Christina Gold Case Study Why was the restructuring needed at Western Union – or wasn’t it? Western Union at the time when Christina Gold had in intention to restructure, was a structure pure American – Centric with the main operations managed from US. This structure will not be efficient and will not respond to the goals of growth of Western Union. The trend for growth showed in 2002, when Western Union reported sales of $3,2billion and eighty percent increase compare with the prior year, can not be sustained with the existing structure that’s why is it mandatory to change the current approach.
Christina Gold wants to change Western Union structure from a domestic business and international division as it was in 2003 to a structure based to a global business with regional structures and with a global marketing plan that allows each region to spend their time focusing on customer needs. The existing business with many products on the domestic market and only one product on the international market , money transfer, will not fits with the aim of having a common platform for domestic and international business.
So it is obvious that the restructuring process could not be avoided if Western Union wants to bring their services to market more effectively and wants to have brand consistency across the globe. Even the restructuring process is not simple and needs a lot of resources it is an opportunity for Western Union to sustain the company to meet customers’ expectations, followed the market trend, adapted to each culture market, and understood the needs of individuals.
Do not forget that 85% of Western Union’s revenues came from customer-to-customers (C2C) and 14% from customer-to-business (C2B). The main customers of Western Union are the immigrants and therefore the company anticipated the growth in the money transfer business in correlation to immigration and related to employment rates worldwide. The result is that the company have to follow this trend and delivered tailor-made services to regional markets. What were the most important design changes that were made and what rganizational activities are likely to be more effective as a result of these changes? It starts with developing of the six core strategy : Develop a global brand Enhance global network distribution Expand adjacent markets such as Western Union. com and Prepaid services Develop future business leaders within the organization Increase productivity Execute on service excellence In order to align the organizational structure to the six core strategic focus the changes were made as follows: Top Management Changes:
One president, Christina Gold and six senior executives, four senior vice-presidents, an CFO and the senior vice-president of Western Union International. Geographical Decentralization Reorganization of the company on a decentralized geographical base covering three main regions: the Americas; Europe, Africa, the Middle East and South Asia; and Asia – Pacific Global Product & Market Strategy Setup of a global marketing plan and a global structure. Launching three new business areas: commercial services, the website, WesternUnion. om and the prepaid card. An important issue is Profit and Loss(P&L) responsibility who was proposed to be linked to regional heads. Leadership Changes and Executive Development Moving the head of Western Union International in Paris, France, to the company’s headquarters in Colorado. Two new corporate roles were created: senior vice-president of business development and senior vice-president , operations. Recruiting process was intensified and specially for individuals who possessed an understanding of operating in China and India.
New development programs for leaders were set, “ First Executives”, a program in line with the new changes and the global strategy of the company. What difficulties can be expected as a result of these changes and what can management do to prevent major unintended consequences? Dealing with cultures , could be one of the major problem that I would expect to appear. Different cultures, different ways to behave and doing things, different expectations, different habits, this are the most important issues that Western Union have to face it and deal with them.
This cultural problems can be solved through leadership change it means that from the beginning the company have to be flexible to different culture, will involve local people in local management, will adapt the product portfolio to the local needs, will organize experience interchanges between people from different countries and so on. Resistance to change. Not so many US leaders are willing to be part of this changes, they do not want to give up control of product lines. Giving the responsibility and authority to the regional heads but also the profit nd loss responsibility could be an option to prevent major unintended consequences. Another way to deal with resistance to change is to apply Change Management, but the costs could be much more higher than applying the changes step by step. Exceeding the Budget approved for changes, US$4million. If the initial estimation will be exceeded due to some costs that were nor foreseen, could create a problem in front of the shareholders and can lead Christina Gold and her team to lose the credibility and confidence.
A better construction of the restructuring budget with the involvement of the people working for Western Union in the different regions, outside US, can lead to the construction for a budget close to reality. HR Excellence, finding the right people that understand and respect the code of conduct, people with a solid background and right attitude towards multinational environment. In order to have the right people the recruiting process is extremely important and then followed by internal training programs in the local country and in other locations that can be representative for the Western Union’s climate.
Legal and Social treats, have to be assessed from the beginning because next could course a lot of problems because of the legal frame of the host country and also because of the cost of living varies from country to country. A good evaluation from the beginning can prevent a lot of unpleasant situations than can affect the operations . How well-aligned is the new structure with the six core strategies? What improvements and problems do you anticipate? 28 Develop a global brand 29 Enhance global network distribution 30 Expand adjacent markets such as Western Union. om and Prepaid services 31 Develop future business leaders within the organization 32 Increase productivity 33 Execute on service excellence I would say that the new structure designed is enough aligned with six core strategies . Having a strong presence and a strong structure at the global level, Western Union developed a global brand and enhanced global network distribution. I do not have information that the productivity was increased but it’s clear that the volume of operations was increased means that the business size increased significantly .
Improvements have to be done continuous and have to be done according to the market demand. Western Union has to be focus on the market and adapt immediately the products in order to respond to the customers needs. The problems that could occur are from inside and fro outside the company. From inside the flexibility in taking decisions usually suffer, because of the management structure and because of the long procedures in taking decisions. From outside Western Union has to take care to the competition, MoneyGram for example doesn’t sleep and others competitors too.
