Application on Modern, Interpretive and Postmodern Theories - Example

APPLICATION ON MODERN, INTERPRETIVE AND POSTMODERN THEORIES IN SABMILLER PLC Name: Class Name: Instructor’s name: Institution’s name: City: Date: 1.0 INTRODUCTION (Unless otherwise stated, the content of this report is from SABMiller’s website) The beer sub-sector has for many years witnessed fierce competition between the rival brewers in the world. This has resulted to an almost four-horse battle with half of sector production coming from these four leading brewers (JPMorgan 2010). In recent years, the development of strategic alliances has been at the centre of most brewers’ strategies with rapid consolidation taking place in the emerging markets of Africa, Asia and Central America. The report below evaluates the company, SABMiller in an attempt to see modernist theories in practice. It attempts to highlight various modernist theories within SABMiller’s environment, social structure, corporate culture and technology. The report then proceeds to suggest possible solutions and recommendations for the problems arising out of the previous analysis. Finally, it closes with a look at the alternative perspectives to the modern organization. SABMiller is one of the four largest brewers in the world, offering more than 200 international, national and local brands to more than 75 countries across six continents. Some of its notable brands include Castle Lager, the leading beer in Africa, Miller, Lech, Eagle and Aquila among its many brands. Apart from brewing, it is one of Coca-Cola’s largest bottlers and has strategic investments in hotels and gaming. It is headquartered in London. In brief, modern thinking prompts the consideration of a wide range of factors that interact to influence the situation and therefore, the rational choice of strategies, structures and processes for managing it. It commends the scanning of environments to select a philosophy and design that matches what the environment has to offer with what is demanded by it. 1.1 ENVIRONMENT ANALYSIS Resource dependence theory The theory suggests that the behaviour and success of an organization is a factor of the environment in which it is operating. It thus emphasises that organizations must adapt to their external environments stressing the effects of resources and power. Since an organization depends on the external environment in order to survive, it is subject to pressure from these resource providers in terms of how it functions. Thus, the greater the dependency of an organization upon an element of the external environment, the greater the ability of the element to influence organizational policies and procedures (Hasenfeld, 2009, p. 62). Resource dependence in relation to SABMiller PLC centres on various parties in the external environment that are of utmost importance to its survival and profitability. These include competitors (Inbev, Heineken) alcohol control regulators, tax authorities, allies (suppliers), customers and industry participants. We shall now see how these stakeholders in the external environments are crucial to the survival of SABMiller. The rapid consolidation in the alcohol market of competitor corporations has significant implications for SABMiller because their actions have the potential of unprecedentedly tilting fortunes out of their favour. A SABMiller report indicates that since 2000 the top 20 brewers have been involved in more than 280 mergers and acquisitions with a total transaction value of more than US $80 billion (SABMiller 2007). Consequently, the company faces the risk of entering into unprofitable alliances apart from failing to implement the consolidations effectively. This relationship between SABMiller and its competitors boils to be a serious power-play whose solutions we will look at length in the next section. Social trends have brought in several developments. The company is now confronted with powerful players with the capacity to affect its operations in the many continents it has set its footprint. With the increased concern with drunk driving, several governments have mandated a legal drinking age. For instance, the US Federal Government increased the legal drinking age to 21 years. This raising of legal drinking age has at least in theory decreases the size of SABMiller beer market. Further, public policies regarding alcoholic beverages, which include anti-drunk driving laws and excise tax, have resulted to SABMiller’s stagnating sales volume in some countries. In the US, home to its newly acquired subsidiary, Miller Brewing Ltd, the increase of beer federal excise tax from $ 9 to $ 18 per barrel significantly affected the pricing of beer thus slowing down volume growth. As much, decline in the mature markets of US and Europe can be attributed to such tax regimes. Finally, the campaign by anti-alcohol activists and regulators towards a healthy lifestyle of fitness has also pushed alcohol consumption to a more moderate level. In the recent years, health concerns of weight gain and alcoholism have reduced the appeal of alcoholic beverages. Additionally for SABMiller, the increasing prices of raw-materials notably aluminium, cardboard and bottle prices has devastating effects on its profitability. 1.2 SOCIAL STRUCTURE ANALYSIS Under this title, we shall look at the variants of the contingency model, which assumes that managers act rationally in light of the information and knowledge, which they have about how to ensure efficiency and market responsiveness. Bartlett and Goshal model (1989) identified four models of categorising organizations. Under their model, SABMiller falls under multinational category. The head office in London monitors performance primarily on a financial basis with few transfers of managers or technologies or practices either across the subsidiaries or between the head office and subsidiaries. Typically work systems in the different subsidiaries differ depending on the history of the subsidiary and the normal pattern of control in its particular national context. Country managing directors are responsible for ensuring adherence to SABMiller values and guiding principles and in some cases are supported by divisional level committees. Based on Harzing control focus, Harzing (2000), the headquarters in London, seeks to maintain control using output control where it sets financial targets. For the subsidiaries to achieve with performance at the subsidiaries being monitored and evaluated each quarter using an internal reporting mechanism, based on core key performance indicators .and as such, every six months the results are submitted to SABMiller board for consideration. At the end of the year, a comprehensive questionnaire covering key accountability issues plus more than 250 indicators form the basis their annual reporting. Additionally, they sign off these statements admitting their responsibility to their preparation and accuracy. The difficulty of this form of control, stems from the diversity of output measures and the problem of choosing and secondly information asymmetry ,where the subsidiaries have got more information about their activities than SABMiller, thus leading to the possibility of the subsidiaries distorting the figures in order to serve their own interests. 