Presented by: Niaz Ali Khan Muhammad Sajjad Mohammad Siraj Khan Muhammad Ashraf Presented to: Dr. Khurram Shehzad Course: Change Management

Reg # Mba121006 Reg # Mba121012 Reg # Mba123005 Reg # Mba123006

Articles To Be Presented

Home Depots Blueprint for Culture Change.Is the Bottom of the Pyramid Really for You?

Home Depots Blueprint for Culture ChangeHarvard Business Review By: Ram Charan

Company at a Glance

An American retailer of home improvement & construction products & services. Founded in 1978 in Atlanta. Bernie Marcus & Arthur Blank, Home Depots legendary cofounders. Having 1100 big-box stores since 2000. $40 billion revenue in 2000. $80 billion revenue in 2005. Earning per share Doubled.

Robert NardelliNew CEO of Home Depot December 2000 Strategy Goals:

Take advantage of economies of scale Independence of stores Decentralization Inflexibility of company

Three-part strategy

Enhance the core: Improving the profitability of current and futures stores in existing markets. Extend the business: Offering related services such as tool rental and home installation of Home Depot products.

Expand the market: Geographically and by serving new kinds of customers.

Ways to achieve strategy

Taking advantage of its growing scale. Centralize certain functions (purchasing) in order to leverage buying power.

Functional, regional and store operations need to collaborate.Store environment needs re-evaluated. Assess the HR-Functions.

Tools for cultural change

To improve the collective ways in which people work together across the organization which supports the business model. Tools used in Home Depot:

Data Templates Strategic Operating and Resource Planning Disciplined Talent Reviews Store Manager learning forums Monday morning conference calls Employee Task Forces Mapping of the HR Process.

Mechanisms

Metrics Processes Programs Structures

Mechanisms for change(contd)

Metrics:

Describes the values and make clear what people will be accountable for change. To emphasize new cultural priorities. Usage of data templates for quarterly business review meetings. Standardize the performance management process based upon quantitative criteria. Also provided a platform for collaboration.

Mechanisms for change(contd)

Processes:

To integrate the new culture into the org. Assessing and improving the HR Function. Implementation of Strategic operating and Resource Planning (SOAR). Instituted a two-hour Monday morning conference call. Reports on the previous weeks activities in their responsible area.

Mechanisms for change(contd)

Programs

To build support for culture change. Set up five day forums which including district and store managers. Nearly 1,800 people in all. Working in small groups. Small groups set up to invasion where the company is going. Institution of Bar-Code system. Continued commitment has been continued.

Mechanisms for change(contd)

Structure

To create a framework for the radically new culture. Centralized Purchasing. Super Saturday Meeting of Upper Executives Get people affected by a change to help define the problem and design the solution. Base your change on hard data.

Speed & Sustainability for change

In the game of change, velocity is your friend. Define the problem and design the solution. Base the change on Hard-Data. Institutionalize the change by starting with a single project. Build Accountability. Take SOAR Planning.

Is the Bottom of the Pyramid Really for You?Harvard Business Review By: Khurram Shehzad

What is Bottom of Pyramid?

In economics, the bottom of the pyramid is the largest, but poorest socio-economic group. It is also often referred to as the "Base of the Pyramid" or just the "BoP" current usage refers to the billions people living on less than $2 per day-as defined by Professors C.K. Prahalad and Stuart L. Hart (in 1998 )

BOP Markets for MNCs

Some success in industries like telecommunications, FMCGs and pharmaceuticals. Many other firms face difficulties in reducing costs and prices to serve BOP consumers. E.g: Procter & Gambles PUR water purification for BOP markets was not profitable enough and had to be moved under the companys philanthropic arm.

BOP Markets for MNCs.

The BOP market is not useful for all companies, products and supply chains, irrespective of their motivation Many innovations come from organisations outside the mainstream in their industries Examples: Microfinance by NGOs Mobile money by Telecom providers Micro-mortgage companies in India by inexperienced entrepreneurs with little housing-sector knowledge

Barriers to BOP business success

Uncertain cash flow Gauging demand Sell and Distribution challenges

Disaggregated providersUndeveloped business Eco-system

Uncertain cash flow

Consumer cash flow is a major issue. BOP consumers are not only poor but also live in a state of uncertainty. Immediate payments for many products is not feasible Eg: Many small farmers in Kenya do not buy fertilizers as they cannot afford the 50kg bags it comes in.

Solutions

Reducing up-front payments by using credit Accepting payments in instalments

Pay-per-use strategies Eg: Private primary education in Ghana, irrigation pumps in India, clean drinking water in the Philippines Re-packaging products in small amounts / sizes

Gauging Demand

Common MNC mistake: No point in marketing products consumers dont want (confusing need with demand) Most consumers would buy a cell phone over a solar powered lantern or a low-energy stove

If the demand has to be generated through marketing then this increases prices and costs which is not BOP viable

Solution

Focus on areas where an existing demand can be satisfied with low-cost and high-quality products Eg: Safaricoms M-Pesa Offers money transfers by mobile phone in Africa at 33% of the cost of other organisations like Western Union

Sales and Distribution challenges

Although numerous, BOP consumers are largely rural and highly scattered Difficult to manage face to face and cash-based interactions

Challenge is beyond initial sale high cost of meeting repairs and warranty replacements in far off locations

Solution

Building a dedicated channel to serve the market and teaming up with partners which have extensive reach in the market Eg: Hindustan Levers Pure water filters are marketed through a partnership with microfinance institutions

Disaggregated providers

Small suppliers have rare access to high-quality inputs, they lack inputs, training and financial credit and have an unreliable output Solution : Company assistance through training, predetermined contracts and provision of inputs

Undeveloped business ecosystems

BOP lacks business ecosystems required for products and services Eg: A rural entrepreneur who buys a cow may face difficulties in finding cheap and easily available veterinary services

Solution: Innovative companies may address holes in the eco-system by supplementing value chains end-to-end Eg: Amul, that buys milk from 3 million farmers, also arranged for artificial insemination services for its small producers

BOP challenges and risks1.

Image Must demonstrate that commercial returns help to further community development sustainably rather than come at the expense of the poor Brand Low-end versions of a brand may reduce its attractiveness to customers one solution is creating a distinct name for a BOP product Cannibalization New low-cost product may cut into sales of mid-range products one solution is selling through different channels Underestimating the competition Numerous competitors in the informal economy local competitors can be involved through employment, roles in the value chain or sourcing from them.

2.

3.

4.

Factors to consider1. 2. 3. 4.

Must be able to manage numerous low-margin, low-value transactions. Must be comfortable working with informal markets. Legacy and overhead costs. Requires a long-range Mind-set.

Home Depots Blueprint for culture changeQuestionsQ.1.What Mechanisms were used by the New CEO Robert Nardelli to change the culture of the Firm? Q.2.What Tools of change were implanted in Home Depot? Q.3. What got increased the Earning per share doubled? Q.4. What is Nardelli Three-Part Strategy applied?

Home Depots Blueprint for culture changeRecommended Answers Ans.1. Mechanisms used in Home Depot: Metrics, Processes, Programs & Structure. Ans.2. Tools used at Home Depot: Data Templates, Strategic Operating and Resource Planning, Disciplined Talent Reviews, Store Manager learning forums, Monday morning conference calls, Employee Task Force & Mapping of the HR Process. Ans. 3. Cultural change has increased the Earning per share doubled. Ans.4. Nardelli Three-Part Strategy: Enhance the core, Extend the Business & Expand the Market.