Stanley Works Corporation in Australia - Case Study Example

Name: Course: Instructor: Date: Stanley Australia case study review The Stanley Works is a USA Corporation which controlled and operated two individual companies in Australia-Stanley Australia and Stanley Bostitch. It manufactures more than fifty thousands products which range from hand tools, air and hydraulic tools, fastening systems, automatic doors, doors, hardware tools to mechanical tools among others. It thrived well due to the quality of its products and brand recognition within the manufacturing industry and posted excellent profits. However from 1980s to 1990s, Asian manufactures began to improve their products quality and sold them at a lower price, this put pressure on global competitiveness and Stanley works started to lose market share and customers. The new CEO of US Stanley Works Corporation, John Trani appointed in January 1997; was faced with the severe situation, he had to implement organizational change to improve cost efficiency and regain market share for the Stanley Company globally within a short period. To begin with, Mr. John decided to close down some global manufacturing and distributions sites from 123 to 70. Next, he changed the organizational structure from divisional to matrix. Finally, John merged two subsidiaries, Stanley Australia and Stanley Bostitch because Australia was the most affected by the Asian cheaper products (AUSTRALIA, 2003). In addition he ceased the manufacturing operations in the two companies i.e. Stanley Australia and Stanley Bostitch. With manufacturing operations stopped this meant that plants which dealt with manufacturing had to be shut down. This resulted to closure of four plants while the fifth was sold because it did not comply with the company’s product lines. The plants closed were Wangaratta, Hobart, Sydney, and west heldelberg headquarters while clamps and vices plant in Coburg was sold off. This paper will demonstrate the type of change in Stanley Works in Australia, the analysis of the parent entity’s view to this change in the global context and with regard to the four major elements of the Stanley organization. These elements include people, process, structure and technology. The paper will end with a conclusion of the change and its global impact and sustainability. Deresky (2008) claim that globalization is the degree to which countries, institutions and people are becoming increasingly linked by networks that have been propelled by developing economies, the collapsing of international borders and the rise in technological advancements. The globalization has removed the boundaries between the companies, also increased the need for stronger competition among world organizations; therefore, in the global environment, Stanley Works must struggle to remain global competitiveness via organizational change throughout the whole company. Therefore the type of change that took place at Stanley works Australia was a transformational one. Transformational change programs involve wide spread change throughout the organization that incorporate value change, strategy change, structure change, system change, culture change that includes all stakeholders (CUMMINGS, 2008). In order to capture new market opportunities and survive in the global context, the Stanley works parent entity undertook a transformational change in Stanley Australia to achieve its goal. This type of change involved implementing organizational changes that would ensure it retained its market share that had faced stiff competition from the cheaper and improved Asian products. The company achieved this through hiring more skilled younger employees in the sales and marketing and logistics departments. This strategy to expand these departments was adopted to ensure that the company had competent employees who were directly selling and marketing its products to the existing and new clients. This would strengthen the working relations between the company and its clients. In addition the focus on sales and marketing departments, on increase the market share saw the marketing manager position divided into two to increase efficiency. One manager headed the mechanics tools which were sourced from Sidchrome and Stanley while the other manager headed the builders’ tools which were mainly sourced from Stanley brand. The employees ware divided into self managed groups that were reliant on each other. This fostered team work and ensured that the employees motivated each other to work hard and achieve the goals set out for them by the company. The structural change at Stanley works was transformational because it involved major restructuring changes that saw the company cease its manufacturing operations that resulted to closure and sale of its manufacturing plants. This meant that the company had to import its product from its parent company and other approved companies (JOHNSON & BADE, 2010). This gave rise to a demand for larger space to store the stock to avoid delays in supplying the clients with the products. The other major restructuring change was the merger of both Stanley Australia and Stanley Bostitch into one single entity. This change brought with it many structure changes for example the Stanley’s organizational structure changed from divisional to matrix, the CEO of Stanley Bostitch become redundant since the role was absorbed by the managing director of Stanley Australia and the human resource department was outsourced to a consultancy firm. However manufacture of some products that were only exclusively manufactured in Australia and were leading in market share continued. The merger led to some three hundred