The organization I choose to study Managing Strategy is Anheuser-Busch in U S A. It is ranked no 1 among beer companies and no 2 among beverage companies in fortune magazine "world's most admired companies list" for 2010 (www.anheuser-busch.com).ARHEUSER-BUSCH (AB) is the biggest brewer not only in AMERICA but also globally. It has 14 brands and covers almost 45% market share of beer sales throughout the AMERICA.US beer market relies upon it. AB's with one of its flagship brand named BUDWEISER is the number one selling brand in US with 21.8% market share.
BACK GROUND OF THE ORGANIZATION .
In mid -1860 a German immigrant named its brewing company Bavarian brewery in ST .LOUIS, USA. In 1879 Busch's brewery merged with another brewery and changed its name to Anheuser -Busch with brand BUDWEISER had a dominant 44% of US market share in 1994.The brand however faced decline in its market share. It had grown so strong that it went institutionalized, established and difficult to move (GIBSON, R and M, CHARLIER, 1994) Mentioned that"the traditional surroundings of BUDWEISER was that it might be taken as (dad's beer) by youngsters" so change was getting essential.
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(Anheuser-Busch annual report.1994) at (www.ab-inbev.com/)
WHAT CHANGE WAS BROUGHT ?(REPOSITIONING AND GLOBALIZATION OF BRAND) .
It was suggested that the brand image needs repositioning and refreshing. Some commentators suggested that the brand positioning was no longer appropriate to its target markets .It seemed to have become victim of its own success. It was considered that if young people think BUDWEISER as a choice and taste of older generation or parents preference, than young may be less attractive to them, so was repositioning adopted and it has brought significant result as AB now has sales in 65 countries .It was assumed that brewing industry would remain only dominated in regional or national brewing companies but the idea discarded with international experience for "globalization". It was proved that beer has international potential .AB started making crucial efforts to build global beer brand out of BUDWISER
(ANHEUSER-BUSCH public relations materials, July, 1995)
OVER -STEPPING MARKETS OF COMPETITORS (BUDVAR)
BUDVAR (competitor) was the brewer that was also given the right for using the brand name (Budweiser) like AB but AB felt that the right was misused and Budvar was over stepping its bounds in AB's home market. Other beers were associated by AB'S products by public because of confusion of brand name used by two brewing companies.
CUSTOMERS CONFUSION OF OTHER BEERS WITH AB'S.
Customers were confused for which beer was the product of which company. Since Budvar was exporting its beer in US by same name .Brand name was unfairly used by Budvar that AB had built agreement with Budvar was done with intention of blocking their access to North America. So was Bud name with any beer were surrendered to AB's. The area where Budweiser was manufactured would also not be used so Budver agreed upon .AB paid them 50000$.
GOLDEN OPPORTUNITY TO BE AVAILED IN ENVIORNMENT
AB saw it as a golden opportunity to settle brand issues with BUDVAR specially when in 1991 CZECH industries got under privatization .Both agreed to resolve brand issue .After purchasing the stalk in BUDVAR .AB ended up ideally to use this factor as the mainstream of change supposed to occur soon.
FOCUS OF FAST GROWING BEER MARKETS INTERNTAIONALLY.
AB'S has focused or have forecasted the international exposure of its brands into growing beer markets of developing worlds. It did not put EUROPE on the back burner .IT is selling its beer in Russia by name of BUD. Different brand names and the similarity in identity and positioning strategy were adopted by BUDWEISER.This refreshing and repositioning as brand for every one may encounter the needs and wants of the target market it describes as its core.
BUILDING THE GLOBAL BRAND DUE TO CONCENTRATION OF MARKET.
The factor that drove AB to globalize its brand was partly influenced by competition .The US market was getting saturated. AB was the market leader at that time but gaining more benefit was getting harder so expanding the market internationally was the key factor that urged the AB to be internationally known.
