Change Management in Organisations - of Danone - Case Study Example

Change Management: Case Study on Danone The aim of any established organization is to have an increase in theprofit margin and consequently have the employees leading an improved life and the customers satisfied by the quality of the products. When a company is operating in a manner that it does not achieve its utmost potential, it is imperative to carry out changes to ensure that it achieves the most it can. Groupe Danone is a food manufacturing company that has existed for almost a century. Throughout the years, it has faced many challenges and improvements in the same measure. Going through the various aspects revolving around the operating of the company is appropriate and consequently understand the concepts of change necessary to employ for its general improvement. Many drivers exist within the company. In the former years, the company majored in the production of a single line of products, yoghurt in this case. Over time, the company has developed significantly and this is owing to the many changes in necessity that have taken place with the advent of a new century (Jing, Chen & Zhang, 2012, 23). The company has diversified its productions and as with any developments, challenges have come up. The company’s management has however remained steadfast in ensuring that it keeps up with the changes and continued offering quality commodities much to the appreciation of its loyal customers. One of the dilemmas that the organization faces is regarding the human resource management (Martin & Hau, 2004, 48). Over the years, the company has lost many employees because they claim that there is neglecting of their ideas. To overcome this challenge, the company should consider restructuring the human resource management of the company. Restructuring involves the specialization of some of the top employees to offer the required attention towards the workers (Manuj & Mentzer, 2008, 65). The best suitable change agent for this task is a person who has had a lot of experience in the company as he identifies the ways to please the company with the current resources. The change is however expensive as the reconstructing of any department in the organization deters the company from the original focus of attaining market supremacy. Another problem that Danone faces is involving decision making. The company carries out its decision-making in a departmental manner. Through this kind of decisions, there are many arguments and misunderstandings on the best way to carry out plans and other vital issues in the organization. The best way to overcome this is by having a centralized manner of decision-making (Berman & Putu, 2012, 23). The best change agent to employ in this situation is with the aid of the company’s manager. This is because he has the authority over all the departments in the company. This change can work effectively in several ways. Danone’s manager should set up a system through which the problems and suggestions made by departments in the company should go through to him. The system organization ought in such a manner that every employee in the organization has to relay his or her problems to the departmental heads (Dale, 2009, 51). The heads upon receiving the information should not take up the issue but rather forward it to the manager of the company. The manager ought to present the issues to the company board for decisive decision-making (George & Lisa, 2004, 73). This plan however has the problem that the company’s board may be too busy to handle all the problems and suggestions from the company. This is because it would consume a lot of time. To overcome this challenge, the manager has to figure out a way to cluster the suggestions to groups that the board of the company can easily deal with (Wagner & Bode, 2009, 45). Danone has set very many goals in the recent years. The reason for this is ensuring that it has an increased amount of net sales and consequently gain enough capital to expand the business. One of the goals is to expand to as many countries as possible. With this, there are many challenges that come along and one of them is market domination. Dairy products are international and thus present in all countries (Conrow, 2008, 31). Establishing Danone products in other countries is thus a great challenge and the company ought to make some changes in order to settle in effectively in new markets. One of the changes to carry out is with regard to public relations. There are times that reports have reached the head office that some of their employees have poor communication skills. With poor communication in a new market, the company may fail to establish strong grounds and this may actually register losses. It is imperative for the institution to begin training programs where employees are introduced to basic communication skills (Marks, 2011, 21). With the skills, they can cover a larger customer base. The general effect of this is the predetermined increase in gross income for the company. Incorporating various change management theories is also important in ensuring that Danone performs well in the ever-competitive business environment. One of the models to use is Lewin’s Change Management Model. The first step in this model involves unfreezing where the administration team at Danone ought to motivate the employees and assist them understand the importance of change. After this step is the transition phase, where the leadership has yet another tasking responsibility of taking the employees through this long but necessary process of adapting to the changes made (Green, 2012, 31). There is the other step of