Percieved Need For Change At Aventis Commerce Essay

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This study will examine organisational change within Aventis Pharma, focusing on the strategies that should have been implemented in order to reduce the resistance to change. The study will also focus on the employee satisfaction from a broad perspective of employees within the organisation-shopfloor up to management level.m The merger between Aventis Pharma and Sanofi Synthelabo in 2004 resulted in a plethora of organisational changes impacting upon the organisation. Aventis Pharma was a leading pharmaceutical manufacturing company in South Africa. It manufactured a range of medication from solids to liquid formulations. The management style at Aventis Pharma was participative with its head office in Germany not involved in the day-to-day running of the company. The company was faced with financial difficulties, which culminated in the merger with Sanofi Synthelabo, a French based pharmaceutical company based in South Africa. Sanofi Synthelabo gained a majority of the key positions on the executive board as a result of

the merger. The management style of Sanofi Synthelabo was centralised and leaned towards being autocratic.

The management at Aventis Pharma in addition to acceptance of a management infrastructure as a result of the merger had to comply with organisational requirements in France. Retrenchment became a requirement in order to reduce the head count within the company. The retrenchment included a management restructuring. In April of 2006, the company was once again forced to re-evaluate its headcount and format of its management structures. Further retrenchments are currently under way with associated management restructuring which included demotions of certain key positions. This has lead to extreme uncertainty and fear of job losses amongst employees. The perception amongst employees is that management was on a 'mission' to retrench in order to fulfil cost per unit demands. The Waltloo site in particular is faced with the challenge of reducing the cost per unit, as it is one of the least cost effective sites in the African region. Management were set a target of two years to address this deficiency. The primary reason for the high unit cost is the skewed ratio between direct and indirect labour. Indirect labour outnumbers direct labour resulting in additional costs to the units. Direct labour refers to employees who physically work on the product, such as those who manufacture the drugs and those who pack the product into required pack sizes. Direct labour is responsible for ensuring that there is product that is able to leave the site for sale to the public. Indirect labour refers to the support structures of direct labour and includes employees who work in the logistics and purchasing departments and those staff members who audit documentation to ensure registered methods were used to manufacture, pack and test the product. Indirect labour are a necessity, but are not considered to add value to the final product.

This case study research project will examine the change management strategies that could have been employed at the start of the merger and evaluate the current state of employee satisfaction. The research to be conducted in this dissertation will be based on the research undertaken in the social world, will be theoretical in nature using am qualitative research paradigm as basis.

Description Of the Process

In April 2004, the two companies merged to form the Sanofi- Aventis group. The merged company would operate and function under the auspices of the following principles:

􀂾 The name of the new group will be Sanofi-Aventis.

ô€‚¾ The Board of Directors will be made up of 17 members: Jean-François Dehecq, Chairman and CEO (formally of Sanofi Synthelabo), eight members selected by the Aventis Supervisory Board, including the Vice-Chairman of the board of directors, who will be a German representative, and eight members selected by the Sanofi-Synthélabo board of directors.

􀂾 An integration committee consisting of an equal number of members selected

from Aventis and Sanofi-Synthélabo and Mr. Jean-François Dehecq as

Chairman, will oversee the integration of the two companies and select the

managers of the combined group The style of management of the two companies differed significantly. Where the Aventis head office in Germany preferred a decentralised approach allowing more self management, the Sanofi management style was more centralized and leaned towards being autocratic. This research endeavours to identify the challenges faced by

the new group and the impact of change with regard to merging of two different cultures i.e. the German versus the French approach of operating, the merging of systems and processes and more importantly the people transformation and structural changes that accompany merging organisations at the Waltloo site.

Since the merger in April 2004, there have been two major structural changes with a number of associated retrenchments and demotions. This study will also seek to determine employee satisfaction of staff at all levels in the organisation, since the merger from the shop floor, administrative, laboratory, junior to middle and senior management

In this chapter, the change dynamics within Aventis Pharma will de addressed in detail as well as the impact of change Aventis Pharma is made up of five key departments namely, purchasing, planning and logistics, production, quality and human resources. This chapter will detail how each department was managed and operated during the Aventis era and the changes the departments had to effect in order to comply with the new Sanofi Aventis group requirements. This researcher will also highlight the impact of the change on the company, the affected department, the people, suppliers and customers.

