Business Strategies for New Parent Company's

Walden International is a foreign conglomerate, which is known for being extremely financially well-run company with an emphasis on quarterly financial results. With Walden's ability to consolidate many common functions such as accounting, legal, engineering and customer service, Able Corporation will be able to transpose those saving to their bottom line.

This is a great opportunity for Able Corporation, with being able to streamline many corporate functions, Able Corporation will be able to focus on engineering, marketing and producing their tools. Managing strategically will enable Able Corporation to develop and maintain competitive advantages. In other words, set Able Corporation apart from its competitors. As you already know, their market share of the circular saws is a dominant at 40% and having very strong brand equity and loyalty among both professionals and consumers, we will need to take advantage of this to increase market share in other areas.

Using the industrial organization (I/O) view, we can keep our focus on external forces giving Able Corporation a competitive advantage over other companies and keeping that competitive advantage. It also focuses on keeping track of what is happening within the industry and developing products to meet those needs.

The biggest disadvantage that Able Corporation will have during this transition will be the company's ability to embrace change. Having been a family owned and operating business for many years, how will top management (family members) adjust to the change of someone else calling the shots and controlling so much of the company?

In order to obtain our long-term strategic business objective, in this case to increasingly show profits for each quarter, Able Corporation will need to development and maintain new market shares for its other products besides circular saws. Since cordless tools is the fastest growing market at 10% vs. the corded market at 3% growth per year, and since that is a new market, there is no brand loyalty at this time, with the saving from moving our daily business functions such as accounting to the Walden Headquarters, our savings can be reinvested in the development of cordless tools. Technology advances to increase battery life, and decrease battery size goes hand in hand with the increase in the annual growth rate of cordless tools. As technology picks up, so can the growth rate of this industry.

Able Corporation is an old family owned American Manufacturer of a full range of portable electric power tools (PEPT). Over the past couple of years, there has been virtually no investment in Able Corporation, which makes many of their products lines out and outdated and under the current operations, they are inefficient and costly. The long-term business strategic objective will be to reinvest our savings by having a parent company into new product development.

In order to minimize operating costs we will consider several different factors. First, how we are purchasing raw materials and look into a Just in Time inventory control system. We will also need to consider our work in process stations, and address any staffing issues that can occur from products either sitting around waiting on staffing or staffing waiting on additional parts and/or raw materials to keep the process going. A quality control system will need to be developed to minimize product waste due to malfunctions or product returns.

The development of new and improved product lines along with the raise in technology of the battery life, we will need to invest in research and development of these products. As the technology of power tools continues to grow and change, especially in the cordless power tool market, we can expect the market to be unstable and will need to grow and adapt as a corporation to these changes. Able Corporation must rapidly adept to these changes in the market. Another issue that Able Corporation must concern themselves with is the growth of large retailers that offer both industrial and consumer power tools to the masses. Having these large retailers with established distribution channels to keep the cost of professional power tools down to the everyday consumers will allow for the consumer market to grow into more professional type power tools. The industrial channels are declining at a rate of 5% per year where as the consumer channels are experiencing tremendous grown at a rate of 20% per year. In order to implement our strategic objectives we will need to be sure that company resources are set aside to include proper research and development and design for the cordless power tool market. Considering that the cordless power drill segment is the faster growing at a rate of 10% versus only a 3% growth rate for the corded power tool market. Furthermore, as the battery technology becomes more efficient and smaller we can continue to improve the design of our cordless power tools.

In order to maintain head count control, once the parent company, Walden International, we will need to reorganize the company organizational structure. There are three major factors that affect a company's organization structure; The Organization's Environment, Organization's Technology and Human Resources and the employment relationship. There are 5 different types of organization structures, Simple, functional, divisional, matrix and conglomerate.

With each type of organization structure it has its advantages and disadvantages. These disadvantages can affect the company's bottom line. We will need to put together an analysis of the best type of organization structure that is going to fit with the new parent company.

Another issue that we must address is the Able Corporation employee's resistance to change. In a company's organization, change for one department may not be good for change for another. A conflict between the two departments can slow down or even prevent change from occurring. Both organizational groups and individuals can resist change. People can tend to resist change because they feel uncertain or are insecure. Changes can also alter the group norm. When the norm has changed, resistance can occur while individual are adapting to the new norm. Lewin's Force-field Theory of Change is the theory that an organization's change occurs when forces for change strengthen, resistance to change lessens or both occur simultaneously. Managers must find a way to increase the forces for change to get an organization to change.

Managing Change

1. Unfreeze the organizations from its present state -------------->

2. Make the desired type of change------------->

3. Refreeze the organization in a new desired state

_______________________________

This is Lewin's Three-Step Change Process (George and Jones, 2005, figure 18.2)

_______________________________

By applying Lewin's three-step process to change, a manager can guide its employees though change in an organization. Lewin warns that resistance to change will quickly cause an organization and its members to revert to their old ways of doing things unless the organization actively takes steps to refreeze the organization with the changes in place. As the Director of Strategic Planning, you first must determine the future state of the company, and then implement those changes. We can take two approaches to this, Top-down change or bottom-up change. Whereas top-down starts with changes in mangers and bottom-up changes start with employees at low levels and gradually rises until it is felt throughout the organization. Change is easier to start from the bottom-up. To get the group to conform to a new group norm it is important to ensure the group members that the new group norms are functional for the organization. One way we can get them to conform is by rewarding the group members when they achieve the organization's goals. When members are rewarded for their performance, this then becomes a group goal and group norms are developed from it.

With Walden International being a foreign global company, our main focus will be on building market share, reinvestment into research and development and getting the family owned members to accept the new way of doing business.

References:

Coulter M.K., (2005) Strategic Management - In Action, Third Edition, Upper Saddle River, NJ: Pearson Education, Inc., Pearson Pretense Hall.

CTU, Phase 1 Business Strategy materials, http://www.campus.ctuonline.edu

George, J.M. & Jones, G.R. (2005). Understanding & Managing Organization Behavior - A Custom Edition. Upper Saddle River, NJ: Pearson Custom Publishing.

R.M. Kanter, The Change Masters: Innovation for Productivity in the American Corporation (New York: Simon & Schuster, 1984).

R.M. Kanter, When Giants Learn to Dance: Mastering the Challenges of Strategy (New York: Simon & Schuster, 1989).