“Organizational change is something that occurs throughout an organization’s life cycle and effects the entire organization rather than one part of it. Change is increasing because of number of forces including globalization led by rapidly advance technologies, environmental resources ,cultural diversity, and the economy; therefore the ability to recognize the need for change and implement change strategies effectively with in a proactive response to internal and external pressures is essential to organizational performance. Internal changes can include organizational structure, external changes involve government legislation and process and HR requirements, competitor ...view middle of the document...
3. The Need for Change – Management & Structure
ISPAT needed to align its culture, values and structure with the Jindal steel in order to meet strategic growth goals.
Three fundamental sets of change in their approach are;
Culture/ ideological mix problems.
It is one of these problems that become a pressing issue at anyone time of which then initiates the change
ISPAT has been growing in size since its establishment in 1985 by setting up upward and downward integration of steel plant operations, each operating as a separate business unit with the support of Finance, IT, Commercial Operations, HR and other support services. As ISPAT group does not hold mine of both iron ore and coal therefore both iron ore and coal had to be sourced from both domestic and international market to meet the demand of raw material. Although supply chain management was efficient to maintain ordering and stock of both iron ore and coal but because of price fluctuation of both steel and raw material on domestic and international market the profitability was getting eroded month after month and plant was incurring heavy losses and losing market shares on price competitive scenario during economy slow down period in year 2008 onward.
A decision was made to align the organization in terms of strategy, operations and culture so it could concentrate on innovation and performance to achieve plant profitability and to maintain employee morale at higher level. As a result ISPAT chairman had taken a decision to merge with JINDAL and after merger ISPAT renamed as JSW ISAPT. JINDAL steel plant owned both iron ore and coal mine with an abundance reserve capacity.
3.1 What changed: Need for Change
Phase one was intended to stem the bleeding. Raw material and Manufacturing Costs had to be reduced to maintain as market leader in flat steel segment and that was going to huge challenge for the company.
Phase two was to be about merger and acquisition with Jindal Steel.
Phase three was to involve with Jindal for expanding their operations, capacity and expanding marketing network both domestic and international market without competing each other and to maximize profit.
3.2 Change Process
When management at ISPAT uplifted existing management and reporting structures, employees were initially left without direction, reporting channels, processes and goals were not clearly communicated causing a lot of uncertainty. As a result of this, many staff resigned as they felt upset and confused about what was happening. By realizing this situation instantly ISPAT however, retained some of the more experienced staff with new career development propositions and new managers were encouraging and open about future improvements that were to take place within the organization during merger and acquisition process operation.
One of the ways JSW ISPAT could have managed this change is by using the Freeze/Unfreeze concept; Wood et al (2010) explains Kurt Lewin, a...