1.PURCHASING DEPARTMENT

Prior to the merger in Aventis Pharma, the Purchasing department was nothing more than an administrative unit. The department was responsible for ensuring that whatever was ordered by company departments were executed. Departments had free reign in terms of who they ordered from and how often. This freedom led to a situation where there were up to 16 different paint suppliers to the company at any given time. Aventis Pharma made use of agents when ordering which added to overhead costs.

.The primary focus of the Sanofi-Aventis group was "cost savings". As a result the purchasing department had to focus on new objectives. They were expected to be the key player of procurement. Furthermore, departments must now involve purchasing when they need to make any purchases, and it is purchasing's responsibility to source from the most cost effective supplier This involvement is referred to as 'coverage', and currently their coverage is standing at 80%, as opposed to 0% coverage during Aventis Pharma management. New initiatives such as sourcing for alternative suppliers for all raw materials for key products have been introduced. The department has also been instructed not to work through agents and middlemen as far as possible. The need to cut costs requires that they negotiate directly with manufacturers and suppliers. Sites are expected to submit monthly reports on the progress of new initiatives and them adherence to global directives. The Sanofi-Aventis culture is such that should a particular practice be found to be effective in one of the sister companies worldwide, especially if it results in a cost saving, that practice may be enforced on other sites regardless of the different environmental and economic factors of a particular site. The purchasing department now consists of two people, the manager and senior buyer. Although there has been a significant increase in the role of purchasing and the workload of the department, the staff complement has been reduced.

The impact of the change on the purchasing department culminated in:

􀂾 Frustration to the end users, internal customers, as now any item that needs to be ordered needs to be authorised by purchasing. More often than not, the end users feel they know best regarding their requirements and view purchasing as an obstacle in the process.

􀂾 Delivery delays experienced by end users due to the drawn out process that must be followed.

􀂾 More competitive pricing structures from suppliers as they are now aware they are tendering against other potential suppliers.

􀂾 Unhappiness from some suppliers as they previously enjoyed the status of being the preferred supplier for many years during the Aventis era, and now do not have the contract security they once enjoyed.The failure to manage this change transition has resulted in resistance from the end user to accept the procedural change of procurement and an assertive effort for purchasing to enforce the new requirements. (Mbedzi, 2007).

2. QUALITY DEPARTMENT

The role of the quality department post the merger between Aventis Pharma and Sanofi-Aventis Pharma has changed considerably. High quality standards existed in Aventis Pharma, and the objective of the quality department was to work towards compliance. Compliance with local quality requirements took precedence over company standards. This meant the company tended to place emphasis on the requirements of the Medicine's Control Council (MCC), which is the controlling body that sets minimum requirements in order for drugs or pharmaceuticals be made available to the public.

Sanofi-Aventis refers to quality standards as directives. These prescribed directives must be complied with at all times. Local requirements are secondary to the company directives. Where local requirements were the main focus in Aventis, the company directives are crucial in the Sanofi-Aventis environment. The purpose of instilling compliance to these global directives is that the company believes in uniformity of operation in all sites worldwide. This results in all sites complying with the same standards and ensures that the sites work with the same standards. Authorisation to purchase new equipment is cumbersome

The impact of the change in the quality department has been:

􀂾 An increased workload.

􀂾 Better understanding of the directives thereby enabling clearly defined role and responsibilities within the organisation

􀂾 Creativity and independence have been discouraged, due to the fact that the global office encourages equality and similarity of operations amongst sites. The impact on external customers has been extremely positive. Not only are end user's of the company's medication guaranteed drugs that comply with local requirements, but also global European standards as prescribed by the head office in Paris. (Pelser, 2007).

3. REGULATORY DEPARTMENT

The transition from Aventis Pharma to Sanofi Aventis in a regulatory context has not been a smooth transition. The function of the regulatory division is to ensure that the company adheres to minimum requirements as stipulated by local authorities, the Medicines Control Council (MCC) in South Africa. During the Aventis Pharma era, responsibilities of the regulatory department were clearly demarcated and non ambiguous. There was a strong emphasis, perhaps even an 'over emphasis' on quality. The regulatory leadership was decentralised, allowing for more freedom to achieve objectives defined. This decentralisation of leadership and management resulted in more accountability by the said department. Goals were identified globally and communicated to each site. The onus then rested with the site to achieve the prescribed goals in a manner best suited to the individual site and established by the site.

