Welcome to Week 5 of the MGM!
Below
you shall find this week's Discussion Question (DQ) as well as my
Initial Response (IR) to it followed by the Discussions had with my
professor and fellow student. The post ends with my hand-in assignment
for the week.
Regards,
El Tanoderno
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Week 05 Discussion Question
In working out your responses to the Discussion
Question, you should choose examples from your own experience or find
appropriate cases on the Web that you can discuss. Credit will be given
for references you make to relevant examples from real companies.
Discuss the main problems an organisation can encounter in achieving integration. Are there successful alternatives to integration? Use examples from your own company or one you know well.
Discuss the main problems an organisation can encounter in achieving integration. Are there successful alternatives to integration? Use examples from your own company or one you know well.
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My Initial Response to Week 5's DQ:
Achieving Organizational Integration and
it’s Problems
For an organization to perform well across
all levels, layers, horizontally as well as vertically, it requires cooperating
as a harmonious single system combining interdependent areas of expertise by
coordinating between different roles or units to achieve integration and thus
collectively creating value (Child, 2005).
According to Child (2005), due to globalization
through expansion, and thus the creation of more divisions that cannot manage themselves
sufficiently, and fierce competition the necessity to intensify coordination and
demand to integrate is greater than ever. Areas in which achieving integration
is of upmost importance, especially to a MNC such as Samsung due to what was a
domestic domain has been contained into the international, are Marketing,
R&D and Quality Assurance.
Their
continued success requires turning awayfrom what made them successful. The
tightly integrated business systems that have worked in their home markets are
unlikely to secure their future in global markets. To move to the next level,
they, too, must reinvent themselves in ways that may seem contradictory. And
when they reach new plateaus, they will need to do so again. (Khanna et al, 2011)
Samsung has become a World leader in
R&D, Marketing and Design (Khanna et al, 2011), although prior to 1996 the
company was nowhere as close to where it is today as it hadn’t achieved integration
due to a lack of investment into these areas (Kim, 1997). During the early 90s the
parent group redirected its cost-oriented management to quality-oriented
management improving business units’ relationships although Samsung's corporate
R&D center (SAIT) had a difficult time to carry out its primary mission to
increase competitive advantage of existing business lines and pursuing new opportunities.
Further on into the 90s, the R&D management system became more efficient
but it wasn’t until the break of the new millennium that SAIT developed close
relationships with the business units and increased R&D performance and
further achieved integration by building close relationships with business divisions
by sharing business strategies as well as having their project teams
collaborate with these divisions before project completions (Park & Gil,
2006).
Common problems found in achieving
integration may be of a functional, operational or divisional nature, in that,
functionally, roles in vital positions such as sales or in producing goods and
services find themselves not integrating appropriately with the core of the
organization. Operationally, problems in the method of integrating production
and ancillary services affect the quality of information available to
production and therefore to the standards of performance. Further operational
integration may not be achieved due to the lack of using IT as a control system
combining scheduling, planning, cost and quality into one (Child, 2005).
For this reason, at Richmond Events all the
team leaders constantly confer with the IT department as well as Finance, in
order to control aspects such as quality and budgets as well as to make sure certain
information is available.
An alternative to integration, in my
opinion, doesn’t really exists in the literal sense and most major companies
wouldn’t be able to survive as control would be lost in very damaging ways as
overall quality would drop and competition would eat one alive given the right
opportunity. If anything then techniques or approaches such as team-working where
teams may be created by current demand and necessity to a company such as
project teams or affinity groups among others, but essentially teams that have
specific tasks to focus on.
References:
Child, J. (2005) Organization: Contemporary
Principles and Practice. Malden, MA: Blackwell Publishing.
