SCSA Business Management and Enterprise People

Answers could include:

Financial gain:

• innovation could allow Fizzology to charge premium prices to their unique, new drinks like the business' kombucha and fizzy flavoured teas. This will allow Fizzology to increase profit margins
• Fizzology could enjoy higher revenue growth if the business offered low-sugar and organic drinks. These drinks could attract health-conscious consumers and increase the business' overall sales revenue
• if Fizzology uses innovative manufacturing technologies (such as energy-efficient machinery), this could reduce costs and improve the speed of production. This would allow the business to streamline its production process and reduce operational costs, allowing higher profits to be earned.

Expansion of global market presence:

• innovation allows Fizzology to differentiate itself, creating a competitive advantage in the Australian and global market by offering unique, healthier drinks and eco-friendly packaging that meet current consumer trends and tastes. Fizzology can do this by offering their kombucha range, fizzy flavoured tea drinks and reducing sugar in their popular Fizzology flavoured drinks
• with many new products tailored to global consumer trends and tastes, Fizzology could expand its reach. Fizzology could also appeal to international customers across the globe more effectively
• brand image plus loyal clients may come from Fizzology striving to be ecologically mindful in processes and packaging. By launching items that reflect wants from consumers for health plus sustainability, Fizzology may get global praise for its sustainability, quality and uniqueness.

Increased market share:

• innovation can attract new customers, build brand loyalty and help the business compete against established global brands. Introducing low-sugar, organic drinks caters to health-conscious consumers, providing a distinct market edge with the potential to increase profit
• innovation can help Fizzology tap into new markets as well as a new customer base that prioritises sustainability, health and special product offerings. For example, launching certain kombucha drinks can attract younger, more eco-conscious consumers valuing ecological responsibility.

Answer(s) could include:

Step 1: Create urgency/create a sense of urgency – create a sense of urgency by convincing team members of the need to act immediately by demonstrating the potential risks. There needs to be a compelling case for change, so people understand why change is necessary. Fizzology needs to:

• communicate the risks of not adapting its product range. If it does not adapt its product to be healthier or show environmental consciousness in its packaging and processes, it may lose market share and fall behind competitors
• highlight the growing consumer demand for healthier and sustainable products, motivating resistant team members to recognise the necessity for change
• collate research and data on consumer trends and behaviour and link it to sales results directly impacting the success of Fizzology
• build support for the new initiatives so that the sense of urgency is shared – so much so that the team members would no longer be happy with the current state of the business.

Step 4: Communicate the vision/enlist a volunteer army – share the vision throughout the business, clearly and consistently by using multiple channels to build understanding and support for the vision. Fizzology needs to:

• win the hearts and minds of its team members in order to get everyone on board with the new vision; a business that creates drinks that are healthy and upholds environmental and sustainable processes and practices
• communicate the vision and strategy clearly to all levels of senior and middle management through staff meetings and email updates
• provide training and information sessions on the new products, so that team members have a shared understanding about the benefits of the new product range
• use clear and consistent messaging to address concerns about job security and emphasise how the innovation will benefit employees and Fizzology's future success as a business.

Answer(s) could include:

Timing:

• timing for product development is important in order to align with consumer trends and tastes. If Fizzology can launch new products that meet current market tastes for more healthy and eco-friendly beverages, it might catch consumer interest and build brand loyalty with speed. However, if Fizzology launches products too early or late, it risks missing chances. That leads to poor sales and missed opportunity
• if Fizzology does not adapt to the current trends and the tastes it may risk other competitors establishing themselves with similar products. However, rushing such process could lead to poorly developed products that fail to meet consumer expectations as well as tastes
• launching products ahead of competitors can give the advantage of being into the market first, allowing Fizzology to establish brand leadership into niche segments such as kombucha and fizzy tea drinks. However, if it delays entry to the market, established competitors might already have caught an important share of the market, making it difficult for it to compete
• timing can be impacted by government regulations and industry standards. Investing in research and development at such a time can position Fizzology ahead of compliance requirements as well as improve their sustainability credentials.

