PNS Superstore

Initial analysis of the PNS Superstore in Hong Kong revealed that the retail store is currently encountering several internal and external pressures. These in turn affects the overall performance of the business. In order to overcome it major organization issues, the company developed and implemented a number of changes. This first part of the business paper will focus on describing the background of the company as well as its major concerns and objectives. The role of strategic change to the business will also be stressed.

1.1 Background

PNS is one of the major players in the Hong Kong retail industry. A total of two hundred stores within the country and forty-eight more in Mainland China are presently in operation. Initially, the retail store implements traditional supermarket practices. The variety of its product lines is also concentrated mainly on local goods. These resulted to certain issues including loss profit margins and low cost fittings. Over time, the retailer realized that the behavior of the consumers had changed significantly. In particular, customers no longer prefer going to small supermarkets with limited product ranges. The company then began establishing more superstores all over the country. It has been advantageous for PNS that the development of more superstores in Hong Kong had been considerable especially in terms of captured sales, which have increased continuously through the years. At present, PNS is recognized as Hong Kong’s supermarket chain leader due to its growing sales and store branches.

PNS Superstore has a number of other important strengths that make it a strong company in the retail business. Aside from its strong financial background, the company also takes pride of its well-established brand name, good company image as well as effective pricing strategies. The company also has strong potentials for improvement either by store expansion or technology adaptation.

1.2 Issues

Like any other business companies, PNS Superstore goes through a number of organizational issues. On the organization level for example, the company is in need of enforcing quality standards that customers look for in a supermarket. PNS at some point lacks the ability to deliver uniform and quality customer services. In terms of hygiene, the business is not as able in keeping the stores clean and safe at all times. Store floors in some areas are often left untidy; considering that the business mainly retails food product, this environment is unappealing for consumers. Moreover, slippery or wet floors can endanger the safety of the shoppers. The store aisles are also often left blocked with carts or boxes of goods. This in turn causes great inconvenience and delay to the consumers. Even store exits are at time left blocked with trolleys, making it difficult for most consumers to get out of the store while carrying heavy grocery purchases.

The communication and coordination within the company are also important issues for PNS. It appears that these important aspects are limited in the company, making it difficult for the retailers to handle its subsidiaries. In terms of strategy development, the retailer is also struggling with its marketing and productivity strategies. In particular, PNS is operating on unstable grounds as it fails to meet the needs of its diverse markets. In addition, the company is yet to implement effective strategies appropriate for cost reduction and manpower utilization. It is also difficult for the company to assess the outcomes and progress of its business plans as no reliable feedback is being used.

PNS is also encountering major issues with its human resources. For instance, cooperation among the staff is not as efficient. The lack of staff efficiency on the other hand affects the quality of services given to consumers. One example of inefficiency is the staff insufficient knowledge about the products offered by the store; most of them are unable to give useful tips or practical alternatives to the consumers while they are shopping. This staff behavior then does not help in increasing the interest of the consumer towards the store and the products it offers.

During non-peak store hours, the staff does not enthusiastically assist store shoppers. The cashier employees also show inappropriate customer transaction practices. For instance, cashiers do not provide the receipt for the goods purchases by the customer; fresh foods bought by the consumer are often handled improperly by the counter staff. Customer impoliteness is also a major concern. In addition to the staff’s lack of customer skills, other responsibilities are also affected due to work attitude problems. For example, part-time employees are often caught wearing their uniforms improperly, creating a bad customer impression. Though part of staff’s duties, shelves of some goods are often left empty, reducing the number of available products for purchase.

The retail company also has issues with its business environment. Specifically, the retail industry in Hong Kong is very active; new business entrants are continuously growing in number, leading to a more intensive competition. Furthermore, technology is also making its ways to retail store improvement. While this is advantageous, competition from major retailers that can afford high end technology serves as a significant threat. Retail stores are also following the superstore trend as more and more smaller store are merging to form larger establishments. Expanding to other locations is also a challenge as some locations require high rent payments.

