Subject: Organizational Behavior
ASSIGNMENT
Case study: Goran Kapicic and Actavis China 1. Identify the factors that contributed to Kapicic’s successful turn-around of the company. Chinese market is always described as ‘mission impossible’ by many foreign executives. However, Kapicic who is the managing director of a multinational pharmaceutical company could take over a poorly run company and turn it around by carrying out some major transformation in the firm as changing the organizational culture, replacing key personnel and instilling in the workers a strong sense of motivation and productivity. Follow Kapicic, he thinks that “It is always about people management and respecting the local culture”. Therefore, he decided to restructure the Activis’s organizational culture: Organizational culture reflects the shared and learned values, beliefs, and attitudes of its members (text book). He realized his immediate task was to restore his employees’ confidence because of so many negative comments. With his success, his workers now work as a team, they come together to solve the problem and also take responsibility for it instead of “a lot finger-pointing” like before. Additionally, he also needed to balance the demands of his parent company and the local market. On one hand, he tried to pursue his top manager that practices must take local circumstances into consideration. As a result, he appreciates those managers who put more effort into understanding Chinese people and culture and the way its government worked. Therefore, he is also known as “China market expert”. For this reason, he just hired Chinese person to fulfill into all position in the company because they can help him to deal with local matters. On the other hand, he clarified with his staff that they have to meet certain requirements set out China. Chinese operations had to follow many of the guidelines and policies established at the headquarters for all of Actavis’s overseas operations. Moreover, when he found that the current sales activities might be acceptable in China but not compatible with the European standard he decided to change immediately.
Not only change the negative atmosphere here Kapicic but also made many difficult personnel decisions including lose the entire sales team. He believed that “good people can drive an organization to success just as bad people can drive the organization to failure”. Although he is quite refresh with his staff, when change things were met with strong objections from the then-sales directors as well as from the whole sales team he faced the prospect of firing all of them. It’s also one aspect of his personality which is strict and uncompromising inherited from his father who is a traditional Croatian. Because of personnel turnover rule, those who stood in the way of this company moving forward had been removed. Consequently, their departure enabled Kapicic to bring in an outstanding salesperson from another company. At the moment, the key team comprised individuals who had been personally recruited by him and who were in place go grow the company to the next level. He focused more on employee development. What he wanted was a systematic process of developing people. Ms. Meggie Cheng, the new director of HR commented that delegating the right things to the right people is Goran’s greatest strength. By hiring Li Hongkui and promoting Song Chengyan, giving them a lot of ‘face’, he motivated the other subordinates. However, he quite likes challenges so that he remained some older employees to present difficult things for the company going forward. Due to performance is a function of a person’s level of ability and motivation (text book), developing a responsible proactive attitude in workers is one of the first important things. Nonetheless, inspiration does not come only from speeches and talks at company events, a real leader needs to energize everyone by setting the right example. For more information, he promoted Li Hongkui as his deputy but treat him like a partner rather than a second-in-command. The reason for it is that he recognized the importance of Mr.Li to the company because Li Hongkui is Chinese so he has immense experience in running the operational aspects of a factory. In addition, working in China, he needs to consider much about the concept of face. Song Chengyan who leads a team of 90 sales people is also an exemplary employee. He felt his work very enjoyable because Goran gave him a lot of room and trusted him. This is another way to encourage subordinates that satisfying their needs. Kapicic followed the theory of sustainable development. It means that strives to meet current human needs without compromising the ability of future generations to meet their own needs (textbook). Goran Kapicic thinks that the fundamental issue is still people so he also focuses on attract talented and committed individuals to join. 2. Critically discuss Kapicic’s leadership style
Leadership’s brand of Kapicic is the most important factor that contributed to his success to make a loss-making company becomes profitable. His style is an appropriately combination of many models.
First of all, his power comes from five sources, namely: legitimate, reward, coercive, referent, and expert. Legitimate power is an individual’s ability to influence other’s behaviors because of the person’s formal position in the organization (text book). With the role of a top manager of Chinese operation, he has totally right to tell employees what to do. When he want to change sales activities and met with strong objections from the sales directors, he still did his decision. Additionally, he used rewards to reinforce good behaviors of the employees. For example, Song Chengyan who “joined Actavis as the deputy sales manager in Sales Department II” was promoted to become manager of Sales Department I and manager of both sales departments after that on around sixteen months. In contrast, he willing to punish everyone who made undesired actions like refusing the change and therefore, indirectly prevent the moving forward of the company. On the other way, all people in the firm respect him because of his talented and knowledge. He used to read “The Art of War” of a Chinese author Sun Tzu to learn more about Chinese culture and the way to apply some strategies into doing the business. The reasons for Li Hongkui joined Actavis even when he had worked for a big organization and received a very good salary is also by Kapicic’s presence.
To envisage the leadership effectiveness we base on three foundation models. With Kapicic, Traits and Theory Y models are most highlighted.
