Managing Organisational Change And Affect An Organisation Business Essay
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Introduction: Today's business environment produces change in the workplace more suddenly and frequently than ever before. Mergers, acquisitions, new technology, restructuring and downsizing are all factors that contribute to a growing climate of uncertainty. Jobs, health, even marriages can be placed at risk, jeopardizing productivity and profitability. Specially in last five years many businesses has seen unpredictable changes, which have lead them to many possible worst or good outcome, like sell-out, closing down the business or cutting down the staff, low productivity etc. For some businesses changes have been positive and growth and success has been achieved. In this task one we will look at three organizations namely Santander, Pound land and Car phone warehouse.
Objectives: Main objective of the task 1 is to study the changes those have been taken place in above named three companies. Secondary study the current position of these organizations in the current market and thirdly outline the positive and negative outcomes of changes.
From: Marketing Consultant
To: Board of Directors
Subject: Changes in Last years and Outcome of those Changes
Nature of Business & Current position: The Santander Group is the fourth largest bank in the world by profits and eighth by stock market capitalization. Santander is one of the world's biggest retail and commercial bank, based in Spain, with operations in more than 40 countries. Founded in 1857, Santander had EUR 1,168 billion in managed funds at the end of 2008. Santander is the largest financial group in Spain and Latin America, with leading positions in the UK and Portugal and broad presence in Europe through its Santander Consumer Finance arm. In year 2008 Santander registered EUR 8,876 million in net attributable profit, an increase of 9% from previous year excluding capital gain. Its vision is 'to consolidate itself as a large international financial group, which provides an increasingly high return to its shareholders and meets the financial needs of its customers'. In order to achieve this, it combines strong presence in local markets with corporate policies and global capacities. To achieve its vision Santander has gone through many changes mainly mergers and acquisition.
Changes in five years: Over the five years Santander has done many mergers and acquisitions in UK. In UK before 2004 Santander group has very less presence. So in 2004 they acquired deal with Abbey. In September 2008, Santander acquired Bradford and Bingley's saving and branch network and in October 2008 they acquired Alliance and Leicester. Both acquisitions were part of their growth strategy in UK and their goal to become the best commercial bank in the UK. By doing so now Santander has more than 1000 branches all over the country for its customers and more and effective banking products to get advantage over its customers.
Positive Outcome: When an organization undergo any changes there are quite possibility of positive and negative outcome. There are so many positive out-comes for Santander in UK, which are mentioned below:
·€ Strong banking presence in UK
·€ More than 1000 branches and 4500 cash machines
·€ 25 million customer base
·€ Benefits for customer - improved products and it has created customer friendly environment in UK banking environment
·€ It has become third largest deposit taker and second largest mortgage lender in the UK.
Negative Outcome: Still now there are not many negative out-come for Santander in UK market but we can say economic condition is still improving and Santander has to go long way in UK market cause they are facing stiff competition from the banks like Barclays, Lloyds TSB, HSBC etc. As a group Santander has become very complex in size.
Nature of Business and Current position: Pound land was established in April 1990, with funds provided by the multi-million pound sale of an international wholesaling business. Pound land's retailing concepts is extremely simple: a range of more than 3000 items, each offered for sale at only £1 each - representing amazing value for money. They opened first store in Octagon Centre, Burton-upon-Trent in December 1990, followed by new stores in High street, Meadow hall and other quality trading locations. Since then Pound land has 233 stores in UK with 3500 employees. Pound land operates in a Retail Sector, where it provides tough competition to its competitors. Pound land provides all the home related products from chocolate, biscuits, major drinks like coke, Pepsi. They also provide Stationery, toys and other kitchen and bathroom related equipments. Pound lands biggest sale advantage is their price consistency across all products. While other retailers must decide upon the price of each individual product and have this clearly displayed to their customers, pound land may simply move stock onto its shelves from their warehouses, so customers know how much a product cost.
