Application of Organizational Change Management - Case Study Example

Application of organizational change management Name Institution In our prior discussion of literature review on transformational change and organizational management change, it has been observed that the application of the organizational change in a basic concept will lead to improvement of operations of the company in which the change is being effected. It has also been noted that what matters and the level of impact on the application of these strategies is the way the organization strategy is applied. The process through which the various values, goals, objectives, processes and other internal operational measures of a company are change in the view of making some profit is called transformational change (Waddell, Cummings, and Worley, 2007, p.4). It involves a total revamp of ideologies, methodologies and activities of the company. The review of the literature also shows that there lie differences in structural composition of the various companies in existence (Washington & Hacker 2004, p. 404; Chapman 2002, p. 18; Waddell, Cummings, and Worley, 2007, p.3). In view of the above, this portion of the paper seeks to see how the application of the same changes the management setup and the overall operations of a particular company. To achieve this goal, this paper has decided to investigate Holden Ltd company as the following discourse outlines. Holden ltd- brief company profile Holden limited is a vehicle manufacturing and sales company that is based in Port Melbourne, Australia. The company was initially started in the year 1856 as a saddler manufacturing company by James Alexander Holden. Holden ltd became a subsidiary of the U.S based General Motors (GM) in the year 1931 and changed its name to General Motors Holden’s Ltd. The name Holden Ltd was adopted and retained to date in the year 2005 (Holden Ltd website, 2013) making the company become one of the seven fully integrated general Motors operations company that deals in the designing, building and sales of these vehicles across the Australian country and beyond its borders. Holden Ltd manufactures basic local Australian vehicles but also supplements these products with other products from the General Motors Company based in the USA. Most of vehicles manufactured by this company are sold in the local Australian market. Others are exported to other markets outside of this country. The company’s growth since its inception could only be described as nothing short of having been momentous. Today, the company has built an on-site vehicle manufacturing company and rolls out over 45 models. The company sells its products on site and through more than 250 dealership outlets in and out of the country. From inception, the company was designing and manufacturing vehicles exclusively for the Australian market. However, after the year 1950 and declined sales in the country, the company went mainstream and started looking for offshore markets to boost their sales and consequently their profits. This was perhaps one of the best decisions the management of Holden Ltd did. Borrowing concepts from GM and other European models, Holden was able to manufacture vehicles that were appealing even to other markets outside Australia. Commodore, one of the models of the fully designed and manufactured by Holden Ltd was the vehicle that propelled the company into the international market for its wide reception and acceptance. The sales of this particular model have remained to be the best for a single particular model up to date. Through advancement in technology and being in line with the demands of the customer, Holden limited company has positioned itself to be a leader in car manufacturing and development, not only in Australia but also in the other spheres of the world where its products compete quite well with those of other vehicle manufacturers. Company composition and structure of management Holden Ltd operates under General Motors ltd as a fully-fledged subsidiary. Besides the manufacture of and distribution of motor vehicles, the company also manufactures motor vehicle spare parts, motor vehicle engines, components and parts. From the Holden company website (2013), the value of investment by GM into this company is quoted to be in excess of four hundred million dollars, the largest single investment that GM as a company has ever invested in an offshore subsidiary. The head offices of this company are located in Port Melbourne, Australia. This is where the major manufacturing process takes place. The sell point of this company is the Commodore range and brand. Under this brand, the company produces Sedan cars, Ute, Sportswagon and other luxury cars. Holden ltd also operates a press plant where metal assembly operations, hardware body facility, body assembly as well as vehicle assembly operations are carried out. Plastic operations and paint shops are also operated within this company. The company’s market is extensive, having a solid base in the Australian soil and extending to overseas markets such as South Korea, China and Thailand. From their website, Holden ltd has built and released through its line over seven million vehicles and more than ten million engines for both local as well as overseas market. In a span of five decades, more than seven hundred thousand vehicles have been shipped to overseas market. Over a period of just twenty-seven years, approximately four million engines manufactured by this company have been sold to