Organizational change and development
Executive summary
The need to embrace workable and sustainable strategies as touching organizational development and change has been pressing for modern day organizations. Whereas organizational development encompasses the efforts made by firms over duration of time to come up with better problem solving abilities organizational change connotes the process that enables organizations to optimize their performance whilst working towards an ideal and projected state.
Dyson, a multinational company has had to consider embracing strategies for effective development and change due to the changing strategic situation engraved in the current global economic turbulence that has challenged the firms operations, sales, and profitability. The existing strategy for the company being based on cost leadership and differentiation has thus necessitated the adoption of a future strategy entrenched in e-commerce. The internal and external environment of the firm is captured by economic aspects, technology, and low prices.
Introduction
Organizational development and organizational change are directly related. However, the two differ in terms of their definitions. Scholars have repeatedly concurred that organizational development connotes a planned process to stir up change within the culture of a firm by utilizing research, theory, and behavioral science expertise. Additionally, other scholars have defined organizational development as corporate efforts made over a long duration with the intention of enhancing the ability of a firm to solve problems as well as its capacity to deal with alterations in the external environment.
Further, others have argued that the term connotes a systemic process performed via collection of data, analysis, action planning, intercession, and assessment in order to improve congruence in structure, procedure, stratagem, human resource, and culture culminating in the development of more effective problem solving as carried out through organizational team work with the assistance of change agents.
On the other hand, organizational change is a process that enables organizations to optimize their performance whilst working towards an ideal and projected state (Meyers 2013, p. 43). Moreover, studies indicate that organizational change is usually triggered by the business environment that is ever-changing causing organizations to respond in order to avert a crisis. In most cases, organizational development precedes organizational change except in cases where firms are forced to change and adopt new strategies in order to deal with a foreseen problem.
In both cases of development and change, the processes involved always encounter resistance to change as firms seek to make adjustments in operational strategies and culture. This paper takes the form of a report and focuses on Dyson, a multinational company in order to explore its changing strategic situation engraved in the current global economic turbulence that has challenged the firms operations, sales, and profitability.
Review of Literature
Review of literature indicates that in the light of the current turbulent times, companies, and especially multinationals need to come up with new strategies for development and change. Studies also indicate that organizations are fastly adopting to such strategies in order to acquire the ability to stay afloat amidst the unpredictable economic changes. Conversely, Sullivan (2001, p. 7) argues that only few of modern multinationals have fully embraced the need to see change as an organizational project rather than viewing it from the traditional perspective of it being a core organizational process.
Further review of literature also suggests that unless organizations develop the ability to merge development and change into a single process they may not be able to stand the test of time during the turbulent economic times (Weissenberger& Kotch 2007, p. 7). Additionally, firms need to realize the importance of developing the competencies of their core personnel in a way that helps them enhance their objectivity, imagination, consistency, and flexibility (Balzac, 2011, p. 14). However, Sridhar (2011, p. 2) argues that this alone will not help enhance development and change strategies without multinationals embracing the requirements entrenched in efficient collection of data, assessment, forecasting, diagnostics, , design, and implementation procedures.
The company
Dyson is a company based in Britain and has grown over the years since its inception in the year 1974 into one of the largest multinational. The organization basically operates many stores currently having infiltrated markets in over 70 countries with over 7,000 employees. By the year 2014, the company had already been crowned as the number one corporation in terms of annual revenues. However, the current global economic turbulence has recently caught up with the company causing it to experience declines in sales, efficiency in operations, and profitability in virtually all the 70 countries within which it operates.
Actually, records indicate that in the year 2015, the company for the first time since its inception recorded a decline in both sales and revenues. Despite spending over 11 million dollars to advertise in the 70 countries, the company has not been able to produce the level of sales and revenues it anticipates. This as studies indicate is because the target clients in these countries no longer have the financial capability to make purchases as they did before because of the global economic crisis.
Existing strategy
According to Sridhar (2011, p. 3), companies should always ensure that proper strategies are in place. Strategies define the output of a company (Meyers 2013, p. 45). The existing strategy for Dyson is based on cost leadership and differentiation. This simply means that the company endeavors to provide their clients with an assortment of products and services offering similar or improved quality with their competitors at prices that are much more relatively cheaper.
The company took up this strategy since the day it went public having realized that it could source raw materials and acquire products at prices that could pose a threat to its competitors. However, critics have argued that despite the strategy having worked well for the organization in the past decades it may not be sufficient to help it maintain its competitive supremacy given the current agitating global economic problems (Balzac, 2011, p. 18).
This is because despite its low prices the purchasing ability of its target clients is gradually dwindling making them unable to make the same volumes of purchases. Nevertheless, the organization has kept up with this strategy by always looking out for newer ways to provide products and services at lower prices. Additionally, Dyson is relentlessly rethinking new ways via which it can complete its primary and support activities so that it can further lower the costs while simultaneously preserving competitive echelons in terms of differentiation.
