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1IBUS 681, Dr. Yang
Organizational Change
Chapter 14
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2IBUS 681, Dr. Yang.
Learning ObjectivesDefine organizational changeLearn why managing change is an important part of international managementUnderstand the individual, group, and structural levels of changeKnow what internal and external factors influence organizational change
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Learning Objectives (cont.)Explain the role of national and organizational culture on organizational stability and changeUnderstand the processes involved in planning organizational change, including sources of resistance to change and ways to overcome themUnderstand how macro level theories of organizational change influence the management of change
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Roberto C. GoizuetaFormer Chairman and CEO
Coca-Cola Company
There is no permanent organizational chart for the world… It is of supreme importance to be ready at all times to take advantage of new opportunities.
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5IBUS 681, Dr. Yang
Organizational Change
Reconfigures components of an organization to increase efficiency and effectiveness Including any alternations in people, structure, or technology
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6IBUS 681, Dr. Yang
Levels of Organizational Change
Levels of analysis:Structural change Group changeIndividual change
Levels of analysis:Structural change Group changeIndividual change
Cross-culture variation in restructuring
U.S.JapanGermanyChinaSouth Africa
Cross-culture variation in restructuring
U.S.JapanGermanyChinaSouth Africa
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7IBUS 681, Dr. Yang
Internal Change FactorsTechnical Production Processes
ProductionNew TechnologiesQuality
Political ProcessesNew Organizational GoalsConflictNew Leadership
Organizational Culture
ValuesNormsNew Member Socialization
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8IBUS 681, Dr. Yang
External Change Factors
Immediate Environment
Domestic CompetitionPopulation TrendsSocial TrendsGovernment Actions
Immediate Environment
Domestic CompetitionPopulation TrendsSocial TrendsGovernment Actions
General Environment
Foreign CompetitionSocial MovementsPolitical-Economic MovementsTechnologyProfessionalizationCulture Contact
General Environment
Foreign CompetitionSocial MovementsPolitical-Economic MovementsTechnologyProfessionalizationCulture Contact
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IBUS 681, Dr. Yang 9
External Change Factors for Germany Inc.
Factors Post WWII How it is changingOrganizational
change
Ownership
Structure
Big companies and financial institutions controlled stakes in one another, offering mutual protection from hostile takeovers and outside pressures. This stability helped Germany rebuild shattered industries.
Companies are unwinding their stakes in on another to profit from a cut in the capital-gaining tax in 2001, free up capital for their main businesses and reduce the risk that non-core holdings will generate losses.
Companies are subject to more intense capital market pressures
MGMT-Labor
Relations
Co-determination gave labor 50% of seats on corporate management boards, laying the foundation for decades of labor peace.
A center-right government is likely to assume power and try to curtail unions, weakening ties between labor and management.
Supervisory boards are giving CEOs more decision-making power
Outside Capital
Foreign investors have little or no say in running companies or forcing management changes. Cross-border mergers were rare.
A glut of foreign investment, including private equity funds that now total $54 billion, is putting pressure on German companies to restructure.
Spin-offs, mergers and plant shutdowns are accelerating.
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10IBUS 681, Dr. Yang
National Culture and Organizational Change
Time Orientation: PastPresentFutureShort-term vs. long-term oriented
Resistance to Change
TraditionHabitResource LimitationsPower and InfluenceFear of the UnknownValues
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11IBUS 681, Dr. Yang
Resistance to Change in Different Clusters of Countries
Dimension ScoresResistance level PD ID UA Country Clusters
4 (strongest)
3 (strong)
high low high
med med high
high high high
high med high
high low med
Most of Latin America, Portugal,Korea, the former Yugoslavia
Japan
Belgium,France
Spain, Argentina, Brazil, Greece,Turkey, Arab Countries
Indonesia, Thailand, Taiwan,Iran, Pakistan, African countries
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Resistance to Change in Different Clusters of Countries (cont.)
Dimension ScoresResistance level PD ID UA Country Clusters
2 (medium)
1 (week)
0 (weakest)
high low low
low med
high
med high med
med high low
low high low
Philippines, Malaysia, India
Austria, Israel
Italy, Germany, Switzerland, South Africa
Singapore, Hong Kong, Jamaica
Anglo countries, Nordic countries, Netherlands
IBUS 681, Dr. Yang
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13IBUS 681, Dr. Yang
Managing ChangeOrganization developmentLewin’s model of changeManaging resistance to changeImpact of cultural values
OD modelConsultingPower versus employee participation
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14IBUS 681, Dr. Yang
Lewin’s Model of Change
Phase 1 - DiagnosisPhase 2 - UnfreezingPhase 3 - MovementPhase 4 - RefreezingPhase 5 - Renewal
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Managing Resistance to Change
Education and communicationParticipation and involvementNegotiation and agreementManipulation and cooptationCoercion
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The Interaction of National and Organizational Cultures
National cultureOrganizational culture
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Change Strategies for Different Groups of Countries
Change Strategy PD ID MA UA Country Clusters
5 (power)
4 (power,manipulation/persuasion)
High low high high
High low med high
Columbia, Ecuador, Venezuela, Mexico
Rest of Latin America, Spain, Portugal, former Yugoslavia, Greece, Turkey, Arab countries, Korea
Dimension Scores
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Change Strategies for Different Groups of Countries (cont.)
Change Strategy PD ID MA UA Country Clusters
Dimension Scores
3 (manipulation/persuasion)
2 (manipulation/persuasion,consultation)
1 (consultation,participation)
med med high highhigh high med highhigh low med low
high low med lowmed low high low
low med med highmed high high med
low high high lowlow high low low
JapanBelgium, FranceIndonesia, Thailand, Taiwan,Iran, Pakistan, African countriesPhilippines, Malaysia, IndiaSingapore, Hong Kong, Jamaica
Austria, IsraelItaly, Germany,Switzerland,South Africa
Anglo countriesNordic countries, Netherlands
IBUS 681, Dr. Yang
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1912-17IBUS 681, Dr. Yang
Macro-organizational Change Theories
Life-cycle theoryTeleological theoryDialectical theoryEvolutionary theoryCultural implications
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2012-18IBUS 681, Dr. Yang
Convergence or Divergence?Competitive pressuresAttempts to standardize product quality on a worldwide basisDiffusion of advanced management techniquesTransfer of technological innovations
Competitive pressuresAttempts to standardize product quality on a worldwide basisDiffusion of advanced management techniquesTransfer of technological innovations
Problems with diffusion of organizational innovationsCulture and local conditions as barriers to changeCultural and legal conditions influence and limit change and methods for change.
Problems with diffusion of organizational innovationsCulture and local conditions as barriers to changeCultural and legal conditions influence and limit change and methods for change.
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2112-19IBUS 681, Dr. Yang
Implications for ManagersCulture influences organizational change.
When formulating a change program, it is necessary to assess need for change, what changes are appropriate, nature of resistance to change, and how to implement planned changes.
Be aware of internal and external forces for change and how different cultures may respond to them.
Understand larger processes affecting organizational change and how they may limit change.