Describe how the restraining forces impede your progress and develop an intervention strategy to enhance the driving forces to make change possible.

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1 Organization Development: An Introduction to the Field, Its History, and Practices

©Sally Elford/Ikon Images/Corbis

Learning Objectives

After reading this chapter, you should be able to:

Describe the �ield of organization development in terms of its purpose, philosophy, and de�initions.

Summarize the history of organization development, including the key practices of each period.

Explore the roles, values, competencies, professional associations, and ethics of an organization development practitioner.

 

 

More than 2,500 years ago, the Greek philosopher Heraclitus observed, “Change is the only constant” (Mark, 2010). This sentiment is still true today. From �luctuations in weather and seasons to the growth and aging of your own body, change is not an option—it is a fundamental principle of existence. What changes have you experienced recently? Perhaps you became ill or recovered from an illness, enrolled in or dropped out of a class, were promoted at work or changed jobs, ended a relationship or got married, or simply changed your mind about something.

As these examples suggest, sometimes change is intended, but just as often it is unanticipated or even unwanted. For example, few of us welcomed the recent global economic downturn, which required us to adjust our budgets and behaviors to cope. Were these changes planned or unplanned?

Unplanned change refers to changes that were unexpected, like the loss of a job, surprise successes, the sudden death of a loved one, a failed relationship, natural disasters, or new opportunities. What unplanned changes have been the most signi�icant in your life?

Assessment: Change Readiness

Most people think they are open to change. But are they? When change comes, do you �ind yourself curious and even exhilarated, or are you angry, frustrated, and worried that you are unprepared? Take a few minutes to assess your readiness for change.

http://www.ecfvp.org/�iles/uploads/2_-change_readiness_assessment_0426111.pdf (http://www.ecfvp.org/�iles/uploads/2_-change_readiness_assessment_0426111.pdf)

Planned change refers to shifts that are intended and prepared for, such as getting an education, learning new skills, moving to a new city, starting a new hobby, or �inding a new job. Over the past few years, what signi�icant changes have you planned? Have you been successful at implementing these changes?

Tips and Wisdom

Bebop was about change, about evolution. It wasn’t about standing still and becoming safe. If anybody wants to keep creating they have to be about change.

—Miles Davis (1926–1991), U.S. jazz musician and composer

Embracing change is not always easy, but it rewards us with new experiences, new insights, and new creations.

 

http://www.ecfvp.org/files/uploads/2_-change_readiness_assessment_0426111.pdf

 

©ImageZoo/Corbis Organization development (OD) helps organizations cope with change on a global scale.

1.1 What Is Organization Development?

Like individuals, organizations are continually required to adapt to a dizzying number, variety, and pace of change if they are to thrive. These unplanned changes include globalizing markets, emergence of the knowledge economy, advancing technology, growing customer diversity, shif-ting customer preferences, economic upturns or downturns, natural disasters, unanticipated competition, and abrupt reorganizations or changes in management. To navigate such shifts, organizations engage in planned change, an intentional process in which they take action to solve problems or overcome challenges. Examples of planned change in organizations include intentional shifts in products or markets, mergers and acquisitions (at least for the controlling company), prearranged reorganizations, expansion into new regions or countries, and new product development.

Although individuals often manage planned change independently, organizations frequently seek help so that the planned change is systematic, effective, and lasting. This assistance is known as organization development (OD). On its simplest level, OD is a process of helping individuals, groups, and organizations become more effective through planned change.

De�ining OD

Among the many de�initions of OD, no single one is universally accepted. Beckhard (1969) offers an early de�inition that is now considered classic: “Organization development is an effort (1) planned, (2) organization-wide, and (3) managed from the top, to (4) increase organization effectiveness and health through (5) planned interventions in the organization’s ‘processes,’ using behavioral-science knowledge” (p. 9).

Beckhard’s (1969) de�inition points to several key aspects of OD:

1. It is a planned, intentional process to address a problem or issue that needs to change. 2. It is organization wide, based on an understanding that the organization is an integrated system and that a

change made in one place may have rami�ications in others. 3. Top management provides buy-in and support of the OD effort. 4. OD activities address both the effectiveness and the health of the organization by boosting its performance

while making it a more humane place to work. 5. It is an intentional process, grounded in evidence derived from the behavioral sciences.

You can see Beckhard’s points in other popular de�initions of OD, such as this one from Cummings and Worley (2009): “Organization development is a system wide application of behavioral science knowledge to the planned development, improvement, and reinforcement of the strategies, structures, and processes that lead to organization effectiveness [emphasis added]” (pp. 1–2).

Similarly, Anderson (2012) advocated: “Organization development is the process of increasing organizational change through the use of interventions driven by social and behavioral sciences knowledge [emphasis added]” (p. 3).

In other words, OD is an intentional change process that involves the total system. It takes an evidence-based approach to planning change that improves the effectiveness and health of the organization. Moreover, management

 

 

is personally invested in making the organization more effective and healthy. Consultants who work with organizations to identify and implement appropriate interventions practice OD.

OD Consultants and Clients

Many organizations rely on professionals to steer them through complex and changing environments with planned responses to problems and challenges. These professionals are known as organization development consultants. Also known as OD practitioners, human resource developers, human resource managers, or learning and development professionals, OD consultants are skilled at assessing problems, providing direct feedback to the organization, and in�luencing change. OD consultants lead organizations through interventions that are based on careful study and preparation and are grounded in the behavioral sciences.

The key stakeholder in the OD process is known as the client. Sometimes there is more than one type of client. For instance, the person who initially contacts the OD consultant may provide introductory information about the problem but not be the owner of the problem or the person paying for the services. It is important for OD consultants to correctly identify the client—an issue we will cover in Chapter 3.

When Is OD Warranted?

Beckhard (2006) notes there are certain conditions that warrant an organization engaging in an OD effort. These include when a client or organization wants to

1. change a managerial strategy; 2. develop an organization that better meets the needs of employees, the organization, and the environment in

which the organization works (markets, community, and so forth); 3. change cultural norms; 4. change structure and roles; 5. build intergroup collaboration; 6. improve communications; 7. improve planning; 8. tackle issues related to mergers; 9. address motivation issues among the workforce; and

10. better adapt to a changed environment.

