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Organizational change refers to the alteration of relationships and roles of people in an organization. Any shift in status quo of an organization to enable it be better aligned with its environment is Change. Change takes place in all organizations, but at varying rates and degrees of significance.
The following are the organizational facets affected by change:
For BMW to stay in its success track, it should improve on its strategies as it is finding it as a challenge to keep on track, but is not impossible. BMW is great at improving and shaping itself through its design, advertising and the essence of its brand. Continual improvement on its quality, advanced technology, exclusiveness and performance is important to BMW as this will help it stay on the success track.
Since more competitors are shifting product development activities to countries with lower cost, this may affect the profitability of BMW due to its heavy cost. It has to thus maintain its cost competitiveness and its reputation.
BMW needs to improve on its corporate image, which is serious and tradition-bound. It has to keep working on its cost leadership and differentiation strategies as the competition is too tough.
Other changes it should implement are how it can minimize its expenses without jeopardizing the production and quality of the company's product.
BMW should ensure that what it produces is unique internally and externally, and should also take up a segmentation strategy to ensure that it selects a market that would provide it with income.
It should also try and increase on its profits without jeopardizing other things by focusing on price based strategies through the use of Bowman's strategy clock. BMW must try to be unique in its prices for it to stay in the success track.
BMW is good with its management talent and therefore must ensure that this remains even though management may change with time for it to stay successful. BMW should go through incremental change so as to keep improving its brand integrity.
Management needs to treat change in the same way as other decisions and adopt a systematic approach. Managers play a key strategic role at BMW in the development of new products as well as the development of technical solutions. This is done through job activities and interactions at the various organizational groups in BMW.
The following are the roles played by a manager in such a change of implementation:
Identify the required change:
This is identifying the objective of the change. The change is a response to new goals or strategies, themselves arising as a response to the changes in the environment. Changes in the environment will give the direction to organizational change, which needs to be made using the following three stages;
Re-specification of objectives
Careful analysis of current position
Specification of the new position
This takes in to consideration, drawing up of detailed plans for revised operational activities and management structures, and establishing the exact requirements in terms of behavior.
Identify and involve those who will be affected:
Management at BMW has to establish open communication with those affected, keeping them informed and seeking their ideas and suggestions for strategy and implementation.
Identify and select the best overall strategy for change:
BMW manager needs to consider the best way of implementing the changes, the means by which the operational outcomes identified may be brought about. This involves for example, agreeing strategies which will overcome resistance to change.
Draw up and implement detailed plans for effecting the required change:
This involves decision on the length of change over period and the procedures necessary to train staff in the required activities and behaviors. Control of this process is essential since the credibility of management may be affected by the way in which plans are implemented. The financial costs at BMW need also to be addressed.
Review and evaluate the effectiveness of the process:
This stage evaluates the effectiveness of the process. This stage has two aspects;
The effectiveness of the new position in achieving the required objectives.
The effectiveness of the process itself in enabling a smooth transition with minimal disruption to operations and the morale of staff.
If BMW was to use the same strategic approach as Ford/Volkswagen, it would face the following resistance:
Organizational Structure: -They are very hierarchical with many levels and will therefore hinder change.
Resource constraints: - Organizations will resist change where they do not have the resources to effect that change .e.g. the organization might resist introduction of new technology because they do not have the manpower.
Organizational culture: - When the organization notes that the proposed change will interfere with the beliefs, values, attitudes and behavior of the organization, then that organization will resist change.
Maintaining stability: - Organizations will resist change so as to maintain its stability. If the proposed change will result into instability in the organization, then that organization will resist change.
Union opposition: - Organizations will also resist change as a result of labor union representatives who will oppose the proposed change. So as to e in harmony with the union, the organization may resist change.
Threat to power: - If the change is going to make an organization less powerful in terms of market share, then that organization will resist change. Managers will resist change if the change will threaten their power, so they will use their influence to resist it.
BMW would face resistance from its employees, customers and share holders. Shareholders are always concerned with the profitability and hence anything that would lead to a decrease in it would be resisted. Employees would be worried about their status quo and would hence resist the change, whereas customers are brand loyal, hence would resist any change that is not in their favor.
(2)A set of business processes developed in an organization are referred to as Knowledge management. This creates, stores, transfers and applies knowledge. This helps BMW to learn from the external environment and apply knowledge into its business processes. Knowledge management is emerging as a critical component of both e-business and CRM.
The following are the important steps in implementing knowledge management:
Identifying the business problem-for BMW to have a successful implementation of the knowledge management, it needs to have a clear identification of the problems it could face and how to solve them. The knowledge management project with overall business objectives must also be placed in line.