employees being laid off due to closure of manufacturing plants. The mergers aim was to reduce the cost of operation and increase the profit margin since the manufacturing operations was very high compared to importing the products. The change in the company’s processes was transformational because they involved introduction of technology into the company’s operations. Due to a reduction in space which was prompted by large numbers of imported products, incidences of safety and occupational hazards on employees occurred which prompted the company to adopt technology to avoid such incidences. The company changed its process from ISO 9001 to ISO 9002 to comply with the new structural changes which ceased the manufacturing operations. This process change saw the company rewrite its procedures again to reflect the structural change which was that the company was no longer manufacturing its products rather it was importing them. The change in processes led to an increase in lead time that delayed market responsiveness which led to a pressure increase on computer systems of the company. This computer systems pressures were further increased by the process undertaken to remove year 2000 bug to avoid crashing the computers. Another change was the outsourcing of the human resource company which complicated the process of the company hiring, firing and seeking advice from the department (HAUGEN, MUSSER & LOVELACE, 2009). The company did not have access to the consultants daily rather they came in twice a week. The process changed after the merger due to the combination of employees from both companies working together. The management had to change some of the processes to accommodate every employee, the management formed groups which consisted of employees from both companies. The culture of the company experienced transformational changes with the management delegating employees the greater role of making decisions based on their analysis and accepting the responsibility that resulted from their decisions. The management integrated a new communication process and participation of both teams and individuals. These cultural changes were meant to integrate all employees from both companies, reduce waste cost, satisfy the employees and increase the efficiency of the company as a whole. The company’s culture was altered due to the laying off of three hundred manufacturing employees and hiring more skilled sales and marketing employees to work towards increasing its market share (FIRTH & NICKSON, 2002). This change altered the demographic of the company since most of the new workforce hired consisted of young people. After the merger the culture altered after the two companies employees started working together with the former employees of Stanley Bostitch struggling to adjust to the new working culture. These employees experienced a complete transformation since previously they sold products to contractors, builders etc but now were expected to sell to major retailers. Before the merger each company had its own culture for example Stanley Bostitch had adopted a ‘support culture’ based on harmony trust and sense of belonging operated in laissez faire, even ad hoc fashion while, Stanley Australia was operated on traditional lines as a ‘power culture’, which focused on control, strength, direction and loyalty. This further caused uncertainty to the employees when the Stanley Australia culture was being transformed. New Technology was adopted in the company to assist and transform the processes, operating systems and efficiency. The company set up a call centre which increased the company’s efficiency because the clients would call in with their queries, inquire about products, order and raise their complains from their offices or shops (KHONG, 2003). The call centre reduced the operating cost the company would have incurred through hire of customer care representatives throughout the country to assist customers with their queries. However this led to job losses in some sectors since their roles were absorbed when the call center was set up. The company increased its IT systems which ensured that the company was able to respond to the market, increase market share and growth through the skilled labor force hired that reached to a wider market. The company advanced the operational processes by incorporating technology which led to reduced causes of health and safety hazards to employees. New machinery was bought to assist the manpower in the storage due to the reduced space and to increase efficiency. The Stanley US parent company had implemented two major approaches in its organizational change: organizational diagnosis and data collection, designing and implementing interventions. This led the company to apply a transformational change in Stanley Australia through restructuring the company by merging both corporations in Australia. The company wanted to cut cost by doing away with manufacturing operations and outsourcing for products from external companies and parent company. The company changed its organizational structure from divisional to matrix in order to maximize the functional units of the company (CREATIVE EDUCATION VIDEO, INC, 2005). Through the change the company managed to cut down the cost after closure of manufacturing plants and increase its profitability and reach its targeted market share. The parent company which set out to change Stanley Australia from a manufacturing workforce to a sales and marketing workforce, where job descriptions would change from manufacturing tasks to purchasing, planning and predicting the market was successful. This shifted the role of employees to empowerment rather