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Miele - founded in 1899 - is a famliy owned and family run company. Although the workforce numbers over 15,000, including more than 10,000 in Germany. With its own sales subsidiaries in 38 countries and represented by importers, Miele is the only premium brand in the household appliance industry which is represented on all five continents.
Miele is a German brand for which 'Made in Germany' is a very important international hallmark of quality. Miele's company motto is 'Forever better'. This maxim is the guideline for our products and every Miele employee worldwide.
In Germany Miele production takes place in eight plants. The responsibility for sales and distribution is decentralised in six branches in Germany, one of them located in Hamburg.
The market for white goods in Germany is changing and becoming more competitive through globalisation. New international competitors (e.g. from Asia) which are formally known as manufacturers of consumer electronics are trying to expand within the European and especially the German market for white goods.
The declining number of dealers on the one hand and new competitors with concentration of market power through price pressures on the the other hand are influencing Miele's sales activities.
In today's highly competitive business environment, management of change is essential for a large corporation to survive and prosper. The firm must improve both the internal and external situation, evaluate the progress and make adjustments as necessary to stay on track.
The results and given examples of this assignment relate to the German market and Miele's German subsidiary.
2. Background to change affecting the current organisation
Background to change in today's economy
In today's highly competitive business environment there are a lot of changing factors which influence the development of the company. The firm must improve their business organisation to define objectives and asseses and make adjustments as necessary to stay on track.
The Ansoff 'Product-Market Growth Matrix' is a marketing tool created by Igor Ansoff (Lynch 2002:461) The matrix allows to consider ways to grow the business via existing and/or new products, in existing and/or new markets. There are four possible product/market combinations:
Diagram 1: Ansoff's 'Product / Market Matrix' (Lynch 2002:461)
This Ansoff matrix helps companies to decide what course of action should be taken for having a good performance.The following strategies are appropriate for Miele:
Product development: A launch of new products/services with unique features
Market development: Miele washing machine 'medicwash' is to date marketed for allergy sufferers. This mashine could be rebranded for a new target group like expectant mothers.
Diversification is appropriate for entering new markets where Miele has no presence. The distribution of cleaning accessories and detergents are called exemplarily.
Michael Porter's well known 'Five Forces of Competitive Position Model' (Porter, 2004) provides a simple perspective for assessing and analysing the competitive strength and position of a business organisation:
number and size of firms
industry size and trends
fixed vs. variable cost bases
product/service level quality
relationships with customers
bilding processes/ capabilities
Product and Technology Development:
market distribution changes
fashion and trends
volumes, JIT scheduling
New Market Entrants:
new entrant strategy
routes to market
Diagram 2: Porter's Five Forces of Competitive Position applied for Miele
The following key implications for Miele are expected according to Porters Five Forces:
New Market Entrants:
More competitors through globalisation
Increasing competitive and pricing preasure
Copies of Miele's innovations, e.g. honeycomb drum
Rising supplier power through scarcity of raw material e.g. steel and crude oil
Declining supplier loyality based on backup capacity
Concentration of suppliers is raising their power
Customers expect top qualitiy and an after-sales service for their products
Customers can compare prices easily via Internet
Decreasing brand loyality of customers
Power of the technical superstores is increasing, the number of independents shops is declining
Product and Technology Development:
Customers substitute Miele's Rotary Ironer by buying non iron clothes or bringing their clothes to a laundry
Customers expect top qualitiy of their products
The development of new products and innovations is expensive
Escalating competitive environment
New competitiors try to win market shares
Predatory pricing policy is expected
The models from Ansoff and Porter clarify the basic necessity of change in today's economy. The management of the company is responsible for evaluation and definiton of the areas of operation.
2.2. Strengths and weaknesses of bureaucratic organisations
Bureaucratic organisations are often appropriate in stable environments and for routine tasks and technologies. Bureaucratic structures have clear, well defined, centralised and vertical hierachies of command, authority and control.
Bureaucratic organisations have the following strengths:
Formal rules and behaviour bounded by rules
Uniformity of operations continuity despite changes in personnel
Systematic allocation of tasks
Membership constitutes a career
The other side of the coin is that bureaucratic organisations have obviously several weaknesses:
Inflexible in decision making
Lack of empathy/rationality
Highly regulated which signifies that decision making is slow (no urgency or
Positions are organised in a hierachy of authority which limits employee in
Many different stakeholder groups with various expectations
An important step is to assess Miele's current situation as a bureaucratic company. It is necessary to find out where the company is now, which is the prefered way to go and what are the company's choices. For reviewing the potential options of change several criteria and useful models are applied. The SWOT Analysis (Lynch 2002:104) is valuable for finding out the company's strengths, weaknesses, opportunities and threats:
What does Miele do well?
What unique resources can Miele draw on?
What do others see as Miele's strengths?
What could Miele improve?
Where does Miele has fewer resources?
What are others likely to see as weaknesses?