Preparing for change-this is not just an application of technology. It involves cultural changes in the way employees perceive the knowledge they develop. There has to be approval from corporate management for the successful implementation of the knowledge management.
Creating the team-for the successful implementation of knowledge management, there has to be a well trained team with a good team leader and "cross departmental" expertise is important.
Performing the knowledge audit-this audit helps in solving the business problem by identifying the sources of knowledge. It begins with how the organization operates and organizes the knowledge accordingly. This only answers a few questions and therefore does not need to be complex and long.
Defining key features-knowing what key features are required, will ensure that the knowledge management technology acquired will help in solving the business problems BMW may face, while enhancing the overall IT infrastructure of BMW.
Building blocks for knowledge management-using a phased approach, the knowledge management systems are implemented. Each phase of implementation addresses a specific part of the knowledge management solution. The foundation for the next phase is then laid down, and this provides immediate benefits and ROI.
Linking the knowledge to people-this is where knowledge ideas can be exchanged for the improvement in the business processes.
Knowledge management systems can also be where the data and information is acquired, collected, stored and disseminated. This adds value to the information as it's transformed into knowledge.
Knowledge is first acquired depending on the type of knowledge BMW requires. It is then stored to be retrieved later by the employees. The knowledge then has to be applied or this does not add value to the business.
The practical issues that could be expected in the implementation of knowledge management are discussed below;
Since there is no nature of knowledge, various manipulations can be taken as knowledge. Culture is one of the issues in the implementation of knowledge management. Cultural barriers are the cause for failures to share and transfer knowledge within the organization. These could be functional, behavioral, normative etc. There could be a communications problem in the implementation of knowledge management. Knowledge management implementation problems are the ways the processes and systems for the knowledge are being created in isolation from the social systems of the organization.
There could be customer misunderstandings/ miscommunications leading to losing the customers. A common problem in knowledge initiatives is getting irrelevant content.
It is important to understand the strategic knowledge levels and learning processes as misunderstanding these will hinder the implementation of the knowledge management.
(3)"Supply Chain Management refers to a wide variety of activities that firms and industries use to coordinate the key players in their procurement process." (Laudon & Traver, 2001, Pg664).
BMW has a varying degree of integration and cooperation in its supply chain. To improve on its supply chain management, it is using a service management. Supply chain management coordinates with suppliers, intermediaries and customers. BMW uses SAP as one of its platforms.
Customers' requirements are increasing for more flexibility and choice; hence warehouse spaces should be handled well. To have efficient supply chain management, it is important for BMW to meet the customer demand for just-in-time delivery processes. BMWs supply chain management avoids inefficiency in terms of time and space. The technology thus has to be fast and seamless between the processes linking suppliers and manufacturers.
The following are the processes within the supply chain management of BMW:
It ensures there is increases sustainable competitiveness and performance within the BMWs arrangements
Within the supply chain networks between organizations, supply chain management refers to the establishment of long-term customer and supplier relationships
It synchronizes procurement and logistics by considering service and cost structures
Supply chain management solves certain connection problems
It has strategic and operative decisions referring to inventory, procurement, transport and strategic management decisions
Supply chain management has a coordination function
Supply chain management lowers costs and increases profits and hence increases competitiveness and customer satisfaction.
In my opinion, due to the increase in the economic volatility in the competitive environment, BMWs supply chain can be disrupted leading to:
Fluctuations in the currency
Sudden disturbances in the financial markets
Changes in the price of key commodities
Changes in the availability of these commodities
Political events causing disruptions
Customer channels that are continually developing globally.
These can affect the way BMW sources, manufactures and distributes its products. This can thus be minimized by:
Having clear value creation methods
Having an approach to the supply chain, which should be one that delivers value
Segmenting the supply chain so that it fits in well with the different characteristics of each segment
Having accessibility, flexibility and less risk
Investing in selective areas which would prove to be profitable through differentiation
Organizing information systems which will deliver the correct alignment
Having the right talent to enhance performance.
The kind of IS that help BMW adjust to the changes in the demand forecasts are the mySAP Automotive and the electronic data interchange (EDI). The BMWs planning system sends manufacturing orders to mySAP Automotive. This then generates schedules for delivery to match the BMWs planning and sequence lines.
BMW sends long horizon forecasts and short horizon just in time schedules to its suppliers. The EDI transmits information to larger suppliers, while the other suppliers access the mySAP Automotive Supplier Portal which has up-to-date information. This information can be viewed by suppliers in real time only through the internet.
