Analyzing The Downfall Of Bunnings Warehouse After Acquisition: Lessons Learned Essay.

Description You are required to write a Business Report. You are expected to engage in extensive research within the academic literature (peer reviewed journals) relevant to the task and evidence your argument from scholarly sources as well as other relevant reference material, including using organisational examples.

This assessment is designed to further develop critical appraisal of organisational issues and specifically analysing approaches to change management.

Bunnings Warehouse Acquisition

Purpose

Competitive power has been increasing in the business world with the enhancement of technology and competitor base. The businesses use new technologies to provide customer satisfaction concerning new products and services. However, it ensures that customer satisfaction is the topmost priority for the organizations these days. Satisfied users can become a loyal consumer for the firm that can enhance the organizational growth. However, sometimes, change in the organization can fail to provide the ultimate solution to the firm. This report would identify the actual reason behind the change effort of Bunnings Warehouse Company.

Background

The Bunnings Warehouse, being an international company, excels in household hardware chain. The company was founded by two brothers in Perth, Western Australia. Currently, the company has about 30,000 employees and 294 stores in the Australian sector that usually deals with the home timber and hardware aspects. This report will be focusing on the downfall of this company following their acquisition of Homebase in Australia. 

The company had been able to purchase the Homebase for merging and acquisition by January 2016 which had been dealing in the field of hardware retail having an operational base of about 250 stores in the entire UK. At the time of acquisition, it had been considered by Wesfarmers that such a change can bring about higher growth in the organization. However, as the year progressed, the change started to face downfall recording $89 million loss in the year 2017. By October 2017, the company suffered from the heavy losses facing 13.8% fall in the sales. The company also faced about $457 million loss in the first quarter of 2018. Furthermore, Woods (2018) reported by May 2018, the company had announced the same for House base chain that recorded about $406 million loss (p. 3). Hatch (2018) reported that all the 24 pilot Bunnings outlets and 240 Homebase stores as it stands would have to be sold to Hilco Capital (p. 1).

The change strategy that had been adopted by the company had been researched as effective and yet its adoption failed dramatically. Certainly, few aspects have been ignored by the company at large that initiated problems in the change process. Before initiating a change process, it is, however, mandatory to undertake efficient research considering all the facts and aspects (Burke, 2017). To understand the mistakes made by the organization, it is mandatory in the beginning to identify the change theory that is about to be adopted by the organization.

Problems with the Change Effort

Change theory and management

In the general sense, the change theory is meant to provide higher growth opportunity to the individual organizations only if the procedure has been utilized effectively (Huang, 2015, p. 360). In this particular theory, the organization makes the change after thorough consideration of all the factors that can have a drastic effect on the firm (Woodside, 2010, p.7). For that, the appropriate procedure of change management is needed to be followed so that pitfalls, if any, can be successfully bypassed. The management of change is the procedure that has been used by many successful companies to manage the employees’ acceptance of the particular change that has occurred within the organization (Gibbons, 2015).

The aspect of change management involves the set of techniques or tools that help the firm in enabling successful adoption of a particular change (Kasemsap, 2016, p. 152). For this, the firms utilize several theories for developmental purposes. In reality, various change models are available that can ensure a successful organizational change such as Lewin’s change theory or Lippitt’s Phases (Carnall, 2018, p. 42). However, it was observed that none of the change theories have been appropriately utilized by the Bunnings Warehouse at its fullest. 

Observed issue in the acquired change

It was observed that the organization had failed to consider the employees as an integral part of the change within the firm (Imran et al., 2017, p. 340). Furthermore, Hatch (2018) reported the change that occurred within the firm failed to rightly observe the market readings that misled the organization in making poor strategies that caused downfall for the firm (p. 2). This event thus becomes a significant learning example to follow for other or similar kind of organisations. These aspects resulted to an increase in the number of dissatisfied and complaining employees that heavily rejected the change that occurred within the enterprise. It further degraded the performance of the organization finally leading to customer dissatisfaction (Millar, Hind & Magala, 2012, p. 492).

The organization had clearly utilized a change model that was not really effective to create a provision for a better future (Hayes, 2018). However, appropriate utilization of change theory would have given the organizational members an opportunity to have higher growth. This section would analyze the change models in order to determine the exact problems that had occurred within the organization. The Lewin’s model will be compared with the present situation of the organization to identify the problem and recommend an appropriate solution.

Evaluation of Lewin's Change Model

Bunnings warehouse and Lewin’s model

In the Lewin’s change model, three preliminary steps are used in order to bring about successful change within the organization (Erwin & Garman, 2010, p. 42). The following picture would clarify the steps that have been used by the organizations that adopted this model as the basis of the change:

Source: Caldwell (2012)

The primary step that has been used by many organizations is regarded as unfreezing (Kaminski, 2011). In this stage, Bunnings Warehouse failed to instill an enhanced driving force within the organization by ignoring the mere existence and contribution of the employees at large. The organization also failed to make relevant research that could have saved them from using misleading market related information (Lindberg, 2014, p. 522).

In the second stage, the organization did take appropriate action by enabling the change, but the firm lagged behind due to incomplete information and growing number of dissatisfied employees. Since the workforce had been highly distracted and frustrated, they failed to bring about higher growth, leading to a poor quality of outcomes (Rao, 2014, p.75). The circumstances left the company with dissatisfied consumers that further alienated the employees.

