Emergent Change and Planned Change - Case Study Example

Reflective Journal on Managing Change Abstract The turbulent market environment experiencing technological advances, privatisation, deregulation and globalisation has caused an increased competition among players in various industries. With organisations being more attentive to customer needs and responsive to environmental changes, various structures have been adopted to remain competitive. Formerly known as Federal Express, FedEx is a renowned American logistical services company which has over 100,000 employees worldwide. It provides transportation and e-commerce services to both organisations and individuals. The company was founded in 1971 by Fredrick W. Smith with the initial objective to remedy the then inefficient distribution system by air freight (FedEx 2012). Indeed, the company has had a reputation for its revolution on business practices, speed and reliability since then. This paper looks at some of these changes and drivers behind the various change strategies. The resistance that the company faced with going global would also be discussed and with focus on the strategy that FedEx used to counter these challenges. Introduction FedEx entered the express delivery market amidst wide spread customer dissatisfaction and had to adopt Lewin’s 3-step model of having to unfreeze the practice in the industry, bring forth the needed change and refreeze the change, incorporating it into its operations (Burnes 2004). FedEx President, Smith, appreciates the role that information technology plays in ensuring effective business operations hence the reason it plays a crucial role in daily business transactions at the company. Typically, packages would be picked by respective agent at FedEx, scanned and then led to a system, each with a unique identity number. Similar packages would be taken to a hub where they would be sorted by use of technological systems installed on conveyor belts. The dimensional scanner then determines the size and shipping cost of each package by analysing the weight, width, height and length of each of them. Reading the barcodes on each package, the scanner paddles nudge the package onto belts depending on their destination though some could be manually sorted. The packages would finally be packed in boxes ensuring minimal plane space occupation. At its destination, the package would be scanned by the FedEx courier who hand delivers it to make the process complete. The company has specialised control centres that coordinate the movement of its trucks and also monitor the condition of airports and its aeroplanes (FedEx 2012). This indicates the adoption of technology as an essential tool in making business effective, further leveraged on internet-based technology. FedEx SWOT analysis FedEx has a myriad of strengths as the company has been recognised as a leader in global express delivery. The company has always been innovative and comes up with new technologies to add value to its customer experiences. It was the first company to embrace the Internet as a tool of trade making its website the best in the global shipping arena. Other than embracing emergent technologies, the company creates its own such as its wireless technology used in tracking shipments and its website that enables customers track their packages. The company has exhibited high sense of responsiveness to the needs of its customers by extending drop-off times to meet its customers’ needs. FedEx has a large fleet of own aircraft with a far-reaching hub and spoke network extending to over 200 countries worldwide (Harris 2009). The strength of the company has been heavily borrowed from the change leadership in Smith, the President of FedEx. As a leader, he provides the definition of the expected future then aligns the people to share in the vision, inspiring them to make implementation successful (Caldwell 2003). The vision that Smith had for FedEx was that of providing an efficient remedy to the distribution system of air freight that was largely considered as inefficient then. Constant expenditure on infrastructure has caused a cost weakness on the company. FedEx has not been able to lower its costs to earn cost advantage in the already competitive market. The company has also failed to differentiate on a wider scale so as to compete effectively with other leaders in the industry like UPS. In spite of being acknowledged as a pioneer of many logistics solutions, enabling the firm to reap the economies of scale prior to its competitors, these advantages were soon to be eroded as players in the market adopted emergent, more powerful and even less expensive innovations (Ng & Farhoomand 2000). FedEx failed to launch new competitive technologies making the web-based tracking system an industry norm hence barring it from being a source of competitive advantage. Nonetheless, the company has immense opportunities in that the infrastructure cost involved in express delivery business would bar the entry of new players in the industry. The business is associated with high fixed costs needed in the establishment of international transport network including air fleet, hubs and means of ground transportation. As an existing company, FedEx already enjoys economies of scale and large shipment volumes. Being a global leader in express delivery gives it an upper hand in the market with the e-commerce technology creating an increased need for these services. Globalisation presents the need for deliveries across the world hence an opportunity for FedEx to acquire more business. For as long as humans continue with the current socio-economic lifestyle, there would constantly be need for express delivery services. FedEx also experience various threats. The high cost of maintaining infrastructure of an express delivery company could be considered as an exit barrier due to the high fixed costs involved. Low peak seasons could hurt the business as the high fixed costs would still have to be maintained. Partnering with players in the e-tailing industry could call for lowering shipping charges and rates so as to attract more customers in the retailing industry. FedEx faces stiff competition from its major rivals including UPS, DHL and TNT with the company that becomes more responsive to change drivers winning the market. The low switching costs and the existing exit barrier intensifies this rivalry. Drivers of change at FedEx FedEx has been involved in strategic, transformational or second order changes that Val & Fuentes (2003) note to be radical changes that totally transforms an organisation’s essential framework. FedEx joined the logistics industry amidst the existence of long time rivals such as UPS. More so, other leaders in this industry such as DHL and TNT offered the firm stiff competition with Ng and Farhoomand (2001) noting that these four companies claim over 90% of global business in this industry. It is due to this intense competition that FedEx sought to adopt new business practices that would see it not only satisfy its customers but claim a significant portion of the market. FedEx became the first international company to avail package tracking services to its customers via the Internet (Hemmatfar, Salehi & Bayat 