Tma_2_Organizational_Changes_in_Marks_and_Spencer

TMA 2 Organizational Changes in Marks and Spencer Question 1 Describe a change that has occurred in your organization. Draw a force-field analysis to describe the change scenario. Brief introduction to Marks and Spenser In this account I am going to use one of the well-known British retailer Marks and Spencer plc (M&S) to analyze the significant organizational changes which experienced after a very disappointing figures in the late 1990’s. I’ve chosen this organization because I’m a regular customer and I’m aware of the fact that they went over radical restructuring in the past. The company made its reputation in the 20th century with the policy of only selling British products made goods. M&S was founded in 1884 by Michael Marks who became in partnership with Thomas Spencer in 1894. The business ran into trouble and step decline began at the end of the 1990s with falling share prices and profit. The company share prices fell by more than two third and profit dropped from a billion pound to only 145 million by 1997/1998. In 2001 Luc Vandevedel was appointed as new chairman and CEO who began to restructure the organization. Force field analysis (Lewin 1951) In the fowling account I will demonstrate some of the driving and resisting forces that were for or against the decisions for organizational changes at M&S. Driving Forces Resisting Forces Restructuring. A flatter organizational structure was introduced instead of the hierarchical structure. Employees were empowered more and the organizations became less centralized -The management before Vandevelde was not able to recognize the needs for changes. Employee with new skills: New chairman and chief executive as well as new board members were appointed. Possibly only a new team could take the radical measures needed to turn the Company around. -The organization structure was not suitable for changes. It was mechanistic, bureaucratic with tall hierarchic structure, which made it difficult to adapt to changes. Competition: The retail market become very competitive by the late 90s. M&S had to face strong competition from businesses such as Next, TK Max and other high street names whit great quality goods. From consumers point of view M&S’s products were concerned already out of date. -M&S has build up a strong culture over the years about how they did things and it was very difficult to change especially with the old vision. New equipment: Credit cards could not be used in M&S stores until 2001 when credit card facilities were finally introduced. This allowed customers to use not only M&S credit card in their stores. -The cost of British supplier increased so M&S reduced quality buy buying goods from abroad. The new CEO set high performance goals such as back to the ‘’old days’’ and only sale own brands. As well as Concentrating on ready meals and prepared food at high standard. New quality range of clothes and new style were introduced. The old designee was not longer competitive. - The company was losing touch with potential younger customers who increasingly saw M&S designs old fashioned. I the table above I demonstrated the driving and resisting forces in the case of M&S in 2001.The driving forces were stronger because the company managed to move into a positive direction which I will examine in the following account. Because of the constantly pressure from the stockholders the company was forces to deliver changes and create reasonable profit. On the other hand with the existed organization culture and structure they were not able to make the significant changes. Question 2 From your work in Weeks 5 to 8, identify and illustrate the issues that structure and culture posed for the change process. The change Cube Theory In M&S changes can be recognized across all dimensions as discussed by Mintzberg (1998) in the change cube involving the abstract and tangible elements of the organization. I am using this theory as framework to discus different points of the organizational changes. On one side: (Strategy) vision, position, program, and product. On the other side: (Organization,) Culture, Structure, System and People. An organization can easily change a single product or an individual. ‘’But changing, say, a vision or a structure without changing anything else is silly, just an empty gesture’’. (Mintzberg 1998) In other words wherever you intervene on this cube you have to change everything below. For example it makes no sense to change structure without changing systems and people, and to change vision without rethinking strategic positions as well as redesigning products.(Mintzberg 1998). From the Organizational Change point of view. Structure: Morgan (1993) illustrated organizations in a different way using metaphor of a spider plants. I can see the example of the spider plants applying on M&S organization. The center of the organization in the Uk as the main plant and the offshoots as the international locations. Vandevedel broke the hierarchal layers of management and sold off the loss making businesses abroad. He believed the business became to complicate with the oversea units on the side. Vandevedel even expressed in one of his speech using the following metaphor. The previous plan was like feeding a ’’tree’’ that was already overgrown and unhealthy.’’ He perhaps referred here to the oversee business which were difficult to control and were making lost. (Burns, 1963) defined organizations structure as mechanistic or organismic. I can see what the new CEO indented to do was is to shift the organizational structure from a more rigid hierarchical structure to a more organismic structure. He realized that with the old system that also supported the old vision it was not possible to push changes through. It did not mean that the organization become completely organistic only some signs could be identified. For example: People still had job classification and description but with a mach wielder authority and more accountability. Teamwork and group leadership were presented. With this changes the company was able to make quick decision when required. The other point that I want to comment on is that as (Burn, 1963) stated mechanistic structure works best in stable environment but for an unstable environment organismic is a better option. As M&S was established in 1884 and for a long time it was a market leader with out serious competition. Therefore mehanistic structure was working well for the business. Which was slow in responding to external changes and lost touch with customers and shareholders after some time. When the market environment has started changing and became more competitive and also consumer preferences changed the rigid structure was not suitable for the fast changing conditions. Culture. According to Schein (1992) there are three levels of organization culture. Artifacts (visible) Values (greater level of awareness) and Assumptions (Taken for granted invisible). Culture is the most difficult organizational attributes to change. Artifacts level: changes can be identified as follow: new logo, new store layouts and interior, bigger product range targeting a larger segment. M&S logo was changed to a newly designee as well as almost al the stores were refurbished and given a new layout. Vandevedel moved headquarter from Baker Street London to a new location. We can see this a starting