Case Analysis: Sunflower Incorporated

Submitted By: Gyan Prasad Basyal (12305) Srijan Nepal (12321)

Synopsis Sunflower incorporated is a large distribution company that purchases and distributes salty snack foods and liquor to independent retail stores throughout the twenty two autonomous regions across USA and Canada. Upon using a financial system that compares sales, cost and profits across regions, the management found that the profits varied widely. They attributed this variation to the use of substandard items by the highly profitable regions and intense price competition in other regions. The management hired Agnes Albanese who initiated a change in procedure in order to monitor pricing and purchasing practices and communicated about it to the regional executives. However no executives complied with the changed procedures. The major issues of this case are why there was such variation in profits and why the regional executives did not comply with the new procedure. Albaneses autocratic decision making is the reason why the changed procedure was not effective. She is further recommended to follow the Change Management Model and address each step so as to make the change more effective. Issues The case highlights two broader issues followed by their own sub-issue. The first issue is what are the major reasons for variation in profit across regions. Sub-issue following this issue is are the profitable regions using substandard items? The second major issue is what are the reasons for the ineffectiveness of the change program initiated by Albanese? Sub-issue following this issue is why did Albanese not receive any notices from any regions regarding the price or purchases changes? Analysis The first issue mentioned above played the role of a catalyst to instigate change. The variation of profit across regions led the management of Sunflower into believing that the high profit regions were using lower quality items to boost profits. So they were concerned regarding the adverse effect this would have on the image of Sunflower. Also other regions were facing immense price competition. Competitors like Frito-Lay, Nabisco, P&G and others were cutting price and launching new products. So in order to maintain control over the autonomous regions and to monitor their pricing and purchasing practices of these regions, change was a must for Sunflower. The changes that were incorporated by Sunflower were: Creation of a new position to monitor pricing and purchasing practices of the regions. Hiring of Agnes Albanese from the finance department of a competing organization as the Director of pricing and purchasing. After three weeks on the job, in order to standardize pricing and purchasing decisions across regions, Albanese initiated the following changes: Financial executives in each region should notify her of any price changes greater than 3%. Local purchases of more than $5000 should be cleared through her office.

Reasons for failure The change program at Sunflowers was planned and revolutionary. The management adopted a coercive strategy to try and establish change. No inputs from the regional executives were taken in order to initiate the change and the structure was transformed from a decentralized one to a centralized one. Another major feature of the change was that it was implemented when Sunflower was moving into a peak holiday season. Albanese was seeking compliance from the regional executives in regards to her new decisions. Change Management Model suggests that, for effective change management, every change effort should try and address five key issues, namely: motivating change, creating a vision, developing political support, managing the transition and sustaining momentum. Albaneses initiative fails to address every single issue. Motivating Change: The regional executives with profits were doing absolutely fine with their operations. So, Albanese failed to communicate to them the real need for change. No inputs from the regional executives were taken, instead Albanese hurried into the implementation part of the change. Albanese herself didnt have any idea what the final outcome of the change program would be, so there was no way that she could be explaining about her expectation from the change. Also the change program had no benefits for the regional executives to lure them for compliance. For these very reasons, Albanese failed to make the regional executives more compliant or ready to accept change. Creating a Vision: The change program had no short term goals to guide it neither it had any milestones or deadlines to reach. Albanese simply implemented the change without foreseeing the effects it would have. Developing Political Support: Albanese was the change agent. She had the full authority from planning to implementing the change program. The twenty two other regional executives were the key players. Albanese failed to work hand-in-hand with them, as her decisions were directive rather than involving. Managing Transition: The change took place at the wrong time, i.e. just before the peak holiday season. For this very reason, the regional executives with profit must have been reluctant to change their procedure. From Albaneses side, nothing was done to influence the regional executives into accepting the change. Albaneses autocratic decision making and its failure also suggests that the there is no proper blend of people and power. Sustaining Momentum: Nothing was done to reinforce the changed behaviour, in fact, in the end the regional executives didnt change at all, they were still following usual procedure. Proposed Framework for Change Management Failure in each steps of the Change Management Model is what prevented Albanese from receiving compliance from the regional executives. Below is the framework explaining what can be done in each step to make change more effective.

- Communicate the current financial results to every region to highlight the need for change - Communicate concern regarding the use of low quality products and its effect on Sunflowers image. - Communicate the expectation from change, like its benefits in monitoring and controlling the activities of region, and to standardize the product attributes across regions. Motivating Change

-Core Values inherent on quality of product -Core Purpose of providing a standard product to the society -Goal should be to monitor and control larger variation in price and purchase across regions -Desired future state should be a uniform price (with certain allowed percent of deviation from standard price across regions) and about purchase Creating a Vision

-Inputs should be taken from the regional executives because they are more aware of the local market and consumer preferences. -Once the input is taken from the regional executives, it ensures their compliance and support and reduces resistance Developing Political Support

Effective Change Management

-Initiate change process after peak season so that the regional executives will not have any fear about the change affecting their profit. -Active involvement of the regional executives from the planning to implementation of the procedure ensures a feeling of ownership among them and influences them.

Sustaining the Momentum