Week 18: Case Study Hewlett-Packard

“There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.” –(Machiavelli,2013)

How can using change kaleidoscope and Force-field analysis help an organization to deliver its intended strategy?

Change is an act or a process through which something becomes completely different. It encourage in altering the present context of something to a its desired new real state which why changes in life are considered to be one of the most essential characteristics of effective management.

One is able to cope up with change process in a proper manner only when he/she is skillful in obtaining, producing and conveying knowledge and insights. Sometimes both these analytical tools help to measure change and how well does the change happen. In the other hand, changes are ought to be guided by these tools that might sometimes repel or resist change.

Change Kaleidoscope

Change kaleidoscope is comprehensive and better tool that offers people and organization to view the environment and organization in such a way that it is contextualized by the organization, its people as well as the surroundings of that particular firm. To know more about change kaleidoscope, it was introduced by Hope Hailey and Balogum in the year 2002. The advantage of such tool is that it helps in the increment of the potential of a change program for it to be more successful and a hit by reduction in risks being linked to whichever change program in the project.

Change kaleidoscope is a combined study of design choice dimensions and contextual determinants that offers useful information which gives opportunity to a change leader/ manager in order to design consistent yet a coherent as well as integrated suite of interventions that act as a sensitive part to the particular “why, what and who”  of the strategic change program.

Recognition towards the complexity as well as designs of change that are essential for it to be context sensitive is what stays within the Kaleidoscope. Even in case of the context differing largely from the original author developed of it, this tool can still be used as a context sensitive tool. Also, it is a mechanism which helps in dealing with well planned changes as well as is very fit for any kind of organization that set end objectives needed to be achieved. It is most appropriate for firm where change is intermediary and in order to get a very meaningful as well as complete design of the change process, this model should be merged along cultural web or any other multi stage models.

  

Hewlett Packard change Kaleidoscope diagram:

Time:

• ·         High time in order to make changes
• ·         Should concentrate on image of the brand
• ·         Need of change

Scope:

• ·         Necessity of distinguished management style/ motivation strategies
• ·         Alteration of management structure

Preservation:

• ·         Customers that are loyal
• ·         Image of the brand
• ·         Impartiality and satisfaction in job
• ·         Workforce autonomy and quality 

 Diversity:

• ·         Norms, values and culture
• ·         Necessity of diverse thoughts and perceptions
• ·         Need of co-operation between workforce and administration

Capability:

• ·         Change started by skilled experts
• ·         Company that is IT savvy
• ·         Change restrained by organizational culture and structure

Capacity:

• ·         Trained and qualified workforce
• ·         Limited managerial time and money
• ·         Ability to change employee perception by offering more facilities

Readiness:

• ·         Employees are resistant to change
• ·         To deal with new CEO issues

Power:

• ·         Dismiss of hierarchical barriers
• ·         CEO is the most powerful
• ·         Promotion of equality and motivation
• ·         Probability of high power distance

Force Field Analysis

Force Field Analysis is one tool that is simple and useful in helping organizations to identify the “for and against” change factors as well in solving initial vies of the problems related to changes within an organization. In addition to this, force field analysis offers firms with an opportunity to look for the core blockages of the change as well as provides with most suitable remedies in order to go on with the change process.

This change model was introduced 500 years ago by a psychologist named Lewin. His main intension was to help organizations to have a better understanding of the whole working process of changes. In his model, there are two sides; one that represents the forces supporting changes and the other that represents the forces resisting changes.

 Forces supporting changes could be anything that is the driving factors of change such as technology, competition, demographics, etc. Mentioned previously are the external forces but internal forces, forces within an organization, such as inter-division, competition amongst division, etc are also included in forces supporting changes.

Forces resisting changes, commonly known as resistance to change, act as one of the main obstacles in changes since they come to clear in terms of employee behaviour. Lewin’s model is very effective in helping the organizations to look for the probable cause of resistance as well as assistance of change.

Nowadays, businesses have to encounter sophisticated environments where complex tasks are operated vibrantly. Also that difference in the work environments are being created constantly. Everything in this world has a phase after that they prefer change which is considered to be positive thing if they are managed properly. For the organization to have a better understanding of change, these two tools are very helpful. These tools measures different dimensions and different concerns of a change which helps in the manager or the top level seniors to have themselves prepared for any probable actions according to a positivity that can be brought through by the change.

