A Case Study

A Case Study： An Analysis of

Organizational Changes of YTO Group Corporation

作者：Bing WANG

来源：《校园英语·下旬》2016年第05期

【Abstract】This paper describes change events as a case study in a company called YTO （Luoyang）Group Corporation， and analyzes the change events utilizing constructs of organizational environments， structure， leadership and culture， in order to get a better understanding of the change in an organization.

【Key words】Management； Leadership； Organizational Change； Organizational Environments Introduction

In this study， the author tries to first describe and then analyze several organizational changes in the development of a local company by the name of YTO （Luoyang）Group Corporation. After investigating the target company’s developing history， some significant points are found. These points are displayed in this paper as three issues of a） change of business mode ； b） change of government’s policies in recent years and c） financial crisis in2008 . The paper then falls into two parts： the analysis of the causes of organizational changes and the process of the change. The conclusions will be made； the implications and the limitations will be discussed after fully analyzing the YTO case.

Brief Introduction of the Change Event

YTO Group Corporation， headquartered in Luoyang Henan， is the leading agricultural and constructional machinery manufacturer.In accordance with the requirements of the modern enterprise system， YTO has become a diversified holding company， which is changed from the restructuring of the state-- owned company.After more than 50 years of struggle， its main business has extended to the agricultural machinery， engineering machinery， power machinery， vehicles and accessory manufacturing . Owning a national technical center， YTO shows a strong independent innovation R & D capability， product design capability and manufacturing level in the domestic leading position. During the later development of the YTO Company， three notable issues emerged， which will be elaborated in the following paragraphs.

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Issue One

The chairman of YTO， Zhao Yanshui， stated that agricultural machinery manufacturing industry is urgently in need of starting a new round of adjustment. At the end of 2013， China's grain output and farmers' income achieved sharp increase， which should give the credit to agricultural mechanization. However， the core idea of whole industry is shifting from“agricultural mechanization” gradually to“mechanization of agriculture”， which has made the agricultural machinery industry has undergone profound changes. Issue two

Recent years， the Chinese government has changed tremendously in her general policy for the importing and exporting market. Since the adoption of policies of reform and opening to the outside world in 1979， the government has to introduce new policies. YTO Corporation thus changed its role from an individual corporate to an citizen of the whole society in response to the reality.

Expanding business scope to foreign countries and shoulder the social responsibility seems necessary. Issue Three

Unfortunately， a world-wide financial crisis broke out in 2008， causing the rise of the price of raw materials and the appreciation of RMB. The profit of the company decreased remarkably. In order to control this decrease， several crucial decisions were made. Firstly， store up sufficient raw materials before the price raise further. Secondly try to maintain the product prices rather. Thirdly， value the importance of proprietary intellectual property rights； And at last， adjust the

encouragement system and reward system. Evidently， the plans worked out， and the company is now expecting a rise in profit. What is Organizational Change

As many books imply， an organization is a group of people working together for certain purpose， in which the role of the person rather than the person himself is emphasized， regardless of the changes of members. A change in an organization， as defined by Dawson， is ‘any alteration in activities or tasks’， and is likely to happen now and then. The reasons why organizational changes have to take place are closely related to the environment the particular organization is in. Senior distinguished the environment into three types： the temporal environment， the external environment and the internal environment. Organizational Environments

As I have mentioned above， the organizational environment are divided into three types： temporal， external and internal. I will analyze the first two issues using Senior’s theories.

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Temporal Environment

When YTO was founded in 1955， it was a time when heavy industry prevailed and was highly valued. Shortly after YTO was set in motion， the first tractor in Chinese history was born， opening a new chapter for China. Since then， many firsts happened， which won the state-owned

corporation a lot of attention from the government and the whole nation. The Chinese government advocated and supported trade activities with great efforts when the Chinese market was opened， including gaining a favorable balance in foreign trade， by establishing policies and regulations. In addition to this superiority， other advantages were cheap raw materials and labor power， together with abundant resource and preferable technology. However， in recent years， due to the rapid development in China， the economic structure has been redeployed accordingly，which has sharply weakened its position and superiority. Under this circumstance， YTO incisively took actions and coped with new situation by marching into international market in a large scale and develop by-products. The business scope was expanded along with new opportunities. The decline of the operating modes and the exporting industry belong to the temporal environment elements. Internal Environment

The internal environment is shown in both Issue One and Issue Two. It is not hard to notice in Issue One， the core idea of whole industry is shifting from “agricultural mechanization” gradually to “mechanization of agriculture”.

