AB-46-BA1/2 ; 9th March 2024

WARMING UP CASES
ENTERPRISE ANALYSIS
Please answer the following questions:

1. Current state: Identify the business needs and then identify the elements of the current state.
2. Future state: Identify the business goals and objectives, then identify the elements of the future
state.
3. What solutions/changes did the enterprise take and how was the impact?

You are permitted to look for other data sources if needed. You are permitted to take assumptions.

1. Adobe- a transformation of HR functions to support strategic change

Many a times external factors lead to changes in organisational structures and culture. This truly happened
at Adobe which has 11,000 employees worldwide with 4.5 billion $ yearly revenue. Acrobat, Flash Player,
and Photoshop are among the well-known products of Abode.

Due to new emerging technologies and challenges posed by small competitors Adobe had to stop selling
its licensed goods in shrink-wrapped containers in 2011 and switched to offering digital services through
the cloud. They gave their customers option of downloading the necessary software for free or subscribing
to it every month rather than receiving a CD in a box.

The human resource (HR) function also took on a new role, which meant that employees had to adjust to
new working practices. A standard administrative HR function was housed at Adobe’s offices. However, it
was less suitable for the cloud-based strategy and performed well when Adobe was selling software items.

HR changed its role and became more human centric and reduced its office based functions. The HR
personnel did “walk-ins,” to see what assistance they might offer, rather than waiting for calls. With a focus
on innovation, change, and personal growth, Adobe employed a sizable percentage of millennials.

Instead of having an annual reviews, staff members can now use the new “check-in” method to assess and
define their own growth goals whenever they find it necessary, with quick and continuous feedback.
Managers might receive constructive criticism from HR through the workshops they conduct. The least
number of employees have left since this changed approach of HR.

Why did Adobe’s HR department make this change? Since the company’s goals and culture have changed,
HR discovered new ways to operate to support these changes.
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2. Intuit – applying 7s framework of change management

Steve Bennett, a vice president of GE Capital, was appointed CEO of Intuit in 2000. Intuit is a provider of
financial software solutions with three products: Quicken, TurboTax, and QuickBooks, which have
respective market shares of 73 percent, 81 percent, and 84 percent.

Despite this market domination, many observers believed Intuit was not making as much money as it
could. Additionally, the business was known for making decisions slowly, which let rivals take advantage
of numerous market opportunities. Bennett desired to change everything. In his first few weeks, he spoke
with each of the top 200 executives, visited the majority of Intuit’s offices, and addressed the majority of
its 5,000 employees.

He concluded that although employees were enthusiastic about the company’s products, internal
processes weren’t given any thought (based on Higgins, 2005). He followed the famous Mckinsey 7S Model
for Change Management to transform the organization. Let’s see what are those changes that he made:

Strategy:

By making acquisitions, he increased the products range for Intuit.

Structure:

He established a flatter organizational structure and decentralized decision-making, which gave business
units more authority and accountability throughout the whole product creation and distribution process.

Systems:

To accomplish strategic goals, the rewards system was made more aligned to strategic goals.

Style:

He emphasized the necessity of a performance-oriented focus and offered a vision for change and also
made every effort to sell that vision.

Staff:

He acknowledged the commitment of staff to Intuit’s products and further strengthened process by
emphasizing on quality and efficiency of his team.

Skills:

Resources were allotted for learning and development, and certain selected managers were recruited from
GE in particular skill categories, all to enhance staff capabilities concerning productivity and efficiency.

Superordinate goals:

Bennett’s strategy was “vision-driven” and he communicated that vision to his team regularly to meet the
goals.

Bennett’s modifications led to a 40–50% rise in operating profits in 2002 and 2003.

8,000 people worked for Intuit in the United States, Canada, the United Kingdom, India, and other nations
in 2014, and the company generated global revenues of nearly $5 billion.
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3. Barclays Bank – a change in ways of doing business

The financial services industry suffered heavily during mortgage crisis in 2008. In addition to significant
losses, the sector also had to deal with strict and aggressive regulations of their investing activities. To
expand its business, more employees were hired by Barclays Capital under the leadership of its former
chief executive, Bob Diamond, who wanted to make it the largest investment bank in the world. But
Barclays Capital staff was found manipulating the London Inter-Bank Offered Rate (LIBOR) and Barclays
was fined £290 million and as a result of this the bank’s chairman, CEO, and COO had to resign. In an
internal review it was found that the mindset of “win at all costs” needed to be changed so a new strategy
was necessary due to the reputational damage done by the LIBOR affair and new regulatory restrictions.

In 2012, Antony Jenkins became new CEO. He made the following changes in 2014, which led to increase
of 8% in share price.

Aspirations

The word “Capital” was removed from the firm name, which became just Barclays. To concentrate on the
U.S. and UK markets, on Africa, and on a small number of Asian clients, the “world leader” goal was
dropped.

