1. Chapter 3

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

3. 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

4. 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

5. 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

6. 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

7. 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