than control ensuring that performance was measured against profit and productivity results rather than activity. This ensured a continued margin growth in profit globally and market share at a lower cost. The global implications and sustainability of this change on people, process, structure and technology is noted below. The change to merge the two companies cost some employees their jobs though the parent company had taken measures to inform the two corporations of their decision early enough. The companies opted to compensate them and involve them in all the decisions they made to ensure a smooth transition. In addition the company offered a voluntary program for any employee wishing to quit. This ensured a successful merger without much court battles resulting from dismissal complaints. The company managed to hire more skilled workforce in the sales and marketing and logistics department that would steer the new merged company to better times in future (CADOGAN, 2009). The parent company perspective was to change the traditional culture that had not yielded much and replace it with a more open minded one where employees were involved in decision making and were accountable for them. This change increased the overall company performance since the employees were more empowered to work rather than controlled by management. However all this changes experienced some challenges since employees were accustomed to their cultures and were resistant but the management hoped that they would adapt once they were familiar with the new culture. Due to the outsourcing of products there was an increase in logistics job opportunities. However technology introduced in the company made some employees lose their jobs due to absorption of their roles. The change that the parent company took to transform the two companies in Australia significantly affected the process of the companies globally. The merger ceased manufacturing operation which was a major process in the companies and a source of jobs to many. This led the company to change its process from ISO 9001 to ISO 9002 and rewrite all the procedures and processes of the company again. The closure of four manufacturing plants and sale of one that was not in line with the company’s products to reduce cost reduced the number of employees. The merger introduced new process to the company of purchasing and importing products from external companies in order to reduce costs which gave rise to demand for more skilled personnel in logistics and sales and marketing. The logistics department imported more within a higher lead time which increased the stock and reduced the space available causing occupational and safety health risks to the employees. Therefore the organizational process was technologically enhanced to reduce this risks that existed. Despite all this process changes the company was able to achieve the goals it set out to achieve by implementing these changes and have continuously reduced its operating cost, gained market share and regained its profit margin to take its rightful position among the most profitable multinational company globally (TUETH, 2010). The change implications of the structure of the company foremost were the merger of the two individual operated companies into one entity with employees from both companies working as one. The second implication was the integration of the Stanley Bostitch CEO role into the Stanley Australia managing director role. The other implication was the outsourcing of the human resource department to a consultancy firm for two days a week. The sacking of three hundred employees gave room to the company to change its structure to logistical, sales and marketing driven strategy structure rather than a production activity role. In addition these departments were offered increased remuneration and prestige to intervene from the corporate strategy. The company gave different mangers responsibility over specific products for example the marketing manager position was split into two each responsible for different products. These implicated changes led to new sustainable and productive structures that have succeeded in achieving the parent company goals for the company. The implications of this change on technology were that the process become more technologically advanced given an increase in stock and reduction in space which made the company more efficient. The company opened up a call centre that served the customers to ensure that their problems were solved fast. The change brought an increase in computer systems which was a challenge and improved IT systems from the skills workforce that improved the market for the company. Technology has continues to enable the company to penetrate new markets globally and increase its revenue throughout despite the challenges it encountered (COLLINS, 2001). It is evident that the type of change that Stanley works Australia adopted was transformational because it involved major changes to the company’s structural, process, people, culture and technology. It also involved the merger of two companies into one and a shift from manufacturing to outsourcing products from cheaper suppliers in order to cut cost and increase profit margin to meet the target set out for the company by parent US Stanley Company. The parent entity perspective of this change that it implemented to the company had both positive and negative implications on the people, process, structure and technology. However the parent entity managed to achieve its goals through these challenges and the company countered the challenged the best way that they could. 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