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  • Published on: 14th September 2019
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The purpose of this case study involves the analysis of GreenHealth-Cranberry merger that took place in 2012 by applying different types of strategic analysis approaches. Strategic change management is one of the critical areas in business transformation. A critical analysis of the performance of a company has been used to make decisions meant to improve the performance of an organization. One of the approaches commonly employed in the corporate sector is the merger of related company to enhance the performance based on the scale of operation and profitability (Nguyen and Kleiner, 2003). The choice to combine the activities of two distinct businesses is critical and require a comprehensive analysis of the managerial dimensions of each company. The preparation for change is also essential because it defines the extent to which the new business will adjust to the anticipated structure. In the corporate sector, the period before, during, and after the merger are central to change management and business transformation (Nguyen and Kleiner, 2003; Johnson et al., 2013). Nevertheless, factors such as culture integration, structure and strategy combination, and management of externalities of the merger aftermath could be characterized by complex risks.

1.0 Introduction

GreenHealth is a UK-based company dealing with vitamins, minerals, and herbal products. The supplements dominated the major retail outlets in the country such as the Holland and Barrett and Boots retailers. The company also ventured into the American market where the products were introduced into the whole food market, which became the strongest market for the organization (GreenHealth-Cranberry Merger, n.d). Most of the managerial activities were centered in Reading, South of England, which was the headquarter of the company. Before the merger, GreenHealth had a staff of about 930 employees with over £237 million revenue. On the other hand, Cranberry was established in the North of England as a business specializing in natural and ethical beauty products. The company dominated the competitive market in the United Kingdom with a retailer-based market approach (GreenHealth-Cranberry Merger, n.d). About 60% of the revenue emanated from the sales within the UK market while the rest originated from the external and online sales. Similarly, Cranberry enjoyed international presence with the products being sold in over 50 countries. The two companies reached an agreement in January 2012 to combine their operations through a business merger. This excerpt is a critical evaluation of the business change process associated with the GreenHealth-Cranberry merger in 2012 (GreenHealth-Cranberry Merger, n.d).   

2.0 Case Study Analysis

2.1 Balogun and Hope Hailey's Change Kaleidoscope Model

The performance of the two organizations was significant but not sufficient; therefore, there was a need for an alternative approach to the market to encourage further growth and revenue increase. In the corporate sector, the level of business sustainability depends on the ability of a company to generate high revenue, reduce the cost of operation, and enhance the market coverage. The merger between GreenHealth and Cranberry was initiated by several factors based on the performance objectives of each organization. The use of Balogun and Hope Hailey's Change Kaleidoscope model is essential in presenting the factors that contributed to the merge of the two companies (Hailey and Balogun, 2002). The eight dimensions associated with the model, which include time, scope, preservation, diversity, capability, capacity, readiness for change, and power, were evident in the merger process and preparation between the two business ventures in January 2012. Moreover, worth pointing out is that some factors encouraged to the move to prefer a merger as opposed to individual entity existence (GreenHealth-Cranberry Merger, n.d).

One of the features of a corporate change process is the time factor in line with the current situation and future anticipations of the organization (Hailey and Balogun, 2002). The merger between Cranberry and GreenHealth was a strategic move, and the performance of the two organizations was satisfactory; however, there was a need to improve the level of competitiveness and revenue generated from the sale of the products within the local market as well as the international platforms. The focus of the two organizations was to achieve long-term goals in market control and growth (GreenHealth-Cranberry Merger, n.d). Therefore, the move to combine the operations of the two companies was encouraged by the need for the large scale of operation and market control, which is necessary for cost management and an increase in revenue. Carol Moss, Cranberry's CEO, pointed out that they were looking for a partner who will encourage expansion and growth of the business activities while investing in new opportunities for sustainable market control and competitiveness (GreenHealth-Cranberry Merger, n.d).   

On the other hand, the process of the merger had a significant change in the scope of operation associated with the two organizations. Since the organizations were dealing with line products, it was important to merge the process of production and distribution to reduce the cost of operation and increase revenue. Although most of the strategic approaches in the two organizations were to remain unchanged, several elements had to be transformed into the coordinated structure for the efficient management of the new company (GreenHealth-Cranberry Merger, n.d). One of the key changes that altered the structure of the two companies was the new management approach, which now included the heads of the four key divisions: UK, US, Europe, and New Market Development. The structure was different to GreenHealth's management that included a Director of Sales and Marketing and the Operations Director while Cranberry had a Human Resource Manager and three directors for UK, Europe, and the Rest of the World (GreenHealth-Cranberry Merger, n.d). According to Balogun and Hope Hailey's Change Kaleidoscope model, several factors in an organization could be preserved during strategic change implementation (Hailey and Balogun, 2002). The merger of GreenHealth and Cranberry involved the preservation of the market of operation as well as the nature of the product that each company was dealing with before the merger. Such measures allowed each business to benefit from the merger. However, the need for expansion and growth allowed the two businesses to venture into the market controlled by the other party. For example, GreenHealth's products could now enjoy the potential of the market where Cranberry had established a significant positioning. On the other hand, based on the diversity of the staff and organizational structure in line with corporate values, norms, and attitude, the two companies had to reorganize the business to include a comprehensive approach to the new arrangement of the organization (GreenHealth-Cranberry Merger, n.d).

