This report evaluates Hisense’s predicament in light of the shifting business environment, namely the necessity and type of organizational structure change that must be implemented. The purpose of this report is to recommend a new organizational structure for Hisense to the top management of the business. There was a time when bureaucratic and hierarchical business structures were quite effective in stimulating long-term growth and commercial success. Now, those days are long gone. Still, those days are long gone with the advent of the modern business climate. The same cannot be said for today’s business climate. Mainly, this can be attributed to the following:
- Traditional hierarchies do not contribute to an atmosphere that is conducive to the development of innovative ideas.
- Inconsistent communication, a lack of flexibility in approach, and inefficient information sharing are all problems that exist here.
- The operation of enterprises on a worldwide scale has been significantly impacted by globalization. The significance of national boundaries is not what it used to be. The legal protection that once existed for governments, such as in the Hisense case, has nearly vanished entirely.
- Due to deregulatory policies and trade liberalization, the global marketplace now faces fierce competition.
- The most recent technological breakthroughs have considerably impacted the business practices of various firms. Because of the Internet and other communication technologies, which have leveled the playing field, everyone now has access to various previously unavailable possibilities. The most likely beneficiaries of this will be smaller businesses, as they can directly compete on an even playing field with much more significant global corporations.
A penchant for change has always characterized human society, and this penchant continues now. Exploring and flexibility are essential in a world where everything is constantly changing. Sony, IBM, Apple, Nokia, Dell, GE, and HP are just a few well-known companies in our field that have reorganized in response to the challenging and usually volatile market conditions to maintain growth. An organization’s structure can encourage or stifle innovation depending on its priorities and time frames. As mentioned earlier, the companies’ restructuring efforts directly boosted employee creativity.
Given the abovementioned circumstances, I suggest rethinking the current organizational architecture and strategy. These modifications need to contain the following:
- Form an executive team that will collaborate with the company’s chief executive officer, who will serve as the team’s head.
- The decision to defer the replacement of management layers with teams reduces the total number of management layers.
Hisense’s expansion throughout the years has been unrivaled in Chinese corporate history. Hisense began as a small semiconductor plant and has now become a significant Chinese electronics company. We owe a debt of gratitude to the management team and its supporters for this accomplishment. Hisense needs to be able to afford to rest on its laurels since the different challenges of the corporate environment, such as globalization, new technology, and intense rivalry, necessitate a change in structure and practice.
In the past, stability reigned supreme, and market conditions were mostly predictable; nevertheless, the global market environment has changed dramatically. Hisense was required to restructure its organizational structure due to the dynamic nature of its business operations in China, its ability to break new ground on the worldwide market, and its need to respond swiftly to a constantly changing environment. This is necessary to broaden our market presence outside of China, keep our dominant position in the Chinese market, and promptly adapt to the ongoing shifts in our environment.
Hisense’s current organizational structure needs to be revised to meet the demanding standards imposed by globalization. Once China emerged from isolation, the government’s intention to join the World Trade Organization (WTO) gradually eroded state protection. As a result, Hisense is experiencing intense competition, particularly in China, where it once dominated (Shao, 2019). Both new opportunities and new obstacles have arisen as a direct consequence of the progression of technology. The market is flooded with several small-scale electronic makers who offer their wares for sale at meager costs. These new businesses have an edge in their ability to innovate and adapt because of their relatively small size and the ease with which they can react to shifting market conditions.
In the past, when the market was primarily contained within national borders, bureaucratic structures, such as the one that Hisense currently maintains, which place a strong emphasis on hierarchy, strict rules from top to bottom, structured lines of communication, and restricted information flow, served their purpose admirably. As a modern business, Hisense must embrace change and take steps to restructure. Due to the consequences of these rapid changes in the economic environment, organizations must rethink their organizational structures to adapt. New products enter the market near-constant, even though firms work diligently to innovate and adapt to demand shifts.
Because Hisense is a government-owned company, it is structured in a hierarchical and bureaucratic manner (Kanter, 2019). As a direct consequence, both the development rate and the capacity to satisfy the market’s requirements have slowed down. A novel approach is required if one wants to promote individuality, innovation, and output. Because of how deeply ingrained Hisense’s culture is in the intricate workings of the company’s organizational structure, the company desperately needs assistance for several reasons. Businesses must have a method to monitor the market and pay attention to what their customers say.
