Introduction
The world market has become very competitive, and it is important for any business unit to ensure that the strategy it applies has the capacity to meet market demands. One of the best strategies that firms are currently using to increase their size and competitiveness is through mergers and takeovers. It is only those firms that are successful in the market that should be acquired. ABC Company has confirmed that Whole Foods Market is a competitive firm with a good brand name in the market.
It has confirmed that Whole Foods Market has been successful in the local market and its attempts to capture the overseas market have also been successful. It is now upon the management of ABC Company to ensure that after this acquisition, this firm will remain as successful as it is in order to benefit from this acquisition. There must be a diagnosis of the firm to determine its success capacity in the market.
Organizational diagnosis is one of the most important factors that firms in the current market have to conduct when planning acquisitions. Organizational diagnosis refers to a detailed analysis of a firm in order to have full knowledge on various factors about the firm.
Organizational diagnosis is important in analyzing the firm and determining its ability to operate in the market successfully despite various forces that exist. A number of models have been proposed by various theorists to help in organizational analysis. It is important to understand these models in order to choose the one which is the most appropriate for the diagnosis of a firm.
An Overview of the Models
Organizational diagnosis models are important in enabling management make a decision on the capacity of a firm in cases of mergers and takeovers. It helps management in making a decision on the most appropriate model to chose when deciding on the new management approach to take after the acquisition. According to Daft (2009), these models are useful in helping the management understand how the new firm will be integrated into the existing firm successfully.
As was mentioned previously, each model is appropriate for analyzing specific firm or situation. It can be futile for a firm to choose a model that is inappropriate for a given firm or a given circumstance. The best way through which a firm can manage to operate an acquired firm successfully is by selecting an appropriate model and applying it in accordance with the set requirements.
The Congruence Model is one of the most popular organizational diagnosis model used in the current society. This model strives to align all the high performance drivers within an organization. This model was developed by Nadler and Tushman to help organizations that were under-performing due to non-aligned performance drivers. These four elements must be aligned in order to achieve the desired result.
This model holds that the failure of most of organizations is always caused by lack of congruency among these four elements. When any of the four elements is not compatible with others, then it may be impossible to achieve the desired result. For instance, when the organization has a good organizational culture, excellent workforce and properly designed tasks, but lack appropriate structures, the desired success cannot be achieved.
This model holds that none of the four elements can be considered to be superior to others, although the workforce is always given more weight. This is because every organization can only achieve the best result. For instance, when the workforce lacks proper organizational culture to guide their practice within the firm, chances are high that they will not deliver output as per their capacity.
The negative organizational culture will influence their practice within the firm negatively, and this will turn them into poor performers. When all the four elements are appropriately aligned, achieving success would be much easier. This tool may be appropriate for the management of ABC when conducting a diagnosis of Whole Foods Market.
The McKinsey 7S Framework is another model that various contemporary firms have been using in the current competitive market. Developed by Robert Waterman and Tom Peters in 1980s, this model is based on the premise that there seven internal aspects of an organization which must be assigned in order to achieve the expected results (Hooley, 2008).
This model has remained popular in helping firms improve their performance in the market, in determination of the possible impacts of future changes, aligning various processes and departments upon acquisitions or mergers, and determination of how best a proposed strategy can be implemented. This has seen this model become very popular when firms are planning mergers or acquisitions. These seven elements are always categorized as soft or hard elements. The table below shows these elements.
McKinsey Seven Elements
The hard elements are factors that are for the management to identify, define and influence. They include the strategy that is developed by the top management to run the firm, the structures put in place by this top management to help in running the firm, and the systems developed by the management within the firm. These three factors are always determined by the management of the firm. On the other hand, soft elements are factors that less tangible and more difficult to define.
However, they are very important to the organization’s success. They include factors such as the staff working within an organization, their style at work and skills making them useful, and the shared values they have within the organization. As Coulter (2009) puts it, the soft elements involve the organizational culture that defines how employees behave within a firm, and how this behavior may influence the general performance of the firm. These seven elements of this model are intertwined.
They are directly related, and success will always be determined by the ability of the management to ensure that they are aligned and are optimal. Aligning of the seven elements helps in ensuring that success is achieved symmetrically within the firm. The management would need to ensure that all the elements fit into a system where it can deliver the best success within the firm.
Burke-Litwin’s Causal Model of Organizational Performance and Change Model has also gained a lot of fame in the contemporary world as Spulber (2007) notes. This model is built on the premise that success can only be achieved when the internal and external factors are managed optimally. The performance of a firm and its ability to manage change can only be achieved if the management ensures that the internal factors are aligned to the external factors in the business environment.
This model has been useful when diagnosing a firm on the basis of cause and effect. This model is based on the following organizational dimensions.
The external environment, the mission and strategy, leadership, organizational culture, organizational structure, management practices, the systems, the work unit climate, tasks and individual skills, needs and values, the motivation, and organizational and individual performance. This model helps in understanding how each of the above factors has direct influence on the performance of a firm.
Strengths and Weaknesses of the Models
Each of the above models has its own strengths and weaknesses. The congruency model is very appropriate in analyzing the internal factors of a firm and determining their congruency in achieving the set goals. However, it lacks details on how the external factors may affect this effectiveness of the internal factors.
Burke-Litwin’s Causal Model of Organizational Performance and Change Model give detailed analysis of how performance of organization may be influenced by various causative agents. It is advantageous in analyzing and some of the possible causes of success and failures of a firm. However, its main disadvantage is that it is not an appropriate tool in diagnosing a firm during mergers or acquisitions.
This means that the most appropriate tool would be McKinsey 7S Framework. It is widely used in case of mergers and takeovers, although it does not have a detailed internal analysis of a firm as the other two models. However, it still remains the most appropriate model that this firm can use in the diagnosis of Whole Foods Market.
Issues That Whole Foods Market Is Facing
Whole Foods Market has been successful in the American markets and other overseas markets. The management of this firm has ensured that this firm acquires the global market, but in a way that is sensitive to the environment. This has seen it be considered as one of the firms that is very conscious of the environment. However, the firm has not been able to expand its market beyond the United States and Europe.
This means that the firm has not been able to perform optimally in the market. This is what management of ABC must achieve when it takes management roles. The management of ABC Company must find ways of dealing with threats and weaknesses that Whole Foods Market has, while maximizing its strengths and opportunities. This will ensure that the acquisition results into success.
Recommending the Best Model to Use
It is important to determine the best model to use among those that are discussed above. When choosing the appropriate model, it is important to understand the current situation in which a firm is. In the current state, the most pressing issue is how best Whole Foods Market will be integrated into ABC Company successfully in order to increase its productivity and the overall profitability of ABC Company.
The most appropriate tool would therefore, be the McKinsey 7S model. This model is recommended because it starts by analyzing the hard elements that can be manipulated by the management, and the soft elements that cannot easily be manipulated, and coming up with an appropriate strategy that would realize the desired success. It is also appropriate because it has created a precedent where firms that have used it have realized success in their mergers or acquisitions.
References
Coulter, M. (2009). Strategic Management in Action. New York: Pearson Higher Education.
Daft, R. (2009). Organization Theory and Design. New York: Cengage Learning.
Hooley, G. (2008). Marketing Strategy and Competitive Positioning. Harlow: FT Prentice Hall.
Spulber, D. (2007). Global Competitive Strategy, Cambridge: Cambridge University Press.