Strategic Thinking & Effecting Change Essays Examples
Presently, business organizations encounter many challenges when it comes to designing the best change framework to fit all their organizational goals. The growing demand for fast moving consumer goods (FMCG) market and the increasing competition in the retail business calls upon organization managers to think outside the box. Organizations dealing with a retail of food and non-food products should introduce innovations aimed at increasing demand and consumption from consumers (Anonymous 2014). CEC International Holdings Limited (CECIHL) in Hong Kong came up with a plan of expanding their new retail business. The organization, focusing on retail business, opened 759 Store in Kwai Chung Plaza in July 2010. The store focused on selling beverages, snacks, and other food products directly imported from Japan. In order to win the competitive advantage and meet the goal of increasing the number of retail stores to 90 by June 2016, CEC International Holding Limited needs to focus on certain aspects of organizations change.
According to Twarowska & Kakol (2013), the organization should understand and implement global strategies when dealing with business expansion because it creates a variety of business strategies. Additionally, the global strategy creates high-level adaptability to the local business environment while in the international setting. The management at CECIHL should consider a number of important elements that play significance role in successful expansion to new retail store. Firstly, the organization needs a change framework for the new retail shop that uses relevant change management models. Secondly, the expansion of the new retail business creates significance impact on the company stakeholders. Finally, an appropriate organization design model will be utilized to assist in the change process and ensure the new retail business evades losses and uncertainties. The discussion below focuses on three main sections named.
Change framework for CEC International Holdings Limited
Application of force field analysis model in CEC International Holdings Limited change process
In the business world, processes are balanced by two opposing sets of forces, one aiming at promoting change while the other aims at maintaining the usual state of the business. Kurt Lewin’s Force Field Analysis framework has a lot of significance in explaining and analyzing organizational change. According to Lewin, forces, made up of habits, customs, attitudes, and people, compel and control change. The compelling forces introduce positive changes while the controlling forces inhibit the implementation of changes and lead to adverse outcomes. Figure 1 shows CECHIL’s driving and restraining forces.
Figure 1: Force Field Analysis of CEC International Holdings Limited change process
Availability of ready market in Kwai Chung
CECIHL should consider implementing the proposed change because of the availability of a significant market for snacks, beverages, and other food products imported from Japan. In 2011, China was ranked third world’s largest market for food and grocery retail. The country expects a total retail sales growth rate of 15 percent annually until 2015 (The Institute of Grocery Distribution 2013). CECIHL has produced a change plan aimed to introduce new stores in Kwai Chung until mid-2016. The organization stands better chances of meeting its goals with the above-expected growth rate in food and beverages retail industry. As at October 31, 2011, the company realized revenues worth 54 million HK dollars, a 14.8 percent growth rate and an increase in gross margin of 27.8 percent. The trend was the highest compared to other companies in the region.
Customer demand for new products
The demand for new food products from Japan is high in China. Demand for Japanese food products is higher than the domestic demand in major food importers such as China (Food Export Association of the Midwest USA 2014). The increasing demand for Japanese food in China is a better chance for CECIHL to achieve higher sales output by opening new 759 Stores.
Need for expansion and growth
CECHIL is an established company, and the stakeholders highly welcome any effort to expand the organization into more diversified business environments. The company has been in operation in Hong Kong for more than 25 years. The company’s strength comes from ability to adapt to the ever-changing customer demands and expectations in the market (CEC International Holdings Limited (CECIH) 2015). Any change plan aimed at increasing the customer pool is highly recommended because it helps the company acquire higher sales volume. Expansion of food retails shops will make the company achieve its organizational goals.
Slow adaptation to change
The reluctances of the staff in implementing new proposed change plans delay the expansion of the business. The company employees have a tendency of not accepting new changes within the organization until they prove them to be worth taking.
