Strategic
Management in Action
Table of Contents
1.0 Introduction
The
management theories have been changing since the nineteenth century. New
management methods are released whenever they have been proven to work. It is
important that an organization develops the best management strategy and uses
it. The paper discusses three case studies on different scenarios of management
to determine effectiveness of management techniques on the business success.
The case studies are the Organising for
Success- One Sony?, Boardroom Battles
at Hewlett Packard and Leadership and
Strategic Change: Leading Change in Fiat and Chrysler.
2.0 Case Study 1 – Hewlett Packard – Strategy development process
According
to the Case Study, the profits made by HP kept reducing despite their high
sales. Besides, there were false accusations in that the members of the board
were leaking information on each other to the media so that the other members could
be viewed as the source of the problem. The board members did not trust
themselves and campaigned against the other..
The problems of the company started
in 2002 during Carly Fiona’s tenure as the CEO. According to the case study,
she publicly condemned one of the board members for opposing the acquisition of
Compaq. Issues then started when the members of the board started propagating lies
on one another. The case study indicates that the next CEO, Mark Hurd changed
the strategy to cutting of costs. However, he failed and again, there was
public criticism from the board members.
The Case study states that Apokether
was the next CEO and he too developed strategies that did not work. The board
turned against him and did not want to associate themselves with the strategies
which he had implemented that failed. According to the Case Study, Meg Whitman was
appointed CEO and initially her strategy to tackle the problems of the
organization seemed to be working. However, they proved to be worse when the
share price fell further.
2.1 Development of strategies in organizations
The first
step begins with the identification of the prevailing market situation and the
scenario of the organization. The second part is the development phase where
the formulation of plans is made. It should be noted that one of the most
crucial factors in this period is employee involvement and consultation for the
project formulation process. Another factor is the consideration of the
economic and political background that are present within the firm. The next
stage is usually the implementation of the procedures so that so that execution
of the strategies is undertaken. There are two main parts of the policy
development process as discussed below.
2.3 Emergent and Intended Strategies
As suggested by the name, this
procedure occurs where the employees are consulted, and their opinions are as
important as that of the management. The significance of this option of
strategy development process is the increased efficiency due to the
consideration of the social situation and the eco-politics of the
organization.
The CEOs that were
being replaced each tried implementing their strategy and what they thought
would work best for the company. For instance, Apokether focused the company on
operating on business-to-business sales of the printers and PCs. He further
invested much into the software business and while spinning off the PC
business. Besides, he launched a tablet computer in 2011. All these strategies
were meant to work well for the company, but the result was the opposite of the
expectations. When the plans of acquiring Autonomy came to the knowledge of the
investors, the shares prices fell. The shareholders were also against the idea.
This led to the dismissal of Apokether. Further, he was blamed for the woes
that had befallen the company while the board disassociated with his strategic
plans.
The two strategic
development processes are combined and used together to achieve the required
objectives of the process. Consequently, the company will get results that are
very effective. Despite HP being a giant IT corporation and one of the best in
the world, the case study indicates that the company experienced hardships in
the nine-year period between the years 2002 to 2011. The CEO in 2010 Leo
Apotheker introduced several strategic development techniques that were meant
to bring changes to the frustrating condition. The strategies faced significant
challenges. The decisions that were made were inappropriate, and the planning
was also affected.
According
to the Case Study, Apokether intended to make business decisions without
involving some members of the board. For instance, he wanted to acquire
Autonomy. However, his plans were shot down by the CFO when she stated to the
board it could not help the company achieve its objective. She also added that
Autonomy was overpriced.
Another
instance of intended strategy is seen where Apokether issues profits warning
internally because he did not trust some of the directors. However, it was not
easy keeping that a secret and soon it was known to the public and
shareholders. They were disappointed.
2.4 Proposed policy development process - HP
One
of the best strategies is the quality function deployment. In this type of
plan, the organization starts by identifying the specifications and the designs
that the customers require. This technique would have enabled HP to development
several computers and printers that would have satisfied the customers’ tastes.
Primarily, it would allow HP to develop different models with the specific
features the customers would require and not just a few brands with several
features that would not be useful to the majority of the buyers. Besides, this
method would lower the cost of the PCs and printers and make several customers
buy them.
3.0 Case study 2 – One Sony
According
to the Case Study Organizing for
Success-One Sony? CEO Stringer intended to make Sony one by incorporating
different changes into the organization. His primary strategy of achieving this
was through combining the hardware section of the firm, normally in Japan, with
other sections mainly led by the Sony Music and Movies in the US. After
combining all the businesses, he called it United Sony.