Have you experienced an OD effort at an organization you have worked for? If so, what motivated it?

Interventions

When someone decides to make a change, they usually do something speci�ic. For instance, if you decided to rein in your spending, you might establish a budget, create a spreadsheet to track it, switch to electronic banking, visit a �inancial planner, or change your saving habits. Actions like these that are taken to improve a situation are known as interventions. What are some problems you have experienced and interventions you have made?

In OD an intervention is a corrective action made to resolve problems or address challenges. Interventions in OD focus on tackling organization challenges such as low morale, quality defects, shifting markets, new management, leadership problems, strategic planning, and so forth.

Philosophy of OD

Most of us want to do meaningful work in an organization that has pleasant working conditions, with colleagues who are respectful, and where our work is recognized and rewarded. OD seeks to honor the individual and advance

 

 

organization goals. This commitment to bene�it all organizational stakeholders is grounded in the philosophy of humanism.

Humanism is the belief in the inherent good of human beings, their capacity to reach full potential in life, and their right to be treated fairly and humanely. “The OD value is not about change but about change that makes people better—humanistic values” (Marshak in Wheatley, Tannenbaum, Yardley Grif�in & Quade, 2003, p. 4). OD experts herald OD’s humanistic values as the �ield’s distinguishing feature (Greiner & Cummings, 2004; Porras & Bradford, 2004; Wirtenberg, Abrams, & Ott, 2004), embracing the notion that “the individual has to gain in the long-term for the organization to gain in the long-term” (Porras & Bradford, 2004, p. 401).

Wirtenberg, Abrams, and Ott (2004) capture this sentiment:

The need in organizations to manifest socially responsible values and create win–win business results has never been greater. OD is in an excellent position to seize the opportunity to build bridges, �ind common ground, and address organizational and cultural divides. (p. 479)

If you are fortunate enough to work in an organization with a highly functioning OD process, you should observe an operation engaged in continual improvement for individuals, teams, and the organization itself. As you read the case study on Sparklite, ask yourself if this company is engaging in humanistic practices.

Case Study: Is Sparklite a Candidate for OD?

Sparklite, a spark plug manufacturing plant, underwent a management change 6 months ago when John Stevenson became the plant manager. Stevenson replaced Al Smith, who was a beloved manager and had run the plant for 20 years. Smith was a hands-on manager. He was always willing to roll up his sleeves and work on a problem, whether it involved a machine in the plant or a con�lict with a customer. He was not a micromanager; rather, he would work closely with the team to solve problems. He listened to input, whether from the janitor or the vice president. He expected all management personnel to behave similarly. People who worked in the plant respected Smith and felt respected by him. Over time a true community atmosphere evolved, and the plant was one of the highest performing in the company.

Stevenson, on the other hand, spends a lot of time in his of�ice, reading over production numbers, talking on the phone, and holding meetings with his management team. Rarely does he go out onto the manufacturing �loor and talk with employees or listen to their ideas. When one of his managers suggests, “It might be helpful if you spent more time getting to know our workers,” Stevenson barks, “That is what I pay the supervisors to do. My time is better spent on �inding ways to cut costs and improve our margin.” Stevenson is very driven by numbers: When they are not good, he slams his �ist on the table and demands that the next shift “pick up the slack.”

It does not take long for the supervisors to become afraid of Stevenson and to quit coming to him with problems. The convivial atmosphere the plant had enjoyed for so many years quickly erodes into an atmosphere of fear. Soon the plant’s performance begins to suffer. Morale sinks. Members of the management team begin applying for transfers to other locations. Longtime workers are exploring other employment options. This only makes Stevenson more frustrated, agitated, and frightening to the workers.

One day a corporate vice president comes for a plant tour and visit. It is immediately clear to her that the plant has taken a turn for the worse. She talks with several employees and can see that something has to change.

Critical Thinking Questions

 

 

1. How might planned change play a role in turning things around at Sparklite? 2. How aligned with humanism is the organization emerging under Stevenson’s leadership?

Characteristics of OD

As we have already learned, OD is a planned change process that is grounded in a humanistic philosophy. It also has the following key characteristics (Beckhard, 2006, p. 9).

OD Is Systems Based

OD interventions are planned with consideration for the whole organization as a system. Like medicine, OD intends to “�irst, do no harm.” Recall that the tenets of humanism require that OD bene�it all stakeholders. This means, for example, that before implementing a change to work �low, the OD consultant would check to make sure the adjustments do not have a negative impact elsewhere in the organization. For instance, a work-�low change might expose employees to repetitive-motion injuries or make the work �low in another area unmanageable.

Top Management Is Committed

Effective OD secures management’s awareness of and commitment to the chosen intervention and its management from the very beginning. Employees look to management for approval and example, and it is imperative for organization leadership to visibly support any change effort. OD consultants play a key role in holding management accountable for demonstrating sustained and visible commitment to the OD change process.

The Intervention Is Tied to the Organization’s Mission

A key aspect of securing management commitment is helping leaders see how the OD initiative helps actualize the organization’s mission. It is also important for employees to understand this connection. For example, in the Sparklite case study, the organization’s mission to produce quality products on a timely basis was facilitated by a collegial, collaborative atmosphere that was being eroded by Stevenson’s behavior. If an intervention were made to help Stevenson and other managers change their managerial style to a more participative one, everyone would have to understand and buy in to how the new behaviors would help the organization meet its mission.

There Is Long-Term Commitment to Implementing the Intervention

Although OD interventions can sometimes be relatively simple and quick to implement, they often require a long- term commitment, sometimes 2 to 3 years or more. Interventions that change work practices, beliefs, or standards do not succeed overnight. Making lasting organization change needs long-term commitment and action from all levels of the organization.