Within the Sanofi Aventis environment, the roles and responsibilities have not been clearly defined, resulting in delayed action. As with the previous two departments, the workload and accountability have significantly increased. The Waltloo site regulatory department also acts a liaison between the site and third part customers. Any queries or changes to processes involve the department. Due to the rise in amount of work, often queries are not swiftly handled or attended to as previously executed. The quality standards are not as stringent as before, largely because Sanofi-Aventis is a cost driven company. The centralised leadership and management of Sanofi-Aventis do not encourage creative thought or initiative by employees. The goals and objectives are set and defined globally and the method or means to achieve these goals are also defined.

The impact of the changes in the regulatory department has been:

􀂾 A significant mindset change by the department staff from Aventis Pharma to Sanofi-Aventis

􀂾 The external customer, third party client, is bearing the brunt of decreased resources. Perceived service levels (by the client) have declined. This has led,to strained relations between the companies. Service standards have been compromised because of time and human resource constraints.

􀂾 The staff complement decreased from three people to two people although the workload has increased. (Matjila, 2007).

4. OPERATIONAL PLANT LOGISTICS

The Operational plant logistics department within Aventis Pharma operated on a "make to stock method". This involved stock coverage for packaging material, raw material and finished packs. The means of how to achieve objectives was left to the site as long as it was within targets set. Waltloo plant logistics had a direct and close involvement with marketing and sales with regards to forecasting. Operational plant logistics met on a regular basis with marketing and sales to evaluate and discuss the forecast compared to sales achieved for a particular period

In the Sanofi Aventis environment plant logistics is strictly an Industrial Affairs Site function and the Supply Chain Department, responsible for the commercial operations. Under the new dispensation, operational plant logistics department no longer has input into marketing and sales with regards to forecasting.

For business purposes the Sanofi-Aventis South Africa group has been divided into twobusiness units, namely Winthrop pharmaceuticals which encompasses the Waltloo site, generic division and state product business. The second arm of the South African operations is referred to Sanofi-Aventis. This division consists of over the counter products and ethical

pharmaceuticals. The Waltloo manufacturing site manufactures and packs both 'Winthrop' products and 'Sanofi-aventis' products

The impact of the change from Aventis Pharma to Sanofi-Aventis Pharma has been the following:

􀂾 Staff at Waltloo were not well trained to cope with the new processes that came about with the introduction of the two business entities.

􀂾 As experienced in many departments, reduced human resources has had an impact on the efficiency of the unit.

􀂾 The termination of SAP access for some operations has resulted in delays within the Waltloo plant.

􀂾 Communication to marketing and sales has deteriorated. Communication with the Supply Chain Department regarding delivery has also decreased compared with the days when plant logistics was planning and scheduling lines.

􀂾 Many within the department feel they are planning blindly as the reduced SAP access has meant they are not able to view stock levels of the distribution centre. In this past, this ability enabled swift action, where batches could be planned and replenished based on the minimum stock levels at the distribution. (Araujo, 2007).

5. HUMAN RESOURCES

Aventis Pharma's method of operation was one of non-interference in the day-to-day

running of the site. Basic procedures existed and were a guideline for the local Human

Resources (HR) department to use.

Aventis Pharma South Africa had its own HIV Aids policy and management system as well as its own talent management system. The site had HR objectives which were agreed upon through consultation with the local HR management. It was left to the site HR to decide on methods of achieving the set objectives. Nothing was ever prescribed globally. The head of HR globally did not have much interaction with the site HR. The site HR manager only met once with the global HR director and this was not a planned meeting, but rather quite coincidental. This lack of contact clearly illustrates the type of aloof and non interfering management style used by Aventis Pharma.

Sanofi Aventis firmly believes in equality throughout its plant worldwide, structure of provident funds, medical aid minimum requirements have become equal at all sites. What is also encouraging to note is the direct involvement global operations has in the management of HIV Aids policies. A senior managerial position was created and filled in Paris, to overlook the management of HIV Aids at all sites globally.

