Change Management: Carrefour Group

Change Management: Carrefour Group Background to the organization Carrefour is a multinational company which has its retail stores almost all over the world. In the recent past it has expanded the business in the Asian Market. In the year 1995, this company had total of seven stores in Asia but in year 2004, this total went up to 126 stores which was a huge gain for the company. One of the best features of the company was that it was not affected by the economic crisis that happened and this was the biggest reason that company came up with its plan in UAE. Carrefour is an infrastructure group and the real estate was the section which was very much affected by the economic downfall but the company had enough capability to face the risk that it did not get affected (United Arab Emirates: Carrefour expands its services in retail sector). Carrefour is the second largest retail group in the entire world. Carrefour entered into UAE in the year 1995 and till now it has 11 big retail stores around UAE. And soon it will be a famous hypermarket at Dubai Sports City at Emirates Road in Dubai. The company provides as much as 6800 to 14000 sq m of area for a hypermarket in UAE. CEO: Josà ©-Luis Duran (Fortune Globe 500, 2007) Employees: 456,295 Address: 26 Quai Michelet, Levallois-Perret 92695, France (main office) Phone: 33-1-5563-3900 Website: www.carrefour.com Present Rank: 32nd in the World SWOT Analysis Strengths and Weaknesses (Internally COntrolled factors) Strengths One of the major strategic successes of the company is that Carrefour has collaboration with one of the most successful infrastructure company in the world, MAF of Abu Dhabi. This gives the company strength to the company to improve the internal built. The internal reason for the company to collaborate with MAF in UAE because of the restrictions that UAE government put on the foreign companies to start up a business in the country. In order to get the ease, this collaboration has occurred. As far as the industry average in the country in the field of real estate is seen, Carrefour is far above the industry average and the main reason is that it got unaffected at the time of economic crisis. The company is in a phase of a continuous success for the past fourteen years which is easily reflected in the financial ratios of the company which shows a continuous betterment for the past several years. The human resource management of the company is also very strong and it shows the increasing betterment in the performance matrix of the company. This gives the internal support to the company especially in the case of recruitment process. Companys standing at present is at the 32nd place which is really a remarkable success and strength for Carrefour and gives it a motivation to improve its ranking further. Due to the fact that most of the investments done by the company are huge, hence company takes a collaboration of government subsidiaries in UAE which prevent any hindrance in the future. The marketing department of the company is very highly appreciated because of the fact that the company has a huge brand value all around the world and after the success of Hypermarket at Dubai Sports City; it is going to be better and better. The financial department of the company and the research and development section are simultaneously doing a great job of understanding the financial situation of the people living in UAE and accordingly plan the investment. Hypermarket is the best suited for this purpose. Weaknesses The collaboration with MAF is absolutely very helpful for Carrefour in UAE but along with the strengths there are several weaknesses associated with this collaboration. The company does not have full freedom to take the decisions and especially the financial decision. The only area where the company can take the 100 percent decision is the operational department but otherwise there would be several restrictions posed by the collaborated companies. One of the biggest weakness can be that around three fourth of the total profit of the company is in the hands of MAF which means that the investment point of view is really weak because if any person would like to be the part of stakeholder of Carrefour, he would have to worry. There are several social concerns of the company like increasing Emiratization with in the company which means that there is a specific percentage that they have to give to the national employees. This may reduce the output of the company. It is true that economic crisis has not affected Carrefour but under the rules made by the government, there are several restrictions posed on the company which stops the company in its fast expansion. Opportunities and Threats (Externally COntrolled Factors) Opportunities There are several opportunities for the company to expand its business in UAE. The most important factor is its demography. The culture and social aspect of the country is absolutely support the advancement and enhancement of whatever the company is doing. There are several malls and several other locations which are suiting the infrastructure of Carrefour. The financial crisis in 2008 had made the situation worst for the country in the real estate structure. There are several companies which are still lagging because of that crisis. It gives a big opportunity for Carrefour to rapidly enhance the business so that there could be better prospects in the future. Dubai Sports City itself is one of the best opportunities for Carrefour group because of royal crowd and enthusiasm. Threats Of course, if there are so many opportunities for the company in UAE, then threat have to be there. The biggest threat