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STRATEGIC MANAGEMENT IN ACTION
Strategic Management in Action
1
CASE STUDIES ON MANAGEMENT
2
Table of Contents 1.0
Introduction...........................................................................................................................3
2.0 Case Study 1 – Hewlett Packard – Strategy development process............................................3 2.1 Development of strategies in organizations...........................................................................4 2.2
Strategy development process – Intended Strategy – Pros and Cons...............................5
2.3
Strategy development process – Emergent Strategy – Pros and Cons..............................6
2.4 Proposed policy development process - HP...........................................................................7 3.0 3.1
Case Study 2 – One Sony.....................................................................................................8 Organisation’s configuration – Structure, Systems, and Strategy.....................................8
3.2 7S McKinsey’s model – One Sony?...................................................................................10 3.3
Configuration dilemma – One Sony...............................................................................11
4.0
Leadership and change management – Fiat and Chrysler..................................................12
4.1
Change management and its challenges – forcefield analysis............................................13
4.2
Types of change by Sergio Marchionne..........................................................................14
4.3
Levers of change that were implemented by Sergio......................................................16
5.0
Conclusion..........................................................................................................................18
2 | Page
CASE STUDIES ON MANAGEMENT
1.0
3
Introduction The management theories have been changing since the nineteenth century. New
management methods are released whenever they have been proven to work. It is important that an organization develops the best management strategy and uses it. The paper discusses three case studies on different scenarios of management to determine effectiveness of management techniques on the business success. The case studies are the Organising for Success- One Sony?, Boardroom Battles at Hewlett Packard and Leadership and Strategic Change: Leading Change in Fiat and Chrysler.
2.0 Case Study 1 – Hewlett Packard – Strategy development process According to the Case Study, the profits made by HP kept reducing despite their high sales. Besides, there were false accusations in that the of the board were leaking information on each other to the media so that the other could be viewed as the source of the problem. The board did not trust themselves and campaigned against the other.. The problems of the company started in 2002 during Carly Fiona’s tenure as the CEO. According to the case study, she publicly condemned one of the board for opposing the acquisition of Compaq. Issues then started when the of the board started propagating lies on one another. The case study indicates that the next CEO, Mark Hurd changed the strategy to cutting of costs. However, he failed and again, there was public criticism from the board . The Case study states that Apokether was the next CEO and he too developed strategies that did not work. The board turned against him and did not want to associate themselves with 3 | Page
CASE STUDIES ON MANAGEMENT
4
the strategies which he had implemented that failed. According to the Case Study, Meg Whitman was appointed CEO and initially her strategy to tackle the problems of the organization seemed to be working. However, they proved to be worse when the share price fell further. 2.1 Development of strategies in organizations
The first step begins with the identification of the prevailing market situation and the scenario of the organization. The second part is the development phase where the formulation of plans is made. It should be noted that one of the most crucial factors in this period is employee involvement and consultation for the project formulation process. Another factor is the consideration of the economic and political background that are present within the firm. The next stage is usually the implementation of the procedures so that so that execution of the strategies is undertaken. There are two main parts of the policy development process as discussed below.
