Holey Soles-Final

Holey Soles: A Change Plan to Achieve Firm’s Goals

ORGB 5600

Ike Hall

3/6/2013

Prepared by:Amar Gill

Sam MaedelConnor Jeske

Vitaly StalmakovYoung Kwak

Joe ZhangBBA, Set D

Table of Contents

Introduction............................................................................................................................................. 1

Problem Statement:............................................................................................................................... 1

Symptoms:............................................................................................................................................... 1

PESTEEL................................................................................................................................................. 2

TOWS Matrix......................................................................................................................................... 5

GE Model................................................................................................................................................. 6

Porter's Five Forces Analysis............................................................................................................... 8

Business Environment Analysis Model.............................................................................................. 9

Stakeholder Map.................................................................................................................................. 11

Gaps........................................................................................................................................................ 12

Changing the Deal by Denise Rousseau.......................................................................................... 14

The Ten Commandments by Todd Jick........................................................................................... 16

Frame Bending..................................................................................................................................... 18

The Marconi Change Curve.............................................................................................................. 21

Six Steps to Effective Change............................................................................................................ 23

The Sawhney and Wolcott Model..................................................................................................... 25

Beatty and Ulrich Model.................................................................................................................... 26

Charlotte Beers.................................................................................................................................... 28

Hamel..................................................................................................................................................... 29

Seagram’s Values................................................................................................................................. 29

Marconi PLC........................................................................................................................................ 30

Implementation.................................................................................................................................... 31

Appendix 1............................................................................................................................................ 36

Appendix 2............................................................................................................................................ 38

Appendix 3............................................................................................................................................ 40

Introduction

Holey Soles is a Vancouver based injection-molded footwear company founded in 2002 by Ann Rosenberg in her garage and backyard. In 2004, the fast growing company was purchased by Joyce Groote and Rick Walter with the goal of expanding the organization on all fronts: developing new markets, expanding the product portfolio with the aim of reaching an aggressive $40 million in sales by 2009.

Problem Statement:What strategy does Holey Soles need to adopt in order to reach its goal of $40 million in sales by 2009 considering the competitive North American market, global supply chain challenges, international market pressures, and evolving consumer demands?

Symptoms:Revenue goal Aggressive goal of $40 million in sales by 2009 (two years later, an increase of approximately 400% of current revenue)

Competitive North American marketLarge competitors (Crocs, Waldies) with the market share and financials that enable them to potentially slow Holey Soles growth. (Ex. Frivolous lawsuits, faster market penetration/expansion) New entrants due to rapid growth which is expected to reduce market share and potentially erode profits and/or markets.

Global supply chain challengesLong shipping times from China which result in longer waits for merchandise and higher costs due to increased warehousing requirements (in order to have quick access to inventory).Exclusive dependence on Chinese suppliers for footwear products, resulting in increased supplier power.

International market pressuresIncreased globalization that results in easier access to other markets and competitor products. Inflationary and exchange rate concerns that have the potential to negatively affect Holey Soles finances.

Evolving consumer demandsChanging styles – consumers are fickle, while EVA products are in high demand at present it is possible that a new fad will emerge relatively quickly, which could negatively affect demand for Holey Soles Products.Changing consumer preferences – presently consumers are willing to pay more for comfortable footwear, however, it is possible that this may change depending on various global economic realities.

PESTEELPolitical(Pol.O1) Canada/U.S. are fairly liberalized in terms of free-trade between different nations, allowing for simplified shipments in and out of the countries which saves time and money. (Rank: Negligible Opportunity – Time Frame: Current)(Pol.OT1) Canada has an upcoming federal election so there may be changes to taxation at the federal level which could increase expenses. (Rank: Negligible Opportunity/Threat – Time Frame: Short term)(Pol.O2) Canada/U.S. are stable country with little threat of civil unrest, which provides a stable environment for Holey Soles to solidify North American operations, while expanding internationally. (Rank: Negligible Threat – Time Frame: Current)(Pol.O3) UK, Western Europe and Japan are also politically stable markets, but with varying degrees of bureaucracy, which will make forays into these countries less risky, but potentially more time involved (depending upon level of bureaucracy). (Ranks: Moderate Opportunity – Time Frame: Current)

Economic(Econ.T1) Canada has a high taxation rate which increases the cost of doing business in Canada and reduces profits. (Ranks: Negligible Threat – Time Frame: Current)(Econ.T2) Holey Soles experiences exchange rate fluctuations since their books are denominated in CAD and they do business in USD, which causes a degree of financial uncertainty depending on exchange rates. (Rank: Negligible Threat – Time Frame: Short/Long Term)(Econ.OT1) Low interest rates in Canada and high inflation in China may costs Holey Soles potential earnings due to small returns in Canada and increased costs in China. However, the Canadian interest rates would also allow for low cost investment in Canada. (Rank: Negligible Threat – Time Frame: Short/Long term)(Econ.T3) High employee wages in Canada will reduce profit margins. Therefore, global offices in areas with lower employee wages should be considered. (Rank: Moderate Threat – Time Frame: Current)(Econ.T4) US currency depreciating in Europe and Japan, which reduces earnings. Therefore, changing the operating currency in those markets should be explored. (Rank: Important Threat – Time Frame: Current)

(Econ.T5) Shipping products from China to North America takes a long time, which requires more inventory to be stored in warehouses, costing time and money.

Sociocultural(Socio.O1) Comfort is an important factor in consumer’s decision to purchase, which benefits Holey Soles due to their extremely comfortable EVA molded footwear. (Rank: Important Opportunity – Time Frame: Current)(Socio.OT1) Consumers are much more knowledgeable with the adoption of the internet, which means that actions taken by Holey Soles and information regarding products are easily obtainable, which is a double edged sword for Holey Soles, as customer reaction may be varied due to their interpretation of HS actions. (Rank: Moderate Opportunity/Threat – Time Frame: Current) (Socio.T1) Consumers view price as an important purchasing factor, but it is not the only factor considered by most purchasers, as such it is important that HS maintains the proper balance between price and other factors (comfort, style etc.). (Rank: Important Threat – Time Frame: Current) (Socio.OT2) Increase in competition due to increased popularity of EVA type products, which results in many clog style products in the market. The varying degrees of quality in these products both threaten and create an opportunity for HS to differentiate itself based on quality. (Rank: Important Opportunity/Threat – Time Frame: Current)

Technological(Tech.O1) EVA compounds are becoming more popular and the injection-molding manufacturing process has improved, which allows for more innovative products that appeal to consumer tastes. (Rank: Important Opportunity – Time Frame: Current)(Tech.OT1) High tech., specialized and expensive machinery needed to manufacture injection-molding products serves as a barrier to entry for the industry. However, it also increases costs to Holey Soles. Accordingly, this is viewed as both a threat and an opportunity/advantage to the company. (Rank: Moderate Opportunity/Threat – Time Frame: Current)

Environmental(Enviro.T1) Canadians are environmentally conscious, and people in developed countries are also becoming increasingly environmentally aware, which could result in increased costs due to the possible need for the implementation of green initiatives. (Rank: Moderate Threat – Time Frame: Current)(Enviro.T2) Potential concerns over the injection-molding manufacturing process and the disposal of such products could have negative effects on HS brand in the long run. (Rank: Moderate Threat – Time Frame: Short/Long Term)

Employees

(Empl.OT1) Knowledgeable and specialized employees are required in the injection-molding processes which serve as both a barrier to entry and increased cost in the industry, which is both an opportunity and threat for HS. (Rank: Moderate Opportunity/Threat – Time Frame: Current)(Empl.O1) Opportunity for an increase in the use of inexpensive labour in China and Mexico, which potentially allows for reduced costs and higher profits. (Rank: Important Opportunity – Time Frame: Current)

Legal(Legal.T1)Tariffs, duties, freight forwarders and other documents are required for international shipments which costs time and money. While these costs are (mostly) transferred to the customers it does result in higher costs for end users. (Rank: Moderate Threat/Opportunity – Time Frame: Current)(Legal.T2) Frivolous lawsuits within the industry have the potential to cost money and time. (Rank: Negligible Threat – Time Frame: Current)(Legal.O1) Canadian companies have the ability to avoid high taxation by moving certain operations overseas which would reduce taxes and save money. (Rank: Moderate Opportunity – Time Frame: Current)(Legal.T3) China offers little in the way of patent and intellectual property protection which may result in stolen intellectual property and increased competition. (Rank: Important Threat – Time Frame: Current