WHAT ARE BUREAUCRATIC ORGANIZATIONS,
Always on Time
Marked to Standard
Bureau is a French word meaning desk, an office or extension. It is a rule through office or desk .Organizations with bureaucratic structures are based on key features of authority to publish rules and codes of practises for all employees .Rules, decisions and actions are controlled by top most executives and each level in hierarchy is controlled by level above it. Responsibilities are clearly delineated and job holders have no right in decision making. Each level has its own sphere of competence .It prevents learning from own errors. Although many definitions are given but all bureaucratic organizations run upon controlled management and strict decision making
(THE IDEAL BURUCREACY, MAX WEBER, 1864-1920)
(MAX WEBER AND BURUCREACY)
STRENGTH OF ORGANIZATIONS
The effectiveness of bureaucratic organization is because of its controlled activities .Top management is primarily concerned with monitoring the activities .Activities are not derailed and are in proper routine and alignment .Procedures are done under strict supervision that lessen the chances of mismanagement.
STANDARD OF WORK AND PROCEDURES.
The controlled activities of these organizations help them maintaining their standard of work .Procedures are followed timely and in specified manner .No disruption of activities are allowed. Standard of method is given importance .Priorities are allocated and negligence and lack of responsibilities of employees can be subjected to demerit or demotions of employees.
CLEAR AND EASY TO FOLLOW RULES AND REGULATIONS.
Rules and regulations in bureaucratic organizations are predefined and less obvious to be amended .These rules and procedures are fixed and clear and employees are directed to act upon them and follow them properly.
WELL DEFINED CHANNEL OF COMMUNICATION BETWEEN ORGANIZATIONAL LEVELS.
Employees are explained directly about whom they are authorized to approach .The channel of communication is also predefined and employees are acknowledged about their communicational pattern and paths .Each subordinates is familiar with concerned employees they have access to or can easily approach.
CENTRALIZATION OF WORK.
Bureaucratic organization exercise centralization that helps them in monitoring and controlling all the activities effectively .All the decisions made and implemented by them are time to time monitored and it is assured that work is being done as per their expectations of results, mismanagement, conflict, irresponsibility, misconduct or negligence of employees can be easily identified.
SUCCESS OF TOP MANAGMENT DECISION -MAKING.
Bureaucratic organizations are successful because all of its decisions are made and implemented by its top experienced management .Those decisions are taken wisely and all aspects of decisions are looked properly so that chances of errors or risks could be reduced
WEAKNESSES OF ORGANIZATION
LACK OF OPPORTUNITY FOR INNOVATION AND NEW IDEAS.
Organizations are strictly bounded in decision making .Decision is the prime concern of top management that does not give an opportunity to employees for creativity and implementation of their new and unique ideas .These organizations lack creation .Innovative procedures are not given importance rather organization itself comes as an obstacle in its own way of growth in terms of innovation .Employees cannot take initiatives at their own .innovation is almost eliminated from the bureaucratic organizations.
SLOW DECISION MAKING PROCESS.
Bureaucratic organizations are very reluctant in making decisions in time .Decisions of top management are very time consuming .Top management wants to take less risks so decisions are made delayed .Late decisions if implemented might bring disadvantage to the organizations .
FIXED PROCEDURES AND METHODS.
Top management confines the authorities with themselves and organization runs on same patterns and techniques .If any of change in any aspect of organization is required the decision is finally taken with the consent and acceptance of top management.
DEMOTIVATION OF EMPLOYEES .
Less participation of employees in any of organizational decisions or procedures demotivates them. They feel less participative and importance of their roles. Less involvement of employees in organization can hinder their capacities and can create an atmosphere of uncertainty and least confidence .Employees feel hesitant to take any initiative or decision at their own.
MINIMAL CREATIVITY UTILIZATION OF HR DEPARTMENT IN BUREAUCRATIC ORGANIZATIONS.
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Human resource department of bureaucratic organizations finds it very difficult and rigid to get involved in utilization of human resource for creativity and growth activities .The developmental plans designed by HR may not be appreciated or entertained by the management .Optimal benefit and output in terms of development of HR serve to be the most highlighted disadvantage or weakness of bureaucratic organizations.
