MANAGING PEOPLE

Gorenje: Evolution or Revolution

Gorenje: Evolution or Revolution

Question 1 - Discuss the types of change in this case.

Gorenje is facing a horde of daunting challenges that are triggered due to a radical change in the environment within which the company is operating. For example, the surrounding environment within which the company has traditionally operated has changed significantly. This can be seen in the way the focus of the consumers has shifted to quality rather than quality and there is a greater emphasis on brand image. Moreover, the markets in central Eastern Europe abound with retailers who act as facilitators for small businesses like Gorenje. They provide shelf space to brands while also promising them greater visibility. However, the retailers give a higher preference to bigger brands and this has practice has had an adverse effect on the visibility of smaller brands like Gorenje. When looking at the entire case form the point of view of the labour market, it becomes evident that Gorenje is also on the brink of a labour crisis. This can be seen in the changing mindset of the labour whose views contrast with those of the previous generation. The labour working at Gorenje is more concerned about their livelihood as well as their remuneration package and marks a shift from a previous mindset which believed more in establishing and maintaining a loyal relationship with the employer and the company. This is mainly the result of the accession of Slovenia to the European bloc which has opened up new avenues for prospective Slovenian since they now have the liberty to work in other bigger European markets that offer them a more handsome wage. Bobinac therefore acknowledges that the company will have to buy the loyalty of the labour rather than winning it.

Questions 2 - Could the organization evolve or would change require nothing less than a revolution? Why? Why not?

After reviewing the case study of Gorenje, it is evident that the company is left with only two plausible choices - evolution or revolution. However, looking at the dilapidated condition that the company is in, it is clear that nothing less than a revolution is needed to rescue Gorenje from the ever-closing clutches of bankruptcy. It is clear that the company is surviving in a highly competitive market environment while its resources and investments are also not being utilized in the best way. The changing landscape within which the company operates has significantly affected the company's share in European markets and also had a negative impact on the profit margin. Therefore, as president of Gorenje D. D., Bobinac needs to redefine the strategic focus of the company, and align marketing strategies with the core competencies of the business. The need to achieve this is even more urgent in the wake of cut-throat competition which the company faces from bigger brands of household appliances manufacturers in Europe. For example, the company has invested in major markets across Europe and this has stretched the production capacity of the ...