that the company will seek is huge competition in the market. However, it would be lesser because of economic crisis of 2008 but still companies like EMAAR give Carrefour a healthy competition in the country. That too, when the company is foreign based and its major shares are not owned by the company itself. Change Identification This part of the projects deals with the different types of problems related to the identification of changes in the organization: Identification of different kind of changes which can exist Identification for the reason for such changes Identification of scopes and goals for such changes Identification of present part of the changes and comparison with the future prospects Kind of changes This project deals with the parts of the changes which have occurred in Carrefour with its collaboration with MAF in UAE to expand the business. There are several kinds of changes which company has undergone in order to commit this partnership with MAF. Several types of changes which company has seen because of this collaboration are as follows: Change in the working atmosphere in UAE Change in the policies of the company Change in the human resource activities of the company Changes in the process of implementation of work Changes in the roles and responsibilities of employees of the company Changes in the owner ship of the company In order to start for the working progress of Hypermarket in the Dubai Sports City, Carrefour went into collaboration with MAF which has brought about several changes in the organization and its working. This collaboration has affected the atmosphere of the entire organization. Being a French organization, Carrefour has absolutely a different culture and different atmosphere which prevails in the company but entering into UAE was an absolute change for the company. The change in the working process of the company is very high as it does not match to the working standards of Carrefour in other countries. There are several changes in the policies and processes and especially the ownership has a great effect because of such collaboration Reason for changes There are different reasons which have led to the growth of such changes in the organizational structure and its working process. The main of them all is ors collaboration with MAF. Entering into UAE for a foreign based company is not an easy job to do until unless company do not have any partner who is national of UAE and that too with a partnership of more than 50 percent shares of the company. Hence, company entered into the UAE market with its collaboration in MAF for making Hypermarket in the Dubai Sports City. Another reason for changes could be a sense of an easy capture to the market because of its collaboration with MAF because MAF is very well known Construction Company in UAE. Everyone in the country knows this company; it would be very much beneficial for Carrefour to enter into business in UAE having collaborated with MAF. Changes in the scope of the company Carrefour has undergone a change at the entire organizational level. There are some special areas where the company has seen a number of changes. These areas where company has seen a number of changes are as follows: Changes in the types of employees Working process of the company Levels of Departments Business process units Level of systems Above are the main areas which have undergone changes for Carrefour because of the collaboration with MAF. It was quite obvious for these areas to undergo changes because of the reason that there is a huge difference in the culture and the atmosphere of both the companies is entirely difference. One is a France based company and another is a UAE based company. Goals for Changes There are several goals which have been identified to connect them with the changes: Collaboration between Carrefour and MAF For fulfillment of law and order in UAE To benefit the name of MAF to seek the competitive advantage To make people of UAE know about the company Enhance the business Where are you now? GAP Analysis GAP Analysis basically deals with highlighting the difference between the implemented strategies and the expected strategies. There can be two different types of gap may be there, namely Knowledge Gap and Strategic Gap. The exact meaning of Gap analysis is to analyze the difference between the present situations of the company and the future prospects of the company. At the starting, it is necessary to analyze the present condition of the company and in the next situation, the future condition of the company is taken care of. Present and the future condition of the company are necessary to analyze because it gives an indication about the performance of the company. There are different types of analysis takes place in the GAP Analysis of any company. Comparison of organizational performance Comparison of marketing potential of the company Comparison of Business relationships of the company Comparison of operational activities of the company The following diagram shows the gap analysis of Carrefour. Fundamentals Applied for Changes (Kurt Lewin 3 step model) Unfreezing: This corresponds for Carrefour to getting itself ready for desired changes that it going to get in by making collaboration with MAF in UAE. Changes: This corresponds to present situation where the changes are being untaken by the company and making it happening for the customers and the staff. Freezing: This corresponds to the final approval of the changed strategies by Carrefour. Present situation of the company Carrefour is a widely known organization which operates in various countries. It sees different types of organizational culture wherever it starts