TOWS Matrix Internal Factors (Ranked in Order of Importance)

External Factors(Ranked in Order of Importance)

Strengths (S)

(S.1) High quality manufacturing capabilities resulting from experienced manufacturing patented technologies

(S.2)Strong customer service relations which enables HS to attract/retain important clients

(S.3) Strong business units which include the LPI subsidiary that enables significant tax savings

(S.4) Valuable relationship with Chinese manufacturers which results in high quality production with industry leading low rates of defective merchandise and quality standards

Weaknesses (W)

(W.1) Long shipping times from China, which result in high inventory costs for HS, due to their required ability to quickly resupply customers

(W.2) Inventory management issues – Difficulty and expense associated with maintaining inventory (narrow range of colours and sizes) for large chains

(W.3) Lack of specialized employees – HS has grown immensely since founded, and now requires specialized and highly skilled employees to operate properly

(W.4) Large amounts of cash tied up in Accounts Receivable (A/R) – Resulting in lost interest earning

Opportunities (O)

1. (O.1) EVA popularity – Broad appeal of comfortable EVA shoes results in large markets with strong customer interest in many international markets (Tech.O1)

2. (O.2) Inexpensive labour available in China and Mexico which allow HS to increase profits (Empl.O1)

3. (O.3) Changing consumer tastes – Could result in increased demand for HS/EVA products (Socio.OT2)

SO Strategies

(SO.1) Differentiation via quality by leveraging high quality products and manufacturing, as well as superior customer service in order to take advantage of EVA popularity and potential changing consumer tastes (as it is assumed consumers will always value quality) (S.1,2,4 – O.1,3)

(SO.2) Cost strategy to lower prices while utilising inexpensive labour to expand manufacturing into Mexico and increase ability to provide products that appeal to potential changes in consumer tastes (S.1,2 – O.2,3)

WO strategies

(WO.1) Cost strategy to reduce prices by improving inventory management and A/R balances, while taking advantage of inexpensive Mexican production which could allow HS to take immediate action if any changes in consumer taste (W.1,2,4 – O.2,3)

(WO.2) Differentiation based on quality - Hire inexpensive labour to take pressure off management which should allow HS hire specialized management and take advantage of their skills in order to improve quality (W.3 – O.2)

Threats (T)

1. (T.1) Lack of patent protection in China which may result in stolen intellectual property and increased competition (Legal.T3)

2. (T.2) Increased competition in clog style shoe market which can negatively affect HS market share and profits (Socio.T1)

3. (T.3) Changing consumer tastes which may result in decreased sales of HS products (Socio.OT2)

4. (T.4) Depreciation of $US in Europe and Japan which results in reduced earnings in these locations (Econ T.4)

ST Strategies

(ST.1) Differentiation via quality by providing high quality products and using quality manufacturing, and customer service expertise to combat increased competition, intellectual property theft (via brand reputation for quality) and potential changes in consumer taste (again assumed consumers will always value quality) (S.1,2,4 – T.2,3)

(ST.2) Cost strategy - Reducing prices by utilizing LPI subsidiary and adjusting currency to counteract depreciation of $US, which would enable HS to maintain profits (S.1,2 – T.2,3)

WT Strategies

(WT.1) Cost strategy to reduce prices by decreasing inventory management issues and lowering inventory costs while adapting to changing consumer tastes and mitigating global competition and Chines patent issues (W.1,2 – T.1,2,3)

(WT.2) Differentiation based on quality by increasing specialised employees, who will help to reduce A/R, switch currencies in Europe/Japan and investigate the possibility of reducing shipping times from China (W.3,4 – T.,4)

Chosen StrategyGiven Holey Soles high quality: high quality manufacturing capabilities, customer service relations, strong business units, valuable relationship with Chinese manufacturers, the popularity of EVA products and inexpensive labour available in China it is recommended that Holey Soles pursue a differentiation strategy based on quality. This will involve developing high quality, innovative products using proprietary (EVA) technologies and leveraging current strengths: customer service, inexpensive manufacturing and supplier relations to overcome industry risks such as, competitive international markets, negative economic realities (high Canadian taxes and depreciation of $US currency in Europe and Japan) and evolving consumer demands.

GE Model

Industry AttractivenessBusiness Strengths

Criteria Rating Applied Criteria Rating Applied

Market size and growth rate 4.5 5 Relative market share 3 4.5

Industry profit margins 3 3 Profit margins 3 2.5

Competitive intensity 2 4Ability to compete on price and quality

Seasonality 2 2Knowledge of customer and market

Cyclicality 3 4Competitive strengths and weaknesses

Economies of scale 3 4 Technological capability 4.5 4.5

Technology 4 5 Caliber of management 4 4

Social, environmental, legal, and human impacts

Holey Soles should differentiate through quality, which would allow Holey Soles to continue its profitable international expansion. Currently, the shoe market is far from saturation and is virtually untouched in many other countries. The company can take advantage of rapidly growing markets while pursuing the strategy of differentiation through because this will send out the right message to consumers. When people have a positive experience with a qualitative product, they are more likely to buy that product or service again. Also, higher quality brings new and greater functionality, thus boosting the reputation of the company in the highly competitive industry. If the suggested strategy of differentiation through quality is successfully implemented, it will lead to substantial increasing market share which means higher demand for Holey Soles products, so that the company can also enjoy economies of scale. In addition, the suggested strategy supports the company’s global expansion plan which helps extending the product life cycle so that it might minimize the risk of cyclicality of the product and cannibalization effect.

Porter's Five Forces AnalysisPower of Buyers (Risk Before: 3.5/5) (Risk After: 2.5/5)- Increasing product innovation is resulting in more and more varieties of shoes becoming available, for an increasing range of activities.- Internet - Shopping and purchasing can be done online. This process is quick and easy for buyers to shop around, checking the prices and products available from all companies. A high quality, innovative product will overcome the threat of price-cutting.

Therefore, differentiation through quality will provide Holey Soles with a competitive advantage both in retail and online.

Power of Suppliers (Risk Before: 3/5) (Risk After: 2.5/5)- Demand is intermittent, so supply needs to be flexible. This is difficult and costly to maintain, as inventories need to be purchased and stored. Customers will see heightened customer service, as they will never be without product to purchase.

Therefore, differentiation through high quality will minimize the power of suppliers.

Threat of New Entrants (Risk Before: 3/5) (Risk After: 2/5)- High barriers to entry, due to the sizable initial investment needed to establish a production facility. Expensive and specialized machines used in operation, high level of technical expertise needed in operating them.- Intellectual property rights and patents provide for a barrier in entering the market. New companies will be subject to the threat of lawsuits.

Therefore, a product line of high-quality shoes will increase the entry barriers of new firms.

Threat of Substitutes (Risk Before: 4/5) (Risk After: 3/5)- Traditional shoes/footwear will always be a substitute. Creating specific uses for the clogs (as gardening shoes, beach shoes, etc) will reduce the threat of substitutes.-Durability will be important in these niche shoe roles. High quality will be essential to proving the shoes useful in many situations.

Therefore, differentiation through high-quality products and great customer service will lower the threat of substitutes.

Competitive Rivalry (Risk Before: 4/5) (Risk After: 3/5)- Very little difference in the available products. Product variations provide an edge, but the product is still very similar.

- Quality is varying; some products are built to last while others are cheap imitations.- Brand awareness is limited in some firms and very strong in others. This is a significant threat.

Therefore, differentiation through high-quality will target competitive rivalry and the risk of poor brand awareness.

All the detailed scorings are available in the appendix 2.

Business Environment Analysis ModelDemandNeeds and preferences: Holey Soles, as one of the largest footwear manufactures in Canada, has millions of clients worldwide. To better serve them, the firm has to forecast the future needs and preferences of its clients. In the future, there will be higher demand for clogs in the developed countries around the Globe due to increased environmental awareness.

Timing of market development: Being one of the leaders in the market, Hole Soles will continue to hold a significant share of the market. The market for clogs will be growing over the next years due to economic development around the world.

