Hcm541 | Change Management | Assessment Answers

The company chosen is Badja Karya Technik (BKT). It’s a hardware, mechanical & engineering general trades company (take a look a this website: https://www.badjakarya.com/home/about)

Current problems:

The revenue of BKT decreasing 20% - 30% over past 4 years (from 40tons/month of PVC and copper pipe in 2015 to 28-32tons/month in 2018). 

In the past there were 8 big regular customers and 3 of them stopped purchasing the product from the BKT (losing market share).

There are some reasons:

• Due to the developments of technology, the customers can easily laise and find direct source from oversea and import the products by themselves so that they can save cost (they don’t have to go through a middle distributor like BKT). 
• Tax increases from 15% to 20% in last 4 years for hardware/ mechanical products.
• Cost (include labour cost and transportation cost also increased by 5%).
• Indonesian gorvernment policy is more open for global trading (this might need some proof of reading).

The Model given for dianogsis:

In this assignment, we just need to focus on INPUT (external factors) and TRANSFORMATION.

Introduction

Badga karya technik was founded in 1980 as a small organization dealing with general hard hardware and technical equipment, by now the organization is the sole mediator of Indonesian SICOMA mixtures. With time, the clients are developing such that they always need modern and efficient equipment, the company has been trying very much, utilizing every opportunity to ensure that their customers are always satisfied with their products and services. Badga is more committed to render reliable services to their clients. The company generally is engaged in mechanical equipment.

1. About Badga Karya Technic publicity.

Badja karya is one of the leading company in the world. There data goes through a comprehensive quality test that has over 3000 discrete confirmation for reliability and validity. It uses over 20,000 variety of sources that includes a panel of prime source researchers to modernize data more than five million times in a day. Badga Karya advertise their products globally to make sure that other firms do not complete it within the industry (Hosking & Anderson 2018)

Products

•    Fittings: double Nipple, cross tee, Dob/cap, knee, Water Mur, Verlop, concentric and eccentric reducers and many more.

•    Valves: ball valve, check valve, butterfly, globe valve, solenoid valve,

Hydrant valve, pressure valve, tuzen and many more.

•    Flanges slip, slip-on and joints, blind flanges.

•    Electronic motors- motor SEM, Moto Motology and Motot Yuam

•    Packaging- Normal rubber, insulating rubber, Tombo, HDPE sheet.

2. External and temporal environment for BKTECHNIC

External environment

• Weather: Weather is not control by any organization, during rainy or sunny seasons Badja Karya suffers because of storms, tomadoes or wildfires, this actually, affects the company either directly or indirectly. For instance, the influence of storms may affect the business capacity to open the business at any time.
• Laws: federal or local changes in Indonesia have affected the way Badja Karya operate their business. The company has experienced high tax by the country over the years. High taxation affects the prices of goods and services for the company.
• Temporal environment
• Location: Badja Karya technic is located in big equipment store Surabaya district, the strategic location has contributed to its success over the years.
• Trends: an increase in information technology have affected BKTECNIC, the way consumers use technology is driving the company to modifier the way the services are accessed by customers remotely. BKTECNIC have to use a lot of their resources to employ professional that would help to cope with the gradual change in information technology.
• Customer base- target customers test and preferences change slowly or suddenly over with time. Changes makeup of the of competitors of BKTECNIC have taken away their customers.
• Finance- BKTECNIC has been has been getting funds from financial institution. This has affected the company positively because they use the funds to gather for the daily activities for the business
• Sequences: the products from badger Karya distributes their product worldwide, the machinery are always applicable in every most of the modern activities.

Problems facing BKTECNIC

BKTECNIC revenue have decreased by 20 % - 30 % over the past for months from 40 tonnes per month of PVC and copper pipes in 2015 to 28-32 tonnes per month this year. This is because of the following reasons;

• Increase in the price of the fuel - the global government agreed to reduce the creation of gold by 16 % to help to minimize air pollution, the stakeholders of the government put their plan into action and definitely they achieve their goal, the production of coal was reduce by 34 %. Since Coal is the most important source of energy in most of the developing countries, its reduction has increased the cost of metal sanitising and power.
• Rise in the price of chemicals

Over the past few years there has been increase in the cost of fuel due to increase in VAT and other factors. This has cost the production of goods and services for BKTECNIC and it has forced them to increase the cost their goods. High cost of products have chased away regular customers in the company to lose its market share, for instance, over the past few years the company has lost about 6% of big customers.

• High cost of transport

It has driven the three major shifts in strategies of supply chain in the company, these shifts has not only affected financial performance and supply chain but also transport budget.

• Depreciation of RMB- low cost of products may be helpful to traders but, however it is not recommended for importation of crude products. For example, knowing one of the main goals of BKTECNIC like to acquire many customers globally, the value of the currency of the company’s host country is lower than that of the US dollar, this has limited the country to participation in the international trade.
• Pollution- BKTECNIC releases a lot of toxic gas into the environment.

