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Change refers to transformation of a function, practice or anything from its past stage to something better in its present state. In this present era of dynamic environment it becomes pivotal for an organization to introduce, accept and manage changes in reference to changing market scenario. Thus in context of an organization change leads to modification or introduction in process, organization structure, system or in job roles impact of which can be both negative as well as positive. Thus, it becomes crucially significant fore a comp nay to implement strategies that can effectively implement, control and support people to adapt to change (Al-Haddad and Kotnour, 2015).
Adidas and Nike are the two leading sports goods industries managing their operations worldwide.
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The project undertaken will give a brief about how these companies are impacted by change, how internal and external environment affects leadership, team and employees behaviour. Moreover synopsis about barriers to change and various measures to be adopted to reduce negative impact of it will be given.
P1 Impact of change on an organisation’s strategy and operations
Change refers to alteration in a firm's procedure, structure, policies , tools and techniques of an organization in order to cope up with new emerging competencies be it to be more competitive, customer oriented or more efficient so as to be ahead of business rivals and be market leader. Changes can be introduced both internally and externally to enhance the efficiency and performance of a firm. Internal drives of changes involves alteration in organisation culture, technology capacity , management of various department etc. (Brown, 2012). External drives of change are because of political condition, social, technological, economical, environmental etc.
Nike and Adidas are the two market leaders over the decades has become synonym for sports industry. Both these companies initially started off as athletic footwear and sportswear manufacturers. But with the span of time and due dynamic environment full of heavy competition and with frequently changing customers need and aspirations they recognize opportunities in diversifying its operations by focusing on both product attributes and brand values than merely on sportswear and equipments Adopting themselves and their business operations with emerging changes has lead both these companies to be world's leading brands in their industry.
Nike: It is an American multinational company which is engaged in designing and manufacturing of footwear, apparel, equipment, accessories etc. More than 44000 employees are working to deliver their products effectively to end customers. In 2017, brand value of Nike is calculated as $ 29.6 billion. It is one of the largest supplier and manufacturer of sports equipment in world.
Adidas: Adidas is the 2nd largest multinational brand deali8ng in designing and manufacturing of shoes, clothings and accessories. It was established in 1924 in Germany and is considered as one of the biggest sportswear manufacturer in Europe with a revenue of around € 19.29 billion as observed in 2016 (Doppelt, 2017) .
Nike and Adidas both are successfully runn9ing their operations all across the globe which is the indicator that there are various external factors that have an impact on their business operations. Although both companies ahead strong internal operations base which is a major reason behind managing change successfully. Mentioned below are the comparison between the strategies that both these companies follow to tackle change and to remain competitive :
Nike acquiring 18th position according to top 100 Global Brand Report 2017, is the one of the leading designer and supplier of sportswear worldwide. Both female and male between age group 18 to 35 years old and the football players forms the target audience of Nike. It has different advertising and promotional activities for men and women and Gen Y according to their nationality, race and age. By implementing innovative and creative marketing strategies like providing the option to customers to design their own shoes as per their requirements , using celebrities for sponsoring and promoting their products and so on company focuses to capture the market of Europe where Adidas has large market share.
Adidas forms one of the leading competitor of Adidas as its market share has tremendously increased by 11% according to NPD data,2017. Adidas was able too cater the needs of more than 50% of UK population comprising target audience between 18 to 30 years and sports such as handball, rugby and volleyball. By using various promotional stargates through TV commercials, sport panorama, magazines, billboards and sponsoring football matches maintains a close competition with NIKE.
Nike pricing strategy is based on vertical integration and the company has maintained its pricing structure in a way that it is competitive to its business rivals in terms of price as a well as quality .
ADIDAS is second largest organisation after NIKE. In order to capture the attention of customers and to take a lead in market share company need to work on its pricing strategy and focus on catering the need of moderate income groups.
