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Organisation Companies Changes

Task 1 Background to Change

1.1 Describe the significance of change within an organisation in the current economic climate. What factors do you consider to be the most important?

Many people are finding that the speed of change is exceeding their physical and mental capicity to adapt. A growing world population is the root cause of so many social threats and opportunites, and the results are in an ever increasing number of individuals, companies and groups, organisations, countries and economies are approaching their technologies, products and services, economic agendas, social changes, innovations, ideologies and politics and interventions.

As these changes crash and interact, they accelerate the rate of perceived and real change. People feel overwhelmed about this all change and technology. If we take ourselves in count we'll find that we want more time with our families, but feel compelled to work longer hours, make more money for future savings and coverup our extra expenses i.e minimum 2 or 3 mobile phone of each of us having.

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Most important factors of change are; globalisation, demographic shifts (eg. Aging population and declining fertility rates), advancement in information technology etc, and demassification of society, and hypercompetition are reshaping the competitive landscape worldwide. As a result, companies in most industries are not only going undergoing rapid and radical change but also expereinceing the fundamental shift in the rules of competition is played.

The old, genteel, stable oligopolies, that defined competition during the 20th century are rapidly restructuring. In their places are emerging markets fraought wirh uncertainty, diverse global players, rapid technological change, widespread price wars and seemingly endless reorganisation. That transition is occurring not only in US but also in Europe and Asia.

1.2 What are meant by the following terms in relation to organisational structure change, Bureaucracy - Hierarchy? Explain the advantages and disadvantages of each.

Bureaucracy

A bureaucracy can be defined as a system or method of functions. These functions are applied to an organization or a type of government. Many duties of the organization are divided into departments. With this, there is a main boss, but with larger organizations, such as a bank, a group of people could all be considered for top position.

In many old organizations we will find even today they like to use the bureaucratic system. This is because the bureaucratic system was the only kind of system uncovered to them.

A bureaucrat is the most despicable of men though he is needed as vultures are needed, but one hardly admires vultures that bureaucrats so strongly resemble. -Marcus Tullius Cicero

Kenneth B. Johnston (1992) suggests that the bureaucratic system is so influential that many executives are unable to even imagine that there are alterations to bureaucracies.

It is common to find modern organizations adopting a bureaucratic system. They are becoming more focused on their customers, and the goal of the organization. This erases the hierarchy and flattens things out. The satisfaction of their customers become top priority and group teams grow.

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Advantages

  • The bigger advantage of bureaucracy is, there is clearly one person in control. Everybody, within and outside of the organization, knows who to address with their problems. People like the idea of having someone at the top that sets the rules and guidelines
  • Weber says that bureaucracy creates a more structured work place (Cheney, 2004, p. 32). The I in individual is buried in a bureaucratic system in order to have a more universal organization that is based on principles. No one is treated better or worse than another. And people like that fact that bureaucracy is based on merit.
  • Everything about business comes down to PEOPLE. Where in business can we escape the impact of human care, human creativity, human commitment, human frustration, and human despair? There is no reason for anything in business to exist if it does not serve the needs of people. -Bruce Cryer

Disadvantages

There are also some disadvantages in Bureaucracy:

  • There is minimum space for one to be an individual. Each department in a bureaucratic system depends on the next department in some kind of way. It is like a machine: if one department is not doing its part then the machine does not function properly.
  • We find a threat to individuality: the conflict surfaces because the organizational rules become more important that the individuals they were designed to serve. (Cheney, 2004, p. 33)
  • Weber believes that bureaucratization of the modern world has led to its depersonalization (Bureaucracy, 1977). You are expected to leave your personal matters outside of the office.

So it does not really come down to the question of Is bureaucracy good or bad? It is based on your organization and the people that make up your organization.

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Hierarchy

In a hierarchical organisation employees are on many ranks within the organisation, at each level they are above the eachother. At each stage in the chain, one person has a number of workers directly under him, and within his distance of control.

Hierarchical organisation is the traditional form of organising in an industry. In hierarchical structure there is a clearly defined chain of command. The structure is like a pyramid, where most power is at the top of the pyramid and the less power at the bottom.

Traditionally, there are three levels of management in a large industry, but smaller industries are likely to have only two or even one. In a very small industry the owner -manager may be the only decision maker.

The hierarchical organisations were popular in 20th century, because they could ensure command and control of the organisation. However with the start of globalisation and widespread use of technology, in the 1990's hierarchical organisations began to downsize and reduce their workforce. Technology was able to carry out many of the functions previously carried out by humans.

