Zamil Air Conditioners Company’s Creativity

Subject: Case Studies
Pages: 8
Words: 2191
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Study level: PhD

Introduction

Zamil Air Conditioners (ZAC), one of the four business units of Zamil Industrial Investment Company, is based in Damman, Saudi Arabia, with a production facility in Italy. The company, founded in 1974, is currently the market leader in the supply of air conditioning systems in the Middle East and the world (Zamil Air Conditioners, 2009, para.1). ZAC produces and sells a wide range of air conditioning systems for both small-scale and large-scale use in various places. Presently, ZAC deals with the manufacture of the following category of products: residential, commercial and industrial, Zamil cool care services & contracting, and Zamil controls (Shoult, 2006, pp. 509). ZAC also offers various services to its clients. Some of these are planned preventive maintenance programs, HVAC consulting, and various training courses. Besides receiving the ISO 9001:2000 quality certification, the company has received other official recognitions such as the coveted ARI (Air-Conditioning and Refrigeration Institute, USA) and Eurovent certifications for its quality products. ZAC has regional offices in the U.S, Australia, the United Arab Emirates, and Lebanon.

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Creativity in ZAC

Creativity has been defined as “the bringing together of knowledge from different areas of experience to produce new and improved ideas” (West, 1997, pp.1). It is an important characteristic for any company that wants to maintain a competitive edge in the market with its products. Organizations that fail to maintain flexibility and enhance the quality of their products and services are vulnerable to their competitors (Robbins, 2000). Workers of an organization often have ideas for fostering innovation at their places of work. However, it is important to note that those around them have a considerable influence in encouraging or hindering this creativity (Stacey, 1996; West, 1997; Nina, 1998). This implies that companies are responsible for creating the ethos or atmosphere within which creativity either is nurtured and blooms in innovation or is deprived of the oxygen that is necessary for its growth.

ZAC has recognized the ever-increasing role that creativity plays in producing ideas that are both novel and valuable; therefore, it has embraced it in its organizational setup. The application of this concept has enabled it to be a major competitor in the provision of goods and services to its consumers (Timpe, 1987). The company has invested in various product lines in their production facilities in Italy and Saudi Arabia. It has come up with successful brands that induce end-users confidence and validate its goal of maintaining the market leadership in the Middle East region and beyond. ZAC has a broad coverage of the market for its products that has been facilitated by the creative marketing skills practised by the marketing department (Alessandria, 2007; Rix, 2003).

The varied products provide a competitive advantage over its competitors. The well-researched brand names have given it the reputation it needs to stay in the market. The company usually involves its workforce in training workshops aimed at enhancing their creativity in undertaking their duties (Kreitner & Kinicki, 2001). The management at ZAC offers an appropriate leadership style that makes the working environment to be conducive for everyone at the company (Sternberg, 2003). The company is always on the lookout for upcoming markets in various parts of the world. The control systems at ZAC are up to international standards; this provides a quick response time in instances when corrective action has to be done. The company practices routine internal and external audits to ensure that its good financial management is maintained (Tax, 2009). The company has appropriate research and development skills that have enabled it to provide innovative products to consumers.

ZAC has also applied creativity in ensuring that it maintains its growth in the market (Styhre & Sundgren, 2005). It has implemented various growth strategies based on the degree of risk it can tolerate, availability of resources, and its leadership skills. The company is currently pursuing various growth strategies such as market penetration, product development, market development, and product diversification. In achieving a wider penetration of the market, ZAC has modified some of its existing products to increase its market share in the Middle East and beyond (Minter, 2002). The company undertakes market development activities by venturing into the foreign market with its existing innovative products and services (The International Development Research Centre, 2009). In practising creativity, ZAC has diversified into various businesses intending to move from the present products and markets into new products and new markets. To reduce the risks involved in achieving this, the company innovatively practices related diversification techniques in which it enters markets having the same links with its value chain. This strategy enables it to develop synergy. This is because it can match up to its available resources with its capabilities to have a competitive advantage in its current market segments (Henry, 2008, pp.24).

ZAC has applied creativity appropriately in the development of its four Strategic Business Units that determines its business criteria. The Strategic Business Units serve the purpose of providing five in-house products and services under a range of the following names: “Classic, Cooline, Cool Care, Clima, Tech, Kessler Clima Tech and Geoclima.” These products and services are sold differently per the targeted market. Of the four Strategic Business Units that ZAC operates, the first three are headquartered in Dammam, Saudi Arabia. These are “Consumer Products, Unitary & Applied Products, and CoolCare Service.” The remaining one called Geoclima directs its production activities in Monfalcone, Italy. It also has a design plant located in Australia. As much as the four Strategic Business Units are autonomous, they have been creatively designed in such a way that they complement the operations of one another hence assisting in meeting the overall objectives of Zamil Air Conditioners (Koontz & Weihrich, 2007; Maromonte, 1998).

ZAC has survived in business for over thirty years now. Few organizations have been able to record such an excellent level of growth in such a short time. Is there a secret that has been pushing this company forward since its establishment? The secret can be found in its ability to embrace creativity in the development of an efficient organizational structure (Miner, 1982). It has several guidelines, which outline the tasks of every employee in the company, that is, from the chief executive officer to the other employees within the company. ZAC is made up of a large number of people from various backgrounds who work together as a cohesive unit in fulfilling the corporate objectives of the company. To foster creativity at the workplace, the company’s management does not engage in actions that can make the workers lose the morale in their work. The workers drive to accomplish duties is always let down when they work under a lot of pressure. In boosting the morale of the workforce, ZAC operates various incentive systems (Mrudula, 2006).

