The race for securing dominance in the global market is heavily affecting the major agricultural, construction, and turf care companies such as Deere & Company. In an effort to leverage resources and institute cost-saving measures, John Deere released approximately 800 salaried employees and revised its organizational structure. There are several interventions that can be applied to structural design. This paper will examine the interrelated application stages of reengineering and downsizing as well as execution concepts . Reengineering – Downsizing 1. Clarifying the Organization’s Strategy According to Zedong (2011), downsizing is “typically an ill-conceived attempt by people in power to pander to shareholders or the public to reduce costs. It is an admission of failure” (p. 1). In 2009 Sam Allen, the CEO of Deere & Company along with senior executives introduced a strategic plan to reduce costs and expand business interests globally. First, in order to reduce costs John Deere offered a voluntary separation program for all salaried employees. As a result, approximately 800 employees left the company. Thus, the program provided John Deere with a cost saving of $75 million. Moreover, in order to compete globally, John Deere introduced a global operating model (GOM) that merged two formerly distinct divisions, agriculture equipment and commercial & consumer equipment into one division: Worldwide Agriculture and Turf (Golden, 2009). According to Golden (2009), strategic public relations director for Deere, “the voluntary separation program was designed to help Deere immediately leverage the efficiencies of the merged divisions. The company expects the new operating model will enhance the company’s competitive positio... ... middle of paper ... ...ere has exceeded forecast projections for 2011 and has posted one of its highest third quarter results in years. Conclusion The ultimate goal of an organization is to gain a competitive edge and increase profits by providing a quality product or service to its targeted customer base. Thus, companies must be able to differentiate themselves from the competition by taking calculated risks. John Deere, one of the oldest companies in America, implemented a change strategy that was risky and unconventional. It can be argued that the term voluntary separation is a euphemism for terminating employees, John Deere’s approach was well constructed. While reengineering and downsizing yield negative connotations; these interventions are how companies remain in business. Therefore, in order to be successful proper implementation and a humane approach are essential.
However, whereas Caterpillar and John Deere manufacture machinery that are substitutes for each other, the success of complementary products are also crucial. Whereas Caterpillar is a company that is based on construction equipment, John Deere is first and foremost an agricultural company. More specifically, a corn-driven company. This is never more evident than when looking at 2015. The 16% drop in stock price in 2015 coincided with a very poor corn harvest, but things are looking up. The USDA recently forecasted a record-high in corn-production, along with soybean production. Corn production is expected to increase by 11% in 2016 compared to 2015, which will greatly help with John Deere equipment sales. In addition, corn prices are finally expected to begin to recover in the next three years (Clark, 2015), which provides yet another positive factor for the growth in sales of John
John Deere Component Works (JDCW), subdivision of John Deere and Co. was in charged specifically of the manufacturing of tractor component parts. The demand for JDCW’s products had problems due to the collapse of farmland value and commodity prices. Numerous and constant failures in JDCW’s competition for bids, alerted top management to start questioning their current costing methods. As an outcome, the analysis has to be guided to research on the current costing methods with the intention of establishing legitimacy and to help the company in adopting a more appropriate costing system.
Downsizing, restructuring, rightsizing, even a term as obscure as census readjustment has been used to describe the plague that has been affecting corporate America for years and has left many of its hardest working employees without work. In the 1980’s, twenty-five percent of middle management was eliminated in the United States (Greenberg/Baron 582). In the 1990’s, one million managers of American corporations with salaries over $40,000 also lost their jobs (Greenberg/Baron 582). In total, Fortune 500 companies have eliminated 4.4 million positions since 1979 (Greenberg/Baron 627). Although this downsizing of companies can have many reasons behind it and cannot be avoided at times, there are simple measures a company can take to make the process easier on the laid-off employees and those who survive with the company.
...strategy when the initial downsizing failed to take them out of the red or gain back lost market share.
Organizational changes that reduce cost. The M&S reduced its management levels to reduce the cost.
Corning’s resource allocation process shows another ill fated effort towards an organized and objective budgeting and planning process. The inefficiencies and disorganized implementation of the plan that resulted plague company performance. The underlying problem of inadequate communication dissemination of Corning has led the managers, workers and committees to focus on different goals. The Resource Committee and Business Committee through the splitting of a previously larger group, which was believed to be slowing down innovation due to conflicts of interest between two subgroups (cost reduction and innovation). However, by just splitting the two groups, nothing was effectively put into place to arbitrate the issue, and once again the resource committee (known for having only accountants) focused mainly on cost reduction while the business plan focused on which projects had innovative ideas.
Nowadays, organizational change has a serious implication for the survival of an organization (Furst & Cable, 2008). Change is critical, necessary, and has becomes a key factor to win the game.
The willingness of companies to swiftly lay off workers to cope with changing business environments.
John Deere’s ability to operate profitably throughout their business cycle has been through proper supply chain management, rigorous cost controls, and lean productivity John Deere shows ambition towards future sustainment with agricultural equipment solutions and a larger global presence in their construction equipment product line. While agriculture equipment has gotten more powerful and larger than original designs, John Deere understands the importance of increased technology and innovation to meet the needs of customers around the world. John Deere strives to meet the business conditions for their customers by developing cost strategies that meet the goals and expectations of the current customer base and future
CrysTel is a telecommunications company that exists in a very dynamic environment, and it has the need for all aspects of itself to be dynamic and able to change relatively quickly. The upper management recently realized that CrysTel has the need to bring more products and services into its portfolio. That means that everybody who works for the company needs to be good at analyzing the best way to change, implementing a change, and sustaining the change. It also means that CrysTel employees need to change with the organization. In order for all of the employees to be good at the constant change that will be happening and be as dynamic as they need to be, they have to have good and dynamic leaders and managers to aid in the effort. Without the support from above, the employees will probably lose focus and the desire to see the company succeed (Miller et al, 2004). If the company does not prepare well, it might experience a high turnover rate as well. A study conducted by Lester Coch and John R.P. French showed that if a group of workers was not prepared for a change properly, that group exhibited a high turnover rate (Krietner & Kinicki, 2003).
Organizational structure within an organization is a critical component of the day to day operations of a business. An organization benefits from organizational structure as a result of all it encompasses. It is used to define how tasks are divided, grouped and coordinated. Six elements should be addressed during the design of the organization’s structure: work specialization, departmentalization, chain of command, spans of control, centralization and decentralization. These components are a direct reflection of the organization’s culture, power and politics.
Strain, M. 2014. Examples of Downsizing in the Business World. [online] Available at: http://smallbusiness.chron.com/examples-downsizing-business-world-22506.html [Accessed: 25 March 2014].
“In a world where so many people are so deprived, it’s a sin to be so inefficient”
Organizational change, particularly large-scale change, becomes part of the company’s history; therefore, it is crucial that senior leadership plan the change thoroughly. Planning may include understanding the current state of the organization, the external and internal environment, and identifying the organization’s long-term vision simultaneously. Choosing the right approach is significant in the change process as it may be true with British Airlines’ wildcat strike blunder. This blunder is now added to British Airway history where they lost 40 million pounds because of an oversight. Ideally, changes in the organization will have minimal employee impact and operational disruption; however, this is not the case with British Airways when
Michael Hammer, the management expert who initiated the reengineering movement, defines reengineering as “the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed. It uses many of the tools just discussed to achieve these goals.