Organizational Problems of Fishery Products International - Essay Example

? Fishery Products International Table of Contents Introduction 3 2. Fishery Products International – organizational problems 4 2 Management roles and responsibility 4 2.2 Business strategy 6 2.3 HRM and managing people 7 2.4 Organization structure and culture 9 2.5 IT and the learning organization 10 2.6 Total Quality Management 11 2.7 Managing of change 12 3. Conclusion 12 4. Recommendations 13 References Appendix 1. Introduction In the context of the global market, one of the key challenges that firms have to face is to identify those strategies that will offer them competitive advantage towards their rivals. Most commonly, the above effort is delayed because of the market pressures and the appearance of problems in the internal organizational environment. Therefore, in order for a firm to secure its position in its industry it is necessary to ensure that its strategies are appropriately aligned to the market needs and that conflicts in its internal are effectively controlled. Current paper focuses on the examination of the organizational problems of Fishery Products International (FPI), a key competitor in the global fishery industry. The changes that the firm had to promote, mostly because of its transformation in 1087, from a public-sector firm to a firm of the private sector, have negatively affected its performance. Of course, the high level of the firm’s profitability, especially compared to its rivals, cannot be denied. However, it seems that the transition of the firm from the public sector to the private sector has been problematic, even if the problem was not revealed immediately, i.e. in 1987 when the firm entered the private sector. The ability of the firm to survive in the private sector depends on the willingness of its stakeholders to support this effort but also on the market’s conditions, which have been proved to be critical for the firm’s stability. It should be noted that the efforts of the firm’s CEO, Vic Young, regarding the increase of the firm’s competitiveness have been significant. Measures should be taken so that these efforts to be appropriately customized being most aligned with the firm’s culture and its actual potentials in the global fishery industry. 2. Fishery Products International – organizational problems The history of the firm is rather short; the firm was established in 1984 through the amalgamation of three major seafood companies. However, the firms participated in the particular organization had a long presence in the particular industry, being related to the first efforts for the establishment of the fishery industry in Canada. This fact should be taken into consideration when evaluating the firm’s performance after the transformation to a legal entity of the private sector. From a first view, the performance of the firm in its industry can be characterized as satisfactory, taking into consideration the market conditions and the environmental challenges, referring especially to the limitation of the fish stock. Despite the above issues, the firm should stabilize its performance and strengthen its position in the global fishery industry in order to be able to face any potential attacks from competitors, as such attack was expressed through the ‘unsolicited takeover bid’ (case study, p.15) against the firm by NEOS Seafoods Inc. in 1999. The firm’s key organizational problems are highlighted below; suggestions are made for their elimination and the increase of the firm’s competitiveness, so that similar events, like the takeover bid of NEOS, to be avoided in the future. 2.1 Management roles and responsibility One of the key characteristics of FPI is its leadership style. As noted above, the first established in 1984; in 1987 the firm entered the private sector, which means that for about 3 years the firm was under the control of the government. It was in 1984 when the current CEO of the firm, Vic Young, was appointed in his current position. During this period of transition, from 1984 up to 1987, it was unavoidable for the firm’s management to face a series of critical challenges; three independent firms had to cooperate, being a single business unit. Vic Young managed to face the critical organizational issues appeared during that period, proving that the choice of leadership style for the particular period of time has been quite successful. After the entrance of the firm in the private sector, in 1987, a differentiation in the firm’s management structure would be normally expected. However, there was no such issue. In fact, Vic Young remained the only person responsible for the monitoring of the firm’s various organizational activities. Of course, the key role of Vic Young in the development of the firm’s strategic decisions could not change. However, since the firm’s activities had to be expanded – in order to face the competition in the private sector – the restructuring of its management style was necessary. Managers should be appointed at low and middle levels of the organizational hierarchy, in addition to the existing managerial staff, ensuring that tasks in each organizational department are effectively organized and monitored. Moreover, the roles of managers in the organizations, which participated in FPI, should be appropriately changed, taking into consideration the needs of the firm in its new form, i.e. as an organization of the private sector. Of course, the