Implementing Kotter's Change Model in SMEs

This assignment delves into the practical application of Kotter's 8-Step Change Model within the context of Small and Medium Enterprises (SMEs). It examines various aspects of implementing change effectively in SMEs, drawing upon relevant research and case studies. The provided text includes a description of Kotter's model, its eight steps, and how it can be tailored to the specific needs of SMEs. Furthermore, the assignment considers the challenges and opportunities associated with change management in SMEs, highlighting best practices and strategies for success.

Small Business Enterprises

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Business Profile of Black Penny and its strengths and weaknesses (317)............................1
1.2 Analysis of the Black Penny using comparative measures of performance.........................2
TASK 2............................................................................................................................................4
2.1 Suitable actions to overcome the weaknesses.......................................................................4
2.2 Methods through which existing performance can be maintained and strengthen...............5
2.3 Identifying new business growth opportunities....................................................................6
TASK 3............................................................................................................................................7
3.1 The existing objectives and plan of The Black Penny.........................................................7
3.2 Business Plan to incorporate change.....................................................................................8
3.3 Formulation of action plan to implement following transformation.....................................9
TASK 4..........................................................................................................................................10
4.1 Proposed changes impacts on Black Penny personnels......................................................10
4.2 Management of change in Black Penny..............................................................................11
4.3 Supervising improvements in the performance of Black Penny over a given time scale...12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

Index of Tables
Table 1: 5 years profits of Black Penny...........................................................................................3
Table 2: Comparison of sales of Black Penny and Cafe Portrait.....................................................3
Table 3: Non financial comparison of Black Penny and Cafe Portrait............................................4

INTRODUCTION
Small Business Enterprises (SBE) are the enterprises who have considerably low capital
investment as compared to large organisations. They have limited range of customers and
produce specific products and services in order to fulfil the needs and expectations of customers
effectively and efficiently (Mutanda, De Beer and Myers, 2014). In this context, as a business
consultant in a small business consultancy firm, review of small and medium enterprise i.e. “The
Black Penny” cafe incorporating in United Kingdom will be made in this report. The company
profile including the strengths and weakness of the organisation will be analysed in this report.
Further, the performance of the organisation will be analysed by comparing their past and
present performance. Justification for appropriate actions in order to overcome the weakness will
be provided in this assignment.
The new business opportunities will be identified so that the management of small and
medium enterprises can expand their business. Further, assessment of existing business
objectives and plans will be analysed so that business plan can incorporate suitable
transformation. The action plan will be prepared so that the management can work on it
effectively.
TASK 1
1.1 Business Profile of Black Penny and its strengths and weaknesses (317)
The business profile of Black Penny consisting its name and address, phone number,
employees and annual sales is provided below:
Profile
Name and address: The Black Penny, 34 Great Queen St, London WC2B 5AA, UK
Phone Number: 442072422580
Employees: 20
Annual Sales: £3, 28, 000
Email: [e-mail]
The mission and vision of the organisation is provided below:
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 Mission: “To provide customers perfect and fine dining experience” The mission of the
organisation is to provide customer efficient dinning experience so that loyalty and
customer attraction increases effectively and efficiently (Alasadi and Al Sabbagh, 2015).
 Vision: The vision of the organisation is to become leading cafe in United Kingdom by
providing customers unique and innovative refreshments (Granados, Hlupic and Hlupic,
2017).
The strengths and weaknesses of the organisation is provided below:
Strengths
 The strength of the organisation is its unique products and services that aid in increasing
customer attraction and retention.
 The ambience of The Black Penny is located at main and hotspot location that aid in
increasing the attraction of customers (Belás, Habánik and Novák, 2014).
 The skilled and qualified labour and manpower that aid in growth and development of the
organisation effectively and efficiently.
 The marketing tactics and user friendly website of the company that aid in promotions of
the products and services produced by the organisation (Zamberi Ahmad, 2014). Interactive facilities such as free Wi-Fi and music facility to gain more customers
effectively and efficiently.