Reference:

http://www.kenyaplex.com/resources/7361-strategic-change-context-using-a-change-kaleidoscope-and-force-field-analysis.aspx,accessed on November, 2013

Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 14

J. Balogun and V. Hope Hailey, Exploring Strategic Change, 3rd edition, Prentice Hall, 2009

Week 17

Can you think of an organization that has implemented a “high risk strategy” that has resulted in success (why was it high risk at the time and why was it a success-was it good luck or good judgment)?

High risk strategy: High risk strategy is an organization’s plans and policies in order to achieve the organization’s main objectives/ goals which involve excessive risk in it but expects a higher amount of return.

In my personal view, there are organizations that have enforced “high risk strategy” in order to succeed. One of the reasons for my belief is Wal-Mart Stores that implemented high risk strategy.

In the year 1945, Sam Walton, a former employee in J.C. Penney, purchased Ben Franklin Store’s branch from the Butler Brothers. Talking about Walton’s high risk strategy, it was to sell the store’s products in a very low price in order to increase maximum volume sales. This decision of Walton was full of risks. He had to go through many obstacles as he had to hover around places where he could get lower cost suppliers as compared to any other stores. Not only this, he constantly passed on the savings in order to have the products’ price low. In his first year of ownership, the store had increased its sales up to 45% which further increased to $140,000 in the very next year. This increment did not stop; there was a gradual increment every year. Later he opened the “Walton’s Five and Dime” once his ownership expired and just went on the same way. He then opened his first Wal-Mart Discount City Store only in the year 1962; ever since the company has faced high and low situations but, Walton’s decision has proven to be a great one as it made him very successful.

Talking about Wal-Mart Store, Inc.’s achievements, it is operating retails stores that uses different plans throughout the world. In addition to this, it has franchise of huge departmental stores that gives discounts and also owns many warehouse stores. According to Fortune Global 500 list in 2013, it ranked 2^nd in the world’s largest public corporation with over 2 million employees. It is the largest retailer in the world.

It has three segments, namely:

1.    Wal-Mart U.S,

2.    Wal-Mart International and

3.    Sam’s Club

In the points below is shown some financial information of Wal-Mart for the recent years:

·         The Wal-Mart U.S had 59% of its net sales and has operated many retail stores in different plans in up to 50 states in USA and Puerto Rico in the fiscal year that ended on 31^st January 2013.

·         Wal-Mart International consists of a range of setups for retail stores, Sam’s Club, online retail transactions, that has been operating in 26 countries exclusive of the United States with 29%of its net sales generated by it in 2013.

·         Sam’s Club includes a membership of warehouse clubs that are being operated in 47 states in the U.S as well As Puerto Rico and the segment’s online operations.

At the beginning of the establishment of the company, it was a high risk to lower product price because of the fact that every store in the U.S had common suppliers which really did not favor Walton greatly. Nevertheless, Walton had a clear vision and good judgment because of which he used up all his savings just to keep his costs low and consequently resulted in his favor that the company very successful.

Do the same for an organization which embarked on high risk strategy that resulted in some sort of failure (why was it high risk and why did it fail-bad luck or poor judgment?)

There are organizations which embarked “high risk strategy” that resulted in failure. One organization that resulted failure on high risk strategy implementation would be Apple Company while releasing iPhone 5C.

In September 2012, Apple launched two iPhones namely, iPhone 5S and iPhone 5C. The 5C model was nothing but plastic and it starts with price of $549 in the United States which is same as the iPhone 5. It is way too expensive to buy such mobile made out of plastic.

According to Guy Potter, director and market researcher at Usurv, “the brand is under pressure to deliver excitement and innovation at every launch and this time the initial mood indicates that in that sense it has failed.”

According to the survey conducted by We Are Social, it resulted that very few people i.e. 19% of the customers gave positive feedbacks while 45% of the customers talked about the costs being criticized and hence, gave negative feedbacks. As per many people’s statement, the high price of the 5C is a very high risk factor that might not do well in the market. Even in countries like India and China where they want more product satisfaction with affordable price, the iPhone 5C was still expensive.

In the case of China and other emerging markets, the investors believed that Apple would poise for a land grab but they were completely wrong. All the Chinese as well as the consumers in other emerging markets would not go for 5C because of the model being expensive than what people had expected it to be. Also it is said that all the consumers would rather go for smartphones introduced by other companies rather than 5C.

Being more precise about the 5C’s price, it would cost £469 for 16GB and £549 for 32 GB. Even if a consumer would want the phone with 2 years of contract it would cost about $100, else it would be costing about $500 which is still expensive either way. This is the reason why Apple should focus more on the pricing strategy before introducing it to the market.

