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Depa Ltd. specializes in the full-scope turnkey fit-out and furnishing of five-star luxury hotels, yachts, apartments, and other fine private and public facilities in Dubai and around the world. Depa's superior portfolio of projects illustrates our skills in combining aesthetic and operational requirements to create the harmonious and complete results our clients expect. We proudly set the standards of excellence in interior implementation.
Depa Ltd. has steadily grown and expanded throughout Europe, Africa, Asia, and the Middle East. Over the years, our company has managed to build up an association with international suppliers and manufacturers, in addition to utilizing our own in-house Depa manufacturing facilities.
Headquartered in Dubai, our expansive network allows Depa Ltd. to leverage the knowledge, organizational ability, purchasing power, facilities, and economies of scale we provide in order to meet the individual needs and unique requirements of our clients worldwide.
Tight adherence to our clients' needs is essential to our business. Our long-term relationships with our suppliers allow us to ensure punctual delivery within budget. We provide our clients with creative and achievable design solutions of the highest standard, which can stand alone or be integrated.
Our philosophy - to deliver excellence to our clients in a cost-effective and timely manner - has made us the largest and most profitable interior contractor and specialist fit-out company in the Middle East and North Africa region, and in the top five in the world. " (www.depa.com)
Investigate and summarize the organizational structure, product and market characteristics, and the operating strategy (past and current) of your chosen organization first. Explore and discuss the background to change, both internally and externally, including organizational development within the economic change outside.
What is Change? Change is an alteration of an organization's environment, structure, technology, or people. (Robbins,2001) According to Robbins, the external forces that creates a need for change are Altering Structure (authority relationships, coordinating mechanisms, job redesign, spans of control, Technology (work processes, work methods, equipment) and People (attitudes, expectations, perceptions, behaviour) In addition, there are also internal forces which can stimulate the need for change; originating primarily from the internal operations of from the impact of change, for example, management of an firm redefines its strategy to compete with in the market.
The following is an evaluation of a company, Depa Ltd. its organization and the change that it is facing.
Depa Ltd. with headquarters in Dubai, U. A. E. is a contracting company dealing with construction projects in the Middle East, Europe, Asia and Africa. It specializes in interior contracting and interior manufacturing services. Its scope of interior specialization includes commercial, infrastructure, residential and specialist or themed structures.Â It integrates all its services into one single package making it comprehensive and customized to deliver high end specialist needs of its clients in the industry.
Terminal 3 Airport-Dubai
Museum of Islamic Arts-Doha
Four Seasons Hotel-Mumbai
Mission & Values
It has a clear mission of being a global high end interior contracting specialist brand by delivering quality products and services through its group network and systems while caring for the environment and empowering its people to deliver excellence in its performance.
It values long, lasting relationships with its clients as well as its suppliers and the employees in the organization. It values customer feedback and satisfying its needs. It values healthy and fair working environment for its team and providing for growth and development .
To deliver their product, Depa has over 9,000 employees in its network. It works through subsidiaries, affiliates and representative offices specializing in two different group structures; the lead interior contractors and the supporting divisions. A key figure in its management is CEO, Mohannad Sweid, who with other significant heads in 1996 established the company and because of major expansions in its operations, in 1998 the group lead it to the acquisition of the Italian based Depa. It later moved its base to Dubai, acquired contracting subsidiaries, joint ventures and more acquisitions all over the world. Since then Depa became one of the most influential organization in the industry. In 2008, it was incorporated as a company limited by shares.
The company currently focuses its strategy on diversifying revenues through expanding geographically and penetrating to more market segments for the refurbishment and infrastructure projects. Because of the impact of previous years' economic downturn which badly hit its major contracts in Dubai, its operations will move forward to a more active geographic diversification strategy to lessen the risk of dependence on any one market.
Recently, it acquired Depa Design Studio which is one of the fastest growing business in its strategic scheme location in Southeast Asia with a staggering rise in its revenue from 9 Million in 2008 to 266 Million in 2009.
Depa will work only with reputable international companies and selective projects which will heavily reduce its project risk especially while it is still overcoming the effects of the economic downturn.
Changes brought about by the Recession
The group structure of Depa was so much affected by the cancellation of projects and early termination of projects from recession in 2008 and 2009. Some of the departments of the company had to downsize and subsidiaries had to merge. People will have to be moved from one place to another, perform new roles, will be introduced to new salary structure and will have to see a new working environment. Major cuts were done across the board. It was heavily dependent on its projects in the United Arab Emirates. With these, the Board of Directors had to decide to be more cautious and pay particular attention to risk management and the allocation of contingency budget for the existing projects that they have and the process of payments by these clients. Yet more joint ventures and acquisitions will still be present as this company will certainly take advantage of any growth prospect in any new market if it means affiliating with another company or investor.
