Case Study
Change Management in Proton Holdings

Introduction

In the recent decades, due to the rise of the era of globalization, competitions across borders among businesses are becoming more and more competitive. In such an era, it is apparent that changes are necessary for a firm to stay competent and relevant in the volatile and fast changing business environment (Johnson et. al., 2005). In this report, several business management toolkits will be designed and presented to Proton Holdings Sdn. Bhd. (“Proton”), to assist the management team to lead a transformation process in the organization. This report is arranged as follow. Firstly, the company background of Proton Holdings Sdn. Bhd. will be presented. The rationales on changes are necessary in the organization will be discussed. Then, in order to transform the organization, several management tools for developing a viable work plan to change the organization will be presented. Under this section, the usages as well as the limitations of these tools will also be articulated. Then, it will be summarized how these many tools presented in this report can be combined to develop comprehensive and quality work plan for the company to transform itself in order to stay relevant in the ever dynamic and competitive business environment.

Company Background – Proton Holdings Sdn. Bhd.

Proton is the Malaysian government supported national car makers. Under the leadership of the previous Malaysian Prime Minister of Malaysia, Dr. Mahathir Mohammed, Proton is established to make affordable national cars for the Malaysian, while at the same time develop car manufacturing technologies and capabilities in the nation (Jayasankaran et. al., 2004). However, due to the increasingly competitive automotive industry around the world, Proton today is facing huge challenges, and had been experiencing several financial losses in the previous years. Instead of working towards the mission of providing affordable cars to Malaysian, the company is creating huge burden to the people, as the costs of manufacturing by the company is too high; while the quality of the car manufactured are too low, when compared to leading car manufacturers such as Toyota, Honda, Ford, Volkswagen and many others (Shari et. al., 1998). As the company is not doing well, it can be seen that the management team is fast to resort for government support to stay relevant in the marketplace. Due to government support, such as implementation of quota to make imported cars exceptionally expensive, Proton is still able to survive in the challenging business environment (Chacko, 2006). However, looking forward, the situation may no longer be favorable to Proton in the coming decades. For example, it can be seen that there are talks that government is not longer willing to support the company in the future, as the Malaysian government is having pressures to adopt free trade among the ASEAN countries (Burton, 2005). Besides, due to the inferior quality of the cars, people are found to willing to buy imported cars, even when the pricings are expensive. As such, change is necessary in the organization. It is crucial to throw away the old mindset, and move toward a performance oriented organization. People should no longer hope for government support, but instead should be motivated to work hard for superior product quality, customer satisfaction and company performance in the future.

Management Toolkits for Managing Change and Transformation

In order to outline the change process, it is necessary to firstly discuss on the changes needed in the organization. As discussed in the above scenario, the main issues affecting the performance of Proton is due to people and organization culture issues. Proton is a government linked company, and thus, people working inside are expecting government supports and easy work life, instead of competing hard with other stronger competitors. Due to such a situation, people are actually not improving the businesses, or their competencies in car manufacturing capabilities. Thus, a series of tools will be designed to assist the formulation of work plan on the organization transformation process. The various tools will be discussed as follow.

Situational Analysis

Before the change process can be designed, it is crucial for the management to utilize several tools to analyze the macroeconomy environment. For this, it is important for the management to employ PESTLE model to understand the external environment. Under such model, the political, economic, social, technology, legal as well as environmental factors will be discussed and researched. The framework is useful to assist decision makers to understand the macro environment in a holistic manner (De Wit et. al., 2004). By understanding the macro environment, it is then possible for the management to take into account the possible trends happening in the world. This is crucial as it is definitely not a wise choice to move against the trend, or to stay in status quo, waiting to become obsolete if the organization is not able to move in a consistent way by growing through capitalizing on the business trends around the world. Thus, PESTLE analysis will be used to assist the management team in Proton to understand how the business environment has been changing from time to time, and if they should change accordingly and adapt to the new competitive landscape.

The advantages of PESTLE tool are that it is easy to understand, and it is intuitive. The tool is also a powerful way to force the management to analyze the many issues in the external environment. Besides, PESTLE is also theoretically acceptable, and widely employed by practitioners. However, the tool is not the only method to understand the external environment. For a better understanding on the external environment, other tools are also available. These tools, such as stakeholder analysis, Porter Five Forces, as well as SWOT analysis, should be used to complement the PESTLE analysis for better research findings.

Kurt Lewin’s Change Model

One of the most popular and widely applied change management tools is Kurt Lewin’s Change Model, which separate the change process into three phases, namely: (a) unfreeze, (b) change, and (c) refreeze. Such a tool is relevant for Proton as it is discussed that a probably complete business transformation of Proton to a performance oriented and competitive firm is required. As such, the entire change process in proton can be arranged in accordance to the Change Model as outlined by Lewin. To be specific, it is important for the firm to plan the change program in Proton into three different phases, whereby different goals for the different phases should be set. The first phase should then be the unfreezing phase, whereby management should think of methods to move the people to embrace the new culture and working habits and style in the organization. As such stage, the strategies are mainly developed to handle the resistance to change among people from a psychological perspective. Then, other program can also be planned, as to move the people forward. Lastly, when people have change, then the management can plan to unfreeze the desired habits and culture in the organization.

