Chapter 3

Managing Organizational Change: A Multiple Perspectives Approach Chapter 3 – Why Organizations Change Managing Organizational Change: A Multiple Perspectives Approach McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Why change? Change is a risky activity – many organizational changes fail or do not realize their intended outcomes. This raises the question of why change is so prevalent? Pressure to change comes from: External, environmental pressures Internal, organizational pressures Chapter 3

External, environmental pressures Examples Description Fashion pressures Boeing Co. This is based on mimetic isomorphism – imitating companies that are legitimate and successful Mandated Chevron Texaco This is based on coercive isomorphism – when change is demanded by outside sources. Geopolitical pressures 3M This is when global crises greatly impact an organization and change is necessary for survival. Chapter 3

External, environmental pressures Examples Description Market decline pressures AOL Time Warner When current markets that the organization operates in begin to decline there is pressure to find newer, more viable markets. Hypercompetition pressures Gateway This affects the way organizations respond to their consumers and their competitors to cater for the increasingly rapid pace of business. Reputation and credibility pressures Walt Disney Company In light of recent corporate governance scandals in organizations, the pressure to maintain a good reputation and high level of credibility has increased. Chapter 3

Internal organizational pressures Examples Description Growth pressures Microsoft Existing systems and processes in a smaller organization may no longer be applicable when the size of the organization increases. Integration and collaboration pressures EDS Integration and creating economies of scale can lead to pressure for change in organizations. Identity pressures Forte Hotel A common organizational identity and the unified commitment of staff in different areas/departments of an organization can be difficult to manage and may encourage change. Chapter 3

Internal organizational pressures Examples Description New broom pressures Bank of America New authority figures in an organization can herald a new era and often signal significant changes an organization in an organization. Power and political pressures Morgan Stanley Power relationships and politicking can change internal processes and decision making. This has significant flow on effects within the organization. Chapter 3