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Another way that ZAC is appropriately applying creativity is through corporations with other companies. For example, since 1997, the company has successfully collaborated with GE Appliances, Europe, to form a joint business enterprise called the Middle East Air Conditioners (MEAC). The enterprise deals with the production and marketing of GE branded products in the Middle East and around the world. MEAC was given the certification to make and sell “Window,” “Mini Splits,” and “Ducted Split types,” marketed using the brand names “GE,” “Hotpoint,” and “RCA.” ZAC entered into this creative joint venture to counteract the modern challenges in the production and marketing of air conditioners. More so, in this dynamic environment, ZAC has increased its product lines by buying two plants constructed by Zamil Industrial in Europe and Geoclima.

Lack of creativity in ZAC

Besides the explicit situations where ZAC has appropriately applied creativity, it has not effectively applied this concept in other instances. The price of purchasing raw materials as well as the cost of energy has increased in recent times. This has made the company cope with the increased cost of manufacturing various products, which has been passed on to the end-users. ZAC consumers now have to pay increased prices for the company’s products and services. This lack of creativity has sometimes resulted in the loss of the goodwill of the customers especially when the company’s services fail to reach them in time or are in poor condition (Saito, 2009). This situation is more evident in areas where ZAC is seeking to penetrate new markets with its products and services.

Zamil Air Conditioners, together with the other four companies, are members of the larger Zamil Industrial Company. Creativity has not been applied in ensuring that there is efficient coordination from all the five partners in the business. The lack of coordination is often caused by internal strife and politics (Amabile, 1996). ZAC has not effectively applied creativity in curbing the increasing rate of competition from modern upcoming companies. ZAC is facing stiff competition from companies in the Middle East region and those in the foreign market. The company has also failed to apply creativity effectively in addressing the ever-changing values and perceptions of the end-users concerning air conditioning systems. Demographic factors and economic factors are regularly changing in the market segments that ZAC supply with its products and services. ZAC supplies consumers of diverse cultural backgrounds with its products and services and how the end-users view air conditioning systems differ on a regional basis. Consequently, a lack of proper ways of addressing this need through creative ideas can impair the normal business operations of the company.

ZAC has been slow in fully implementing a corporate organizational chart in its organizational structure. This has prolonged the period of implementation of new innovative ideas in the company. In addition, it has failed to optimize the production capacity of its different affiliate companies. This weakness in organizational structure has somewhat been caused by improper implementation of creative ideas by the company’s management. Serving different customers around the world, ZAC has abandoned most of the traditional ways it employed in carrying out its operations. Although it has not fully implemented the corporate organizational structure, it still has several competitive advantages. These include a large market share that exists throughout the world, years of global experience in dealing with different customers, and a variety of brand names that appeal to all the target markets. However, besides its success, the company has failed to adopt creative changes in this dynamic world to maintain its market leadership.

Recommendations

To foster the culture of creativity in its organizational culture, ZAC should take note of the following recommendations. The company should allocate more resources for research and development projects that are especially aimed at reducing the cost of energy used in the manufacture of its various products. This may involve divesting certain obsolete business endeavours and investing in sustainable energy sources, which would ultimately cut its energy costs (Eggink, 2007). The manufacturing department should make efforts to capitalize on opportunities that may arise and ensure that things are done in time to avoid accomplishing tasks in a hurry, which always leads to low-quality products in the market.

An organization that is properly structured has the advantage of initiating competent decisions and adjusting to creative changes with ease (Dauw & Fredian, 1970). On the other hand, an organizational structure that cannot enhance the flow of decisions made lacks the capability of facilitating productive growth. This will eventually lower the profits of the organization. Therefore, as much as ZAC corporate with the larger Zamil Industrial, it should make sure that its structure is efficient to ease the flow of information. ZAC partly achieved this recently by the appointment of a new Chief Executive Officer and a new Chief Operating Officer. To make this new arrangement beneficial, the CEO should be able to channel managerial issues directly to the company’s Managing Director. The Chief Operating Officer should also be able to channel the issues expressly to the new CEO.

To stay competitive in the market, ZAC should develop various designs of products that can cater for the cultural differences of its customers in different parts of the world (Thomas, 2008). To counteract the dynamics of the market, especially the foreign market, ZAC should create new innovative products, identify exclusive market sections for supplying their products, and constantly change its business-level strategy based on the existing opportunities and threats. To stay competitive in the market, ZAC should regularly regulate its prices so as not to exceed those of its competitors, supply competent products to win the confidence of the consumers, and practice product diversification depending on the targeted market.

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Conclusion

Zamil Air Conditioners has an appropriate management style that has embraced creativity in its business practices. This has made it to be a major competitor in the supply of quality goods and services to its clients all over the world. Some of the ways it has achieved this are by having strong brand names, implementing various growth strategies, developing its four Strategic Business Units, and cooperating with other companies. However, some areas that it has not effectively applied creativity include increased costs of its products, lack of coordination with its other business partners, and slow implementation process of the corporate organizational chart. This lack of creativity can be counteracted by implementing some strategies in its organizational culture.

References

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