Change took place and Outcome: In last five years major change has taken place in pound land, internally and externally. When VAT was introduced, in November 2008 to 15%, Pound land's prices remained fixed at £1m, it is because they kept the price point of £1 for 18 years and during that time they have cut down on duty and suppliers cost. They said they will pass the saving on customers. Other external change was its competitors. There are not much competition for Pound land apart from small shops and 99p store ltd.
Nature of the Business and current position: The Car Phone warehouse Group was founded in 1989 by Charles Dun stone as a UK mobile phone retailer, in the following eight years, the business grew organically and opened its first branches elsewhere in Western Europe in 1996, the business supplemented this organic growth with a series of acquisition both in the UK and Western Europe and now has a portfolio of 2453 stores across nine European countries of which 2231 are owned and 222 are franchised. Car phone Warehouse provides large number of mobile pay as you go and pay monthly phones, it also provides laptop and broadband and other accessories. Over the years it has developed many contracts with mobile phone providers such as Virgin Mobile, T Mobile, 3 Mobile, O2, Vodafone, Orange etc. Car phone Warehouse believes in Wireless world and By March 2010 40 to 50 wireless stores are planned, including mix of new stores. Car phone Warehouse has enjoyed its success in last 10 years because of their sales strategy and customer service.
Changes and Outcome: In last 5 years CPW has gone through many changes one of them is Virgin Mobile France, In April 2006, Virgin Mobile France was launched as a joint venture between the Car phone Warehouse Group and Virgin Group. On 14 December 2009, Virgin Mobile France completed the acquisition of Tele 2, consolidating its position as France's largest MVNO and fourth largest mobile operator in France, with 1.7 million customers. Other changes were because of economic condition, where in last three years market growth is slow, customers has become very choosy about the product and money minded. Still the outcome is positive for the CPW, it is one of the highest mobile sellers in Europe, It has wide range of customers all across Europe, the profit margins has been gone up since 2007. The Brand itself has become very popular.
Conclusion: In last five years above companies have gone through many management or organizational changes. Organizations like Santander and Car phone Warehouse has seen many positives and negative outcomes, and small organization like Pound land has also seen market changes in current economic climate but overall its beneficial for the all the companies.
Task 2:- Bureaucratic Organizations
Introduction: Crozier (1964, p 187) suggests that "A bureaucratic organization is an organization that can not correct its behaviors by learning from its errors." Normally Bureaucratic organizations are those government agencies, where work needs be done from department to departments. But today bureaucratic organizations are really big organizations where they are very complex in size, their hierarchy is really complicated, have unhappy employees etc. In this Task 2, two bureaucratic organizations IKEA and Virgin Group will be studied; over last many years what changes have been taken place and how these big companies have handled those changes?
Objectives: In task 2, Current positioning and How bureaucratic organizations like IKEA and Virgin Group performs, their strengths and weaknesses, changes which has been taken place, how the changes has been taken place and whether they were beneficial or not will be studied.
From: Marketing Consultant
To: Board of Directors
Subject: Bureaucratic Organizations - IKEA and Virgin Group
1) IKEA (Efficiency through which IKEA run) - Over the last sixty years IKEA offers wide range of furniture to its customers. IKEA is a bureaucratic organization with offices and store in more than 25 countries. The IKEA story began in 1943 in the small village of Agunnaryd in Sweden, when founder Ingvar Kamprad was Just 17. Since then, the IKEA group has grown into a major retail experience with 123,000 co-workers in 25 countries generating annual sales of more than 21.5 billion euros. To maintain the big brand name it has also got the big work force different areas of businesses. It has 13800 people working in purchasing, distribution and wholesale range while 15000 and 94200 workers working in Swedwood and retail area respectively. It has also got very systematic distribution chain. It has 28 distribution centers and 11 customer distribution centers in 16 countries.
Impact on environment and reaction to change: Over the six decades IKEA has gone though many organizational changes like business expansion in many new markets like USA, China, and Whole Europe etc. It has also developed many different products to sustained market growth and customer satisfaction. It operates in wide range of products comprises from Living room furniture to textiles. It has also got various other sections like bedroom, kitchen and children's IKEA, which actually gives them the edge over their competitors. It has also started to operate in franchise system.
