Change management which forms the core of the report can be stated in simple terms as a style of management directed towards changing the way individuals, teams or a n organization at large changes to adapt to the business or any other associated needs by deployment of resources differently, changing businesses processes or reviewing budget allocations. Macville, which is an Australia based espresso coffee machine seller, forms the subject of this report where critical analysis of the company along with its macroeconomic environment will be conducted. Along with this analysis, possible partnerships both long term and short term will be assessed so that a strategic alliance, which is mutually beneficial, can be crafted (Booth, 2015). Change management, as a tool to influence the organizational work style has been instrumental in business context as the components necessary for growth are identified and worked upon. A change management strategy touching upon all the stakeholders affected by changes is also drafted as a part of this report with focus on parameters such as cost, possible benefits and risks that the company might get exposed to following the strategy (Botha, Kourie & Snyman , 2014).
The Management information system (MIS) has been identified as a major strength of the company as through business intelligence generated by the system, the company is able to strategies effectively based on real time data as well as accurate finance. The product placement if another area where Macville finds itself comfortable in terms of ease of execution and level of control. Since most of the customers that Macville is targeting falls under the range which social media also targets, the company has extended its promotions on social media front to effectively capture the right customers for the company. Technological advancements has allowed Macville to reduce the costs as the marketing campaigns online are much cheaper than offline model marketing (Boje, 2012). The company has also been applauded for its service since the business that the company operates in makes it imperative to have a strong service base. Rights from installation of the coffee machine at the customer location through complaint handling right to the after sales service the company have covered all effectively. Product sale business particularly of this nature requires an organization to understand the customer’s focus on performance of the devices. To deliver a seamless experience, companies need to focus directly at the service, which Macville has done effectively. Right allocation of work to the party best suited to deliver the task is a strategy that has worked well for the company. Macville has increased its sales through a customer-focused policy of service calls within 24 hours.
Although Macville has established competencies for itself in its business but it still has some deficiencies in its operations that hamper its growth trajectory. Inbound logistic is one area where the company needs to improve on so as have balanced custom operations and importation activities. The company due sometimes delays delivery times to lack of human resource management intervention in the matter (Cameron & Green, 2015). Similarly outbound logistics is also an area where Macville can improve its operations. The company has a 3 years contract with the delivery service provider, which at times delay the delivery due to non- availability of right vehicle for delivery. This creates a bad reputation for the company and Macville should look at either negotiating the contract or call off the contract so as to partner with a reliable service provider (Gerth, 2013).
The opportunities that lie ahead for Macville are huge owing to the increase in the overall market of the espresso coffee. The company can focus on shifting to Sydney from where a major competitor has retracted recently and the city accounts for a bulk purchase of coffee machines annually. Strategic alliances with coffee bean suppliers can be formed where the cost of advertising can be reduced and the overall value chain can be optimized. The consultant’s report has also highlighted the expected overall growth that the industry can experience and Macville could tap onto the market. With the advent of machines using 30% less energy, changes in trade as well as rising home consumer market are some driving factors, which can change the course of business conducted by Macville. The population of Australia is also increasing at a steady pace, which is an opportunity from the company’s point of view as the target market expands over time. Higher than expected growth in economy due to resource boom is another major factor boosting the business and operations of Macville.
Every business irrespective of its nature is constantly under threat from multiple fronts and it needs to assess that threat in order to minimize them. Currency risks looms large for Macville as strengthening dollars can increase the cost against all trading partners of the company. Tourists being it will affect a major buyer of coffee machines as Australia grows to be an expensive destination to go. Possibility of a carbon tax to be implemented on all energy intensive machines used commercially can reduce the likelihood of purchase of coffee machines (Bresciani, Thrassou & Vrontis, 2013). Macville is also under threat posed by global corporation Nufix Inc that has moved from instant coffee to espresso coffee machine business. The extensive financial and operational backing that the company has is a threat to Macville but since the industry is characterized by allegiances between dealers/ suppliers over many years, Nufix will have a tough time ahead of it. BeanEx, which is a coffee bean supplier, has forward integrated its business by entering into coffee machine business. However, BeanEx lacks the resources that it needs to provide service to the clients and establishment of such facilities takes time and money. In light of all the threats that Macville is facing, it needs to assess the opportunities that lie in front of it and capitalize on those before its competitors does (Khattak, Latif & Lee, 2013).
To form a strategic alliance with competitors, Macville needs to understand the value that the other company is able to bring to the partnership before entering into a contract with the company. Howsoever lucrative strategic alliances may appear to be, they are always laden with risks, which need to be identified and mitigated before any alliance if formed. In this section, the competitors of Macville, which have proposed for alliance, will be assessed (By, Burnes & Oswick, 2012).
