Organizational Change

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Learning Objectives
Define organizational change
Learn why managing change is an
important part of international
management
Understand the individual, group, and
structural levels of change
Know what internal and external factors
influence organizational change
IBUS 681, Dr. Yang.
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Learning Objectives (cont.)
Explain the role of national and organizational
culture on organizational stability and change
Understand the processes involved in
planning organizational change, including
sources of resistance to change and ways to
overcome them
Understand how macro level theories of
organizational change influence the
management of change
IBUS 681, Dr. Yang
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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.
Roberto C. Goizueta
Former Chairman and CEO
Coca-Cola Company

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Organizational Change
Reconfigures components of an
organization to increase efficiency and
effectiveness
Including any alternations in people,
structure, or technology

IBUS 681, Dr. Yang

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Levels of Organizational Change
Levels
Levels of
of analysis:
analysis:
Structural
Structural change
change
Cross-culture
Cross-culture variation
variation
Group
Group change
change
in
in restructuring
restructuring
Individual
Individual change
change U.S.
U.S.
Japan
Japan
Germany
Germany
China
China
South
South Africa
Africa

IBUS 681, Dr. Yang

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Internal Change Factors
Technical Production Organizational
Processes Culture
Production Values
New Technologies Norms
Quality New Member
Political Processes Socialization
New Organizational Goals
Conflict
New Leadership

IBUS 681, Dr. Yang 7

External Change Factors
Immediate
Immediate General
General Environment
Environment
Environment
Environment Foreign
Foreign Competition
Competition
Domestic
Domestic Competition
Competition Social
Social Movements
Movements
Population
Population Trends
Trends Political-Economic
Political-Economic
Social
Social Trends
Trends Movements
Movements
Government
Government Actions
Actions Technology
Technology
Professionalization
Professionalization
Culture
Culture Contact
Contact

IBUS 681, Dr. Yang

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 External Change Factors for Germany Inc.
Factors Post WWII
Big companies and financial
institutions controlled stakes
in one another, offering
Ownership mutual protection from
Structure hostile takeovers and outside
pressures. This stability
helped Germany rebuild
shattered industries.
Co-determination gave labor
MGMT- 50% of seats on corporate
Labor management boards, laying
Relations the foundation for decades of
labor peace.
Foreign investors have little
or no say in running
Outside companies or forcing
Capital management changes.
Cross-border mergers were
rare.
IBUS 681, Dr. Yang
Organizational
How it is changing
change
Companies are unwinding
their stakes in on another to
profit from a cut in the Companies are
capital-gaining tax in 2001, subject to more
free up capital for their main intense capital
businesses and reduce the market pressures
risk that non-core holdings
will generate losses.
A center-right government is
Supervisory boards
likely to assume power and
are giving CEOs
try to curtail unions,
more decision-
weakening ties between
making power
labor and management.
A glut of foreign investment,
including private equity
Spin-offs, mergers
funds that now total $54
and plant shutdowns
billion, is putting pressure
are accelerating.
on German companies to
restructure.
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National Culture and
Organizational Change
Time Orientation:
Past
Present
Future
Short-term vs. long-
term oriented
Resistance to Change
Tradition
Habit
Resource Limitations
Power and Influence
Fear of the Unknown
Values

IBUS 681, Dr. Yang

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Resistance to Change in Different
Clusters of Countries
Dimension Scores
Resistance level PD ID UA Country Clusters

4 (strongest) high low high Most of Latin America, Portugal,

Korea, the former Yugoslavia
3 (strong) med med high Japan
high high high Belgium,France
high med high Spain, Argentina, Brazil, Greece,
Turkey, Arab Countries
high low med Indonesia, Thailand, Taiwan,
Iran, Pakistan, African countries
IBUS 681, Dr. Yang 11
Resistance to Change in Different
Clusters of Countries (cont.)
Dimension Scores
Resistance level PD ID UA Country Clusters

2 (medium) high low low

Philippines, Malaysia, India
low med
Austria, Israel
high Italy, Germany, Switzerland,
med high med South Africa

1 (week) Singapore, Hong Kong, Jamaica

med high low
0 (weakest) Anglo countries, Nordic
low high low countries, Netherlands

IBUS 681, Dr. Yang 12

Managing Change
Organization development
Lewin’s model of change
Managing resistance to change
Impact of cultural values
OD model
Consulting
Power versus employee participation

IBUS 681, Dr. Yang

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Lewin’s Model of Change
Phase 1 - Diagnosis
Phase 2 - Unfreezing
Phase 3 - Movement
Phase 4 - Refreezing
Phase 5 - Renewal

IBUS 681, Dr. Yang

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Managing Resistance to Change
Education and communication
Participation and involvement
Negotiation and agreement
Manipulation and cooptation
Coercion

IBUS 681, Dr. Yang

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The Interaction of National and
Organizational Cultures
National culture
Organizational culture

IBUS 681, Dr. Yang

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Change Strategies for Different
Groups of Countries
Dimension Scores
Change
Strategy PD ID MA UA Country Clusters

5 (power) High low high high Columbia, Ecuador,

Venezuela, Mexico

4 (power, High low med high Rest of Latin America,

manipulation Spain, Portugal, former
/persuasion) Yugoslavia, Greece, Turkey,
Arab countries, Korea

IBUS 681, Dr. Yang 17

Change Strategies for Different Groups of
Countries (cont.)
Change Dimension Scores
Strategy PD ID MA UA Country Clusters
3 (manipulation/ med med high high Japan
persuasion) high high med high Belgium, France
high low med low Indonesia, Thailand, Taiwan,
Iran, Pakistan, African countries
high low med low Philippines, Malaysia, India
med low high low Singapore, Hong Kong, Jamaica
2 (manipulation/ low med med high Austria, Israel
persuasion, med high high med Italy, Germany,Switzerland,
consultation) South Africa
1 (consultation, low high high low Anglo countries
participation) low high low low Nordic countries, Netherlands
IBUS 681, Dr. Yang 18
Macro-organizational Change
Theories
Life-cycle theory
Teleological theory
Dialectical theory
Evolutionary theory
Cultural implications

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12-17
Convergence or Divergence?
Competitive
Competitive pressures
pressures Problems
Problems with
with diffusion
diffusion
Attempts
Attempts toto standardize
standardize of
of organizational
organizational
product
product quality
quality onon aa innovations
innovations
worldwide
worldwide basis
basis Culture
Culture and
and local
local
Diffusion
Diffusion of
of advanced
advanced conditions
conditions as
as barriers
barriers to
to
management
management techniques
techniques change
change
Transfer
Transfer of
of technological
technological Cultural
Cultural and
and legal
legal
innovations
innovations conditions
conditions influence
influence and
and
limit
limit change
change and
and
methods
methods for
for change.
change.

IBUS 681, Dr. Yang 12-18

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Implications for Managers
Culture 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.

IBUS 681, Dr. Yang 12-19

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