Chapter 08 Page 1 of 7

SIMULATION TITLE: Change

SIMULATION DESCRIPTION: Holden Evan is a global powerhouse in branded consumer

packaged goods. The company is organized into three distinct Strategic Business Units (SBUs):
Beauty, Health, and Home and Family. Each of the SBUs has limited autonomy and is
responsible for its own marketing, expansion of product lines, and performance. The newly-hired
SVP of Worldwide Operations for Holden-Evan must make structural changes to these SBUs,
including choosing organizational development techniques and responding to any resistance to
these changes.

You earned 51 percent.

Background

Holden Evan is a global powerhouse in branded consumer packaged goods. The company is
organized into three distinct Strategic Business Units (SBUs): Beauty, Health, and Home and
Family. Each of the SBUs has limited autonomy and is responsible for its own marketing,
expansion of product lines, and performance. The parent company is the ultimate overseer and
supplies support services such as legal and financial.
You are the newly-hired SVP of Worldwide Operations for Holden Evan. Based on a major
recent event that negatively affected the company's marketing reputation and profit margins, you
have decided to implement major changes to the company's structure. You must implement the
changes and manage any resistance to these changes.

Background

Holden Evan encountered a public relations disaster when two factories were revealed to be
dumping pollution into nearby rivers. The marketing directors of the Beauty and Health SBUs at
first attempted to deny the problem, which caused even more scandal and anger towards the

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company, especially when the marketing director of Home and Family admitted and apologized
for it. Consumers boycotted Holden Evan products and created angry websites that spread the
outrage globally.
The two offending factories have been shut down, and the pollution has been stopped, but
distrust of the company continues. The CEO is extremely displeased with how the marketing
departments responded and instructs you to address their situation immediately. "We can't have
another situation like this. The marketing departments must be organized so that they don't tell
conflicting messagesand tell the truth."

Background

An additional challenge facing Holden Evan is the rise in costs of raw materials. Each of the
SBUs currently maintains its own relationships with suppliers and is paying different prices for
the same goods. The CEO of Holden Evan tells you that this is a serious issue for the company.
"We must find a way to rein in these costs. I expect you to improve the company's efficiency and
find other ways to reduce costs right away."

Implementing Change

You decide that structural changes must be made immediately at Holden Evan to deal with the
problems caused by the three SBU marketing teams. Choose the change you think is the best
choice.

YOU CHOSE OPTION 2

Merge the independent procurement teams of each SBU into a single procurement division
serving all product lines.

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You decided to create a system in which the three marketing teams compete with one another to
offer the best marketing message for each situation. This is not the best choice. It is little
different from the current situation, which led to the mixed messages about the pollution.
Consider how you could give Holden Evan a single marketing voice.

Competing Marketing Teams

You decide to create a system in which the three marketing teams compete with one another to
offer the best marketing message for each situation. Almost immediately, you realize this is a bad
choice when the three teams spread conflicting messages about why you have chosen this
structureeach team claims it is to reward them and punish the other two.

Merging Marketing Teams

You decide to merge the marketing groups in each SBU into a single marketing team. As a
consequence, two of the marketing head positions are eliminatedone head is given early
retirement, while another is laid off. Additionally, four marketers who had received low
performance reviews over the last few years were laid off. The new team will have twelve
members and will be led by the previous head of the Home and Family SBU's marketing team.

Merging Marketing Groups

Now that you have made these changes, you know that you must help your employees to deal
with them. What is the best strategy to help facilitate these changes?

YOU CHOSE OPTION 3

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Hold a two-day offsite meeting with the new team, in which you explain the change, the reasons
for it, and provide opportunities for team members to get to know one another.

You decided to hold a two-day offsite with the new team, in which you explain the change, the
reasons for it, and provide opportunities for team members to get to know one another. This was
the best choice, because it would help the team members understand the reasons for the change
and help them become one team.

