DOI: Abstract: The joint management of multi-business companies is a challenge that deserves to be studied from an administrative perspective. This exploratory work aims to show how Leonisa , a Colombian multi-business company in the textile sector, has managed its business. Particularly, it presents the purposes of forming the Leonisa group, as well as its main corporate functions. In addition, it identifies the multi-divisional structure adopted for the joint management of its businesses from two fronts, commercial and industrial.
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The joint management of multi-business companies is a challenge that deserves to be studied from an administrative perspective. This exploratory work aims to show how Leonisa , a Colombian multi-business company in the textile sector, has managed its business. Particularly, it presents the purposes of forming the Leonisa group, as well as its main corporate functions. In addition, it identifies the multi-divisional structure adopted for the joint management of its businesses from two fronts, commercial and industrial.
This qualitative study is based on semi-structured interviews with managers from various businesses and levels of this multi-business company. The findings show that Leonisa is characterized by not having a corporate center CC with a formal structure. Instead, these headquarters are evidenced by the functions exercised by its directors at the corporate level of the strategy, such as: 1 definition of the business portfolio and 2 internal management of centralized processes.
These two functions are performed from the CC, which is set up according to the needs of the business as a whole at specific times. In other words, Leonisa does not have an autonomous corporate center, but it does have a multi-divisional structure wherefrom to manage its entire business.
El presente trabajo exploratorio tiene como objetivo mostrar la manera como Leonisa, empresa multinegocios colombiana del sector textil, ha administrado su conjunto de negocios. Este estudio cualitativo se basa en entrevistas semiestructuradas con directivos de diversos negocios y niveles de esta empresa multinegocios.
Los hallazgos evidencian que Leonisa se caracteriza por no tener un centro corporativo CC con una estructura formal. Palabras-clave: Centro corporativo; Empresa multinegocios; Estructura multidivisional M-form ; Leonisa. The multi-business company, understood as a group of businesses managed jointly, is the result of the growth of a company from the creation or acquisition of other businesses.
The formation and management of this set of businesses is the focus of the study of strategy at the corporate level Chandler, , p. In the literature on corporate strategy, multi-business companies are also recognized as conglomerates , modern corporations or diversified firms. In Latin America, this type of company is also recognized as an economic group Leff, ; Ramachandran, Manikandan and Pant, ; Stolovich, and as a business group in Colombia, on account of Law from Supersociedades, Normally, the multi-business strategy is defined and executed from a general or central office Chandler, , , also known as a corporate headquarters HQ Birkinshaw, Braunerhjelm, Holm and Terjesen, ; Collis, Young and Goold, These corporate headquarters have been recognized as the most relevant organizational innovation of the 20th century, since it separated the operations of individual businesses from the strategic responsibilities of the multi-business company Menz, Kunisch and Collis, Headquarters are understood as a central organizational unit wherefrom business units BUs are managed Menz et al.
From the beginning of the strategy academic field, Chandler in his text Strategy and Structure refers to the headquarters as a central office wherein executives coordinate, evaluate, define goals and policies and allocate the resources required by a series of semi-autonomous and self-contained divisions Chandler, , p. In other words, the headquarters are staffed by corporate executives who, from a central office, manage the multi-business company Chandler, Birkinshaw et al.
Each of these functions is performed from a physically locateable location. Furthermore, these authors argue that there is a third element that characterizes the headquarters: the legal domicile. In Colombia, there is an economic group that does jointly manage its business from its headquarters , but has neither staffing nor a central office.
Even so, the senior management of this group exercises functions related to the corporate level of the strategy. Corporate strategy is concerned with both the definition of the business portfolio and its management. Therefore, it is convenient to know in greater detail the functions, strategies and structures from which multi-business companies are managed in emerging countries, in which particular cases such as GEA appear.
The specificity of this case motivated this research into the management of Leonisa, a Colombian company in the textile sector. Furthermore, the purposes that keep Leonisa together as a multi-business company are analyzed. Leonisa is a company with over 60 years of experience in the production and marketing of underwear and swimwear.
