Business World

Business World: Anna Hazarel : South East Asia on its way to a Pub...

2011-08-19T21:13:00.000-07:00

Business World: Anna Hazarel : South East Asia on its way to a Pub...: Now veteran social reformer Anna Hazare, has caught the state off guard, bringing tens of thousands on to the streets of the country’s majo...

Anna Hazarel : South East Asia on its way to a Public Led Revolution after Middle East

2011-08-19T21:12:00.000-07:00

Now veteran social reformer Anna Hazare, has caught the state off guard, bringing tens of thousands on to the streets of the country’s major cities. Many are young and middle class, and their outcry – broadcast round the clock by the nation’s TV channels – is one of anger with rampant corruption, and a Congress party-led government leaden-footed in its response.

As one Delhi-based businessman explained, the middle class are working harder and yet finding their goals – such as education or buying a house – further out of reach. The idea that politicians, bureaucrats and oligarch-like business leaders are plundering a growing national cake is increasingly intolerable to India’s “squeezed middle”, touching a nerve in a country whose economy is much changed over the past 20 years, but whose vote bank politics remain stuck in the past.

Yet while Mr Hazare’s cause is well-intentioned, it is also dangerous. The 74 year old is not an obvious champion for India’s youthful, urban classes, who are supporting him in growing numbers in what is becoming an uncomfortable face-off with a flagging Mr Singh.

A former army driver, Mr Hazare was previously best known for running a rural model village, where he implemented religiously-inspired iron discipline to raise education standards and improve agricultural productivity. He overtly encourages comparisons with Mahatma Gandhi, India’s liberation leader; but his background proves he is no Gandhi.

True, his resort to hunger strike as a weapon against the government has proved as effective today as it did when Gandhi held British rule to ransom in the 1930s and 40s. But Mr Hazare, despite being a formidable lobbyist, has neither legitimacy to rewrite the laws of the land himself, nor to subvert democratic process.

Even so the Congress party-led coalition, which has lost traction since its re election 2009, is at a loss as how to handle him. This week it made the crashing mistake of jailing him when he threatened a public fast. Overnight, he became the next best thing to a Bollywood blockbuster. India loves an arrest, and the martyrdom it confers. The government’s mis-steps made Mr Hazare a hero, not the people.

The real risk – for the government, and India’s stability – is that this anti-corruption movement will gather momentum, becoming a lightening rod for malcontents all over India – of which there are many. Already the issue at hand has changed, from corruption in Asia’s third-largest economy to one of a governance deficit in the world’s largest democracy. India’s leaders stand accused of silencing dissent and trampling the constitution.

Senior lawyers line up to warn the government that it had committed a “colossal folly”. The shrill Hindu nationalist opposition cries that India had returned to the era of the Emergency, under former president Indira Gandhi, from 1975 to 1977. But far worse is a growing public disdain for the political class itself, with doubts about whether it really represents a young population of 1.2bn with rising economic ambition.

Here the Congress-led government has itself to blame. On its watch a number of corruption scandal have blown up, including the $39bn estimated to have been lost from state coffers during the auction of 2G mobile spectrum. Graft scandals marred last year’s Commonwealth Games, while a Mumbai property scam also managed to tar the handlebar-moustached rectitude of the army’s top brass.

Some in the Congress party plainly regret this week’s action against Mr Hazare. Rahul Gandhi, the scion of the Nehru-Gandhi dynasty and, at 41 years old, a symbol of generational change, is probably among them. The legacy he is set to inherit from his mother, Congress party president Sonia Ghandi, now looks all the more shaky.

Others, however, risk complacency by seeing Mr Hazare’s arrest to be business as usual. Salman Khurshid, the Oxford-educated law minister, says the protests in Delhi are simply part of the nation’s political theatre. “This is one way of showing dissent in Indian democracy,” he says, “You sit there, you sing songs, you are given food by the police and that’s the part of the compassionate Indian state. What’s wrong with that?”

Mr Hazare’s campaign may yet fizzle, of course. Many political analysts predict India will muddle through, in a prolonged monsoon of discontent, characterised by grievances, bungling and a weakened government. They are probably right: this Indian Summer is certainly no Arab Spring, or at least not yet. The jail in which Mr Hazare was put is no Tahrir Square. Mr Singh, a respected leader, is not comparable to Egypt’s Hosni Mubarak.

But deafness to appeals for change risks something worse, if not now, then soon. For this anti-corruption struggle does bear some of the hallmarks of that which unfolded in the Middle East earlier this year. Young populations, armed with better information, do not suffer gerontocrats, distant power and cheats indefinitely. Instead they seek peaceful renewal – and if denied it by defunct parliaments, they seek it on the streets. India is right to have faith in its democratic institutions, but until its leaders become less self-serving and more honest, that faith alone is unlikely to be enough to keep India’s dreams alive.

Business World: Change Management

2011-08-04T21:48:00.000-07:00

Business World: Change Management: "Introduction to Descon Descon is one of the largest conglomerates in Pakistan operating for over three decades. Founded in 1977, initial..."

Business World: Islamic Financing

2011-08-04T21:46:00.000-07:00

Business World: Islamic Financing: "Islamic finance, one of the hottest topics in European and Middle Eastern financial training, is now being adopted in accountancy training t..."

Business World: UNILEVER: AN ANALYSIS OF STRENGTHS, WEAKNESSES AND...