4 | Page
CASE STUDIES ON MANAGEMENT
2.3
5
Emergent and Intended Strategies As suggested by the name, this procedure occurs where the employees are consulted, and
their opinions are as important as that of the management. The significance of this option of strategy development process is the increased efficiency due to the consideration of the social situation and the eco-politics of the organization. The CEOs that were being replaced each tried implementing their strategy and what they thought would work best for the company. For instance, Apokether focused the company on operating on business-to-business sales of the printers and PCs. He further invested much into the software business and while spinning off the PC business. Besides, he launched a tablet computer in 2011. All these strategies were meant to work well for the company, but the result was the opposite of the expectations. When the plans of acquiring Autonomy came to the knowledge of the investors, the shares prices fell. The shareholders were also against the idea. This led to the dismissal of Apokether. Further, he was blamed for the woes that had befallen the company while the board disassociated with his strategic plans. The two strategic development processes are combined and used together to achieve the required objectives of the process. Consequently, the company will get results that are very 5 | Page
CASE STUDIES ON MANAGEMENT
6
effective. Despite HP being a giant IT corporation and one of the best in the world, the case study indicates that the company experienced hardships in the nine-year period between the years 2002 to 2011. The CEO in 2010 Leo Apotheker introduced several strategic development techniques that were meant to bring changes to the frustrating condition. The strategies faced significant challenges. The decisions that were made were inappropriate, and the planning was also affected. According to the Case Study, Apokether intended to make business decisions without involving some of the board. For instance, he wanted to acquire Autonomy. However, his plans were shot down by the CFO when she stated to the board it could not help the company achieve its objective. She also added that Autonomy was overpriced. Another instance of intended strategy is seen where Apokether issues profits warning internally because he did not trust some of the directors. However, it was not easy keeping that a secret and soon it was known to the public and shareholders. They were disappointed.
2.4 Proposed policy development process - HP One of the best strategies is the quality function deployment. In this type of plan, the organization starts by identifying the specifications and the designs that the customers require. This technique would have enabled HP to development several computers and printers that would have satisfied the customers’ tastes. Primarily, it would allow HP to develop different models with the specific features the customers would require and not just a few brands with several features that would not be useful to the majority of the buyers. Besides, this method would lower the cost of the PCs and printers and make several customers buy them.
6 | Page
CASE STUDIES ON MANAGEMENT
7
3.0 Case study 2 – One Sony According to the Case Study Organizing for Success-One Sony? CEO Stringer intended to make Sony one by incorporating different changes into the organization. His primary strategy of achieving this was through combining the hardware section of the firm, normally in Japan, with other sections mainly led by the Sony Music and Movies in the US. After combining all the businesses, he called it United Sony. 3.1
Organisation’s configuration – Structure, Systems, and Strategy According to the Case Study, Sony experienced a reduction in its profits. Despite its rival
companies growing and getting more profit, Sony's profit remained low. It therefore resorted to bringing new CEOs. All of the CEOs had a particular structure of managing the company. However, most of the CEOs together with their methods failed. The configuration of an organization consists of the relationships, processes, and structures through which the organization operates. There should be a coherent vicious circle between these. The relationship refers to the connection that exists among the employees both within and without the organization. This relationship can be seen between Howard the foreign CEO and the local employees. According to the case study, the CEO did not understand Japanese. Therefore, he would talk in English and give instructions which would ultimately be ignored by the employees. This describes how weak the relationships were within the company. This was partly responsible for the failure of Howard as indicated by the results. Thirdly, structural design is used to imply the lines of reporting, roles, and the responsibilities. Unless structures are appropriately adjusted, the process of implementing strategy can fail. This happened for the case of Sony. In the Case Study, when Hirai become the CEO, he was determined to have the business transformed. He wanted to alter the structural 7 | Page
CASE STUDIES ON MANAGEMENT
8
design that had been in existence and bring in a new one. One of his actions was the breaking up of the big groups and developing 12 businesses that were stand alone and independent. This made communication between the different structures difficult since they had to take long to agree. Mainly, they had adopted a multidivisional structure so as to run the business. The structures were several. At some point, they had divided the business into five functional structures with each area specializing on something else.
3.2 7S McKinsey’s model – One Sony? These goals are examined by looking at seven key elements within the organization. Firstly, there is the strategy which is the overall plan set by the organization so that it can take some competitive advantage and edge out its rivals. The company had a good structure, but it did not work as expected. Both Howard and Hirai's strategy failed to produce results that could be said to the right. They should have changed their policy so that they get a competitive advantage over Apple and Samsung who were their main rivals. Besides, the strategies could have protected them from the cheap electronics from Asia. Secondly, the CEOs adopted a wrong structure. By dividing the organization into different 12 independent units, the structure had been defamed.