Weaknesses
 Despite of unique and innovative products and services, organisation fails to generate the
customer base. Thus, this become the barricade in growth and development of the
organisation.
 Lack of professional experience in maintaining and operating the cafe effectively and
efficiently.
 Lack of monitoring and supervising which leads to conflicts and chaos between
customers and employees (Thomas, 2013).
 The costs are higher and expensive as compared to other cafe operating in the territory.
 As Black Penny is a small sized company, its ways of promotion are also limited. A
large amount of people are not aware of the restaurant because of its less popularity.
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1.2 Analysis of the Black Penny using comparative measures of performance
The analysis of the performance of Black Penny is done with the help of comparing
financial and non-financial data of Cafe Portrait with Black Penny. The comparison of the data is
provided below:
Table 1: 5 years profits of Black Penny
Year PAT(Profit after tax @20%)
(￡000)
PBT (Profit before tax)
(￡000)
2016 455 512
2015 420 500
2014 382 420
2013 415 499
2012 412 480
The above table shows the profit generated by Black Penny in five years. From the above
table it can be understood that company shows increasing in profits and only faced one
declination that was in year 2014. In 2014 due to volatile policies of European Union and
recession, small business enterprises were unable to generate profits effectively and efficiently
(Karadag, 2015). After implementation of particular strategies that aid in attraction of customer,
the organisation was able to generate profits efficiently. The previous year profit recorded was
￡455000.
Table 2: Comparison of sales of Black Penny and Cafe Portrait
Year The Black Penny Cafe Portrait
2016 300 258
2015 280 300
2014 220 199
2013 279 256
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2012 258 231
The above table shows the difference between sales down by The Black Penny and Cafe
Portrait in last five years. From the comparison it can be understood that the overall sales of The
Black Penny is more than the overall sales of Cafe Portrait (Rice, Galvin and Martin, 2015).
Though in 2015 the total sales of Cafe Portrait is more than the total sales of The Black Penny.
From the analysis it was identified that due to ineffective marketing tactics in 2015, the sales has
been reduced.
Table 3: Non financial comparison of Black Penny and Cafe Portrait
Year ending 2016 The Black Penny Cafe Portrait
Employee Turnover rate 3.00% 7.10%
Employee job Satisfaction 85.00% 69.00%
Job Offers 25.00% 15.50%
Absenteeism 15 Days 22 Days
The above table shows non financial comparison between The Black Penny Cafe and
Cafe Portrait. From the analysis of table it was identified that the management of Black Penny is
efficient and effective enough to motivate employees so that absenteeism reduced effectively
(Khan and Terziovski, 2014). As compared to Cafe Portrait, the overall performance of The
Black Penny is good and efficient.
TASK 2
2.1 Suitable actions to overcome the weaknesses
The small business enterprises incorporating their operations in United Kingdom possess
with some strengths and some weaknesses (Taylor and Taylor, 2014). The suitable and
appropriate actions to overcome the weaknesses of Black Penny cafe will help in growth and
development of the organisation. Thus, the suitable actions are provided below: Large Space Ambience: From the analysis of customer taste and preferences, it was
identified the customers in United Kingdom prefer to have large and open areas so that
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they can enjoy their food and snacks. Thus, it is recommended to the management of The
Black Penny to build large area so that customer can enjoy their food and snacks
effectively and efficiently (Sala, Landoni and Verganti, 2016). After implementing this
step, the organisation will able to overcome its weakness and will able to increase it
customer base effectively and efficiently. Promotion and Expansion: From the analysis it was identified the organisation invest
little in promotional and marketing activities. This lead to degradation of the
organisational growth and development (Legg, Laird and Hasle, 2015). Thus, in order to
overcome weaknesses, the management of the organisation needs to invest more in
marketing and promotional activities so that company can developed in effective and
efficient way. From further analysis, the small business enterprise lack expansion. Thus,
unable to generate ample profits and revenue. Thus, in order to overcome the weakness,
organisation needs to expand its business effectively and efficiently. Home Delivery service: The organisation haven't started home delivery services in their
areas whereas other cafe has already implemented this strategy. This leads to their growth
and development (Sahut and Peris-Ortiz, 2014). Thus, in order to gain competitive
advantage management of the organisation needs to embark on home delivery services.
