Globalization and Organizational Changes
Discuss About The Services It Offers More Thanseven Thousand Clients?
Globalization and technological advancement has seen businesses look for the beststrategies to ensure that they are competitive within the market. In every entity,organizational changes become at some point pertinent and necessaryfor the continuity andgrowth of the organization; developing the best strategies and organizational behaviorpractices is critical for ensuring that there is sustainability and growth within the entity.
Global competition, technology changes, consumer behavior and needs, political climates, emerging markets, economic factors and much more are all elements of importance that leadto develop and apply new strategies and are determinant in the adaptation of the organization.
Different business analysis tools are available and can be used to asses an organizationsuch as PESTLE, SWOT, Porter’s five force, balanced scorecard, The McKinsey 7-S Framework andmany more.Some of these tools emphasize on the internal environment of the organization, some other on theexternal environment and some cover both environments.
In my assessment I will be conducting all SWOT, PESTLE, Porter 5 and 7-S analysis to analyze the company and market and the different aspects that are critical in ensuring that XYZ is sustainable in the market,I will also accordingly establish a balanced scorecard to outline the main elements and make a proper assessment and model of change.
XYZ is a Lebanese local company that has been involved in the development and implementing of ERP systems solutions in the last 30years. The company implements integrated management solutions of core business processes and mediated software and technology for clients in a dynamic growing market.
The company’s major line of ERP business solutions cover financials, logistics, retail, manufacturing, construction, project management, procurement, job costing, media booking and creative production solution. These are the main services that the company offers and have been selected among a large pool of its ERP services.
The company has its headquarters located in Lebanon, but it has also set up two satellite offices in Dubai and Saudi Arabia. The offices support its vast network of clients and services across the United Arab Emirates, Oman, Kuwait, Qatar,Jordan, Egypt, Tunisia Morocco, KSA and Lebanon clients. The company has more than 7000 customers spread across the Middle East and North Africa with huge potential of the markets only opening up for more opportunities and customers in the region. XYZ looks to establish itself as a major brand and increase its market share in the region.
Different Business Analysis Tools for Organizational Assessment
XYZ is a medium size, family owned, companythat operates within the Middle-East and North African markets. XYZ has more than 80 dedicated consultants that are all specialized in systems design and solution integration that are important in developing the company. (Organizational Chart Appendix a)
The huge potential in the region has however, started attracting medium size competitors from the West as well as the East, along with the existing major big players (SAP/Oracle/Microsoft Dynamics).This is increasingly leading to stiff competition in the markets; It is therefore, critical to ensure that the company develops the best strategic actions and methods to position itself in the market and develop better sustainable methods of change.
As the company looks to develop and grow, it is imperative to ensure that the proper systems have been developed. An analysis of internal and external factors determining growth and development of the company is therefore critical.
XYZ looks to establish itself as a major brand and increase its market share in the region.
The SWOT analysis is a tool used for planning services, that helps build the strategy of the organization and allows to analyse its actual strengths and weaknesses and define the threats and opportunities that it may faces whether internally or externally.
- Full fledge ERP solutions adaptable to many lines of industries.
- Cost effective and competitive line of prices.
- Flexibility and customization of the services provided.
- Competent and cohesive workforce that understands the underlying goals and objectives of the company. The entity has seventy members within its workforce that are highly productive.
- The company also has a strong market share in the region and prides itself in having more than 7000 clients in the region.
- The company can be considered as a major player in the Lebanese market.
- High profit in the Lebanese market
- Low brand awareness in the regional market.
- XYZ ERP solutions are Client Server basedonly whereas competition has alsoWeb based and orCloud basedERP solution, which means less flexibility and additional IT costs for customers.
- Less competitive product if considering the new trend in technology.
- Lack of diversification of the different services that are offered under the ERP system.
- Weakness of the Dubai and KSA branch in terms of sustainability and profit.