Interrelationship between the problems faced by BKTECNIC

• Timely payments and billing- this issue have raised a lot of concern during the payments and invoicing, the customers’ needs to expanse out overheads to pack their cash flow. The high demand is the more than the company needs to leverage over suppliers, on the other hand the supplier needs to be paid as soon as possible, the suppliers may even offer discounts if payments is made immediately. Buyers blame suppliers and vice versa. This may be a result of pure communication media in the company (Berry, et al.2018).
• Delivery and shipments- this has become  appoint of concern for the BKTECNIC and its customers, their customers for the first few years has been complaining about the delay, the company on the other hand is blaming the customers for not notifying them in time about their orders.
• Accuracy and quality- the accuracy and quality is rarely met because the customer may order specific goods from a long distance and the goods follow a long distribution channel. The customer may at the end receive the order but he may unsatisfied. This would leads to several blames.
• Performance-performance needs to be monitored in order to achieve success, the company needs to make smart decisions to prevent risks.

Underlying Sources of a problem faced by BKTECNIC Company

Causes of hire prices – currently in BKTECNIC high prices of their goods are caused by legal order to reduce coal creation (Kaplan et al., 2001)

High transport cost is caused by increase in the cost of fuel and also the current shifts in in strategies

Legal factors such as reduction of coal creation is also affecting the operations of BKTECNIC, the company lacking money to organize seminars and workshops for the employees to adopt change, this because of few profits.

3. Suitable interventions for problems faced by BKTECNIC based on the diagnostics

The best method that would help to bring certain factors affecting the business into consideration is the use of PEST analysis

Political factors

BKTECNIC should address the issue of the international rules and find ways of dealing with any political issue that might affect the business. BKTECNIC should also consider the pending legislation, adhere to the government policies and regulations for example sticking to the quality required by the government

Economic factors

BKTECNIC should research on the current economical stands on the market. Knowing the income of the customers also is very important because it helps in deciding on how to price products and services. If the company take appropriate inquiry they would discover and understand what creates the best of tackling the problems

Use of technical professionals to resolve issues- experts should be brought in when there is a need for particular expertise to solve certain problems within the business unit. Johnston et al. (2018 pp.713-723) state that the use of knowledge faces issues such as experts are neglecting a local experience, mean insiders who are not willing to share their knowledge, rejection of a proposal to change by the insiders.

Social factors

Human process intervention focus on management of people practices and how it is used to integrate workers in the organization. Address issues like how to gain competitive advantage and retain customers (Liao & Ai 2018)

Development and training would help to how training of employees would bring positive change in the company, the employees and staff should be made aware of existing technology in the market (Farag, 2018). High management performance- BKTENIC should develop a bundle of management of people, motivate and educate staff and employees (Petrou, Demerouti & Schaufeli, 2018)

Action research it is believed that people learned by solving problems. Action research includes: observing actions, develop a hypothesis, take action, collect data and text the results based on the hypothesis (Olmedoey et al., 2018)

Technological factors

BKTECNIC should employ the use of modern technologies like the modern machineries and the application of business process re-engineering.

Modern technologies are fast and efficient and it would help the company to save time and also to reduce cost.

Business process re-engineering- this comprises of a radical redesign of crucial business processes to attain gradual improvements in the production of high quality goods and services (Garnett et al., 2018)

Other structural issues or technology shifts are associated with technology interventions it leads to change from rigidity to more cost-efficient and adaptive forms (Wee &Taylor 2018).

Strategic issues- there is a need to address the formulation and the implantation by use of strategic interventions.

4. Planning for change

Change in DKTECNIC needs to be the plan the will need to migrate from their current state to change to a new one (Carnall, 2018). The company would have to continue using the old manufacturing system and put in place roles that would be put in place for the system.

In order for BKTECNIC to realize a good management plan, it should first chose the people who would be in charge of the transition phase from the top management of BKTECNIC to the clients and also the society the second thing is to classify the plans for the company, this may involve re-ordering the plan in order to turn the companies goals into action. The third thing is to identify the requirements for the change such as resources required to enhance planning. The forth step is to schedule activities and time appropriately and create implementation plan. The final step is to experiment change and create feedback that shows change. (Farag 2018 pp.194-196).

Implementation of change

Schumacher et al. (2018 pp. 23-48) state that Implementation is the process of deploying and integrating technology capabilities in a business in a manner that is applicable and compatible with business. The following are issues that should be implemented by BKTECNIC in order for it to implement change.

BKTECNIC should provide explicit specification of change goals and quality of their products, the explicit goals should include availing spare parts for all the products, employ modern adaptive technology in production of their hardware equipment.

BKTECNIC must communicate effectively to all the stakeholders in the mechanical industry and the clients. The company would also need to change the management strategy, adopt management practices according to the plan purposes and avoid complex approaches when addressing vulnerable activities to reduce work risk (Wee & Taylor, 2018).

