Tasek_Cement

Tasek Corporation venturing downstream Tasek Corp change management Summary of the article The organization being chosen to carry out such change management process analysis is the upstream and downstream businesses, ranging from quarry operations and cement production to ready-mixed concrete products and pre-cast concrete. Thus, change process will be carried out once the strategic planning was properly done to improve the organization effectiveness. For instance, almost every organization has to adjust into a multicultural environment to resolve problem of changing nature of the workforce. Human resource policies and practices have to change in order to attract and keep this more diverse workforce (Stephen 2001). Organization need to have a clear emphasis on internal and external change driver and other essential factors to enable the organization obtain the factual information that will be give a better understanding on what organization state needed for change and the application of the suitable management model as well as concepts per se. This article utilized Tasek Corp previous business and the future plan to emphasis on the downstream business that allow them to provide an outlet for the cement the company produces, leading better price control. Teo Tong Kooi, CEO of the HLA Ltd, which owns 72.6% of Tasek Corp, believes the company should evolve into an integrated cement player in both downstream and upstream business and he uses Singapore-listed HLA as an example to prove that his idea is workable. He believes that the trend of cement producers also own downstream businesses will emerge in Malaysia soon. The Tasek Corporation actually started their concrete business 5 years ago and it has a great return. And now Tasek Corporation wants to start the pre-fabrication business which stops 2 years ago due to the financial crisis. With the well plan of the project, Teo very confident about the move as the parent company HLA is well established in downstream cement products in Singapore. Tasek Corporation will concern on high-end products which have a high entry barriers to the field to avoid the competition from small and medium players. Moreover, implementation of government projects such as the new low cost carrier terminal and the Pahang-Selangor interstate water project will benefits the building materials company compare to the construction companies. The article ended by the financial status presented by Tasek Corporation as the organization is sitting on a cash pile which Teo describes the cement maker as HLA’s cash cow. Research of the company problem Tasek Corporation Berhad was incorporated in 1962 as Tasek Cement Limited and listed on the stock exchange the following year. It commenced cement production in 1964 with an annual rated production capacity of 250,000 tonnes at its present plant in the Tasek Industrial Estate, Ipoh against the backdrop of scenic limestone hills and excellent infrastructure.  Tasek Corporation vison is "Tasek Cement will be a leading manufacturer in the cement industry, operating in harmony with the environment and exceeding customer expectations." Mission statement of Tasek Corporation are Tasek Cement will achieve an acceptable margin per tones in the industry through cost competitiveness, optimizing the utilization of the company's resources and enhancing a safe, challenging and rewarding work environment for all employees and Tasek Cement will systematically incorporate the latest technology, and be innovative, in order to improve capacity, quality, and be recognized as environmentally friendly. To align its vision and mission, strategic planning was carried out by Tasek Corporation to increase its productivity as well as its profitability. A key premise of the management of strategic change is that nearly all the business environments are in a state of ongoing change or disequilibrium. (L.J. Bourgeois,III et al 1999). Stiff competition and overcapacity have long been problems for the cement industry. The industry was losing millions of ringgit a day when cement was sold below cost and these problems still exist although the players have some kind of understanding to curb unhealthy rivalry. Teo believe that there is room for growth and for the company to become a building materials power-house because Tasek Corporation not content with being just a cement producer. Organizational change will be essential for firm survival as strategic management change be implemented to organizational success. The trend of downstream activity will emerge to Malaysia soon as most of the industrialized countries do. Teo believe that the environmental change and managerial thinking should come across when the tough get going. The problem of noticing, interpretation of the data and organizational action will be the key of future success of the organization. The success of the parent company in Singapore is the best reference as Teo and the management teams already have the Know-How. Financial crisis of Tasek Corporation in year 2008 is the problem of running the pre-fabrication business and now financial issues isn’t the problem. The capital of about RM10 million to start up the pre-fabrication business will bring advantage to Tasek Corporation as they aim to produce high-end product the set a very high entry barrier. Analysis and discussion Introduction Change management is a structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state. In