P2. Impact of internal and external drivers of change on leadership, team and individual behaviour
Business environment is amalgamation of a number of internal ans external factors that influences the working and decision making of a firm (Fullan, 2014). Internal factors comprises those attributes that are in control of company to manage and modify as per the changes occurring in the market. These factors involves organizational culture, management, employees etc. External factors are those that are beyond the control of a business and thus firm has to find out a way to deal with it. Thus, to survive in a long run and to maintain the productivity and profitability of its business operation all transnational accompanies like Nike and Adidas requires to formulate or adopt policies and strategies which are in accordance with the market trends of a particular country to be figurehead in its industry. To accomplish this a firm is required to analysis both its internal and external factors in the light of market competencies so as to formulate the most appropriate policies , procedures and strategies that can be supportive in achieving targets and objectives and to get maximum returns with higher profits (Fyke and Buzzanell, 2013). Every alteration or change introduced in a business significantly affects its leadership, teams and individual behaviour which is responsibility of a manger to coordinate for its success. Mentioned below are the internal and external drives regarding Nike and Adidas are described below:-
Internal drivers of change
- Organisation Culture: It involves the values, beliefs assumptions that guides the behaviour of employees in an organization. It is critical factor for both the companies to analyse the cultural differences presented within the firm and to formu8late appropriate policies and strategies to over come such gaps. This will give firms an opportunity to improve and enhance coordination and well as relations among management and the employees.
- Financial management: Funds forms one of the basic and most important internal factor that have a great effect on the working of a business. Management of both firms need to source of sufficient amount of funds for the smoothie running of their operations. Any lacking while doing financial analysis may results in hampering the functionality of business , leading to reduction in its operational capacity and negative effect on its output and profits (Holt and Vardaman, 2013).
- Employees: Employees are the cornerstone of any business. They forms the source of all innovation and creative ideas utilizing which a company convert its inputs into maximum outputs with higher returns. Thus, it is of vital importance for both the enterprises to keep it human resources the center of focus while formulating any policies, procedures and strategies in a way that align their personal goals with the organizational goals. This will motive them resulting in increasing their productivity, work commitment and performance.
External Factors driving to change
- Economy: This is one of the major external factor that impact organization and its operations. IT is concerned with economic condition of a nation. Nike to cope up with adverse financial crisis has used its brand equity to take advantage of eEconomy:merging customers demand in developing economies (Latham, 2013). This act has lead to creation of employment and fulfilment of its CSR responsibility. Adidas products are categories as leisure items that are not necessity. Due to which Adidas has to face a lot of competition from other leisure product brands. Also due to fluctuation in global economy it is required to search out new markets to sell and distribute its products to ensure company's growth and opportunities.
- Political: It is concerned with the politico stability, government policies, ideology of parties etc. of the countries in which both firms are running there operations. Nike has been benefited with the initiative taken by government regarding transparency of global value chain. Adidas on the other hand are prone to risks emerging from sudden hike in import restrictions, charges in taxation system of a country and import tariffs that abstain free flow of goods.
- Environmental Factors: Both the companies maintain a positive image when in comes to environmental issues. Nike under its environmental policy has launched projects for checking out and reduction in carbon emissions and reducing and treating its industrial waste (Lawrence, 2015). Adidas Group too has applied various approaches for controlling and monitoring emission of VOC, tackling climatic changes by developing sustainable products.
- New competitors: Competitors are biggest factors influencing the activities of business organization. With the entry of competitors who have innovative technologies, ideas, reasonable pricing policies to capture the attention of consumers which attracts the customers of such leading organisation like Adidas and Nike
- Technology: It forms one of the major factors that affects the demand of goods and services of an organization. With emerging new and latest technologies it becomes important for firms to adopt and accept new and innovative technologies so that they can utilize their resources to utmost level and can be figurehead in the market.
P3 Measures regarding minimising the negative impact of change
One of the most baffling issue faced by every firm, while implementing change is the resistance from its employees which is inevitable. Change if not introduced effectively may negatively influence the firms giving rise to issues like reduction in outcome, employees absenteeism or turnovers, request for transfers, strikes and so on which all will ultimately hamper the functioning of a n enterprise operation's leading to losses (Salmela, Eriksson and Fagerström, 2012). Thus, to avoid any adverse effect it is responsibility of every management to be pro active in focusing on developing strategies for change management which will help the firm to convince its employees about the need and benefits that the particular change when applied will bring. Following are some steps that if adopted by an enterprise will help it to handle resistance from change from its workforce:-
- Creating pathway: It is of vital importance for management to create a transparent system for communicating every detail and information regarding all the new initiatives, policies and procedures that company is going to adopt and implement to its employees. Besides this management should conduct meetings to discuss latest updates with its team members so as to make them aware of all the know how of changes to be applied.