2011-08-04T21:45:00.000-07:00

Business World: UNILEVER: AN ANALYSIS OF STRENGTHS, WEAKNESSES AND...: " Unilever S W O T Analysis Strengths n Recognise as a Global Company Unilever is a well known global company with p..."

Business World: Unilever - Porter's 5 Forces Analysis

2011-08-04T21:44:00.000-07:00

Business World: Unilever - Porter's 5 Forces Analysis: "Porter’s 5 Forces Model Being a global company, Unilever has very strong competition not only from other strong multinational companies like..."

Business World: PESTEL ANALYSIS - UNILEVER GLOBAL

2011-08-04T20:55:00.000-07:00

Business World: PESTEL ANALYSIS - UNILEVER GLOBAL: "PESTEL analysis - UNILEVER A scan of the external macro environment in which the firm operates can be expressed in terms of following facto..."

Business World: Business World: Financial Crisis and Hidden Hand

2011-08-04T20:53:00.000-07:00

Business World: Business World: Financial Crisis and Hidden Hand: "Current economic situation is at its worst almost in all the countries, where credit is a major source of financing. Especially, United Stat..."

Business World: Obama surrenders on debt ceiling

2011-08-04T20:44:00.000-07:00

Business World: Obama surrenders on debt ceiling: "By PAUL KRUGMAN Paul Krugman is a Nobel Prize Economist and writer to many newspapers The deal to raise the federal debt ceiling, given th..."

Obama surrenders on debt ceiling

2011-08-04T20:43:00.000-07:00

By PAUL KRUGMAN
Paul Krugman is a Nobel Prize Economist and writer to many newspapers

The deal to raise the federal debt ceiling, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America's long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.

Start with the economics. We currently have a deeply depressed economy. We will almost certainly continue to have a depressed economy all through next year. And we will probably have a depressed economy through 2013 as well, if not beyond.

The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further. Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn't work that way, a fact confirmed by many studies of the historical record.

Indeed, slashing spending while the economy is depressed won't even help the budget situation much, and might make it worse. On one side, interest rates on federal borrowing are currently very low, so spending cuts now will do little to reduce future interest costs. On the other side, making the economy weaker now will also hurt its long-run prospects, which will in turn reduce future revenue. So those demanding spending cuts now are like medieval doctors who treated the sick by bleeding them, and thereby made them even sicker.

And then there are the reported terms of the deal, which amount to an abject surrender on the part of the president. First, there will be big spending cuts, with no increase in revenue. Then a panel will make recommendations for further deficit reduction — and if these recommendations aren't accepted, there will be more spending cuts.

Republicans will supposedly have an incentive to make concessions the next time around, because defense spending will be among the areas cut. But the GOP has just demonstrated its willingness to risk financial collapse unless it gets everything its most extreme members want. Why expect it to be more reasonable in the next round?

In fact, Republicans will surely be emboldened by the way Obama keeps folding in the face of their threats. He surrendered in December, extending all the Bush tax cuts; he surrendered in the spring when they threatened to shut down the government; and he has now surrendered on a grand scale to raw extortion over the debt ceiling. Maybe it's just me, but I see a pattern here.

Did the president have any alternative this time around? Yes.

First of all, he could have and should have demanded an increase in the debt ceiling back in December. When asked why he didn't, he replied that he was sure that Republicans would act responsibly. Great call.

And even now, the Obama administration could have resorted to legal maneuvering to sidestep the debt ceiling, using any of several options. In ordinary circumstances, this might have been an extreme step. But faced with the reality of what is happening, namely raw extortion on the part of a party that, after all, only controls one house of Congress, it would have been totally justifiable.

At the very least, Obama could have used the possibility of a legal end run to strengthen his bargaining position. Instead, however, he ruled all such options out from the beginning.

But wouldn't taking a tough stance have worried markets? Probably not. In fact, if I were an investor I would be reassured, not dismayed, by a demonstration that the president is willing and able to stand up to blackmail on the part of right-wing extremists. Instead, he has chosen to demonstrate the opposite.

Make no mistake about it, what we're witnessing here is a catastrophe on multiple levels.

It is, of course, a political catastrophe for Democrats, who just a few weeks ago seemed to have Republicans on the run over their plan to dismantle Medicare; now Obama has thrown all that away. And the damage isn't over: There will be more choke points where Republicans can threaten to create a crisis unless the president surrenders, and they can now act with the confident expectation that he will.

In the long run, however, Democrats won't be the only losers. What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation's economic security, gets to dictate policy? And the answer is, maybe it can't.

Business World: Financial Crisis and Hidden Hand

2011-07-30T08:52:00.000-07:00

Current economic situation is at its worst almost in all the countries, where credit is a major source of financing. Especially, United State is at a very critical stage of time as it is at a higher risk of default and President Obama is begging Republicans (opposition) who have a majority in US senate, to support him to extend US borrowing limit to avoid possible default. This is a very serious issue not only for US itself but also for the rest of the world. In case of default, US will lose its Triple A credit rating which means very expensive borrowings. Idea of US default is horrible as it is one of the biggest Economy and has the ability to affect already suffering international stock markets and businesses around the globe and ultimately a common man either living in US or in any part of the world. International Monetary Fund warned that if the debt ceiling was not increased there could be an impact on the US dollar as well and one of the consequences could be a decline of the dollar as a reserve currency.