- Lack of strong presence in all the countries where the company has clients across the Middle East. The company does not have offices or people spread through the different countries in the larger region.
- Lack of motivation and /or orientation of a big number of staff.
- Autocratic leadership system where most, if not all, decisions lies in the hands of the CEO.
- Family business following a one-man leadership point of view.
- No unity in command and direction. Employees are receiving orders at the same time from the CEO and the head of departments.
- Overloaded operational capacity leading to lower efficiency.
- Lack of financial resources that is slowing the recruitment process for acquiring new talents and development of new technologies.
- The huge potential in the region with growing businesses and entities needing the ERP services offered by XYZ.
- Widening the number of ERP services offered in the market thereby increasing the company’s portfolio.
- Add web or cloud based technology which will allow growing business with the actual clients and pitching for new ones.
- Target more dynamically and cover more countries in the MENA region.
- XYZ ERP solutions are complant and tested with the VAT tax that will be implemented in the GCC countries as of January 2018.
- Increase in the level of competition in the region.
- Dynamic changes in technology in the market.
- The clients’ employeesand managers are resistant to development and change in their ERPsystems therefore representing barriers for XYZ new business and sales.
- Critical economic situation in the MENA region due to the drop of oil and gas prices.
- Critical political situations in all MENA countries; namely Qatar and GCC being in conflict, Syria and IRAK
The SWOT analysis reveals that XYZ offers a strong and competitive service that is flexible and can be customized upon customer’s needs.
The company is in a great position within the Lebanese market especially due to its market share and brand. Branding and market share are important facets in every market since these aspects ensure that the company can be competitive against any other brand names from abroad.
The positioning of the company in the Gulf regionhowever is weak. The company needs to take advantage of the opportunities available in the market especially through increasing its services portfolio and reaching out to more potential clients throughout the MENA region. The numbers of services that are offered by the company also lack the proper level of diversification in the market and new technologies are to be considered.
Motivation of employees and engaging the members of the team is a critical aspect that the company needs to address sincethe company is mainly driven by these employees who offer the services that are critical to the entity. Increasing the number of qualified and committed employees within the different regions is as well critical. Also the leadership style needs to be addressed and reviewed.
XYZ Company and Its Services Offered
The threat of changes in technology in ERP systems has also been identified as a major threat to the company. Therefore, developing proper and dynamic technologies while updating the individual systems is fundamental for gaining market advantage
The PESTEL model is used to analyse and identify the external macro environment thatmight affect the organization. The PESTEL model includes various factors in the externalenvironment: The Political, Ecological, Socio-Cultural, Technological, marketing and Legal fields. It studies every element and defines the potential impact of each of them on the organization.
Being aware of these factors and elements allows the company to face any changes, stay on top of the competition and be ready to react quickly. It can also serve as ? checklist to verify that the SWOT analysishas not forgotten any important factor
XYZ has already navigated through most of the political hurdles that are present in the Middle-East and North African countries. The company is a Middle East based entity meaning that it is a homegrown entity within the region and cannot be curtailed by most of the bureaucratic government and political models that are present in the region. The political atmosphere in theregion is somewhat stabilized in some of the countries like Lebanon, KSA, Egypt, and UAE but still unstable in IRAQ, Syria and QATAR.
However, as opposed to companies from other regions and new entrants in the market, XYZ may deem the political atmosphere and indicators as positively impacting the market and industry to its advantage. While concentrating for the time being on the stable markets, the other MENA countries will represent huge emerging markets when the political situation stabilize and reconstruction time comes.
The economy of the Middle East is one of the first growing economies in the world with the UAE reporting increased growth since the turn of the 21st century. The region is rich in oil making it one of the most productive regions and bar the political conditions that curtail growth it has a vibrant economy (Minefield, 2012). However, the drop in oil and gas prices and some critical political issues in the region have slowed down the growth index.
XYZ needs to take advantage of the general economic growth to tap into more markets and expand its service portfolio (Minefield, 2012).