overseas market. These staggering figures are a representation of the largest exports from Australia from the automotive industry. Coming closer to its internal organization, the company boosts of having an employee base numbering 13500 to date. This is followed by a network of more than 200 stores scattered across the Australian nation that deal in direct sales of the Holden company automotive products. The company has 12 authorized service centers across Australia. The brief of this company has given an insight into the volume of the company in terms of market size and company size. This brings this discourse into another portion. It is obvious that a company of this magnitude has to have very clear-cut policies and guidelines of management that propels the operations of the company to new heights as observed above. However, as noted by Barr, Stimpert & Huff (1992, p. 17) and Henderson (2013, p. 187), every company faces a number of challenges in its operations and structural management composition. For a company this big, the management challenges are even more amplified (Ford & Ford, 1994, p. 758). Most companies are resistant to change and the bigger the company is, the harder it is to adopt new changes or redesign its strategies (Waddell, Cummings, and Worley, 2007, p.18; Brown, 2011, p.11). The next part of this discussion follows the investigation of organizational change and how Holden ltd has applied the concept of organization change to propel the company to new levels of profit making and management. Also, how this organizational change has helped the company stay on its ground during challenging times most notably during the global financial crisis of 2008/09 and the recent years following this crisis. Holden ltd in the wake of financial crisis During the years lying between 2007 and 2009, the world experienced what has come to be noted as the global financial crisis (Kuntz, & Gomes, 2012, p.145; Weick & Quinn, 1999, p.362). During this period, thousands of companies went under, millions of people lost their money in form of savings or investment equity and others lost their homes. There was a general outcry in the whole world with majority of businesses especially those that operated as multinational corporations falling and collapsing left right and centre. The crisis, having been triggered in the USA following the mortgage crisis soon spilled over to affect the operations of other multinational companies across the globe. Most of the companies that fell during this challenging time had loose organizational structures or either made unwise organizational decisions. Holden ltd was not spared either. As a subsidiary of the giant General Motors company which has its headquarters in the USA where the financial crisis started, it was bound to be adversely affected in one way or the other. General Motors company was in the midst of this crisis and it had so many of its operations, both on USA soil and offshore affected drastically, almost paralysed. Many subsidiaries of the GM were either shut down or sold at a loss following a massive decline in profit levels and fall of the market. The weakened value of the USA dollar only served to worsen the situation. Workers were laid off, sometimes even without their benefits or compensation of any kind and there was widespread chaos and uproar that threatened to bring many companies down. Holden ltd survived collapsing as many of GM’S offshore subsidiaries did because it had become established in the local Australian market as a local company. However, this does not imply that the company did not face any challenge during this period. Matter of fact, it is during this period that the company faced the greatest challenges than it has ever faced since its inception. Overseas sales and exports of cars, engines and other products from the Holden Company practically went from six digit figures to practically zero. Markets were lost, people had acquired financing to purchase cars and products from Holden ltd suddenly did not have the capability of paying back those debts. The repossessed vehicles and other products could not be resold as there was no market for them. The economies of these nations had dwindled massively. People did not have money, most lost their jobs. Partnerships failed. Organizational management reaction to the challenge brought by financial crisis in Holden ltd Organizational management reaction to the challenge brought by financial crisis in Holden ltd might have been very instrumental in wrenching this company from the verge of collapse. The decisions that management of a company makes when faced with a particular issue which in one way or the other threatens their existence and future operations play a great role in the determination of whether the company goes on to rise from the shambles or sinks to its death (Frohman, 1997, p. 40; Luzinski, 2011, P. 504; Graetz, Rimmer, Lawrence and Smith, 2011, p. 14). Implementation of strategies when faced with a certain form of challenge is very crucial for any company (Graetz, Rimmer, Lawrence and Smith, 2011, p. 14; Landau and Drori, 2008, p.6). Most companies that collapsed during the financial crisis period did so because in one way or another, the management of these companies failed to implement strategies of the company in the right manner. Others collapsed just for the sheer fact that they had not even designed any strategies in the first place and so they were caught off-guard. Designing strategies and setting objectives is