1.3 TECHNOLOGICAL ANALYSIS Technological determinism is the theory that has been at the heart of mainstream management explanation of the relationship between technology and organizational behaviour. At the core of technological, determinism is the assumption that the technical properties of a particular technological device are the causes of corresponding development in organization and society. Woodward (1965) argues that, organizational structures will reflect the type of technology in place. In modern management terms, technology radically alters the cost/benefit equation therefore introducing remarkable efficiency gains. The evidence of this theory in SABMiller cut through a whole range of technological improvement underscoring the effect technology has on the company’s structure. Mainstream thought on change assume a smooth transition to a new organization forms structured around new technologies. Thus, it fails to address the fundamental problems of resistance to change. It impedes managers from anticipating problems because it takes inadequate account of the implications of change for employees. In addition to, recognizing and explaining why change is resented and resisted, it fails to take in account how employees become attached to established work arrangements and valued work routines. Most change management programmes are mere exercise of management power and subjugation rather real empowerment. 1.4 CULTURE ANALYSIS The inclusion of corporate culture into the organizations’ governance configurations have been so much neglected by managers of MNCs, because of weak empirical support for data supporting the theoretical line of reasoning. This has resulted in governance structures focused exclusively on the structural point of view. Nevertheless culture represents an interesting perspective for the MNCs with substantial benefit from expanding the concept of corporate culture. Like any other MNC, SABMiller represents a theatre of action at the intersection between two cultures. The culture or subculture of SABMiller and the culture or subculture of the countries SABMiller is operating (Ghoshal and Westney, 1993, p.6). The modernist view of culture perceives that through mechanistic interventions, culture can be influenced. Often this view comes from consultants who have a vested interest in providing easy solutions to the management of culture. The problem of the modernist view is that attempt to influence the design and development of corporate culture often prove futile because culture is unresponsive to managerial attempts of control (Martin and Siehl, 1983, p.53). SABMiller has dual mechanisms at their disposal to effectively coordinate and control their operations. On one hand, the structural and formal, and on the other hand, the cultural, informal tools. Cultural management for SABMiller may prove to be not so effective. 1.5 PROBLEMS Legislations like anti-drunk driving broadcasting laws. Trends towards healthy life style and reduction in alcohol uptake and weight gain. Rapid industry alliances and mergers. Control and measurement of subsidiaries performance. Handling change in company’s operations processes. Culture management. Tax legislations that severely impacts on SABMiller profitability. 1.6 RECOMMENDATIONS To take into account the cultural aspect of the diverse nations it is operating into its control and coordination mechanisms, SABMiller may adapt their structures to accommodate local styles of management. In particular societies where, a pecking order of hierarchy is seen as an irreducible fact, an authoritarian and hierarchical structure may be adopted, because the local employees may have been conditioned to accept that their superiors has more power .Such societies Hofstede referred to as of high power distance for example, France. With regard to risk aversion level in these diverse societies, SABMiller could use Hofstede’s uncertainty avoidance index to determine the approach to use handling risk aversion in diverse nations and regions. Other useful analysis and indexes are found in (Hofstede, 2002). Control and coordination can also be exercised by positioning expatriates managers in the most important roles within its subsidiaries. These will act as ‘the eyes and ears’ of the head office. They will exercise controls and coordination by implementing practices defined by the head office as essential to its functioning. However, room should be given to the sort of managers with knowledge of the local conditions. To ensure continuous improvements of quality and productivity, operations in SABMiller should use a variety of product labelling for monitoring and tracking. These are Julian codes having brewing data such as production line, manufacturing date and time expiry or best before date. This will assist distributors and retailers to manage their stock and help in solving quality problems in cases of quality inquiries. 