It is more than three year since the economic crisis started and conditions are worsen day by day. Different people suggest different solutions to this problem but no one is looking at the reasons and source of crisis. For me it is quite strange as everything is same as before the crisis like consumers, demand, financial resources and market. Is that because of war on terror? increased population? or shift of economic power from west to east. These financial crisis seems to be artificially created by a hidden hand to gain some serious financial or political advantages.Current, US crisis are a part of that artificial game plan as the most powerful person on the planet, Mr. Obama, is helpless like an ordinary person. The US Treasury has warned the government will run out of money to pay all its bills unless a $14.3tn borrowing limit is increased by 2 August. US politicians need to understand Its possible impact on the world and should not politicise the issue to make it a single point of failure for US economy. There is a need to serious effort to find the reasons of all that and especially that hidden hand playing with the destiny of billions of people.

Government's cuttings and Recession in my view

2011-07-24T05:57:00.000-07:00

Most of Govt.'s including UK and USA have adopted the policy of cuttings in expenses by restructuring of public funded bodies and cutting in the staff. This strategy will be helpful in reducing the Govt. borrowings and maintenance of their credit ratings which will lead to the cheap interest rate borrowings to cover the budget deficit.

But the dangers of this strategy are very horrible including;

With cuttings more people will be redundant and unemployed which will lead to lower buying power of consumers and definitely it will directly affect the business of consumer goods companies, their lower profits and higher losses which will lead to redundancy programmes in these companies so more people out of jobs. It is a vicious cycle which will involve more and more people and ultimately multi-dip recession and finally death of economy.

This recession is more like a fear in the mind of investors who got the money but because of fear they are not investing. Govt.'s need to adopt a strategy of reducing this fear and promote economic activity by creating more jobs and opportunities. They need to learn from history as Keynes (A great economist) adopted the strategy of creating jobs and economic activity and brought world out of Great Recession of 1930.

So, we need to get rid of such thinking and be positive in our approach and policies and promote economic activity either at the cost of expensive loans as it will be difficult in the short run but very fruitful in the long run for economic prosperity and progress of global economies.

Business World: PESTEL ANALYSIS - UNILEVER GLOBAL

2011-07-20T13:55:00.000-07:00

Business World: PESTEL ANALYSIS - UNILEVER GLOBAL: "PESTEL analysis - UNILEVER A scan of the external macro environment in which the firm operates can be expressed in terms of following facto..."

Change Management

2011-07-17T15:09:00.000-07:00

Introduction to Descon

Descon is one of the largest conglomerates in Pakistan operating for over three decades. Founded in 1977, initially it was a multi-faceted engineering and manufacturing concern that has now become the largest Engineering, Procurement, Construction & Commissioning [EPCC] company in the country.

A few years after its establishment, the focus turned to chemicals, materials and power generation. For over three decades. Desk on is a group of companies with multiple companies operating under this group conglomerates. It has a workforce of over 600 persons and operating from different location and has product range of more than 200 innovative products and services.

Source: http://www.descon.com/chemicals.php?id=206

My research work is focused on the how change can be implemented in an organisation. Detail the implementation with a special focus on dealing with resistance to change in an organisation of my choice. So I have selected Deskon for my detailed review and analysis.

Introduction to Change Management

Change management is a structured approach to shifting individuals, teams, and organizations from a current state to a desired future state. It is an organizational process aimed at empowering employees to accept and embrace changes in their current business environment. In project management, change management refers to a project management process where changes to a project are formally introduced and approved.

Source: Wikipedia

Change management has different areas and phases which a change manager need to condiser at planning stage and these areas include;

Missionary changes

It is a strategic management job which was performed by executives and relevant business area managers at Deskon but in this project there were not many missionary changes. However, Chief Executive made it clear that we nee new system and he emphasied the reasons in the light of long term strategic objectives and competitive emvironment.

Strategic changes

At Deskon strategy is designed by BOD and relevent managers and in the over all strategic planning they considered the element of new ERP system and how it could help to acheive strategic ovbjectives.

Operational changes (including Structural changes)

Likely changes in operational and technocratic structure of Deskon and improvement in the current working practices and relative resistance against the new system and how to cope with it through imposition, training and communication.

Technological changes

What type of technical infrastructure will be installed and how it will impact the working style of staff and training needs of individuals and support they want.

Changing the attitudes and behaviors of personnel

Discussed in detail in next section.

How Change Management worked at Descon

Measurement: Organizational Change Management at Descon started with a systematic diagnosis of the current situation in order to determine both the need for change and the capability to change. The objectives, content, and process of change was specified as part of a Change Management plan.Change Management processes was treated as a creative marketing to enable communication between change audiences which included both internal as well as external to organisation, but also deep social understanding about leadership’s styles and group dynamics in different departments like marketing, production and finance. As a visible track on transformation projects, Organisational Change Management aligns groups’ expectations, communicates, integrates teams and manages people training. Director of IT made use of performance metrics, such as financial results, operational efficiency, leadership commitment, communication effectiveness, and the perceived need for change to design appropriate strategies, in order to avoid change failures or solve troubled change projects.
Strategy was Successful at Descon because DIT included some of really important elements in the Change Management strategy including;

Measurement enefits management and realization to define measurable stakeholder aims, create a business case for their achievement , and monitor assumptions, risks, dependencies, costs, return on investment, dis-benefits and cultural issues affecting the progress of the associated work.

Effective Communications

Informs various stakeholders of the reasons for the change (why?), the benefits of successful implementation (what is in it for us, and you) as well as the details of the change (when? where? who is involved? how much will it cost? etc.).

Training

Devise an effective education, training and skills upgrading scheme for the organization.