unfreezing where Danone’s administration ought to offer guidelines through which the employees ought to work with regarding the changes made to the organization. Understanding the various threats that revolve around the company is vital to understand the changes that ought to take place to counteract these threats. One of the commonly identified threats is the threat of new entrance (Zentes, 2013, 24). This when broken down is one that reveals the issues that Danone bears when introducing new commodities into the market. With the advancing society, the rise of new commodities is given. It is important to make some changes to accommodate these commodities (Reiss, 2011, 45). One of the reason as to why this fear or rather threat is brought out is that there may be an established firm in the market that already has introduced the commodity. This is a threat that is most common in very many places and is one to treat with utmost concern. For Danone, one of the ways to deal with this challenge is by changing from the production of new commodities in small-scale as seen in past years but majoring in large-scale sale of the product. This is because it will induce economies of scale and thus the customers will be attracted to the products having their will to save money (Adams, 2010, 76). One other issue that Danone may have to face when introducing a commodity into the market is the capital to establish itself fully. This is because the company deals with products that will require an industry to process and finally manufacture. Producing a new commodity and all the required machinery is quite a hustle and will require a lot of money. It will be appropriate for the business to ensure that it saves a lot of money to start up as capital for the successful establishment into the industry (Barcroft, 2010, 87). Another concern to grasp regarding the productivity of the organization is regarding substitute products. The administration ought to understand how to change with regard to countering this by always staying vigilant. This is because the products that substitute the product may be of a better quality. This is known to be one very good challenge due to the manner in which the companies may flock to one area; they may be in a hurry to produce a lot to increase their profits. In the process of producing a lot, there is the risk of producing substandard products that may not be pleasing to the customers (Pritts, 2007, 65). Due to this, the customers may opt to go to the alternative similar product well known as the substitute product and this is very detrimental for Danone. To avoid this, the company should change and focus more on ensuring its ideals are tied around quality and not quantity. This is due to the knowledge that quantity that will not sell well will not bring in the company any benefits. This is as opposed to proper quality products. Another theory that Danone ought to include is the McKinsey 7-S Model. This is a model where 7 concepts are understood to assist the company in moving forward. The top management and workers ought to recognize their shared values to act as a common ground. They should then strategize for the future and structure the change process to take place. Understanding the company’s systems and leadership styles acts as a basis for the company’s change process. Comprehending the operating of the staff and the skills that each possesses is vital during the change process to understand each other (Green, 2012, 54). Very many changes ought to take place in the organization with regard to handling substitute products. There is also the fact that the relative prices of the substitute may vary. This may arise from a number of reasons. The substitute may have already established a very good customer base and thus the effect of its reduced prices may not befall it. Due to this, the customers may decide to go and purchase the substitute product that is much more beneficial to their economy (Anderson, 2008, 31). To work this out efficiently, Danone ought to embrace the concept of patience. There should be the virtue of patience that should come into play because it is not easy to change the mind of the customers. For the few loyal customers left to the new company, the company should do everything in its power even involving large discounts and good quality to maintain them. This is effective as compared to previous years where they have given up early when they have introduced products that have not done as well as predetermined. This has led to many unnecessary loses (Surhone, 2010, 65). The power of bargaining that the customers possess is one of the issues that the firm should totally pay attention to. Over the past years, the company has let the customers have a large bargaining power. This is a positive reason though it has led to subtle performance with regard to accumulated profits. Danone should change and ensure that it sets a fixed price for some of its commodities. This is because the customers have other products to purchase in order to satisfy their daily needs and hence look for the easiest way possible to economize on their hard work. One of the most efficient manners to explain this is regarding the buyer concentration in relation to the concentration of firms providing the particular product. This majorly depends on who is most in the area (Craig, 2011, 43). This change however has some challenges that come along with it. This is from the fact that the customers may decide to form some of the so-called unions and beg for the reduction in prices. This is one of the many efficient manners that customers have used over the years to ascertain that they are