The region is placed perfectly towards being a strong economic hub. The company needs to capitalize on the changing political atmosphere and expand to other countries within the region. The opening up of the markets will give, on the longer run, impetus to the company to engage in other entities all over the world and look to expand globally and not only regionally.
The social factors are also favorable for XYZ Company with the employees mostly coming from the region. However, to ensure that there is diversity and tap into the growing market of other markets from abroad, the company needs to integrate and engage in diversity models especially in the workforce (Robbins et al, 2010).
The technological aspects of XYZ are the most important attributes of the entity.
ERP systems are run through developing and running the most efficient models that are meant to widen the business and create a stronger and more potent system (Ludwig and Frazier, 2012).
Since the company engages in different technological processes, it is therefore fundamental to integrate the proper technology in its systems and services.
The dynamism of technology combined with the high level of competition across the industries, offers a major challenge to XYZ Company and is a major precept towards creating a better and more structured model (Ludwig and Frazier, 2012).
The business is within the legal structures that have been set across the region. However, the company needs to keep up to date with the legal models and issues that may arise from different systems and approach that are critical for change within the company.
The Porter’s Five Forces are important in decision making and working out a proper model towards changing and developing the best organizational methods.
The Company is facing a threat of new entry from companies looking to enter the market especially from the West. Technological companies are looking to enter the market and start selling similar and newer ERP services to the clients or the region as a whole (Ludwig and Frazier, 2012). It is one of the major threats that the company can be facing and the entity needs to be ready to face this threat.
The buyers have considerable bargaining power that is gained from the fact that the services offered by the entity are tailored for individual entities. The entities have the sole power to engage the company and elicit their services through the market with their clients not needing their sole service in the market (Ludwig and The supplier power does not represent a challenge to the company. The high level of competition among the suppliers means that the entity has the freedom to engage the services of different companies/individuals and as a result the supplier bargaining power is not a major challenge to the entity.s
The threat of substitutes represents a challenge to the growth and sustainability of the entity. ERP systems can be substituted to other companies and the competition is increasing within the region which means that the company could be facing major problems.
The level of competition within the market is a major problem to the company with increasing brands entering the market. Although the brand of XYZ as well as the market share of the company is in its favor, the company still faces major challenges from new brands entering the market. The level of competition has increased exponentially as newer brands and models have been introduced in the market. It is important for the company to ensure that it reinvents itself and develops a dynamic model towards growth within the region.
The seven’s model is a very useful framework that was developed to assess and analyze changes in the internal models that are used within the organization. The McKinsey’s 7s framework incorporates skills, strategy, style, staff, systems, structure and the shared values (later becoming superordinate goals) implemented within the entity.
These are the fundamental attributes that the management needs to assess and monitor in every organization. In an entity, it is critical to improve performance as well as align the department goals to the larger organization. It is also helpful in taking strategic action to proactively deal with different market conditions that are present in the market.
- Lackofa clear definedstrategy spread amongst the company.
- Inexistence of long term goals.
- Immediate Profit and market growth are the main targets without the existence of a clear path to achieve them.
- Growth and expansion plans are not defined.
- Headquarters are based in Beirut.A major division is established in Dubai and a business unit /representative office is set in KSA.
- Many resources are shared between the different offices.
- Centralized authority and no autonomy for the different offices.
- Lack of delegation and responsibility at head of department’s level and no decision making power.
- Nonexistence of Marketing and strategic planning departments.
- No sales force; the project managers being the direct contact with the clients.
- Lack of accountability and measurement throughout the different levels of the organization.
- No proper reporting systems.
- Existence of Productivity measuring tool.
- Good financial control system.
- Lack of synergy and coordination between departments.
- Overlap and Duplication of functions in some departments.
- Centralized control where most of the decisions are taken mostly by the CEO.
- Autocratic leadership style.
- Execution role only for the heads of departments.