role of the firm’s board (12 members) in confronting the organisational crises cannot be ignored; however, no member of the board had been involved in the firm’s management apart from Vic Young. Therefore, these persons could not have a clear view of the organisation’s status and needs. The involvement of the one of the board’s members in the governance of the firm – referring to ‘the chairperson of the board’s HR committee’ (case study, p.14) – cannot effectively support Vic Young, who has to monitor the national and international activities of the organization on a daily basis. The participation of more members of the board in the firm’s management would be a first attempt to strengthen the firm’s various departments. Then, the appointment of additional staff in managerial positions could be decided in case that a further distribution of managerial responsibilities was considered as necessary. 2.2 Business strategy As noted above, in 1984, the firm’s strategy has been changed following its transformation to a firm of the private sector. Since then, the firm’s CEO has tried to promote innovation, aiming to make the firm ‘more market driven and diversified, investing heavily in technology and its workforce’ (case study p.4). In other words, emphasis had been given on the alignment of the business strategy with the market trends and the consumer demands. However, the conditions under which the above target could be achieved were not sufficiently examined. More specifically, before attempting any relevant effort, it should be made sure that the potential of the firm to respond to the needs of new operational practices (as decided in order to increase the firm’s competitiveness in the global market) would exist in the long term. At that time point, no such criterion was set. Instead, the development of the firm’s activities started aiming to reach the targets set in terms of production and quality. In this context, significant a significant amount of money was invested on the improvement (actually, re-development) of the firm’s facilities and its processing machinery. Advanced technology was promoted across the organization in order to support a significant increase of the firm’s production, a necessary requirement for the stabilization of the firm in the international fishery industry. However, the time available for the pay-back of the investment proved to be shorter than initially estimated. The introduction of restrictions in 1989 ‘by the government regarding the fishing quotas’ (case study, p.4), which were expanded in 1993 including bans on the harvest of cod, led to the radical limitation of the firm’s profitability. At this point, the lack of appropriate alternative for the support of business activities has been proved of crucial importance. The firm had achieved to access important markets, such as the Japanese market, in 1988, but such measures were not adequate for facing this crisis. The acquisition in 1992 of the National Sea Products should be characterized as a strategically quite successful decision, allowing the differentiation of the firm’s activities, its entrance in the shrimp industry, which was then quite promising. However, it is clear that additional policies of such type would be required for the stabilization of the firm’s position in the international market – in accordance with the case study, no similar initiatives were undertaken by the firm, a fact which could be explained, alternatively, through the following: a) there were no adequate resources for supporting additional initiatives of such type or b) there was no time of the firm’s management team to check on additional plans of similar characteristics. The need for changes in the firm’s structure and culture is clear. At the same time, changes should be made on the firm’s HR and IT department, in the context described below. Emphasis should be given on the change management policies used in each particular case. The use of literature that addresses similar problems would be necessary for identifying solutions in regard to a series of organizational problems, as analytically explained in the sections that follow. 2.3 HRM and managing people The HRM in the specific organization had to face a significant challenge: to handle the crisis developed across the organization because of the loss of 6,000 jobs as a result of the ‘reductions in fishing quotas’ (case study p.4) introduced by the government of Canada in 1989. In this case, redundancies had been considered as the most effective measure for facing the crisis, taking into consideration that after the limitation of harvest (because of the relevant governmental restrictions) ‘many of the firm’s plants had to close while the capacity utilization of the remaining plants reached just the 65%’ (case study, p.4). The suggestion of the firm to offer to its employees, an Employment Insurance was not welcomed by the employees who decided to further develop their resistance through demonstrations, a fact that indicates the level of crisis in the internal organizational environment. The specific crisis was difficult to be handled, not because of the lack of communication between the employer and the employees but because its causes could not be controlled by the firm’s CEO. The use of collective agreements and various benefit plans have helped to the limitation of the conflict but additional measures should be taken. The hiring of Angela Bugden, as a plant manager in the