2010). This gave the company a competitive advantage over its major rivals, giving it the ability to relay information between its global subsidiaries and business units on a near real time basis which addressed the emergent change of need for customer satisfaction as defined by (Burnes 2004). The partnership with w-Technologies Inc. to make use of wireless devices like cell phones has boosted this capability between couriers and the immense network of the company’s information system. The company’s daily business transactions thus rose to over 4.5 million involving over 5,000 trading partners worldwide. Being a change leader, Smith had foreseen the benefits that businesses would reap from the advent of the Internet. Indeed, web-based operations opened doors for diverse business applications while ensuring low cost, appeal and accessibility of products. In line with the firm’s vision, FedEx also sought to increase its customer satisfaction by understanding and meeting their needs. Today, customers of FedEx do not have to deliver their parcels physically to nearest locations as they have an option to order online for pick up or simply by calling their offices. Further, these customers would easily track their shipments from their desktop terminals as tracking services have been availed online. Through its website, FedEx gives each customer unique barcodes that would be used to individualise their shipments making it convenient to track package movement. FedEx calls this system FedEx InternetShip (FedEx 2012). Other benefits have accrued from a web-based system including the ability for both customers and recipients to print all shipping documentation from the web without having to visit any FedEx offices. Harris (2009) observes that FedEx PowerShip Programmes, another web-based technology gave FedEx customers a high level of autonomy while the company benefitted from shipment preparations capability, printing of barcode labels, invoices production and tracking the status of packages, all without the physical effort of a FedEx employee By the mid 2000s, the company had its name, Federal Express being rarely recognised as customers and suppliers alike embrace FedEx as a more appealing name. Similarly, FedEx’s global partners found it inconveniencing to have to deal with different brands all under the company. FedEx, as a group, is made up of various independent companies dealing with different variations of logistics support. It was against this backdrop that the company renamed to FedEx Corporation in the year 2000 and had all its customers deal with just that for all their requirements in logistics. As such, a customer who receives Ground and Express tracking invoices would do a combined remittance advice to FedEx alone (Hemmatfar, Salehi & Bayat 2010). Graetz and Smith (2005) note that this intra-organisational and inter-organisational collaboration and interdependence forms a network organisation which aims at understanding the interconnectivity between processes, people, structures and systems. This critical attention to technology has seen FedEx partner with world’s renowned technological organisations for different service delivery (Ng & Farhoomand 2001). Orbit Commerce has been critical in enabling the firm rent out small businesses’ e-commerce services in addition to partnering with Cisco to establish an e-based supply chain for itself. AT & T has been charged with provision of wireless internet site for tracking packages. It is against this influence that the company has been able to acquire greater opportunities for business by partnering with e-tailers like eToys, LL Bean, Value America and Pro-Flowers such that with every order on their sites, there would be an automatic trigger for a FedEx dispatch request. Resistance to change The aim of change in an organisation would be to either adapt to the turbulent environment or improve performance (Val & Fuentes 2003). Resistance to such changes would slow down or hinder implementation and lead to increase in costs. With its technological systems in place, FedEx sought to acquire more international markets. Despite minimal internal resistance (Harris 2009), the company faced major resistance in acquiring markets from other countries. Regulatory and governmental restrictions by other countries in limitations, taxation and legalities made it difficult for the company to acquire an international look. But according to Val and Fuentes (2003), resistance to change could also be an information source that would aid in the development of successful processes of change. FedEx understands what Pinto terms as “an interesting paradox” of politics and power in influencing successful project management (2000, p.85). Political behaviour is the process that an organisation would use in seeking, acquiring and maintaining power and is pervasive in modern organisations. Successful project managers would be known by the significance they pay to political ties in their organisations as means to achievement of success. Influence has been used as a form of persuasive control at FedEx through development of cordial relationship with the government of America and Transportation Departments which has seen it break various trade barriers. It was against this influence that the firm was able to pioneer expansion of air express services into Russia and previous Eastern and Central Europe communist nations. This also saw the company spearhead acquisition of new markets via open skies deregulation (Ng & Farhoomand 2001). Conclusion Change management plays a critical role in ensuring that organisations attain sustainable competitive advantage. The aim of change would always be to improve performance or align the organisation with changes in the environment. FedEx has been keen to adapt to emergent and planned changes, being a player in a highly competitive industry. This has been critical in ensuring the satisfaction of its customers and acquisition of more business. Its strategic approach has enabled the firm beat resistance to change and now operates in Latin America, Europe, Middle East, Canada, Asia Pacific and Africa. References Burnes, B 2004, Emergent Change and Planned Change – Competitors or Allies? The Case of XYZ Construction, International Journal of Operations & Production Management, vol. 24, no. 9, 886 – 902. Caldwell, R 2003, Change Leaders and Change Managers: Different or Complementary? Leadership and Organisation Development Journal, vol. 24, no. 5, 285 – 293. FedEx 2012, viewed 12 April 2012, http://www.fedex.com/gb/ Harris, BF 2009, America, Technology and strategic Culture: A Clausewitzian Assessment, Routledge, Abingdon, Oxon. Hemmatfar, M, Salehi, M & Bayat, M 2010, Competitive Advantages and Strategic Information Systems. International Journal of Business and Management, vol. 5, no. 7. Ng, P & Farhoomand, AR 2001, FedEx Corp: Structural Transformation Through e-Business, The University of Hong Kong. Pinto, JK 2000, Understanding the Role of Politics in Successful Project Management, International Journal of Project Management, vol. 18, 85 – 91. Val, MP & Fuentes, CM 2003, Resistance to Change: A Literature Review and Empirical Study, Management Decision, vol. 42, no. 2, 148 – 155. Read More