Kim, Y. (1997) ‘Technological Capabilities
and Samsung Electronics' International Production Network in Asia’ BRIE, November 1997, Working Paper 106
[Online] Available from: http://brie.berkeley.edu/publications/WP106.pdf
(Accessed: 4 February 2012)
Khanna et al (2011) ‘The Paradox of Samsung’s
Rise’ The Globe, July-August 2011
[Online] Available from: http://www.liv.ac.uk.ezproxy.liv.ac.uk/library/ohecampus/
(Accessed: 4 February 2012)
Park, S. & Gil, Y. (2006) ‘HOW SAMSUNG
TRANSFORMED ITS CORPORATE R&O CENTER’ Research
Technology Management, July-August 2006 [Online]
Available from: http://www.liv.ac.uk.ezproxy.liv.ac.uk/library/ohecampus/
(Accessed: 4 February 2012)
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My Response to Noriko's IR followed by my professor's comment
Dear Noriko,
I really liked your analogy of comparing
water molecules with integration. In fact, I was going to compare the way
integration works to create value with how the different body parts function
interdependently to one another while the brain uses the right integration
system to coordinate each part to work as efficiently as possible and creating
said value which in terms of our body would be represented by optimum health
and speed of thought.
Obviously the brain or Integration system
requires the right leadership which is done by one-self, acting as the CEO of
our body, which manages our food intake, fitness levels and education.
This is supported by the following example
of HP merging with Compaq in 2002. For several years the company merger was
lacking in the right management and leadership as according to Rosen (2008) the
then CEO and Chairman, Carly Fiorina, didn’t possess the right leadership
skills as she failed for three years to realize the potential of the combined
companies until Mark Hurd replaced her and transformed the company into a world
leader in technology through strategic integration.
Food intake represents a company’s
resources, finances and wealth represented by the vitamins, minerals and other
beneficial factors we take in through food that allow our brain to successfully
allocate resources to the different departments of our body, whereas fitness
levels represent R&D resource investments as well as up-to-date technology
and machinery, and last but not least, the way we educate ourselves represents
R&D endeavors, training staff and strategic organization and integration
processes.
As Child (2005) states, signs that integration
is not being met is noticeable if persistent conflict between departments
arises and if this keeps recurring which has far more negative influence if the
agents involved accept these conditions as normal. Just as a persistent health
problem which a person might get used to living with and not taking it seriously
can lead to serious future health issues that may put that person in danger.
These three areas are all affected by our
family, friends and teachers which have a great influence on our choices in
life and therefore act as our Board of Directors and advisors.
The stomach acts as the team-leader for the
Supply Chain while the brain orchestrates the Logistics and then allocates the
right places the resources have to go to.
Therefore one can see that the
implementation of integration systems into organizations is as vital as our own
brains orchestrating our bodily functions which are only possible through the
right use and availability of information, but managed by our conscience in
regards to integration approaches. The wrong way of thinking is the same as a
bad leader and will therefore slow down productivity.
The better we treat our bodies in respect
to these three areas mentioned above the better we perform on a long-term basis
which is effectively the same for any organizational body as it can only
deliver high-performance on a long-term if all areas work together by
cross-communication and effective integration.
Integration therefore, in my opinion, is
irreplaceable as once it is taken away control of the different areas break
down through lack of sharing information and the failing of departments the
same way organs may fail if not looked after.
References:
Rosen, B. (2008) ‘The Merger That Worked:
Compaq and Hewlett-Packard’ USA: Huffington Post [Online] Available from:
http://www.huffingtonpost.com/ben-rosen/the-merger-that-worked-co_b_95873.html
(Accessed: 6 February 2012)
Child, J. (2005) Organization: Contemporary
Principles and Practice. Malden, MA: Blackwell Publishing.
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Andrew, this is a great analogy. Thanks! Best,
Dr. L.
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Dr. L.
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Dear Andrew
Thank you for your comment.
I
have very much enjoyed your posting. Your analogy which adjusting
Integration to the body parts is more supportive for understanding the
term “Integration” and much better examples in details than mine.
Integration in business means activities of coordination for different
units or systems. The water molecules are the same but the bands are
different in its status. I like your referring with body parts,
functions and status. I totally agree with you but I had no idea like that way you described nevertheless I am a medical professionals.
I would like to add the examples to your explanations.
There
is a medical term “ Occult cancer “.Occult cancer is a cancer of
unknown origin but presence in a metastatic region. Unnoticeable but
serious issues which you mentioned like occult cancer. If it occurred in
a brain ( top management ), no hope in some occasions. Therefore,
external auditors for inspection are generally demanded for
organizations. Unfortunately, it becomes a dead letter in some
occasions.
For
example, in Olympus Inc’s financial fraud scandal, Farmer British chief
executives Michael Woodford was dismissed after he indicated and
exposed their financial fraud which other executives had been involved.
