Making Changes in Existing System of Conducting Business - Case Study Example

?Management Executive Summary Change management is an essential feature of management which tries to make sure that a business responds quickly to the changing environment in which the organization operates. John Kotter defines change management as the proper utilization of primary tools and structures which helps to control any attempt of organizational change. In other words change management tries to reduce the impacts on the employees of the organization and ensures to avoid disruption. Therefore the companies which successfully implements change in their system of operation are successful and on the contrary those who could not execute it properly remain at the flipside. The report will highlight on the rationale for which the company is making changes in its existing system of conducting business. The report will also try to draw attention to on the specific changes which are undertaken by Virgin Blue. Apart from that the report will also use Kotter’s eight step change model to showcase change management process. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Why Virgin is changing 5 Changes in Virgin 7 Kotter Eight step model 9 Conclusion 14 References 15 Bibliography 17 Introduction Business environment is turbulent and organizations are not only making frequent changes to their operations but also making changes which are complex in nature. Change is the most essential characteristic for an effective management (Hussey, 2000, p.1). Change management is defined as the structured approach for modifying the organizations current situation to a preferred situation in the future. Change management is considered important for various reasons i.e. a number of issues influences the need for change. The major changes include technological change, change in customer tastes, alteration in the rules and regulations of the government, issues related to industrial relationship, competition changes, changes in leadership and a cluster of different other changes which either affects the growth of the organization or improves survival opportunity and expansion of the organization (A. Mills, Dye & J. Mills, 2008, p.10). In order to conduct or assess the positive impacts of change management in an organization Virgin blue the Australian air transport company has been chosen. The chosen company is a part of the renowned virgin group. The company arrived in the Australian market during the early 2000. They entered the Australian aviation industry and from then onwards they have given stiff completion to other players. The first flight of the company was DJ214 from Brisbane to Sydney during august 2000 (Virgin Australia, n.d.). They have principally focused on the leisure sector of the industry. The company has repositioned itself during the mid of 2011 with the launching of virgin Australia (Virgin Australia, n.d.). The company also achieved plenty of acclamation to its name. So in order to remain in the long run the company is also focusing on the changes to its current state. Why Virgin is changing A change in organization is a risky activity as organizations sometime fails or do not realize the proposed results. There are number of factors which are considered by the company to undergo changes in their existing system. Some of the reasons that Virgin blue has considered for making changes in their organization are as follows:- Declining market share – With the struggling economy there were huge losses of job and slow growth of economy. In such situations there are very less leisure travels and people tend to cut down their cost on luxury spending. Leisure travelling is one activity which gets hampered. Therefore it was necessary to make changes in their current state in order to strengthen the financial condition of the company. The changes which need to be undertaken are strictly based on current market situation. Strengthen Position in the corporate market – One of the strongest reason for which the company considered to implement changes in their current state was to strengthen its position in the corporate market. They also propose to make changes in leisure travelling market as well. In order to implement these functions the company is in the process to introduce many upcoming service ventures for the intended customers. Image Makeover – The Company is also in the process to changing its existing image in the market. In order to do so the company has to change its existing name. This has been also undertaken to increase the share of market for business and corporate travelers by around 10 % to 15 % (Cnbc, n.d.). Increased customer experience – The Company also felt the need for change in order to increase the level of customer experience and thereby providing full customer satisfaction. Subsequently, there were introduction of various programs in order to implement the change. External Cost Pressures – Virgin blue faces huge external pressures in the form of cost of the materials. The cost of fuel is getting increased on a regular basis but the company still offers the services which are 20% cheaper form its competitors. Therefore in order to cope up with this high cost market, the company is facing external pressure. Competitive pressures – The Company is highly affected by the competitive pressures as well. With the competitors like airlines of Tasmania, Australian air expresses, Jet star airways, Qantas and eastern Australia airlines the company is also feeling the need of change to maintain its current standings and grab more market share. Decline in the Profit margins – One of the biggest reasons for the company to undertake few changes in the organization is because of the decline in the net profit. The net profit was even below the forecasted profit margin. Changes in Virgin The company has proposed to bring some of the immense noticeable changes to its current circumstances. Chief Executive of Virgin blue John Borghetti has confirmed that there are several changes which they will be bringing to the company. New uniforms, a new airport lounge and a new business class product which are among some of the proposed changes that