Consider a large change made by your organization—perhaps a shift to a new database, marketing plan, or procedure. How long did it take? Make a list of a few changes you can recall and estimate how long they took. Chances are, the more complex changes required more time and resources.

OD Has a “Bias for Action”

Management guru Tom Peters, coauthor of In Search of Excellence, one of the best-selling business books of all time, became famous for saying that

 

 

Shannon Fagan/Taxi/Getty Images The goal of OD is to take timely, meaningful action to address problems, challenges, and opportunities within the organization.

effective organizations have a “bias for action” (1982; 2004). This means that an organization engages in active decision making and moves quickly to action, rather than being caught in an incessant cycle of planning without action. Although OD implementation can take a long time, it is based on taking action, analyzing how the action is working, tweaking it, and repeating the process for as long as necessary.

OD Focuses on Changing Attitudes or Behavior

Lasting change occurs when people alter their ways of thinking and doing. This is why OD can be powerful and can also take a long time to implement. For example, when leaders experience opportunities for leadership development and receive feedback that indicates they are not as effective as they think they are, they usually engage in introspection and change. Becoming less autocratic may not happen overnight, but real, lasting change occurs as leaders experiment with new ways of thinking about their role as leaders and when they implement new behaviors, such as listening or including others in decision making.

OD Tends to Incorporate Experiential Learning

We will learn throughout this book that when people change, they learn new ways of thinking and doing. OD favors action; thus, interventions often create opportunities for employees to experience new ways to think and act. Can you recall a time when you participated in a change that prompted new learning? For example, when I participated in a leadership development initiative, I learned how to coach employees in a way that focused on helping them solve problems on their own, rather than me giving them the answer. Although there was a chance to learn about coaching from books, I did not internalize it until there was an employee in front of me with a problem and I made a conscious effort to behave differently.

OD Is Largely a Group Process

Most OD is not done in isolation. Even when consultants make individual interventions such as providing training or coaching, the goal is usually to help the person function better with others. Similarly, changes in processes require that groups understand and collectively implement the changes. As we will discover, the �ield of group dynamics and facilitation grew out of OD.

Realities and Misconceptions About OD

To better understand what OD is, it is useful to explore what it is not. Table 1.1 compares some common realities and misconceptions about OD.

Table 1.1: OD Realities and Misconceptions

OD realities OD misconceptions

OD is a systematic process of planned change to address organization problems or issues. It follows the action research model (introduced later in this chapter).

OD is not management consulting or performance improvement activities that focus on making speci�ic expert, functional interventions that are disconnected from the organization system.

 

 

OD realities OD misconceptions

OD is humanistic in that it seeks to improve organizations through performance enhancements and improvements to people that make an organization a better place for all stakeholders.

OD is not oriented toward processes that only bene�it the organization and economic values of performance and productivity.

OD is strategic, and its interventions include a range of activities.

OD is not simply training and development initiatives, although often these interventions are erroneously prescribed to address problems.

OD is a long-term commitment to change that requires buy-in at multiple levels.

OD is not a short-term, quick �ix for problems.

OD interventions are customized to address needs speci�ic to the organization and its goals.

OD does not come with a one-size-�its-all set of interventions. Matching the right consultant with the problem is important for effective OD.

The next section of this chapter examines OD’s origins and the interventions that have developed over the past 70 years.

Take Away 1.1: What Is Organization Development?

People constantly experience both planned and unplanned change in the course of their personal and work lives. OD is a planned change effort that is supported by management and applied system-wide to increase organization effectiveness and health through interventions targeted at organization challenges or problems. OD is practiced by individuals who help the organization cope with and respond to change, also known as OD consultants. They work with the key organizational stakeholders or clients to resolve problems. OD is grounded in the philosophy of humanism that assumes human goodness and seeks to do no harm to the individuals or their organizations when making changes. Key characteristics of OD include: it is systems-based, top management is committed, the intervention is tied to the organization’s mission, there is a long-term commitment to implementing the intervention, there is a bias for action, it focuses on changing attitudes or behavior, it tends to incorporate experiential learning, and it is largely a group process.

Group Company Project Research Paper

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BA 620 Managerial Finance Group Problem Set 4: This problem Set is based on materials covered in modules 7 and 2/weeks 7 and 8. It is designed for you to demonstrate your understanding of basic working capital management concepts, dividend policy, and international financial management. Before you start this assignment, please review weeks 7 and 8 materials thoroughly. Part 1: Working Capital Management 1. Adams Stores, Inc. is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash flow cycle. Adams’ sales last year (all on credit) were $150,000, and it earned a net profit of 6%. It turned over inventory 7.5 times, during the year and its DSO was 36.5 days. Its annual cost of goods sold was $121,667. The company had fixed assets totally $35,000. Adams’ payable deferral period is 40 days.

A. Calculate Adams’ cash conversion cycle B. Calculate assets turnover and return on assets (ROA) C. As one of the managers at Adams Stores, Inc, you believe the annual inventory

turnover can be raised to 9 times without affecting sales. What would Adams’ cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9 for the year?

2. Assume the company work for reported sales of $10 million and an inventory turnover of 2. The company is now adopting a new inventory system as part of its working capital management. If the new system is able to reduce the company’s inventory level and increase inventory turnover ratio to 5 while maintaining the same level sales, how much cash will be freed up as a result of the new inventory system. Part 2: Dividend Policy: Assume that you were recently hired by a national consulting firm, which has been asked to help Adams, Stores, Inc. prepare for its public offering. Prepare a presentation in which you review the theory of dividend policy and discuss the following:

A. The terms “irrelevance,” “bird-in-the-hand,” and “tax preference” have been used to describe three major theories regarding the way dividend payouts affect a firm’s value. Explain what these terms mean, and briefly describe each theory.

B. What do the three theories indicate regarding the actions management should take with respect to dividend payout?

C. What are stock repurchases? Discuss the advantages and disadvantages of a firm’s repurchasing its own shares.

D. What are stock dividends and stock splits? What are the advantages and disadvantages of stock dividends and stock splits?