Change Management as part of over all strategic plan

Counter resistance from the employees of companies and align them to overall strategic direction of the organization.

personal counseling

Provide personal counseling (if required) to alleviate any change related fears.

Feedback stystem in operation

Monitoring of the implementation and fine-tuning as required.

Change management in the context of IT projects

Change Management is a part of IT Service Management discipline. At Descon, Change Management in this context is to ensure that standardized methods and procedures were to use it for efficient and prompt handling of all changes. This process controlled IT infrastructure, in order to minimize the number and impact of any related incidents upon the project.

It is important to consider that changes may arise reactively in response to problems or externally imposed requirements, e.g. legislative changes, or proactively from seeking improved efficiency and effectiveness. Change Management can ensure standardized methods, processes and procedures which are used for all changes, facilitate efficient and prompt handling of all changes, and maintain the proper balance between the need for change and the potential detrimental impact of changes. This strategy proved to be very successful at Descon.

Resistance Framework

Resistance is the act or power of resisting, opposing, or withstanding. Changes always welcome resisted especially in an organisational context. Major reasons for resistance that I observed at Descon include:

A lack of awareness about the change

Resistance was higher from the employees who were less aware or completely ignorant of what is happening around them and what are the reasons for the introduction of new Hi-tech ERP system.

Comfort with the ways things are and fear of the unknown

Technology fear was very common as most of the employees including management level staff were suffering from this fear as they were more comfortable with the existing in-house developed system.

The individual's personal predisposition to change

New system means new management infrastructure and sometimes redundancies. Also managers had the fear of losing their current comfort zone and powers.

Surprise and fear of the unknown

As new ERP Oracle based system was an unknown for most of employees and staff and there were so many myths and self developed perceptions so this leads to create stress among the employees which was a major cause of resistance.

Climate of mistrust

In a phase of change because of fear of losing current position and even job people did not trust even their peers and colleagues, this situation creates a frustration and element of stress.

Fear of failure.

Managers always have a fear of failure to achieve tasks and targets and even a failure to adjust in the new environment would expose them.

Disruption of cultural traditions and/or group relationships

New system affected the cultural traditions and relationship among the staff. New set up so new relationship dimensions and so new culture which is quite unfamiliar will increase strain and stress.

Personality conflicts.

New system and setup where everyone is stressed and under pressure, it would affect relationship dimensions among the people and hence personality clashes would be exposed and severe which will ultimately create stress and resistance to new system as people will think major cause of problem is new system.

Not seeing the benefits

People always look at negative aspects and they disregard the benefits and positive areas. This attitude will generate lot of stress and resistance to new system.

Change Management system Goal

The goal of the Change Management process is to ensure that standardized methods and procedures are used for efficient and prompt handling of all changes, in order to minimize the impact of change-related incidents upon service quality, and consequently improve the day-to-day operations of the organization.

Source:http://www.itil-officialsite.com/

Change Management system at Descon

Change Management would typically be composed of the raising and recording of changes, assessing the impact, cost, benefit and risk of proposed changes. It also involves developing business justification and obtaining approval, managing and co-ordinating change implementation, monitoring and reporting on implementation and finally reviewing and closing change requests.

1. Responsibility for managing change

At Descon Management realised that the employee does not have a responsibility to manage change - the employee's responsibility is no other than to do their best, which is different for every person and depends on a wide variety of factors (health, maturity, stability, experience, personality, motivation, etc). Responsibility for managing change is with management and executives of the organisation - they must manage the change in a way that employees can cope with it. The manager has a responsibility to facilitate and enable change, and all that is implied within that statement, especially to understand the situation from an objective standpoint (to 'step back', and be non-judgemental), and then to help people understand reasons, aims, and ways of responding positively according to employees' own situations and capabilities.

2. change must involve the people - change must not be imposed upon the people

Top management was aware with the fact that key to success is 'changing people's mindsets' or 'changing attitudes', because this language often indicates a tendency towards imposed or enforced change and it implies strongly that the organization believes that its people currently have the 'wrong' mindset, which is never, ever, the case.

Management was also aware that whenever an organization imposes new things on people there will be difficulties. Participation, involvement and open, early, full communication are the important factors and they adopted a very systematic approach involving;

Workshops proved very useful processes to develop collective understanding, approaches, policies, methods, systems, ideas, etc

Staff surveys also proved to be a helpful way to repair damage and mistrust among staff - provided you allow people to complete them anonymously, and provided you publish and act on the findings.

Management training programmes helped a lot because managers are crucial to the change process and they enabled and facilitated, not merely convey and implement policy from above, which does not work.

Change Management principles

At Descon top management realised the importance of principles good change management which later proved to be a success story for Deskon. These principles including;

Ø At all times involve and agree support from people within system (system = environment, processes, culture, relationships, behaviours, etc., whether personal or organisational).

Ø Understand where you/the organisation is at the moment.

Ø Understand where you want to be, when, why, and what the measures will be for having got there.

Ø Plan development towards above No.3 in appropriate achievable measurable stages.

Ø Communicate, involve, enable and facilitate involvement from people, as early and openly and as fully as is possible.

John P Kotter's 'eight steps to successful change'

American John P Kotter is a Harvard Business School professor and leading thinker and author on organizational change management. Kotter's highly regarded books 'Leading Change' (1995) and the follow-up 'The Heart Of Change' (2002) describe a helpful model for understanding and managing change. Each stage acknowledges a key principle identified by Kotter relating to people's response and approach to change, in which people see, feel and then change.