Skills management has been introduced to sites by the implementation of peopledevelopment interview systems to management levels in the form of annual training needs analyses. In keeping with other departments at Sanofi-Aventis, there is stringent reporting to overseas HR. Headcount within the site is an important HR objective, which is managed by HR. For the year 2007, one of the global objectives has been focusing on absenteeism at the sites. HR is expected to report on a monthly basis the number of days of unscheduled absence (sick leave, unpaid leave and short hours) greater than or equal to three days.

The company also lives its value systems. The values of Sanofi-Aventis include:

􀂾 Courage.

􀂾 Creativity.

􀂾 Respect.

􀂾 Solidarity.

􀂾 Audacity.

􀂾 Performance.

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The changed recruitment process has had a negative impact on the Waltloo site. Since the recruitment process has been controlled by global HR, prospective interview candidates have been lost to the company due to the delay in obtaining global approval. This has caused a lot of frustration for the departments seeking to fill positions as well as local HR as they are powerless as a result. The company as a whole loses out, as the first choice candidates are taken by local pharmaceutical companies. Departments are expected to operate indefinitely without the full staff complement due to them, which places strain on employees.

HR were responsible for publishing a line communication brief during the Aventis dispensation, which was a form of communicating what was happening in the company, generally keeping employees abreast of company issues, achievements and challenges. This was considered a best practice. In the sanofi-aventis environment, lack of time has played a role in this practice not being continued. This has resulted in employees sometimes feeling

uninformed, or that management is not willing to share information that could impact on them. (Janse van Rensburg, 2007).

2.2.6 THE CHEMICAL, ENERGY, PAPER, WOOD AND ALLIED

WORKERS UNION

The worker's union played a significant role within the life of Aventis Pharma. There

was consultation with the union on any decisions or proposals impacting on union membership. Aventis management would involve the union on any changes necessary to policies, procedures and proposed new ways of working. The input of the union was considered and sometimes even included. The relationship between the union leadership and management was healthy and transparent.

Since the transition to Sanofi-Aventis, the relationship of the union and management has become extremely strained. Whereas in the past, the union was consulted and involved with any changes, of late changes have come in the form instructions from Paris. The perception from the union leadership is that management is trying to frustrate them and keep them at a distance, as management insist changes have become instructions from Paris. There is a distinct element of untrustworthiness of management by the worker's union. The union believes that the global company enforcing rules and regulations without taking into consideration the differing political, social and economic environments of different countries and sites. The union has not wholly supported some of the initiatives of the global company who endeavors to promote equality amongst sites worldwide. Due to the union not being

able to interact and meet with the global decision making parties, they are unable to challenge decisions. They have been reduced to accepting decisions which may not be in line with their mandate.

The challenges faced by the worker's union include:

􀂾 Difficulty in influencing their position to management regarding critical issues

􀂾 The 'take it or leave it' attitude to decisions affecting them.

􀂾 Literacy levels of the union members is particularly low, meaning the ability of the members to think 'out of the box' and understand the reasoning andimplication of change is very difficult to comprehend.

􀂾 Members perceive the union leadership to be succumbing to management pressure too easily. The union membership has lost some confidence in theability of the union leadership to represent them and protect their interests.

􀂾 Although the union leadership may understand the underlying reason for some changes, the challenge faced by them is to communicate the understanding to the general membership, without losing face. (Tjiane, 2007).

The objective of this section was to provide a holistic perspective of Aventis Pharma by providing insight into the change dynamics within some of the key departments and describing the impact of the change on the company, internally and externally. There are some key similarities in terms of what each departments change experience has been

.

Literature Review

1. FORCES OF CHANGE

Kreitner, Kinicki and Buelens (1999: 585-588) explain that companies need to know when to change. There are no clear cut answers to the question, what a company must look out for, however the forces of change can be external or internal. According to Kreitner, Kinicki and Buelens (1999:585), external forces originate outside the company. These forces may have a global impact and may cause the company to question the essence of what business it is in and the process by which products and services are produced. Robbins (1990:387) states that the seeds of structural change can come from an unlimited set of sources. Changes in strategy, size, technology, environment or power can be the source of structural change.