1.3 Objectives

PNS has indeed a number of issues that need to be addressed. Although the company is considered a leader in Hong Kong retail industry, changes are clearly necessary. For this reason, the company then developed relevant objectives to guide its business plan:

• To create a better shopping experience by greeting customers
• To develop a staff who are highly initiative and willing to help out the consumers
• To conduct specialist trainings to enhance the knowledge of the staff regarding store management and customer relations
• To implement efforts towards employee empowerment
• To reorganize staff structure for more effective work distribution
• To promote effective communication and team-building among company personnel
• To employ appropriate performance standards to evaluate the progress of implemented business plans or changes

1.4 The Need for Strategic Change

Considering that PNS is encountering a number of organizational issues, changes in its operations should be done to overcome them. In order to carry these out, change management should be done. This concept is defined as the development and integration of organizational change in a systematic process. Change management can also be defined as the response of different business to various pressures brought about by environmental influences in which organizations have minimal or absolutely no control over. The main purpose of conducting organization changes is to introduce innovative means and systems in the organization. This can similarly be compared to the application of certain information technologies in the company or the adoption of new marketing strategies. Businesses must normally undergo change in order to evolve to a higher level of stability, management or production.

While change is induced to bring better business outcomes, introducing change is a challenging task. This is due to the number of factors that could hinder its successful induction. One of which is the hesitance of some employees and managers in considering change within the company. Among various reasons, the most common of which is that some employees are afraid of risks and are already comfortable with their current status. Other managers on the other hand, feared the lost of control over the changed management and the responsibilities it will entail. Due to these obstacles, companies conducting change management would have to do countermeasures. For example, the implementation of change management may be successful when a strong and effective sponsorship supports the project. Moreover, the implementation may be more effective when senior management or the employees’ immediate superiors are the ones in charge of the process.

Hall, Rosenthal and Wade (1993) also suggested other strategies to address the factors that hinder effective change implementation. One is the participation of the chief executive to the project should be 20-50%, from the planning, implementation and monitoring stages. This can be done through scheduled meetings that will inform the top management of the change project’s status and progress. An aggressive change management target must also be set to ensure sufficient range. This can be done by conducting a comprehensive review of the customer needs, economic leverage points and market trends through interviews, benchmarking, analysis of best practices in other industries and economic modeling of the business. In order to facilitate the critical phase of the implementation stage of change, an additional senior executive may also be assigned. Finally, a complete pilot of the new design must be conducted. The pilot should examine the design's general effect as well as the implementation procedure, while at the same time creating enthusiasm for full implementation. While these suggestions are useful, it is still upon the discretion of the company how change will be introduced. The important thing is that companies realize that risks are always present in organizational changes and that appropriate steps must be done to prevent or resolve them.

Changes in the organization can be introduced in a several ways and approaches. There are approaches that are more focused on what is needed to be changed; others emphasize on how change can be accomplished. Leavitt had defined three approaches to organizational change management, which includes structure, technology and people (Leavitt 1964). New formal guidelines and procedures like organization chart, budgeting methods, rules and regulations can be considered as structural approaches on inducing change. On the other hand, rearrangements in work flow through new physical layouts, work methods, job descriptions and work standards are examples of technological approaches. Some organizations stress on inducing organizational change through the people approach which includes alterations in attitudes, motivation and behavioral skills. This can be done through new training programs, selection procedures, and performance appraisal schemes.

Other approaches to manage change had also been introduced. Based on one survey from a previous study on change management, seven approaches are frequently used by managers to manage organizational change (Greiner 1967). These approaches had been categorized into three: the unilateral power, which focuses on changing a component of the organization; shared power that emphasizes on addressing change through group discussion and agreement; and delegated power in which certain change catalysts or agents are in charge of disseminating change. It has been mentioned that change management is done order to improve specific organizational aspects. In the case of PNS, strategic change is necessary in order to help the company adapt to various environmental pressures and to improve its human resources. The need for the retailer to implement changes is the same reason for implementing a change concept known as reengineering.

Reengineering is a strategy for organizational change done for a number of reasons. Higher performance, acceptance of new techniques, greater motivation, more innovation, increased cooperation and better employee relations are some of the common purposes for organizational reengineering. However, in general, the conduction of reengineering in a company has two main goals. One is to change the organization’s level of adaptation to its environment. As the organization management cannot entirely control its environment, they constantly induce internal changes to enable them to overcome new challenges including competition, advances in technology, new government legislation, and pressing social demands. Often times, these changes are applied in response to environmental changes, others in preparation for the future.