project management, change management refers to a project management process where changes to a project are formally introduced and approved. (John 2007). Change management in Tasek corporation focus on expands the downstream activity that will bring a growth to the organization in the gradual adjustment of “new” management and its workforce. During the last quarter of the financial year 2009, the Board of Tasek Corporation received a notice of conditional take-over offer from Hartwell Pte Ltd, a wholly-owned subsidiary of Hong Leong Asia Ltd at an offer price of RM3.80 per share. The offer closed on 20 January, 2009 and the Company is now a 72.63 per cent subsidiary of Hong Leong Asia Ltd. Due to the take-over, the newly acquired business entitle don’t really have a easy time adjusting to the changes as most of the people are resisting to change. Studies have shown that individual and organizational behavior is that organizations and their members resist changing due to the stability and predictability on behavior. (Stephen 2001). However, change management deals with all operations done within Tasek Corporation. Activities such as management of purchases control of quality, logistics and evaluations are often focusing of change management. The formal rules and regulations governing behavior will then evolve to sustain to the new equilibrium. Therefore, change management need to be done after a well prepared analysis and management of internal process to ensure its efficiency and effectiveness. Vision for renewed organization Previously, Tasek Corporation is on a simple concept: cement producer. Tasek Corporation is one of the four integrated cement manufactured in the country. The mission of Tasek Corporation are Tasek Cement will achieve an acceptable margin per tones in the industry through cost competitiveness, optimizing the utilization of the company's resources and enhancing a safe, challenging and rewarding work environment for all employees and Tasek Cement will systematically incorporate the latest technology, and be innovative, in order to improve capacity, quality, and be recognized as environmentally friendly, by means meeting the customer expectation of highest quality, fully utilize the resources, leading technology and company accountability and support as well as flexible customization capability, safety and rewarding environment, financial stability and green environment. Tasek Corp aims for the change management in order to pursue growth in downstream business as the cement industry having a tough time. In the case, Tasek Corporation is having an advantage side which Teo was seconded to HLA after he spent nearly 2 years at Tasek Corp. Teo explains that they already have the planning on expanding their downstream business which are ready-mixed concrete products and pre-cast concrete. With the guidance of the parent company which done very well in Singapore and China, he is very confident about the move. The new vision proposed of Tasek Corporation for renewed organization will be “Tasek Corp will be the leading manufacturer in cement industry and building material power house, operating in harmony with environment and customer expectations”. A vision for living trough and benefiting from these changing circumstances is important to any organization. For example, joint venture between American and Japanese auto manufacturer was New United Motor Manufacturing Inc- NUMMI for short. Creation of new vision lead to the success of NUMMI, its management of human resource had set 3 goals which are 1)to serve management by improving overall quality and productivity; 2) to serve the worker by involving themselves in the design and control of their own work, thereby increase motivation and satisfaction in work; 3) to serve the interest of the entire organization by creating a formal system to encourage learning, to seize and communicate innovation, and to systematize continuous improvement.( James 1995).The strategy to achieve the vision involve few elements: 1. kaizen, the never ending search for perfection (continuous improvement) 2. kanban, the reduction of costs, as tasek cement can be the main supplier of raw material 3. development of full human potential 4. employee involvement 5. work life balance and performance reward Strategic planning After diagnosis reveals the cause of the problems, Teo then identifies the opportunities for the downstream business which may break out of the red ocean of bloody competition by creating uncontested market spaces that make the competition irrelevant- Blue ocean strategy (Kim and Mauborgne 2005). The high entry barrier advantage the Tasek Corp as the organization targeted on high-end product to avoid small or medium company compete with them. Managerial thinking Managerial thinking of Teo enables him to foresee the market trend in future as he had experience before in Singapore while he seconded to HLA Singapore. He noticed the change in their business environment and suggests expanding their downstream business. Research evidence in Singapore and China would help him to notice the change and response to appropriate action. The problem of noticing, interpretation of data and limits on organization actions would be the obstacle in limit the responsiveness of the managers and their firm to environmental changes. Organizational learning and managerial learning Failure in organizational learning will influence the organization