Case Study: Stanley Australia
The push factor for Stanley’s reform is acute industry competition, as their products are losing market share due to diagnosed factors like better quality and cheaper tools from Asian countries. Stanley Australia is hence inevitably under pressure from US headquarter in terms of improving cost efficiency and regaining market share within a compact time framework. Given these inputs, decisions were made by US parent company to reorganize the Stanley presence in Australia. The strategic change was a transformational one, which laid more emphasis on marketing and planned the demise of uncompetitive manufacturing operations. In addition, the two independent companies located in Australia - Stanley Australia and Stanley Bostitch would be merged and managed as an integrated matrix. In the process, the full spectrum of change management was practiced. The US parent company created the vision of new Stanley Australia, as a competitive marketing hub with integrated process and structure between former Bostitch and Stanley Australia. Management on the ground was tasked with the implementation, targeting an ultimate goal of profitability. In the process, Stanley Australia’s management need to handle the layoff and merger impact to people, embrace a more dynamic corporate culture that fit into the competitive marketing orientation, and synchronize the process and structure of two Stanley subsidiaries to achieve operational efficiency. A combination of the two archetypes of change – Theory E based on economic value (hard approach), and Theory O based on organizational capability (soft approach) were adopted in various steps of implementation. The case study below is thus structured to examine in detail how E or O management style, the related organizational change strategies and their respective effectiveness were experienced in Stanley’s case. The analysis starts from organization level diagnosis, to group level restructure implementation in people, corporate culture, process and structure aspects, particularly with the complication of a merger process. The change process implemented at Stanley works
The Stanley US parent company had gone through three major steps in organizational change: Diagnosis & collecting information, designing interventions and evaluating interventions. The change implementation was largely assigned to Stanley Australia’s management. By realizing the fact that the Stanley’s products were losing market share, the US parent company started from analyzing the external competition landscape and gathering internal inputs. Specific to Stanley Australia, some cost inputs were sourced from the management on the ground. The US parent company adopted mainly an E change management style understandably from their value maximizing perspective. Conclusions were made for Stanley Australia to move to a more desirable state in order to improve profitability and market share. The organizational interventions involved cutting down uncompetitive manufacturing plants, upgrading marketing force and synchronizing Stanley Australia’s presence into one structure. Effectiveness of the change implementation was evaluated from profitability and revenue angle on the high level, while some matrix like industrial interruptions, unfair dismissal claims were also considered. It was expected from the structure transformation to yield quick financial achievements from cost efficiency, and also to embrace achievement oriented culture over time. Given Stanley’s urgency to react, such powerful guiding coalition from the top had its own merit. There were indeed many hopeful signs of a successful transition but the output was not all that satisfactory. As we could see from the following analysis, some undesirable costs incurred in the implementation process following the hard approach, to name a few, unscheduled downsizing in Stanley Australia due to extra profitability pressure, cultural dissonance as a result...
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