very important. But what is of more importance is the capacity to understand exactly how these strategies will be implemented. The previous section has shown the challenges that rocked Holden ltd during the financial crisis. It would be important here to explore in this section the responses that saved the company from the verge of collapse. This has been detailed in a number of subtopics. Laying off of workers Miller (2012, p.17) and Schneider (1997, p.200) agree that laying off workers is among the main steps that majority of companies faced with financial issues and declining volumes of sales do. This is designed to take off some expenses and try to balance the revenue flows with the expenses account (Wanberg and Banas, 2000, p. 134). In other words, the amount of money that was going out of the company in the form of paying employees salary would be now diverted towards other aspects of the business like growth. Laying off workers however is an action that is met with a lot of criticism from the various worker’s unions and bodies that promote the rights of these workers. Painful as it may seem to be; sometimes it can be the only decision that prevents the company from going under. Holden Ltd company managers had to let some people go following a wave of decreased revenue resulting from decreased sale in the financial crisis period. From the Holden ltd website (2013), it is stated that many of the employees especially who worked on casual terms had to be let off to ease the financial burden on the company. Forced Pay cuts Another strategy used by the company to stay afloat was to offer forced pay cuts to their permanent staff. Employees of the Holden company ltd had to do with decreased payment as a result of decreased revenue from sales. Though this was not welcome news, especially since the global financial crises had left a wake of inflation across the globe, many of the workers had to be content with this decision by the management of the company after the management of the company explained to them that it was being done to enable the company survive this challenge. Faced with the option of retrenchment and paycut, most of the employees opted to have their salaries reduced slightly to cushion the company from collapse. With decreased amount of money going out of the business through salaries, and still retaining the same level of workers, the Holden ltd company was able to steer its way through the financial crisis Structural reorganization of the management More often than not, when the revenues of a certain company decreases, the structure of management is usually reorganized so that the right people are placed in the right positions to be able to steer the companies through the waves of numerous challenges (Phillips & Lawrence, 2012). In Holden ltd, a lot of management structural reorganization took place during this period. The reorganization of management and transformational change that occurred in Holden ltd during this period led to even the reorganization of the goals as well as objectives of the company. It is very important for a company to have a management team that is dynamic and that is capable of designing, formulating and implementing strategies that enable the company to retain its perpetuity. If one department is not performing well, then this department is either disbanded, linked up with another or the management of the department changed. This is the situation that Holden ltd was faced with during this period of financial crisis. Many managers in the company were either reshuffled, demoted or even outright laid off depending on the intensity of the situation and the impact they created for the business. The new management team was then tasked with the job of coming up with new strategies that would enable the company not only to weather the storm, but also to ensure that the future operations of the company were not compromised. Local Brand enhancement Perhaps one of the best reactions to the financial crisis and it could also possibly be among the reasons that ensured that Holden ltd stayed on its feet while other companies were collapsing could be because the management of the company decided to enhance the local brand. As a fact matter, the vehicles that were imports from outside and assembled by the Holden ltd were more expensive than the vehicles that were wholly produced locally. In the wake of financial crisis, people were looking to buy products that were cheap and that would suit within their new status. Discovering this urge, the company invested in enhancement of the local brands through extending the brand to include vehicles such as sedans and SUVs. The pricing was also moderated and this served to attract people to buy from this company as opposed from importing from other companies overseas. Finance arrangement for people who wished to purchase these vehicles even during this challenging period was conducted and people could still afford to buy from the company and pay later in form of installments. This ensured the sales of the company were steady. Expanding into international markets Though the company had already expanded its scope of operations into countries like South Korea and China, during the financial crisis, these offshore branches were not performing according to the expectations of the company. Holden ltd, in a bid to increase its profile and even the decreasing profitability levels, it ventured into the international market in pursuit of partners to invest with them. The fact that the