Advantages

  • In heirarchy, authority and responsibilities are mostly defined the promotion path is difined in clearly.
  • There are specialists managers and the hierarchical environment and encourages the effective use of specialist managers. Employees are very loyal to their department within the organisation.

Disadvantages

  • All hierarchies get slim at the top. Doesn't matter how intelligent the senior executives are, no matter how effective their teamwork may be and no matter whether they are in a corporation or government agency, there is a limit to their problem-solving capacity and their ability to respond quickly. In hypercompetitive settings, there are simply too many demands on management's time, too many decisions to be made, and too many constituencies to satisfy.
  • The organisation can be bureaucratic and respond slowly to the market within which the organisation operates. Communication across various sections can be poor especially horizontal communication.

1.3 Compare and contrast two different forms of organisational change development by producing a brief report containing examples from known organisations.

Planned change is usually triggered by the failure of people to create continuously adaptive organizations (Dunphy 1996). Thus, organizational change routinely occurs in the context of failure of some sort. A typical story line is First there were losses, then there was a plan of change, and then there was an implementation, which led to unexpected results (Czarniawska & Joerges 1996:20 )

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As first example I'll take ABB, which is a global leader in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact. It was formed in 1987 and decided to move power down to every manager, towards its operating companies. The motive was to encourage managers to move closer to their customers and provide them the incentives to act as smaller and more entrepreneurial units.

This came with its own problems as managers became happy only on 4 cent margins and were told that Americans were making 10 cent. In coming years more issues surfaced; the small units were not able to handle the big global companies who wanted on centralized negotiating and decision making unit.

Secondly it was difficult to find trained and experienced managers everywhere, thirdly extra financial burden had to be incurred in duplicating management positions in a large number of small companies and then the companies were not able to enjoy economies of scale. In 2000 organization decided to make some changes for improvement so the new CEO accelerated the shift to Asian labor, and matrix organizational structure was iliminated.

The new younger executives were hired in demand of the IT ear. Four major customer segments were developed and number of subsidiaries was cut from over 100 to around 400. More focus was put on ABB'S large, global customers, cutting costs in duplicating management positions across business units and the need to exploit the power of internet. And now the company has largely dismantled the previous decentralized structure and key decisions revert to the center of the organization.

Second example is BIG6, it is an international consulting firm, introduced a multimillion-dollar information system to facilitate knowledge sharing. Although BIG 6's offices were relatively independent of each other, they worked on a common class of problems. The information system was designed to permit solutions discovered in one office to be used in other offices. If consultants were able to use a good existing solution, then they would need to spend less time on discovering solutions themselves.

The information system should reduce the time to complete an engagement. If the team then were able to produce more engagements, the revenue per team should increase, and the office and firm should benefit. This information system was successfully implemented, and a variety of metrics showed that the system was actively used by the consultants across offices. However, there were no observable increases in revenue/labor hours at the firm level.

2.1 Within your own organisation or one within which you are familiar, identify all stakeholders likely to be involved in the change process

Stakeholders are those groups of people or institutions that have a stake in any company. There are many general theories about stakeholder management and methods to implement. When dealing with change, a simple stakeholder view could help in controlling the change.

As an example I'll take British Telecome, BT is committed of having a constructive discussion with all stakeholders to ensure they understand what is important to them and allow themselves the opportunity to present their position. Engagement helps them identify new risks and opportunities to ensure that their long-term strategy is sustainable.

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In some instances they find that working with stakeholders in partnership can help deliver shared goals. BT has a strong relationship with a range of stakeholders. Over time it has become clear that six stakeholder groups are particularly significant to the success of BT:

  • Customers
  • Employees
  • Suppliers
  • Shareholders
  • Partners
  • Community

Customers

BT's customers are more important stakeholders and have important role in change process i.e. Consumer Liaison Panel and surveys of customers on quality of service and future expectations

Employees

The employees are also having strong impact in change, the highlights of dialogue with employees include, annual employee survey, Relationships with trade unions, European Consultative Works Council

Suppliers

Suppliers are plays important role in change it include, Supplier relationship management programme, Ethical trading forums with key suppliers and industry colleagues

Shareholders

BT always values feedback from shareholders and aims to inform investors of the issues we face. More details are found in the Shareholder services section of our Investor Centre site.

Partners

A description of BT's relationship with joint ventures and wholly-owned subsidiaries on social and environmental issues is described in the Statement of Business Practice section.

Community

Community is also important for BT to help taking decission about change.