adaptation and change. Lower-level learning and higher level learning are the most important organization issues. Lower-level learning issues refer to the improvement or refinement of existing beliefs, understanding, and organizational process. In the other hand, high-level learning is developing totally new beliefs, understanding and organizational process. In simple word, low-level learning as exploitation of the known whereas higher-level learning refer to exploitation of the new. Teo consider to engage in their long run business by the combination of these two learning theory. As this downstream business is known in Singapore and China but it is new to Malaysia. In spite of its cost and speculative nature, higher-level learning is essential to develop new and profitable market to the organization. The power of industry influence The common practices will limit the organizational change as firms in the same industry will also develop a common language and similar understanding about how to compete. In the cement industry, competition is very high and the industry is having millions ringgit of loss a day when cement was sold below cost. The common practice does not ‘blind’ Teo to seek a new opportunities and adopt new strategy to contest the industrial norm and influence. For example, circus industry is in a declining status and have little space to grow but Cirque du Soleil has achieved a level of revenues that took Ringling Bros. and Barnum & bailey- the global champion of the circus industry- more than 10 yeas to attain. Cirque du Soleil’s success is that not taking customer from the already shrinking circus industry which historically catered to children. Instead of competing each other, it creates an uncontested market which target to a whole new group of customer: adults and corporate clients prepared to pay a price several times for an unprecedented entertainment experience (Kim and Mauborgne 2005). Teo is trying to use the same way to expand his downstream business by using the same material but different way to present it. (Ready-mixed concrete and pre-cast concrete compare to previous only cement producer). Scope of change A. Change of worker Employees are the human capitals who contribute their knowledge, skill, ability and others to helps organization meet the mission and vision. The people approach is the approach to change the employee by focusing on their skills, attitudes, perception and expectation to the organization. Organizational development is the ideal approach to change employee performance and satisfaction in order to contribute to a higher level of functioning in long term, more compassing, more complex and of course more costly. For example, OD for individual like cognitive ability training can provide to the employee of Tasek Corp to improve their cognitive ability. OD activity for two or three people like transaction analysis can concentrate on style or messages between people. It enables the employees communicate well and to be more open and honest to address their opinion to organization. OD activity for teams or group like team building can wisely use in Tasek Corp as they expand their downstream business, cooperation between workers are very crucial at the beginning stage of new business. OD for the total organization like survey feedback can be used to improve the operations of total organization. Management team can understand the process implemented and continuous improve the system. B. Technological change Technology involve its equipment, engineering process, research techniques or production methods need to be improve especially in the manufacturing industry. Aging machine should be replaced and the latest technology should bring in to ensure it generate the highest output. Job enlargement and job enrichment are the example of techno structural approaches to change. Tasek Corp no longer the cement producer but they will go into ready-mixed and pre-cast concrete, so their employee need to be ready to adopt the new knowledge of the new system and new technology. C. Structural change Changing structure involve rearrange its internal systems, such as line of communication, work flow or management hierarchy and its Board of director. In this cases, Dato’ Khoo Peng Lai has joined the Board as Independent Non-Executive Director at 2009.Non-Executive Director, and Mr. Tan Saik Hock has resigned as a member of the Board of Directors and as a member of the Board Audit and Risk Management Committee. Speed of Change Although the management change had be made and may enhance the productivity and profitability of Tasek Corp, this does not means that the company will free from other problems, according to the Action Research Model, after the action is taken data must be collected to determine the effectiveness of the planned change. This action may lead to re-diagnose the problem and come out with improved action. Moreover, employees also need to take time to suit themselves due to the changes. Recommendations Proposed action to the new business(pre-fabrication business) Strategy 1: product development Tasek Concrete Sdn Bhd is a wholly owned subsidiary of Tasek Corporation Berhad. Tasek Concrete is reputed for its consistent concrete quality as well as its reliability. As a continuous effort to improve on quality, Tasek Concrete has emphasized the use of information technology and the latest process control technology for the ready-mixed batching