Introduction
This presentation describes how to use creative change and innovation to manage change in a Small and Medium Enterprises (SMEs). It is divided into four main thematic areas namely, company, environmental, implementation, and change management.
Change Management in SMEs
The subject of change management in SMEs has been widely discussed and encompasses such debates as the reasons for change and how to manage it. According to Mustafa, Nakov, and Islami (201, p. 93), many businesses today innovate to survive rather than to to prosper. The main point is that even the SMEs find it necessary to change in response to the global economic trends. In many cases, SMEs implement change to retain their competitive edge, which could be easily lost to rivals, which explains why many family-owned businesses rely on external knowledge to remain competitive (Werner, Schroder, and Chlosta, 2018, p. 205). The SME selected for this report is Alessi Bakery, a family-owned business employing just over 100 employees. The need and type of change are discussed alongside such aspects as what the firm can learn from other companies in the same industry.
Alessi Bakery: Company Overview
The history of Alessi Bakery is unique because of the dedication of a single family to keep the business going. The Alessi family first arrived in Tampa Bay in 1905 from Italy and brought with them bread-making knowledge (Flocal, 2018). The first bakery was opened in 1912 on Cherry Street. However, the Alessi family went back to Italy in the early 1920s and came back to Tampa in 1925, when they reopened the business. Today, Alessi is regarded as one of the oldest family-owned businesses in Tampa spanning over 108 years (Gannon, 2020; Roman, 2021). Many customers have since identified themselves with the brand due to the quality and the friendly environment fostered. Today, Alessi bakery has become a true landmark in Tampa Bay, Florida.
According to Flocal (2018, para. 2), Alessi has built a reputable legacy among the Tampa natives and visitors coming from around the nation. As a family-owned business, Alessi is now in the fourth generation of owners since it was established in 1912 by Nicolo Alessi. An important aspect of the business is that it seeks to serve the local clientele, which could explain why efforts for expansion have been rare. Additionally, many traditional aspects of the business have been retained due to the emphasis on retaining the firm’s legacy. The company prides itself in quality delivered across all products (Alessi Bakeries, n.d.). Convenience has also been achieved by ensuring that the baked goods are accessible across the stores and supermarkets across the country.
Just like the mission statement, the vision of Alessi Bakery can only be inferred from the content found across the websites. The most common theme that emerges is that Alessi bakery hopes to be a level above the competition through continuous innovation and business promotion. According to Kelly (2018, para. 6), Alessi does a lot of thinking outside the box, which makes it impossible for competitors to achieve the level of Alessi when it comes to specialty cakes. Business promotion is achieved through such efforts as printed T-shirts to help consumers identify with the product but the key idea is to build upon the legacy that has been established over the years. Therefore, Alessi has a vision to remain an icon of Tampa Bay by offering tastes that have persisted.
The mission statement of Alessi is not expressly stated in the company’s documents or websites. However, it can be inferred from the company’s posts and adverts posted on the various digital media. On its website, the company states that quality has ruled since 1912 and that all goods produced are expected to meet the highest possible quality standards. The dimensions of quality are diverse but it can be established that Alessi Bakery focuses on skilled workforce and custom designed products. Another aspect of quality is that Alessi addresses various consumer needs, including allergies and intolerances to different ingredients (Alessi Bakery, n.d., para 2). Additionally, the business uses age-old recipes that have become iconic (Kelly, 2018, para. 4). Lastly, the current owners keep innovating to keep up with the market trends.
From the mission and vision of the company, it can be inferred that Alessi bakery upholds several values that guide its operations. Most importantly, quality products act as a guiding principle and the foundation upon which the firm’s legacy is built. Additionally, Alessi also acknowledges that the business environment is dynamic and keeps changing and that the only way to deal with it is by thinking outside the box. Such a phrase simply implies innovation, which also aid in keeping up with the market trends. Product development is also critical despite the fact that Alessi uses recipes developed decades ago by its founders. Addressing consumer needs through the product development means that Alessi can remain at the top of the competition for the foreseeable future while retaining the age-old legacy.
