A brief on Organisational Structure and Change
In the present business era, it is very important for the management to give proper focus on the culture of the organisation as the uprising global culture can affect a company and its workers both in positive and negative manner. Thus, it significantly impact the change initiatives which the company needs to adopt. Whatever the change may be, it has been always found that people find reasons to oppose the change. Most of the employees generally have negative thoughts about the change even if it is for good reasons (Maguire, 2003). The present work analyzes organisation structure and change in relation to the “The Body Shop”, which is one of the largest players in the cosmetic industry with 1200 products and 2500 franchised stores in 61 nations of the globe. The report focuses on managing conflicts, power, politics; designing organisational structure and evaluating business organisation in a daily changing global environment.
Business organisation in a changing global environment
The future of any organisation is significantly influenced by the technological, social and economic challenges happening in the current business scenario. These challenges not only affect the business environment, but also the players operating in it. Factors such as emerging markets like India, China, Brazil, etc. impacts the production and sales of a company, demographic factors and consumer behaviour impacts the service or product portfolio of the company (Chang, 2005). Therefore, it is essential for the organisations to consider these changes in order to converts these challenges and threats into opportunities on the basis of its strengths.
Global environment and economy plays important role in change management and forces companies to make changes within the organisation. These changes can be proved either positive or negative for the firm. In changing environment it is essential for The Body Shop to force certain changes which have been overlooked in the past. This will result in higher employee morale, enhanced performance and ultimately increase in profit levels. The way in which The Body Shop will respond to the changes in the economy and market will have its impact on the company’s success and sustainability (Naoum, 2001). To achieve these, The Body Shop has to focus on factors mentioned below:
Mentality and attitude of the organisation largely depends on its leaders and their leadership styles. For achieving smooth transitions within The Body Shop, it is essential for it to clearly define its commitments and goals. The processes of the company must be such that it can easily adopt itself with the changing demand in the market. Its leaders must remain calm and composed during the pressure situations. Now a day’s people are inclining more towards natural cosmetic products and are ready to buy them on premium prices. Thus, it is essential for the leader to think creatively so that they can serve both customers and its employees in better manner (Kinney, 2008). Gradually and gradually The Body Shop is expanding its business boundaries, therefore to benefit from it, it is necessary to have long term vision and that must be effectively communicated to the employees so that they can better understand the need for change and put the change into action.
The Body Shop operates in many counties, therefore, it can benefit from the advanced technologies, trade agreements and transportation which provides newer opportunities to its products (Standish and Standish, 2000). To further meet the ever growing demands of its natural products, it must develop expansion strategies so that it can exploit opportunities by opening more stores, creating ad campaign and to make use of local resources in order to remain competitive in different markets.
IT is not possible for The Body Shop to meet the demand of customers in different parts of the world. To overcome from this problem, the best solution available with The Body Shop is to go for mergers and alliances (Standish and Standish, 2000). For developing global network, joint ventures and acquisitions can significantly help the company in solidifying its position in various countries.
The Body Shop is functioning in various locations around the world, therefore, it is essential for its management to develop new skills and have clear communication between all the levels. New techniques must be developed in relation to hiring, pay scale and employee benefits.
It is very important for the organisation to involve its employees in practicing change. The Body Shop understands this. There are around 10034 directly employed workers and around 21000 workers are The Body Shop At Home Consultants or are employed by the franchisees. Therefore, it was very difficult for the company to manage myriad of employees. In this regards the organisation motivates its workers and make them feel that they are integral part of their firm and for this purpose various kinds of training is provided by the company. In addition to this, the company applies Vroom’s Expectancy Theory to keep the employees motivated. The company has launched a spot reward scheme in which it rewards the worker immediately after his performance (Hoffmann, 2012). Apart from this, the company also practice the Maslow’s Need Hierarchy Theory to keep its people motivated.
In 2006 the firm was takeover by French cosmetics giant L'Oreal for $ 1 million. Since then the organisation structure of the company is not clear. In such situations, many of its supporters threaten to boycott the company. Thus, presently it is the biggest problem of the company. The company needs to react face to face with the change, but the management is showing resistance towards the change. After the death of its founder Anita Roddick, company needs to come up with new strategies to keep its employees motivated. On the other hand, if the company does not take some immediate serious steps towards these issues, there are higher chances that these issues will become incurable for The Body Shop (Hoffmann, 2012).