The second goal, which is focused more on the employee’s behavioral patterns, is the most vital. Without the employees’ participation in the reengineering strategy, no improvement or company transformation can be attained. Organizations do not operate through computers but through people who can make decisions and every organization has its unique patterns of decision-making behavior. These patterns stem from both formal and informal ground rules which indicate how an effective manager or employee should behave in dealing with others and in making decisions.

Hence, be it a new structural design or a new training program, in order to feel the effects of change management, these new behavioral patterns must not only be evident within the superior-subordinate relations, but also between and within work groups and extend out to larger subsystems of the whole organization. In other words, the effectiveness of reengineering efforts is dependent on the rate to which the members of the organization respond cooperatively to emerging threats and opportunities (Cunningham 1993).

The need of PNS for strategic change is indeed covered by the purpose of implementing reengineering plans. However, other developments can be achieved by the company by applying efforts toward strategic change. These include the achievement of organization efficiency and the observance of double-loop learning. From way back 1980s, researchers have long been interested in analyzing and studying about organizational efficiency. As early as this time, researchers have attempted to develop means on how to measure and assess organizational efficiency (Gist 1987). Using a study of fourteen companies throughout the Midwest, researchers were able to provide a database to create a tool that will facilitate the evaluation of organizational efficacy as well as its constituent factors.

Based on this study, organizational efficiency is then defined as a generative capability found in an organization so as to effectively overcome various challenges, stressors, opportunities and demands most businesses encounter within its environment. Organizational efficiency exists as a combined judgment of the individual members of the organization regarding their sense of joint capacities, their sense of purpose, direction or mission as well as their sense of resilience (Bohn, 2001 & 2002). Basically, organizational efficiency refers to the strong sense of self-belief that one can do something to stand out, excel and make a difference. Hence, oftentimes, organizational efficiency is used interchangeably with organizational confidence.

The involvement of organizational efficiency within the organization is one of the many factors that contribute to business excellence and workforce efficiency. From this brief description, it becomes clear how important it is to involve organizational efficacy in the business operations. Most importantly, if organizational efficiency can be achieved by PNS through strategic change, the company will be able to acquire significant competitive advantages. These will further help in ensuring the successful future of the retail company.

Another important development that can be achieved through strategic change is the observance of double-loop learning. Argyris and Schon (1996) stated that organizational learning can be categorized into three. These are the single, double and triple loop learning. Single-loop learning is centered on instrumental learning wherein strategies are changed without affecting theoretical values. On the contrary, double-loop learning enables the change not only in strategies but also in theoretical values. The triple-loop learning on the other hand is centered on learning system reflection. The authors noted that to develop a learning organization, companies should move from the first loop of learning up to the last.

Various authors had noted the differences of each learning loops especially between the single and double loop learning types. Authors noted that while the single-loop type promotes incremental learning, the double-loop type is more on transformative learning (Bartunek 1984; Argyris & Schon 1978). In single-loop learning, users implement incremental modifications on organizational behaviors in order to improve organizational efficiency. Double-loop learning on the other hand, challenges these existing practices. Tobert (1991) stated that this type of organization learning tends to continuously ask whether the organization and its personnel are acting appropriately to pursue certain goals. In other words, an organization that observes double-loop learning is one that is open to constant changes.

In order to achieve double-loop learning, it is essential that the company is willing to uncover unpleasant issues and hidden assumptions (Argyris 1990). By means of this attitude, organizations are able to break through their defensive routines and implement strategies that would help achieve better performance outcomes. The ability of double-loop learning at the cognitive level is one of its strong points. This is because it helps companies to become more flexible and adaptable.

PNS is a major retailer in Hong Kong. However, while its conventional practices may have successfully placed the company in the lead, this does not necessarily mean that the same strategies should be applied for further progress. As the company moves out from its traditional operations, PNS will be able realize the weaknesses of its current business approach. From here, new systems or better techniques can be drawn out. Considering that the world of business is constantly changing, being able to achieve double-loop learning in the company will be a good outcome for implementing strategic changes.

References:

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