Firstly to understand the working efficiency of big organizations it is must to understand the mission statement of that organization. A mission statement may be a phrase, sentence, or document which attempts to sum up a company's corporate goals (long-term), in a way in which it may create a common purpose for all the stakeholders for the business. To date, IKEA's vision statement is: "to create a better everyday life for the many people". Whilst its business idea, as stated by the IKEA group website is 'to offer a wide range of well-designed, functional, home furnishing products at prices so low that as many people as possible can afford them'. For the employees and managers of IKEA, the mission statement aims to motivate and inspire the staff as one, in order to achieve other financial goals and aims.
Strength and Weaknesses
IKEA's strength is given below:
·€ A strong global brand
·€ A clear vision
·€ Strong concept
·€ Democratic design (the equal balance of function, quality, design and price)
IKEA's weaknesses are given below:
·€ The size and scale of its business
·€ The demand for low-cost products
·€ The need to keep the public and IKEA stakeholders well informed about its environmental activities.
·€ Cultural change
The first weakness for a bureaucratic organization is the size and scale of its business. IKEA is a large organization, so it is difficult to maintain and keep track of its global activities and it will make difficult to handle its operations. As IKEA is offering low cost, good quality furniture to its customers it is really difficult to maintain low cost against quality.
2) Virgin Group (Efficiency through which it operates): Virgin is a leading branded venture capital organization and is one of the world's most recognized and respected brands. Conceived in 1970 by Sir Richard Branson, the Virgin Group has gone on to grow very successful businesses in sectors ranging from mobile telephone to transportation, travel, financial services, media, music and fitness. As a group Virgin has created more than 300 branded companies worldwide, employing approximately 50,000 people, in 30 countries. It has its revenues in 2009 exceeded £11.5 billion. Virgin believes in making a difference. Virgin stands for value for money, quality, innovation, fun and a sense of competitive challenge.
Impact on their environment: Virgin has always considered themselves to be a responsible business, and whilst taking environmental and social pressures of world. Virgin's mission statement which can be seen in their growth is "Looked for new, innovative ways to do business by offering consumers another way, a better way, and by being willing to fight their corner". In starting years whenever Virgin has started its new business, it had gone through really tough time but effective strategic management it has grown from one Office Company to group. One of the single most influence behind the company success is its founder Sir Richard Branson, his strategic decisions, long vision, forward thinking and risk taking ability had enable virgin to achieve the height of success they are enjoying now.
How they react to changes: Virgin has very straight forward working pattern, their hierarchy is really simple, and they operate their businesses around their customer needs. When Virgin opened Virgin Atlantic they had very stiff competition from British Airways and other American airline companies. It had also seen very stiff competition in music industry. The strategy virgin has adopted over the year is known as strategy of unrelated diversification - entering in to the new market. In Virgin Control was distributed in to the different divisions to gain effective organization.
Virgin Strength and Weaknesses
a. Price: Price is the main factor in Virgin's success as a group, Virgin has always try to provide quality and good customer service at lower price or if they charge high for any product they keep their promises for their products
b. Brand: As mentioned above Sir Richard Brandson is the big brand by himself and he had put lots of efforts to develop Virgin brand from jumping from the roof of American building to balloon flight across the Atlantic.
c. Customer Service: As Virgin is operating in many industry and different products, customer service is the main strength of Virgin, as they tends to give all products under one roof service options to its customer.
d. Democratic Design: As mentioned earlier Virgin has very simple operating structure, so it helps in quick decision making. And its avoid miscommunication.
Weaknesses: Every big organization has one big weakness; it is their size so it is very difficult to maintain the balance between different departments. Secondly so many products, which virgin offers are bound to create misunderstanding among its customers. Thirdly the cultural change is the another weakness in the case of Virgin as its operates businesses in so many countries and it has 50000 employees over many countries, Virgin has to manage right culture mix approach, if they fail to do so, it will lead them to big problem in future.