Evaluation of change implementation

After the implementation has been done BKTECNIC would need to evaluate the performance based on the implementation. It would be crucial for the company to evaluate the following steps (Hayes (2018)

• Criticize on prize- the company should ensure that the cost of materials is directly proportional to the cost of finished products, this would depend on the ratio of the materials in the previous value of the finished goods.
• Prizing of goods- evaluation of price of goods, to find the root cause of reduction in customer demand of goods and services. If the cost of goods are critically evaluated, the company would be able to determine their pricing is reasonable or not.
• Pre-order of raw materials assessment – evaluate whether information of cost is effective supplier, assessment of all available suppliers and choose the least expensive with high quality. Pre-ordering also will assist the company to avoid cases of low stock.

Recommendation

BKTECNIC needs to change their pricing criteria in several of its department, sales should be modified according to the price, marketing of products needs to be re-align, products differentiation needs to be implemented and also overall operations of the business systems should be looked at.

In order for the company to address the issue of high prices of their products which has caused the losing of customers, they should try all means possible to reduce the cost of the production which is the root cause of this.

According to my research I found how that the BKTECHNIC company is produce around  300 metric tons of harmful gas, the company should therefore encourage green engineering to advance sustainability and minimize production of harmful; gases such as carbon dioxide which affects the environment, the company should also encourage the use of efficient and renewable sources of energy (Oreg et al, 2018)

BKTECNIC should safeguard companies and customers data from cyber-attacks, to achieve this it should employ competent IT professionals to deal with the vulnerability issues.

References

Bryk, A., 2018. Charting Chicago school reform: Democratic localism as a lever for change.Routledge.

Berry, A., McCabe, C.S., Muir, S., and Walsh, N., 2018. Digital behavior change Interventions to facilitate physical activity in osteoarthritis: a systematic review. Physical Therapy Reviews, pp.1-10. Carnall, C., 2018. Managing change. Routledge.

Farag, S., Geus-Oei, L.F., Grunhagen, D., Reyners, A.K., Boonstra, P.A., Desar, I., Gelderblom, H. and Steeghs, N., 2018. Early Evaluation of Response Using 18F-FDG PET Influences Management in Gastrointestinal Stromal Tumor Patients Treated with Neoadjuvant Imatinib. Journal of nuclear medicine: official publication, Society of Nuclear Medicine, 59(2), pp.194-196.

Hankonen, N., Presseau, J., Rodrigues, A. and Sniehotta, F.F., 2018. Developing Behavior Change Interventions for Self-Management in Chronic Illness. European Psychologist.

Hayes, J., 2018. The theory and practice of change management.

Hosking, D.M., and Anderson, N., 2018. Organizational change and innovation: Psychological perspectives and practices in Europe. Routledge.

Johnston, M., Johnston, D., Wood, C.E., Hardeman, W., Francis, J. and Michie, S., 2018.

Communication of behavior change interventions: Can they be recognized from written descriptions?. Psychology & health, 33(6), pp.713-723.

Kaplan, R.S., Robert, N.P.D.K.S., Davenport, T.H., Kaplan, R.S. and Norton, D.P., 2001.

The strategy-focused organization: How balanced scorecard companies thrive in the new business environment. Harvard Business Press Krantz, J., 2018. Dilemmas of organizational change: A systems psychodynamic perspective. The systems psychodynamics of organizations (pp. 133-156). Routledge.

Liao, L. and Ai Lin Teo, E., 2018. Organizational Change Perspective on People Management in BIM Implementation in Building Projects. Journal of Management in Engineering, 34(3), p.04018008.

Olmedo, A., Sharif, V., and Milner?Gulland, E.J., 2018. Evaluating the design of behavior change interventions: a case study of rhino horn in Vietnam. Conservation Letters, 11(1), p.e12365.

Oreg, Shaul, Jean M. Bartunek, Gayoung Lee, and Boram Do. "An affect-based model of recipients’ responses to organizational change events." Academy of Management Review 43, no. 1 (2018): 65-86.

Petrou, P., Demerouti, E. and Schaufeli, W.B., 2018. Crafting the change: The role of employee job crafting behaviors for successful organizational change. Journal of Management, 44(5), pp.1766-1792.

Schumacher, P., Garstecki, T., Mislimshoeva, B., Morrison, J., Ibele, B., Lesk, C., Dzhumabaeva, S., Bulbulshoev, U. and Martin, S., 2018. Using the Open Standards-Based Framework for Planning and Implementing Ecosystem-Based Adaptation Projects in the High Mountainous Regions of Central Asia. In Theory and Practice of Climate Adaptation (pp. 23-48). Springer, Cham.

Wee, E.X. and Taylor, M.S., 2018. Attention to change: A multilevel theory on the process of new continuous organizational change. Journal of Applied Psychology, 103(1), p.1.