Virgin Blue has revealed. The company has also projected more changes in the succeeding years. Some of them are new and innovative marketing campaign and new products. The initiative has been taken principally to attract as much corporate travelers as possible. This will ensure increased productivity as well as increased market share and profit. The company is also focusing first order and second order changes through the improvements in services for business class, refurbishing corporate image and a stylish portrayal of images. A first order change is the change which is characterized as the change which is incremental and gradual. While on the other hand a second order change is a profound change which modifies the system in a dramatic way. In other words a second order change makes people uncomfortable as there involves an exit from the accepted procedure (Taylor, 2009, p.xi). A continuous and smaller change in the structure of the organization is the first order change and transformational change is the second order change. The different types of change are downsizing, technological and mergers. There are generally three approaches of downsizing namely Retrenchment, Downscaling and down scoping. But it can also be noted that practising such approaches does not necessarily increase the productivity and to add to that it is also a costly exercise. While in case of technological changes it includes the use of new tools such as Customer Relationship Management system (CRM), Enterprise Resource Planning (ERP), Business Process Reengineering (BPR), Point of Sale management (POS), E-commerce and different other wireless technologies. On the other hand a merger and acquisition helps an organisation to grow at an enhanced rate. Some of the visible changes of Virgin blue which are implemented or to be implemented in their existing position are as follows:- New name – The Company has been renamed to Virgin Australia from virgin blue. This has been undertaken to have a makeover in the image of the company. New business class cabins - The Company promises to install a new business class cabin i.e. an advanced economy class mainly intended for the corporate travelers. Turboprop Engine – Virgin blue will also focuses on turboprop aircraft in order to make partnership with SkyWest and fly in the regional routes. New Uniforms – The cabin crews and the employees of the company are also given with new outfits. New Lounge – The Company also intends to open a new lounge at the Coolangatta airport. Apart from this they also plans to amalgamate business class with the domestic flights primarily projected for the business fliers. Expansion in the international and domestic routes – Virgin blue is also planning to expand the routes of international and domestic flights in order to grab more customers with its longer reach. Introduction to new reservation systems – The Company is also under taking a new and updated reservation and distribution system. This has been implemented to offer higher level of service and will also provide greater elasticity along with a list of options for the customers. Customers can now book online tickets through the website virginblue.com.au. This system not only offer hassle free transaction but also it saves a lot of time. Kotter Eight step model The model has been proposed by John Kotter in the year 1996. Kotter eight step change model is one of the popular models of scheduling, implementation and sustaining change. It offers a simple and uncomplicated for planning the change (Beitler, Gupta & Sabri, 2006, p.176). The model segments the change process of organization into eight steps:- Step 1 – Establish a sense of urgency: - The first step is to create a sense of urgency. In this step the organization is thoroughly analyzed and also convincing reasons are found out in the context of why a change is needed in the organization. The market clearly suggests that due to slowdown in the economy there is a huge decline in the leisure travel and also in the profit margin of the company. While conducting the research it has been also found that the company is facing immense pressure from the competitors as well as pressure from the external environment. Therefore in order to curb this, company is looking for expansions apart from the low cost travel market. Since Qantas is the market leader and Virgin blue holds only 10 % of the market share, it sees the opportunity to tap other virgin market. This is the reason why Virgin blue introduced lots of packages for business travelers in order to get more profit margin. Thus in order to get the public attention they deliberately changed their uniform and even the name of the company (Kinicki, 1999, p.406). Step 2 – Create the guiding coalition: - This stage is characterized by the creation of cross-functional group of people who will be having the power to lead the change. In this context the company should use a renowned designer to design their dress code and the uniform must have some innovations to it. For example the uniforms can carry some important statements like ‘save water save electricity’. This will also attract the attention of the customers. The company also needs to develop a separate marketing team who will be looking after the entire process. Another recommendation is that the company can use any attractive color for their uniforms. Step 3 – Develop a vision strategy: - This stage is about developing a vision and also to generate a strategic plan which will act as the guide of change process. The vision of the company must be to grab at least 25% of the market share within the next two years. The company must also aim to go at par with the Qantas by using low priced strategy and better customer offerings. Step 4 – Communicate the change vision: - This step deals with the communication strategy of the company. In this stage there is creation and implementation of the communication strategy which continually notifies the vision and the developed strategic plan. In order to notify the changes to the employees the company needs to create buzz around that a changing is coming to the organization which will actually change for the betterment. And in order