ADMARC casestudy

1. CASE STUDY: ADMARC FAILURE TO
DOWNSIZE
BY FLORIDA SIKWESE
WALDEN UNIVERSITY
COURSE:6115

2. ADMARC is a government owned cooperation or
organization established to;
 Promote Malawi’s economy by increasing
volume and quality of agricultural exports
 To develop new foreign markets for the
consumption of Malawian agricultural produce
 To support Malawian farmers on customary
land with agricultural inputs such as fertilizer,
seeds.

3.  ADMARC was established in 1971 when three
board were merged as government’s
intervention in agricultural sector. The boards
that were merged were National Tobacco
board that was formed in 1926, Cotton and
Maize control boards formed in 1956. After
merging the three boards they formed
Agricultural Production and Marketing Board
(APMB), Later the establishment of ADMARC
to do all the functions allocated to the three
boards.

4. Shareholder
s
Board of
directors
Chief
executive
officer
Director of
Finance
Director of
Administrati
on
Director of
Operations
Southern Region
Manager
Central Region
Manager
Northern Region
Manager

5.  Upon establishment ADMARC was given the power to
make its own decisions either to finance or make
policies for agricultural development. It was less
bureaucratic than similar bodies in Africa
 Later it became corrupt, ADMARC was governed by a
bureaucratic system where decisions are made by
parliament and then implemented to the organization.
 Over the years that has been seen as a weakness
making its work to be inefficient since most decision
are politically motivated but not worthy for the smooth
running of the organization.
 With external pressure from World bank it became
partially privatized and shareholders became part of
the decision making system but still the organization is
facing financial difficulties.

6.  The organization has basic cultural aspect that can
be described as strong at times and this tend to
influence behavior of the organization as a whole.
Such aspects are displayed in the following areas;
 Informal channels of command where staff
members expect to get guidance from their leaders
 Informal communication channels which create
links which people expect information to flow. i.e.
gossip and rumors create a link where people tend
to get information which has a negative impact at
some point

7.  Years later after its establishment ADMARC became inefficient in its operations due to
economic decline facing the country in the early 1980’s as it became the major sponsor
for political elite who were controlling the organization. The fertilizer subsidy program
that was created to benefit small holder farmers was diverted as it was going to the
political elites who had farms.
 After mismanagement of the funds and resources from the organization it started facing
financial dilemma forcing it borrow from World Bank to sustain its operations.
 The World Bank gave a condition that unless the organization is privatized and make
new policies they will help. It was partially privatized but still there was no change.
 In 1992 the country was faced with another food crisis and the World Bank still insisted
that the organization become fully privatized but the government was reluctant.
 Another challenge the organization was facing was poor management due to its size,
ADMARC has over 3000 workers who are working in 350 outlets increasing operation
costs.
 Recently ADMARC was also involved in a change that was a failure in which we will
focus much on.

8.  The organization was involved in a downsizing exercise 9
years ago. The process was done in a view to bring about
innovation after function review and restructuring the roles.
 The cause was external (donor driven) and their
understanding the environment of how the organization
operates was totally different from reality.
 This led to the failure of the change process as this was done
without prior knowledge of how the organization is run,
there were no clearly redefining the roles of the organization
and stakeholder expectation remained as they were.
 The assessment that was done was sorely based on financial
to the total exclusion of other factors such as social function,
food security, provision of ready market for smallholder
farmers and also net buyers from the rural areas, price
stabilization among others.

9.  The leadership skills used were largely negotiation
skills and competences together with rewarding
since the changes were tied to donor funding
disbursement.
 The implementation process never materialized as
the public who form part of the stakeholders
reacted angrily to the change.
 Another cause of failure was that since the change
was imposed it caused some resistance in fear of
losing their jobs and only a few accepted the
change.

10.  The change had a few shortfalls in that
 It never had a full assessment of both external and internal environments.
One cause for the failure was that the change was donor driven therefore
it created more room for resistance. On the part of the organization it also
to understand and meet customer needs and effective delivery of its
services since it did not take time to assess its external environment.
 Over the years the cause for its inefficiency was because the organization
never had its own mandate to carryout on its own. Political influence has
been the major cause which lacked will power for innovation. Privatizing
the organization would have been good for its improvement on service
delivery to farmers and the public.
 Lack of communication has also influenced the failure to the change as
the public has little knowledge of the what is going on but tend to have a
blind eye to what is happening. Lately we are glad with the introduction
of public lectures which help to enlite the public of the governance and
other issues of concern so that as a nation we all take part in decision
making on matters like these.

11.  Innovation seeks to look at the external
environment where clients are in need of a new
way of doing things, an organization has to
respond to their needs. This allows creativity and
at the same time helps to be competitive in this
case ADMARC privatization would have ensured
a level market for agricultural companies to
compete.
 Transformational leaders create a climate that
provide support for innovation, provide
intellectual stimulation, removing obstacles by
providing information, resources, Reiter PR (2006).

12.  Chirwa EW & Doward AR: The role of Private Sector in the farm input subsidy
program in Malawi (2013) www.future-agricuture.org
 Lee R. Beach (2006) Leadership and the Art of Change: A Practical Guide to
Organizational Transformation. Sage Publication Inc.
 Nthala K (2002) WHAT NEEDS TO BE DONE TO IMPROVE THE IMPACT
 OF ADMARC ON THE POOR. Oxfarm Malawi
 Reiter-Palmon, R., Herman, A. E., & Yurkovich, J. M. (2006). Innovation.
Encyclopedia of Industrial and Organizational,Psychology.
 Foster Mlumbe Chief Executive Officer ADMARC LTD -interview -27/09/2015