 

 

 

Part 3: International Financial Management Citrus, Inc. is a medium-sized producer of citrus juice drinks in Florida. Until now, the company has confined its operations and sales to the United States, but its CEO, Heidi Sims, wants to expand into Europe. The first step would be to set up sales subsidiaries in Spain and Sweden, then to set up a production plant in Spain, and, finally, to distribute the product throughout the European Union. The firm’s financial manager, George Benson, is enthusiastic about the plan, but he is worried about the implications of the foreign expansion on the firm’s financial management process. He has asked you, the firm’s most recently hired financial analyst, to develop a 1-hour tutorial package that explains the basics of multinational financial management. The tutorial will be presented at the next board of director’s meeting. To get you started, Benson has supplied you with the following list of questions.

A. What is a multinational corporation? Why do firms expand into other countries? B. Discuss at least six major factors which distinguish multinational financial

management from financial management as practiced by a purely domestic firm. (Please consider doing additional research on this question and document your findings).

C. Discuss exchange rate risk as they relate to multinational corporations. D. Describe the current International Monetary System. How does the current

system differ from the system that was in place prior to August 1971? (Please consider doing additional research on this question and document your findings).

E. What is the difference between spot rates and forward rates? When is the forward rate at a premium to the spot rate? At a discount? (Please consider doing additional research on this question and document your findings).

F. From a managerial point of view, discuss how your responses above will help Citrus, Inc. as they plan to expand overseas.

Specific Instructions:

1. Complete and submit your assignment no later than the last day of Module 8/Week 8.

2. Include only the names of your group members who participated in this assignment when you submit.

3. Submit only one copy per group. 4. Use only Microsoft Word for this assignment. Please DO NOT use any other

format such PDF, etc. 5. After you complete the assignment, please give each member opportunity to

review the final paper before you submit it. You are jointly responsible for any

error made.

Side Note: Please note that this is not the type of assignment where the assignment is divided and each student completes the part that is assigned. Each person in your group need to participate fully in the completion of this assignment. This is the only way each group member can master and be able to use the concepts in this assignment. After you complete the assignment, please give each member opportunity to review the final paper before you submit it. You are jointly responsible for any error made.

What is the impact of Porter’s Five Forces model on the online car portal industry?

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please review   TruCar.in:  Finding a Position in an Emerging Online Market

case study and answer below questions

  • What is the impact of Porter’s Five Forces model on the online car portal industry?
  • What is the consumer decision-making process for purchasing a car, and what is the role of online car websites in this process?
  • What bases for segmentation could be useful for TruCar to identify key market segments?  What are the possible key target segments for TruCar?
  • What are the possible marketing strategies that TruCar can adopt to cement its position in the online car portal industry?

 

  • 2 pages
  • APA format

    W18429

    TRUCAR.IN: FINDING A POSITION IN AN EMERGING ONLINE MARKET

    Utkarsh, Prashant Kumar, Anmol Lamba, Manadeep Ganguli, and Santosh Gupta wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

    This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.

    Copyright © 2018, Ivey Business School Foundation Version: 2018-07-13

    In May 2017, Varun Kalra was pondering his aspiration of being an entrepreneur who made a difference in the automobile industry. A management graduate from a reputed business school in India, Kalra was immensely passionate about cars. After gaining five years of experience in the financial sector in 2014, Kalra launched his venture TruCar.in (TruCar), an online car portal he hoped would make a mark in the online car portal industry in India.

    Unlike the existing online platforms that focused solely on selling used cars and providing necessary information to new car buyers, TruCar.in was a website built to help consumers (visitors to the website) select particular car models in accordance with their requirements and budget. The website provided information on the car availability at specific dealerships and the range of attractive discounts the dealerships offered. It listed and regularly updated the details of several car brands sold in India, and enabled consumers to contact TruCar’s online team for selecting a dealer of their choice.

    To develop an effective marketing strategy to compete with both the established and the new online car portals in the Indian market, Kalra needed to identify key market segments among car consumers. In doing so, he faced some crucial questions. What was the way to determine the appropriate target segment? Which segment would offer a better business opportunity? How should the company position its offerings in the minds of the chosen target segment? As Kalra was thinking about these questions, he felt certain his company’s future depended upon how they were answered.

    THE AUTOMOBILE INDUSTRY IN INDIA

    By 2020, India was expected to be one of the key markets globally and a developing automobile exporter for the automobile industry,1 which in mid-2017 accounted for 7.1 per cent of India’s gross domestic product of US$2.26 trillion.2 Moreover, the Indian automobile industry produced a total of 25.3 million vehicles (passenger, commercial, and two- or three-wheelers) in April 2016–March 2017. The Society of

    1 Booz & Company, Indian Automotive Market 2020, 2011, accessed September 26, 2017, www.strategyand.pwc.com/media/file/Strategyand-India-Automotive-Market-2020.pdf. 2 All currency amounts are in US$ unless otherwise specified. “Automobile Industry in India,” India Brand Equity Foundation, accessed September 29, 2017, www.ibef.org/industry/india-automobiles.aspx.

    For the exclusive use of L. Hutchison, 2019.

    This document is authorized for use only by Lauren Hutchison in Managerial Marketing – Spring 2019 taught by JOHN REED, University of New Mexico from Jan 2019 to Jul 2019.