This will not only aid in increasing sales, but also promotes growth and development of
the organisation.
 Feedback: The restaurant can also take proper feedbacks from the customers after their
meals. It will help the Black Penny in understanding the loop holes and then focusing on
their solutions to satisfy the needs of the customers, keeping in mind their health and
happiness (Bernaert, Snoeck and De Backer, 2014). It will overall maximize the number
of the customers, thus increasing the growth of the Black Penny.
2.2 Methods through which existing performance can be maintained and strengthen
There are certain methods and ways by which the management of The Black Penny can
maintain their performance and strengthen them effectively and efficiently. Thus, in this context
some the methods and ways are provided below: Developing Technologies: The technological development in United Kingdom is rapidly
increasing. This not helps the organisation to reduce their efforts, but also aid in growth
and development. There are multiple tools and equipment available at market through the
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effectiveness in Black Penny can be increased (Inyang, 2013). It is the responsibility of
operations management of the organisation to invest in appropriate technologies so that
productivity can be improved and profitability can be increases. Conduct market research: Conducting marketing research frequently so that the changes
in taste and preferences of customers can be acquired effectively and efficiently. It is the
responsibility of the marketing management of the organisation to conduct market
research through survey and observations so that information relating with recent changes
in taste and preference of customers can retain (Verbano, Crema and Venturini, 2015). Provide rewards and benefits: Rewards and benefits must be provided to the high
performing employees so that their motivation and determination can increased.
Motivated and satisfied employees performs well and efficiently, thus the productivity
and profitability can be increased effectively (Wickert, 2016). It is the responsibility of
human resource management of the organisation to implement and formulate strategies to
increase the motivation of employees effectively and efficiently. Provide training and development: Training and development is to be provided to
employees so that their skills, knowledge and competencies can be increased effectively
and efficiently (Lavia López and Hiebl, 2014). It is the responsibility of human resource
management of the Black Penny, to provide effective training and development to the
employees. This will help in improvement in the effectiveness in quality of food and
coffee can be made. Thus, training and development leads to growth and development of
the organisation.
 Focus on Professional development: The management needs to focus on professional
development of each department established in the organisation (Mutanda, De Beer and
Myers, 2014). Professional development activities include promotions of experienced
employees. This will increase the motivation in employees and they will perform more
efficiently and effectively.
2.3 Identifying new business growth opportunities
Continuous growth and development is very essential for the organisations. Business
must seeks for new opportunities so that expansion of business and productivity can be increases
simultaneously. From the analysis, several growth opportunities have been identified which are
provided below:
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 Global Expansion: London is a developed tourist destination and visitors from different
countries arrive in order to know the taste and culture of the country (Alasadi and Al
Sabbagh, 2015). Thus, in order to attract the international visitors, the management of
The Black Penny needs to expand their range of products and also provide unique and
innovative products so that their attraction can be increased effectively and efficiently. Digital Marketing: In the age of social media and internet, digital marketing plays
essential and vital role in growth and development of organisations. The marketing
management needs to focus on improving search engine optimisation so that the website
of The Black Penny can be visible to its customers (Granados, Hlupic and Hlupic, 2017).
Further, digital marketing aid in increasing the customers and assist in providing growth
opportunities to the organisation. Establishing new location: In order to expand the operations of Black Penny,
management needs to established another branch in different location where cafe has not
been opened yet (Belás, Habánik and Novák, 2014). It is the responsibility of marketing
metalanguage and operations management of the organisation to identify the areas in
which the cafe can established it's another branch. This will aid in growth and
development of the organisation effectively and efficiently.
