Bega Cheese Organizational Management - Case Study Example

Bega Cheese Organizational Management Name Course Tutor Date Managing people and organizations Table of Contents Managing people and organizations 2 Table of Contents 2 1.0 Introduction 3 2.0 Company Overview 4 3.0 Lessons learned about Bega Cheese and managing people and organizations 5 4.0 Mechanistic-organic continuum of Bega Cheese and why 8 5.0 The implications for managers in ensuring that the organization survives into the long term 11 6.0 Conclusion 12 7.0 References 13 1.0 Introduction Normally, it is considered that management of people and organization would be simple if employees had a positive attitude, outstanding talent, collaborative and hardworking. Then again the management will have little to do because multitudes of the highly motivated workforce would be working diligently and happily. However, this cannot be true since business environment is changing greatly and managers that have been relying solely on the old Fayol’s theories of management have become less relevant compared to a hundred years ago (Verbeeten, 2008, p.429). The organizations have become too complex to run because the businesses now operate in culturally different environments. With young people contemporary managers are finding flat organizational design, easy and efficient to manage (Jacobides, 2007, p.456). Globalization is increasing, companies are manufacturing product to export to foreign countries and diverse cultures are interacting prompting managers to train employees on how to handle people of other culture. Bega Cheese Company is one such company which is the focus of this paper. This report assesses the lesson learned about Bega Cheese and managing people and organizations. The paper will also discuss where and why on the mechanistic-organic continuum should the organization be positioned and the implications for managers in ensuring that the organization survives into the long term. 2.0 Company Overview Bega Cheese is an Australian company which processes and distributes the dairy products. The company was established in 1899 in New South Wales and has since grown and now distributes its product all over Australia and beyond to more than 50 countries (IBISWorld, 2013). Bega Cheese manufactures one of well-recognized cheese in Australia. The establishment of Bega started over 100 years ago when Bega Valley dairy farmers formed Bega Co-operative Society in New South Wales, but restructured to a company in 2008 called Bega Cheese Limited. Bega Cheese is still primarily supplied and owned by the Bega Valley dairy farmers. According to IBISworld (2014), the company today employs more than 1630 staff within its manufacturing plants and supply networks. Every year, Bega Cheese manufactures about 20,000 tonnes of cheddar cheese and 50,200 tonnes of the value-added cheese in its production and packaging plants in its headquarters, Bega Valley (IBISWorld, 2013). Around 20 percent of the production volumes are sent to foreign markets as exports. The company domestically supplies markets such supermarkets and food-service outlets. IBISWorld (2013) claims Bega Cheese makes numerous unique cheese products and other brands under Bega including Tasty Sticks, Super Slices, Strong & Bitey Sticks, Real Cheese Snacks, Super Slim, Bega Shapers, Bega Junior and Original Stringers. Under Cheddar cheese, the company makes products such as cheddar cheese blocks, cheddar cheese sticks, cheddar cheese slices, grated cheddar cheese and cheddar cheese cubes. Over the years, the company has performed well and is expected to continue with the same results in 2014-15. 3.0 Lessons learned about Bega Cheese and managing people and organizations Contemporary business is very competitive and the secret to success depends on the management of people and organizations. Kagaari, Munene & Ntayi (2010, p.510) pine that human resource (employees) remains the greatest asset that a company owns; they drive company processes to prosperity. To make the people work hard and perform as required, they must be motivated through remunerated well, rewards, involvement, have favorable working environment and the right tools work (Schauffeli, Taris & Van Rhenen, 2008, p.181). Managing people goes beyond employees to customers and community at large so as to satisfy their needs. This means making quality products and upholding highest honesty, integrity and values. As mentioned before, Bega Cheese Company today employs more than 1360 to help the company deliver its promise to customers and in return make maximum profits (Abigail, 2014). Managing people at the Bega Cheese starts from recruitment of employees to the time they become experienced employees. Over the years, the company has realized having the right staffs for the right jobs is a step to reducing the time the company spends in training new employees. According to Abigail (2014) policies, numerous careers exist in Bega Cheese; many of which job opportunities are internally advertised before being communicated externally to other applicants, unless the company needs particular skill-sets. The company draws a lot advantages from internal recruitment. One of such advantage is that, employees who have worked in the company for