The David Jones is iconic department store in Australian retail industry, but the net profit of David Jones has been decreasing because of the rapid retail environmental changes, unhealthy cultures, and global online attack. The problems of declining net profit in David Jones are creating make it essential to apply the most suitable change management for company. 1.2Aim
The aim of this report is not only applying the change management theory, model, and style for David Jones and David Jones’ CEO, Paul Zahra, but also supporting the arguments through case studies in order to find practical solution. 1.3Scope
This report presents the view that a positive model, modular transformation and incremental change are the most suitable change management theory that can be implemented for David Jones. Also, a coercive style of management is a suitable style of management for David Jones’ CEO, Paul Zahra. The findings and analysis of performance for each theory, model, and style are justified by a critical comparison of the change management theories, models, styles and practical problem solution cases. Moreover, the improvements for David Jones’ restructure are discussed.
2.0 MODEL OF PLANNED CHANGE FOR DAVID JONES 2.1 David Jones issues
David Jones is the oldest department store in Australia and was established in 1838. Until 2010, David Jones worked successfully in the Australian market, especially from 2007 to 2010. During that time, the net profit of David Jones increased from $109.5 million to $156.5 million, but the significant growth in the net profit dropped slowly from $156.5 million to $101.1 million by 2012. The slow decrease in the net profit of David Jones is caused by unhealthy organisational culture, global online retail attacks and retail environmental changes. In order to reconfirm David Jones’s importance in the Australian retail and consumer market, the best planned change model has to be chosen for David Jones.
2.2 Comparison of planned change models for David Jones Cummings and Worley (2009) summarise the differences of three major models of planned change. The first one is Lewin’s change and action research model, which are more focused on fixing problems than concentrating on what the organisation does well and gaining those strengths. Also, Lewin’s change model, a three-stage model, claims that adaption of these forces maintain the status quo, which leads to efficient strategy for change (Waddell, Cummings & Worley 2007).
The three-stage of Lewin’s change model is shown in figure 1(A). Moreover, the action research model is a cyclical process, which is determined by eight steps that fix problems using frequent research (Cummings & Worley 2009). Eight steps of action research are shown in figure 1(B). On the other side, a positive model focuses on positive dynamics in an organisation that improves the extraordinary results (Waddell, Cummings & Worley 2014, p. 39). This model is described by in five steps, which is shown in figure 1(C). Figure 1: The comparison of planned change models (Cummings & Worley 2009, p.25)
2.3 Positive model for David Jones
According to David Jones case study, the positive model of planned change is the best suitable one for David Jones because: • it is proved that in order to survive with today’s uncertainty and huge competitive business environment, organisations need to focus on more business environmental changes than fixing the organisational problems (Waddell, Cummings & Worley 2014, p. 39) •Cristian-Liviu (2013, p. 1690) notes that the resistance for change causes the failure of strategic implementation because employees try to maintain their culture.
Also, Ruxandra and Camelia (2013, p. 127) noted that resistance to change may create lots of problems during the change process such as activity drawl, activity slow-down, delays in launching and change process, and delayed and inefficient performance. •Sandra and Tracy (2012) indicate that bad news in business leads to poor financial outcomes, and external and internal crisis. • it is supported by case studies that the linkage between inability of identifying of retail environmental changes and Zahra’s new rescue plan for David Jones failed because after the new rescue plan of Zahra, net profit and share price continued to decrease.
Moreover, the case study said that ‘it may be a good five years before strategy can be assessed properly’ (Waddell Waddell, Cummings & Worley 2014). On the other hand, Lewin’s change model or action research model is not suitable for David Jones case because of focusing on more problems in the organisation than concentrating on retail environmental changes. The result of implementation of Lewin’s change model or action research model would be led to the strategic failure. The possibility of positive model of planned change for David Jones makes it necessary for the company to use positive model.
3. THE CURRENT RESTRUCTURE OF DAVID JONES
3.1 Current business restructure analysis
Even though this report agrees with the current restructure and rescue plan of David Jones, which were divided main three parts including eleven subparts that are renovating store policies, focusing its core strengths, and transferring from traditional business to technologically oriented business, I want to add two main parts that are sustainable training and focused marketing strategy. 3.2 Recommended changes for David Jones
In order to achieve optimum results, David Jones should consider the following choices. •Sustainable training: The rapid changes in business environment are needed and required to learn every innovations for business organisations in order to dominate their current market. It is proved that in the today’s interconnected world, the success of organisations and teams depends on how much they can use and operate new information and communication technologies that changes business environment (Ancona, Bresman & Caldwell 2009). Also, Blanchard (2009) notes that coaching for their employees lead to successful organisation within the unpredictable changes, but the new rescue plan has no any special training and coaching for their employees.
It is a big disadvantage of new rescue plan that has been causing the decreasing net profit of David Jones and failure of strategic implementation. Moreover, it is supported by case study that although David Jones had excellent customer service in the fast, but it has decreased over the years. •Focused marketing strategy: Another disadvantage of new rescue plan is unfocused marketing strategy. According to case study, new strategic plan did not include any focused marketing plans, which target customers and profitable markets. Also, David Jones could not identify changing customer behaviours and profitable buyers. It is supported that new economic order has changed the buyer’s market, which is that a twenty-four percent of buyers in Australian population has balanced fifty-four percent of discretionary spending, but David Jones has been concentrating on fifty percent of buyers, who are only twenty-four percent of discretionary spending in Australian population.
