What changes in organization

CHAPTER 4 :What changes in organizationPresented by :

Noorliza Binti Md Noordin (814780)Norazlina Binti Mansor (814778)MANAGING CHANGE AND COMMUNICATION(BSMH 5093)

1Presentation overview:Spectrum of ChangesFirst Order Change - IncrementalSecond Order Change - TransformationalBeyond First and Second Order ChangeMid Range ChangesPunctuated EquilibriumRobust TransformationTypes of ChangesDownsizingTechnological ChangeMergers and AcquisitionsKey Change Challenges2FIRST ORDER CHANGE - INCREMENTALSPECTRUM OF CHANGES3FIRST ORDER CHANGE IncrementalMaintains and develops the organizationAdjusting systems, processes, structures, but no strategies and valuesTaking of individual initiativesDevelopment of local routinesE.g.:Continuous & smaller changes to the structure of the organization.4SECOND ORDER CHANGE - TRANSFORMATIONAL SPECTRUM OF CHANGE5Second order changeTransformationalFundamentally changes the way an organization functionsMove from entrepreneurial to professional management structureRevitalization of already-established companyVisionary change in the businessE.g.:Downsizing

6Types of organizational changeTUNINGADAPTATIONREORIENTATIONRE-CREATIONPROACTIVEREACTIVEINCREMENTALTRANSFORMATIONAL7Types of organizational change incremental TuningThe management decided to change the whole organization business structure or objective.

Require fine tuning or minor changes to existing organization either to increase organization efficiency towards achieving its objectives or defending its strategic goal.

8Types of organizational change incremental TuningContinuous activities within the organization in order to maintain alignment between internal elements of the organization and between the organizations strategy and external environment.

E.g.:improving existing processes, policies, organization methodology, procedures; introduction of new technology;

9Types of organizational change incremental AdaptationIncremental and adaptive requirement for a change of an organization due to external environment or circumstances that the organization needs to adapt with.

Involves responding to a successful new marketing strategy adopted by competitor or to a change in the availability of a key resource.

10Types of organizational change incremental AdaptationInvolves doing more of the same but doing it better in order to remain competitive. This kind of change is not about doing things in fundamentally different ways or about doing fundamentally different things.

E.g.:E-commerce and online adaptation to offline business strategies.

11Types of organizational change transformational Re-orientationProgram that involves a redefinition of the organization or enterprise for future opportunities or problems.

To ensure that the organization will be aligned and effective in the future.

Involves a gradual process of continuous frame modification.

12Types of organizational change transformational Re-creationInvolves transformation of organization that basically involves all basic elements within the organization. Involves either a portion of the organization or the entire structure and system of the organization. i.e. organization frame breaking and the destruction of some elements of the system.Can lead to disorientation because the orientation involved many changes including people at every level.

13Intensity of change

14MID RANGE CHANGESBEYOND FIRST & SECOND ORDER CHANGE15Mid range changesOrganization seeks to modify the company without destroying employee loyalty and other positive company attributes.

Avoids the alarming implications of large scale change.

Avoids the negative perception of change announcement:High inertia - result when change is perceived as unnecessary.High stress result when the change is perceived as unattainable.

16PUNCTUATED EQUILIBRIUMBEYOND FIRST & SECOND ORDER CHANGE17Punctuated equilibriumAnother alternative other than adaptive and transformational change.Long periods of stability followed by short bursts of change and instability.E.g.Strategic stability as a group over a long period but at times of any environmental disturbances, there were minor instability.

18ROBUST TRANSFORMATIONBEYOND FIRST & SECOND ORDER CHANGE19Robust transformationConsiders environmental conditions as being temporary and requiring robust responses including the enactment of new capabilities.

E.g. Rebranding

20TYPES OF CHANGES

21downsizingTYPES OF CHANGES22downsizingWhat is organizational downsizing ?Reduction in organizational size - Laying off employees - Eliminates operating units

Why organization carry out downsizing ?Achieve cost cutting Improve organizational efficiencyImprove productivityIncrease competitiveness of the organization

23DOWNSIZINGApproaches to DownsizingDownsizingRetrenchmentCentralize operations to improve productivityRemove unnecessary jobs and amenitiesIncrease economies of scale and maintain competitive advantagesDownscalingPermanent changes to employment and tangible resource capacityReduces firms economies of scale and competitive market shareDownscopingEliminate business that are unrelated to organizations core business25TECHNOLOGICAL CHANGETYPES OF CHANGES26Technological changeAdvancements in technology has led to evolution of newer and faster modes of data and information transfer.

Computer and Internet technologies are global and have changed every sector - medicine, tourism, education, entertainment or any other. Technology has touched every aspect of life, making it easier, better and different. Technology has changed living.

27Technological changeTypes of Technologies being used

28Technological changeEnterprise Resource Planning(ERP)Business management software that collect, store, manage and interpret data from business activitiesCustomer Relationship Management(CRM)System that manage companys interactions with current and future customers to forecast future demandWireless TechnologyDevices that transmit information from remote point to central pointTypes of Technologies being used29Technological changeBusiness Process Reengineering(BRP)Process of redesign, business transformation, or business process change managementSix SigmaProcess of quality control through statistical information

30MERGERS and ACQUISITIONSTYPES OF CHANGES31Mergers and acquisitionsMergersAbsorption of one company by another

Acquisitions Purchase of some portion of one company by another

LOS: Explain major reasons for divestitures.Page 452

Reasons for Restructuring

Companies generally increase in size with a merger or acquisition.Restructuring, which includes divestitures, generally follows periods of merger and acquisitions.Reasons for restructuring:Change in strategic focusPoor fitReverse synergyFinancial or cash flow needs

32Mergers and acquisitionsCompanies generally increase in size with a merger or acquisition

Reasons for merger and acquisition:Change in strategic focusSynergyFinancial needs

LOS: Explain major reasons for divestitures.Page 452

Reasons for Restructuring

Companies generally increase in size with a merger or acquisition.Restructuring, which includes divestitures, generally follows periods of merger and acquisitions.Reasons for restructuring:Change in strategic focusPoor fitReverse synergyFinancial or cash flow needs

33Mergers and acquisitions34Mergers and acquisitionsExcessive CapacityWhen firm has opportunity to reduce excessive capacity and consolidate operations in matured industriesNeighbouring Market ExpansionWhen firm acquires operations in neighbouring areas to increase value for consumers and lowering the overhead costsNew Product/Market InvestmentWhen two firms wish to explore on new product line or global scopeTypes of Mergers and Acquisitions35Mergers and acquisitionsResearch and DevelopmentWhen firm wish to increase market position at more rapid rate, especially when the products that being developed has shorter life cycle Leveraging to create New IndustriesWhen resources of two firms are pooled to launch new industryTypes of Mergers and Acquisitions36KEY CHANGE CHALLENGESTYPES OF CHALLENGES37Key change challengesDOWNSIZINGEmployee retentionAvoiding hard landingsMinimizing political behavior & loss of teamworkSurvivor syndromeCommunicationDue diligenceCultural adjustmentChoice of restructuring technique

38Key change challengesNEW TECHNOLOGIESGoal synthesisChoice of technologyIdentifying political barriersThe IT teamCommunicationTime frameContingency planning

39Key change challengesMERGERS AND ACQUISITIONSCost savingsCultural adjustmentBalancing change and continuityDue diligenceEmployee retentionContingency planningPower structureCommunication

40THANK YOU41Q & A SESSION42