- Individually competitive environment whereas team efforts are needed.
- Overloaded and unmotivated staff working sometimes under incoherent orders.
- Qualified employees who fulfill the requirements of their job descriptions.
- The company is however understaffed especially in terms of program developers which can develop the web based ERP services.
- Family style business environment which is enjoyable but not translated into concrete motivational factors and benefits.
- Qualified staffwith the required skills.
- Lack of training mainly for the developers of ERP services for the web.
- Inexistence of company purpose.
- Profit-driven company with no higher objective.
- Family business; no identification of internal staff needs and the human factor.
As per the SWOT analysis that has been conducted, it can be critically analyzed that as the company is already in a good position due to the higher authorities can make the market share as well as the brand image of the company. However, certain changes can be implemented by them wherein positioning of the company can be changed and can open new outlets in the areas where they can attract customers and gain competitive advantage as well. The other change is proper diversification of products and services in the competitive market as to create proper customer base and can be a competition to the other markets in the competitive industry.
Another critical aspect is providing proper motivation to the employees in the organization, as they are the ones who help in achieving goals and success for the entire organization by providing them both monetary as well as non-monetary benefits as this will increase the morale of the employees in the organization. The advancement in technologies has to be adopted by the respective company as it helps in analyzing the advancement in the competitive market and it will help them in gaining competitive market.
Porter’s Five Forces
According to the PESTLE analysis, on the political front there will be no such change required in the company as they are politically strong in nature and have good competitive advantage as well upon other companies. The economic factors has to be revised by the company as this will help in reaching the larger areas of the entire market and attract customers with proper advancement in technology and expand globally as well (Gupta and Mishra 2016).
The social factors are desirable in nature for the company, however in order to improve the diversity of the company it is essential for the company to improve the market rate with proper usage of technology and resources and it will be helpful in generating success in the organization as well. Proper structured models has to be created by them as this will help in gaining advantage in the industry and create better models in the market as well. Lastly, there are presently some issues related to the legal structure of the company.
Therefore, it can be recommended that proper strategies need to be implemented by the company, as it will help in understanding the threats that are faced by the respective company from the new entrants in the market. The services related to ERP have to be analyzed in such a way that it will help in understanding the needs of the company and solve such issues accordingly. There are threats from substitutes that are challenging in nature for the company, as this will have impact on the brand image of the company. Lastly, the rivalry among the competitors is a challenge for the company as this will have huge impact on the growth of the company and affect the reputation of the company as well. Due to increase in the brands in the market, proper dynamic model has to be implemented by the company, as this will help in gaining advantage in the company.
As per the system is concerned of the company, proper reporting system is essential, as this helps in measuring the productivity of the organization and it will lead to generate coordination among the employees and the customers in the competitive market. This will help in correcting and reducing the overlapping and duplication of the functions in the different departments in the organization.
The skills that are required in the management team, proper training is essential as it will help in gaining success and it will help in developing ERP services that are essential to be successful in the competitive market as well. Lastly, the shared values are essential to be properly maintained by the company, as this will help in achieving objectives of the company and proper identification of the internal staffs are essential as this will help in providing benefit to the clients and the employees in the competitive market.
Conclusion and Recommendations
It is a quantifiable measure that is derived from the unique strategy of organization. The measures that are selected for the scorecard helps in representing tool that are used in communication with the employees as well as the outside stakeholders that will help in achieving strategic aims and objectives.
Generally, a strategic as well as management tool helps the entire organization to work according to the mandates and helps in improving the external and internal process of communication. It helps in monitoring the performance against the goals related to the strategies.
The model of Balanced Scorecard helps in understanding the four perspectives:
- Learning as well as growth wherein it helps the staff and the other employees in the organization about the mission and strategic goals of the company. XYZ Company is investing in service to the customers and development of goods and services.
The particular perspective helps in retaining the staff and it will benefit the organization as well. The recommendations are providing proper development along with connecting the growth as well as development with the appraisal of annual performance.