3.1 Organisation’s configuration – Structure, Systems, and Strategy
According
to the Case Study, Sony experienced a reduction in its profits. Despite its
rival companies growing and getting more profit, Sony's profit remained low. It
therefore resorted to bringing new CEOs. All of the CEOs had a particular
structure of managing the company. However, most of the CEOs together with
their methods failed. The configuration of an organization consists of the
relationships, processes, and structures through which the organization
operates. There should be a coherent vicious circle between these. The
relationship refers to the connection that exists among the employees both
within and without the organization. This relationship can be seen between
Howard the foreign CEO and the local employees. According to the case study,
the CEO did not understand Japanese. Therefore, he would talk in English and
give instructions which would ultimately be ignored by the employees. This
describes how weak the relationships were within the company. This was partly
responsible for the failure of Howard as indicated by the results.
Thirdly,
structural design is used to imply the lines of reporting, roles, and the
responsibilities. Unless structures are appropriately adjusted, the process of
implementing strategy can fail. This happened for the case of Sony. In the Case
Study, when Hirai become the CEO, he was determined to have the business
transformed. He wanted to alter the structural design that had been in
existence and bring in a new one. One of his actions was the breaking up of the
big groups and developing 12 businesses that were stand alone and independent.
This made communication between the different structures difficult since they
had to take long to agree. Mainly, they had adopted a multidivisional structure
so as to run the business. The structures were several. At some point, they had
divided the business into five functional structures with each area
specializing on something else.
3.2 7S McKinsey’s model – One Sony?
These
goals are examined by looking at seven key elements within the organization.
Firstly, there is the strategy which is the overall plan set by the
organization so that it can take some competitive advantage and edge out its
rivals. The company had a good structure, but it did not work as expected. Both
Howard and Hirai's strategy failed to produce results that could be said to the
right. They should have changed their policy so that they get a competitive
advantage over Apple and Samsung who were their main rivals. Besides, the
strategies could have protected them from the cheap electronics from Asia.
Secondly, the CEOs adopted a wrong structure. By dividing the organization into
different 12 independent units, the structure had been defamed.
Thirdly, shared values are the
values that majority of the people believe. It is the organization's beliefs.
Not all employees in the company shared the same values. For instance, the
employees did not follow exactly what Howard told them. The other is skill and
competencies. The CEOs were not engineers, yet they were working for a high
tech company hence they did not fit into those positions. The management method
of the leaders was not constant since each one tried to implement something
different. For instance, while Stringer centralized the business Hirai created
various positions with a horizontal method of management.
3.3 Configuration dilemma – One Sony
According
to the Case Study, Hirai used horizontal method while Howard wanted best
practice in each element produced. These kinds of structures both proved to be
wrong. They could have stricken a balance between hierarchies and the holistic
methods so that they could increase their profits.
Hierarchies
vs. networks – Action and control are usually
ensured using formal hierarchies. However, they can behave uneasily when they
are with informal networks which foster innovation and exchange of ideas. Hirai created several hierarchies by
implementing the five structural changes. A networked company would have
brought in more visible income and profit compared to creating several hierarchies
within Sony.
Centralizing
vs. decentralizing – Centralization is
necessary for processes and products standardization. However, decentralization
is flexible. The Sony’s solution would have been achieved by decentralizing the
business. Stringer had initially centralized everything by creating the Sony
United. The best remedy would be making each of them decentralized and
independent so that they could make their decisions.
The organization should manage the
dilemmas through subdivision of the organization, simultaneous combination of
different organization principles and frequent recognition.
4.0 Leadership and change management – Fiat and Chrysler
In
the present economy of the world, many automotive companies are bailed out by
the government. Without the bailouts then the industry would be in chaos.
Without management change in Chrysler, then the Company would also require a
bailout from the Government. Otherwise, it would have stopped operations.
However, the arrival of Sergio Marchionne brought new hopes for the firm. He
had rescued Fiat from losses to profits in just two years. Sergio Marchionne
created management that was able to change Chrysler from near bankruptcy to a
thriving company. This case study examines the management methods used by
Sergio Marchionne to achieve the transformational management to lead to the
success of the bankrupt the auto manufacturer.
Sergio
Marchionne was the one responsible for leading change in Fiat and Chrysler. His
fame was first from leading Fiat from losses to profitable. He then went to
went to Chrysler to work as its CEO. Chrysler was on the brink of bankruptcy
during 2009 financial crisis.
4.1 Change management and its challenges – forcefield analysis
Force
field analysis is a tool for managing change in the workplace. The use of this
tool has its critical advantages. For instance, it enables the evaluation of a
particular opportunity and the determination of its benefits and disadvantages.
Hence, the company can decide whether it should drop the changes or continue
with them. Besides, it helps in the determination of the challenges which are
ahead and therefore, the company develops options for overcoming the problem.
According
to the Force Analysis of the Case Study, Sergio Marchionne faced several
challenges as he tried to bring change in the two companies. For instance, the
senior management had a bad habit of upward referral to the CEO. However, he
solved this by laying them off. Besides, when he took over as the CEO of
Chrysler, the organization had a $6 billion loan from the Government which he
had to work to reduce or clear. It is therefore, evident that he brought change
to the company.
