The Organizational Change

Organizational Transformation

Organizational transformation comprises a review and modification of organizational structures and operational procedures with the goal of improving the company. Organizational transformation is a strategy used by businesses to embrace methods that are more productive and cost-effective while staying one step ahead of the competition. This essay will look at the adjustments Unilever made in the Middle East, the reasons behind them, how they worked out, and how to arrive at a conclusion.

Unilever: A Multinational Corporation

One of the top multinational corporations is Unilever. It was established in 1930 as a business with the intention of producing soap, process food products and a wide range of fast-moving consumer goods, (Benn et al., 2014). It was founded as a Dutch-British firm, and ever since then, it has gone through a series of changes, which are Darwinian, whereby it retains what is profitable and do away with what is no longer working. Unilever deals with Fast Moving Consumer Goods (FMCG) which are diverse, since they vary from food and beverage products, sanitation products, health products, among others. The major groups of Unilever products which are responsible for profits, particularly in Europe and North America are brands such as Lipton Tea and Lux soap. The nature of the goods requires customer proximity, hence demanding the company to undergo changes that ensure that they earn a competitive advantage, (Pettigrew et al.,2003).

Change in Management Structure

Based on its location, its management team comprised of Dutch members at first. This was due to the accessibility of labor since the Dutch were the closest regarding geographical location. However, economies of scale, the need to benefit from the diversity of human labor, among other factors led to the change of management structure to a matrix of individual managers who strive to achieve the vision and the mission of Unilever, (Boyle et al., 2005).

Reasons for Change

In the recent years, Unilever has concentrated on the foods business. This came from a strategic intention by the managers to focus on one of the consumer products and make it the brand of Unilever. Change is an inevitable occurrence in transnational companies. Unilever saw its change as a long march forward and not one big jump. This explains why the change has taken quite some time, (Marshak, 2006). Until the mid-1960s most operations such as marketing and distribution decisions were in the hands of local managers. The local manager was fully responsible for the profits of all the brands. However, as the company diversified and became transnational, there was a need to allow management specialization. This is where managers were given specific units that they were supposed to be in charge. There was a need to form product groups which would major on specific brands, (Reilly, 2009).

Operational Changes

There was also a need to change the operations due to the availability of raw materials. Before the World War II, the food’s brand was only driven by raw materials, that is, tea and edible oils. Edible oils were used for the production of margarine and table oils. The raw materials needed to be preserved before they are put into use, as a way of ensuring less lead time. With high competition in the industry, the competitive advantage shifted from raw materials acquisition to the logistics of handling frozen products and the company had to enact organizational changes that focused on value addition on work-in-progress rather than raw materials. This made Unilever be the leading ice cream company and other frozen products.

The Changes Undertaken

Ten years after it was founded, Unilever started changing its provision of management skills to replace the Dutch and British managers. Some were retained, but most of the executives were fired to accommodate the new talents from the new managers. Most executive and technical positions were occupied by people of diverse nationalities, (Kolk et al. 2005). New profit-responsible groups were formed, with a creation of three food unit heads. The new units were expected to focus partially on raw materials acquisition and also on the leverage that would come from the right logistics in product distribution, (Senge et al., 2007).

Outcome of the Changes

The profit-responsible groups worked well for quite some time, this enabled Unilever’s food business to drastically grow, with major markets being Europe and North America. Unilever was, therefore, able to maintain a strong market position.The changes also led to well shared and known brand names, repeated consumer-related research and adoption of new food-processing technologies. This led to an overall better performance in the company in the early 1980s, (Gioia et al.,2013).

Conclusion

Organizational change is a repeated process that takes time and is therefore not a one-time occurrence. The study has shown that organizational change brings about positive changes to the well-being of the organization. This is evident in the case of Unilever. However, it is worth noting that a change that led to a positive performance at a particular time in history may need to be revised after some time. For instance, decentralization leads to better operations in Unilever in the 1940s, but in the 1980s, the management was working towards embracing a semi-structured management system. This is one that comprised of both centralization and decentralization aspects.

References

Benn, S., Dunphy, D., & Griffiths, A. (2014). Organizational change for corporate sustainability. Routledge.

Boyle, M. E., & Ottensmeyer, E. (2005). Solving business problems through the creative power of the arts: catalyzing change at Unilever. Journal of Business Strategy, 26(5), 14-21.

Gioia, D. A., Patvardhan, S. D., Hamilton, A. L., & Corley, K. G. (2013). Organizational identity formation and change.Academy of Management Annals, 7(1), 123-193.

Kolk, A., & Pinkse, J. (2005). Business responses to climate change: identifying emergent strategies. California Management Review, 47(3), 6-20.

Marshak, R. J. (2006). Covert processes at work: Managing the five hidden dimensions of organizational change. Berrett-Koehler Publishers.

Pettigrew, A., & Whittington, R. (2003). Complementarities in action: organizational change and performance in BP and Unilever 1985-2002.

Reilly, A. H. (2009). Communicating sustainability initiatives in corporate reports: Linking implications to organizational change. SAM Advanced Management Journal, 74(3), 33.

Senge, P. M., Lichtenstein, B. B., Kaeufer, K., Bradbury, H., & Carroll, J. S. (2007). Collaborating for systemic change.MIT Sloan Management Review, 48(2), 44.