"ONLY THING CONSTANT IS CHANGE "It requires considerable amount of commitment to set up an organization and enter particular mode of operation. To be able to sustain and continually climb in the ladder of growth, companies have to be lean, flexible and prepared to change constantly to implement new processes, introduce or close down particular products, incorporate faster technologies, make strategic shifts and decisions thus stimulating creativity, learning, diversity and growth. While the change is inevitable and its own need being evidently understood, resistance and adverse influences are also likely to emerge.
We have types of Leaders like Mahatma Gandhi who initiated and led non-violent movements of "Salt March" and Civil Disobedience movement that have been collective and well coordinated mass acts spread throughout India. It had been these acts of mass protest that eventually brought down British rule. Gandhi's role as a leader and catalyst for change was discovered by his ability to get strength of committed followers.
Another classic exemplory case of a celebrated and observed leader "Jack Welch" of a worldwide manufacturing firm often known for technological talents has used a very human and spiritual process to operate a vehicle and implement change throughout GE.
On the other hand, there are also types of badly led changes. In midst of the monetary challenges, Barack Obama ran a masterful campaign and won the elections on the basis of strongly proposed changes. Who would have thought that, just 2 yrs later, after passing all types of ground-breaking legislation that definitely brought "change" to Washington, Americans would react just how they did on election night happened recently. Regardless, there's clearly a very large gap between "Obama the campaigner" and "Obama the first choice. " The former promised change in leadership and captured the hearts and minds of Americans, as the latter didn't deliver on that promise.
Therefore, critical indicators in execution of a successful Change are that it ought to be properly planned/ focused along with a high degree of commitment Leadership. A Leader for just about any organization can be recognized as a Spark plug who, because of high energy, good communication and motivational skills, and a can-do attitude, helps realizing important objectives. The leader is the catalyst that triggers good team spirit.
- Act on & initiate good/new ideas.
- Not await permissions or instructions for something to be achieved.
-Possess large levels of energy
-Should learn how to use energy to energize others
-Inspire and motivate others for the involvement in a big change and present in their finest.
-Value team ideas and frequently build on them, candidly opening up their thought processes to others.
The Leader or sparkplug's behavior influences others to an increased level of commitment which will get the job done, which can result in higher productivity and accomplishment by the group. ( "When two armies are prearranged for battle, the side that wins would be the one that is fully focused on the way of their leaders. ")
Initiating a big change process, however, does not come naturally for most leaders. They need a stimulus or motivation to believe on lines of bringing a change. Stimulus can be a sudden downturn in financial results and an alteration becomes necessity or may be whenever a competitor captures market share and threatens the business. Sometimes key people leave the organization, producing a different management and operational practices. Sometimes a new technology is introduced. Many of these events in addition to numerous more cause managers/leaders to consider change, but considering a big change program and successfully implementing are two various things.
Meaningful change generally occurs at a pace where executive managers and can effectively lead the change, and the organization can effectively adapt to the changes happening. In case the change process is too slow, changes do not take effect or show meaningful results. If the pace is too fast, leaders lose focus, or associates may become overwhelmed. With an activity to check out and commitment of the associates to participate, the first choice can be an efficient catalyst for change, an inspiration for associates to check out. The change process should be carefully planned and executed throughout.
There are essentially six steps of bringing up and successfully leading a big change:
1) Examine the change: That is an essential step for clarifying and examining the change. When there is no improvement/growth in present business structure, change can be called off. Leader needs to carefully gather data and analyze and ensures the change is carefully aligned towards strategic vision and other priorities.
-Purpose of the change like how it's related to organizational growth or how it takes care of current problem.
-Plan for implantation of the change which should follow a goal/time oriented approach.
-Show them the ultimate outcome/picture of the Change.
-Responsibilities of associates should be clearly indicated in process of change implementation.
3) Anticipate and Analyze: Diagnose possible risk prone areas in implementing the change which include associates resistance, cultural, social and cost factors. Ensure proper monitoring of timelines and progress of the change and take corrective actions whenever required. Demonstrate personal commitment and energize others to drive the change smoothly.
4) Build Acceptance: Clear and concise plan to guide the people through transition should be developed and so obtain the acceptance. Tell people logical steps try arrive at a particular decision. Tell them what will be the same and what is going to change.
5) Implement the Change: Now the change is into action and is very much indeed operational. Leaders need to teach associates on the changed process and ensure maximum results. Training should include information on past practices, advantages of new changes, Do's and don'ts of the process. Also encouraging the team to put in continuous improvements helps.
6) Sustaining the Change: Now the Change is implemented and needs to be anchored /sustained. Monitor the change and improvements to be done wherever necessary. A disciplined approach can be maintained to monitor the change at regular intervals.
LEADER's ROLE in bringing about a change and acting as a catalyst
-Essential to gaining commitment. When the first choice is absent, group dynamics change, and rarely for the better. Most of the groups tend to revert back again to initial form.