firm’s plant in Nova Scotia and the support of the professional development of the employees have been also important initiatives showing the firm’s efforts to increase its employees’ motivation. The standardization of the firm’s HR policies across its departments (Briscoe et al. 2008, p.30) and the emphasis on ‘local responsiveness rather than the global integration’ (Burke et al. 2005, p.81) could further help towards the elimination of conflicts in the workplace. FPI is an international firm, but it should focus more on the needs of the local communities and the trends of the local culture ensuring its employees that their role in organizational performance is critical; emphasis should be given on employees’ needs rather than on the market trends, which have been proved to be quite unstable (Erickson et al. 2009, p.177). Loyalty and trust within the organisation could help to increase the firm’s productivity and to reduce the chances for resistance next time that a plan of change will be initiated. 2.4 Organization structure and culture In accordance with the case study, organization’s culture has not been highly differentiated after its transformation to a firm of the private sector. More specifically, since the establishment of the firm, its CEO, has tried to promote diversification, alignment with market trends and development of the firm’s IT systems in order for its productivity to be increased (case study, p.4). The firm’s culture has been effectively supported through its operations, as proved by the high recognition of the firm’s brand, which has been related to quality (case study, p.12). In the context of organizational culture, teamwork in the workplace is highly promoted. Emphasis is also given on equality (an issue highlighted through the hiring of a woman, for the first time, as a manager of the firm’s plant in Riverport) and the support of employees’ professional development (case study, p.13). The firm’s culture would become more effective if it would be used not just as a criterion to characterize the firm’s strategic choices but also as a criterion to promote strategic change (Alvesson, 2002, p.71). This means that current organizational activities and strategies should be carefully reviewed and their change should be attempted in case they were be found to be in opposition with the firm’s culture, as described above. The potential elements of organizational culture are presented in Graph 1, Appendix. The strategies followed in regard to the firm’s structure can be characterized as quite effective. In fact, the operations of the firm have been divided into three categories: ‘primary processing, secondary processing and seafood trading’ (case study, p.12), a fact that supports the distribution of tasks, i.e. the limitation of complexity in each phase of processing. The fact, also, that each plant ‘is treated as a cost centre’ (case study, p.12) increases the independency of each unit of the firm, giving the chance for the development of a separate cost plan for each operational unit. In this way, the risk for high losses is avoided; failures in a particular organizational activity have limited effects on the firm’s total profits. At the same time, since tasks are clearly distributed, it’s easier to identify the causes of organizational failures and develop the necessary measures. The strategic options of the firm’s CEO in regard to the firm’s structure are, thus, quite effective and should be only improved at the following point: employees in each plant should be given the chance to improve their position in the organization, since this is an issue which has not been adequately addressed by the firms’ management team – as proved through the case study (p.13, 14). 2.5 IT and the learning organization In accordance with the issues discussed above, it is clear that one of the key priorities of the firm’s CEO would be the transformation of the firm to a learning organization. As noted in the study of Mullins (2008) a learning organization is ‘an organization which facilitates the learning of all its members and continuously transforms itself’ (Mullins 2008, p.102). Moreover, Pathak (2011) states that an organization, which does not have the qualities of a learning organization, tends ‘to repeat old practices’ (Pathak 2011, p.286). In the case of the specific firm, the non-transformation of the firm, as suggested above, would mean that the firm would not be able to promote innovation. As a result in the case of another takeover bid in the future, the firm would not be able to face the attack. IT would be a key element of the transformation of the organization to a learning organization. In accordance with the case study, the firm updated its IT systems in 1987 (case study, p.4); no similar plan has been developed by the firm, at least no such initiative is described in the case study. The need for update of the firm’s IT systems is emergent in order for the transformation of the firm to a learning organization to be achieved. 