- Explain about plans: It is advisable for management to make employees aware about all the refined and revised goals , objectives of the firm, strategies and plans to achieve them and modified job roles and responsibilities in regard to changes that are going to be implemented. This will help in reducing the fear of employees making them clear about expected performance and ways to achieve the set targets. This all will benefit firm in reducing the negative impact of change as employees will be clear about the need and probable benefits that the change would bring (Thomas and et. al., 2013).
- Manage planning and its implementation: Proper planning and its successfully implementation is the key issue while introducing change in an enterprise. Thus the management should before hand prepare a detailed plan comprising responsibilities of each manager, team leader and employees. Management should appoint one person from each department to deal with various consents in suitable manner. Thus, that person responsibility is to instruct employees as per the set guideline of the plan so that all activities are implemented and executed as per initial plan.
- Continuous improvement model: This model helps in continuously identifying changes occurring due to both internal and external factors and then accepting them to improve firms productivity ans functionality. Application of this model helps in reducing the workload and supports management to concentrate on other significant matters (Yoder-Wise, 2014). It involves PDCA cycle which works to make the future of organisation better.
PDCA Cycle: This cycle involves various functions define below:
- Plan: This is the initial stage which involves determining changes that are occurring in various internal and external factors.
- Do: This step involves implementing changes on real business operations.
- Check: It is the most important and critical steps that involves identifying an d monitoring the impact of the changes that are applied on both the organization as well as on its workforce. It also includes studying weather these changes are accepted or rejected to ascertain its effect on organization performance.
- Act: This includes implementation of change at organizational level that is from strategic to production level. The model is to be accepted if its produces positive effects otherwise it is to be re checked and reviewed to be efficient enough for organization to be accepted.
P4 Different barriers for change and determine how they influence leadership decision-making
Trait Theory: This theory is mainly taken into account in order to predict effectiveness of leadership. It can be applied at all organisational level. This theory is based on the assumption that people are either born as successful leader or made with certain attributes that will makes them excel in their respective leadership roles. The theory laid stress on analysing physical, social an mental characteristics in order gain to gain more understanding about particular situation. This theory is suitable when company undergo change. Nike always believes that in order to gain high competitive advantage in overseas market they need to develop a culture of change within their organisation. They create the expectation among workers that change comes regularly and this motivates everyone in Nike to contribute more effectively and efficiently towards achieving business objective. However, leader play great role in such type of situation. It become easier for them to adapt changes because of their special traits and characteristics which also inspire their followers to act accordingly as per the change.
Contingency Theory: This leadership approach deals with finding the suitable match between a leader and a situation. Under this theory, the success of leader is a function of various contingencies in the form of task or group. When Nike undergo change management, they select leader that is going deal with various situation on the basis of skill and knowledge. Selecting right leader plays key role in organisational success and growth.
Transactional Leadership Theory: This theory is based on the assumption that company can motivate employees by paying them great reward and benefits on the basis of their work performance. This mainly deals with directing and motivating followers mainly through appealing to their own sell-interest. The main objective of follower is to follow the path instruct by its leaders. When Nike changes its organisational culture, it enable employee to change its workings style and this can only be possible with the proper guidance and direction of motivated leaders. Leaders possess the ability to shape the working of their followers. Therefore, the entire working of followers depend upon the way they get the direction or guidance from its leaders or managers (Wells and Nieuwenhuis, 2014).