The combination of lack of marketing strategy and non-target sales activities cause the inefficient strategy implementation. In addition, Nemcova & and Dvorak (2011) state that the strategic management of electronic commerce is concentrating essentially on customers, but David Jones focuses on more result s than concentrating on customers. The possibility of sustainable training and marketing strategy supporting strategic implementation of David Jones makes it necessary for the David Jones to add sustainable training and marketing strategy for their strategic plan. 4. SCALE OF CHANGE FOR DAVID JONES
4.1 Comparison of scale change
During the unpredictable changing business environment, the scale of change helps to organisation in order to achieve optimum result how much change the organisations. This process is divided by from fine-tuning organisational development to corporate transformation (Waddell, Cummings & Worley 2014, p. 52). •Fine-tuning: This changing process is performed at divisional or departmental level as matching between organisation’s structure, strategy, people and activities.
•Incremental change: Change process that in order to match changing environment, corporate business structures, strategies and management process are always adapted.
•Modular transformation: Modular change concentrating on more changing and redesigning one or more division than changing whole organisation.
•Corporate transformation: Corporate transformation brings about whole organisational transformation.
4.2 Suitable scale of change for David Jones
For David Jones, the most suitable of scale of changes are modular transformation and incremental change the reason why: • in the case study, although new strategy of David Jones was implemented in order to match between retail environmental change and strategic performance, it faced failure because of performing too late. Firstly, in order to dominate online and retail market, David Jones has to use the modular transformation that renovates some divisions including information technology, marketing and strategy and human resource. By renovating the inability of divisions, it reduces the risk of failure of strategic implementations because Poblador (2014) notes that the failure of organisational strategy is sometimes caused by unexpected responses from the organisation itself, especially its employees behaviours that indicates corporation culture. It is showed that using corporate transformation is more risky for David Jones than using modular transformation.
After that modular transformation process would be finished and are matched business environment changes, David Jones should be applied to use incremental change process in order to maintain and dominate its retail market. Also, it is supported that the maintenance of changing environmental situations are accomplished by keeping incremental changes (Poblador 2014, p.143). •fine-tunning is not suitable for David Jones because between 1960s and 1970s fine-tuning was implemented successfully in organisation, but today’s uncertainty business environment is needed by different change process (Waddell, Cummings & Worley 2014). Also, case study said that even though unhealthy organisational culture have been causing for losing net profit of David, main reason for David Jones is retail environmental change especially online trade, new economic order and technological revolution.
On the other side, the decrease of net profit in David Jones was caused by online trade, new economic order, technological revolution and unhealthy organisational culture, and majority of profit in David Jones is earned by traditional department stores, it is not necessary to make whole organisational change in order to match retail environmental changes. It is proved that Ford Plastics was implemented in an organisation-wide change in order to match its external environmental change, but it faced the failure soon (Graetz et al. 2002, p.32). All the evidence shows that the modular transformation change and incremental change are the most suitable change process for David Jones. 5. APPROPRIATE STYLE OF MANAGEMENT FOR DAVID JONES’ CEO PAUL ZAHRA
5.1 Comparison of style of management
The style of management is described by Australian researchers Doug Stace and Dexter Dunphy. The main idea of the style of management is that unpredictable business environment is required and demanded the rapid changes for organisation to achieve their strategic goal. Using style of management for organisation, which is described by from collaborative to coercive, makes it easier to be employed (Waddell, Cummings & Worley 2014). •Collaborative: Employees are involved in making significant decisions about organisational future and change performance.
•Consultative: According to consultation, employees bring about organisational change, but for goal setting, they involved limited participation. The goal setting is done by expertise or responsibility. •Directive: Main form of significant decisions about organisational future and change performance are made by managerial authority and direction. •Coercive: One of forcing authorities, which are outside parties, managers and executives imposes to change on key group in the organisation.
5.2 The most suitable style of management for Paul Zahra
For David Jones’ CEO Paul Zahra, the most affordable style of management is coercive because: •the long term performance results of sixty teams are estimated that empowering team leader leads to higher work performance for teams over time than a directive team leaders because of higher level of team coordination, empowerment, learning, and mental model development (Natalia, Matthew & Henry 2013). •collaborative and consultative are not suitable for David Jones because Phil (2012) estates that the most efficient change management for overpowering companies were brought by the combination of concentrated clear vision of change and sponsorship from the top.
Also, it is supported that the commitment of top management for change creates energy for action within the organisation, which leads to a successful vision (Graetz et al. 2002). •according to Jaroslav (2013), the directive style leads to lower capacity for the average bank sales clerks, which is proved by banking sector in Slovakia. It is showed like David Jones current situation the reason why net profit of David Jones has been decreasing, which proves that the directive style is not suitable for David Jones. • case study said that not only the board of David Jones has been supporting Zahra’s vision of change, but also the rapid changes in retail business environment are needed to manage quickly because the business environment changes and competitors do not wait David Jones. To sum up, the possibility of coercive management style to be used successfully in rapid changes business environment makes it necessary for the David Jones’ CEO Paul Zahra to use coercive management style.
It can be seen that the most affordable suitable planned change model for David Jones is Positive model, and scale of change is modular transformation with incremental change. Moreover, the best suitable style of management for David Jones’ CEO Paul Zahra is coercive. Furthermore, even thought this paper agrees with the restructure of David Jones, sustainable training and focused marketing strategy would be added for David Jones’ rescue plan. In conclusion, the combination of Positive change model, modular transformation with incremental change, coercive style of management, sustainable training, and focused marketing strategy will support David Jones’ strategy achievement. Also, the improvements for David Jones’ restructure are discussed.