Background information and theory
To manage strategic change effectively, Hill and Jones (2008) state that the management in an organisation needs to determine that change is indeed necessary. Additionally, the managers must identify the type of strategic change ideal for its situation, in addition to identifying the obstacles it is likely to encounter while implementing the change.
The company’s senior management must also determine the best ways to manage and evaluate change. In an ideal business scenario, businesses get to choose from three possible forms of strategic change namely, reengineering changes, restructuring changes, and innovative changes. In most companies, reengineering strategic changes are adopted as part of organisation restructuring actions.
Specifically, reengineering changes are put in place when a company is seeking to differentiate its operations or products from other players in the market. Alternatively, reengineering changes can be used to integrate the operations of a company in order to improve organisational performance. Reengineering changes are also viable where the management is seeking to downsize its workforce or streamline its operations in order to achieve an identified organisational objective.
In the first step, the management determines there is a need for change by: i) recognising that a gap exists between the company’s desired results and the actual performance; ii) analyzing the company’s current position; and iii) determining how best the company can attain the desired results (Hill and Jones, 2008).
In the second step, the management needs to determine specific obstacles that the company may experience while implementing strategic change. According to Hill and Jones (2008), organisations usually face corporate, divisional, individual, or functional obstacles when implementing changes.
In the last two steps identified by Hill and Jones (2008), managers must determine how well the identified strategic changes are going to be managed and evaluated.
Specifically, managers responsible for implementing strategic change must decide who between internal managers and external consultants are best suited to spearhead the change efforts. While doing this, Hill and Jones (2008), note that the managers must balance between the need to have independent views presented by external consultants and the knowledge possessed by internal managers on the operations of the company.
Strategic recommendations for Arkas
New market
According to Bhatt and Troutt (2005), change in any organisation “involves bringing about desired choices and usually involves stopping, starting or modifying activities” (p. 535). The focus of this study (Arkas Holding- hereunder mentioned as Arkas) is no exception to this. Considering the wide array of services that Arkas has, venturing into new markets would be a more appropriate strategic action than the introduction of a new service.
According to evidence available in the Company website, Arkas has ventured into different operation fields, which provide it with an outstanding business presence in and beyond Turkey. Specifically, Arkas’ operations include shipping, warehousing, container deports, port management, air transportation, and land transportation.
As is evident in the Moroccan case (Arkas Holding, 2010), diversifying Arkas’ operations into new frontiers could enhance the company’s profitability. Information provided in the Arkas website show that the company’s presence in Africa is wanting. With Morocco, being the only African country that Arkas has ventured into, it is rather evident that targeting other African countries could be beneficial to the company.
Some of the potential markets include Ghana, Nigeria and Gabon. Ghana is a major exporter of cocoa, gold, tuna, timber, manganese ore, diamonds and aluminium (Workman, 2007). Gabon on the other hand exports oil, manganese and wood to both developed and developing countries (Bureau of African affairs, 2010), while Nigeria is a major oil and natural gas exporter. The Northern Africa country also exports timber and cocoa (economywatch, n.d).
Since Arkas may not be able to venture into the three identified African countries at the same time, the management of the company may have to sit back and decide about the country with the greatest potential of serving its interests. Once they decide on the country of choice, the management should then decide on the approach to use when implanting change. According to Hill and Jones (2008), companies usually have to choose between top-down change and bottom-up change.
In the former approach, “The top management team analyzes what strategies need to be pursued, recommends a course of action, and then moves quickly to restructure and implement change” (p. 193). In bottom-up change, the top management in a company consults with other people in the organisation, and develops a plan that details events and steps that the company will undertake during the implementation of change.
While the bottom-up change is more comprehensive, the top-down change is more appropriate for Arkas owing to the fact that the company would be venturing into a market, which is already targeted by other shipping and freight companies. Using a top-down change approach would ensure that decisions on implementing change are made at the managerial level, therefore ensuring that they are speedy and prompt.
Internal improvement using Business Process Improvement Initiatives (BPII)
Through incorporating BPIIs in their change strategies, organisations are able to restructure their business programs in a manner that enhances the efficiency, effectiveness and flexibility of processes (Bhatt & Troutt, 2005, p.535). Seeing that Arkas has diversified its business processes to other sub-sectors beyond shipping, it is natural to assume that the different organisational units represented in the company presents an extra management challenge to the company.
Specifically, Arkas may have a hard time aligning internal and external organisational processes in a manner that would ensure operational effectiveness and minimal conflict. As suggested in the BPII theory evident in Bhatt and Troutt (2005), Arkas can succeed in internal improvement initiatives through minimising any waste that can be attributed to customer claim settlements, warranty costs, reworking or wasted time.
More so, the shipping company can enhance its internal operations by reducing variance among its different activities. Additionally, the holding company can eliminate redundancy by streamlining similar operations across the various departments in the various companies working under the Arkas group umbrella.
Trying to streamline operations across the different agencies in Arkas will no doubt present the management with alignment challenges. As such, the management should be prepared to start the process by streamlining operations in agencies whose services are similar.
For example, terminal operators can agree on specific approaches of upgrading the quality of their operations in order to attain new performance standards. Among the approaches that the different agency heads can take in order to attain the standards, include reducing the differences among their respective activities, and reducing the wasted hours that goes into repetitive work.
Implementing a new Information technology system
Arkas has proven that it is ready to implement information technology systems through the tracking system concept. Information posted on the company website (arkas.com.tr) reveals that the tracking system gives customers an ideal tool to track the progress of their cargo.
While this is an ideal way of serving the customers and enhancing customer satisfaction, an information technology system that allows necessary information sharing between different departments and employees in all agencies working under the Arkas group would also serve the company well.