8 | Page
CASE STUDIES ON MANAGEMENT
9
Thirdly, shared values are the values that majority of the people believe. It is the organization's beliefs. Not all employees in the company shared the same values. For instance, the employees did not follow exactly what Howard told them. The other is skill and competencies. The CEOs were not engineers, yet they were working for a high tech company hence they did not fit into those positions. The management method of the leaders was not constant since each one tried to implement something different. For instance, while Stringer centralized the business Hirai created various positions with a horizontal method of management.
3.3
Configuration dilemma – One Sony
9 | Page
CASE STUDIES ON MANAGEMENT
10
According to the Case Study, Hirai used horizontal method while Howard wanted best practice in each element produced. These kinds of structures both proved to be wrong. They could have stricken a balance between hierarchies and the holistic methods so that they could increase their profits. Hierarchies vs. networks – Action and control are usually ensured using formal hierarchies. However, they can behave uneasily when they are with informal networks which foster innovation and exchange of ideas. Hirai created several hierarchies by implementing the five structural changes. A networked company would have brought in more visible income and profit compared to creating several hierarchies within Sony. Centralizing vs. decentralizing – Centralization is necessary for processes and products standardization. However, decentralization is flexible. The Sony’s solution would have been achieved by decentralizing the business. Stringer had initially centralized everything by creating the Sony United. The best remedy would be making each of them decentralized and independent so that they could make their decisions. The organization should manage the dilemmas through subdivision of the organization, simultaneous combination of different organization principles and frequent recognition.
4.0
Leadership and change management – Fiat and Chrysler In the present economy of the world, many automotive companies are bailed out by the
government. Without the bailouts then the industry would be in chaos. Without management change in Chrysler, then the Company would also require a bailout from the Government. Otherwise, it would have stopped operations. However, the arrival of Sergio Marchionne brought
10 | P a g e
CASE STUDIES ON MANAGEMENT
11
new hopes for the firm. He had rescued Fiat from losses to profits in just two years. Sergio Marchionne created management that was able to change Chrysler from near bankruptcy to a thriving company. This case study examines the management methods used by Sergio Marchionne to achieve the transformational management to lead to the success of the bankrupt the auto manufacturer. Sergio Marchionne was the one responsible for leading change in Fiat and Chrysler. His fame was first from leading Fiat from losses to profitable. He then went to went to Chrysler to work as its CEO. Chrysler was on the brink of bankruptcy during 2009 financial crisis.
4.1
Change management and its challenges – forcefield analysis Force field analysis is a tool for managing change in the workplace. The use of this tool
has its critical advantages. For instance, it enables the evaluation of a particular opportunity and the determination of its benefits and disadvantages. Hence, the company can decide whether it should drop the changes or continue with them. Besides, it helps in the determination of the challenges which are ahead and therefore, the company develops options for overcoming the problem. According to the Force Analysis of the Case Study, Sergio Marchionne faced several challenges as he tried to bring change in the two companies. For instance, the senior management had a bad habit of upward referral to the CEO. However, he solved this by laying them off. Besides, when he took over as the CEO of Chrysler, the organization had a $6 billion loan from the Government which he had to work to reduce or clear. It is therefore, evident that he brought change to the company.
11 | P a g e
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12
According to the Force Field analysis from the case study, Sergio Marchionne faced problem in that although the stake of Fiat in Chrysler was 53.5%, Fiat experienced a reduction in its sales due to the bad economic conditions in Europe while Chrysler kept prospering and its profits and spending rose. In the case study, the factories of Fiat were operating at 50% and the vehicles had one of the least ratings in the US. However, he handled this by asking for government’s intervention so that it could close down non-profitable companies and lay off some workers.