To attain global presence, The Body Shop becomes a part of L’Oreal and because of this the company has to face many challenges. Firstly, it has to step down from the stock market, secondly, there was challenge related to values as values of The Body Shop is entirely different from that of L’Oreal. Later on the comment by the CEO Jean Paul showed that L’Oreal do supports the value of The Body Shop (Kortmann, 2012). Third challenge it has to face was change in management. Although, the entire board was not changed yet the company has to work under the management of L’Oreal. To overcome from this challenge, the organisation followed Lewin’s three steps model for change, initiating with unfreezing step. In this step, the company provided training to all of its employees so that they can effectively participate in the company’s activities and can handle the change. The second stage of the mode is the movement step. In this stage all the employees and employers adopts to the proposed changes in the organisation. The last step of the model is the refreezing stage, in this stage the proposed change has been establish in the company and the workers works as per the new situation (Kortmann, 2012). Thus, The Body Shop precisely implemented the Lewin’s model for change in their organisation which significantly helped the company and its employees in managing change.
Managing conflicts, power, politics
The image of The Body Shop is that of caring company that gives proper attention towards environment protection. In addition to this, it helps indigenous people and prevents animals from suffering. All these can be cemented from the fact that the company is involved manufacturing of only natural and herbal products which delivers little to no harm to the environment, animals and nature. However, it is not exactly the case. Like operations of other multinational organisations, operations of The Body Shop also have their ill impact on the environment and the nature (Baligh, 2006). Operations of the company have plight on indigenous peoples and animals. In addition to this, authorities have found that most of their products are far from the standards set by the panel. This has created conflicts between the management and the authorities. The company has global presence and its main motto is to enhance the value of its shareholders. Since its products are placed in premium range, only about 20 per cent of the world total population consumes its 80 per cent of the products. Apart from this, mass production of different products, its packaging, transportation to different parts of the world has resulted in faster consumption of natural resources. The rate of consumption is much faster than the time taken by these resources to renew. Thus, there are conflicts between the socialists and the management of the company. Socialist believes that if it continuous, than there will be disastrous impact on the ecology (Gibson, 2010). Thus, if The Body Shop needs to attain sustainability, it has to resolve this conflict as soon as possible. In this regards company does not have to reject consumerism, rather it need to create a sustainable and stable world so that local community have full control over the resources and the resources can be distributed sparingly and equally. The management needs to improve the quality of life of each individual.
The Body Shop claims that all of its products are 100 per cent natural and herbal, but like other big cosmetic companies, The Body Shop also make use of synthetic colours, non renewable petrochemicals, preservatives and fragrances. This has also created disputes between the management and customers. Many time, due to harmful chemical and artificial colours and fragrances, many of its customers had adverse effects on their skins (Takahara and Mesarovic, 2003). Some of its products are prepared from hazardous non renewable uranium which cannot be disposed off safely. Such chemicals have badly impacted the lives of many of the workers working in the factories of The Body Shop. This has also raised conflicts between the labour union and the management. Labour union demands safe working environment at the work place and have requested the management to ban the use of harmful and hazardous raw material and chemicals. However, since the motive of the management is just to increase its profit levels and to enhance the shareholder values, no strict action has been taken till date regarding use of such chemicals. This has created lot of dissatisfaction among the workers and has resulted in decline in their efficiency levels. All these activities and events have significantly impacted the overall performance of The Body Shop.
Unhygienic working environment is not only the sole reason behind the conflicts between the management and the labour union. There are several other issues also that acts as fuel in igniting frequent conflicts. The most important among all the reasons is the issue of low wages. Government has set certain standards regarding the daily or monthly wages of the workers, but The Body Shop does not follow those policies at all (Mantere and et. al., 2007). Wages given to its workers are far less than the standard set by the government. The European government has defined certain decency threshold regarding minimum pay for the workers and all the organisations have to remain abide by them. However, in case of The Body Shop, the company opposes the trade union. The main reason behind the conflict is low labour cost. The company ensures that workers are not able to improve the working conditions at the workplace. Because of this there is no labour union in the company and even if any of the labour has to file certain complain, he or she has to follow a set procedure defined by the company which is strictly controlled by the organisation. Therefore the workers are isolated from each other and thus the collective bargaining power is very low among them (Mantere and et. al., 2007).