(Reuters,2012)
Noriko
Reference:
REUTERS(2012)Clear Accounting Firms in Olympus Fraud,The New York Times
Available at:
(Accessed: 07 February 2012)
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Luai's IR and followed by our Discussion
Integration is:
combining
or coordinating separate elements so as to provide a an extremely good
result, better profit and market share ,in consideration of leader ship
,cultural issues of any company
Case 1 ...........(irrelevant paragraph to the discussion that follows)
Case 2
Hp company integrating merger with compact company and the reason they have failed
In
1990 the HP Company which where specialized in printers had a branch to
make personnel computers but unfortunately through the years they
didn’t release good products and made them slip of the competition which
lead to huge loss.
On September 4th
2001 the HP company announced its integration with compact company in
order to make a big bang in the computer world by making the highest
purchase of the computer history which cost more than 24 million dollars
which will open shops in more than 169 countries and hires more than
145,000 employees providing the world with a complete set of production
and services but unfortunately the integration failed and in less than a
week the shares went down and the loss began
All the competitors ask the question why they did so
A
company that is specialized in printings ,well known of its products
from inkjet , laser printers , huge office network printers to merger
with a losing company of pc
As
a result it made them directly face dell completion for the pc which
offered competitive prices and better quality and Lexmark which had a
chance to compete HP and raise its sales and market share HP faced two
companies rather than one which makes them to lose control and
management rather than being a standard company in printer's
specialization
Fortune, February 07, 2005.
"One bad PC business merged with another bad PC business does not make a good PC company."
References:
Burgelman, R, & McKinney, W 2006, 'Managing the Strategic Dynamics of Acquisition Integration: LESSONS FROM HP AND COMPAQ', California Management Review, 48, 3, pp. 6-27, Business Source Premier, EBSCOhost, viewed 4 February 2012.
Child, J. (2005) Organization: contemporary principles and practice. Malden, MA: Blackwell Publishing
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Luai,
As an owner of a HP Pavilion Desktop I was intrigued
by your second example of HP and Compaq merging with-one-another and the quote
you concluded with saying, ‘One bad PC business merged with another bad PC
business does not make a good PC company’.
Your conclusion, however, made me wonder as
to how HP would be able to compete on the Korean market, with Samsung, LG and
various other Korean & Japanese brands, if it really was so bad.
According to Burgelman & McKinney
(2006), yes the merger posed a lot of difficulties during the first three years
up until 2005 as their competitive effectiveness was a subject of debate, but,
according to Rosen (2008), the merger proofed to be very successful indeed whether
by market share, market leadership or increased shareholder value.
Rosen (2008) further states that in 2005
Carly Fiorina, CEO and Chairman, was replaced by Mark Hurd who by 2008
transformed the merger by creating a growing, profitable and increasingly
valuable company that became a world leader in technology.
This is further supported by Burgelman in
LaPlante’s 2007 article, where he states that Hurd managed a far better job, where
Fiorina failed, at analyzing the market and thus adjusting HP’s corporate
strategy by having 1500 full-time employees, including HP leaders, work on
short and long term goals that helped to define the new organization and thus
achieved upcoming operational and strategic integration phases.
Do you believe, even though this merger has
proven to be successful, that it has gotten rid of its international problems produced
by the 2002 merger or that it still has to deal with a few after-effects?
Thanks,
Andrew
References:
Burgelman, R, & McKinney, W. (2006)
'Managing the Strategic Dynamics of Acquisition Integration: LESSONS FROM HP
AND COMPAQ', California Management
Review, 48, 3, pp. 6-27, Business Source Premier [Online] Available from: http://www.liv.ac.uk.ezproxy.liv.ac.uk/library/ohecampus/
(Accessed: 6 February 2012)
Rosen, B. (2008) ‘The Merger That Worked:
Compaq and Hewlett-Packard’ USA: Huffington Post [Online] Available from: http://www.huffingtonpost.com/ben-rosen/the-merger-that-worked-co_b_95873.html
(Accessed: 6 February 2012)
LaPlante, A. (2007) ‘Compaq and HP: Urge to
Merge Was Right’ Stanford: Stanford Alumni Magazine [Online] Available from: http://www.gsb.stanford.edu/news/bmag/sbsm0711/kn-merge.html
(Accessed: 6 February 2012)
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I
can tell you defiantly the leader chip plays a great role especially
for hp company changing in their leader got them to the top again but
again the fault they made was a big mistake.