Costs:

• innovation requires substantial upfront investment, including hiring experts, acquiring technology and conducting trials
• high costs could then strain Fizzology's financial resources plus impact on profitability in the short term
• the total costs of innovation can be huge; businesses need to invest in research, prototype development, testing, and also the actual creation of new production processes. In the event Fizzology does not allocate enough budget or needs to then cut the research and the development spending due to financial constraints, the quality of innovation could possibly suffer, resulting in underdeveloped products that may fail among consumers
• innovation investments take time to gain returns financially. Fizzology may need to stop if costs are too high across a longer time frame, leading to lost opportunities. It can also damage Fizzology's reputation
• introducing newer products will usually require investment in new machinery, training for staff, as well as sourcing sustainable materials for these products
• financial forecasting and cost analysis are key to ensure the innovation and the production remains profitable for the business. If Fizzology can effectively increase production and purchase resources in bulk, the business' overall cost per unit decreases, contributing to higher profit margins.

Answers could include:

Threat of new entrants:

• this force looks at how easily new entrants can go into the market and disrupt existing businesses
• high barriers to entry, including high capital needs or strict rules, can reduce the threat, while minimal barriers can add to threats
• new competitors that enter into the market can increase the competition, driving the prices down and reducing the market share. Several barriers such as economies of scale and strong brand loyalty can help Fizzology overcome that threat
• existing big brands may deter other new entrants to the market
• new entrants that offer similar ecologically friendly and health-conscious products could now limit Fizzology's ability for establishing itself on a global scale
• Fizzology could focus on markets that have high entry barriers. Such markets have strict regulations and also important start-up costs; their new kombucha and fizzy tea products can give Fizzology a competitive edge over new entrants that are less resourceful.

Bargaining power of buyers:

• this force is to do with the influence in which customers hold over any business
• it can also relate to the number of buyers, switching costs, purchasing size and price sensitivity
• buyers gain power when they have lots of options or when switching costs are minimal, allowing buyers to demand reduced prices or superior-quality products
• consumers and retailers have increased bargaining power due to access to multiple alternatives, especially in the soft drink industry. Buyers may demand lower prices or higher quality, forcing Fizzology to continually innovate and maintain competitive pricing
• to reduce buyer power, Fizzology should emphasise the uniqueness of its kombucha and fizzy tea flavoured drinks and promote its environmental and sustainable processes through its marketing campaigns. This will improve its chance of successful expansion.

Rivalry among competitors:

• this force examines the amount and strength of competition within the industry
• high rivalry results from factors like numerous competitors, industry growth or similarity of products offered in the market
• established global brands with significant resources can intensify competition through competitive pricing, extensive marketing and product innovation. This would be prevalent in the soft drink industry with high profile brands
• Fizzology may need to allocate substantial resources to marketing and research and development to maintain relevance
• Fizzology should focus on countries where the market for sustainable and low-sugar drinks is underserved and differentiate its brand by continuously innovating and responding quickly to changing consumer trends and tastes if they are to expand successfully.

Recommendation:

• while the global market presents challenges, such as big soft drink brands being highly competitive, the rising demand for health-conscious and environmentally-sustainable products aligns with Fizzology's new focus
• expansion is feasible if the company targets countries where its unique kombucha and fizzy tea flavoured drinks can differentiate it from its competitors
• it could be argued that with high profile brands with huge resources it may not be feasible to expand globally and that Fizzology should focus on being successful in the Australian market.

Answers could include:

Political and legal external factors:

• changing legislation and the legal requirements of individual countries can drive change in a global business environment
• 'international border restrictions, regulations and legislation have decreased' hence more people are travelling, increasing rooms booked and memberships to their loyalty program.

