Change Management in BMW Thailand - Essay Example

? Change Management Contents Contents 2 Introduction 3 Overview of the analysis tools used 3 SWOT of BMW Thailand 3 Lewin Model of Change 4 Balanced Scorecard 5 Mckinsey's 7S 5 Kotter's 8 steps change model 6 Results of the analysis and evaluation of the models 6 Proposals for a change strategy: Application of the theoretical models on change management 6 Recommendation for implementation of the change program 8 Conclusion 10 References 11 Bibliography 14 Introduction BMW AG is a German automobile company founded in 1917. It has its headquarters in Munich, Germany. Its first business was manufacture of engines of an airplane. In 1923 due to prohibition of production of airplane engines, the company launched its first motorcycle. It was only after the 2nd World War when the company started entering into the luxurious automobile segment. In 1951 they launched BMW 501 which was their first automobile. Since then the company has been one of the frontrunners in producing cars. BMW is one of the “German Big 3” high end car makers together with Mercedes-Benz and Audi. BMW is actually a house of brands containing brands like Mini, BMW and Rolls-Royce. BMW is present across the world and has its operations adjusted to meet the requirements of respective country. In this report we will analyse the change management of BMW in Thailand. Overview of the analysis tools used SWOT of BMW Thailand BMW was one of the key drivers for growth of the premium segment in whole of Thailand. In 2009, it was the only brand whose market share increased. Through their relentless effort of proving the most advanced technologies in the Thai market, they have created a name for themselves. Due to challenging economic conditions in Thai, coupled with fluctuation of oil prices, world financial crisis, the consumers of Thailand were looking for more fuel-efficient cars. But they still wanted to have that comfort, safety and smooth driving performance. BMW came out with a perfect solution named BMW Efficient Dynamics technology (BMW Thailand, 2013, p. 1). It gave exactly what the consumers have been looking for and earned BMW group the title of “The Most Sustainable Car Company in the World.” This shows that BMW has strong innovative strength to cater to Thai customers. The major weakness that BMW faces in Thailand is that their overall servicing process is not good. It takes considerable time to fix or service the car and sometimes it is seen that the problems are not actually resolved. Another weakness is that there is a strong rivalry between the dealers in Thailand (Dealtry, 1992, p. 61). Thailand has approximately 4-5 dealers and they are very competitive to each other. BMW faces major threat from external environment. With world economy in a bad shape so is the economy of Thailand. There is intense competition in the Thai Market. The fuel price keeps fluctuating along with change in exchange rates. The prices of raw materials also keep on increasing. BMW in Thailand has a strong brand presence which enables it to become No.1 in the premium segment. With customer focused strategy adopted they can continue to make exciting additions to BMW group Thailand products (Liu, Akram and Bouguettaya, 2011, p. 82). Lewin Model of Change According to Kurt Lewin model of Change, every organisation has to go through three steps to complete the Change process. They are Unfreeze, Change and Refreeze. In the Unfreeze stage, BMW must try to understand the importance of change and communicate to the employees (Cameron and Green, 2012, p. 215). In Thailand, the customer service is a major issue that needs to be changed. Hence the employees to be told about the issue of long servicing process faced by their customers. During the change process, BMW has to keep on communicating the importance of change in customer service and how it will affect their revenue (Dessler and Phillips, 2007, p. 316). Finally in the Refreeze step once BMW has been able to achieve improved customer service and the employees have themselves adjust to the new servicing process, they must be rewarded. Balanced Scorecard The Balanced score card approach looks at the organisation from four perspectives. First is the financial view. BMW in Thailand has been able to achieved record sales of 2,356 units in 2009 resulting in increase of 26% per annum (Schlegelmilch, Lehrbrink and Osterroth, 2010, p. 217). Hence the financial position was good. Second point of view is customer. BMW in Thailand is not getting good feedback from the customers. They need to ramp up their customer service process. Also their cars don’t work well in the hot climate of Thailand. Third perspective is Business Process (Hiatt and Creasey, 2003, p. 75). For BMW it is the Strategic Asset Management framework (Department of Treasury and Finance, 2010, p. 12). This allows the mangers to know is the business performing and whether the product and services provided meets the customer requirement. The last is the Learning and Growth which includes how is the corporate attitude of the employee to the individuals (Niven, 2010, p. 89). Mckinsey's 7S The main Strategy of BMW in Thailand is to strengthen their product portfolio. They want to shift gear to formulate customer focused strategy. They want to become number 1 in the premium category segment. The Structure of BMW is comparable to its competitors. For BMW the most important structure is that of its management and advisory board. It is the duty of the management board to take care of the daily operations and the strategic development. The board is composed of 10 persons with each having their own responsibility (Ploen and Olesen, 2010, p. 46). BMW has three systems which are technical administrative and social system. Such a division makes the organisation to grasp all aspects of the organisation. The shared value of BMW is customer focus, high quality standards, continuous improvements and sustainability. The staffs of BMW Thailand are competent and motivated (Witcher and Chau, 2010, p. 248). Kotter's 8 steps change model The first step is the increase in urgency for change. Since BMW Thailand has been multiple issues they need to change to benefit from it. Then it needs to build together team to bring about the change (Biech, 2007, p. 28). Next BMW needs to create the vision for change. The next step is important which enables the change to occur. Then a short term success must be achieved. The senior leader must ensure that the short term success is not let up by them. The leadership must work to make the change process stick (Kotter, 1996, p. 141). Results of the analysis and evaluation of the models The above analysis revealed that BMW faces multiple issues. It faces issues like their vehicles don not suit the Thai Climate. Their customer service process is very slow. The 2nd hand BMW price depreciates very badly (Paton and McCalman, 2008, p. 271). With such issues being faced by BMW it needs to apply change management process to its operations so that it can improve their brand image in the eye of the consumers. BMW needs to take note of its weakness and threats faced by it in the Thai market (Pahl, and Richter, 2009, p. 53). Then it also needs to look at the balance scored card approach to see which