Strong product brand
Market & product knowledge
High quality products
Family owned and run company
Most products are 'Made in Germany'
Only products in high price segment
Outdated company structures
Long response times to changes
High manufacturing costs
Decline in market segment
Long product life cycle
Poor cost management
What good opportunities are open to Miele?
What trends could Miele take advantage of?
How can Miele turn strengths into opportunities?
What trends could harm Miele?
What is Miele's competition doing?
What threats can expose Miele's weaknesses?
Open up new markets
Change in company management
Focus on new target groups
Improve cooperation with key accounts
Target new trends like 'homing' and 'simplicity'
Extend product range for target groups and niche markets
Increase customer loyality through service offers like leasing or installment
Increasing competetive pressure
No experience in other business fields
Worsening economic conditions
Globalisation and pricing pressure
Competitors access into Miele's price segment
Loss of innovative leadership
Diagram 3: The Miele SWOT analysis (www.mindtools.com, 2009)
The SWOT-analysis shows that Miele has long response times to changes. This could lead to a competitive disadvantage, if Miele needs too much time for putting changes into practice.
The most important problem for bureaucratic organisations is to integrate the different stakeholder-groups in the strategy of change and the planning process for reaching consensus and their support.
The 'Johari Window Model' clarifies that it is important to bring every stakeholder in the open/free area:
Diagram 4: The 'Johari Window Model' (www.businessballs.com online 2009)
But this is a weak point for bureaucratic organisations like Miele because they have to involve many stakeholders with wide interests (more information, point 3.1.).
2.3. Alternative forms of organisational development
Organisational development is a planned intervention designed to effect change in some facet of an organisation. Interventions have been developed over the years to address different problems or create various results with the intention to improve the entire organisation through change. In general, organisations that wish to achieve a high degree of organisational change will employ a full range of interventions:
Human processes, e.g. team building and process consultation
Technostructural, e.g. Total Quality Management, work/job design
Human resource management, e.g. performance management (employee), reward systems
Strategic, e.g. cultural change, strategic mangement
The change of the business environment requires a change for every company to stay on track. As mentioned above is the team buliding process one important sector for organsational development. Dr. Bruce Tuckmann published 1965 his 'Forming Storming Norming Performing' model which is an helpful explanation of team development and behaviour.
The intention is to bring the team to the performing phase stage 4, because that's the phase where the team and its leader have the best performance and achieve the goals and objectives of their company:
Diagram 5: Bruce Tuckman's 'Forming Storming Norming Performing Team Development Stages Model' -1965, (www.businessballs.com online 2009)
Another tool for understanding problematic situations and for planning corrective action is Kurt Lewins 'Forced Fiels Analysis':
Diagram 6: Kurt Lewin's 'Forced Field Analysis' (Value Based Management.net, 2009)
The Action plan tailored to Miele is as follows:
Forces for change
Forces against change
No action required
Involvement of key staff in designing new process
Review of new process with experts to ensure 'Best Practice'
Key staff coaches other staff members during change
Diagram 7: Action plan according to Kurt Lewin's 'Forced Field Analysis'
The model from Lewin illustrates the necessity to involve the staff and the stakeholder in the process of change because otherwise the overbalanced forces against change prevent the successful implementation.
3. Systems for involving others in the process of change
3.1. Systems to involve stakeholders in the introduction of change
For a large company like Miele it is essential to integrate the different stakeholder-groups in the strategy and the planning process for reaching consensus and their support.
Miele's most important stakeholders are:
Members of the owner families
Workers committee and Trade union
Customers and suppliers
For the integration of these stakeholder groups the following actions are proposed:
Action / Briefing
Responsibility for information
Members of the owner familiy
Non involved executive and middle management
Annual general meeting
Staff meeting, notice board, suggestion scheme, working groups
Every manager / head of department
Workers commitee and trade union
Commitee / union meeting, management letter, working groups
Customers and suppliers
Newsletter, trade fair, product presentation, events, workshops
Head of Marketing/Sales, Purchasing
Diagram 8: The integration of Miele's stakeholders
It is fundamental for a large company like Miele to involve the stakeholder groups in the process for gaining their support in reaching the strategy goals and objectives.
According to Belbin's 'Team Roles' it is helpful for a bureaucratic organisation like Miele to integrate stakeholders e.g. in project teams which evaluate the need of change and the implementation process. It is a duty of the management to find the best possible compositon with several roles in the team:
Diagram 9: Belbin's 'Team Roles': A * means these are more introvert roles,
(www.businessballs.com online 2009)
For a successful involvement of stakeholders in the process of change, the existing management style is decisive. There are two management styles according to Douglas Mc Gregor's 'XY Theory', the 'authoritarian management' (theory x) and the 'participative management' (theory y) style:
Diagram 10: Douglas McGregor's X-Y Theory (www.businessballs.com online 2009)
The behaviour of 'theory y' manager subserves the involvement of stakeholder in the change process, because they have the capacity to use a high degree of imagination, ingenuity and creativity in solving organisational problems. Enlightened managers use 'theory y', which produces better performance and results and allows people to grow and develop.
