P CH3 Why Organizations Change

Question 1

economic perspective of org. change

Answer 1

• aligned to management as control
• firm survival depends on satisfying shareholders. Mangers conduct change in order to produce better organizational performance in the form of better quarterly results with correspondingly better company share prices

Question 2

organizational learning perspective

Answer 2

• aligned to management as shaping
• objectives of change management is the need to increase an org. adaptive capacity
• because how an org. might achieve shareholder value is likely to change over time

Question 3

environmental pressures

Answer 3

• occur when the resource base decreases as a result of e.g. reduced demand
  Six types of env. pressures

Question 4

Fashion Pressures

Answer 4

• mimetic isomorphism
• when org. imitate the structures and practices of other org. in their field or industry, usually ones that they consider as legitimate or successful

Question 5

Mandated Pressures

Answer 5

• coercive isomorphism as change is forced onto an organization through formally mandated requirements
• org. are forced to take on activities similar to those of other org. because of outside demands placed on them to do so. (racial law suit CocaCola=)

Question 6

formal coercive pressures

Answer 6

• government mandates

Question 7

informal coercive pressures

Answer 7

• commitment to certain types of org. changes such as empowerment in order to get the support of other org. also committed to such programs.

Question 8

geopolitical pressures

Answer 8

• four global environmental forces for change

Question 9

• four global environmental forces for change (Kotter)

Answer 9

• technological–> fast communication
• greater economic integration of currencies and capital flows
• maturation and slowdown of domestic markets –> emphasis on exports
• fall of socialist countries

–> Kotter argues that all companies are affected by these forces for change

Question 10

Market Decline Pressures

Answer 10

• declining markets for products and services place org. under pressure to remain relevant.

Question 11

Hyper-competition Pressures

Answer 11

• new there is a hypercompetitive business environment which is discontinuous, post bureaucratic, and chaotic in a. postmodernist paradigm

Question 12

Reputation and Credibility Pressures

Answer 12

change is associated with maintaining proper corporate governance mechanisms to ensure a positive corporate reputation.

Question 13

corporate reputation

Answer 13

a collective representation of a firm’s past actions and results that describe the firm’s ability to deliver valued outcomes to multiple stakeholders

Question 14

Org. learning vs. Threat-Rigidity

Answer 14

• org. learning: env. pressures such as market decline will lead to innovative organizational adaptation and change as managers learn from the problems.
• threat-rigidity theorists: pressure will inhibit innovative change as managers cognitive and decision-making processes become restricted when confronted with threatening problems.

Question 15

discontinuous change

Answer 15

• when it faces new, fundamentally different trends in its operating environment

Question 16

Solution to the paradox of opportunities and threats

Answer 16

through structural differentiation of the company, separating it into different org. units dominated by different cognitive fames of operations.
- senior management as strategically integrating these competing frames, ensuring hat the firm takes appropriate, timely actions across its operations.

Question 17

Factors that influence whether environmental pressures will lead to innovative change

Answer 17

• extent to which an org.’s mission is institutionalized in stakeholders and the external environment: the less institutionalized the more flexible the org. will have to respond to innovative change.
• extent of diffusion of power and resources throughout the org. (the more concentrated the power in the org. the greater the ability to. make decisions and allocate resources to achieve change)
• rationale managers employ to explain decline: the more controllable the causes, the more likely managers are to introduce innovative changes

Question 18

Bridging vs. Buffering

Answer 18

• bridging = adapting
• > designed to keep the org. effective by adapting parts of it to change happening in the outside environment.
• buffering = shielding
• -> keep org. efficient by avoiding change through shielding parts of it from the effects of the environment.
• -> used in times of high press coverage and used by powerful companies
• -> can lead to less competitiveness

Question 19

Org. pressure for change

Answer 19

internal forces for change:

• growth
• need for integration
• collaboration
• org. identities
• power & political

Question 20

Integration and collaboration pressures

Answer 20

• some changes are made in order to better integrate the organization or create economies of scale across business units

Question 21

new broom pressures

Answer 21

• when a new CEO arrives

- act as a signal that the old ways are about to change