During the last stage, the organizations are supposed to make the change permanent to ensure higher growth (?uriši?-Bojanovi?, 2016, p. 42). However, such was not the case with Bunnings Warehouse following the acquisition. The change started to fail after a year of its adoption that resulted in insurmountable difficulties. The permanent change could only have occurred when the firm had attained success out of its adoption. 

The actual problem

After comparing the organizational situation with the Lewin’s change theory model, it has been clarified that the organizational leaders did not have effective communication with the employees and hence could not involve them in the change process. Other than that, the organization was subjected to misleading information involving false data about the market that forced the firm towards a strategic failure.

The organization failed to create awareness about the change amongst its workforce by adopting the strategy without any prior information (Georgalis et al., 2015, p. 93). The alienation of the employees could have happened by constantly ignoring their individual problems. Furthermore, many employees were observed to have been trained very little about the new situation that led to dissatisfaction.

In this context, Nissan also faced problems of bankruptcy that had a sudden need to change. However, the company used the Lewin’s strategy of change by first conducting a detailed research of the market vis-à-vis the company’s position. This led to the formation of an appropriate strategy that was used by the company. Thereafter, Ghosn took appropriate charge of the company and commissioned a robust plan to ensure that the organizational members are made fully aware about the change. The organization also ensured that change had been followed effectively by taking regular feedback from the employees. Such efforts led the organization to have less resistance because of effective communication within the workforce (Amado & Amato, 2018, p. 65). 

Recommendations

Conclusion

It was observed that the organization Bunnings warehouse faced severe problems concerning the change failure that led to the sale of the entire firm along with the acquired Homebase. The major problem that was observed in the organization concerned with the aspects of employee alienation and misled information concerning the market growth and company status in Australia. It led the firm towards an ultimate downfall. After conducting appropriate research, it was clear that the organization faced problems in the absence of proper information and appropriate communication with the employees.

The following recommendations to the organization are aimed at ensuring that event of change is appropriately used by the firm in future:

• The organization should initiate proper research by employing professionals.
• Appropriate strategies should be used so that the change can occur successfully, with regard to the factor of employee engagement at large (Imran et al, 2017, p. 350).
• The organization should make sure that the employees are well trained and respected in the organization.
• Feedback session and proper monitoring of the processes should be adopted to ensure that the change process is being followed without any hindrances (Woodside, 2010, p. 7).
• The company should ensure that professional help is taken wherever and whenever necessary.
• In case of an adverse situation, the company should take immediate action by understanding the depth of the problem through a proper professional evaluation of the issues within the firm. 

References

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Burke, W. W. (2017). Organization change: Theory and practice. Sage Publications.

Caldwell, R. (2012). Systems thinking, organizational change and agency: A practice theory critique of Senge's learning organization. Journal of Change Management, 12(2), 145-164.

Carnall, C. (2018). Managing change (pp. 20-87). Routledge.

?uriši?-Bojanovi?, M. (2016). The interplay between cognitive styles and organisational change. Journal of East European Management Studies, 35-59.

Erwin, D. G., & Garman, A. N. (2010). Resistance to organizational change: linking research and practice. Leadership & Organization Development Journal, 31(1), 39-56.

Georgalis, J., Samaratunge, R., Kimberley, N., & Lu, Y. (2015). Change process characteristics and resistance to organisational change: The role of employee perceptions of justice. Australian Journal of Management, 40(1), 89-113.

Gibbons, P. (2015). The Science of Successful Organizational Change. United States of America: Paul Boger.

Hatch, P. (2018, May 25). In for $705m, out for £1: Wesfarmers abandons UK Bunnings disaster. Retrieved from The Sydney Morning Hearld: https://www.smh.com.au/business/companies/wesfarmers-decides-to-pull-out-of-uk-bunnings-disaster-20180525-p4zhg4.html

Hayes, J. (2018). The theory and practice of change management (5th ed.). United Kingdom: Palgrave.

Huang, R. T. (2015). Overcoming invisible obstacles in organizational learning: the moderating effect of employee resistance to change. Journal of Organizational Change Management, 28(3), 356-368.

Imran, M. K., Bilal, A. R., Aslam, U., & Rahman, U. U. (2017). Knowledge management strategy: an organizational change prospective. Journal of Enterprise Information Management, 30(2), 335-351.

Kaminski, J. (2011). Theory applied to informatics-Lewin’s change theory. Canadian Journal of Nursing Informatics, 6(1).

Kasemsap, K. (2016). The roles of organizational change management and resistance to change in the modern business world. In Organizational change management strategies in modern business (pp. 143-171). IGI Global.

Lindberg, E. (2014). Principals with and without performance measures means no change?. Journal of Organizational Change Management, 27(3), 520-531.

Millar, C., Hind, P., & Magala, S. (2012). Sustainability and the need for change: organisational change and transformational vision. Journal of Organizational Change Management, 25(4), 489-500.

Rao, M. (2014). Cultivating openness to change in multicultural organizations: Assessing the value of appreciative discourse. Organization Development Journal, 32(3), 75.

Wood, Z. (2018, March 30). Homebase is the most disastrous retail acquisition in the UK ever. Retrieved from The Guardian: https://www.theguardian.com/lifeandstyle/2018/mar/30/homebase-is-undoubtedly-the-most-disastrous-retail-acquisition-in-the-uk-ever

Woodside, A. G. (2010). Chapter 1 Introduction: Theory and practice of organizational culture, B2B relationships, and interfirm networks. In Organizational Culture, Business-to-Business Relationships, and Interfirm Networks (pp. 1-9). Emerald Group Publishing Limited.