In Issue Two， the recent government policy has triggered a series of changes among the whole agricultural machinery industry as the whole society is shifting its focus from economic construction to spiritual civilization. That is to say， YTO has to make some adjustments to fulfill its obligation as a member of society according to some policies. Thus to achieve a win-win situation between success of corporations and development of social community. External Environment

Senior introduced PETS to further explain the external environment changes. The political factors include government legislation， government ideology， international law， universal rights， wars， local regulations， taxation and trades union activities. The economic factors consist of competitors， suppliers， currency exchange rates， employment rates， wage rates， government economic policies， other countries’ economic policies， lending policies of financial institutions， and changes from public to private ownership. The socio-cultural factors are listed as demographic trends， lifestyle changes， skills availability， attitudes to work and employment， attitudes to minority groups， gender issues， willingness and ability to move， concern for the environment， and business ethics. And the technological factors contain information technology， new production processes， computerization of processes， and changes in transport technology.

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One case shows the effect from the social-cultural factors.As the citizens’ living level rising and lifestyle changing，YTO changes its publicity means，such as Oriental Red Industry tourism，which helps more customers understand YTO`s culture and products vividly.

Haveman， Russo， and Meyer further explained the impact of regulatory change in their study. They concluded that many regulatory changes force organizations to fundamentally alter their

strategies， structures and activities， and the changes they which they make will bring unintended consequences. Thus， organizations should be careful with regulatory changes and make wise choices. When I look back at the Issue Two and Issue three again， I realize that the external environment change and the internal environment change exist in an interdependent way. The external changes of policies of reform and opening to the outside world ， force the YTO to follow the trend. They seek cooperation with the foreign companies . what they meet not only the opportunities but the challenges as well . Unexpected， the financial crisis gives a heavy blow to the global economy. However ， by maintaining the prices of products itself and seize the moment to exchange the currency， YTO goes through the crisis smoothly. The internal changes in organizations are usually resulting from the external changes， and only by responding rapidly and accurately to the external changes， can the organizations survive in critical moments.

The increasing speed of agricultural machinery industry is gradually slowing down. It is new normal to see the transformation of developing way and the conversion of drivers. The main driving force focus is shifted from the government policy to the consumption. The whole industry attaches more emphasis to the innovation and branding operation. It is unwilling to rely on the government support now.

The aggravated market competition and development of technology has brought a new challenge to the industry. The government aims to build a environmental friendly society. “Ecological”characteristics should be shown in business model. Response：

With the transformation from the industrial economy to the knowledge-based one，

knowledge， brand and reputation are playing more and more important parts. The only way to

compete is not to enlarge market share but expand the living place. It not only has to own a very clear target and developing strategy but also improve and innovate with regard to its method and system， which should be based on the inheriting and carrying forward its good tradition. Burke-Litwin Causal Model of Organizational Performance and Change

I would like to use the Burke-Litwin`s model to analyze issue three， in which twelve variables （listed as external environment， mission and strategy， leadership， culture， structure， management practices， systems， climate， task requirements and individual skills/abilities， individual needs and values， motivation， individual and organizational performance） are

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connected by arrows going both directions， indicating that any two variables may affect and may be affected by each other.

I will then try to figure out some variables in the YTO case to better illustrate the Burke-Litwin model. As is shown in my case， the external environment， is the financial crisis in 2008， causing steel and crude oil price fall violently， bank credit crisis and exchange rate movement. The mission and strategy are to restrain the profit loss，and YTO adopted proper solutions. Firstly， YTO focused more on the market of low-exposure areas in this financial crisis， like Central Asia， Russia，Africa，etc.Secondly，it assisted its dealers to work cash by helping them applying for export credit or expanding financial lease. Thirdly，it took full advantage of the native market to expand sales.Those strategies also affected work unit climate，for the staff had confidence to overcome difficulties， and caused strong motivation to succeed， which then changed individual and organizational performance.At last， the profit increased a lot in 2008， with year-on-year growth of 67%.