The Balogun and Hope Hailey's Change Kaleidoscope model also ascertains the implication of capabilities and capacities of organizations when implementing a strategic corporate change (Hailey and Balogun, 2002). The objective of the merger was to enhance the performance of the companies; therefore, each organization was committed to changing both managerial approach and market coverage by seizing each opportunity in the international and local scope. The merger was set to be carried between 2011 and 2013, where the resources of each organization was to be integrated into the new business model. Furthermore, the level of readiness for change before the merger differed between the two businesses. For instance, GreenHealth employees were not ready for any business restructuring and were used to the old system associated with the organization (GreenHealth-Cranberry Merger, n.d). On the other hand, Cranberry employees were willing for any change based on the nature of the corporate culture that was established in the company that encouraged innovation and brainstorming; therefore, each employee was aware of the need for change. Moreover, worth pointing out is that the power to implement the change was within the top leadership of the two companies. The management had the capacity to decide on the new trends to be applied in the business (GreenHealth-Cranberry Merger, n.d). However, the inclusion of the employees was also central; therefore, the merger planning and execution of change depended on the focus of the leaders in line with the anticipated performance targets. The following figure presents an overview of the Balogun and Hope Hailey's Change Kaleidoscope associated with the merger.

2.2 Culture Web Model

The culture web paradigm identifies six key factors that define the nature of the adopted values and norms in the organization that enhances the operations of an organization. Johnson and Scholes Culture Web Model points out the essence of the cultural orientation of an organization on the success of the strategic implementation and interrelation with the external environment (Johnson, 2000; Johnson, 1992). The management of culture defines the extent to which an organization will benefit from the structure and strategy correlation. The model highlights how stories, rituals and routines, symbols, control systems, organizational structure, and power structure in the organization contribute to the culture web (Johnson, 2000). The factors were also evident in the particular companies, in the GreenHealth-Cranberry merger before and after the implementation of change.

Before the merger, GreenHealth was founded as a family business, and the staff composition adopted the same tendency. Such a move made the company remain rigid for change over an extended period. Most of the employees had worked in the organization for many years with their average age being 45 years old. The head of the Board of Management was the supreme leader of the organization with other key leaders being the directors of departments in the organization (GreenHealth-Cranberry Merger, n.d). The power of the organization was centralized upon the board member, and the employees had little contribution on the key decisions made. On the other hand, the key symbols associated with the company was the reverence of the chair of BOM, which was depicted by a segregated parking space and a granite plaque where the name of those who served at different periods had been engraved. Marcus Steele was another symbol of the organization known for his poor approach to managerial processes and strategies (GreenHealth-Cranberry Merger, n.d). Furthermore, the contribution of employees was not being recognized as the organization operated on the favor-based preference and most of the processes were bureaucratic.

On the other hand, before the merger, Cranberry was associated with a more advanced culture orientation. The structure of the organization was based on a decentralized power system where the employees also formed part of the decision process. The organization, therefore, had an efficient recruitment and retention strategy that allowed talented and ambitious employees to be hired. The organization had a culture of employees challenging the decisions that the leadership made through the regular forums, which is part of the unique stories characterizing the organization. The organization also used to run exercise classes every morning and adopted an open office plan for all departments. The open office structure was a striking symbol of the organization since the leadership undertook an interactive approach to the employee-management relationship (GreenHealth-Cranberry Merger, n.d). Moreover, the market approach and strategy included the customer centricity and technology incorporation that allowed the collection of data regarding the client\'s experience to improve the services and products.

In the GreenHealth-Cranberry merger, the Cranberry culture was more advanced than that of the latter; therefore, most of the factors were included in the structure of the new organization. Nevertheless, several factors had to change to accommodate the diversity that existed between the two companies. The first change that characterized the merger was the alteration of the management structure where the divisional structure of Cranberry and the functional structure of GreenHealth were combined to form an integrated management team based on divisions and shared functions (GreenHealth-Cranberry Merger, n.d). Furthermore, the new organization focused on the experience and commitment of the employees and therefore Cranberry's approach to human resource management and development was adopted. Although the top management was the supreme leadership of the organization, the level of employee engagement increased after the merger and GreenHealth staff started adjusting and appreciating the change. The new organization embraced a limited power distance that allowed the workers to contribute to the change management process to sustain the operation of the merged organization (GreenHealth-Cranberry Merger, n.d). The following table represent a comparison of the culture web for each organization before and for the new company after the merger.

