Running head: Strategic management audit 1

Strategic management audit

Institution:

Student’s name:

Date:
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The company

Koch Industries, Inc. is an American multinational company based in Wichita, Kansas.

The company operates as a conglomerate with its subsidiaries in refining, energy, chemicals,

petroleum and fertilizers. With the diverse product lines, the company has a wide organizational

structure characterized by various departments and leaders who report to the overall executive

management.

 The success and growth of the company relies on the efficiency of the

management function and how they are able to utilize the available resources in

the organization.

 The company’s capital is only available from the private ownership sources or

debt finance. The three owners of the company: Charles Koch whose share is 42

percent, heirs of David Koch whose share is 42 percent and the trusts for the

Marshall family occupies the remaining 16 percent. With the company being a

private company, the company cannot raise capital from the members of the

public.

 The second source of funds apart from the equity owners is debt financing which

is normally used in supplementing the retained earnings on growth projects.

Through the policy, the company has a strong leverage position which makes it

credible among the creditors for loans and other types of borrowings.

 Despite the company claiming to be self-righteous in its business practices and

operations, there has been concerns of the company prioritizing profits and

growth over the general welfare off the society. The company use their marketing

campaign and advocacy on marketing-based management in which the

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organization empowers the individuals to succeed with the aim of gaining from

the mutual benefits relationship. The management of the employees in ensuring

they comply with ethical standards promoted by the organization is crippled by

presence of a complex organizational structure (Leonard, 2020). 

The environment

There are some aspects of Koch’s Industries business environment that has raised

concern on the success and brand reputation of the company. Koch Industries has been ranked

among the top companies in the United States but his has comes with concerns too. This

includes:

 Increased number of cases of complaints among the employees on workplace

civility. There has been increased number of cases on allegations of the company

being engaged in various forms of bias and ill-treatment of the employees and

business associates. A recent incident is the sexual harassment and race claims

where the company was required to pay $3.75 M to settle the case. The suit was

filed by the Equal Employment and Opportunity Commission (EEOC) where an

employee had reported the matter to the regulatory authority and the commission

sued the company (MacLean, 2020).

 Koch Industries, Inc. has secured a major way of sustaining raw materials chain

for its global market demand. One of the strategy used by the company in

securing its raw materials is strategic alliances with big companies and

multinational companies. The company incurs huge costs in such deals but on the

other hand, it gains a continuous and reliable supply of raw materials. One of the

recent strategic alliance deals in which Koch Industries hired a different company
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to supply it with polyester materials occurred with a Turkish company, Sasa

Polyester Industries Inc.

The industry

 Koch Industries has been able to match the level of competition in the different

industries in which it deals with. This has been attained through continuous

research and development and the continuous innovations and creativity. The

company empower the employees to develop new interventions to assist the

company boost its products and enhance quality and efficiency of the products.

Koch industries also engages in research to monitor the trends inn different

markets and respond by tailoring the products to match the needs of the market.

This has enabled the company to remain at the position of the market leader

(POLINKEVYCH, 2020).

Recommendations

Koch industries can improve its current level of efficiency in operations through a variety

of ways. One of the ways is by facilitating regular training programs on employees to help them

in remaining competitive in value creation but without compromising ethical standards. The

company should also consider developing its own subsidiaries that are directly involved with

processing of raw materials other than hiring large companies at a very high cost (MacLean,

2020).
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Reference

Leonard, C. (2020). Kochland: The secret history of Koch industries and corporate power in

America. Simon & Schuster.

MacLean, N. (2020). Since we are greatly outnumbered’: why and how the Koch network uses

disinformation to thwart democracy. A modern history of the disinformation age:

communication, technology, and democracy in transition, 120-149.

POLINKEVYCH, O., KHOVRAK, I., TRYNCHUK, V., KLAPKIV, Y., & VOLYNETS, I.

(2021). Business risk management in times of crises and pandemics. ELIT–Economic

Laboratory for Transition Research Dz. Washingtona 4/5, 17(3), 99-110.