On the contrary，as individual and organizational performance improved， the goal would be easier to achieve， thus the company needed to modify their mission and strategy to adjust to new situation. This phenomenon illustrates that the two variables can affect each other. Lewin’s Three-Step Model

Lewin’s three-step procedure of changing consists of unfreezing， moving and freezing steps. The unfreezing step is to change the present state of the organization， the moving step is to move from the present state to a new state， and finally the freezing step is to stay at the new state. In the change event of personnel in Issue One， the unfreezing stage is the distance in

international business capacity. After analyzing the current situation ， The chairman of YTO， Zhao Yanshui realizes the fact of the “out -going” strategy is still keeping in the main state of international trade and what they lack is the international business capacity compared to transnational agricultural machinery enterprises in developed countries.

The moving stage is the process of lead a change to business mode. In order to solve this

problem， what he does first is to strengthen the ability in independent research and development for expand the market all around world .besides， shortening the distance in technical level towards the international enterprise by technological innovation. And the last， building up the information

construction in international operation to adjust themselves according to the international environment. The freezing stage refers to high-skilled talent .absorbing new people was like to inject fresh blood into the company， making it a more energetic and active organization. Kotter’s 8 steps to change mode

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Before it took the change， it realized the internal and the external environment were keep changing around.

Although it is admitted that YTO felt not quite ready and reacted not so significantly， it thought it was time to change the business mode from the traditional one to business which payed attention to the human being and the environment as never before. It informed the company and trusted the key board members to pass all the information of reforming to the lower rank as a team.

At the same time，the leaders improved the communicating system with regard to avoid the sending of wrong message. It set a clear goal to realize the revenue of 100 billion in the 3～5years and reshape the marketing system.For improving the market segmenting ，it could provide more products catering for the customers and the environment like “Oriental red tour”and “Running man”project. It took courage to advocate new items and keeps experimenting and implementing in want to refine the goals in several different periods.

As for the employees， it inherited the traditional way of human resources management but it acted not so strictly but more relaxing than before. The humanistic and innovation-promoted atmosphere were creating.And the reward system had been improved. Conclusion

In this study， the author describes the case of YTO， and three outstanding change events emerged during its development. The three issues are the change of business mode， the internal change caused by the change of government policy in the external environment， and the 2008 financial crisis leading to corresponding changes in the company. However， they could calmly figure out strategic decisions to help the company through disadvantageous circumstances， depending on the analyzing the environment correctly and making proper adjustment during the process of the change.

The author then adopted Senior’s organizational environment theories to analyze the temporal， internal and external environment in the three issues；Burke-Litwin’s Causal Model of

Organizational Performance and Change to identify different causal elements in the third issue.

Lewin’s three-step model and the Kotter’s eight-step change process model were used in analyzing the change event of YTO`s business mode.

After applying the theories to the real case， conclusions can be made as follows. The

organizational environment is decisive in organizational changes and the external environment may cause the internal changes directly.The study implicates that changes in an organization and in the outside environment are inevitable. Managers in the organization should be alert and should possess the capability of judging and evaluating. Finally， the manager must carefully monitor the

implementation， and be prepared for anything unexpected to happen， and make proper adjustment during the process of the change.

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References：

[1]B.Senior，Organizational Change，England：Pearson Education Limited，England，1997. [2]W.Burke，G.Litwin，A causal model of organizational performance and change.Journal of Management，18（1992）523-545.

[3]K.Lewin，Group Decisions and Social Change.In G.E.，Swanson，1958.

[4]J.Kotter，Leading change：Why transformation efforts fail.Harvard Business Review，73（1995）9-67.

[5]D.Statt，Concise Dictionary of Business Management，Routledge，London，1991. [6]P.Dawson，Organizational Change：A Processual Approach，Paul Chanpman Publishing Ltd，London，1994.

[7]NPC deputy Zhao Yan shui proposed to speed up the development of China's agricultural machinery industry.From www.cqn.com.cn.