GreenHealth and Cranberry Companies: Culture and Structure of Operations - Case Study Example

The GreenHealth-Cranberry case study: Strategy, Choices and Impact ID: Table of contents 0 Introduction 3 2.0 Case Study Analysis 3 2.1 Apply Balogun and Hope Hailey’s Change Kaleidoscope model to the case and use this to discuss the strategic change context in January 2012, at the start of the merger process. 3 2.2 Apply Johnson’s Cultural Web model to the case and use this to compare and contrast the culture of GreenHealth and Cranberry before the merger (2011) with the new GreenHealth-Cranberry after the merger (2013). 6 2.3 Critically evaluate the change process that took place during 2012-13 using relevant academic theory. 10 3.0 Conclusions 12 4.0 References 13 1.0 Introduction The merger of GreenHealth and Cranberry in 2012 has been initiated for helping both companies to improve their position in the global market. Both these firms are based in UK but their profits are mostly generated through foreign markets, such as the US market for GreenHealth and the European market, for Cranberry. Current paper highlights the terms on which the merger between the two companies was based, meaning especially the strategies used by the firms’ leaders for managing change, as part of the merger process. It is proved that a merger can be successful even if the companies involved have different culture and structure of operations. The active support of employees at all organizational levels is vital for the success of the relevant plan. 2.0 Case Study Analysis 2.1 Apply Balogun and Hope Hailey’s Change Kaleidoscope model to the case and use this to discuss the strategic change context in January 2012, at the start of the merger process. The successful implementation of change in modern organizations can be a challenging task. The use of a carefully designed theoretical context has been proved as helpful for securing the success of change plans. The Change Kaleidoscope model developed by Hope Hailey and Balogun (Figure 1) has such role. The change model of Hope Hailey and Balogun does not promote a particular style of change or specific criteria/ characteristics of plans of change (Hope Hailey and Balogun 2002, p.159). Rather the general context of change is set; managers in organizations where a plan of change needs to be implemented should focus on the issues highlighted in the model and should choose a change strategy, characterized as implementation options in the model, which is more suitable for their organization (Hope Hailey and Balogun 2002, p.159). In other words, the plan used by each firm for the implementation of change is unique (Balogun 2008, p.2). The success of the whole process is also highly influenced by the skills of the individual who manages the plan of change; this individual is also called, the change agent (Cameron and Green 2012, p.220). Figure 1 - Change Kaleidoscope model of Hope Hailey and Balogun (source: Hope Hailey and Balogun 2002, p.156) In the case under examination, the strategic change context at the start of the merger process, in January 2012, could be described using the Change Kaleidoscope model (as analyzed in the study of Hope Hailey and Balogun, 2002, p.160-161) as follows: 1) Time: both firms involved in the merger did not phase at that period severe problems or damages; thus, there was no emergent need for the completion of the merger. Instead the merger process could be completed with no rush, allowing both firms to make appropriate changes according to the needs of the specific plan, 2) Scope: the changes required in both companies for the successful implementation of the change plan are not extensive; rather, issues of employees relocation and staff reduction need to be addressed; each company is already well established in each market so that changes necessary for the improvement of organizational performance are not major (case study, p.2). Between the two firms, GreenHealth seems to need more changes, especially due to the lack of rules in regard to organizational processes and the unfairness by the leader’s side in favour of his strong supporters (case study, p.2); 3) Preservation; the emphasis on innovation and cooperation, as developed in Cranberry, should be preserved in the company resulted from the merger. Also, by GreenHealth’s side emphasis should be given on the preservation of the firm’s physical assets, meaning especially the equipment used in the production process (case study, p.2); 4) Diversity; in GreenHealth ‘the diversity between the members of staff in regard to values and attitudes’ (Hope Hailey and Balogun, 2002, p.160) is rather low, as most of the firm’s employees work there for many years; this means that their views and attitudes have become, almost, homogenous. On the other hand, in Cranberry staff is changed periodically; existing staff is characterized by high diversity, a fact denoting that Cranberry should not have to promote changes for securing diversity among its workforce; 5) Capability; in Cranberry the management of change is easier since in the specific firm the development of initiatives by employees has been always encouraged; also, the firm’s system for monitoring sales is highly functional, meaning that the firm’s leaders are able to have an accurate view of the organization’s performance but also of the organization’s weaknesses (case study, p.2); in opposition, in GreenHealth change is not part of the organization’s culture; rather bureaucracy and lack of a system for monitoring business operations characterize the organization’s structure (case study, p.2); 6) Capacity; in regard to the resources available for supporting the change process, Cranberry seems to be at a better position; the firm’s staff is highly skilled while revenues are at high levels (case study, p.2); in GreenHealth growth has been achieved mostly because of the work of a team of employees who have employed their own personal contacts for achieving key business agreements in the US market (case study, p.2); 7) Readiness for change; in GreenHealth employee motivation is at quite low levels; operations are standardized according to a routine and any change from existing operational practices is not welcomed (case study, p.2); instead, in Cranberry change has been part of the firm’s success (case study, p.2); 8) Power; Bruno Meta, the ‘Chief of the Financial Office of GreenHealth’ (case study, p.1) had a key role in the growth of GreenHealth, even if it was not the firm’s leader and despite the strong resistance he had to face in regard to attempted changes (case study, p.2). Thus, if the two leaders, the one of Cranberry and Bruno Meta, are compared, it could be assumed that Bruno Meta is more capable of promoting change. 