Kotter's eight step change model if applied at Descon then we discover that;

Increase urgency - Inspire people to move, make objectives real and relevant. Descon created sense of urgency among its people and gave every one some tasks to perform and thus made everyone part of it.
Build the guiding team -Get the right people in place with the right emotional commitment, and the right mix of skills and levels. Descon hired a team of at least 20 people with different backgrounds like system, network, security and management consultants to implement the system and also involved existing business manager to design and implement this programme.
Get the vision right - Get the team to establish a simple vision and strategy, focus on emotional and creative aspects necessary to drive service and efficiency.
Communicate for buy-in - Involve as many people as possible, communicate the essentials, simply, and to appeal and respond to people's needs. De-clutter communications - make technology work for you rather than against. That was the key tactic of Descon to get the project done.
Empower action - Remove obstacles, enable constructive feedback and lots of support from leaders - reward and recognise progress and achievements. Chief Executive officer, busness area managers alwasys reduced sense of beurocracy to get the jobs done before deadlines.
Create short-term wins - Set aims that are easy to achieve - in bite-size chunks. Manageable numbers of initiatives. Finish current stages before starting new ones. Even the team achieved to Go Alive of system one month before the deadline.
Don't let up - Foster and encourage determination and persistence - ongoing change - encourage ongoing progress reporting - highlight achieved and future milestones.
Make change stick - Reinforce the value of successful change via recruitment, promotion, new change leaders. Weave change into culture. This strategy helped a lot as management created an environment of change and they were successful to clone it into Deskon’s culture. www.kotterinternational.com.

In my observation at Descon there are some very important aspects which were either ignored or less importance was given to them and these aspects include:

The six phases personal or professional change Model

Anticipation

This is a waiting stage. In this stage employees really don't know what to expect so they wait, anticipating what the future holds.

Confrontation

Employees begin to confront reality. They realise that change is really going to happen or is happening.

Realization

Post change - Realizing that nothing is ever going to be as it once was.

Depression

This is often a necessary step in the change process. This is the stage where a person mourns the past. Not only have they realised the change intellectually, but now they are beginning to comprehend it emotionally as well.

Acceptance

This involves acceptance of the change emotionally. Although they may still have reservations but they are not fighting the change at this stage. They may even see some of the benefits even if they are not completely convinced.

Enlightenment

This involves people completely accept the new change. In fact, many wonder how they ever managed the "old" way. Overall, they feel good about the change and accept it as the status quo from here forward.

At Descon people proceeded through the different phases at different rates of speed. Some people accepted the change in two months and some of them took twelve months. So a change manager has to consider all the people according to their perception, level, position and attitude.

Resistance to Change – A more intellectual discussion

Most people prefer predictability and stability in both their personal and professional lives. People typically avoid situations that upset order, threaten their self-interests, increase stress or involve risk. When faced with changes to the status quo, people usually resist initially. The resistance continues and, in some cases increases, until they are able to recognize the benefits of change and perceive the gains to be worth more than the risk or threats to their self-interests.

Project leader should anticipate resistance to any change effort, prepare for it, and make special efforts to assess and deal with individual reactions to change.

Leaders must develop the proper attitude toward resistance to change and realize that it is neither good nor bad. In fact, resistance can serve as a signal that there are ways in which the change effort should be modified and improved. The following steps should help leaders faced with resistance to their change attempts:

Ø Actively seek out people's thoughts and reactions to the proposed changes.

Ø Listen carefully. Do not launch into lengthy diatribes justifying the change - in the early stages, people are not interested in that. They want to be heard and have their concerns attended to. Recognize that it takes time to work through reactions to change.

Ø Engage people in dialogue about the change. Leaders should do this only after fully understanding the specific concerns of others.

Ø Involve Others

There is no better way to minimize resistance to change than to involve those responsible for implementing it and those affected by it. If there is no involvement early on in the planning, during the implementation and throughout perpetuation, the change effort will fail. When people feel that they are valued participants in planning and implementing the change, they are more likely to be motivated toward successful completion. The following techniques are effective ways to get people involved and gain their commitment to change efforts:

Ø Determine who must be involved in planning the change and include them in the decision making process. Err on the side of involving more people rather than fewer. If there is a question as to whether or not a certain person's support will be needed, include them.

Ø Ensure that people from all levels of the organization are involved in planning the change process. This means involving the people that are at the on the floor level as well. It will be these people who will make the change process succeed or fail.

Ø Consult with employees from the areas affected by the change when determining the steps needed for change.

Ø Seek input from people at all levels to establish realistic time frames for specific actions.

Ø When possible, run a test program with a selected work unit and solicit feedback on what is working well, where the problem areas are and how to work out any difficulties.

Ø Publicly recognize any employees whose suggestions are used in the change process.

Ø Design a mechanism that provides ongoing feedback from employees throughout the change effort. Involved people are an effective barometer of what is working well and what is not working well. Ask them to suggest improvements.

Monitor for Results

All change efforts are results-oriented - leaders implement change to realize new, different and better results. If the change is not monitored, effectiveness cannot be measured. Monitoring is particularly crucial during change processes due to the many forces that will challenge, resist or disrupt efforts. Since organizations must continue to operate day-to-day while undergoing change initiatives, the complexity of change is increased. When people within the organization begin to suspect that senior leaders are more interested in starting new programs than in the follow-through necessary to complete them, they will lose the sense of urgency and commitment to the initiatives and be more sceptical about any future change efforts. While monitoring change, remember to:

Provide people the authority to implement changes.
Keep people informed about the progress of changes.
Listen to people's needs and concerns.
Reward those who support the change efforts and achieve milestones.