Over the years, the company has made changes in its strategy and structure to speed up its production processes and reach its customers in more than 20 countries. The first part of this paper presents a review of the literature on corporate centers and multi-divisional structure. In the second, the methodological approach of the research is detailed, and the third describes Leonisa as a multi-business company. The fourth section discusses the results of the research thereafter.
While corporate strategy addresses the questions: what business to be into and what business to be out of? What is my value proposition? Where am I going to compete? What are my capabilities and strategic resources that allow me to create and sustain competitive advantage? Along the same line, it is important to clarify that it is the corporate strategy that deals with multi-business management, while the competitive one is at the level of each business unit and may be different for each of one.
Functional strategies support the fulfillment of the value proposition and the creation and maintenance of competitive advantage De Wit and Meyer, Such organizations have been recognized in the literature as multi-divisional M-Form organizations, highlighted by Chandler in his research on Strategy and Structure in four major U.
In his text on organizations structuring, Mintzberg , presents five structural configurations simple structure, machine bureaucracy, professional bureaucracy, divisional form and adhocracy , most often described in the literature on organizational theory. According to this author, most organizations experience them all, leaning towards one, according to the corresponding configuration in each organization. Regarding the divisional configuration, it specifically refers to the multi-divisional form M-form as the structure that emerges when companies become so large that the simple divisional form becomes insufficient and, therefore, divisions appear above divisions.
Whittington , describes the organizational structure based on questions such as:. Who has the resources, who communicates with whom, who is responsible for what, who can do what, what can be done on their own and what can be done with others, what kinds of careers are available and what is the flow of knowledge throughout the organization p.
Additionally, this author warns that, in the case of multi-business enterprises, the functional or divisional structure in terms of Mintzberg is insufficient to deal with the tension between the headquarters and the business units or divisions that characterize this type of company. On this account, the multidivisional structure is adopted as it separates the business or operational responsibilities from the strategic responsibilities that remain at the headquarters.
The multidivisional structure clearly expresses a tension typical of multi-business companies: centralization vs. While centralization offers the benefits of economies of scale, process consistency, knowledge and capacity building possibilities, decentralization allows managers greater autonomy in decision-making and resource allocation, thereby facilitating the speed, creativity and innovation required by competitive markets Kates and Galbraith, In relation to the management of the multi-business company, Eisenhardt and Piezunka , three main choices posited by the corporate strategy stand out: control and motivation of the BUs; collaborations between BUs and scope of the firm.
In addition, these authors refer to two perspectives from which multi-business companies have been studied: the traditional one and the complex one. The cooperative multi-divisional structure is characterized by less decentralization and greater integration between divisions, while the competitive structure has less integration between divisions and a high degree of operational decentralization.
In contrast, the inner network is characterized by a high degree of operational decentralization and integration between divisions. These three new forms were the result of studies carried out in one hundred Spanish companies in the period between and The N-form emphasizes lateral rather than vertical interactions; it proposes a shift to a place of command and control as opposed to bureaucratization.
In addition, it posits the creation of networks, instead of managerialism Whittington and Mayer, , p. Namely, as argued by Whittington and Mayer , the N -form is a flatter, more flexible and horizontal form of organization than the M-form, but there are no differences in decentralized operations and the centralized corporate strategy as it seems to remain intact.
On the subject of strategic management from a central office or headquarters, Mintzberg asserts the latter is concerned with managing a strategic portfolio, allocating global financial resources, designing performance management systems, replacing and appointing division managers, monitoring divisional behavior on a personal level and providing support services to divisions.
In turn, Menz et al. Once the concepts of multi-divisional structure and corporate headquarters have been clarified, the following section presents the methodological approach of the research on the Leonisa group.
What structure does the Leonisa Group adopt to support these functions? To this end, specific objectives were defined as follows: 1 Identify the purposes for creating the Leonisa Group; 2 Identify the structure of the organization; and 3 Describe the business and administrative functions of the Leonisa corporate headquarters.
Firstly, an exploration on journals specializing on the Business and Management area and the category of Strategy and Management from Scimago Journal and Country Rank and ISI Web of Science was carried out for the period comprised between and The search was conducted using keywords that could account for the multi-business company from an administrative perspective such as Headquarters , Multi-business Firm and Multidivisional.