2.3 Kotter's 8 Change Steps Model

The process of implementing a change in business is one of the critical concerns of the management and other stakeholders. Having a designed outline for executing the change is essential in ensuring a smooth transition in the organization. A keen analysis of the GreenHealth-Cranberry's merger based on the eight-step Kotter's Change Model ascertains the existence of effective implementations as well as several drawbacks (Kotter, 1995). The two organizations created the need for urgency by assessing the current opportunities for expansion. The first step of change process calls for a comprehensive analysis of the needs of the organization to establish the motivation. The two companies were associated with substantial operating revenue and income, but the need for further growth and expansion was evident. Although GreenHealth was static to change with no plans, Cranberry was constantly seeking avenues of expanding its operations. A powerful coalition is the second consideration of change process (GreenHealth-Cranberry Merger, n.d). The management at Cranberry saw a potential in combining the operations, resources, and market segmentations of the two companies to achieve cost reduction and high revenue. Therefore, through the powerful coalition between the two companies, the anticipated performance targets became easy to incorporate and achieve. The key considerations in the merger were the opportunities to be exploited and the advantages of economies of scale (GreenHealth-Cranberry Merger, n.d).

Additionally, the teams from each organization created a vision for change that included the future of the new organization based on the combined structure. Having a clear vision for change during business transformation is essential for effective results and sustainable operation under the new strategies. The GreenHealth-Cranberry merger considered the advantages of marketing the products through same retail outlets as well as manufacturing the products through line-based production (GreenHealth-Cranberry Merger, n.d). Once the new team had entered the agreement, it was essential for the vision to be communicated to the stakeholders. Such a move is critical in creating room for support from both the internal and external stakeholders. When the management made the announcement regarding the merger, it was now clear for employees what nature of changes will occur in their respective organizations. Worth pointing is that after the official communication of the proposed change, possible obstacles may arise from the internal and external environment associated with the organization. GreenHealth-Cranberry merger was linked to cultural barriers and employees adjusting to change especially from the GreenHealth staff (GreenHealth-Cranberry Merger, n.d). However, the new management team did not have a comprehensive and inclusive structure to manage cultural diversity.

Furthermore, the Kotter's 8-Step change model points the need for the creation of short-term gains and building on the modification of key factors as necessary before the strategy is embedded in the culture of the organization (Kotter, 1995). The first target of the merger was to reduce the cost of operation through integrated production. Low cost of exploitation was the baseline to guarantee market expansion into foreign economies. The increasing sales and market experience formed part of the considerations that the merger predicted to offer opportunities for product development (GreenHealth-Cranberry Merger, n.d). The merger also looked at the long-term implication of successful integration of the two companies. Such measures allowed the business to consider partnership that will offer synergistic advantages without bias. Therefore, with each dimension factored in the merger process, the new management was tasked with the integration of the culture diversity in the new company. The leadership did not have a comprehensive strategy to allow employees fit into the new structure and combined operability (GreenHealth-Cranberry Merger, n.d). However, Cranberry has modernized human resource practices than the practices at GreenHealth; therefore, most of the processes were adopted into the new organization such as employee participation, motivation, and engagement (GreenHealth-Cranberry Merger, n.d). The following figure shows the summary of the change process steps associated with the merger.

In conclusion, the process of change management in a business calls for strategic planning and implementation. The restructuring process should include a comprehensive analysis of the short-term and long-term needs. Furthermore, the assessment of the risks associated with the change that is to be implemented should be involved in the process of planning and strategize the methodology of executing the change. A balanced approach that includes the barriers, risks, and benefits guarantees sustainable performance and success.

In this case study, the use of Balogun and Hope Hailey's Change Kaledoeiscope model, showed how the management focused on the needs of the organization, which included market expansion, cost reduction, and increasing the revenue. The leadership organized the administration structure, market coverage, and sales operation effectively for the benefit of each party in the merger. On the other hand, the change process was excellent and incorporated the eight major steps of change implementation of Kotter's Change Model. Therefore, most of the undertaking associated with the merger followed the existing corporate models of strategic change management. However, the integration of culture was one of the areas that were not effectively executed based on the diversity that existed between the two organizations. Nevertheless, in using Johnson's Cultural Web model, since the nature of human resource approach and orientation in Cranberry was more advanced than the one that characterized Green Health, the former was incorporated into the new organization to a larger extent. Furthermore, based on the scale of operation and profitability (Nguyen and Kleiner, 2003), the GreenHealth-Cranberry merger has proven to be a success.

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