its operation. This would happen in all the places and same in the case in performing operation in UAE. The culture of UAE is varied. Here, majority of the population is expatriates, which means that in this country there are people from different parts of the world. This is one of the biggest problems that the company is facing. Actually, this is not a problem but it is a concern which is so important to be taken care of by the company. Another concern with Carrefour is the restrictions which are imposed by the culture and the local government of the country on the company. These restrictions stop the company from taking various decisions due to the fact that company has a major share holding with MAF. The root of all such concerns of the company is the strict law which is followed in UAE and high number of expatriates coming in the country. But in another way, for business of Carrefour, this is profitable as well. There are some challenges associated with the present scenario of operational and all around management of Carrefour in UAE. There are several restrictions posed by the government on the foreign based companies to start up businesses in UAE. This is the biggest challenge that the company face and this needs to be soon addressed. Where do you want to be? Future State of the company This will describe the state of the company after little time (at least 5 years after the collaboration between MAF and Carrefour). The future of the company is supposed to be more in favor of MAF rather than Carrefour. The main reason behind this is that the majority of the shares of the company are held by MAF which accounts for more than 50 percent ownership of the company which means that in case of profit to the company, there will be more profit for MAF rather than Carrefour. The future prospects for the company in future are obviously growing as hypermarket in Dubai Sports City is one of the rare infrastructural buildings which are there in the city. This makes this a special place for the local population and the tourist to roam around. But the only problem which the company will have to face is that huge percentage of partnership is taken by MAF which means that huge percentage of profit will go to MAF. Another future prospect which can be helpful in generating more profit is that there is no tax charged by the government which allows the company generate more revenues and earn more money. The organizational culture in the future will be more or what same as the company has its organizational culture in Dubai at present. The organizational culture would be very much diversified. Reason being there are people coming from all over the world to this country. Around 80 percent of the total population of UAE comprises of expatriates. This means that staff in the organization will be of diversified culture. There are several steps which have to be done frequently by Carrefour. These steps are as follows: Company should well regulate its collaboration with MAF so that it can easily operate in the country Company should think of expanding the business and should keep an eye on the total earnings so that it can generate maximum possible profit Company should hire people with in the country and also should call some of the higher authorities from some of the different branches of Carrefour so that it can sustain the culture of the company in the internal matters at least. Company should formulate the strategies according to the marketing potential in the country and according to the diversified public of UAE but along with that company should also keep an eye on the laws, rules and regulations given by UAE. Company should formulate the strategies with in the company in such a manner which would help it to succeed in the plans and should help to generate more and more revenue. Readiness of the organization to undergo the changes This is one of the best possible reasons which could account for change management in the company. Carrefour, being one of the biggest organizations in real estate and infrastructure entered into the business for making hypermarket at Dubai Sports City by collaborating with MAF. There are several changes that company had to face in order to implement their business plan in the country. The biggest change that company had come up with is the organizational culture in the country which is very much different from any other country in the world. There are several restrictions on the business activities imposed on the company by the local government of UAE. The company is ready to adopt these changes in order to generate profit. It might be possible that company do not suit with such an atmosphere of organizational culture but the company is ready to accept the changes because it knows that UAE gives the best possible prospect for their business. Deliverable: To Identify whether the company is ready to adopt the changes Implementation Team Leader: Board of Directors Implementation Sponsor: Strategic Management Team PEOPLE READINESS Action Required When Completed Business Unit / Product Group Actions Were the contracts of business unit notified? Yes Were these contracts briefly explained to the team members? Yes Has the priority of business management unit set? Yes Training Has the identification of training team done? Yes Has the analysis of training been done? Yes Is the Training Information Sheet available? Yes Has the training provider been established? Yes Has all the training details provided by the coordinator? Yes Will the criterions are according to the training rollout? Yes SYSTEMS READINESS Action Required When Completed Information Communications Technology (ICT) Have tools of audit