Introduction
This presentation describes how to use creative change and innovation to institute changes in Small and Medium Enterprises (SMEs). It is divided into four main thematic areas: company, environmental, implementation, and change management analytical areas.
Advantages and Disadvantages of SMEs
Based on their size, nature of operations, and corporate structures, SMEs have unique characteristics that make them adaptable, or resistant, to change. Their small size, high flexibility, easy communication among staff, and speedy decision-making enable them to be adaptable to change. However, limited funds, poor access to skilled personnel, and small markets may affect how well they adopt new technology (Wang et al., 2020).
Company Analysis – Background
This paper will use a family-owned business, known as Franz Bakery, which is located in Oregon, US, as a case study. The company has operated for more than 5 years and developed a good reputation for producing quality products (United States Bakery, 2021). This analysis will be important in understanding how the organization can adopt new changes to improve its overall performance.
Company Analysis – Corporate Culture
Văduva et al. (2018) say there are four main types of organizational culture and they include adhocracy, clan, hierarchy, and market. Franz Bakery assumes a market culture because most of its operational processes are adapted to prevailing market dynamics. Lancaster (2018) says that a market culture emanates from a results-oriented and competitive business philosophy, which promotes inter-firm and employee competitiveness. This cultural framework is fast-paced, promotes fair compensation, and cherishes employee independence and flexibility (Indeed, 2021).
Strategy for Change Management
The purpose of this presentation is to demonstrate how companies can use innovative thinking approaches to solve their operational problems. This analysis is confined within discussions on how to manage change in an SME and use the findings to propose innovative solutions for change. Strategies for change management will be analyzed on two fronts. The first one will be the identification and analysis of challenges affecting technology adoption and the second one is the development of a basic change management strategy.
Identification and Analysis of Problems
For purposes of this investigation, the format proposed by Dawson and Andriopoulos (2017), which analyzes environmental factors in three phases, including macro-environment, industry environment, and internal corporate environment analyses, will be used. The framework is a comprehensive guide to understanding situational factors impacting change.
Macro-Environmental Analysis – PESTLE
As pointed out by the Global Health and International Food Policy Research Institute (2021), diversity, inclusion, equality, and equity are current forces affecting the political environment in the food manufacturing and processing sector. The Food and Agriculture Organization of the United Nations (2018), Moon, and Christensen (2020) add that these developments are informed by debates about the need to have a diverse workforce. Al Doghan, Bhatti, and Juhari (2019) believe that these issues are likely to affect a company’s hiring processes, legal compliance plans, and employee retention strategies. Janssens and Zanoni (2021) concur with this statement by saying that discussions about diversity and liquidity should move beyond the confines of a firm and highlight wider societal implications they have on communities.
The second force in Porter’s model is economic and it has been dominated by discussions about efficiency and cost reduction, as highlighted by Moudud-Ul-Huq (2021). In this regard, bakeries are looking for cost-minimization opportunities to improve their profitability and enhance their competitiveness. Relative to this assertion, Moudud-Ul-Huq (2021) has advocated for the use of lean production systems to improve competitiveness, thereby complementing this strategy.
Socially, local communities are making demands for greater accountability from companies for their activities and impact on society (Schoeneborn, Morsing and Crane, 2020). Relative to this statement, Feix and Philippe (2020) say some organizations have volunteered to provide community services, while others have chosen to support vulnerable groups in different areas of social development, such as sports and arts.
Technology is another force from Porter’s five-force model, which profoundly influences the macro-environment of Franz Bakery. Particularly, advancements in robotics, machine learning, and artificial intelligence have the highest impact on its operations because of their ability to automate production processes and customer service activities (Wang et al., 2020). Other researchers, such as Kim and Kim (2019), have also highlighted their impact in similar sectors, such as the tourism and hospitality industry.
The legal environment is another factor affecting Franz Bakery’s macroeconomic environment due to its potential to influence the firm’s compliance with corporate and labor laws. Changes in workplace policies that focus on social distancing, wearing of masks, and traveling, which have been brought by the COVID-19 pandemic to minimize infections, also have a high impact on the business environment (Hemmington and Neill, 2021). The same challenge has been reported in related industries, such as the tourism sector, as demonstrated by Hemmington and Neill (2021).
Environmental factors outline the last group of issues mentioned in Porter’s fiver-force analysis that affect Franz Bakery’s business environment. This is because authorities and the public are becoming more sensitive to the environmental impact of business operations, as affirmed by Gelski (2019). Therefore, companies are encouraged to adopt more environmentally friendly means of production, including the adoption of energy-efficient means of production to protect the environment (Gelski, 2019).
