Change management in

multinational corporations

Lecture 2
Lecture: Organizational change
 Organizational Change
A complex process calling for thorough managerial
knowledge and skills aimed at activities such as:

•organizational analysis (with a view to identifying the present status

and the forces which may possibly cause the existing problems);

•analysis of the factors that are relevant to actually perform the

required change;

•selection, based on the analyses conducted, of the most adequate

strategy for performing the change;

•implementation process monitoring.

Organizational changes can
be classified into:

• Structural changes;

• Behavioural changes ;

• Technological changes.
Structural changes
Structural changes affect particularly the
modality in which the organization and its
levels are “conceived”

Their impact is usually reflected upon the whole

organization.
 Undertaking certain actions, such as any
changes brought to plans or procedures and
the control activities at various hierarchical
levels brings about a relationship of permanent
interaction among all the structural parts
within the organization.
Behavioural change:

Focused on the human resources within an

organization, building into efforts oriented
towards their values, competences and
skills.
Behavioural change in a nutshell
 Most methods applied are oriented towards
behavioural changes groups of individuals, so that
they may become capable of rapidly making
decisions as well as of ensuring direct and efficient
communication.

 Among the most frequently used modalities of

approaching change: team building; transactional
analysis; neuro-linguistic programming (NLP)
 Technological change:

In the current context of technology’s extremely

fast evolution also pointed out to by the frequent
collocation “the information era” the
technological change concept can no longer be
limited to machines, equipment or installations,
but it will also refer to any application and
techniques related to the new methods of
turning the resources into products or services.
1. Strategic changes

 brought about the intentional change

(proactive attitude) or the forced change
(reactive attitude) initiated by the market
leaders in the market trend and / of the niche
market;
2. Structural changes

 are more often than not linked to strategic

changes or come as a consequence to them

 adopting a new strategy can be correlated

with replacing some structures by others.
Structural changes in action
For example, replacing pyramid organizational structures by
horizontal ones:

 the former are often appreciated by employees because

they entail their overburdening with professional
responsibilities only to a small extent, while the latter has
the advantage of an open communication and of
stimulating creativity (which get “inhibited” with
bureaucratic structures).

 the transition to horizontal structures is a structural

change often determined by putting forth a new strategy
based on teamwork, which is much easier in the absence
of bureaucracy.
 Outsourcing - intro

Outsourcing entered the English-speaking lexicon

in 1980s to designate a business practice in
which a company hires third-party service
usually located outside of the country. Initially,
this was used to cut costs.

Also a strategic management option.

Outsourcing rationale

Outsourcing is the most talked topic these

days often referred to as the most important
management development of the decade.

Based on a simple rule, if something is not the

core competency of your company then
simply just takes the task and contract it out
 Some controversy
Simple tool for world-class companies that allows them to
improve their product and services, increase the net profit
and grow the businesses.
• The positive aspect: It takes huge benefit for
businesses in terms of cost savings, better outcomes,
increased productivity, improved accuracy and efficiency,
allow employees to do the things that they can do best.

• The negative aspect: Citizen lose their jobs because

either their company fires them or outsourcing a part of
their work and they have fewer resources to earn.
 Outsourcing motives
Why do companies outsource their work?
1) Get experts: Team of experts would be ready to handle the load of your
projects. They might have already experienced with your business niche
and can give you good quality, expert guidance and better exposure.
2) Release burden: If you outsource most of the tasks, you don’t have to
worry about many employees separate desks, computers, life insurance,
vacation, personal problems, sickness, 15 plus holidays, retirement etc.
3) Pay on Deliveries: You don’t have to pay monthly wages similar to your
onsite employees – you can pay them after the work!
4) Analyze day-to-day progress of work: Because of the time zone
difference between countries, you can get your work done while your
business closes down in the evening and you get complete report of your
outsourced non-core tasks the very next day.
Why Outsourcing is Increasing?

Most of the companies are launched by

engineers or operations professionals. They
are able to grow at a certain level after that, a
company may go stagnant and need more
professionals in order to achieve the next level
of growth but it is not easy to find the
professionals quickly and on affordable wages.
Global outsourcing leaders
Active Areas in Outsourcing
 References
Aldo Srabotic, Mitja Ruzzier, 2012, Logistics Outsourcing: Lessons
from Case Studies, Managing Global Transitions, 10(2):205–225

Marchewka, Jack T. and Oruganti, Shiva, 2013, A Combined Model of

IT Outsourcing Partnerships and Success, Communications of the
IIMA: Vol. 13: Iss. 2, Article 6.
Available at: http://scholarworks.lib.csusb.edu/ciima/vol13/iss2/6

Görg, Holger; Hanley, Aoife, 2009 ,Services outsourcing and

innovation: an empirical investigation, IZA Discussion Papers, No.
4404