been configured? Yes Content Action Required When Completed Have the procedure published? Yes Is documentation for the procedure necessary? Yes Business Application Does deliverable require software assistance? Yes Does the distribution require any support model? Yes Have IT Business Unit been notified for support? Yes Particulars of the changes (Road Map for Changes) The main objectives which are covered in this part of the plan are: Alternative, methodologies, solutions and different ranges of actions and plans are considered especially or implementation of change Consideration of risk involved in the implementation of plan Consideration of cost to be estimated for the change to be implemented Kotlers 8-Step Change Model Following 8 steps will be used for making a road map for changes in Carrefour for its collaboration with MAF: There is a need to create urgency Formation of a powerful collaboration which the company ahs already done Company has a perfect vision which can lead to changes Communication will be done supporting this vision It is necessary for the company to remove obstacles coming in between Short term profit will be made Changes will be applied for every sector The entire organizational culture will experience the changes How will you get there? There are several changes which will be required by the organization to adopt the business sense according to the culture in the country: There are two types of strategies which will help the company to come up with the changes. These are: Rational This is quite natural that organizational structure of the company has to be changed. It requires changes according to the diversified culture of UAE. New system of workgroup and the human resource is necessary in the company so as to run the business properly in UAE. The main reason behind this is that this will be the first hypermarket in the country which means that the industry and exposure for the company is going to be new. Highly sophisticated system will be required by the company for the process because of the hugeness of the market exposure for the company in UAE Non Rational There will be change in the relationships as well. Carrefour needs to build good relationships with MAF and government of Dubai so as to get the best out of their business techniques in the country. The culture will accept the changes which will be made by Carrefour in UAE. Reason being these changes will be made according to the culture of UAE. Process Change It is required for the company to have process change as well. Process change is necessary. If it would have been a brand of some eatables, clothes, then it would have required that process should have maintained as it is every where but this is an infrastructure company. The structure of the building, shops in the hypermarket and every thing else which is a part of process in the companys operational activities need to be changed according to the destination (change management). Hence all the processes of Carrefour need to be differentiated according to the need in Dubai Sports City. There are some important process changes required by the company: Management process Recruitment process Operational process People Change In order to make changes it might be possible that job roles of the people and their responsibilities change. The biggest problem with the people change result in the de recruitment of some very intelligent people from the company so as to follow the rules and regulations of the company. Roles and responsibilities of the employees will be affected because they will be enforced to follow different prospect Knowledge and training will be entirely different, especially it would required by the employee to learn Arabic in order to work at the ground level Work practices will be entirely be different as a result of the change because these work practices would clearly adopt the culture of UAE. Third party relationships will also be built. This could be done mainly because of the relationships of MAF in the country. The relationships will be built with several agents of MAF. Carrefour will come in contact with these agent companies and will create third party relationships in the market. Information Sharing During the change in the process of Carrefour, there is some information which needs to be shared among the partners of the business. Carrefour and MAF are the two organizations who have collaborated to make hypermarket in Dubai Sports City. There is certain information which has been shared between the two organizations. These are: Financial Information (this needs to be very much critical because MAF has a huge sharing Hypermarket) Some parts of the operational information There are some policies of Carrefour which have changed due to the information sharing. These policies could be: Policies for the implementation of financial plan Policies for fixing up of prices There are several methods which are used for sharing information. These methods are: Direct Conversation In direct conversation There are some processes needed in order to manage the knowledge about the project. These processes are: Knowledge sharing process Internal Managerial Process Cost of Change Financial support is also needed to manage the changes. There are different types of cost which will be required in order to manage the organization. These costs are as follows: Cost of training the new employees in the organization Cost of integration with MAF ( all the legal formalities are included in that) Opportunity cost will also be included. This opportunity cost will be based on the opportunity of the organization to build up a hypermarket in any other country There are different modes