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WMC is a 55 year old company founded by Sofea Wong (with financial assistance and business guidance from her parents) in the early 1960s in Malaysia. The principle business is in manufacturing and selling wholesale cotton and wool fabric to local retailers and buyers, including designers in Malaysia. Before setting up her manufacturing business, Sofea had travelled the world and spent about 10 years in Australia studying and working in the Australian textile industry in Sydney and rural New South Wales. It is from this experience that Sofea developed relationships with cotton and wool growers and saw an opportunity to source high quality cotton and wool raw materials from Australia and use these to create a high quality fabric manufacturing business in Malaysia. Despite taking advantage of Malaysia’s lower cost wages, Sofea had always paid her staff above the local wage regulations which quickly earned her respect from her employees. She also gained respect and admiration from local retailers and designers. Sofea had established a highly successful local company based on strong family values that had always been well respected.
Sofea’s employees always enjoyed working for her and she had created and implemented many employment reward systems that were ahead of her time. She implemented sick leave, holiday pay, rostered days off and child minding facilities as her workers were from poorer working families. Tradition and tales about the company were perpetuated over the years to the extent that Sofea became a larger-than-life personality and everyone knew about her early years and beginnings of the company. Everyone knew how she worked hard and how she treated all staff like family members. There were many media articles and events that favoured Sofea and her successful business. The WMC factory in Kuala Lumpur had grown to a workforce of over 1000 workers throughout the 1970s. However, by the mid 2000s staff numbers had been substantially reduced to about 600 employees. It was at this time that Sofea was suffering ill-health and was forced to hand over her business to her daughter Hana.
Hana had grown up in this business and knew all aspects of manufacturing. Both Sofea and Hana made business decisions together and they employed the same business practices. Like her mother, Hana had the respect of all employees, suppliers, retailers and designers. During this time, the common business characteristics were high quality manufactured fabrics using unique fabric processing in manufacturing of high quality wool and cotton from rural New
South Wales Australia. All of WMC’s sales were to local industry retailers and local designers with consistent employee and customer loyalty and with relatively slow but consistent growth. Since, the mid 2000s WMC has been challenged by increasing low-cost – high polluting suppliers from other countries exporting poor quality and low cost fabrics and garments in high volumes into Malaysia. All of this has had an impact on the perception of quality, manufacturing, excessive pollution and reduced safety and employee standards – both in Malaysia and from importing countries. The high pollution and environmental impacts of all manufacturing was being discussed at industry level and in the media.
To assist Hana operate the business she employed her two children: her daughter Mira and son Ryan. Both siblings had been educated in Malaysia and at Sofea’s insistence – they completed Masters of Business Administration degrees in Australia. In addition to their formal education, Ryan had also completed a post graduate degree in fashion design in Sydney. In more recent times, Mira had been more vocal for change at WMC and Ryan had supported a move to increase the value-added component of design, customer reach and product depth from essentially large-batch production of cloth to making designer clothing for larger international markets. This meant forward integration by not only manufacturing the textile cloth, but also moving to a new manufacturing stage of making and supplying retail firms with designer garments. To accommodate this change in manufacture, the siblings decided that a more environmentally efficient production that will reduce energy and water consumption, reduce waste, and implement recycling of products was the key to improving efficiencies at WMC. Mira and Ryan were very keen to be socially and environmentally responsible and increase awareness through their actions. Mira had introduced to the Board Members the idea of exporting to China, Japan and Indonesia the large-batch production output while simultaneously supplying designer and retail outlets across the world. In this discussion, they portrayed their idea of a new and revised manufacturing plant with improved technology that would reduce their environmental ‘footprint’ and promote environmentally sustainable outcomes at WMC.
This conflicted somewhat with the view that cheap imports would hold sway and that customers wanted low-cost products from China and Bangladesh with the Board often pointing to low-cost retailers such as Cotton-On in Australia and JC Penny in the United States of America (USA). Mira and Ryan were persistent in pointing out the opportunities for WMC to sell directly to customers via the web and to implement business to Business (B2B) relationships with quality seeking buyers and the opportunity to provide products that considered the environment in its production.
Ryan had also highlighted the increasing need for more visibility at Malaysian Fashion Week attracting up to 50,000 clients. Increasingly, Mira had identified problems with manufacturing safety and control issues and pollution in countries like Bangladesh with major brands such as Benetton in Italy, H&M from Sweden, Nike, JC Penny and Walmart in the USA, David Jones and Myer in Australia seeking alternative suppliers. According to Mira, WMC could take advantage of their name by building new relationships with retailers and designers since many were looking for long-term relationships of quality suppliers and the reliability that comes with large volume fabric and garment production. Mira and Ryan
were also wanting to influence their suppliers to assist them to consider their environmental impact as well. Basically, Mira and Ryan were trying to drive growth and increase spending (in the short term) to implement environmentally sound production practices and this has led to disagreement with Board members. At stake was WMC’s traditional approach to manufacturing positioned around large-batch production in cotton and wool textiles and fabrics to making designer and retail garments – without consideration of the natural environment! This promoted many Board members to comment privately that Mira and Ryan were trying to be “too smart too soon” arguing the company would not cope. Similarly, product and manufacturing change needed to be supported by dramatic staff decreases and management restructuring to stream-line cost and efficiency, manage two-way product stretches between the old and new production, improve their environmental impact while tackling competition from other suppliers.
While Hana and Sofeawere immensely proud of their children and grandchildren, in a short period of time they had created mayhem in the management ranks prompting local analysts to downgrade the value of company stock and medium to long-term outlook.
Based on less than perfect information supplied about the WMC problem statement, you are required to act as an external change consultant to assist WMC address the issues and challenges:
- Develop at least five (5) realistic assumptions that you can add to the issues and problems expressed. These might typically be related to management, change processes, managerial information systems, technology, competitors, Customer’s and so on. Use at least two (2) sentences to describe each assumption (200 words).
- Referring to Hayes (2014) Chapter 3 and Stoughton &Ludema (2012) discuss how WMC anticipated the need for change. Which typology of change (using Figure 3.4 Types of Organisational Change p56) might best describe the approach that WMC should adopt? (600 words).
- With reference to the indicators of effectiveness (Hayes 2014 Chapter 4), explain how WMC has or has not been effective and discuss how this can be improved. (600 words)
- In reference to Hayes (2014) Chapter 10 and Malhortra&Hinings (2015) Reading 9 discuss the importance of enlisting support from key stakeholders.What advice would you give to WMC at this time? (600 words)