Customer bargaining power: The clients of Holey Soles will continue to have a lot of bargaining power due to a high level of competition in the market and low switching costs. The firm will have to attract more new clients and by making their products one of the most qualitative in the market.

Therefore, Differentiation through quality will allow the firm to meet the demand and preferences of its customers in the future. Also, the suggested strategy of differentiation through quality will result in lower bargaining power of buyers.

SupplyTechnology: New technologies in the footwear industry are a key success factor of the development of Holey Soles. In the future, more advanced technologies will be used throughout the industry in order to increase sales.Supplier competence and bargaining power: Suppliers will continue to have moderate bargaining power. However, more technologically advanced production facilities will be required in the future.

Competition for people: Operating in the footwear industry, Holey Soles will have to invest a lot of money in human resources development and compensation to keep its leading position in the market. By doing so, the company will be able to keep its current employees and attract the best talents available in the industry.

Therefore, the suggested strategy of differentiation through providing highly qualitative products will result in the most advanced technologies being used by Holey Soles, lower supplier bargaining power due to higher demand for the products of Holey Soles, and better prepared personnel.

CompetitionIntense industry rivalry: The level of competition will continue to be high in the future. Also, the firms will be competing on quality and technological advancement.

Ease of entry: As the footwear industry is relatively accessible for new entrants, more new companies are expected to enter the market in the future.

Therefore, the suggested strategy of differentiation through quality will take the above factors into account and will allow Holey Soles to create a competitive advantage in the future.

GovernmentGovernment support: In Canada, some government support such as grants and tax credits will be available for technologically-advanced companies. The Canadian Government will continue to motivate companies around the country to use greener technologies.

Government regulations: The footwear industry will continue to be easily regulated by the government.

Therefore, the suggested strategy of differentiation through quality will take the above factors into consideration and will require Holey Soles to continually upgrade the technologies used in production to achieve better quality. As a result, the firm will be able to qualify for government grants and tax credits by applying the latest technologies at all steps of the value chain.

Stakeholder Map

Priority Targets

Technology Gap

Area of Concern

Current Situation Required Situation Situational GapFilling the Gaps:

Tactics and Risks

Specialized tech-nology and manu-facturing tech-niques

Keep investing money and time on R&D to appeal to consumer taste

More time and efforts

TG1: Conduct market research to keep up with market trends and con-sumer taste to enhance brand

TG2: Encourage design consultants to come up with creative design ideas to stay positive brand by providing high quality product and service offer-ings

TrainingAnnual perfor-mance appraisal

Expertise in knowledge of consumer wants and needs to build positive brand image

Lack of training programs

TG3: Expand current training program to enhance knowledge of consumers’ wants and needs

MarketingNot sufficiently strong brand recognition

Establish brand image of high quality, and fash-ionable products and service of-ferings

Knowledge of consumer taste

Required many types of mar-keting activities

TG4: Launch a social media campaign to maximize the viral marketing effect of current high quality product and service (word-of-mouth)

TG5: Create customer service excellence training programs

Organization Gap

Activity / Area

Current Advantages

Required Advantages

Advantage Gaps Fill the Gap

Vision and Mission

Encouraging the sharing of new ideas by providing positive feedback and by acknowledging and rewarding superior performance

Facilitating the implementation of its organizational vision and mission

Creation of positive and comfortable work environment to foster employee’s creativity

OG1: Build an open communication to provide high quality service to customers

Recruiting and Hiring

Contracted design, marketing and sale consultants

More number of experts to foster high quality product and service

Required successful recruitment and selection

OG2: Establish clear recruitment and selection policy and practices to gain qualified talents to provide high quality service offerings

Culture

Building a healthy, happy and productive environment which creates a positive experience for staff and customers alike

Fostering environment that employees are motivated to enhance customer service and quality of product

Not clear

OG3: Create incentive offerings to keep employees motivated to enhance quality of product and service offerings

OG4: Develop a strategic plan that’s understood and embraced by all level of the organization to enhance quality of customer offerings and product

Staffing

Contracted experienced design, marketing and sale consultants

Retaining qualified people to keep providing high quality product and service

Required employee retention strategy to enhance quality of product and service

OG5: Create open communication between employees and management to keep providing high quality product and service

OG6: Conduct “exit interview” to learn why employees are leaving to retain experts for further high quality service and product

People Gap

People Issue Current Required GapsRequired Change

Tactics and Risks

Investors Unknown

Increased revenues and market share by high quality product and service

Increased market share by taking customers from competitors

PG1: Conduct market research to understand consumer’s taste as well as competitor’s move to provide higher quality product and service offerings

Buyers, Customers

Relatively high satisfaction on current product

Expecting higher quality product and good customer service

Offering customer-focused product

Providing high level of customer service

PG2: Conduct a market research to find consumer’s taste and market trends

PG3: Develop employee training program to foster better customer service

Management / staff

One wearing multiple hats

Need more and more specialists with great depth in each area

Recruiting high quality people with large company experience to develop product and service offerings

PG4: Establish clear recruitment and selection policy and practices to gain qualified talents to provide high quality service offerings

PG5: Create open communication between employees and management to keep providing high quality product and service

Changing the Deal by Denise Rousseau

Denise Rousseau, a professor at Carnegie Mellon University, has developed a four-step process of changing psychological contracts in organizations (CMU, 2013). According to Rousseau, when a firm requires higher contributions from its employees in order to improve the quality of products, psychological contracts between the workers and the firm need to be changed (Jick et al., 2010, p.298).

At Holey Soles, we can see a need for a change towards more qualitative products in order to pursue the strategy of differentiation through quality (Beamish, 2012). The suggested strategy will allow the firm to achieve its goal of $40 million in sales in two years; consequently, contracts between Holey Soles and its employees need to be changed in order to achieve the goal. Below are the suggested tactics the management team should apply in order to pursue the strategy of differentiation through quality at Holey Soles.

Current Situation Goals Tactics

Step 1: Challenging the old contracts

Old contacts are in place

Educate employees about the benefits of new contacts

(R1) Provide new information on better production techniques that will result in quality improvement

Step 2: Preparation for change

Employees are educated about new contracts

Make employees believe in positive changes coming with new contracts

(R2) Create a transitional team that will be responsible for changing the contracts in order to pursue the strategy of differentiation through quality

Step 3: Contract Generation

Employees are forced to enter new contracts

Make employees publicly commit to new contracts

(R3) End old contracts and make key employees sign new contacts in order to implement the strategy of differentiation through quality.

(R4) Make employees publicly commit to new contracts that will allow Holey Soles to improve the quality of products.

Step 4: Living the new contract

Employees are have changed their professional attitude towards concentration on quality

Make required changes to HR practices in order to facilitate new contracts aimed at quality improvement

(R5) Align HR practises with new contacts by adding more quality dimensions into employee performance evaluation

As a result, the personnel of Holey Soles will be able to achieve company’s goals by committing to the suggested strategy of differentiation through quality that will allow Holey Soles to attain its goal of $40 million in sales in two years.

The Ten Commandments by Todd Jick

Almost every change plan faces pitfalls during the implementation process. According to Jick, a professor at the Harvard Business School, the most common pitfalls are: lack of coordination, insufficient training and explanation of the process, lack of management capabilities, and uncontrollable factors (Jick et al., 2010, p.213). In order to avoid pitfalls on the way of implementing the strategy of differentiation through quality, the managers of Holey Soles must follow the ten-step plan, the “Ten Commandments” created by Todd Jick.

As Holey Soles requires going through several changes in order to achieve its goal of $40 million in sales in two years by implementing the chosen strategy, we have come up with several tactics the management team of the firm should pursue during each of the steps:

1. Analyze the environment and determine the direction change must take:Show visible payoff in order to improve quality (This tactic is already taken care of in the Rousseau Model)2. Create shared vision and common direction:Explain expected benefits to make people understand what are the benefits of the suggested strategyUnite organization behind a central vision of quality improvement (These tactics are already taken care of in the Rousseau Model)3. Separate from the past:Reinforce positives from the past in order to bring efficient production techniques into the future to achieve better quality (Taken care of in the Rousseau Model)4. Create a sense of urgency: (10C 1) Avoid a downturn in quality during the implementation change by continually training the staff5. Leader role:(10C 2) Choose a leader that will inspire the change for a more qualitative products being made by Holey Soles6. Line up political sponsorship:(10C 3) Get support of a change for better quality in the organization(10C 4) Develop a commitment plan to pursue the strategy of differentiation through quality(10C 5) Create quality tests for suppliers in order to increase the percentage of defected products supplied to company’s manufacturing facilitiesMake required employees commit to a change (Taken care of on the Rousseau Model)

Key Players No Commitment Let it Happen Help it Happen Make it Happen

A) Owners OX

B) Management O X

C) Employees X O

D) Suppliers X O

E) Customers O

F) Environment OX

G) Government OX

H) Competitors O X

In the chart above, O stands for minimum commitment required for a change and X stands for a current position on the map.