sometimes understand the systems and policy and stand a chance of delivering positive results compared to new employee from outside. It has been established in theory of managing people and organizations that creating of organization-specific human resource normally takes up a combined investment of the company and staff, which is rare to find; hence there is intent of maintaining and keeping a long-term relationship (Schawbel, 2012). When an employee occupies has been in the organization for quite some time, he or she increases skill set leading to specific human capital. This means if Bega Cheese recruits externally, “it would be difficult to get an external candidate who can do a better job compared to an already existing worker in the organization settings” (Wagner & Hollenbeck, 2010). Another advantage that Bega has when it recruits from within, it works as a promotion. Another lesson learned is that when a company recruits from within, there are positive effects on staff’s motivation and morale. In such perspective, staffs feel valued that the organization rewards their work by providing a chance to take up new roles or is being moved step further to a department where a staff has a greater interest. This also means Bega supports and promotes personal development its employees. Wagner & Hollenbeck (2010) assert that employees who are allowed to realize their career development tend be loyal to the company because they feel valued. Internal recruitment also inspires staff to perform better to improve production. When an employee is rewarded with a better opportunity to progress in a “career ladder”, the employee will work harder to retain a higher degree of productivity (Schawbel, 2012). This has been evident with the Bega Cheese Company in the recent years. The company has been hungry for the better and has gone ahead to double in size from 2007. According IBISWorld (2014), Bega’s revenues has been strong in the last five years, as a result of management and employee’s spirited performance to improve productive capacity (see figure 1 and 2). The exemplary customer service of the staff has seen the company create a loyal and solid customer base through communication assisting the company retain a high level of consumer purchase in difficult economic times. IBISWorld (2014) posit that the performance has also been enhanced as a result of the partnership with the Tatura Milk Company. Internal recruitment has also proved to be at a lower cost compared to external recruitment. To advertise jobs to staff within the company, the human resource department just requires posting the vacancy on the bulletin board of the organization, memos or circulates the openings through the emails or the intranet of the company (Collings & Mellahi, 2009, p.305). Bega management is able to cut cost of operation through recruiting internally. This is because the costs they would have used for advertising for external in media like the Televisions, newspapers or magazines can be used in other projects. They can also save the cost used by human resources experts to screen and select the right applicants and even that of departmental manager money for personal interviews. Bega has also been able to reduce employee high turnover through internal recruitment. Schawbel (2012) maintains that when employees who worked for the organization for a long time are by-passed for an external candidate, they feel less valued and even starting to question their competence. The result is that they will be demoralized hence looking for a better job elsewhere. The company also upholds strong corporate values that also incorporate the societal values (Abigail, 2014). Incorporating societal values ensure the there is no conflict between company, customer and the general community. The research on Bega Cheese reveals that company has been doing well in Australia for several years, mainly because of its strong moral principles and values to employees and the local community. Verbeeten (2008, p.432) claims that when values of an organization are aligned with inspirational values of the employees, organization performs higher due to high commitment. The community will also be attracted because they feel the company manufactures product which suit not only their needs but also adheres to their culture. Hence, they become loyal as a result of satisfaction. Figure 1: Bega Cheese financial performance Source: (IBISWorld, 2014). Figure 2: Segment performance Source: (IBISWorld, 2014) 4.0 Mechanistic-organic continuum of Bega Cheese and why Over the years organization structures have moved from more complex to simple. On the other hand, management style have are no longer those used during Fayol’s time. Research carried by Burns and Walker in 1961 illustrated the nature of organizations based on a continuum from the mechanistic to more of organic (Lunenburg, 2012, p.4). In the research, they described mechanistic organizations are ones that are hierarchical and authoritarian in nature, structure and practices. One the other hand, organic organization is team based, democratic in practice and flat in structure. Burns and Stalker also claim that organic organizations are very flexible and can adapt to change (Cole, 2005). This structure has few management