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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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Identification of management of change situation and the context.

Agoda is a type of company that requires making changes on its products and business strategies according to the customer expectations and external environment. This study will examine what were the triggering events for opting the change and what strategies the company developed and implemented in order to going through the transitioning process.

The need for change in an organization is often created by external and internal factors, where external ones encompass competition, technology and legislation, and internal factors are the resources, attitudes of workers and strategy adopted by the organisation. Due to the rapid growth and expansion of its business, the company has gone through many internal and external changes since it has been in existence.

The company has faced a lot of external changes such as an acquisition by Priceline.com in 2007 and the disruptive business model like Airbnb providing an online marketplace and hospitality service for people to lease or rent short-term non-hotel accommodation, including apartments and hostel beds. Since then, there has been continued disruption and growing competition in the distribution landscape (Eyefortravel.com, 2018).

The company also changed its advertising strategy to put more emphasis on brand advertising – meaning TV commercials – to enhance its direct relationships with its customers, presumably reducing growth in its online advertising spend (Skift, 2018). This is mainly due to the rise of the competitive landscape, especially Google, including Google Hotels. A big expansion for Google in travel is foreseen a major threat in Online Travel Agency (OTA) industry as a whole, which market share could be stolen, while every organisation must be ready to change and adapt to retain customer base.

Moreover, Agoda faced challenges in high turnover rate. Due to one of the fastest growing companies in the industry, agility caused several gaps in people management whilst clear organisational structure, culture enhancement and inspiring leaders were demanded. A lot of negative reviews have been shared publicly: poor performance review process, little transparency, lack of collaboration among different teams, micromanagement across all teams and poor change management initiatives (Glassdoor.com, 2018).

In this study, the major organisational change that is going to be analysed and discussed is related to the company's global expansion, particularly to the US, as aligned with the company's goal. There were a lot of people movements within the organisation. Ideally, top performers were given wide range of opportunities to obtain increased pays, promotions or relocation to the US. In the meanwhile, the company took approach to restructure several teams by getting new hires onboard to take on leadership roles. The management put pressure on several Heads of business verticals by setting key personal improvements while some received packages to leave the company.

Background to the organization, its product/service, location, employment, business strategy and goals being pursued.

Agoda is one of the world's largest online hotel and accommodation booking platforms.  Established in 2005, the start-up quickly expanded in Asia and was acquired in 2007 by Booking Holdings Inc. – the world's largest seller of rooms online.

Headquartered in Singapore, Agoda has 53 offices in major cities across over 30 countries with more than 3,700 staff worldwide. It provides a network of over 2 million accommodation properties, including apartments, villas, homes, and hotels backed by over 15 million real traveler reviews. Known for discounted hotels, Agoda was a pioneer in non-hotel accommodation, offering villas and homes throughout the region from the very start.

Its web and mobile products provide a first-rate reservation service in 38 languages that uniquely combines local knowledge and local connections to provide the best deals for business and leisure travelers.

In every department – from engineering to customer experience – Agoda provides an environment rich with creativity, collaboration, and experimentation, and the tools to work faster and smarter. At Agoda, people work hard, have fun, and are dedicated to making things great.

Analysis and discussion of change management, structure, culture, and leadership issues.

One of the key focuses of Agoda is to make the brand become known internationally. Although several major market players are out there, the company has been trying to increase its customer base in the markets where it has low presence such as China, Japan, European countries and the US. One of its strategies is to grow through partnerships.

In recent years, the company opened new offices in the US while the management strategically selected people within the organization, including Head of Partner Marketing and other senior managers, to relocate and grow the business there. Partner Marketing department was affected greatly from the loss of leaders while the management hired new persons to replace such positions.

This type of change is planned and more radical, and typically led in a top-down manner. It involves a re-imagining of an organisation's vision, processes and way of working whilst significant buy-in from all levels of staff required. It is more of a realignment, rather than a big transformation which can take longer time or requires a fundamental reappraisal of the central assumptions and beliefs.

To classify the type of change, the most suitable approach for change in this case is ‘Reconstruction' change type which is a change undertaken to realign the way in which the organisation operates with many initiatives implemented simultaneously (Balogun and Hope Hailey, 2008). It involves rapid changes but without fundamentally changing the culture.

Figure 1: Type of Change

Extent of change

Transformation Realignment

Speed of change Incremental Evolution Adaptation

Big Bang Revolution Reconstruction

According to Greiner's Life Cycle Model, the company expansion aligns with the forth stage ‘Elaboration'. It is where growth continues but increasingly lead to problems of control that create a need for ever more dispersed systems that rely not only on central direction, but also on collaboration (Greiner, 1972).

Figure 2: Greiner's Life Cycle Model

To provide an overview of the change problems that require the business to tackle with, it is useful to analyse using Lewin's Force-Field Model, splitting factors into forces for and against the change (Hayes, 2014). In this case, the forces for change mainly include a business sense of growing. On the other hand, the obstacles to change (restraining forces) involve fear of the unknown from introduction of new leaders and working practices, sense of insecurity, loss of friends, inertia, lack of resources, sunk costs, and rigidity of structure.

