Strategic Management with Respect of Merger between Cranberry and GreenHealth - Case Study Example

Strategy Contents Introduction 3 Discussion 3 a. Application of Balogun and Hope Hailey’s Change Kaleidoscope model 3 b. Application of Johnson’s Cultural Web Model 7 c. Critical Evaluation of the change process 10 Conclusion 13 References 15 Introduction Strategic management refers to the coordination of processes and activities to help organizations in the alignment of resources with the visions, missions, and strategies of an organization. It acts as a basis of transforming the static plan and provides feedback related to strategic performance which assists the decision making process of an organization. Strategy refers to a plan of action which states how an organization will achieve its objectives and mission. The management of these activities can be termed as strategic management. There are various strategic decisions which an organization has to make relating to factors such as the direction of an organization in the long run, the scope of its activities, stakeholders’ values and expectations, responding to the ever changing business environment, building on its capability as a business entity, and acquiring a higher market share relative to its competitors. These decisions tend to be complex as they have to be made in an uncertain situation. The discussion section of this essay focuses on strategic management with respect to merger between two companies such as Cranberry and GreenHealth. Discussion a. Application of Balogun and Hope Hailey’s Change Kaleidoscope model The organization Cranberry is considered to begin its operations in the year 1980. The organization is the process of manufacturing beauty products. It experienced significant growth on a year on year basis. The organization is considered to be cash rich as compared to its numerous competitors. The company is on the lookout for opportunities to expand on a global scale and also to grow its core business and broaden its horizon. It seeks to identify such opportunities which complemented its existing business. GreenHealth is considered to be an organization which focuses on manufacturing of herbal supplements, minerals, and vitamins. The organization used to be bureaucratic in nature in a sense that it consists of a lot of processes. The average age of employees in the organization is considered to be over 45 years and many of its employees have worked for the company for their whole careers. GreenHealth is considered to develop its employees and promote them from within the organization. The products that are manufactured by the organization are considered to be modern but the ethos is traditional and crafted. Employees of GreenHealth do not like change and are considered to do things the same way for about 100 years. It is considered as a source of pride for the organization and is not seen as a source of criticism. Both the organizations such as Cranberry and GreenHealth are considered to require certain changes in order to compete in an efficient way in the ever changing business environment (Adair, 2007, p. 53). The organizations agreed on some biggest aspects of change through a merger announcement of the two companies. There are numerous opportunities for both the companies with regard to the merger announcement such as opportunities for development of new products that have the potential to harness the expertise of GreenHealth in minerals and vitamins and Cranberry in beauty products. The main purpose of the merger is to save on costs through estates and staff reductions, global expansion into the US and Europe for Cranberry and GreenHealth respectively, and development of new product range. The change kaleidoscope model has got huge applications in this regard. It seeks to help managers of organizations to design an approach which is considered as context sensitive with regard to change within organizations. The contextual features are considered as those features which are concerned with aspects such as current situation, competencies, and culture of an organization. The change kaleidoscope model is considered to have eight features as follows: I) Time: It is an important factor with regard to change in organizations. Organizations in crisis are considered to have little time and they are required to change reactively. Organizations concerned with long term strategic development is considered to have more time with regard to change. II) Scope: It is considered as the extent of change that is required in terms of transformation or realignment. III) Preservation: It is concerned with the extent to which it is necessary to preserve certain ways of working, aspects of culture, retention of specific sets of people, and preservation of specific competencies of an organization. IV) Diversity: It is concerned with the extent of diversity among organizational members who are required to undertake change. V) Capability: It is concerned with the ability of an organization to adapt to changes that are required. It is considered to have three levels such as organizational, managerial, and individual. VI) Capacity: It deals with the resources of an organization which are considered as necessary for investment purposes with regard to proposed change in an organization. VII) Readiness: It is considered as the extent to which organizational members are aware of the needs for change and are committed to make personal changes that are required of them in this regard. VIII) Power: It is concerned with the amount of autonomy that key change agents are considered to possess with regard to implementing change in organizations. Figure 1: Change Kaleidoscope (Source: Balogun and Hailey, 2004, p. 111) The organization Cranberry is considered to be quite efficient with regard to identifying new opportunities that complemented its existing business. It is considered to be at par with GreenHealth with regard to its size in terms of revenue. The process of merger between the two companies is considered to have quite potential because GreenHealth is considered to be a good strategic fit in this regard with significant benefits for both organizations. The employees of GreenHealth are not quite comfortable with change and the organization is also not considered to have undergone change in