4.2 Types of change by Sergio Marchionne Sergio Marchionne implemented different management changes. These changes were responsible for the transformation of the two businesses from a loss to profit. The primary change type used is the revolution change. This kind of change occurs over a very short time in an organization. It involves significant cultural and strategic changes which are conducted rapidly. To accomplish this, he engages himself in different actions. For instance, he adopts multiple management styles. This is seen when he selects 26 leaders within Chrysler. These leaders were either two or three level below the top level. They were to report to him directly and hence the management of the organization was flattened. Secondly, Sergio 12 | P a g e
CASE STUDIES ON MANAGEMENT
13
Marchionne adopted culture change. In this case, he worked with the already existing elements at the Organization and also used the experience of the previous management team so that he could improve the products. Another change element is that of monitoring the change that was taking place. He set clear targets for his staff. Most of these changes were related to the company's finances which involved a reduction in pay and job cuts. The fourth change required clear strategic direction. Sergio Marchionne created an action plan that was both strategic and precise for Fiat when he became its CEO. Lastly, he caused changes at the top management. In this scenario, Sergio Marchionne realizes that the top management had so much upward referral. Consequently, he laid out more than 2,000 of them.
4.3
Levers of change that were implemented by Sergio The levers of change are actions and decisions that business leaders take to involve the
employees in the change process. It also allows the knowledge and enthusiasm of those already involved in the change to be engaged and motivated. They should be involved since the organizations can only get change if those inside are participating in the change process
13 | P a g e
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14
themselves. Thus, they can recognize the importance of the modification. Besides, it gives them momentum to be changed. Sergio Marchionne used different change at both companies to make the process easier. The case study postulates that Sergio Marchionne used challenging the taken-for-granted. This is clear in the statement “Why did it take Fiat four years to develop a new model?” The second lever for change was power and political system. This occurred when there was a formation of a strategic alliance between Fiat and Chrysler. Also, removal of individuals who were resistant to change was a power, and political systems change for the lever. The third lever of change involved changing of operational processes and routines. This included separating the departments of different brands in Chrysler. It also included compelling the managers to think differently. The fourth lever for change involved change tactics. This included the arrival of Sergio Marchionne as the new CEO at different times for each of the two companies concerned. The second element of the change lever of change tactics was the maximization of the advantage of downturn performance. Lastly, symbolic changes took place also a part of the lever of change, and it included the behaviors of the managers since the new CEO came. Another aspect of this changing level was the grocery store and the kindergarten that were built outside the plant. Therefore, the changes that were applied by Sergio Marchionne caused the profitability of the companies to increase within very short time.
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15
Some of the levers that can be used by managers include communication plan and resistance management. Communication is an important tool when effective change management is to be achieved. An excellent communication occurs when each person receives communication that is best for him or her. Sergio knew very well how to use so that he could the required to all of the workers. Besides, he had teams such as that of the 26 leaders. These teams could always update him with any information that he would need. Thus his communication methods were useful and enabled him to effect the change process. According to the Case Study, the second lever used by Sergio was managing resistance to change. This is one of the biggest obstacles that are experienced by managers who try to create change. However, it is a typical reaction that employees must show. Good managers know how to create changes and overcome the workers' resistance to the changes that are being made. Sergio developed an excellent method of overcoming the change resistance that existed within the company. He initially began by telling the employees that they should expect which was to prepare them psychologically that they should expect changes. Hence, when the real changes are made, they would be ready for them. The other clear method that he used to prevent resistance was firing those he thought could not be talked out the resistance. Hence, any of the changes that
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were to be created found a fertile since all the people challenging the changes were no longer available. Hence, he was able to modify the organizations successfully.
5.0
Conclusion This article has looked at three case studies on management. Some of the organizations
have had their profits reduced by billions. On the other hand, some having started small and had been managed well to move from debt to profit. Notably, Fiat and Chrysler have got so much profit within a period of just two years while Sony and HP have had a decrease in the number of sales made. Therefore, it can be concluded that a business should adopt a proper management so that it can thrive.
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17 References
Organising for Success- One Sony? Boardroom Battles at Hewlett Packard Leadership and Strategic Change: Leading Change in Fiat and Chrysler.
