Tire Manufacturer

In: Business and Management

Submitted By drbuten
Words 12792
Pages 52
For the exclusive use of C. SULLIVAN
Harvard Business School 9-391-095
Rev. April 18, 1995

Cooper Industries’ Corporate Strategy (A)
The business of Cooper is value-added manufacturing. – Cooper Industries’ management philosophy Manufacturing may not be glamorous, but we know a lot about it. – Robert Cizik, Chairman, President and CEO Cooper Industries, a company more than 150 years old, spent most of its history as a small but reputable maker of engines and compressors to propel natural gas through pipelines. In the 1960s, the firm’s leaders decided to expand the company to lessen its dependence on the capital expenditures of the cyclical natural gas business. During the next 30 years, the company acquired more than 60 manufacturing companies that dramatically increased the size and scope of Cooper Industries (Exhibits 1 and 2). Through a process that both insiders and outsiders called “Cooperization,” the company welded a group of “independent, over-the-hill companies into a highly efficient, profitable, competitive business.”1 By 1988, the diversified industrial products company derived $4.3 billion in annual revenues from manufacturing 2 million items. Cooper’s products ranged from 10¢ fuses to $3 million turbine compressor sets marketed under an array of brand names, the most famous of which was Crescent wrenches. “We decided a long time ago,” said Robert Cizik, chairman, president, and CEO, “that if we could do an outstanding job at the unglamorous part by making necessary products of exceptional quality, then we could be successful indeed.”2 In early 1989, Cooper Industries tested this philosophy when it launched a $21-a-share, $825 million tender offer for Champion Spark Plug. The Cooper bid trumped a $17.50-a-share bid by Dana Corp., a $4.9 billion auto-parts manufacturer. Although Champion had a well-known brand name and worldwide manufacturing…...

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