Strategies for Managing VUCA in Organizations
Discuss about the Working Capital Management Corporate Performance.
What makes us successful is that we have six organisational divisions within the company, each concentrating on specific production. For instance, energy is out most profitable division while capital is our largest division. Within the energy division, we still have three other subdivisions; energy services, oil and gas, and power and water. Other than the six divisions, we have global growth and operations division responsible for global sales and marketing of GE. Our managing strategy is merger and acquisition that means combining several companies to diversify operations and boost our revenues. Therefore, to act in the current VUCA world, one must combine emergent and deliberate approach in the most complimentary manner. The four primary approaches that I have managed to this is by building a solid foundation within the current volatile world, experimenting and making quick decisions to respond to uncertainties, collaborating with complexity in order to promote a self-organization, as well as ensuring that I draw an outline to act as a guideline in the ambiguous world.
Should organizations plan or not plan in the current unpredictable world?
Our organisational planning is composed of distinctive international divisions in each continent around the globe with each division’s staff operating autonomously and separate from the central office. Independent continental presidents and vice presidents that control subdivisions based on countries or a region, which makes it a very efficient structure for us because we are a huge company, head the division. Hence, planning has made it possible for us to set various objectives and determine the manner in which we could go ahead to accomplish them. We all need to understand that traditional planning approach does not work anymore. The change that has come with advancement in technology has changed how we conduct our business. Therefore, effective strategic planning plays a crucial role in preparing one come up with quick decisions in cases of sudden opportunities and challenges
Case study 1: Jeffrey Immelt
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Volatility In the 21st-century business environment, the prices of products and services fluctuate regularly due to the many market forces that affect them. For example, the fluctuations of fuel prices that impacted the energy sector of GE. |
Uncertainty In the 21st century, there is high business competition, the number of competitors is high, offering the same products and services to attract the same customers. What this means is that the customers now look for value in the products and services offered on the market. For large companies like GE which has operations in several countries, to read and predict the market in this era is quite complicated because each nation GE operates in has different cultural values, unique regulatory environments, and tariffs. |
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Complexity For large companies like GE which have operations in several countries, to read and predict the market in this era is quite complicated because each nation GE operates in has different and unique cultural values, unique regulatory environments, and tariffs which the organization has to cope with. |
Ambiguity Venturing into new emerging markets and launching new products out of your scope in the 21st-century is difficult because of the future unknowns. It is like experimenting the direction of the organization due to how ambiguous the market is. You cannot foresee what the future holds to plan your course well. |
Table 1: GE VUCA Analysis
Jeffrey Immelt is the former chief executive officer of General Electric Company. He took over as the CEO of General Electric in September 2001 and served for 16 years before retiring in July 2017. He was the 9th chairman of General Electric. During his tenure, Immelt overhauled the General Electric’s strategy, organizational culture, design structure of the company, and a lot of structural changes that rebuild General Electric’s globalization workforce and revenues.
Case Study 1: Jeffrey Immelt and GE
Jeffrey Immelt took General Electric at a time when the company was on a tough course and future uncertainties. He took over leadership a few days after an attack to the World Trade Center which cost General Electric millions of dollars as well as affecting the aviation business (General Electric, 2018). During his leadership, Immelt researched and realized that the company needed four strategies to manage to pull through the tough course. His policies were to make the company invest in innovation, product diversification, globalization, and customer-centred production. These strategies were to create General Electric more competitive on the market by inventing new products on the market that were satisfying the customer needs and demands and enhance organic growth (Pomerantz & Dusen, 2017). The strategies were also to help General Electric boost its revenues through new businesses and venturing into new markets in the world. Furthermore, the plan was to increase the presence of General Electric in markets outside the USA such as the developing countries around the world.
During his tenure, owed to these strategies, his focus was to change the direction of the company to major in producing high-quality products and services to meet the high demand of customers in the fast-growing markets in developing. The main characteristic of this plan was to enable General Electric to venture into new businesses but at the same time maintaining the existing ones. This would result in new business growth platforms developed by strategically investing into the fast-growing economic sectors.
To help him achieve the objectives of the strategies, Immelt decided to reshape the structure of the General Electric including its working culture (Baños-Caballero, García-Teruel, & Martínez-Solano, 2014). Immelt refurbished the business culture of General Electric to a business diversification culture whereby GE launched new businesses in healthcare, renewable energy, and technology (Ngoie, 2012). He also restructured the organizational structure of the company whereby he revamped the management model and introduced a new model in which the company’s business segments were subdivided into small interconnected units which operated independently to realize the goals and objectives of the General Electric.