2.2 What measures or processes could be used to help involve stakeholders in aspects of organisational change?

2.3 For two of this comment on their relevance and effectiveness to an organization

The measures or processes which can be helpful in invoving the stakeholders in change process can be stakeholder analysis and stakeholder mapping.

Stakeholder Analysis

A stakeholder analysis is an approach that is frequently used to identify and investigate the Force Field formed by any group or individual who can affect or is affected by the achievement of the objectives of an organisation. Stakeholder Analysis identifies the ways in which stakeholders may influence the organisation or may be influenced by its activities, as well as their attitude towards the organisation and its targets,

Objective

Stakeholder analysis ensures that every stakeholder has been considered when conducting risk assessment work and action planning. In some cases, the risks or benefits associated with a particular group may be minimal, and further action may not be required, but it is important to assess all potential groups to ensure that all possible risks are identified. By analyzing stakeholders, we can ensure that all the activities that need to be entered in the Change Plan are identified across every area affected or influencing groups of people.

Stakeholder analysis is a very important tool used to determine the list of all stakeholders of the organisation. It is used as a basic tool for stakeholder mapping, force field analysis, strategic planning and development, decision making, programme and project management.

In using the stakeholder analysis, the organisation can determine the interests, power and relationships with its stakeholders; the significance of stakeholders; the priority of stakeholders; and associated risk areas, in order to get better decision making in formulating new strategies or change. It is also used to evaluate the existing strategies. When change happens, there are probably conflicts between many stakeholders. Stakeholder analysis, that identifies the interests and the potential conflicts of these interests of stakeholders, helps to increase the effectiveness of change in the organisation.

The following steps should be taken in consideration when completing a stakeholder analysis.

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  1. Identify the stakeholder groups impacted by the project or initiative with project team leaders or with sponsors

  2. Gather information to complete the stakeholder analysis template through interviews, surveys, or observations for each stakeholder group.

  3. For each group, analyze areas of risk, and draft a two-page Stakeholder Group Strategy

Stakeholder Mapping

Stakeholder mapping is a graphical illustration to know how the stakeholders are disposed towardsthe organisational change project.it helps to identify who we need to influence and what action to be taken.

It could be use in early stage of change project and at the Mobilise and Discover stages. It could revisit in later stages as we evaluate efforts to improve positive attitudesand engage stakeholders.

Power/ Dynamism Matrix

classifies stakeholders in accordance with their power and the dynamism This stakeholder map divides the current positions of stakeholders on the map into four groups. These groups are fewer problems, unpredictable but manageable; powerful but predictable; and greatest danger or opportunities

PREDICTABILITY

A

Few problems

B

Unpredictable but manageable

High

Low

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Low

D

Greatest danger or opportunities

C

Power but predictable

POWER

High

Power/ Dynamism Matrix

Power, legitimacy, and urgency model

It is based on stakeholders' power, legitimacy of relationships and actions between stakeholders and the organisation, and the urgency of the requirements being set for the organisation by stakeholders. This model divides stakeholders' behaviour into seven groups.

Power/ Interest Matrix

It is based on the power stakeholder holds and the extent to which they are likely to show their interest to divide them into four groups that are minimal effort; keep informed; keep satisfied; and key player.

LEVEL OF INTEREST

Low

High

B

Keep informed

A

Minimal effort

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Low

D

Key players

C

Keep satisfied

POWER

High

It concludes that the above methods are very useful tools for management and change. However, the management decides appropriate methods to get the highest effectiveness in change

Comments:

It is obvious that the stakeholders have a substantial influence on the structure of the organisation, mission and objectives of an organization. However, the roles and power of owners, shareholders, financing banks and worker-owners will differ around the world as a result of different ownership structures, national government policies and other matters. In particular, shareholding structures can vary significantly.

Thus the mission and objectives may also change and this needs to be considered in international strategy development. For example owner-stakeholder interests across different parts of world as Europe are not necessarily the same. As we can see in some European countries that banks hold substantial portfolio of shares large companies

Task3. Implement models for ensuring ongoing change

    1. Describe two models for change. Include appropriate examples in your answer.

  1. Kurt Lewin's Change Model

Kurt Lewin developed an influential three-stage model of how organizational change occurs. Lewin's model was based on his observations of group dynamics and organizational development. This model considers that change involves a move from one static state via a state of activity to another static status quo. Lewin specifically considers a three-stage process of managing change: unfreezing, changing and re-freezing.

The first stage involves creating a level of dissatisfaction with the status quo, which creates conditions for change to be implemented. The second stage requires organising and mobilising the resources required to bring about the change. The third stage involves embedding the new ways of working into the organisation.