     

    www.ibef.org/industry/india-automobiles.aspx
    www.strategyand.pwc.com/media/file/Strategyand-India-Automotive-Market-2020.pdf
    https://TruCar.in
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    www.iveycases.com
    https://TRUCAR.IN

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

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    Indian Automobile Manufacturers expected an annual growth of 10–15 per cent in the Indian automobile sector with a turnover of $300 billion by 2026.3

    The Department of Industrial Policy & Promotion declared that foreign direct investment in the Indian automobile industry was $15.79 billion between April 2000 and September 2016.4 Since the liberation of the Indian economy in 1991, multinational firms had started setting up their export plants in the country, which were favoured by low operating costs.5 This trend continued until 2017. The electric car manufacturer Tesla Inc. was expected to enter the Indian market soon,6 and several other multinational companies were expected to launch innovative and technologically advanced vehicles in India in the near future.7 Moreover, the industry was expected to be one of the major drivers of the “Make in India” campaign, a government of India initiative to promote the manufacturing sector in India.8

    The automobile industry in India was primarily classified into commercial vehicles, passenger vehicles, and three- and two-wheelers.9 The Indian passenger car market was expected to grow from 1.97 million units in 2014–15 to 4 million units by 2020.10 The two-wheeler segment in the Indian automobile industry, which catered to the growing middle class and young population in the country, had an 81-per-cent contribution toward the market share, as opposed to the 13-per-cent contribution of the passenger vehicle segment11 (see Exhibit 1).

    EMERGING ONLINE CAR PORTALS IN THE AUTOMOBILE INDUSTRY

    The automobile industry had witnessed tremendous changes over the years, which started with the philosophy of Henry Ford, who in 1908 said, “You can have any colour [car] as long as it’s black.” In 2016, the company Ford had founded, the Ford Motor Company, was offering mass customization for most of its car models, through online and offline channels.12 Over the years, the process of purchasing a vehicle, particularly cars, became increasingly complex. This complexity created opportunities for the emergence of web-based (online) car portals. Business experts considered the online car portal business as the next billion-dollar opportunity.13 The online platforms in this sector primarily catered to the following two segments: (1) the used-car marketplace, which focused on selling and buying used cars, and (2) online auto classifieds, which primarily provided information to potential buyers of new cars.

    The online car portal business in India was about 10 years old, with a handful of companies in the industry such as CarWale India (CarWale), CarTrade.com (CarTrade), and CarDekho, which offered numerous services to consumers and dealers.

    3 BMR Advisors, “Indian Automotive Industry: The Road Ahead,” Forbes India, October 20, 2015, accessed September 20, 2017, www.forbesindia.com/blog/business-strategy/indian-automotive-industry-the-road-ahead. 4 “Automobile Industry in India,” op. cit. 5 BMR Advisors, op. cit. 6 “Automobile Industry in India,” op. cit. 7 Tim Leverton, “Cars will Evolve as Essential Part of Digital Life,” Economic Times, June 14, 2017, accessed September 12, 2017, http://auto.economictimes.indiatimes.com/autologue/cars-will-evolve-as-essential-part-of-digital-life/2422. 8 “Automobile Industry in India,” op. cit.

    “Overview,” Society of Indian Automobile Manufacturers, accessed September 15, 2017, www.siamindia.com/statistics.aspx?mpgid=8&pgidtrail=9. 10 “Automobile Industry in India,” op. cit. 11 Ibid. 12 Mohan Subramaniam, Bala Iyer, and Gerald C. Kane, “Mass Customization and the Do-It-Yourself Supply Chain,” MIT Sloan Management Review, April 5, 2016, accessed August 12, 2017, http://sloanreview.mit.edu/article/mass-customization- and-the-do-it-yourself-supply-chain/. 13 Deepti Chaudhary, Shravan Bhat, Debojyoti Ghosh, and Sohini Mitter, “10 Sharply Focused Ecommerce Players in India,” Forbes India, March 17, 2015, accessed September 26, 2017, www.forbesindia.com/article/ecommerce-in-india/10-sharply- focussed-ecommerce-players-in-india/39827/1.

    9

    For the exclusive use of L. Hutchison, 2019.

    This document is authorized for use only by Lauren Hutchison in Managerial Marketing – Spring 2019 taught by JOHN REED, University of New Mexico from Jan 2019 to Jul 2019.

     

    www.forbesindia.com/article/ecommerce-in-india/10-sharply
    http://sloanreview.mit.edu/article/mass-customization
    www.siamindia.com/statistics.aspx?mpgid=8&pgidtrail=9
    http://auto.economictimes.indiatimes.com/autologue/cars-will-evolve-as-essential-part-of-digital-life/2422
    www.forbesindia.com/blog/business-strategy/indian-automotive-industry-the-road-ahead
    https://CarTrade.com
    https://opportunity.13
    https://channels.12

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

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    MAJOR COMPETITORS IN THE ONLINE AUTOMOBILE INDUSTRY14

    CarWale: India’s oldest online car portal, CarWale,15 established in 2005, had initiated a unique model for offering free car consultations to car buyers across the country. CarWale was initially launched as a website offering consolidated information regarding the used-car inventory of Indian car dealerships.16 It gradually increased its functional portfolio by introducing features that helped the owners of old cars to estimate the cars’ value before actually selling them. CarWale eventually moved into the online auto classifieds business segment in 2007. This business segment focused on providing potential buyers with information regarding new cars. Catering to the needs of the new-car segment led to the introduction of numerous features on its website such as the latest costs and offers across dealerships, detailed specifications of cars, car comparisons, reviews by automobile industry experts, reviews by car owners, and blogs. These features on the website facilitated the car-buying decision with thorough information on cars and attracted numerous consumers; consequently, CarWale’s online traffic gradually increased.

    The company had a presence in 200 Indian cities and towns with a network of more than 1,000 new-car dealer outlets. Moreover, it provided loan processing and insurance options. This served as an information source for buyers to access the best available car prices, the cheapest loans, and the lowest insurance quote. CarWale also rolled out dealership loyalty and rewards programs to promote its business in the country.