a significant manner. The process of merger will help the company to deal with change in an efficient manner. The most challenging aspects of change context in this regard could be diversity and scope (Bass, 1985, p. 57). Diversity is considered as one of the challenging aspects because the employees of both the organizations differ in a significant manner with respect to their culture. Employees of GreenHealth do not seem comfortable to change and they follow the same way for doing things for about 100 years. Cranberry in this regard is considered as efficient with regard to identification of new opportunities for growth and broadening its horizon. Scope is also considered as one of the challenging aspects because the process of merger between the two companies will lead to an organization-wide change in GreenHealth (Bennis and Nanus, 1997, p. 79). b. Application of Johnson’s Cultural Web Model Culture is considered to be the most important aspect that receives considerable attention during periods of changes in organizations. It is considered that cultures of organizations tend to clash with each other when an organization enters into a process of merger with another organization. It is also considered to have a considerable influence on growth and strategic changes for an organization. In this regard, it can be said that existing cultures of an organization may become ineffective and have the potential to hinder growth rather than supporting it. The Johnson’s Cultural Web Model is considered as an approach which plays an important role in planning change or formulating strategy by organizations. It is considered to have six interrelated elements as follows: I) Stories: It is concerned with the past events of an organization and communicates its values and what it perceives as great behaviour. II) Routines and rituals: It is considered to be involved with daily actions and behaviours of people which can be considered as a signal of acceptable behaviour within an organization. III) Symbols: It is considered to be concerned with visual representations including logos of an organization. It is also said to be involved with the informal and formal dress codes in an organization. IV) Organizational structure: It deals with the structure of an organization as defined by the organizational chart and is also considered to be involved with unwritten lines of influence and power which plays a major role in determining valuable contributions of organizational members. V) Control systems: It consists of rewards, quality systems, and financial systems and is also considered to be involved with their measurement and distribution within an organization. VI) Power structures: It is considered to be involved with the power structures that are in operation within an organization. It may comprise a department, a group of executives, and some key senior executives who are considered to have significant influence on strategic decisions of an organization. Figure 2: Culture Web (Source: Grundy, Johnson and Scholes, 1998, p. 118) The cultural web is considered to be a good framework by which organizations can assess the extent of change that is required in order to compete in an ever changing business environment. It is considered to represent organizational culture in a way such that it tends to be interlinked to a set of subsystems of an organization. GreenHealth is considered to have a functional structure and it tends to group its employees in accordance with specialized or similar set of tasks or roles. Functional structures are considered to work well in an environment which is considered as stable. It is also considered to be appropriate where the business strategies of an organization are less inclined to dynamism or changes. As GreenHealth is considered to be an organization which is bureaucratic in nature and so it is very difficult for such an organization to respond to changes in the business environment in a quick and efficient manner. Cranberry is considered to have a divisional structure which allows its team to focus upon only a single service or product. The leadership structure of the organization is also considered to support major strategic objectives. A divisional structure leads to esprit de corps and also facilitates the development of a common culture which can contribute in a significant manner to both better knowledge and higher morale of the division’s portfolio. Divisions within an organization should be well managed such that the organization can be considered as successful. Executive leadership is considered to play a very significant role with regard to organizations having a divisional structure. After the merger between the two companies, it is felt that the new organization needs to change in a significant manner. It is also felt that employees of the new organization need to do things in a different way. It is considered that the best way forward in this regard is to go for a radical change of structures in the new organization. The main objective of the restructure is to maintain the focus of the company geographically such that the divisional head of US can develop the retailing relationships for the products of both the companies (Schein, 1992, p. 73). The focus of the new company should be outward facing, on the markets and the target consumers. c. Critical Evaluation of the change process The divisional structure in the new organization that is formed after the merger is considered to work very well for the organization. It seemed to promote healthy competitive rivalry between the divisions of the new organization. The cultural change is also considered to come along nicely in the new organization. The change process in the new organization is considered to follow the change steps as laid down by Kotter. Dr. Kotter has developed an eight step process for leading change in organizations which are as follows: I) Establishment of a sense of urgency, II) Creation of the guiding coalition, III) Development of the vision for change, IV) Communication of the vision for change within the organization, V) Encouragement of broad-based action, VI) Generation of short term wins, VII) An attitude of never letting up, and VIII) Incorporation of changes into the culture of the organization. (Source: Kotter, 2012, p. 129) The new