The key to monitoring change effectively is to stay in touch with the people. Ask questions, demonstrate concern for their welfare and goal achievement and commit to do whatever is necessary to make the change successful. Leaders who can do this while continuing to practice great leadership skills will attune themselves to how the changes are progressing and react quickly with any required adjustments.

Concluding Thoughts

Although most people feel comfortable with minor changes, no one can live and work by yesterday's reality. Leaders must enlist the support of other organizational members to identify the right changes to make, credibly communicate these changes throughout the organization, provide resources to support the changes and allow enough time and flexibility for the changes to take place. With the widespread commitment of people throughout the organization, change efforts will succeed. Change does not substantially alter the way a leader leads; change only reinforces that leaders must always use their skills to lead every day.

Unilever - Porter's 5 Forces Analysis

2011-07-16T15:45:00.000-07:00

Porter’s 5 Forces Model

Being a global company, Unilever has very strong competition not only from other strong multinational companies like P&G, Kraft and Nestle but also from other regional retailers. Porter’s 5 forces model is one of the most recognized frameworks for the analysis of competetive environment of an organisation. Porter’s five forces model which determine the competitive intensity and therefore attractiveness of the market where Unilever is operating . This model describes the attributes of an attractive industry and thus suggests when opportunities will be greater, and threats less, in these of industries.

Attractiveness in this context refers to the overall industry profitability and also reflects upon the profitability of Unilever. An “unattractive” industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching “pure competition”, from the perspective of pure industrial economics theory.

This model is based on five important elements of an organisation and uses both internal as well as external competences and threats faced by a business organisation. These five elements including;

Buyer Power

Unilever’s buyers are scattered all around the world and they are in billions. In true sense they are not so powerful to pull prices down. But on the other hand it is easier for the customers to switch to a competitor. So Unilever has to be very precautious in deciding about prices and keep the customers satisfied.

Competitive Rivalry

In consumer products business Unilever has a large number of competitors and these competitors are in reality very strong. They range from small local corner shop retailer to big giants like P&G, Kraft and Nestle. These competitors almost provide equally attractive products and services and sometimes better. These competitors have the power to attract and influence the customers by more attractive substitute, prices and marketing techniques.

Threat of Substitution

Continuous research and development in the consumer and household products has brought about a revolution in the consumer market and today customers like to try something new and better. This trend has reduced the customer loyalty and product lifecycle. Unilever is under continuous threat of substitute products and its competitors are already spending huge sums on R&D and new product development. Unilever has to be very adoptive and closer to its customers so as to get what exactly its customers want.

Threat of New Entry

As Unilever operates in different geographical markets so threat of new entrants varies in different markets. In well developed countries where big players like Unilever have a very strong hold and brand image, it is very hard for a new entrant to enter the market because of higher cost to set up a business. On the other hand in less developed markets, it is easier to enter as legal requirements and capital needed is not as much as in a developed market. Unilever has its presence almost in every market either through its subsidiaries, branches or franchises. But its brand image is a strong barrier in the way of new entrants.

Supplier’s Power

Unilever has a policy of local buying and local manufacturing. Which provides itself an edge to brake power of its suppliers and make them weaker to negotiate at its own terms. Most of time Unilever has blanket agreements with its suppliers to provide for a certain period of time at a certain rate. This strategy help to prevent supplier’s from switching to other competitors and charge higher rates. Also Unilever treat its supplier’s fairly so as to create more loyalty among them like customers.

Conclusions and Recommendations

Unilever is operating in a highly competitive and volatile environment and especially current economic crisis have made it difficult for many businesses to operate profitability. Legal requirements, technical changes and change in the habits of the customers have created problems for the businesses. Because of that companies like Unilever have to be updated and cotinuos R&D is solution to many of the problems. An attractive business is one with higher margins and low competitions. So the environment where Unilever operates is with higher level of competition and low level of profit margins. In this situation best strategy is to keep customers satisfied and loyal, continuos R&D, cost control and be responsive to the competitors.

PESTEL ANALYSIS - UNILEVER GLOBAL

2011-07-16T11:41:00.000-07:00

PESTEL analysis - UNILEVER

A scan of the external macro environment in which the firm operates can be expressed in terms of following factors:

§ Political

§ Economical

§ Social

§ Technological

PESTEL analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The headings of PESTEL are a framework for reviewing a situation, and can in addition to SWOT and Porter’s Five Forces models, be applied by companies to review a strategic directions, including marketing proposition. The use of PESTEL analysis can be seen effective for business and strategic planning, marketing planning, business and product development and research reports. PESTEL also ensures that company’s performance is aligned positively with the powerful forces of change that are affecting business environment (Porter, 1985). PESTEL is useful when a company decides to enter its business operations into new markets and new countries. The use of PESTEL, in this case, helps to break free of unconscious assumptions, and help to effectively adapt to the realities of the new environment.

Limitations of PEST analysis

Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Economic factors affect the purchasing power of potential customers and the firm’s cost of capital. Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer’s needs and size of potential markets. Technological factors can lower barriers to entry reduce minimum efficient production levels and influencing outsourcing decisions.

