The Significance Of Change Within Economic Climates Business Essay

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What is change? It is a question which has been one of the major challenges an organisation has to face because it is unavoidable, due to the drastic economical and business changes, according to CIPD Available at: [Accessed 2 July 2010]. Why organisations need to change? In this topic the Chartered Institute of Personnel and Development states that there are many things that play a relevant role in cause of organisational changes, this according to CIPD professionals include:

Many management gurus have researched and presented theories as how change can be managed in an organisation, and on the bases on this the management gurus have discuss four basic view points, these are:

I - Classic View: this is more focused towards the traditional bureaucratic organisation concept; here various managers believe that to manage change in an organisation is through edict, as it provides a clear sense of direction for every one in the organisation, however the issue in this is if it fails to create commitment to change in that case it results in developing resistance by acknowledging the power causing distrust and conflict.

II- Human-Relation View: this to deal with resistance of change, this concept has three basic points first it involves change in order to promote commitment, secondly it influences people attitudes and beliefs and thirdly it influences the work group in focusing towards group achievement.

III- Contingency view: this is the first modern approach towards managing change; this approach is based on two steps.

III a- Initial systems scanning; in this step there are two basic analysis to be conducted first is the analysis of the technical aspect of the system which in case of manufacturing unit is the analysis of production process and existing equipment, the second step is based on the social system: in this the organisation system, job profile, ER, informal structure and its operative systems are analysis. 

III b- Change process: this step is sub divided into five steps which are

i - Idea and initiatory step, in this step the market analysis, financial investment which includes cost and saving analysis.

ii - Programming step specification and requirement for implementation and formulation with the integration of human resources.

iii - Project planning step is structured on basic planning, planning and detail planning phases.

iv - Implementation step - here it is to setup the change mechanism

v -. Operating step is the running of the mechanism in the organisation.

IV - Political view; in this concept to implement or bring change, power, authority is the main component, meaning without power nothing is possible, here the people have to comprehend the following:

i - Social perspective from the human aspect

ii -The organisation has to structure it self with its environment keeping the contingency concept

iii -There has to be alignment between the organisation change, organisation structure and organisation behaviour.

Current economical climate and its impact on change:

Global economical survey conducted by ACCA (the Association of Chartered Certified Accountants) in the 1Q of 2010 came to a conclusion that around 23% of the respondent to the survey stated that there was global growth however the impact of economical environment especially since 2007 till end of 2009 had affected a large number of businesses especially in the financial sector, in case of United Kingdom (UK), it should be noted that service sector is the largest sector in the UK which is approximately about 75%, the economic credit crunch had a strong downpour on it and due to this reason organisations in the financial, clothing and manufacturing sector redundant their workforce. However many large retailers in the grocery sector in 2009 mid had a different vision of credit crunch, here the retails sector announce that they will create 30,000 job, and in this ASDA announce that it was in process of hiring further 7000, this is with reference to the article written in by Kollewe. J., 2009, Available at: [Accessed 2 July 2010]. Furthermore despite the sales had reduced United Kingdoms largest retailers like Tesco had developed a strategy to induct 10,000 new staff as an expansion plan. This was followed another by retailer like Morrisons whose corporate communication head announce that they will hire 5,000 more people by the end of the year and even J Sainsbury stated that it intends to create 4,000 jobs by expanding its convenience stores business.

Environmental impact of managing change in the grocer sector has been stated by Barrie Brackstone, Business Director of TDG in press release, that the grocer shops have moved away from the traditional perishable products to longer life grocery items, and due to this reason the large grocery retail organisations have shown growth of their organisation. Barrie in his statement had further mentioned that these organisations especially in the grocer sector had developed and made drastic changes in their supply chain management procedure which was one of the major factors in their growth and expansion.

It should be note that the organisational change management is the grass root point of organisational development and if the organisation does not go through changes it will not be able to meet with the challenges happening in the global environment, furthermore with reference to Torrington, D. Hall, L. Taylor, S., 2005 Human Resource Management. 6th ed. London: Prentice Hall International states that the third set of core objectives in nearly every business is relates to the role played by the HR functions in effectively managing change.

Organisational structure based on Bureaucracy and Hierarchy and its difference

Organisational structure is a framework of classifying and systemizing allocated task of individuals which results in determining different departments in the organisation, furthermore this results in instituting responsibilities of the individuals, this is a normal condition in a formal organisation. The basic difference between the formal and informal organisation is the approach between departments and operations which are not rigid in case of informal organisation.