organization is considered to achieve significantly in respect of cost reduction and implementing new organizational structures. It put into place numerous processes and systems that enables it to conduct its operation as one company. The new organization is also considered to have a strong sense of divisional identity with regard to culture along geographic lines. The role of divisional heads in the new organization is of immense importance with regard to growth of the organization. They have to play an important motivational and leadership role in the organization and should ensure that they represent the organization GreenHealth-Cranberry and not provide more importance to one than the other. The leaders of the new organization should provide transformational leadership to ensure the success of the merger in a significant manner (Bennis, 2009, p. 81). Transformational leadership involves motivating and guiding followers in the direction of organizational goals by clarifying task and role requirements of employees. It involves inspiring followers to transcend their self interest for the betterment of the organization. Transformational leaders are considered to have an extraordinary and profound impact on their followers. They are considered to pay attention to the developmental needs and concerns of individual followers in the organization. They guide followers in changing their awareness of issues by helping them to have a new way of looking at old problems (Bertocci, 2009, p. 63). They are quite capable of inspiring, arousing, and create excitement in followers such that they put an extra effort with regard to achievement of organizational objectives. Leadership is considered as the ability to influence members of an organization toward achievement of organizational vision or set of organizational goals. The influence in this regard can be considered as formal which is provided by possession of any managerial rank in an organization. Management positions in an organization involve to an extent formally designated authority and as such it is quite possible that individuals may assume a leadership role simply because of their organizational position. But in this regard it is important to note that all leaders are not considered as managers. In the same way, all managers are also not considered as leaders. Organizations provide their managers with certain formal rights but there is no guarantee that those managers will also be able to efficiently lead a group. The ability to influence people outside the formal structure of an organization is considered as more important than formal influence. The leaders of the new organization should possess this ability of influencing organizational members outside the formal structure which can have a positive influence on the performance of the organization GreenHealth-Cranberry (Griseri and Seppala, 2010, p. 69). They should also motivate the employees of the organization such that they put their best efforts in the realization of organizational objectives. Motivation is defined to be an interaction between a particular situation and an individual. It is concerned with those processes that are mainly responsible for an individual’s persistence, direction, and intensity toward achievement of a certain specific goal. Intensity refers to the efforts that are put in by persons to achieve goals. In this regard, it can be said that intensity must be channelled in such a direction so as to achieve maximum benefits for an organization. Motivation is also said to have a persistence dimension which is concerned with the maintainability of efforts by individuals for a considerable period of time to achieve such results that are desired by an organization. Conclusion There are also various levels of strategy for an organization such as business level strategy, operational strategy, and corporate level strategy. Business level strategy refers to the way a business organization conducts itself in a particular market to be successful. Operational level strategy is about various levels of an organization and their contribution with regard to accomplishment of the strategy. Corporate level strategy deals with the overall scope and purpose of an organization and how to add value to various business units. The new organization GreenHealth-Cranberry should focus on all these strategies such that they have a positive influence on the performance of the organization in the long run. The leaders of the organization should also focus on transformational leadership because it involves inspiring employees to transcend their self interest for the betterment of the organization. Divisions within the organization should be well managed such that the organization can be considered as successful. The employees of the new organization should focus on doing things in a different manner. It is considered that the best way forward in this regard is to go for a radical change of structures in the new organization. The main objective of the restructure should be to maintain the focus of the company geographically such that the divisional head of US can develop the retailing relationships for the products of both the companies. The focus of the new company should be outward facing, on the markets and the target consumers. References Adair, J., 2007. Leadership for Innovation: how to organize team creativity and harvest ideas. Second ed. London: Kogan age. Balogun, J. and Hailey, V., 2004. Exploring Strategic Change. New Jersey: Prentice Hall/Financial Times. Bass, B., 1985. Leadership and performance beyond expectations. First ed. New York: The Free Press. Bennis, W. and Nanus, B., 1997. Leaders; Strategies for taking charge. Second ed. New York: First Harper Business. Bennis, W., 2009. On Becoming a Leader. Second ed. New York: Basic Books. Bertocci, D. I., 2009. Leadership in Organizations. First ed. Plymouth: University Press of America. Griseri, P. and Seppala, N., 2010. Business Ethics and Corporate Social Responsibility. London: Cengage. Grundy, T., Johnson, G. and Scholes, K., 1998. Exploring strategic financial management. New Jersey: Prentice Hall. Kotter, J., 2012. Leading Change. Boston: Harvard Business Press. Schein, E., 1992. Organizational Culture and Leadership: A Dynamic View. San Francisco, CA: Jossey-Bass. Read More