features that are a must for us.
The whole model revolves around Continuous Improvement as an
element to make management more dynamic.
0. Overview
3