Organizational Change In Country Road Business Essay


1.0 Introduction

Australia Country Road Company which was established in 1974 and started with women's shirting business soon became now Australia's first lifestyle brand, renowned for simply stylish, high-quality apparel, accessories and home wares. During 1987-1988 Country Road decided to enter US market, which was a successful and profitable decision for years. However, during 1999-2000 the trading situation of Country Road was suffering a bad time with great loss in finance, especially in US market, therefore, the Company made a decision again to exit US market and embark on a fundamental transformation of processes and systems so as to strive for better future growth. Change, such as that exhibited by the Country Road is one of the most important features during the development of any organization along with the economic globalization thus to survive in the competitive global market. In this article, based on the case of Country Road, analysis of organizational change in terms of change perspectives, drivers for change and balanced scorecard approach has been studied.

2.0 Change perspectives

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As the rapid development and changes occurring in the world everyday, organizational change within the company is becoming necessary part of the management in order to enhance corporate position and survive in the fierce marketplace. There are ten perspectives on managing organizational change developed including: the biological, the rational, the institutional, the resource, the contingency, the psychological, the political, the cultural, the systems and the postmodern perspective (Graetz and Smith, 2010). In Country Road case, the rational, cultural and system change perspectives will be discussed.

Rational perspective is just like the original meaning; change is rational, prescriptive and logical. Change comes about for a reason (Dierkes, Antal, Child, and Nonaka, 2003). Company management has a reason for embarking on organizational change. It is exact how Country Road reacted to the external change. During 1987-1988 Country Road saw an opportunity for growth in US market, so it made decision to enter US market. Later when it came across difficult time in operating in US market, it decided to withdraw from market. All these changes come from certain reasons.

Organizational culture is a cognitive factor and totality of assumptions, beliefs, values and norms that are shared by an organization's members (Raju and Parthasarathy, 2004). Cultural perspective of change is concerned with the common behaviors of individuals in the organization. Cultural change is likely to confront disaffection from people within the organization because most people do not like change.

The systems perspective of change is about the holistic change for the company. A company is consisted of many sub-systems, when a sub-system is changed, the whole systems will face change to some extent. Country Road may have used the systems perspective to approach the change of exiting US market. As US market was an important distribution part of Country Road's business, financial, personnel and other structures related to the operation in US market have been established. Once Country Road determined to withdraw from the market, Country Road would face a great change within its systems as its sub-system had great change. Country Road not only exited from US market but also embarked on a fundamental transformation of processes and systems, therefore, it would have suffered a great and thorough change within the organization.

3.0 Drivers for change

The impetus for change may arise externally in the environment of the organization or from inside the organization itself (Slack and Parent, 2006). Generally, the external factors causing organizational change are often recognized as from the competition and the customer needs in the market:

3.1 External environment---market competition and customer needs

A business often faces competition from the competitors with same strength in the same industry, new entrants to the industry, and competitors providing substitute products or other forms of competition (Smit, 2000). In order to cope with and combat the competition and consolidate and improve its market position, organization may need to strengthen its personnel in certain aspects, or form a new structure. For instance, if organization wants to enhance the product quality, then quality supervising team may be established. In the competitive market, many enterprises have to face organizational change so as to meet the competition or improve its competitiveness in the market. In addition, when enterprise feels hard to cope with competitive pressures, it is likely to transfer out its resources even close the production line. Another external factor driving organization change is customer needs. When a business finds not able to meet customer needs, it would be likely to have organizational change to respond to customer's demands. From organizational change of Country Road case, when the Company encountered competition from US market and failure to meet customer needs, Country Road made a decision to exit US market and embark on a fundamental change of processes and systems aimed at providing a lean and efficient foundation for strong and profitable future growth. Therefore Country Road had the organizational change mainly coming from the forces of external environment.

3.2 Internal environment

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Besides the external environment factors driving organizational change, internal factors from inside the organization which is also called internal environment contribute the organization change as well. Internal environment includes culture and personnel elements. When the culture within the organization is diversified with more cultural elements and personnel have been adjusted, it is also very necessary for the company to get organizational change to comply with present culture and personnel system.

4.0 Balanced scorecard

Balanced scorecard (BSC for short) is a completely new comprehensive measurement system widely applied by various enterprises in the world. BSC is especially featured with the integrated function of assessment, management and communication. By centering the corporate strategy, BSC can conduct a comprehensive evaluation of the corporation regarding the four perspectives: finance, customer, internal business and learning & innovation and there is a logical connection between them-learning and innovation lead to better business processes, which in turn lead to increased value to the customer, which finally leads to improved financial performance (Niven, 2006).

4.1 Strengths of BSC system

â-† Comprehensive Assessment: BSC can effectively evaluate whether Company is making progress according to its corporate strategy and objectives by massive using lead indicators and lag indicators. Lead indicators, particularly, can give the organization an indication of financial decline as a result of the current activities. While the traditional financial indicators can not reflect the decline trend in time, therefore, when Company finds the sales decline on the financial statement or quarterly report, it is too late to take preventative actions.

In Country Road case, it is obvious that the Company did not adopt BSC measurement system within the organization. The end of the financial year in 2001, Country Road found there was $7.7 million loss in Australia and USA and 6% drop in US market sales compared with the previous year. If Country Road applied an effective BSC within the organization, it would have the time to take measures regarding quality improving, promotion, change in design style and all the possible methods to keep its market share in US market instead of withdrawing from it.

Management Control: BSC is closely and clearly linked to corporate strategy and it gives managers a clear concept of corporate strategy so that manager can pay a highly attention to the impact of future organization activities on the corporate strategy. It will help the Company success in the market and gain a good financial statement eventually.

Communication: BSC can make employees easier understand how their performance will affect the Company success. It helps the whole staff of the company to respond to the external changes more quickly, which is very important in the rapid changing market.

5.0 Conclusions

With the environment changes both externally and internally, company is always facing a certain needs for change to meet the competitiveness from the marketplace and develop into a more well-organized company. Organization changes happen for a reason, the changes could be necessary for the company but sometimes if the situation is not analyzed correctly and unnecessary changes has made which would be harmful for the growth of the company. Therefore, a useful method should be maintained. The introduction of BSC measurement system was an effective way to monitor the company's situation from a comprehensive perspective, which tells the managers what changes or measures should be taken at what stage. However, change is not always preferred or supported by the employees because most of people do not like change. So although not been discussed in this article, the effort of educating employees' sense and responsibility of cooperating and supporting organizational change.