Organisation Change and Transition

1
Organisation Change and Transition

• Lecture 2
• The Business Environment and Change

2
Lecture Structure

• The External Environment
• Contemporary Environmental Challenges
• Analysing Change in the Organisations
  Environmental Domain
• Strategic Change Responding to the External
  Environment
• Strategic options for Organisations
• Miles and Snows Strategic Types
• Class Activities
• Summary and Conclusions

3
The External Environment

• Organisations as Open systems
• Receive inputs from environment and provide
  outputs back into that environment, (Senior,
  2002 7)
• Importance and influence of
• Historical events
• Contemporary events
• Uncertain Future

4
Comtemporary Challenges for Organisations

• Global Competition
• Ethics and and Corporate Social Responsibility
• Speed of Responsiveness
• The Digital Workplace
• Diversity
• Others?

5
Contemporary EventsImplications on
Organisations Burns and Stalkers study

• Mechanistic Processes
• Tasks are broken down into specialized parts and
  defined
• Strict hierarchy of authority and control, with
  many rules
• Knowledge and control centralized at the top of
  organization
• Communication is vertical
• Organic
• Employees contribute to the common task of the
  department
• Teamwork vital
• Less hierarchy of authority and control, and
  fewer rules.
• Knowledge and control of tasks are located
  anywhere in the organization
• Communication is horizontal

6
Analysing Change in the Organisations
Environmental Domains

• Organisational Environment
• Elements in the Domain
• Task Environment
• General Environment
• International Context
• Growing in importance
• Internal Triggers for Change

7
Analysing an Organisation Environment

• (g) Recession, unemployment rate,
• inflation rate, rate of investment,
• economics,
• growth
• (h) City, state,
• federal laws
• and regulations, taxes,
• services, court
• system,
• political processes
• Age,
• values, beliefs,
• education,
• religion,
• work ethic,
• consumer
• and
• environmental
• movements

International Context

• (a) Competitors, industry size and
• competitiveness, related issues
• (b) Suppliers,
• manufacturers, real
• estate, services
• (c) Labour market,
• employment agencies,
• universities, training
• schools, employees
• in other companies,
• unionization
• (d) Stock markets,
• banks, savings and
• loans, private
• investors
• (e) Customers, clients,
• potential users of products
• and services
• (f) Techniques of production, science,

(j) International Sector
(a) Industry Sector
(b) Raw Materials Sector
(i) Sociocultural Sector
DOMAIN
(c) Human Resources Sector
(h) Government Sector
ORGANIZATION
(g) Economic Conditions Sector
(d) Financial Resources Sector
(e) Market Sector
(f) Technology Sector
Internal Triggers
8
PEST (PETS or STEP)

• Political factors Economic factors
• Social trends Technological advances

Organisation
9
Strategic Change Responding to the External
Environment

• What is Strategy and Strategic Management?
• An organisational process designed to sustain,
  invigorate and direct the organisations human
  and other resources in the profitable fulfilment
  of the needs of customers and other principal
  stakeholders the process once started is an
  organisation-wide collaborative effort to satisfy
  the expectations of all its stakeholders (Cole,
  1994)
• How can we formulate and select a strategy?
• Perform different activities from competitors?
• Perform the same activities more efficiently?

10
Strategic Change Responding to the External
Environment

• Three Types of Strategies
• Positioning Strategy Porters model of
  Competitive Strategies (Contingency and Fit)
• Strategic Conflict Model
• Resource Based Model
• Miles and Snows Typology of Organisational
  Strategic Types

11
Positioning Strategy Porters model of
Competitive Strategies (Contingency /
Fit)Porters Five Force Framework for Analysing
Industry Structure
Threat of new entrants
Suppliers
Buyers
Intensity of competitive rivalry
Bargaining power
Bargaining power
Availability of Substitute products/services
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Positioning Strategy Porters model of
Competitive Strategies (Contingency / Fit)
Porters Competitive Strategies
13
Positioning Strategy Porters model of
Competitive Strategies (Contingency / Fit)
Contingency Factors affecting Organization Design
Technology


Organizational Structure and Design
The Right Mix of Design Characteristics Fits the
Contingency Factors
14
Positioning Strategy Porters model of
Competitive Strategies (Contingency / Fit)
Criticisms of Porter in context of Change

• Narrow and Inflexible
• Assumes organisations make rational decisions
  political issues?
• Big business bias
• Other aspects at work organisations changing
  rules of game, government influence etc.