2.6 Total Quality Management The firm operational activities are fully aligned with the quality standards related to the fishery industry (case study, p.13). The above target is achieved through the use of appropriately customized quality management programs based ‘on the principles of Hazard Analysis Critical Control Point (HACCP)’ (case study, p.13). This fact indicates the high importance of Total Quality Management as part of the strategic planning in FPI. On the other hand, the continuous improvement of fishing practices, as continuously initiated by the firm is an important indication of the firm’s awareness on environmental risks (Rawlins 2008). The fact that the firm funds appropriate research scheme, aiming to keep its total quality management and environmental policies updated, also proves that in this sector, the firm’s strategic planning would not need any change (Holbeche 2009). The continuation of the above initiatives should be ensured, meaning that the firm should try to expand its financing potentials, possibly by issuing additional shares, i.e. borrowing should be avoided in current economic conditions. 2.7 Managing of change The introduction of changes in regard to the firm’s practices, as discussed above, should be initiated, taking into consideration the following issues, as highlighted in the relevant literature: a) in certain cases, the time limits for change are quite narrow; this means, that instead of attempting changing organizational practices, it should be most appropriate to introduce organizational policies which are achievable and meet the organizational needs (Carnall 2007, p.161), b) the change, as part of the firm’s strategic planning, could be characterized as ‘reactive change’, being rather a response to the changes in the firm’s external environment, and not a ‘proactive change’, i.e. a change which is irrelevant with the firm’s environment (Cole 2003, p.108). Indeed, change in the specific organization is related to the need for the increase of the firm’s strength in order to be able to face effectively a potential takeover bid in the future. 3. Conclusion The takeover bid in 1999 against FPI could be regarded by the specific firm as a chance to review its strategic plans but also its operational activities in order to verify the level at which its strategic decisions are applied. However, the development of the above activities is not an easy task. Two are the facts that are expected to cause delays in the relevant initiatives: a) the expansion of the firm’s plants would make difficult for integrated strategic plans to be effectively promoted, b) the current level of cooperation among employees needs to be improved; the strong conflicts developed in the firm’s plants in the past – because of the redundancies decided because of the limitation of the firm’s profits – have not been fully eliminated. Cooperation and communication in the internal organizational environment should be appropriately supported before attempts are made for the change of the firm’s existing strategies (Gennard et al. 2005). The above effort would be enforced by appropriately updating the firm’s culture, as explained above, ensuring that the promotion of equality and coordination in the workplace is not just a strategic decision but rather a daily organizational practice. 4. Recommendations The increase of the firm’s productivity would be a key method for its stabilization in the international market to be promoted. However, since the development of productivity in current market conditions, and taking into consideration the continuous increase of restrictions in fishery quotas, it would be preferable for alternative organizational practices to be developed. These practices could ensure that the firm’s position in its industry would not be threatened, even if its profits were stabilized: a) increase of the support to employees; this practice could help to the increase of employees’ loyalty; employees would be expected to support organizational efforts for change, when such plans are promoted (Gennard et al. 2005), b) increase of strategic alliances with other firms in the industry, c) improvement of the firm’s communication with its suppliers; lower prices from the suppliers would be achieved, a fact that would increase the level of the firm’s profits; also, in this way, the firm would be able to respond to increased market demands, improving its position towards its rivals, d) the use of IT across the firm’s activities should be further reviewed; aiming to decrease time required for the completion of the various organizational activities. References Alvesson, M. (2002) Understanding organizational culture. London: SAGE Briscoe, D., Schuler, R., Claus, L. (2008) International Human Resource Management. Oxon: Taylor & Francis Burke, R., Cooper, G. (2005) Reinventing human resource management: challenges and new directions. London: Routledge Campbell, D., Stonehouse, G., Houston, B. (2002) Business Strategy. Oxford: Butterworth-Heinemann Carnall, C. (2007) Managing change in organizations. Pearson Education Cole, G. (2003) Strategic Management. Belmont: Cengage Learning Erickson, M., Stephenson, C., Bradley, H. (2009) Business in Society: People, Work and Organizations. Cambridge: Polity Gennard, J., Judge, G. (2005) Employee relations. London: CIPD Publishing Holbeche, L. (2009) Aligning human resources and business strategy. Oxford: Butterworth-Heinemann Mullins, L. (2008) Essentials of organisational behaviour. Essex: Pearson Education Mullins, L. (2007) Management and organisational behaviour. Essex: Pearson Education Pathak, H. (2011) Organisational Change. New Delhi: Pearson Education India Rawlins, A. (2008) Total Quality Management (TQM). Central Milton Keynes: AuthorHouse Appendices Graph 1 – Elements of organizational culture (Source: http://www.adb.org/documents/studies/auditing-lessons-architecture/img/fig5.jpg) Read More