Home espresso traders
The company deals in home entertainment products as well as coffee machine only in Sydney and has proposed a shared space in 4 trade shows per year. Since the company has an extensive portfolio of products, Macville can benefit from the alliance as customers from various segments will come to the booth but a limited presence of the company is a concern. Although such a partnership can prove out to be beneficial for the company as an access to a broader customer base is available, but a partnership with a party not entirely focused on the hospitality business is a risk that Macville should look at deploy before entering into an alliance. Other risks involve s threat to trade secrets and tarnishing of image of Macville due to association with a non-industry company. The benefit in terms of revenue with this alliance is mere $5000/year and Home espresso traders have been registering positive growth over the past 5 years of operations (Cummings & Worley, 2014). The company has also agreed for giving access to all the data that Macville needs for conducting due diligence.
Ambrosia coffee roast
Partnership with this company is a net step for Macville to integrate into its value chain as Ambrosia coffee roast deals in coffee beans supply to hospitality outlets and supermarkets for retail customers. The proposal entails a shared cost in outdoor advertisement for cafes and other hospitality outlets with shared branding of umbrellas and barriers. Ambrosia is a company committed to the industry and has a client base that Macville can tap onto but the alliance can possibly fail, as the company is not known for quality but for commodity – based products. The financial statements of the company along with direct contact to all the directors of the company is not available to Macville which will make it difficult for the company to conduct due diligence before entering into an alliance. The sales trend of Ambrosia has been steady over the past five year and has not registered any major growth in its revenue which indicates a stagnant market share and market as a whole (Freiling, 2013).
This company is into the Arabica roasted coffee bean business in all states of Australia and proposes sell Macville coffee machines to its clients by paying cost to Macville and thereafter giving the outstanding amount in a 12 month repayment program. The company is highly committed towards the industry and Macville can benefit immensely from the partnership as the company has a presence across nation. However, a strong alliance with Java estate can hamper the sales of the machine by other coffee sellers. As per the forecast, a total of 200 machines will be sold in the first year since commencement of alliance with the breakeven coming after selling of 80 machines (Frankland et al, 2013). The company has also registered high growth in its own business of coffee beans over the past 5 years with its revenue growing to about double in the five years. The company has also maintained sound financials with its assets being legitimate and liabilities being reasonable. The company has also given Macville access to all the documents as well as key decision makers necessary for the due diligence (Gattermeyer, & Al-Ani, 2013).
Looking at the tenders that have come to Macville, the opportunities that each partnership provides along with the risks attached is unique (Hayes, 2014). However, Java estate seems the most probable choice for a strategic partnership with Macville as the company has a sound financial backing and has been on a growth track for over five years of operations (Marquardt, 2014). The deal is mutually beneficial with just a minor financial burden for Macville, which will be equally compensated with the profits that the company will earn over time. The resources that Macville needs to expand its operations across Australia can only be provided by this partnership as the company has already been doing business across all states of Australia. Although this partnership has the most benefit prospects out of all the tenders that Macville received, but the risk of losing out on the other coffee sellers is quite high. To reduce this risk, Macville should focus on building relationship with all coffee sellers across Australia so as to have a network of partners that favor Macville as their preferred choice of selling coffee machines. With a national presence across various customer segments, Macville will now be able to move into other related businesses as well such as third party service provider, coffee beans business and retail segment (Eissa, Farhan & Dahlan, 2016).
Change management strategy for Macville
To effectively transition to the stage of strategic alliance, Macville needs to have a robust change management strategy at place, which covers all the aspects of business and touches upon all key stakeholders of the company. The approach needs to be holistic in order to be effective and enable the organization to align itself with the change. The forces of change that Macville is exposed to include nature of work, technology, economic and competition growth (Stark, 2015).
Goals of change
The main goal of the change is to align itself to the current business needs (consultant’s report) along with the strategic alliances that the company wishes to form with Java estate. Looking at the growth prospects of the industry in general, Macville should focus on introduction of energy efficient machines in the market before its competitors does. However, since the technology is in nascent stages, Macville shouldn’t invest heavily on this and should stick with the current model for majority of its operations. Other goals are to form an alliance with Java estate through competency/resource sharing, brand sharing as well as knowledge sharing between the organizations (Goetsch & Davis, 2014). The company also needs to focus on areas such as Sydney where bulk of machines are sold annually so that it can access the core market of coffee machines in Australia. Resistance to change from employee side is a huge concern but can be dealt with using communication, participation from employees and active negotiation (Hamraz, Caldwell & Clarkson, P2012).