-Important in initiating in virtually any change. Leaders are selfless, their egos are who is fit; they don't fear coming off looking foolish Action oriented, they study from mistakes, adjust, and try again. Others join in and excel, because they don't have to take the initial responsibility, that much-dreaded first rung on the ladder off the cliff-even if the "drop" is less than a few feet. It is as if they need you to definitely take the lead, to accept the chance in leading.
-Motivating and inspiring people. Leaders as a a big change agent do what good sense urges these to do, neglecting past what tradition maintains and slicing through to the essentials. And, in so doing, they could help lift the lethargy lowering like a dark cloud over those who have lost the pleasures of striving and accomplishing. Thus energizing people through the immense energy and passion will drive them.
To conclude we can say that change occurs through the voluntary and coordinated switch of actions by a huge number of individuals. While a leader cannot directly engineer change through coercion, he is able to facilitate it through helping the populace mount a coordinated challenge to the status-quo. By rallying support for the first choice, committed followers form a crucial part of this process. With this context, more able leaders are better able to engender change both by (i) attracting more committed followers, and (ii) by allocating more effort at identifying if the conditions are ripe for change and then rallying popular support for this through their followers and through effective communication. Actually, both are interrelated. While folks are more easily attracted towards a dynamic leader, giving him strength and overall flexibility to rally support among the populace, the followers themselves contribute importantly to his dynamism.
Question 2 - Your organization (or family) is going to acquire (buy) a new business. Because you are in the MBA program you are tasked with the assessment of the new company. (You might use your present or past organization as the mark to acquire). While using the assessment tools we have discussed in this forum, provide your management or family with a whole assessment of the target company. Please are the current and future organizational charts and make clear your advice for change.
Answer - To get a new business is always challenging and exciting as well. Since there is a huge possibility to expand your existing business, there are some risks involved too. There should be some objective to get a new company; it could be Political, Economical, Sociological, Technological, Legal or Environmental. AN ENTERPRISE analyst should do some following steps to do the analysis.
Concept Development - The Question is excatly why? Why my company/family must acquire this business? There could be some significant reasons. For Example: -
To Expand company's financial growth by acquiring new proposed company
To fulfill current shortage of skill of the company into a particular industry, this is resolved by acquiring this.
Need to obtain this company to improve the market value + assets value &
Need a BRAND in specific area.
Due to Legal Governmental restrictions. For Example - Company A wants to expand the business into India, But Law of India says a foreign company needs to tie up with an area company and there should be 51% total value of the company should participate in Local Company.
One needs to be clear of the reason for the expansion. Now, there are certain Steps which need to follow to analyze the company situation and exactly how it can provide benefit to existing company.
Risk Assessment - Risk Assessment can be an important aspect part of business strategy intend to determine the risk which a firm or a organization can face. Risk can be calculated by doing the assessment. Risk assessment is not a process to eliminate the risk but to control the risk so by which you can handle the situation.
Identify the Hazard
Decide who might be harmed and exactly how?
Evaluation of the chance and choose precautions
Record the findings & implementations strategy to workout.
Review your assessment & update again.
There is something to keep in mind when you are doing the chance assessment -
Business Analysis & Testing - From the Discipline to recognize business needs also to locate the solutions of business problems. This Analysis helps the business process by doing Organizational Change or implementing new ideas/method to improve the current process. You can find number or techniques to do these analysis & many of these techniques includes PESTLE (Political, Economical, Sociological, Technological, Legal, Environmental), MOST (Mission, Objectives, Strategies, Tactics), SWOT (Strength, Weakness, Opportunities, Threats), CATWOE (Customers, Actors, Transformation Process, World View, Owner, Environmental Constraints).
Improvement by doing Business Analysis (BPI) - A Typical BPI Process works in 6 Steps
Selection of Process Teams & Leaders
Process Analysis training
Process Analysis Interviews
Goal of the analysis - The following outcome is desired by this Business analysis Process
Efficient completion of projects on time
Proper Documentation of the right requirements
Market Share / Financial Reasons - Great things about Mergers and Acquisitions are diverse. Mergers can generate cost efficiency through scale economies, can enhance the revenue through gain in market share and may also generate easy tax gains.
The principal benefits can be listed as upsurge in value generation, upsurge in efficiency of cost & increase in market share.
Greater Value Generation - Mergers often lead to an increased value generation for the company. It really is expected that the shareholders values of a firm after mergers would be higher than the sum of the investor values of the parent companies. Mergers generally succeed in creating cost effectiveness through the execution of economies of scale.
Tax Gains - Merger & Acquisition also leads to tax gains and may also lead to a earnings enhancement through market share gain. Companies go for Mergers and Acquisition from the theory that, the joint company will be able to generate more value than the separate firms. Whenever a company buys out another, it expects that the newly generated shareholder value will be higher than the value of the sum of the shares of the two separate companies.