able to achieve their goals. Customers use this as a method of bargaining and since the product that the company is willing to introduce to the market is not a necessity, the customers may decide to go on some kind of strike (Paton, 2008, 601). This would mean that the amount of trading going on may reduce and thus the market ability of the company generally goes down. The information that is available to the buyers over a certain period is very influential when looking at the bargaining power of the customers. This is because the customers may have a wide range of sources outside the market geographical locality. This is very effective on the side of the customers as they get information of the prices and quality of products outside their locality. With this, they can be able to bargain fully informed. It is thus appropriate to ensure that the customers understand the various processes that lead to the production of dairy products and thus appreciate the prices marked (Jing, Chen & Zhang, 2012, 89). Another important change that Danone ought to consider is regarding the bargaining power of suppliers. Just like in the case of customers, there is also the case of the ratio through which the suppliers relate to the daily products industry. The suppliers have an advantage when put into comparison with the owners of the firm. In this case, the suppliers are in fewer numbers as compared to the number of firms or companies in a certain industry. This is because the suppliers of certain raw materials that are applicable in the industry are rare (Susannah, 2013, 65). Due to this, the price at which they would be selling their products is definitely expected to be higher when compared to that at which they are supposed to be used. This is a peril to the company because it may not have put for effort so desired for the attainment of a full and stable market structure. To evade this, the company should set up a good relationship with a straight and honest supplier and if the company is loyal to him, it will be able to achieve its goals (Business Monitor International, 2009, 52). The Kotter’s 8 Step Change Model is another important concept to include in Danone’s change process. The model offers various actions that the company ought to take to perform exceedingly well. The first step that Danone ought to take is make the change feel needed. This is important to smooth the entire process as the staff gets to understand the importance of the change (Wit, 2010, 37). The company ought to have a team that has the sole work of working on the change. Creation of a vision for change in the food market is important for Danone to incorporate to give the staff an idea of what to expect (Green, 2012, 127). Communicating to the staff and empowering them by showing them that change is indeed achievable is also imperative. For long-term goals to come true, it is important for Danone to set short-term goals to ensure that they succeed in their deeds. Maintaining persistence in the harsh economic environment is vital and once the change is achieved, it ought to remain permanent. The distribution channel is another sector that needs to have changes. The current one that the suppliers use is one that affects the company. This is because the speed through which raw materials can transfer from their original base to the firm itself is very elastic. The company should ensure that the channel it uses is very effective and legitimate. This is to avoid misfortunes such as being conned and cheated by fraud dealers. The system through which the information reaches Danone should also be fast to ensure that the customers are served according to their will in time. The company should ensure of this by making sure that it liaises with established companies in the market to identify the best supplier or set up a flowing and stable relationship with the established suppliers (Albertijin, Bessler & Drobetz, 2011, 63). Competition is one of the other identified factors that affect the company as a threat (Chong, 2012, 34). The dairy products industry already has its fair share of players who have triumphed. Entrance of new products is bound to create a more competitive edge in the industry because the established companies fear losing customers and can do anything possible to retain them. This threat is known to be the most diverse one because competition is very healthy for the achievement of happiness for both the customer and the company (Okan & Ozlem, 2008, 151). The competition ensures that there is the introduction of healthy products that could serve to please the customers with their quality. Due to this, the company can evade the concept of competition but not to a full throttle manner. It is necessary for Danone to ensure that it has a well laid out competition match plan by ensuring that the products it introduces are of high quality (Sweeny, 2008, 19). Dairy products are the simplest in improving. These products ought to involve the least amount of effort and finances when producing them. This has the consequent of saving a lot of money when producing while still maintaining and capturing a higher amount of customers (Maria & Damianos, 2009, 907). It is hence advisable that the company sets high marketing strategies for its product. This could serve to draw the attention of the customers and hence a better competitive advantage over the rivals. However, to retain the customers, quality is an essence that should be given a priority when dealing with the situation. The best manner in which the company can attain this is by incorporating the use of more brand ambassadors. 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