It may be difficult to forecast future trends with an acceptable level of accuracy. In this regard, the firm may turn to scenario planning techniques to deal with high levels of uncertainty in important macro-environmental variables.

http://www.quickmba.com/strategy/pest/

UNILEVER PESTEL

Political and legal analysis

Unilever is subject to local, regional and global rules, laws and regulations. These rules and regulations cover diverse areas such as product safety, product claims, trademarks, copyright, patents, employee health and safety, the environment, corporate governance, listing and disclosure, employment and taxes. Important regulatory bodies in respect of business include the European Commission and the US Food and Drug Administration. Failure to comply with laws and regulations could leave Unilever open to civil and criminal legal challenge and may result in fines or imprisonment of personnel. Further, reputation could be significantly damaged by adverse publicity relating to such a breach of laws or regulations.

During 2009-2010 almost 49% of Unilever revenue came from D&E markets including Brazil, India, Indonesia, Turkey, South Africa, China, Mexico and Russia. These markets typically proved more volatile than developed markets. Any government response to reduce the impact such as fiscal stimulus, changes to taxation and measures to minimise unemployment have also affected Unilever’s economic performance.

In some regions Govt. has imposed heavy duties on imports and raw materials and it has a negative impact on production capacity. However, Unilever is quite good in managing relations with Governnments.

source: http://www.hbs.edu/research/pdf/06-061.pdf

Unilever Financial Statement

Economic analysis

Unilever market environment is becoming highly competitive especially in the Western Europe. Macro economic environment is highly uncertain whcih has affected micro economic environment as well by creating a fear among ordinary consumers. Consumers would not want to buy expensive product or brands due to current economic tide. Competition in EU has grown so strong that Unilever is facing difficulties in places like France, Netherlands.

Economic Decline in business during an economic downturn has resulted in customer and supplier default. Unilever’s business is dependent on continuing consumer demand for its brands. Reduced consumer wealth driven by adverse economic conditions has resulted in consumers becoming unwilling or unable to purchase Unilever products, which has adversely affected cash flow, turnover, profits and profit margins. Adverse economic conditions have resulted in the impairment of some of intangible assets which are in the form of brand names. Adverse economic conditions have affected in two ways i.e. one or more countries within a region or extended globally. However, recession has increased the demand for some of the home care products. Unilever is operating in different market, which have reacted to recession in different ways. In D&E markets volume led growth has been improved upto 7% in the first quarter of 2010.

Source: www.unilever.com

Executives Director’s Report

Societal and Ecological Analysis

Unilever has developed a strong corporate reputation over many years for its focus on social and environmental issues, including promoting sustainable development and utilisation of renewable resources. It is very conscious about safety and health of its employees and accident rate decreased by 9% during 2009.

Unilever’s vision is to help people feel good, look good and get more out of life with brands and services that are good for them and good for others.

It has successfully maintained high social and environmental standards by designing and producing products that are safe for consumers. Unilever is working on so many social welfare projects like World food programme and safe drinking water. Unilever is using environment friendly materials and packing stuff.The Unilever brand logo now displayed on all products and advertising, increases its external exposure. Unilever has built its image as an environment friendly and socially responsible company.

Unilever Financial Statements – Operational Highlights

http://www.unilever.com/sustainability/?WT.GNAV=Sustainability

Technological Analysis

Unilever has been spending on IT to improve its business especially in the area of e-business so as to improve brands image and quality of its products.

Unilever know that failure to provide sufficient funding to develop new products, lack of technical capability in the R&D function and quickly roll out the products may adversely impact its cash flow, turnover, profit and profit margins and affect reputation.

High level of automation is one of the critical success factors of Unilever that differentiates then from their competitors and serves as a source of competitive advantage. Today, Unilever is trying to minimize cost through IT efficiencies at global level. In addition, Unilever Technology Venture works in collaboration with Unilever R&D group to help Unilever meet consumers’ needs. Area of concern is genomics, advanced bioscience, advanced materials science and nano technology.

Islamic Financing

2011-07-16T09:29:00.000-07:00

Islamic finance, one of the hottest topics in European and Middle Eastern financial training, is now being adopted in accountancy training too.
Cima, the Chartered Institute of Management Accountants, has launched an Advanced Diploma in Islamic Finance, intended for those working in accounting and financial services who want to move into Islamic finance, as well as those already working in the sector who want to broaden their knowledge.
“We see the Islamic finance market as particularly important, with its current global value estimated at more than $1.1 trillion,” says Cima’s John Willsdon. “Islamic finance is becoming much more prominent throughout the financial institutions of the world, rapidly growing from a niche industry to a mainstay of finance.”
Growth in the industry is daunting. According to Mohd Daud Bakar, president and chief executive of the International Institute of Islamic Finance, “Thousands of professionals will need to join the industry globally over the next five to seven years if its impressive growth is to be sustained.”
The Cima Advanced Diploma has been launched in addition to the Institute’s diploma in Islamic finance launched four years ago (and formerly know as Cima Certificate in Islamic Finance).

UNILEVER: AN ANALYSIS OF STRENGTHS, WEAKNESSES AND OPPORTUNITIES AND THREATS

2011-07-16T09:16:00.000-07:00

Unilever SWOT Analysis

Strengths

n Recognise as a Global Company

Unilever is a well known global company with presence almost in more than 170 countries and it is registered at various stock exchanges around the globe which makes it a really global company with all the privileges of a global company like economies of scale, access to global resources and above all synergy of resources and operations.

n Strong brand portfolio

Unilever has established a very strong relationship with retailers by offering them good margins and incentives, which are very important for a company in the consumer brand market. This provides Unilever strength to reach the ultimate consumers.