Social external factors:

• evolving social norms can drive change as people's expectations and consumption behaviours change
• 'people have the confidence to travel internationally once again'
• international events may drive change in a global business environment
• 'popular events are back on, such as the Australian Open and the Formula 1 Grand Prix'.

Answers could include:

Managerial inertia:

• occurs due to managers' reluctance to the change due to factors, such as unfamiliarity, lack of understanding and motivation, poor communication of the vision, dislike of disruptions or uncertainty, lack of security, costs or the process of change itself and a preference to continue with the status quo.

Reasons for resistance to change:

• 'Wendy would like to move their head office in the Asia Pacific area to focus on increasing membership and customer service within that region', but staff 'are also unhappy with the change of head office to Singapore'.
• 'Everyone within each team can apply if interested, no matter the time at the organisation and/or experience', hence, 'some more experienced employees within the company have expressed disappointment and frustration that junior members of staff can apply for this promotional position creating resistance to change and arguments within the teams.

Answers could include:

• managing diversity can be a strategy for business growth as it enables a business to have employees who possess a wide range of talents, skills, experience and ideas, leading to business growth. The diversity amongst the staff will enable the potential for higher levels of creativity and innovation, hence being a strategy for business growth. Diversity leads to better understanding of client needs which then leads to increased client loyalty, sales and profit
• diversity includes employing people from a range of genders, ages, ethnicity, cultural and religious backgrounds and also includes employing people who may have differences in educational levels, skills, socioeconomic backgrounds, personality, geographic locations and family situations
• when Wendy is selecting her new Training and Development Coordinators, she needs to ensure that she chooses a diverse range of people who have a wide range of experience, skills, gender, ethnicity, age and backgrounds. This will ensure a dynamic team is selected that will bring a variety of ideas, creativity, and innovation to create further growth within the business.

Answers could include:

Step 6: Create short-term wins

• Wendy needs to create short-term targets where success can be achieved. This could be based around her loyalty program membership goals, employing the new roles and the first success training trips to Singapore
• Wendy could achieve this by choosing early targets carefully, as failure to achieve these targets will hinder any future success and commitment of her team.

Step 7: Build on the change

• to achieve long-term change, Wendy needs to build on what has gone well and identify where they can improve
• Wendy needs to achieve this by ensuring that any changes are regularly reviewed and improved upon; ensuring all policies are updated; seeking feedback from her staff and identifying where new changes are not being followed.

Step 8: Anchor the changes in corporate culture

• to make any change stick, it needs to become part of the core of Wanders Hotels values and goals. Wendy needs to make continuous efforts to ensure that the change is seen in every aspect of the business
• Wendy needs to implement this step by celebrating her team's success regularly; emphasising that success has come from the change; and ensuring that her Training and Development team are widely informed of the changes and can take help their team confidently with queries.

Advice for Wendy:
Kotter's 8 Steps change management model is an 8-step model that provides guidelines for the successful implementation of change. The model will allow for Wendy to have a clear idea about how to manage change and to effectively communicate the change to her employees. Kotter argues that involvement of staff instils commitment to the change. The model can be used to reduce resistance to change that Wendy is experiencing with her decision to allow everyone to apply for the new Training and Development Coordinator roles and creating a new head office in Singapore. By Wendy applying each of the 8 steps to her changes within the business she will reduce the amount of resistance, create a vision for her employees and steps towards successful implementation of change.

Answer(s) could include:

Skilled communicator:

• process or ability to exchange information accurately and timely, active listening
• more difficult in a cross-cultural setting due to language barriers
• Harrison will need to work on his communication and adapt to a more open style of communication.

Socially aware:

• an awareness of relationships, thus leading to the ability to understand the needs of team members
• the ability to understand other social and cultural customs leads to the ability to establish trust and long-lasting business relationships
• Harrison needs to be aware of the social norms in Singapore in order to not offend any employees.

Skilled decision-maker:

• knows when to make decisions quickly if required, but also able to balance the risk in decision-making to avoid damage to the business
• needed in a new cross-cultural setting as there is no history of past actions and performance to follow or provide advice
• Harrison is highly skilled in the production process and will be able to make decisions in a timely manner.

