Change Management in Transition Economies: Integrating Corporate Strategy, Structure and Culture

Since the breakdown of the socialist regimes in Central and Eastern Europe, with their planned economies and lack of entrepreneurial freedom, a dramatic development of free markets and competitive enterprises in an extremely turbulent economic environment has been observed . One of these countries, Poland, can be regarded as a laboratory for scientific research on macroeconomic transformation and managerial change. Poland not only spearheaded the process of economic democratization and liberation, but in 1989, immediately after the political turnaround , it also became a preferred target market for concentrated investment by foreign enterprises. One prominent example, which is a focus of our research, is Beiersdorf-Lechia in Poznan, which produces and distributes the Nivea Creme brand in Poland and other Central and Eastern European countries . The many facets of the process of developing a market-oriented strategy, structure and culture reveal the enormous challenges of managing change in a transforming society.

Although there is a rapidly growing body of work on the macroeconomic transformation processes in Central and Eastern Europe, less has been written about the managerial challenges and problems of changing state-owned conglomerates into highly responsive , consumer-oriented, lean-structured private enterprises. Those managers of Western companies who were sent to the region were like astronauts venturing into unknown space. Most were unable to speak the language or understand the customs and culture of the countries in question. Furthermore they had to develop their own situation- related solutions as prior experience of similar change management processes did not exist.

The aim of this book is to fill the knowledge gap in this area by analyzing the complex transition of production-centred, highly diversified, vertically integrated conglomerates into thriving consumer-oriented private enterprises. One of the main findings of our in-depth analysis of the change process is that standard theories , models and recommendations for change management have to be reformulated. Many important facets of the change process are often underestimated or neglected, including the need for speedy action, the pressing demand for appropriate capital investment, the problem of inappropriately trained human resources, the resolution of conflicts of interest and the struggle between old and new holders of authority, all of which require a flexible, situation-dependent, management leadership style.

This book takes a multidimensional approach to change management in transforming economies and is divided into three parts . Part I describes the expansion of international trade and foreign direct investment in Central and Eastern Europe since the early 1990s, considers various aspects of mass privatization , including firm behaviour and corporate governance in state-owned and privatized firms, and traces the evolution of labour relations in Central and Eastern Europe. It focuses specifically on the development of economic, political and cultural relations between Poland, the region s largest market, and Germany, which is Poland s most important economic partner within the European Union. By analyzing the threats, opportunities and constraints that exist in Central and Eastern European countries, Part I reveals the scope for and limitations on managerial action in this region.

In Part II the case of Beiersdorf-Lechia in Poland is used as a vehicle to examine how management can handle these opportunities, threats and constraints when trying to bring about full-scale radical change. The case study addresses the adjustment of strategies and structures, the establishment of a strong marketing and sales function, the crucial question of human resource management in change processes, the integration of subsidiaries into international corporate networks, and the process of transforming the organizational culture.

Part III considers a broad range of specific aspects of managerial action and options for handling change, including barriers to and strategies for market entry into Central and Eastern European countries, the marketing and branding strategies of multinational corporations in the region, the evolution of the trade sector, human resource and leadership issues, change of organizational identity, and the accession of Central and Eastern European countries to the European Union.

In view of global trends, this volume will be useful to any manager who is confronted with change management problems not only in Central and Eastern Europe but also in other parts of the world. The editors hope that the analysis will encourage new perspectives on the process of change management and will help managers in similar situations to reflect critically on their own management decisions and leadership style. Furthermore we hope to contribute to scholarship on the management of change in transition economies by offering a framework for further research into this area.

Acknowledgements

The editors of this volume would first like to extend their gratitude to all the contributors, who in line with the objectives of the project come from both academia and the world of management, and from both East and West “ thus providing an insider s perspective, in contrast to many other publications on Central and Eastern Europe. We are also deeply indebted to all those employees and managers at Beiersdorf-Lechia who never tired of giving yet another interview or searching for yet another piece of information in the company s archives. Dr Rolf Kunisch, CEO of the Beiersdorf group, supported our project from the start and provided important insights into the international strategy of the Beiersdorf group and its expansion into Central and Eastern Europe.

We also wish to thank Roksana Sopinka and Simone Oberl nder for their never ending patience with the tedious formatting and correction of the final manuscript. Francis Page helped us to put it into correct English “ not an easy task as the bulk of the contributions were written by authors for whom English is a foreign language.

Finally, we thank Caitlin Cornish and Palgrave for their support of this project and for the opportunity to share our ideas on and experiences of the process of change with you, the reader.

Heinz-J ¼rgen St ¼ting Wolfgang Dorow Frank Claassen Susanne Blazejewski