LESS ATTRACTIVENESS OF JOB FOR EMPLOYEES.
Employees feel the routine activities and jobs very boring .They find it unattractive and less interesting because they are doing their jobs like machines .Work place and procedures are strict, less flexible and boring for employees so they feel less attached to the organization and keeps on working without interest.
EXTRA COMMUNICATIONAL LEVELS.
Sometimes bureaucratic organization take extra communication into account .Employees are directed to communicate to many of managerial levels at one time .Communicational channels are broadened to that extent which distorts the true meaning of the issue communicated ..
EXCESSIVE HIERARCHICAL LEVELS IN ORGANIZATION.
The bureaucratic organizations has so many levels .The structure is very complex and tall .The more complex it is the more rigid it gets with number of managerial and communicational level .The employees are accountable for minor mistakes and answerable to many of managerial levels..
Organization TOOK INTO ACCOUNT THE PROCESS OF OD.
The AB'S approach towards their organizational development was derived through consistent efforts and considerations. The practise of their strategy was to bring change in a way that it could benefit organization's development. The change was not brought at once .The interventions and innovations brought were fully taken into account of organizational development. The development was brought into following way as,
MANAGEMENT'S PERCEPTION OF PROBLEM,
The management was unaware of the need of change management could not predict the market saturation. The problem was perceived by external consultants and management was told about change that has to be implemented .As soon as the change's need was identified it created an urge in them to adopt change .
CONSULTATION WITH BEHAVIOURAL SCIENCE CONSULTANT,
Change was a new step ahead in market so it had behavioural effects. Employees and managers were taken into confidence and detailed effect of change was analysed by external consultants.
DATA GATHERING AND PRILIMINARY DIAGNOSIS BY CONSULTANT,
As soon as consultants knew the saturation of market, they started identifying the areas where need was required. Data was collected by spreading questionnaires and survey was conducted by employees to analyze customers' attitude towards change. This data was further used in decision making by management.
FEED-BACK TO KEY CLIENT OR GROUP,
Customers were the key client. Through media campaigns they were told about the future change which got good feedback and the process of change actually started up share holders and other groups with effect in change process were given the reason for why was change crucial.
JOINT AGREEMENT OF THE PROBLEM,
The brand repositioning and its globalization and saturation of market was considered seriously and brand conflict was sorted out by an agreement and purchasing a stake in competitor (budvar) business. This brought both the companies the mutual benefit of using the brand name with their products.
JOINT ACTION PLANS,
Both AB and Budvar were willing to use the famous brand name with prefix (bud) .AB and Budvar had some conflicts over brand issue which were resolved later but both these companies were joined under one umbrella to use the same brand name in their markets.
Joint actions and agreement on buying a stake in Budvar business was the initiative that was taken by AB to implement the real change. Implementing the plans and change strategies
REINFORCEMENT AND ASSESSMENT OF THE CHANGE.
The change was necessary so company adopted it for its survival. At first few strategies went waste so change was updated and more and better strategies were adopted, the change was assessed at each step with all its pros and cons and thus it was implemented effectively.
MAJOR STAKE HOLDERS.
The company on its own was not able to adopt change by its self without considering its major internal or external stake holders' .The change was brought with consent of all of its stake holders.
FULL-SCALE PUBLIC RELATION COMPAIGN.(CUSTOMER-ORIENTED).
AB recognized that this change proposal would be doubted by public (customers) in early 1993 as per GUYON, J (1993), AB started a massive public relation campaign explaining why they wanted to buy a stake in BUDVAR .It took full pages advertisement in several national daily newspapers .Intentions for distinctive quality of beer and centuries-old traditions were promised to be maintained.
HOW WAS GOVERNMENT SATISFIED?