The Need to Restructure:
It is essential to raise awareness of the need for strategic reorganization. Due to the nature of businesses, the past required bureaucratic company leadership and hierarchical management structures. In the contemporary business world, however, additional operational flexibility is required due to the globalization of industries and the advancement of new technology. As a result, modern businesses need to be more adaptive. Hisense needs to consider conducting a strategic reorganization to maintain its position as a prominent market competitor both now and in the foreseeable future.
Boost organizational clock efficiency: It is essential to realign organizational structure and procedures to increase productivity.
(a) To foresee impending market changes and respond more promptly to those developments.
(b) To speed up the decision-making process and reduce the time needed to plan and carry out strategic adjustments.
(c) Communication that is successful on every level of the organizational hierarchy.
ii.) Building Divergence: A divergence that is increasing with time, Hisense already controls many companies and has aspirations to dominate markets worldwide. As a direct result of this, it is required to make use of a variety of different tactics and procedures all at the same time.
(a) Promotes the growth of leadership abilities that can be applied in multiple directions.
(b) Let internal structural diversity instead than sticking to the norm to maintain consistency.
(c) Use processes that combine and differentiate the many aspects of your work.
iii.) Modularity: The organizational structures must also vary because of the variety of demands.
iv.) Distributing Routes: The framework must permit the simultaneous management of various market requirements and distribution channels. (a) The tendencies of the consumer market must be taken into consideration. The products must be of high quality while remaining affordable, easy to install and use, and able to be purchased over the phone or through their websites.
(b) In addition to this, it is necessary to consider the regional features of the market because various client subgroups may have different requirements.
- Research and Development Organizational Design: The R&D business must encourage creativity. As a result, the structure must be modified to support the divergence technique. (a) To avoid obstacles, a variety of inventive techniques are required.
- Conflict Resolution Methods: In the new setting, having a realistic appearance that is simply an illusion of strength and frailty will not be advantageous. It is essential to create a market framework that can resolve disputes and innovate in response to competition.
Conclusions and Recommendations:
Euromonitor reports that in 2003, Hisense had a 1.0% global volume share and a 5.5% share in China (Liu et al., 2022). The Nanjing Finance and Economic University Brand and Research Centre discovered in 2004 that Hisense’s home province of Shandong was responsible for approximately forty percent of the province’s market share, while Jiangsu was only responsible for eight and a half percent of the market share. This proves beyond any reasonable doubt that the business has to be reorganized and re-engineered immediately.
The following outlines the most critical actions that need to be completed to ensure that Hisense’s reorganization is successful.
- A brand-new executive team should take over the highest positions in the organizational hierarchy. Three strategies could be used to create a more streamlined organizational structure: outsourcing, staff reduction, and decision delay. As a result, it’s feasible to get clarity as well as cost savings. A hierarchy with additional levels may need to be clarified in addition to incurring more costs due to this misunderstanding. This is the case even though the most significant benefit of size is that it encourages order, which runs counter to the notion that adding additional levels to a hierarchy is beneficial in any manner.
- Decentralize and reorganize the R&D sector so that it can provide more flexibility and make it simpler to carry out new procedures in a timely way that is both effective and efficient.
- Techniques of efficient conflict management are necessary if one wishes to keep the implications of this structuring under control. A committee responsible for resolving disagreements ought to be constituted so that problems that have surfaced due to the occurrence can be resolved. For the new company to win customers’ loyalty, it must be able to implement novel concepts over time.
Kanter, R. M. (2019). The future of bureaucracy and hierarchy in organizational theory: a report from the field. In Social theory for changing society (pp. 63-93). Routledge.
Ng, H. M. E., Xu, J., Liu, Q., & Rangan, A. (2022). Changes in Package Sizes of Savoury Snacks through Exploration of Euromonitor and Industry Perspectives. International Journal of Environmental Research and Public Health, 19(15), 9359.
Shao, L. (2019). Dynamic study of corporate governance structure and firm performance in China: Evidence from 2001-2015. Chinese Management Studies, 13(2), 299-317.