 Online order and delivery of products: In today's world, this is the best way to expand the
business as use of internet is rapidly increasing. Cafe can make available their product
online and can provide better services to them (Zamberi Ahmad, 2014). Thus, in order to
expand their business, the management of Black Penny needs to focus on online modes
of order and delivering services. This will aid in growth and development and expansion
of business effectively and efficiently.
TASK 3
3.1 The existing objectives and plan of The Black Penny
The main objective on which The Black Penny works on is to increase the customer base
by offering them unique and innovative quality of goods and services. In this context, the
objectives are described below: To be the leading cafe in London: To be the leading cafe in London is the objective of the
organisation and management working diligently so that the objective can be attain
effectively and efficiently (Thomas, 2013). By offering variety of products to the
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customers so that their attraction and retention can be increased, the management of
Black Penny aim to become number one cafe operating in entire London. Work hard to accomplish goals: Another objective of the organisation is to accomplish
their set goals and targets. The top management set targets which are to be accomplished
by the employees and other departments (Karadag, 2015). This aid in promoting the
growth and development of organisation and also set benchmark for future success.
 To increase sales and production of the organisation: The objective of The Black Penny
is to increase the sales and productivity of the organisation. With the help skilled
workforce, advance technologies and effective managerial practices, business
management of the corporation aims to increase the sales and production of the
organisation.
Business plans of the Black Penny in order to accomplish the set objectives are provided below: Market Research: The marketing management of the organisation scan market
periodically so that recent trends and preferences of customers can be acquired (Rice,
Galvin and Martin, 2015). In order to increase sales and productivity market research is
very important and essential. Competitive strategy: The objective of Black Penny is to be the leading cafe operating in
London. Thus, in order to do that, competitive strategy has been developed as
management of the organisation provides unique and differentiated products and services
(Khan and Terziovski, 2014).
 Internal and external environment scanning: The aim and objective of Black Penny is to
achieve set targets and goals. By analysing internal and external analysis, management of
the organisation can accomplish their set goals and targets.
3.2 Business Plan to incorporate change
In order to implement and incorporate desirable change, the management of Black Penny
needs to formulate SMART plans and objectives. The SMART plans for Black Penny is
provided below: Specific: The management of Black Penny wants to increase their customer base to 20%
by the end of 2017. The current customer base is 14%, thus in order to accomplish the
specific target, management needs to focus on their products and services and also
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marketing strategies. This can aid in accomplishment of targets effectively and efficiently
(Taylor and Taylor, 2014). Measurable: To improve the workers' performance so that absenteeism and conflicts can
be reduced and motivation can be increased simultaneously. The organisation aims to be
the leading cafe operating in London. Thus, in order to that, management needs to
measure the performance of employees so that growth and development of the
organisation can be made (Sala, Landoni and Verganti, 2016). Thus, it is the
responsibility of human resource management of the organisation to improve the
performance of employees by providing them training and work on their overall
development. Achievable: The management of Black Penny, desire to increase their market share to
50%. This is to be achieved by the end of year 2017. Thus, management of Black Penny
needs to work hard and diligent so that the desired goals and objective can be achieved by
the set deadline (Legg, Laird and Hasle, 2015). It is the responsibility of operation
management and marketing management to acquired the desired market share so that
organisation can increase their productivity and profitability effectively and efficiently. Realistic: Black Penny cafe should develop new flavours or dishes and start home
delivery which would help in increasing the sales (Sahut and Peris-Ortiz, 2014). In this
context, they must formulate specific strategies and market plan so that the realistic
objectives can accomplish effectively and efficiently.
 Time Bound: Management of the Black Penny, desired to accomplish the set tasks by the
end of year 2017. Thus, it is recommended to the management of the organisation to
improve their strategies and work according to the set business plan. This will aid in
effective growth and development of the organisation within the time limit.