Traits model of leadership is based on characteristics of many leaders – both successful and unsuccessful – to predict leadership effectiveness (text book). There are four traits in most successful leaders: Intelligence, Maturity and breadth, Achievement drive, Integrity. Additionally, Chinese Corporation always respects the leader with the type of decisiveness, trustworthiness and team spirit. Goran Kapicic has a very high possibility to become a successful leader in China as he shows that he has owned these types of personality traits. He is inherited from his father who is strict and uncompromising. He is always assertive in every situation from recruiting to changing and firing. He performed also seven competencies that are all contributed to his success. A competency is an interrelated cluster of knowledge, skills, and abilities needed by an individual, team, or organization for effective performance (text book). Specifically, self-competency is his ability to evaluate personal strengths and weaknesses and interest in new learning. For instance, Meggie Cheng, new HR director, said that: “I see Goran’s greatest strength as his ability to delegate the right thing to the right people. In this way, he not only gets things done but also develops employees”. At the same time, Kapicic also encourages employees to keep going for their studying: “I personally feel that continuous learning is a very important factor for an individual’s career growth and organizational success”. Diversify competency express in the way he evaluated each subordinates as inviting Li Hongkui to work for him. Across culture competency clearly indicate through he had strong understanding of the market, people and the government due to have worked in China for more than 19 years so that he is called “China market expert”. Goran Kapicic learned Mandarin during his time in China so he can better understand the Chinese culture and the way its government work. Although he respects culture of the local market he still tries to avoid stereotypes. More specifically, some kinds of sales activities that might be acceptable in China but were not suitable with the practices and requirements from a European standpoint therefore Actavis China needed to change the way they worked in the local country. He knew how to ‘communicate’ with employees by active listening so he can timely discover what they need and think and offers input whenever it is needed. In all these things, building a team is an importance and he did it very well. He made each individuals in the firm had become a real team and worked as a uniform machine. From the past, employees in the company right now were changing to become a real team which is just like Edward Wu praised proudly: “Today, when a problem occurs, we all come together to solve it because it is our responsibility. We now work as a team”. Finally, he easily adapted with new transformation like working conditions and official culture at China by his change competency.
One more key term to comment about his leadership style is Theory Y models. Theory Y is a composite of propositions and beliefs that take an empowering approach to leadership to leadership that is based on a positive view of human nature; it focuses more on leaders’ actions (text book). Demonstration clearly for that is his refreshing leadership style. He suggested everyone call him by first name instead of Mr. Kapicic. It proves that he tried to reduce his power distance with the others person to make everyone becomes more familiar. This style contrasted greatly with the Theory X which was addressed in most Chinese firm. It means that Chinese managers will always supervise their employees because they have a negative view of human nature.. However, the difference was appearance because still had to address Kapicic’s deputy (Li Hongkui). Additionally, he rarely directs employees for what they do and just provides the tools for them to do the required task when they need. This means he puts more autonomy for the workers and it can help them to develop knowledge and skills for themselves. To consolidate for what he did, he is also quite good in satisfying human needs through Maslow’s Needs Hierarchy from deficiency to growth needs. Beside physiological, security, affiliation and esteem need, it is important that he let them free to become what they can become (self-actualization). To demonstrate, Song Chengyan commented that: “I derive much satisfaction because of the opportunity to take control of my work. I often work late in the office, sometimes past midnight, but although I tired, I find my work very enjoyable. Money cannot buy all of this.”
For the new perspective of leadership, it can be said that his style is a mix of authentic leadership and transformational leadership. An authentic leader will win the respect of followers by encouraging and respecting diverse viewpoints and is general by fostering collaborative relationship (text book). By having self-competency, he understood clearly his value and always provided a listening ear to the employees so that he can not only provided them the autonomy but also knew their needs and their matters they met to help them timely. While authentic leadership will includes the interrelated components, namely: simulates follower identification, creates hope, reflects trust, shows positive emotions and raises optimism, transformational leadership focus more on showing individualized consideration, creating intellectual stimulation, providing inspirational motivation and fostering idealized influence. It is a plainly evidence that for each situation Kapicic would have different treatment. Normally, everyone can call him by first name for friendship and closeness. However, he also willing to fire entire sales team when they opposed his decision to change the way selling product. Additionally, the staffs also developed to be leaders, typically Song Chengyan, he “learn a lot from him about leadership and motivating subordinates”.
To sum up, it can be applied foundation and new perspective of leadership’s models to critically discuss about Kapicic’s unique brand. Partly analyses some theories in that two term help to predict the effective of Goran Kapicic leading way. 3. Kapicic obviously places much emphasis on staff development. How should he manage this effort when the company operates in a highly competitive environment with low margins?
Kapicic highly appreciated in systematic process for training employees. However, good-quality development programs would be expensive. The company was starting to earn profit, but the drug industry still remained a very competitive market with very thin margins. Therefore, managing this effort to suitable with current circumstance is very important.
