Sunflower Incorporated is a large distribution company with over 5,000 employees and gross sales over $700 million in 1991. The company purchases and distributes salty snack foods and liquor to independent retail stores throughout the United States and Canada. Salty snack foods include corn chips, potato chips, cheese curls, tortilla chips, and peanuts.
The United States and Canada are divided into 22 regions, each with its own central warehouse, salespeople, finance department, and purchasing department.
The organization distributes national as well as local brands and packages some items under private labels. The head office encourages each regions to be autonomous because of local tastes and practices. The northeast United States, for example, consumes a greater percentage of Canadian whisky and American bourbon, while the West consumes more light liquors, such as vodka, gin, and rum. Snack foods in the Southwest are often seasoned to reflect Mexican tastes. Early in 1989, Sunflower began using a financial reporting system that compared sales, costs, and profits across regions.
Management was surprised to learn that profits varied widely. By 1990, the differences was so great that management decided some standardization was necessary. They believed that highly profitable regions were sometimes using lower-quality items, even seconds, to boost profit margins. The practice could hurt Sunflower’s image. Other regions were facing intense price competition in order to hold market share. National distributors were pushing hard to increase their market share.
Frito-Lay, Bordens, Nabisco, Procter & Gamble (Pringles), and Standard Brands (Planter’s peanuts) were pushing hard to increase market share by cutting prices and launching new products. As these problems accumulated, Mr. Steelman, president of Sunflower, decided to create a new position to monitor pricing and purchasing practices. Agnes Albanese was hired from the finance department of a competing organization. Her new title was director of pricing and purchasing, and she reported to the vice president of finance, Mr. Mobley.
Steelman and Mobley gave Albanese great freedom in organizing her job and encouraged her to establish whatever rules and procedures were necessary. She was also encouraged to gather information from each region. Each region was notified of her appoinment by an official memo sent to the regional managers. A copy of the memo was posted on each warehouse bulletin board. The announcement was also made in the company newspaper. After 3 weeks on the job, Albanese decided that pricing and purchasing decisions should be standardized across regions.
As a first step, she wanted the financial executive in each regions to notify her of any change in local prices of more than 3%. She also decided that all new contracts for local purchases of more than $5,000 should be cleared through her office. Albanese believed that the only way to standardize operations was for each region to notify the home office in advance of any change in prices or purchases. Albanese discussed the proposed policy with Mobley. He agreed, so they submitted a formal proposal to the president and board of directors, who approved the plan.
Sunflower was moving into the peak holiday season, so Albanese wanted to implement the new procedures right away. She decided to send an email to the financial and purchasing executives in each region notifying them of the new procedures. The change would be inserted in all policy and procedure manuals thorughout Sunflower within 4 months. Albanese showed a draft of the email to Mobley and invited his comments. Mobley said the Internet was an excellent idea but it was not sufficient. The regions handle hundreds of items and were used to decentralized decision making.
Mobley suggested that Albanese ought to visit the regions and discuss purchasing and pricing policies with the executives. Albanese refused, saying that the trips would be expensive and time-consuming. She had so many things to do at headquarters that a trip was impossible. Mobley also suggested waiting to implement the procedures until after the annual company meeting 3 months. Albanese said this would take too long because the procedures would not take effect until after the peak sales season. She believed the procedures were needed now. The email went out the next day.
During the next few days, replies came in from most of the regions. The executives were in agreement with the email and said they would be happy to cooperate. Eight weeks later, Albanese had not received notices from any regions about local price or purchase change. Other executives who had visited regional warehouses indicated to her that the regions were busy as usual. Regional executives seemed to be following usual procedures for that time of year. Albanese might analyze what the cause of the ineffective organizationl changes, and she might done differently.
Albanese should do something now. From the case above, we now that the cause of the ineffective organization changes are: first, response to changes programs were less enthusiastic. The regional executives was not give their opinions, critics, and participation in developing the programs. Their enthusiastic have showed just in the next few days from the email about the announcement the changes programs was sent. But, there was no enthusiastic in 2 months later. Seconds, the changes program may be agreed by regional executives but were perceived as not in top priority.
The regional offices might face the different various problems because of local market characteristics and practices, and they made the priority rank of the problems and other implementations differently. Third, the changes programs seemed to be not well planned. Because the programs built on the Albanese perceptions of the expensiveness and time-consume. Fourth, data gathering was not conducted properly. So, Albanese was not capture the “real problems” and how to solve it efficiently and instituzionalizing the interventions.
Fifth, data analysis was done inappropriately, no follow-up actions were taken to confirm the real problems. The actions wasn’t conducted by accurate data analysis. Sixth, no opportunity was given to regional executives to participate in the change programs. The email procedure was not give the regional executives to build a feedback, and report the implementation problems they faced. Seventh, limited time was avaible to implement the change. Eighth, socialization was done via email only indicated that dominance strategy was implemented, feeding back process was less effective.
So, the organization should take change actions building on the cause of the ineffective organizational changes. The Sunflower could be done : 1. Improving the planning process. Sunflower can use the general model of planned change for the Organizational Change and Develoment theory. The four activites in the planning process (entering and contracting, diagnosing, planning and implementing, and evaluating and institutionalizing) can be used to describe how to take changes in Sunflower. 2. Visiting regions to gather (and confirm) the data, offer the changes program, encourage participation, and build commitment.
The head office and regional office can discuss together how to plan the changes programs and how well implement it. The commitment for to implement the change continually should be increased. 3. Allocate reasonable time frame for socialization, transition process (process in the organizational change and development when the performance decrease because of the implementation of the changes programs before it result the more effective and increase in the performance), feeding back to improve the changes programs, and provide opportunities to regions executives to speak up, 4.
Implement the changes at the (more) appropriate time (not it busy season). It is important to diagnose the best moment for implementation of the changes programs. 5. Actively monitor the implementation and evaluate periodically and accurately. Feedback about intervention’s results provides information about whether the change should be continued, modified, or suspended.