Managing Organisational Change at Foxconn’s Factories in Contemporary China

Topics: Management, Change management, Foxconn Pages: 14 (4620 words) Published: March 30, 2011
Managing organisational change at Foxconn’s factories in contemporary China
1. Introduction
Since China’s engagement to the global economy in the early 1980s, it has become the global manufacturing centre given its abundant supply of low-cost labours. International corporations have long taken advantages of this to have their goods produced or assembled in China, and they have been able to squeeze their costs and transform them into a lower product price for their potential customers. However, as the economic development and the workers’ perceptions toward lives have changed dramatically, these firms have faced severe issues with their corporate policies. The raise of employee salary has become a trend in China and has given these manufacturers tremendous pressures on their financial performances. One good example would be the Honda Motor Co. incident happened in May 2010. Continuing strikes took place at Honda’s assembly plants in Foshan and Zhongshan, complaining poor pays to the workers, and it has forced the company to raise its employee salaries by 10 to 30 percent (Shirouzu, Chao, and Dean, 2010). However, such issue is like a rolling snowball and is not likely to end. According to Lewis model, china has reached a turning point where shortage of labour force is driving up industrial wages and inflation as a result of China’s high economic growth (Thomson, 2006). The change in economic conditions and shrinking workforce in contemporary China are the signs to all the corporations which rely heavily on cheap Chinese labours that adaption of new business strategy, management style, and corporate structure is urgent. In 2010, a series of tragedies among workers at Foxconn in China has again proved the necessities to initiate fundamental changes in accordance to the new social and economical conditions in China. A total of 12 deaths and 2 suicide attempts pointed out severe issues of Foxconn’s policies and management style, and has triggered a number of nationwide protests against the company (Luk, 2010). Foxconn, the country’s largest contract manufacturer with 937000 employees in mainland China, has announced to take a series of initiatives to improve labour conditions, including a large-scale of wage increase, after a spate of employee suicides (Luk, 2010). This paper aims to examine Foxconn’s reactions to its worker suicides, approaches to change toward its China operations, as well as a review of relevant change management models. 2. Literature Review

Managing and adapting to change is an important task most organisations face daily in today’s world. Relocating the factory, salary increase with inflation, downsizing, new business strategies responding to current economic conditions, organisational restructure, and change of management are all good examples. There are two types of change: planned and unplanned ones (Mullins, 2006): the former is the result of careful consideration on what changes to be implemented to achieve the desirable goals, while the latter usually comes as surprises which has become more common nowadays. According to Nelson & Campbell (2006), an organisation has to be flexible, adaptive, and responsive to the competitive market to achieve success. Organisational management should be aware of changes and have the insight on responding spontaneously and quickly toward them. In order to sustain the business success, company leaders and managers should recognise the models and theories of change management and apply them in real practice. 2.1Forces & Triggers for Change

There are external and internal forces to organisational change (Palmer, 2009). Since a company will not perform well without adequate interaction to its external environment, its company structure and functioning always reflect its adaption to the nature of such environment. Supply of labour force, globalisation, new technology, and financial crisis are all the instances of external forces....

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