AB spent over a million dollars to build the 'St Louis cultural centre' in CESKE BUDEJOVICE. This centre offered language, library and sponsors events .Although it made its effort but government wanted it to follow the normal procedure of privatization procedure and then the government was satisfied that a stake in Budvar should be sold to a foreign investor .Indecision was endured till 1995. It finally offered 10 years agreement worth $76 million with down payment of 20 million dollar on future purchase of BUDVAR by AB.
HOW WERE SHARE HOLDERS SATISFIED.
The trade mark issue was the major element in the process of change that has to be taken in consideration. The brand repositioning seemed more appropriate for this target group .Their positioning in US and in INTERNATIONAL MARKETS were done with the satisfaction of their share holders .Mass market with huge profits and trade mark brand removed the obstacles from the path of change and share holders stated intent of change to develop a global beer brand.(BOLAND,V(1996)
HOW WERE FINANCE PROVIDERS SATISFIED?
When exports of competitor went to west EUROPE, AB was not threatened by them so the constraints and obstacles in path of repositioning were completely gone out. Finance providers were convinced to fund for international expansion due to saturation of market in the home town and to gain more return on investments. New markets got attraction for financers and financers paid one million dollar to CZECHOSLOVAK government for the EUROPEAN rights to the BUDWEISER trademark. (MASEK,I.(1993).
HOW WERE EMPLOYEES AND MANAGERS SATISFIED?
These were the key players in the change going to be happened .Management started up involving the employees into the phases of change .Strategies were designed in a way that could not harm personal interests of employees .No downsizing or re -allocation of employees was brought .They were acknowledged with the current situation and market saturation and were told that to penetrate and grow further it was necessary to globalize and reposition their brand and beers.
OVERALL ANHEUSER-BUSCH .
Change brought luck to the organization and company expanded globally within years. The change was adopted effectively but it had few areas that were lacking.
DRAW BACK OF OVER ALL PROCESS.
It took many years to adopt change.
Penetration in home- market was not fully saturated as the company assumed.
Innovation was given less importance that could create a new demand in same market.
Company had advantage as other competitors dramatically lost their brand shares.
Brand refreshing and repositioning was the idea given from external agency.
The brand was established so strong in its own market that made it hard to move from its origin to other markets.
Beer market faced decline so the company remained static and forecasted no change prior.
Change was considered situational not strategic and gradual.
A lot of resources were wasted in acquiring equity stakes in micro brewers that constituted only 4.6% of market.
In home market Budweiser was a working man's beer but in international market it was positioned as a premium product with premium price.
Change was seriously constrained by trade mark disputes.
The sale of brand with trade mark conflicts created confusions for its customers.
Winning law suits against BUDVAR took many of years and finances.
Although the change was successful, still others are doing more good in many countries.
Forecast of global beer potential was lacking.
Resolution with BUDVAR for brand issues took many years because of company's negligence.
BUDVAR was a minor stake in market but it had cost time and expense and hindered AB'S expansion strategies.
AB was unable to design an appropriate marketing strategy of repositioning its brands .It was mere a sequential and accidental change.
There were number of obstacles in the path of change that needed urgency of solution but took longer.
SUGGESTIONS FOR HOW COULD AB DO MORE BETTER IN PROCESS
It required letting its international presence be felt all around.
The change had to be felt and initiated earlier.
Strategic aspects of overall change had to be analyzed properly.
Other competitors started expansions of their businesses in early twentieth century so it must also had to do beyond.
Global beer potential had to be identified earlier.
Restricted access to some of European markets demanded unified market strategies.
The earlier invest in BUDVAR could resolve the conflict earlier and A-B could expand more fast.
Freely pursuing of brand would enable company to launch product all around.
IN ANY ORGANIZATION I WOULD BE WORKING AS A MANAGER.WHICH MODEL Would I ADOPT AND WHY;
If I get an opportunity for being deployed as a manager in XYZ company which is beaurucratic in its structure I would focus to bring a change from its centralized structure in to decentralized knowledge -based organization.
WHY THIS CHANGE WOULD BE ESSENTIAL TO ME AND MY ORGANIZATION, (From beaurucratic to knowledge organization).