7. Craft an implementation plan:Provide a detailed plan of implementation the strategy of differentiation through customer service (This tactic is already taken care of in the Rousseau Model)8. Develop enabling structures:Create new mechanisms for implementation of the differentiation through quality strategy (Taken care of on the Rousseau Model)(10C 6) Organize pilot-tests, off-site workshops in order to improve the quality of products9. Involve people in the change process:Explain evaluation criterion for quality standardsIntroduce the implementation team of managers (These tactics are already taken care of in the Rousseau Model)10. Reinforce and institutionalize the change:(10C 7) Create a culture committed to highly qualitative products to implement the chosen strategyThus, the suggested above tactics will complement the tactics proposed in the Rousseau Model and will allow Holey Soles to achieve its goal of $40 million in sales in two years by implementing the strategy of differentiation through quality.

Frame Bending

Based on the theory of Nadler and Tushman, by comparing the scope of the changes, changes are considered in two dimensions, incremental changes and strategic changes, in which incremental changes focus on individual components, but strategic changes address the organization as a whole. By considering the positioning of the changes in relation to external events, changes are categorized as reactive changes and anticipatory. Reactive changes are the changes that in response to an external threat or opportunity, where anticipatory changes are the changes that in anticipation of external events. For Holey Soles, as the company’s strategy is differentiation through quality, while in anticipation of relative external events, the company’s change will be incremental and anticipatory.

The image below is to show the relationship between the two dimensions. Tuning means incremental changes that are in anticipation of external events, which is seeking increases in efficiency. Changes in adaptation class also mean incremental changes, but they are made in response to external events because of competition, new markets or new technology. The next two classes are all strategic changes, reorientation changes emphasize the continuity of the past in order to bring changes without breaking the existing organization frame. However, re-creation changes require drastic shifts in senior leadership, values, strategy, culture and so on, which is also called frame-breaking changes. As discussed before, Holey Soles is in tuning stage.

The image below classified types of change in terms of their intensity, which relates to the severity of the change. As shown in the image that strategic changes are more intense than incremental changes because they cannot be implemented without altering organization’s fundamental management.

Relative Intensity of Different Types of Change

Furthermore, the relative intensity is also affected by organizational complexity. The more complex Holey Soles is, the more difficult it is to make organizational changes. As the level of

organizational complexity is getting higher, the level of intensity of change is also getting higher, which means it will be harder to implement a change in a highly complex company. It is relatively hard for Holey Soles to make organizational changes because it is a company that is operating worldwide, with various suppliers and customers in different countries.

Lastly, the experts also identified four “model” of frame bending with different principles associated with each model to further describe how the changes are implemented. The image below shows the process of achieving organizational changes and also the relationship between the models and principles.

Principles of Effective Frame Bending

Initiating Change

a. Diagnose the current strategyNT1: Holey Soles should collect and analyze data frequently, increase marketing research effort to monitor the implementation of the strategy, differentiation through quality, and be aware of other company’s mimic strategy.

b. Create a new visionNT2: Holey Soles should reevaluating company’s value, goal, performance objectives to ensure employers and employees are on the same page, which will help maintain a healthy operation system.

c. Energy for making changes

NT3: Holey Soles should communicate with all the stakeholders to gain energy for urgency and commitment in order to face the threats in the market, that competitor such as Crocs is better quality products for the customers.

Content of Change

a. Better connection for centralityNT4: Increase communications between different departments within Holey Soles. Senior management should be better connected to other departments to be informed of company operation. Decisions should be concentrated on differentiation through better quality products.

b. Create themes for employeesNT5: Management team should communicate with each other and conceptualize changes in better understanding of how to differentiate the company through quality, so they can encourage the employees to be energized.

Leading Change

a. Leading the future directionNT6: Leaders of Holey Soles should create a clear vision of Holey Soles implementing the differentiation though quality strategy, and rebuild its internal reward and punishment system to encourage motivated employees. Also the leaders of the company should be able to create sense of urgency and lead the direction of the changes.

b. Beyond the Magic LeaderNT7: Leaders of Holey Soles should pay attention on management control to ensure quality of the products, while expanding leadership through the development and involvement of senior management in order to develop leadership through organization to better monitor the quality of the products.

Achieving Change

a. Planning for better opportunitiesNT8: Planning is necessary before implementing differentiation through quality strategy. Unforeseen events should be in anticipation because each event may represent an opportunity, such as better technology can be used for producing better quality products.

b. Ready for changes

NT9: Holey Soles should be able to adjust its infrastructure to be able to produce better quality products, and also need to address the crucial factors, such as standards and measures of performance, rewards and incentives, planning process, budgeting and resource allocation methods and also information systems, which should all support the differentiation through quality strategy.

c. Investments and ReturnsNT10: Company should encourage SmartCel and SoleTek and other new technologies to be used into its products to provide better quality products so that Holey Soles is able to compete with strong competitors in the different markets. Leadership should also involve in the system to ensure implementation of the strategy.

The Marconi Change Curve

There are four main stages to change within an organization. For Holey Soles, there is emphasis on the development and growth of the organization. This kind of emphasis on growth almost always involves a shift in the organization’s structure, values or culture. With the company looking to turn generalists into experts, or sourcing experts from outside the organization, there is usually a cause for concern amongst its people.

Below is an image of the four stages of change and what a change curve looks like. After a brief description of each stage of the Change Curve we will introduce a tactic. The primary purpose of a change curve is not to eliminate the negative stages (Stage 1 and 2) of the curve, but to understand and be aware that minimizing the impact and length of time of negative stages will reduce negative consequences.

Stage 1 - Denial

At this stage, people may be in shock or in denial. Even if the change has been well planned and it is understood what is happening, this is when reality of the change hits, and people need to take time to adjust. Here, people need information, need to understand what is happening, and need to know how to get help. This is a critical stage for communication, communicate often, but don't overwhelm. People must know where to go for more information if they need it, and answer any questions that come up.

MC1 – Hold open meetings on a weekly basis to inform staff of any updates or information. Also use these weekly meetings to answer any questions staff may have for the company executives. These meetings should also reinforce Holey Soles’ new strategy of differentiation based on quality product and service offerings.

Stage 2 - Resistance

As people start to react to the change, they may start to feel concern, anger, resentment or fear.They may resist the change actively or passively. They may feel the need to express their feelings and concerns, and vent their anger. For the organization, this stage is the "danger zone." If this stage is badly managed, the organization may descend into crisis or chaos. Issues people have must be addressed early with clear communication and support, and by taking action to minimize and mitigate the problems that people will experience.

MC2 – This stage needs careful planning and preparation. Management must prepare by carefully considering the impacts and objections that people may have with a new differentiation strategy based on quality product and service offerings. As the reaction to change is very personal and can be emotional, it is often impossible to pre-empt everything, during this stage it is critical to listen and watch carefully so an organization can respond to the unexpected.

Stage 3 - Acceptance

This is the turning point for individuals and for the organization. Once the corner is turned to stage 3, the organization starts to come out of the danger zone, and is on the way to making a success of the changes. Individually, as people's acceptance grows, they'll need to test and explore what the change means. They will do this more easily if they are helped and supported to do so, even if this is a simple matter of allowing enough time for them to do so. It is important to lay good foundations for this stage by making sure that people are well trained, and are given early opportunities to experience what the changes will bring. This stage is vital for learning and acceptance, and it takes time.

MC3 – During this vital stage management must ensure staff are properly trained and given time to accept and explore new ways of working with a new strategy of differentiation based on

quality product and service offerings. A tactic for this stage is to offer staff contingency time so they can learn and explore without excessive pressure.