Normal large organisations are hierarchy as compared to smaller organisation and due to this reason the small organisations are normal flat in structure, in an hierarchy organisational structure is more like a pyramid where the senior management sitting on the top of the organisation are less in number but have the basic decision making responsibility and are normally considered as policy makers, the middle management set of people who basically are the one who implement the policy and eventfully the lower management are set of people who are considered as workers.

Organisations have various type of operating mechanism and one of them is the Bureaucracy concept, this concept was presented by Max Weber (1864-1920), the word bureaucracy is been drive from a French word Bureau meaning office, hence the bureaucracy is an operating mechanism of an organisation with a rule through a desk or office, in this kind of environment each and every task is documented. According to the Manual provided by RDI BTEC level 7 Managing Change in Organisations, the bureaucratic management is associated with six characteristic and these characteristics are Rules and regulations, Impersonality, Division of labour, Hierarchical structure, Authority structure and Rationality.

In case of bureaucratic organisations the manager follows a set of system and does not have a say in the organisational operation of bring change whereas in the modern scientific management approach the manager and the people working in the organisation have a say in the operational mechanism.

Task 2

Systems for understanding and involving others in the process of change

2. Task 2 Systems for understanding and involving others in the process of change

Concept of Stakeholder

The concept of stakeholder is based on the interest they have in the organisation, these stakeholders are divided into two classes the first class is a group or individual are within the organisation and they can be referred as "Primary Stakeholder" such Director, employee, the second class is a group or individual who are outside the organisation referred as "Secondary Stakeholder" such as customer, supplier to the organisation.

The concept of stakeholder was first used by Stanford Research Institute; this theory was further developed by R Edward Freeman (1980).

This figure is taken from Wikipedia

Involvement of stakeholders in aspect of organisational change

Managing change is process when an organisation from small grows and becomes a large entity, to understand the involvement of stakeholder in bring change can be projected by the case study of ASDA, this company initially started in 1949 as Associate Dairies and Farm Stores in Leeds, however in 1965 the name of this company was changed to ASDA due the merger of Asquith Chain and Associated Dairies. The stores of ASDA were initially located in the North of United Kingdom and by 1989 the company started to expand its stores in the South of United Kingdom, in mid of 1999 ASDA was purchased by Wal-Mart, one of the largest American retail companies. At present according to Wikipedia website [Accessed 4 July 2010] states that there are 143,126 employees working for ASDA, and with a sale of GBP 15 billion, furthermore ASDA has 321 stores in the UK and around 29 stores in Northern Ireland.  

Both the type of stakeholders play a vital role in managing changes in an organisation like ASDA. For example at present majority of organisations in UK are going through price competition, even ASDA is a part of this price competition because the customers, who is an external stakeholder want low price, furthermore the customer wants ASDA to participate in the local community. To cater these to points ASDA has changed it management operation by becoming an active participant to activities of the community and these activities are published by ASDA on the newsletters and also on the notice boards of the stores, the other point is lower prices, to manage low price is possible in two ways first by negotiating with the supplier and buying bulk amount of product from suppliers, secondly is by improving the operation mechanism of the organisation, according to the report publish on ASDA website it states that it has made lots of management changes within the organisation so to improve the services to the customer.

These changes in ASDA is possible by conducting stakeholder analysis, here there are two kinds of stakeholders, the first one are Key Stakeholders who has a direct interest in the process of change and the other are non key stakeholders who do not play a vital role in the process of change but their presence is accountable.

The analysis of the stakeholder conducted by ASDA and other organisation is because it assists the organisation in making important decisions, and these decisions are important in developing the organisation.

The steps an organisation like ASDA takes in involving their stakeholders are:

Data Collection

There can be several ways of colleting data like:

interviewing directly the stakeholders

interviewing the specialist

Based on the information collected the initial step is to draw a chart having the information, which has a proper listing of the stakeholders keeping the attitude and confidence structured in various columns

Developing Strategies of change:

Based on the tabulated information the management of ASDA develops strategies of improving the operation of the organisation and these strategies are the key steps towards bring change in the organisation.

The steps involved in developing strategies of change are based on the following steps

Forming: in this step the leader plays an important role in guidance of the management change

Storming: in this step the change managers sit and do loud thinking about the information collect during the process of data collection.

