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Chapter 10

Chapter 10 – Confronting Changing Contexts.docx

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Administrative Studies
ADMS 1000
Natalie Guriel

Chapter 10 – Confronting Changing Contexts Forces for Change Internal and External  Organizations are open systems that are in continual interaction with their external environment.  Success and survival require organizations to continually develop a ―fit‖ with their dynamic and evolving environment.  The success of any organization depends on the capability to maintain stable and reproducible organizational processes and outcomes. 1. Economic Changes
  Organizations must adapt to changing economic conditions.  Downsizings are more likely to occur in lean times than in rich.  Organizational expansion cannot occur in an economic vacuum.  Improving the organization. 2. Competitive Changes  the organizational skills and capabilities needed to survive and grow change in significant ways.  Organizations must adapt to change as competition evolves in markets from fragmented and fast growing to concentrated and declining.  competition, both domestic and foreign, certainly has demanded an acceleration in innovation among firms in many industries.  Organizations, to compete effectively, must continually create new and better methods of serving customers. 3. Technological Change  Technological is both a continuously changing variable and one that permits and demands organizational change.  Technology has been a double-edged sword for business—brining both benefits and threats.  It can create new industries and destroy old ones.  Benefits from technology have also included the ability to gain more flexibility in work arrangements such as the practice of telework. 4. Labour Force Changes
  Business must understand and respond to changing demographics in the working population. o Eg: diversity in our work force is reflected in the growing presence of older workers.  Organizations need to understand how relationships with the labour pool can change over time.  many businesses need to consider how labour or union demands can impact corporate policy and decision-making. 5. Global Changes
  Tremendous growth of ―borderless‖ corporations.  The increasing ability of multinational corporations to move freely across borders and set up business just about anywhere reflects the title ―borderless corporation.‖ o Ex: goods can be designed in one country and raw material obtained from a second country 6. Legal/Political Changes
  Deregulation and privatization are clear examples of the importance of considering governmental changes on business strategy.  Are legal regulations facilitating, or restricting, certain strategies? The legal environment of business can dictate changes in how business competes, as well as what services it offers and how they can be offered. 7. Societal Changes  Business must respond to society: consumers‘ tastes change for example, and business must adapt to such changes.  the types of organizations that service societal demands can change.  The aging population suggests greater emphasis needs to be placed on such industries as the health care sector.  The increasing education level of the workforce has also generated changes to the nature of work. Why do organizations resist change?  Focusing on day to day routines and goals can create resistance to change. Change may be required to organizational systems and structures that have been in place for a long time.  It also requires individuals to change, the way they do their work and whom they work with as well as reporting systems and roles.  Bureaucracies have rigid rules and procedures in place which can create resistance to change. Although they allow for control and some level of security and consistency this can limit creativity and innovation (i.e. change). Types of Organizational Change Organizations may confront three fundamentally different types of change: developmental, transitional and transformational 1. Developmental Change
  This type of change attempts to improve upon what the business is currently doing, rather than creating something completely new.  This includes the improvement of existing skulls, processes, methods, performance standards or conditions. 2. Transitional Change  This type of change actually replaces what already exists with something completely new and requires the organization to depart from old methods of operating while the new state is being established. o The two factors that largely distinguish transitional from transformational change:  It is possible to determine the final destination or state in detail before the transition change is implemented. This permits the change to be managed.  Transitional change largely impacts employees only at the levels of skills and actions, but not at the more personal levels of mindset, behavior and culture. 3. Transformational Change
  This type of change is far more challenging to manage compared to the other types of change for at least two reasons.  First, the future state or destination cause by the change is unknown when the transformation begins.  the final state is determined through trial and error as new information is gathered.  transformational change cannot be managed with predetermined, time-bound or ―linear‖ plans.  the actual change process only really emerges, somewhat unpredictably, as the change is implemented Methods of Change  THEORY E focuses on formal structural and systemic change. o Goal: Seeks to maximize shareholder value o Focus: top managers decide on the format and process of 
 change, emphasize structure and systems o Planning: programmatic, top driven o Mechanisms: rely on mechanisms such as performance bonuses, personal reduction, asset sales, strategic re-ordering of business units o E.g. Scott Paper – loss of 11,000 jobs, divestment of business units, relocation of HQ  HQ 
 THEORY O o Goal: develop organization capabilities, o Focus: develop an organizational culture that supports learning and high performance employee base o Planning: emergent, participative o Mechanisms: requires flatter structure, increased bonds between organization and employee; contingent on employee commitment to the change o 
 E.g. Champion International – high employee involvement, improved relations with unions, skill-based pay system, no layoffs. Transformational change Methods and Strategies for Managing Change IBM Example 1. Understanding the Forces for Change  At a time when the external marketplace was changing rapidly, IBM had not realized that its customers, technology and competitors had changed; nor had it adapted to meet those changes 2. The Change Vision and Implementation
  Gestner had to develop and implement a program what would be accepted and adopted by the stakeholders (employees, customers and shareholders). o Steps:  Analyze the organization and its need for change
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