Future thinker:

• has a long-term vision of where the business is headed, so incremental planning can take place and the business is pro-active, rather than reactive in its responses
• can see the larger global picture, implement the vision on a global scale
• Quinn needs to develop a long-term vision regarding the direction of Laffitaya so he can be pro-active not reactive.

Self-discipline:

• able to control own emotions and have intelligence in dealing with a crisis or adverse situations
• a self-disciplined leader understands the impact that their actions and decisions may have in a cross-cultural setting, as it helps to provide greater certainty for staff
• Harrison may need to adapt his direct communication style to ensure that he controls his emotions in high pressure situations.

Responsible:

• ability to be independent, accountable, accept authority and be more aware that actions have consequences
• needed in a new cross-cultural setting to understand pre-established ideas, to understand where adaptation or new ideas are required, to demonstrate they can think for themselves, often seeing new perspectives, real purpose and outcomes
• Harrison must have the ability to take control and be answerable in a new cross-cultural setting.

Motivational:

• ability to use psychological forces/motivate people to strive for certain goals rather than simply act on orders
• Quinn needs to be aware in a new cross-cultural setting to provide motivation, direction and support for staff while recognising differences in intrinsic and extrinsic motivations, rewards and punishments in different cultural settings.

Answer(s) could include:

• Autocratic leaders are typically bossy and dictatorship-like style may put new workers offside and cause resentment. Changing to situational leadership, Harrison can be more democratic which could develop positive relationships with employees, recognising their success and adding to their motivation.
• Autocratic style limits creativity and ‘out-of-the-box’ thinking – a highly structured, rigid leadership style might not fit the culture of the global workplace, hence changing the leadership style to suit the situation can help improve creativity and innovation.
• Harrison normally makes all the decisions – this may not be wise when not understanding the culture or new business landscape and does not allow for skilled workers to contribute ideas. Harrison can adapt his style by listening to team members and taking on feedback which can be beneficial for the business.
• Harrison currently uses one-way communication – this may upset new team members and does not foster good teamwork and relationships, and this can limit performance. He can adapt this to an open communication style, encouraging feedback from employees.

Answer(s) could include:

Managerial inertia:

• This may occur due to the pressure from staff being reluctant due to factors such as unfamiliarity, lack of understanding, dislike of disruptions or uncertainty, lack of security, costs or the process of change itself.
• Adapting to technology can be a factor of managerial inertia. Laffitaya may be forced to change the way it operates the business. This could be in the way they communicate, use technology to transfer data or finance, or the way that they conduct their marketing and/or distribution.
• The lack of communication from Laffitaya to management about the benefits and improvements of the merger can cause resistance to the change.

Financial costs:

• This could result in Laffitaya staff fearing job losses due to new technologies, processes or equipment being costly.
• Employees may be concerned they will be made redundant due to outsourcing functions and/or combining jobs with ExNex Outdoors.
• Employees at Laffitaya may have to undergo significant and costly training and development, which they may resist so that the business does not reap the reward of these costs.

Answer(s) could include:

Step 4: Communicate the vision

• Quinn must ensure that employees throughout the workplace understand what is happening by understanding the vision of the business.
• Clear and regular communication is important to deal with fears and concerns about the change.
• Quinn can hold meetings, talk to individuals, give regular updates and seek feedback about how the change is progressing.

Step 5: Remove obstacles

• Planning for change includes anticipating what could go wrong or delay success.
• Quinn will need to identify obstacles blocking change and identify how to remove them.
• Quinn can reward people for making change happen and identify people who are resisting change and try to convince them of its importance.
• Quinn needs to address the staff regarding their concerns, as this obstacle could block the success of the merger.

