What are some of the social, political and economic forces that are influencing Ivanovskaya Manufactura’s decision?

In the early years of the new century, it wasn’t hard to see that Ivanovskaya Manufactura, the Russian wool processing plant, with over 3300 employees couldn’t keep doing business the old-fashioned twentieth cen- tury way. The newly appointed Vice Director for for- eign relations Maria Ivanova, having completed her MBA in the UK and now back in Russia to support her family business, fully realized that she had to rise to this challenge to justify her new position in the recently formed foreign relations department. Headquartered in Moscow, Ivanovskaya Manu- factura was the only wool processing company in central Russia, offering a wide range of wool fab- rics, and woollen blankets for the army and civil- ians, as well as producing screens and felts for paper machines to commercial customers of all sizes throughout the country. Over the years it had diversified into various types of activities by dividing the company into smaller business units until it consisted of more than 30 separate such units. ‘Like mother, like son’ each had its own hierarchy, char- acterized by strong top-down administration and the well-defined rules and procedures typical of the textile industry; virtually every employee possessed specialized knowledge about a narrowly defined market niche. After Maria’s presentation on the development of trends in management science and how the company should adapt its business practices, the upper-level management gave the matter considerable attention and concluded that Ivanovskaya Manufactura’s refined division of labour into technical specialisms needed to give way to a collaborative learning organization, one where employee empowerment and open information made it possible for anyone, from workers at the shop floor to the management in each business unit to be knowledgeable about a variety of products the other units were producing, and as a result to join forces on the R&D front.

Since it was Maria’s idea, she was given responsibility to start implementing the learning organization environment. She wanted to introduce newsletters as vehicles of information sharing – an idea she had seen working well abroad. However, she was stuck, as she was obstructed at every step and could not print the necessary information as a newsletter, could not summarize the information on the website and if newsletters were sent via email then only the top management would have access to these and then only during working hours. It appeared that there was always a reason why things were not possible.

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Alexey Ivanov, the president of the company, clued her in. After weathering a turbulent period, one that had seen plenty of layoffs in the textile industry, many employees viewed the restructuring and new information-sharing methods as the first step in a process that would lead to redundancy let- ters landing on their desks. Some employees, in fact, saw their own highly specialized knowledge as a kind of job insurance policy. ‘They know that if they don’t share their specialist information now, they become a lot more important to the company.’ However, Maria thought that it was not the workers that were not ready to share their expertise and experience, it was also management that did not want any ideas to be shared. She thought, ‘They simply do not want to devolve the power to lower levels!’

Question: 1 What are some of the social, political and economic forces that are influencing Ivanovskaya Manufactura’s decision to move with the time and become a learning organization?

2. If you were a specialist at Ivanovskaya Manufactura, how and why would you respond to the proposed changes? What steps would you sug- gest Maria take to increase employee utilization of the knowledge-sharing system in particular? How can she encourage management and employees to share information?

3. What general obstacles would you foresee in a company such as Ivanovskaya Manufactura try- ing to make the transition from a hierarchical, or bureaucratic, to a learning organization? What are some general measures managers can take to smooth the way?

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