NEVER DOUBT THAT A SMALL GROUP OF THOUGHTFUL, COMMITTED CITIZENS CAN CHANGE THE WORLD.INDEED IT IS THE ONLY THING THAT EVER HAS. (MARGARET MEAD)
There's a common mistake a lot of businesses make .They own the idea, and they have the passion to pursue it. But they can't possibly posses all the skills needed to make the idea actually happen .Reluctant to delegate ,they surround themselves with faithful aides .They're afraid to bring in true, smart, successful individuals as high-level managers.(Schultz and yang.1997)
Despite the effectiveness of bearucreatic organization, it exercises less creativity and involvement of employees .The routine and boring tasks are required to be transformed into innovative .change would be essential as it will cover,
INTEGRATION OF EXPERIENCE.
I would appreciate employees to share their knowledge, experiences .Relevant and understandable ideas would be formulated by integrating the knowledge. Employees would attempt to assess existing problems and would search for their solutions .Faults and lacking aspects in departments would be highlighted and employees would be given an opportunity to express their ideas.
LEARNING THROUGH THE KNOWLEDGE.
Acquiring knowledge through beaurucratic organization is very limited that I want to transform .The rigidity in beaurucratic organizations is what I want to discourage .The recent era is of mutual integration of employees and organization .Good and innovative ideas can be appreciated by any level employees. The slow decision making process of organization would I wish to change.
DECENTRALIZED TO CENTRALIZED ORGANIZATION .
As a manager I would try to make top managers realise the importance of participation of employees and collective decision making .The authority of decision making if transferred to lower levels would create an environment of mutual cooperation and development of organization.
THE MODEL I WOULD ADAPT FOR APPLYING THE CHANGE.
Out of planned approach I would prefer to utilize (The phase of planned change model).
This model will help me in bringing change in four stage
1; EXPLORATION ,
I would let the top management realize the importance of decentralization .I would try my level best to aware them the need of change .The benefits and outcome of result would be highlighted and management would be able to explore the need of change .This change would only require human resource .The management can find it more feasible and an opportunity would be given for exercising this change.
The organization if starts realizing the need of change, the information would be gathered for identifying the weak points in management and decision making .Diagnosis of problem for designing objectives and outcome of change would be planned .Actions will be taken and activities would be designed for decentralized initiatives.
3. ACTION PHASE.
The planned processes like discussions, brain storming, seminars, formal and informal group debates would be transformed from paper work into practical actions .These actions would actually change the centralization state into decentralization. The process of change would be controlled, managed and arranged .it would be timely evaluated to ensure top management the benefit of this change .Feedback would be received for reviewing change.
As soon as the decentralization would be started, its successful implementation would be checked by feedback from employees and management .This information would then be integrated and reward system would also be granted for participants in process of change .Employees would also be trained to monitor further changes and improving performances.
ADVANTAGES OF APPLYING THIS MODEL OF CHANGE.
1. The model is systematic and does not require freezing the work.
2. It passes through proper stages of change.
3. All efforts are organized and monitored effectively.
4. It will appreciate creativity and innovation.
5. Participation of employees would create environment of belongingness.
6. Rewards and appraisals would encourage employees.
7. Change itself would be a learning session.
8. Responsibilities of employees will be broadened and employees could practise more responsibilities.
9. All information gathered from feedback would be used for future changes.
10. There would be less reliance upon externals consultants or top management.
11. Training and monitoring would implement changes.
12. Current position of organization would smoothly be shifted to desired changed level without financial costs.
HOW I WOULD IMPLEMENT THE PROCESS TO MAKE SURE IT WILL BRING SUCCESS FOR MY ORGANIZATION.
(A moment's insight is sometimes worth a life's experience)W, OLIVER HOLMES (1809-94)
Change is the most constant process that has to be adopted somehow .Change is crucial in today's dynamic world .Organizations with dynamic and accurate forecasts are getting best results of changes adopted. The importance of change cannot be denied. (http://www.ispim.org)
RESISTANCE OF CHANGE THAT I WANT TO ADOPT.