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As an example I'll take British Airways, they made an attempt of change at British Airways when new networks formed amongst staff as a reaction to the changes. Bob Ayling was appointed chief executive at British Airways in 1997 and attempted to cut costs by 1bn within three years. This plan met with considerable resistance. Management took a tough and confrontational stance which had the unintended consequence of making moderate staff act in a more extreme manner against management.

He downsized the workforce from 59,000 to 37,000 made change of Managing People First Peer support groups and refreezed with continued commitment of the top management. He Reduced hierarchical levels make change of Purchased Cartridge for training centre and refreezed with system focused on customer service and subordinate development.

He Change top management and commitment and change with Data Feedback on work-unit climate and refreezed with Developed and used of cabin-crew teams. As a result of this 300 staff went on strike with a further 2,000 on sick leave, the strike cost 125m. Ayling resigned three years later and soon after British Airways reported a loss of 200m.

  1. John P Kotter's 'eight steps change model

John P. Kotter identified eight steps that the organization has to follow to gain long-term benefits from organizational change

  1. Establish a sense of urgency.

  2. Form a powerful guiding coalition

  3. Creat a vision

  4. Communicate the vision

  5. Empower others to act on the vision -

  6. Plan for and create short-tem wins

  7. Consolidate Improvements and produce till more change

  8. Institutionalize new approaches

Kotter suggest that all of these steps must be undertaken to get effect permanent change, each stage acknowledges a key principle relating to the response and approach of people to change. In this model, communication and culture of the organisation are the most significant.

As an example I'll take Mastercard, in 2006 when it gone public and began encountering all the changes associated with that milestone in the company's 40-year history. Mastercard adopt following 8 steps change model of John p Kotter for a succesfull change.

  1. To increase the urgency for change

In November 2007, Chief Marketing Officer Larry Flanagan involved close to a thousand MasterCard employees via a global teleconference of the key themes of Dr. Kotter's work and their application to the company.

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  1. The Guiding Coalition

It consists of all major post holders i.e chiefs, heads their teams, and officers "While we focus on creating a culture of change, we allow each business unit to assemble the correct guiding team for each individual change initiative," says Ann Schulte, VP, Learning & Development, who leads GTM&D's MasterCard University. "We en-courage each 'Fred' and 'Alice' of each initiative to be sure they have all the necessary skills to execute each change. Our role is to support each change thread and to weave them into a culture of change readiness."

  1. MasterCard's vision

"To be ready, willing, and able to change as the need arises."

  1. The company's broad communication efforts i

It including Intranet coverage of the change initiatives have been enhanced through its strategic partnership with Worldwide Communications.

  1. Empowered action

It happened by providing all MasterCard employees access to these concepts through a variety of means. By certifying all teams and working closely with senior leaders and their intact teams, we are willing and able to assist each business unit with its change initiative as needs arise," Breitfelder says.

  1. Short-term wins

Schulte says, "While we are early in our process, we already can see improvements in the ways in which teams think about and plan for change. We are beginning to build a common 'language' around change."

  1. Consolidate Improvements and produce wtill more change

As Breitfelder said, "We know we have to keep the momentum going, so we spend time with teams helping them see the end goal but also making sure they remember the reason why this work is so important."

  1. Institutionalize new approaches

Making these changes sustainable does not occur by coincidence. "Following each LBC session, the participants have a detailed action plan that prepares them to not only launch their initiative, but to sustain early gains. Rays said, "The GTM&D team follows up with business unit teams, providing guidance, monitoring progress against action plans, and serving as 'group mentors,' all aimed at making the changes a permanent part of our culture.

Recommendations:

Strategic change is the proactive management of change in organizations to achieve clearly identified strategic objectives. It may be undertaken using either prescriptive or emergent strategic approaches. Because strategy is fundamentally concerned with moving organizations forward, there will inevitably be change for some people inside the organization. However, strategic change is not just a casual drift through time but a proactive search for new ways of working which everyone will be required to adopt. Thus strategic change involves the implementation of new strategies that involve substantive changes beyond the normal routines of the organization. Such activities involve but not limited to, the induction of new patterns of action, belief and attitudes among substantial segments of the population

References

Organisation development and change 8th edition By Thomas G. Cummings p.1-4

Organisation Science/vol 7 p.211

Bureaucracy. A Joint Center for Politics and Economics.

Cheney, George (2004). Organizational Communication in an Age of Globalization. USA: Waveland Press

Mullins, L.J, Management and Organisational Behaviour,fig.1 4th edition, P 349

The Determinants of Hierarchical Organization in Industry, Chapter 2.

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