So in order to Apple gain its popularity, it should match up its price to compete with Samsung. Markellos Diorinos also said that, “Apple has made a wrong move- if Apple designed iPhone 5C in order to capture emerging markets, then they’ve made a wrong turn.”

One third of the emerging market consumers are agreeing to spend their $100 yet denying to spend an extra penny on price that is extremely risky. This is due to the fact that the market for smartphones is growing rapidly and that is why people are against spending more money. That is where Apple made a huge mistake by making iPhone 5C look so plastic yet expensive. It is known that the market shares of Apple fell 6% just after a day of launching its two brand new models. Also, 4 banks downgraded their recommendations marking Apple to neutral on stocks.

Hence, I would conclude my point saying that it was poor judgment of Apple where they lacked market confirmation without concentrating on all the market demands. They had completely misjudged the emerging markets that are very certain about spending a lot. Apple should have done a study on every aspect before launching it to any emerging market.

Reference:

http://www.theguardian.com/business/2012/mar/09/bank-of-scotland-fsa-serious-misconduct, accessed on  November, 2013

http://facts.randomhistory.com/interesting-facts-about-apple-and-mac.html, accessed on November, 2013

http://passioncapitalists.wordpress.com/2010/06/22/69/?gclid=COu8x7Tii7sCFQcB4godZkQA0g, accessed on November, 2013

Week 16: case Britvic bar Berger

1. In your own words and using referenced quotes describe the difference between organic growth, merger & acquisition and strategic alliance.

Organic growth

Organic growth is a growth strategy where it supports and assists in making a firm strong by using its own energy sources and the resources needed. As compared to any other approach, this is very slow yet contains lower up-front costs. For small businesses lacking huge amount of capital but willing to enhance themselves, it is a very much appropriate approach. This is more like a “Do It Yourself” type of strategy where most of the firms fabricate their capabilities.

Merger and Acquisition

Merger and Acquisition is a growth strategy that makes an involvement of two different firms in order to create a new firm where they acquire corporations. Here, acquisition means the process of controlling a firm completely by any means.

Strategic Alliance

Strategic Alliance is an approach where a set of predetermined goals is pursued by more than two companies conjointly sharing resources for the same project for a temporary cause.

2. Give an example of a company that has grown through a) organic growth, b) merger or acquisition and c) strategic alliance

The examples of companies that have grown through the following are listed below:

Organic growth: Lego Toy Brand made from its creative and innovative ides developed to become successful.

 Merger or Acquisition: Sony Ericsson is the best example for merger and acquisition as Sony Corporation merged along Ericsson in 2001 which then emerged to an acquisition of shares of Ericsson by Sony Corporations hence developed as a Sony Mobile Communications in 2012.

Strategic Alliance: Nokia and Microsoft would be the best example of a recent alliance.

  

3. Briefly discuss the merger between Britvic and AG Barr. What advice would you give to the new Board?

Case Study answers

Positives:

·                     A newly formed company after merger experienced 37% and 63% shares of AG Barr and Britvic respectively with a loyal customer base for each product. Since they are combined, the loyal customer base is also combined to have a larger market.

·                     The risk is expanded and the large amount of cash flows is very helpful to cover the debts.

·                     They are able to compete in a very intense market since they are combined.

·                     Both companies can benefit from the scale production.

Negatives:

·                     It might result in unemployment of people because of redundancy occurred by merger.

·                     Top management might face problems related to authorization.

·                     Barr individually will experience less profitability as it has to share the £600 debt of Britvic.

·                     Both might face the loss of customer due to any negative experience of a customer of either brand before merger.

·                     One firm will directly be affected by the bankruptcy in another firm.

·                     In some cases it might be very tricky to shift from one product to another.

The suggestions to the new board are as follows:

·                      They should minimize the unwanted expenses.

·                     In order to gain market share, there must be more cash inflows.

·                     In order to increase comfort level and trust, there must more participative goal set.

·                     Good/ meaningful communication should be encouraged more within the combined firm as well with customers.

·                     Respond positively towards the customer’s feedback on product to improvise work.

·                     To show an actual emotional bond between the companies, appropriate advertising should be encouraged so that they will be able to lure loyal customers.

References:

http://www.businessdictionary.com/definition/organic-growth.html, accessed on November, 2013

http://financial-dictionary.thefreedictionary.com/Organic+Growth, accessed on November, 2013

http://smallbusiness.chron.com/organic-growth-strategy-57130.html, accessed on November, 2013

Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 10

Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 6