Top management was faced with the challenge of the global economic climate. It was one external factor that triggered change in the organization, its strategies and its business unit structure and its operations. Although their core strategy remains the same, their focus is now refined and focus on adjustments to important changes and uncertainty it faces. The change in the strategy aims to leverage areas of market growth yet minimizing the exposure to areas which may still be impacted by the recession over the coming years.
The organization is also affected by the technological factor in the industry and therefore to be able to compete in the recession, it must focus on internal issues such as the need for employee training and systems development. Its business rely on its people to deliver quality products and services and any change in Depa's multi-cultural organization will have a big impact on their performance. They have introduced Depa University which offers courses to develop its employess, further train them to be more productive and competitive.
To sum up, the following are strategic initiatives that Depa as a business will have to focus on because of the change.
Diversify its operations in key geographical areas and not just in interior contracting and manufacturing but also procurement of materials for the interior contracting and manufacturing, optimizing the resources that they have.
More conservative approach before signing project contracts with clients, focusing on risk management
Engage in joint ventures which could help them penetrate new markets or merge subsidiaries to maintain business units
Retain key workforce and talent but reduce size of employees as needed, reduce overtime hours and review hiring of workers from overseas
Examine the change process in the chosen organization, including using relevant change models that you learned in the class for understanding and involving others in the change process.
"An organization will always go through various changes in its lifetime. After all, adaptation is one of the key factors in an organization's survival. There are several well accepted change models of
management. All of them have been scientifically proven to be effective in the management of change. Kotter's Eight Step Change Model of Management explains that there are eight essential steps in an organization's change management." (Blokdijk,2008)
Initiative Urgency - Depa as an organization with is establishing quick solutions to implement changes. News on changes are explained through meetings with subsidiaries and employees and through other communication channels such as emails and talks. Awareness should be increased across the organization. This will make them to start moving. The talks need to be inspirational and convincing enough to extend the news on the changes happening in the company. This could be done by holding honest and open discussions, developing scenarios to show what will happen in the future and discussing opportunities that could be grabbed from the situation. Issues on termination of employees and closing of projects are very sensitive and handling of these issues should be discussed properly and on time.
Change Team - The Senior Management and General Managers heading the different business units are responsible for implementing policies for the change and overseeing that everyone in the team including subsidiaries and joint ventures are influenced. The managers should steer the company through a recession in such a way that it will prepare them also for the rebound. These leaders would not just be there to order layoffs, hold cash, delay development of their product and wait for tough times to end. They are there to be pro-active and to address the tough condition the changes bring. Convincing the people in the organization needs leaders and support from key people. Depa will identify the leaders and ask for their commitment. They will work on team building and help the people get ready for the process.
Vision - The organization's outlook should now be established to see where the participants in the company will move. A clear vision will help them achieve the goals and direct them to where they are going. This vision will give them the purpose and sense for doing the directives given to them. Values that are important to change should be determined. A strategy to execute this vision should be created.
Communicate Vision - Although, their core strategy remains unchanged, the new focus should be communicated properly and send the message that would bring forth the implications of change. This vision needed to be communicated frequently and be kept in everyone's mind in the organization. Another important key is for the change team to lead by example and openly addressing the people's anxieties towards change. This vision should also be applied to all areas of operations.
Empower Others - When the employees feel that they are part of the organization, they will be empowered to achieve the vision and will be more motivated, would less likely to resist and be uncooperative. The transition will be accelerated and even dramatically contribute to achievement of goals. To do this, the structure for change should be put in place. This should be constantly checked and if obstacles get in the way, these should be removed right away. From here, the people should start feeling the benefits of what the change team has been promoting.
Easy Goals - Depa will create short-term goals and a reward system for employees who will contribute much to helping the whole organization achieve its goals. Creating short-term targets will allow the people to quickly see the results and achievements and answering doubts and negativity in the success of the change process.
More Goals - Despite the recession, Depa believes that they can take advantage of the situation and move forward with their diversification strategy. When they are beginning to see that they are successful with the current strategy, they should not stop here but continue to look for more improvements.
Embrace Culture - This is the final step in the organization's change model of management. This step will permanently put forward the new approaches brought about by change, bringing a new organizational culture. To make it stick, continuous activities and efforts from the leaders to support the change should be encouraged. Progress of the change should be communicated and new ideas should be retained not just by present employees but new employees as well.
