Leadinga Continuously Changing Organization
Leadinga Continuously Changing Organization
Thesuccess of a business depends on the efficiency of the strategicplanning an organization takes. The Chief Executive Officer (CEO)needs to be on the lookout for every opportunity that can enhance theperformance of an organization. In some cases, a business may bestable financially but it may still have the capacity to expand intonew markets or even increase the sales in an existing market. Planned change is crucial for a business to reach optimumperformance. The change may involve hiring new staff, changingtechnology, venturing into new markets or even revising the goals ofan organization. Regardless of the tool a business targets to use toachieve the desired change and the employees often resisttransformation at the initial stages. Subsequently, leading acontinuously changing organization requires a visionary principal whocan motivate and unite the staff to achieve the set ambitions.
Oneof the key indicators a CEO of a medium-sized business can use todetermine whether an organization is ready for transformation is thepresence of skilled staff. The business has recently hired newemployees with the essential intelligence required to take thebusiness into the national market. Internationalization of abusiness is a multi-faceted process that requires strategic planning. The ambitions of the business can be achieved faster when a businessrecruits employees with experiencing internationalizing anotherbusiness. The new staff members are determined to modernize theorganization. Although the skilled staff is new in the organization,the business has several long-serving employees who have been withthe business since it was established (Grover & Markus, 2008).
Accordingto the theory of Absolute Advantage, an organization can venture intoa new market because it can produce goods or offer services at arelatively lower cost than organizations in the target market. When abusiness can manufacture products at a lower cost, it can export theminto a new market where they can sell them at a lower price than thelocal competitors, and still generate substantial profits. Thecustomers are always in search of quality and affordable products, sointernational businesses with the capacity to offer superior goods atlower prices than their rivals generate high returns due to highsales. Businesses often achieve absolute advantage when it has veryefficient technology that enables it to make products at a lower costper unit than its competitors do (Schumacher, 2012).
Accordingto Bouare (2009), the theory of comparative advantage could alsoencourage the organization to venture into the international market.An organization achieves comparative advantage if it can manufacturegoods at a lower opportunity cost than the target market. DavidRicardo described invented the theory in the 18th century. Heobserved that Portugal could manufacture wine and clothes at a lowercost compared to England. Similarly, the CEO would be motivated toexpand into an international country where the organization can findlabor and raw materials for producing its products at a lower cost.
Similarly,the location theory can motivate the CEO to transfer a part of itsservices internationally. The theory recommends establishing abusiness in an environment where the consumers in need of theservices or products offered by the company are situated. Forexample, the Toyota Company may construct a car manufacturing plantin the United States since it has a big customer base in the country. Since the raw materials and the labor are sourced in the country,the cost of production per unit of the local cars is lower comparedto the imported vehicles.
Assessingthe effectiveness of the foundational theories
AdamSmith invented the theory of comparative advantage (CA). He arguedthat an organization achieves absolute advantage when it can producehigher quantity of goods, services or products (using the same amountof resources) compared to its rivals. CA exists when anorganization can access cheaper labor production cost than itscompetitors can (Schumacher, 2012). The CEO will opt to expand thebusiness into the new country provided he or she can find affordablelabor supply in the new market. The new staff members with theknowledge to modernize the company can help the CEO adopt technologyand strategic planning approach that can substantially reduce thelabor input while increasing the output through using thecontemporary standards. For instance, it the company has been usingoutdated machinery it can upgrade to match its competitors(Schumacher, 2012).
Onthe same note, the CEO can know if it would be worth to transfer abusiness into a new environment by establishing whether theorganization can make higher quality products than its competitors inthe new market, and t a lower cost. In such a case, the organizationwould be able to price its products at a competitive price than rivalenterprises and still earn a huge profit margin. The economic law isvaluable among countries that have consented free trade. In such acase, the organization will focus on exporting readymade productsinto the new international market, as the clients will prefer theentry product to the previous players due to the attractive prices(Bouare, 2009).
Finally,the CEO would know that that the location theory would work in thenew environment by considering the potential of clients in the newmarket. The economic law argues that a business can increase itsproductivity and profitability when it is located in a region whereit can access its customers and raw materials conveniently. Thecompany has several employees who have been working with the company,so they understand the strengths of the organizations as well as thecommodities that can help to attract is clients. As such, they canhelp the company develop loyalty with the clients in the newenvironment easily. In addition, the CEO will receive advice from theteam of new employees with the knowledge to modernize theorganization concerning the best approach to enter an internationalmarket (North, 1955).
Oneof the benefits organizations achieve by going international is taxsavings. Presently, the business could be making just enough tosustain its local operations as well as generate a modest profit.However, the management would be more interested in expanding theservices into another country with friendly taxation terms. Drucker(2011) draws the potential savings that corporate businesses in theUS can make by shifting their operations in Bermuda and Irelandrespectively. The highest corporate tax in the United States canreach 35%. On the contrary, Ireland charges 12.5% while Bermuda hasno corporate tax. Subsequently, an organization can transfer itsservices to countries with lower taxation policies to save billionsof dollars. The author uses the example of Google that saved morethan 3 billion USD between 2008 and 2011. The organization acquiredthe profit through transferring most of its international income toaccounts held in Bermuda, Ireland and the Netherlands. Theorganization’s executive will know the foundational theories areefficient if the organization is making a profit in the new market.
Leadershipskills and style
Theleadership approach of the organization is suitable for achieving thesuccess of transforming the enterprise into a modern, profitableventure. The CEO uses the democratic leadership style. As a result,the employees are involved in the decision-making process. The newemployees with potential knowledge to modernize the business can workdirectly with the management and the concerned department totransform its operations (Kane & Patapan, 2014). According toChoi (2007), the democratic leadership is suitable for a continuouslychanging organization since it allows every member of a team to givehis or her view concerning a given issue. As a result, it encouragesemployees to share their ideas with the management. The free flow ofinformation helps in ensuring that the organization is up to datewith the market development as well as the clients’ desires.
Theexecutive will play an essential role in unifying the entire staff asit encourages everyone to share their ideologies, participate in theevaluation of the available information as well as choosing the finaldecision. The democratic leaders are associated with highproductivity and morale therefore, the employees who have remainedloyal to the organization will have a fair opportunity to advise themanagement regarding the fair reward they would like to feelappreciated for the unrelenting services they have offered to theenterprise (Kane & Patapan, 2014). The CEO will be instrumentalin the unification of the employees as the organization seeks tomodernize and improve its financial status. Choi (2007) notes thategalitarian leaders provide logical consequences, they areknowledgeable about current affairs, makes decisions based onsituations and they are good listeners.
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Drucker,J. (2011). How offshore tax havens save companies billions. NationalPublic Radio.Web. Retrieved on 9 Nov. 2015 fromhttps://www.sovereignman.com/offshore-company/
Grover,V., & Markus, M. L. (2008). Businessprocess transformation.Armonk, N.Y: M.E. Sharpe.
Kane,J., & Patapan, H. (2014). Gooddemocratic leadership: On prudence and judgment in moderndemocracies.Oxford: Oxford University Press.
North,D.C. (1955). Location theory and regional economic growth. Journalof Political Economy, 63(3),243-258
Schumacher,R., (2012). Adam Smith’s theory of absolute advantage and the useof doxography in the history of economics. ErasmusJournal for Philosophy and Economics, 5(2),54-80.