(4)The SWOT analysis generates information that is useful in all the functional areas in BMW. There are various functional areas in BMW where innovation is possible. These include; Research and development, production, advertising, sales, finance, quality control, inventory control, and customer service. The specialists within the BMWs research and development are using the most advanced technologies and methods and convert new ideas systematically into innovations. These innovations are what make BMW stand out from competition. The benefit resulting from this innovation is that it strongly influences the purchasing decisions of its customers. This also improves on team work by providing better opportunities and improves the organizational structure. It encourages new visions due to the exchange of various ideas. The development of the company's product is continuously being improved.
The marketing manager will combine the SWOT analyzed from the various functional areas and identify the opportunities. When BMW develops a new car, they relocate 200 to 300 design, production, engineering, finance and marketing employees to the research and innovation centre. The benefits from this are that the development of the car is speeded up as well as the communication.
The sales area has a corporate strategy. It approves the used cars here and develops new cars. Some of the other areas look at the customer relationship management. This thus improves on the quality of the product. Employees are an important asset in the advertising area. They provide information that increases in the effectiveness.
BMWs product development phase centers around developing new models. It has breakthroughs of technology as well. It provides attractive and high quality products quickly to its customers.
"Innovations do not come about by chance, but result from the right combination of creativity and courage as well as systematic innovation management."(Göschel, B, BMW Group Board of Management).
Since innovation is unavoidable, it is important for the managers to keep in mind what benefits are available for its customers, such as; the safety, driving pleasures and sustainability. Managers must first of all identify the general trends and technologies leading in to the future, by making use of different varieties of sources of creative influences or stimulus. It is also very important to identify the opportunities emerging from the environment, which can help in maximizing the value of BMW.
Managers should assess the practical and economical implementation as well as what benefits are actually offered to customers. They must also mitigate and manage the risk arising from the innovation activities.
The manager leading an innovative project must keep the following in mind:
Strategy-which sets a foundation defining the innovative objectives
Ideas-developing new ideas related to the objectives of BMW
Process-innovative ideas are guided to the market through the use of flexible approaches
Climate-which drives innovation across BMW by building a flourished work environment
BMW strongly believes that the quality of its websites must match the quality of the cars. Having a good online presence, BMW would easily be able to precede its competition.
It is important for BMW to improve customer and supplier satisfaction. This can be done through the introduction of self-service websites as Ford motors has, to make their company information readily available. It should also expand into various communication channels to have direct dealings with its customers.
(5)Automotive industry is one of the toughest business environments today. This is due to the intensifying global competition. Automobile companies compete on price, quality, size, development, safety etc.
Quality has become the main focus point in the recent years; however that of the Western countries is not of the same high standard as that of Japan. Innovations are emerging really quick as the demand for safer vehicles is increasing as well as environmentally friendly vehicles. There is an alarming competitive gap between the Western countries and Japan because the growth in the automobile market in Japan is tremendous.
The information systems that could help reduce the alarming competitive gap are the Transactional processing system and the Decision support system. The impact of globalization is also creating a sustainable competitive advantage. The western countries should improve on their cost and flexibility by setting up manufacturing facilities in lower cost regions.
This gap could be due to the wrong strategies implemented by the Western countries as compared to that of Japan. The way the information systems help reduce the competitive gap has been explained below;
A Transaction processing system is an organized collection of people, procedures, software, databases and devices that record completed business transactions. They produce routine business transactions hence can keep up with the competition and make necessary changes where required. It seeks time and cost efficiency by automating repetitive operations. It interfaces with the organizations other information systems, hence whatever changes may be required can be made with immediate effect hence helping the organization try and stand by the competitors if not ahead of them.
The Decision support systems help managers make decisions that are unique. This can help improve in the competitive advantage. These have more analytical power than the other systems and addresses problems from the external environment as well as the internal, hence can help in reducing the competitive gap.
A major reason for this gap will be the relation with the suppliers. It is important to have the correct supply chain management system that adds value to a business. The channels of this are very crucial, hence has to be strategically stable do as to avoid the gap between the Western countries and Japan. Japans customer relationship management as well as the supply chain management is very well maintained, hence it has the competitive edge. The western countries need to improve on this.
Japanese cars are reliable and efficient. They are affordable and highly functional. They are far more receptive to what customers want as compared to the Western countries; hence hold a strong competitive edge. They have adapted with time and are aware of how the autonomics can work for the industry, hence are at an advantage as compared to the Western counties. The other countries, to reduce this gap must look at the strategies adopted by Japan and work on improving theirs.
Information systems therefore play a crucial role in every function of an organization. They also play a very important role in helping the organization maintain its competitive advantage.