The top management would find this change as an interruption in their decision making. They might feel it against their authorities or can hesitate for transfer of their power. This change can also create a resistance in employees to hesitate as they are used to the older ways where they work as machines. Change in beaurucratic organizations is very difficult but examples are seen where beaurucratic organization has changed into learned and knowledge organizations..
HOW TO OVER COME RESISTANCE OF CHANGE AND BRING SUCCESSFUL CHANGE.
Change can be brought as
1. Top management will be assured of change benefits.
2. Exceeding formal older ways into new creative techniques.
3. Transforming new ideas into new tasks.
4. Human resource would be utilized in its best possible way.
5. Intelligence, professional and developmental career of employees would be ensured.
6. Capturing the weak areas and by approaching well experienced staff.
7. Examples of other organization seeking change successfully can be quoted.
8. Good communicational and interpersonal skill can convince all stakeholders of organization to adopt change.
9. Knowledge, learning and growth of organizations adopting change is given the top most priority in change process.
10. People are the best resource that can be utilized in the process of change.
11. Intellectual knowledge can further assist in future change the organization would face in dynamic world.
12. Appreciations of knowledge can be an important factor for organization.
13. Competitive advantage of knowledge based organization is higher than other organizations.
14. Real working is taking place inside the minds of employees so they can be best utilized in process of change.
FACTORS TO IMPRESS.
IDENTIFYING THE CRITICAL SUCCESS FACTORS.
It is very difficult to identify the critical success factors. These factors are often the hard ways to go along or to look deep inside their effects and consequences.
COPING WITH DYNAMIC GLOBAL ENVIORNMENT .
Change is crucial for every business' existence .Companies must realise the importance of change and so would I give importance to this factor .Today's dynamic world is moving fast towards change in creativity and ideas of their products and services .No company can survive alone so if environment is changing we have to follow the same pattern.
INNOVATION CATCHES ON PROFIT,
It's a common practise now that companies with innovation and creativity gathers more profit and high competitive advantage .To gain more market shares it is required to be innovative and give creative products.
REVOLUTIONARY CHANGE IN EXTERNAL ENVIRONMENT,
Change is essential .If we deny its importance, it does not mean that change is useless. If change is brought with best strategies the companies can rule the world and can easily leave others behind.
WHAT DOES IT TAKE TO WIN?
To move ahead and win the position in market ,it is essential to take initiatives to day that could yield profits tomorrow, so change must be taken into consideration now .If surroundings are changing one must not delay to change.
AT THE END OF DAY ITS CHANGE THAT COUNTS.
Companies that offer changes gradually and bring new technologies and products or adapt timely in changing environment gain most. It is change that counts a lot .It gives differential benefit and competitive advantage over others.
LADY LUCK COMES TO THE WELL CONNECTED.
Change is like a lady luck that comes to companies once .If the opportunity is not availed ,it has worst consequences .If change is not considered in time ,the benefits that others reap would be their lost .So it must be valued and change must be appreciated .Companies must be adaptive and flexible and must contain margin of transforming.
SEEKING COMPETITIVE ADVANTAGE,
The change would give my company a competitive advantage over others, the world today is of change so we need to adapt these changes also.
TRENDS HAVE POWERFUL EFFECTS ON DEMAND,
As the demands of consumers are changing so the businesses are .Businesses are running on consumers so changing trends can overall change the companies.
REACHING NEW TARGET MARKET,
Change like globalization and repositioning or reaching niche markets can be profitable and it can be taken into account of profitability and targeting new and fresh markets.
SPARKILNG RESULTS OF CHANGE.
If change is taken positively and strategies are defined properly, the results are tremendous .Change is always a good way out of old and obsolete techniques.
GETTING OUT OF STAGNANT TECHNIQUES .
Change provides an alternative for leaving stagnant techniques and feeling fresh and breathing in new air. A change itself is motivational and open new vistas and new worlds.