2.2 Apply Johnson’s Cultural Web model to the case and use this to compare and contrast the culture of GreenHealth and Cranberry before the merger (2011) with the new GreenHealth-Cranberry after the merger (2013). In order for the merge attempted to be successful it is necessary for the culture of the firms involved to be clearly defined. Only in this way it would be possible for the culture of the new firm to be set, a term that needs to be met before developing the new firm’s strategy. The Cultural Web of Johnson (Figure 2) shows the ‘key values of each organization’ (Sun 2008, p.139) as this culture is depended on various elements. In the Cultural Web model organizational culture is presented as based on ‘a series of core values, named as Paradigm, as influenced by seven elements, around the Paradigm’ (Sun 2008, p.139). The elements of the Cultural Web (Figure 2) should be analyzed as follows: a) Routines: the methods used by organizations ‘for doing business’ (Beech and Macintosh 2012, p.70); these can be highly differentiated across businesses depending on organizational objectives, organizational culture and the resources available (Beech and Macintosh 2012, p.70); b) Symbols: each company is recognized by consumers through a logo/ graphical representation which is designed in such way that reflects the organization’s culture or its area of operations (Sitkin and Bowen 2013, p.166); a company’s symbol can have a unique importance for the success of the business. For example, there are brands that have been made popular for their symbol either because of the uniqueness of design or because of the use of the symbol as a sign of quality; BMW is an example of this case (Sitkin and Bowen 2013, p.166); c) Power structures; this cultural element reflect the ‘actual source of power within each organization’ (Sitkin and Bowen 2013, p.166); this source of power can be an individual or a group of persons; for example, in the case under examination, the team of Bruno Meta that has supported the expansion and the growth of GreenHealth in the US market can be considered as the organization’s Power structure; d) Organizational structures; the term is used for showing the formal structure of an organization, as ‘it presented in its organizational chart’ (Sitkin and Bowen 2013, p.166); in the case of GreenHealth organizational structure is characterized by the extensive power of the leader, a fact that implies the existence of an autocratic leadership style; e) Control systems; they denote an organization’s mechanisms for checking the quality of its products/ services, ‘for monitoring its finances and for rewarding employees’ (Sitkin and Bowen 2013, p.166); the value of a firm’s control system can be high. In fact, without effective control systems an organization is not capable of identifying its weaknesses or the progress of its plans. Thus, without effective control systems an organization has limited chances to secure its market position (Sitkin and Bowen 2013, p.166); and f) Stories; these are stories developed in regard to each organization; these stories are not always based in facts but they can often represent actual organizational practices (Beech and Macintosh 2012, p.70). Under certain terms, stories ‘circulated in the market’ (Beech and Macintosh 2012, p.70) can highly contribute in the business success as they can build a myth around the business potentials/ performance. The Cultural Web (Figure 2) can be used for representing the culture of GreenHealth-Cranberry (Figure 2a), as opposed to the culture of each of the firms (Figure 2b and Figure 2c) participated in the merger, meaning their culture in the pre-merger period. The Cultural Web model has been developed separately for each firm, as before the merger, so that the cultural integration of the new firm to be made easily checked. Figure 2 – The Cultural Web of Johnson (source: Sun 2008, p.139) Figure 2a – Cultural Web for GreenHealth-Cranberry Figure 2b - Cultural Web for GreenHealth Figure 2c - Cultural Web for Cranberry The Cultural webs presented above show clearly the superiority of Cranberry in regard to the Culture of the firm resulted from the merger. 2.3 Critically evaluate the change process that took place during 2012-13 using relevant academic theory. The change plan, as related to the merger of the two companies, was based on the achievement of three targets: a) the operational costs of the new, after-merger, firm should be reduced at least by 20%, b) the two firms – parts of the new firm should be expanded in a new market, meaning the market in which their counterpart was already established; for example, ‘Cranberry should be expanded in the US market and GreenHealth should be expanded in the European market where Cranberry was already successfully established’ (case study, p.3); c) the new firm should manage to develop a new product; a ‘new men’s skincare range’ (case study, p.3) was the product chosen for the specific part of the merger agreement. The success of the change process should be evaluated using relevant literature and by referring to the level