Purpose
Change management is the framework that is used to manage the effects of processes of business, changes in organization structure and culture and many more. Business environment is dynamic in nature, with this ever-changing environment of business, customer’s expectation and dynamic nature of market, change is imperative in business to cope up (HCL, 2018).
1.2 Background
Here in this report purpose is to examine the issues that led to the failure of Woolworth’s Masters Hardware. Research is based on secondary sources of information.
Evidence is based on the theories and models of Change management. These models of change management help in understanding the change process of the organization.
2. Examination of issues led to the failure of Woolworth’s Masters Hardware
2.1 About Woolworth
Woolworth is a multinational company based in Australia. It had opened Masters Hardware store, that was announced to be closed by John Winning, the founder of Appliances Online and the CEO of Winning Appliances on December 11.
The main competitor of the Woolworth is Bunning; it gave cutthroat competition to the Master Hardware store of the Woolworth. Consumers already have established paired with Bunning, this led to the failure of establishment of Master Hardware Store of Woolworth. The Masters business lost about $200 million in a year itself, on the other hand Bunning made major contribution to its profits. Shut down of the store was driven by the Brand Banducci who was appointed as CEO in February. The livelihoods of 7700 people and their families were affected immensely. Woolworth also promised all of its employees to find new jobs within the groups (ABC, 2018).
Experts said that Masters started too far behind the Bunnings, which has already established market. US hardware retailer Lowe’s also has been criticized heavily by this closure of Masters Hardware store of Woolworth.
2.2 Factors leading to the failure of Masters Hardware Store of Woolworth, these are given below
Barriers to high entry: Industry analyst Spenser Little said that there were high barriers to the company when it had entered the market. Its cutthroat competitor Bunning was prevailing that time, because Bunnings had established market share. Share price of the Woolworth also kept on declining during the years of closure (Biddle, 2016).
Tough decision: Expansion of Woolworth through this Master Hardware store was proved to be the tough decision for the Woolworth group. Woolworth at that time was touching the Coles in departmental store and super market sector. Down price strategy of the Coles hit the Masters badly in the market. The Masters decision of keeping the profits margins high in the market made the customers annoyed and this decision somewhere shifted the large number of customers towards Coles and Bunnings (Knox, 2015).
Selling wrong products: Masters had partnership with Lowe’s company of USA in joint venture. They jointly sold their products, but their products were out of season, example: none of the customer would purchase lawn mower in winter season.
Lacklustre workplace culture and store experience: Masters was blamed for its flawed culture at workplace. On the other hand, Bunnings was praised for good culture at workplace, as Bunnings provide day out for families. Masters never had generated the same enthusiasm as of Bunnings.
Lack of communication: Lack of communication between the staff of the company, when Woolworth wanted to open the Masters store, then they have to articulate this decision to the company employees, this would help in decision making. Employees have creative mind. If utilized by the company for decision making, results in right decision making. Communication between the upper and lower staff of the organization will become fruitful in many cases, as employees have also creative thinking and intellectual thinking (Burke, 2017).
Poor planning set ups led to the failure of change in an organization: Lack of planning will let to the failure of change of organization. Without adequately doing the planning for designing phase is also the reason of failure. Changes without a proper plan likely to outcome as a false start. Poor planning of the Woolworth resulted in the closure of the Masters Hardware. If there was proper and wise planning, then Masters never be winded off (Eberhart, Eesley & Eisenhardt, 2017).
Poor processes: Before starting any process, the proper implementation steps should be dictated to the staff, this will result in desired change. Otherwise staff will resist the change.
Lack of commitment: If an organization really wants to change its business, commitment is needed from both the sides i.e. staff and CEO. Desired change in an organization can be accepted as a rule not an option by the staff. Therefore, commitment towards the desired change always paves the path of success.
Lack of leadership: Leadership is needed to create a favourable atmosphere in the organization. When an organization enters a new vision and mission plan, then proper leading should be there to make the troops well aligned with the new goal of the organization. Leadership support is very crucial for the success of the organization (Kuipers, Higgs, Kickert, Tummers, Grandia & Van der Voet, 2014).
Lack of resources: Resources are very important for every organization. Huge amount is required for expansion of business or change in an organization. It is the most common reason of failing of organizations in the change process. Sustainment and adoption of change are long term investment of the organization.