I
can tell you something that compact as a company is nearly forgotten
and the name is not mention a lot meaning that hp tried to get their
name instead and solely they came back to the top checking the market
now a days you can find hp is better than dell.
But
still as I said that there is no existence to compact because what I
think they started to change it to hp solely "brain of compact holding
hp name"
References :
accessed on the 7th jan at 18:30
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Luai,
You have a point about Compaq stepping into
the shadows and working from behind as some partners believe that the greatest
advantage brought forth by the merger was the enterprise focus Compaq brought
to HP as well as some solution providers believe it seemed like Compaq buying
HP because Compaq's sales approach and enterprise focus dominated thus allowing
to get into new ventures and product lines whilst sticking to a sole vendor (Wright,
2011).
The above complies with your "brain of
compact holding hp name" view of the merger.
In Wright’s 2011 article, Don Richie, CEO
of Sequel Data Systems, a Compaq partner prior to the merger in Austin, Texas,
believes that HP acquired Compaq not solely and primarily for its PC business
but to acquire Compaq’s enterprise products.
As it was an acquisition that merged two big
players together, there is always likely to be a dominant one that directs the
other player while the other player’s name carries most of the fame just as a
coach and number one football player or a director working with the same actor.
Many organizations do not care much about being in the spotlight as long as they
reap the fruits of their labor and profit substantially. In a merger only one
name needs to be provided, in this case HP, although if you look around the
internet for HP notebooks you will find many branded as HP Compaq or simply
carrying model codes HPQ.
Regards,
Andrew
References:
Wright, R. (2011) ‘The HP-Compaq Merger:
Partners Reflect 10 Years Later’ CRN [Online] Available from: http://m.crn.com/69720/show/2a57da078468e377d6ea5ae9b3b2df3d&t=e8d7b5611a6dc862ad1e1acbeb90ef2f
(Accessed: 8 February 2012)
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Week 5 Hand-In Assignment:
Rolls-Royce: How it overcame technical and the
cultural obstacles in successfully implementing the organization’s ERP project
A Brief History of Rolls-Royce
The idea of Rolls-Royce came about at a
meeting on May 4 1904 (Madslien, 2004) but the company wasn’t founded until
1906 by Henry Royce, a successful engineer and Charles Rolls, the owner of one
of the first car dealerships in London, after the selling their first batch of
cars branded ‘Rolls-Royce’ (Rolls-Royce, 2012)(Susiwala, 2011). Rolls-Royce earned
the name of its Silver Ghost model being the best car in the World and upon
this success the company grew producing and selling the model steadily up to
1925 although its’ last ever batch was in 1927 (Susiwala, 2011). It has become
one of the most recognizable brands in the world during its 107 year lifespan,
manufacturing expensive vehicles and producing aircraft engines during the
World War thus focusing on aviation and automotive division (Madslien, 2004),
and is now owned by BMW with last year’s biggest markets being China and North
America and an overall rise in sales of 30% in the Asia-Pacific region where
the economy is keeps growing (Milmo, 2012).
Enterprise Resource Planning (ERP)
An ERP Systems is an advanced modern complex
technology integrating and coordinating almost all functional areas, such as
manufacturing, finance, procurement and distribution (Yusuf et al, 2004), in a
modern organization supporting most aspects of a company’s information needs
(Kholeif et al, 2008). These systems, such as the SAP R/3 selected by
Rolls-Royce (Yusuf et al, 2004), may come at a cost of tens of millions of
dollars but according to Ladley (2010) one major issue is that these systems
are implemented the same way as their predecessors by companies and therefore,
even though the right platform is provided to develop integrated data,
corporate willpower to treat the data in the correct manner lacks, thus
producing the same over-rides and errors as before. The latter is further
supported by Yusuf et al (2004) by stating that they need to be managed well
and even though many companies have benefited as expected, a good amount of
other companies weren’t ready for integration or flexible enough they didn’t
experience the full rewards with some companies even filing for bankruptcy due
to their rigidity.