17 | P a g e
Strategic Management in Action
1
CASE STUDIES ON MANAGEMENT
2
Table of Contents 1.0
Introduction...........................................................................................................................3
2.0 Case Study 1 – Hewlett Packard – Strategy development process............................................3 2.1 Development of strategies in organizations...........................................................................4 2.2
Strategy development process – Intended Strategy – Pros and Cons...............................5
2.3
Strategy development process – Emergent Strategy – Pros and Cons..............................6
2.4 Proposed policy development process - HP...........................................................................7 3.0 3.1
Case Study 2 – One Sony.....................................................................................................8 Organisation’s configuration – Structure, Systems, and Strategy.....................................8
3.2 7S McKinsey’s model – One Sony?...................................................................................10 3.3
Configuration dilemma – One Sony...............................................................................11
4.0
Leadership and change management – Fiat and Chrysler..................................................12
4.1
Change management and its challenges – forcefield analysis............................................13
4.2
Types of change by Sergio Marchionne..........................................................................14
4.3
Levers of change that were implemented by Sergio......................................................16
5.0
Conclusion..........................................................................................................................18
2 | Page
CASE STUDIES ON MANAGEMENT
1.0
3
Introduction The management theories have been changing since the nineteenth century. New
management methods are released whenever they have been proven to work. It is important that an organization develops the best management strategy and uses it. The paper discusses three case studies on different scenarios of management to determine effectiveness of management techniques on the business success. The case studies are the Organising for Success- One Sony?, Boardroom Battles at Hewlett Packard and Leadership and Strategic Change: Leading Change in Fiat and Chrysler.
2.0 Case Study 1 – Hewlett Packard – Strategy development process According to the Case Study, the profits made by HP kept reducing despite their high sales. Besides, there were false accusations in that the of the board were leaking information on each other to the media so that the other could be viewed as the source of the problem. The board did not trust themselves and campaigned against the other.. The problems of the company started in 2002 during Carly Fiona’s tenure as the CEO. According to the case study, she publicly condemned one of the board for opposing the acquisition of Compaq. Issues then started when the of the board started propagating lies on one another. The case study indicates that the next CEO, Mark Hurd changed the strategy to cutting of costs. However, he failed and again, there was public criticism from the board . The Case study states that Apokether was the next CEO and he too developed strategies that did not work. The board turned against him and did not want to associate themselves with 3 | Page
CASE STUDIES ON MANAGEMENT
4
the strategies which he had implemented that failed. According to the Case Study, Meg Whitman was appointed CEO and initially her strategy to tackle the problems of the organization seemed to be working. However, they proved to be worse when the share price fell further. 2.1 Development of strategies in organizations
The first step begins with the identification of the prevailing market situation and the scenario of the organization. The second part is the development phase where the formulation of plans is made. It should be noted that one of the most crucial factors in this period is employee involvement and consultation for the project formulation process. Another factor is the consideration of the economic and political background that are present within the firm. The next stage is usually the implementation of the procedures so that so that execution of the strategies is undertaken. There are two main parts of the policy development process as discussed below.