Alessi bakery is a manufacturer of baked products, including pastries, cakes, cupcakes, cookies, and sandwiches. Multiple products fall under these categories, for instance, Coconut Cream Horn and Peanut Butter Cannoli under pastries. A key point to note is that Alessi produces products that have visible differences from the competitors. For instance, Alessi is founded on a solid legacy comprising of ancient recipes and methodologies that have been maintained across the generations. The production of these goods can be classified as manufacturing because each of them is designed and made by the bakery. The production or manufacturing procedures may also be guided by the family’s traditions and the Italian origins. Additionally, the selling of these products fall under marketing where the company reaches out to consumers through multiple initiatives.
Company Overview – Financial situation
The financials of Alessi Bakery are not easily accessible majorly because of the fact that the business is family-owned. However, digging for facts on the internet reveals that the company makes only decent profits, which is attributed to the fact that profitability is not the primary objective. The sentimental attachment to the bakery means that the current generation priorities extending the legacy of Alessi through the age-old recipes and processes labelled ‘Italian touch’ by VanDooijeweert (2021, para. 7). The financial situation is sometimes dire as illustrated the company filing for bankruptcy in 2012. today, the revenues average between $10 and $20 million across all locations. After factoring in the operational costs, the profits can only be decent. Therefore, it can be argued that maintaining family traditions can negatively affect the profitability of a business.
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. The findings will be useful in proposing 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, environmental factors will be analyzed in three phases, including macro-environment, industry environment, and internal corporate environment analyses. The framework is a comprehensive guide to understanding situational factors impacting change in an organization.
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, Alessi 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, Alessi Bakery could digitize some of its production processes to improve product quality and service standards (Knight and Wójcik, 2020).
Additionally, growth opportunities could be tapped through creativity. Today, YouTube videos and other social media sharing networks are full of creative ideas on how to bake creative cakes. The focus is usually on new recipes and decorations where people attempt to experiment with new ideas. Cakes are particularly common among those seeking to innovate because the list recipes, ingredients, and decorations seem to be endless. Additionally, new ingredients are also added to recipes, for example, poppy seeds, lemons, and chocolate fillings. The creativity is embraced by the millennials, which could see a shift in consumption patterns. Such developments pose a threat to Alessi due to the focus on the traditional products. However, Alessi prides itself in innovativeness and the custom cakes it produces are evidence that that the firm can get creative.
There is also a growing nostalgia towards traditional treats. Artesian breads can be seen as part of this shift in consumer behavior as many decide to try them. the main difference between mass-produced and artesian bread is that the latter are not made to last long on the shelves. Additionally, artesian breads have better flavors and taste. Additionally, the quality is usually higher as traditional recipes and methods are used. Even though Alessi prides itself in the legacy and tradition spanning over a hundred years, artesian products are hardly part of its specialty. Therefore, artesian bread and the growing nostalgia poses another threat to the business. an argument can be made that since the firm has traditional recipes it can produce artesian breads and other products that can meet the growing demand for traditional treats.
New technologies and equipment are being developed each day for bakeries across the world. Currently, such breakthroughs as vacuum cooling and radio frequency heating are becoming common among large bakeries and other in-house bakeries in supermarkets. In many aspects, such technologies are associated with many benefits, some of which include reduced baking time, lower energy consumption, and even time and cost saving abilities. Others include rotating and spiral cooling racks and new kinds of ovens. Alessi hardly uses the new technologies and equipment as they strive to achieve the Italian touch. Going forward, Alessi may consider those technologies and equipment that can help achieve better results while maintaining their legacy and identity. Many traditional businesses have made considerable efforts to deploy new technologies and techniques and still achieve the same results.
Innovations in bakeries are endless as businesses try to create new designs, artesian breads, and new products for the consumers to enjoy. However, it can be argued that most bakeries are after the current market and their history is not as great as Alessi’s who have survived on their traditions. Some add herbs while others create nutritionally-focused products with less sugars and fats or that contain other ingredients that add nutritional value. Product aesthetics have also dominated the bakery business in the country. At the same time, it is important to acknowledge that there is also growing nostalgia as more consumers embrace traditional treats. For Alessi, such is a trend that feels welcome because the firm can always convince consumers that its products offer traditional treats dating back since 1912.