15
Strategic Conflict Model

• Competition War between rival organisations
• Organisation influences actions of competitors
  through
• Investing in capacity Research and Development
  Advertising Pricing strategy, reputation issues
  competition and co-operation
• Emphasis on speedy, quick witted and emotionally
  charged decision making
• But does it take into account all external and
  internal factors which contribute to
  organisational competitiveness?

16
Resource Based Model

• Based on idea that
• Superior systems and structures low costs and
  better quality
• Scarce resources central to approach
• Need for distinctive competences and skills
  competence building central to to firm (Prahalad
  and Hamel, 1990)
• The essence of the resource based model
  is that competitive advantage is created when
  resources and capabilities that are owned
  exclusively by the firm are applied to developing
  unique competencies. Moreover, the resulting
  advantage can be sustained due to the lack of
  substitution and imitation capabilities by the
  firms competitors (Hax and Majluf, 1996 10)
• Long term focus building and developing
  competence do organisations have this luxury?

17
Miles and Snows Strategy Typology

• Prospector
• Learning orientation flexible, fluid,
  decentralized structure
• Strong capability in research
• Values creativity, risk-taking, and innovation
• Defender
• Efficiency orientation centralized authority and
  tight cost control
• Emphasis on production efficiency, low overhead
• Close supervision little employee empowerment

18
Miles and Snows Strategy Typology

• Analyzer
• Balances efficiency and learning tight cost
  control with flexibility and adaptability
• Efficient production for stable product lines
  emphasis on creativity, research, risk-taking for
  innovation
• Reactor
• No clear organizational approach design
  characteristics may shift abruptly depending on
  current needs

Source Based on Michael Treacy and Fred
Wiersema, How Market Leaders Keep Their Edge,
Fortune February 6, 1995, 88-98 Michael Hitt,
R. Duane Ireland, and Robert E. Hoskisson,
Strategic Management (St. Paul, Minn. West,
1995), 100-113 and Raymond E. Miles, Charles c.
Snow, Alan D. Meyer, and Henry L. Coleman, Jr.,
Organizational Strategy, Structure, and
Process, Academy of Management Review 3 (1978),
546-562
19
Positioning Strategy Porters model of
Competitive Strategies (Contingency / Fit)
Contingency Factors affecting Organization Design
Technology


Organizational Structure and Design
The Right Mix of Design Characteristics Fits the
Contingency Factors
20
Summary and Conclusions

• Looked at major external influences on
  organisations and how they might asses the
  importance of the various sectors in that
  external environment
• Strategic Management Concepts on how
  organisations deal with the external environment
• Next week begin to look at the general
  approaches that organisations can utilise to deal
  with the change

21
References

• Burns T and Stalker G, (1961) The Management of
  Innovation, Tavistock.
• Burns T, (1994) The Management of Innovation,
  Oxford OUP.
• Brown S.L. and Eisenhardt, K.M. (1997) The Art
  of Continuous Change Linking Complexity Theory
  and Time-Paced Evolution in Relentlessly Shifting
  Organizations, Administrative Science Quarterly,
  42 (1) 1-34.
• Cole, G A (1995), Organisational Behaviour,
  London DP Publications
• Hax, C.A. and Majluf, N.S. (1996) The Strategy
  Concept and Process (2nd Ed), NJ Prentice hall.
• Hayes, J. (2002), The Theory and Practice of
  Change Management, Basingstoke Palgrave
• Prahalad, C.K. and Hamel, G. (1990) The core
  competence of the corporation, Harvard Business
  Review, May/June, 71-91
• Porter, M. (1985) Competitive Advantage, New
  York Free Press.
• Senior, B. (2002) Organisational Change, London
  Prentice-Hall.