Case study 2: James Quincey
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Volatility In the 21st-century business environment, the prices of products and services fluctuate regularly due to the many market forces affecting them. For instance, the fluctuations of energy prices affect production at Coca-Cola. |
Uncertainty High business competition on the market with competitors offering the same products as Coca-Cola. For example, Pepsi who also produce soft drinks like Coca-Cola. Therefore, strategic understanding of business changes in the 21st century is crucial for any company. |
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Complexity Coca-Cola is a large company that operates in several countries and business regions, therefore, to read and predicts the market in this era is quite complicated because each nation Coca-Cola operates in has different and unique cultural values, unique regulatory environments, and tariffs which the organization has to cope with. |
Ambiguity Market penetration and diversification in the 21st-century is tough because of the difficulty to predict the future. It is like experimenting the direction of the organization due to how ambiguous the market is. You cannot foresee what the future holds to plan your course well. |
Table 2: Coca-Cola VUCA Analysis
James Quincey is the president, CEO, and Director at The Coca-Cola Company. He is of British origin, joined the company in 1996, and worked in various positions until he assumed the office of the chief executive officer in May 2017 (Grantham, 2017).
Case Study 2: James Quincey and Coca-Cola
Soon after joining Coca-Cola on May 1st, 2017, Quincey announced that under his leadership specific changes were going to steer forward the next growth level. Quincey’s strategy after taking over was to focus on Coca Cola’s strategic actions for growth continuously. They were five; making disciplined growth and brand investments, streamlining and simplifying the company’s business, managing revenue and profits growth through the distinct market roles, enhance productivity and progressive improvement and focusing on the company’s core business model (Mokhov & Ryabukhin, 2018). To make these five strategic actions achievable he focused on the company growing talents every year while also bringing on board competent and result in oriented people to help achieve the goals of the strategies. His other agenda was to bring some freshness and rotation at Coca-Cola in a move to strike a balance between change and stability (Coca-Cola India, 2017). The last one was to streamline the operational structure so that it could be faster and more efficient.
It is evident under Quincey’s leadership that he developed the culture of Coca-Cola based on talent development and bringing in result oriented individuals competent enough to help the company achieve its goals (Coca-Cola India, 2017). In spite of these changes, he was also keen not to disrupt the stability and present culture of the company based on the seven core values; collaboration, leadership, quality, passion, diversity, accountability, and integrity (Coca-Cola India, 2017).
The most notable structural changes were the development of one Middle East, Europe and Africa group that combined the operations of Europe, Africa, and Asia groups. This decision was meant to align the activities of the business units to streamline with the company’s evolving bottling footprint in the regions whereby the number of business units was reduced to six (Coca-Cola India, 2017). Other structural changes that he introduced were restructuring Africa to have two new groups south and East Africa as one business unit and West Africa as the other to align with the newly formed bottler in Africa. Furthermore, two new business units were created from the merger of Russia, Southern, and Central Europe into Eastern Europe and Belarus and Ukraine into another business unit, which aligned bottlers in those regions (Coca-Cola India, 2017).
References
Baños-Caballero, S., García-Teruel, P. J., & Martínez-Solano, P. (2014) Working capital management, corporate performance, and financial constraints. Journal of Business Research, 67(3), 332-338. doi:10.1016/j.jbusres.2013.01.016
Coca-Cola India. (2017, May 26). President James Quincey explains the international leadership changes at Coca-Cola. Coca-Cola Journey [New Delhi]. Retrieved from https://www.coca-colaindia.com/point-of-view/president-james-quincey-explains-the-international-leadership-changes#
General Electric management. (2018, March 5) Jeffrey R. Immelt [Online]. Available at https://www.ge.com/about-us/leadership/profiles/jeffrey-r-immelt [accessed on 20 May 2018]
Grantham, R. (2017). Coke’s new CEO: ‘The next stage has to be about growth’. The Atlanta Journal-Constitution [Online]. Available at https://www.myajc.com/business/coke-new-ceo-the-next-stage-has-about-growth/sTvsJI8ZZLJ9Rocn1pF9jJ/
Mokhov, V., & Ryabukhin, M. (2018). Sustainable development program «COCA-COLA HBC RUSSIA». Investment and innovation management journal, (4), 68-72. doi:10.14529/iimj170410
Ngoie, O. M. (2012, May 2) General Electric Company Case Study [Online]. Available at https://www.researchgate.net/publication/261097811_GENERAL_ELECTRIC_COMPANY_CASE_STUDY [accessed on 20 May 2018]
Pomerantz, D., & Dusen, M. V. (2017, August 1). CEO Transition: How Jeff Immelt Reinvented GE - GE Reports [Online]. Available at https://www.ge.com/reports/jeff-immelt-reinvented-ge/ [accessed on 20 May 2018]
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