Organisational Change Management Volume 1

Section 7 Case Studies - Case Study 1 - (Spectacular Growth and Dynamic Change)

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Background to Organisation:

A large, integrated merchant which is the leading organisation in its industry

Head Office is at the largest branch

Started by 2 friends around 20 years ago; one has retired from active involvement in the management, while the other is managing director and has many outside interests

The organisation's activities involve retailing and wholesaling

The organisation's dominant activity is selling merchandise; it also provides value-added services, such as consultancy, and lends working capital to selected clients

Has 7 branches in one state and 6 in another state, plus 11 affiliates and many depots (one branch has 12 depots)

Staffed by 100 people (mostly graduates) but has a high staff turnover - 20% annually

Around 10,000 clients

Annual turnover is expected to double in 2 years - mainly through acquisition (over the previous 10 years the turnover has increased 7 fold)

Administration, especially the computer system, is unable to handle growth in sales - unable to get accurate financial statements quickly and it looks like $1 million in stock has disappeared

Dealing with over 40 suppliers

Recently a private equity group purchased 50% of the organisation and initiated a merger with a similar organisation that it partly owned - this merger failed, owing to the financial collapse of the other organisation

The Board is divided and there is continual conflict between the founders of the company and representatives of the private equity group

Several years earlier, one of the senior managers left to set up his own organisation in competition to the largest branch. He took some good staff and several large clients with him; they were key shareholders of his new company

The General Manager was sacked owing to his poor people-handling skills:

- high staff turnover

- some traditional suppliers refused to deal with him

- the company's debtors were out of control (one client owed $1 million which is unsecured and he is going 'broke')

- lack of delegation of responsibility

Some issues confronting the organisation are

- profit margins falling

- shareholders want to maximise dividend pay-outs

- explosive sales growth and inadequate administration system

- cyclical swings in markets and seasons

- high debt level

Your Role

To get the company 'back on the track' and to prepare the company to float on the stock exchange

Maximum time-frame is 3 years