Team Building

You hold a two-day offsite with the new team, in which you explain the change, the reasons for
it, and provide opportunities for team members to get to know one another. Overall, the team
reports satisfaction with their experience and, a month later, most of the team is doing well.
However, employees from the Health SBU (from which three of the previous layoffs occurred)
are taking many sick days, missing deadlines, and engaging in conflicts with other team
members. How do you diagnose the problem, and how would you address it?

YOU CHOSE OPTION 1

The team is incompatible. You should break it back up into separate SBU groups.

You decided that the team was incompatible and you should break it back into the three SBU
groups. This was not the best choice. You made the original decision for a reason, and you need
to help your employees facilitate the change rather than reverse yourself. The best diagnosis is
that the team members are suffering from stress.

Returning to SBU Teams: Results

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You decided that the team was incompatible, and broke it back into the three marketing SBU
teams. Although the problems decreased, new ones soon arose as the marketing teams began to
compete and spread contradicting information as they had in the past. Additionally, the
employees lost respect for you and assumed you would give in to their demands in any situation.
The CEO is displeased.

Merging the Procurement Teams

Next you decide to merge the three independent procurement teams into one division in order to
control costs and increase efficiency. Based on what you learned from your experience merging
the marketing teams, and given that you have more time for this structural change, you decide to
involve the teams' managers in your decision-making process. All three have worked at Holden
Evan for over twenty-five years, and have been in their current positions for over ten. The
manager of the Beauty procurement team in particular has established close relationships with
suppliers and has a great deal of influence in the company.

Procurement Teams' Meeting

You hold a meeting with the three procurement team managers. Two managers arrive late, and all
three are surly and uncooperative when you explain your plans. One asks, "Do you understand
what you are getting yourself into?" What is the most likely reason for their resistance?

YOU CHOSE OPTION 2

As older employees, the managers are set in their ways and don't want to change their habits.

You determined that as older employees, the managers are set in their ways and don't want to
change their habits. Although it is possible, it was not the most likely cause of their resistance.
Most likely, they were invested in the current system and did not want to lose their power and
position.

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Procurement Managers' Resistance

Having determined the likely cause of the managers' resistance, you must decide how to respond.
Choose the best response from the choices at right.

YOU CHOSE OPTION 3

Negotiation. Work with the managers to determine the best scope and form of organizational
change.

You determined that negotiation was the best response. This is a good response, but it does not
adequately address the cause of resistance that you identified, which is that the managers are
concerned about losing their power and position. Negotiation is the best response to this cause of
resistance.

Merging the Procurement Teams

The procurement team managers grudgingly agree to work with you, although they obviously
don't have much enthusiasm. You must now introduce the changes to the other team members.
How best should you work with the team members to implement these structural changes?

YOU CHOSE OPTION 1

Send out a survey letting employees share opinions about the changes.

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You decided to send out a survey asking procurement team members about their opinions of the
changes. This was a possible response, but may not be enough in this situation. The best choice
would be to explain the reasons for the changes to the procurement team members and provide
opportunities for them to learn to work together. This would help them accept the changes and
learn to view themselves as one team.

Procurement Team's Response

Despite your efforts to introduce the change, the new procurement team is encountering
difficulties. HR tells you that the employees are suffering from stress. The employees report that
although they are comfortable with the other team members and with their duties, the team
culture has become tense and anxious, with conflicting and harsh direction from management.
What is the most likely cause of this stress?

YOU CHOSE OPTION 2

Role demands: The team has not clarified roles and responsibilities for its members.

You determined that the team had not clarified roles and responsibilities. This was a possible
choice, but not the most likely source of stress. Most likely, the managers were creating a
difficult work environment in response to the changes.

Responding to Stress

You work with the procurement team to clarify roles and responsibilities. The situation improves
somewhat, but the three original managers still have difficulty working together. You ask two to
take early retirement, and they do so angrily. Relationships with the suppliers suffer, and the
company still has problems with costs. The CEO is not pleased with you.