Organisational Change Management - Dissertation Example

However, the recent economic downturn has had a big impact on demand and the company is struggling to survive. It has formulated a new strategy that focuses on cutting costs as quickly as possible and to this end it has decided to stop producing some components and to concentrate the production of other components at fewer sites in order to benefit from economies of scale. This decision is still to be announced. It is possible that many of the B2 product development engineers may be reluctant to relocate.

Employees at the other sites in Spain and France are likely to be worried that this may only be the first of many changes. Definition The primary underlying and the key issues of the case provided are discussed ahead. Before defining the problem, there is a need to have a brief look at the company holistically. D2, a car components manufacturing company has been a well renowned company for years and has been able to remain competitive over years since its establishment. The company has been able to maintain a good ROI that is return on investment and growing shareholder value by producing innovatively, investment in new technology and staff development. . The company gets reluctant to spend on the marketing side too so cutting these costs may impact any sort of business especially big businesses like D2.

There is a possibility that in such a situation the dividends may slump too or may be disappearing of completely. The shareholders may get worried. As the stock of manufacturer starts to falls and the dividends decline, the institutional investors that hold the stock are likely to sell it off and reinvest into stocks that are performing better. This will even more depress the stock price of the company (Cascio, 2002). Moreover the company may get bankrupted as the impact of recession can also lead to the slow, partial, late, or may be no return by the accounts receivable.

This results in the company failing to pay its bills and meet its other costs and eventually there will be a reduction in the valuation of the company’s bonds and its ability to get the financing. This can have a great impact on the company’s credit rating also that will prevent borrowing as it fails to pay the interest on the money previously borrowed (Redman and Wilkinson, 2006). The company in this situation like D2 likes to cut the cost buy cutting down the number of employees and increasing the work load of the remaining employees after the lay off.

Productivity will be required to increase per employee but the morale of the employee may get lowered under such a situation. Despite of the increased work load the company fails to offer additional bonuses and compensation packages to its remaining employees leading to an even lowered morale level (Gandolfi, 2008). For companies like D2 which is a manufacturing company the company may be forced to close