Stage 4 – Commitment

Here we finally start to see the benefits and results. This is where the changes start to become second nature, and people embrace the improvements to the way they work. The organization starts to become productive and efficient, and the positive effects of change become apparent.

MC4 – At this final stage, it is important to celebrate success. The journey to this new strategy of differentiation based on quality product and service offerings may have been rocky, and it will have certainly been at least a little uncomfortable for some people involved: Everyone deserves to share the success. By celebrating an achievement, Holey Soles can establish a track record of success: Which will make things easier the next time change is needed. Tactics include a beer and pizza night after reaching a critical milestone such as reaching our quality targets or launching a new product.

Six Steps to Effective ChangeBeer, Spector, and Eisenstat

In order to implement effective change in an organization an alternative should be sought to a standardized, top-down change program. These formal change programs have proven, in many cases, to be much too general, having no connection to the employees who are expected to carry out the change.

The solution posed by these experts is to follow their six steps to effective change, which will reinforce cycles of employee commitment, coordination, and competence. This is named the "critical path".

1. Mobilize commitment to change through joint diagnosis of business problems: have all employees take part in identifying the issues of what is wrong and what can and must be improved. This creates commitment to begin the change process. The results of this session will be up to the employees, but it will likely identify the issue of poor brand awareness, compared to Crocs.

2. Develop a shared vision of how to organize and manage for competitiveness: developing a shared vision will provide the employees with a solid understanding of why they are doing what they are doing. The change isn't happening for the fun of it, it is being done to overcome the business problem. Here a core group agrees on the analysis of a problem. The group would likely

identify that the issue is caused by customers not being aware of the high quality and innovative products offered by HS.

3. Foster consensus for the new vision, competence to enact it, and cohesion to move it along: having a clear understanding of the new vision will allow the employees to best understand why they need to learn new skills, restructure, etc. This is the opportunity to replace employees who are unwilling to change. They can either be transferred within the company or fired. The employees would need to ensure that everyone in the organization was capable of delivering high quality and innovative products, great customer service, and efficient supply, which will be essential to strengthening the brand name.

4. Spread revitalization to all departments without pushing it from the top: each individual employee will inspire the change. It will be wanted, rather than ordered. Each department of the organization will need to undergo change, finding its own way to function in the new organization. Each employee will understand that they are striving for the highest quality and constant innovation in order to accomplish a strengthened brand name, not just because their boss has told them to.

5. Institutionalize revitalization through formal policies, systems, and structures: at this point, standardization will be simple and pain free due to the fact that the change is already adopted. But these new processes must become entrenched. The behaviors that have become adopted in order to accomplish this change will now become the rules and guidelines for the future employees who won't have the understanding of the thought process that led to it.

6. Monitor and adjust strategies in response to problems in the revitalization process: there will inevitably be things that haven't had a lasting or deep impact on the employees and this is where these misses need to be acknowledged and corrected. This will be completely subjective to any issues that arise during the process.

The change at Holey Soles will involve all of these six steps, used to achieve the business problems that have been identified through the brainstorming session. Ideally, the business problems that the employees come up with would be on par with the problem statement of this report. These issues would be similar to customer service, providing high quality products, constant innovation, and building brand awareness.

In order to effectively implement and carry out this program, the following tactics should be utilized.

BSE1: Designate a few employees to run this program. Select a group of employees who possess significant respect and influence within the company, but are not managers. Have them follow the 6-steps.

BSE2: Create a system for approving and carrying out the ideas generated within the meeting. Monitoring and evaluating will be essential.

BSE3: Strengthen the brand image, through marketing, to reflect the high level of quality at Holey-Soles.

BSE4: Remove, replace, or fire employees who aren't cohesive with the new strategy.

The Sawhney and Wolcott Model

The 12 Different Ways for Companies to Innovate was developed by Mohanbir Sawhney, Robert C. Wolcott and Inigo Arroniz. Companies with a restricted view of innovation can miss opportunities and the "innovation radar" framework helps avoid that. Given that our chosen strategy is differentiation based on quality product and service offerings, we have used Sawhney and Wolcott’s 12 Ways to Innovate to identify shortfall areas by using a benchmark comparison against Holey Soles’ competitors. The main shortfall areas are Presence, Networking and Brand.

The first shortfall area is Presence. Holey Soles must create innovative points of presence for their products. This will allow them to build the brand by highlighting the high quality products and services they offer while also encouraging and supporting the company’s growth. These

points of presence may include new distribution channels, increasing the number of retail establishments where the products can be bought, and increasing the web presence of Holey Soles.

SW1: Holey Soles must increase its points of contact and presence with customers to follow the differentiation strategy based on quality product and service offerings. Holey Soles should start a mobile sales team to promote the Holey Soles quality in high-growth regions at places of employment that suit their high quality product offerings. These places may include hospitals, airports, and food and beverage establishments.

Another shortfall area is Networking. Holey Soles must work closely with retailers to pick up on new customer trends, get product feedback and develop new high quality product ideas based on customer needs. This follows our strategy in terms of quality product and service offerings which helps build the Holey Soles brand.

SW2: Have front-line sales staff survey and question retailers to encourage feedback as well as criticisms for the company and its products at the retail level – concentrating on product quality. Ensure that retail customers understand the importance of useful feedback in developing quality product and service offerings the Holey Soles brand is known for.

The last shortfall area is Brand. Currently, Holey Soles has relatively weak brand awareness, they were the first to introduce EVA-molded footwear that has unparalleled comfort yet no one knows about them. Holey Soles must develop their brand name and commitment to quality so they can leverage it into new domains to support company growth on an international level.

SW3: Change the name of Holey Soles’ footwear products to a one-syllable word to promote the brand. We want people to refer to high quality EVA molded shoes not by our competitors’ names, but by ours.

Beatty and Ulrich Model

In order to differentiate itself through quality, Holey Soles should instill a customer perspective and concentrating on customer demands, which can provide Holey Soles feedback on products and services to ensure best quality products and services. Also, Holey Soles should increase its capacity for changes, alternating hardware and software within the organization’s system, and creating empowered employees who can act as leaders at all levels of the organization. By doing this, Holey Soles is able to utilize all the resources to achieve differentiation through quality strategy.

Restructuring

o Courage to make changes fairly and boldly to ensure better quality

BU1: Reduce number of employees that are unnecessary in North America, or increase use of local employees in the local markets in different countries that Holey Soles is currently operating to take advantage of skilled employees, which will help Holey Soles improve employee quality.

Bureaucracy Bashingo Get rid of unnecessary work activities so that employees can concentrate more on quality

of the works

BU2: Re-evaluating work activities that are currently happening within the company in order to get rid of ineffective activities to improve the quality of the work activities.

BU3: Reduce interactions with various agents from different places in regards to the customers, by doing so, Holey Soles can ensure good quality customer service.

Employee Empowerment Stageo Removing barriers between employees and managers to build openness in the ongoing

management process to change the nature of the organization to quality orientated

BU4: Add more communication channels for customer service so customers can interact with the company directly, which will also help Holey Soles gain more customer data so that it helps improving quality of the products and services.

Continuous Improvementso Error detection and prevention should be used for continuous improvements in order to

achieve differentiation through quality strategy

BU5: Ensure manufacturers produce products by using best quality materials and technology. Production process should be monitored to detect errors to ensure best quality products are provided to agents and customers worldwide.

Cultural Changeo Employees should be motivated with enthusiasm and commitment of the new strategy.

Motivated employees can provide quality works for Holey Soles, which help implement differentiation through quality strategy.

BU6: Strategy change is the hardest part to implement as the employees have accepted the old company strategy. Leadership of the company should lead the employees to better understand the differentiation through quality strategy. And they should also encourage employees to make

changes to be better implement quality concept into their daily work routine to ensure quality works.

Charlotte Beers

Good Beers dismissed a top level executive who had failed to instigate necessary changes, which is necessary to ensure quality management team of the company

Beers and her senior team worked relentlessly to spread the message of brand stewardship throughout the agencies. By the end of the year, they had identified several issues that they felt required immediate attention. It is method for detecting errors within the organization, which will help improve the quality of the organization’s operation

Bad As clients demanded lower costs and greater service, Ogilvy & Mather like many large agencies at the time was slow to make adjustments. It is bad because slow changing will cause worse problems later on.