Some determinants of structural change according to Robbins (1990:588) are:

􀂾 Change in objectives.

􀂾 Purchase of new equipment.

􀂾 Scarcity of labour.

􀂾 Implementation of a sophisticated information-processing system.

􀂾 Government regulations.

􀂾 The economy.

􀂾 Unionisation.

􀂾 Merger and acquisitions.

􀂾 Actions of competitors.

􀂾 Decline in employee morale.

􀂾 Increase in turnover.

􀂾 Internal and external turnover and.

􀂾 Decline in profits.

A generic typology of company change is described as being adaptive, innovative and radically innovative. Adaptive change is the reintroduction of a familiar practice. Innovative change is the introduction of a practice new to the company and radically innovative change will be a practice new to the industry (Kreitner, Kinicki andBuelens 1999:588).

2.CHANGE AGENTS

Changes within an organisation demand a catalyst. The persons who assume the responsibility of managing the change process within an organisation and who act as catalysts are called 'change agents' (Fox, 2006:160). Structural change must be,initiated by change agents who are in power or wish to replace or constrain the power. Internal change agents are typically senior executives, managers, internal staff developers or powerful lower level employees. External change agents can be consultants brought in from outside the company. Any manager may act as a change agent, although a change agent may also be a non-manager, a staff specialist or outside specialist whose area of expertise is in the implementation of change. 4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"http://books.google.co.uk/books?id=FHZvfOu4XRECHYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"&HYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"pg=PA145HYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"&HYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"dq=change+agents+in+organisation+changesHYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"&HYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"ei=YLbUS8eDMYTIywT7xonFCQHYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"&HYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"cd=3#v=onepageHYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"&HYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"q=change%20agents%20in%20organisation%20changesHYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"&HYPERLINK "http://books.google.co.uk/books?id=FHZvfOu4XREC&pg=PA145&dq=change+agents+in+organisation+changes&ei=YLbUS8eDMYTIywT7xonFCQ&cd=3#v=onepage&q=change agents in organisation changes&f=false"f=false

Change agents always need the ability to get all people affected by the project involved, to ensure their support and commitment. This requires a high competency as the basis for acceptance as well as soft skills, which are often summarized as emotional intelligence. This includes the ability to communicate, to understand and to take into account opinions and doubts of others. Change projects involve a great variety of factors and forces. These factors do not only comprise the reasons and objectives for change, but also the existing state of the organization, values, beliefs and routines of the people there. Many change projects challenge the existing cultural framework of an organization. http://www.themanager.org/strategy/change_agent.htm

External employees are temporary employees of the company as they are only engaged for the duration of the change process. The internal change agent works for the company and knows something about its problems. The usual internal agent is the manager who is appointed in a position in the knowledge that major change is necessary. (Fox, 2006:160) states that often in the event of any major organisational change internal managers are inclined to hire the services of an outside specialist as consultants to provide advice and assistance. These outside experts are said to be able to present an objective perspective, as opposed to insiders. On the other hand, outsider specialists may be at a disadvantage because they do not have an adequate understanding of the culture, history, operating procedures and personnel of theorganisation. Managing the kinds of changes encountered by and instituted within organisations, requires an unusually broad and finely honed set of skills, chief among which are the following according to (Nickols, 2004:7):

􀂾 Political Skills: Organisations are first and foremost social systems. Without people there can be no organisation. Lose sight of this fact and any would-be change agent will likely lose his or her head. Organizations are hotly and intensely political. The lower the stakes, the more intense the politics. Change agents dare not join in this game but they had better understand it. This is one area where one must make ones own judgments and keep ones own counsel;

no one can do it for you.

􀂾 Analytical Skills: Two particular sets of skills are very important, namely workflow operations or systems analysis, and financial analysis. Change agents should learn to take apart and reassemble operations and systems in novel ways, and then determine the financial and political impacts of what they have done. Conversely, they must be able to start with some financial measure or indicator or goal, and make their way quickly to those operations

and systems that, if reconfigured in a certain way, would have the desired financial impact. Those who master these two techniques have learned a trade that will be in demand for the foreseeable future.