    CarTrade: CarTrade, established in 2010, was a popular website that dealt in business-to-business and business-to-consumer operations for used cars. On its business-to-consumer platform, consumers could buy and sell used cars, whereas on cartradeexchange.com (CarTrade’s business-to-business platform), dealers could manage the online auction and sales. CarTrade, promoted by automobile industry veterans, offered car price information, certification, insurance, and used-car financing. Moreover, to facilitate the evaluation of cars, it offered features such as comparisons, on-road prices, and reviews for new-car buyers.17

    Furthermore, CarTrade physically networked with more than 4,000 dealers across 80 cities in India.18 The website enlisted more than 180,000 certified used cars.19 The platform attracted 4.5 million–5 million unique visitors per month.20 In 2016, it acquired CarWale and emerged as a market leader in the used-car and auto classifieds market.21

    CarDekho: CarDekho.com, established in 2008, was another leading online car portal, with 33 million visitors per month,22 providing users with expert reviews, detailed specifications, and cost comparisons for car brands and models available in India. The company collaborated with 1,900 new-car dealers and more than 4,000 used-car dealers across the country.23 It provided consumers an immersive experience of evaluating

    14 No specific report or research identifies these specific four companies as major the competitors; we have chosen these companies based on their existence in the market and our discussion with Varun Kalra, who considers these companies to be his close competitors. 15 “Find the Right Car,” CarWale India, accessed September 10, 2017, www.carwale.com. 16 Ibid. 17 Disha Kathuria, “These 5 Startups Are Redefining the Experience of Buying a Car,” YourStory, February 11, 2017, accessed September 29, 2017, https://yourstory.com/2017/02/startups-redefining-car-shopping. 18 “About Us,” CarTrade, accessed August 16, 2017, www.cartrade.com/company/about-us. 19 Anita Babu, “E-commerce Platforms Selling Pre-owned Cars Likely to See Traffic, Growth Surge,” Business Standard, March 29, 2015, accessed September 26, 2017, www.business-standard.com/article/companies/online-platforms-selling-pre- owned-cars-see-increased-interest-115032500404_1.html. 20 Ibid. 21 “Find the Right Car,” op. cit. 22 Rahul Sachitanand, Malini Goyal, and Rajiv Singh, “15 Startups that Appear Best Placed to Enter the $1-Billion Valuation Club,” Economic Times, ET Tech, January 4, 2016, accessed September 29, 2017, http://tech.economictimes.indiatimes.com/news/startups/15-indian-startup-potential-unicorn-club/50433985; This included website traffic from Gaadi.com, because both firms were owned by GirnarSoft. CarDekho also acquired Zigwheels.com in 2015. 23 Ibid.

    For the exclusive use of L. Hutchison, 2019.

    This document is authorized for use only by Lauren Hutchison in Managerial Marketing – Spring 2019 taught by JOHN REED, University of New Mexico from Jan 2019 to Jul 2019.

     

    https://Zigwheels.com
    https://Gaadi.com
    http://tech.economictimes.indiatimes.com/news/startups/15-indian-startup-potential-unicorn-club/50433985
    www.business-standard.com/article/companies/online-platforms-selling-pre
    www.cartrade.com/company/about-us
    https://yourstory.com/2017/02/startups-redefining-car-shopping
    www.carwale.com
    https://country.23
    https://CarDekho.com
    https://market.21
    https://month.20
    https://India.18
    https://buyers.17
    https://cartradeexchange.com
    https://dealerships.16

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

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    cars before they visited the dealer showroom. CarDekho had launched innovative features such as 360-degree interior and exterior views of cars, search functions, and cost and feature comparisons.24 It facilitated the buying and selling of used cars. Furthermore, CarDekho provided several tools for car dealers to manage their day-to-day operations such as managing leads, tracking sales performance, and digital marketing support.

    Autoportal: Autoportal, co-founded by Anton Rublevskyy, was a Ukraine-based start-up that entered the Indian market in late 2013. This web-based portal provided information on automobile products using thorough research tools, comprehensive video reviews, and comparative car analysis for different car models, which facilitated the consumer decision-making process for the purchasing and selling of cars. In a very short period, Autoportal had carved a niche space in the online car market.

    Apart from these major competitors, Zigwheels.com and Gaadi.com were considered established companies in the market.25 Moreover, new Indian and multinational companies had entered the online car industry in India, leading to stiff competition. Popular classified advertising platforms such as Quikr and OLX, which had traditionally dealt in the selling and buying of household items, also entered the used-car market. These established companies, supported by global investors, had a healthy revenue stream from other businesses. The financials of the major competitors (see Exhibit 2) suggested that firms were incurring huge advertising expenditures to gain consumer attention.

    Overall, the online automobile industry was an emerging industry, and over the last few years investors had keenly observed the emerging companies.26 Several mergers and acquisitions and private equity investments were initiated in this segment.27

    In addition to the used-car market and online auto classifieds, online new-car sales emerged as a third segment. This business segment was anticipated to be the next growth phase of the online car platforms. The multinational players were already moving forward from being simply mirrors for car dealership inventory to becoming e-commerce websites where consumers could actually buy a car without visiting the physical car dealership.28 Global leaders, including Cars.com, Autobytel, and AutoTrader, were already moving toward becoming full-fledged car-buying websites.29 The next level of growth required attracting consumers and enhancing their online experience, which could only be done by understanding the car- buying process and the specific consumer requirements at each stage.

    EVOLVING CAR CONSUMER BEHAVIOUR

    In 2014–15, approximately 2.6 million new passenger vehicles, including cars, utility vehicles, and vans, were sold in India.30 Several new companies entered the Indian market, and several new models were

    24 Disha Kathuria, op. cit. 25 Jubin Mehta, “One Hell of a Ride: More than $100 Million Poured into India’s Auto Classifieds Space,” YourStory, February 14, 2015, accessed October 10, 2017, https://yourstory.com/2015/02/india-auto-classifieds-space. 26 Ibid. 27 Ketan Salhotra, “Indian Automotive Industry in the E-commerce Era,” Economic Times, ET Auto, May 26, 2016, accessed October 10, 2017, http://auto.economictimes.indiatimes.com/autologue/indian-automotive-industry-in-the-e-commerce- era/1523. 28 Jubin Mehta, op. cit. 29 Vince Bond Jr., “Car-shopping Sites Could Move into Sales: Dealer, Finance Partnerships Needed First,” Automotive News, March 27, 2017, accessed September 15, 2017, www.autonews.com/article/20170327/RETAIL07/303279979/car-shopping- sites-could-move-into-sales. 30 Ketan Salhotra, op. cit.