4 | Page
CASE STUDIES ON MANAGEMENT
2.3
5
Emergent and Intended Strategies As suggested by the name, this procedure occurs where the employees are consulted, and
their opinions are as important as that of the management. The significance of this option of strategy development process is the increased efficiency due to the consideration of the social situation and the eco-politics of the organization. The CEOs that were being replaced each tried implementing their strategy and what they thought would work best for the company. For instance, Apokether focused the company on operating on business-to-business sales of the printers and PCs. He further invested much into the software business and while spinning off the PC business. Besides, he launched a tablet computer in 2011. All these strategies were meant to work well for the company, but the result was the opposite of the expectations. When the plans of acquiring Autonomy came to the knowledge of the investors, the shares prices fell. The shareholders were also against the idea. This led to the dismissal of Apokether. Further, he was blamed for the woes that had befallen the company while the board disassociated with his strategic plans. The two strategic development processes are combined and used together to achieve the required objectives of the process. Consequently, the company will get results that are very 5 | Page
CASE STUDIES ON MANAGEMENT
6
effective. Despite HP being a giant IT corporation and one of the best in the world, the case study indicates that the company experienced hardships in the nine-year period between the years 2002 to 2011. The CEO in 2010 Leo Apotheker introduced several strategic development techniques that were meant to bring changes to the frustrating condition. The strategies faced significant challenges. The decisions that were made were inappropriate, and the planning was also affected. According to the Case Study, Apokether intended to make business decisions without involving some of the board. For instance, he wanted to acquire Autonomy. However, his plans were shot down by the CFO when she stated to the board it could not help the company achieve its objective. She also added that Autonomy was overpriced. Another instance of intended strategy is seen where Apokether issues profits warning internally because he did not trust some of the directors. However, it was not easy keeping that a secret and soon it was known to the public and shareholders. They were disappointed.
2.4 Proposed policy development process - HP One of the best strategies is the quality function deployment. In this type of plan, the organization starts by identifying the specifications and the designs that the customers require. This technique would have enabled HP to development several computers and printers that would have satisfied the customers’ tastes. Primarily, it would allow HP to develop different models with the specific features the customers would require and not just a few brands with several features that would not be useful to the majority of the buyers. Besides, this method would lower the cost of the PCs and printers and make several customers buy them.
6 | Page
CASE STUDIES ON MANAGEMENT
7
3.0 Case study 2 – One Sony According to the Case Study Organizing for Success-One Sony? CEO Stringer intended to make Sony one by incorporating different changes into the organization. His primary strategy of achieving this was through combining the hardware section of the firm, normally in Japan, with other sections mainly led by the Sony Music and Movies in the US. After combining all the businesses, he called it United Sony. 3.1
Organisation’s configuration – Structure, Systems, and Strategy According to the Case Study, Sony experienced a reduction in its profits. Despite its rival
companies growing and getting more profit, Sony's profit remained low. It therefore resorted to bringing new CEOs. All of the CEOs had a particular structure of managing the company. However, most of the CEOs together with their methods failed. The configuration of an organization consists of the relationships, processes, and structures through which the organization operates. There should be a coherent vicious circle between these. The relationship refers to the connection that exists among the employees both within and without the organization. This relationship can be seen between Howard the foreign CEO and the local employees. According to the case study, the CEO did not understand Japanese. Therefore, he would talk in English and give instructions which would ultimately be ignored by the employees. This describes how weak the relationships were within the company. This was partly responsible for the failure of Howard as indicated by the results. Thirdly, structural design is used to imply the lines of reporting, roles, and the responsibilities. Unless structures are appropriately adjusted, the process of implementing strategy can fail. This happened for the case of Sony. In the Case Study, when Hirai become the CEO, he was determined to have the business transformed. He wanted to alter the structural 7 | Page
CASE STUDIES ON MANAGEMENT
8
design that had been in existence and bring in a new one. One of his actions was the breaking up of the big groups and developing 12 businesses that were stand alone and independent. This made communication between the different structures difficult since they had to take long to agree. Mainly, they had adopted a multidivisional structure so as to run the business. The structures were several. At some point, they had divided the business into five functional structures with each area specializing on something else.
3.2 7S McKinsey’s model – One Sony? These goals are examined by looking at seven key elements within the organization. Firstly, there is the strategy which is the overall plan set by the organization so that it can take some competitive advantage and edge out its rivals. The company had a good structure, but it did not work as expected. Both Howard and Hirai's strategy failed to produce results that could be said to the right. They should have changed their policy so that they get a competitive advantage over Apple and Samsung who were their main rivals. Besides, the strategies could have protected them from the cheap electronics from Asia. Secondly, the CEOs adopted a wrong structure. By dividing the organization into different 12 independent units, the structure had been defamed.