There was a lack of financial discipline, a lack of focus on cost, and a lack of structured decision-making on business issues. Therefore, quality of the work is a big problem.

TacticCB1: Holey Soles should create an evaluation system that frequently check employees’ performance, and to analyse and discuss potential business risks to make sure that all the

company’s members are providing best quality performance. Holey Soles should also monitor the customers’ demand among different markets, and do not afraid of providing better quality innovation products for the customers.

Good4 questions (and multiple sub questions) to detect business strategy (Holey Soles - differentiation via quality) decay. Replication – Is our strategy losing its distinctiveness?Supplantation – Is our strategy in danger of being superseded?Exhaustion – Is our strategy reaching the point of exhaustion?Evisceration – Is increasing customer power eviscerating our margins?

BadManagers withholding funds from other business units or areas for fear of losing capital.

Conquering Denial – A belated recognition of changing circumstances, which can postpone the work of renewal. Lack of preparation for “unexpected” shocks.

TacticHamel 1: Holey Soles should create a business/strategy evaluation team that periodically meets to analyze and discuss potential business shocks, current strategy and resource management. It is suggested that this team meet once per month, with the option to increase meeting frequency if required.

Seagram’s Values

GoodCrisis management ability - The company’s top management recognized its challenges they faced and coped with the need for strategic repositioning and a redefinition of the company’s competitive advantage quickly.

Communication plan (a personalized communication cascade) – It ensures all employees to understand the company’s values so that employees can rapidly adapt to the new company culture which helps overcoming current challenges.

360 degree feedback – the company is able to clarify and communicate organizational values by allowing lower-level managers and employees to provide feedback without the fear of retribution.

TacticSV1: create an open communication environment to foster a feedback without the fear of retribution for a high level of customer service to make sure better quality.

Marconi PLC

GoodParton moved quickly with a short term action plan: to sell multiple non-core competencies, make necessary job cuts and pare Marconi down to its core competencies.

Goal to “stop living for the next quarter” and to develop a long term strategy.

Effort to encourage “100% commitment” from team and management. “If you are not with me, come to me and I will help you exit the building. Demonstrating Partons commitment to a cohesive organization.

BadTried to be an “end to end” supplier, wanting to be present in all segments of the market. Almost trying to be everything for everyone.

Some middle managers didn’t feel responsible for moving the company forward and thought they could just keep to the status quo and essentially ignore the problem.

Lack of communication and clear organizational structure in regards to change process, resulting in management confusion.

TacticPLC 1: Holey Soles should identify core competencies and utilise these strengths to implement long term strategic grows with full engagement from management and clear organizational communication between individuals and business units.

Implementation

Priority 1: Assess internal environment and successfully implement internal changes, which will allow for the implementation of quality differentiation strategy.Objective: To ensure employee cooperation and reduce resistance to internal changes stemming from strategic reorganization.Timeframe: Immediate implementation, reevaluate every 6 monthsTarget: Initial implementation by management, with staff supportTactics:TG3: Expand current training program to enhance knowledge of consumers’ wants and needsTG5: Create customer service excellence training programs OG2: Establish clear recruitment and selection policy and practices to gain qualified talents to provide high quality service offeringsOG3: Create incentive offerings to keep employees motivated to enhance quality of product and service offeringsOG4: Develop a strategic plan that’s understood and embraced by all level of the organization to enhance quality of customer offerings and productOG5: Create open communication between employees and management to keep providing high quality product and serviceOG6: Conduct “exit interview” to learn why employees are leaving to retain experts for further high quality service and productPG3: Develop employee training program to foster better customer servicePG4: Establish clear recruitment and selection policy and practices to gain qualified talents to provide high quality service offeringsPG5: Create open communication between employees and management to keep providing high quality product and service(R2): Create a transitional team that will be responsible for changing the contracts in order to pursue the strategy of differentiation through quality(R3): End old contracts and make key employees sign new contacts in order to implement the strategy of differentiation through quality.(R4): Make employees publicly commit to new contracts that will allow Holey Soles to improve the quality of products.(R5): Align HR practices with new contacts by adding more quality dimensions into employee performance evaluation(10C 1): Avoid a downturn in quality during the implementation change by continually training the staff(10C 2): Choose a leader that will inspire the change for a more qualitative products being made by Holey Soles(10C 3): Get support of a change for better quality in the organization(10C 7): Create a culture committed to highly qualitative products to implement the chosen strategy

NT1: Holey Soles should collect and analyze data frequently, increase marketing research effort to monitor the implementation of the strategy, differentiation through quality, and be aware of other company’s mimic strategy.NT2: Holey Soles should reevaluating company’s value, goal, performance objectives to ensure employers and employees are on the same page, which will help maintain a healthy operation system.NT3: Holey Soles should communicate with all the stakeholders to gain energy for urgency and commitment in order to face the threats in the market, that competitor such as Crocs is better quality products for the customers.NT4: Increase communications between different departments within Holey Soles. Senior management should be better connected to other departments to be informed of company operation. Decisions should be concentrated on differentiation through better quality products.NT5: Management team should communicate with each other and conceptualize changes in better understanding of how to differentiate the company through quality, so they can encourage the employees to be energized.NT6: Leaders of Holey Soles should create a clear vision of Holey Soles implementing the differentiation though quality strategy, and rebuild its internal reward and punishment system to encourage motivated employees. Also the leaders of the company should be able to create sense of urgency and lead the direction of the changes.NT7: Leaders of Holey Soles should pay attention on management control to ensure quality of the products, while expanding leadership through the development and involvement of senior management in order to develop leadership through organization to better monitor the quality of the products.NT8: Planning is necessary before implementing differentiation through quality strategy. Unforeseen events should be in anticipation because each event may represent an opportunity, such as better technology can be used for producing better quality products.NT9: Holey Soles should be able to adjust its infrastructure to be able to produce better quality products, and also need to address the crucial factors, such as standards and measures of performance, rewards and incentives, planning process, budgeting and resource allocation methods and also information systems, which should all support the differentiation through quality strategy.MC1: Hold open meetings on a weekly basis to inform staff of any updates or information. Also use these weekly meetings to answer any questions staff may have for the company executives. These meetings should also reinforce Holey Soles’ new strategy of differentiation based on quality product and service offerings.MC2: This stage needs careful planning and preparation. Management must prepare by carefully considering the impacts and objections that people may have with a new differentiation strategy based on quality product and service offerings. As the reaction to change is very personal and can be emotional, it is often impossible to pre-empt everything, during this stage it is critical to listen and watch carefully so an organization can respond to the unexpected.

MC3: During this vital stage management must ensure staff are properly trained and given time to accept and explore new ways of working with a new strategy of differentiation based on quality product and service offerings. A tactic for this stage is to offer staff contingency time so they can learn and explore without excessive pressure.MC4: At this final stage, it is important to celebrate success. The journey to this new strategy of differentiation based on quality product and service offerings may have been rocky, and it will have certainly been at least a little uncomfortable for some people involved: Everyone deserves to share the success. By celebrating an achievement, Holey Soles can establish a track record of success: Which will make things easier the next time change is needed. Tactics include a beer and pizza night after reaching a critical milestone such as reaching our quality targets or launching a new product.BSE1: Designate a few employees to run six-step program. Select a group of employees who possess significant respect and influence within the company, but are not managers. Have them follow the 6-steps. BSE2: Create a system for approving and carrying out the ideas generated within the meeting. Monitoring and evaluating will be essential. BSE4: Remove, replace, or fire employees who aren't cohesive with the new strategy.BU1: Reduce number of employees that are unnecessary in North America, or increase use of local employees in the local markets in different countries that Holey Soles is currently operating to take advantage of skilled employees, which will help Holey Soles improve employee quality.BU2: Re-evaluating work activities that are currently happening within the company in order to get rid of ineffective activities to improve the quality of the work activities.BU3: Reduce interactions with various agents from different places in regards to the customers, by doing so, Holey Soles can ensure good quality customer service.BU6: Strategy change is the hardest part to implement as the employees have accepted the old company strategy. Leadership of the company should lead the employees to better understand the differentiation through quality strategy. And they should also encourage employees to make changes to be better implement quality concept into their daily work routine to ensure quality works.CB1: Holey Soles should create an evaluation system that frequently check employees’ performance, and to analyse and discuss potential business risks to make sure that all the company’s members are providing best quality performance. Holey Soles should also monitor the customers’ demand among different markets, and do not afraid of providing better quality innovation products for the customers.Hamel1: Holey Soles should create a business/strategy evaluation team that periodically meets to analyze and discuss potential business shocks, current strategy and resource management. It is suggested that this team meet once per month, with the option to increase meeting frequency if required.SV1: create an open communication environment to foster a feedback without the fear of retribution for a high level of customer service to make sure better quality.

