Reference no: EM133183700

TASK

A. Summarise the measures required to turn the company around

B. Describe:

i. the most likely sources of resistance to change;

ii. Lewin's force field analysis model and explain how it might be used to implement change in GVF.

BACKGROUND:

Great Value Foods (GVF) is one of Bigland's leading supermarket chains, having traded for over fifty years. Though fierce competitive activity had reduced the major players in the industry to six large chains in the last twenty years, the competitive pressures and large-scale capital investment required had not prevented all new entrants to the market. A high proportion of all workers in the supermarket industry are unionised.

A few foreign competitors seeking new markets had managed to secure a market share by offering unbranded goods at extremely low prices. This development increased the pressure on GVF as these new entrants were attracting consumers that had been part of GVF's traditional customer base.

In the midst of these difficulties, GVF was presented with a major opportunity. One of its competitors was experiencing difficulties and offered GVF the chance to purchase 60 of its stores in the south of the country. GVF borrowed $800 million and made the purchase, doubling its number of outlets.

As GVF took over management of the new stores, however, it realised that considerable time and funds would be required to convert them to its own distinctive format and to the modern standards now expected by customers. This not only delayed the expected revenue stream, but also required additional borrowing, raising GVF's gearing to uncomfortably high levels. The government of Bigland subsequently raised interest rates, increasing the financial pressure on GVF.

During all this, GVF had been seeking to catch up with its competitors in a number of ways. This had included increasing the number of own-brand products it offered, along with the development of a new central distribution system that experts agreed was one of the best in the country. However, there were delays in distribution of supplies to some stores during the run up to the country's most important festive period. This resulted in a considerable loss for the company and three of the directors considered responsible for the problems were sacked.

These problems, together with an accompanying decline in profits, resulted in a fall in GVF's share price. Investors were concerned that GVF had paid too much for its 60 southern stores and that a rights issue would be needed to reduce the company's debt burden.

GVF has recently appointed a new CEO, and she has spent her first few weeks reviewing the company and its problems. She has found that the company has too many layers of management, narrow functional attitudes and a controlling, bureaucratic head office culture. She feels that the business is no longer effective or responding to customer needs.