at which the targets set by the firm’s leaders, in regard to the change process, were finally achieved or not. In the literature, the success of change plans has been highly related to the skills of the leaders, or else change agents (Chew et al. 2006). It has been also proved that organizational culture is likely to be highly influenced by processes that require critical changes; the merger process is an example (Kamugisha 2013). In addition, it seems that change plans are likely to fail if the needs of employees involved are not taken into consideration. Indeed, the research developed in this field has revealed that change initiatives have failed when employee motivation is low (Sanda and Pearl 2011). At the same time, the modes of change plans adopted by firms worldwide can highly vary, mostly because of ‘the different speed used for promoting change and the different range of resources available for supporting these plans’ (Pryor et al. 2008, p.1). Moreover, an organization that needs to implement change has to be able to respond to a series of pressures, or else to meet certain requirements, as presented in the graph in Figure 3 below. Such organization is characterized as a transformed organization (Figure 3). Figure 3 – A transformed organization (source: Pryor et al. 2008, p.4) From a similar point of view, Kilfoil and Groenewald (2005) noted that the successful completion of a merger is depended on the ability of the leaders involved to promote ‘trust, cooperation and appropriate distribution of roles’ (Kilfoil and Groenewald, 2005, p.11). In regard to the change process, as developed between 2012 and 2013, emphasis should be given to the following facts: the level of cooperation between the employees of the two firms/ parts of the new firm is rather low. Meetings are held between employees at the higher level of the organizational hierarchy, but at lower levels the cooperation and communication between employees is not well established. In fact, the refusal of certain employees to relocate has led to the existence of two central business units, a practice that has caused delays in the organization’s growth. Moreover, the culture of the new firm does not seem integrate. Still, each part of the merger seems as reluctant to fully abandon its culture. For example, the employees of GreenHealth continue to emphasize on bureaucracy and to highly use the routine in their daily tasks, avoiding innovation and team-work, as these changes are important terms of the merger process. Due to this practice, it has been difficult to fully define the strategy of the new firm, a fact that is reflected in the following problems: a) still, no plan exists for the development of a new product and b) the process of expansion of the firm in new markets is not clear; existing markets are used for promoting sales. 3.0 Conclusions The merger between GreenHealth and Cranberry, as developed in 2012, could be characterized as successful. If the various phases of the merger process are carefully reviewed, then various failures can be identified: a) for example, the development of a new product has been set among the three key targets of the merger but no signs of such product have appeared even if a long period has passed since the arrangement for the firms’ mergers, b) also, the expansion of GreenHealth and Cranberry in new markets, i.e. in the European market and in the US market accordingly, is at quite low level, even if this target has been included among the three core targets of the merger. This means that two out of the three terms of the merger have not been achieved, a fact that could set the effectiveness and the reason of the whole process in doubt. Still, a continuous improvement seems to exist in regard to the promotion of the merger’s objectives: the new firm has managed to significantly reduce the operational costs while the cooperation between employees is at high levels. The successful completion of the merger should be depended on two facts: a) the willingness of GreenHealth’s employees to fully support the changes required and b) the ability of both leaders to identify an operational system that could allow innovation, in addition to the firm’s potentials to respond to market needs for current products. Also, the necessity of a scheme for securing expansion in new markets is emergent; up to now, the two firms that participate in the new firm have been able to keep their market share but have not been proved able to achieve expansion despite the increased resources available as a result of the merger. 4.0 References Balogun, J., 2008. Exploring Strategic Change. Essex: Pearson Education. Beech, N. and Macintosh, R., 2012. Managing Change: Enquiry and Action. Cambridge: Cambridge University Press. Cameron, E. and Green, M., 2012. Making Sense of Change Management: A Complete Guide to the Models Tools and Techniques of Organizational Change. London: Kogan Page Publishers Chew, M., Cheng, J. and Petrovic-Lazarevic, S., 2006. “MANAGERS’ ROLE IN IMPLEMENTING ORGANIZATIONAL CHANGE: CASE OF THE RESTAURANT INDUSTRY IN MELBOURNE.” Journal of Global Business and Technology, 2(1): 58-67 Hope Hailey, V. and Balogun, J., 2002. “Devising Context Sensitive Approaches To Change: The Example of Glaxo Wellcome.” Long Range Planning, 35: 153–178 Kamugisha, S., 2013. “THE EFFECTS OF CHANGE MANAGEMENT IN AN ORGANISATION: A CASE STUDY OF NATIONAL UNIVERSITY OF RWANDA (NUR).” Wyno Journal of Management & Business Studies, 1(1): 1-18 Kilfoil, W. and Groenewald, T., 2005. “MERGERS AND CHANGE MANAGEMENT AT THE MICRO LEVEL: A CASE STUDY.” Journal of Human Resource Management, 3(2): 11-18 Pryor, M., Taneja, S., Humphreys, J., Anderson, D. and Singleton, L., 2008. “Challenges facing change management theories and research.” Delhi Business Review, 9(1): 1-20 Sanda, M. and Pearl, A., 2011. How is the Firm Dealing with the Merger? 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