􀂾 Business Skills: Change agents need to understand how a business works. In particular, change agents better understand how the business in which and on which they are working, works. This entails an understanding of money - where it comes from, where it goes, how to get it, and how to keep it. It also calls into play knowledge of markets and marketing, products and product development, customers, sales, selling, buying, hiring, firing and just about anything else one might think of.

3. FOUR FACTORS FOR FAILURE

According to Harding (2004) the four factors for failure in managing change can help

identify problems more rapidly, and can show where initial action should be concentrated:

􀂾 Lack of consistent leadership.

􀂾 De-motivated staff kept in the dark.

􀂾 Lack of capacity: Budget cuts, no spend-to-save policy, short-term approach to investment, stressed out staff working hard just to stand still.

􀂾 Lack of initiative to do something different.

These four factors for failure then lead to the 'treadmill effect', which culminates in, the situation where there is:

􀂾 No time for reflection, planning and learning.

􀂾 No improvement in design and implementation.

􀂾 An increasing need to do something.

􀂾 An increasing failure and unplanned consequences.

􀂾 A trend to consistently going back to the first factor.

Implementing the four factors for success can help get off this treadmill Harding, (2004).

The four key factors for success when implementing change within an organisation are:

􀂾 Pressure for change: Demonstrated senior management commitment is essential.

􀂾 A clear, shared vision: One must take everyone with you. This is a shared agenda that benefits the whole organisation.

􀂾 Capacity for change: One needs to provide the resources: time and finance.

􀂾 Action - and performance: 'Plan, do, check, act' - and keep communication channels open.

The employee does not have a responsibility to manage change, as the employee's responsibility is no other than to do their best, which is different for every person and depends on a wide variety of factors (health, maturity, stability, experience, personality, motivation, etc). Responsibility for managing change is with management and executives of the organization. They must manage the change in a way that employees can cope with it.

4. MERGER STRATEGY AND STYLE AS AN ELEMENT OF CHANGE

Lind and Stevens, (2004:11) argue that many mergers fall far short of hopes and expectations because most managers do not realise there are a number of different types of mergers, each requiring different strategies, actions and leadership styles to achieve success. They also suggest a simple framework used for discussing potential mergers, uncovering merger pitfalls, and for preserving value during merger integration. The framework is based on the concept that a key to an appropriate merger and acquisition strategy lies in the interplay of two factors, namely:

􀂾 Disparity: The degree to which businesses are different or similar, and

􀂾 Goodwill: Including intellectual and social capital across such parameters as products, channels, culture, customer relationships and intellectual property.

Lind and Stevens, (2004:13) provide steps on how executives can determine what type of merger they are contending with:

􀂾 Define and validate overall merger vision and strategy: The primary reason for the merger.

􀂾 Execute a 'disparity' analysis: Carefully examining the ways in which the companies are similar and dissimilar, looking at all business units.

􀂾 Execute a 'goodwill' analysis: To determine what constitutes goodwill for each company, again looking at each business unit.

􀂾 Determine the primary merger type: The best merger strategy is one that capitalises on the vision and drives most of the value creation. Why is this merger different from all others?

􀂾 Determine secondary strategies: Determine if a single primary strategy will drive the process or if differentiated approaches based on business units and their unique markets, customers, cultures are indicated.

5. THE CHANGE PROCESS FOR THE PURPOSE PROBLEM SOLVING

AND PROBLEM FINDING

Managing change is seen as a matter of moving from one state to another, specifically from the 'problem state' to the 'solved state' (Nickols, 2004:4). Problem analysis is acknowledged as essential. Goals are set and achieved at various levels and in various areas or functions. Ends and means are discussed and related to one another. Careful planning is accompanied by efforts to obtain buy-in, support and commitment. The net effect is a transition from one state to another in a planned, orderly fashion. This represents a planned change model. Ackerman Anderson and Anderson (2001) refer to the three key aspects of change as content, process and people. At the heart of change management lies the change problem, representing some future state to be realized, some current state to be left behind, and some structured, organised process for getting from the one to the other. The change problem may be large or small in scope and scale, and focus on individuals or groups, on one or more divisions or departments, the entire organisation, or one or on more aspects of the organisation's environment.

