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Before attempting to respond to this post, refer to “The Corus Case Study: Developing a Stronger Customer Focus” Learning Activity. Read this case study and assess the change strategy approach used in this case. Then, research and select another change approach that you think would have lead to goal accomplishment. What is this approach and why did you select it? Be detailed in your explanation and give an example(s).
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Developing a stronger customer focus
Internal Changes
Introduction
Business continually needs to adapt to the
and then provides the good quality solution
changing environment in which it operates. In
regarding product that meets the customer’s
recent years a key element of this environment
requirement. The solution therefore sells the
has been that of increasing customer expectation.
product and service.
Modern customers want far more than ever
before deciding who to buy from. When they
This case study looks at how Corus, one of
deal with an organisation they want to deal with
the world’s leading steel companies, has
a sales team that is fully informed, able to focus
developed a market focused approach.
on their specific needs and provide suitable
This involved an extensive process of change
solutions. Customers are not simply looking
management to enable the company to gain
for good products. Rather, they seek good
a competitive advantage in a fast moving
products which address their individual needs
marketplace. The focus is on one of Corus’
and buying requirements. The result is that
key business units – the Construction and
business organisations today must be
Industrial Unit which manufactures sections
marketing rather than production-orientated.
and heavy plates for the construction, energy,
The production-orientated company of the
shipbuilding, process plant and engineering
past concentrates on making good products,
sectors; coil plate and reversing mill plate for
selling what they make – they were disappointed
a wide range of end-uses, rod for wire drawing
when they did not sell all manufactured goods.
and semi-finished products for re-rolling and
The modern marketing orientated company
further processing into many industrial and
first finds out what the customer requires
consumer goods.
Corus Group plc is the largest steel producer in Europe and the third largest in
the world. The Company produces
steel by the basic oxygen steelmaking
method at four integrated steelworks
in the UK and one in Holland. Corus
came into being as a result of a merger
between British Steel and Dutch company Hoogovens on the 6th October
1999. The merger is part of a consolidation in the steel industry through
which the leading steelmaking companies have sought to develop a much
more extensive international presence
in a highly competitive marketplace.
Considerable synergy has resulted
from the merger enabling the individual strengths of the two companies to
be combined. The process of change
has also enabled the company to shed
some outdated practices and to develop
a much stronger customer focus which
secures the future of the company
which secures jobs.
Developing
a clear strategy
Organisations must have a clear sense
of direction if they are to be effective.
This involves establishing a goal and a
strategy (plan) to achieve this goal.
Corus has established its goal
(for its Construction and Industrial
Business Unit) as to:
“Achieve a 15% return on net assets
with real profit growth through the
cycle by providing products, solution
and expertise to our customers in the
construction and industrial markets.”
This is to be achieved by using the
resources of the business unit to sustain
a leading position in the market in the
UK, Europe and in global markets
whilst also maximising profits. Corus
is seeking to drive down its cost of production while continuing to focus on
doing those things that it does best. At
the same time, it is also seeking to
build new skills and expertise.
One of the major actions involved in
the new strategy is that of creating
partnerships with customers and
suppliers that change the market or
transform the interface with customers.
A key change that has taken place in
organisational structure has been in the
organisation of sales accounts teams.
Before the merger Corus operated with
product based sales teams operating
from four different geographical locations. The new emphasis has been on
bringing the management of sales to a
centralised area at Scunthorpe. Now
empowered sales account managers
have the responsibility for managing
accounts with individual customers.
The new account manager is entrusted
to know all aspects of the business
aided by the latest Information and
Communications Technology systems.
What this means, is that a customer like
British Waterways will deal with one
Corus account manager rather than
having to buy different types of steel
from a range of sales staff and locations
as was the case in the past.
The new account managers at Corus
not only need to be enterprising but
also have an extensive understanding
of the company they work for, its range
of products, and of the needs of the
companies that they are selling to.
Corus’ customers are businesses
seeking solutions in wire drawing,
foundations, ship building, energy,
heavy engineering and construction
steel amongst others. Today they are
able to build a relationship with one
point of contact – the account manager
who represents Corus (a multi-product
organisation).
Organisational Culture
We use the term “culture” to describe
the typical approach within an organisation. Culture refers to the personality
of an organisation and the shared
beliefs. It also encompasses the written
and unwritten policies and procedures
that determine the ways in which the
organisation and its people behave
and solve business problems. You can
quickly get a feel for the culture of
an organisation just by looking around
the company and talking to the people
who work for it. For example, some
organisations are very dynamic and
its people are encouraged to take risks.
Others are backward-looking and
rarely take risks.
This case examines how Corus has
sought to develop a customer focused
business culture based on developing
high performance teams.
BROWSE THE WEB FOR
information on the organisation
www.corusgroup.com
GLOSSARY OF KEYWORDS
Managing Change
Changing the culture of an organisation
requires a great deal of skill. Change
management is always most successful when the participants in the change
process feel involved. The change
process at Corus has not been easy both
on account of the extensive changes
taking place in the business environment and because of the sheer scale of
the changes required. People used to
working in specific product areas and
in specific locations now needed to
change their mind-set to realise that
they were working in a single business
unit producing a variety of products to
the benefit of the customer. They
needed to take shared responsibility for
these products, and for the success of
the business unit.
Corus has been seeking to create
high performance teams within its
business units in order to improve
performance and particularly to build
stronger relationships with customers.
