1.0 Company ProfileHeineken is one of the worlds leading brewers, in terms of sales volume and profitability. The company hasa wide international presence through a global network of distributors and breweries. Heineken is also thelargest brewer and beverage distributor in Europe in terms of volume. The company brews and sells morethan 170 varieties of international premiums, regional, local and specialty beers (Drink Market watch, 2009)2.0 Punctuated Equilibrium model applied in Heineken Inc.The punctuated equilibrium model of organizational transformation (Tushman&Romanelli, 1985) hasrecently emerged as a prominent theoretical framework for characterizing and investigating fundamentalorganizational change. As described by its proponents, punctuated equilibrium theory depicts organizationsas evolving through relatively long periods of stability, equilibrium periods in their basic patterns of activitythat are punctuated by relatively short bursts of fundamental change.As explained further by Stinchcomhe, (1965), the general theory argues that the common state oforganizational activity is one of stability or equilibrium. Organizations establish an initial pattern of activitybased on the environmental conditions prevailing and the managerial decisions made during their time offounding. The modal explanation shown by the diagram as follows;
In Heineken, there has been business as usual status being the top brewers and retailers of beer until the1950’s, the grandson of the Heineken founder, Freddy Heineken observed the consumption patterns changeradically in coming years. The change was an initial radical change as shown by Figure 1. Following theimmediate change in the initial stage, there was an incremental change seen in the organization amongmiddle level managers adapting to the new environment of work, strategy of the organization and powerdistribution. (Beugelsdjik.S, Slangen.A, Herpen.M.V, 2001).This pattern change was due to the technological developments in terms of introduction of televisions andrefrigerators in the modern households. Heinekens noticed the change in lifestyle pattern from bar and pubsto consumption at home. Heinekens had to reach the customers via the supermarkets. This meant Heinekenshad to abolish the traditional distribution methods, making supermarkets and wholesalers the new partnersin the business3.0 Implementing the ChangeMiller and Friesen (1982, 1984) showed that organizations that radically and quickly altered their formalstructures, decision-making routines, and information-processing devices performed better over their livesthan organizations that changed gradually or incrementally.
Following the change introduction of technology and change in the environment of the business, Heinekenhad to drastically change the distribution system. By the end of the 1940, the distribution system waschanged from depending on agents and breweries to supermarkets and wholesalers. The decision was madeby general manager, Feith (Beugelsdjik.S, Slangen.A, Herpen.M.V, 2001)4.0 Results from the ChangeResults from this sudden changes implemented are the amount of beer consumption went up from ten litresper person in 1949 to 45 litres in 1968, Heineken’s market share rose from 21 per cent to 39 per cent(Beugelsdjik.S, Slangen.A, Herpen.M.V, 2001). As explained byVirany, Tushman, and Romanelli (1992) that organizations that accomplished transformationsdiscontinuously and in response to basic changes in their environments performed better over their livesthan organizations that were either never transformed or were transformed excessively without the clearstimulus of environmental change.5.0 ResistanceIn Heineken breweries sold their beer to pubs via agents. The agents and the brewers were mutuallydependent. Heineken had three commercial directors who were active in the region of respectivelyAmsterdam, Rotterdam and Hertogenbosch. The commercial policies were determined by these agents(Beugelsdjik.S, Slangen.A, Herpen.M.V, 2001).During the change process, the three commercial managers did post resistance to change and attempted toremain status quo. This change implied that their crucial positions between brewer and pub owners came toan end, and also the new system demanded new ways of doing business.Resistance to change as subunit managers seek to maintain a complex network of commitments andrelationships. Resistance to change is critical to punctuated equilibrium theory in that it establishes the keycondition that supports revolutionary transformation as the principal means by which organizations canaccomplish transformation.(Romanelli.E and Tushman.M.L, 1994, pg1144).
Organizations develop "webs of interdependent relationships with buyers, suppliers, and financial backers . .. and patterns of culture, norms, and ideology" (Tushman&Romanelli, 1985: 177) that legally andnormatively constrain organizations to an ongoing commitment to established activities and relationships6.0 ConclusionAs conclusion, the radical change and incremental change is seen due to a sudden change in the factorsaffecting the organizations. In this case the environmental change and technological change has affectedHeinekens to adopt and change using the equibilirium modal.ReferencesBeugelsdjik.S, Slangen.A, Herpen.M.V (2002), Shapes of organizational change: The case ofHeineken Inc., Shapes of organizational change Vol15, No3, pg311-326Drink Marketwatch,(2009) Company Spotlight: Heineken, Data Monitor pg32-38Miller, D,,& Friesen, P, H, (1980), Momentum and revolution in organizational adaptation.Academy of Man agement Journal, 23: 591-614Romanelli.E and Tushman.M.L, (1994), Organizational Transformation as PunctuatedEquilibrium: An Empirical Test, Academy of Management Journal. Vol. 37. No. 5, pg1144Stinchcombe. A. L.(1965). Social structure and organizations.In J. G. March (Ed.). Handbook oforganizations: 142-193. Chicago: Rand-McNally.Tushman. M. L..&Romanelli, E. (1985). Organizational evolution: A metamorphosis model ofconvergence and reorientation. In L. L. Cummings & B. M. Staw (Eds.). Research inorganizational behavior, vol. 7: 171-222. Greenwich. CT: JAI Press.Virany.B..Tushman. M. L.,&Romanelli. E. (1992). Executive succession and organizationoutcomes in turbulent environments: An organization learning approach. OrganizationScience, 3: 72-91.