The case is focused on major issues faced by Templeton Hardware while operating newly acquired businesses. The given case is a best example of poor organizational management. Templeton hardware was willing to expand its business in new products and services hence they acquired The Great Outdoors and Lodeston Landscapes.
Decisions for acquiring two companies were taken by the company in hurry and all the implementation and changes took place very quickly. The company changed the name of both the acquired companies from the great outdoors to Templeton Caravans and from Lodeston Landscapes to Templeton landscape solutions. Templeton planned to operate all the business from existing hardware store locations. All The landscape solutions outlets were brought together with hardware stores. The great outdoor showrooms also brought under or adjacent to hardware stores.
Action Impact on Organizational Members:
The Action taken by management impacted the organizational members in great way. All three businesses companies were operating required different job skills and knowledge skills. Company was not able to retain employees working earlier in these organizations hence they brought new staff on board which was not knowledgeable and experienced. Templeton was new in the businesses and existing employee base was not having knowledge about product and services associated with caravans and landscaping. A study conducted by Ashwin W. Joshi and Sanjay Sharma on customer knowledge development and success of new product provides insight that product knowledge plays a very important role in success of product. If employees are not aware of the product, how they can convince the customers, it will be difficult for them to sell the products. It was also noticed that employees were not motivated enough and trained to effectively deal with customers. The reasons could be less knowledge about the product, high work pressure or working environment. Eugene Sivadas and F. Robert Dwyer in a study mentioned that many companies acquire well known business to speed up their growth process. It also reduces the risk associated with launching a completely new product in the market. Around 70 percent of such deals fail because companies fail to manage innovation required for the product, proper cooperation between the departments and functional areas. Innovation term referred to advancement of product technically or any variation in product-service. In the given case the reason for failure of the products were the employees who never attended customers properly, there were no innovation done to the product and after sales services were also poor. Over all the performance of employees was declining which impacted the sales and profit.
Issues Arises While Implementation of newly acquired products:
The major challenges faced by the organization were insufficient knowledge, lack of desired skills of employees and managers. The change management was not done properly and decision of acquisition was taken and implemented very fast.
We will do an analysis to see the strengths, weaknesses, opportunities and threats organization was having at the time of acquiring two new different businesses:
the organization is dealing in hardware business for several years and is well-known renowned name in providing hardware solutions
one of the biggest hardware retail chain in Australia
strong financial base
huge customer base
no knowledge of other businesses
Acquired businesses required technical skills and knowledge
Poor employee management
Poor change management
Employees training, learning acquisition and motivation
Poor customer management
Templeton can expand its business by integrating various process that company is outsourcing presently
Apart from hardware retailing company can look forward to hardware manufacturing
There is huge demand for computer maintenance services as all the organizations give their annual maintenance contract and majority of individuals are keeping computer devices.
Retailing of those items which required same dealing and processes like electronics, home appliances and mobile etc.
Hardware manufacturer and retailers existing in the market are biggest threat
Dissatisfied customers are also a threat to the organization. They spread bad word of mouth which create negative image of the company and de-motivate potential customers
Problem faced by Templeton in implementing the process:
The primary problem faced by Templeton was poor employee and customer management.
The secondary problem faced by Templeton was lack of proper strategy and change management.
All the implementation was done in a short span of time hence company was not able to form a good skilled employee base for new businesses.
All the existing locations were changed and clubbed with hardware outlet locations. Each business required its own setup and ambiance to inspire customer for purchase. The hardware shopping is need driven with low cost involvement hence customers spend very less time in hardware outlet. Customer does not look for special ambience and treatment in hardware store. On the other hand buying a caravan is a costly affair and customer want a special luxury treatment. Dealing with a hardware customer is altogether different from dealing a caravan customer. Templeton employees were unable to handle caravan customers.
Employees were not trained to deal with high end customers which was reflected in comments provided by the customers.
Innovation in products and services was also missing. Customer did not find caravan manufactured by Templeton very attractive and worth for huge sum they are going to spend. Services provided by the company were also dull.
Approach to the locations was also not good. High end customers look for a VIP treatment. They did not find landscaping of the location very delightful.
Templeton did not take landscaping business very seriously hence all the new contracts were managed very poorly. New contract were further outsourced to other companies. Templeton act as middle man in landscaping contracts.
Positive and Negative Aspects of the Processes:
Positive Aspects of the Processes- It is very difficult for any organization to develop a new product. As mentioned by Jinhong Xie, X. Michael Song and Anne Stringfellow, Development of new product required huge investment in research & Development, Manufacturing and marketing of product. Establishing various processes and inter department coordination is a cumbersome task. The risk associated with new product development is very high as it is unclear that product will be accepted by the customer or not. Acquiring existing business reduce the risk associated with new product. The product is already accepted by the customer and company is well established brand name with a customer base. Instead of developing a new product, it is good to acquire existing business. Acquisition helps in extending market and taps the opportunity.
