Tanic

Typical of many subsidiaries and joint ventures with multinationals in Central America through the 1980s, TANIC operated over the years in Nicaragua with considerable autonomy from its parent, British American Tobacco. It was largely self-sufficient, obtaining raw materials from local producers, manufacturing, and selling in the domestic market. Globalization was a distant and abstract concept. When Miguel Trivelli arrived in Nicaragua from Chile to become general manager of TANIC in 1995, this situation was rapidly changing. In response to new policy initiatives, the sourcing of raw materials for Central American subsidiaries had been concentrated in Guatemala and Honduras. A regional office had been established in Costa Rica, communications technology had become standardized, and such functions as purchasing and training were becoming centralized. There was even some discussion of closing the less efficient plants. This process of rationalization, now familiar to multinational subsidiaries operating in more open economies, posed a clear threat to TANIC operations, which had recently suffered quality problems and could have become a candidate for closure. Mr. Trivelli is faced with the challenge of increasing quality and productivity in a difficult environment, impoverished by decades of civil strife and economic crisis. The case centers around Mr. Trivelli's decision to introduce a new organizational scheme, the “mini-factory,” in the TANIC plant. The scheme is based on self-motivated work teams that operate their own businesses, obtaining inputs from other mini-factories and selling to internal clients. The skeptic can identify numerous reasons why the scheme is destined to fail: workers have low educational levels; they are accustomed only to receiving orders; supervisors and mechanics will offer strong resistance; and managers will oppose the idea. The remainder of the case describes the actions taken by Mr. Trivelli and other TANIC personnel to overcome these problems. Though there was resistance initially, particularly among the mechanics who saw their authority and status diminished, the work team concept offered opportunities for collaboration and learning that were not available under the traditional production system. Information technology was a critical resource that was used to consolidate the work teams. By the close of the case in mid-1997, quality and productivity were at their highest levels, and TANIC had achieved the world's highest sta