3.3 Formulation of action plan to implement following transformation
Action plan are series of actions and activities which are set by the management of the
organisation in order to increase the productivity and profitability of the organisation. The action
plan of the Black Penny is provided below:
1. Determining objectives and goals: The first step in implementing change and
transformation in the organisation is to determine the set goals and objectives. From the
analysis, it was identified that Black Penny wants to be the leading cafe in London and
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desired to increase the customer base accordingly (Bernaert, Snoeck and De Backer,
2014). Thus, in order to that management first needs to analyse the internal and external
environment efficiently so that determination of goals and objectives can be made.
2. Employee participation: The second step in implementing change in the organisation is to
increase the employee participation and involvement. This can be done by articulating the
important information to the employees and collect their feedbacks and suggestions. As
employees and workers are the one who greatly affected from the changes, it is important
to know their reviews so that chances of conflicts can be minimised effectively and
efficiently (Inyang, 2013).
3. Development of Action Plan: After gaining the feedbacks from employees, management
of the organisation can formulate action plan, which helps in growth and development of
Black Penny. The particular strategies must be formulated by the management, so that
organisation can walk on the path of success and growth. It must have all those strategies
that will aid in accomplishment of organisational goals and targets.
4. Implementing action plan: After the formulation of action plan, the next step is to
implement it in the organisation. Implementing the action plan will lead to growth and
development of the organisation (Verbano, Crema and Venturini, 2015). The action plan
will aid in accomplishing goals and objectives of the Black Penny in effective and
efficient way.
5. Follow Up: The next step after implementation of action plan is follow up. In this
manager analysis the overall performance of organisation after change. With the help of
analysis managers identifies various barriers that blocks the growth and development of
company (Wickert, 2016). The Black Penny management with the help of action plan can
improve the performance of business in effective and efficient way.
TASK 4
4.1 Proposed changes impacts on Black Penny personnels
The proposed changes impact on Black Penny and its personnels in following ways: Increase in growth: The proposed changes and transformations aid in improving
profitability and productivity of the organisation. These changes help the management to
improve the performance of employees and increase the quality of the products and
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services (Lavia López and Hiebl, 2014). Thus, eventually it leads to growth and
development of the organisation. Increase in attraction of customers: transformations implemented in the organisation will
aid in improving the customer base of the Black Penny effectively and efficiently. Thus,
these transformations will lead to increase in customer base by increasing their attraction.
This will lead to increase in sales and revenue generated by the organisation. Increasing market share: Organisation change helps in acquisition of market. Black
Penny desires to expand its market and become the leading cafe in London. The
following changes will aid the management to accomplish the desire goals and objective
in effective and efficient way. Employee Satisfaction: Transformations in organisation impacts upon employee
satisfaction in positive ways (Mutanda, De Beer and Myers, 2014). Employees will be
provided with new technologies to improve their skills and competencies. This will not
only increase the motivation of employees but also assist management of Black Penny to
accomplish their goals and objectives effectively.
 Growth in sales and revenue: The desired changes leads to increase in sales and revenue
of Black Penny effectively and efficiently. These changes aid in improving the quality of
products and services thus, customer increases and sales and profits of the organisation
raised effectively.
4.2 Management of change in Black Penny
The changes can be managed in the Black Penny with the help of Kotter change model.
The eight steps of Kotter change model with respect of the organisation is provided below:
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1. Create Urgency: The first step to manage change is analysing the urgency of the change.
In this management first need to identify the potential threats and make strategies in order
to eradicate them.
2. Forming Powerful coalition: Identifying and analysing the potential of leaders and
managers who ready to bring change in the organisation and forming a powerful
coalitions so that team work can be increases in the organisation (Alasadi and Al
Sabbagh, 2015).
3. Developing a vision and a strategy: Formulating a vision and a strategy so that change
can be implemented and executed in the organisation effectively and efficiently. This will
lead to growth and development of Black Penny.
4. Communicating the Vision: Communicating the vision with employees and employers so
that they work in team and collaboratively so that organisational goals and objectives can
be accomplished effectively and efficiently.