Technical Obstacles prior to and after the ERP Project
Prior to the implementation of the ERP
system Rolls-Royce used over 1500 systems which were mainly developed by the
company itself and were expensive to operate and lacked the accuracy,
consistency and accessibility in providing the data necessary to make timely
decision-making and performance-based assessments. The latter represents the
main technical problem, being the accuracy of data, as the new system required
the old systems’ data in order to format it into a sensible data repository of
the ERP system, although the duplication of data was a major concern and
therefore tackled in three phases over three years until all of the old systems
were no longer necessary.
In the first quarter of 1998 the first
phase took place which essentially assessed the situation to come up with an
outline plan and the finances involved by performing a brief and intensive
study and thus a committee was established for financial guidance in the
project.
The second and third quarter saw the
implementation of Phase 2 and the detailed planning which lead to a prototype
system based on the Rolls-Royce Allison model drawing all existing projects
together and merging them whilst analyzing and customizing said prototype over
a 5month testing and development period. This early deployment was an extension
to the original plan in order to tackle any difficulties found with SAP and
therefore ran from the last quarter of 1998 to the second quarter of 1999,
whilst at the same time implementing Phase three which was so large it had to
be divided into two parts lasting a total of nine quarters focusing on the
physical implementation and architecture, hence up until March 2001.
The first part of Phase 3 replaced all of
the old systems developed initially by Rolls-Royce whilst introducing a new
system and towards its end it saw the foundations being laid down by a SAP
pilot project which paved the way to fully ‘go live’. After the first part of
Phase 3 was finished the second part commenced in which SAP became the
executive system and the old systems became totally phased out as the system
covered the whole organization by the first quarter of 2001.
Cultural Obstacles prior to and after the ERP Project
Problems faced in a cultural sense by the
implementation of the ERP system were that some functions and processes would
perhaps demonstrate a lack of appreciation compared to the old systems and
therefore the project team had to tackle this possible outcome by highlighting
the advantaged posed and improvements made to the organization as a whole. This
lead to specialist and mass-user training being carried out by SAP in
collaboration with EDS consultants in order to break down traditional barriers
and departments to prepare all employees for the changes in working approaches.
Analysis and Conclusion
Rolls-Royce along with the help of EDS
consultants systematically implemented the ERP SAP R/3 system successfully by
phasing out the legacy systems and thus overcoming the problem of transferring
the data of these old systems, whilst having its employees trained, prepared
and adjusted to the cultural changes in the work place that would secure the
right approach to integrate data into the new system. By carefully planning
ahead and staying flexible to adjust and customize the pilots to create an
optimum system that works for Rolls-Royce, it managed to gain the
implementations' full benefits.
References:
Madslien, J. (2004) ‘Rolls-Royce cars enter
second century’ BBC News [Online] Available from: http://news.bbc.co.uk/2/hi/business/3671029.stm
(Accessed: 7 February 2012)
Susiwala, A. (2011) ‘Rolls Royce-The
Ultimate Symbol of Success’ LiveO Magazine [Online] Available from: http://www.liveomagazine.com/article/rolls-royce-the-ultimate-symbol-of-success-193.html
(Accessed: 7 February 2012)
Anon (2012) ‘Rolls-Royce history timeline’
Rolls-Royce [Online] Available from: http://www.rolls-royce.com/about/heritage/timeline/
(Accessed: 7 February 2012)
Milmo, D. (2012) ‘Rolls-Royce hits new
sales record on Asian demand’ The Guardian [Online] Available from: http://www.guardian.co.uk/business/2012/jan/09/rolls-royce-sales-record-asian-demand
(Accessed: 7 February 2012)
Kholeif et al (2008) Enterprise Resource
Planning: Implementation and Management Accounting Change in a Transitional
Country [Online]
Available from: http://www.liv.ac.uk.ezproxy.liv.ac.uk/library/ohecampus/
(Accessed: 7 February 2012)
Yusuf et al (2004) ‘Enterprise information
systems project implementation: A case study of ERP in Rolls-Royce’ Int. J. Production Economics 87 (2004)
251-266 [Online] Available from: http://www.liv.ac.uk.ezproxy.liv.ac.uk/library/ohecampus/
(Accessed: 7 February 2012)
Ladley, J. (2010) ‘Making EIM Enterprise
Information Management Work for Business’ [Online] Available from: http://www.liv.ac.uk.ezproxy.liv.ac.uk/library/ohecampus/
(Accessed: 7 February 2012)
