LEXMARK: A CASE STUDY

Just as in nature it is sometimes difficult to shove a young bird out of the mother's nest to fly on its own, so the divestiture of IBM's Information Products unit into Lexmark was not an easy feat to accomplish, even though top management at IBM felt that the corporation's strategy had to leap beyond a rather mature typewriter market also eliminate the potentials of the printer and keyboard market. At the time of the separation, employees in Lexington knew of the financial difficulties of their parent company. They figured the Lexington Plant, which had been making typewriters since 1956 and printers since the early 1980s would be closed or, perhaps, sold to the Japanese. Instead, they were introduced to long-time IBM Vice President Marvin Mann as the new CEO of an independent Lexmark Company, backed by New York financial people. The "deal" was that Lexmark would continue to manufacture IMB brand desktop printers, typewriters, related products and keyboards until 1996 (six years down the road from this announcement) and then move into competition with its own brand name.

While the products the new Lexmark made were a truly small percent of the total market, the greatest immediate problem was the concern of employees about their tenure. They were given two options -- to remain with the new company or to take an IBM-approved buy-out -- a cash settlement upon their leaving. However, the real safety umbrella -- a lifelong career with IBM was now

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tude that IBM once fostered. If there was one thing that would help develop the impetus of the new Lexmark was the fact that, although a good many employees took advantage of buyout options and left, key executives at the management and technological levels remained. The company was reorganized into four business units- personal printers, typewriters, keyboards, and related office-equipment supplies. Each unit had the autonomy to build its business and run its niche of the total market to at the very least hold market share. For the first time, management had to worry about marketing on an international basis, something that it never had to do under the IBM aegis. This restructuring and separation of "powers" made good sense, because it placed the emphasis of each business unit on a combination of technology and marketing -- creating innovative product lines and having its own marketing force to push them, world-wide. The remarkable thing about this "new" Lexmark, as early as 1991, was the reduction of people in production and support by 40% and managers in production and support by 60%. Lexmark's corporate headquarters in Greenwich CT now had only about 20 employees. What this new organizational architecture did was

Category: Business - L