http://books.google.co.uk/books?id=vpJLQHlN-BQCHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"printsec=frontcoverHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"dq=organisation+changeHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"ei=imDbS4CrKZq0zQTL17WcCQHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"cd=2#v=onepageHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"q=organisation%20changeHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=organisation+change&ei=imDbS4CrKZq0zQTL17WcCQ&cd=2#v=onepage&q=organisation change&f=false"f=false

6. IMPLEMENTING ORGANISATIONAL CHANGE

Waddell, Cummings and Worley (2004:181) suggest that implementing organisational change, involves moving from the existing organisation state to the desired future state. This movement does not occur immediately, but rather requires a transition state during which the organisation learns how to implement the conditions needed to reach the desired future. Three major activities and structures have been identified to facilitate organisational transition, namely 'activity planning', 'commitment planning' and 'management structures'.

http://books.google.co.uk/books?id=vpJLQHlN-BQCHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"printsec=frontcoverHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"dq=IMPLEMENTING+ORGANISATIONAL+CHANGEHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"ei=AbjUS-L1Go6CygSn5YySCQHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"cd=5#v=onepageHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"qHYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"&HYPERLINK "http://books.google.co.uk/books?id=vpJLQHlN-BQC&printsec=frontcover&dq=IMPLEMENTING+ORGANISATIONAL+CHANGE&ei=AbjUS-L1Go6CygSn5YySCQ&cd=5#v=onepage&q&f=false"f=false

7. CULTURE OF CHANGE

Kreitner, Kinicki and Buelens (1999:57) define organisational culture as the, "shared values and beliefs that underlie a company's identity". Johnson and Scholes (1999:73) define the cultural web as a, "representation of the taken for granted assumptions or paradigm of an organisation and the physical manifestation of organisational culture". The web comprises the routines, rituals, stories, symbols, controls, power structures, and the formal company structure, which constitutes the paradigms of a company.

Schraeder and Self (2003:511) claim that Mergers and Acquisitions (M&As) are becoming a strategy of choice for organisations attempting to maintain competitive advantage. The success rate, however, is less than commendable. Organisational culture has been identified as one factor acting as a potential catalyst to M&A success. Hamel and Prahalad (1994:426) explain that while one should always be sensitive to the differences in cultures, they should be seen as supporting the intent of an alliance and not hindering it.

The difficulty in modifying cultures becomes quite significant during mergers and acquisitions. It is improbable to develop an exhaustive list of cultural characteristics that would be of interest in the context of mergers and acquisitions. While certainly not exhaustive, convergent themes such as people orientation, attitudes toward innovation, customer service orientation, employee loyalty and attitudes toward growth appear repeatedly in literature related to organisational culture, in the context of mergers and acquisitions.

8. RESISTANCE TO CHANGE

Newstrom and Davis (1993:276) explain resistance to change as, "employees resisting change because it threatens their needs for security, social interaction, status or self esteem. The perceived threat stemming from a change may be real or imagined, intended or unintended, large or small. Regardless of its nature, employees will try to protect themselves from effects of change." Strebel (1996:139) explains the reason for employees resisting change, is that, "…many employees see change as disruptive and intrusive." An din this case also as

Aventis management at Waltloo were forced to make changes to the management

style to which staff was unaccustomed to, once the merger between the two

companies were realised. This management change resulted in much uncertainty,

dissatisfaction and resistance. Morale amongst staff was at a low and faith in

management extremely poor. In addition, retrenchments and management

restructuring were also envisaged. The objectives of the people changes were to

reduce the head count in order to become more profitable, leaner and in line with

3

other Sanofi-Aventis sites worldwide. With the second round of structural changes in

progress within eighteen months of the merger, employees were once again under

tremendous pressure often impacting productivity.

Fox (2006:162) suggest that older people tend to resist change more than younger people. This is because older people have generally invested more in the current system and, therefore, have more to sacrifice by adapting to change. Karyn (2002:138) states that major organisational change or innovation can anticipate resistance, especially if proposed changes alter values and visions related to the

existing order. Senior (1997:217) explains that there are forces 'facilitating' change and forces 'acting against' it. The forces that are acting against change are categorised into individual responses and company responses.

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