Conclusion: Bureaucratic organizations are really complicated and there were many changes in IKEA and Virgin Group, but they have good hierarchy and management in place to handle those changes. They have enjoyed good current positioning in the market. Specially, because of current economic meltdown Virgin Airlines did go through tough time but as it got support from other virgin group companies, Virgin Airlines survive in the market. So these are the strengths and weaknesses of IKEA and Virgin Group companies.
Introduction: "It is not the strongest of the species that survives, or the most intelligent that survives, it is the most adaptable to change" Charles Darwn (1809-1882). Major organizational change should be avoided at all cost; it sucks up time, energy and emotion, distracts your main purpose, disrupts operations, annoys your people, undermines morale and rarely delivers the promised benefits. And if organization can adopt the change very quickly and efficiently they can surely taste the growth in near future. In Task 3, comparison between two organizations one from task 1 and one from task two will be given.
Objectives: Objectives of task three:
Understanding of Fordism concept
Learn New and Better Methods of Managements
Comparison between two organizations.
From: Marketing Consultant
To: Board of Directors
Subject: Fordism concept and new management techniques with comparison
Fordism Concept and Importance: Frodism, named after Henry Ford, refers to various social theories about production and related socio-economic phenomena. Berman (1982, p21) suggest that "The essential meaning is that the worker must be paid higher wages in order to afford the products that the industrialist himself produces, causing an economy that runs full circle. " Fordism was specifically modern modes of organizing labour which immediately suggest that this is all it was. Fordism concept, that is valuable for any organization because of its meaningful characteristics. Higher productivity is the main philosophy of manufacturing by doing standardizing the output, using conveyor assembly lines and breaking work into small de-skilled tasks. Taylorism seeks machine and worker efficiency, while fordism seeks to combine them as one unit.
Now there is comparison between two organizations each one from task 1 and task 2.
Organizational Development: According to Cummings and Worley Organizational development are both a professional field of social action and an area of scientific inquiry. The OD Covers wide spectrum of activities with seemingly endless variations upon them. Organization development refers to a long range effort to improve an organization's problem solving capabilities and its ability to cope with changes in its external environment with the help of external or internal behavioral scientist consultants, of change agents, as they are sometimes called. Globalization, cultural change, system change and employee play an important role in organizational development. Apart from internal stakeholders and systems, external stakeholders like customers, shareholders and suppliers also play an important role in OD. Below we will discuss the comparison between two organizations and its development.
Comparison between IKEA and Santander: As we have seen in the case of IKEA, it is a big organization with many offices and stores across the world. They need to go through changes very frequently compare to Santander which is banking sector company. During the change process people, structure, size, leadership, strategies etc. are most important factors which need to be taken care of by organization. While doing change organizations must consult their employee and let them know in advance the future changes those are going to be happening in the organization. So they are ready to accept the changes. While any organizations main assets are its products and people. Stakeholders also play an important role in management change or organizational change. Now a day's people have become more net savvy and they do most of the shopping on line or even they can book their holidays online. So internet has become fastest way of medium to serve the clients in fastest way. While every organization is investing millions of dollars or pounds in creating e shop for their customers they are also investing lots of money to train their employee and to help them to improve their skills and techniques to use improved system. There are so many factors which play important part in organizational development and change: direction, purposeful leadership, alignment of purpose and value and porter's five forces.
Operations are in the bank are very wide, from customer services to back office operations and to do the work efficiently, most of the banks used electronic equipment and system to cope with the future demands. For an example as we have seen Santander is a one of the big bank in Europe and to manage their operations they are spending lots of money in banking system and website development. When a customer wants to open bank account they physically need not to go in to the bank, they can just click few buttons on their computer and they will be able to open bank account, they can transfer funds between their accounts, even they can pay their bills online as well. So this way Santander is enjoying luxury of reaching the people indirectly through its website. While other banking system they use for their employees is internal system where they can store each and every data of every customer transaction. To use the system they need to train their employee how to use the system etc. Multinational companies needs to also look after cultural changes in their respective offices. As a bank it has merged with many other financial institutions in other countries. So merger is also one the better organizational management methods.