Source: Unilever financial statement

n Strong relationship with retailers

Unilever has established a very strong relationship with retailers by offering them good margins and incentives, which are very important for a company in the consumer brand market. This provides Unilever strength to reach the ultimate consumers.

Source: Unilever Director’s report

n Economies of scale

Economies of scale occur when increased output leads to lower long run average costs. As a global company Unilever has reach to universal cheap resources. Because of its mass scale production it has ability to overcome the bargaining power of suppliers which results in lower cost of production.

Source: http://www.economicshelp.org/blog/concepts/economics-of-scale/

l Research and development

Unilever is an innovative company and investing a huge sum on research and development of new products and brands. Because of this ability Unilever has created high entry barriers to the global consumer market. It has more than 61 innovation centres and 4000 academic researches.

Source: Unilever financial statement

l Excellent management and human element

Unilever has a pool of very skilled managerial capabilities in the form of its human resource capital from around the world in each geographic region. Its top management belongs to 21 different countries. This also helps Unilever to understand and manage local needs of customers, employees and stakeholder

Source:http://www.unilever.com/images/ir_Unilever_factsheet_2010_tcm13-70889.pdf.

l Merger and acquisitions

Unilever has a long history of mergers and acquisitions. This has enabled Unilever to break entry barriers into some very competitive markets and knock out strong competitors. This ability of Unilever has made it a local multinational company. Unilever has more than 44 companies in the Unilever group, 2 joint ventures and one UK associate. Other than that Unilever has its operation and agency relations in a huge number of countries. At present Unilever has more than 350 production facilities.

Source: Director’s Report

http://www.unilever.com/investorrelations/understanding_unilever/factsheet/index.aspx

Weaknesses

n No direct connecting with customers

Because of nature of business, Unilever has no direct connection to its ultimate consumers. It has to rely on its wholesalers and retailers. In western counties retails giants i.e. Tesco, Asda and Sainsbury are very strong and have the ability to dictate big multinational retail companies.

Source: http://www.unilever.co.uk/sustainability/people/customers/

n Inefficient management of brands

Unilever has almost 400 different brands which is very difficult to manage to reap ultimate benefit. This huge portfolio of brands has created inefficiency on part of Unilever to differentiate between stars, cash cows and dog brands according to Mandelows’ matrix. Top 25 brands of Unilever account for 73% of global turnover, which means rest of 375 brands account for only 27%.

Source: Unilever’s financial statements

n Reduced spending for R & D

Unilever is trying to improve its cash flow by cutting expenditure on R&D. During 2008 R&D spending were €927m which were reduced to €891m in 2009 and similar trend during 2010. This will lead to lack of innovations and introduction of new products

Source: Unilever’s financial statements

n Fall in revenues

Decrease in revenue has revealed weak areas and put a psychological pressure on its management to make short term decisions to cope. This is oblivious from the strategy of maintaining short term cash flow by reducing spending on R&D and investment in long term assets and projects. Decrease in revenue has directly affected profit margins and market value of shares.

Source: Unilever’s financial statements

Opportunities

n Economic Crisis

Where current economic crisis have made small companies with liquidity problems to find way for exit, there it has created opportunities for Unilever to acquire these demising companies at a very cheap price and enter into new markets.

Source: (http://www.darkreading.com/security/management/showArticle.jhtml?articleID=212002170)

n Increasing need for healthy products

Consumers are more aware today and prefer healthy products, so it is a good opportunity for Unilever to introduce healthy and safe products under its brand name to increase its market share and knock out its competitors.

n Developing markets

More than 50% of Unilever’s market share is from developing and emerging countries where market is less saturated and less competitive. Growth rate is high in these markets, so Unilever can invest in these markets to increase its market share.

Source: http://www.unilever.com/mediacentre/pressreleases/2002/trade.aspx

n Personal Care segment

Unilever’s personal care segment is fastest growing business and a key to achieving sustainable profitable growth. In 2010 Unilever reported an increase in personal care sales by 4%. The personal care segment should be a priority area for creation of future sales growth and sustaining profits from increasing raw material costs.

Source: Unilever Director’s report

Threats

n Strong Competition

Unilever is not only a big multinational company in the global market. It has very strong competitors like P&G, Nestle and Kraft. These competitors always try to give tough time to Unilever and try to create high entry barriers to new and emerging markets. In developing markets like India and Spain, small low cost retailers have a big market share and competition for Unilever.

Source: Unilever Director’s report

n Increasing store brands

Big retail store like Tesco, ASDA, and Sainsbury has introduced a plenty of their own cheap brands which have led customers to switch for cheaper products.

Source: Customer’s Interviews

n Tougher Business Climate

Overall business climate is tougher today because of economic crisis, tough Government regulations and competitive environment. It has led the companies to focus more their liquidity instead of profitability.

Source: Unilever Director’s report

n Complex Organisational Structure

Unilever has more than 42 group companies, Joint ventures and associates. It has hundreds of agency relationships. It has more than 300 production facilities are across the globe. All this has made Unilever structure very complex. A wrong corporate strategy can be a single point of failure of business.

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Political and legal analysis

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UNILEVER: AN ANALYSIS OF STRENGTHS, WEAKNESSES AND OPPORTUNITIES AND THREATS

By PAUL KRUGMAN
Paul Krugman is a Nobel Prize Economist and writer to many newspapers