Actually, studies indicate that this is the reason why its competitors have not been able to gain the upper hand over the last three decades because they have not appreciated the need to lower their prices due to the emphasis they have been giving to the maintenance of escalating revenues. The role of the firms supply chain in terms of fostering efficiency in this strategy is evidenced by the efficient internal logistics made possible by the usage of just in time inventory .
Consequently, the company has been able to reduce the costs emanating from outbound logistics. This explains the creation of better levels of fuel efficacy in the firm’s trucks and the bulk purchases that have also served to enable the organization cut down its costs. It is also imperative to consider the role played by technology in advancing and implementing the strategy under discussion.
Technology has given the organization the capacity to forecast demand in an accurate manner and has also sharpened its ability to come up with routes of transport that are more efficient than those used by its competitors. Additionally, technology has also enhanced the ability of Dyson to manage its clients. Conclusively, the cost leadership and differentiation strategy has given the organization the upper hand due by placing high barriers of entry to its competitors (Meyers 2013, p. 49).
Future strategy
The future strategy of Dyson is entrenched in E-commerce. The company came up with this strategy having realized that its sales and revenues had declined greatly over the last few years. By using this strategy, the company intends to rely on technology by setting up a framework that will use the internet as a platform to serve its customers across all conduits. The agenda behind the strategy is to come up with a unique shopping experience (Weissenberger& Kotch 2007, p. 7).
However, one would wonder whether the same strategy will enable the organization to lower its costs below the current ones being offered. However, there is a possibility that this could enable the company to do so bearing in mind that it will lead to a reduction in operational costs. Thus, the strategy could well enable Dyson to lower its prices by approximately 10-15% compared to those offered by its competitors (Sullivan 2001, p. 8). Whereas critics argue that this may not be possible, some scholars believe that it could work with clients that make bulk purchases.
The use of this strategy is also aimed at positioning the firm to become the future of retail as well as catering for the declining purchasing abilities of its globally positioned clients by enabling them to save money. Nevertheless, before agreeing to this possibility one would have to consider the existence of competitors in e-commerce such as Amazon.
Evidently, Dyson will have to do more than just enter into e-commerce because Amazon is currently the giant in this line of business making around 60 billion dollars per year. Whereas Dyson has built its reputation based on logistics, it is almost impossible to achieve the echelons of delivery that Amazon has when it comes to e-commerce. Nonetheless, Dyson intends to start relying on computer sales and the growth of e-commerce by lessening the investments made in starting new stores to focus more on directing capital towards e-commerce.
Transition process
The transition process for Dyson to move from emphasizing on cost leadership and differentiation strategy to directing its resources towards e-commerce must first take into consideration redirecting the company’s resources towards expansion of its e-commerce infrastructure (Riley 2013, p. 23). This means that the organization has to forego its previous efforts geared towards opening new physical stores and focus more on enhancing its online business.
Actually, Dyson has already embarked on the acquisition of jet.com as it seeks to pursue its digital aspirations (Zogjani & Raçi, 2015, p. 3). However, pumping financial resources towards e-commerce alone is not enough to ensure an effective transition. As studies indicate, transition processes only prove effective when organizations realize the need to focus on the needs of target clients by ensuring that the needs of the customers become the platform for business growth.
Bearing in mind the fact that the need for strategy change has been triggered by the adversity of global economic conditions that have decreased the sales and profitability of the company, the transition process must involve a careful consideration of how shifting to e-commerce will enable Dyson to lower its prices to levels that global clients can afford bulk purchases. In addition, the transition process must involve the training of personnel so that the people deployed to work in the digital line will have full comprehension of their duty related obligations (Sharma & Vredenburg 2009, p. 11).
As such, functional training will be necessary so that the e-commerce personnel will have the skills needed as well as the new process information for the transition to be fruitful. Nevertheless, studies indicate that functional training works best when an organization has particular people in mind. This means that prior to the training exercise Dyson will have to identify and recruit specific individuals and sharpen their performance standards based on the e-commerce strategy (Denyer, 2013, p. 135).
Further, the transition process must encapsulate a communication strategy. This means that the current employees must be involved and updated concerning the new changes in order to give each of them the ability to leverage their knowledge, decipher probable pitfalls, and make a commitment towards working with the new strategy.
More importantly, the process of transition should not be considered as an opportunity for the organization to lay down its former strategy entirely but should rather be viewed as an opportunity to merge the useful attributes of the old with the new strategy. Studies indicate that organizations that have viewed the process of strategy transition as an opportunity to completely do away with old strategies have seldom reaped the projected benefits of their new strategy (Denyer, 2013, p. 137).
Consequently, for the e-commerce strategy to help the organization deal with the challenge posed by the turbulent economic crisis Dyson must be able to adopt the new strategy while simultaneously seeking to implement useful and workable aspects of the cost leadership and differentiation strategy it has been using (Suriyamathi, Velavan & Radhiga 2013, p. 31).