Assess the process and models of change implementation, including the change programs carried out and issues encountered such as resources constraints and time schedules as well as overcoming resistance to change.
Steps that Depa must make to implement change
Stage 1 - Prepare for Change
This stage prepares for the change in the organization's profile, its structure, its management strategy and the change management structure.
Step 2 - Manage Change
This phase is about crating the plans to incorporate it to their business operations. Change management plans should be created including how communication is channelled, training, and management for resistance to change.
Stage 3 - Reinforce Change
This step is what the company needs to formulate plans to ensure the change is maintained throughout. Measures and tools to review, correct, recognize and to acknowledge plan results will have to be taken. This will see if the people in Depa are executing their new roles and achieving strategy.
The range of business activities performed by Depa comprises the interior contracting, which focuses on fit-outs, manufacturing, which focuses on customized furnitures and equipments, and procurement, which involves procurement of materials to support the interior contracting and manufacturing operations. The business operation is to execute project management and manufacturing expertise to combine all efforts in bringing about their product to their target market. Project goals are always to hand over on time and on budget. The whole project could be very complex using systems, technology, skills, resources and of course, management and collaboration of multi-party activities. Because of the change in the organization's structure and strategy, executing the project while implementing the changes would add pressure to the employees. They may either be so resistant or too enthusiastic to embrace the change. Proper dissemination of information regarding change is important to achieve the new goals set by management.
Depa has been struggling in a way as projects in the construction industry trend slowed down. Its management was on the go to find solutions to their problems. Most of these solutions even end up as factors to stimulate further change in one form or another. To quote some notes from a business magazine, "Take advantage of the scarce resources that are available in the difficult period to push your initiatives forward. Those resources won't be available forever. Slim down your project portfolios. Focus on the really important changes and get them completed well and quickly. Finally, press on with those difficult changes that, in the good times, are just too painful a challenge to undertake. No one likes it when their company struggles, but in the longer run the most successful organizations are those that find opportunities in any situation." (Newton,2010) Depa has indeed grabbed whatever opportunity they can to maintain their competitive edge in the industry. Difficult times have impacted the change initiatives through areas in choice of strategies, resources and attitudes.
For Depa, the change initiatives were for the organization's survival and at the same time building for the uncertain future in the construction and contracting area. Expanding to other areas at a time when recession is still present has been a very bold and risky decision for the company. No one is certain for sure that even in countries not so badly hit by the crisis would sooner or later be affected. An example is its venture in Singapore where it proved to be very successful.
Money and skilled people are needed to pursue the change. Investment and funds were smaller and the decision making on using these resources become more lengthy than usual. There would be limited choice on the use and more chances of getting at the wrong decision. Probably one may say that laying off 1,000 employees in a span of less than a year was cutting costs and helping the company to survive. But the timely decision also helped the company cut costs. Making people redundant that fast will impact the resources who will move the strategy But a big part of cutting people down its size is a relative part of the strategy. For Depa, previously, they have worked on taking too many projects at a time, employing too many staff but did not focus on making its people efficient. Perhaps, the difficult times made them realized a change is needed when it comes to this issue. Therefore, part of the strategy was to develop its employees to become more productive and pro-active. The opportunity that arose when the company was hit by the economic change made them see that they need to focus on a few things which they as a business can do well with their resources rather than expanding too fast and failing when the next difficult time comes in.
All the participants involved in the change management understands that the impact of the attitudes of employees to achieving the new strategy and tactics for change. Depa believed that to be successful in implementing change, it is not all about change in organization's design, processes, systems and tools. Although, they have placed in effect as part of the plan to educate and train their people to use a new and more efficient information management tool to become competitive during the tough times, this alone will not achieve anything if their people won't use it. Construction managers, engineers and field supervisors who are on site but need to use the system are the very first people who opposed to the training because they are on site. Change can be too complex but the essence of it is the people and their attitudes toward modifying what they can do and how they want it done. In Depa, for people who were not made redundant, they were made to maximize their time and production capabilities, it affected how fast and willing they would cooperate to the circumstances they are at. They became more tense with the job losses. Change management team may sometimes demand an unrealistic solution. This are very depressing to the people and either become an obstacle or as a motivation to keep working better to keep their jobs.
When Depa was struggling to keep more projects coming, laying off people, and changing salary structure, this created a tense atmosphere around the people. The opportunity here was that its people was made to agree on change initiatives which would have been harder to have them agreed on if it was on a calmer time. Everyone has to accept that fact and that changes had to be made and difficult decisions have to be made. To sum up, Depa saw hidden opportunities in the change affecting them and managed to come up with a strategy that was fair for all its stakeholders.