There are some questions he should consider before making decision. First, was this is the right time to start investing heavily in employee development? If so, how should employees be chosen and ranked for the development process? Second, what sort of development programs should Kapicic select, and who should serve as the company’s training providers? Or should Actavis China develop its employees through on-the-job experiences, which were the current practices?
To answer these questions, it can be said that he should training employees through experiences when they worked daily rather than providing for them some professors who just teach them the theory. For more information, it can reduce the explicit cost of opening class and salary for experts and the implicit cost of the time the workers need to pay to take part in the class. There are some opposite ideals said that learning by experience can create large amount of cost if the employees do something wrong which cannot fix. Although they can learn from the failure company still paid for this fault and it’s still not mention about some consequences cannot recovery and damage to company’s image, especially when it’s competing with a huge amount of competitors. However, they forgot one thing that those who can understand and learn by heart the theories doesn’t mean that they can do it well in reality. In other words, learning cannot totally delete fault, it just reduce the probability occurrence and current practices is also a way of studying. Therefore, with the moment when there is highly competitive market, to reduce the cost for company, developing a full program right now may be quite soon. Beginning with learning from experience first can be a better way.
One more thing to consider is that the company needs to survive first before talking about training employees. On the other hand, staff development program does not take one or two day to do, it is a long process of observation and selection from what courses need to be applied to who can do it well to bring the best result after receiving training. It cannot do for fun and doesn’t get anything after that. As a result, it will take a lot of time and quite high cost. At the moment, Kapicic just took the company from loss operation to become making profit, it’s quite hazard to bet on something which hard to predict consequence. One more time, training employees by a systematic program is not bad but it should be performed gradually so employees also can adapt better. 4. How will news of the acquisition by Watson affect the employees of Actavis China? Is there anything Kapicic can do in advance to his people will be better prepared?
On 25 April 2012, Actavis Group is acquired by Watson Pharmaceuticals for approximately EUR 4.25 billion. Therefore, Actavis China a subsidiary also is affected because of Individual resistance and Organizational resistance and needed some technical method from the manager to help employee adapt with the change.
It is mentioned in the text book that there are six reasons for individual resistance: perception, personality, habit, threat to power and influence, fear of unknown and economic reason. Initially, Watson Corporation and Actavis Group are competitors; the employees of each company saw that they were equal in the market. However, when acquisition occur the Actavis’s employees can feel being looked down by Watson because now they become subordinates of Watson. Additionally, they will scare to be fired and influenced by the other different boss. These behaviors are the surface of the different value in them. Another resistance contribute to the employees’ behaviors is organizational resistance to change. It is included two essential components: Organizational Design and Organizational Culture. The merge of Watson and Activis create the big change in Organizational Culture. It is really a difficult task for Kapicic to solve. To be more details, external adaptation and survival, the Internal integration are the two elements which help to form an organizational culture. Specifically, Watson is a Western Corporation with high individualism value compare to Actavis China with collectivism culture. This is the very important factors that affect individual behaviors. There are more and more in differences between the two countries and the two Corporations. The question is with all individual resistance and organizational resistance to change which method will Kapicic apply to make the acquisition successful? As analysis before, Goran Kapicic owned change competency so that he quite good on recognition and implement needed adaptations not only for him but also for his staff. To prepare for workers, Kapicic can do some kinds of interpersonal method: empathy and support, communication, participation and involvement. He needs to understand his staff’s trouble in the change to support and help them overcome that and try to make employees know that he still concern them so that they can easily to provide information. People usually scare something unknown which cannot predict consequence. Therefore, communication can help to reduce this feeling and attack the scandal. However, just giving advice is not enough, manager need to take part in solving problems with the employees to help them gradually decrease their resistance.
Organizational resistance to change only can be reduced by applying three organizational methods, namely: envisioning, energizing, enabling. First of all, he should make them aware about the change and try to explain for them why and how applying the change. As a result, it can make employee curious about the process and is open to information. Applying an appraisal procedure give employees a change to test and see the effective result of the change. Finally, the workers can adopt well with the innovation.
In conclusion, acquisition can create some bad moods for the employees and make them lack of motivation to work that lead to decrease productivity for Actavis China because of Individual Resistance and Organizational Resistance. For each problem, Kapicic should deal with its solution as Individual methods and Organizational methods.

References
(MBA), B. W. (9 April 2011). Working for Chinese Boss: Leadership in China. Moscow, Russia: Camellia Universal Limited. http://www.slideshare.net/camelliauniversal/working-for-chinese-boss-leadership-in-china Don Hellriegel and John W.Slocum, J. (20011). Organizational Behavior (13th Edition). South-Western cengage learning.

--------------------------------------------
[ 1 ]. http://www.slideshare.net/camelliauniversal/working-for-chinese-boss-leadership-in-china