While it has been pursuing this strategy
it has been faced with an external
environment which contains many
hostile factors. The major hostile
factor has been the strength of the
£ and the weakness of the Euro which
has made it particularly difficult for
UK manufacturers. Corus is one of
the UK’s top ten exporters, its aim is
to retain regular customers’ existing
orders and to win new ones in a competitive market place, which is not
helped by the weakness of the euro.
Corus has had to develop an extensive
process for managing change
particularly in its sales force. It had to
move from a situation in which there
was a hierarchical structure in which
many of the sales staff expected to be
told what to do. Managing change has
involved a process of breaking staff
away from the “comfort zone” of
behaving in a certain way, “If you do
what you have always done, you get
what you always got” to developing
new ways of working in which the new
account managers have considerable
responsibility: to sign off deals and to
negotiate contracts for example.
An important aspect of the change
was that of relocating employees to
Scunthorpe. Previously the sales force
had been located across the country
e.g. in Motherwell (central Scotland)
and Teesside. The new staff needed to
be re-trained in new areas so that they
could work with new products and new
systems. Not everyone was prepared to
make the move or to make the change
in the way they worked. Corus therefore had to engage in a drive to fill the
gaps by interviewing to fill vacancies.
It was then necessary to engage in an
extensive training programme so that
everyone involved with the new way
of working was familiar with new
approaches and was familiar with how
their new roles differed from previous
roles. Training programmes were implemented in late 1999 and by early 2000
the company began to reap some of the
benefits although it will take a long time
for the real impact of the change to be
felt. The training programmes involved
familiarising people with a range of
products that were new to them, new
markets, and new ways of dealing with
people. An account management course
was a key component of the training.
One of the major difficulties faced in
the early days of introducing the
change was the sheer volume of learning that needed to take place, as individuals had to take on board a lot of
new information and ways of working.
Another difficulty was that while the
objective was to get account managers
to create account development plans,
talk to customers and develop an
awareness of their customers’ strategies,
they were often unable to do this until
the nitty-gritty operational activities
such as handling enquiries and entering
orders had been effectively carried out.
In simple terms the account
managers were having to carry out
administrative tasks within the organisation. Corus therefore realised that it
had to make new appointments at clerical levels in order to ensure that
account managers could concentrate on
more defined management tasks.
Another barrier to change was that of
“invisible walls” that existed between
people within the unit. Previously contact had been made over the phone
between people at different locations
and dealing with different products.
Now these people were working in an
open plan office at the same location in
Scunthorpe but at first there was still a
reluctance to share ideas and to develop common systems – many people
wanted to continue working with the
old patterns. A key part of the process
of change was therefore to develop a
teamwork approach so that everyone in
the business unit could start to work as
a high performance team member. In
addition common systems needed to be
established to create a consistency of
approach so that for example there
would be standardised approaches to
handling orders, dealing with complaints from customers, etc.
The key drivers for the change process
were the emphasis on getting everyone
to see themselves as working as part of
a single business unit and to make sure
that the focus was on the customer.
The training programme assisted
by consultancy therefore emphasised
the key objective for teams within
the unit as being – We want to be…
“indispensable to our customers”.
Conclusion
Changing an organisation is not easy particularly when people are used to doing
things in a set way. Managing that change
process is not easy when an organisation
is faced by a hostile environment (in this
case the strength of the £ against the
Euro). However, change is essential in a
dynamic business environment. Today
Corus is beginning to reap some of the
rewards of its change management
process. Customers feel more confident
now that they can deal with one account
manager who is familiar with their
business and their problems and can
provide tailor made solutions. Within
Corus, team members are now becoming more confident in their roles and
have come to grips with the need to work
more closely together using shared systems. The £ continues to be strong so it
will take time for the results of the new
strategy to be fully realised. However,
the changes are in place to secure a
future for the business and the people
QUESTIONS
1 Why is it important for
business organisations today
to be willing to change?
Production Orientation:
concentrating on making products
with the assumption that the
company will find a market.
Marketing Orientation: finding
out what customers want and need
in order to provide products that
meet customer expectations better.
Business Units: components of a
total business that operate with a
considerable degree of independence.
Integrated Steelworks: a steelworks
that carries out all of the processes
involved in steel manufacture
including iron/steel making facilities,
i.e. conversion of raw materials (iron
ore, coke) etc. into finished products.
Merger: joining together of
two companies.
Strategy: setting the company
goals/objectives and how to achieve
these business aims.
Account Manager: manager that
deals with all aspects of specific
customers’ needs as a focal point of
contact within the given organisation.
Culture: the typical pattern of ways
of doing things in an organisation.
Backward Looking: basing decisions
and ways of working on the way
things were done in the past.
Change Management: the process
of planning and carrying out
organisational change.
High Performance Team: team
in which all members feel a shared
commitment and pull in the same
direction.
Consolidation Process: cutting out
unnecessary duplication of business
activity by concentrating on the core
activities by utilising the minimum
of equipment needed e.g. by closing
down a plant operating at half its
capacity to concentrate on a more
efficient plant that is also operating
at half capacity.
BROWSE THE WEB FOR
2 What external difficulties
did Corus face while it
was introducing the
change process?
©Business Case Studies LLP
did Corus’ Construction
3 Why
and Industrial Unit create a
series of account managers?
4 How did the changes that took
place at Corus’ Construction
and Industrial Unit involve a
change of culture?
5 How could you evaluate
the effectiveness of the
changes made at Corus?
www.corusgroup.com
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