Specifically, Arkas can opt to implement a new system based on “information systems integration”, which Bhatt and Troutt (2005) define as an integrated technology, which enables the sharing of applications and information throughout the organisation (p. 533).
For such IT systems to be implemented however, Bhatt and Troutt (2005) note that management decisions regarding the flexibility and connectivity in communication networks would have to be made. Moreover, the managers in different departments in Arkas would need to determine the level of data integration they would like to have in the new information technology system.
This recommendation is made based on the conviction that an integrated information technology system would help Arkas avail consistent information to its internal stakeholders hence improving the organisation’s capacity to form a common internal force to deal with the challenging market dynamics.
An assessment of the recommendations’ effect on Arkas strategic direction
To assess the effect that the proposed recommendations would have on Arkas strategic direction, this report will use a strategic assessment framework. Based on the framework, the recommendations will be gauged against Arkas’ goals and objectives. In addition, the recommendations’ effect on company policies and decision-making will be estimated.
Table 1 represent the strategic recommendations scored against two more Arkas goals.
Due to its multi-criteria assessment potential, SAF will be structured around the Arkas goals. As is evident in Arkas Holding (2011), the shipping company lists adopting “a management style that is goal-oriented” as its first goal/objective. The first recommendation of venturing into the Nigerian market would serve to help the company meet this objective since venturing into the new market is a goal that would no doubt require the input of managers in the company.
The second recommendation (streamlining operations in line with BPII) would also have a positive effect in relation to the goal/objective since it would require the combined input of managers from different departments. The development of a new IT system, which enhances the sharing of data across departments and agencies under the Akas group, would also score positively towards the company developing a goal-oriented management style since it would requires input from different managers.
All the three recommendations would affect Arkas’s goal/objective “to invest in sectors that can develop under our leadership” (Arkas Holding, 2010) positively since venturing into a new market would be a deliberate decision made by the management.
More so, streamlining operations in the organisation through BPII would also qualify as an investment that has potential for growth under the leadership of the management. The three recommendations would also have some impressive effects on the organisation’s goal to support its employees towards self-improvement.
Specifically, the new markets would create new opportunities for existing employees to work in the new venture, while streamlining operations would enhance the performance of individual employees. The new IT system, would also affect positively affect the organisation’s goal of supporting employees’ self improvement, since it would give them an opportunity to learn from each other through an enhanced mode of information sharing.
Theory review, identifying general reasons, and implementation actions for senior management
New markets: venturing into new markets comes with a fair share of risk. According to Zacharakis, Meyer and DeCastro (1999), organisations may fail if the product or service they provide is not received well in their target market, or when the organisation fails to respond fast enough to changing market needs. Shepherd, Douglas and Stanley (2000) on the other hand propose that a venture into a new market can fail if customers do not respond well to the new venture.
More so, the venture may fail if the production technology used by the company do not meet the needs presented in the new markets, and if the management lacks the business skills, start-up experience or industry-specific needed to make the new venture a success. To succeed in the African venture, the Arkas management would need to research trends in the new target market in order to match the management and production approaches with the customer needs presented in the new market.
Information systems integration: According to Bhatt and Troutt (2005) information technology “does not bring worthwhile improvement in the strategic position if the firm “(p. 533). Rather, it just acts as an enabler for strategic action. Applying this into Arkas scenario means that the management in the organisation would need to identify clear goals, and take the necessary steps towards attaining them. Only then can new IT systems like those recommended herein, have a positive influence on the strategic performance of the organisation
Internal improvement using BPII: According to Harrington (1991), most organisations use BPIIs to restructure business programs with an aim of enhancing the effectiveness, efficiency and flexibility of business processes.
In the Arkas case, the recommendation to use BPII to streamline the company’s operations seeks to reduce time wastage, reduce variance and eliminate redundancy in the organisation. Markedly, Mcneally (1993) posits that strategic actions can only succeed if the management in an organisation considers “a continual improvement as a standard element of their strategies” (p. 135).
As such, the management in Arkas would need to use BPIIs as a means of attaining a short time organisational goal, but would need to use them on a continuous basis. Bhatt and Troutt (2005) support the proposition by McNealy (1993) by stating that continued use of BPIIs would prevent a substantial number of business errors from occurring, and provide the management with new quality benchmarks, which they (management) can use to enhance the quality and capabilities of their business processes.
References
Arkas Holding (2010) Company website. [online]. Web.
Bhatt, G.D. & Troutt, M.D. (2005) Examining the relationship between business process improvement initiatives, information systems integration and customer focus: an empirical study. Business Process Management Journal, 11(5), 532-558.
Bureau of African Affairs. (2010) Background Note: Gabon. US department of State. [online]. Available from: https://www.state.gov/u-s-relations-with-gabon/ .
Economywatch. (n.d.) Nigeria trade, exports and imports. [online]. Available from: http://www.economywatch.com/world_economy/nigeria/export-import.html .
Harrington, H. J. (1991) Business process improvement: The breakthrough strategy for total quality, productivity, and competitiveness. McGraw-Hill, New York.
Hill, Charles and Jones, Gareth. (2008) Essentials of strategic management. Cengage Learning, London.
McNealy, R. (1993) Making quality happen: a step by step guide to winning the quality revolution. Chapman and Hall, London.
Shepherd, D.A., Douglas, E.J. & Shanley, M. (2000) New venture survival: ignorance, external shocks, and risk reduction strategies. Journal of Business Venturing, 15(5-6), 393-410.
Workman, D. (2007). Ghana’s Trade Economy. Suite 101. [online]. Web.
Zacharakis, A.L., Meyer, G.D., & DeCastro, J. (1999) Differing perceptions of new venture failure: a matched exploratory study of venture capitalists and entrepreneurs. Journal of Small Business Management, 37, 1-27.