Situational Leadership: The theory was prosed by Paul Hersey and Kenneth Blanchard. Under this type of leadership, manager or leader of a company must change or adjust style to fit the development level of the employees he is trying to influence. Basically under this, leaders need to change its style not the workers or followers to adapt to the leader's style. The style may change on frequent basis so as to accomplish organisational objectives in cost-effective and timely manner. For example: When Nike experience cultural change they expect their leaders or managers to change or adjust his style accordingly. Company undergo change so as to gain high competitive advantage in overseas market but its success depend upon how employees perceive the change.
P5 Contribution of different leadership approaches regarding organisational change
Leadership is the ability of a person to influence other people and make them work towards achieving set objectives. It has a direct cause and effect relationship with the funbctionb9onhg and success of and enterprise. The role of leader is very significant in introducing change in an organization. It is because they are people who shapes business strategies starting from their execution to making them effectively implemented. There are various leadership theories in management that describes leaders on basis of their traits and power an d authority that they possess over others (van der Voet, Kuipers and Groeneveld, 2015). It thus become critical for an organization to identify the individual qualities of its leaders and then choose the most appropriate leadership style to attain company's objectives with specific time frame giving maximum outcomes. Following are some leadership theory that can be taken into consideration while
Situational Leadership Style :- It is a leadership theory applies that there is no perfect way or style of leadership. It is the capability and efforts of leader to understand needs of individual or group they are going to lead and then mould his leadership style to meet those requirements. This theory includes four behaviour types:-
- Directing the employees about their roles and responsibilities communicating about best way to accomplish there tasks.
- Coaching is given to inexperience employees who are still learning. Leader uses two way communication and provide support to individual or groups by asking them inputs during the process of decision making process.
- Supporting is given proper feedback to improve the performance of employees and praising teem for their efforts to build up their confidence and morale.
- Delegating involves process of distributing authority and responsibilities to employees where they are responsible for selecting the task, its course of action and delivering desired results within specific times.
Transactional leadership: The main function of this leadership theory is to focus on managerial functions comprising controlling, organizing and short term planning to achieve pre determined targets within specific time limits. Leaders applying this theory motivates its employees to give best of their efforts by using a system of rewards and punishments. If employee perform as per desired resulted he is motivated by giving rewards.
Transformational Leadership :- It is the leadership style in which leaders and subordinates work together to identify the changes that are need to be implemented, creating its vision and mission for guidance, ascertaining the probable difficulties that employees might face with their solutions and executing change allowing leader to align subordinates with tasks that enhance their performance.
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From the assignment undertaken it can be concluded that, change is a significant attribute in determining the success and growth of an enterprise. Thus is becomes highly important for organization to be attentive and adoptive to such frequently occurring changes in market. Moreover there are various approaches adopted by management of Adidas and Nike for developing leadership among its workforce. Apart from that there are various internal and external factors like political, economical, social, technological, legal that majorly influences decision making process of an enterprise. There are various approaches that can be adopted along with PDCA cycle to minimise the negative effects of changes that are been applied. In A firm can also make use of various leadership approaches for motivating and developing knowledge and skills of employees for achieving predetermined goals.
You may also like to read:
- Al-Haddad, S. and Kotnour, T., 2015. Integrating the organizational change literature: a model for successful change. Journal of Organizational Change Management. 28(2). pp.234-262.
- Brown, B.C., 2012. Leading complex change with post-conventional consciousness. Journal of Organizational Change Management. 25(4). pp.560-575.
- Doppelt, B., 2017. Leading change toward sustainability: A change-management guide for business, government and civil society. Routledge.
- Fullan, M., 2014. Leading in a culture of change personal action guide and workbook. John Wiley & Sons.
- Fyke, J.P. and Buzzanell, P.M., 2013. The ethics of conscious capitalism: Wicked problems in leading change and changing leaders. Human Relations. 66(12). pp.1619-1643.
- Holt, D.T. and Vardaman, J.M., 2013. Toward a comprehensive understanding of readiness for change: The case for an expanded conceptualization. Journal of Change Management. 13(1). pp.9-18.
- Latham, J.R., 2013. A framework for leading the transformation to performance excellence part II: CEO perspectives on leadership behaviors, individual leader characteristics, and organizational culture. Quality Management Journal. 20(3). pp.19-40.