Alvarez corporation
Paper 2 practice cases 1 and 2 (google.com)
Alverez Corporation (AC) is a large manufacturer of microchips and computer accessories, established in 1990 in Mendoza, Argentina. The company has recently decided to implement a new capital-intensive production process that would increase efficiency and gain from additional economies of scale. However, many employees have resisted the change, making it difficult for the management team to fully implement the new production process.
define the term economies of scale Economies of scales refers to the reduced costs of production when a firm produces a product in large quantities. Although increasing production capacity is capital intensive, the reduces manufacturing costs with economies of scale can justify the change. correction: economies of scale refer to a reduction in the average cost of production as a firm increases production output explain two reasons for resistance to change at Alverez Corporation Resistance to change results from disagreements between stakeholders, in this case between AC’s employees and upper management. One reason for resistance to change is lack of communication since employees believe that upper management has not explained why they are changing. Lack of communication reduces employee motivation <talk about motivation theory?>, which makes employees unwilling to change from their role. Another worry is that employees will be forced to learn new skills. According to Taylor’s theory of management, employees only work for higher pay, which suggest that they are a role based firm (does not say in question though…), meaning they will not work outside their given role
⇒ this is a terrible response, because I don’t know the relevant BM theory, so I’m making stuff up… ⇒ ask about this question; is it a setup? it says the reasons in the question…
impact of resistance:
- low employee moral ⇒ escalate to industrial action
- low productivity
- high labour turnover rate
Evaluate the effectiveness of AC’s approach to mitigate resistance to change.
their approach is to improve communication (regular meetings to answer question) and offer training.
advantage: regular meetings means that their concern are potentially addressed disadvantage: only effective if there is trust in upper management. Some workers are afraid to ask about their job security, indicates a lack of trust with upper management in the firm advantage: offering training helps to ensure all employees are on the same page. avoids resistance to change because they know how their jobs will hcange disadvantage: Taylor’s theory of management, also equity theory (input vs output) → it’s extra work for employees, training just adds to their stresses. it would be better to offer them increase compensation or fringe benefits to taking training to improve employee satisfaction.
sum up at end: with limited information: certainly effective in mitigating resistance to change since it emphasizes increased communication which is essential to accepting change. problem is employee lack of trust in management
⇒ clarify limited information bit
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