Managing organisational change at Foxconn’s factories in contemporary China
1. Introduction
Since China’s engagement to the global economy in the early 1980s, it has become the global manufacturing centre given its abundant supply of low-cost labours. International corporations have long taken advantages of this to have their goods produced or assembled in China, and they have been able to squeeze their costs and transform them into a lower product price for their potential customers. However, as the economic development and the workers’ perceptions toward lives have changed dramatically, these firms have faced severe issues with their corporate policies.
The raise of employee salary has become a trend in China and has given
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External forces are usually the forces which lead to timely organisational changes (Mullins, 2006).
Many internal forces of change come from the aging process according to Mullins (2006). For example, when the employees or company equipments do not work effectively or properly anymore due to their seniority, there may be a need for a total replacement. These changes could however be properly handled by advanced planning.
PEST analysis, which refers to political, economic, social, and technological factors, is a useful tool for an organisation to capture external changes and its strength and weakness for strategic management (Henry, 2008). This analysis plays an important role as company performance depends on how well the company handles the opportunities and obstacles presented by external change.
From the PEST analysis conducted in Appendix 1, it is noticed that Foxconn, the studied foreign-owned manufacturers in China, is now reaching a turning point where adequate adaption to external changes is needed. It is clear the company is losing its competitive advantage of its heavy use of low-cost labour and is running high on its operating costs.
As a result, it needs to find a way to cut off its operating costs while at the same time sustain and recruit sufficient workers. In order to maintain its low cost on manufacturing, Foxconn may also need to consider about relocating both domestically and internationally or investing on automation.
2.2
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