5. Removing Obstacles: In order to implement change, management must work diligently so
that the barricades and obstacles can be removed and eradicated effectively and
efficiently.
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Illustration 1: Kotter’s 8 Step Change Model
(Source: Gibbonsaustin, 2014)

6. Creating short term wins: Short term goals and objectives can be accomplished easily
and efficiently. By accomplishing short term goals and objectives, management can
evaluate change effectively and efficiently (Granados, Hlupic and Hlupic, 2017).
7. Consolidating change: Achieve continuous improvement by analysing the success stories
individually and improving from those individual experiences.
8. Anchoring Change in Corporate culture: Finally change can be accepted by the
management of Black Penny effectively and efficiently.
4.3 Supervising improvements in the performance of Black Penny over a given time scale
The changes can be monitored and supervised effectively and efficiently with the help fo
Gantt Chart. In this, business activities are sequenced accordingly. This provide brief idea to the
management about the flow business activities (Belás, Habánik and Novák, 2014). This not only
aid in providing information about the business activities but also aid in monitoring and
supervising of business activities effectively and efficiently. It will assist the management of the
Black Penny to work accordingly so that desired goals and objectives can be accomplished
effectively and efficiently.
Activities/Week 1 2 3 4 5 6 7 8 9 10
Gathering Facts
Collection of funds
Identifying market trends
Interacting with suppliers
Installing new assets and
technologies
Application of strategies
Importing quality range of
coffee beans
Initiating project
Training and development
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Monitoring
CONCLUSION
Small Business Enterprises are very essential for growth and development of national
economy of United Kingdom. In this context, the government of the country investing heavily so
that small business enterprises can be bloom in United Kingdom. From this context, this report
efficiently generates the business profile of Black Penny, a small business enterprise
incorporating in London. Further, strength and weaknesses of the organisation has been assessed
in this report effectively and efficiently. The appropriate actions and recommendation through
which Black Penny can overcome its weaknesses has been discussed in this report. The ways and
methods through which existing performance could be maintained and strengthen has been
evaluated in this assignment. The current objectives and plans of the organisation has been
critically examined and action plan has been formulated in this assignment to incorporate
changes have been made. Further, the management of change with the help of Kotter change
management theory has been investigated and prepared in this report.
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REFERENCES
Books and Journals
Alasadi, R. and Al Sabbagh, H., 2015. The role of training in small business
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Bernaert, M., Snoeck, M. and De Backer, M., 2014. Enterprise architecture for small and
medium-sized enterprises: a starting point for bringing EA to SMEs, based on adoption
models. In Information Systems for Small and Medium-Sized Enterprises(pp. 67-96).
Springer Berlin Heidelberg.
Granados, M.L., Hlupic, V. and Hlupic, V., 2017. Knowledge management activities in social
enterprises: lessons for small and non-profit firms. Journal of Knowledge
Management, 21(2), pp.376-396.
Inyang, B.J., 2013. Defining the role engagement of small and medium-sized enterprises (SMEs)
in corporate social responsibility (CSR). International business research, 6(5), p.123.
Karadag, H., 2015. Financial management challenges in small and medium-sized enterprises: A
strategic management approach. Emerging Markets Journal, 5(1), p.26.
Khan, Y. and Terziovski, M., 2014. The effects of intellectual capital on performance in
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of Management (ANZAM) (pp. 1-29). ANZAM.
Lavia López, O. and Hiebl, M.R., 2014. Management accounting in small and medium-sized
enterprises: current knowledge and avenues for further research. Journal of Management
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Legg, S.J., Laird, I.S. and Hasle, P., 2015. Managing safety in small and medium enterprises.
Mutanda, M., De Beer, M. and Myers, G.T., 2014. The perception of small and micro enterprises
in the city of Durban Central Business District (CBD),(Kwazulu-Natal)(KZN) towards
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Rice, J., Galvin, P. and Martin, N., 2015. A configuration-based approach to integrating dynamic
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