The initial result yielded papers, of which 28 were selected, published in English or Spanish, directly related to the field of corporate strategy. Subsequently, 15 papers were selected, which specifically referred to the multi-divisional structure in the context of multi-business companies. Furthermore, some books and handbooks by authors recognized in the field of strategy for their contributions on organizational structure were reviewed.
The literature review on multi-divisional structure gains relevance in publications produced between and , particularly in the context of developed countries. These articles have been published by widely recognized journals , such as Organization Science, Journal of International Management, Strategic Management Journal, among others.
Finally, both the Theory of the Firm Zhou, and the theoretical references on Mergers and Acquisitions MyA, Mergers and Acquisitions Tallman and Koza, , were present in only one paper respectively. Table 1 shows the countries of affiliation for the universities where the authors of the 15 papers studied work, the universities that stand out for their research on multi-divisional structure and the theoretical approaches from which such research has been carried out.
On this account, it was decided to complement this information with other authors recognized within the topic of multidivisional structure. Secondly, two techniques were used to collect the data: semi-structured interview and documentary review. There were two criteria for selecting the interviewees: the management level of the different businesses managers and former managers and the possibility of access to information or the willingness of the interviewees to share information.
The seven semi-structured interviews were conducted with executives and former executives of both Leonisa and the parent company , as well as from its enterprises or subsidiaries business units , which were selected from different hierarchical positions within the structure of each company for their roles as heads, directors or managers.
Each of them was interviewed for one hour in August and September The documentary review was conducted on websites , annual reports of the organization, and public domain documents written about Leonisa.
The analysis of the data was carried out through a process of categorization or codification, open at first and then selective thereafter, based on the transcription of interviews and revised documents. Therefore, the theoretical categories defined in the conceptual framework were complemented by those emerging from the fieldwork.
Leonisa is currently headquartered in Medellin, Colombia, where it produces and markets underwear through various companies described in Table 2. Leonisa has shaped its business portfolio over the years based on a growth strategy that seeks to minimize risk and increase the speed of its operation.
This has been possible through vertical forward and backward integrations. In the case of vertical backward integration, the production of fabrics, the dyeing and finishing processes and the manufacturing of its products through cooperatives that work exclusively for Leonisa stand out.
In , Leonisa began its process of internationalization to the Caribbean Islands and Venezuela, through the sale of its flagship product, the reference brassiere. Later on, it continued its expansion to fourteen other Latin American and three European countries from product distribution subsidiaries, and from a garment plant in Costa Rica to serve the Central American market Sanabria, From there, national and international orders began to be met and negotiations with freight forwarders began in order to achieve economies of scale in the distribution of products.
The entire export and import operation is managed from the headquarters or central office, and none of the subsidiaries is allowed perform operations outside the Leonisa foreign trade team. As a multi-business company, Leonisa counts with strategies at the corporate, competitive and operational levels.
Its corporate strategy is characterized as related diversification, with vertical backward and forward integration. Integrations are strategies to diversify the core business into adjacent activities in the network or value chain. Backwards integration has been accomplished through the creation of companies that supply the inputs for underwear and swimwear production, where each specializes in the production of specific parts that were previously purchased from third parties.
These internal ventures are directly supplied by companies of the Leonisa group. The corporate strategy has become a multi-business company managed through a multi-divisional structure. In addition to the general guidelines, the competitive strategy for each company is also defined.
The competitive strategy developed in recent years has been based on two main pillars: differentiation and total look. The former seeks to develop new products, different from those offered in the market.
Caso Leonisa Taller
Marleny Natalia Malaver Rojas nathmalaver gmail. Estudiante del doctorado en Ciencias de la direccion de la misma universidad. Direccion de correspondencia: carrera 7B No , casa Conjunto Belmira reservado II. Bogota, D. Hugo Alberto Rivera Rodriguez hugo.
INTERNACIONALIZACION DE LEONISA: UNA EMPRESA COLOMBIANA DE ROPA INTERIOR
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Leonisa. Los visionarios