Analysis and evaluation of these systems
The theoretical approach of Belbin or Mc Gregor clarifies the importance to involve both the management on the one side and the stakeholder on the other side in the process of change. This means for Miele that it is helpful to integrate the stakeholder in the future more than at present. Interviews with employees show that they are unsettled regarding
new processes. The outcome for the company increases with timely staff information and collaboration within these processes. The management plays the key role, because their management style and success in selling the ideas to the stakeholders is essential for the achievement of the objectives. Miele should intensify the involvement of their stakeholders as proposed at point 3.1 to gain a better acceptance, comprehension and encouragement from them.
4. Plan for implementation of models for ongoing change
Appropriate models for change
John Kotter defined a helpful model for understanding and managing change. Each stage acknowledges a key principle identified by Kotter relating to people's response and approach to change, in which people see, feel and then change. Kotter's 'Eight Step Change Model' (Kotter and Cohen 2002) can be summarised as:
Establish a sense of urgency
Create a coalition
Develop a clear vison
Share the vision
Empower people to clear obstacles
Secure short-term wins
Consolidate and keep moving
Anchor the change
According to Kotter, it is crucial to follow the eight phases of change in the above exact sequence.
Another appropriate model is Kurt Lewin's 'Change Model' which defines three stages in the process of change:
It assists organisational change by allowing the process to be understood and by providing milestones for evaluating progress towards the change.
Kotters 'Eight Step Model' and Lewins 'Change Model' can be adapted for Miele's change process as follows:
Diagramm 11: Miele's way of change adapted from Kotter's 'Eight Step Change Model' and Lewin's 'Change Model'
The development, involvement of stakeholders, implementation, controlling and if applicable adjustment of a change process is a long lasting challenge which is one of the main duties of the company's management.
Planning of implementation process and outcomes
To ensure that all staff are aware of the change process and what his or her duty to reach the strategic goals of the company is, a implementation process for gaining commitment is required. For this process it is appropriate to cover the following points:
Total Miele organisation agreement to full plan
Inter-department agreement to each other's plans, e.g. budget impact between units and human capital planning (having the right people in the right place at the right time with the right skills)
Tracking and course adjustments
Using Balanced Scorecards Concept for planning implementation to analyse the cause and effect of the business process
Existence of timetable with responsibilities for accomplishing the change process:
Mission / vision statement: Top Management
Environmental scanning: Top Management
Change process formulation: Top Management
Change process implementation, Information of owner families: Top Management
Change process implementation, kick-off meeting for workforce: Top Management
Departmental meetings for business units: Line management
Notice board information for workforce: Head of Business Units
Staff training sessions/workshops, ideas for process' improvement: Head of department
Annual performance review of the management with target-performance comparison: Top Management
Change strategy and target review, if applicable adjustment: Top Management
Diagram 12: A timetable for implementing the Miele change process
One key task of the management is to raise the staff motivation. Information about the changing process and the implementation process are inevitable. According to Herzbergs 'Two Factor Theory it is furthermore essential for the management to have a positive impact towards the 'hygiene' and 'motivation' factors:
Diagram 13: Frederick Herzberg's 'Two Factor Theory' (Value Based Management.net, online, 2009)
Typical hygiene factors which are a strenght of Miele are working conditions, salary, security and company/brand status. But there are also weak points which could be improved to motivate the staff like recognition of achievement, responsibility for tasks, advancement to higher level tasks and personal growth. Herzberg's theory shows that it is important for a company to have enough and strong 'hygiene' and 'motivation' factors to have satisfied and motivated employees.This is the ideal situation where employees are highly motivated and have few complaints.
During the whole change process it is the responsibility of the top and the line management to support the staff and ensure, that no one is losing direction and is able to fulfil the expectations:
Diagram 14: John Fisher's 'Process of Transition' curve (www.businessballs.com online 2009)
The progress of John Fisher' transition curve clarifies that it is a key task of the whole management to help people through the process as effectively as possible. It is mentioned that every person will experience transition through the curve at slightly different speeds, depending on his/her self perception, locus of control and other past experiences and how these all combine to create his/her anticipation of future events.
This report clarifies that several steps have to be taken for a successful change process. The first step for the company is to recognise that a change process is necessary to improve the business organisation. The second step is obtaining the environmental scanning. Third is the change process formulation, stakeholder involvement and the implementation of the process within the company. The last step is to evaluate and control the change process and if applicable process and target adjustment.
The involvement of stakeholders is essential for a successful realisation because otherwise they could have negative impact towards the process' performance.
Furthermore, critical standpoints like business ethics and corporate social responsibility have to be covered to have a positive response from the public.
The change process implementation, controlling and if applicable the adjustment is a long lasting and ongoing process which is one of the main duties of the company's management.
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