Industry Environment – Porter’s Five Force Model
Porter’s five forces model can be used to highlight the environment in which the firm operates and justify the need for change. The analysis reveals that the competition or rivalry is very high that a business can only survive by having an edge in the market. barriers to entry are also low because small startup capital is required. Even smaller businesses can easily establish bakery operations and snatch significant market shares. Customers have a variety of options, which means their bargaining power is high. Sellers have moderate bargaining power because they are numerous enough to allow relatively stable market prices. Lastly, bakery products come in different forms and types, which customers can substitute any of them
Industry Environment – Threat to Business
Based on the outcomes of Porter’s five-force framework, threats to Alessi 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, Alessi Bakery has a strong brand heritage that spans more than a century and a pleasant store environment that attracts many customers. 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. These resources are responsible for the company’s success,. Alternatively, inimitable aspects of the firm’s operations include its brand image, customer service standards, and global presence. Additionally, from an organizational standpoint, Alessi 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
A SWOT analysis can be used to examine the current situation at Alessi Bakery. A key observation is that the firm is surrounded by strong competitors often performing better. Larger businesses are able to reach broader markets and are often aided by their ability to embrace new technologies and methods. An argument can be made that the core differences between the rivals is that they have adopted a business model that is different from that used by Alessi. However, Alessi’s main strength is its legacy and iconic nature of its brand and products. Even so, new generations of consumer may fail to appreciate the value of the company’s traditions and embrace new products offering better tastes. The competition is the main threat for Alessi but there are opportunities to be exploited through geographical expansion and embracing new technologies.
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 Alessi 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 Alessi’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 Alessi Bakery come from market dynamics and not technological advancements. To manage market-driven changes, organization processes should be recalibrated based on prevailing market dynamics (Mierzwa, 2021).
Tackling Threats From Larger Organizations
Bakeries are a common site in the United States, which means the competition is usually stiff. Many bakeries in the country are large in size and generate massive revenues and profits for the owners. In Tampa, Alessi is also not the largest bakery, which explains the decent revenues and financial problems. Family-owned businesses may fail to embrace growth opportunities as most pursue legacies and the connection they have with the local consumers. Such competitors as Phil’s and More Bakery are almost double the size of Alessi in terms of revenues (Inc Fact, 2021). Therefore, the external environment presents stiff competition for Alessi. The environment analysis has not revealed how the businesses differentiate themselves or what products they sell. Therefore, it can only be assumed that the survival of each is based on the ability to serve unique markets.
The need for change at Alessi Bakery emanates from the current situation where the business seems to struggle financially. Apparently, even serving local clientele may require businesses to embrace the digital transformation (Ulas, 2019, p. 663; Pelletier and Cloutier, 2019, p. 855). A digital transformation can be necessitated by the fact that the millennials have become inherently digital where their lives, including shopping, revolved around the use of digital gadgets. New opportunities include new markets and cheap and effective marketing practices due to the effectiveness associated with digital tools. Digital businesses have a competitive edge over the brick and mortar business models. There are also the financial incentives where broader markets raise revenues. Changing with time is critical, which means Alessi can build a new legacy that connects with the current generation.
Using Technology To Tackle Threats From Larger Organizations – Innovation Drivers
Bigger companies have embraced innovations and new technologies to help them improve operational efficiency. However, the key threat comes from the fact that new technologies allow larger firms to design and produce new products to keep up with the changing consumer tastes. The current market is characterized by a wide variety of baked products, some which are novel ideas and designs by individuals and smaller firms. However, even large bakeries are following the trend and new products keep emerging rapidly. Additionally, innovations have helped improve product aesthetics and produce higher quality products. Better equipment saves time and costs due to the possibility of automation. However, these elements can only work if the larger companies serve the same markets or are able to encroach into Alessi’s niche market.
Relatyove to these discussions, 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
This section discusses the strategy for change management that will be adopted at Alessi Bakery. To achieve this objective, an overview of the need for change, type of change, and change management strategies will be discussed in detail. Additionally, other aspects that accompany the strategy for change include time and resources needed for implementation. The actual implementation of the change is highlighted alongside such practices as monitoring the implementation. Other include key considerations when implementing the change, expected outcomes, and key success factors.
Using Technology To Tackle Threats From Larger Organizations – Business Direction
Alessi 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 the 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; Kunisch et al., 2017).
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.
Strategic Choice Approach Model – Shaping Mode
In the context of the present investigation, the success of the process of implementing new technology at Alessi Bakery is influenced by the availability of funds, skills acquisition, competition, and organizational culture. 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.