The key stakeholders that are affected by the change are customers, employees and suppliers. With all the changes that Macville is proposing to introduce in its arsenal, the overall value proposition to the end customers is going to increase; the effect to the retail customers will be less than compared to the direct clients of the company (Haslam, 2014). However, with the introduction of efficient machines, the overall costs will come down and so will the switching costs. Employees are the other set of stakeholders, which will be affected to a larger extent (Kuipers et al., 2014). Since working with another company involves integration issues, employees need to be communicated and educated regarding the urgency and benefits that they will gain from this alliance. Any failure to understand the alliance by the employee can produce failure for both the companies. Also since Macville is planning on shifting to Sydney, employees will face issues in moving from on place to another. Huge attrition can be expected and Macville needs to give right motivation/ incentives and at the same time prepare for talent contingency. Suppliers are also going to be affected by the change as Java Estate might be a rival of some suppliers in one way or the other leading to conflict of interests between parties. Also to move from current machines to efficient ones, Macville also needs to develop newer relationships with suppliers which will take time/effort and might not be taken very positively by other suppliers (Kool & van Dierendonck 2012).
The changes that have been identified are directly related to the overall goal of the company- growth. Macville has been a prominent name in the coffee industry but with the entry of global corporations, the company is forced to shift to alternative means so as to remain profitable of a larger segment. Also the environmental (external) changes have forced Macville to pursue strategic alliance in order to remain agile in its business. So in essence, the changes are in line with the company’s long-term agenda of being profitable and ever growing.
Cost benefit analysis
Strategic alliance with Java estate has to analyze in terms of the costs involved in the project and the possible benefits that the partnership will deliver to Macville. In order to effectively move from the current stage to the joint venture stage, Macville needs to focus on the four areas of changes- increase the resources at hand (F), greater capacity of operation (F), increase the expertise (MF) and greater access to market (MF). To increase the resources at hand the company needs to manage talent, which is its biggest resource. The change may leave Macville with lesser employees so it needs to plan for talent contingency. Other resources such as establishment and distribution network n Sydney can be established using loan as well as equity as an option. A total of $5 million is the cost associated with the change.
To increase the capacity of peratons of the company, it should increase the existing ties with the suppliers or increase the number of suppliers to diversify its interests, which will cost around $1 million to the company. To increase the expertise of the employees, effective training can be used at all levels. Employee engagement can prove out to be beneficial for the current business at hand and will cost somewhere around $.5 million to the company. Finally to have greater access to market, company should develop networks and infrastructure which will cost the company around $.5 million.
The main risks involved in this joint venture are the risk of losing out on other suppliers, integration risk and outstanding money. It has been observed that a strong partnership with one company reduces ties with another, which could be the case with Macville. To mitigate this risk, Macville should develop strong ties with existing suppliers through increased focus on business prospects for both the parties. Using techniques such as education, communication as well as negotiation can easily mitigate the issue of integration. Outstanding amount that the company will be left with is a financial issue which can be taken care of by maintaining adequate working capital in the company at all levels (McCarthy & Eastman, 2013).
Change management project plan
Lewin’s three-step change model including unfreezing, movement and refreezing can be using in this situation. First the organization needs to unfreeze the organization by removing protocols and opening communication (Ghimire , & Pimbert, 2013). Following this stage comes stage of movement where the required changes will be made at the organizational level in Macville. When the desired changes are made, Macville needs to free the changes again by phasing out the changes that it has made in the organization (Merrell & Watson, 2012).
High value desired
Efficient machines, low cost, robust after sales service
Communication, education, sense of urgency, coercion and negotiation
Conflict of interests
Focus on development of stronger ties
The main audience of the plan will be the stakeholders involved with main focus on employees and suppliers (Rigby & Bilodeau, 2015). The message to be communicated is the change that is being implemented along with the benefits of the change. This communication needs to be done at the time of formalization of change in the organization (Senge, 2014). The best way to communicate the message is through email (for supplier) and in person meetings with employees. The directors of every department will be the person responsible for the communication (Sjogren & Fagerstrom 2015, December).
The main participants of the education plan will be employees at all level where they will be imparted skills related to increasing technical competencies. Training will occur immediately post alliance formation and will be delivered via classroom method. Managers of each department will be responsible for the education of employees (Turner, 2014).
Measurement and reporting strategy
The key parameter used for reporting success is revenue growth over a financial year. The reporting will occur at all levels and the managers responsible will be the VPs of every department. The managers below every VP will produce the report in consultation with their sub ordinates. The success of the company will be reported via reports and will be produced annually. For internal communication, quarterly reports can also be produced in the company. Every employee will receive a copy of the report so as to gauge the position of the company in the period mentioned (Quinn, 2012).
The main tools that the company needs are enterprise resource planning (ERP) software, MIS software up gradation and Customer relationship management (CRM) software (Quintana, 2012).
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