Analysis of internal and external environment
The most significant factor in the organizations external environment with regard to the turbulent economic times is the economic aspect. Consequently, Dyson is undergoing a lot of pressure as it seeks to adapt its new e-commerce strategy to the prices of its products and services (Windapo & Goulding, 2013, p. 10). This single factor has led to the reduction of revenues since the countries within which the organization operates are having problems with economic stability.
However, the economic factor still presents an opportunity for the company because of the levels of economic growth being experienced by developing countries in which Dyson has not yet started to operate. Technology is another external factor since the organization must now focus on addressing the current technological trends and especially with regards to e-commerce. Additionally, there is an opportunity because the company can automate its operations and increase its revenue levels.
The aspect of technology also presents an opportunity for Dyson because of the escalating levels of mobile device usage. The threat however is that companies like Amazon have already made their successful entry into e-commerce and it may take a lot of time and effort before Dyson catches up. The most significant internal factor for the company is its low prices. This is a great advantage for the organization because customers have become accustomed to the fact that its products and services are lower than those of its competitors.
Critical analysis of the changing situation
The changing situation as engraved in the turbulent economic times and the future strategy of e-commerce is more of a planned than emergent change. It is a planned change because the company is currently making intentional changes to make its products available over the internet. However, Ali (2008, p. 56) argues that he change is more of emergent than planned because the company has been forced to make amendments in order to respond to the changing customer preferences for online shopping as well as the turbulent economic times.
Although the company has decided to use e-commerce as the future strategy for combating the effects of the turbulent economic times, this may not remedy the situation because of the presence of already existing online companies like Amazon.
While some deem the move to adopt the new strategy the best option for the company to respond, Ali (2008 p. 7) says that it may not be possible for the company to reap the anticipated results unless it persists and focuses on delivery. The ability of Dyson to deal effectively with the challenges emanating from the turbulent economic times will depend on how well it is able to make fitting structural changes that are aligned with the new strategy.
The most significant structural change that will be experienced by Dyson as it seeks to adopt the e-commerce strategy will affect teams and team work in the organization. This is because Dyson will have to come up with technology efficient teams that will work together for the success of the strategy. Additionally, this structural change will influence the culture of the organization.
According to Strazewski (2009, p. 137), e-commerce teams have to be so cohesive that any changes in the customer demands and prices are passed to each member of the team to help businesses stay afloat. This means that the organization will have to focus more on the culture of timeliness and transparency. However, the company is likely to experience problems in entrenching this culture because its current employees have not been accustomed to online business.
The cultural web of Dyson has played a major role in the past in helping achieve organizational competence (Prasad & Nori 2008, p. 50). For instance, the control systems of the firm have enabled the company to effectively monitor and sustain its supply chain (Zendg 2009, p.44). However, the current control system may not be compatible with the strategy that the company aims to deploy.
According to Cloutier and others (2015, p. 21), it is impossible for companies that have engaged in e-business before to expect success by deploying the same control system. Further, the current rituals in the organization have been focusing on the supply chain as well. This means that the firm will have to adopt a new set of rituals that emphasize more on the performance of e-business.
The role of technology at Dyson as the company seeks to introduce the e-commerce strategy is irreplaceable. Firstly, this is because the organization will most likely have to make some changes in terms of human resource in order for the strategy to work. This means that the company may have to replace some of its employees with others that are technology efficient (Loo 2009, p. 9).
Further, there will be need for constant training so that the strategy works as anticipated. Although Dyson expects the new strategy to lead to higher profit margins, this may not be the case in the short-run. According to Huang (2010, p. 140), e-commerce forces organizations to lower their prices more than expected because customers can easily find the same products at similar or lower prices over the internet. Nevertheless, the catch is that technology will help Dyson to do business in every country of the world. This is because of the ability of technology to break geographical barriers (Jones & Parry 2011, p. 16).
This means that the organization will have the capacity to increase the volume of sales and consequently the profit margins due to the global expansion of its market (Theodore, 2014, p. 71). There is however a possible problem in that the use of technology has a way of altering consumer loyalty and purchasing behaviors. This is because of the increasing presence of online retailers causing clients to begin evaluating their options and may opt to go for retailers that have already made their impact in online business like Amazon (Ling. 2015, p. 75).
Recommendations
It is highly recommendable for Dyson that the company instead of completely doing away with the cost leadership and differentiation strategy to try and merge the existing strategy with the future strategy based on e-commerce. This is because the existing strategy has helped the company achieve the current levels of competitiveness and completely setting it aside will deprive the company of the benefits attached. Due to the presence of competitors like Amazon the company should also consider taking time to research on better online platforms although this will take time.
Conclusion
Business strategies should be set up in line with structures of businesses. Well selected strategies always thrust businesses into good performances. Change management should be handled properly till completion. This should be guided by organization culture and company leadership as seen in the case of Dyson company.
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