of financial support available with the company. These are: Borrowing the money from an external source Issues shares in the share market Investment by the company itself Selling the fixed assets of the company Risk Assessment During the implementation process, it is highly possible that company will be affected by several risks. It is very much necessary that these risks are to be eliminated in order to carry out the work in a smooth manner. Risks that might be involved with the implementation of the project are as follows: Change could lead to incur losses Planning may not be effective Scope for change may not be there It is necessary to minimize the risks as well and hence following steps could be taken. In order to keep the project very much viable for the changes. It is necessary that changes are done with proper planning and keeping in view the culture with the country. For example in UAE, there is a diversified culture and hence accordingly changes should be implemented It could be possible that planning may not work well and hence alternatives should be made so that if one plan fails, company immediately can apply the other one In the case when changes are not adapted by the country and its people then obviously company should keep going with the old policies and old culture. Risk Assessment Matrix Change could lead to incur losses Likelihood Consequences Insignificant Minor Moderate Major Catastrophic Almost certain Likely Possible Unlikely Rare Planning may not be effective Likelihood Consequences Insignificant Minor Moderate Major Catastrophic Almost certain Likely Possible Unlikely Rare Scope for change may not be there Likelihood Consequences Insignificant Minor Moderate Major Catastrophic Almost certain Likely Possible Unlikely Rare Risk Assessment Table Risk no Date of occurrence Risk Description Low Medium High Mitigation action taken Approval of commencement Date 1 Change could lead to incur losses Communication Plan Made 31 August, 2010 4 Planning may not be effective Periodic Review Made 31 August, 2010 2 Scope for change may not be there Periodic Review Made 31 August, 2010 Change Approach (Developing a Critique) Main objectives of this section are: This section finds out the stakeholder of the company and their role in the company What are the barriers that come in between the growth Roles and responsibilities of change management team Stakeholder Analysis Stakeholder is the one on whose stake the company is running. There are different stakeholders of Carrefour in UAE. Strategic management team Project leader Mangers Employees Customer The below stakeholder pyramid will give an indication about the role and the responsibilities of these stakeholder in the working of the company. There are different types of roles and responsibilities described by the below pyramid like driving, active participation, advocacy, willingness and understanding. Resistance to change It is necessary that every individual working in the company is resistance to change. It is required by the organizational growth and its survival. There are some important reasons which lead to resistance among the employees of the organization: This could the feedback given by the employees This could be several inputs given by the supervisor of the company This could be results of the audit Several decisions taken on the issues of various teams Resistance Assessment Survey is taken into care for resolving all the issues related to change. This survey is attached in the appendices Change Management Team Change Management Team is vital for the organization of various activities regarding progress of change in the company. For Carrefour, a committee is formed which analysis the effect of changes which have occurred due to collaboration with MAF in UAE (Majid Al Futtaim Hypermarkets ). There are several roles and responsibilities of this committee which are there for them in order to make the change management not liable for the company. Some of the important decisions taken by the change management team of the company are as follows: Change management team performs gap analysis between the present and future trend of the company. The present trend of the company is researched and the future trend of the company are estimated which means that company a possible gap between the two trends is analyzed by the company so that it can give suggestion for the changes to take place It works for devising the project plan of the company It works for the resistance management plan of the company It works for implementation of changes It see the results of the changes which are implemented on the company and accordingly give the suggestions and the review about the research It works on upgrading the action plans and the change management plan if any flaw is found in the plan (How to write an action plan) Strategies for Implementation There are several strategies implemented for the implementation of the change plan of the company. These strategies are as follows: Action Plan: Action Plan helps in analyzing the overall achievement of the company. The main objective of this is the change management plan and all measures are taken on the basis of percentage of the completed plan Communication Plan: Communication Plan is one of the most important plans of the company because it works for establishing communication between one team member to any other team member of the company Communication Plan Audience Key Communication Delivery Medium Date Length of session (if applicable) Location Leaders of each team, Managers of each Department Action Plan Various meeting, e-mails,etc. 31st August 2010 N/A HO Agents (senders) Operational manager, project