Focus on people vs. System: Most often leaders focus on system changes than people of the organization. They forget to focus on the people, as people are the only one who brings change in the organization. Implementation of change rules are done by the people of the organization. Therefore, it is very important to focus in people, their lives, and their families. Masters Hardware didn’t focus on people lives on the other hand its competitor Bunnings gave due focus on the lives of the people.
Lack of external environment analysis: External environment analysis is very important for every organization either existing organization or new venture in the market. Before going for expansion phase of the organization. Analysis of competitors in the market is very crucial for an organization that is going to expand its business. In case of Masters Hardware of Woolworth external analysis was missing, as Bunnings and Coles already has established market.
Poor pricing strategies: Poor pricing strategies led to the failure of the organization. Price should always be fixed in comparison to that of competitor’s price and market demand of the product. Masters kept its prices high to make the profit, and its competitor Bunning lowered down the price and this led to the diversion of customers of Masters.
3. Theories or models of the Change management process
Models of the change management are the approaches that are very important to be considered before going for any change in the organization. To implement the change strategies, it is very crucial to avoid irrelevant or random strategies.
3.1 Lewin’s Change Management Model
This model of the Change is most popular and effective model of the Change Management (Burke, 2017). This model was designed by the Kurt Lewin in the year 1950s. According to this model Change can be bring through these three steps:
Unfreeze: This is the first step of the Change process. It includes preparation of the change. At this stage organization gets prepared for the change (Cummings, Bridgman & Brown, 2016).
Change: This is the stage at which transition of change takes place. Process of the change takes place at this stage (Hayes, 2018).
Refreeze: At this stage change is has been accepted and implemented by the staff and company. That is why this is called as refreeze stage (Cameron & Green, 2015).
3.2 McKinsey 7 S Model
This the universally accepted model of the Change management. This model is prepared by the McKinsey & Company in the year 1980s.
Stages of this model:
This model of the Change management gives the direction to the company to get deep insight into the task. Considers both the emotional and practical aspects, this model also gives the directional change to the organizational change (Ravanfar, 2015).
These both models are very crucial for any Change process of the organization. Every company should go for change with these models, the strategy involving in these models prove to be successful in proper implementation of the change (Rosenbaum, More, & Steane, 2018).
Conclusion
It can be concluded from the above report that, the reasons behind the failure of the Masters Hardware store of the Woolworth was its poor planning and wrong strategies. Lack of external market analysis was also the main problem in the failure of Masters Business. If there was proper planning and external analysis, then Masters never saw the face of failure. Proper change management process should be followed by the company that can be possible with the models and theories of the change management. And this will eventually be resulted in success.
References
ABC. (2018). Masters hardware failure: Woolworth does some home improvement.
Biddle, I. (2016). The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters Battle. Busidate, 24(3), 3.
Burke, W. W. (2017). Organization change: Theory and practice. London: Sage Publications.
Change. (2018). Theories of change management.
Cummings, S., Bridgman, T., & Brown, K. G. (2016). Unfreezing change as three steps: Rethinking Kurt Lewin’s legacy for change management. human relations, 69(1), 33-60.
Eberhart, R. N., Eesley, C. E., & Eisenhardt, K. M. (2017). Failure is an option: Institutional change, entrepreneurial risk, and new firm growth. Organization Science, 28(1), 93-112.
Hayes, J. (2018). The theory and practice of change management. New york: Routledge
HCL. (2018). what is organizational change management.
KCameron, E., & Green, M. (2015). Making sense of change management: A complete guide to the models, tools and techniques of organizational change.London: Routledge.
Knox, M. (2015). Supermarket monsters: The price of Coles and Woolworths’ dominance (Vol. 6). Black Inc.
Kuipers, B. S., Higgs, M., Kickert, W., Tummers, L., Grandia, J., & Van der Voet, J. (2014). The management of change in public organizations: A literature review. Public administration, 92(1), 1-20.
Ravanfar, M. M. (2015). Analyzing Organizational Structure based on 7s model of McKinsey. Global Journal of Management And Business Research.
Rosenbaum, D., More, E., & Steane, P. (2018). Planned organisational change management: Forward to the past? An exploratory literature review. Journal of Organizational Change Management, 31(2), 286-303.
The Australian. (2018). Masters logo.
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