PLC1: Holey Soles should identify core competencies and utilise these strengths to implement long term strategic grows with full engagement from management and clear organizational communication between individuals and business units.

Priority 2: Increase market share and sales of Holey Soles products, allowing HS brand to successfully penetrate current and new markets.Objective: Successfully implement quality improvements in regards to product and service offerings.Timeframe: 3 months after priority 1 also reevaluate 3-6 monthsTarget: Implement by management with staff support, specifically manufacturers and customer service agentsTactics:TG1: Conduct market research to keep up with market trends and consumer taste to enhance brandTG2: Encourage design consultants to come up with creative design ideas to stay positive brand by providing high quality product and service offeringsTG4: Launch a social media campaign to maximize the viral marketing effect of current high quality product and service (word-of-mouth)OG1: Build an open communication to provide high quality service to customersOG2: Establish clear recruitment and selection policy and practices to gain qualified talents to provide high quality service offeringsOG4: Develop a strategic plan that’s understood and embraced by all level of the organization to enhance quality of customer offerings and productPG1: Conduct market research to understand consumer’s taste as well as competitor’s move to provide higher quality product and service offeringsPG2: Conduct a market research to find consumer’s taste and market trends(R1): Provide new information on better production techniques that will result in quality improvement(10C 5): Create quality tests for suppliers in order to increase the percentage of defected products supplied to company’s manufacturing facilities(10C 6): Organize pilot-tests, off-site workshops in order to improve the quality of productsNT1: Holey Soles should collect and analyze data frequently, increase marketing research effort to monitor the implementation of the strategy, differentiation through quality, and be aware of other company’s mimic strategy.NT8: Planning is necessary before implementing differentiation through quality strategy. Unforeseen events should be in anticipation because each event may represent an opportunity, such as better technology can be used for producing better quality products.NT9: Holey Soles should be able to adjust its infrastructure to be able to produce better quality products, and also need to address the crucial factors, such as standards and measures of performance, rewards and incentives, planning process, budgeting and resource allocation

methods and also information systems, which should all support the differentiation through quality strategy.NT10: Company should encourage SmartCel and SoleTek and other new technologies to be used into its products to provide better quality products so that Holey Soles is able to compete with strong competitors in the different markets. Leadership should also involve in the system to ensure implementation of the strategy.BSE3: Strengthen the brand image, through marketing, to reflect the high level of quality at Holey-Soles. SW1: Holey Soles must increase its points of contact and presence with customers to follow the differentiation strategy based on quality product and service offerings. Holey Soles should start a mobile sales team to promote the Holey Soles quality in high-growth regions at places of employment that suit their high quality product offerings. These places may include hospitals, airports, and food and beverage establishments.SW2: Have front-line sales staff survey and question retailers to encourage feedback as well as criticisms for the company and its products at the retail level – concentrating on product quality. Ensure that retail customers understand the importance of useful feedback in developing quality product and service offerings the Holey Soles brand is known for.BU3: Reduce interactions with various agents from different places in regards to the customers, by doing so, Holey Soles can ensure good quality customer service.BU4: Add more communication channels for customer service so customers can interact with the company directly, which will also help Holey Soles gain more customer data so that it helps improving quality of the products and services.BU5: Ensure manufacturers produce products by using best quality materials and technology. Production process should be monitored to detect errors to ensure best quality products are provided to agents and customers worldwide. SV1: create an open communication environment to foster a feedback without the fear of retribution for a high level of customer service to make sure better quality.

Summary of Tactics

Refer to Appendix 3 for a summary of tactics that Holey Sole will implement.

Appendix 1

Threats

Important Threats(Socio.OT2) Consumer tastes vary around the world and change over time(Tech.OT1) High tech, specialized and expensive machinery needed to manufacture injection-moulding products(Empl.OT1) Knowledgeable and specialized employees are required in the injection-moulding processes(Econ.T4) Shipping products from China to North America takes a long time(Econ.T5) US currency depreciating in Europe and Japan(Socio.T1) Consumers view price as an important purchasing factor(Legal.T3) China offers little in the way of patent and intellectual property protection

Medium Threats(Econ.T1) Canada may be experiencing a business cycle recession due to the financial market meltdown(Econ.T2) Canada has a high taxation rate(Econ.T3) Holey Soles experiences exchange rate fluctuations since their books are denominated in CAD and they do business in USD(Enviro.T1) Canadians are environmentally conscious, and people in developed countries are also becoming increasingly environmentally conscious(Enviro.T2) Potential concerns over the injection-moulding manufacturing process and the disposal of such products(Legal.T1)Tariffs, duties, freight forwarders and other documents are required for international shipments(Legal.T2) Frivolous lawsuits within the industryOther Threats(Pol.OT1) Canada has an upcoming federal election so there may be changes to taxation at the federal level(Econ.OT1) Low interest rates in Canada, high inflation in China(Socio.OT1) Consumers are much more knowledgeable with the adoption of the internet

Opportunities

Important Opportunities(Tech.O1) EVA compounds are becoming more popular and the injection-moulding manufacturing process has improved(Empl.O1) Opportunity for inexpensive labour in China and Mexico(Legal.O1) Canadian companies have the ability to avoid high taxation by moving certain operations overseasMedium Opportunities(Pol.O1) Canada/U.S. are fairly liberalized in terms of free-trade between different nations.(Pol.O2) Canada/U.S. are stable country with little threat of civil unrest etc.(Pol.O3) UK, Western Europe and Japan also politically stable markets, but with varying degrees of bureaucracy. (Pol.OT1) Canada has an upcoming federal election so there may be changes to taxation at the federal level(Econ.OT1) Low interest rates in Canada, high inflation in China(Socio.OT1) Consumers are much more knowledgeable with the adoption of the internetSocio.OT2) Consumer tastes vary around the world and change over time(Socio.O2) Comfort is an important factor in consumers decision to purchase(Tech.OT1) High tech, specialized and expensive machinery needed to manufacture injection-moulding products(Empl.OT1) Knowledgeable and specialized employees are required in the injection-moulding processes

Other opportunities(Socio.O1) Canadians like to support Canadian companies. Weaknesses

Important Weaknesses(TOWS.W1) Inventory management issues: high inventory holdings, factory production well below capacity (winter months)(TOWS.W3) Freight times: long shipping times from China to Vancouver and Virginia(TOWS.W5) Large amount of cash tied up in Accounts Receivable

Medium Weaknesses(TOWS.W2) Non-specialized employees to match the rate of expansionOther Weaknesses(TOWS.W4) Some small quality issues in manufacturing process (especially with new lines)Strengths

Important Strengths

(TOWS.S1) High quality manufacturing process that results in low defect rates (0.5% versus 3-5% industry acceptable standards)(TOWS.S3) LPI subsidiary opened in Barbados in order to minimize taxation and maximize efficiency of international sales efforts(TOWS.S4) Strong customer service and strong relations with clients(TOWS.S5) Strong established relationship with Chinese manufacturers

Medium Strengths(TOWS.S6) Strong feedback in regards to employee performance(TOWS.S7) Strong, positive image of a Canadian company(TOWS.S2) Strong due diligence process

