This article will examine the Transformation of Valio case study written by Lamprinakis (2013) about how Valio executed organizational change due to change in its external environment. The case study can be downloaded here. The case study is important for business students because it shows how a company struggles to adapt with external change in order to maintain its competitiveness, seize opportunities, and mitigate threats and risks.
The Transformation of Valio
In order to meet the challenges brought on by the EU accession, Valio, a long-standing institution in Finland built on a cooperative heritage and wide regional reach, underwent a process of restructuring and reorganization. Valio was a 17-member dairy cooperative that began as an Irish butter cooperative and eventually expanded to make its own cheese and sell milk to consumers. The business gradually expanded and established itself as the leader in the Finnish diary market. When Finland joined the EU in 1995, the company acknowledged several changes in the market that may endanger the company. Thus, the company decided to create an organizational change in reaction to the challenges.
This paper will examine the organizational change applied by Valio to respond to external changes. It will describe the problem identification, the root causes, the possible alternatives, and recommendation on the plan of action. It will also state the importance and the relevance of the case study to the overall business studies..
The Transformation of Valio: Problem Identification
An important environmental change that had significant effects on several economic aspects was the issue Valio had to deal with. This involved giving up the protective policies and putting the business in the face of fierce competition from businesses based in other EU member states (Lamprinakis, 2013). Valio concentrated on organizational change to address this environmental change. Organizational change refers to new ways of organizing and operating. Change can be seen as a sign of improvement and progress. Additionally, it deals with transformation, reorganization, and restructuring (Brauns, 2015).
Even though the change is external, the problem is also in the internal side of the company. The company believes that the current organization may not be able to catch up with the fast dynamic of the changing market due to the ascencion of Finland to the EU. Hence, the company considers the organizational change is necessary.
Diagnosing the Causes of the Problem
In 1995, Finland joined the EU, and as a result, Valio’s underwent organizational reform as a response to outside pressure. This was the primary factor. Organizational change can occur for a number of reasons, including a response to outside pressure from management and employees (Swaim,2021). This pressure can originate from a variety of sources.
It matters whether the cause is internal or external. The main cause will determine how the plan of action would be designed. In this case, the cause is from external environment due to a changing market situation. Valio tried to create internal change to respond to the external change.
Evaluating the Transformation of Valio and Other Possible Alternatives
Valio employed downsizing and streamlining for the internal environment, spending money on R&D, as well as actively searching out and developing new markets. In terms of the external environment, the company concentrated on the discovery and growth of new markets and “natural markets,” as well as stepping up marketing initiatives and bolstering brand recognition. The business blended proactive and retrenchment tactics (Lamprinakis, 2013). These responses are proved to be a great strategy for Valio.
There are several other possible alternatives for the transformation of Valio. Valio can differentiate itself from the competition in two ways: by providing affordable or high-quality items. To better serve budgeters, cost leadership places an emphasis on product diversity and cost reduction. Trade is a key factor in any organization’s growth, and eliminating trade barriers across EU Member States would lead to increased commerce and advancement. Making a precise counterfactual to comprehend what would have happened if Valio had not joined the EU is challenging. The EU’s single market reforms, however, would improve intra-EU commerce and profit from fewer trade obstacles.
Valio may lower expenses, trim workers, and shut down facilities. They can start looking for product gaps and opportunities both within Finland and abroad once they have access to outside markets. They might spend money on R&D and create unique products like milkshakes or cheese platters that can be eaten as snacks, among other things, that are zero or low-fat, sugar-free, and added value. They ought to establish exclusive alliances with restaurants and cafés all around Europe.
Recommendation on the Plan of Action
Valio can use change management process as a framework to design the organizational change. It consists of five steps: prepare the organization for change, create a vision and plan for change, put the changes into practice, integrate the changes into corporate culture and practices, review progress, and analyze results. A corporation must be intellectually and culturally equipped for organizational change; the necessity for change must be obvious to employees, and there must be awareness-raising about the issues and difficulties the company is experiencing. After that, a realistic, thorough strategy should be created that includes the project’s scope, stakeholders, team, and key performance metrics. Steps for implementing the necessary change should be described after the plan has been created.
The emphasis during this process should also be on employee empowerment so that they may take the appropriate actions to fulfill the objectives. Managers should stop the revert to the previous state once the change endeavor is finished. It’s crucial to examine and review the results of a change effort after it’s over in order to gain insights into whether or not the project was successful (5 critical steps in the Change Management Process: HBS Online, 2020). Retrenchment and proactive methods were employed by Valio as part of their internal and external environment initiatives. I believe that the emphasis on empowering employees was missed, as they will be the ones responsible for bringing about the change.
The Importance and Relevance of the Case Study
The situation in the transformation of Valio case study serves as an illustration of how to manage difficulties brought on by external pressures and changes. It offers greater information about organizational change and how to overcome obstacles. The case contains beneficial guidelines and business-related insights. It offers an alternative perspective on how organizational change might be used within businesses. As the article suggested, organizational change is extensively studied but the success rate can be as low as only 10%. Having a case study that shows how to approach organizational change is significant to the overall business studies.
References 5 critical steps in the Change Management Process: HBS Online. Business Insights Blog. (2020, March 19). from https://online.hbs.edu/blog/post/change-management-process Brauns, M. (2015). The management of change in a changing environment – To change or not to change?. Corporate Board: role, duties and composition. 11. 37-42. 10.22495/cbv11i3art4. https://www.researchgate.net/publication/309047978_The_management_of_change_in_a_changing_environment_-_To_change_or_not_to_change Lamprinakis, L. (2013). The transformation of Valio: A case study. Journal of Business Case Studies, 9(1), 85-88. http://cluteinstitute.com/ojs/index.php/JBCS/article/view/7549/7615 Swaim, R. W. (2021, May 12). Nine reasons organizations need to change. Process Excellence Network. https://www.processexcellencenetwork.com/organizational-change/columns/why-organizations-change-and-what-they-can-change