financial crisis affected everybody globally made it even easier for the Holden company to acquire rights and partnerships that were not very costly for the company. through this and strategically positioning itself for the time the crisis would end, it was able to make profits and stay ahead of its competitors. Corporate social responsibility Corporate social responsibility forms one of the best ways through which companies rebrand themselves and attain a certain level of appeal from the public that enables them to maintain status of market leaders. In other words, through corporate social responsibility, companies are in a position to resonate with the people who more often than not form their customer base. Through this interaction, people are able to see the bright side of the company and become loyal to the company. It is within the objective of every major company to be able to engage itself in activities that give back to the community as a way of earning the good will of the community. Holden ltd Company is no exception to this undertaking. As one of the largest company in Australia and certainly the largest in the automotive industry in the country, the company conducts very numerous charity projects that are designed to make the people maintain the taste and liking to the products of the company. During the global financial crisis when the majority of the companies were shying away from engaging themselves in activities that would take cash from their business, Holden ltd was busy looking for avenues through which it could cement and utilize its give back to the community policy through the community social responsibility docket. This actually went a very long way in making the people come forward and buy products from the company despite the harsh economic times then. Price reductions, financing arrangements, sale fairs and discounting The management of Holden ltd Company was faced with one major problem following the global crisis; the people who had previously no problems in affording these cars could no longer afford to buy the cars. The economic meltdown had fusion into even basic homesteads. This implied that the company was producing thousands of cars for a market that had already sunk. People could no longer afford to buy basic commodities and as such, they definitely could not afford to buy cars. Therefore, something had to be done. The management of Holden ltd came together to look at the best possible way to approach this problem. Three things cropped out; price reduction, financing arrangements, discounting sales and conducting sales fairs. Price reduction was designed to bring down the price of purchasing a vehicle or motor vehicle products to a level whereby people could afford and the company would still make a percentage profit at the top. This strategy worked and the sales volumes started improving. At the same time, the management found out the some people wished to purchase cars from the company but they did not have the monetary capacity to purchase vehicles outright. Through collaboration with banks and other financial partners, Holden ltd started offering motor vehicles to these people on a financial plan that suited both parties. People could now come, pick a vehicle of their choice, place a down payment according to preset conditions and drive away. Then they would clear the balance off the car in a certain stipulated period of time. Discounting was also aiming at reducing the prices of vehicles and making these vehicles become affordable. Recommendations A couple of recommendations are offered here as follows; i. The company should concentrate on positioning itself as an international competitor through production of products that meet the international standards criteria rather than restricting its market to Australia and a few other countries. This could be done through partnering with other players in these countries. ii. Now that the global crisis is over, the company should look into the affairs of the employees and offer them better terms as happy employees are usually more motivated to work harder. Conclusion Data laid out here in line with Holden ltd organization strategy has been empirically collected and analysed to show how organizational strategy can be utilized to assist a company weather rough conditions. From the discussion, Holden ltd company has been observed to have utilized this theory of organizational change to assist it overcome the challenge that was the financial crisis that hit the whole globe. A number of ways applied by the company have been discussed. Some of them include drastic measures that included laying off the workers, price reductions, expansion into other markets overseas and strengthening local presence through brand enhancements. The process of organizational change has been shown to be able to allow companies that were initially making losses or underperforming to come around and start being performers. References Barr, S., Stimpert, L. & Huff, S. 1992. Cognitive change, strategic action, and organizational renewal. Strategic Management Journal, Vol.13, no.1, pp. 15-36. Brown, D R, 2011, An Experiential Approach to Organisation Development, 8th ed., Prentice Hall, New Jersey. Chapman, J., 2002. A Framework for Transformational Change in Organizations, Leadership & Organization Developments Journal, Vol. 23, no.1, pp. 16-25 Frohman, L. 1997. Igniting organizational change from below: The power of personal Initiative. 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