I feel that the decision to acquire an existing business was the right decision but selection of business was not wisely and implementation was also not managed rightly.
Negative Aspects of the Process: Customers were having high expectation because the company was well known in hardware market and holding high perceived value. Templeton was unable to match customer expectation due to its poor sales service, no innovation in technology and poor approach to the locations. The company was also unsuccessful in retaining the image and employees of acquired companies. The major negative aspects of the processes were poor employee and customer management. No training was provided to employees on new product and services. Customer was also not treated well while selling the products. Another drawback was ignoring landscaping business. No office or premises was setup to operate landscaping business. The contracts were outsourced to another firm as and when received. No sales pitch was made and no efforts were made for landscaping solutions. Lodestone Landscapes was a renowned company in Australia and New Zealand. Templeton was unable to manage the old well established image of the company due to poor management.
I personally feel that the lack of vision of top management and unplanned decisions are responsible for failure of acquisitions. Before acquisition a proper strategy need to be developed based on facts, research data and information. Company should not made acquisition in the businesses in which company is having no expertise and knowledge. A wrong decision cost a huge sum in acquiring new business, technology, resources and infrastructure.
Solution to the Problems:
Organizational tools that could be used for successful implementation of strategy are as follow:
Change Management -
It is very important for any organization to manage the change very effectively and in planned manner. In Templeton the changes were driven by senior management as they thought that it will be helpful in raising more revenue for the organization. Change should be done without creating any disturbance to the employees . In the given case the changes brought in the organization were strategic and operational. Company changes its strategy and operation by acquiring new businesses. The changes made by senior management were not planned and done without any proper evaluation. Changes can be very effective and fruitful if planned properly. Four things need to be defined very clearly for successful change;
Strategy – before bringing changes it is very important to define clear strategy like what all changes will be made and how they will be made. Measurement to analyze the success rate of strategy also needs to be established.
Authority – it is very important to define responsibility at each and every level. Managers need to understand their responsibility, tasks and targets. Distribution of authority also helps in taking decision at different levels which increase accountability of various people involve in decision making. Overall authority distribution helps in bringing motivation and commitment.
Leadership – leadership plays an important role in polishing skills of employees. As per a research study; an effective leadership helps not only in motivating employees but also gives them ideas to bring innovation at work place.
Performance – performance at all level need to be measure effectively. Performance evaluation plays important role in motivating employees. If employee is performing well and his evaluation is done wrongly, the employee will be de motivated. There should be a proper reward system in place to recognize and appreciate star performer.
J. Kotter has defined eight steps for bringing change in organization in his book leading change. Templeton should follow these steps for bringing changes in their organization;
Step 1 – Develop Urgency: Analyze existing opportunities and check their feasibility. Discuss the opportunities with people to motivate them for performing tasks. In the given case proper analysis and feasibility of potential opportunities was not done. People were also not involved in the decision making.
Step 2 – Formation of Committed Team: selection of people who are capable enough to perform the changes and good team player. Templeton did not pay attention towards retaining the experienced staff and forming a good team of knowledgably people .
Step 3 – Formation of Change Vision: creation of a change vision to direct the strategy in a proper direction. A vision helps employees to work in a direction to achieve the vision. Templeton should have formed a vision to support accelerate their changes and driving employees.
Step 4 – Communication of Vision – clear communication of vision to the employees and behavior changes required from them to support the vision established by the organization. All the training and guidance should be provided to employees for developing behavioral changes.
Step 5 – Empowering Actions: management should remove any obstacle coming in the way. A proper feedback and performance appraisal mechanism should be established to recognize the work done by employees. Management should provide support and authority to leaders.
Step 6 – Short-term Gals: a long term goal will take time to achieve hence it is beneficial to create short term goals to measure the performance of employees. Time to time work recognition helps in motivating the employees and increase their commitment.
Step 7 - Continuous Encouragement: it important not to let vision down. Promotion and appreciation of capable managers should be done. New concepts, projects and change agent should be introduced to maintain the excitement level of people.
Step 8 – Bring Change in Culture: establish a relationship between new change and company success. It is also very important to keep developing strong leadership.
Above mentioned eight steps are very helpful in achieving desired change in the organization. As we can see that people play a very important role in making any change possible whereas in the given case Templeton did not pay any attention towards developing leaders and teams. In absence of proper strategy and employee involvement the change done by the company was a failure.
Organization can use various change tools to make their process more effective. For example
Training and Learning: employees should provide a proper training on the skills required to perform new tasks. A right kind of training provides knowledge to the people on how they have to deal with different situations and how they will perform their responsibilities.