Such a tool is practical as it is simple to understand, and it makes sense (Dessler, 2011). Secondly, the tools is comprehensive enough and yet straightforward for management to outline the work process for the change program in a very fast manner. However, such a tool has several inherent weaknesses. Firstly, it may be overly simplistic, as in the change process, it is reasonable to believe that many unforeseen circumstances may occur. Besides, the tool is not having several ways to capture the psychological factors in the change process. Not only is that, the many possible scenario on the change process is also not investigated. In order to cater for such weaknesses, in the change and transformation process, it is necessary for the management to utilize other tools, such as the scenario planning, sensitivity analysis, decision tree analysis as well as other form of financial simulation to analyze their decisions. By incorporating these tools into the change model, it is possible that the management can come out with better decisions.

Lewin Force Field Model

In the change process, it can be argued that the initial change momentum is the hardest part (Robbins, 2005). There are inertia factors to be overcome before people can be changed, or motivated to move towards a new direction. Luckily, a practical tool is available for assisting management to overcome the initial resistances to change – i.e., the Lewin Force Field Model (McShane et. al., 2010). The tool is presented in Figure 1 below. As shown in Figure 1, the tool can be used to identify the both driving and resisting forces against the change. Thus, by understanding on the respective forces, management can then pin down the root causes of the resistance to change, and then to tackle the respective resistance individually.

 

Figure 1: The Lewin Force Field Model

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There are many benefits of such model. Firstly, it makes the change process easier. Instead of losing their ways in the complexities of the change program, management can use more systematic way to ferret out the resisting forces and step by step, tackle the every single resisting force separately. This will make the change process more fulfilling, and will definitely motivate the management to move forwards. However, the limitations of such model are that it does not provide guidelines on how each of the driving or resisting forces can be identified. For this, other tools will definitely be required. For example, questionnaires survey, fishbone diagram, mind mapping as well as other relevant tools can be applied.

The Cultural Web

After the many big picture issues are solved, then, the change process will move into a more detail phase. For this, as in the context of Proton, the change is ultimately about the change of organization culture, the tool such as cultural web is suitable for applications in the organization. The cultural web can be used as follow. Firstly, the existing organization culture can be analyzed, by investigating each of the various dimensions, as shown in Figure 2 below. The various dimensions include: stories, symbols, power structure, organizational structures, control system, rituals and routines, and the paradigm (Legge, 2004). All of these dimensions are powerful in characterizing the culture of a particular organization. Then, after the existing culture of Proton is known, the desired culture will be defined. By understanding where the organization is situated now, and the direction it should move towards, the many elements of the culture can then be designed and changed. The change process can be a gradual one, usually at one step at a time, until all of the dimensions are changed accordingly to become consistent and reflect the new culture.

 

Figure 2: Cultural Web

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Conclusion

As shown above, many tools are required, and the combination of these tools, in a harmonious manner is critical to ensure that the work flow and plan can be carried out properly and effectively. Not a single tool can standalone, as each of the tool have the respective strengths and weaknesses. For each of the tool, a certain set of objectives can be achieved. In the report, a series of complementary and related tools are designed in a consistent and mutually supportive manner, to assist the management in Proton to ease the transformation and change process. Nonetheless, it should be highlighted that all of these tools can be combined with many other tools or concepts as well, whenever it is fit to do so. Management shall exercise certain degree of flexibilities and common sense to change accordingly when the situation deem fit.

References & Bibliography

Burtinshaw-Gunn, S. (2008) The Essential Management Toolbox: Tools, Models And Notes For Managers And Consultants . Wiley.

Burton, J.  (2005, July 21). Future of national carmaker divides Malaysian government: [ASIA EDITION]. Financial Times,p. 2.

Burtonshaw-Gunn, S. & Salameh, M. (2009) Essential tools for organizational performance: Tools, models and approaches for managers and consultants. Wiley.

Chacko, G. K.  (2006). Proton transitioning to Malaysian engine. Management Research News, 29(3), 139-151.

De Wit, B. and Meyer, R. (2004). Strategy Process, Content, and Context International Perspective, 3rd Edition, Thomson Learning.

Dessler, G. (2011) Human Resource Management ,12th edition,   Prentice Hall,

Economist. (1998). Business: Proton bomb. The Economist, 347(8070), 63-64.

Economist. (2005). Business: Malaysia’s motor mess; The car industry. The Economist, 376(8437), 62.

Jayasankaran, S.  (2004, July 14). Malaysia’s Proton Faces Uncertainty. Wall Street Journal  (Eastern Edition),  p. 1.

Johnson, G., Scholes, K. and Whittington, R. (2005). Exploring Corporate Strategy: Text and Cases, 7th Edition, Financial Times Prentice Hall.

Legge, K. (2004). Human Resource Management: Rhetorics and Realities (Management, Work and Organisations), (Ed. Edition). Palgrave Macmillan.

Lynch, R. (2006). Corporate Strategy, Fourth Edition, Financial Times Prentice Hall.

McShane, S. L., & Von Glinow, M. A. V. (2010). Organizational Behavior: emerging knowledge and practice for the real world (5th Edition). McGraw Hill.

Rigby, Darrell K (1994) ‘Managing the Management Tools’, Planning Review 22 (5). pp 20-24.

Robbins, S.P. (2005). Organizational Behavior, 11th edn, Pearson Prentice Hall, Upper Saddle River, NJ.

Shari, M., and Dawley, H. (1998, March). A Wrong Turn in Malaysia. Business Week, (3568), 50.

Van Assen, M., van den Berg, G. & Pietersma, P. (2008) Key Management Models: The 60+ Models Every Manager Needs to Know. Financial Times Prentice Hall, 2nd.edn.

 

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