levels, minimal job specialization, minimal direct supervision and decentralized form of decision-making. In a nutshell, an organic organization is fit for the ever changing conditions while a mechanistic one is regarded to be rigid and apt for stable conditions (Cole, 2005). Based on such analysis, Bega should be positioned at organic continuum. The company has a flat organizational structure to adapt modern conditions of business, it has sophisticated and advance technology aligned to its business systems, team-based systems and motivated workforce. Verbeeten (2008, p.437) argues that organizational structure matters a lot in terms of decisions making and market delivery. Companies where decision takes a lot of time are known to lag behind in market delivery and market share. Therefore, the need for speed prompted Bega create a flat organizational structure. In this structure, middle level managers are eliminated between the employees and top executives (Fried, 2011). The notion here is that Bega’s well-trained employees will become much more productive because they will be directly taking part in decision making processes, as opposed to closely being supervised by the several management levels. By uplifting the responsibility level of baseline staff and doing way with middle level management, opinions and feedback get to all personnel engaged in decision-making more rapidly (Fried, 2011. Also anticipated response to customers takes shorter time. In the current business arena, technology has become an important asset for competitive advantage (Sinha, 2004). However, it keeps on advancing, and technological system that was used ten years ago has become of little reverence today. As an organization at the organic continuum, Bega has a strong emphasis on technology advancement and its importance to supply management, production, marketing and selling. Abigail (2014) claims that the company has adopted an exceptionally higher degree of mechanization and automation within its company. Some of the contemporary machines the company uses in its operation are unmanned case palletizers, automatic de-boxers and automatic laser-guided forklifts. The company is also using modern technology in its product and packaging. Through technology, Bega Cheese is producing various products which are in excess of 200,000 tonnes every year (Abigail, 2014). The CEO Aidan Coleman claims the company has one whole line which is completely mechanized from the de-boxing raw materials to conveying of pallets to truck at the company stores. Bega Cheese Company also has established partnerships so as to benefit from highly developed technology (Abigail, 2014). Coleman went further to claim that one of the Bega’s major strengths is their capability to create a joint venture with other firms to develop technology which create faster growth of the cheese industry. According to IBISWorld (2014), the introduction and integration of the APV Siro Curd technology at Bega Cheese led to more cheese yields and enabled constant automation with better control of process variables. Technology reduces costs of operations. As an organic organization, Bega has embraced team based to increase the rate of its projects and production (Lunenburg, 2012, p.3). Competition has increased considerably between companies in their scramble than before. Therefore, they must work with speed to reach the market. Organizations have created team settings to realize the speed of delivery. Without teamwork, it can be very be hard for managers to establish which employee can greatly complete tasks. Bega Cheese has several teams working in production, marketing and sales. According to Abigail (2014), one of the outstanding one is the Farm Services Team which directly interacts with farmers and manages milk supply and also ensures quality is maintained as per milk specifications as well as maintaining. 5.0 The implications for managers in ensuring that the organization survives into the long term Hardly can one find business managers who can communicate and inspire long-term vision and goals and direct the daily operations with the necessary passion for details. In the ever-change business environment, a manager must be strategic in styles so as enhance shareholder value and remain in the business for a long time (Rowe & Nejad, 2009). They must also pay attention to creating their resources, competencies and capabilities for the organization so as to gain sustained and appropriate competitive advantages. Smith & Hitt (2005) hold that some of the strategies long term survival of an organization includes employees management, asset management, innovation and creativity and use of technology and good customer service. Human resource remains the greatest asset for organizational survival (Schauffeli, Taris & Van Rhenen, 2008). It is the employees who make organization to run; they manufacture products, package, distribute and sell them. Hence, building better and formidable relationships with staff is paramount for managers (Wagner & Hollenbeck, 2010). The workforce must be motivated to perform better. Motivation takes various forms such as better remuneration, incentive and rewards. The rewards can also be in the form of finance or job promotion. Company assets