Conflicts within the organization
Conflicts in the organization between the top management, shareholders, and the staff result into disagreements that restrain planned changes. Conflicts are a common phenomenon in all organizations. Individuals and groups engage in daily conflicts after a disagreement over a particular issue. The primary causes of conflicts in the organization are lack of resources, competition, varying expectations, lack of cooperation, and weak leadership (Hotepo, Asokere, Abdul-Azeez, & Ajemunigbohum 2010). The presence of conflicts between the management, employees, and shareholders in CECIH will delay the expansion of the business to retail stores in Kwai Chung Plaza.
Cost of expansion
Cost form one of the most critical factors affecting organizational change. The management should evaluate the cost of implementing a proposed change and compare it with the resources available to determine the acceptability of change. Managers at CECIH have an enormous challenge of ensuring they cover the cost of opening 90 new retail stores from the profits made by the organization. According to the Encyclopedia of Business (2015), organizational change occurs when the company manages to minimize employees’ resistance and cost of implementing change. As at October 31, 2011, CECHIL was operating 49 retail stores in Kwai. In the entire period, the company made losses of approximately 2.3 million Hong Kong Dollars. The loss acted like a significant blow to the expansion of the remaining 41 stores as per the initial change proposal.
Impact of proposed change of new retail business on specific groups
Change in any organization faces opposition from different parties associated with the company. In the above change plan, CECIHL shareholders and employees have a significant effect on the full implementation of the new expansion plan. The management should consider introducing changes that have less impact towards shareholders and employees.
Reaction of shareholders to proposed change
CECIHL shareholders form part of the company in terms of ownership and should be included in any decision-making process regardless of the desired outcome. Shareholders play a significant role in the success of business strategies because they approve or deny the proposal depending on the objectives of the plan. In order to determine shareholders’ reactions to the proposed expansion of new retails shops, the management should go through past proposals and determine how shareholders responded to each one of them. Additionally, business experts have conducted numerous studies to investigate the role and impact of company shareholders in implementing organizational change. Investors’ main interest in large organizations like CECIHL is the financial performance. Any strategy aiming at improving the financial performance of the firm is readily approved by shareholders (Glac 2010).
On the other hand, surveys assist in determining shareholders’ expectations on a proposed change in the organization. Studies conducted by publicly traded companies reveal that organizational management redesigns plans and strategies to meet shareholders’ expectations. Developing a changed structure that attracts the attention of company shareholders through adding value to the program increases chances of shareholders approving the plan (McKinsey, 2015).
Reaction of employees to proposed change
Employees are less often involved in organization change, but they play critical roles in ensuring the success of planned changes (Ioana 2013). In CECHIL, employees are very significant in the change process and ignoring them will make the company fail in achieving its expansion goals. The management should conduct an extensive research to determine the reaction of employees to the proposed change. According to Ioana (2013), evaluative research on employees’ response towards proposed new changes within the organization falls under five dimensions. These are salience, impact, significance, meaning, and control. Employees must demonstrate positive attitudes towards these reactions for the success of organizational change. At CECHIL, the management needs the existing employees in new stores and must engage them in extensive training, participation change process, communication, and appraisals such as salary increments. The employee’s emotion determines the level of adaptation towards a given change in the organization. Employees’ resistance is the leading cause of failure of change in many companies (Wittig 2012). CECHIL’s survey team should focus on investigating the level of acceptance shown by the organizational employees to determine the rate of success of the strategy.
Necessary organization model to promote change
CECIHL should adapt a change model that addresses all issues associated with business expansion. The integrative model for organizational change containing three levels and five components would be the most appropriate for the expansion of new retail business (see fig. 2). The model helps organizational managers in planning, strategizing, understanding, leading, and managing changes in a new business environment. Level 1 contains three components; type of change needed, change phases, and desired outcomes. Level 2 has one parts dealing with organizations strategy for change and plan development. The final level also has one component about change management. Change management contains capabilities possessed by organizational managers in implementing and planning change operations (Flamholtz and Randle, 2008). The integrative model will assist the CECIHL Management undertake the new project and achieve the desired outcomes. Additionally, combining the integrative model with force field analysis helps in evaluating the situation completely.