to notify the change to the outsiders the company can showcase its change through a big platform such as a big sporting event or by organizing some musical nights. Step 5 – Remove obstacles: - In this steps the barriers to change needs to be eliminated. Apart from this step is also responsible for solving the problems in a creative way and also encouraging taking risk. In this context the barriers can be based on the external environment which is beyond the control of the organization. And the ways by which these barriers can be identified are brainstorming sessions, focus group interviews, questionnaire and interacting with the key individuals. Now the most important portion is to overcome these barriers. This can be done through opinion leaders, reminder systems, feedback programs and meetings (Nice, n.d.). Step 6 – Generate short term wins: - In this step the company needs to plan and create short term improvements. In other words short term goals can be created and if achieved, it gives a huge moral boost. And it is also necessary to recognize and reward the personnel’s who contributes towards the improvements. In this case the Virgin blue can create an employee appraisal system which will allow them to properly recognize the potential employee and reward them. This in-turn motivates the workers. Step 7 – Consolidate gains and produce more changes: - Kotter argues that most organizational change falters because success is affirmed too early. But the real change penetrates deep into the organization. For example launching a new product through a new system is alright. But if 10 products can be launched with it, it suggests that the new system is properly working. And also to remain in the long run companies needs to keep looking for enhancements. Quick wins are only the beginning of what needs to be done to achieve long-term change. In this step short term improvements must be used to create new changes within the organization. There are even attempts to give a boost to the new changes. In this particular case the company may opt for other innovative changes as well by utilizing the short term developments. Step 8 – Anchor the changes in the culture: - The final step states that in order make any change permanent it should be incorporated in the core of the organization (Global Literacy Foundation, n.d.). Therefore the company must ensure that the changes are seen in every segment of the organization by making continuous efforts. The company can also showcase it’s the effectiveness of the newly implemented change to its employees. This will ensure that a sense of trust will be generated in the minds of the employees about the change (Glasgow, n.d.). Figure 1 (Source: Samvara, n.d.). Conclusion The report was about the need for change management in the organizations. The report was also about the ways to identify the areas where change is needed and the ways to implement the change. Apart from this the report also focused on the method by which a change in the organization can be incorporated in the core system of the organization. In other words how to make the change stick with the organization for long term. In order to conduct the research on change management and asses its effectiveness Virgin blue currently renamed as Virgin Australia has been used. Kotters Eight step model has also been used for the management of organizational change. Therefore after conducting all the necessary researches it can be firmly stated that a change is a necessity for every organization. In respect with virgin blue there are ample reasons for which the company must make changes to its current standings. The company needs to ensure that they follow the steps of the change management process to quickly respond and adapt to the change. It will also help the company in effectively implementing change and at the same time give them a competitive advantage. Moreover periodic changes also ensure the long term presence of a company. And to sum it up all it can be said that change is a necessity than a desire for organizations today. References Beitler, M. A., Gupta, A. P., & Sabri, E. H. (2006). Purchase Order Management Best Practices: Process, Technology, and Change Management. Florida: J. Ross Publishing. Cnbc. (2011). Virgin Blue goes Upmarket with Name Change. [Online]. Available at: http://www.cnbc.com/id/42891877/Virgin_Blue_Goes_Upmarket_With_Name_Change. [Accessed on 16 May 2012]. Glasgow. (No Date). Kotter's 8-Step Change Model. Implementing Change Powerfully and Successfully. [Pdf]. Available at: http://md.glasgow.anglican.org/wp-content/uploads/2011/05/Kotter-on-change.pdf. [Accessed on 16 May 2012]. Global Literacy Foundation. (No Date). Kotter's 8-Step Change Model. [Online]. Available at: http://globalliteracy.org/content/kotters-8-step-change-model. [Accessed on 16 May 2012]. Hussey, D. E. (2000). How to Manage Organisational Change. London: Kogan Page Publishers. Kinicki. (1999). Organizational Behavior. New Delhi: Tata McGraw-Hill Education. Mills, A. J., Dye, K., & Mills, J. H. (2008). Understanding Organizational Change. Abingdon: Taylor & Francis. Nice. (No Date). How to Change Practice. [Pdf]. Available at: http://www.nice.org.uk/media/AF1/73/HowToGuideChangePractice.pdf. [Accessed on 16 May 2012]. Samvara. (No Date). Organisational Change. [Online]. Available at: http://samvara.dreamwidth.org/584887.html. [Accessed on 16 May 2012]. Taylor, R. T. (2009). Leading Learning: Change Student Achievement Today. California: Corwin Press. Virgin Australia. (No Date). Company Overview. [Online]. Available at: http://www.virginaustralia.com/au/en/about-us/company-overview/. [Accessed on 16 May 2012]. Virgin Australia. (No Date). Virgin Australia History. [Online]. Available at: http://www.virginaustralia.com/us/en/about-us/company-overview/virgin-australia-history/. [Accessed on 16 May 2012]. Bibliography Cowan, S. L. (2005). Change Management. Virginia: American Society for Training and Development. Pugh, L. (2007). Change Management in Information Services. Farnham: Ashgate Publishing, Ltd. Ventris, G. (2004). Successful Change Management: The Fifty Key Facts. London: Continuum International Publishing Group. Read More