Appendix 2

Porter’s Five Forces Analysis

Appendix 3

Summary of Tactics

GAPSTG1: Conduct mar¬ket research to keep up with mar¬ket trends and con¬sumer taste to enhance brandTG2: Encourage design consultants to come up with creative design ideas to stay posi¬tive brand by providing high quality product and service offer¬ingsTG3: Expand cur¬rent training pro¬gram to enhance knowledge of con¬sumers’ wants and needsTG4: Launch a so¬cial media cam¬paign to maximize the viral marketing effect of current high quality product and service (word-of-mouth)TG5: Create customer service excellence training programs OG1: Build an open communication to provide high quality service to customersOG2: Establish clear recruitment and selection policy and practices to gain qualified talents to provide high quality service offeringsOG3: Create incentive offerings to keep employees motivated to enhance quality of product and service offeringsOG4: Develop a strategic plan that’s understood and embraced by all level of the organization to enhance quality of customer offerings and productOG5: Create open communication between employees and management to keep providing high quality product and service

OG6: Conduct “exit interview” to learn why employees are leaving to retain experts for further high quality service and product

PG1: Conduct market research to understand consumer’s taste as well as competitor’s move to provide higher quality product and service offeringsPG2: Conduct a market research to find consumer’s taste and market trendsPG3: Develop employee training program to foster better customer servicePG4: Establish clear recruitment and selection policy and practices to gain qualified talents to provide high quality service offeringsPG5: Create open communication between employees and management to keep providing high quality product and service

Changing the deal by Denise Rousseau

(R1) Provide new information on better production techniques that will result in quality improvement(R2) Create a transitional team that will be responsible for changing the contracts in order to pursue the strategy of differentiation through quality(R3) End old contracts and make key employees sign new contacts in order to implement the strategy of differentiation through quality.(R4) Make employees publicly commit to new contracts that will allow Holey Soles to improve the quality of products.(R5) Align HR practises with new contacts by adding more quality dimensions into employee performance evaluation

The Ten Commandments by Todd Jick

(10C 1) Avoid a downturn in quality during the implementation change by continually training the staff(10C 2) Choose a leader that will inspire the change for a more qualitative products being made by Holey Soles(10C 3) Get support of a change for better quality in the organization(10C 4) Develop a commitment plan to pursue the strategy of differentiation through quality(10C 5) Create quality tests for suppliers in order to increase the percentage of defected products supplied to company’s manufacturing facilities(10C 6) Organize pilot-tests, off-site workshops in order to improve the quality of products(10C 7) Create a culture committed to highly qualitative products to implement the chosen strategy

Frame Bending

NT1: Holey Soles should collect and analyze data frequently, increase marketing research effort to monitor the implementation of the strategy, differentiation through quality, and be aware of other company’s mimic strategy.NT2: Holey Soles should reevaluating company’s value, goal, performance objectives to ensure employers and employees are on the same page, which will help maintain a healthy operation system.NT3: Holey Soles should communicate with all the stakeholders to gain energy for urgency and commitment in order to face the threats in the market, that competitor such as Crocs is better quality products for the customers.NT4: Increase communications between different departments within Holey Soles. Senior management should be better connected to other departments to be informed of company operation. Decisions should be concentrated on differentiation through better quality products.NT5: Management team should communicate with each other and conceptualize changes in better understanding of how to differentiate the company through quality, so they can encourage the employees to be energized.NT6: Leaders of Holey Soles should create a clear vision of Holey Soles implementing the differentiation though quality strategy, and rebuild its internal reward and punishment system to encourage motivated employees. Also the leaders of the company should be able to create sense of urgency and lead the direction of the changes.NT7: Leaders of Holey Soles should pay attention on management control to ensure quality of the products, while expanding leadership through the development and involvement of senior management in order to develop leadership through organization to better monitor the quality of the products.NT8: Planning is necessary before implementing differentiation through quality strategy. Unforeseen events should be in anticipation because each event may represent an opportunity, such as better technology can be used for producing better quality products.NT9: Holey Soles should be able to adjust its infrastructure to be able to produce better quality products, and also need to address the crucial factors, such as standards and measures of performance, rewards and incentives, planning process, budgeting and resource allocation methods and also information systems, which should all support the differentiation through quality strategy.NT10: Company should encourage SmartCel and SoleTek and other new technologies to be used into its products to provide better quality products so that Holey Soles is able to compete with strong competitors in the different markets. Leadership should also involve in the system to ensure implementation of the strategy.

The Marconi Change Curve

MC1 – Hold open meetings on a weekly basis to inform staff of any updates or information. Also use these weekly meetings to answer any questions staff may have for the company executives. These meetings should also reinforce Holey Soles’ new strategy of differentiation based on quality product and service offerings.MC2 – This stage needs careful planning and preparation. Management must prepare by carefully considering the impacts and objections that people may have with a new differentiation strategy based on quality product and service offerings. As the reaction to change is very personal and can be emotional, it is often impossible to pre-empt everything, during this stage it is critical to listen and watch carefully so an organization can respond to the unexpected.MC3 – During this vital stage management must ensure staff are properly trained and given time to accept and explore new ways of working with a new strategy of differentiation based on quality product and service offerings. A tactic for this stage is to offer staff contingency time so they can learn and explore without excessive pressure.MC4 – At this final stage, it is important to celebrate success. The journey to this new strategy of differentiation based on quality product and service offerings may have been rocky, and it will have certainly been at least a little uncomfortable for some people involved: Everyone deserves to share the success. By celebrating an achievement, Holey Soles can establish a track record of success: Which will make things easier the next time change is needed. Tactics include a beer and pizza night after reaching a critical milestone such as reaching our quality targets or launching a new product.

Six Steps to Effective Change

BSE1: Designate a few employees to run this program. Select a group of employees who possess significant respect and influence within the company, but are not managers. Have them follow the 6-steps. BSE2: Create a system for approving and carrying out the ideas generated within the meeting. Monitoring and evaluating will be essential. BSE3: Strengthen the brand image, through marketing, to reflect the high level of quality at Holey-Soles. BSE4: Remove, replace, or fire employees who aren't cohesive with the new strategy.

The Sawhney and Wolcott Model

SW1: Holey Soles must increase its points of contact and presence with customers to follow the differentiation strategy based on quality product and service offerings. Holey Soles should start a mobile sales team to promote the Holey Soles quality in high-growth regions at places of employment that suit their high quality product offerings. These places may include hospitals, airports, and food and beverage establishments.SW2: Have front-line sales staff survey and question retailers to encourage feedback as well as criticisms for the company and its products at the retail level – concentrating on product quality. Ensure that retail customers understand the importance of useful feedback in developing quality product and service offerings the Holey Soles brand is known for.SW3: Change the name of Holey Soles’ footwear products to a one-syllable word to promote the brand. We want people to refer to high quality EVA molded shoes not by our competitors’ names, but by ours.

Beatty and Ulrich Model

BU1: Reduce number of employees that are unnecessary in North America, or increase use of local employees in the local markets in different countries that Holey Soles is currently operating to take advantage of skilled employees, which will help Holey Soles improve employee quality.BU2: Re-evaluating work activities that are currently happening within the company in order to get rid of ineffective activities to improve the quality of the work activities.BU3: Reduce interactions with various agents from different places in regards to the customers, by doing so, Holey Soles can ensure good quality customer service.BU4: Add more communication channels for customer service so customers can interact with the company directly, which will also help Holey Soles gain more customer data so that it helps improving quality of the products and services.BU5: Ensure manufacturers produce products by using best quality materials and technology. Production process should be monitored to detect errors to ensure best quality products are provided to agents and customers worldwide. BU6: Strategy change is the hardest part to implement as the employees have accepted the old company strategy. Leadership of the company should lead the employees to better understand the differentiation through quality strategy. And they should also encourage employees to make changes to be better implement quality concept into their daily work routine to ensure quality works.

Charlotte Beers

CB1: Holey Soles should create an evaluation system that frequently check employees’ performance, and to analyse and discuss potential business risks to make sure that all the company’s members are providing best quality performance. Holey Soles should also monitor

the customers’ demand among different markets, and do not afraid of providing better quality innovation products for the customers.

Hamel1: Holey Soles should create a business/strategy evaluation team that periodically meets to analyze and discuss potential business shocks, current strategy and resource management. It is suggested that this team meet once per month, with the option to increase meeting frequency if required.

Seagram’s Values

SV1: create an open communication environment to foster a feedback without the fear of retribution for a high level of customer service to make sure better quality.

Marconi PLC

PLC 1: Holey Soles should identify core competencies and utilise these strengths to implement long term strategic grows with full engagement from management and clear organizational communication between individuals and business units.

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