Business Section a Newspaper a Business Magazine

¶ … business section a newspaper a business magazine organizations change. For articles answer questions: 1. For article, rationale presented change? Which external internal pressures considered chapter referred ? Are additional pressures specifically considered chapter? (hint: Tables 3.

Change rationales: A comparison of recent cases

In the article, "Operating profit surges as Bank of America slims down," the fortunes of one of the largest banks in the world is reported to have recovered after the negative impact of the 2008 mortgage crisis through effective change management in the form of organizational cost-cutting. BoA has "slashed staff, combined business units and dialed back its massive mortgage business. These steps helped the bank post $3.6 billion in operating profit during the first three months of the year -- a 40% surge -- even as revenue fell 2.5%" (Reckard 2012). BoA has been subject to a great deal of negative press in recent years, based upon its charging exorbitant service fees and its inflexibility in dealing with mortgage holders. After its acquisition of Countrywide Financial, BoA became one of the nation's largest holders of subprime mortgages. Rather than focusing on expansion, BoA is now focusing on shedding unprofitable assets. Its mortgage business is still in the red, but its financial services are showing a strong profit, and its credit card business is booming. It hopes to emphasize the profitable aspects of its empire while ridding itself of the more troubled components of its business.

BoA is focusing on changing aspects of its operations and services to reduce costs and generate more profits. In contrast, the Starbucks organization has recently instituted changes in response to bad PR, rather than shifts in consumer buying habits. "The coffee giant is ditching the red dye made from crushed beetles" in some of its baked goods and drinks (Hsu 2012). The red dye drew the ire of many customers, particularly vegans who wish to consume no animal products. Starbucks has traditionally catered to a youthful, moderately upscale clientele, and addressing the outrage of a small yet vocal group of customers was deemed to be in the retail coffee giant's best interest. Despite its 'crunchy' Seattle origins, Starbucks has drawn criticism for shutting down many independent coffee chains with its widespread expansion. Showing concern for customer's vegan proclivities is one way to foster its image of staying true to its roots. Also, as a service-based company, it must keep customer-focused. "The beetle juice blowup began last month, when an anonymous vegan Starbucks barista emailed the This Dish Is Vegetarian website to disclose that the strawberry sauce used for certain soy drinks contained the bug extract" (Hsu 2012).

To deal with new marketplace challenges, BoA is focused upon changing its organizational structure and holdings, which are troubled thanks to poor business decisions it made after the credit crisis. As a company devoted to pleasing the customer, Starbucks is changing its core offerings, to improve its brand image. As a luxury business (no one needs to buy a latte) that markets image as much as product, this is essential for Starbucks. Another company desperately trying to change its image is the Ford Motor Company. Along with the other major American car manufacturers, Ford was accused of placing too much emphasis on manufacturing gas-guzzling SUVs. Now, Ford has created a new advertising campaign which stresses that it has the smallest, rather than the largest engines in the industry (Hirsch 2012).