According
to the Force Field analysis from the case study, Sergio Marchionne faced
problem in that although the stake of Fiat in Chrysler was 53.5%, Fiat
experienced a reduction in its sales due to the bad economic conditions in
Europe while Chrysler kept prospering and its profits and spending rose. In the
case study, the factories of Fiat were operating at 50% and the vehicles had
one of the least ratings in the US. However, he handled this by asking for
government’s intervention so that it could close down non-profitable companies
and lay off some workers.
4.2 Types of change by Sergio Marchionne
Sergio
Marchionne implemented different management changes. These changes were
responsible for the transformation of the two businesses from a loss to profit.
The primary change type used is the revolution change. This kind of change
occurs over a very short time in an organization. It involves significant
cultural and strategic changes which are conducted rapidly. To accomplish this,
he engages himself in different actions. For instance, he adopts multiple
management styles. This is seen when he selects 26 upcoming leaders within
Chrysler. These leaders were either two or three level below the top level.
They were to report to him directly and hence the management of the
organization was flattened. Secondly,
Sergio Marchionne adopted culture change. In this case, he worked with the
already existing elements at the Organization and also used the experience of
the previous management team so that he could improve the products.
Another
change element is that of monitoring the change that was taking place. He set
clear targets for his staff. Most of these changes were related to the
company's finances which involved a reduction in pay and job cuts. The fourth
change required clear strategic direction. Sergio Marchionne created an action
plan that was both strategic and precise for Fiat when he became its CEO.
Lastly, he caused changes at the top management. In this scenario, Sergio
Marchionne realizes that the top management had so much upward referral.
Consequently, he laid out more than 2,000 of them.
4.3 Levers of change that were implemented by Sergio
The
levers of change are actions and decisions that business leaders take to
involve the employees in the change process. It also allows the knowledge and
enthusiasm of those already involved in the change to be engaged and motivated.
They should be involved since the organizations can only get change if those
inside are participating in the change process themselves. Thus, they can
recognize the importance of the modification. Besides, it gives them momentum
to be changed. Sergio Marchionne used different change at both companies to
make the process easier.
The
case study postulates that Sergio Marchionne used challenging the
taken-for-granted. This is clear in the statement “Why did it take Fiat four
years to develop a new model?” The second lever for change was power and
political system. This occurred when there was a formation of a strategic
alliance between Fiat and Chrysler. Also, removal of individuals who were
resistant to change was a power, and political systems change for the lever.
The third lever of change involved changing of operational processes and
routines. This included separating the departments of different brands in
Chrysler. It also included compelling the managers to think differently. The
fourth lever for change involved change tactics. This included the arrival of
Sergio Marchionne as the new CEO at different times for each of the two
companies concerned. The second element of the change lever of change tactics
was the maximization of the advantage of downturn performance. Lastly, symbolic
changes took place also a part of the lever of change, and it included the
behaviors of the managers since the new CEO came. Another aspect of this
changing level was the grocery store and the kindergarten that were built
outside the plant. Therefore, the changes that were applied by Sergio
Marchionne caused the profitability of the companies to increase within very
short time.
Some of the levers that can be used by
managers include communication plan and resistance management. Communication is
an important tool when effective change management is to be achieved. An
excellent communication occurs when each person receives communication that is
best for him or her. Sergio knew very well how to use contact so that he could
pass the required to all of the workers. Besides, he had teams such as that of
the 26 leaders. These teams could always update him with any information that
he would need. Thus his communication methods were useful and enabled him to
effect the change process.
According
to the Case Study, the second lever used by Sergio was managing resistance to
change. This is one of the biggest obstacles that are experienced by managers
who try to create change. However, it is a typical reaction that employees must
show. Good managers know how to create changes and overcome the workers'
resistance to the changes that are being made. Sergio developed an excellent
method of overcoming the change resistance that existed within the company. He
initially began by telling the employees that they should expect which was to
prepare them psychologically that they should expect changes. Hence, when the
real changes are made, they would be ready for them. The other clear method
that he used to prevent resistance was firing those he thought could not be talked
out the resistance. Hence, any of the changes that were to be created found a
fertile since all the people challenging the changes were no longer available.
Hence, he was able to modify the organizations successfully.
5.0 Conclusion
This
article has looked at three case studies on management. Some of the
organizations have had their profits reduced by billions. On the other hand,
some having started small and had been managed well to move from debt to
profit. Notably, Fiat and Chrysler have got so much profit within a period of
just two years while Sony and HP have had a decrease in the number of sales
made. Therefore, it can be concluded that a business should adopt a proper
management so that it can thrive.
References
Organising
for Success- One Sony?
Boardroom
Battles at Hewlett Packard
Leadership
and Strategic Change: Leading Change in Fiat and Chrysler.
No comments:
Post a Comment