Strategic Choice Approach Model – Designing Mode
For family-owned businesses like Alessi, it can be assumed that it has lasted for decades due to the connection it has with its customers. Therefore, a key consideration in change implementation is that the connection is sustained and consumer loyalty remains. Major organizational changes can ruin an identity, which is social constructed through sophisticated interactions between a business and its stakeholders (Essamri, McKechnie, Winkhofer, 2019). Alessi’s image and identity is tied to its legacy of producing baked products with an Italian touch. The brand and identity of Alessi should be protected for the sake of the legacy. Consumer perceptions of the change and its effects could affect the future legacy of the business. therefore, there is a need to ensure that digitization does not change Alessi’s image in the eyes of its loyal consumers.
When designing an innovative plan for Alessi 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.
Comparison between Greggs and In-House Bakeries- Greggs
Large international bakeries have embraced modernization, which has allowed them to prosper. Initiatives that Alessi can copy include product diversification to include products other that baked goods. For instance, Greggs also sells other foods, including sausages (Greggs, 2021). However, it can be argued that their capacity is larger and the use of new technologies allow for flexibility and diversification. On the other hand, Alessi can be regarded as a specialist business focuses on a selected product lined based on the family’s capabilities. Geographical expansion is another initiative that facilitates growth in size and revenues, which is something that Alessi can achieve with the help of digitization. Varied consumer groups and brand positioning have allowed Greggs and similar companies to prosper and survive in a highly competitive market.
Comparison between Greggs and In-House Bakeries – In-House Bakeries
In-house bakeries in supermarkets also pose a significant threat to Alessi but there are lessons to be learned. Many such firms often engage in purposeful packaging that seek to inspire impulse buying. Additionally, products on the shelves are often freshly produced, which means that consumers can be guaranteed that what they purchase has not lasted too long (InHouse Bakery and Coffee Shop, 2021). Additionally, the in-house bakeries can also offer better alternatives to traditional bakeries as long as they can get the recipes. Aesthetics is another core lesson to learn from such firms.
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
Change management is not always easy for SMEs and family-owned businesses seeking to retain their traditions. However, the small size of many SMEs should allow them to be flexible enough to embrace and implement change as the need arises. The success of a project depends on several factors. For Alessi, a successful change implementation is one which attracts positive consumer response. As explained earlier, branding and identity will be critical and consumers need to accept the changes. A similar aspect applies to the internal stakeholders where all employees need to accept the changes. For a traditional business, some changes are hardly welcome among employees whose resistance can be the difference between success and failure. Lastly, the financial implications of the change can affect implementation success. Funding is needed for labor and equipment and other aspects. If the changes do not improve the financial situation of the company, then Alessi may consider retaining status quo. However, it can be expected that the reputation of Alessi can spread across the country and attract the attention of more visitors to Tampa.
Therefore, some key considerations or strategies that can be adopted include making sure the employees are aware of the change. Most importantly, the change proposition needs to be compelling, which could contribute towards managing the resistance. At Alessi, digitization of different operations offers benefits for both the firm and the employees. Effective leadership keeps workers engaged, satisfied, and well-informed on the change and roles and responsibilities of each employee. A key point to emphasize is the need to effectively communicate with the employees, which keeps them informed on what is needed of them.
At the same time, change implementation can be a challenging process and focus may be lost with time. Monitoring becomes a critical element because leaders can examine the effecting of change to determine if the desired impacts are achieved. According to Neumann, Robson, and Sloan (2018, p. 120), monitoring can be done formally or informally but it is key that the leaders remain enthusiastic about the process. However, the basic idea is that the progress is evaluated and any deviations from the set goals corrected. Additionally, monitoring presents all stakeholders with a learning opportunity regarding the change and how the business responds. Any modification in strategy, practice, or even the change itself can be determined through effective monitoring. Under normal circumstances, implemented is designed to follow a plan, which should be agile enough to accommodate uncertainties.
Conclusion
The report explores the strategy for change management at Alessi bakery. Among the key observations include that Alessi has to digitize in to effectively serve the current market comprising of a generation that is increasingly digital. Additionally, this change allows the firm to be more exposed and serve a wider market. new technologies and equipment are transforming bakeries and their operations, a trend that Alessi has to embrace. Lastly, the change will allow Alessi to address some of the critical financial issues.
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