2.0 SYMBOLIC INTERPRETIVE This approach focuses on how an organization can make sense of and give meaning to equivocal or ambiguous information. It accounts for the idea that information has no inherent meaning and that it is given meaning through interpretive processes. From this perspective, data mean nothing until they are used by organizational participants. The focus of interpretive perspective is the way organizational structures, organizational processes and the psychological characteristics of organizational members influence the interpretation of information. Over time though communication among organizational members, symbols evolve and take on new meaning. Such symbols are used to interpret information. As strategic issues that emerge from an organizational internal and external environment, that have the potential impact on the organizational performance managers can develop interpretations and share them with other organizational members. This is in order to reach a common understanding as a basis of further decision-making. Additionally strategic issues arising just of the environment can have an individual perspective where individual develop ‘mental’ models because insight and innovation occur to individual, not organizations [ref]. This varying interpretation can then be shared and as a result, mental model changes. Such a refined ‘mental’ model leads to the questioning of organizational goals involving a new interpretation of the environment. The interpretive view of culture is that, culture can be influenced within limits; otherwise, the concept would be of little significance to corporate practice and organizational theory alike. Therefore, while it cannot be expected that a manager can exert control over the direction of cultural development they can slightly modify the trajectory of a culture by living and leading by example. These parameters may have signalling effect on the members by showing them which tasks and perspectives are important to the organization. Modernist contingency theory assumes that the environment determines the nature of the organization. However, symbolic interpretive thought argue that, such environmental forces have to be sensed and analysed by organizational decision makers and use their interpretation of the environment to take actions they deem appropriate. Some managerial teams may be better at sensing environment than others. 3.0 Postmodernism The message of post modernism to organizations is that members must unlearn traditional behaviours and learn new ways of working that allow long-standing hierarchical rule, bureaucratic conventional and formal relationships to be broken up and new ones formed within larger inter-professional operational units and work groups that are loosely coordinated rather than controlled centrally(Ferlie 1996). Postmodern approach in opposition to the technological determinism ideas is premised on technological choices made possible through flexible manufacturing systems. On one hand, jobs in the modern organization are highly demarcated and deskilled, while in postmodern organizations, jobs are highly differentiated, demarcated, and multi-skilled. Where modern organization were based on tight employment relations, post modern organizations develops more complex and fragmentary relational forms such as sub-contracting and networking. Postmodern approach means that SABMiller can quickly respond to changes in supply and demand, through robust information systems that can be used for, purchasing, production, and distribution decisions. SABMiller has some elements of a postmodern organization. The company adopts the ‘listening to the customer’ approach. All SABMiller operations have swift systems to respond swiftly and positively to feedback from customers and final consumers alike. In miller brewing company, customer queries are processed through a toll free number with these queries classified into five categories: enquiries, complaints, nutritional questions, praise and miscellaneous. Beer South Africa operates a customer care line for receiving enquiries. Additionally the 0-800 is imprinted o all bottles and cans for easy contacts. Attitudes of final consumers are quarterly assessed though a marketing impact monitor. Also, other researches are undertaken including evolving cultural trends, views of young adults and the changing roles of women. In fact, 7% of expenditure is devoted to research and development. In fostering working and effective relationships with suppliers as postmodern management thinking prescribed, SABMiller strives to meet legal and contractual relationship with its suppliers. Most SABMiller companies pay 20-30 days from the invoice date. The global sourcing council initiative ensures that a supplier can secure large secure contracts. SABMiller opts for partnership with suppliers to increase quality and guaranteed reliable supplies. In Botswana, a central procurement department is present to build better relations and ensure fair allocation of contracts. In Tanzania, long-term relationship with barley farmers has had positive impacts on the livelihood of farmers by guaranteeing them stable and long-term market. Tanzania Breweries provides interest-free loans for; fertilizers, insecticides, and seeds as well technical support to farmers. This is in line with the postmodern approach of employing a web of strategic partners in supply and distribution. Additionally, the company has a core of highly educated workers and a peripheral flexible labour force consisting of part-time and temporary staff. 25% of assembling is done by temporary workers. Postmodern management guidelines in SABMiller include being attentive to customers and anticipating or even initiating shifts in demand, paying attention to current and potential competitors so as to establish a distinctive market position where better profits are made. 4.0 CONCLUSION Throughout the study, it has been evident that the organization of this company is partly modern, and post modern. The limitations of the mainstream approach have been highlighted, and the alternative approaches used to explain how the weaknesses evident in the modern approach may be solved. Reference Bartlett, C. a. (1989). Managing across Borders: The Transnational Solution. Boston: Harvard Business School Press. Ferlie, E. A. (1996). The New Public Management in Action. Oxford: Oxford University Press. Ghoshal, P. a. (1993). Organisational Theory and Multinational Corporations. London: Macmillan. Harzing, A. a. (2000). Transferability of human resource management practices across borders:. Bradford: University of Bradford, Management Centre, 2000. Hasenfeld, Y. (2009). Human services as complex organizations. Newbury Park, CA: Sage. Hofstede, G. (2002). Culture's Consequences, 2nd Ed. London: Sage. Joanne Martin and Caren Siehl. (1983). "Organizational Culture and Counterculture: An Uneasy Symbiosis,". Organizational Dynamics , 52-64. JP Morgan. (2010). Brewery Sector Highlights, 2010. New York: JPMorgan. SABMiller. (2011). Retrieved August 27, 2011, from SABMiller: www.sabmiller.com/ SABMiller. (2007). Annual Report 2007. Retrieved August 27, 2011, from SABMiller: www.sabmiller.com/files/reports/ar2007/2007_annual_report.pdf Woodward, J. (1965). Industrial organization: theory and practice. Oxford: Oxford University Press. Read More