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Case study on VRD Industries Singapore


Words : 2400


Problem Statement:

You need to consider how you will identify the range of issues and problems in the following

problem statement.

Lee Bineesh is a highly qualified but aggressive Singaporean CEO educated in Sydney

who has just taken over as CEO of a company we shall call VRD Industries located in

Singapore. Lee had a track record of working in fast cycle markets and achieving above

average growth in developing industries. Lee’s arrival at VRD was greeted with much initial

surprise followed by a steely resolve to change things. For over 40 years, the company

manufactured component parts for the auto industry in both Europe, GM in the US and other

US automakers. Recently, VRD has also exported to GM in China which has been identified

as a growth market. VRD operated as three product-divisional strategic business units (SBUs)

all located within the same industrial complex: 1) Automotive Parts 2) Infotainment and 3)

Electrical & Energy. Each SBU has its own Divisional General Manager with a small office

staff, a manufacturing manager, Quality Control Engineers, Process Supervisors, leading

hands and upwards of 150 staff working within each factory centre. The three SBUs shared

the normal Head Office functions of R&D, Technical, HR, Sales & Marketing, Accounting

and Warehouse and Distribution. The top management team comes from the main VRD Head

Office structure (8 senior managers). Middle management consists of about12 managers in

each factory. Functional or line managers consist of another 6 managers.

Lee took over from Frank Delacy who had worked his way up in the business from the

factory and had retired at age 70. For over 30 years, Frank had a steady team of managers at

each of the SBUs including middle managers. Staff turnover was low with most managers

(functional staff included) having been with the company for over 20 years. Staff loyalty to

Frank was extremely high. Changes had been few. Despite discontinuities within the auto

industry, Frank and some senior sales staff had built up long-term relationships at Detroit

resulting in a fairly consistent sales growth with consistent supply contracts to Europe.

Recently, discontinuities and the relentless pace of competition from China, Taiwan and

Vietnam for component exports placed heavy pressure on VRD to compete. A new line of

managers at Detroit following the GFC and aggravated supply contracts out of Europe meant

sales had halved. This coincided with Frank’s retirement placing heavy pressure on Lee

and the top team. Lee also appointed a change manager, May Wong, to assist the divisional

and manufacturing managers to implement a change agenda. After some weeks of constant

review, Lee realised that the company was too slow in production, had old job design

methods and that conflict existed between the SBU divisional managers and their teams and

between each SBU.

The basis of the conflict related to maintaining the current processes and systems that had

held the company in good stead for many years and the type of change being imposed by

Lee. For his part, Lee wanted an agile company, highly responsive to shifting markets, a

cooperative team, and a highly efficient production process. It was no surprise then that each

divisional manager had been advised that a staff reduction of 10 per cent had to occur within

the next 6 months. This was difficult for senior management who had long-standing

friendships with lower managers and line staff dating back to the 1990s and in some cases,

the 1980s. Indeed, some factory staff had been on the same machine and processes for over

20 years. That processes needed to change and that manager’s had to “get off their backsides

and do some real work” had suddenly become the ‘new’ culture. This shocked the senior

team as they were more familiar with Frank’s easier fine-tuning and collaborative style. The

problems and issues facing VRD came to a head for Lee after May’s quite detailed interviews

and assessment of staff practices and policies. Mays exit polls consisting of qualitative

questionnaires and several focus groups revealed further issues. Warehousing and

Distribution staff accused sales and marketing of imposing unrealistic delivery estimates.

Sales and marketing accused warehousing of being ‘too slow’. Fractious lines of

communication started to appear within groups in each factory since more pressure was being

placed on divisions for more efficiency. Also, following Frank’s departure, the impact of less

capital expenditure and funds for resources appeared to create conflict between each SBU

manager competing for a decreasing slice of the pie. This led to falling morale, a clash

between managers for updating technical processes, and lower-level staff accusing managers

of ruining a perfectly good company. After 6 months of constant conflict and falling sales,

Lee asks May to also hire an outside change consultancy firm to assist the organisation deal

with its next phase of growth. Lee was struggling for control and May was being flooded

with an increasing list of day-to-day issues.

Task -required: Based on less than perfect information supplied about the VRD

problem statement, you are required to act as an external change consultant to assist

the firm to:

•Develop a set of realistic assumptions that you can add to the issues and problems

expressed. These might typically be related to each other at: a) the organisational

level, b) the group level, c) the individual level. For instance, you might develop

assumptions about leadership, about teams at each level, about creative thinking or

lack of creative thinking, about innovation. List each assumption and discuss in a

paragraph why you have chosen this assumption. (Total 150–200 words)

•In reference to the classic article by Larry Greiner, explain what is happening

between growth and change in VRD industries. (150–200 words)

•May Wong advises Lee that the experiences of the company relate to incremental

change and that solutions will gradually come to be realised. Is that right? Why or

why not? Explain your answer with reference to three or more readings cited in the

course

•Why is the company finding it difficult to change given the theory-to-practice link?

(100–150 words)

•Using the open system model outlined in your study book and text, identify the

issues (from the problem statement and from your own assumptions) by redrawing

and populating each connecting box. Complete this exercise for as many times as you

see connecting systems within (or external to) the company that is influencing

change. (600–700 words excluding boxes)

•Evidence: From point 5, use theory to justify your selection of the open systems

identified. Here, you should use at least 7-10 separate references from the study book

that support your selections and systems’ linkages. (900–1000 words).





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