Business model

Physical commodities and obscure “derivative” products would no longer be traded by Barclays. It was
decided that rather than using its customers’ money, the business would invest its own.

Only thirty percent of the bank’s profits came from investment banking. Instead of concentrating on
lending at high risk, the focus was on a smaller range of customers.

Culture

In place of an aggressive, short-term growth strategy that rewarded commercial drive and success and
fostered a culture of fear of not meeting targets, “customer first,” clarity, and openness took precedence.
Investment bankers’ remuneration was also reduced.

Downsizing

Beginning in 2014, branches were shut, and 19,000 jobs were lost over three years, including 7,000
investment banking employees, personnel at high-street firms, and many in New York and London
headquarters. £1.7 billion in costs were reduced in 2014.

Technology

There was an increase in customers’ online or mobile banking, and increased automation of transactions
to lower expenses. To assist customers in using new computer systems, 30 fully automated branches were
established by 2014, replacing the 6,500 cashiers that were lost to this change with “digital eagles” who
used iPads.

These changes were made to build an organization that is stronger, more integrated, leaner, and more
streamlined, leading to a higher return on equity and better returns for shareholders. This was also done
to rebuild the bank’s credibility and win back the trust of its clients.
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4. Kodak – a failure to embrace disruptive change

The first digital camera and the first-megapixel camera were both created by Kodak in 1975 and 1986
respectively.

Why then did Kodak declare bankruptcy in 2012?

When this new technology first came out in 1975, it was expensive and had poor quality of images. Kodak
anticipated that it would be at least additional ten years until digital technology started to pose a threat
to their long-standing business of camera, film, chemical, and photo-printing paper industries.

Although that prediction came true, Kodak chose to increase the film’s quality through ongoing advances
rather than embracing change and working on digital technology.

Kodak continued with old business model and captured market by 90% of the film and 85% of the cameras
sold in America in 1976. With $16 billion in annual sales at its peak, Kodak’s profits in 1999 was around
$2.5 billion. The brand’s confidence was boosted by this success but there was complete complacency in
terms of embracing new technology.

Kodak started experiencing losses in 2011 as revenues dropped to $6.2 billion.

Fuji, a competitor of Kodak, identified the same threat and decided to transition to digital while making
the most money possible from film and creating new commercial ventures, such as cosmetics based on
chemicals used in film processing.

Even though both businesses had the same information, they made different judgments, and Kodak was
reluctant to respond. And when it started to switch towards digital technology, mobile phones with in-
built digital camera had arrived to disrupt digital cameras.

Although Kodak developed the technology, they were unaware of how revolutionary digitalization would
prove to be, rendering their long-standing industry obsolete.
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5. Heinz – a 3G way to make changes

Warren Buffett’s Berkshire Hathaway and the Brazilian private equity business 3G Capital paid $29 billion
in 2013 to acquire Heinz, the renowned food manufacturer with $11.6 billion in yearly sales.

The modifications were made right away by the new owners. Eleven of the top twelve executives were
replaced, 600 employees were let go, corporate planes were sold, personal offices were eliminated, and
executives were required to stay at Holiday Inn hotel rather than the Ritz-Carlton when traveling and
substantially longer work hours were anticipated.

Each employee was given a monthly copy restriction of 200 by micromanagement, and printer usage was
recorded. Only 100 business cards were permitted each year for executives.

Numerous Heinz workers spoke of “an insular management style” where only a small inner circle knows
what is truly going on.

On the other side, 3G had a youthful team of executives, largely from Brazil, who moved from company to
company as instructed across nations and industries. They were loyal to 3G, not Heinz, and were motivated
to perform well to earn bonuses or stock options.

“The 3G way,” a theory that 3G has applied to bring about change in prior acquisitions like Burger King,
was the driving reason behind these modifications. Everything was measured, efficiency was paramount,
and “nonstrategic costs” were drastically reduced.

From this vantage point, “lean and mean” prevails, and human capital was not regarded as a crucial
element of business success. It was believed that rather than being driven by a feeling of purpose or
mission, employees were motivated by the financial gains associated with holding company stock.

Because it had been well-received by the 3G partners, those who might be impacted by a deal frequently
saw a “how to” guide published by consultant Bob Fifer as a “must read.”

However, many food industry experts felt that while some of 3G’s prior acquisitions would have been ideal
candidates for a program of cost-cutting, Heinz was not the most appropriate choice to “hack and slash.”
The company had already undergone several years of improved efficiency and it was already a well-
established player in the market.

In summarizing the situation, business journalists Jennifer Reingold and Daniel Roberts predicted that “the
experiment now underway will determine whether Heinz will become a newly invigorated embodiment
of efficiency—or whether 3G will take the cult of cost-cutting so far that it chokes off Heinz’s ability to
innovate and make the products that have made it a market leader for almost a century and a half.”