Macro-Environmental Analysis – Growth Opportunities for Business
Considering the potential impact that environmental forces could have on the food industry, Franz Bakery has an opportunity to tap into the organic foods market. Research articles, such as those authored by Ayyub, Asif, and Nawaz (2021) the prominence of this trend among customers. Secondly, Franz Bakery could digitize some of its production processes to improve product quality and service standards. Other opportunities exist in adopting cloud computing services for better data management and the use of Fin-Tech tools, such as digital payments, to expand the firm’s market outreach. Researchers, such as Knight and Wójcik (2020) have highlighted the efficacy of these tools in improving organizational productivity and performance.
Industry Environment – Porter’s Five Force Model
Porter’s five-force analysis refers to multiple areas of review that are useful when analyzing a company’s operating environment. The analysis done on the food and bakery industry suggest a high level of internal rivalry, low barriers to entry, high customer bargaining power, low supplier bargaining power, and a high threat of substitute products (Sawyer, 2018). The works of Wang et al. (2020) support these findings because they demonstrate that SMEs have a high level of internal rivalry because of low barriers to entry. This means that many players in the sector produce products that can be used as substitutes for one another. However, as, indicated by the Food and Agriculture Organization of the United Nations (2018), suppliers have low bargaining power because of the easy availability of raw materials and the relatively developed markets that support their exploitation.
Industry Environment – Threat to Business
Based on the outcomes of Porter’s five-force framework, threats to Franz Bakery’s operations include competition, economic uncertainty, workers’ health, and safety, as well as changes in laws and regulations. The last two threats are related to the COVID-19 pandemic because the measures instituted by governments to control infection affect workers’ health, safety, and the legal environment (Hemmington and Neill, 2021). High rates of competition are also a threat to the bakery’s current businesses operations. They are caused by low barriers to entry and the presence of substitute products in the market (Food and Agriculture Organization of the United Nations, 2018). Comparatively, customer and supplier bargaining power are likely to be affected by current economic uncertainties in the market, which stem from technology changes and the COVID-19 pandemic (Hemmington and Neill, 2021). They make it difficult for businesses to make long-term plans.
Internal Environment Analysis – VRIO Model
In using the VRIO Model to analyze a company’s internal environment, emphasis is on value, rarity, imitability, and organization of company operations. In terms of value, Franz Bakery has a strong brand heritage that spans more than a century and a pleasant store environment that attracts many customers (United States Bakery, 2021). Special flavors associated with its products also contribute to the firm’s value. Rare attributes about the bakery include its customer service standards, strong supply chain network, and brand quality (United States Bakery, 2021). These resources are responsible for the company’s success, as highlighted by Sawyer (2018). Alternatively, inimitable aspects of the firm’s operations include its brand image, customer service standards, and global presence. Additionally, from an organizational standpoint, Franz Bakery is well organized because of its high level of technological integration in its core management and production processes.
Internal Environment Analysis – Strengths and Weaknesses of Company
Based on a review of VRIO model findings highlighted in the previous slide Franz Bakery’s main strengths include its strong brand image, superior products, and strong supply chain network (Sawyer, 2018). These competencies are associated with the company’s positive brand image and superior product quality that have been perfected throughout its extensive years of operation (United States Bakery, 2021). Its strong supply chain network is also a product of many years of developing long-standing business relationships with suppliers and partners around the US who have supported the firm’s operations (Sawyer, 2018). However, the slow pace of adopting technological changes due to limited expertise and funds undermines these strengths.
Basic Change Management Strategy
The strategy for change management will be evaluated based on the application of Lewin’s change model. It describes three stages of amendment to an organization’s systems, which include freezing, unfreezing, and refreezing (Moon and Christensen, 2020). In the next slide, the importance of adopting this model to implement change at Franz Bakery will be highlighted.
Basic Change Management Strategy -Application of Lewin’s Model
Lewin’s change model demonstrates that there are forces for and against change adoption in an organization. In the context of this assessment, there are more forces for change than those seeking to maintain the status quo because high flexibility, intense competition, economic uncertainty, and effects of the COVID-19 pandemic on business operations, encourage the adoption of change in the workplace, while insufficient funds and limited access to skilled workers discourage the same. Forces that support change have a cumulative score of 10 points, while those that prevent it have a cumulative score of 4 points. These points were allocated based on their severity to Franz’s business operations and performance. The highest score was five points and the lowest was one point.
Basic Change Management Strategy- Driving Forces and Resistance to Change
Implementing the basic change management strategy requires a detailed understanding of the basic forces driving the change and causing its resistance. The primary driving forces affecting the operations of Franz Bakery come from market dynamics and not technological advancements (Sawyer, 2018). To manage market-driven changes, organization processes should be recalibrated based on prevailing market dynamics (Mierzwa, 2021).
Using Technology To Tackle Threats From Larger Organizations
Managing threats from large firms requires Franz Bakery to identify unique paths and drivers to innovation. This is because the process will help to clarify the objectives of the change management process and identify resources needed to implement a transformative plan, as stipulated by Lubik et al. (2013).