Facing Tough Times - can be really good for those organizations when they go through the tough times. If the company which is suffering from many critical problems in the market and may well not be able to overcome the problems, it can go for a merger deal. If the company, which has a good market presence, buys out the slightly weak firm, then a more competitive and cost efficient company can be easily made and this is the common case. Here, the prospective company gets the power as it gets from the hard situation and after being acquired by the top firm, the joint company ventures accumulates larger market share. This is because of the benefits that the tiny and less powerful firms agree to be acquired by the top firms.
Gaining Cost Efficiency - When two companies comes together by an acquisition, the joint company benefits in conditions of cost effectiveness. A merger can create economies of good scale which in turn generates cost effectiveness. As both firms form a new and perhaps much bigger company, the production, marketing and all the operations are done on a much bigger scale and when the output production increases there are high chances that the price of production per unit of output is reduced.
An increase in cost efficiency is exaggerated through the technique of mergers. It is because mergers lead to economies of scale. This is well in turn promotes cost efficiency. As the parent companies amalgamate to create a larger new firm the scale of operations of the new firm increases. Definetly when production is higher the cost is much lower.
An upsurge in market share - is one of the plausible benefits of mergers. In case a financially good company acquires a fairly distressed one, the resultant company can experience a substantial upsurge in market share. The brand new firm is not necessarily but usually more cost-efficient and competitive as compared to its financially weak parent organization.
This is something companies use to take some cost advantage over their competition by acquiring such companies and provide their shares or deal in them. The acquisition of a significant competitor is a reasonable way to gain market capital. So it is an excellent point to note during analysis for a new company.
Survey on the market - Social & People acceptance is a essential requirement for a new business. Before acquiring a business they would understand how this deal will effect on track people & media. The way the Market will react after this news? Etc. To be able to know this a company survey is very much indeed required during analysis stage.
Expertise of the New Company & how it could be beneficial to the existing company - Core Business and the expertise of the new proposed company is something definitely could be one of the reason why of takeover. By Taking over its easy to get new contact, groups etc. A FIRM can follow this path via internal expansion and gain success throughout a long period of time, or undertake it at once via acquiring a company. Local market expertise is specially valuable in some internal situations where a Buyer (existing company) has minimum understanding of local customs, language and other barriers. Such Reasons makes a takeover important and it could be one of the extremely important point for the takeover.
Market Growth - In Slow growth markets no matter a buyer push how hard, its just cannot grow revenues because there are minimum sales to be produced and another company maybe already quite strong on the market. For the kind of company must target which is growing much faster when compared to a new company for the reason that field.
Products - The Target Company may involve some excellent products or something which a competitor wants to acquire and those products can fill a hole in its product line. Whenever a company doesn't have much time to develop a product and other company has already been very strong in that product, this important reason can be the only reason behind takeover too. And, acquired products have likelihood of fewer bugs than the products created internal.
Vertical Integration - in military terms, a firm may choose to "secure its supply lines" by acquiring some selected special suppliers. That is somewhat important if there is considerable demand for key supplies and a supplier has control over an enormous proportion of them. This is important when other suppliers are positioned in politically volatile areas and leaving few reliable suppliers. Furthermore kind of so called "backward integration, " a firm can engage in "forward integration" by acquiring a distributor or customer too. This takeover most commonly occurs with those distributors, if indeed they have unusually excellent relationships with the ultimate group of customers. An organization can also use its ownership of your distributor from a defensive perspective so that competition have to shift their sales to other distributors.
Regulatory Environment - There are a few suffocating regulatory environment in some areas such as is imposed on utilities, airlines plus some governmental contractors. In case a target operator/company has less regulations because of its operation in such area the buyer (Interested company) tends to incline more to the mark company.
Organizational Structure, Market presence of the business, Commercialization and other major reasons are normal for the takeover on another company. So This Part should be clear for the Buyer (Existing company) that why they want into a fresh company.
Example 1 - I am taking a good example of a significant Indian construction company "Punj Lloyd" who acquired 2 companies in recent years before the corporation had major image and name in Indian market. Punj Lloyd took over "Sembawang " of Singapore & "Simon Carves" of UK and many companies in India. These takeovers helps Punj Lloyd to expand its occurrence in more countries and internationally. It had been the Strategy of the business when it were only available in later 90's their strategy was to become one of the major construction companies in the world and by now they are already in Fortune 500 Set of companies. Their Strategy worked and they increased their growth in south east asia and also on the European market. So Conclusion is the fact Punj Lloyd got more business in those markets.
Example 2 - Suppose I am being asked to investigate on the courier company takeover. The prospective company has its reach in america and globally as well. The organizational chart below (chart 1) is designed for the existing company and another chart (chart 2) is after the takeover.
Conclusion - There are important aspects and reasons to acquire a company or a organizations such as PESTLE (Political, Economical, Sociological, Technological, Legal, Environmental), MOST (Mission, Objectives, Strategies, Tactics), SWOT (Strength, Weakness, Opportunities, Threats), CATWOE (Customers, Actors, Transformation Process, World View, Owner, Environmental Constraints).
CHART 2 - ABC Group of Companies
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