Figure 3: Lewin's Force Field Model

In order for the change to happen the status quo, the actions to add conditions favourable to the change or to reduce those restraining forces is needed. However, Agoda failed to achieve as poor communication, lack of necessary skills from the new leaders, insufficient training and development offered for the employees, and inadequate rewards to incentivize people.

Here, the successful change could be achieved by management responsible for the change to explain the need for change, provide transparent information, offer support and training, involve people in the process, and build employee relations. These would increase trust and sense of security.

According to Lewin's 3 Step Model, the process of change could be improved through three crucial stages: unfreezing, changing behaviour and refreezing (Hayes, 2014).

Managers at Agoda can motivate workforce in the “unfreezing” stage by making them aware of a need to change being planned in context of organisation and mutual benefits. It is to unlock the existing level of behavior. Training to the staff members can make them more adept at accepting the transformational stage.

In the “changing” phase, it is to move to a new level. Agoda can initiate practical steps with regards to the strategic plan for change management process. It can be achieved by developing strong relationships and offering rewards.

"Refreezing" phase allows Agoda to refreeze behavior at this new level and to make recently innovated change a part of their strategy. As a result, employees do not return to the previously used practices of the organisation (Robbins and Coulter, 2008).

Stakeholder Analysis

As discussed earlier, the resistance of some stakeholders was a major problem for Agoda in this case. The process described by Grundy (1998) is being used to identify the power and commitment of stakeholders and to ensure maximum support for the change.

In this case, most of the people who were affected by and/or affected the outcome of the proposed change were the middle management level. This study will be discussed those in the Marketing department at that time.

Diverse political issues related to the power and attitude of people appeared. There were people who expressed support for the change but cannot be relied on because their supportive efforts are weakened by other people in the department whereas some individuals had considerable influence over others due to the change of new leaders. There were groups who appeared to support the proposal in public but worked against it behind the scenes while others misunderstood the proposed change but would be willing to support if they were better informed.

The stakeholder grid demonstrates where the group of stakeholders located based on the degree of power and attitude (Hayes, 2014). In this case, we are going to discuss only the issue in the Marketing department. It appeared that most of the people who either had high or low power had negative attitude towards the change. There were Market Director and Heads of Business Verticals who had high power and negative influence on other people in the organization, which made the situation really difficult to solve.

Winning the support of these powerful blockers could result highly favourable since they have the power to influence the outcome. Listening to their reasons of opposition and indicating a willingness to at least consider revising the change plan could be an effective way of changing powerful blockers into sponsors. However, Agoda did not emphasize on such communication process. Only a few people got involved in the change process. There were no inspiring vision that would highlight mutual benefits and encourage independent groups of stakeholders to align themselves with the purpose of the change. Consequently, Agoda failed to shift a group of blockers to become supporters.

Figure 4: Stakeholder Grid

Recommendations into change management for Agoda

Change is sensitive, yet inevitable. The emphasis should not be to avoid change, but to bring about a smooth transition towards the new change by ensuring communications among the relevant stakeholders in order to have them get the best of involvement during the process of change. To implement organisational change, organisational structure, culture and leadership are key to success. It is also important to see whether the change would make the best alignment with the company's goals.

Firstly, Agoda should be aware of the key problem and understand its root cause in order to come up with change management strategic plan. Agoda may hire a change manager to specifically focus on change management issues, and design and adopt a change management  programme in order to deal with uncertain events and potential blockers. One of the most crucial things is to train senior management to have certain skills in leading and management people to effectively carrying through the transitioning process.

More brief expression of strategic plans that Agoda can adopt for better change management is discussed as follows.

Redesign organisational structure. Agoda initially started with just a small group of people and has been growing more than 100% year-on-year. The start-up work environment and structure therefore need to be revisited frequently. The company structure at Agoda seems to be in hierarchy while the nature of how people work tends to be more of flat. It allows people to be able to reach out to upper management. However, obscure structure caused delayed process due to an unclear decision power as well as ownership whilst sometimes involving too many people.

Therefore, redesigning a new organizational structure would ease the work productivity as ownership and responsibilities could be clearly distinguished. It is to define clear hierarchy, scope of work, rules and regulations, and to standardize the work and procedures. This will not only decrease overlaps, but also make it easier to bring out the best from each team and increased collaborations.

Reduce employee defiance. Negative thinking is easier to develop and has greater impact than positive one (Peeters and Czapinski, 1990). People can easily spot the bad sides of things. In particular, people usually resist the change at the workplace. However, it is important for Agoda to develop strategies to weaken such resistance among employees.

Agoda faced a variety of issues including lack of information, inaccurate information, and groups losing out. The methods for managing resistance shall be considered in order to choose the right strategies for the change. The approach to effectively implement the change management programme is discussed below (Kotter and Schelesinger, 1979).

 

Involving potential blockers in designing and implementing the change, and communicating the desired changes and the reasons for them could solve the issues when there was a lack of information or inaccurate information about the change's implications, but could be time-consuming as lots of people involved. On the other hand, offering incentives for making changes could also avoid some conflicts and resistance. This approach is an easy way to defuse major power to resist, but costs much especially when big packages involved.

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