Charting of Roles and Responsibilities: a clear demarcation of individual responsibilities helps in measuring the performance of employees. It also helps in avoiding task repetition and any confusion related with task execution.
Feedback and Future Planning: time to time feedback from the employees helps in making process better. Feedback can be collected with the help of questionnaire or by face to face interview. Feedback is important in understanding the problems and concerns of the employee. Feedback provides a chance to management to understand their employees on the other hand employee also feel that he is an important part of organization. It helps in developing a sense of belongings in the employee which further help in motivating employee.
Templeton was unable in bringing change successfully and the major reason behind that were lack of proper strategy, poor employee and customer management. Employees play an important role in implementing any idea in the organization hence their involvement and commitment is required at each level for successful implementation. Without employee involvement organization can not achieve its targets. In case of Templeton the decision was taken by senior management without involving any managers or leaders even no employee were involved during implementation. Company was unable to access the training and learning needs of individuals which resulted in failure of organization. For brining changes above mentioned steps and tools can be very helpful as they provide description of tasks need to be performed step by step task.
The case can be a good learning and example for organizations that are planning to bring any change in their organization. After discussing the case we can say that no task should be performed without proper planning and strategy. Decision taken in hurry can cause a huge damage to the organizations. Another learning from the case is that, it is people who formed organization hence their involvement and commitment is required at each level. If employees are happy and satisfied they will do their best to achieve the goals and targets.
Anderson, D. L. (2012). Organization Development: The Process of Leading Organizational Change. Washington DC: SAGE Publication.
Ashwin W. Joshi and Sanjay Sharma. (2004). Customer Knowledge Development: Antecedents and Impact on New Product Performance. The Journal of Marketing , 47-59.
Change Management. (n.d.). Retrieved March 13, 2012, from www.organizationalchangemanagement.net: http://organizationalchangemanagement.net
Change Management. (n.d.). Retrieved March 13, 2012, from www.businessballs.com: http://www.businessballs.com/changemanagement.htm
Danca, A. C. (n.d.). SWOT Analysis. Retrieved March 12, 2012, from www.stfrancis.edu: http://www.stfrancis.edu/content/ba/ghkickul/stuwebs/btopics/works/swot.htm
Dunphy, D., Griffiths, A. and Benn, S. (2007). Organizational change for corporate sustainability : A guide for leaders and change agents of the future. New York: Routledge.
enneth Kerber and Anthony F Buono. (2005). Rethinking Organizational Change : Reframing the Challenge of Change Management. Development , 23-38.
Eugene Sivadas and F. Robert Dwyer. (2000). An Examination of Organizational Factors Influencing New Product Success in Internal and Alliance-Based Processes. The Journal of Marketing , 31-49.
Jeroen P.J. de Jong and Deanne N. Den Hartog. (2007). How leaders influence employees' innovative behaviour. European Journal of Innovation Management , 41-64.
Jinhong Xie, X. Michael Song and Anne Stringfellow. (1998). Interfunctional Conflict, Conflict Resolution Styles, and New Product Success: A Four-Culture Comparison. Management Science , 192-206.
John P. Kotter and Dan S. Cohen. (2002). The heart of change: real-life stories of how people change their organizations. Boston: Harvard Business Press.
Kotter, J. (2011, December 7). Forbes. Retrieved March 13, 2012, from www.forbes.com: http://www.forbes.com/sites/johnkotter/2011/07/12/change-management-vs-change-leadership-whats-the-difference/
Kotter, J. (n.d.). Kotter International. Retrieved March 13, 2012, from www.kotterinternational.com: http://www.kotterinternational.com/kotterprinciples/changesteps
Kotter, J. P. (1996). Leading change. Boston: Harvard Business Press.
Shelton, L. M. (1988). Strategic business fits and corporate acquisition: Empirical evidence. Strategic Management Journal , 279-287.
Silberman, M. L. (2003). The consultant's big book of organization development tools. New York: McGraw-Hill Professional.
Srikant Datar, Richard Frankel and Mark Wolfson. (2001). Earnouts: The Effects of Adverse Selection and Agency Costs on Acquisition Techniques. JLEO , 201-238.
Therese F. Yaeger and Peter F. Sorensen. (2009). Strategic organization development: managing change for success. North Carolina: Information Age Publishing.
Thomas G. Cummings and Christopher G. Worley. (2008). Organization development & change. Mason: Cengage Learning.
Wm. E. Souder and Svenn Are Jenssen. (1999). Management Practices Influencing New Product Success and Failure in the United States and Scandinavia: A Cross-Cultural Comparative Study. Journal of Product Innovation Management , 183–203.