Figure 2: Integrative model (Source: Flamholtz and Randle, 2008)
Organizations face many situations that force them to undergo changes in order to fit in the prevailing business environment. Different factors, both internal and external, contribute to changes made by an organization. The primary external factors that cause change in an organization are changes in customer preferences, change in regulatory environment, or changes in technology. On the other hand, internal factors that lead to a change in the organization are need for company growth, changes in technology within the organization and change in leadership. CECIHL wants to expand its business by opening new retail business stores. CECHIL's change management plan can be analyzed as follows using the integrative model. Firstly, the first level seeks to determine the type of change needed. The organization wants to expand its business by opening new retail stores at Kwai Chung Plaza, Japan (see fig. 3).
Figure 3: Application Integrative model in managing change at CEC International Holdings Limited
The second component of the first level requires the organization to determine the change phases. CECIHL aims at implementing change in three stages. The first phase will take approximately eight months and aims at opening 11 new branches. The second phase will start in April 2011 and end in December 2011. At the end of the second phase, the company is expected to have opened 49 more stores. Finally, the third stage covering the period from January 2012 to June 2015 will see the organization grow to 90 stores. The third component of the first level in the integrative model aims at identifying change outcomes. The primary outcomes of opening the new retail business, “759 Store” are to increase customer output, increase sales volume, and achieve high profits. The organization operated chains in the form of a supermarket majoring in snacks. Additionally, the management aims at establishing an extensive distribution of sales point throughout the store to ensure all customers are served in an efficient and timely manner. According to Myers, Hulks & Wiggins (2012), the management should communicate the desired outcomes of the planned change to the organizational shareholders and employees. The communicated outcome must adhere to the company’s mission and goals.
The second level of the integrative model focuses on strategic organizational development. The level deals with issues pertaining change management, plan development, and implementation process. Japan is one of the fast growing food and beverages markets in the world. However, any investor willing to enter the Japanese market must be fully prepared with unique business plans in order to win the big market competition. An article from New Zealand Trade & Enterprise claimed that consumers in Japan have high expectations and require quality standards making it hard for investors to develop trust and good relationships. In order to develop a long-term relationship with clients, a perfect approach to business is demanded. CECIHL has done an adequate study on the Japanese food and beverage market and aims at increasing the number of stores offering unique and quality services. Additionally, the company exports approximately 70 percent of its products from Japan. In the year 2010, supermarkets in Japan had the largest market share of grocery retail (Anonymous 2015). The market position of Japan is the main cause of implementing the above change.
The third level, which forms the final level in the integrative model, deals with leadership capabilities. In implementing change in the organizations, managers must demonstrate quality leadership skills. Leadership capabilities ensure all employees stick to their duties and do not relax during plan implementation process. Leadership capabilities go hand-in-hand with organizational culture. For a business to achieve change outcomes, it must develop strategic business processes that consider the culture of the organization. A combination of business culture and leadership strategy works simultaneously when developing core organizational goals. Leadership capabilities play essential roles in designing for future directions, allocation of resources in the new organization, and motivating employees into the new business environment (McGuire 2003). CEC International Holding Limited developed the new change plan by incorporating culture and ethics that promotes human potential.
CECHIL has a better chance of winning the Chinese food market when it manages to open new retail stores, 759 STORES, in Kwai Chung Plaza. In the discussion, analysis of Force Field framework shows that the driving forces are more powerful than the opposing forces. Hence, the company should go ahead and launch 90 new retail stores as proposed. Secondly, the reaction of shareholders and employees were identified to have a greater influence on the success of the proposed change. The company management should ensure every shareholder gets a detailed copy of the new expansion strategy showing the expected returns when the project ends. Additionally, they should engage employees in all activities pertaining change management through training, communication, and appraisals to give them morale when implementing new changes. Finally, the integrative model helps in identifying the specific level of the organization since the commencement of the change program.
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