While as a bureaucratic organization IKEA is more sensitive towards the changes, they need to face many changes all the time cause every time they need to develop new products, develop new markets etc. Cultural change is the major issue in the bureaucratic organization compare to domestic organization or small organization. Because they are producing furniture and when they do so they need look after its customers' needs and believes while making so. Organizational changes are also depends on competition of the particular industry. As in the furniture industry, there tends to be major changes every year and competition is likely to be very high and to survive in the industry employee management, efficient leadership, System changes, Cultural changes etc. are really important.
Conclusion: At the end of the day all organization runs its business to give excellent customer service to its customer and end motto is to earn profit and stabilization in current economic climate. As we have seen in above comparison, customer service is the main factor all organizations work for and they are ready to go through all the changes to achieve its goal. System change, culture change, people change are the main changes which are occur very often.
Introduction: In task 4 we will see various change models available for organization and comparison between conventional sales and internet sales. There are total six change management models available for its businesses. And businesses can use it to adopt the changes.
Objectives: In task 4 main objectives will be: Study various change models, Comparison between conventional sales and internet sales, presentation.
From: Marketing Consultant
To: Board of Directors
Subject: Change management Models
Change management Models:
MODEL 1: 4-D, Desire, Dream, Discovery, Deliver
MODEL 2: Lewis's theory of change, now a day there is hardly any organization which has not affected with change yet, as he argued that there are 3 different stages of change which can change the whole structure of any organization.
MODEL 3: John Katter's Change Model,
establish a sense
Develop a of urgency coalition clear vision
Share the people to vision clear obstacles
Consolidate and 8. Secure short- change keep moving term wins
MODEL 5: Better future for all Analyze Understand needs, processes & structures and foresee resistance Cyclical Process Framework (CFAN) Change at Team & Change at Individual Levels System Level Nurture Establish a framework that sustains Monitor & the change Communicate Make the change Goals visible to all Exploring and creating meaning Coach and Mentor Help individuals to master change Review Design new structures, processes Facilities etc.
MODEL 6: Mckinley's 7-S Model: that includes
Shared value, Strategy, Structure, Systems,
Style, Staff, Skills
Internet sale and Conventional Sale: In current market conventional sale has been taken over by internet sale. Most of the organizations have started their online sale activities through their websites. Internet has offered an exceptional platform for marketers to promote their products and services. The multiple benefits have made internet sale more productive tool as compare to traditional sale and sales methods. Because of the change in sale environment lots of organizations have gone through many changes, changes like system, employee behavior, hierarchy etc. Many well established organizations are spending millions of pounds for their internet activities. Compare to traditional sale and sales techniques, online or internet sale has many benefits. It has proven to be an effective platform from which almost every company is benefiting and it is supporting them to strengthen their relationship with their globally dispersed consumers.
Benefits and Challenges:
Internet sale has so many advantages: it is quick, easy, and cheaper and it's even beneficial for smaller organizations. Though there are many benefits still there are some challenges with internet sale, Challenges like:
·€ Very fast advancement means people have to really spend a lot of time researching and keeping up to date with the latest trends and methods.
·€ Sometimes the data can be misleading.
While Conventional Sale costly technique compare to internet sale, Conventional marketing is not quick. There are many stages through which sales have been made. It's a customer facing role where employees are elected to do sales activities. Plus transportation is the main disadvantage in conventional sales. Because in conventional sale goods need to be transported from ware house to different stores while in online sales goods can be directly reached to its customers.
Pound-land and IKEA: IKEA has gone through many changes in recent time, mainly in their sales activities. They have many different stores across the world, still they do online sales. They provide all the product information online which allows their customers to check the product online and if customers want to buy it they can buy it online as well. It allows IKEA to save the time, cost and transportation expenses. While Pound-land still doing conventional sales, their products are very cheap and wide range of products still they haven't started any major online activities. They have developed their websites but they are not in to online marketing and sales process. When implementing changes now a day's internet plays an important role, it also creates job opportunities.