Norming: in this step the change manager develop systems of activities which will bring changes in the organisation.

Performing: this step is implementing the change process in the organisation.

Task 3

Implement models for ensuring ongoing change

Task 3 Implement models for ensuring ongoing change

Two models of change

There are many models which are been used by various organisations to bring a change, like Business Process Re-engineering, Kaizen, Delayering and downsizing etc.

Business Process Reengineering (BPR) : was model design to assist the private sector organisations, this process was discuss by Michael Hammer.1990 (former Professor at MIT (Massachusetts Institute of Technology) in his article published in Harvard Business Review, this process was for improving operational cost of the organisation and to improve the customer services, so that these organisation could compete their competitor.

The BRP initiates at the senior management where the organisation's strategy and its mission are redefine, during the initial process the basic point is debated is that, "does the organisation need to redefine it mission?" and in doing the redesigning process will the stakeholders be motivated? Is it a step towards the organisational development? Once these questions are address the process is initiated.

The process of reengineering is focused on the restructuring the business processes, and during the process trying to stay in the framework of the organisational mission and goals. The first step towards this model is to specify activities which have to be understood in the process of reengineering and this is possible through analysis of the organisation and its stakeholders.

As this process is to develop new system in the organisation, it is important to keep the stakeholders confidence intact, the process starts at the senior management level, where the mission, work process, decision, information and technology is define, execute, consider and employed for the purpose of processes, support, guide and accomplishment.

This figure is taken from Wikipedia

Kaizen: is a model of change in an organisation which is based on the concept of practices which focuses towards continuous improvement of business and operative process in the organisations, these process could be with manufacturing, marketing, administrative, purchases, logistics, supply chain management of the organisation. As this is the process of life long ladder towards improvement in the orgniasation hence it starts from the Managing Director to the worker at the grass-root level.

Kaizen continuous improvement process and is based on 5 basic factors, which are:

Team work

High moral

Self discipline

Quality operation

Good listener to suggestion of improvement

Implementing a model of change

Implementing Kaizen can be explained with the case study of Toyota Motor Corporation, Toyota was founded by Kiichiro Toyoda in the year 1937, at present Toyota has approximately 320,808 employees working for Toyota all around the globe. In the year 2001 Toyota Management adopted "Toyota Way 2001"concept under to domains "Respect for People" and the other "Continuous Improvement". The guidelines which were summarized by Toyota had five values points,:

1) Kaizen (improvement),

2) Challenge,

3) Respect,

4) Genchi Genbutsu (go and see)

5) Teamwork

Kaizen was strongly implemented by the Toyota Production, here all the personnel had to work towards on core object which is to do with continuous improvement, and the Kaizen cycle is based in Toyota Production as follows:

4. Summary

The assignment covers all the learning points explained in three different tasks, each task has the learning pointer discuss which reflects the learning outcome, in the first task the changes in the organisations is discussed covering topics related to organisational change and its economical affects especially focusing to retail sectors growth in the United Kingdom keeping the global financial credit crunch, in the second task the involvement of stakeholder is described with a case study growth of ASDA and in the third task implementation two models of change are described, here the learning point is described with Kaizen model been used by the Toyota Production.

5. Recommendations

Change is an ongoing process and if the organisation does not change according to the economical environment it can not be sustainable, here in this assignment two sectors have been discussed one in the retail sector and the other in auto manufacturing sector, while analysis of change in case of ASDA and the growth ASDA has achieved during years is due to it merger and furthermore on based on its acquisition by Wal-mart, however when comparing ASDA with Tesco and Sainsbury it is my recommendation that ASDA should not follow the direction set by Wal-mart, because the Wal-marts philosophy is based on American concept of huge outlets, whereas normal in United Kingdom land is comparatively much expense and due to this reason ASDA's growth becomes limited, it is recommended that ASDA should follows the track of growth of Tesco or Sainsbury in changing, as it will have more growth because Tesco and Sainsbury beside having large outlets even have smaller outlets and due to this reason Tesco and Sainsbury have a very market share, whereas in the third learning outcome where kaizen principle is discuss on behalf of Toyota case study, here the recommendation is that Toyota should try other continuous improvement mechanism especially in the production division and quality assurance department because Toyota made a huge loss due to the defect in their cars.