perspectives are not satisfying the brands objectives. BMW needs to implement the change in their operations either through Kurt Lewin model of change or Kotter’s 8 Step. While applying change BMW needs to take into consideration the McKinsey’s 7-S framework so that the change affects all the 7S of the organisation. Proposals for a change strategy: Application of the theoretical models on change management BMW which is a luxury car has faced strategic issues in the market of Thailand. The strategic issue has developed due to the changes in the environment of the automobile market of Thailand. There are 4 to 5 dealers of BMW in the market of Thailand who are very competitive. However, the cars manufactured by BMW are not suitable to the climatic conditions of Thailand and are subject to frequent breakdowns and service requirements (Reuvid, 2012, p.104). However, the servicing of the BMW vehicles take much longer time in the service centers of the dealers. This adds to the dissatisfaction of the BMW customers thereby resulting into inefficient customer service after sale of the BMW vehicles in Thailand. The value of the BMW vehicles also depreciates very badly in case of second hand sale of the cars. The above mentioned issues have resulted in strategic losses for the BMW brand as they are likely to loose market share due to the inefficient servicing of the customers and the increase in customer dissatisfaction. In order to adapt to the changes in the market environment of Thailand, BMW would need to resort to the proposed changed strategy as an application of the change management theories and models (Hill and Jones, 2009, p35). BMW would need to undertake policies of change management in order to address the falling performance of the vehicles in the Thai climate and the service issues of the dealers. A SWOT analysis of the business of BMW in Thai market reveals that the company is exposed to the threats of the decline in market due to its weakness in the vehicle designs and inefficiency of the performance of accessories and auto parts. BMW would also need to undertake strategic policy changes in handling the dealers so that customer service issues are addressed in a quick way (Gupta and Tyagi, 2008, p.17). The proposed changes take into account the information on the benchmarks for internal process performance for vehicle manufacturing and the customer service which is compared with the actual performance of the BMW vehicles and the dealers in Thailand. By addressing the gaps in internal process and balanced scorecard, BMW would able to check its declining market share (Smith, 2010, p.56). According to the 7S framework of McKinsey, BMW would need to realign their strategies that could be supported by their organizational structure and systems. The dealership offered by BMW must be cautioned to follow the strategic objectives of BMW in servicing their customer in the least turn around time possible (Michalski, 2011, p.100). BMW should ensure proper training of their staffs so that they imbibe the shared values of the business of BMW. The emphasis by BMW in enhancing the level of skill of their staffs would help them to retain their reputation and style as a luxury brand. The proposed strategy for changes in the internal process for the manufacture of modified BMW vehicles, improvement in the skills of the staffs and the dealer to resolve customer service issues and sustenance of the changed model through effective governance is also supported by the Lewin’s model of change management. According to this model, the change management would pass through the stage of first identifying the strategic issue followed by necessary implementation of the proposed changes followed by sustenance of the changed values for the best interest of the business. The proposed strategies for change have followed the eight steps of Kotter’s change management model as the urgency for change was first felt due to the service issues and the inefficiency of the BMW vehicle in the climate of Thailand. In order to undertake change management approach, it has been proposed that BMW should look for a powerful coalition with their dealers with a vision for change. The vision should be communicated to the internal stakeholders and the dealers to incorporate the changes in the work culture as well as during the time of customer service. Recommendation for implementation of the change program The recommended actions for implementation of the change program include a review of the mission statement of the company. BMW need to assess the profile and the potential of the applicants before offering dealership for sales and service of the vehicles after sale (Fitzroy and Herbert, 2007, p.57). The changes are to be implemented in the internal processes of manufacturing of vehicles which is aimed at improving the customer experience during use of the vehicles. With a focus towards efficiency of the vehicle performance in the Thai market, the change strategy includes investment in technological advancements in order to incorporate automobile parts that could withstand the climate of Thailand (Kozami, 2002, p.93). BMW could use sensors in their car that would signal any service issue well in advance. Thus the customers would have the time in hand to visit the service and adjust the time requirements in advance (McLoughlin and Aaker, 2010, p.38). Also the modification in the design and technology used for the manufacture of the vehicles would result in good performance in the Thailand climate and lower possibility of breakdown. The company should also undertake strict policies to ensure that their dealers work in line with the mission of the company (Mazzucato and The Open University, 2002, p.47). This would require faster resolution of the service issues and BMW would need to reward those Thai dealers who adhere to their policies. This would enable BMW to achieve higher performance by addressing the strategic issues (Verweire and  Berghe, 2004, p.75). Conclusion The strategic issues faced by BMW have been addressed with the strategies of change management. The strategy has been proposed in line with the theoretical models of change management that includes the McKinsey 7S framework, Lewin’s stages of changes management, Balanced Scorecard, SWOT Analysis and Kotter’s eight steps. With the help of these models, BMW has strategized to undertake policies which ensure integrated performance of their organizational structures and systems and also leverage on the use of technology to bring about necessary development of efficiency of the vehicles. The training of manpower is aimed at developing the skills and incorporates values of organizational culture among the staffs so that customer service could be provided to maintain the reputation of the luxury brand in the market. References Biech, E. 2007. Thriving Through Change: A Leader's Practical Guide to Change Mastery. New York: American Society for Training and Development. BMW Thailand. 2013. BMW Group Thailand is well on its path to become No. 1 premium segment, with the remarkable 2009 results. Retrieved from: http://www.bmw.co.th/th/en/general/bmwinsight/news_read.php?id=468. [Accessed on: 7 December 2013]. Cameron, E. and Green, M. 2012. 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