After the acquisition of The Body Shop by the L’Oreal, although there was no change in the management of the company, but the entire control was in the hands of the management of the L’Oreal. Many of the workers of The Body Shop were not keen for this merger as they were opposing the change. The main reason behind opposing the change is the cultural and value different between the two organisations. There was participative culture followed in The Body Shop, that is, all the worker of all the levels are involved in the decision making process. They were motivated to participate in the meetings and to present their views and ideas on the issues faced by the company. In this way, the company was able to motivate the people as the workers feel that they are the integral part of the company and given their hundred per cent for the development of the organisation (Luscher and et. al., 2006). Contrary to this, autocratic management style is followed at L’Oreal. It means worker or employees of all the orders are not allowed to participate in the meetings. They were not allowed to put up their views in the meetings and thus are neglected by the management. All the important decisions are taken by top management only and middle and lower level workers are ignored. Thus, the employees of The Body Shop were showing resistance for this change as they were not sure whether they will be able to work under autocratic management style. This also arise conflict between the management and the workers.
Thus from the above discussion it can be said that there are various conflicts existing in the company. In the present competitive environment, to achieve sustainability in the market, it is essential for the company to overcome from all these conflicts. Firstly, the company need to reorganize all its operations. If it claims to manufacture 100 per cent natural and herbal products, then the company must ensure that all the process are natural and there is minimum degradation to the environment. In addition to this, management must also practice such activities which maintain the ecological balance in the nature (Luscher and et. al., 2006). Secondly, it is essential for the company to improve the working conditions of the employees. This will help them in eliminating the conflicts between the management and the employees and will indirectly increase the overall efficiency of the workers and that of the organisation. It must formulate wages policy as per the guideline set by the European government. If the government has set certain standards regarding minimum wages, the company must follow that. This will enhance the brand image of the company in the market and among the workers and they will also try to give their best shot. Lastly, to achieve harmony at the work place, it is essential for the management to involve all the workers in the decision making process. In this regards, practicing participative management activities will hugely benefit the organisation in motivating its employees (McCormick, 2007). Through these actives employees will also feel that they are the integral part of the company and thus will automatically put greater efforts to enhance the quality and productivity of the firm.
To attain competitive edge over the industry peers or to expand business boundaries or to increase the profit levels of the companies, now a day’s organisations are taking help of power and politics. In other words it can be said that power and politics have become two of the strongest pillars required for running a business successfully. Same is the case with The Body Shop. The company is one of the biggest consumers of palm oil which is required for its flagship product, soap. Thus, the company is in contact with many suppliers of the palm oil (McCormick, 2007). Recently, the company pulled out its one of the suppliers on the ethical grounds. Its Colombian supplier kicked out 123 families from their land for the palm tree plantation. The supplier, because of its political connections and power burnt all the crops planted by the local families to develop huge plantation of palm tree. As soon as the management of The Body Shop came to know about this news, they pulled out the Colombian suppliers on the ethical grounds. This is because the cosmetic giant puts human values above a quick buck. This incident has not only enhanced the brand image of the company in the market but also among its stakeholders and the company hugely benefitted from this (Kenny, 2009). Thus, from this it can be concluded that organisations must use power and politics into the business but not at the cost of human values. Companies must not misuse their power and political connections for its benefit only. It must focus on all the aspects before making any business decisions.
Organisation structure defines hierarchical arrangement of lines of power, rights and duties and communication of a company. Roles, responsibilities, power, etc. are determined and assigned on the basis of organisational structure. In addition to this, control and coordination and flow of information are also managed between different levels on the basis of structure of the organisation. Structure of the organisation is formulated as per the strategies and objectives of the company. There are basically two types of organisational structure, one is centralized structure and other is decentralized structure. In centralized organisational structure all the powers are in the hands of top management. Top management is the only party which have total control over the entire organisation and all the decisions are taken by them only. They have complete control over different departments and middle and lower level employees are not included in the decision making process (Lewis, 1994). Contrary to this, in decentralized organisational structure all the departments are included in the decision making process and power is distributed among all the levels. In addition to this different department have different degrees of independence. In other words it can be said that organisational structure acts as operating manual that tell people how all the employees of the organisation can work together for achieving common objectives. Members of the organisation are ace accepted on the basis of organisational structure, further, leadership and decision making are also dependent on the organisational structure (Lewis, 1994).