- Business Process is through which the managers in the organization can get a close look at the processes of the organization that can provide safety to the stakeholders and satisfy their wants as well.
- Customers satisfaction is essential in nature as it helps in understanding the conflicts of the customers faced by them and this will help them in enhancing the issues by evaluating their needs and providing proper feedback as well.
- Financial data is essential in the business, as this will help in managing the data that is required in order to provide sustainability in the organization.
Figure 1: Organizational structure
(Source: Created by author)
From the above diagram of the organizational structure, it can be analyzed that the enterprise structure of ERP in the company is working smoothly and this helps in understanding the client base as well as location of the storage of the organization (Frankenberger, Weiblen and Gassmann 2014). Proper focus has to be given to the sales department of the organization wherein legal entity along with accounting unit is not functioning properly and proper infrastructure is required as to generate proper profit in the company. The distribution of goods and services is not properly done by the company and is reducing the sales of the company. The sales have to be properly generated by the company as to negotiate the conditions of sale in the market as well (Baden-Fuller and Mangematin 2013).
The distribution channels have to be properly set up by the company, as this will help in gaining competitive advantage. The distribution channels need to reach the different customers and the materials are delivered on time with implementation of ERP strategies. The company needs to distribute the goods and services to the customers in such a way that it helps the customer in understanding the ERP related strategies and can trade without any issue faced by them as well.
However, there is little lack in the strategies that are to be applied by the company and it has to be rectified properly as well. The sales division of the company needs to represent product line properly as this will help in emphasizing on the services that has to be provided by them as to generate sales in the company. The current organization structure of the company is organized in nature but there are changes that are required in order to make the ERP systems more flexible in nature (Pedersen, Gwozdz and Hvass 2016).
There are few requirements needed that will help in making the system easier and it will remove the complexity from the organization structure as well. The functions of sales department along with other issues that are faced by the company presently. There are certain changes required in the sales division along with the factory that will help in making the tasks easier in the departments and it will boost the morale of the employees as well (E. Dobbs 2014).
Figure 2: New organizational structure
(Source: Created by author)
Proper rectifications are required in the sales and the factory division wherein the tasks has to be delegated thoroughly as this will help in improving the tasks performed by the employees in the organization and it will help in gaining competitive advantage as well (Rothaermel 2015). The sales area of SAP is designed in such a manner that it will help in combining the sales along with the distribution channels of the organization and it will help in purpose of reporting of the ideas related to the design of the sales division in the company (Ho 2014). Proper business development segment has to be added in the organization as to analyze the sales and marketing of the companies. The company needs to implement strategies related to marketing as it will help in proper procurement of the actions that has to be taken as well.
Therefore, it can be concluded that proper analysis is required in the organization as to analyze the micro and macro environment analysis and it will help in controlling the activities of the departments as well. The integration links has to be properly analyzed, as this will help in gaining competitive advantage and understanding the loopholes of the company as well. Lastly, proper strategies and system has to be maintained as this will help in understanding the requirements that can help in designing proper structure of the organization with implementation of various designs and strategies as well.
Baden-Fuller, C. and Mangematin, V., 2013. Business models: A challenging agenda. Strategic Organization, 11(4), pp.418-427.
Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
Frankenberger, K., Weiblen, T. and Gassmann, O., 2014. The antecedents of open business models: an exploratory study of incumbent firms. R&D Management, 44(2), pp.management.
Gupta, G. and Mishra, R.P., 2016. A SWOT analysis of reliability centered maintenance framework. Journal of Quality in Maintenance Engineering, 22(2), pp.130-145.
Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), pp.6478-6492.
Pedersen, E.R.G., Gwozdz, W. and Hvass, K.K., 2016. Exploring the relationship between business model innovation, corporate sustainability, and organisational values within the fashion industry. Journal of Business Ethics, pp.1-18.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education
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