Advice to Quinn about how Laffitaya could build on the change:

• Long term success is dependent on changing the workplace culture. Therefore, providing opportunities for employees at Laffitaya and ExNex Outdoors to learn about the new policies and procedures and leadership restructure.
• Quinn needs to ensure the employees at both Laffitaya and ExNex Outdoors believe in the benefits of the merger and how it will assist the company be successful. If the employees believe in the change, it is more likely to be a success.
• Quinn also needs to continue to review and improve its policies and processes to ensure the change is working.
• Quinn and Harrison need to ensure all policies and procedures and instructions are updated and communicated to all staff clearly.
• Quinn and Harrison also need to seek feedback from employees at both ExNex Outdoors and Laffitaya in order to build on the change and adapt as necessary.
• Quinn and Harrison also need to identify where the new policies are not being followed and manage any new issues that arise due to the changes.

Answers could include:

• staff downsizing for cost reductions in global operations
• transition from physical stores to online stores worldwide
• introduction of new products in global markets
• establishing strategic alliances with overseas businesses
• adaption of staff attitudes and work habits in changing global environments
• extent of a business's financial resources
• international expansion of domestic businesses.

Answers could include:

• Forcefield Analysis is a tool that can be used in change management to help employees understand the need for a change
• the model can be used to organise thinking where a brainstorming template is used to record the forces that support change and the forces that create any resistance to the change
• once the forces are identified, they are then given a rating, which could be out of 5 or 10, according to their importance. The lower the rating, the least impact a force has on the proposed change, the higher the rating, the greater the impact
• the change would look viable if the forces for change score higher than the forces which may create resistance to the change
• management may have to attempt to find ways to reduce the forces which resist change if these forces are rated more highly; similarly, they may have to develop plans to exploit the forces for change if these rate more highly.

Answer(s) could include:

Internal factors that drive change:

• management’s desire to introduce change, e.g. costs can be a factor in driving change; if the cost of production is too expensive, outsourcing may be an option to save labour costs
• employees might initiate change to improve working conditions and/or skill development
• introduction of new technology for efficiency and/or cost savings
• staff attitude and work habits may drive change in a global environment.

External factors that drive change:

Political and legal:

• political decisions can have a huge impact on a business by changing laws or regulatory regimes
• changing legislation and the legal requirements of individual countries can drive change in a global business environment

Economic:

• interest rates
• inflation
• unemployment
• economic indicators

Social:

• evolving social norms can drive change as people change expectations and consumption behaviours
• international events and issues may drive change in a global business environment
• use of technology by consumers also drives change as it forces businesses to reconsider their own use of technology and interaction with outside parties
• prevailing social issues might impact on public image or relations

Technological:

• technology is rapidly changing and impacts on the way businesses are able to interact with stakeholders. This could drive change in the way a business distributes products, engages in e-commerce or uses social media to connect with customers

Environmental:

• changing attitudes to climate and environmental impacts might drive change in a global environment; businesses may need to consider their own environmental impact and how that might affect their ability to penetrate new markets.

Answer(s) could include:

Lewin’s Forcefield Analysis model is used by businesses to ascertain how viable a decision or change might be. It takes into account forces that drive change and restrain change, determining whether the change is the preferred option.

Lewin’s Forcefield Analysis model can be implemented through a series of steps:

1. describe the plan or proposal for change
2. identify the forces for change
3. identify forces against change
4. assign scores
5. analyse and apply the change.

The forces driving and restraining change must be appropriate to the type of business and the proposed change: driving change – long-term revenue, market demand, unsustainable costs, competition, customer expectations; restraining change – company culture, time restraints, conversion cost, staff attitude.

A business can use Lewin’s Forcefield Analysis model to prepare people for change by sharing with their stakeholders how the change would impact on them, and the factors that had been taken into account in preparing for the change.

The evaluation of forces should be clear and appropriate; it must be determined whether the proposed change is feasible.

By using Lewin’s Forcefield Analysis model, businesses can be transparent and clear in communicating the impending change and, therefore, properly prepare its people.