BMO7000 Human Resource Case Study Unilever Corporate Restructuring

by Dr. Alan October 09, 2018

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Question

Drawing on your own personal experience, write a mini case-study (max 1500 words) on the following OB-related topic:

Organisational Change

Following the case study, two questions should be posed which encourage the reader to examine and analyse different aspects of the case in close detail. Students should also provide a brief 200-300 word example answer for each question in order to demonstrate the potential learning outcomes of the case.

Solution

Introduction to the Case

The experience is about Unilever Inc which is an Anglo-Dutch FMCG conglomerate from the UK. The company has a presence in more than 190 countries and has more than 500 brands serving the various needs of its consumers (Unilever.com, 2015). Their products range from soaps to detergents to food & beverages to personal care to dental products and other consumer products. The company has established its name all over the world for its superior quality products and strong marketing strategy.

It was understood that due to the global presence of the company it became very critical for the company to shift their focus from non-core areas to their core areas of business. Their continuous expansion for decades together had made their business so vast and large scale that now they felt a situation has arrived that some consolidation is required. John realized in order to grow exponentially the company kept on launching new products under each segment and now the entire product portfolio had become huge and unmanageable.

 

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Organizational Change

This management concept identifies with the change brought about in the organization with respect to structure, culture, strategy, operations, methods, technologies and employees to bring about a positive change in the organization and lead the company to a higher platform of performance (Armstrong, 2008). This concept is interdisciplinary in nature and takes cues from various fields like management, economics, psychology and social sciences. It also related to a smooth transition of organization, companies, and teams to the desired state in the future.

Change Management in the company

The company is multinational in consumer goods and has divisions like soaps & detergents, personal care, dental care, foods & beverages and much more. John came to know that earlier the company was following a functional based structure. The structure is the hierarchy or departmentalization followed by a company to divide their activities into similar tasks and then group them together to form verticals (Robbins & Judge, 2007). Hence organizational structure would develop and create authority and responsibility structure within the organization in each vertical so that work can get done.

A functional-based structure which the company was following was divided into various functions of the company like marketing, sales, operations, human resource, finance, etc (Boxall et al, 2007).  All the brands of the company were being managed by everyone under each vertical. For example, the marketing team was managing the marketing and branding of all the brands whether in any category. This was possible to manage before the company went on global expansion as they had fewer brand then.

Challenges to Change Management

But gradually John realized it was becoming very difficult and cumbersome to continue in the same structure and model. Hence there was a need to undergo complete corporate restructuring which would establish a new structure and hierarchy to consolidate and streamline the entire business. Corporate restructuring means reorganizing the entire legal, operational, structural system for the purpose of making it more streamlined and profitable and become better than the current position (Luthans, 2005).  John experienced it always involves reorganizing some aspect of the organization whether structure or marketing or financial or strategy and should lead to bringing in some kind of competitive advantage for the company.

Unilever brought about this change in the organization to modify the existing structure and develop the new structure which was SBU based. John was told SBU stands for Strategic Business Units which the company created by consolidating products which have similarities into one SBU like Foods & Beverages, Soaps & Detergents, Personal Grooming, Dental Care, etc. Each SBU required a reshuffling of the brands, products, employees, offices to be remodeled into a new setup. The SBU was supposed to work as an individual entity with its own CEO, budget, competitors, customer segments and a set of employees. And every SBU was responsible for its own performance and profitability (Holbeche, 2009).

Everyone at the company said this is supposedly a major change in the organization and would be brought about in a planned and systematic way and also time-consuming. It also meant a complete change in each employee’s job profile, team, senior and subordinate and work area. It is human tendency to resist change of any form (Avey et al, 2008).  And a similar thing happened at Unilever. Moreover, this was not just a simple change in work or team. Every employee would have to retrained and reoriented towards the new job and responsibility which now he was entrusted with.

 

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