Using Technology To Tackle Threats From Larger Organizations – Innovation Drivers
Innovation drivers refer to motivations for an organization, or its employees, to choose one strategy of change management over another (Mierzwa, 2021). Market-based drivers to change management are aimed at aligning a business’s operations with these environmental dynamics, while technology drivers are designed to integrate useful advancements in technology into existing business processes (Lubik et al., 2013).
Using Technology To Tackle Threats From Larger Organizations – Innovation Paths
The push to use technology to tackle threats from large organizations stems from two routes to achieve success in innovation – technology push and market pull. Lubik et al. (2013) believe that market factors often create an environment where companies adopt new technologies to align their internal processes with prevailing environmental conditions. Comparatively, Mierzwa (2021) says that technology push is focused on developing new product ideas to bring to the market.
Using Technology To Tackle Threats From Larger Organizations – Business Direction
Franz Bakery should change its focus from a market-driven change model to an innovation-driven one. This strategy is meant to keep up with on-going changes in the business environment, such as remote working, automation, and use of artificial intelligence in food production (Moudud-Ul-Huq, 2021). Thus, it is important for Franz Bakery’s business direction to be characterized by the development of a robust digitization plan across all levels of operation. At the same time, the firm should still maintain its sensitivity to market changes because technology and market forces are interconnected and interdependent in their functions and approach (Mierzwa, 2021).
Strategic Choice Approach Model
The strategic choice approach model aims to identify the right change management plans based on an evaluation of factors that cause uncertainty in an organization. This framework of reasoning is characterized by four modes of idea development that include shaping, designing, comparing, and choosing (Sawyer, 2018).
Strategic Choice Approach Model – Shaping Mode
In the context of the present investigation, the success of the process of implementing new technology at Franz Bakery is influenced by the availability of funds, skills acquisition, competition, and organizational culture (Sawyer, 2018). Other auxiliary considerations include brand image, employee health, and safety issues in the workplace. At the same time, competition creates the background for the deployment of innovative techniques for outwitting rivals but the availability of funds, competent skills, and a supportive corporate culture determines how successful such a strategy would be (Sawyer, 2018).
Strategic Choice Approach Model – Designing Mode
When designing an innovative plan for Franz Bakery, it is important to understand what can be done to address its challenges and the potential drawbacks of each choice available to the managers. These outcomes are influenced by the extent of uncertainty prevailing in the business environment and how well proposed strategies align with the company’s existing business objectives (Lancaster, 2018). The cost of adopting new technology and the potential for their acceptance are also important considerations in this process. Collectively, they define issues that need to be considered in the design mode stage of the strategic choice approach model.
Strategic Choice Approach Model – Comparing mode (Greggs)
Gregg’s success is an example of the importance of transformational leadership in supporting change management. A detailed analysis of the company’s strategies reveals that companies should focus on the “why” of adopting new technology as opposed to the “how.” Doing so gave Greggs the momentum it needed to communicate intended change management objectives and secure employee support in the process (Greggs, 2021). Given its success in implementing transformative change, Franz Bakery should also focus on communicating tangible benefits of change to all employees through e-learning solutions to enhance employee support for change.
Strategic Choice Approach Model – Comparing Mode (In-house Bakers)
In-House Bakery’s innovation plan makes it possible to monitor the quality of its products on-site, while an existing stream of customers review their products online. Its success is premised on product diversity and building a loyal customer base (InHouse Bakery and Coffee Shop, 2021).
Strategic Choice Approach Model – Similarities and Differences in Gregg and In-House Bakery
It emerges that Greggs and In-house Bakers are similar because they were both started as family-owned businesses and have existed for more than five decades each. However, both bakeries differ in their business focus because Greggs is specializing in wholesome products while In-house Bakers is focused on traditional brands (InHouse Bakery and Coffee Shop, 2021). Greggs also does most of its baking off-site, while In-house does it on-site (Greggs, 2021).
Strategic Choice Approach Model- Choosing Mode
An adaptive change strategy should be adopted by Franz Bakery. It involves instituting incremental changes in the organization and merging new technologies with existing cultures to find the right balance between fulfilling market and technology needs (Sawyer, 2018). Employees also need to be trained before any new change is implemented to better prepare them for it, as proposed by Moon and Christensen (2020).
Summary
This presentation has highlighted different factors that are relevant to change management and innovation for a bakery business willing to use technology to outwit its competitors. Franz Bakery has been used as a case study to highlight market opportunities and challenges that exist in meeting these objectives. Given the environmental challenges and internal resources needed to implement a robust change management plan in the organization, opportunities for growth are likely to be seized if the bakery abandons its market-driven business direction for a technology-based one.
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