In a conclusion it is clear that in every organization there is need of a change and it is very beneficial for any organization to have a change in the company or organization as it is above mentioned that there are more models of change , but again its depends on the situation that how we can get this change being in mind the current position of the company, as there are lots of change going in IKEA and best change model for them is the Mckinley's 7-s Model cause it covers most of the stock holders and customer values. For Pound land as it has not started its online activities, 4 D model is suitable for them as they have to dream and desire about reaching more customers through various ways.
Change Management: Change management entails thoughtful planning and sensitive implementation, and above all consultation with, and involvement of, the people affected by the changes. The only person who likes Change is a wet baby! A wet baby is aware of the imperfections of its current situation and will cry and scream until a Change is brought about. This analogy is a simple one, but it does contain a core of truth. If your Target audience is dissatisfied with their Status Quo, they will be willing to Change to something-else. Resistance isn't an indication that something is wrong with what you are trying to change. It is an indication that something is happening. It is a good sign. Another aspect is culture. Culture changes will e a bigger project than the original change. There are three options: change the change, change the culture or prepare to fail.
What is their Vision of the Future?
Where would they like to be in 1 year, 5 years? Can they define what they would like their future Status Quo to look like? The better they can define it, the more detail they can describe, the more tangible it becomes.
What can they do to achieve it?
How can they become involved in their vision? What can they do to move towards it? Surprisingly enough, they have answers to these questions. And those answers can become a plan of action... if we let them.
What commitment will they invest?
Change is never easy... What will they contribute to get to the future they've described? If the answer to the question "What's in it for me?" is satisfactory to them... they'll be willing to contribute more than we expect.
What do they need from you?
Staff needs management support. This is what is meant by the phrase 'Top down Support' and it is crucial to successful Change. IF top management does NOT believe in the Change, then it becomes very difficult to achieve... not impossible, just needlessly difficult. Before going to the troops with a Change, make sure the political battles in the upper ranks have been resolved.
When will their 'Transition Plan' be ready?
Set a date for the completion of the Change. Nothing happens without a deadline. Deadlines, especially deadlines offered voluntarily, with eyes open, become a commitment.
What will NOT Change?
Very important People need to know what parts of the old Status Quo will remain. Even if it is only small things which will remain constant, don't underestimate their value.
At pound land system implementation is easy compare to bureaucratic organization like IKEA. Cause in bureaucratic organization, employee's have less trust in the organization. Trust plays an important role in change management. Secondly strong top management involvement required while doing changes or going through changes. Motivation factor plays an important role in processes; every one needs to be motivated while implementing changes.
Task 6: When going through different processes of change management it is must to involve all stakeholders because they are the back bone of organization. When implementing new system in to any organization it is really important to involve all stakeholders of the organizations. Stake holders include various people and partner. Few of them have been mentioned below:
Customers: Customers are the main stakeholders of any organization; they are the front side people who are going to use service or product of any organization.
Employees: After customer Employees are also important stakeholders for any organization. When any organization going through any changes it is must to keep informing employees because eventually they are the people whom change will affect the most.
Management: Management plays an important role in change processes. They are the people who decide what change will take the company to another level, or what will help to improve organizational performance.
Other Interested Parties: Other interested Parties also play an important role in change management like government, media, NGO etc. in the case of job loss, environmental issues.
Small organizations like pound land and phone 4 u doesn't go through many changes cause their vision is wider while big organizations like Santander, IKEA and Virgin group go through changes very frequently or if we will say change management process is constant in big organization than the statement wont be false. When IKEA going through its changes like opening store in UK and other countries they involved its stakeholders in to the process and they are one of the successful bureaucratic organizations as on date.
Conclusion: Because of the globalization many companies are going international, and that is why all the organizations are going through some changes or expected some changes. While doing change stakeholders plays an unavoidable role in process. Basically organization been formed by its people so indirectly its people who is going to be affect a most. So while doing change management process it is must to keep stakeholders involve in each and every process and for that clear communication skill requires.
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