Michael Porter also developed the 'Five Forces model' to analyze the nature of the competitive environment of an industry. This model is useful in identifying the forces which affect the level of competition in an industry as an input to strategic analysis and strategic choice. These are:
Threat of new entrants
Taking these into consideration, the Western countries can see the improvements they need to implement to reduce the competitive gap.
(6)Since today's modern business world is rapidly developing in technologies, most businesses are operating through the internet. This is cost effective as well as time saving. BMW should therefore have its dealings through the internet via creating websites that would allow dealers and visitors to easily find any information they would require. BMW should also have the Web communication channels to have a direct correspondence with its dealers. This will thus help BMW improve in its customer satisfaction. It should use high tech devices and Wed based tools to reach up to the customers' expectations.
BMW should have self service websites. This should have intelligent question and answers which would provide real-time answers to customers' questions. Through the use of internet, BMW could have new chat rooms which would help BMW with customer feedbacks and that would enable BMW to know how well customers are satisfied. It should also have an analysis of car related blogs, which would also lead to the feedback from its customers.
BMW should also introduce the Electronic customer relationship management. Using this digital communication technology will lead to maximization of sales and will encourage the continual usage of the online services. This also helps in the communication through e-mails, which would hence address and integrate customers' information and enable targeting. This can be done through web based personalization and mass customization.
BMW can use the internet to maintain its relation with its customers and suppliers through Electronic procurement. This is the electronic integration that manages the procurement activities such as; purchase, request, authorization, ordering, delivery and payment between a supplier and a purchaser.
BMW can also have a business to business electronic market place which enables trading between buyers and sellers through virtual locations. Private business to business exchanges is where a major supplier creates a portal which is used for managing all aspects of procurement. BMW can also achieve its marketing objectives through the use of E-marketing. This is how the internet can be used to deliver services.
BMW should be designed in such a way to support and automate existing lean manufacturing processes. The material flow provides an integrated wireless infrastructure to handle material request signals enabling every member of the supply chain access real-time data from BMW factory floor to internal and external supply.
A just-in-time inventory management process involves an understanding of the supplies BMW needs at the exact moment when they are needed. It is how much of a given item is needed to maintain production while more of the same item is ordered. It is important to know how long an item will take to be shipped from the supplier to reach the manufacturing site. It is also important to know the life of the item. Thus an item can be reordered just in time to replace one that could be worn out. This can thus improve on quality and lower the costs. Just in time adds value and at the same time reduces costs. BMW must continuously adjust its timings of ordering and delivering. Thus the communication in the supply chain will be critical.
(7)It is important to gain a competitive advantage in the market. This should not always be based on competition on price strategies. There are various non price factors which may also lead to achieving a competitive advantage within a particular market. BMW can attain its competitive advantage through the use of its non price factors. BMW can thus move away from the low cost production and add higher value to its products through the use of non price factors like quality, design and reliability.
BMW can enhance its non price factor competitive advantage through the following:
To reduce costs-procurement and inventory costs, human operating costs, and improves on the intangible costs.
To improve product quality-the use of information and integrating it well. Reduce any production errors, and use of customer service systems.
Increase productivity through improved efficiency-communication should be effective hence reducing the communication costs. Enhancing the relation with customers through new marketing channels. Resources must not be wasted; there should be a reduction in this to reduce on the procurement costs.
Strengthen the ability to integrate the division of labor-establishing a good customer relationship management and speeding up the process of e-procurement. There should be strategic alliances and complementary niche to have a competitive advantage. There should be business to business synergy between the corporate strategies.
Improving customer satisfaction and service quality-this is achieved through the e-business processes from processes such as production, shipping, transportation etc.
Enhance the corporate image-should be closely related to the suppliers and provide rapid services to the customers.
It can also attain competitive advantage through the enterprise software. The software system should be accurate and reliable and should provide management parameters such as safety and control.
Non price competition should emphasize on the product features, service and quality. BMW must try to build customer loyalty towards its brand. The price differences should be offset by perceived benefits and the brand must be distinguished through features that are unique. These differences must be in a way that the customers can view as desirable. These differences should be difficult to be emulated by the competitors. Features uniqueness must be in a way so as to promote customer awareness. It should have distinctive attributes.
Customers' demands keep changing and BMW must adapt itself accordingly so as to meet the customer needs. There should be more variety in the models it develops. It should always be innovative and have different models so as to have customers always at the edge. There should always be more activities and actions with the products. Good services should be provided such as high quality and faster delivery of the products to the customers.
BMW can influence demand through its marketing activities and hence compete on the basis of its quality, brand, assortment or services.