    For the exclusive use of L. Hutchison, 2019.

    This document is authorized for use only by Lauren Hutchison in Managerial Marketing – Spring 2019 taught by JOHN REED, University of New Mexico from Jan 2019 to Jul 2019.

     

    www.autonews.com/article/20170327/RETAIL07/303279979/car-shopping
    http://auto.economictimes.indiatimes.com/autologue/indian-automotive-industry-in-the-e-commerce
    https://yourstory.com/2015/02/india-auto-classifieds-space
    https://India.30
    https://websites.29
    https://Cars.com
    https://dealership.28
    https://segment.27
    https://companies.26
    https://market.25
    https://Gaadi.com
    https://Zigwheels.com
    https://comparisons.24

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

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What business and IT problems can be caused by lack of common information and an enterprise IM strategy

/in /by

Mini Case Building Shared Services at RR Communications4

4  Smith, H. A., and J. D. McKeen. “Shared Services at RR Communications.” #1-L07-1-002, Queen’s School of Business, September 2007. Reproduced by permission of Queen’s University, School of Business, Kingston, Ontario, Canada.

Vince Patton had been waiting years for this day. He pulled the papers together in front of him and scanned the small conference room. “You’re fired,” he said to the four divisional CIOs sitting at the table. They looked nervously at him, grinning weakly. Vince wasn’t known to make practical jokes, but this had been a pretty good meeting, at least relative to some they’d had over the past five years. “You’re kidding,” said Matt Dawes, one of the more outspoken members of the divisional CIO team. “Nope,” said Vince. “I’ve got the boss’s OK on this. We don’t need any of you anymore. I’m creating one enterprise IT organization, and there’s no room for any of you. The HR people are waiting outside.” With that, he picked up his papers and headed to the door, leaving the four of them in shock.

“That felt good,” he admitted as he strode back to his office. A big man, not known to tolerate fools gladly (or corporate politics), he was not a cruel one. But those guys had been thorns in his side ever since he had taken the new executive VP of IT job at the faltering RR Communications five years ago. The company’s stock had been in the dumpster, and with the dramatically increased competition in the telecommunications industry as a result of deregulation, his friends and family had all thought he was nuts. But Ross Roman, RR’s eccentric but brilliant founder, had made him an offer he couldn’t refuse. “We need you to transform IT so that we can introduce new products more quickly,” he’d said. “You’ll have my full backing for whatever you want to do.”

Typically for an entrepreneur, Roman had sketched the vision swiftly, leaving someone else to actually implement it. “We’ve got to have a more flexible and responsive IT organization. Every time I want to do something, they tell me ‘the systems won’t allow it.’ I’m tired of having customers complaining about getting multiple bills for each of our products. It’s not acceptable that RR can’t create one simple little bill for each customer.” Roman punctuated his remarks by stabbing with his finger at a file full of letters to the president, which he insisted on reading personally each week. “You’ve got a reputation as a ‘can do’ kind of guy; I checked. Don’t bother me with details; just get the job done.”

Vince knew he was a good, proactive IT leader, but he hadn’t been prepared for the mess he inherited—or the politics. There was no central IT, just separate divisional units for the four key lines of business—Internet, mobile, landline, and cable TV service—each doing its own thing. Every business unit had bought its own hardware and software, so introducing the common systems that would be needed to accomplish Roman’s vision would be hugely difficult—that is, assuming they wanted them, which they didn’t. There were multiple sales systems, databases, and customer service centers, all of which led to customer and business frustration. The company was in trouble not only with its customers but also with the telecommunications regulators and with its software vendors, who each wanted information about the company’s activities, which they were legally entitled to have but which the company couldn’t provide.

Where should he start to untangle this mess? Clearly, it wasn’t going to be possible to provide bundled billing, responsiveness, unified customer care, and rapid time to market all at once, let alone keep up with the new products and services that were flooding into the telecommunications arena. And he hadn’t exactly been welcomed with open arms by the divisional CIOs (DIOs), who were suspicious of him in the extreme. “Getting IT to operate as a single enterprise unit, regardless of the product involved, is going to be tough,” he admitted to himself. “This corporate culture is not going to take easily to centralized direction.”

And so it was. The DIOs had fought him tooth and nail, resisting any form of integration of their systems. So had the business unit leaders, themselves presidents, who were rewarded on the basis of the performance of their divisions and, therefore, didn’t give a hoot about “the enterprise” or about anything other than their quarterly results. To them, centralized IT meant increased bureaucracy and much less freedom to pick up the phone and call their buddy Matt or Larry or Helen, or Dave and get that person to drop everything to deal with their latest money-making initiative. The fact that it cost the enterprise more and more every time they did this didn’t concern them—they didn’t care that costs racked up: testing to make sure changes didn’t affect anything else that was operational; creation of duplicate data and files, which often perpetuated bad data; and loss of integrated information with which to run the enterprise. And the fact that the company needed an army of “data cleansers” to prepare the reports needed for the government to meet its regulatory and Sarbanes–Oxley requirements wasn’t their concern. Everyone believed his or her needs were unique.

Unfortunately, although he had Roman’s backing in theory, in practice Vince’s position was a bit unusual because he himself didn’t have an enterprise IT organization as yet and the DIOs’ first allegiance was clearly to their division presidents, despite having a “dotted line” reporting relationship to Vince. The result was that he had to choose his battles very, very carefully in order to lay the foundation for the future. First up was redesigning the company’s internal computer infrastructure to use one set of standard technologies. Simplification and standardization involved a radical reduction of the number of suppliers and centralized procurement. The politics were fierce and painful with the various suppliers the company was using, simultaneously courting the DIOs and business unit leaders while trying to sell Vince on the merits of their brand of technology for the whole company. Matt Dawes had done everything he could to undermine this vision, making sure that the users caused the maximum fuss right up to Roman’s office.