8 | Page
CASE STUDIES ON MANAGEMENT
9
Thirdly, shared values are the values that majority of the people believe. It is the organization's beliefs. Not all employees in the company shared the same values. For instance, the employees did not follow exactly what Howard told them. The other is skill and competencies. The CEOs were not engineers, yet they were working for a high tech company hence they did not fit into those positions. The management method of the leaders was not constant since each one tried to implement something different. For instance, while Stringer centralized the business Hirai created various positions with a horizontal method of management.
3.3
Configuration dilemma – One Sony
9 | Page
CASE STUDIES ON MANAGEMENT
10
According to the Case Study, Hirai used horizontal method while Howard wanted best practice in each element produced. These kinds of structures both proved to be wrong. They could have stricken a balance between hierarchies and the holistic methods so that they could increase their profits. Hierarchies vs. networks – Action and control are usually ensured using formal hierarchies. However, they can behave uneasily when they are with informal networks which foster innovation and exchange of ideas. Hirai created several hierarchies by implementing the five structural changes. A networked company would have brought in more visible income and profit compared to creating several hierarchies within Sony. Centralizing vs. decentralizing – Centralization is necessary for processes and products standardization. However, decentralization is flexible. The Sony’s solution would have been achieved by decentralizing the business. Stringer had initially centralized everything by creating the Sony United. The best remedy would be making each of them decentralized and independent so that they could make their decisions. The organization should manage the dilemmas through subdivision of the organization, simultaneous combination of different organization principles and frequent recognition.
4.0
Leadership and change management – Fiat and Chrysler In the present economy of the world, many automotive companies are bailed out by the
government. Without the bailouts then the industry would be in chaos. Without management change in Chrysler, then the Company would also require a bailout from the Government. Otherwise, it would have stopped operations. However, the arrival of Sergio Marchionne brought
10 | P a g e
CASE STUDIES ON MANAGEMENT
11
new hopes for the firm. He had rescued Fiat from losses to profits in just two years. Sergio Marchionne created management that was able to change Chrysler from near bankruptcy to a thriving company. This case study examines the management methods used by Sergio Marchionne to achieve the transformational management to lead to the success of the bankrupt the auto manufacturer. Sergio Marchionne was the one responsible for leading change in Fiat and Chrysler. His fame was first from leading Fiat from losses to profitable. He then went to went to Chrysler to work as its CEO. Chrysler was on the brink of bankruptcy during 2009 financial crisis.
4.1
Change management and its challenges – forcefield analysis Force field analysis is a tool for managing change in the workplace. The use of this tool
has its critical advantages. For instance, it enables the evaluation of a particular opportunity and the determination of its benefits and disadvantages. Hence, the company can decide whether it should drop the changes or continue with them. Besides, it helps in the determination of the challenges which are ahead and therefore, the company develops options for overcoming the problem. According to the Force Analysis of the Case Study, Sergio Marchionne faced several challenges as he tried to bring change in the two companies. For instance, the senior management had a bad habit of upward referral to the CEO. However, he solved this by laying them off. Besides, when he took over as the CEO of Chrysler, the organization had a $6 billion loan from the Government which he had to work to reduce or clear. It is therefore, evident that he brought change to the company.
11 | P a g e
CASE STUDIES ON MANAGEMENT
12
According to the Force Field analysis from the case study, Sergio Marchionne faced problem in that although the stake of Fiat in Chrysler was 53.5%, Fiat experienced a reduction in its sales due to the bad economic conditions in Europe while Chrysler kept prospering and its profits and spending rose. In the case study, the factories of Fiat were operating at 50% and the vehicles had one of the least ratings in the US. However, he handled this by asking for government’s intervention so that it could close down non-profitable companies and lay off some workers.