It is very essential for the organisations to develop certain organisational structure. Firstly, organisational structure helps in providing clear guidelines to the employees of the companies that how they can proceed and thus helps in resolving disagreement. Secondly, it plays very significant role in binding the members of the company. That is, it provides certain identity and meaning to the employees and to the company as a whole. Organisational structure is inevitable for all the companies. Every company has to formulate certain structure so that management can have effective control over the resources (Mantere and et. al., 2007). It is essential for the company to define certain structure at the starting of the operations so that it does not crowd out the work. With time as the company grows organisation structure keeps on changing so that there can be complete control over the people.
In the present case, The Body Shop uses Divisional Structure Agreement which is a basic approach of decentralized organisational structure. Under decentralization organisation structure, company can group people in three different ways, that is, on the basis of product or service on which they work, on the basis of geographical location in which they function or on the basis of sets of customers they serve. In all the operating regions around the world the company uses divisional structure (Baligh, 2006). Since the company has presence across the globe, the products of the company have to face different markets in different areas of the globe. For example, the company offers different hair and skin products in UK, Canada and in Asia; this is because of the diverse nature of the market and the customer behaviour. Most of the organisations often evolve from the functional design to the divisional design; this is because this organisational structure offers various benefits to the company. Since different market offers different kind of competition, it is mandatory for the companies to diversify its operations. This will enable them to remain competitive and to achieve sustainability in the market. Since the external environment is very complex and dynamic, and companies do not have any control on the elements which governs the eternal environment, therefore it becomes very necessary for them to diversify their operation (Standish and Standish, 2000). Thus, company needs to follow divisional organisational structure. Divisional organisational structure provides various benefits to The Body Shop as it emphasizes independence in the decision making process of the company.
Divisional organisational structure provides various benefits to The Body Shop. Firstly, it improves decision making of the company. Since, through this organisational structure company can delegate power to the division managers who have thorough knowledge of the local market. This organisational structure increases the accountability of the divisional manager and they are countable for their decisions. As the company operates in different part of the world, the performance of the divisional managers are assessed on the basis of overall performance of the division. If the division is performed well, it reflects the divisional managers is performing well, on the other hand, if the performance of the unit is not up to the mark, it reflects the inability of the manager to perform his or her duties well (Kinney, 2008). If this organisation structure has certain advantages, then it has some disadvantages also. The disadvantages come from basically decentralization of the organisational structure or the decentralization of the activities. Company is not able to achieve the economies of the scale because various functions of the companies such as marketing, accounting, control functions, human resource management, etc. are duplicated within different departments of the company. Another disadvantage of this organisational structure is that specialist of one division does not share information with the specialist of the other division. It shows that the autonomy provided to different departments acts as hurdle in achieving the overall goal and objectives of the companies (Maguire, 2003). Since every divisional head tries to outperform than it counterpart, it develops negative competition in the company and may result in lack of coordination and synchronization between the divisional heads of different departments. This organisational structure also proves to be disadvantageous for the employees of the company. If the product or service of the company are relocated to some another geographical location, in that case there are higher chances of joblessness for the workers (Chang, 2005). To overcome from the disadvantages of the divisional organisational structure, The Body Shop may adopt the matrix organisational structure. In such kind of structure there are two managers, first is the functional manager and other is product manager, that is, it maintains both product and functional specialist. The main responsibility of the functional manager is to conducts programs related to selection, training and development to different employees of different functional departments. Contrary to this, the product manager of the company is responsible for coordinating various activities of workers working in different workers of the various functional areas. To coordinate all the activities of different departments so that better product or service can be delivered to the customers. Therefore, in this organisational structure, the worker needs to report to two different managers (Naoum, 2001). The main benefit which The Body Shop can avail from the matrix structure is optimal utilization of the resources. Further the company can improve its lateral communication and can broaden its technical excellence. If the company practices this structure, it will have to keep two things in the mind, firstly, it must not impact the decision making process as the workers need to report to two different managers, and secondly, it should no result in conflicts between functional and product division (Naoum, 2001).
Thus, from the above discussion it can be concluded that it is very essential for the companies to adopt appropriate structure. The Body Shop is presently following divisional organisational structure which hinders its performance. To overcome from this it can switch to matrix organisational structure. Further, it is also essential for the companies to manage conflicts in the organisation between various stakeholders of the company. If the company is able to manage conflicts effectively, it will enable the firm to achieve success and sustainability. Finally, firms must develop such leaders and managers who can motivate the employees to practice change so that they can benefit from the opportunities.
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