Colorado Technical University
This paper was prepared for HRMT440, CS42-01, taught by Angela Nixon on June 23, 2013.
Table of Contents
Making the Decision to Offshore 3 – 5
Management’s Role in Organizational Change 5 – 6
Theories of Change Management 7 – 8
Communication Plan 8 – 11
Implementation Plan 11 – 13
Mitigating the Risks 13 – 14
References 15 – 16
Transformational Change Management Plan
In today’s fast-paced and technologically advanced global economy, organizations must maintain a posture for change in order to stay competitive and be successful. Newer and better products, systems, services, and processes are continually being developed and discovered. Consumers today are looking for the new thing and many times want it at the cheapest price possible. Therefore, the companies that stay on the cutting edge of what is up and coming are strategically positioned to meet market needs and move ahead of the competition. This, however, requires companies to be adaptable and willing to make transformational change a part of their strategic operational and management plan.
Making the Decision to Offshore
Regardless of the industry, companies must continue to grow and adapt to changes in the marketplace. As technology advances, so do consumers’ expectations and wants. Inflation continually increases costs, and economic factors drive the price that people are willing to pay for goods and services. In today’s market, global considerations must be looked at. Because of the easier access to cheaper labor in foreign countries, many companies are making the decision to offshore some or all of its production and/or services. This allows them to keep their overhead down, which in turn allows them to be more competitive in price. Other companies are then forced to look at their organization, and make the decision whether they may also need to offshore to stay competitive. It may be the last thing they want to do to their employees, but if they do not, it could cost them the entire company down the road. Therefore, management must weigh the benefits versus the risks of offshoring.
Offshoring involves the moving of essential functions of an organization to be performed in another country. It can entail the setting up and implementation of a facility in the foreign country, or it can be the hiring of a third party who is already set up and functioning in the other country. Many times companies are too quick to begin offshoring, believing the lower labor costs in these other countries will be the quick fix to their financial problems. However, there are many other considerations that must be taken into account when making the decision whether or not to offshore, such as location, cost to move the operations, “turnover rates, risk, infrastructure and the availability of qualified personnel” (Tiwary, 2009). When these things are not examined, it can be disastrous for the company; although, when done properly and for the right reasons, offshoring can prove to be a beneficial decision for the organization.
Candy making is an industry that has seen a high percentage of companies choosing to offshore much of its production. One of the reasons cited is the high cost of sugar in the United States, which can range between two to three times the cost in other markets, and is attributed to “U.S. government subsidies to domestic sugar producers and tariffs against sugar imports that have artificially inflated the prices” (Jusko, 2002, pp.23- 24). Brach’s Confections, Inc. is one such candy manufacturing company that decided to close its Chicago plant, which was responsible for about 75% of the company’s candy making, and move production to Mexico (Sachdev, 2001). Cost of sugar was not the only factor in Brach’s decision; infrastructure was another issue. A new management team came to the decision after more than $76