also provide it with a competitive advantage and if used well, the company will improve its profits. For instance, before the Bega bought unmanned case palletizers, automatic de-boxers and automatic laser-guided forklifts they used lead to supply of less cheese which could not meet the demands of its customers (Abigail, 2014). Today, with these assets, the firm produces in excess of 200,000 tonnes every year. Meaning they are able to increase their profits when their asset are managed well. The company can also form partnerships with other competitive companies to help them get into new markets or to help it increase competition in various markets (Rowe & Nejad, 2009). On the other hand, they can decide to merge or absorb the competitor business to ease competition. This is the case of Bega Cheese which acquired Kraft Foods processing factory in 2008 to not only increase in production capacity but also to get rid of the competition (IBISWorld, 2013). In 2011, it also acquired Tatura Milk Company to enhance economies of scale and operational efficiency and supply (IBISWorld, 2013). Today, the organization can be compared with war and victory remains ephemeral. Maintaining a brand in the mind of a consumer is a continuing battle in which victory can be grabbed away very fast. Sinha (2004) argues that the constant battle to gain top spot in the market has compelled firms to continuously innovate. This is a strong message to contemporary managers to always be creative and innovative so as to improve their brand. Continuous creativity and innovation remains the heart of competitive strategy in the 21st century (Sinha, 2004). What drives this innovation is technological change in any competing company. 6.0 Conclusion From the research, it is evident that Bega Cheese is currently enjoying the market dominance as the most recognized cheese brand in Australia because of its management of both employees and organization. The company has continued to use its strength such as better human resource management, innovation, strong corporate values and technological advancement to improve its market share for many years. However, its competition has increased greatly owing to increase in external forces such as globalization, advancement of technology and rise of competitors like Murray Goulburn Co-operative and Lion limited. However, there are still opportunities which Bega can exploit to remain strong brand in Cheese industry. The company must seek partnerships, improve its technology and expands into new market to sustain competition. 7.0 References Abigail, P. (2014). Bega Cheese Ltd: Bega Cheese Tastes Victory. Retrieved on 13th August 2014 from http://www.businessreviewaustralia.com/Bega-Cheese-Ltd/profiles/14/Bega-Cheese-Tastes-Victory Collings, D.G. & Mellahi, K. (2009). Strategic talent management: A review and research agenda. Human Resource Management Review, 19, (4), 304-313. Cole, N. (2005). Organic Church: Growing faith where life happens. London: John Wiley & Sons. Fried, J. (2011). Why I Run a Flat Company. Inc. (magazine) IBISWorld. (2014). IBISWorld Industry Report C1133a: Cheese Manufacturing in Australia. Retrieved on 13th August 2014 from http://clients1.ibisworld.com.au.ezproxy.lib.uts.edu.au/reports/au/industry/default.aspx?entid=1856 IBISWorld. (2013). IBISWorld Company Premium Report: Bega Cheese Limited. Retrieved on 13th August 2014 from http://clients1.ibisworld.com.au.ezproxy.lib.uts.edu.au/reports/au/enterprisepremium/default.aspx?entid=2214 Jacobides, M. G. (2007). The inherent limits of organizational structure and the unfulfilled role of hierarchy: Lessons from a near-war. Organization Science, 18, (3), 455-477. Kagaari, J., Munene, J. C., & Ntayi. J. M. (2010). Performance management practices, employee attitudes and managed performance. International Journal of Educational Management, 24 (6), 507 – 530. Lunenburg, F.C. (2012). Mechanistic-Organic Organizations—An Axiomatic Theory: Authority Based on Bureaucracy or Professional Norms. International Journal of Scholarly Academic Intellectual Diversity, 14, 1-7. Rowe, W. G & Nejad, M.H. (2009). Strategic Leadership: Short-Term Stability and Long-Term Viability. Retrieved on 13th August 2014 from http://iveybusinessjournal.com/topics/leadership/strategic-leadership-short-term-stability-and-long-term-viability#.U-ucR-OSxmM Schawbel, D. (2012). The Power Within: Why Internal Recruiting & Hiring Are on the Rise. Time. Schauffeli, W., Taris, T. & Van Rhenen, W. (2008). Workaholism, burnout, and work engagement: three of a kind or three different kinds of employee well-being? Applied Psychology: An International Review, 57 (2), 173-203. Sinha, P. (2004). Survival Strategies: Innovate or Die. Economics web institute. Retrieved on 13th August 2014 from http://www.economicswebinstitute.org/essays/survivalstrategies.htm Smith, K., & Hitt, M. (2005). Great Minds in Management: The Process of Theory Development. Oxford University Press, Oxford. Verbeeten, F. (2008). Performance management practices in public sector organizations impact on performance. Accounting, Auditing & Accountability Journal, 21 (3), 427-54. Wagner, J. A., & Hollenbeck, J. R. (2010). Organizational behavior: Securing competitive advantage. New York: Routledge. Read More