point to change at this level of the culture. New location with new environment was a huge step away from the old culture. Values: Vandevedel wanted M&S to be famous once again for its quality, value, service and innovation, drawing on strengths, which still exist but was overlooked. He wanted to provide only own brands, which was also overlooked in past years. He established a new mission statement, which stated the following points. -To be the standard against which others are measured. -Mission - To make aspirational quality accessible to all. -Values - Quality value, service, innovation and trust. (Luc Vandevedel 2001) Basic Assumptions. Ones M&S was famous from being the best retailer people were proud to use they service and the members of the organization shared this attitude. M&S wanted to be the best again and to have respect back from customers but it was no longer the cases. It is important to note that Vandevedel was the first director for the organization who was appointed from outside of the family to lead M&S. Which was a big step away form the deep family orientated organizational culture. People: Vandevedel appointed a brand new team for the executive board and also changed managers at lower levels. He believed only a new team could take the radical measures to turn around the company. I agree with the fact that major transformation as such may be better to introduce with people how have new ideas and viewpoints on/about the organization. As Morgan suggested it is impossible to develop new style of organization and management while thinking the old ways. One of the most powerful ways to change organization culture is by changing the executive support and training and crating a new value and belief system( Morgan 1980) From the strategy point of view the following points needs to be considered. Vison: The new CEO wanted to return Marks & Spencer to its former position as the standard against which others are measured. M&S to be famous again for its quality, value, service and innovation, drawing on strengths which still exist but which may have been overlooked. To inspire trust in customers, and to reward shareholders. (Vandevadel 2001) Product: M&S come out with new designee, brand name and trendy clothing targeting improved segment. On the food side new coffee bars were opened in many stores. Also extended range of new food products were introduced. M&S began to sell own brand product again. Developed home and beauty area. Changes in market position: Vandevadel wanted to concentrate on the UK market rather continuing internationally to retrain customers and shareholders. I assume that as it is the hart of the company he felt vital to get it right in the UK before thinking again abroad. Question 3 Using Kotter’s approach to understanding ways of successfully implementing and managing change within business organizations, identify what was done well and what not so well during the change process, and make some suggestions for how things might have been done differently. (Katter’s 2007) Organizational Changes (Kotter 2007) suggested there are eight vital steps to implement Changes powerfully and successfully. 1 Establishing a Sense of Urgency The new CEO examined the market and identified the potential treats. According to Kotter sense of urgency can be created on the top level or even at lower level but first the problem has to be recognized and many times it is difficult from inside the organization to see what is going on in the external environment. Closing unprofitable oversee businesses, the importance for concentrating on the domestic market. Many argued that he made a major mistake to close oversea business down before they could gain oversea knowledge. I think M&S fell to understand the business abroad perhaps the lack of cultural knowledge in the host countries (Hofstede 1980) culture dimensions possibly a good starting point to examine this question. M&S tried to sell an image and products abroad, which were designed for the British culture. In the Canadian market M&S were considered a ‘’Stogy’’ retailer, which was created for senior citizens in Briton. Canadian customers thought the clotting were far too conservative and expensive. 38 shops had to be closed in 2000. Vandevedel stated one of his speech:’’ our stores were to big and we hadn’t properly understood the market before we invested in’’ 2. Forming a Powerful Guiding Coalition He appointed a new team to lead M&S because he believed that way they can take radical measure to turn the company around. -Encouraged the new talent to work together with the existing staff, which has voluble, experience but was missing the right leadership before. 3. Creating a Vision Vandevelde clearly stated in his vision which direction he would like to move and kept to his plan. 4. Communicating the Vision -Using every possibility to communicate (press, media) his new vision and strategies. Vandevelde not just told what to imagine for the future in his vision but also put it into practice. With the new executive team Vandevedel communicated his vision across the organization and made it sure his ideas going to be put in practice. Perhaps there is one thing that is worth to mansion at this point. Vandevelde stepped down after two years as CEO but still remained Chairman and took up position of non-executive director in a few organizations. May be it was to soon for Vandevelde to make such moves. ’’ Declaring victory to soon’’ 5. Empowering Others to Act on the Vision -Changing systems or structures that seriously undermine the vision The organization structure was changed to a flatter structure as well as shifting it to a direction of a more organismic structure. Employees were more empowered to act on the vision. 6. Planning and creating for and Creating Short-Term Wins -Improved performance of its core ranges of food and clothing. Both ranges had been performing poorly. After these changes (new food range, new clothing brand name and designee) were put in place there was an immediate increase in profits. Conclusion In the account above I described some of the organizational changes that happened in M&S from 1999-2002 under the lead of Vandevede. To analyses the issues I used theories on organizational structure and culture form B201 course. Because it was still an ongoing process it made me difficult to decide it rather it was a positive or negative processes on a long term. Referencing: -Derek S.Pough & David J.Hickson (2007) Organization Theory, London, Penguin -T. Burns (1963) Mechanistic and Organismic Structures in Derek S.Pough & Davis J Hickson (2007) Organization Theory, London, Penguin Books Ltd -G. Morgan (1993) Imaginization: On Spider Plants in Derek S.Pough & David J Hickson (2007) Organization Theory, London, Penguin Books Ltd -G. Hofstede (1980) Motivation, Leadership and Organization: Do American Theories of Organization Apply Abroad' In Derek S.Pough & David J Hickson (2007) Organization Theory, London, Penguin Books Ltd www.marksandspencer.com M&S Scraps Oversea Stores at http://news.bbc.co.uk/1/hi/business/1249044.stm The Guardian: Mark and Spencer lay off 4,390 staff (29. March 2001) http://www.guardian.co.uk/business/2001/mar/29/personalfinancenews.marksspencer Christine Seib (2007) Business big Shots: Luc Vandevelde from The Times, http://business.timesonline.co.uk/tol/business/movers_and_shakers/article1940421.ece