Finally, they’d had a showdown with Roman. “As far as I’m concerned, moving to standardized hardware and software is nondiscussable,” Vince stated bluntly. “We can’t even begin to tackle the issues facing this company without it. And furthermore, we are in serious noncompliance with our software licensing agreements. We can’t even tell how many users we have!” This was a potentially serious legal issue that had to be dealt with. “I promised our suppliers that we would get this problem under control within eighteen months, and they’ve agreed to give us time to improve. We won’t have this opportunity again.”

Roman nodded, effectively shutting down the argument. “I don’t really understand how more standardization is going to improve our business flexibility,” he’d growled, “but if you say so, let’s do it!” From that point on, Vince had moved steadily to consolidate his position, centralizing the purchasing budget; creating an enterprise architecture; establishing a standardized desktop and infrastructure; and putting tools, metrics, and policies in place to manage them and ensure the plan was respected by the divisions.

Dawes and Larry Hughes, another DIO, had tried to sabotage him on this matter yet again by adopting another manufacturer’s customer relationship management (CRM) system (and yet another database), hoping that it could be up and running before Vince noticed. But Vince had moved swiftly to pull the plug on that one by refusing the project access to company hardware and giving the divisional structure yet another black mark.

That episode had highlighted the need for a steering committee, one with teeth to make sure that no other rogue projects got implemented with “back door funding.” But the company’s entrepreneurial culture wasn’t ready for it, so again foundational work had to be done. “I’d have had a riot on my hands if I’d tried to do this in my first few years here,” Vince reflected as he walked back to his office, stopping to chat with some of the other executives on his way. Vince now knew everyone and was widely respected at this level because he understood their concerns and interests. Mainly, these were financial—delivering more IT for less cost. But as Vince moved around the organization, he stressed that IT decisions were first and foremost business decisions. He spoke to his colleagues in business terms. “The company wants one consistent brand for its organization so it can cross-sell services. So why do we need different customer service organizations or back-end systems?” he would ask them. One by one he had brought the “C”-level executives around to at least thinking about the need for an enterprise IT organization.

Vince had also taken advantage of his weekly meetings with Roman to demonstrate the critical linkage between IT and Roman’s vision for the enterprise. Vince’s motto was “IT must be very visible in this organization.” When he felt the political climate was right, he called all the “Cs” to a meeting. With Roman in the room for psychological support, he made his pitch. “We need to make all major IT decisions together as a business,” he said. “If we met monthly, we could determine what projects we need to launch in order to support the business and then allocate resources and budgets accordingly.”

Phil Cooper, president of Internet Services, spoke up. “But what about our specific projects? Won’t they get lost when they’re all mixed up with everyone else’s? How do we get funding for what we need to do?”

Vince had a ready answer. “With a steering committee, we will do what’s best for the organization as a whole, not for one division at the expense of the others. The first thing we’re going to do is undertake a visioning exercise for what you all want our business to look like in three years, and then we’ll build the systems and IT infrastructure to support that vision.”

Talking the language of business had been the right approach because no one wanted to get bogged down in techno-jargon. And this meeting had effectively turned the tide from a divisional focus to an enterprise one—at least as far as establishing a steering committee went. Slowly, Vince had built up his enterprise IT organization, putting those senior IT managers reporting to him into each of the business divisions. “Your job is to participate in all business decisions, not just IT ones,” he stated. “There is nothing that happens in this company that doesn’t affect IT.” He and his staff had also “walked the talk” over the past two years, working with the business to identify opportunities for short-term improvements that really mattered a lot to the divisions. These types of quick wins demonstrated that he and his organization really cared about the business and made IT’s value much more visible. He also stressed accountability. “Centralized units are always seen to be overhead by the business,” he explained to his staff. “That’s why we must be accountable for everything we spend and our costs must be transparent. We also need to give the business some choices in what they spend. Although I won’t compromise on legal, safety, or health issues, we need to let them know where they can save money if they want. For example, even though they can’t choose not to back up their files, they can choose the amount of time it will take them to recover them.”

But the problem of the DIOs had remained. Used to being kings of their own kingdoms, everything they did appeared to be in direct opposition to Vince’s vision. And it was apparent that Roman was preaching “one company” but IT itself was not unified. Things had come to a head last year when Vince had started looking at outsourcing. Again the DIOs had resisted, seeing the move as one designed to take yet more power away from them. Vince had offered Helen a position as sourcing director, but she’d turned it down, seeing it as a demotion rather than a lateral move. The more the DIOs stonewalled Vince, the more determined he became to deal with them once and for all. “They’re undermining my credibility with the business and with our suppliers,” Vince had complained to himself. “There’s still so much more to do, and this divisional structure isn’t working for us.” That’s when he’d realized he had to act or RR wouldn’t be able to move ahead on its next project: a single customer service center shared by the four divisions instead of the multiple divisional and regional ones they had now.

So Vince had called a meeting, ostensibly to sort out what would be outsourced and what wouldn’t. Then he’d dropped the bombshell. “They’ll get a good package,” he reassured himself. “And they’ll be happier somewhere else than always fighting with me.” The new IT organizational charts, creating a central IT function, had been drawn up, and the memo appointing his management team had been signed. Vince sighed. That had been a piece of cake compared to what he was going to be facing now. Was he ready for the next round in the “IT wars”? He was going to have to go head to head with the business, and it wouldn’t be pretty. Roman had supported him in getting the IT house in order, but would he be there for the next step?

Vince looked gloomily at the reports the DIOs had prepared for their final meeting. They documented a complete data mess—even within the divisions. The next goal was to implement the single customer service center for all divisions, so a customer could call one place and get service for all RR products. This would be a major step forward in enabling the company to implement new products and services. If he could pull it off, all of the company’s support systems would, for the first time, talk to each other and share data. “We can’t have shared services without common data, and we can’t have good business intelligence either,” he muttered. Everything he needed to do next relied on this, but the business had seen it differently when he’d last tried to broach the subject with them. “These are our data, and these are our customers,” they’d said. “Don’t mess with them.” And he hadn’t . . . . but that was then. Now it was essential to get their information in order. But what would he have to do to convince them and to make it happen?