plants. Other than Tasek Concrete, Teo is now consider of pre-fabrication business and use the raw material supplied by Tasek Corp. Building material power house has potential growth while the cement industry is having downturn. The implementation of the government project will increase the demand of building material and cement maker will have higher chance to tender the projects. Strategy 2: strategic group within industry The company can identify a similar opportunities by looking a cross two strategic groups in the housing industry, one is makers of prefabricated housing and the other is on site developers. Prefabricated house are cheap and easy to build and house built by the developers on-site offer variety and an image of high quality but are more expensive and take longer time to build. Tasek Corp new business prefabricated concrete may offer the decisive advantage of both strategic groups. Tasek can allows buyers to choose such high-end touches such as fireplace, skylights and even vaulted ceiling to give the homes a personal feeling. In essence, Tasek Corp can change the definition of prefabricated housing as cheap and low quality image. Strategy 3: tendering the government project Building material companies especially cement makers are a better bet compare to construction companies. The implementation of the government projects such as new low-cost carrier terminal and Pahang-Selangor interstate water project will increase the demand of cement and is expected to grow about 5%. The project of pre-fabrication business of Tasek Corp will get advantage in tendering government project as it is a cement maker too. Strategy 4: technology improvement Technology is an important source of competitive advantage. And this is consider a strength as Tasek Corp because the firm has greater technology advancement brought in by its parent company in Singapore. Tasek Corp also emphasize on the used of information technology and the latest control process for greater productivity and quality. Proposed action to improve the responsiveness due to the change of industry environment A. Thinking and acting like an outsider The manager of successful new rival generally do not attack incumbent firms but instead are more likely to enter an industry at the ‘holes’ that are created by changes in industry dimensions, such as new consumer preferences and the adoption of new product and process technologies.(L.J. Bourgeois III 1999). The new idea moving the industry into ‘holes’ in the competitive space or creating new competitive space rather than attacking incumbent firm directly. For example, Teo expand its downstream business- pre-fabrication business rather invest in a stiff competition cement industry. B. demographic diversity versus ‘genetic diversity’ Hiring and promoting the minorities and women into top management position may lead to greater cognitive diversity or what Hamel and Prahalad have called ‘genetic diversity’- by introducing more divergent and contrarian points of view into organization. The arrangement in the Tasek Corp enables the new and diverse points of view to an organization expand or enlarge company ‘gene pool’. C. organizational learning and strategic change This focuses on the importance of higher-level learning which emphasize on ‘exploiting to new’ concept. Introducing the new product line such as ready-mixed concrete and pre-fabricated concrete may increase the profitability of Tasek Corp and there is greater room to growth. Communication skill Communication within and outside the organization is very important as Tasek Corp want to expand their business. Communication within organization which include accurate message transfer one to the other. The effective, straightforward and honest communications from management enable the employee to work in cohesive teams as they can communicate openly and often. Communication provides a common thread for the management to run the process of Planning, Leading, Organizing, and Controlling. According to James et al. 1995, effective communication skills can enable manager to draw on the vast array of talents available in the multicultural world of organizations. Communicate information to the outsider like customer and shareholder also very important in the expanding stage of Tasek Corp. In order to gain trust and confidence about the strategic move of Teo, communication skills are a vital role for the manager to convince the customers and shareholders. Formal channels of communication is the factor that influence communication effectiveness in Tasek Corp, normally communication is endorsed and probably controlled by the managers especially in a larger organization. Moreover this type of formal communication can inhibit the free flow of information between organization levels. The perception and the suggestion will take longer time reach to the top level management. Thus, communication skills need to be improved to overcome the differing perceptions within and outside the organization. Conclusion The strategic move seems will be bring a success to Tasek Corp as there is a guidance and reference from parent company HLA. Planned change management prepares readiness for workers and management teams to change. Motivation of the Tasek Corp will be increased as the expanding of the downstream business will bring a growth to Tasek Corp. In addition, implementation of strategic management will help Tasek Corp to achieve its goal in easy way.