4.2 Types of change by Sergio Marchionne Sergio Marchionne implemented different management changes. These changes were responsible for the transformation of the two businesses from a loss to profit. The primary change type used is the revolution change. This kind of change occurs over a very short time in an organization. It involves significant cultural and strategic changes which are conducted rapidly. To accomplish this, he engages himself in different actions. For instance, he adopts multiple management styles. This is seen when he selects 26 leaders within Chrysler. These leaders were either two or three level below the top level. They were to report to him directly and hence the management of the organization was flattened. Secondly, Sergio 12 | P a g e
CASE STUDIES ON MANAGEMENT
13
Marchionne adopted culture change. In this case, he worked with the already existing elements at the Organization and also used the experience of the previous management team so that he could improve the products. Another change element is that of monitoring the change that was taking place. He set clear targets for his staff. Most of these changes were related to the company's finances which involved a reduction in pay and job cuts. The fourth change required clear strategic direction. Sergio Marchionne created an action plan that was both strategic and precise for Fiat when he became its CEO. Lastly, he caused changes at the top management. In this scenario, Sergio Marchionne realizes that the top management had so much upward referral. Consequently, he laid out more than 2,000 of them.
4.3
Levers of change that were implemented by Sergio The levers of change are actions and decisions that business leaders take to involve the
employees in the change process. It also allows the knowledge and enthusiasm of those already involved in the change to be engaged and motivated. They should be involved since the organizations can only get change if those inside are participating in the change process
13 | P a g e
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14
themselves. Thus, they can recognize the importance of the modification. Besides, it gives them momentum to be changed. Sergio Marchionne used different change at both companies to make the process easier. The case study postulates that Sergio Marchionne used challenging the taken-for-granted. This is clear in the statement “Why did it take Fiat four years to develop a new model?” The second lever for change was power and political system. This occurred when there was a formation of a strategic alliance between Fiat and Chrysler. Also, removal of individuals who were resistant to change was a power, and political systems change for the lever. The third lever of change involved changing of operational processes and routines. This included separating the departments of different brands in Chrysler. It also included compelling the managers to think differently. The fourth lever for change involved change tactics. This included the arrival of Sergio Marchionne as the new CEO at different times for each of the two companies concerned. The second element of the change lever of change tactics was the maximization of the advantage of downturn performance. Lastly, symbolic changes took place also a part of the lever of change, and it included the behaviors of the managers since the new CEO came. Another aspect of this changing level was the grocery store and the kindergarten that were built outside the plant. Therefore, the changes that were applied by Sergio Marchionne caused the profitability of the companies to increase within very short time.
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Some of the levers that can be used by managers include communication plan and resistance management. Communication is an important tool when effective change management is to be achieved. An excellent communication occurs when each person receives communication that is best for him or her. Sergio knew very well how to use so that he could the required to all of the workers. Besides, he had teams such as that of the 26 leaders. These teams could always update him with any information that he would need. Thus his communication methods were useful and enabled him to effect the change process. According to the Case Study, the second lever used by Sergio was managing resistance to change. This is one of the biggest obstacles that are experienced by managers who try to create change. However, it is a typical reaction that employees must show. Good managers know how to create changes and overcome the workers' resistance to the changes that are being made. Sergio developed an excellent method of overcoming the change resistance that existed within the company. He initially began by telling the employees that they should expect which was to prepare them psychologically that they should expect changes. Hence, when the real changes are made, they would be ready for them. The other clear method that he used to prevent resistance was firing those he thought could not be talked out the resistance. Hence, any of the changes that
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were to be created found a fertile since all the people challenging the changes were no longer available. Hence, he was able to modify the organizations successfully.
5.0
Conclusion This article has looked at three case studies on management. Some of the organizations
have had their profits reduced by billions. On the other hand, some having started small and had been managed well to move from debt to profit. Notably, Fiat and Chrysler have got so much profit within a period of just two years while Sony and HP have had a decrease in the number of sales made. Therefore, it can be concluded that a business should adopt a proper management so that it can thrive.
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Organising for Success- One Sony? Boardroom Battles at Hewlett Packard Leadership and Strategic Change: Leading Change in Fiat and Chrysler.
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