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Managing Change - Essay Example

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Downsizing has been defined as "a set of organizational activities undertaken on the part of management of an organization and designed to improve organizational efficiency, productivity, and/or competitiveness" (Cameron, 1994, p. 194). A more specific description perhaps is that downsizing is a management tool for achieving desired change through restructuring or re-engineering initiatives by an organization…
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Managing Change
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Download file to see previous pages This move would have resulted in the loss of 600 jobs in its combined workforce of approximately 4,200 employees from the two plants. For that year, annual production targets were also reduce from 70,000 units to merely 40,000. Global overproduction and a 17% slump in domestic sales for the second half of 1999 were the reasons cited by Mitsubishi for the downsizing. Mitsubishi officials also claimed that the decline in the value of the Australian dollar had made it too costly to import Mitsubishi components. The decision to downsize in 2000 followed the downsizing of already 300 production jobs for the company yet despite these decisions, profits for the company did not improve. As of December 1999, the company reported a $A 130-million loss, its worse in twenty years in Australia (Cook, 2000).
In 1997, the Howard government suspended plans to end tariff protection for the car industry until 2010 due to pressure from car manufacturers and threats by Mitsubishi that it will wind-up production in Australia. This was initially regarded as guaranteeing job security for worker, but despite the existence of tariff protection, major restructuring and downsizing still continued in Mitsubishi. The reason is that downsizing is attributed not to the company's national performance but to a major global restructuring program announced by Mitsubishi in October 2000 to cut costs by $US 3 billion by 2001. The plan involved cutting 9,900 jobs from the company's international workforce of 88,800 over a span of four years. Of the 9,900 jobs to be cut, 1,400 of these are production and clerical jobs in Japan (Cook, 2000).
Another factor that compounds to the company's problems is its debt of 1.75 trillion yen or $A 27 billion. Mitsubishi continues to be under pressure from Daimler-Chrysler, who has a one-third holding in the company, and the power of veto over Mitsubishi's board. Daimler-Chrysler is demanding Mitsubishi to take drastic steps to reduce its huge debt and that the company focuses its future investment in more efficient production plants in Malaysia and Thailand (rather than Australia) where there is cheaper labour and favourable local investment incentives (Cook, 2000). In addition to these problems, Mitsubishi is also burdened by a failed vehicle financing scheme in the U.S. and losses amounting to approximately $US 2.8 billion in 2003. Daimler-Chrysler, the majority shareholder for the company, also refused to give Mitsubishi a $US 6.5 billion restructuring package (Spoehr, 2004).
In 2004, Mitsubishi released a restructuring plan and formally announced its decision to close down its Lonsdale Plant resulting in the loss of 650 jobs, including the reduction of 350 workers in their Tonsley Park assembly plant workforce (Spoehr, 2004). The ...Download file to see next pagesRead More
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