Zeton Ltd is an engineering company based in Kuala Lumpur, Malaysia. It has been established for nearly 60 years. The company originally began by supplying components for small machines and war equipment during the Second World War. However, since the early seventies it has undergone rapid transformation under the founder's son, Tommy Lee. Tommy Lee has diversified the company into supplying automobile components and machine tools to the Malaysian market. The company now employs some 1000 staff around the city and is well known for the quality of its workmanship. The company operates under three divisions. One division is concerned with the manufacture of automobile parts, a second division with machine tools and a third small division with specific one-off work in engineering and engineering design. The automobile section is by far the biggest and accounts for 70 per cent of the total turnover. The smaller specialist engineering design section is by far the most profitable in terms of the capital employed, and it relies a great deal on a senior engineer, Chow Fung, who has been with the company for 20 years.
Recently, the company was invited to send sample component supplies to a German car manufacturer which was keen to set up in Malaysia. These components were needed within eight months.
However, Mr Lee was concerned that his company might not be able to meet the strict standards imposed by the Germans. The deal would also make sure that Zeton Ltd became known in the west as an important auto components supplier, thus opening up the potential for exports. Lee realised that the export potential was great and that any export initiative would get full backing from the government.
While this was happening, the machine tools division was also showing signs of growth. Recent reforms in Eastern Europe meant that companies in that area were very keen to modernise and develop their old manufacturing bases. Zeton had received enquiries from that area.
Tommy Lee faced a dilemma. He knew that the opportunities that had presented themselves would establish the company on a worldwide footing. At the same time he knew that the companies were solely under his management as Chief Executive.
Tommy Lee held 80 per cent of the shares. The other directors held 10 per cent each. Although the other divisions had Managing Directors, they relied on him for decision-making. The Managing Directors were drawn from family members; one was a brother-in-law and the other a cousin. Their knowledge of the industry and workings was generally poor. He made these appointments to please his father so that he could be left to run the company as he saw fit. Tommy knew that in order to satisfy the German auto manufacturer he needed to reorganise that division and consider issues of Total Quality Management. His time would be fully taken up. He needed to delegate to the divisions, but felt uncomfortable in doing so.
The company was at a crossroads. The divisions were doing well, and potentially could do even better. The systems driving these divisions were old, bureaucratic, and hierarchical. Some of the younger managers and engineers would prefer a more open flexible management structure. Some of them had studied both engineering and management in the UK and the USA and were keen to see changes. He knew that these opportunities could not be missed, but how was he going to ensure that they were handled successfully so that the future for Zeton Ltd was even brighter? He knew that he needed to make some harsh decisions and restructure the company within the next few months. He still had time.

Questions

(a) What are the key issues facing Zeton Ltd? Give justifications for your priorities.
(b) How should Mr Lee restructure the company, and what leadership skills will he need to exhibit?